Reforming Defence: Lessons from the UK Defence Restructuring History

The British Government once again finds itself at the crossroads of defence reform. The recommendations of the 2025 Strategic Defence Review (SDR 25) were intended to fire the starting gun for ‘the deepest defence reforms for 50 years’, yet ambition is not implementation.

Historically, there have been three structural tensions that determine whether a defence reform succeeds or becomes a case of partial implementation: that between centralisation and decentralisation; between institutional stability and adaptive agility; and between fiscal realism and the MOD’s ambition. Each is present to greater or lesser extent in every major defence reform since 1990 and each has a corresponding set of indictors and warning signs against which Defence Reform 2026 can be assessed.

The purpose here is not to adjudicate on the planned reform programme nor the merits of SDR 25, it is to inform a diagnostic framework for those tasked with the development and implementation of defence reform.

Balancing Centralised and Decentralised Authority

The first tension is the question of authority and the extent to which decision-making and resource control is concentrated in the centre or dispersed amongst the single services. It is a critical foundation upon which a defence reform programme depends.

Though Defence’s Operating Model (DOM) introduced by the 2011 Levene Review was explicitly ended in SDR 25, its implementation offers an instructive case study that illustrates how a well-designed reform programme can be undermined by incomplete application. The Levene model delegated authorities for financial approval and capability planning to the single services to drive accountability and efficiency through a stronger corporate framework. By design, it was a coherent proposition. In practice, delegation to service commands was not accompanied by strengthened central authority which meant there was ‘an erosion of financial discipline and a model ill-suited to making defence-wide adjustments’.

The correct decision to fix this may be found in Defence Reform 2026’s plan to bring the individual services under direct command of the Chief of Defence Staff (CDS) through the newly established Military Strategic Headquarters (MSHQ). It is a proven approach and mirrors the establishment of the Permanent Joint Headquarters (PJHQ) in the 1994 Frontline First Research Paper. This successfully concentrated operational command at the joint level, ending dispersed control amongst single services. It came with authority through Commander Joint Operations (CJO) and sufficient resource allocation. The historical lesson is that central authority works when exercised consistently rather than asserted rhetorically. The subsequent development of the British Army’s Land Operations Command (LOC) and the Royal Navy’s Maritime Operations Command (MOC) are examples of how ‘componency’ deviation can occur. Looking to the future, we can expect the same institutional forces that eroded Levene to test its successor: single services will probe the boundaries of the new model and, for Defence Reform 2026 implementation to be judged a success, the centre must hold.

Reforms implemented without sustained political and institutional backing have been shown historically to be only selectively adopted, unevenly adhered to and gradually abandoned. Particularly, the lack of accountability and governance mechanisms. If authority is diffused, reform erodes and fails to take; where it is clear and appropriately concentrated, it holds.

Balancing Institutional Stability with Adaptive Agility

The second tension is between how stable an institution is designed to be and, conversely, how able it can adapt in a crisis. Reform programmes need to use long enough forecast horizons to embed new behaviours and incentive structures yet must be able to adjust to changing geopolitical and technological conditions. Building adaptability into governance design rather than treating it as a risk to be managed is a lesson from the frailty of previous reviews.

Many defence reform programmes have been overtaken by unforeseen events that they are unable or unwilling to adapt to. The 1990 Options for Change reform capitalised on the collapse of the Soviet Union by announcing cuts and ‘an overall reduction in regular service manpower [of] around 18%’ but quickly faced Saddam Hussein’s invasion of Kuwait. The significant military commitment under Operation Granby did little to sway the minds of policy makers and the downward trajectory of defence spending continued largely unabated. The 2015 SDSR was credited for correcting some of this damage, but it in turn was ‘largely moribund following the 2016 Brexit referendum’ and disappointing economic growth. Attempts to redress by supplementary reviews in 2018 under the National Security Capability Review and Modernising Defence Programme were partially successful, similar to the Integrated Review and the subsequent Integrated Review Refresh. Therefore, the consistent pattern appears to be reviews are vulnerable to being ‘knocked off’ course by unforeseen strategic shocks and external events because they lack funding resilience to withstand them.

The 1998 SDR offers a partial example of good practice. It was regarded as ‘being generally positive’ at the time and considered to be amongst the most analytically coherent post-Cold War reviews. That said, even it required buttressing with subsequent reforms and reviews to counteract service-centric drift. It also produced recommendations on joint force generation (for example, the Integrated Force), defence diplomacy (in other words, the Integrated Global Defence Network) and technological capability planning. By comparison the 2010 SDSR was led more by budget reality than threat. 1998 and 2025 reviews set priority targets whilst 2010 self-censored to meet reality. Defence Reform 2026 is entering the year of implementation which will be a focus on testing, implementing and refining ways of working before Reform transitions to business as usual in May 2027, which recognises Defence will need to continuously adapt ways of working and that adaptive agility is vital.

Fiscal Realism Balanced Against Departmental Ambition

The third tension is the compromise between cost savings and efficiencies, and investment for growth to be made. Turning political ambition into departmental implementation depends upon the fidelity of underlying cost assumptions and the robustness of the oversight mechanisms. However, it is concerning that achieving 2025 SDR’s recommendations depends upon on an assumption that the Government will ‘unlock nearly £6bn of new savings over the course of this Parliament through efficiency and productivity savings’. The historical record does not provide much optimism.

The equivalent savings forecast in the 2015 SDSR was subsequently characterised by then Chief of Defence staff General Sir N. Houghton as ‘gusting towards a collective self-delusion’. Fundamentally, a defence reform programme should be fiscally anchored on conservative cost assumptions, not optimistic ‘best case’ projections, to avoid being vulnerable to changing strategic circumstance. Hitherto, single services have been incentivised when bidding for centrally controlled MOD funding to offer the most capable solution at the lowest plausible price. Demonstrating value for money to the Treasury means ‘winning’, even if this may mean in the long-term many programmes were highly likely to have costs that would inevitably rise. However, by the time they did, cancellation would be politically difficult with a programme that had begun, and costs would be incurred from contract cancellation. Reform of governance structures, of which there have been many, have not addressed the underlying incentive architecture. The lesson for the current Defence Reform is that structural change must accompany cultural and financial.

The cautionary tale is the much criticised 2010 SDSR which was called a ‘missed opportunity’ that had its ‘ambitious rhetoric being paradoxically accompanied by budget cuts’. Many called it a spending review dressed up as a defence review designed to close a £38 billion funding gap inherited from previous reforms. It cut front-line naval and air capabilities without resolving the underlying structural deficit. RUSI analysis of that review noted how defence spending was set to fall by 7.5% in real terms over the following four years, even as the armed forces were heavily committed to operations in Afghanistan and Iraq. Malcolm Chalmers described this as a ‘new round of cuts . . . [that were] primarily a response to a worsening fiscal environment, not to an improving strategic situation’.

So, What Does Good Look Like?

The characteristics of a successful defence reform that emerges from the post-Cold War historical record are identifiable, if not easily achievable. Political commitment needs to be sustained beyond the review’s announcement, through the programme’s development and to the end of the implementation. Realistic cost assumptions need to be validated independent of service advocacy but considered beyond HM Treasury’s traditional ‘value for money’ rubric. A strong central authority with accountability and governance mechanisms is needed to override single service preferences. MSHQ will have a vital role in tracking milestones and measures of performance / effectiveness against which implementation is scrutinised. SDR 25 has stated recommendations in most of these areas but its noted weakness is ‘a lack of hard targets’ and funding allocation. Unfortunately, the gap between a defence review and the implementation of reform has historically been the graveyard of British defence ambition.

To date, the Defence Investment Plan (DIP) continues to be delayed. This leaves defence industry, the single services and wider Government without a clear idea of the fiscal bounds within which to operate and frame their future. More fundamentally, many echo Chatham House’s analysis that call into question ‘whether [SDR 25] recommendations can be fully implemented’ given the Britain’s worsening economic situation. Ultimately, history has shown that reform implementation declines quietly. Rarely in a single visible event and more often through incremental neglect, largely invisible and unremarked. Stockpiles diminish, Small and Medium Enterprises (SME) depart, specialist manufacturing atrophies and investor confidence declines. The cumulative effect of this trajectory in the post-Cold War era has been, as characterised by the House of Lords Defence Committee in 2024, an Armed Forces that ‘lack the mass, resilience and internal coherence necessary to maintain a deterrent effect and sustain prolonged conflict’.

Cause for Optimism: Defence Reform 2026

The ongoing Defence Reform 2026 programme is qualitatively different from its predecessors in that it has been explicitly positioned as a paradigm shift in the way Defence operates, rather than simply restructuring the organisation.

Each of the four new Defence Areas, which reached Initial Operating Capability on 31 March 2025, have a distinct purpose and an accountable Four-Star leader that reports directly to the Government’s Defence Secretary and Ministers. Each will have a clearly bounded set of accountabilities that reflect the purpose of their respective area and, in principle, eliminate the accountability ambiguity that the Secretary of State identified as central to previous dysfunction. They are: the Permanent Under Secretary leading the Department of State; the Chief of the Defence Staff leading Military Strategic Headquarters and thus the Military Commands and Joint Commanders; the National Armaments Director leading the National Armaments Director Group; and the Chief of Defence Nuclear leading the Defence Nuclear Organisation.

The Secretary of State for Defence has said this new operating model will address the fact that ‘extraordinary people [are] doing extraordinary things within a system that very often doesn’t work in the way that we need it to’. The goal being to build a Defence-wide enterprise founded upon defined roles and responsibilities, with correspondingly clear accountability, to provide the British Government with defence levers with which to exercise in an increasingly unstable world. Whether it can do so remains to be seen.

© Laurence Thomson, 2026, published by RUSI with permission of the author.

The views expressed in this Commentary are the author's, and do not represent those of RUSI or any other institution.

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