Q37 Lord Trimble: The National Security Capability Review and the Modernising Defence Programme both took longer than either of the two full SDSR processes in 2010 and 2015. Can you explain why it took so long, bearing in mind that the Committee was told that it would be “a quick refresh”?

Sir Mark Sedwill: Indeed. The Capability Review started immediately after the 2017 election, whereas with most SDSRs, although the formal process can be briefer, as it was in 2015, there has been a great deal of preparation over the previous few years. Some of you, such as Dr Lewis, will know that the Ministry of Defence, for example, starts preparing the next one almost as soon as the previous one is locked down and thinking about the kinds of approaches it needs to take. One should distinguish a little between the public work and the official work that goes on behind it.

The Capability Review, of course, was a portfolio approach and it ran for a matter of months after 2017. It was completed by the end of that year, even though it was not published until later. Rather than focusing entirely on a public document, which is what some of the previous reviews had done, we started out by operating at a proper level of classification – most of the work was confidential or secret – took the decisions on that basis and only produced a public document thereafter, because there had been criticism in the past that focusing on a public document inevitably biased some of the conclusions.

So the timing was not quite as it appeared publicly. The Modernising Defence Programme, as you indicate, was one of the components that were already in train. There will be an SDSR at some point, but essentially it is an ongoing programme to mobilise the current capability, to modernise and of course to transform the way the MoD itself works and improve its efficiency and effectiveness.

Lord Trimble: Quite a remarkable goal at the end of that sentence.

Sir Mark Sedwill: Indeed.

The Chair [Dame Margaret Beckett]: We might have heard that before, too.

Q38 Dr Julian Lewis: One of your predecessors, Sir Mark, complained to this Committee that the defence strands were taken out of the National Security Capability Review, for a particular reason that I will come to. I thought it was rather a good thing. What was your view?

Sir Mark Sedwill: I did not mind as long as it was aligned. That was the key thing. The honeycomb picture that we use to express the Capability Review sets out 12 different components, essentially individual projects – I think I set this out the last time I was here – some of which were already in train. For those, and defence was one of them, the purpose of the Capability Review was to bring coherence to work that had already been announced, and to add to it areas of capability that were not being addressed. So for me the question was one of alignment and coherence, rather than ownership.

Dr Lewis: But you can take the Fusion Doctrine too far, can you not? I would argue that there was the danger that you were trying to fuse the defence and security budgets into a single pot of money. When the defence strand was part of the National Security Capability Review, as you revealed to this Committee previously, the whole operation was meant to be fiscally neutral. That meant that for every pound spent on the security side of the equation, £1 less would have to be spent on defence. Did this combining of the two not lead to plans being drawn up for serious cuts in our conventional defences?

Sir Mark Sedwill: First, we are a long way away from the point at which I would say that fusion could go too far. We are still very much in the early phases –

Dr Lewis: I am talking about financial fusion.

Sir Mark Sedwill: I understand the point you are making. I recall talking to this Committee, and indeed to yours when I appeared in front of it, about a total national security pool of about £58 billion, of which defence forms about 60-plus per cent. You are right that the overall approach to the Capability Review was fiscally neutral, but there were ring-fenced commitments within that, including the 2% of GDP for defence, the 0.5% real growth per year and the 0.7% of GNI for international aid. So there were ring fences within it.

There were leaks about potential changes within defence – different shifts of capability, cuts in some areas and increases in others. That was nothing to do with the overall pool of resources. All that thinking was within defence’s own budget. There was no transfer between that and security, for example.

Dr Lewis: Are you saying that all those leaks, saying that we might lose the amphibious capability, we might see a loss of one or two RAF squadrons and we might see a lower target for the size of the Army, were nothing to do with anything extraneous to the defence budget that was already guaranteed? In which case, why, when the defence strand was taken out of that review and it was then decided that it would not be a fiscally neutral exercise, did those cuts not happen and defence actually got more money?

Sir Mark Sedwill: As you say, when the Modernising Defence Programme ran through and the work was done, additional funds were found in the short term for dealing with some of the pressures on defence to both mobilise and modernise. You will understand that I do not want to get drawn into speculating about leaked documents that were – how shall I put it? – an incomplete record of the thinking that was going on at the time, but some of the rather lurid stories and speculation at the time were never any part of government policy thinking. There was quite a lot of speculative material, but it was not part of government thinking.

As I say, within the National Security Capability Review, defence was one of the areas that was ring-fenced because of the public commitments that had been made.

Dr Lewis: Are you saying that even though the whole National Security Capability Review was supposed to be fiscally neutral, so there would be no extra money for the overall pot, and even though there was a lot of talk about spending more money on new types of threats for the 21st century – every time I asked the Prime Minister about more resources for the Army, the Navy and the Air Force, she would always come back with the same answer: “You’ve got to consider new threats in the 21st century that don’t traditionally fall within the remit of the three services” – and all the signs were that more money was going to be spent on these new threats, it would not have been money taken away from the conventional defence budget, and the whole thing was meant to be fiscally neutral?

Sir Mark Sedwill: Of course, we approached it thinking that it would be fiscally neutral, because we felt that that was the right way to approach a review of capability. In fact, additional resources were found in several areas as new pressures and requirements were identified. There was an uplift for counterterrorism work, some of which arose from the operational reviews of our counterterrorism work.

We found a relatively small amount, certainly by the standards of defence, to beef up strategic communications capability. We reallocated money to create the National Economic Crime Centre. None of that came out of the core defence budget. Obviously I do not recall exactly which exchange with the Prime Minister you are referring to –

Dr Lewis: There were several.

Sir Mark Sedwill: Yes, I can imagine. I imagine that she was referring not so much to money coming out of defence into other areas but to defence, as the biggest part of the country’s national security capabilities, applying itself to the new threats as well as to the traditional threats. We have seen that over at least a decade and a half.

Dr Lewis: Being entirely specific, are you saying that the report by Deborah Haynes on the front of The Times, which had three lots of specific options regarding cuts in each of the three Armed Services that appeared to be on the cards before the defence strand was removed from the National Security Capability Review, was groundless speculation and nothing specific?

Sir Mark Sedwill: Again, you will understand that no one in my position ever comments on a leaked document, because once we start down that track we start having to share every document in government.

Dr Lewis: That assumes that it was a document that was leaked.

Sir Mark Sedwill: Well, Deborah Haynes is a very professional reporter and would not have reported in those terms had that not been the case. However, I would not use exactly the phrase that you did to describe it. It was clearly put out there in order to have a political effect.

Dr Lewis: So the Government will be holding a full review of the national security strategy and the SDSR at some time. Normally that would have been five years after the last one in 2015. Are we expecting the next one to be in 2020, or will it, as a result of this exercise, be delayed a bit?

Sir Mark Sedwill: The five-year cycle, of course, links to the parliamentary cycle. It has been traditional at the beginning of a new Parliament for there to be a spending review, and it is right that if there is a comprehensively spending review it is associated with an SDSR and a national security strategy review.

Obviously, the parliamentary cycle shifted with the 2017 election. The Government still have to take a decision on the exact scope and duration of the spending review. The Chancellor will announce that in due course, but, as he has set out, there will certainly be a spending review this year. That sequence is essentially no longer exactly as it was before, so Ministers still have yet to decide whether to apply an SDSR alongside it. That will depend somewhat on the terms of reference of the spending review.

Q39 Dr Lewis: Are there any particular lessons that you think you have learned   from the experience of holding this interim review process?

Sir Mark Sedwill: Yes. As I mentioned earlier, there are two things we want to do in linking strategy and implementation to capability. First, we will be conducting, and have actually started to conduct, the first annual posture review. That is not a full SDSR or anything of that kind but is essentially about identifying how the existing capability set can be deployed in order to meet the national security priorities, and, if there are some capabilities that are oversubscribed and some that are undersubscribed, whether there can be re-prioritisation, although in effect you will be aware that with that kind of cycle there is a fairly fixed supply. We will report on that in the annual SDSR report and will include in it material on the first of those. The development of major capability, the really big decisions, should be for the SDSR on a five-year cycle.

The other thing I am keen to explore, although again this is a decision for Ministers, is how we can also look at SDSRs sequentially. Even though five years is quite a long planning horizon for defence capability and for major aid priorities and so on, and of course fits with the political cycle, actually it still is not long enough. Each SDSR also needs to be seen as the area in which we can to some extent pilot or prepare some of the capabilities that might be industrialised in the subsequent one, obviously depending on political decisions taken at that time. I am quite keen that we look at it in a more strategic way.

[ … ]

 Q55 Dr Lewis: We are on the home straight now. I would like to slip in a couple of disparate points if I may.

Sir Mark Sedwill: Are you lulling me into a false sense of security?

Dr Lewis: I hope so. On the question of strategic communications, when you are trying to influence groups in a competitive way and an adversary is operating against you, as is the nature of those we face today, do you accept that often the message is less effective when it seems to come from the Government than when it comes from intermediaries and opinion-formers? Are you taking that into account in your strategy?

Sir Mark Sedwill: The short answer is yes. You will understand that in a public forum I do not want to say too much about it, but the point is very well made. It is a significant component of how we approach this.

 Q56 Dr Lewis: Thank you. On Huawei and China, do you share the very deep concerns expressed by the Defence Secretary, Gavin Williamson, about their possible involvement in the 5G network and, perhaps even more unusually, the concern expressed in a public lecture by the head of MI6 on the same subject?

Sir Mark Sedwill: Of course, they both set out the Government’s position. It relates to the point I made in response to an earlier question: our approach to this must be about standards and transparency. We need to ensure that Huawei and any other companies operating within our communications infrastructure do so in a way that means we are confident about the security of that infrastructure.

Dr Lewis: On Salisbury, you were heavily involved in the co-ordination of that very successful operation. I think we ought to record our appreciation for that and for getting so many countries to respond in a comradely way. Do you feel that you would have been able to do that job under the present arrangements where effectively the National Security Adviser is having to double up as the Cabinet Secretary?

Sir Mark Sedwill: Yes, because whatever one’s portfolio – and as National Security Adviser it is very broad – one has to deal with the biggest issues of the day. Salisbury was the biggest issue of that period. 

Dr Lewis: Am I right in thinking that you are saving the public purse a considerable amount of money by doing these two jobs for a single salary?

Sir Mark Sedwill: That is why I am not getting two salaries, but I welcome the nudge.

Dr Lewis: You can take it that way if you like. It has been suggested to me that perhaps the National Security Adviser post is being held open for one Mr Olly Robbins when we are safely out of the EU. If that is the case, could you put a date on it, as we are all very keen to know when this might happen?

Sir Mark Sedwill: You will understand that I am not going to speculate on individuals.

The Chairman: That is an unashamed bid to steal the headlines.

 Q57 Lord Powell of Bayswater: I have a follow-up question on the point about Huawei. Do you agree that we do not necessarily have to go along with every detail of what our Five Eyes allies say, given that we have a much longer experience of doing business with Huawei? The technical people who deal with Huawei exclude it anyway from the more sensitive aspects of anything they do. It is not immediately apparent that Huawei is in a position to be much of a threat to us.

Sir Mark Sedwill: That is a very good point. We have had an arrangement with Huawei since, I think, 2010, where there are air gaps, as you suggest, within some of the governance. We also have unrivalled insight and scrutiny into the systems that they deploy here in the UK. That puts us in a different position from some of our allies and enables us to take the more targeted approach that I have described; we are looking at standards and transparency rather than at involvement in a binary way.

Dr Lewis: However, the Intelligence and Security Committee pointed out in a 2013 report on Huawei that there are over 1 million lines of code. It is impossible to survey them all properly is it not?

Sir Mark Sedwill: You would have to ask an expert, but I think the experts believe that we have a good grip and understanding of this. The issues are about the quality and standard of the capability and ensuring that it meets all our requirements.

Dr Lewis: On another topical point, am I right in thinking that no COBRA meeting was called when the drone incident at Gatwick occurred? If that is the case, why was it not?

Sir Mark Sedwill: We do not usually comment on individual COBRA meetings in public fora, as you will understand. The Gatwick incident was largely handled as a law-enforcement matter at the time, but with some support from other agencies.

Dr Lewis: Okay, although one might have thought that it was tailor-made for such a meeting. Finally, on the Modernising Defence Programme, you were still involved in the capability strand of that. I believe you chaired it. Is that right?

Sir Mark Sedwill: Yes.

Dr Lewis: Was there any reason why, other than the fact that we are still waiting to know what sort of funds will be available in the long term, the MDP did not include any significant capability decisions?

Sir Mark Sedwill: The MDP probably did include capability decisions; they were about modernisation and mobilisation in the immediate future, and they set out a perspective for the future. But the big decisions have to be accompanied by resource choices, and that needs a spending review.

Dr Lewis: So we are in suspension until we get to that point and know what the budget will be.

Sir Mark Sedwill: As you will know better than I, sufficient additional resources were found for the MoD for the short term, for 2018-19 and 2019-20, but those are not strategic decisions for the future.

Dr Lewis: That is right. A lot of plans for the future are based on the thought that we are going to achieve billions of pounds’ worth of efficiency savings in the MoD. Is there a danger that these plans have been overpromised and oversold?

Sir Mark Sedwill: I am trying to recall the name of your Select Committee’s report, which made that point rather pithily.

Dr Lewis: It was called Gambling on ‘Efficiency’.

Sir Mark Sedwill: Exactly. To be fair to the MoD, we have ensured – I think the Defence Secretary would say this if he were here – that, while in the past there has been a degree of ambition in it, the efficiency programme ahead has been through a great deal of detailed scrutiny. The MoD is confident that it will be able to deliver. This is not just aspirational.

Dr Lewis: Finally, from me at any rate, the MoD has a request on the table for an additional £360 million for the defence transformation fund as part of its bid for the next spending review. Are you likely to proactively support it?

Sir Mark Sedwill: I will be proactively involved in helping to make the right assessment, but in the end it is a decision for Ministers.