Grand Committee
Greater Manchester Combined Authority (Fire and Rescue Functions) Order 2017
(7 years, 8 months ago)
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Baroness Williams of Trafford
That the Grand Committee do consider the Greater Manchester Combined Authority (Fire and Rescue Functions) Order 2017.
The Minister of State, Home Office (Baroness Williams of Trafford) (Con)
My Lords, I shall speak also to the Greater Manchester Combined Authority (Transfer of Police and Crime Commissioner Functions to the Mayor) Order 2017. These orders give effect to the policing and fire elements of the devolution agreements between the Government and the Greater Manchester Combined Authority.
With the Committee’s permission, I will turn first to the Greater Manchester Combined Authority (Transfer of Police and Crime Commissioner Functions to the Mayor) Order 2017. The purpose of this order is to make detailed provision in relation to the transfer of responsibility for police and crime commissioner functions in Greater Manchester from the Greater Manchester police and crime commissioner to the directly elected mayor of Greater Manchester.
The transfer of these functions to the elected mayor will preserve the democratic accountability already established under the police and crime commissioner model. It will also join up oversight of a range of local services, including fire and rescue, opening up opportunities for broader collaboration. This is a chance to build on the strengths of the PCC model. The order requires that the elected mayor must personally exercise the core strategic functions of setting the police and crime plan, take decisions on chief constable appointments and set the policing component of the combined authority precept.
To provide additional leadership capacity, the order enables the elected mayor to appoint a deputy mayor for policing and crime, to whom certain police and crime commissioner responsibilities may be delegated. The order also requires that a new police and crime panel be set up. This panel will scrutinise the decisions of the mayor in respect of the exercise of their PCC functions in much the same way as the current panel does in relation to the police and crime commissioner. This order has been developed in consultation with the Greater Manchester Combined Authority and the Greater Manchester police and crime commissioner, and the combined authority and its constituent councils have given their consent.
I will now turn to the Greater Manchester Combined Authority (Fire and Rescue Functions) Order 2017. The purpose of this order is to transfer the responsibility for oversight of fire and rescue functions from the Greater Manchester Fire and Rescue Authority to the Greater Manchester Combined Authority, with these functions to be exercised by the directly elected mayor. Transferring oversight of fire and rescue functions to the mayor will provide direct electoral accountability for the provision of this key public service. It should also facilitate closer working with other local partners, including the police. This is obviously consistent with our desire to encourage greater collaboration between the emergency services.
The order permits the mayor to delegate certain responsibilities to a fire committee, to be formed of members from the constituent councils of the Greater Manchester Combined Authority. The committee is intended to assist the mayor in carrying out their fire and rescue functions. At the same time, the order identifies a number of fire and rescue functions as strategic to the delivery of fire and rescue. These functions must be personally exercised by the mayor and shall not be delegated. These strategic functions include approving the local risk plan and fire and rescue declaration in accordance with the fire and rescue national framework, and approving contingency plans under the Civil Contingencies Act 2004. The elected mayor will also remain personally responsible for decisions relating to the appointment of the chief fire officer. Scrutiny of the mayor’s exercise of fire and rescue functions will be undertaken in line with the arrangements for non-PCC functions.
The changes to be made by this order have been endorsed by the people of Greater Manchester in a public consultation conducted by the combined authority. The order was developed in close consultation with the Greater Manchester Combined Authority and has been formally consented to by the combined authority and its constituent councils. I commend these orders to the Committee.
Lord Stunell (LD)
First, I thank the Minister for her introduction to these orders. I agree with her that there has been wide consultation and that it is appropriate for this Committee to bear that in mind when reaching its decision in what I hope will be only a few minutes’ time. I should declare a residency qualification, in that I live in Greater Manchester and for 18 years I was an MP for one of the 27 constituencies. For eight years, I was a member of one of the 10 constituent borough councils—and, to complete the full set, I was a Minister in the Department for Communities and Local Government when the combined authority order was set up in 2011. I know that the city deal that flowed from that was widely welcomed across Greater Manchester, along with the steps that have been taken since to ensure that additional resources—funding what has traditionally been central government, Whitehall-directed services—will be put into the hands of the combined authority from the start of the new regime in May.
The progress made so far has been much envied and imitated around England, where a steady stream of visitors from other cities and for that matter rural and shire areas have been received by the combined authority, asking it how the model has been developed and how it can be copied. All that is positive and very much a direction of travel that my parliamentary colleagues and I believe is right, with more decision-making and discretion over the delivery of public services in a given area in the hands of those who live there and are elected from there.
I have a concern about the mayoral model, but that particular ship has left port. A loss in cross-authority representation and accountability flows from that, but these orders do something to combat or respond to that. Certainly, to replace the police and crime commissioner —somebody who, for all his qualities, was elected on a 14% turnout across Greater Manchester—with somebody elected to be mayor of the combined authority, and with a much more significant and wider role in the delivery of public services, is almost bound to increase the visibility and accountability of the person carrying out that role. I welcome that, as do the constituent authorities.
The police and crime panel, to which the Minister referred, is seen as a way of maintaining or improving the police service’s accountability. There is a way to go in that regard; it is to be hoped that a more visible mayor’s being in charge of the police service may lead to the panel having more visibility and capacity to keep control, or a proper oversight of that service. Nevertheless, it is a good thing to see that incorporated in the proposals.
As for the Greater Manchester Fire and Rescue Authority, there is no equivalent commissioner but rather control by representatives of the 10 local authorities, and there is no doubt that the new arrangements will give more visibility to the leadership of that service. In the longer term, bringing the police and fire services under common management must be a better way to provide a coherent and integrated service. Indeed, my one question to the Minister relates to that. Today, the Care Quality Commission has produced a report on independent ambulance services. The ambulance service in Greater Manchester is provided by an independent body based in Blackpool. Bearing in mind that these orders bring together two of the blue light services in Greater Manchester—and particularly in view of the critical nature of that report, but more generally in any case—have the Government looked at ways the blue light services in Greater Manchester could be brought together? Again, I remind the Minister that the combined authority in Greater Manchester will be taking over a significant amount of NHS commissioning for future years—a step that I very much favour.
With that sole question to the Minister—I dare say she is not equipped to answer it off the top of her head; perhaps she would like to write to us about bringing together the three blue light services—I am certainly happy to support these orders.
Lord Smith of Leigh (Lab)
My Lords, I declare my interest not merely as a member of the combined authority and leader of Wigan Council; I am in a position to answer the question asked by the noble Lord, Lord Stunell, on ambulance services because I chair the Greater Manchester health partnership board. The orders are very interesting. I have yet to see in the manifestos of either of the two main mayoral candidates what their policies are on the docking of working dogs’ tails. That obviously is an important consideration.
I not only thank the Minister for introducing the orders, but welcome the fact that the Government have put them together. To add to the points she raised, it is not just about bringing together the blue light services, which is important. We need to see police and fire as part of general public service reform. Many of the issues the services face are related to the fact that people have problems across their lives. We need to get the police and fire services engaged in the work we are doing in Greater Manchester across a wider range of public services, not just in blue light services.
The answer to the question asked by the noble Lord, Lord Stunell, is that the arrangements are currently handled through Blackpool but they are coming back to Greater Manchester. We asked for ambulance service commissioning to come back to Greater Manchester because, as we are now a devolved health area, we need to do this rather than working through CCGs in Blackpool, for example.
There are actually two panels that look after the PCC in Greater Manchester: the scrutiny panel, made up of members of the authorities, and the combined authority itself. We will need to find a mechanism to continue that work, because it is important that the work of the police and crime commissioner, whether exercised by the mayor or anybody else, has consent across the whole of Greater Manchester on major issues.
It may be my ignorance, but the documentation does not make clear the deputy’s role. I would hope that the mayor would appoint a deputy. He or she will have a lot to do generally and we need to supervise what is going on in the police service. A day-to-day role in running the police service would be too much for anybody, and the same is true for the fire service. I hope we will set up the committee to run that, but we need to understand the role of the deputy and how answerable they will be to various public bodies.
As the Minister is probably aware, I regret that the PCC can implement the Greater Manchester precept without really consulting the 10 authorities. That needs to be changed. Unfortunately these orders do not do that; they roll it on. It is also not clear in the fire order whether the fire precept will need to go to the combined authority for approval, or the mayor will simply make a recommendation and we will not have any control over it. There has been a little dispute this year about how much the fire precept should go up by. With the representative of Trafford, I was on the losing side of that argument but we need to do that.
As the Minister said, we consulted on this across Greater Manchester. We welcome the changes. It will be an interesting challenge to have a mayor with the combined authority but I am sure we can all make it work to ensure proper devolution across Greater Manchester.
Lord Beecham (Lab)
My Lords, I am sure the mayoral system will be interesting—possibly in the Chinese sense—but if it is likely to work anywhere, it will undoubtedly be Manchester. I want to raise a couple of issues with the Minister.
First, of course the Government would like to see combined police and fire authorities. There are places where that might be suitable. But I take it that where there is a different view locally—as there would be in the north-east, for example, where we have different boundaries for the different services—there will not be any compulsion on authorities to go in that direction.
I am sorry to say that, having been spending my time on the next statutory instrument, I have forgotten what my second point was. Perhaps I will approach the Minister afterwards.
Lord Kennedy of Southwark (Lab)
My Lords, first, I make my usual declaration of interests as in the register; specifically that I am a local councillor and a vice-president of the Local Government Association. The two orders before us I have no issue with, and my comments will be correspondingly brief. The Minister, the noble Lord, Lord Stunell, and my noble friend Lord Smith of Leigh, who is a member of the authority, are the experts here.
As we have heard, the orders transfer fire and rescue functions and police and crime commissioner functions to the mayor for Greater Manchester. I am pleased that we are having an election for this position on the first Thursday in May. These functions will then be transferred to this new elected person to be accountable for the delivery of these very important services to people living in the Greater Manchester area. At the same time, the office of police and crime commissioner and the Greater Manchester Fire and Rescue Authority will both be abolished.
I record my thanks to Tony Lloyd, who has been the PCC for Greater Manchester since 2012. Before that he was a Member of the other place for 29 years, for both Stretford and Manchester Central. In that time, he also served as the chair of the Parliamentary Labour Party, which is an interesting job to hold down, and he managed to hold it for six years until he left this place to become the PCC.
Lord Kennedy of Southwark
Escaped, yes. Anyway, it is important to put that on record. For both policing and fire and rescue services, specific functions can be exercised only by the mayor, although they will be able to appoint a deputy mayor for policing and crime.
The issue I have with these devolution deals in general—not this one specifically—is that I sometimes feel they are a little unclear and you get a sort of patchwork. I accept the point that areas can work with what they think they can cope with. Certainly, in this area, the Greater Manchester mayor will have considerable powers, in many respects similar to those of the Mayor of London. They will also have powers in respect of the health service.
I am sure the three noble Lords present today fully understand all the functions the mayor will take over, but I am not convinced that every Member of your Lordships’ House is fully aware, or members of the general public living in Greater Manchester and other places. We need to have a much wider discussion about where we are going with local government and all these functions. It is time for the Government to consider producing a Green Paper to enable proper debate about these functions in England. I have approved a number of these orders in recent weeks in this Room and the Chamber. They are all different and sometimes you cannot work out why. We need a discussion about where we are going with local government. All these positions are important, and it is important to have democratic control. Let us not forget that the individuals involved will be spending huge sums of council tax payers’ and taxpayers’ money. We must be clear who is there, why they are doing it and how we engage with them. But that is a discussion for another time.
As I said, I support the orders and I certainly wish the new Manchester mayor—whoever it is, although I hope, of course, that the Labour candidate gets elected—the very best in their new role.
Lord Beecham
My Lords, I have overcome my senior moment. I wanted to ask whether any consideration had been given to ambulance trusts, which are fairly unaccountable bodies but are, of course, part of the emergency services. Has there been any discussion with either trusts or local authorities about a different relationship—keeping that phrase fairly neutral—as regards the future of that service?
Baroness Williams of Trafford
I thank all noble Lords who have taken part in this debate. I too must declare an interest as a former councillor and resident of Greater Manchester. I pay tribute to Tony Lloyd who has held the fort very well over the last couple of years in his role as interim mayor, and in all the roles he has held previously in government and local government. We have here three people who will be voting in the mayoral elections in May, so that is very good. The noble Lord, Lord Stunell, mentioned turnout. I recall an experience I had in Greater Manchester of probably the worst turnout in history: the Benchill by-election back in November or December 2001, where turnout was 8%. That was a depressing low. Looking forward to the mayoral elections, I was quite sceptical about the Mayor of London, but that is not a position for which any political party is scraping round for candidates. It is very sought-after and has gained a profile over the years, and I fully expect that will happen in Greater Manchester and elsewhere. As it does, visibility will grow and accountability will become a lot more obvious.
The noble Lord, Lord Smith—I was going to call him my noble friend, but he is really—talked about blue light services being brought back down to GM. The noble Lord, Lord Beecham, asked about ambulance trusts. It is within the gift of whichever combined authority to request collaboration in that regard, or that those matters be part of the devolved model. There are no limits to what the model may look at. That brings in the point made by the noble Lord, Lord Kennedy: that the different devolution deals are a bit of a patchwork. This is necessarily a patchwork because every area is different. For example, rural areas look very different from urban areas; they have different needs and different proposals. The noble Lord, Lord Kennedy, is smiling at me slightly but I said that on the then devolution Bill, and I firmly believe it. I say to the noble Lord, Lord Stunell, that the Liberal Democrats grilled me on accountability and scrutiny during the passage of that Bill. We have very rigorous structures in place, certainly in Greater Manchester and, I hope, elsewhere.
The noble Lord, Lord Beecham, asked about the compulsion to combine police and fire authority areas, particularly where they are not contiguous. There is absolutely no compulsion to do that. If they are not contiguous, such a move would require structural change anyway.
I think I have answered all the questions, but if not I will certainly come back to noble Lords.
Lord Kennedy of Southwark
I accept entirely that different areas have different needs and may want to tackle this issue in different ways. The point I was making is that the Government have not made it clear where we are going. That is not to say that different areas cannot tackle this issue in different ways; of course they can; they have different needs. However, the Government have never set out clearly in a document where they are going with this, which is why the situation is confusing. The West Midlands is a similar conurbation to others, with similar problems and similar areas, but the deal that was arrived at and the powers that were transferred are vastly different from those in other similar areas. Why? That information is missing. There is no difficulty with having different arrangements, but we need to know how the Government have arrived at the present position.
Baroness Williams of Trafford
As the noble Lord, Lord Smith, mentioned, we left it up to local areas to say what their version of public service reform looked like—what did public service efficiency look like going forward and what was their plan for growth? Therefore, that might look slightly different in different areas, which is why I explained it in the way I did. However, there will be similarities: transport is a huge issue in Greater Manchester and the solution to that will be huge in terms of growth, as it will be for other areas.
Greater Manchester Combined Authority (Transfer of Police and Crime Commissioner Functions to the Mayor) Order 2017
(7 years, 8 months ago)
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Baroness Williams of Trafford
That the Grand Committee do consider the Greater Manchester Combined Authority (Transfer of Police and Crime Commissioner Functions to the Mayor) Order 2017.
Electricity Supplier Payments (Amendment) Regulations 2017
(7 years, 8 months ago)
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Lord Prior of Brampton
That the Grand Committee do consider the Electricity Supplier Payments (Amendment) Regulations 2017.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Prior of Brampton) (Con)
My Lords, I beg to move that the Committee approves the draft Electricity Supplier Payments (Amendments) Regulations 2017. This instrument amends regulations concerning the contracts for difference scheme and the capacity market. Before diving into the specifics of the amendments we are discussing today, I will briefly explain these two schemes.
Contracts for difference, or CFDs, provide long-term price stabilisation to low-carbon generators, allowing investment to come forward at a lower cost of capital and therefore at a lower cost to consumers. The scheme ensures greater certainty and stability of revenues to electricity generators by reducing their exposure to volatile wholesale prices, while protecting consumers from paying higher support costs when electricity prices are high. The capacity market provides regular payments to reliable forms of generation in return for such capacity being available when needed, thus ensuring that enough capacity is always in place to maintain security of supply. A fundamental aspect of both schemes is the competitive auction process for awarding contracts, which drives down costs to consumers.
The next CFD auction, with a budget of £290 million for less established renewables technologies, is on track to open in April. This will result in enough renewable electricity to power 1 million homes and reduce carbon emissions by around 2.5 million tonnes per year from 2021-22 onwards. It will also allow developers of innovative renewable technologies to deliver the best deal for bill payers. Three main capacity market auctions have been held each December from 2014 to 2016 to secure capacity four years ahead from 2018-19 to 2020-21. The latest of these secured 52.4 gigawatts of capacity at a price of £22.50 per kilowatt per year. In January 2017, an early capacity auction was also held to secure capacity for winter 2017-18. The auction secured 54.4 gigawatts of capacity at a clearing price of £6.95 per kilowatt per year.
The regulations we are considering today will implement a second tranche of minor and technical amendments to improve the efficiency and transparency of the CFD supplier obligation, the levy on suppliers that pays for the costs of CFDs. They build on a first tranche of changes approved by Parliament last year, which became law in April 2016. These further changes are being implemented later to allow time for necessary changes to be made to the settlement system, which determines the way that CFD payments are calculated and paid. Both the changes under consideration today, and those implemented last year, were the subject of a public consultation and received a largely favourable response. These regulations also amend the levies that fund the companies established to deliver the CFD and capacity market schemes.
Lord Deben (Con)
I shall intervene for just a short moment. Whenever we talk about these things there is always a kind of reticence—a fear somehow or other that the customer will be charged in an unsatisfactory way for Britain to move to the low-carbon economy that we all seek. I remind the Committee of my interest as chairman of the Climate Change Committee.
I will say three quick things. First, this is inevitably a complex matter. Inevitably, anyone listening to the Minister describing what was changing might have some difficulty in following, were they not absolutely up to date with what it was changing from. That is one of our problems: when we deal with these matters it is difficult to get them right and to get them simple. The Committee must accept that the Minister did a great job in explaining what is to happen. The regulations’ purpose is to do what I imagine we will go on doing almost every year to make sure that we learn from the lessons of the past and discover mechanisms whereby we can make the system work as cost effectively as possible. I emphasise that all of us wish to support that process. Whereas we want some stability in the overall system, we will be concerned if the basics are changed more than is absolutely necessary. We are perfectly happy if on each occasion we seek to tighten some things and loosen others to make the system manifestly more effective.
Secondly, however, I hope the Minister, in all the times that he speaks on these matters, will refer people to the work recently done by the Climate Change Committee, which shows that the overall effect of our low-carbon policy has been to reduce bills, not increase them. Roughly speaking it costs us about £9 a month more to pay for the costs of moving towards a low- carbon economy, but the bills are £20 a month less than they would have been because of the effects of those policies. As people exchange old white goods and other electrical goods for new ones, because of our policies, the latter are much more efficient. We have pressed the technology.
I remember going to buy a freezer at the beginning of the European Union process of warning people about the amount of energy used by new products—when the little notices came in for the first time. The freezers on offer ranged from those with an A rating to those with a G rating. As a matter of fact, I did not buy a freezer in that sale. I waited a year for the next January sales. I went around again and discovered that all the freezers were now between an A++ rating and a B rating. In one year we had changed: people were told about the value of low-carbon, low-emission products at a time when they could do something about it. They were not just generally told about it, but told at the moment when they could save so much a year by making that choice. Manufacturers discovered that they would not sell their products unless they made those technological changes.
I raise these issues because the constant talk in the press is very trying—not just for those of us who are concerned with them daily but for the Government and Opposition too—as if all this has made bills heavier, when it has not. Had we not done this, bills would be £20 a month more. That is not an imaginary figure, but shows how the reduction in domestic use of electricity affects the bills of the majority of people—some 85% of the population—who use both gas and electricity. In those circumstances, we have to go on talking about this, otherwise we lead people astray into thinking they are paying £9 a month extra, instead of saving some £11 a month in total. If they take a personal decision to improve their energy efficiency, they can make even more savings, but we never take that into account, of course, because it is a personal decision. However, the other two factors are a result of government policy playing back into how people pay their bills.
I want the Government constantly to quote this fact, because we have spent a lot of time on it, and it is very objective indeed. I know how objective it is, because our opponents have attacked it and said that it is outrageous, but have been unable to find a single item that they can show to be outrageous, being unable to find a single fact with which they can argue. It is outrageous to them, of course, because it undermines their whole attitude and the campaigning they have done—I am afraid—through a number of our popular newspapers. I hope that the Government will in future speeches include this simple matter to remind people, so that they always know.
My third point is that we hear from the press that the Government are very keen on keeping down energy bills and will make significant investigations and possibly take draconian measures to do so. I point out to the Minister that the report we have just produced shows that business electricity bills in this country are significantly higher than in the rest of Europe. It is not true of domestic bills, as a matter of fact; we sometimes forget that. It is more or less the same position with gas—the cost is somewhere in the middle of bills in the whole of Europe, which suggests that we may find there is not much we can do about it.
I have already spoken about the fact that bills are not greater, but less, because of our green measures, but I want to point to something in the report that is of considerable relevance to our discussion today: that electricity bills to business are higher in this country than in the rest of Europe. It is quite clear why: partly because we charge a higher distribution cost, whether or not it is a real cost, but also because our wholesale market is higher than in the rest of Europe. There is a real problem here. When as a committee we sought to find out why that was, nobody could tell us. Of course, the industry was unwilling to explain it—and one could understand why—and the Government admit that they do not have a ready answer. The Minister has said that the amendments address the cost of the necessary adjustment in how the market works and operating, as far as possible, a free market as we move towards a zero-carbon electricity supply. In that context, I hope he will spend a good deal of time concentrating on the two factors that are independently assessed as the reason for higher prices in the business sector. Otherwise, I am afraid that he may be led down the line that it is all about green taxes, when the opposite is true.
Baroness Maddock (LD)
My Lords, it is always a pleasure to follow the noble Lord, Lord Deben, on these issues. I agree with much of what he has said. I had not intended to speak, but he reminded me, as did the Minister in his opening comments, of how complicated the Bill that put all of this into place was. To this day, some of us still find it quite difficult to get to grips with. I thank the Minister for trying to explain it as well as he did. I miss Lord Jenkin who saw us through that Bill. I was saying to my noble friend Lady Featherstone, who was not here at the time, that Lord Jenkin was the man who really understood what was going on and helped us all through a difficult Bill. I put that on the record.
Lord Grantchester (Lab)
I thank the Minister for explaining the amendments to these regulations. They seem eminently sensible, drawn from the experiences of operating the regulations, which are vital to reforming the electricity market and encouraging low-carbon electricity generation to ensure the UK’s security of supply. I also express my gratitude to the noble Lord, Lord Deben, for his helpful remarks as background to the regulations, and for underlining the importance of the progress we have made.
The amendments to the regulations should increase the cost-effectiveness of the two main measures, the CFD scheme and the capacity market, since they reduce the heavy-handedness of the belt-and-braces approach of the CFD counterparty, the Low Carbon Contracts Company, and that of the Electricity Settlements Company for the capacity market. The Minister’s introduction eloquently explained the improvements. These companies exist only to make payments for low- carbon generation or demand-side responses, and to collect these payments from suppliers. The companies must also cover their costs. The regulations set up the system to do this in as transparent, equitable and cost-effective a way as possible, allowing for a sensible amount of reserves as some guarantee. One would hope and expect these payments to balance out through the reconciliation process.
Much of the debate on these regulations in the other place focused on the probability of error. I could join in and tease the Minister by asking him about 20 scenarios, any one of which could be the one occurrence that could not be reconciled. However, that would be facetious. The modelling looks robust, indicating that the companies have the ability to raise the funding necessary in a modern, technologically efficient manner and make the payments required.
The regulations merely deal with the process of funding. The bigger question is the accuracy of the strike price, which is relevant to the setting up of this compulsory regime. Noble Lords will know that that is contained in the contracts agreements and is not part of these regulations. The two most controversial applications relate to nuclear power and the Hinkley Point C plant, and onshore wind.
The Government have shown how quickly they can alter their assessments and mechanisms for adjustment through Part 2 of the Energy Act 2016 in relation to onshore wind and the compensation payments in the FIT regime. On the prevention of double-counting of exemptions in the measure, exemptions from payments are available to suppliers which import renewable electricity from EU member states. This green excluded electricity—GEE—will not count towards electricity suppliers’ market share for calculating their CFD liabilities. This raises questions about security of supply; whether government policy is blind, whether British-based or not; the relative pricing of renewable energy in the UK and in the EU; and whether security-of-supply policy should seek to encourage import substitution. It also begs questions relating to Brexit; I could ask the Minister various hypothetical questions about the internal energy market and any likely scenarios of tariff applications. I imagine he would say that further amendments can be made as circumstances change.
I am grateful for the clarity provided regarding the operational budgets of the two companies and the professional fees increase, brought about by the inquiries of your Lordships’ Secondary Legislation Scrutiny Committee. I very much agree with the Government’s financial policy to expense rather than capitalise software upgrade costs.
I have a few questions about the regulations. First, on the amendment to allow CFD reconciliation determination after the 10th quarter to be classified as non-generation payments, is a longstop provision of time envisaged, or is that included in the general retrospective provisions? Could this be one of those 20 unknown unknowns? Secondly, following the onshore wind provisions in last year’s Energy Act and given that onshore wind is now so much cheaper, are the Government any closer to allowing onshore wind to participate in future CFD auctions now that the threat of UKIP has receded? Can the Minister update the Committee on the position following the consultation on onshore wind in November 2016? Thirdly and lastly, I understand that the net savings to be passed on to electricity consumers are not a cash item and cannot therefore be shown or guaranteed in some way. However, the memorandum states that the operational costs budget of the two companies will increase, resulting in an increase, albeit minimal, in household electricity bills. Will these two features balance out and the net effect on consumers be neutral?
Having said that, I am content to approve the regulations.
Lord Prior of Brampton
My Lords, I begin by echoing the comments of the noble Baroness, Lady Maddock, about Lord Jenkin. I was reminded of the Schleswig-Holstein question, to which the Duke of Wellington said that only three people knew the answer—and one was dead, one had gone insane and the other one had forgotten it. Fortunately, my noble friend Lord Deben has not forgotten it and spoke very eloquently about broader issues than those raised by the statutory instrument before us.
It was interesting to hear my noble friend’s story about how shopping for a freezer had changed in the space of a year—from being able to buy one rated from A to G, to one now rated A++ to B. That is just one small illustration of how technology has helped hugely in reducing the use of electricity. He is absolutely right that technology has significantly reduced bills.
Lord Deben
I am sorry but it is not just that the technology has changed; we have now shown people that it is not worth selling bad products. You have to use the technology and it is we politicians who have made that technology actually go into the marketplace, because it has been worth while. The Government should take credit for what they have done.
Lord Prior of Brampton
That is true. The incentives need to be there, but the fact is that technology is remarkable. Technology is going to do it. If we are going to solve the problem of carbon emissions, technology and incentives to use new technology—which is what the CFD programme is all about, as I understand it —are crucial.
My noble friend also spoke about the cost of electricity for business. It is an issue I take a particular interest in, given that it affects very energy-intensive industries, such as the steel industry, the glass and ceramics industries and other industries, including the potteries in places such as Stoke. It is difficult to know why our costs are higher. It is partly because of distribution and transmission, we are told, and partly because of the wholesale market, but I do not think we have a full answer to that. I have not read my noble friend’s report on this. It may suggest an answer. I will read it with interest. It is certainly a question that we need to answer. It is always very easy to blame the green lobby for the extra costs falling on high-energy consumers. My noble friend raises a question that needs to be answered.
I thank the noble Lord, Lord Grantchester, for supporting these regulations. He asked three questions. I shall write to him on them. I have been given the answer, but I cannot absorb it and give it to the noble Lord at the same time without just reading it out without thinking about it. He raised the more general issue of the impact of Brexit on the internal energy market and what tariffs there might be. I will have to give him the rather dull and predictable but honest answer that we will have to wait to see how the negotiations turn out.
The regulations the Government are seeking to amend through this instrument affect the CFD scheme through making some fairly minor technical amendments to improve the efficiency of the CFD supplier obligation and to amend the operational costs levies of the Low Carbon Contracts Company and the Electricity Settlements Company. As I read this, I do realise that this is quite complex, arcane stuff. These companies play a crucial role in delivering the CFD scheme and the capacity market scheme, and they must be sufficiently funded to perform their roles effectively. I have been struck by how the cost of offshore wind has come down in the last auction and how the capacity auction has driven prices down. The market is very powerful. I thank the noble Lord for his support for this measure?
Motion agreed.
Electricity and Gas (Energy Company Obligation) (Amendment) Order 2017
(7 years, 8 months ago)
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Lord Prior of Brampton
That the Grand Committee do consider the Electricity and Gas (Energy Company Obligation) (Amendment) Order 2017.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Prior of Brampton) (Con)
My Lords, I am pleased to open the debate on this draft order. The ECO order exercises powers set out in the Gas Act 1986 and the Electricity Act 1989 which allow obligations to be placed on energy suppliers in Great Britain.
In the Prime Minister’s first speech of her term in office, she recognised the hardships faced by poorer households in Britain—hard-working families, who,
“can just about manage but … worry about the cost of living”.
As part of the response to that dilemma, the Government are committed to helping households in fuel poverty or on lower incomes living in homes which are expensive to heat. That is why this order is before the Committee today. It will also make an important contribution to the Government’s clean growth plan and to reducing carbon emissions.
We are making amendments to the existing ECO order, which covers the period from 1 April 2015 to 31 March 2017. The amendments extend the current scheme from 1 April 2017 to 30 September 2018 to enable reforms to be introduced, while also allowing industry time before further improvements are made through a new longer-term scheme from 2018 to 2022. Planning ahead to 2022, beyond the life of this Parliament, reflects announcements on funding made in the 2015 spending review. This longer-term confirmation of funding is designed to give greater certainty to energy suppliers, installers, local authorities and other energy stakeholders.
Lord O'Neill of Clackmannan (Lab)
My Lords, this order is something of a curate’s egg. There are a number of aspects that one would be quite happy with were it not for the fact that one player in this whole scheme is absent: the Government. They are changing some of the regulations and arrangements but they are providing no money themselves, unlike the Administrations in Belfast, Cardiff or Edinburgh. Therefore, we have to say in the first instance, on the objective of moving the starting time by six months, from 12 to 18 months, if we are to get a better scheme, that might be very well. However, it is a delay, in fact from 2015, when the opportunity to introduce an improved scheme first arose.
It begs the question: why is there a delay? If it is because the Government are wrestling with the complexity of it, I submit that they have had plenty of time to do that. I know from the briefing I received from National Energy Action—of which I happen to be the honorary president, and therefore declare a limited, non-pecuniary interest—that this estimable charity has somewhat mixed feelings, which reflect my own. The Government seem to be doing a little bit with one hand, and then taking it away with the other. When we see the reduction in boiler replacement, it is not because the job is nearly ending—that we have completed the replacement of inefficient boilers—but simply because the Government take the view that it costs too much.
There is also the fact that if you want to make households more conscious of the benefits of energy efficiency, a dramatic change such as the replacement or introduction of a boiler is of critical significance in this change of thought process. We know that in many respects the households that are most disadvantaged are those which have so many problems that trying to be energy efficient is very much a kind of finger-in-the-dyke operation, and they need assistance. Very often, when we are able to secure the replacement boilers, we get a change of step and a greater willingness to help.
It is also fair to say that we have insufficient sums to meet even the most modest of home improvements. We are told by a number of bodies—including, for example, the Committee on Fuel Poverty, the Committee on Climate Change, and Policy Exchange—that even to meet the very modest target of getting households to EPC E level by 2020 will require £1.9 billion. To get households to EPC D level by 2025 will cost £5.6 billion. To get all households up to EPC C level by 2030 will require £12.3 billion. These are large sums. However, what the Minister is talking about seems to be nowhere near what is required to reach these households. Indeed, it has been suggested that a baby born today into inadequate housing would probably be about 75 before their home was properly heated.
A number of the changes are sensible and not unwelcome. However, the Government cannot get away with the platitudinous nonsense the Minister spoke at the beginning of his speech when he quoted the Prime Minister. If the Prime Minister really wants to help hard-working families and do something about this kind of household, the Government will have to use central taxation as a mechanism to do it. It is not enough just to express pious hopes and, on occasion, go for cheaper options. That seems to be at least part of the thinking behind a number of the changes in this measure.
Therefore, as I say, this is a curate’s egg. This Committee does not have the opportunity to overturn or amend it. I know that it has been the subject of fairly wide consultation but I do not think that all the organisations that were consulted would necessarily embrace everything in the order. Therefore, as I say, my welcome of it is highly qualified and I am somewhat disappointed. An opportunity has been missed here—and not because the Government have rushed into this. They have had since 2015 to get something done and the best that they can come up with is this rather feeble list of changes and a further six-month delay in bringing about many measures that would be regarded as improvements. We cannot take any consolation as some of the less desirable aspects of this measure will continue for some time.
As I say, I think that this is a missed opportunity for the Minister. He and I are old friends from Select Committee days in the Commons. I am trying to chastise him as gently as I can as I know that he is new to the job and I expect that his influence over the drafting of this order was probably minimal. However, I would like to think that in the months and years that he may still be in the job he will be able to come up with something better before too long.
Baroness Maddock (LD)
My Lords, something is better than nothing. We on these Benches, at least, welcome this measure, although there are many “buts”. There is no doubt that improving the quality of existing homes can play a very important part in increasing warmth and comfort and help to make fuel bills far more affordable, particularly for vulnerable occupants. However—I think the Minister recognises this—it is also a highly cost-effective way of reducing carbon emissions and saving energy. In addition, ambitious energy efficiency savings programmes can capture substantial macroeconomic benefits.
I remember taking through the House of Commons a Private Member’s Bill that became the Home Energy Conservation Act 1995, and saying that the job creation potential in making homes energy efficient was enormous. I regret that some 20-plus years later, we are still grappling with this issue and people are still living in fuel poverty. As the noble Lord said, people born into fuel poverty today will probably still be in fuel poverty at the end of their lives. That is very sad.
Lord Grantchester (Lab)
I thank the Minister for his comprehensive introduction and explanation of the order. The ECO is now the only government instrument to increase overall carbon emissions reductions targets for households and overall home heating cost reduction targets by a statutory obligation on the largest energy suppliers to install energy-efficiency measures for households in Great Britain. I approve of the order today and support the measures, as far as they go, to promote energy efficiency and the reduction of fuel poverty. Improving the quality of the housing stock is a highly cost-effective way in which to reduce carbon emissions, save energy, improve the lives of the fuel poor and capture substantial national economic benefits. However, I cannot disguise the widespread disappointment in the Government for their inability to meet their legal target to end fuel poverty by 2017. Comments around the Committee today have reflected that view.
The Government are now extending the ECO scheme in this intermediary fashion for a further 18 months, to September 2018, before introducing further measures to end fuel poverty by the end of the scheme in 2022. The increasing focus on fuel poverty is to be encouraged, but reducing the annual spend by 25% from £860 million to £640 million reveals a lack of political will and the required proper funding. The Committee on Fuel Poverty has estimated an investment requirement of £20 billion to improve fuel-poor homes in England to at least EPC rating C by 2030. The Committee on Climate Change considers that the current funding is less than half that which is required to meet these now delayed commitments.
The Green Deal has been a failure, improving only 15,000 homes. Last year, the Conservative Government scrapped the 2016 zero-carbon homes policy. The UK ranks bottom, 16 out of 16, in western Europe for the proportion of people who cannot afford to heat their homes adequately. While welcoming the change on balance towards better funding of energy efficiency measures, the cap on the installation of mains gas qualifying boiler replacements under the affordable warmth arrangements leaves a big gap in the provision needed to replace or repair existing gas boilers.
A big factor for being in fuel poverty is living in a home off the gas grid. The worst properties are located off the grid and are more likely to be located in rural areas. Over the last Parliament, the number of major energy-efficiency measures installed in homes fell by 76% as total investment fell by 53% between 2010 and 2015. The implications have been particularly crucial to the NHS. Of the 43,900 excess winter deaths calculated for 2014-15, at least 14,000 deaths can be attributable to the cold homes crisis.
Are the Government confident that electricity companies can access the necessary data to target expenditure effectively? The data-sharing powers need critical assessment. Hospitals need to join up outpatient care with fuel poverty initiatives for patients at risk of recurrent visits. Local authorities must act on their duties to enforce and monitor housing standards, and basic energy-efficiency standards should form a critical part of existing licensing requirements. Additional national energy-efficiency programmes are urgently needed to support the upgrading of lower rated properties, notably for the installation of first-time central heating. My noble friend Lord O’Neill and the noble Baroness, Lady Maddock, have highlighted how the Government are alone among UK Administrations in not providing additional funding towards this important policy. The National Infrastructure Commission and the Government must respond and act on the strong case for domestic energy efficiency to be regarded as a nationally important infrastructure policy.
I shall ask only one or two important questions on this order. These amendments are an extension to the present scheme and delays to meeting targets have been recognised. Will the Minister make clear how the statutory fuel poverty commitment will be met, with milestones along the way? Lastly, what additional energy-efficiency programmes are under consideration by the Government? What is the timing of any policy plan development between April 2017 and the end of this intermediary period in September 2018? In approving the order, I urge the Government to recognise their shortfall in ambition in tackling fuel poverty and the energy efficiency of homes.
Lord Prior of Brampton
My Lords, I accept that noble Lords who have spoken regard this order as a curate’s egg and that it does not go as far as they would like. I will try to address the more general questions raised by all three noble Lords. The Government feel that the supplier obligations have proven to be remarkably successful, but we have probably pushed them as far as they can go. That is why we have decided to cap the supplier obligation at £640 million. The noble Baroness, Lady Maddock, and the noble Lord, Lord O’Neill, think that we should go further. If I might slightly oversimplify it, I think I am right that the noble Lord, Lord O’Neill, feels that we should consider raising taxation more generally to solve this issue, whereas the noble Baroness, Lady Maddock, thinks that we could take money from other areas that we are spending money on to put more money into this area.
To start with the noble Lord’s point, our response is not to increase central taxation. He mentioned a figure of £12 billion, and the noble Lord, Lord Grantchester, came up with a figure of £20 billion to 2030. That level of increased taxation is simply not an option—at least not for our Government. Our response to the issues that the Prime Minister has focused on is not to raise general taxation, but to try to address the issue by improving the productivity of the country, which is why we have an industrial strategy. Frankly, to load a lot more general taxation on to our economy cannot be a way to improve productivity. I do not know whether that view will be shared by the leader of the Opposition—who knows these days?—But it is certainly not an option for us to raise central taxation. The noble Baroness, Lady Maddock, said that there must be other areas that we could take money from.
Baroness Maddock
For example, we know that people who live in cold or damp homes, particularly elderly people, cost us a huge amount in the health service. Over the years, NEA has run various schemes and has looked carefully at this. That is one area where we could look to see whether we could get some money because it will save money in the long run.
Lord Prior of Brampton
I understand that argument, but it would take five minutes to have a whole list of other parts of the population, whether it is people who have mental health problems or learning difficulties or old people who are lonely. There are lots of people we would like to do more for and from whom there will be knock-on benefits to the NHS, social services and the like. As the noble Baroness will know well, the trouble with politics is that choices have to be made. It is very easy to say that we should take more money from this group and give it to that, but if only life was so simple.
Lord O'Neill of Clackmannan
I am almost reluctant to make this point because it is a wee bit unkind and it is not the Minister’s fault. We know that the Government have problems with raising taxes. We have seen that in the past two weeks in the context of national insurance contributions. There was a willingness to raise taxes, but they discovered that they were raising the wrong ones as far as their supporters were concerned. Perhaps between now and next November the Minister can look afresh at what sources of revenue could be secured to help the fuel poor and to meet the Prime Minister’s pious words about helping hard-working families who are unfortunate enough to be living in hard-to-heat homes.
Lord Prior of Brampton
I understand where the noble Lord is coming from. I repeat, our approach is diametrically opposite to his. We do not want to raise taxes from any group of citizens in this country when the alternative is to try to improve productivity. He will know from the time when he was chairing the Trade and Industry Select Committee in the other place that productivity has been, and is still, a huge issue for this country. I do not think that he seriously thinks that we are going to improve productivity by taxing hard-working British people. That is a choice that we have to make. His party, during those long-off, rosy days when Tony Blair was Prime Minister, had in a sense got the message that there is a direct relationship between high taxes and successful economic growth. Raising taxation along the lines that he described is simply not an option for this Government at this time.
Collection of Fines etc. (Northern Ireland Consequential Amendments) Order 2017
(7 years, 8 months ago)
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Lord Keen of Elie
That the Grand Committee do consider the Collection of Fines etc. (Northern Ireland Consequential Amendments) Order 2017.
The Advocate-General for Scotland (Lord Keen of Elie) (Con)
My Lords, the draft order, which was laid before the House on 6 February and which was approved in the other place on 14 March, is made under Section 84(2) of the Northern Ireland Act 1998. The Northern Ireland Act allows changes to be made to legislation that are necessary because of an Act of the Northern Ireland Assembly. This order is made in consequence of the Justice Act (Northern Ireland) 2016, which was passed by the Northern Ireland Assembly on 14 March 2016 and received Her Majesty’s Assent on 12 May 2016.
Part 1 of the 2016 Act fundamentally reforms arrangements for the collection and enforcement of fines in Northern Ireland by creating a new regime that provides additional ways for offenders to pay their fines. It includes powers for collection officers to secure payment through an attachment of earnings order, which is a court order made in Northern Ireland that requires a debtor’s employer to deduct specified amounts from wages and pay them to the court to discharge the outstanding amount.
The order will amend Schedule 5 to the Courts Act 2003 to enable fine collection officers and courts in Northern Ireland to obtain or verify certain information from HM Revenue & Customs, including the name and address of any employer the individual may have and details of any earnings or other income that the individual receives. This information will allow fine collection officers in Northern Ireland to determine whether an attachment of earnings order is an appropriate enforcement option to be pursued in respect of the debtor.
Schedule 5 to the 2003 Act already enables Her Majesty’s Revenue & Customs to make such disclosures in England and Wales, and the amendments made under the order will allow it to do so in Northern Ireland as well. Such amendments could not be made by the Department of Justice in Northern Ireland through the 2016 Act because Section 18 of the Commissioners for Revenue and Customs Act 2005 stipulates that conferring such powers on HMRC cannot be carried in Northern Ireland legislation and can be done only through Westminster. However, Section 84(2) of the 1998 Act allows for such amendments to be made by an Order in Council, such as this order, if “necessary or expedient” and I consider that the proposed amendments are necessary to facilitate the effective operation of the attachment of earnings provisions of the 2016 Act.
I am happy to confirm to noble Lords that Ministers and officials of the United Kingdom Government and the Northern Ireland Department of Justice have worked closely together on this draft order, which I commend to the Committee.
Lord Browne of Belmont (DUP)
My Lords, I thank the noble and learned Lord for his very comprehensive explanation of the order, and I very much welcome the order, which will provide the courts in Northern Ireland with additional sentencing, collecting and enforcement options. It will go a long way in helping to reduce the number of people—I believe 2,000—who are jailed each year for non-payment of fines by increasing the availability of community-based options in place of custody, by deducting money from their benefits each week. I believe that the vehicles of habitual offenders can be seized.
Can the Minister say how much money in unpaid fines is owed to the Stormont Government, going back over the last number of years, and how much money in police time is spent in enforcing fines? Is the Minister confident that there are enough safeguards with regard to the policy of possible seizure of vehicles? However, these amendments will go a long way and will prove effective in saving money.
Lord Beecham (Lab)
My Lords, this order—one of five we are discussing today—is the only one so far to have been taken in the Commons. In that place a very brief explanation was given by the Minister—the noble and learned Lord has given a rather fuller explanation than was given then—and my honourable friend David Anderson replied with a sentence only. I do not propose to add to that except to say that the noble Lord who has just spoken has raised some salient points and I was interested to hear what he said. We certainly have no objection to the order.
Lord Keen of Elie
I am obliged to noble Lords. I will address the points raised by the noble Lord, Lord Browne of Belmont. I do not have precise figures for outstanding fines, but if those figures can be collated I undertake to write to the noble Lord, although I am not sure that they can be collated in the manner he indicated. However, perhaps at a higher level of generality, I can say that at present we are dealing with about 20,000 cases a year where there is a financial imposition. Of those, more than 16,000 currently result in a default hearing, and the default hearing itself is an extremely time-consuming exercise, taking up manpower and, in particular, police time. It is anticipated that with these measures we will be able to reduce the number of default hearings to something of the order of 4,000 cases. That in itself will bring about a significant saving in time and money. I hope that goes some way to satisfy the points raised by the noble Lord. With that, I invite agreement to the order.
Public Guardian (Fees, etc.) (Amendment) Regulations 2017
(7 years, 8 months ago)
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Lord Keen of Elie
That the Grand Committee do consider the Public Guardian (Fees, etc.) (Amendment) Regulations 2017.
The Advocate-General for Scotland (Lord Keen of Elie) (Con)
My Lords, these regulations apply to England and Wales and reduce the fee for registering enduring and lasting powers of attorney. The current fee of £110 will be reduced to £82. The resubmission fee, paid when an application has to be resubmitted because of an error with the original application, will be reduced to £41 from £55. If Parliament agrees, we intend these changes to take effect on 1 April this year.
The new fee will be an enhanced fee, allowing us to cover the full cost of registering a power of attorney as well as to ensure the efficient and effective discharge of the public guardian’s functions. The power to charge an enhanced fee is contained in Section 180 of the Anti-social Behaviour, Crime and Policing Act 2014.
There are currently more than 2 million powers of attorney registered. These comprise lasting powers of attorney and their predecessor enduring powers of attorney, which remain valid and may still be registered. In October 2017, we will celebrate 10 years since lasting powers of attorney were introduced. In that time, the Office of the Public Guardian, the body responsible for maintaining a register of powers of attorney, has registered nearly 2.5 million powers.
The high uptake of lasting powers of attorney is an indication of the success of the Mental Capacity Act. They allow individuals to plan ahead for a time when they may lack capacity to make decisions for themselves and to appoint someone they trust to make those decisions for them. It is, of course, positive that so many more people are now making powers of attorney, but it has led to a position where the income we receive from fees charged is exceeding the cost of delivering the service. A detailed review of power of attorney fees, together with an improved forecasting model for volumes of applications, taking into account the ageing demographic and the rise in dementia, has enabled us to take decisive action to reduce fees and bring them closer to the cost of providing the service.
As many more people have been registering LPAs in recent years, increased volumes coupled with greater efficiencies in processing applications have resulted in fees being charged above the operational cost of delivering the service without our having exercised the power provided by legislation to allow us to do this. Clearly this situation must be remedied, which is what these draft regulations seek to do. Furthermore, alongside the reduction in fee, we will also introduce a scheme for refunding a portion of the fee to customers who may have paid more than they should. Full details of the scheme will be announced in due course. We will take such steps as are necessary to make sure that people are made aware of, and receive, the refunds to which they are entitled.
The Government’s aim is to ensure that the public guardian’s functions are properly resourced. We consider that an enhanced fee will go towards funding vital wider functions carried out by the Office of the Public Guardian. The enhanced fee will allow the public guardian to ensure that those who cannot afford to pay still have access to the key services offered by the Office of the Public Guardian; there is a remission scheme in that regard. The fee will also contribute to costs of the public guardian’s safeguarding activities, including the annual costs of supervising deputies appointed by the court to manage the affairs of people who have lost capacity to do so for themselves. I therefore commend these draft regulations to the Committee, and I beg to move.
Lord Beecham (Lab)
My Lords, I am not sure whether I need to declare an interest in this matter as having registered an enduring power of attorney myself, which might entitle me, I suppose, to a rebate. It is pretty unlikely, I suspect, but it is a possibility and I shall have my old firm explore it.
Obviously, therefore, I welcome the main thrust of the order, which is to reduce the fees from their current level. The Government have acted perfectly properly in that respect. However, it is interesting that the Explanatory Memorandum confirms what the Minister has described as the Government’s policy—namely, that they have decided,
“in view of the financial circumstances and given the reductions in public spending, that a fee above full cost is necessary in order to ensure that the Public Guardian is adequately funded and that safeguarding the vulnerable is protected in the long term”.
That does not seem to be a logical explanation for retaining, albeit now reduced, a fee that is above the full cost. It is a philosophy which I hope will not be applied elsewhere in public services—namely, that you contribute not just to the cost but to an excess of the cost. Have the Government made any estimate of how much they will benefit by this device over time? How do they justify charging more than it actually costs to provide the service? They have been doing so, as it were, unconsciously for some time; now they will do so consciously. That strikes me as a very odd way of proceeding.
Lord Keen of Elie
The fees charged in respect of a power of attorney in 2007, when the scheme came in, were £150. They have reduced steadily since then, although they increased between 2009 and 2011, while transitional measures were being taken to upgrade IT for the Office of the Public Guardian. When they were reviewed in 2013, they were brought down. Subsequently, audit has indicated that they are still above a necessary and appropriate level.
However, with regard to the question about the enhanced fee, that allows for the fact that over and above the actual cost of dealing with a power of attorney, the Office of the Public Guardian also has to deal with other costs and demands—namely, those involving the application of parties who get a fee exemption and therefore the cost of their application has to be covered, as well as the cost of appointing deputy supervisors by the court. I did not use the correct term. It is not deputy supervisors but supervising deputies.
Lord Keen of Elie
I am sure it does—to somebody. Therefore, the limits in Section 180 of the 2014 Act are there to ensure that although we can recover more than the actual costs of the operation itself, it is for the purposes of funding the wider demands on the Ministry of Justice.
Lord Beecham
Is there any report of how that actually works in practice? I do not expect the Minister to have the answer today but what is the amount that has been raised in that way and where has it been spent?
Lord Keen of Elie
So far as the additional funding is concerned, I should have made it clear that it is funding for the Office of the Public Guardian and not wider than that. As to the precise sum, no, I do not have the figure to hand.
Judicial Pensions (Additional Voluntary Contributions) Regulations 2017
(7 years, 8 months ago)
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Lord Keen of Elie
That the Grand Committee do consider the Judicial Pensions (Additional Voluntary Contributions) Regulations 2017.
The Advocate-General for Scotland (Lord Keen of Elie) (Con)
My Lords, I will set out the purpose of the draft regulations in turn.
First, the fee-paid regulations are required to establish a pension scheme for eligible fee-paid judges, to mirror the existing pension scheme for salaried judges established by the Judicial Pensions and Retirement Act 1993. This is required following the court’s decision in the case of O’Brien v Ministry of Justice. These regulations make provision for a pension scheme for the benefit of those people who have held eligible fee-paid judicial office between 7 April 2000 and 31 March 2015. They also establish the Fee-Paid Judicial Added Voluntary Contributions Scheme, the Fee-Paid Added Years Scheme and the Fee-Paid Judicial Added Surviving Adult Pension Scheme to enable members of the principal scheme to pay voluntary contributions towards the costs of additional benefits under one of more of these additional schemes.
Following the case of O’Brien v Ministry of Justice and subsequent decisions it is now established law that a lack of a pension and other specified benefits amounted to less favourable treatment than some fee-paid judicial office holders in comparison to salaried judges doing the same or broadly similar work, contrary to the part-time work directive. The Ministry of Justice made a commitment to implement a pension scheme for these fee-paid judges. This commitment was honoured for future service, subject to transitional protection, by the Judicial Pensions Regulations 2015. However, a new scheme is required as the remedy in respect of reckonable fee-paid service from 7 April 2000—the date when the part-time work directive ought to have been transposed into UK law. The power to create such a scheme was created by Section 78 of the Pensions Schemes Act 2015, which inserted a new Section 18A into the Judicial Pensions and Retirement Act 1993.
The draft fee-paid regulations have been the subject of a detailed public consultation and were modified as part of that consultation process, taking account of responses and as part of our own review of the draft. A response to the consultation was published on 27 February alongside the final draft regulations.
The amendment regulations amend the Judicial Pensions Regulations 2015 to take account of the creation of the fee-paid judicial pension scheme and ensure parity of treatment between individuals with entitlement in the existing Judicial Pensions and Retirement Act 1993 scheme and those with entitlements under the fee-paid scheme in respect of their pension entitlements under the 2015 regulations. In addition, we are taking the opportunity to amend the 2015 regulations to make a number of other changes: to amend a drafting error in Regulation 1 of the 2015 regulations; to enable the Lord Chancellor to determine the eligibility of particular Scottish fee-paid judicial officeholders to join the pension scheme created by the 2015 regulations; to remove negligence as a basis for forfeiture or set-off; to make a correction to the definition of index adjustment for revaluation purposes; and to apply full and tapering protection for those judges who were in fee-paid office on 31 March 2012 but who have subsequently been appointed to salaried office.
The 2015 regulations were made under the Public Service Pensions Act 2013 to create a career average pension scheme for judicial officeholders as part of the Government’s wider reform of public service pensions. This is the first time the 2015 regulations have been amended.
Thirdly, I turn to the additional voluntary contributions regulations, the purpose of which is to make provision to establish a judicial additional voluntary contributions scheme. This is a money purchase scheme that enables scheme members to make contributions within a range of investment options. This is in addition to their contributions to the 2015 scheme. The AVC scheme is to be managed by the Lord Chancellor and the Judicial Pensions Board will oversee the governance. The 2015 judicial pension scheme was established on 1 April 2015 in response to the Public Service Pensions Act 2013. The 2015 scheme applies to fee-paid and salaried judicial officeholders.
The existing judicial pension schemes provided a facility to contribute to a money purchase pension scheme and the same facility is provided for members of the 2015 scheme through these AVC regulations. This includes the pension flexibilities contained in the Taxation of Pensions Act 2014 and the Pension Schemes Act 2015. Amendments to the additional voluntary contribution scheme established under the older judicial pension scheme, made by the Judicial Pensions and Retirement Act 1993, are being made in separate instruments containing similar regulations, which also give effect to the pension flexibilities.
To summarise, the fee-paid regulations are necessary as the remedy to provide eligible fee-paid judges with pension benefits that are equivalent to their salaried comparators. The amendment regulations are necessary as they introduce a range of amendments required to the 2015 judicial pension scheme. The additional voluntary contributions regulations are necessary to honour the department’s commitment to provide such a facility to members of the 2015 judicial pensions scheme. I hope that noble Lords will welcome these three sets of regulations as necessary to make important provision for judicial pensions. This is in terms of the Government’s legal obligations and to meet outstanding commitments, and to ensure that all the necessary arrangements are in place for a consistent approach relating to the relevant provisions across the judicial pension schemes. I therefore commend these draft regulations to the Committee.
Lord Beecham (Lab)
My Lords, I must declare a paternal interest since my daughter is a part-time, fee-paid district judge. The noble and learned Lord will, no doubt, be particularly pleased with the Judicial Pensions (Amendment) Regulations 2017 inasmuch as they contain a rather rare provision for the Scottish Government to request permission to join a national UK scheme, which is a remarkable volte face from the present Administration in Edinburgh. No doubt the noble and learned Lord will make that point on his next return to that city, and I wish him well in such an approach.
The three regulations dealing with judicial pensions are, of course, welcome so far as they go, but they come at a time when we face a shortage of judges and apparent difficulty in finding sufficient numbers of suitable applicants to fill a rising number of retirements. The Lord Chief Justice’s report of 2016 referred to,
“serious concerns about recruitment to the judiciary, in particular the ability to attract well-qualified candidates for positions in the higher levels”.
He pointed out that this created an impact both on the administration of justice and the position of the UK as a forum for international business litigation, where we are already facing growing competition from other jurisdictions.
The degree of unhappiness with the situation is reflected by results of a recent survey which shows that nearly half of High Court judges plan to retire early. Respondents to that survey alluded to resentment over loss of earnings, deteriorating working conditions and even fear for their personal safety in court. The latter will not have been helped by the scurrilous campaign against the judges by sections of the media and the further reaches of the Conservative Party and of UKIP, which were roundly denounced by the Minister, much to his credit.
A survey of judicial attitudes last year showed that 42% of all judges would leave if they had a viable option, nearly double the number of the previous survey in 2014. A more recent survey suggests that 47% of High Court judges and 36% of all judges indicated they would consider early retirement from the Bench over the next five years. Their attitude is partly coloured by the large number—78%—who suffered a loss of net earnings over the past two years and the 62% who were affected by pension changes. The Lord Chief Justice warned in 2016 that a new High Court judge would have a pension less than that of a District Judge, which is hardly conducive, one might think, to retention or recruitment to the High Court. He also felt that the situation was likely to have a considerable inhibiting effect on promoting gender and ethnic diversity, which the survey disclosed. Significantly 43% of judges felt unappreciated by the public but, tellingly, only 3% felt they were esteemed by the media, and, shockingly, only 2% felt they were esteemed by the public.
If this were not bad enough, one-third complained of the quality of court buildings and two-thirds referred to the low morale of court staff. Just over half the judges expressed concerns for their safety in court, partly due to the number of unrepresented litigants, especially in somewhat fraught cases in the family side of the courts’ work. The same proportion said that out-of-hours work was affecting them—a rise from 29% in 2014.
Currently there is a shortage of 25 High Court judges and between 120 and 140 circuit judges. Lord Justice Burnett, who is vice-chairman of the Judicial Appointment Commission, has complained that suitable applicants for the High Court have been insufficient in the past two years, while the demands on the judiciary continue to grow across the whole system. It would appear that only 55 applications were made last year for 25 vacancies and only eight were filled.
Lord Keen of Elie
I thank the noble Lord for his observations. I appreciate that these regulations may be only a small step in trying to ensure that we are in a position to maintain what is still a world-class judiciary that is respected around the globe, not just in this country.
Recruitment to the Bench has often been an issue in circumstances where we seek to appoint only the best. There are competing issues when it comes to appointment to the High Court Bench. It is not simply a matter of salary, nor of pension, although I readily acknowledge that these matters have to be addressed. That is not what drives people towards the higher ranks of the judiciary at a later point in their career. Rather, I would suggest it is the desire to put something back into a system of which they have been a part for many years. We are succeeding there.
The noble Lord referred to the chair of the Judicial Appointments Commission, the noble Lord, Lord Kakkar, who is taking steps to broaden the pool of talent that can be attracted to the upper reaches of the judiciary, including to the solicitor branch of the profession, which has often been, if not ignored, perhaps overlooked to a greater or lesser extent when it comes to judicial appointment. They also address direct appointment to try to ensure that people do not feel that they have to go into a judicial career part time for many years before they can find themselves eligible for appointment to the High Court Bench. Steps are therefore being taken.
I infer from the noble Lord’s comments that he will welcome the Prison and Courts Bill that we recently introduced in the other place and the developments that that will bring about in court reform, in particular digitisation of the court process. That will ensure that a greater degree of judicial time can be made over to matters that should truly engage the requirements for our higher judiciary. I look forward to his assisting with that Bill as it progresses through our House. I am obliged to the noble Lord.
Judicial Pensions (Fee-Paid Judges) Regulations 2017
(7 years, 8 months ago)
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Lord Keen of Elie
That the Grand Committee do consider the Judicial Pensions (Fee-Paid Judges) Regulations 2017.
Judicial Pensions (Amendment) Regulations 2017
(7 years, 8 months ago)
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Lord Keen of Elie
That the Grand Committee do consider the Judicial Pensions (Amendment) Regulations 2017.
Industrial Training Levy (Engineering Construction Industry Training Board) Order 2017
(7 years, 8 months ago)
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Viscount Younger of Leckie
That the Grand Committee do consider the Industrial Training Levy (Engineering Construction Industry Training Board) Order 2017.
Viscount Younger of Leckie (Con)
My Lords, I start by setting the scene. The Government are committed to delivering a bold, long-term industry strategy. We start from a position of strength, as the fifth biggest economy in the world with an employment rate that has never been higher and world-leading industries, from car manufacturing and satellite engineering to financial services and the creative arts. Engineering construction is at the forefront of that industrial strategy. To support delivery of this industrial strategy we are building a high-quality technical education system to improve basic skills, address shortages in STEM skills and ensure that people have the skills that employers are looking for, now and in the future. It is integral that through this system we provide opportunities for lifelong technical education learning.
There are several ways in which we are doing this. The first is through the establishment of 48 university technical colleges, with a further six in the pipeline to provide high-quality technical education to 14 to 19 year-olds. Secondly, there is the implementation of the Sainsbury panel’s 15 new technical routes and wide-reaching reforms to improve the apprenticeship offer. We are committed to raising the prestige of further education and apprenticeships. Thirdly, the Engineering Construction Industry Training Board plays a key role in helping delivery of this programme. The engineering construction industry encompasses much of the nation’s key national infrastructure work. We must ensure that skills exist in the engineering construction workforce to deliver such critical new infrastructure projects as Hinkley Point C and HS2. Much like mainstream construction, engineering construction is characterised by significant levels of project working, where demand can be unpredictable. Workers in the sector are often highly skilled, and in high demand both domestically and internationally.
The Engineering Construction Industry Training Board works to help retain these vital skills within the UK economy and to drive innovative working practices within the industry, such as the development of drone technology. The order enables the ECITB to raise and collect a levy on employers in the engineering construction industry. The board has been providing vital industry support since its creation in 1991. Established under the Industrial Training Act, its core activity is to invest money that it receives by way of the levy in skills training for the engineering construction workforce. The board develops the skills of the existing workforce and new entrants into the industry through providing training grants and puts in place strategic initiatives that will benefit industry over the long term and secure a sustainable pipeline of skills. The ECITB is led by industry and has a central role in training the workforce in the engineering construction industry. It provides a wide range of services including setting occupational standards, developing vocational qualifications and offering direct grants to employers who carry out training. In doing all this, the Government look to the board to minimise bureaucracy and to ensure that support to employers is relevant and accessible.
The ECITB also has a key role in encouraging greater diversity across the engineering construction industry. Currently, only 7% of the engineering construction workforce are women. This lack of diversity needs addressing. The board is running extensive careers programmes in schools and promoting female engineering role models and will continue to support the department in its continued drive to increase the number of woman undertaking STEM qualifications. The Department for Education is also investing £20 million in business mentors, which will help disadvantaged and vulnerable young people to access the right information about a fulfilling education or training route that is right for them.
Industry support is fundamental to the success of the ECITB. The vast majority of employers in the engineering construction industry continue to support a statutory framework for training and the ECITB levy. The order will enable these statutory levy arrangements to continue.
I move on to how the levy is calculated. The Industrial Training Act allows an industrial training board to submit a proposal to the Secretary of State for raising and collecting a levy on employers to ensure the effective provision of skills in the industries that they serve. This order will give effect to a proposal submitted to us for a levy to be raised by the ECITB for levy periods ending 31 December 2017, 31 December 2018 and 31 December 2019.
Given the history of this levy and our wider reforms, the Committee may ask how the order interacts with the apprenticeship levy. Let me explain. After the introduction of the apprenticeship levy, the ECITB reviewed its levy arrangements and made the decision to reduce its rates as follows. The levy rate attributed to site employees will be reduced to 1.2% of total emoluments—and by emoluments I mean all salaries, fees, wages and any other earnings of an employee—plus net expenditure on subcontract labour. This is down from 1.5% of total emoluments in the 2015 order. The rate in respect of off-site employees, often referred to as head office employees, will be reduced to 0.14% of total emoluments, plus net expenditure on subcontract labour. This is down from 0.18% of total emoluments in the 2015 order.
The Industrial Training Act requires the ECITB to take reasonable steps to ascertain the views of persons who are likely to be liable to pay the levy as a consequence of the proposals. This involves ascertaining the views of the majority of employers who together are likely to pay the majority of the levy. The proposal for the levy obtained the support of the majority of employers in their respective industries. The three major employer federations in the industry, the ECIA, the OCA and BCECA, supported the levy. All levy-paying members of the employer associations, 84 in total, were deemed to be supportive. Of the 149 employers not represented by these federations, 41 did not respond and only 10 declined to provide their support. On that basis, 78% of levy-paying employers were supportive of ECITB’s proposal, and such employers are likely to pay 87% of the value of the levy.
The Industrial Training Act also requires that the board includes within its proposal a proposal for exempting small employers from the levy. This order therefore provides that small firms are exempt from the levy if their total emoluments are below a threshold that the industry considers to be appropriate. If the total gross emoluments and total gross payments are less than £275,000, no training levy will be payable in respect of site-based workers. If the total gross emoluments and total gross payments are less than £1 million, no training levy will be payable in respect of off-site based workers. Those employers who are exempt from paying the levy can and do continue to benefit from support from the board, including grants. The ECITB determines that 375 establishments are considered to be in the scope of the levy. Of that, 120 establishments are exempted due to their size, which means that 32% of establishments are exempted. This order is therefore expected to raise around £78 million for the ECITB in levy income over three years.
To conclude my opening remarks, this order will enable the ECITB to continue to carry out its vital training responsibilities alongside the introduction of the apprenticeship levy and, aligned to our wider skills reform programme, it will help the Government meet their industrial strategy goals. Accordingly, I commend it to the Committee. I beg to move.
Lord Watson of Invergowrie (Lab)
My Lords, I thank the Minister for his introduction to this order, which I think it fair to say is not particularly controversial and need not detain us for too long.
Preparing for this took me back some time. In a previous guise, I was the full-time official of a trade union in the engineering sector, and I well remember dealing with many industry training boards on a number of different issues. When the Department for Business, Innovation and Skills published its final report in December 2015 on the combined triennial review of the industry training boards, it mentioned the background to the industrial training levy itself, which was introduced as part of the Industrial Training Act 1964. That is of course where the industry training boards can be traced back to as well.
It is to be regretted that there are now only three industry training boards left. I certainly remember that there were more than 20 in the 1980s, and they were significantly reduced by the Industrial Training Act 1982. Apart from the film sector, only the Construction Industry Training Board and the Engineering Construction Industry Training Board are still in place today, both of which are of course accountable to Parliament. They raise most of their funds through training levies and various commercial activities. In 2016, the ECITB raised £32 million in levy and returned £28 million to the industry. It is interesting that the ECITB itself made the proposal to reduce the industrial training levy rate for employers, which appears to be a direct result of the impending introduction of the apprenticeship levy. That is reasonable and I understand the thinking behind it.
I made notes but if I read them out I would largely repeat what the noble Viscount said in his introduction, and I see little purpose in doing that. However, the listed exemptions seem reasonable and are set at reasonable levels with regard to the overall pay bill of establishments. I was interested to hear the noble Viscount say that a total of 275 establishments would qualify for the levy, with 120 exemptions. I will not mention the details of the exemptions, but they meet the needs of the industry. It is instructive that the consultation carried out by the ECITB found that 78% of levy payers were in favour of the proposals, and together they will pay a total of 87% of the value of the forecast levy. There is fairly broad support, therefore; I certainly have not been made aware of any opposition.
As the noble Viscount himself pointed out, and I thank him for doing so, less than 10% of the engineering workforce is female. Again, going back to my days as a trade union negotiator, I remember the attempts that were made to get more women into the union, particularly the predominantly engineering-based union that I looked after. It was very difficult, and I pay tribute to WISE—Women into Science and Engineering, which is backed by my union, Unite. We want as many women as possible to come forward and fill jobs in the manufacturing sector, particularly in engineering.
This issue goes back to the requirement for qualifications, particularly STEM qualifications, and will impact on what I am going to say about the next set of regulations for consideration. The pressure on schools to find enough teachers to make sure they can deliver teaching in these subjects cannot be ignored. A lot more work has to be done on that, because they provide the building blocks to get the initial qualifications to get women into university, or through the technical routes into engineering. It is important that the Minister highlighted that, and it is to be welcomed.
The order is not controversial and is to be welcomed. It has been welcomed in the industry, and on that basis I can only hope it will achieve what it sets out to achieve and assists the development of the industry.
Viscount Younger of Leckie
My Lords, I thank the noble Lord, Lord Watson, for his comments and for his contribution today. I was particularly interested to hear of his background, which I did not know about. I appreciate his general support for the order.
Before I make some very brief concluding remarks, I shall pick up on his very important point about the need to encourage more females into engineering. I am delighted that my noble friend Lord Nash is in Committee today because I am sure he agrees with me that this is a very important part of what the Department for Education is doing. It is starting from the very early years to encourage more women to study STEM subjects and then, through proper career guidance, to encourage them to take roles in science and engineering. It is one of the major priorities and major thrusts—the noble Lord is right about that.
Noble Lords will be aware from previous debates that the ECITB exists because of the support it receives from employers and employer interest groups in the sector. There is a firm belief that without this levy, there would be a serious deterioration in the quality and quantity of training in the engineering construction industry, leading to a deficiency in skill levels. It continues to be the collective view of employers in the engineering construction industry that training should be funded through the statutory levy system in order to secure a sufficient pool of skilled labour. I commend this order to the Committee.
Motion agreed.
Immigration Skills Charge Regulations 2017
(7 years, 8 months ago)
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The Parliamentary Under-Secretary of State, Department for Education (Lord Nash) (Con)
My Lords, this Government are committed to a strong skills system that can drive increases in productivity and improvements in social mobility and help make a success of Brexit. We need to do more to support people into high-quality jobs and help them gain world-class skills that meet employers’ needs. Lack of investment in skills is damaging our productivity and our economy. Employer investment in training has been declining for 20 years. On average, UK workers undertake 20% less continuing vocational training than those in the EU. According to the latest available international comparison, the UK spends 55% less than Germany and just over 70% less than France per employee on vocational training. We are forecast to fall from 24th to 28th out of 33 OECD countries for intermediate skills by 2020. We need urgently to address this underinvestment, and the immigration skills charge is one way we are doing so.
The charge was first announced in May 2015. The Immigration Act 2014, as amended last year, provides the Secretary of State with the power to require certain employers who recruit skilled workers from outside the European Economic Area to pay an immigration skills charge. These regulations provide for the amount and obligation to pay the charge. Through the charge we want to incentivise employers to think differently about their recruitment and skills decisions and the balance between investing in UK skills and overseas recruitment.
There is no doubt that skilled migration has brought economic benefit to the UK. It has boosted our ability to compete in global markets and helped make us world leaders in many sectors. There are many examples of good practice, but it seems that some employers would prefer to recruit skilled workers from overseas rather than invest in training UK workers. Use of the tier 2 visa route grew by 37% between 2010 and 2016. Our aim is to see UK workers with the right skills fill these roles.
When we first announced this policy, we commissioned the independent Migration Advisory Committee to advise on applying a skills charge to employers recruiting workers from outside the European Economic Area as part of its wider review of tier 2. As the Secondary Legislation Scrutiny Committee acknowledged, most respondents to the MAC’s consultation were not in favour of a charge. It is not surprising that those who will have to pay the charge did not welcome it. Based on the SLSC’s comments, we revised and re-laid the Explanatory Memorandum accompanying the regulations to reflect more of the evidence we considered. The MAC, which is made up of independent experts in the fields of economics and migration policy, supported it. The committee analysed different levels of charge and took into account views from more than 250 written submissions and from meetings with more than 200 public and private sector employers. It considered that a flat charge of £1,000 per worker per year would be large enough to have an impact on employer behaviour and that this would be the right level to incentivise employers to reduce their reliance on migrant workers.
Where the Government took a different line from the MAC was to protect the UK’s position as a centre of excellence for education and research and to support smaller employers. We announced the rate, scope, exemptions and introduction date for the charge in March last year. The draft regulations implement the decisions taken last year. We believe that this has given employers enough time to prepare for its introduction on 6 April, subject to parliamentary consideration. In deciding the scope and rate of the charge, we took into account the MAC’s recommendations, but we also responded to concerns raised in Parliament during the passage of the Immigration Bill and from employers to announce a number of exemptions and a lower rate for charities and smaller employers. For that reason, Regulation 3 introduces a reduced rate of £364 per individual per year for small and charitable sponsors.
Regulation 4 provides for the exemptions. As the MAC recommended, sponsors of tier 2 intra-company transfer graduate trainees are exempt from paying the charge. The Government have also exempted specified PhD-level occupations, including higher education lecturers and researchers. In addition, those switching from a tier 4 student visa to a tier 2 general visa to take up a graduate-level position in the UK are exempt. This was welcomed by the British Medical Association as it will benefit doctors completing their foundation training. These exemptions are designed to protect employers’ ability to recruit the brightest and the best. For out-of-country applications for entry clearance, the regulations provide that the charge does not apply for leave of less than six months.
Regulation 5 provides that the sponsor must pay the charge up front. This is for a minimum of 12 months and then in six-monthly increments, rounded up. It will be calculated according to the length of employment the sponsor enters on the certificate of sponsorship. Employers will pay the charge as part of the existing sponsorship process, administered by the Home Office.
Regulation 6 provides that part or all of the charge may be refunded or waived. Regulation 7 means that the charge will not be retrospective. Employers of individuals who are already in the UK on a tier 2 visa or have been assigned a tier 2 certificate of sponsorship at the time the regulations come into force will not have to pay the charge. This is also the case where these individuals apply to extend their stay or change job or employer.
I turn to how the funding raised will be used. Based on Home Office analysis of the use of the tier 2 route, it is estimated that the charge could raise £100 million in the first year. The Home Office will collect the charge and transfer it to the Consolidated Fund, less an amount to cover the costs of collection. The population percentages underlying the Barnett formula will be used by the Treasury to determine the split of funding between the Department for Education and each of the devolved Administrations.
The income raised from the charge will be used to address skills gaps in the workforce. It will make a contribution to the department’s skills budget, ensuring that we can continue to make a significant investment in developing the skills the country needs. The charge will raise income but it is also designed to change employer behaviour, and that applies across all sectors.
I recognise the concerns about the impact of the charge on health and education in particular. The MAC was clear in its recommendation that the public sector should not be exempt. As an employer like any other, it should be incentivised to consider the UK labour market first. This is in line with government policy. It is not sustainable to rely on recruiting overseas staff. We are committed to building homegrown skills, to recruit from the domestic labour market and to invest in training.
We recognise that immigration has a role to play in the supply of workers where there are genuine skills shortages, but that should not come at the expense of investment in skills in our country. The immigration skills charge is designed to incentivise employers to invest in training and upskilling the resident workforce. It will also raise funding to support ongoing investment by the Government in their skills programmes. I hope that the Committee will support these regulations. I beg to move.
Lord Lucas (Con)
My Lords, I welcome these regulations. They are well targeted, have a good concept, good execution, with a sensible set of exemptions and remission for small businesses. I am disappointed that they do not extend to hospitality and construction, both areas where we have a substantial tendency for employers to bring in people from overseas rather than concentrate on training our own people. However, I entirely understand, given that most of that migration is from the EU, why we do not wish to complicate our Brexit negotiations by trying this on the continent just yet. However, when you talk to hospitality employers, they say, “We have to employ these overseas people because the Brits just don’t know how to treat customers”. I say let us bring back the British Airways charm school, which is what I grew up with. We can do this; we just need to train people properly. I do not think that we should accept the excuses of our hospitality industry. We should apply this principle to it to get it to bring our own people up to speed.
However, within the industries this measure is aimed at, it is an excellent idea. It is largely, I think, aimed in practice at IT and industries round that. I would be very grateful if the Minister or his colleagues would agree to meet me and representatives of the tech industry to discuss how to craft training which will meet the needs of employers who are hit by this levy so that the incentive which is provided by it can be directed at the provision of training which will ensure that the objectives of the levy are realised.
Baroness Hamwee (LD)
We are all being so polite. Perhaps we have learned from the charm school with which the noble Lord, Lord Lucas, grew up. We, of course, support investment in skills and training but it is appropriate to put these proposals in the context of the very tight brief which the MAC, as always, was given. It was required to advise on,
“significantly reducing the level of economic migration from outside the EU”,
taking into account the impact on the economy, including on productivity and competitiveness, and was asked to consider five issues, of which a skills levy was one. As the Minister said, at the time of the review the Government had already signalled an intent to introduce the charge. It is fair to acknowledge the MAC endorsement of the proposal. It said in its review:
“We consider that the imposition of an ISC will serve to incentivise employers to reduce their reliance on employing migrant workers and to invest in training and upskilling UK workers”.
But I also observe that, certainly in the health sector, that gives the term “incentivise” a rather new meaning. The Explanatory Memorandum refers to a collapse in training. Will the Minister tell the Committee whether the Government have analysed why that has been the case?
The letter from the Minister, Robert Halfon, to the Secondary Legislation Scrutiny Committee confirms that this is a tax. We know that the Treasury hates hypothecation, but given its rationale it seems to us that those who are paying it must be able to see how it is used and, more than that, be involved in decisions about the application of the funds, because they know what normally works best in their own sectors. There must be a lot of sector-specific experience which should be tapped, as well as this being in the interest of transparency.
The Institute of Directors recognised that “penalising employers” who need to look to the “global talent pool” is,
“not the answer to gaining more home-grown talent”.
To balance that, PwC said:
“The levy will not impact the way that companies recruit as they require the skills they require”.
It raised the spectre of, in the long term,
“parts of businesses moving overseas, if mounting costs become prohibitive and companies risk damaging their brands by providing substandard products or services”.
I recall that during the passage of the Bill an argument used against this, partly in the higher education sector, was that some industries will pay the charge but would not see any benefits because their sectors are not apprenticeship-appropriate. That applied in particular to the health sector. I will leave it to my noble friend Lady Walmsley to deal in detail with the health sector. I know that I will support everything that she says.
During the passage of the Bill we also expressed concern about the costs of the bureaucracy of this exercise. Given the investment that the sectors in question already make in training, there seemed to be a danger of a charge being levied, having administration costs deducted and the balance then returned to them. I have been assured that the deduction will be small because the Home Office visa system will be used, but there will be a deduction. We can add to that the unquantified cost of the loading on to the Home Office, which is overloaded. It probably feels that the light at the end of the tunnel is that ever-present oncoming train.
The MAC also said that,
“it is impossible to conclude, ex ante, whether the benefit arising to employers … will outweigh the costs imposed on Tier 2 sponsors”,
because the Government have not yet determined how the revenue will be reinvested. That is clearly a significant point. It is clear that the health sector has come to a conclusion, and it is not the positive conclusion that the Government want to see. Robert Halfon, in his letter to the Secondary Legislation Scrutiny Committee, said:
“The cost to the healthcare sector and to the NHS in particular has not been estimated”.
That is quite an astonishing statement.
One other area is that of intercompany transfers. The Minister has referred to the exemption in the regulations, but the exemption is limited to trainees. Why is it so limited? Is it simply because they are trainees? That fits in with the thrust of the proposals. I ask that question and make the implied point because we need to do all that we can to attract, retain and not deter international companies basing themselves in the UK. I do not think that I need to fill in the gaps between the lines there.
There are steps that the Government can take after taking through these regulations, particularly by way of exemptions and by working with different sectors, which would make them more palatable to those who find them unpalatable, and more effective, and might help to avoid unintended consequences, as these charges are clearly going to be significant for some sectors.
Baroness Walmsley (LD)
My Lords, as my noble friend Lady Hamwee said, I would like to say a few words about health and social care. Report after report shows the dire financial straits in which NHS employers find themselves, with 75% of hospitals already in deficit and A&E departments struggling to meet the four-hour target for attending to patients. There is a shortage of nurses, and retention is terrible. Doctors’ rosters are not filled, resulting in cancelled patient treatments, which puts a greater burden on existing staff, who are acting as the shock absorber for the system. GP practices cannot fill vacancies. Care homes providers are handing back local authority contracts because they cannot provide a decent service within the amount of fees that they are paid. The number of care beds is falling while demand is rising, and 1.2 million elderly and disabled people are not receiving the care that they need.
It is in this climate that the Government have decided to tax health and care employers for every worker from outside the EEA who is on a tier 2 visa. You could not make it up. On top of this, they choose to do it at a time when they have removed the nurse training bursary and have no idea of the effect that it will have on the number of nurses in training. It is no wonder that the BMA and the RCN have written to the Home Secretary, laying out the damaging effects of the charge on health and care. The Government may not have calculated how much it is going to cost them, but they have—it is £7.2 million per year, which will deter cash-strapped employers from filling rosters with essential staff, thereby putting patients at risk. I ask myself why the Government could not make those calculations. Perhaps it is because it is so politically embarrassing.
It is little wonder that the Secondary Legislation Scrutiny Committee had serious concerns about the measure, with particular regard to the fact that the memorandum laid with the instrument said nothing about the opposition to the measure voiced by those who were consulted. It was also provided with no information about the impact of the measure, particularly on health and care employers, who are the sector fourth-most affected by the charge. It is no wonder that it was not provided with that information since, in reply to its questions, as my noble friend has just said, Robert Halfon MP confessed that the cost of the charge to the NHS has not been estimated because it is classified as a tax. His letter also shows complete ignorance of the nature of the modern nursing workforce, saying:
“There is no direct impact on employers of care workers as they do not qualify for entry to the UK under the Tier 2 route. Tier 2 has been reserved for graduate occupations since 2011”.
Yes, nursing has been a graduate occupation for a similar length of time. Does the Minister think that care employers do not employ graduate nurses any longer?
The ISC was intended to deter employers recruiting from abroad, but health and care employers have no option, and they have no need for this. As the BMA letter says:
“Checks and balances are already in place to ensure posts are first offered to UK and EU nationals through the resident labour market test”.
Although we are going to introduce apprentice nurses later this year, doctors undergo long and rigorous training, and it is impossible to upskill UK citizens overnight.
Lord Watson of Invergowrie (Lab)
My Lords, the Labour Force Survey showed that by 2014 the number of workers participating in training courses away from their own workplace has collapsed since 1992. I will not repeat the figures that the Minister gave, but this feeds into a pattern. In general, UK employers underinvest in training relative to comparable countries. It is therefore understandable that the Government should decide to incentivise employers to invest in training so as to maximise the number of jobs available to the domestic workforce. In that aim, we support what the Government are attempting to achieve through these regulations.
However, the Secondary Legislation Scrutiny Committee was critical of the fact that the Explanatory Memorandum laid with the instrument said nothing about the opposition to the proposals voiced by most of those consulted by the Migration Advisory Committee. The Secondary Legislation Scrutiny Committee was also critical of the fact that the Explanatory Memorandum provided little or no detail about the impact of the charge on those employers likely to be affected. That led the committee to conclude that the process of policy formulation for the proposals was not complete and that the Government were not in a position to supply Parliament with sufficient information about the implementation and impact of the proposed charge. If that is not the source of some embarrassment to the Minister and his officials, then it ought to be.
As far back as May 2015, the then Prime Minister announced the intention to introduce the charge, and in March 2016 the scope of the charge was set out. Why then was the DfE not ready when the regulations came to be submitted? Given the array of staff in the department, there is surely no excuse for this. I hope that the Minister will apologise and give an assurance that in future his officials will be better prepared.
Since the charge was first proposed almost two years ago, we can discount any suggestion that it had its roots in what I regret to say is the increasingly anti-immigrant rhetoric that since last year’s referendum has characterised some government policy. The Government’s generally hostile approach towards migration—and the definition of it, as evidenced by their attitude on the Higher Education and Research Bill in relation to international students—risks further fuelling discrimination and social tension.
Changes to migration policies should be developed through consultation with employers and trade unions and, once agreed, should be introduced with adequate lead-in time to allow employers and employees to plan accordingly. That allows short-term gaps in the labour market to be filled while other measures are taken to address long-term training needs in the domestic labour market. It is to be hoped that that is what this charge will achieve.
Last week, during the briefing session on the charge, the Minister for Skills, Mr Halfon, explained that it will be used to address skills gaps in the workforce. In terms of the resources available to do so, and to some extent reflecting what the noble Baroness, Lady Walmsley, has said, the Minister said he anticipated an annual surplus of around £100 million once the Home Office had deducted the costs involved in collecting the charge.
Identifying those skills gaps is at the heart of these regulations. The UK Commission for Employment and Skills’ Employer Skills Survey 2015 shows that, while overall employer investment in training, in kind and cash, increased between 2011 and 2015, per employee expenditure flatlined at £1,600, despite a period of economic recovery and business growth. That was the last survey to be published, and I regret to say that it will remain the last survey to be published because earlier this year the Government closed the UK Commission for Employment and Skills. We no longer have a national overview. Perhaps the Minister will explain the rationale behind what appears to be an extraordinary step. What will replace it?
The Employer Skills Survey 2015 highlighted what it termed skill-shortage vacancies by sector and listed 13. The top five were: construction; manufacturing; electricity, gas and water; transport and communications; and agriculture. Interestingly, health and social work were only in seventh place, despite the regular reports of difficulty in filling vacancies. The noble Baroness, Lady Walmsley, has stolen a bit of my thunder here, so I will not repeat the thrust of her argument. Certainly, the proportion of NHS staff who are not UK nationals is high, although already in decline following last year’s referendum. It seems questionable, at the very least, that the list of exempted occupations listed in the regulations does not include doctors or nurses at a time when the NHS is under real pressure in filling posts in these areas. I acknowledge that the noble Baroness, Lady Walmsley, said that it goes wider than doctors and nurses. Enforcing the levy would effectively penalise the NHS for recruiting workers from outside the EEA to fill gaps in an already stretched workforce in an essential public service. I accept that to some extent the NHS has over the years gone for the easier option of hiring from outwith the UK, but the pressures currently being experienced there will be as nothing two years hence. I urge the Minister to consider what the noble Baroness, Lady Walmsley, said and what the pressures on the NHS will be if the charge is applied across the board for that sector.
Science, technology, engineering and mathematics are also areas where there are skills gaps, not least in schools, where recruitment also remains a problem. I shall not repeat the comments I made in respect of the Engineering Construction Industry Training Board in a previous debate. Few teachers will earn above the £30,000 cut-off for the charge, and so non-EEA nationals will be unable to be used to help fill these gaps. From memory, Mr Halfon—or perhaps it was officials—said that there are only about 150 non-EEA nationals in that bracket. I accept that that is not a big number, but none the less these gaps need to be filled. With maths and ICT demonstrating digital skills shortages for the jobs of tomorrow, there could have been a case for relaxing the charge in these areas.
One suggestion I shall make concerns the follow-through on the charge, which we all hope will meet its aims. Could employers not be eligible for some sort of rebate on the charge for employing a non-EEA worker? There is an element of double-charging. If an employer has identified a gap for a group of employees, so that he or she has to take on workers from outwith the UK and, I assume in this case, from outwith the EEA, while doing that, the employer is meeting the aims of this charge by bringing through young, or perhaps not so young, people to train them up to the necessary level. So he is paying the charge for them to be employed and to be trained, and he is also paying a surcharge for those outwith the EEA who he is using temporarily. So in a sense he is training people for the long-term good of the business and of the UK economy, and there does seem to be an element of double-charging, particularly when the £1,000 rises over the years to a maximum of £5,000—leaving aside the charitable sector—when the employer is in fact doing what the Government want him or her to do: training employees.
My other question for the Minister is: when will the charge be reviewed? I do not know whether there is any significance in the fact that the assumption in the regulations is that it covers only non-EEA employees for up to five years. I am not clear whether that is to be a maximum. But there may be a case for, in effect, a sunset clause so that after five years the regulations could be reviewed and some assessment made of the charge’s success. As I said earlier, all of us in this debate, whatever our views and however critical we have been, want to see the outcome that the Government intend. I would be interested in the Minister’s views on that point. I do not expect him to respond just now. I do not expect his officials to give him a response just now. If it is more convenient, I am more than happy to receive something in writing.
Overall, I certainly want to see this charge introduced effectively and fairly, leading to a situation where there are more UK workers able to fill the gaps that are evident now and likely to be even more evident in the post-EU years ahead of us. To that extent, I do not do this often but I wish the Government well because I think their intentions are good, but there are certainly some rough edges in this charge which could perhaps be smoothed down to make it more palatable and perhaps even more effective.
Lord Nash
My Lords, I thank all noble Lords for a really interesting debate. We welcome this feedback. I come back to my opening remarks: the investment in skills is crucial to a productive, strong UK economy—an economy which gives people from all backgrounds the opportunity to fill today’s skilled roles as well as those in the future. Migration has a role to play in supporting the development and supply of expertise and skills and we want to continue to attract the brightest and the best, but through the immigration skills charge we want to incentivise employers to invest in training. I am grateful for the support that has been expressed today for our desire to upskill our workforce. I am afraid that I will not cover all the points that have been raised but I will write to all noble Lords present today.
The noble Baronesses, Lady Walmsley and Lady Hamwee, asked why this impacts particularly on the health service. The MAC was clear in its view that the charge should apply to the public sector. It is not sustainable to rely on recruiting overseas staff and the Government are committed to building home-grown skills. All employers need to look at how they meet their longer-term skills needs, and the long-term strategy must be to train and retain our own nurses and doctors in the UK. Steps are being taken to address the shortage of nurses, including continued investment in training, retention strategies, and a return to practice campaign. We are introducing a new nursing degree apprenticeship. Health Education England has increased nurse training places by 50% over the past two years and is forecasting that more than 40,000 additional nurses will be available by 2020. Similarly, Health Education England is forecasting that more than 11,000 additional doctors will be available by 2020. The noble Baroness, Lady Walmsley, asked about the number of nurses impacted by the charge: 2,600 certificates of sponsorship were used for nurses in the year ending August 2015.
The noble Lord, Lord Watson, asked about the delay in publishing the impact assessment. As the charge is classified as a tax, we have not been required to carry out a formal impact assessment. It is also difficult to do so because it is difficult to anticipate how employers will respond to the charge and to wider changes to tier 2. In addition, the charge does not sit as an isolated measure—it is part of a wider skills programme to develop a strong, productive economy. On the noble Lord’s point about how we will assess and evaluate the impact of the policy and whether the charge will be reviewed, we will monitor the operation of the charge and will undertake a review of the policy after one year, as covered in the Explanatory Memorandum.
Lord Watson of Invergowrie
Before the Minister finishes, I mentioned the UK Commission for Employment and Skills, and that apparently it has been disbanded. Perhaps the Minister can give me a commitment that he will also write to me about that. I am happy to leave it at that just now.
Baroness Walmsley
Before the Minister concludes his remarks, I will make one point. Of course I agree with what he said about the need for employers to make a contribution to the training of the workforce from whom they will eventually benefit. However, is he aware of the very high level of commitment to training that all health and care employers already make? It takes them a lot of time and costs them a lot of money. Every ward has training nurses on it; every clinical team has trainee doctors on it; most GP practices have GP trainees; most care homes also have trainee co-workers. An enormous contribution is made already. The noble Lord, Lord Watson, talked about double charging—that is what we have here.
House of Lords
International Development: Forestry
(7 years, 8 months ago)
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Baroness Parminter
To ask Her Majesty’s Government, in the light of the Department for International Development’s Economic Development Strategy, whether they plan to commit to supporting forest programmes across the globe to improve forest governance and reduce deforestation.
The Minister of State, Department for International Development (Lord Bates) (Con)
My Lords, stopping deforestation is an essential part of global efforts to promote sustainable economic development. DfID already supports programmes focused on governance, tackling illegal logging and related corruption, and working with companies to eliminate deforestation from supply chains for palm oil, cocoa and other commodities. This makes an important contribution to DfID’s economic development strategy.
Baroness Parminter (LD)
My Lords, I pay tribute to the work of both this Government and previous Governments in the fight against global deforestation. Given that we are losing an area the size of a football pitch every two seconds, and that deforestation accounts for 10% of our global carbon emissions, will the Minister commit to the fact that the Government will not lose any further funding to take forward this important work?
Lord Bates
I am very happy to renew that commitment, particularly on the International Day of Forests. The commitment is there not only in a government statement on such matters, but also in our signing up to the sustainable development goals. Sustainable development goal 15 puts sustainable managed forests, combating deforestation and reversing land degradation at the heart of one of the key goals that need to be attained. The Government are committed to those goals, and through a number of different mechanisms seek to bring them about by 2030.
Lord Crickhowell (Con)
My Lords, the Washington-based NGO Forest Trends has been working extremely hard to save the South American rainforests. I declare an interest: my son is in Brazil on its behalf at this moment. It has received support from the Obama Administration, but that is now almost certain to end as a result of the policies of President Trump. Does my noble friend agree that public/private organisations of this kind, particularly those working in countries like Brazil, facing economic difficulties, deserve the widest possible support?
Lord Bates
I do, and that is what DfID provides through many of its programmes and by working in public/private partnerships in this area. We recognise that tropical forests regulate weather patterns and that 25% of global greenhouse gases are a result of deforestation and land-use changes. It is therefore crucial that we make efforts in this area. Regarding my noble friend’s opening point about the US Administration’s policy, I would comfort him to an extent and say that that policy is a proposal. A full budget will be published in May and has then to find its way through Congress.
Lord Clark of Windermere (Lab)
My Lords, I declare an interest as a former chair of the Forestry Commission. As the Minister is aware, Britain has a unique reputation as one of the few countries in the world that has successfully reforested its landscape. Traditionally, the Forestry Commission has offered much expertise and experience to countries seeking to reforest their landscape but of late, due to the financial cuts, it has been unable to sustain that at the level it would like. Will the Minister look again at how we could use money to utilise the expertise of the Forestry Commission to practically help countries grow more trees?
Lord Bates
I certainly pay regard to the noble Lord’s great experience and commitment to this area over many years. However, I would also say that, through DfID, we fund a number of programmes, such as the international forestry knowledge programme, which does a great deal around the world in terms of forest governance and partnerships in forests, and are part of the forest investment programme with the World Bank. A key part of those initiatives takes place in areas such as Indonesia, for example, where 80% of forestry was formerly illegal but now 90% is legally audited. We want to see more of that type of work and I assure the noble Lord that that will continue to happen.
Lord Cameron of Dillington (CB)
With DfID’s new and welcome emphasis on the promotion of agriculture as the bottom rung of our wider economic agenda, does the Minister agree that forestry and agri-forestry have a vital role to play in sustaining soils and encouraging the sustainable management of water and grazing, and that therefore forestry has a really important role to play in the wider economic agenda generally within sub-Saharan Africa in particular?
Lord Bates
Absolutely. That is why it is such a prominent part of the sustainable development goals. As the noble Lord says, it is about livelihoods and climate change. It is also about direct livelihoods, as about a billion people around the world depend on forests for their livelihoods. That is a very important part of our economic development strategy.
Lord Naseby (Con)
Will my noble friend look again at the decision of DfID not to give any help to Chile, our greatest ally in South America, following the extensive deforestation from the wildfires and the subsequent difficulties of rehabilitation for the people who were devastated in that part of Chile?
Lord Bates
My noble friend and I have had a number of discussions on this. Of course, because Chile is not ODA eligible due to its middle-income status, it is difficult to do that. However, we have corresponded and are looking at ways, through the Cabinet Office, to extend technical support and advice to the people of Chile, who are of course great friends of the UK and who we want to support in their hour of need.
Lord McConnell of Glenscorrodale (Lab)
My Lords, do the Government agree that if their fine objectives in this strategy of securing greater prosperity and tackling poverty are to be achieved, then tying aid to trade as part of any DfID economic strategy would be the wrong course of action? Will they support continued improvements in the business environment in developing countries, including in forestry, to ensure that there is greater prosperity in those countries in the future?
Lord Bates
The noble Lord is absolutely right that tying aid to trade benefits no one in the long run. We want to get the most competitive people who can deliver the best services to the countries that are in need of our help. We remain resolutely committed to that. That was set out again in the economic development paper.
Lord Collins of Highbury (Lab)
Global co-operation is absolutely critical, as the Minister mentioned, in achieving the SDGs. Can he tell us how we will ensure that co-operation post Brexit? How will we maintain a relationship with our European partners in delivering the SDGs, particularly on deforestation? I must admit that on days like this, hearing his responses, I wish he was the Secretary of State.
Lord Bates
Let me go straight to the points that the noble Lord has raised. As has been said many times from this Dispatch Box in recent years, we are leaving the European Union, not leaving Europe. We work with Europe around the world on delivering those sustainable development goals, and we will continue to do so. We also have other commitments. There is the New York Declaration on Forests, which is an international commitment of 190 NGOs, Governments and multinationals that contribute towards that effort. We will be working with everyone in pursuit of those global sustainable development goals.
Police: Pension Rights
(7 years, 8 months ago)
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The Minister of State, Home Office (Baroness Williams of Trafford) (Con)
My Lords, in January 2016, this Government changed legislation to the benefit of widows, widowers and civil partners of police officers in England and Wales who have died on duty. As a result, from 1 April 2015, those survivors who qualify for a survivor pension will now continue to receive their survivor’s benefits for life, regardless of remarriage.
Lord Bach (Lab)
My Lords, I declare an interest as the serving police and crime commissioner for Leicester, Leicestershire and Rutland. I thank the Minister for her Answer and for seeing me earlier today to discuss these matters with her and her officials. On 15 August 2002, two Leicestershire police officers—Police Constables Andy Munn and Bryan Moore—were brutally killed by a criminal driver on the A42. They not only both died in the same incident but both left young widows and small children. One widow remarried seven years later in 2009 and lost her police widow’s pension. The other widow remarried in 2015 and, because of a change in the law, has kept her police widow’s pension. How in all conscience can it be right that two women, both of whose husbands were killed while bravely fighting crime and in the line of duty on the same occasion, can be treated so differently by the country that owes so much to both of them? Will the Minister please look at this case again? Does she not agree that such obvious unfairness offends against every principle this House believes in?
Baroness Williams of Trafford
I thank the noble Lord for his Question, for the way in which he has always constructively engaged with me, and for coming to see me this morning. I pay tribute to him as Parliament’s only PCC. Without talking about individual cases, I say that it is absolutely tragic that police officers are killed in the line of public duty. When it happens, we should honour the officers’ memory and sacrifice. That is why this Government have changed the rules so that all survivors of police officers who die on duty do not now face the prospect of losing their pension on remarriage. That is a change that no previous Government have felt able to make. However, we must continue to have regard to the wider implications of a change to public service pensions. It is the duty of government to ensure that any policy changes are legally and financially sound. I do not pretend that the judgment is always easy but it is one that we must make. Successive Governments have maintained a general presumption against retrospective changes to public service pensions, and I am afraid that that remains in place.
Baroness Harris of Richmond (LD)
My Lords, I declare my interest as an honorary member of the National Association of Retired Police Officers, which has been instrumental in championing this campaign. Should the Government not recognise the principle that the widows and widowers of police officers who have given their lives in service to the community should receive pensions for life no matter when their partners were killed?
Baroness Williams of Trafford
I agree with the noble Baroness that the Government recognise the principle and that is why we made these changes back in 2016, to be applied from 2015. But as I have said, the retrospective judgment is not one that is made across the public service.
Lord Kinnock (Lab)
My Lords, may I recommend to the Minister the principle of “When the facts change, I change my mind” as wise guidance in issues like this? Does she accept from me that the principle of no retrospection, although applicable in many circumstances, simply does not meet the moral obligations that arise from cases like those which have been raised properly by my noble friend?
Baroness Williams of Trafford
I agree with the noble Lord that, when the facts change, the Government change their mind. That is why in 2016, after decades of widows who remarry not being able to claim the survivor’s pension, the Government did indeed change their mind. The issue of retrospection is something about which no Government have changed their mind.
Lord Mackenzie of Framwellgate (Non-Afl)
My Lords, I declare my interest as a current police pensioner. I have often heard Ministers both in this House and in the other place, and indeed at conferences, committing the Government to giving priority to the victims of crime. Does the Minister agree that in homicide cases the definition of victim by necessity applies to the spouses and partners, in this case of police officers who have died in the line of duty? Is there not therefore a justified need to reflect that in the pension arrangements for those officers?
Baroness Williams of Trafford
I certainly recognise the difficulties faced by the families of members of the Armed Forces, the police service and the fire service and how they could be seen as the indirect victims of crime themselves. The noble Lord talks about provisions for death in the line of duty. There most certainly are awards under the police injury benefit arrangements which ensure that higher benefits are payable when an officer is killed in certain circumstances. These are broadly if death resulted while seeking to apprehend a suspect, protecting life, or if the officer was targeted for the reason of being a police officer. I take this opportunity to recognise the incredible public service that police officers, fire officers and our Armed Forces make to public life.
Gaza Strip
(7 years, 8 months ago)
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Lord Hylton
To ask Her Majesty’s Government what assessment they have made of the present state of public health in the Occupied Territories of Palestine; and the prospects for agreed international action, in particular action by Israel, to keep the Gaza Strip habitable.
The Minister of State, Department for International Development (Lord Bates) (Con)
My Lords, health indicators in the Occupied Palestinian Territories are relatively good in comparison with regional averages, but they are at risk of deterioration due to conflict and restrictions on movement and access. Increased water and electricity supplies are a prerequisite to improving life in Gaza. We welcome recent initiatives by Israel to increase such supplies and are monitoring their implementation. Further easing of restrictions on materials entering Gaza is also needed.
Lord Hylton (CB)
I thank the Minister for that full reply. The health situation inside Gaza is already bad under the partial blockade by Israel. In the interests of all sides, will the Government keep calling for water, sewerage and electricity supplies to be addressed without delay so that Gaza remains habitable from 2020 onwards? Will they make constructive proposals for all to consider, given the help that is available from British doctors who visit Gaza regularly?
Lord Bates
I reiterate that the Government will continue to make representations to ensure that the suffering of the Gaza people is alleviated as far as possible. We are doing a number of things, such as in the area of reconstruction. We are contributing to the Gaza Reconstruction Mechanism, which has rebuilt 2,100 houses destroyed in the 2014 conflict. We are urging the Israelis to honour the obligations they gave in 2015 about the supply of water, which is critical to Gaza. We are also urging them to progress with the connection of the high-voltage 161 kilovolt transmission line to the area. At the same time, we urge those militant organisations in Gaza to restrain themselves and resist and renounce those violent attacks that are at the heart of the cause of this conflict.
Baroness Eaton (Con)
Will the Minister outline what steps, if any, are in place to ensure that none of the £25 million that the UK has pledged to the Palestinian Authority for 2017 to fund salaries for 30,000 officials in the West Bank health and education sectors goes towards rewarding terrorism and teaching hate?
Lord Bates
This is a very good example of where we are working with our European colleagues. We work through the EU PEGASE fund to distribute that part of aid. There is strict vetting to ensure that the only people who receive that salary support are legitimately providing healthcare and other medical services and teaching support in those areas. It is very important that we make sure that British taxpayers’ money ends up exactly where it is intended, helping those in need, and not funding people who have been guilty of terrorist acts.
The Lord Bishop of Leeds
My Lords, does the Minister agree that the health sector in the Gaza Strip is really on life support and that while the blockade remains and while there is a lack of public water, this will continue? Does he see any way of encouraging direct aid from the United Kingdom towards particular hospitals? There are two Anglican hospitals, for example, serving the whole community, often free of charge: the Al Ahli Arab Hospital; and the Al-Wafa Medical Rehabilitation Hospital, which has had to be relocated because of damage to St Luke’s Hospital in Nablus. These are beacons of hope in a fairly desperate place. Is there a way of enabling direct funding there as we continue to urge an end to the blockade?
Lord Bates
As the right reverend Prelate may know, our support of healthcare in this area is directed through the UN Relief and Works Agency, which channels support into the health sector there. A number of hospitals, particularly in Jerusalem, are providing help, particularly for those in Gaza, but there has been significant difficulty, to which the noble Lord, Lord Hylton, referred, in getting those in medical need to those hospitals to get that care, so we have been providing help at the border through an access and co-ordination team, to try to facilitate that. The situation is very fraught, tense and difficult, and there needs to be a political solution very shortly.
Baroness Sheehan (LD)
My Lords, does the Minister share my concern that a lack of credible investigation and accountability for repeated attacks on medical facilities, such as the destruction of the Al-Wafa Hospital in Gaza in 2014, is hindering the development of grossly overstretched health facilities? Can the Minister reassure me that the UK will support the resolution at the UN Human Rights Council on Friday calling for accountability for such attacks so that hospitals can be rebuilt with some guarantee of future protection?
Lord Bates
For the people who are suffering so terribly in Gaza in a situation that looks so bleak as we move towards 2020, as the UN forecast, there should be several steps in addition to our supporting resolutions in various bodies. First, Hamas and the terrorist organisation should cease their terrorist attacks. Next, the Palestinian Authority should take over control of the operation of Gaza. Finally, we need to see the opening of the borders, not just with Israel but the border at Rafah with Egypt as well.
Lord Anderson of Swansea (Lab)
My Lords, the situation in Gaza is indeed dire, particularly for children, and this is due not only to Hamas. Do the Government at least recognise that on the latest WHO figures, albeit they are a little dated, over 4,000 Gazans have been received in hospitals in Israel and well over 90% of applicants from Palestine as a whole are accepted by Israel? Would it not be better if Gaza were to seek to build bridges rather than tunnels to Israel?
Lord Bates
That lies at the heart of this situation. There will be no relief for the people in Gaza, who are suffering so terribly, until there is a political solution and an easing of the tensions, and those should be based on mutually recognised rights to exist. That has to be the only way forward and the noble Lord is right to point to it as we try to apply these urgent humanitarian responses. There needs to be a longer-term political solution.
Schools: Funding Formula
(7 years, 8 months ago)
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Baroness Massey of Darwen
To ask Her Majesty’s Government what is their response to the Education Policy Institute report on the new funding formula for schools which indicates that primary schools may lose funding equivalent to two teachers and secondary schools may lose funding equivalent to six teachers.
The Parliamentary Under-Secretary of State, Department for Education (Lord Nash) (Con)
My Lords, through our careful management of the economy, we have protected the core schools budget in real terms. In 2017-18, schools will have more funding than ever—over £40 billion—set to rise to £42 billion by 2020. The IFS analysis shows that per pupil funding in 2020 will be over 50% higher in real terms than in 2000. While we know schools are facing pressures, we know that there is scope for schools to become more efficient and we are supporting them to achieve this.
Baroness Massey of Darwen (Lab)
I thank the Minister for that interesting reply. Could he say whether he recognises the concerns of teachers at schools with more disadvantaged pupils, who are more likely to suffer than others under this funding formula? Could he predict what the future for those schools might be?
Lord Storey (LD)
My Lords, in the next four years, the budget of an average primary school will be £74,000 worse off. That is the equivalent of two teachers. The budget of an average secondary school will be £291,000 worse off, which is the equivalent of six teachers. Does the Minister think that it is wise to be spending £240 million on expanding grammar schools and £320 million on creating new free schools when these budgetary pressures exist?
Lord Nash
All public services are facing budgetary pressures. We are still trying to recover from the deficit that we inherited. The National Audit Office has made it quite clear that it is reasonable to look to schools to make efficiency savings. The Education Endowment Fund has said that there is significant scope for better deployment of staff in schools. We find that many of our best schools educationally are also running themselves financially very efficiently. We believe that there is significant scope for saving, in non-staff costs in schools, of over £1 billion.
Lord Polak (Con)
Will the Minister join me in recognising that the current funding system for schools is fundamentally flawed? It is a postcode lottery, where resources provided to identical schools depend not on their needs but on location. This is unfair and needs to be addressed urgently.
Lord Nash
I wholeheartedly agree with my noble friend. As I have already said, the EPI, to which the noble Baroness, Lady Massey, referred, has agreed with him that the system as it currently stands is broken, is unfair and must be addressed urgently. Underfunded schools do not have access to the same opportunities as others do, and this cannot be right. This is why we are introducing a much clearer, fairer and more transparent system.
Baroness Symons of Vernham Dean (Lab)
My Lords, does the Minister accept that these proposals have a disproportionate effect on small primary schools in rural areas? I declare an interest because the school in my village, of Vernham Dean in Hampshire, will have suffered a cut of £64,000 in relation to the money that was available to it only a year and a half ago. I wonder whether the Minister can accept that these proposals will adversely affect young children in small, rural schools in relation to their counterparts in larger towns.
Lord Nash
Rural schools are of course essential to their local communities and ensure that children do not have to travel long distances to school, but we are including an enhanced sparsity factor in our formula to target additional funding to our smallest and most remote schools. This sparsity funding is over and above the lump sum that all schools will receive to help them meet costs that do not vary with their pupil numbers.
Lord Evans of Weardale (CB)
My Lords, while I welcome the additional efficiency and flexibility that come from the multi-academy trust system, and from trusts and free schools overall, does the Minister agree that a reduction in funding per pupil at a time when greater skills are needed to compete internationally, and when mental health problems among young people are increasing so rapidly and causing problems for many schools, is a bad allocation of money?
Lord Nash
I am grateful to the noble Lord for his comments about the efficiency of multi-academy trusts. One study shows that multi-academy trusts can achieve a saving of £146 per pupil. As I said, we are still recovering from the financial hole that we inherited in 2010 and we all have to adjust our resources. Schools have had a huge increase in money in recent years. We are trying very hard and have a lot of resources available on our government website to help them become more efficient.
Baroness Farrington of Ribbleton (Lab)
My Lords, will the Minister apologise for the fact that the Government are taking money out for their own pet schemes for grammar schools and depriving children in other schools in other parts of the country? Will he agree to go away and look at whether the Government’s pet schemes should have additional money that is not stolen from children in other schools?
Parking Places (Variation of Charges) Bill
Tuesday 21st March 2017
(7 years, 8 months ago)
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Baroness Redfern (Con)
My Lords, I would just like to thank David Tredinnick MP, the Member in charge of taking the Bill through the Commons—he is in the Chamber today—and Marcus Jones, the Local Government Minister, for his support. I particularly thank my noble friend Lord Young of Cookham for his kind words in responding for the Government and the noble Lord, Lord Kennedy of Southwark, for speaking in support of the Bill at Second Reading. I also thank the RAC Foundation, the Federation of Small Businesses and the Association of Convenience Stores for their support and, finally, the Department for Communities and Local Government. I beg to move.
Broadcasting (Radio Multiplex Services) Bill
Tuesday 21st March 2017
(7 years, 8 months ago)
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Armed Forces Act (Continuation) Order 2017
(7 years, 8 months ago)
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The Minister of State, Ministry of Defence (Earl Howe) (Con)
My Lords, the brave men and women of the UK’s Armed Forces are, even as we debate, stationed around the globe keeping us safe. Yet, ever since the 1689 Bill of Rights, the vital protection they afford us rests upon the consent of Parliament. The specific legislation governing our military is contained in the Armed Forces Act 2006. It provides the legal basis for the system of command, discipline and justice that makes our personnel the best in the world.
Every five years, that legislation must be renewed by an Act of Parliament and, in the interim, by annual Order in Council. Since the Act itself passed in 2016, today our job is to consider, and I hope approve, the order, which will extend the force of legislation until May 2018. To appreciate its significance, one has only to imagine the consequences of allowing the Act to expire. The prospect of having our Armed Forces unregulated and our nation no longer able to defend itself is not to be contemplated.
It is in all our interests to ensure a speedy renewal, and I urge the House to agree to that, not least because the dangers we are facing are growing in complexity, diversity, multiplicity and concurrency. That was the expert opinion of our SDSR in 2015, and I firmly contend that nothing that has happened since has given us cause to alter it. Let us consider just a few of the main security challenges that we face in the world today: Daesh in the Middle East, and the prospect of its fighters returning to the continent; an increasingly aggressive Russia, menacing its neighbours in eastern Europe; an ever more assertive China in the South Pacific; and a belligerent North Korea, testing nuclear weapons and the patience of the international community.
All the while, we are contending with humanitarian crises in Syria and South Sudan, mass migration in Europe, rising Islamist fundamentalism, cyberwarfare, piracy on the high seas, and the perils of climate change. Individually, each represents a greater or lesser threat to our nation. Collectively, they pose a direct danger to our international rules-based order—which, in turn, underpins our values and our way of life.
As we have discussed many times before, the UK’s Armed Forces are working tirelessly to protect our nation today. The real question hinges on their ability to react tomorrow. Indeed, that was precisely the focus of our SDSR in 2015. Its response was to restructure defence to make us better prepared for the future, so it is worth reflecting on three of its most significant elements.
First, it ensured that we are investing in the full spectrum capability necessary to deter any danger. The Government chose to grow their defence budget, at a time of austerity and in the face of many other competing interests, so that they could spend £178 billion on the best kit money can buy: digitally enhanced Ajax armoured vehicles, upgraded Apaches, new frigates, a new fleet of drones and a regenerated carrier strike. We are investing not just in conventional forces but in nuclear deterrence, putting aside billions to build new Dreadnought submarines to provide our nation’s ultimate safeguard well into the 2050s. All the while, the exponential pace of technological advance means that we must continually stay ahead of the curve. So we are putting our emphasis on innovation, using an £800 million fund to generate a wide range of disruptive capability in laser weaponry, cyber and big data.
Secondly, the SDSR makes government far more integrated. The global problems we are facing transcend Whitehall borders and boundaries. Consequently, we have brought together all levers of government—whether defence, diplomacy, development, trade or engagement —to pack a more powerful punch. So today we do not just have a National Security Council offering collective strategic leadership across Whitehall on national security and crisis concerns: we have cross-Whitehall funds and joint policy and delivery units covering defence, the Foreign Office and DfID to focus our combined energies on the most pressing issues.
This holistic approach is paying dividends on the ground. When it came to tackling Ebola in Sierra Leone, our Armed Forces built treatment centres staffed by NHS volunteers, while officials from DfID, the FCO and our charities educated villagers about prevention. Together with our international partners, we stopped a deadly disease in its tracks. Meanwhile, today we are applying persistent simultaneous pressure to the Daesh terrorists on multiple fronts—militarily, economically and in cyberspace.
The third element of our SDSR was about ensuring that UK defence becomes international by design. In a world of complex global problems, it is vital for us to work more effectively with our partners. That means much more than collaborating to counter imminent threats; it is about joining forces to stop crisis morphing into regional chaos. It is about building the capability of partners to support good governance and doing more to understand international perspectives. It is also about working collectively to strengthen our trade and increase our prosperity.
Since the decision of our people to leave the EU, we have become even more determined to step up to defend global security. So we are doubling peacekeeping support for the UN, as well as working more closely with the OSCE, the African Union and the Commonwealth. Above all, we are strengthening our support for NATO. Sixty-eight years after the alliance was formed, it remains as relevant as ever. As US Defense Secretary James Mattis said recently, it is,
“a fundamental … bedrock … for all the transatlantic community”.
That is why the UK continues to meet the 2% GDP target. It is why we are leading the very high readiness joint task force—sending 3,000 of our own personnel to join the 14-nation force. It is why we are contributing to the enhanced forward presence in Estonia and Poland, as well as policing Black Sea skies. Finally, it is why we are playing a key role building up the alliance’s cyberdefences as part of the Cooperative Cyber Defence Centre of Excellence in Estonia.
However, the alliance is only as strong as its weakest link. It is not enough for us to pull out all the stops; we need other nations to up their game. We agree with President Trump and General Mattis that it is time for the allies to pay their way. US taxpayers cannot subsidise European defence. Currently, 19 of the 28 EU member states are failing to spend 1.5% of GDP on defence. Five—by no means the poorest five—do not even spend 1%. It is salutary to think that, after we leave, EU countries will pay only 20% of NATO’s bills.
NATO adaptation also goes beyond money. We need the alliance to streamline its political and governance structures to make faster decisions, just as we need it to take a 360 degree view, offering total security against threats both from the east and the south.
The UK is also looking to develop combined military formations with like-minded allies that complement NATO. Our joint expeditionary task force working with our northern European partners—Denmark, Estonia, Latvia, Lithuania, the Netherlands and Norway —gives us greater speed and flexibility to respond to crises. At the same time, we are strengthening our ties with our closest allies such as the US, France and Germany. Together we are building a tapestry of capability to tailor our response to any threat. With France, besides creating a combined joint expeditionary force, we are co-operating on future combat air systems, which will give us the most advanced unmanned combat air system in Europe.
No one would deny that the international environment is becoming more challenging, that the dangers are increasing daily and that we need to do more. In fact, the great advantage of debates such as this is that we have the chance to listen and learn from the opinion of our finest military minds and thereby become even stronger.
All that said, I believe SDSR 2015 has put us in a better position to deal with the unexpected. The UK is investing more, integrating more and doing more to work internationally. The future remains uncertain but we are now on a more secure path towards peace and prosperity. I beg to move.
Lord Touhig (Lab)
My Lords, the House will note that I am not my noble friend Lord Rosser. I apologise at the outset for my part in any confusion caused to the very excellent staff who drew up the speakers list. The House will not be denied my noble friend’s comments; he will speak at the end of the debate.
Seventy years ago last month, on 24 February 1947, the British ambassador to Washington was instructed by Labour Foreign Secretary Ernest Bevin to deliver a memorandum to George Marshall, the American Secretary of State. The memorandum made it clear that Britain’s economic position would no longer allow her to continue as the reservoir of financial military support to Greece and Turkey. The shockwaves it produced throughout the Truman Administration were just what Bevin wanted. He believed that, following the end of the Second World War, the United States was in Europe but not yet of it in defence terms. His memorandum forced the US Government to take a decision that they had been unwilling to make up to that time. It led to the creation of NATO, and it was a Labour Foreign Secretary who was the midwife at that birth.
Moreover, it was also Bevin who conspired with Prime Minister Clem Attlee to create Britain’s independent nuclear deterrent, against opposition from some hard-left members of the Labour Party—alas, so far as our nuclear deterrent is concerned, some things never change. The decision was taken in secret by a small Cabinet committee. Arguing that Britain should have the atomic bomb, Bevin told the committee:
“We’ve got to have this thing over here, whatever it costs. We’ve got to have the bloody Union Jack on top of it”.
Labour has always had a proud record on defence when in government. Indeed, the Defence Secretary, Michael Fallon, told The House magazine last year:
“It was the Labour Party that gave us the two most important pieces of our defence architecture today—NATO and our independent nuclear deterrent. It was the Labour Government who committed to the 2% and the Labour Government who was the founding member of NATO—every time Labour has been in Government they have taken a responsible view of defence”.
Labour in government has committed resources to the defence of Britain, which this Government have failed to do. In particular, we spent on average 2.3% of GDP when we were in office. The present Government have failed to match this, preferring instead to use creative accounting to massage the figures by including some £1 billion of pensions in the 2%. Will the Minister’s Government match my Government in this? As we urge other NATO states to spend 2%, we would have more credibility if we were genuinely spending that amount ourselves.
The SDSR 2010 was the most misnamed of government publications. In the foreword, David Cameron and Nick Clegg wrote about bringing the defence budget into balance. They meant cuts. They offered a sop by saying that defence and security would contribute to the deficit reduction on a lower scale than other departments. That document was not about our strategic defence and security; it was about cutting back on defence spending. It was a document promoted not by the Ministry of Defence but by the Treasury. It talked of reconfiguring our Armed Forces. Having worked for some time as Gordon Brown’s PPS, I know that is Treasury-speak for cuts.
Today our Army is smaller than the one we put in the field against Napoleon. The latest figures show an Army of just 75,840 personnel. The Royal Navy is reduced to 19 ships, of which six have propulsion problems and two are laid up in Portsmouth because they are short of crew as a result of spending cuts. On top of this, we have no aircraft carriers. I look forward to the Government’s response to the National Audit Office report published last week on the carriers. We have no marine patrol aircraft and there are currently only seven RAF fighter squadrons. Two of these exist only because the life of the Typhoon has been extended until 2040.
There is an overdependence on recruiting reservists. Despite millions of pounds spent on recruitment, targets for all three services have been missed. Morale is poor. Some 54% of service personnel are dissatisfied with service life. The most valuable asset that Britain’s Armed Forces have are the men and women who serve. They have had their pay frozen and their pensions reduced, and their accommodation is in need of major investment. According to the 2016 continuous attitude survey, almost half believe that the quality of their accommodation has fallen. The Armed Forces’ Pay Review Body has revealed that almost every group spoken to believed that their pay increases were unreasonable. The 2016 survey revealed that only one in three of our Armed Forces personnel believed they were valued and just one in three planned to stay as long as they possibly could.
The failings I have identified are not the responsibility of our Armed Forces, but the consequence of government policy of cuts, mismanagement and poor forecasting. Concern at the state of our Armed Forces is not the exclusive interest of this side of the House. In recent debates, Conservative, Liberal Democrat and Cross-Bench Peers have expressed their concerns.
While continuing my criticism of the Government, I want to say that the whole House values the work of the noble Earl who has constantly demonstrated his commitment to the well-being of our Armed Forces. He comes to the Dispatch Box time and again, often to defend the indefensible, which he does with such great style that he is almost convincing. Those of us who are the Government’s critics in this House have nothing but admiration for him personally and value the fact that he listens and responds. For this, we are all grateful.
The SDSR 2015 was a missed opportunity. It failed to give a vision of the future which could have given us confidence that the Government were tackling the problems that they had created in 2010. There is a strong case for revisiting SDSR 2015. A revised SDSR would afford the opportunity to look afresh at Britain’s position in the world. We, on this side, happen to believe that defence and foreign policy are two sides of the same coin. The SDSR 2015 should have been based on our key foreign policy objectives. It was not. These are bound to be revised now, as a result of Brexit, and this will impact on defence. If the Government shared that view, we would not have the Foreign Secretary going around the Middle East proclaiming:
“Britain is back East of Suez”,
and even announcing a military spend of £3 billion over the next 10 years—all before the Ministry of Defence has published its Gulf strategy.
We cannot have major foreign and defence policy decisions made on the wing. Of course we have a role to play in the Middle East, but we have interests in the Far East and around the globe. We are a maritime trading nation. Keeping open the world’s shipping lanes and being able to protect and defend our global interests are essential. We are—and remain—a world power, one with a nuclear capability available to deter and protect. If we have clear foreign policy objectives, linked to defence, we can answer the question: what do we want our Armed Forces to be capable of doing? It is not rocket science. It is about asking the basic, obvious questions about what we want from our Armed Forces.
My noble friend Lord Robertson of Port Ellen most skilfully set out how such tasks could be approached. In a speech in 2015 about the NATO objective of spending 2% on defence, he said that,
“the 2% only makes sense if it is spent on the right things—deployable troops, precision weapons, logistics and specialist people”.
This simple and basic approach sums up what needs to be done. The SDSR 2015 could have set out those objectives clearly, made provision for the resourcing and funding and included the defence-industrial strategy. Perhaps I may commend this booklet, A Benefit, Not a Burden, which clearly sets out the case for the strategic value of Britain having a defence-industrial strategy. I am grateful to the noble Lord, Lord Sterling, for drawing my attention to it. In this debate, I look forward to listening to and learning from the noble Lord, Lord Levene, whom I suspect might have a different view.
We face challenges not known by previous generations. Challenges posed by cyber have the capacity to change warfare into something we have never known or imagined. The Government are right to invest in cyber, but we must be willing to use it in an offensive, as well as defensive, mode if we are determined to deter. The other threat is from terrorist groups such as ISIL, which would turn high streets anywhere into a war zone. Some of the most evil and barbaric acts witnessed by humanity have been carried out by religious extremists who are in fact betraying the beauty of their faith.
We face a resurgent Russia, which has spent billions modernising its forces. We face an economically ambitious China, making dubious territorial claims in the South China Sea and increasing defence spending, and we face the evil regime in North Korea, which enslaves its people and threatens the peace of the region. We face the crisis of failed states such as Libya and Syria and the awful consequences of civil war, which has forced millions to flee and try to get to Europe.
NATO remains the bedrock of our defence, and I hope that at the May summit, Britain will make it clear to President Trump that, while we agree with him that all states should spend 2% of GDP on defence, NATO is not obsolete, irrelevant or out of date, as he said during his election campaign.
The first duty of the British Government is the care and welfare of our people, and at the heart of that is our defence. For that reason, we have no hesitation today in supporting the Armed Forces Act (Continuation) Order, to which the noble Earl referred in opening the debate.
Coming full circle, I return to Ernest Bevin. His shock tactics led to the creation of NATO, but it also led directly to the Truman doctrine of 12 March 1947. For me, the most powerful part of the President’s statement remains true today. He said that,
“totalitarian regimes imposed on free peoples, by direct or indirect aggression, undermine the foundation of international peace”.
The world is no safer today than it was in 1947, and we must therefore be ever vigilant.
Lord Wallace of Saltaire (LD)
My Lords, I think we all accept that we have moved on from the apparently benign international context of the post-Cold War years to a much more unstable international order in which the advanced democracies of western Europe and North America can no longer set the rules without carrying with them the rising Asian powers. Multilateral co-operation with like-minded Governments who share our values has been among the most important levers of British foreign policy since the Second World War—through NATO since 1949 and through the European Union since 1973. It has been a force multiplier and an influence multiplier in international institutions and in negotiations such as the six-power nuclear negotiation with Iran. We will need to work more closely with others as we face this global shift in power.
The most significant change in the UK’s international environment since the publication of the 2015 strategic defence and security review has been the defection of the United States from its position as promoter and protector of the rules-based international order, to which the Motion refers. We do not yet know what the Trump Administration’s foreign policy will become or exactly their approach to NATO and their European partners, but we have seen enough to know that Trump will put America first, as he promised throughout his campaign, and pay less attention to international order and North Atlantic security, and that Britain cannot expect any greater favours than such other close US partners as Canada, Mexico, Germany or Japan.
I want to focus on the future relationship between Britain and our other long-standing allies and partners with whom we share values in promoting and protecting the rules-based international order: our European NATO allies, which are also, with the exception of Iceland, Norway and Turkey, our partners in the European Union.
Successive Governments have kept from the public and the media how close and effective our security and defence co-operation with our European neighbours has become. Tony Blair signed a bilateral treaty on defence co-operation with France in 1998, to add to our existing collaboration with the Netherlands and Belgium, the most long-standing example of which being the British-Dutch marine amphibious force. His Government, with the then George Robertson—later NATO Secretary-General and now the noble Lord, Lord Robertson—as Secretary of State for Defence, attempted to widen this into a network of European defence partnerships. He recognised that the UK could no longer afford to procure a full spectrum of military capabilities under UK sovereign control and that it therefore made sense to share capabilities to meet shared threats. But when the Daily Mail dubbed this initiative “the European Army”, he backed off and went quiet. Co-operation continued to strengthen but Ministers said as little as possible about it.
When the Conservatives came to power in coalition in 2010, they fought with their Liberal Democrat partners to keep from the public this pattern of undeclared co-operation. Liam Fox, then Secretary of State for Defence, signed a new and closer defence co-operation agreement with France but told the official responsible for UK-French co-operation that he would do his best to keep it out of the newspapers. Since then I have read about major UK-French exercises in the French press, but rarely in the British. I have been told of the exchange programmes under which British pilots fly French military aircraft and that one interception of a Russian plane not far from UK airspace was made by a French pilot in an RAF fighter. But nobody told the Daily Mail, of course.
The level of ignorance within the Conservative Party about the extent of European defence co-operation was and is astonishing. I recall a meeting in Whitehall in which a serving Minister repeated the common prejudice about the uselessness of the Belgians, to be asked by officials whether he was unaware that the strike in Libya which had just knocked out Colonel Gaddafi had been a joint British-Belgian mission. Since the 2015 election, the latest SDSR has spelled out for those willing to read as far as chapter 5 the importance of our links with France, Germany, Italy and the Nordic and Baltic states, both through NATO and through the European Union which, it reminds us in paragraph 5.41,
“has a range of capabilities that can be complementary to those of NATO”.
It goes on to say:
“We will ... continue to foster closer coordination and cooperation between the EU and other institutions, principally NATO, in ways which support our national priorities and build Euro-Atlantic security”.
This underpublicised admission of the extent of our security interdependence with our neighbours did not prevent the leave campaign from repeatedly insisting that the European Union has no security role or value, and no relevance to NATO. When the noble Lord, Lord Forsyth, repeated this piece of fake news in a debate in this Chamber I gave him a copy of the 2015 SDSR, with chapter 5 carefully annotated; he seemed genuinely surprised to read what it said. I made some effort when in government to persuade Conservative colleagues to give more publicity to the impressive UK-led EU operational headquarters for Operation Atalanta, the anti-piracy mission off Somalia, based at Joint Forces HQ Northwood. Conservative colleagues agreed to invite ambassadors from other EU states to visit, and I understand that a number of Conservative MPs were also invited, but the press was kept well away. The same happened with the Review of the Balance of Competences between the United Kingdom and the European Union Foreign Policy, which stated in its executive summary that “the key benefits” of common action to the UK,
“included: increased impact from acting in concert with 27 other countries; greater influence with non-EU powers, derived from our position as a leading EU country”,
and,
“the range and versatility of the EU’s tools, as compared with other international organisations”.
But again, No. 10 delayed publication until the day after Parliament rose for the Summer Recess, and allowed David Lidington and me to brief EU ambassadors but not the domestic media.
Yesterday several newspapers carried the story that the Prime Minister is now seeking a defence pact with Germany. No mention that we already have one with France, I noted: the Government still seem unwilling to admit how close our security and defence co-operation with our neighbours has become. The Government, from the Prime Minister downwards, endlessly repeat the empty phrase, “We may be leaving the EU, but we are not leaving Europe”, with the implication that it will be in the defence and security sphere that we will remain engaged as we cast all economic integration away.
So can the Minister tell us what sort of defence pact is now planned with Germany? Will it be modelled on the treaty with France? Do we plan any other bilateral treaties of this sort—for example, with the Netherlands, Spain or Italy, or with the Nordic states, which are very grateful for the co-operation that the British quietly gave them in increasing their own multilateral integration? Or do we even consider a network of arrangements that might become in time a multilateral organisation—a sort of revived Western European Union of blessed memory?
Does this announcement mean that security in Europe and around its neighbourhood remains the first priority for UK defence, in contradiction to Boris Johnson’s promise that British forces are going to sail off again east of Suez to defend India and confront China? Do we intend to remain a member of the EU caucus within the United Nations and other international organisations, if it is possible to negotiate that? Are the Government willing to face down the hostility of the Europhobes within their party to any continuing links of this sort with our continental neighbours? Unless the Government are willing to reassert our commitment to continuing European co-operation in foreign policy, security and defence, clearly and publicly, our ability to meet the current challenges to the rules-based international order, severe as they are, will be sadly diminished.
Lord Stirrup (CB)
My Lords, this important debate comes at a crucial time for our country and I am grateful to the Government for making space for it in the timetable. We will shortly be immersed in the considerable legislative agenda attendant upon Brexit and then there will probably be little time for anything else. Yet while we are devoting our attention to the Brexit trees, it would be very dangerous for us to lose sight of the whole wood. Much of our attention over the next two years will understandably be taken up with economic and trade concerns. Yet we stand at a time when our underpinning assumptions about the world in which we live, and in which we will need to trade and carry on business more widely, are threatened in a way that we have not seen for decades.
Over the past three years we have been commemorating various centenaries connected with the First World War, and the Government are now thinking about the appropriate way to mark the end of major European hostilities in 1918. In doing so it will be important to reflect on the fact that the war was a strategic failure for the supposed victors. This was not because of events on the numerous, blood-soaked battlefields, but because the politicians of the day were unable to create a lasting political settlement. The treatment of Germany, the retreat of the United States into its more traditional isolationism, and other such misjudgements, set us on the path to the Second World War and another 60 million deaths.
This is in contrast to the situation after 1945. The sustained engagement of the United States in setting up and supporting international institutions, the reduction in barriers to trade, the economic and political resurrection of Germany, and even the sense of collective endeavour in containing the Soviet Union all contributed to the development of stability and prosperity. Yet that post-war order, which most of us in your Lordships’ House have taken for granted for most of our lives, is being shaken. The foundations have not yet been destroyed, but the building is at serious risk. The threatened—and, to some extent, actual—retreat of the United States from a position of leadership in the wider world, the rise of nasty nationalism and xenophobia in many countries, the growing popularity of beggar-my-neighbour trade policies and the pursuit of amoral opportunism, particularly by Russia, have all left Europe in a state of insecurity that some had rather naively hoped we would never see again.
Further afield, the increasing muscularity of China’s policy in the Asia-Pacific region risks miscalculation and conflict with its neighbours. Above all, North Korea’s almost ineluctable progress towards a nuclear-armed ballistic missile capable of reaching Hawaii and Alaska poses a challenge that no US President could ignore. Some people believe that these problems are remote from the UK and should not concern us directly. They are wrong. War in the Asia-Pacific region would have serious and possibly disastrous consequences for us all, and we must take the danger seriously. Within that wider context, we have a continuing threat to our security from extremist Islamic terrorist groups, and a whole new dimension of conflict within cyberspace. Economic, resource and population pressures are all contributing to increasing levels of instability in many parts of the world, and mass movements of people seem likely to be a feature of the international scene for some time to come; indeed, they could well become worse. I could go on, but I have already depressed myself enough.
Of course, the world is not all bad. There are developments that give one cause for hope and some problems that we once thought intractable have succumbed to patient persistence. But what worries me most about the current situation is not simply the scale and nature of the individual challenges—it is the evident weakening of our will to combat them vigorously and collectively. For us, in Europe, the bedrock of such an approach has long been our commitment to NATO. Those who talk about the alliance becoming irrelevant must ask themselves what sort of collective security arrangement might replace it. Certainly, it will not be the EU. In fact, there is no substitute for NATO—at least, not in the near future. Our first response to the challenges of the turbulent present must, therefore, be to ensure the solidarity and capability of the alliance.
NATO’s responses to the challenges posed by Russia’s actions over the past few years have been rather slow, although they go in the right direction, and the strengthening determination to stand behind Article 5 is reassuring. To be successful, NATO needs the wholehearted involvement of the United States, and we cannot take that for granted. President Trump’s demands for European nations to spend more on defence are neither new nor wrong. Germany does not, as he claims, “owe” money to NATO, nor should the United States be “paid” for the large contribution it makes to the security of Germany—not least because it does so to safeguard its own security. However, Germany owes it to itself, and to Europe as a whole, to spend at least the NATO minimum of 2% of GDP on defence. Others also need to do more, but Germany’s example in this regard is crucial. I therefore welcome Chancellor Merkel’s commitment to increase spending to that level.
However, we need to be clear about the significance of the 2% figure. It is a bare minimum, designed to provide a clear baseline against which one can measure delinquency. It is not like some fundraising target, which we should celebrate reaching. I say to the noble Lord, Lord Touhig, that while he is right to question what lies beneath our own figures, the present Government are far from the only ones to have used creative accounting when it comes to defence expenditure.
In any event, the UK’s commitment to the 2% floor merely raises us above the level of those who should be named and shamed; it does not imply an adequate level of investment in our future security. Indeed, I argue that our public expenditure on security remains woefully inadequate in light of the present challenges to international order. We undoubtedly have first-class military capabilities, as the Minister has said, but we do not have enough of them. Our ships, ground combat formations, aircraft and people are spread too thin, and it is obvious that financial pressures within the MoD are mounting. We ought to be spending more like 3% of GDP on defence, not just the minimum of 2%. We also need greater investment in diplomacy and in other elements of soft power. There will always be arguments about how the money should be spent: about the balance between platforms, weapons, people and new capabilities—such as unmanned vehicles and cyberwarfare. But when such arguments are about the division of an already inadequate cake, they rather miss the point.
The mantra of the moment seems to be about taking back control. With control comes responsibility, and with responsibility comes the duty to will the means as well as willing the ends. Successive Governments have paid lip service to the fact that preserving the safety and security of their citizens is their first priority, but their actions—particularly their spending decisions—have said otherwise. The Minister has pointed to all that the present Government are currently doing in this regard, and I acknowledge that they have at least reversed the miserable downward trend of investment in recent years. They have made a start, but they must do more. We cannot provide all the resources necessary to tackle such a dangerous world ourselves, but we can—and should—set the example for others. It is clearly in our interest to do so.
If we are to be a great global trading nation we shall require a reasonable degree of stability and predictability in the world. Without that, not only our security but also our prosperity will be at risk. Perhaps, as we approach Brexit, it is time to remember, with Thucydides,
“that prosperity can be only for the free, that freedom is the sure possession of those alone who have the courage to defend it”.
I hope that the Government will find the courage to make that defence a financial practicality.
The Lord Bishop of Leeds
My Lords, I hesitate to follow such eloquent speeches on so much detail, but I want to make one or two general points about a more specific area. I do so from an interest that began when I was a Soviet specialist at GCHQ in a previous incarnation, although I realise that that is probably not the right religious phrase to use.
It still seems to me that an SDSR should enable us to be flexible enough to cope with whatever changes are likely to come. My fear, which I have expressed in the House before, remains that in 15 to 20 years’ time we may end up with a force that meets the demands of now but perhaps not the demands of the situation 15 or 20 years down the line because the world changes so much. When I left GCHQ, the Soviet Union was intact, and we see what has changed since then. Therefore, I want to focus on Russia in particular.
It seems pretty obvious that one of Russia’s tactics at the moment, either deliberate or incidental, is to divide the allies one from another—and it seems to be quite effective in that at the moment—enabling the threat against Russia to be diminished, at least in its mind. When we talk about,
“challenges to the international rules-based order”—
the words of the Motion—this begs the question of whose rules. There always are rules, but the question is whose rules they are, on what basis and criteria they are agreed and who adheres to them. What happens if countries decide to change the rules and operate in a different way, which is clearly what is going on at the moment?
Two things that characterise Russia are not only pride and the nature of glory—and there is much more that could be said about that—but the fact that Russians identify themselves through their suffering, which is why I am still a little suspicious of the assumption that the application of greater and greater sanctions will have a big impact. That might be the case in the material West but I think that in Russia a different narrative is running.
How do we look through the eyes of Russia, for example, in determining our response to how we shape our forces for the future? I draw your Lordships’ attention to an article by Richard Sokolsky from the Carnegie Endowment for International Peace, entitled The New NATO-Russia Military Balance: Implications for European Security. I found this one of the most easily understood and probably most helpful and accurate surveys of the situation at the moment, drawing attention to the political and military challenges or perspectives that we face. One point that he makes is that it is incumbent on NATO to draw clear lines if we are to maintain an international rules-based order. For example, when the INF treaty is violated by Russia, even if we think it will not go back on it, we should at least make it clear that that is a violation of rules—a transgression over lines that have previously been drawn in the sand—and perhaps attention should be drawn to that a little more loudly.
The other point that he goes on to make is the importance of keeping dialogue with Russia open, including through back-door diplomacy, and this could be extrapolated to other contexts. When the divisions are increasing in the foreground, how do we maintain those perhaps unofficial back-door routes where the conversation can keep going? If we are to maintain a situation where the same rules can be adhered to whatever the change in circumstances, that conversation will be essential.
I end, noble Lords will be glad to hear, largely where I began. How do we enable our forces to have the confidence that they are being set up to exercise power in a changing environment that has already changed from the assumptions that were set out when the SDSR of 2015 was established? That is where the challenge lies as we pay attention to some of the dynamics of relations with countries such as Russia.
Lord King of Bridgwater (Con)
My Lords, the right reverend Prelate ended on a challenging question, which relates to the success in recruitment that may be essential to underpin the programme that the Government have before them. I start by echoing the tribute that the noble Lord, Lord Touhig, paid to my noble friend Lord Howe for the way in which he conducts defence matters. I shall also, if I may, pay tribute to the noble Lord himself, for the very constructive and serious way in which he speaks from the Opposition Front Bench on defence matters, which I think the whole House appreciates.
Noble Lords, including my noble friend in his introduction, have already said—and I agree with them—that this is the most unstable world that we have seen since the Second World War. The threats are greater. I notice the changes since my time in office and in defence. We never had global Islamic extremism, which is a completely new variety of terrorism of a particularly nasty and dangerous kind. Now we never know where the next terrorist outrage in support of Islamic extremism will be—whether in Australia, Brussels or New York. The range of this is challenging and extremely difficult.
The range of problems is much greater than I remember in my time. The population explosion in the world undoubtedly underpins some of the mass migration of people; I have referred to this in an earlier speech. I remember my noble friend Lord Hague saying that although we may look at what is happening at the moment and think that this may be near the end, it may be just the beginning of the problems of migration—underpinned in part by climate change, which does not make things easier.
We can add to that the extraordinary complications of the internet and cyber, and the whole new dimension that they have introduced, including social media, which underpin much of the communication of terrorist activities in a way that we still have not suitably mastered. These are all new. Then there is the total chaos of Syria, the situations in Iraq, in Libya, in Yemen—and in Afghanistan, I believe, at the moment—and in North Korea, including its possibly aggressive activities. To pick up a phrase from the noble and gallant Lord, Lord Stirrup, I must not get too depressed about this—but it seems to me that it is all leading to a lack of confidence in the West. That has undoubtedly been made worse by Brexit, which, whatever its outcome may be, introduces instant uncertainty into the world at present.
There are also uncertain signals coming out of Washington, which I hope, with the help of General Mattis, may become more reassuring shortly, to the effect that America is soundly in support of NATO, notwithstanding the absolutely justifiable request by President Trump that the other members of NATO, including the European members, make their proper contribution.
The other danger that I see is the re-emergence of Russia as it tries to reassert itself after the humiliation of the collapse of the Soviet Union. I was briefly Secretary of State for Defence, yet in my time I moved from recognising a President of the Soviet Union—President Gorbachev—and a Berlin Wall, to, before the end of my time in office, welcoming President Yeltsin of Russia, the whole Russian Soviet empire having collapsed. We all know that part of President Putin’s appeal to his own people is the fact that he is creating a sense that Russia matters again in the world. Russia was once a superpower, and he is determined to have it recognised as such again. We have to learn how to deal with that. It poses major challenges to the West. We are moving into Estonia. We are waving a big flag called Article 5, as our 800 troops and those from the other contributing countries make the front line of NATO.
We are just in the process of commemorating the First World War and the various years of it. Any of us who have been involved in studying it, and the Second World War, will realise how tragedies and terrible wars occurred because people did not believe treaty obligations and had not properly understood the responsibility they had. That was certainly true in the First World War for undertakings of that kind to Belgium under treaty, and in the Second World War for undertakings to Poland, both of which were dismissed by potential adversaries because we perhaps would not really be prepared to stand over them.
I do not want to depress the House too much, but we have a very similar situation now in which the humiliation and collapse of the Soviet Union has left pockets of Russian citizens in various territories. We saw what their activities were in Ukraine, when they were positively begging President Putin to get involved, and you can see their presence in the Baltic states, where they represent about 25% of the population. They were abandoned in the collapse of the Soviet Union and have been left there. If they seek to stir up grievances in those areas, handling that could pose a major challenge. That is part of the dangerous situation that we have.
The Prime Minister, in her speech to the Republican gathering in Philadelphia, referred to the phrase that President Reagan coined to describe his approach to President Gorbachev: “trust but verify”. Prime Minister May said that her approach to President Putin is “engage but beware”. I am not sure whether she said “beware”, or whether that was a misprint and she said “be wary”, but that is how it came out.
We have to look at the situations that we face. Others have referred to China. How ready are we to cope with this situation? I worry that we are not very well prepared or ready. I am not going to say a word about the naval programme, because the noble Lord, Lord West, is about to follow me and he will cover that in some detail. However, I will be very interested to see what an old friend of mine from Northern Ireland, Sir John Parker, and his national shipbuilding strategy will produce. I understand that that is coming out in spring 2017. Today is the second day of spring, but I do not know whether we can expect an early delivery of the strategy. Looking at the naval programme and whether we will be ready for anybody by 2025—although according to the latest report from the Defence Committee, that might even be a bit late—I worry about the very lumpy programme we have got involved in and whether it has the flexibility that we need.
When I was Defence Secretary, I was privileged to have responsibility for considerably larger Army numbers than we have now. I see the challenge that numbers represent at a time of austerity and difficulties in recruitment. However, I think that we need everyone we have got, and we probably need more. It underlines the importance of working with allies if we do not have the resources that we might like for everything. I say to the noble Lord, Lord Wallace, that I do not regard Brexit as a reason to stop work on the common security and defence policy. I see every reason why we should continue in the work we are doing against piracy and on helping refugees in the Mediterranean. There is no reason why we should not also lead some projects, which is a role we could well play.
The other critical issue is the difficulties we face in looking after NATO. We have to make sure that the US stays firmly committed and that our European allies keep their contributions up.
There are other issues that I think are even more essential because of the present difficulties. One of the things that has kept us ahead so many times in the difficult and dangerous world we are in is our skill in intelligence. Intelligence co-operation with the United States is vital. Everybody is familiar with the “Five Eyes” partnership. We have a very high standard on that and we must ensure that it is not undermined any more than it has been—partly by Mr Snowden, and with the situation not helped by the recent row in the United States. Other issues are cyber defence and the Prevent programme at home against terrorism. Lastly, and most importantly to avoid military activity, is soft power. I worry whether the Foreign Office is sufficiently resourced in the light of the difficult problems it faces and now has to take on, as its role in Brexit and thereafter is crucial. It is important not only for our relations with other countries but for the defence of our own country.
Lord West of Spithead (Lab)
My Lords, I thank the Government for the opportunity for this debate, which is extremely timely. Indeed, there is so much going on at the moment that our nation and the Government seem to have lost sight of the growing threats to our security and, in the worst case, our very existence.
I draw noble Lords’ attention to my speech in the defence debate on 12 January when I articulated the perfect storm of threats and uncertainties threatening global security. I spoke in some detail of Russia, the Middle East and the countries there, terrorism, Afghanistan, Pakistan, North Korea, China and cyberthreats. Today, I am sure that many noble Lords will talk about the significance of cyber in all of our considerations. As the country’s first ever cybersecurity Minister who produced the nation’s first cybersecurity policy, I am well aware of that threat. However, I reiterate what I said in the last defence debate: spending on cybercapability is not an alternative to conventional defence spending, as some, particularly the Treasury, seem to think. It is necessary spending, but it is additional.
We are entering a hypercompetitive age in which illiberal power is growing and liberal power declining. It is a world made dangerous by Europe’s retreat from power and its wilful refusal until recently to invest in power. There are real dangers of an even more chaotic and highly dangerous world developing over the next decades, not least within the context of possibly irreversible climate change and an ever-increasing competition for resources of all kinds amidst a rapidly expanding world population. That population pressure is enormous and worrying. The dramatic rise in the numbers of migrants fleeing either war and persecution or economic hardship are a stark reflection of this.
Recent events have shown that the late 20th-century consensus that rested on the perception that the international system benefited both the US and global interests seems to be breaking down. We cannot be sure how much longer the US will be willing or able to bear the burdens of being the protector of last resort for the free world and will remain the ultimate guarantor of a rules-based international system. Nor can we assume that the idea of a multilateral rules-based world for diplomacy and economics will necessarily survive the population and resource pressures of the early decades of the 21st century. Our human record in circumstances of intense competition across all dimensions has not been good. Robust defence forces may prevent, contain or mitigate the consequences of a uniquely threatening combination of global and strategic risks.
Our nation, despite what the chattering classes may say, unlike most countries in Europe is a global power, and global stability is crucial to the wealth and security of our nation. Brexit, if anything, reinforces that fact. Our soft power, with the all-pervasive English language, the fact that the financial hub of London sits on the Greenwich meridian, the best universities in the world, the BBC World Service, a globally admired legal system and so on has great leverage—but, in many situations, it is as nothing without hard power to back it up.
In the face of the threats we face, what have the Government done? They have shown staggering complacency and self-delusion when it is quite clear to experts and laymen that defence needs more resources. When in coalition they reduced our military capability by 30% and our forces remain underfunded. Despite what the Defence Secretary says, there is minimal new money. It is, in theory, being produced by efficiencies. The HCDC has pointed out the creative accounting in the 2% figure, which has been mentioned by other speakers, for spending on defence. Spending on pensions does not win wars, and the 2% of GDP is not a target but the very minimum that any NATO nation should spend. Our nation should spend more.
Others will speak about lack of Army numbers and the inability to generate a fighting division in a meaningful timescale, but I, as the noble Lord, Lord King, spotted, will focus on maritime, which I believe is crucial for global reach and stability, as well as the protection of our shipping and dependencies. The Defence Secretary himself called this year the Year of the Navy. The simple fact is that the Royal Navy has too few ships to do what the nation expects of it. It has been underfunded against its core programme by £250 million a year for the last three years. That is three-quarters of a billion pounds. It also took a forced reduction of 4,000 men in the dreadful 2010 SDSR, recovering only 400 in SDSR 2015. We must fully fund an uplift of people for the Navy, I believe by around 3,000 people, and we need to put that in the programme and ensure that we recruit to it. The combined effect of a lack of funding and lack of people, particularly engineers, is having a profound impact on our nation’s maritime capability.
Before looking at the Navy in more detail, it is worth reflecting on the very real problems that exist in our procurement world—although I know that the Government are trying to tackle those. Indeed, there are some interesting articles in the House magazine this week—I wrote one myself but there are some from other contributors as well—on this specific subject. Moving back to the Navy, the decision to proceed with the Successor programme is fundamental to the ultimate security of our nation and I compliment the Government on the fact that we are proceeding with it. However, Trident is not a war-fighting weapon. I remain convinced that the capital costs of the Vanguard replacement submarines should fall outside the defence vote and come from Treasury contingency funds. Such a move would remove the yawning cash black hole that is appearing in our defence programme.
Two new Queen Elizabeth-class aircraft carriers are being built and again I must congratulate the Government on recognising their importance. The future carrier battle group is the only conventional asset our nation will possess that has global strategic significance, and the US cannot wait for them to be operational. But it appears that there are problems. There seems to be no certainty about when sea trials will commence and there is a lack of transparency over whether the delay is being caused by a major technical problem or just the sort of snags one would expect from a highly complex programme of this type. Perhaps the noble Earl could update us on where the programme stands. The build-up of the Sea Lightning squadrons is crucial, as is the operational availability of the Crowsnest early warning system and the new solid support ships. When will all this come together to allow us to deploy a fully functioning carrier battle group? Perhaps the noble Earl could tell us when we will be able to do that with our own resources.
A carrier battle group, if facing a peer threat, needs a nuclear attack submarine, two Type 45 destroyers and two to three Type 26 frigates in company. At present our great maritime nation with its huge maritime history has in effect only 11 escorts fully capable of operations. When I joined the Navy it was 110. Today we have 19 altogether in our order of battle, which is a national disgrace—something I have said before. If five of the 19 are needed for the battle group, 14 are left to provide presence and stability in the south Atlantic, around the UK, around the Horn of Africa, in the Gulf, in the Mediterranean and the Far East. To provide one ship on task you need three, so simple arithmetic shows that we need 30, not 19—and there is no allowance in that for attrition.
In the Falklands we lost four escorts and 12 were badly damaged. When you fight, you have attrition. Delays in ordering the Type 26 frigate have resulted in cost rises and the initial plan to build 13 has been cut to eight. The much-vaunted Type 31 frigate is still a doodle on the drawing board and we await the much-heralded shipbuilding strategy with interest. It is difficult to see how the present Type 23s will be replaced one for one on their present planned disposal dates. Perhaps the Minister will let us know when we need to start cutting steel on the Type 31 frigates that will replace the last of the Type 23s.
Our amphibious force is about to take a major hit. Manpower and funding problems in the Navy have led to the decision to pay off HMS “Ocean” after a £65 million refit to run her on until 2025. The Government appear to be most complacent and have said that “Ocean’s” capability will be provided by other shipping. This is rubbish. I have commanded task groups and amphibious assault groups, and it is clear and well known that the only way of providing simultaneous two-company lift is to have a large deck with at least six spots that can be operated simultaneously and a hangar that can carry up to 12 or 14 helicopters. Anything else will not achieve it, and that amphibious capability is clearly laid out clearly in our doctrine. So we will lose our full amphibious capability until the “Prince of Wales” starts operating in the mid-2020s. I beg the noble Earl, as I have done before, in this highly dangerous world, the most chaotic I have known in my 50 years on the active list, to put “Ocean” in reserve in the way we are doing with “Bulwark”, so that if there is a crisis we can pull her out and use her.
Delays in ordering Type 26s have led to the ordering of extra, highly overpriced offshore patrol vessels to fill the Clyde yard—but any ship is of value and has utility. Hence I find the decision to pay off the relatively youthful batch 1 River class offshore patrol vessels, which are between 11 and 15 years old, slightly strange.
It is quite clear that there are insufficient maritime assets to ensure the security of UK inshore waters, particularly post Brexit, and there is a need for an urgent study into what craft are available, how many we need, and how command and control are to be executed and by whom. There may be a role for the RNR and batch 1 OPVs in this. Will a study be undertaken to look at this yawning gap in our nation’s maritime border security? Having robust defence forces makes a war involving our nation less likely. If Ministers get defence wrong, the nation will never forgive them. The costs in blood and treasure are enormous. It can be argued that the planned saving of £16 million by getting rid of HMS “Endurance” precipitated the Falklands War, at a final cost of 300 lives and £6.5 billion. The Government have a choice in whether to spend what is required to ensure the safety of our nation, dependencies and people, or not. At present, I believe that they are getting the choice wrong.
Lord Hennessy of Nympsfield (CB)
My Lords, I declare my membership of the Chief of the Defence Staff’s strategic advisory panel and of the Foreign and Commonwealth Office’s diplomatic excellence external panel, and that I shall shortly become, at an advanced age, an honorary captain in the Royal Naval Reserve.
In the life of a nation, it falls to certain generations to undertake a rethink of their country’s place in the world, its means of defence, its instruments for projecting international influence, the limits as well as the possibilities of what it can sensibly seek to do and the states of mind needed to reconcile aspiration and reality. The outcome of last June’s referendum on our membership of the European Union requires us to be just such a generation —a generation that truly rises to the level of events.
The multiple resetting of our national and international dials, the plethora of overlapping uncertainties, is, I think, creating a growing and unsettling realisation that, for probably a decade to come, we will be a destabiliser nation in the world. It is a condition we can scarce forbear to recognise in ourselves, for it cuts deeply against the grain of how we have imagined ourselves in the past, as a nation that strives to bring stability to others and tries to turn down the heat and to lower the noise in international affairs. But cut against that comforting grain it does.
In view of this, I should like to make the case this afternoon for taking a long, hard look at ourselves in a way that goes beyond the scope of our five-yearly cycles of strategic defence and security reviews. The model I have in mind is the Future Policy Study, part of a series of post-Suez rethinks that Harold Macmillan commissioned. He established the Future Policy Study in 1959 and tasked it to take a searching forward look at where the United Kingdom would be by 1970 on current policies. It was conducted in secret, reporting in 1960, but saw the light of day only 30 years later, as it was a Cabinet document. But, at the time, it undoubtedly added its weight to the tilt away from Empire and towards Europe which led the Macmillan Cabinet to undertake the first application for British membership of the European Economic Community in the summer of 1961, which began the long years of “Brentry” negotiations that eventually concluded in 1972.
In the cold light of “Brexit”, may I suggest that we wait neither for the conclusion of the Article 50 process in 2019 nor for the next SDSR in 2020, but instead encourage the Government to create a royal commission, or equivalent, on Britain’s place in the world, peopled by a widely drawn and knowledgeable membership recruited to do in public what Macmillan’s study group did nearly 60 years ago? It could, if so commissioned, divide its work into two parts. The first would be an audit of our assets as a nation, motivated by an appetite, which I share, to play a careful but substantial role in the world. The second would be to draw up the options and possibilities that our new, post-Brexit geopolitical position will present.
General de Gaulle famously opened his memoirs by declaring, “I always had a certain idea of France”. Each of us carries in our heads a certain idea of Britain, of our country’s gifts, accomplishments and what it can bring to the international table. Here, briefly, is my own certain idea, and the ingredients of our debate today are naturally central to that idea—to that audit of our assets that I mentioned earlier on.
We live on top of the world’s sixth-largest economy.
Thanks to our history, we are a member of more international organisations than any other country, with, in addition, our permanent seat on the United Nations Security Council, though of course we are about to leave a mega-international organisation thanks to Brexit.
As others in this debate have mentioned, we possess a range of top-flight Armed Forces, albeit in my judgment not enough of them, including some stunning specialities—special forces, submarines and many more—plus a substantial nuclear deterrent. We have a cluster of top-of-the-range security and intelligence services, as well as a position as one of only three nations with genuine global intelligence reach, thanks to our so-called “Two Eyes” relationship with the United States and our “Five Eyes” relationship when you add Canada, Australia and New Zealand. The other two powers with global reach are, of course, Russia and the United States, with China coming up fast.
We are served by a top-flight Diplomatic Service, and a meritocratic and uncorrupt Civil Service.
We undoubtedly think above our weight in the world. Just linger for a moment on the most stunning of our trade statistics: we have around 1.5% of the world’s population with 5% of the world’s scientific papers and 15% of its most cited ones.
We deploy a formidable array of soft-power instruments —what the noble Lord, Lord Bragg, has called our “cultural world service”, which goes far wider than the BBC World Service and the British Council.
This is but a sketch. The list could go on. It amounts to a remarkable national portfolio. We must strive to sustain, cherish and burnish it. In seeking so to do, we must not think about those assets as a hubristic, wider-still-and-wider nation, but as a temporarily anxious and perplexed people who, if the national conversation rises to the level of events, can find good, sensible and sustainable ways through into a new and valuable geopolitical place in the world, to the relief of our friends and the disappointment of our adversaries.
But, first, we need that royal commission, fuelled by a high sense of purpose and shaped by a stretching and wide-ranging set of terms of reference. The sooner that we cease to be a destabiliser nation, the better. The first step to that is working out what we think our global position should be and how best to conduct ourselves in a vexing, testing world.
Lord Astor of Hever (Con)
My Lords, I echo the very warm words of the noble Lord, Lord Touhig, about my noble friend the Minister.
I want to say a few words today about legacy issues arising from the Troubles in Northern Ireland. This is relevant to the morale and recruitment of our present-day Armed Forces. I pay tribute to all those who helped bring about the Northern Ireland peace process, and am aware of the huge effort and difficult compromises that brought about the current settlement. It is in everyone’s interest that the peace process continues and endures. Along with the police, the Armed Forces paid a huge price for the part they played in the Troubles: 520 Army, Royal Navy and Royal Air Force regulars, reserves and veterans, and 243 from the Ulster Defence Regiment and the Royal Irish Regiment, including veterans, were murdered by terrorists. Countless others were seriously injured, and left to bear the mental and physical scars.
We should not forget that the Army was originally called to Northern Ireland to restore order and to protect Catholics. Quite by chance, serving with the Life Guards I was one of the first soldiers sent to Northern Ireland in August 1969. I can vouch that our soldiers, mostly young men, conducted themselves to the highest possible professional standards, despite some very difficult times. I am concerned, however, about the legacy issues and, as an example, want to raise one particular case—that of former Life Guards Corporal Major Dennis Hutchings, whose committal hearing took place in Armagh today. I declare an interest in that I am on the Life Guards regimental council and served with Dennis Hutchings in this country and in the Far East. However, I do not raise the issue for this one case alone. It is of great interest to other veterans who may face similar problems to his in the future.
In 1974, the Life Guards were sent to Northern Ireland. In June, Dennis was on patrol and came across an IRA unit with weapons being readied for an attack. He exhibited great bravery in engaging the terrorists in a firefight; several terrorists were arrested. This shows that Dennis was an exemplary soldier who used proportionate force and exhibited great bravery. A couple of days later, while soldiers were sweeping a locality for terrorists who had escaped, John Pat Cunningham was shot dead. This was a tragic incident. The soldiers who are alleged to have fired the shots, including Dennis Hutchings, were interviewed under caution at the time. A file was submitted to the Director of Public Prosecutions, who concluded:
“I do not consider that the evidence warrants any criminal proceedings”.
The incident was reviewed by the PSNI Historical Enquiries Team—the HET—in 2012, which concluded that there was no new evidence and that nothing had changed. On the basis of the HET report and following a request by their solicitors, the MoD issued an apology to the family of Mr Cunningham in January 2013.
The HET was disbanded by the PSNI and replaced by a legacy unit, which again reviewed this case. There was no new evidence. Nevertheless, the PSNI was determined to arrest Mr Hutchings and in April 2015, without any warning, did so in an early morning raid at his home in Cornwall. He was immediately escorted back to Northern Ireland, held in police cells and interviewed under caution over four days. He was then charged with the attempted murder of Mr Cunningham.
Dennis has now been on bail for nearly two years. Friends report that his health has been damaged by the stress of this matter. He has had heart surgery and been measured as having 13% renal function. He went into hospital last November to receive surgery, in the expectation that he will start kidney dialysis soon. Yet the Northern Ireland PPS was determined that he should be in court, which is where he was today, having been committed for trial in a Crown Court in Belfast on a charge of grievous bodily harm with intent.
Many members of the Life Guards, and of the Household Cavalry as a whole, believe this to be a grave injustice and that scrutiny has been applied to the security forces in a way that has not been allowed for others. In particular, John Downey was charged in relation to the Hyde Park attack on the Household Cavalry’s Queen’s Life Guard in 1982, when four soldiers and seven horses were killed by a nail bomb. But John Downey’s trial collapsed after a ruling on a letter sent to him by police, assuring him that he would not be pursued as a result of the Government of the day’s secret amnesty for terrorists. One hundred and eighty-six other people wanted for terror-related offences in the Troubles received similar assurances, yet no British soldier has received any assurances, despite 90% of the deaths being attributed to terrorism.
One could well ask: why was Dennis in court today but the case against John Downey dropped? Is it really fair that soldiers should face trial for their alleged misdeeds more than 40 years ago, while the perpetrators of terrorist activities are ignored and their victims forgotten? I really feel that the whole system of addressing the past in Northern Ireland is not balanced, and is unjust. Dennis was sent to Northern Ireland by our Government. They cannot now wash their hands of their responsibility and pass on the consequences to the Northern Ireland Executive. That is a fundamental breach of the Armed Forces covenant.
It must be very difficult being the magistrate who hears cases such as this one, with so much riding on the decision. That magistrate is someone who lives in the local community and will have to be a very brave man or woman to find no case to answer. Does my noble friend agree that a great deal of time, money and anguish on all sides would be better spent if an independent QC or judge were to be retained in all similar cases in the future to review the evidence and confirm whether there is a case to answer?
Baroness Crawley (Lab)
My Lords, I, too, welcome this timely debate and thank the Minister, who has great respect in the House, for setting out the Government’s thinking and spending on present and future UK defence strategy.
Although I was a Government defence Whip for several years in the last Labour Government and recently co-chaired the Parliamentary Labour Party’s defence committee, it has been some time since I took part in a major defence debate in your Lordships’ House. As I focus again on our domestic and international responsibilities, I am reminded how like the 1980s it seems out there and how the Cold War did not really go away—yet how our response is still inadequate.
As Yeats put it in his poem “The Second Coming”,
“the centre cannot hold …
The best lack all conviction, while the worst
Are full of passionate intensity”.
The new and old forces ranging against the West today, and against NATO in particular, have a new strength and determination. Our major ally, the US, despite its recent announcements on NATO and defence spending, seems very unsure of its value base when it comes to its global responsibilities. The enfant terrible of cyber and hybrid warfare often appears out of control.
I welcome our emphasis on NATO this afternoon. Sweden, one of the shining examples of a modern democracy, is bringing in a new military service obligation, which is being imposed on all men and women there, which allows us to see the anxiety it has for its borders in the face of the emerging Russian aggression. That anxiety is prevalent also in the Baltics, Poland and elsewhere. I welcome the deployment this past weekend of the first of 800 British troops to Estonia, and I know that we all wish them well in their extremely important work there. Could the Minister go into more detail on the discussions the Secretary of State for Defence has had with the new US Defense Secretary, James Mattis, on how we can reaffirm our joint commitments to our NATO allies in the face of Russia in its new bastion mode and in the face of President Trump’s suggestion that he may not come to the aid of a NATO ally unless it has paid its dues?
I welcome the progress, albeit slow, that is being made by NATO members towards meeting the 2% of GDP target for defence spending, agreed in Wales of course in 2014. I understand that five countries in NATO now meet that target, while 10 meet the 20% pledge on major equipment and research. However, like my noble friend Lord Touhig, I would like to press the Minister on his response to the defence committee’s findings that Britain can claim to meet the 2% target only by including areas such as pensions that were not previously counted—certainly not during the last Labour Government. Can the Minister tell us what defence expenditure would be if we used the same accounting rules that we did in 2010? Does the Minister agree that we would have more credibility when urging our NATO allies to meet their spending commitments, were we not barely scraping over the line ourselves? Surely, as other noble Lords have said, the proportion should be whatever is required to allow the UK to respond to the threats of today.
Those of us who grew to adulthood under the chill of the Cold War have seen our hopes for a stabilised and globalised peace grow ever more threadbare in the last few years. Whatever is required should be the only limit to our spending. As someone who grew up in Plymouth—that great naval city—I was particularly pleased to see that the Ministry of Defence has confirmed that Plymouth will be the centre for the Royal Marines. I ask: what additional naval expenditure will come the way of Devonport in the near future?
However, does the Minister feel that there has been an adequate government response to the defence select committee’s report of last November, which concluded that there was a woefully low number of Royal Navy warships? We could not possibly miss out on that position, as we have with us the noble Lord, Lord West, who manages wonderfully and creatively to get the Royal Navy into most Questions in Oral Question Time. As we look to the future, it is still the Government’s planning assumption, I take it, under the Joint Force 2025 of the SDSR 2015, that there will be a maritime task force centred on the Queen Elizabeth-class aircraft carrier, with F35 Lightning combat aircraft and consisting of 10 to 25 ships and 4,000 to 10,000 personnel.
While still on naval matters, I for one was content with the vote in the House of Commons last year enabling the Government to take the Successor submarine programme forward into the manufacture phase. The Labour Party remains committed to a minimum credible independent nuclear deterrent, delivered through a continuous at-sea presence. Will the Minister update the House on the various investment stages that will replace the Vanguard class of submarines?
I add my heartfelt thanks and gratitude to the dedicated RAF crews who are working around the clock to defeat Daesh in Iraq and Syria. We all wish success to the coalition forces in the battle to liberate Mosul. I know that the Government are doing what they can to encourage, once Daesh is routed there, a more lasting peace that has political reconciliation between Sunni and Shia people at its heart.
Finally, we come to Brexit. We seem to be doing that a lot. As we leave the European Union—and with it the EU Foreign Ministers’ monthly meetings, the daily meetings of EU ambassadors and diplomats and the thousands of meetings that form the EU’s foreign affairs co-ordination at the United Nations—what detailed planning is going on to set up a meaningful structure for exchange of information, intelligence and assistance between the UK and our EU partners on common positions in international policy? I will give an example from when I chaired the Women’s National Commission at the UN some years ago. Then, the UK always met with other EU countries to form a common EU position—in that case on women’s rights—before meeting with other UN members and coming to UN decisions on issues such as abortion rights, FGM and girls’ education. There was always a European common position—usually the most progressive position at the UN. It would be foolhardy in the extreme for this country to lose its influence and partnership in EU decision-making on international matters. However, at present I am not optimistic.
Do noble Lords think that once the Brexit deal is done, the whole of NATO as a force for democratic solidarity—here I disagree with the noble Lord, Lord King, for whom I have a lot of respect—will be stronger, weaker or just the same as it was when the referendum was but a twinkle in a badly misguided Prime Minister’s eye? This is a very bad time to create friction with our allies. I see a hard Brexit as little more than organised friction, as we can be sure President Putin knows only too well. Brexit is a geopolitical windfall for the Kremlin and all who despise the West. While I wish the Government well in their future defence policy, we are all aware of how rocky that future is going to be.
Lord Craig of Radley (CB)
My Lords, I should like for a moment to narrow the wide focus of this very welcome debate and turn to an issue that I have repeatedly raised in debates in your Lordships’ House: combat immunity and the legislative fog that surrounds it. I have long argued that it is essential to tackle incompatibilities between the Armed Forces, human rights and international humanitarian legislation—that is, incompatibilities between international humanitarian law and the European Convention on Human Rights as interpreted by the European court in Strasbourg, and incompatibilities between the current Armed Forces Act and the Human Rights Act. I first raised this matter in 1998 when the House was considering the Human Rights Act. Since then, and particularly in the past decade, I have pressed and encouraged the Government of the day to come forward with new proposals, particularly to provide a clearer definition, understanding and reach of combat immunity.
A series of judgments handed down by the Strasbourg court about the geographic areas and the exercise, even for a limited time, of effective mandate of the European Convention on Human Rights, have overridden some of the judgments of our national courts and blurred the primacy that is due to the lex specialis of international humanitarian law in combat situations. The Supreme Court judgment in Smith and others in 2013 upheld the defence of combat immunity, narrowly defined, but invented an area of middle ground edging the land of combat immunity, where the writ of Article 2 and other articles of the European convention were deemed not automatically excluded. The judgment was not unanimous; three of the seven judges did not support the finding. They were concerned that the courts would be drawn into the judicialisation of combat and potentially inhibit the actions of commanders and others in operations.
However, the majority finding of the Supreme Court, in the absence of any clear guidance from Strasbourg, was that the boundary between combat immunity, narrowly defined, and that putative middle ground had to be determined on a case-by-case basis. For the service man or woman, however, that is not a clearly described or marked boundary. To them, the meaning of the phrases “narrowly defined” and “the middle ground” are unclear. It does not help them to appreciate in advance, or at the time, whether their operational activity in the course of hostilities or a threat of hostilities is or is not combat-immune. The services operate to, and respond to, executive direction. They need to be clear what their mission is, what the constraints on the exercise of force are and whether their actions can be deemed combat-immune. Faced with conflicting interpretations of legislation, and the practical experience in the past decade or so of the complexities and protracted nature of claims and counterclaims arising out of injury or death to their fellow service men and women, this situation cries out to be clarified.
Indeed, as far back as October 2013, I asked,
“will Her Majesty’s Government consider new legislation to define combat immunity, in order to clarify the current position”?—[Official Report, 23/10/13; col. 1003.]
Happily, after a number of false starts and some indecision, the Government have set about doing just that. The MoD’s consultation paper, circulated earlier this year, briefly set out their case and sought views on a variety of issues relating to the scope and definition of combat immunity. The nub of their proposals is that the Government will legislate to enshrine the position that combat immunity should apply to deaths or injuries that occur in the course of combat. This will be combined with awards of compensation for the death or injury of entitled individuals equal to that which a court would have awarded as if the Government and their servants had been negligent, even when no negligence arises. This will remove a requirement to take legal action against the Government to gain the fullest compensation for a death or injury in combat.
I do not underrate the challenge of a statutory description and definition of combat immunity. The Government have put their mind to it and I welcome that. This time they must see it through—no ifs, no buts. Clearly, new legislation will be required. In so far as the enlarged compensation package is concerned, this can be achieved by secondary legislation to the Armed Forces (Pensions and Compensation) Act 2004. This Act allows for the Secretary of State to make orders about pensions and compensation schemes. With an affirmative order, it would seem straightforward.
Combat immunity, however, will call for primary legislation, presumably led by the MoD, rather than by the Ministry of Justice, which had been involved previously in the legislative considerations. The Bill of Rights—of forgotten memory—was trailed for some considerable time as a possible statutory vehicle for combat immunity. Now that the MoD has the lead, it should consider whether new legislation should be by amendment to the Armed Forces Act, rather than by a new, free-standing Bill.
The Armed Forces have been disadvantaged in the past by serious incompatibilities in primary legislation to which I have already referred. The existence of combat immunity, as defined by statute, would directly relate to many of the disciplinary provisions in the Armed Forces Act. It would be helpful if those who have responsibility for and oversight of service behaviour —when deployed on operations—had all the statutory provisions, including for combat immunity, within one service statute. I urge the Government to give this suggestion serious consideration.
A further suggestion for legislation is to enact a time limit to forestall historic investigations and the charging of individual service personnel many years after they have been actively involved in a combat scenario. Recent experience of historical allegations relating to Iraq—and their inept handling—shows the obvious problem of finding witnesses and reliable evidence 10 years after the event being examined, let alone 20 or even 40. This points to having some time limit, as the noble Lord, Lord Astor of Hever, suggested a few moments ago. Combat immunity compensation claims will surely have to be time-limited. Why not also have a similar time limit for allegations made about behaviour when combat immunity obtains? These two proposals clearly do not refer directly to the continuation order that is the subject of this debate and to which I give my full support.
Lord Sterling of Plaistow (Con)
My Lords, I have been involved in international trade for pretty well all my working life and, since the Falklands War, heavily involved with the armed services. Indeed, I have the great honour of being an honorary vice-admiral. I start by thanking my noble friends Lady Evans, Lord Taylor and Lord Howe for agreeing to hold this debate.
There is an obvious difference between history and memory, and we often confuse the two. History is what we have been taught and read about. We are a product of it but in danger of forgetting it. Nelson’s Navy, Wellington’s Army and Churchill’s Air Force are a reassurance. One thing we did in history: we maintained our credibility. Memory is shorter term. It is what we are all imbued with as a product of our experience. It is the ability to have a visceral reaction to that which is within our experience; it colours all that we do and the way we think. I believe that today it is adversely affecting our credibility. Due to relatively short-term financial expediency, we are in great danger of undermining that credibility on which, I am sure that your Lordships will agree, our reputation depends.
Late last year, the noble Lord, Lord Touhig, said that the world had changed to such a degree that the role and therefore the needs of our armed services had changed dramatically since the defence review in 2015, and that a re-examination was therefore required. I stated that I totally agreed, but that this must also include the needs of our foreign and intelligence services. I am sure that many in both Houses concur.
The timing of this debate is critical. One thing that history teaches us is that we cannot dictate events. In 2010, it is worth remembering, the only major area of conflict was Afghanistan. Ukraine, Crimea, the so-called Arab spring—Egypt, Tunisia, Morocco, Libya and Syria—and the potentially more extreme ambitions of Russia were totally unknown. Our military chiefs must have the firepower and flexibility to react at a moment’s notice to the unexpected.
As your Lordships are aware, defence has always had all-party support in both Houses, and many have participated in the armed services scheme. I have had discussions with Dr Julian Lewis—who, by the way, has joined us tonight—chairman of the powerful Select Committee on Defence, and with Bernard Jenkin, Crispin Blunt, James Gray and Graham Brady, who head influential committees in the other place. They are all concerned that resources for our long-term needs are inadequate, and are particularly troubled that our present capability is being heavily emasculated.
I entirely agree with the views of the noble Lord, Lord West, on what is needed. Indeed, I would go further, if he does not mind me saying so: the £250 million he talked about is not just for the past three years, but goes back to a major mistake in 2010. As he said, for 40 years the capital cost of the deterrent was carried by the nation, not by the Ministry of Defence. Following what I hope will be a robust debate here, a strong debate in the other House will carry much greater weight.
I have thought long and hard whether there is a key new factor that will galvanise the Government. Sadly, it appears that only the need to go on to an immediate war footing would have that effect.
Although today’s debate must concentrate on the present and future, it should be noted that the so-called defence review of 2010 proved to be a highly damaging major cost-cutting exercise. Our armed services are still recovering from those ill-thought-through decisions leading to unintended consequences. I vividly remember the immediate destruction of the Harrier jets on board the “Ark Royal” in advance of taking it out of service in days to stop any reversal of the decision. The massive reductions in Army numbers and Air Force squadrons were brutal.
The savage reduction in people across all services—salami slicing—has had the most damaging effect on morale. In my experience, organisations are usually at their best when they are growing and have a very clear view of their role in both the short-term and the long-term future. It was almost worse than receiving friendly fire. We were left without a carrier strike force for well over 10 years between that period and the early 2020s.
How different history might have been if we had retained that capability. Perception of our international standing could have been quite different. The last defence review was infinitely more professional, and covered the equipment needs for the future as then perceived, accompanied by a re-examination of sovereign procurement, namely the strategic value of Britain’s defence industry, including a major uplift in cybersecurity. However, the key logistical build-up is still under immense pressure, due to continued hollowing-out, together with the extra required savings to be made by 2020. I do not think it is fully realised by many just how adverse an effect this is having.
Like all major living structures, can the Ministry of Defence improve on its use of moneys? The answer must be yes. It is clear to me that its present structure may be understandably, but not acceptably, that of peacetime and not that of wartime. Peacetime always creates unnecessary bureaucracy and interference from other departments. In time of war, a clear command structure would demolish the present totally unacceptable timescales. Ethos in our armed services is still outstandingly high. Despite life changes in the last 50 years, it must never be forgotten how crucial a part pride in the cap badge plays in ethos. We must never take those serving for granted and expect them to live on love alone. Those of this nation who serve in our armed services are truly special—the salt of the earth—and we need the finest of our young men and women to volunteer.
It goes without saying, having been in business all my life, that long-term economic strength is of overriding importance. Without it, you cannot have hard power capability. The USSR, as has been mentioned, discovered this in spades. But fundamentally this is a wealthy country and we must ensure that sufficient of its wealth is allocated to its protection. Protection of the realm and rule of law must be sovereign over all other needs. I would like to think that the Prime Minister and the Chancellor were more than aware of that.
I am sure that my noble friend the Minister will agree that the input metric—the famous 2%—is useful in forcing other NATO Governments to pay their way. But a real measure of military output or capability can be judged only against hard cash. Many of us consider that 3% of GDP is needed, and already that has been stated by the noble and gallant Lord, Lord Stirrup. Before eyebrows are raised, I remind noble Lords that in practice, in the 1980s, it was a steady 4.5% to 5%.
I am not alone in considering that a serious analysis of our foreign aid programme could deliver serious money to be used by the Ministry of Defence and the Foreign Service. At the opening of Parliament in 2015, Her Majesty used the word “re-engage”. Our allies in the continent of Europe, in the Commonwealth and indeed worldwide were fast coming to the conclusion that we were removing ourselves from the world scene, losing influence and credibility.
The Prime Minister stated in her recent Lancaster House speech that we are returning to a global role and that we work together with our partners in Europe. An enhanced military capability in NATO will further strengthen our commitment to defend continental Europe as we have always done in the past. Public backing is vital. In the United States, public support is unqualified and those serving in their Armed Forces are most appreciative. It is key to the ethos of those prepared to risk their lives for their country. Sadly, I am not sure we could say the same here today. Positive public backing is essential in encouraging parliamentarians to insist on the requisite level of support for the defence of the realm.
Trade has been the driving force for this country throughout history. Since the 1660s, the role of the Royal Navy and Royal Marines has been to protect the merchant marine in delivering world trade. As the empire expanded, the Army in general and, more recently, the Royal Air Force played vital roles. Enhanced hard power, together with our elite submarine nuclear deterrent capability, is of critical importance and will only increase our influence in the Security Council.
Since leaving Aquitaine and Calais, our role in Europe has, for several hundreds of years, been as a power broker between France and Germany, mainly to protect the empire. Such military capability could prove to be an important element of our coming negotiations with those countries in the European Union where defence concerns have, to say the least, been more than heightened. We will be the only European and global nation to operate two dedicated fifth-generation aircraft carriers, and these will represent the nation’s conventional strategic deterrent. Although we are no longer a superpower, our future role, as outlined by the Prime Minister, requires a larger Army, more squadrons for the Royal Air Force and, for example, a considerably larger number of the new Type 31 frigates—the workhorses—if we are to have a real presence east of Suez, in Asia, et cetera, particularly serving with the Commonwealth where necessary. China’s possibly increasing ambitions must not be underestimated. As we are the USA’s closest allies, this would undoubtedly be warmly welcomed in Washington, particularly following its recently significantly increased military budget.
Finally, the positive, worldwide progress of mankind over thousands of years has been quite extraordinary and the human brain has given us so much to wonder at, not least music, the arts, science, medicine, philosophy et cetera. However, the natural competitiveness of mankind is such a driving force that, unless controlled, it still leads to the strong dominating the weak. Despite all these wonders, today this House still needs to debate the defence of the realm as our number one responsibility. Will peace ever prevail? We go to war in order to achieve peace; even better, our capability, and therefore credibility, can deter war. I am sure we all agree that peace must be the goal of a country like ours. It is our responsibility to achieve these aims, and they are the right legacy to leave for future generations. I am sure the Minister, with his great personal sense of history, would agree with these sentiments.
Lord Davies of Stamford (Lab)
My Lords, it is a great pleasure, and not for the first time, to follow the noble Lord. He brings to this House a whole lifetime of experience both in business and in maritime affairs and defence. I very much agree with what he said.
I think the whole House is well aware that I was the Defence Procurement Minister in the last Labour Government, under Gordon Brown. In that role, I was often, and continue to be, accused of having overspent and having created, or culpably presided over, a procurement deficit of £30-odd billion—the actual figure varies from time to time. I have dealt with this matter in correspondence with the Minister and asked him to put that in the Library. I do not know whether he did so: I found that only members of the Government can place correspondence in the Library. Briefly, I could not possibly have overspent because the Treasury would not have allowed me to do so. What I never did, unlike the subsequent Government, was underspend. They did so on two occasions and a large amount of money was permanently lost to defence. I would have regarded such an action as a betrayal of the very important fiduciary responsibility which had been confided to me.
There is always a degree of uncertainty about the cost of a future programme, but the bulk of the procurement deficit was created, when the new Tory-led Government came to power, by the simple expedient of changing, from 1.5% in real terms to 0% in real terms, the rate of increase in defence expenditure, both currently and prospectively. Doing that, given compound interest and a defence budget of £35 billion, you can create a very large potential deficit and that is exactly what they did.
When he appointed me, Gordon Brown said that my first task was to make sure we got the right equipment out to Iraq and Afghanistan. We did that, and commissioned seven or eight new, bespoke armoured vehicle programmes. On one occasion, we actually got down to six months between specification and delivery to the theatre, which was an absolute record. Anybody familiar with defence procurement will realise what that means. It is a tremendous tribute to the ability, determination and morale of the people working in the DE&S—people who were subsequently, quite disgracefully, attacked publicly by the man who the incoming Tory-led Government put in charge of them. We also made some considerable breakthroughs in areas such as ground-penetrating radars, which were a vital part of the anti-IED programme.
I did not neglect in any sense the core programmes. When I arrived, I found that the two carriers were running into considerable cost overruns and delays. The Defence Board had decided that the programme should be extended by several years—at an enormous increase in cost, because you are doubling and trebling the fixed cost as each year goes by. It was obvious to me that, if that happened, we would ultimately end up cancelling the whole programme. I managed to persuade the Secretary of State—my noble friend Lord Hutton, who unfortunately is not in his place today—as well as others in the MoD and indeed in the Treasury, in due time, that we should go for a quite different option which had not been considered by the Defence Board. This was Option C, as the noble and gallant Lord, Lord Stirrup, may recall, which involved some delay and some additional cost, but of a relatively manageable kind. Fortunately, as a result, it was possible to save that vital programme.
On the Type 45, I thought they were wonderful ships and I still think so. I believe three were launched in my time; they were ordered long before I arrived. But I admit to the House that I never asked—it never occurred to me to ask—the brilliant naval engineers, admirals, shipbuilders and ships’ architects that I was meeting on that programme the key question: are you quite sure you specified enough power to run both the propulsion system and the radars at the same time? I have no idea how such experienced people would have reacted to a Minister asking a question of that type. However, I say with culpability that I should have asked it. It was a pertinent question. I still want to know what happened, and I think the public need to know what happened. There should be a public inquiry about it. I would look forward to taking a full part in such an inquiry to get to the truth.
The other great naval programme was Astute, which I shall come to.
On the RAF, I found when I arrived that the MoD was attempting to push forward as far as possible, in order to save money, the purchase of tranche 3 of the Typhoon. We managed to turn that one round, and I managed to negotiate with our partners for the tranche 3 programme to move forward. I am glad it has done so, because that aircraft now provides the cutting edge for our air capability in the period between the retirement of the Tornado and the arrival of the F35. It will continue—with the Meteor missile—to be the key power we have in the air-to-air area, prospectively into the 2030s.
I was also keen that we get into the unmanned aircraft business. I brought the French into that, because it was important to have partners to share the cost and, particularly, to secure longer production-runs than would have been possible if things were run purely on a UK basis. In addition, we had to renegotiate the A400M programme. I believe we did so successfully. I am a great believer in that aircraft—I think it will be the Hercules of the 21st century—though at times it too looked under threat.
With Nimrod, I inherited something that has now gone down in business schools as a classic example of how not to procure a military project. At the time I arrived, as I recall, the cost was around £2.3 billion for four aircraft. But I believed then, as I believe now, that economic decisions should be taken on the basis of marginal cost, not sunk cost. It was clear to me that almost all the capital cost had already been incurred—certainly, by the time of the election, all the capital cost had been incurred. Therefore, I looked open-mindedly at whether we should stay with that, or buy the P3, which was another possibility in those days. I became convinced that the right thing to do in those circumstances was to stay with the Nimrod programme. Had the Government done so—compared with what they are now doing in buying the P9—I believe they would have saved a lot of money. What is more, we would not have this irresponsible gap in our long-range maritime surveillance capability which we have been running now for many years, and which is quite frightening.
From these experiences, I am left with one or two conclusions, which I want to share with the House. One is that an awful lot of nonsense is talked about how defence procurement would be much more efficient if it were based on fixed-price contracts and if competition were involved. In most cases, you cannot do either of those things in defence procurement in our country because we have to operate at the frontiers of technology. We can send our brave young men and women to risk their lives only if we provide them with the very best equipment that money will buy. That means investing in new technologies, and you cannot speculate in advance what the costs or problems will be.
Every first of class is a prototype. If it costs £1 billion, like an Astute-class submarine, you cannot throw it away, saying, “It was a prototype; we’ll start again”, but it is still a prototype. You are going to spend an awful lot of money at the beginning of these programmes and you cannot tell what the costs will be. If you force the contractors to accept a fixed price, as happened with BAES over Astute and Nimrod, they will just blackmail you after a few years, saying, “We can go bankrupt if you want but we can’t come up with £5 billion”, or whatever it costs to change the programme, so you have to renegotiate, as we did on those occasions. However, that is the worst of all possible worlds.
The solution to that problem is the one that we devised in the case of Astute—that is, to have a target price with a reward for the contractor if it comes in under it and a penalty if it comes in over it. The whole thing was kept under very close and constant review, and that worked for the rest of the Astute programme. I think that that has a very wide application in defence.
Secondly, it is very important to have partners in this business, not just to share the costs of R&D, which are enormous, but because the economies of scale in production runs are so important. We tend to buy both systems and programmes a few dozen or perhaps a few hundred at a time, depending on what we are dealing with. In the same area, the Americans will purchase by the thousands or tens of thousands, which makes the economics completely different. We can achieve something in that direction only if we have partners, not just to share the R&D but to make sure that we have much longer production runs. I did that successfully with the French on several occasions, and it is something that we need to do more and more.
Incidentally, I am delighted to see that OCCAR—an organisation that I strongly supported in every way that I could at the time—has been a great success. I think that it is now running about 30 joint European programmes, including the A400M. It is under the charge of one of my ablest civil servants, Tim Rowntree, and it has been a delight to see how successful that whole project has been.
Another thing that I want to share with the House is that there are a lot of illusions about exportability. I think that it was General O’Donoghue and I who first laid down that exportability must be considered at the specification stage and reported on at the “initial gate” stage. I am very much in favour of it and I commend the Government for trying to do what they can to achieve some exportability for the Type 26. However, again, because we need the best in this country, we will always tend to overspecify. Therefore, in practice the opportunities for export will be really quite small, and we have to face that uncomfortable fact. That may be the case with the Type 26. If it is not, and even if we export some variants of that frigate, we may well find that there are diseconomies of scale by virtue of the fact that we have split up that programme.
Finally, we must go over to modern accounting principles, particularly present value accounting, in defence procurement. I could have saved a large amount of money—perhaps £300 million or £400 million—by purchasing all the supplies and components that we needed for boats 3 to 7 of the Astute programme at one go in bulk, but that was impossible because the Treasury would not let me bring forward the purchases in relation to subsequent parts of the programme, even if I paid it back, as it were, with a substantial discount rate, which of course I was prepared to do, representing the costs of the capital involved. In the private sector, you would always make investment and purchasing appraisal decisions on a present value basis, but we cannot do that in the public sector.
Another good example was the MARS programme for naval tankers. I wanted to take advantage, opportunistically, of the collapse in the shipbuilding market after the Lehman Brothers disaster and so forth and buy in the market, for about $50 million each, tankers that were in the programme at £200 million. Even with the discount rate, the Treasury would not let me do it. By the time of the election, I persuaded not only my own finance director but the head of the National Audit Office, Sir Amyas Morse, to move in that direction, and I was in the process of persuading the Treasury to do so. I set out to my successor the importance of doing this and I thought that I had persuaded him as well. Sadly, I do not think that any progress on that has been made but I raise it this afternoon in the hope that that matter too will be looked at again.
Lord Burnett (LD)
My Lords, it is a pleasure to follow the noble Lord, Lord Davies of Stamford, who has extensive experience of defence procurement as a Minister. I am grateful for the opportunity to debate with him, and I draw the attention of the House to my entries in the register of interests. Like the speeches of the noble Lord, Lord Astor of Hever, and the noble and gallant Lord, Lord Craig of Radley, what I have to say has a bearing on morale in the Armed Forces, and the morale of veterans and their families.
On 15 September 2015 we had a defence debate in the Moses Room. I confined my speech to the case of Sergeant Alexander Blackman, Royal Marines, and I stated that he had been,
“the victim of a terrible miscarriage of justice”.—[Official Report, 15/9/15; col. GC 228.]
Last Wednesday the Court Martial Appeal Court quashed the murder conviction of Sergeant Blackman and substituted a verdict of manslaughter due to diminished responsibility. I very much welcome this decision, and so will many others.
Right at the start, I pay tribute to all the men of 42 Commando Royal Marines who served in that unit during its 2011 tour of Afghanistan. It was a most stressful, demanding and exhausting tour. Seven members of the unit were killed and 45 seriously wounded. I can do no better than quote Sergeant Blackman’s company commander, Major Steve McCulley, who has been medically discharged from the Royal Marines after being blown up by an IED. He said that his men were operating,
“in the most dangerous square mile on earth”.
He added:
“They were superb men and their skills were excellent”.
Sergeant Blackman had an excellent, exemplary record, and has retained his dignity throughout this dreadful ordeal; he has been an exemplary prisoner. I also wish to put on record my admiration for Mrs Claire Blackman, his loyal, courageous and steadfast wife. She has worked and campaigned tirelessly on his behalf.
I explained in my speech in 2015 that I had visited Sergeant Blackman in prison and spoken to him for some hours. I also explained that:
“To become a senior non-commissioned officer in the Royal Marines is an immense achievement. Being accepted for training in the Royal Marines is extremely competitive. The training is rigorous and long”.—[Official Report, 15/9/15; col. GC 229.]
He would also have been selected for, and passed, long and arduous courses for promotion to corporal, and thereafter promotion to sergeant. In addition, he would have had to be selected for, and have passed, long and arduous courses for his specialist qualification.
Sergeant Blackman served for approximately 15 years in the Royal Marines and his behaviour would have been observed closely and scrutinised throughout his time in the corps, especially on the courses that he attended and passed. As I have said, he was an exemplary Royal Marine. In the years leading up to the incident in 2011, he had been deployed on operational service six times. That means six six-month tours involving intense combat operations. As I have said before, no one in the Royal Marines complains about that level of deployment—but it will have its consequences.
I am very much reassured by Sergeant Blackman’s acquittal. The Court Martial Appeal Court recognised the severe, grave and prolonged stresses that will affect even the best-trained, bravest troops of the highest calibre, impairing their ability to think through the consequences of their actions, with potentially lethal consequences. Day after day, night after night, week after week, month after month, 42 Commando were dealing with an enemy which has no respect for human life, and has nothing but contempt for the rules of war. The commandos were in continuous mortal danger. Whether in the dreadful conditions in which they were living or out on patrol, they were under constant threat of mortar fire, rifle fire and improvised explosive devices that could blow them to shreds. And this was all in the searing heat.
Mr Christopher Terrill’s excellent documentary on “Panorama”, shown on the evening of Wednesday 15 March—the day after the Court Martial Appeal Court had handed down its decision—gave the public an insight, but no more than that, into some of the terrible stresses inflicted on our fighting troops. Again, no one is complaining about that, but allowances have to be made, and there will be many in the Armed Forces who are reassured by the Court Martial Appeal Court decision, precipitated by the report of the Criminal Cases Review Commission. I and probably many millions of people in the country wish to ensure that no other member of our Armed Forces has to endure the ordeal that Sergeant Blackman and his wonderful wife have had to endure over the past five years.
My first point is that when charges like this are contemplated, what mentoring and assistance is given to a proposed defendant? He will have no idea of the criminal courts or courts martial and will need an experienced individual to monitor and guide him through the maze so that he can choose the very best defence team available. Remember that Sergeant Blackman had served his country with distinction on active service for years. He deserved to have a fair trial and a fair hearing right from the start. What level of assistance is available at the start of criminal proceedings for someone in that position?
Secondly, was there any psychological testing right at the start of this legal process to gauge the effect of the immense stress and demands made on him and other troops in Afghanistan? As I have said, these troops are constantly shot at, existing in the most basic conditions in the searing heat. They suffer constant exhaustion, knowing that they are always in mortal danger. I said in my earlier speech on this matter that our troops must in all circumstances comply with the law. However, the law itself recognises that stress, provocation and other factors should be taken into account in assessing criminal liability. What tests were offered or given to Sergeant Blackman right at the start of this process? I could list extensive, exceptional stress factors that impacted on both the unit and Sergeant Blackman.
My third point is that I read with interest my noble friend Lord Thomas of Gresford’s letter to the Times, published last week on Saturday 18 March. I am grateful to see him in his position today. I just ask whether it was the duty of the court—in this case, the Judge Advocate-General—to bring the possibility of battle fatigue and diminished responsibility to the attention of the panel.
My fourth point is that my noble friend Lord Thomas was in the Moses Room when I spoke on 15 September, when I raised the point that the Judge Advocate-General and others have criticised the fact that a simple majority at a court martial can convict a person. In Sergeant Blackman’s case, five of the panel found him guilty and two found him not guilty. I went on to say that that ratio would be insufficient to convict in a civilian criminal court. We have a military covenant which states that the members of the Armed Forces should not be disadvantaged in relation to their civilian counterparts. The least that could be done is to change the court-martial rules so that they mirror those that prevail in the civilian criminal courts.
My fifth point, which I also raised in my speech in September 2015, is that the entire ethos of a court martial is that a person is supposed to be tried by their peers, who fully understand through shared experience all the surrounding circumstances. No one who has not served through the hell and horrors of the front line in Afghanistan or similar conditions can hope to appreciate the stresses and dangers that will affect even the strongest and best-trained human being. A number of the panel members would have failed this test—in other words, a number of panel members had not served on active service, let alone even heard a shot fired in anger.
My sixth point is that, after Sergeant Blackman was convicted, it emerged that a member of the panel sent a message to the effect that the panel had come under immense political pressure to convict. If this is true, it is outrageous.
Finally, I believe that the Ministry of Defence is going to inquire into the surrounding circumstances of this case. I hope that it will look into all the matters I have raised and that the findings will be made available to the public.
I put on record again my thanks to the members of the extensive Royal Marines family and the millions of citizens throughout the United Kingdom and beyond who have supported Sergeant Blackman, including the Daily Mail’s defence and campaigns team and the readers of that paper who contributed so generously to his defence fund; to Mr Goldberg QC and his team; and to Mr Frederick Forsyth and Mr Richard Drax, a Member of the other place. I said in September 2015 that we owe it to our fine men and women who continuously and selflessly protect us to fight for them in their hour of need.
Lord Empey (UUP)
My Lords, the brave contribution of the noble Lord, Lord Astor of Hever, drew to the House’s attention the case of Corporal Major Hutchings. In his contribution, the noble Lord, Lord Burnett, said that the military should not be disadvantaged and that this was part of the military covenant. I am afraid that is not working out in practice. We know—it is always correct—that where new evidence comes forward, whether in cases involving members of the security forces or potential terrorists, it is material and should be judged accordingly in a court of law. However, as the noble Lord, Lord Astor, drew to the attention of the House, some people have pieces of paper in their pockets that can override any evidence. The one group of people who have not been identified are those who have received royal pardons. Indeed, we understand that the Government have lost the list containing the names of many of these persons.
We have got things completely out of balance. This applies not only to Northern Ireland but more generally. We have seen an unscrupulous lawyer prepared to profit at the expense of unfortunate members of the security forces who were operating in that hell, as the noble Lord, Lord Burnett, described it. We are all for fairness, but we need a level playing field and we do not have one. That is a matter of deep regret.
The 2% target, to which many noble Lords have referred, is a purely arbitrary figure. The figure should reflect what is necessary, not what is arbitrary. We have ring-fenced 0.7% of our GDP for international aid. However, I am always against ring-fencing departmental money because it usually ends in tears and it makes some departments bear the brunt of reductions in spending in a totally disproportionate and chaotic manner. While I am in favour of well-targeted international aid, I do not believe that the scatter-gun tactics we are using at the moment, whereby we pour millions of pounds into all sorts of weird and wonderful projects, are working. We should concentrate on certain things, such as clean water, trying to rid areas of diseases such as malaria, emergency relief to tackle what we are confronted with in Africa, disasters such as earthquakes and so on. I am in favour of all that, but it is ridiculous that while this country steps up to the plate in this, other, wealthier countries are virtually not even on the pitch in terms of their contributions.
Given the international instability we face, the benefits that we say we are getting from soft power do not, I have to say, register particularly strongly with me. When we are dealing with the North Koreas of this world and a resurgent Russia, which many noble Lords have mentioned, the fact is that the capability of hardware makes a difference. The one point that has been made so blatantly obvious by noble and noble and gallant Lords with their lifetimes of experience in this area is that our surface fleet is wholly inadequate to deal with the circumstances that we face. When the aircraft carriers come on-stream, are we saying that we could simultaneously send two battle groups off to two different parts of the world to work with those carriers? Could we protect the carriers or is it the case that if there was a conflict, they would end up alongside without the capability to protect them? There are huge issues to face here and I do not believe that we will serve our country well if we knowingly, year on year, leave huge areas of our defence capability basically out of action. We have not had the ability to seriously project air power for years and, as has been said, HMS “Ocean” is to be retired early. We have no fixed-wing anti-submarine capability, yet the one thing we need to protect is our nuclear deterrent.
I just do not get it. We are fixated on keeping social programmes going, but there has to be a balance in these things. It has been said: look at what will happen in terms of persons and treasure if this goes wrong. I think we have the balance wrong. I am 100% in favour of co-operation with our European partners and 100% for joint projects to share costs because that makes sense, but we have the balance wrong and continuing to limp forward as we are will not work. Yes, we are getting some great kit, and I do not doubt that that is good, but it comes down to the question of whether we go for gold-plated equipment at the expense of having a spread of volume. That balance must be struck.
I turn to the issues with regard to NATO. I was encouraged by the comments of the American Vice-President Mike Pence in Germany. He reassured us on the commitment of the US to NATO, but as many speakers have already pointed out, many European countries are not stepping up to the plate. It is not that they do not have the money, but as long as someone else is prepared to do it, why bother? The message from the United States is clear: it is not going to carry the can any longer, and who can argue with that? Colleagues in this part of the world have to realise that we have a resurgent Russia, international terrorism and developments taking place, whether in laser technology or weapons that can be triggered from space to identify and damage surface vessels. Not only unmanned aircraft but unmanned naval vessels will be a thing of the future. We must spend enough on protecting our country. Even for an issue such as immigrants trying to cross the Channel, we have three vessels to deal with it. It is ridiculous for an island nation to be in that position.
I ask the Minister to address some of these points when he sums up the debate. Of course, if we press Her Majesty’s Government to spend more on defence, they will have to take decisions to spend less on something else. It is the inevitable piece of arithmetic that has to be done. It will not be pleasant and, as has been said by those who have experience of the military, the price will be high. The Falklands have been mentioned, in particular HMS “Endurance”—all to save a few quid. Everyone looks for economies, but that was being penny wise and pound foolish. There is a fundamental error in the balance between our foreign and defence policies and our aid policies. They are closely linked and it is important that we get the balance right. The noble Lord, Lord Hennessy, who is not in his place at the moment, made a good suggestion. He has called for a commission or whatever it might be. We should not have to wait for the next five-year defence review; this is something we need to get on with now.
On that point, I would argue that unmanned vehicles of all types are likely to replace pilots and surface vessel personnel. Where does the Minister think we are in all of that? Moreover, does he really believe that we have sufficient surface vessels to deploy simultaneously two battle groups for the new aircraft carriers while at the same time meeting our international commitments and dealing with hot spots? You always need to keep a contingency in reserve to deal with an emergency, but we seem absolutely flat out. Some of our surface vessels do not seem able to propel themselves adequately, so how on earth are we going to deploy two aircraft carriers with their battle groups with such a small surface fleet?
Lord Hannay of Chiswick (CB)
My Lords, it is with some trepidation that I participate in this debate, which is after all mainly about defence policy, but I do so because in my view the international rules-based order is under greater and more existential challenge than it has ever been since our predecessors began to piece it together amid the ruins of two catastrophic world wars. I do so also because those challenges and the necessary responses to them cannot be confined to the spheres of defence and security policy; they need to go much wider than that.
To understand this, along with the need for a wider vision and response, we need only look at the period between the two world wars. Of course history does not repeat itself exactly, but it does contain plenty of lessons that we would be foolish to ignore. The world experienced then a perfect storm in which economic, political and military developments fused into a single mass which overwhelmed the totally inadequate rules and international institutions that had been established after the First World War. The 1929 stock market crash led to mass unemployment, trade protectionism and tit-for-tat monetary devaluations. These and other factors fuelled the rise of populist political parties across Europe, while the weakened democracies averted their eyes and turned inwards. Does that sound familiar? Is there any parallel with the faltering response to the financial crisis of 2008-09 and the emergence of political forces such as those which propelled Donald Trump to the White House and are fuelling the political bids of Marine Le Pen, Geert Wilders and Beppe Grillo? It is not an exact parallel, of course, but it is quite enough to cause us to worry very seriously.
I will look at three pillars of our rules-based order which are under threat: the open global trading system, symbolised by the World Trade Organization; the nuclear non-proliferation treaty; and the functions of the UN with respect to international peace and security. The arrival in the White House of a President and a trade policy team who seem to regard protectionism as a path to prosperity, and bilateral trade balances as something to be eliminated by any means, including by measures that would run roughshod over WTO rules, is a challenge to all of us, and in particular to this country which has, quite rightly in my view, nailed its post-Brexit colours to the mast of being a champion of free trade. That will require more than just words. It will require standing up to the forces of mercantilism and protectionism wherever they emerge and defending the rules of the WTO. If we fail, we will end up poorer and less able to generate the resources we need to defend ourselves and our allies, in NATO or elsewhere.
The nuclear non-proliferation treaty has been for a considerable time now one of the cornerstones of our rules-based world, but has been under considerable stress for some years, particularly from North Korea, which cheated on its obligations under the treaty and then withdrew, and from Iran, whose nuclear programmes gave much legitimate cause for concern. The only thing the two challenges have in common, I suggest, is that in neither case is a military response either sensible or to be anticipated or planned for, other than as an extremely last resort. There is no doubt about the immediacy and reality of the challenge from North Korea. Clearly, our own position can only be an ancillary one, but do the Government share the view that China has to be a key player in any effective response? Antagonising China, either politically or in trade policy terms, is unlikely to be the best way of securing its support.
As to Iran, we have the rather oddly acronymed JCPOA. Can the noble Earl confirm that the Government’s policy is to remain committed to that agreement and its rigorous implementation, whatever the US attitude may turn out to be? Is that policy properly understood in Washington? Is it not time, too, that we began thinking about globalising and generalising the constraints in the Iran agreement, thus extending its duration, which is rather on the short side, and ceasing to make it so Iran-specific, which makes it less attractive to Iran?
The United Nations, too, is under stress, even as it has more than 100,000 peacekeepers, both military and civilian, deployed worldwide. Often, as in South Sudan, the Democratic Republic of Congo and the Central African Republic, they are the only forces that fulfil the responsibility to protect civilians—forces that the rulers of those countries are either unwilling or unable to provide. The Government’s decision to strengthen our commitments to UN peacekeeping in South Sudan and Somalia is very welcome. Can the Minister say something about the Government’s medium and long-term policies on UN peacekeeping? Is the shift in policy we have seen in the last year here to stay? Is it built in to our security strategy and destined to play a more prominent part in it than has been the case in the recent past?
Others have covered the crucial issue of NATO and the uncertainties about its deterrent capacity as a result of some of the things that the new President of the United States said during his election campaign. My neglect of that issue merely shows, I think, what an extremely wide scope for debate today has offered us and how important it is to focus on all parts of it.
Lord Howell of Guildford (Con)
My Lords, it is a pleasure to follow the noble Lord, Lord Hannay, with whose analyses I almost invariably agree—although with his conclusions a little less than invariably. Like him, I shall concentrate on the rules-based order part of the Motion we are discussing. I do so not because I question for one moment the crucial role of a fairly funded NATO and a strong and agile military and maritime power on a far greater extent than we have today, but because our defence and physical safety now rely on so many other things, in a totally transformed and disrupted world security environment that is unlike anything that existed even five years ago, let alone a decade or so ago.
A year ago the then Foreign Secretary, Philip Hammond, observed that the distinctions between military capability, intelligence agency capability, diplomatic capability and capacity building through development programmes et cetera, are “becoming more blurred at the edges”—in other words, very interrelated. To his list I would add: the sheer pace of digital technology, which has empowered the streets and the masses and transformed the balance of power throughout the globe; the fragmentation of states, which we have seen in the Middle East particularly; the vast shift of power, production and capital construction to the east and south and away from the north and the west in the 21st century, away from the Atlantic powers and especially to Asia; and, above all, the vital need to win, and keep winning, the narrative through adroit projection of soft power and through maximum connectivity, all the time and everywhere. It is what the Chinese call winning the discourse war, or the information battle, and it is now central in a way that it was not even five years ago.
The signals for a change of gear have been there long enough. None of what has happened now is very new. Long before Brexit or Donald Trump, the need for a fundamental rethink in our position was there. First, for example, it has been obvious for three decades that power was shifting in the world, away from the Atlantic hegemony of the 20th century and from Governments and hierarchies of power generally. Major changes in the co-ordination and configuration of Britain’s international policies were bound to be necessary. In many ways, the whole pace of innovation and investment is being set at the other end of the planet.
Secondly, it has been equally obvious that conventional military size and big spend were going to be challenged everywhere by small and agile methods, and that the whole scale of power and influence deployment has changed. The microchip has, among many other things, miniaturised weapons force and power dramatically. The Davids have been vastly empowered against the Goliaths everywhere. Almost any small organisation, tribe or cell can operate a lethal drone. An inexpensive shoulder-launched missile can destroy a $100 million plane or disable a $1 billion warship.
Thirdly, it has long been clear that in the digital age military engagement has to accept entirely new rules. The battle may no longer be on the battlefield. The ubiquity of the web and total connectivity, on a scale never before known in human history, mean that infinitely greater audiences have to be persuaded and influenced. There are no clear decision points between victors and vanquished. Trust becomes the new and essential winning weapon. Subtle new mixtures of force and friendship have to be crafted and assembled if permanent instability is to be overcome in any theatre and any kind of settlement reached.
As I have already said, none of this is very new. Indeed, our own military thinkers and leaders have responded with growing vigour over the decades. I remember the days of Frank Kitson’s low-intensity warfare, the practice of which I was involved in in Northern Ireland in the 1970s. Profound and innovative ideas have been continuously developed by military thinkers in response to these new conditions and new types of engagement. Yet there seems to me to be one colossal piece missing from this plethora of activity and all this dedication to new forms of power deployment in a radically transformed international milieu. The missing piece is clear: motivating purpose and cause. What exactly is it all aimed at? What is the central story, the truly coherent, graspable, definable strategic narrative that should be the common and impelling theme right across this landscape, and in the minds of every service man and woman at all levels all the time?
A central lesson from our House of Lords soft power report three years ago, Persuasion and Power in the Modern World, from the many experts who gave evidence to it, and from the current International Relations Committee inquiry into the UK Middle Eastern policy, is that for our power and influence to be effective, and our interests to be well protected and promoted, there have to be some defined policy priorities and goals. These can be derived only from a clear and overall articulation of our national purposes and direction, against a background of an increasingly confused and altered world. We need to be prepared for, believe in and be fighting for some definite goal.
As the noble Lord, Lord Hennessy, said, we need a certain idea of the United Kingdom—to adapt, as he said, General de Gaulle’s phrase—in the new networked international landscape that has replaced the 20th-century order. One has to ask what this certain idea, now in its British clothing in this age of global turmoil, is to be. Does the prospect of Brexit—possibly positively—and the arrival of Donald Trump, in a more negative way, point to the answer? I believe that they do. We now have to build a partnership for European security, although not under but liberated from the old EU treaties. This is plainly a major opportunity for creative leadership in the digital age.
We can cast off the image of a Britain of limited, downsized ambitions, as some American commentators keep saying we are signalling. They are frankly reading the wrong signals. However, they can hardly be blamed, when they see that we are spending less on our diplomacy through the Foreign and Commonwealth Office budget—now about £800 million net—than we blow, for example, on cavalier aid dispersals to international agencies or on subsiding carbon reduction by the most expensive conceivable means. Billions have gone in that direction with little to show for it. The sooner that these international departments dovetail, and in some cases even reunite—in the words of my noble friend Lord Howe, to pack a more powerful punch—the better.
As for America, it is obvious that Pax Americana is finished, even if some Americans still believe otherwise. America, spending more than the next eight major countries combined on defence, no longer wins wars. Anyway, I doubt whether President Trump is quite the power everyone seems to think, as power slips away from all Governments into the hyper-connected worldwide network. His attempts to impose trade protection on the fluid and revolutionised international trade scene are bound to fail in an age of internationalised production.
Should not our strategic and unifying vision be something quite different from either of these 20th-century tableaux? Should not our story be of a more confident Britain, superbly placed to operate with agility in today’s networked and heavily interdependent world, making full use of its huge experience and extensive global friendships, and an amazing latticework of relationships, trust, common understanding and brilliant connections all across the globe? Is not the inspiration a resourceful Britain, wonderfully woven into the Commonwealth network of 2.3 billion people using the same working language, language being, of course, the ultimate conveyor of complex ideas, common understanding and trust—the default protocol of the planet? For deploying Britain’s undeniably immense but still underused soft-power assets, the Commonwealth —with its ready-made trust network—is the ideal forum and platform, although there are some backsliders.
To see things through this lens demands a changed mindset among policymakers and those in all branches of government, civil and military, who are charged with safeguarding Britain’s security, and its global business, brand and reputation. We are talking about nothing less than a grand repositioning of the United Kingdom in a world utterly transformed by the digital age. For this we need a new strategic synthesis, ready to work bilaterally, with America as a partner, to a degree with China and closely with our European neighbours, but not permanently tied or overcommitted to any of them.
The Army speaks rightly of its core purpose, but whatever form power, deployment and projection take nowadays, soft, hard or smart, one purpose above all others needs to be clear, inspirational and a source of commitment at every level. This is to uphold the nation’s changing role and interests in an age of global turmoil, and to provide its security with a rock-solid basis. That is the unambiguous message that our society and its leading voices need to send to all three branches of our armed services, so that they can perform at their best, with a clear sense of direction. We owe them nothing less.
Baroness Dean of Thornton-le-Fylde (Lab)
My Lords, I thank the Minister for introducing this debate. I would like to interpret in that also his support for its taking place, as it would be a foolish Chief Whip who listed a debate without the Minister saying, “Yes, let’s go for it”.
I would also like to say how pleased I am that the noble Lord, Lord Astor, is back with us, debating defence issues. This House has been blessed in the past 10 years with two Front-Bench Ministers, the noble Earl, Lord Howe, and the noble Lord, Lord Astor, as defence spokespeople whom we have respected and certainly find most helpful in the work that we are trying to do.
I declare an interest. I chair the House of Lords defence study group, an informal grouping of about 60 Members, comprising experienced former military Members, politicians who have worked in defence and the MoD, and also lay Members, such as myself, who, while not working in either of those areas, have had some experience. I was chairman of the Armed Forces’ Pay Review Body. For the rest of my life I will carry with me a recognition of the huge debt that we as a nation owe to our Armed Forces, young men and women, day in and day out, year in and year out, often without being thanked for it.
A member of that group, possibly one of the oldest in it—not in years but in service—was Lord Lyell. I think that this is the first main defence debate that we have had since his passing. On behalf of the group I would just like to pay our respects and thank him for the work that he did over many years.
In their assessment, National Security Strategy and Strategic Defence and Security Review 2015, the Government said that they had concluded that the threat to our nation had not significantly changed. That is a view that many would challenge—and indeed it has been strongly challenged in this debate. A number of noble Lords have dealt with it quite factually, about how actually the threat has increased. The Minister alluded to it, even if he was not blunt about it. I suggest that, were it not for the distraction of the media with Brexit day in and day out, we would be seeing security issues much more on the front pages of the press than they are at the moment.
Introducing the debate, the Minister referred to the 2% contribution to NATO, as a number of other noble Lords have, too. One of our House of Lords study group Members, who is absent—a number have written to me to apologise and express regret for not taking part—was the noble and gallant Lord, Lord Richards of Herstmonceaux, recently the Chief of the Defence Staff, as we all know. He wrote:
“I am sorry to report I am abroad until 24 March and therefore will not be able to take part. What I would have emphasised is that while hitting the 2% target is a good thing, it has become a veil behind which Her Majesty’s Government is obscuring the true state of the UK’s defence capability. In itself the 2% target means little if a country’s ambitions, or the perceived threat, require more, as would appear to be so in the case of the UK”.
I think that that is view with which many of us would agree. The noble Lord, Lord Empey, who I think is not in his place at the moment, said that he did not agree with the 2%, that we should not have it there and that we should pay what we need to. I agree with the 2% as a base and a minimum entry to NATO. Certainly we need to pay more.
My noble friend Lord Touhig said in his excellent opening address that the most valuable asset was the people. Obviously I agree with that, having chaired the Armed Forces’ Pay Review Body. Two days after the strategic defence and security review in 2015, the Government announced in their spending review and Autumn Statement that they had included in that Statement a decision to spend £11 billion on new capabilities, innovation and the defence estate. Good—but where was the money coming from? Well, £7.2 billion of it was from efficiency savings, including military and civilian pay restraint. That restraint continues—the restraint, as I mentioned in our last defence debate, of a 1% maximum—yet other areas of public service, including MPs, were not limited to it. It also included a cut in the civilian headcount in the MoD of some 30%. So how can it be extra expenditure when it just shifts the deckchairs on the deck—and the people paying for it are, in my view, the least able to do so—at a time when as a nation, we face a higher security threat?
It is no wonder that the Armed Forces’ Pay Review Body talked in its last report about morale dropping, as has been mentioned in this debate. I am not at all surprised about that. Members of the Armed Forces see the statements that are made and what they themselves experience. The reality is—we have probably been too small-minded to say this out loud as we are now—that we need to spend more on the defence of our nation because of the state of the world today. The chairman of the Defence Select Committee in another place, who was sitting with us until a short while ago, has called for 3% expenditure. He reminded us that when we were last in a period of major terrorism and security threat—the 1980s, as has been referred to in this debate—defence expenditure varied between 4.3% and 5%. I do not think anybody is being so bold as to suggest that. The noble Lord, Lord Dannatt, another member of our group, has called for 2.5%—which, on nearly £40 billion of expenditure, is a not significant amount.
This is not just about the pounds and pence; it is about what we need for the security of this nation. How do we properly resource our young men and women and our defence capability in a world which is probably less secure now than it has been for many decades? In fact, between 2010 and 2016 defence spending reduced in real terms by 6.9%. We are still clawing that back. We also face the drop of 15% in the value of the pound since 23 June last year, which is having a negative impact on the MoD budget of around £700 million. I hope that the Minister will be able to confirm in his response that that will not come out of the set budget and that the Treasury will find that money. Talking of resources, is the Minister able to inform the House how progress is being made on an issue which was very topical a short while ago but has gone quiet recently? I refer to the recruitment of reserves, up to the total of 35,000 that was talked about.
Many Members of the House have taken part in this debate today and I respect hugely their expertise and experience. I say to the Minister, as gently as I can, that there has not been one demurring voice in this debate on the assertions, first, that we are in a more insecure world and, secondly, that we need to look at our defence budget. That voice has come from across the House, irrespective of party or which Benches we sit on. Can the Minister please pass that message back? I hope that a similar debate will take place in the House of Commons, because only by raising our voices in this joint, across-the-House way will we stand any chance of being listened to. We are not warmongers or people who call for expenditure because it is politically convenient to have a go at the Government. If we had a Labour Minister sat on those Benches now to answer the debate, my contribution would be exactly the same. I hope that that message can be carried back to the Government.
Lord Levene of Portsoken (CB)
My Lords, it is a great pleasure to follow the noble Baroness, Lady Dean, whose wise words on defence are always worth paying attention to. I thank her for her chairmanship of the group to which she referred, from which we all benefit. I also pay compliments to the noble Lord, Lord Touhig, for the efforts that he always makes to promote the importance of defence in Wales. He does a great job on that. I declare my interests as chairman of General Dynamics UK.
At a time when there is so much uncertainty in international relations, both in Europe and the wider world, our thoughts must always turn towards our defence to ensure that the nation is well protected. During this debate, with so many distinguished contributors, we are learning much of how our Armed Forces and others are properly prepared. But for those Armed Forces to be prepared, that preparation can be most effective only when they are supplied with the best equipment embodying the latest technology. The task of procuring this equipment is undertaken by the Defence Equipment and Support division of the Ministry of Defence, which is staffed by serving officers and civilians. For years, that division and its results have been, all too often, the subject of uninformed criticism centred on perceived delays or excessive cost when, very often, a fuller examination of these issues reveals a different picture.
Defence procurement around the world always gives rise to such feelings and countries have different approaches to dealing with it. The noble Lord, Lord West, recently asked a Question in your Lordships’ House relating to defence industrial policy. I was at pains to say that I did not believe that we should revert to an approach of “national champions”, which we had some years ago and which failed. So I shall speak today about the way in which we go about procuring our equipment for the Armed Forces and the DE&S organisation which is responsible for that task. It is a task for which some 30 years ago I had responsibility and, having been asked more recently by successive Defence Secretaries to oversee a process known as defence reform, I think that my perception of this area is relatively up to date.
Defence procurement requires a thorough understanding of the interaction between technology, production and commercial realism. I have argued for a long time that this was not necessarily very different from imperatives in other industries and that that process should be led by an experienced businessman, who understood both the development and the commercial imperatives. In my opinion, and at long last, the Government have managed to recruit an outstanding individual to head the organisation in the person of Tony Douglas, the man who previously ran the Abu Dhabi airport authority. Your Lordships will understand that that was no mean feat. This is a man used to getting complex projects completed on time and on cost: precisely what is needed in the Ministry of Defence post which he now holds.
To give further credit to those making this appointment, it was decided a little earlier to appoint a non-executive chairman to oversee the division. An inspired choice was made in choosing Paul Skinner to do this, a man whose reputation precedes him from his time spent at Shell and Rio Tinto. The top of the organisation is now in place and we should be able to deliver what we need, on time and on cost.
So far, so good, your Lordships may think, but like any other efficient organisation, it requires a clear line of control. In my view, it requires the chief executive to have authority and control over all the parts of his organisation. I have therefore been greatly concerned to look at the way in which the acquisition of the nuclear submarine successor programme is being largely hived off to a separate procurement organisation, over which DE&S will only have much reduced influence. It may be that that decision was driven by the Treasury, whose understanding of procurement in the past, I have to say, has been far from perfect, but it has taken years to find the right person to run DE&S and now the Ministry of Defence seems to be looking for yet another person to run the submarine programme. I believe that is fundamentally wrong. I know what has driven it, but I do not agree with it.
I hope that it is not too late for the Minister to discuss this with his colleagues to see whether a more suitable arrangement can be arrived at. The nuclear submarine programme is a very complex one, involving the design, development and construction of the most modern vessels. I can say from my past experience that this interface is complex but needs, in every way, to be closely connected with the rest of our defence procurement programme. A separation is wrong, and I believe it will not deliver the outcome that we really need.
I hope your Lordships may concur that we have some extremely dedicated people working on both the military and the civilian side in procurement, who rarely attract praise but very frequently are blamed for faults that often do not really exist or have been misinterpreted. As I said, we need the very best equipment to be procured. We need the best people to enable us to achieve this, and those people deserve our absolute support.
Lord Jopling (Con)
My Lords, I am sure this debate has been immensely enhanced by the contribution of the noble Lord, Lord Levene, who has just sat down, whose huge experience is of massive value to all of us. I begin by reminding the House that for many years I have been a member of the delegation to the NATO Parliamentary Assembly, where I am currently chairman of one of the committees.
It is only seven weeks or so since we had our last defence debate, but in view of continued tensions which confront us it is timely that we have another one today—I pay tribute to my noble friend the Minister for that. That is especially so when one contemplates what I describe as the “arc of trouble”, which stretches from the Baltic states in the north, through the Middle East and North Africa, to the Atlantic Ocean, where Nigeria continues to struggle with Boko Haram. Not all of it, but much of this tension, which has increased in recent times, stems from Russia’s increasing posturing and provocation, and I will concentrate most of my remarks on Russia.
This increased provocation by Russia comes despite a faltering economy, which we should remind ourselves has been compared in scale to that of Spain and which is mainly a consequence of crude oil prices that are near $50 a barrel. At the same time we are seeing burgeoning defence spending—admittedly from a comparatively low base when we remind ourselves that Russian defence expenditure only four years ago was less than that of the United Kingdom—and an intensification of Moscow’s military build-up throughout the entire region from the Arctic through to the Mediterranean. We have seen evidence of their tinkering in Libya recently.
Our allies in NATO and the east continue to feel threatened by the hard power imbalance in their neighbourhoods. Russia has the ability rapidly to amass significant forces on its border, and continues to mount anti-access and area-denial capabilities in the Baltic, Black Sea and Mediterranean regions. The Russians have threatened nuclear strikes against NATO allies and have withdrawn from or violated key arms control agreements. In addition, very importantly, they have developed a highly sophisticated propaganda and disinformation campaign, often blatantly distorting facts and the truth—a matter I shall return to in a few moments.
One cannot help feeling that, with the mounting threat from Russia, the NATO allies are relatively sleeping through all of this, and it is not helped by the continued uncertainty which comes from Washington. That is not only down to the wild and sometimes contradictory tweets and speeches from the President himself but down to this period of uncertainty in the formation of a new Administration in the United States. In the past, it has often taken up to June before all the political appointments are made, but last week, upstairs in the International Relations Select Committee, of which my noble friend Lord Howell is chair, we heard evidence that the current appointments in the United States are proceeding very slowly and that some of the most senior Pentagon political offices remain unfilled.
Perhaps one of the few firm messages, though, to come from Washington recently is President Trump’s dissatisfaction at the poor response to the target declared at NATO’s Welsh summit of moving towards 2% of GDP going to defence. When the noble Earl, Lord Howe, opened the debate, he referred to the five states whose defence spending comes to less than 1%. The noble and gallant Lord, Lord Stirrup, in his speech, talked about the need to name and shame those that do not spend even 1%. Unfortunately, he did not name them, and therefore I will. It has been implied in the past that it is bad manners and not very friendly to name the backsliders, but it is Belgium, Luxembourg, Spain, Slovenia and Hungary that currently spend less than 1%. That is a disgrace, particularly given that some of those countries are extremely wealthy and really ought to be moving towards the Welsh summit target. Indeed, some of them, particularly Belgium, seem to be spending less each year, which again I would have thought was indefensible.
This has been said before, but I repeat that it is a sad reflection on our European friends that after Brexit —I speak as one who was not in favour of it—80% of the spending on NATO’s defence will come from non-members of the European Union. That is also a disgrace. However, one constructive and praiseworthy development in recent times has been the decision to deploy battalion-size battle groups in the three Baltic states and Poland. I have expressed concerns in the past about the delay in their deployment, and I am very relieved that the first of the UK-led contingent has already arrived in Estonia. I have felt for some time that these months, which we are in the middle of now, covered a dangerous period of change and uncertainty which could have encouraged Mr Putin to make another provocative incursion one way or another.
I have two particular questions to ask the Minister. First, will he tell us when the Estonian deployment of UK troops will be complete? Will he tell us when it is expected that the other deployments—I am thinking of the Canada-led one in Latvia, the German-led one in Lithuania, and the United States one in Poland—will be complete? These deployments, although small in size, will provide an essential tripwire, which should warn Moscow that to engage with them would have immediate Article 5 implications.
Finally, I referred earlier to the propaganda and misinformation programme which the Russians are so good at. I ask the Minister to confirm that all preparations have been made, alongside our Estonian battle group deployment, to have adequate back-up of Russian speakers and media facilities to counter the inevitable sniping and vilification which we can be assured that the Russians are bound to spray over them in the months and years ahead.
Lord Hunt of Chesterton (Lab)
My Lords, this is an important debate about the very serious international situation facing the UK in terms of its capacity to defend itself in collaboration with its allies. I declare an interest as a scientific consultant to a defence contractor working for the MoD. I am also a consultant with a university in Toulouse, working on new wings for Airbus, and some of these Airbus facilities are of course important for the UK now. When I was head of the Met Office, I also saw a bit of how the MoD works— some of which made your hair stand on end—and, during that period of focus, the ability of the Met Office to forecast the atmosphere and oceans greatly improved. I should also declare that, when I was a professor at Cambridge, one of my research students used our research techniques to provide high-tech shelters for all the women protesting at Greenham Common.
Since this is a debate on the politics of defence, I should begin by asking HMG whether they are satisfied with the understanding and support of the British people for the main aspects of UK defence strategy. The first point of controversy has been about the size of the Armed Forces, which is now smaller in total than for many years and significantly lower than is needed to confront the main opponents to the UK and its allies, in Asia and the Middle East especially. This is a technical and financial question, depending on the choice of strategic goals, but we should learn more about the arguments.
The second major controversy, which is much more political, concerns whether the UK armaments should continue to depend on nuclear weapons systems. I believe that this is essential. It is of course the official Labour policy, as my noble friend Lord Touhig mentioned earlier this afternoon. The Labour and the Lib Dem parties continue to be split about this, with many members inside and outside Parliament being opposed. Also, of course, many countries in the NATO alliance are opposed to the use of these weapons.
A lesser but more recent controversy about the UK’s defence is to what extent it should be used to support Governments in the Middle East and Africa where civil war is taking place, or where there are outbreaks of disease and civil emergencies such as the breakdown of government systems in Libya and elsewhere. The noble Earl, Lord Howe, in his introductory speech commented on how our defence forces are used for these civil issues—and very effectively too.
There is very little political controversy about the use of the UK’s world-class defensive capability in cyber and security services to protect the UK and our allies.
I should like to make a suggestion that the Government need to build up support of their defence policies among all parts of society, including schools, universities, industry, trade unions and so on, in order to have support for their defence forces and their infrastructure within government. There is also a need to build up understanding about the role of the private sector.
I believe new approaches are necessary. I came to this conclusion when visiting with my grandson the excellent Royal Air Force Museum at Hendon, and I have told the noble Earl, Lord Howe, about this story. The technical and scientific aspects of the RAF over the past century were well displayed, and I assume that there will be some centennial celebrations at this museum in a year or two. But there needs to be more emphasis on current operational policies, as well as the developing technologies, and the existence of nuclear weapons in UK defence should not be ignored. It is also important, in museums and other places providing public information, to explain why the UK has defence forces in 2017—giving information about countries which are the UK’s allies and, controversially, which countries are not our allies.
In some schools, I am afraid to say, the governors prevent school visits to defence facilities. The RAF Museum, as an example, provides information about our former enemies. Surely there should now be considerable emphasis in all such information displays on how these former enemies are now our allies. There is a great misunderstanding by many young people on these issues. I look forward to the Minister’s response to this question.
Demonstrations, museums, and videos about modern defence forces and their infrastructure should also include displays and information about their use of technology and scientific developments, including systems collaborating with our allies. An example is the large Airbus transport plane I mentioned, one of which is used by the UK Prime Minister now, who, I am glad to say, no longer goes on a Boeing.
However, it is not realistic to pretend that our forces depend only upon UK industry and technical products. For example, the Met Office, which provides world-class meteorology and environmental data and forecasts for the UK forces, benefits from information provided through NATO from other forces, but it also provides its information to allied forces—such as weather forecasting, which is now used by the US Air Force. It is important that technical defence collaboration between NATO forces should not be impeded by the UK withdrawing from the current EU technological projects, which other noble Lords have mentioned. That may happen without considerable diplomacy. Perhaps the Minister could say how this issue is also being addressed.
Finally, there should be greater collaboration between UK defence scientists and those of our allies. When I was at the Met Office—perhaps it is not the case now— there were none on the Defence Scientific Advisory Committee, DSAC, and I hope that may have changed by now.
The Earl of Cork and Orrery (CB)
My Lords, in contrast to the large number of qualifications and interests which many noble Lords have professed, I can only profess to having been a Cold War submarine commander, but I have the interests of the senior service very much at heart. I thank the Minister for this debate, which has given us the opportunity to revisit and examine the entire defence area. We have heard the challenges to the rules-based order listed by many. They include, among others that have perhaps not been listed, famine of both food and water, nuclear proliferation and, perhaps we should say, even the new US regime.
In times of peace, military expenditure tends to be the Cinderella of government spending. Large parts of the population see it as neither necessary nor desirable, and it falls to Parliament to persuade the voting public to accept spending on defence when so many other areas command their attention. History tells us that although we are seldom fully prepared for conflict when it arises, we occasionally get it right. Henry VIII regularly ran out of money to maintain his forces; indeed, he began wars only when he had received a new injection of cash. Elizabeth I’s expenditure on warfare was remarkably modest, but it cost the King of Spain two-thirds of the entire revenues of the Spanish Empire in 1585 to build the Spanish Armada. Note that he started three years before the date on which the fleet was to set sail.
Between 1690 and 1815 Britain was involved in a semi-continuous global struggle, generally against France and Spain. In this period, spending on the Royal Navy consumed the largest share of government revenues, with the results that we all learned about in school. I am of course assuming that most of us come from an era when such matters as Napoleonic history and the Industrial Revolution still formed a part of the history curriculum. In 1814, the last year of the Napoleonic wars, the British national budget stood at £66 million, of which £50 million was spent on the war. The Navy spent £10 million, but Trafalgar was behind it; the Army, pre-Waterloo, spent £40 million; and another £10 million was spent on mercenaries from Austria and Prussia.
Post 1815, and during the 100 years or so of the Pax Britannica, we were probably the most confident country on the planet—confidence has been mentioned in several contexts. The peace was substantially maintained by the large but increasingly outdated Royal Navy. Defence expenditure fell steadily as a percentage of GDP, partly because of the vast rise in GDP itself during the 19th century, but by 1900 it stood at just under 4%. The arrival of Admiral Jackie Fisher as First Sea Lord in 1904 saw a complete change in defence thinking. Fisher was convinced that war with Germany was inevitable, and set about modernising the Navy and preparing it for war with enormous enthusiasm. He retired for the first time in 1911, with the job done so effectively that defence spending, at 3% of GDP, was lower than when he had arrived, due to the massive efficiencies and savings that he had been able to make while completely renewing the battleship fleet.
Fisher had the public on his side. He was such a popular figure that, as he bullied Parliament into supporting his new building programmes, the public coined the phrase, “We want eight, and we won’t wait”, referring to yet another class of Dreadnoughts. As a result, the Royal Navy entered the First World War as probably the only military arm in Europe ready for the conflict, and defence spending at 3.15% of GDP. There is a magic quality to this figure of three; it crops up time and again. From 1920 to 1935 it remained fairly steady at around 3%, before rearmament began in 1936. The arguments of Churchill and others surrounding that process do not need rehearsing in your Lordships’ House; suffice to say that they were highly controversial at the time. I apologise to your Lordships for reciting all this history, but I hope my point is clear: we ignore the lessons of the past at our peril. The visionary Fisher managed to revitalise the Navy within 10 years—but it took him 10 years, in an age far less technologically advanced than today. The equally visionary Churchill managed to get the ball rolling in 1936, although we were far from ready when the war started.
In more recent times, we entered the Cold War in the 1950s with defence expenditure at 6% of GDP, and it was still at 4% by the early 1990s. Since then, the so-called Cold War dividend has had the psychological effect of lulling the country into a false sense of security, which is now, 25 years on, starkly apparent. Other speakers have detailed, and no doubt still more will do so, the effects of the obvious lack of “mass”—that is, numbers—manpower shortages, the reduction in the procurement for stocks of weapons and equipment, and the scrapping of useful equipment because its maintenance or manning cannot be funded.
My principal point is that we must start to think the hitherto unthinkable of casting aside some of the shibboleths of 21st-century expectations and politics. Today, real spending as a percentage of GDP, in figures that are not widely understood by the public, includes the following figures: pensions at 8%, health at 7.4% and welfare at 6%. Add all those together and you get one-quarter of our entire GDP. Education gets 4.4% but defence gets 1.76% for pure defence spending and 0.25% for other things that have been creatively accounted into the defence calculation.
We simply do not have 10 years, or even three, to prepare for the next conflict that may be forced upon us. Despite the rapid advance of technologies, development times have lengthened. Fisher built “Dreadnought”, the first of a new type of battleship, in a year. The latest “Dreadnought”, the first of the successor class submarines, will probably take 15 years. It took 10 years from project start to launch of the first Daring class destroyer. The Type 26 frigate project began in 2010 and the first vessel has yet to be ordered. The numbers of both these projects have been halved since inception. The Type 31 frigate—perhaps you could call it the other half of the Type 26—is still a figment of the collective imagination. I could start on the Astute class submarine programme, but embarrassment for my old service forbids further comment.
The elephant in the room is clearly social spending in all its forms. While most would agree that such spending is only right and proper, I argue that the balance has been dangerously upset by the post-Cold War lull in military need. I also argue that the 2015 SDSR has quite possibly already reached its sell-by date, and that another serious look needs to be taken at our defence needs rather than looking through the other end of the telescope—or periscope—at what we can afford when all the other budgetary pressures have been contained. The SDSR addresses development but fails to address personnel recruitment and retention to any great extent. To quote the Secretary of State for Defence:
“Nothing is more important than defending our country and protecting our people”.
I offer another quotation, which I think came from the Prime Minister:
“The first duty of the Government is the defence of the people”.
In conclusion, I point out that while we aim to spend 2% of GDP on defence, Russia spends 5.4%, the US only 2.3%—but of course from a vastly higher GDP base—China 1.9% and Saudi Arabia a huge 13.7%. I have a final question for the Minister, which has already been asked: what consideration has been given to removing the costs of building, maintaining and operating the strategic deterrent from the defence budget to its own separate vote?
Other than all of that, the main issue that seems to come across from noble Lords’ speeches is morale and recruitment—the hollowing-out of services personnel. Equipment can and will be built and budgets will provide for that, but we have to create an attractive enough platform for recruitment to bring enough people into the services and benefit them in order to create the kind of task forces and numbers that we have been talking about.
Lord Robathan (Con)
My Lords, it is a pleasure to follow the noble Earl. He brings nautical experience to our discussions but I bring rather more of an Army bias. He is also a relative newcomer to this House. As a relative new boy myself, I note that your Lordships’ House has taken a bit of a kicking recently in the press but, having sat through most of this debate, I have been extraordinarily impressed by some of the excellent speeches, which have been interesting, well-informed and informative. It is of course invidious to mention names but I shall mention in particular the noble Lord, Lord Hennessy, and the noble and gallant Lord, Lord Stirrup, who I thought spoke particularly well. I am glad to see that the Secretary of State and indeed the chairman of the Select Committee from the House of Commons are both here listening. I hope that I can live up to that high standard, though I rather doubt it.
I shall make two points. The first relates to the standing of the Armed Forces, which was partially covered by the noble Earl. The second is about the current international situation, which was mentioned in the Motion, and our preparedness for it.
It is a cliché to say—quite rightly—that our Armed Forces are highly regarded. When I was working in the MoD, they were probably more highly regarded than they ever had been in my lifetime, largely because of Afghanistan, Iraq and the tragedies there. To digress, a friend of mine in the United States army told me that, after Vietnam, he flew back into Los Angeles airport and, as he walked out in uniform, he was spat at. I am glad to say that we have never got to that stage here and I hope we never do. In the same vein, about a dozen years ago, when there were elections to the US Senate, it was said that there was no elected senator with a child who had served or was serving in the armed forces. Of course, there were people such as McCain who had served themselves. In contrast, on the Benches here and in the other place, there are people who not only have themselves served in the Armed Forces but who continue to have connections through children and relations who serve. This means that we are closer, in many ways, to our Armed Forces than is the case in some other places. I am glad to say that it remains a respected career and attracts a high quality of both officers and men. It remains a profession of which to be proud. Parents can be proud if their children join the Armed Forces.
Lord Robathan
The noble Lord is, of course, an academic. It used to be “mankind” but now, apparently, one has to say “personkind”. When my son rang up and announced that he was thinking of joining the Armed Forces, his mother said, “Over my dead body”. She has changed her mind now, I am glad to say. It is not by chance that we have respected professionals in the Armed Forces. When I served, there used to be something called KAPE—keeping the Army in the public eye. This is very important. Unfortunately, with the reduction in the Armed Forces over a number of years, we have seen, for instance, good barracks being sold. I recall Chelsea. Hounslow, also in London, is on the market as, I understand, is Woolwich. Nobody quite knows what is going on with Hyde Park barracks. The point is that if you consign your Armed Forces personnel to the back of an industrial estate, the respect they are afforded is less. Messes have been contracted out. What used to be regarded as a home, particularly for officers, is no longer seen as such. Pay and conditions have continuously been eroded over many years.
We have heard about morale. Morale is a bit amorphous. If you listen to some people, it is always low. I used to think that if soldiers were not complaining about something, they probably were not happy. To put it mildly, recruitment and retention are not good at the moment. We have an Army that is not recruited to its 82,000 target. I urge the Government to look at this whole situation. It is not about people pitying poor soldiers who have seen awful things in Afghanistan and Iraq, as we sometimes hear. They do not want pity; they want to be respected. It is not about politically correct issues and diversity, nor about bad conditions in which people live, although these too are important. It is about feeling valued and respected by the society one serves. It is about being challenged by adventure and excitement, seeing a future career and lifestyle that can offer a decent life for oneself and one’s family, and doing a worthwhile job. This means the Government seeing the value of some things rather than just looking at the cost.
My second point, which has been covered much more in this debate, is our response to the current international situation. I was particularly impressed by the tour de force from the Minister about the strategic threats we face, which was backed up by the noble and gallant Lord, Lord Stirrup. I know that my noble friend the Minister is in a rather difficult position, but we all value his support for defence. I was part of the SDSR 2010, together with my noble friend Lord Astor and the noble and gallant Lord, Lord Stirrup. The noble Lord, Lord Touhig, is absolutely right. It was driven by costs. Some people tried to deny it at the time, but it was about cutting costs. I say to the three Labour Ministers who have spoken so far today, that the situation we inherited in 2010 across the public finances was dire. There is no question about that, nor any point in arguing about it. Not only was it dire but, in defence, there were unfunded procurement programmes going forward which we estimated at some £30 billion to £60 billion. It was an estimate, since nobody could tell us what the funding was because it was so chaotic.
The last, coalition Government, and Philip Hammond in particular—for whom I worked—brought defence spending under proper control. They should be congratulated on that and on the SDSR as well. They had the assistance of the Liberal Democrats. I see the noble Lord, Lord Wallace of Saltaire, in his place. He was also there with me. SDSR 2015 is a step in the right direction but we need to go a lot further. Other people have said so too.
My noble friend Lord Jopling, who is not now in his place, talked about Russia. I will not cover other strategic threats but let us home in on that. Nobody has been held to account for the murder of Litvinenko 10 years ago—not a mile from here—nor for the downing of a civilian airliner over Ukraine by Russian missiles. The Baltic states have a joke: “Visit Russia, before Russia visits you”. They are worried, and with good reason. The other threat, closely linked to Russia, is from cyberattacks. We have heard about whatever happened during the US election. We have heard about Montenegro. These attacks are non-stop, asymmetric and will grow.
I say to my noble friends on the Front Bench that the situation has changed. When I joined the Army in 1974, we had a complement of 150,000 or so. Some 55,000 were in West Germany, with tanks, missiles, tactical nuclear weapons and aircraft facing the East. We spent about 5% of our GDP on defence throughout the 1980s. Now it is around 2%. I will not dwell on how this is accounted for. We have only a vestige of the BAOR left. We do not expect invasion forces crossing the Elbe or the Rhine, but we should expect asymmetric warfare, as it is called, be it by “little green men” such as we saw in Crimea and the Ukraine, or by undermining the Baltic states by winding up their Russian minorities. We should remember that the Baltic states are guaranteed by Article 5 and an attack on one is an attack on all.
As a country, we need a bigger stick, as does NATO. Much has been heard about how NATO’s spending should rise; of course it should. We need to up our spending as well. I pay tribute to the Government—although it might not seem like it—and especially to current Defence Ministers. I know what they think, but we need to go further. The Chancellor of the Exchequer had rather a bad week last week, but I believe he understands the need to spend more on defence.
We need to educate our public, our politicians and government Ministers that defence is the first duty of government. There is always the danger that old men—and there are quite a few in this place—look back through rose-tinted spectacles at the good old days. We need a balance and to understand history. We could draw analogies with the 1930s, to which the noble Lords, Lord Hannay and Lord King, have referred. There is some validity in this—disarmament, isolationism, aggression and invasion of small parts of countries, such as the Sudetenland. I urge my Government to up defence spending so that the Armed Forces feel valued; so it becomes an attractive career for young men—and women; and, most of all, to ensure that British interests are safe in this deteriorating world situation. The first duty of government has always been the defence of the realm. We all need to remember that.
Lord Judd (Lab)
My Lords, the noble Lord was absolutely right to draw attention to the non-accountability of the Russians for their actions. I was for some years rapporteur to the Council of Europe on the conflict in Chechnya. One thing that drove me to despair was not only their brutal behaviour but the way in which they were recruiting for extremists. People were driven into the arms of the extremists by their behaviour.
It has been a very interesting debate, due in large part to the thoughtful and wise speech by the noble Earl and the firm and trenchant speech by my noble friend Lord Touhig. We should in debates of this kind always take some time to pay the warmest, unlimited tribute to the men and women of our armed services, the security services and the police, who carry so much responsibility in such demanding and exacting circumstances on our behalf.
I should perhaps declare an interest. I had a short service ground commission in the RAF during the Cold War. I was subsequently Minister for Defence responsible for the Navy, when we still had Service Ministers. Despite the awful circumstances, I found that a very fulfilling and enjoyable role.
Surely the first thing we should do in debating defence is to examine and define the threat. We should not start by talking about percentages of expenditure. We should ask: what is the real threat that faces us? What should we be doing to respond to that threat? What does that demand of us? How much is it responsibly essential to pay to respond to that? We sometimes forgo that debate, which leads to a great deal of misunderstanding. What is the threat?
For most ordinary people, one of the biggest threats in their lives is terrorism and extremism. What does that demand of us? It demands extremely good, highly qualified security services—we are deeply grateful for all they do on our behalf. It also requires a great deal of support from the police. However, we have to ask what leads people into extremist positions. We have always to remember that we are in a battle for hearts and minds. This can at times be extremely exacting, but it demands the highest conduct in the values that we proclaim because, if we slip from them, we play into the hands of the recruiters for the extremists.
I get very worried by some of Trump’s language. When Trump starts advocating waterboarding again and talks loosely on Twitter about the acceptability of torture, I get extremely worried. How many new recruits for extremism has he made by those few ill-judged, remarks? We therefore have a great responsibility as a long-standing ally of the United States to stand firm in our position and not yield an inch. I know from my long-standing involvement with people in the United States that many will rejoice if we do that.
The Minister is absolutely right to emphasise the unpredictability, instability and complexity of the situation. It is unnecessary to mention all the places in the world which have been listed several times in this debate, but I am glad that we have also talked about migration—refugees and displaced people—and climate change. Those two factors taken together might make anything we face at the moment seem like child’s play by comparison. We have also touched on the issue of world trade—of moving from an ordered approach to a phase of possibly aggressive free markets, without that moderating influence. That in itself becomes threatening.
I congratulate the noble Lord, Lord Empey, on raising another point. We must ask ourselves whether the carriers as we now have them and Polaris as it now stands are not distorting the expenditure of the overall defence budget compared to the real needs and threats that we will face and the action we may need to be able to take to contain those threats. I am not and never have been a unilateralist. I have always been a multilateralist on disarmament, but we have to ask that question, because it would be unfortunate if we end up muscle-bound because we are unable to respond to the real situation and the demands made of us.
The Minister emphasised working with others. That will be desperately important. I can think of few situations in which we can even contemplate acting alone. All of them, including terrorism of course, demand international collaboration. Therefore, working out new ways of collaborating with the European Union, continuing our close collaboration with France and others and playing our role within NATO is crucial.
Before I conclude, I mention one other point of which I am convinced. If we are to talk about effective defence policy, we have to see the relationship between arms control and regulation of the arms trade as central. In the situation in which we are operating, with extremism and terrorism as a factor, we cannot afford any danger of lethal weapons ending up in the wrong hands or weapons being used in a way that recruits extremists. We have to be certain of the end use of arms that are exported; we need to be certain of accountability. That is not an alternative. It is central to the defence programme. How are we recognising the danger and significance of armaments and ensuring that we are not inadvertently playing into the hands of people who will exacerbate the terrifying issues with which we are confronted?
Lord Walker of Aldringham (CB)
My Lords, as we have heard from many noble Lords who have spoken, we are living in a very troubled and insecure world— militarily, politically, economically and socially. Everything seems to be in turmoil. It does not matter where you look, the landscape is littered with issues that Governments and international institutions are finding it increasingly difficult to handle. In this Chamber, we pray daily for peace and tranquillity in the realm. But we are clearly not doing enough.
So what does all this mean for our military in the second decade of the 21st century? The most pressing item on people’s agenda is Brexit. At first sight it seems to us that Brexit itself is unlikely to have a vast impact on our Armed Forces—certainly on their roles and tasks. We are firmly attached to NATO and expect to be able to continue to co-operate with our European allies. More indirectly, there are big unknowns. What will happen within and to our defence industries? How will a change in the value and exchange rates of the pound affect our ability to fund the ever-increasing costs of procurement of military equipment and manpower?
Added to that is the spectre of the Scottish independence referendum. Should it become a reality, there will presumably be a requirement to give Scotland her share of the combat units and vehicles, aircraft squadrons, warships, intelligence, logistics and maintenance assets, and of course to sort out our nuclear base at Faslane. That will all take some doing. I wonder whether the Minister will be able to give us a view as to the Government’s thinking, should that happen.
The central lesson of our experience of the last 60 years is that forces equipped and capable of prosecuting warfare at the highest-intensity level are absolutely capable of less demanding operations. But the reverse is not true. That is why our national engine is and must remain warfighting. Indeed, the Minister referred to it as full-spectrum capability, so that we can change down through the gears when demands require it. This equation is as much about organisational attitudes and methods as about the physical fabric of our capability, although the former is nothing without the latter. To use an Army analogy, the sort of mentality that can position an armoured division tactically in an area equivalent to that inside the M25, supply it with 70 tonnes of food and 1,600 tonnes of ammunition on a daily basis and then use some 30,000 to 40,000 men and more than 10,000 vehicles to destroy or defend against an enemy at night, should be able to burn a few sheep when everyone else is panicking.
However, you cannot hope to keep the peace if those who threaten doubt your will or your ability to wage war. They will laugh in your face. Contingencies in which the enemy is an abstract noun, such as famine, terror, poverty and disaster, may be more likely at present, but we must never forget that we still have potential enemies whose senses are stimulated only by the weight of conventional force brought to bear on them—and there are more than 120,000 main battle tanks out there. High-intensity warfare is, thankfully, relatively low on likelihood, but we should not forget that we used a version of this capability as recently as the Gulf War in 1991 and again in Iraq in 2003—although thankfully both times against a very weak enemy. But the risk level has gone up a notch or two, as we have heard, particularly in the last couple of years. We have seen the sabre rattling of Russia with its latest modern battle tank and enhanced capabilities across the board—and only the other day Iran announced the development of its own version of the Russian tank.
We currently claim to have a set of forces structured to be capable of high-intensity warfighting as part of an alliance. In this type of warfare, operations are conducted in five dimensions: in and from the air; in and with the electromagnetic spectrum; on the land; and, if sea is involved, with both surface and subsurface operations. Our contribution would in effect be a one-shot weapon which would consume most of our available resources.
In a recently leaked memo, the last commander of our Joint Forces Command cast grave doubts on the efficacy of this capability. Even if only part of what he claims about the shortcomings in our strategic thinking, cybercapability and fragile naval, air and land capabilities is true, our ability to fight a conventional war must be in doubt. At the same time, there is much uncertainty about all our allies in NATO increasing their defence spending, as we have heard from so many noble Lords, and the impact that it might have on our US ally’s intentions. Were we to engage in an endeavour requiring us to deploy this capability and fail, we would be faced with one of two very unpalatable options: either accept defeat or resort to our nuclear capability.
A capability for high-intensity warfare is high on cost—and getting higher by the day. Once that capability is lost, it takes a long time, a lot of money and a lot of training to reconstitute it. Moreover, if Scotland votes for independence, the repair bill will be large and could come sooner than expected. Everybody agrees that the defence of our nation is the first duty of our Government. I believe that that duty to maintain such a capability should be followed, whatever the future costs may be.
I will talk briefly about one other aspect because it has been touched on by a number of noble Lords. It is about our people. Being a service man or woman is not better or cleverer, or necessarily braver, than being in another occupation—but it is different. That is because we require our youngsters to be sent off at a moment’s notice to a place they may have difficulty finding on a map, where they are required to risk life and limb alongside an ally whose language they may not be able to understand and in defence of an issue that they may not even have begun to grasp. In this distinctive chemistry of the military world, men and women, as we have already heard, wish to be valued. They wish to be valuable as well. They are paid folk and they have a contract that takes them to the door of death.
Nothing about the future suggests that tomorrow’s service men or women will have to be any less brave, less physically and mentally tough or less resilient than their predecessors. There will continue to be a premium on the men and women who are prepared to put up with the dreadfulness of an environment that is at best exceptionally unpleasant. There will be an equal premium on those leaders capable of persuading others to accept that dreadfulness.
These folk have hardly been highly rewarded by the nations they have defended. The New Model Army of the 1640s—the most reliable force to emerge from the English Civil War—was eventually driven to oppose the Parliament for which it had fought so well by the fact that its pay was in arrears. Time and again, servicefolk, who have been perfectly prepared to face physical risks, have sulked, grumbled or even mutinied over pay and conditions. The feeling that their country is not honouring its part of the contract or the fear that the well-being of dependants is threatened, strikes at the very basis of their loyalty. It is indeed ironic that our country has oft been best defended by those who owe it the least.
In 1957, when conscription ended, the Regular Armed Forces were some 700,000 strong; the defence budget was some 7% of GDP; and the average per capita cost of a service man or woman was some £41,000. By 2011, we had shrunk to186,000; the defence budget was just over 2% of GDP; but the average per capita cost was some £220,000. The full-time trained strength as of December last year had dropped to just over 139,000—some 4% below establishment. The jury is out on whether full manning can be achieved.
Today, after the last SDSR, one of the main areas in which savings are being sought is in personnel. Military pay will increase by only 1% over the next four years—well below projected levels in the private sector. For a private soldier this is 1% on £18,000—some £7,000 below the national average. Service allowances are being targeted for savings, and the 30% savings in numbers of MoD civilians could well require backfilling with military personnel. There are, too, concerns about the legal pursuit of 60 year-olds in Northern Ireland, as we heard from the noble Lord, Lord Astor, the damage done by the IHAT allegations, and concerns about service accommodation and work/life balance. I believe that we need to do better for our people, for it seems that our country still seeks to be best defended by those who owe it the least.
Earl Attlee (Con)
My Lords, I remind the House of my somewhat technical interest. I support the Motion in the name of my noble friend the Minister. I echo some of the observations about Russia made by my noble friend Lord Jopling. We know that it is an economic basket case with a GDP equivalent to that of Italy. It makes little that is good enough to export to the rest of the world, apart from armaments, and is far too reliant on mineral wealth. To cap it all, it has a perfectly rotten system of justice and the rule of law, which will make it very hard for ordinary, decent Russians to construct a healthy, modern economy. The right reverend Prelate the Bishop of Leeds made important points about the nature of Russia and its population. It is also important to understand that the Kremlin’s map of the world will look very different from the one in the Ministry of Defence. Its leader has no regard for an international rules-based world order and, unfortunately, many of his population hold him in high regard. That might change, however, if his armed forces took a number of casualties. In other words, Mr Putin cannot afford to get a bloody nose.
Russian armed forces have some good capabilities but they are not balanced and have weaknesses as well. Mr Putin’s strategic objective must be to break up NATO and Article 5 by intervening in the Baltic states, possibly by using Russian-speaking minorities as an excuse, as other noble Lords have said. I warmly applaud the Government for not being overreactive and provocative and for avoiding the trap of deploying at medium scale. A battalion group lays out a thin red line, or trip wire, while avoiding the expense of deploying at medium scale, which would fix a large proportion of our deployable combat power. At the same time, Mr Putin is incurring the cost of having large numbers of troops deployed, or at least at high readiness. However, we need to take special care to monitor the position of Russian-speaking minorities, as referred to by my noble friend Lord Jopling and other noble Lords.
Several noble Lords have referred to difficulties with the carrier programme. Yes, it is a capability that we do not yet have in place, but when we do have full operating capability it will be game-changing. Of the western states, only the Americans, the French and we will be able to deploy a carrier battle group to support a brigade deployed out of area. We should be positive and look forward to the increased capacity to be a force for good when the carriers come on stream. They are not in service today, but we do not face an existential threat today. It is perfectly clear, however, that we do not have enough surface warships or submarines and we need to do something about this. Perhaps addressing this concern properly will be unavoidable when the carriers start being deployed. The noble Lord, Lord Empey, suggested that we might have to deploy two carrier battle groups at once. Clearly, we could always have one carrier available, but I believe there is no intention to operate two groups at the same time. We do not have the resources to do that.
Many noble Lords have talked about manning, which is of great concern to me and others. I am content for Regular Army phase 1 soldiers to be counted as part of the trained strength of the British Army. This is because most of them will be trained to a basic trade standard quite soon—in most cases within, say, six months—after phase 1. In addition, they would have some military utility even if not fully qualified at trade. Furthermore, in a period of heightened international tension it would be possible to retain fully trained regulars currently in service, especially in terms of PVR and manning control points. The same cannot be said for a phase 1 trained reservist. I have to be blunt: they may well have attended only a few training weekends prior to a two-week recruits’ course. Conversely, a regular’s phase 1 training course would be about 15 weeks. After reservist recruits’ course, they will attend a few weekend training exercises, but they will gain military experience at a painfully slow rate. They will really learn to be effective only after they have completed their initial trade course and at least one annual camp. Anyone who thinks that a phase 1-trained reservist has military utility is living in a fool’s paradise.
Everywhere I look outside defence, there is a problem with insufficient professional and technical engineers. Pay has been more or less frozen everywhere in public service and conditions reformed—we know what that means. Forgetting the problems with MPs and Ministers, we see problems with getting QCs to be judges because the pay is so poor that it is not worth doing. In Parliament, we have problems recruiting IT technicians. We face similar problems in the Armed Forces. You can have public sector pay freezes for only so long. Careers advisers have a duty to school leavers to brief them honestly about career opportunities and the likely rewards. The Armed Forces simply do not have as good an offer as they used to. The Treasury appears to be interfering with the implementation of the conclusions of the Armed Forces’ Pay Review Body. I agree with everything said by the noble Baroness, Lady Dean.
There is something else that parents and careers advisers need to take into account. The Armed Forces were always a hard taskmaster. Nevertheless, a good serviceperson could be confident that, if they did the right thing—especially on operations—they would be backed by the chain of command and, ultimately, by Ministers on behalf of the sovereign. That is no longer the case: noble Lords need only to think about the IHAT inquiry. It also does not seem to be a problem to torment an old-age pensioner about some incident that occurred decades ago, which was thoroughly investigated by the authorities at the time and many of the witnesses to which have since sadly passed away. There is nothing wrong with our Ministers, but for one reason or another they are powerless to intervene.
Serving on military or aid operations is a risky business, so we need courageous, able and prudent risk-takers for this activity. Defence Ministers may point to reasonable recruiting and retention figures, but I fear that prudent risk-takers will shy away from the Armed Forces and the gap in numbers could, to some extent, be made up with—shall we say?—not such good quality. Of course, it will be exceptionally difficult to measure the difference, and impossible for the Treasury.
I will say a few words about the need for large-scale—more than one brigade—overseas deployment exercises. The whole point of having credible Armed Forces is to be able to deter aggression. It is immaterial how much is spent on defence if your opponent is not convinced that you can inflict unacceptable harm on him using conventional forces. There is also the risk of overestimating one’s own readiness and capability and then overlooking any weaknesses. Of course these exercises have a marginal cost, but it might be better to spend slightly less on capability and more on exercises if one can increase one’s conventional deterrent effect. In this connection, I pay tribute to my noble friend Lord Astor of Hever for his work with Oman. I look forward to the Minister making an announcement about Exercise Saif Sareea at some point in the future.
The world is far less stable than in the early 1990s, when I first made a contribution to a defence debate in your Lordships’ House. Nevertheless, we should be proud of what we do and aspire to do even better.
Lord Ramsbotham (CB)
My Lords, in addition to adding to the tributes to the noble Earl, I congratulate the noble Lord, Lord Sterling, on his persistence in trying to persuade the Government to hold this debate—the first one in which I have taken part whose title comprises three separate subjects.
I declare an interest as a former council member of the International Institute for Strategic Studies, because the starting point of my contribution is the conclusion reached in the most recent publication in its Adelphi series, entitled Harsh Lessons: Iraq, Afghanistan and the Changing Charter of War, in which, as a former soldier, I found it sad to read:
“In both Iraq and Afghanistan, the United States and its allies came extremely close to strategic defeat, due to inadequate leadership, reconstruction efforts, political strategy, military strategy, operational concepts, tactics and equipment. These shortfalls combined with failures, at every level, to adapt quickly enough to unforeseen circumstances, provided opportunities that were exploited by insurgents and militias”.
These are harsh and sobering words, particularly in the context of today’s uncertain world, when the United Kingdom, whose Armed Forces are now weaker than at any time in the last 200 years, has embarked on leaving the Union of its closest geographical allies.
The other interest that I must declare is as a member of the Joint Committee on the National Security Strategy, in which capacity I have already voiced my concern that—despite the lessons of the imperfect 2010 strategic defence and security review, and in defiance of their undertaking to base SDSR 2015 on the national security strategy—the Government published both at the same time. I submit that, in the light of Brexit, SDSR 2015 is now out of date and ought to be reviewed. Of course, we remain a member of NATO, but it is feeling the draught of President Trump’s variance from the long-accepted wisdom that the provision of a large NATO commitment is vital for the security of the United States, and not merely a favour to Europe.
The most visible evidence of that membership is the 2% of GDP that we guarantee to spend on defence—to the inadequacy of which, in real terms, I am not surprised that so many noble Lords have drawn attention. I note, too, that, in this year’s Military Balance, the IISS has suggested that spending amounted only to 1.98%, because the actual amount is blurred by pensions and other associated, rather than actual, costs. In this connection I must repeat what I have said many times in this House: namely, that, like the noble Lord, Lord West, I regret the coalition Government’s decision to lay the cost of the nuclear deterrent on the defence budget. I have also mentioned Field Marshal Lord Carver’s two definitions of affordability: whether you can afford something, and whether you can afford to give up what you have to give up in order to afford it. I suggest that the question of whether you can afford to give up capabilities such as the size of the Army or the number of surface ships needs to be re-examined in the context of today’s uncertainties.
Currently, the West, including both NATO and the EU, are preoccupied with the production of cohesive responses to the various challenges being posed by Russia. In theory, this should encourage European states, including the United Kingdom, to increase their focus on defence, including defence spending. However, rather than just spending more, they need to spend more smartly. Boosting R&D and equipment spending, and driving industrial collaboration, will prove, in the long term, to be much more useful than simply aiming to meet arbitrary financial targets.
Post Brexit, I hope that the United Kingdom will still be able to play a part in EU security structures. Europe’s defence R&D has long been fragmented, with only minimal co-ordination and collaboration. But, in light of the European Commission’s plan—as part of the European Defence Action Plan—to boost defence procurement and establish a European defence fund for defence technology and equipment R&D, I hope that we will also maintain access to EU-wide science and technology developments.
The only word one can use with certainty about the future is “uncertainty”. Currently, the NSS Joint Committee is conducting an inquiry into the national cybersecurity strategy, in the context of which I have been thinking about the whole concept of deterrence, to which cyber adds a new factor. Deterrence must have a strategic goal of preventing crisis, not just responding to it. But what is required to wage deterrence today is more complex than in the days of the uncertain stability of the Cold War. It includes not only operational analysis, strategy development, planning and execution, but understanding and achieving the integration of hard and soft power. In addition, Governments need to understand the potential uncertain regional and global effect that deterrent actions may have on actors other than the adversary, including allies. More significantly, the rise of non-state threats and the pursuit of offensive cybercapabilities and long-range precision conventional capabilities by some nuclear-armed states bring further risk and uncertainly to the efficacy of nuclear deterrence.
In addition to nuclear and cyber, we must not forget that conventional levers play an essential part in promoting our defence and security interests. As so much has happened in the interim, it is easy to forget the so-called revolution in military affairs and its presumption that,
“greatly improved surveillance, communications and precision-strike weapons would produce superior knowledge of the enemy and better-targeted and more effective strikes and manoeuvre, allowing a modernised and networked force to defeat a larger but less modernised one”.
That was announced only in 2001, before the burgeoning of wars among the people. Sadly, it will be some time before British forces are modernised sufficiently for our contribution to NATO’s readiness action plan to allow a credible full-time spectrum combat capability against a peer competitor such as Russia.
Returning to my earlier point about the size of the Army, any plans to increase the size of the forces we can deploy overseas—and the speed with which they can deploy—as many other noble Lords have pointed out, are more likely to be limited by personnel numbers than equipment availability. If we are to meet the challenges to the international rules-based order, and increase our preparedness to satisfy defence and security interests, I agree entirely with my noble friend Lord Hennessy that we should take a cold, hard look at the future, starting with an examination of whether the SDSR 2015 is fit for purpose.
Baroness Jolly (LD)
My Lords, over the last seven decades, the liberal international order has been a bedrock for promoting global stability and prosperity. Throughout my life, this nation—outward-looking and globalist—has been at the heart of the international rules-based project. From the start, British Armed Forces, diplomats and lawyers devoted their lives’ work—and, sometimes, their lives—to build and protect the many institutions and values which are now unremarkable set pieces on the international landscape.
Those values have guided our foreign policy for generations: the rule of law; respect for human rights and the dignity of all people; and international relations driven by process, diplomacy and rules, rather than shows of aggression and force. This liberal international order has not only allowed us to bend the arc of history towards ideals we believe are right—it has striven to move the world away from the games of “great powers”, wars of aggression and the rule of the strong. The institutions that have arisen out of this post-war international order—many of which the UK helped to build and lead—have also directly benefited the lives of UK citizens.
Nowhere is this truer than when it comes to defence and security. Our leading roles in the UN Security Council and a host of other key international institutions have allowed us to shape the international discourse. NATO—and other treaty organisations designed to promote collective security—has allowed us to spend less on defence while still being able to defend ourselves and our interests abroad.
In short, international laws and institutions have made the world, on aggregate, safer and more peaceful. Overall, that world is a more tolerant, wealthy and democratic place than the world of our parents and grandparents. Britain’s place in this world has been assured, and the rules-based system has promoted the norms and values that have made that possible. That order is as much a part of our defence as our Armed Forces and intelligence services. It is not possible to calculate the immense value that we reap from them year on year. Yet we have heard many times today that this international order is under threat, and I feel it—a protective safety net for seven decades, not guaranteed to last another.
Nor is it clear that we have the capacity to defend it. It is clear that without today’s order we will not even have the capacity to defend ourselves. We must treat threats and challenges to the international system as seriously as we treat direct threats to our own security. Some of those challenges have arisen naturally. We live in an era of huge progress—the pace of change near inconceivable to the international order’s architects of the 1940s. Fast-paced developments have transformed international relations, armed conflict and the relationship between individuals and states.
Many noble Lords have spoken about developments in cyber technology which have left our infrastructure and secrets vulnerable. The expansion of the use of drones in conflict has put pressure on laws of armed conflict and human rights norms. The proliferation of technology allows individuals to threaten national interests inexpensively. If the rules-based order is to avoid slipping into irrelevance and if our place on the world stage is to be assured, we must develop new international laws—and reform old ones—to meet the challenges brought by change.
But not all of today’s challenges to our world order originate from the changing times. We must acknowledge that there are those who seek to damage and destroy the system. Vladimir Putin’s Russia has set out to aggressively delegitimise, discredit and undermine western policies and institutions, as well as the entire post-Cold War norms-based security order. International institutions and the entire European security architecture stand in the way of Russia’s strategic aims, and Moscow is determined to undermine and render them irrelevant.
At the same time, Russia is a repeat violator of international laws—be they human rights laws, laws of armed conflict or treaty laws—in its domestic actions, in its annexation of the Crimea, in Syria and across cyberspace. The noble Lord, Lord King of Bridgwater, pondered how to deal with the Russians, and the noble and gallant Lord, Lord Stirrup, had the answer: we have to start by talking to them.
But Russia is not alone. In the South China Sea, China has taken “nation building” all too literally; Syria uses chemical weapons with alarming frequency; and then there is North Korea. Other nations watch the abuses and annexations, and they wonder whether they might reap similar results with impunity. How much chipping away can the rules-based order take before it is damaged beyond repair? The rise of non-state players such as the Taliban, Boko Haram and Daesh ignores the rules-based order altogether.
However, our soft power—second to none—can get us only so far in defending those structures and laws which have kept us so safe through our lives. In 2017 it is not clear that we have the capacity to defend vital interests or deter enemies. We must acknowledge that our Armed Forces have been hollowed out, and other noble Lords have spelled this out in detail: we have spent too little on defence, taking the peace dividend for granted; that which we have spent has sometimes been spent unwisely on pet projects built for yesterday’s wars; and we face a chronic shortage of personnel—young people do not see a future with our Armed Forces as a lifelong career. We may have state-of-the-art fighter jets and capital ships but, without the men and women and funds to run them efficiently, we may struggle to defend our interests abroad.
Our Armed Forces are our national insurance policy or our pension pot. Spending today is less painful and expensive than spending when it is too late. Spending on defence in a world of international rules, international institutions and NATO is much cheaper than spending in a world without them. However, a great deal has changed since the 2015 SDSR. In the light of post-Brexit currency fluctuations, a new spending review might be in order. The risk calculus from global threats is also different. There has been a great bonfire of the post-Cold War certainties these past few years, and our procurement must be adjusted to address this. Of course, there is also Brexit, and I thank my noble friend Lord Wallace of Saltaire for so ably describing the possible impact of our leaving the EU on our defence.
However, there is a third kind of threat to the rules-based order. Throughout the West, populists and nationalists are urging their populations to turn inward, cut ties and put themselves first—several noble Lords have alluded to the 1930s. These demands are not compatible with the globalism, the multilateralism and the idealism of shared values upon which our post-war order was built.
Brexiteers and Trumpeteers alike have railed against institutions which have secured us for decades: the EU, the WTO and NATO—all have come under fire. We must commit ourselves to a political fight to protect those institutions which keep us safe. Though an inward-looking or isolationist foreign policy may be comforting for many, the challenges that we face in today’s complex world cannot be solved by going it alone. Tomorrow’s global powers are not guaranteed to share our values and most certainly do not share our interests. Preserving institutions which promote the international rule of law and prevent the worst excesses of power politics must be as important to our defence as building new ships. Today, our building blocks of peace and security are our alliances, our global institutions and an international order which resolves most disputes without shots fired.
This is not idealism. The number of international armed conflicts has fallen decade on decade since 1945, and the number of deaths as a result of war has fallen consistently since the 1970s. Britain is a world-leading soft power and has the hard-power levers which come with permanent membership of the UN Security Council and key roles within NATO. These levers must become our “smart power” to preserve the international rules-based order. But more than that, the UK should take the lead in working to develop those institutions and rules to suit modern realities. Technologies may change but our commitment to values such as internationalism, openness, human rights and peacebuilding should not.
Lord Rosser (Lab)
My Lords, as one could have safely predicted from the speakers list, this has been an informed and thoughtful debate, during the course of which a number of different concerns have been raised, to which no doubt the Minister will respond shortly.
As my noble friend Lady Dean of Thornton-le-Fylde reminded us, the 2015 spending review and Autumn Statement said that the Government would invest £11 billion in new capabilities, innovation and the defence estate, of which some £7.2 billion would come from efficiency savings. Those efficiency savings apparently included military and civilian pay restraint, which is an interesting definition of the word “efficiency” and, as has been said, will inevitably have repercussions for recruitment and retention, as well as for morale. In the light of views expressed by the Joint Committee on the National Security Strategy that the savings target presented “a significant risk” to the delivery capabilities set out in the strategic defence and security review, and a statement in a Royal United Services Institute paper that the Ministry of Defence is “struggling” to produce the efficiency savings required, can the Government say where those efficiency savings will actually come from, and when?
In July 2015, the Government stated that they would meet the properly measured NATO pledge to spend 2% of national income on defence every year of this decade. However, concerns have been expressed about how the 2% spending target is measured—not least by the House of Commons Defence Committee, which stated that the Government had achieved their commitment to spend 2% of GDP on defence partly by revising the criteria used to calculate the UK defence budget reported to NATO so that it now included expenditure that had not previously been included but had been being incurred, such as, but not exclusively, pensions. According to the House of Commons Library, the Government’s Ministry of Defence net cash requirement for 2015-16 was £36.4 billion, compared to the £39 billion on the UK’s NATO return. No doubt the reason is that the NATO return includes elements of the Government’s cybersecurity spending, parts of the Conflict, Stability and Security Fund relating to peacekeeping, war pensions, and pension payments to retired Ministry of Defence civil servants.
However, creative accountancy and moving items from one set of accounts to another will not ease the pressures on our Armed Forces, at a time when the world hardly seems to be becoming a stable and more secure place, with the threats to our country and our interests diminishing rather than increasing. The Government anticipate moving more items from one account to another in future years, in a bid to stick to their commitment to increase defence expenditure by 0.5% annually over the next five years and keep pace with meeting the 2% NATO target. Under the Government’s projected growth targets, in terms of GDP defence expenditure is likely to fall below the 2% figure by 2020-21, which means that fulfilling the 2% commitment will require further financial contributions. Could the Minister indicate what those further financial contributions to meet the deficit are likely to be, if the Government’s most recent projected growth targets are hit?
The Government have already indicated that the deficit will be met by an additional inclusion of intelligence funding, on the basis that a significant proportion of the annual expenditure that funds the UK intelligence agencies is in support of military activities, with further sums coming from the new joint security fund, which provides money for security-related activities. Again, this does not represent additional resources available for increasing or even maintaining the capabilities of our Armed Forces. It is simply moving existing items of expenditure around, from one account to another, in order to be able to claim that the percentage expenditure commitment has been met.
Could the Minister say how much additional money would have been available for enhancing the capacity and capabilities of our Armed Forces if the additional money to bring us to the 2% of GDP figure on defence spending had been new, additional money, and had not been achieved by including in the figures items of expenditure already being incurred but previously not included in the total?
The reality is that defence spending has fallen, even taking into account the latest accountancy wheezes. The House of Commons Library has calculated that, between 2010-11 and 2015-16, defence spending as measured by the UK’s NATO return has, as my noble friend Lady Dean of Thornton-le-Fylde pointed out, been reduced by 6.9% in real terms. Using NATO’s data, the UK’s average proportion of GDP devoted to defence expenditure dropped from 2.6% to 2.1% between 2010 and 2015.
A further factor impacting adversely on the level of defence resources is the weaker pound, which appears to have been the result of Brexit, and with it an increase in the cost of defence imports. The National Audit Office expressed concern about that issue in a report the other day. Can the Minister say what the fall in the value of the pound since the referendum vote would mean in additional defence import costs over the next five years, if the value of the pound against other currencies were to remain unchanged? One estimate from a Royal United Services Institute source has suggested that, if the decline in the pound is sustained, the cost of our defence imports could increase by around £700 million per year from 2018-19—or around 2% of the total defence budget.
Concerns have been expressed by the Joint Committee on the National Security Strategy about the ability of our Armed Forces to fulfil the tasks given to them in the National Security Strategy and Strategic Defence and Security Review 2015, in the light of the capabilities, manpower and funding allocated. A recently retired head of the UK’s Joint Forces Command was reported last autumn as having said that the capability of our Armed Forces had been “withered by design”, and that there were capability shortfalls, dependence on small numbers of highly expensive pieces of military equipment, and dangerously squeezed manpower.
On top of this, we now have the potential impact of leaving the European Union, which must surely have an impact on some of the assumptions and strategies in the 2015 strategic defence and security review, to which the noble Lord, Lord Wallace of Saltaire, referred, as well as on our foreign policy objectives, to which the SDSR should be closely related if we are to ensure that the money spent on defence is spent on the right things. Do the Government have a view on whether our withdrawal from the EU will have an impact on the tasks set out for our Armed Forces in the National Security Strategy and Strategic Defence and Security Review 2015, and on our present alliances? If so, do they anticipate that fewer or more resources will be required by our Armed Forces to carry out their future role post Brexit? Or is this another Brexit-related issue on which the Government have no public view at all, despite the fact that the Foreign Secretary has already opined that we are now back east of Suez? The noble Lord, Lord Hennessy of Nympsfield, spoke about the need to reassess, determine and clarify our future role and place in the world as it has become today.
Before concluding, I would like to place on record once again our admiration for, and gratitude to, the members of our Armed Forces, who protect our nation at home and our interests abroad, and in so doing are prepared to put their own personal well-being and safety on the line. As my noble friend Lord Touhig said, the most valuable asset our Armed Forces have is the men and women who serve. Yet the 2016 continuous attitude survey revealed that only one in three of forces personnel believes they are valued, with just one in three planning to stay in service as long as they can. The noble Lord, Lord Robathan, referred to that issue.
One of the concerns that has often been expressed in this House is how we address the issues faced by many veterans—issues related, for example, to health, to employment and to housing. On the issue of housing for veterans, I want to refer to recent reports about the disposal of parts of the defence estate and accommodation in London, and apparent suggestions that it might be sold off and developed as up-market luxury housing or offices. What are the Government’s intentions in respect of the disposal of parts of the defence estate in London? There is a shortage of accommodation for those on low incomes in central London, not least among veterans, despite the fact that London is a major centre for jobs and employment. Can the Minister give an assurance that, where parts of the defence estate, particularly in central London, are disposed of, every effort will be made to ensure that it is developed to provide low-cost housing for Armed Forces veterans, and not sold off to be developed only for those with great wealth, whether from this country or from abroad? When it comes to considering bids, there can surely be no higher bidders than Armed Forces veterans and those on low incomes.
My noble friend Lord Touhig asked a question in his opening contribution from these Benches, to which the Minister will no doubt respond. He pointed out that Labour in government committed resources to the defence of Britain, and spent on average 2.3% of our GDP on defence between 1997 and 2010—a figure, incidentally, well below that called for by the noble and gallant Lord, Lord Stirrup, in this debate. My noble friend asked whether the Government would now give a commitment to match that figure of 2.3%—and not through more creative accounting—in the light of the many new challenges we now face. My noble friend referred to those challenges in some detail. They include cyber conflict and cyber warfare, and they mean that the world can hardly be described as a safe place today—as the Minister himself recognised, and on which subject the noble and gallant Lord, Lord Stirrup, my noble friend Lord West of Spithead, and the noble Lord, Lord Howell of Guildford, among others, spoke so powerfully.
Particularly in the current climate of significant change and uncertainty, it is vital that we are clear about the role and capabilities of our Armed Forces in protecting our nation and meeting our foreign policy goals. It is equally important that we then provide our Armed Forces with the necessary resources, manpower, training and skills to undertake effectively the objectives we require them to meet and deliver. Doubts have been expressed today about whether that is what is happening in reality, and we now await the Government’s response to the many questions and concerns that have been raised by noble Lords in this debate.
Earl Howe
My Lords, it is a mark of the experience that resides in this House that we have had the privilege of listening to so many well-informed, constructive and well-argued contributions to this debate today. It has been a truly memorable occasion in that sense. I begin by thanking most warmly all noble Lords and noble and gallant Lords who have spoken. In fulfilling the role that I occupy in government, I carry with me the reassurance that on all Benches in this House, without exception, there is unshakable support for the men and women of our Armed Forces and a passionate wish to ensure that they are led, equipped, trained and looked after to the highest standards in a way that enables them to fulfil, credibly and well, the tasks placed upon them by government. It is not surprising, with so many contributors and a Motion that is so deliberately broad in its scope, that the subject matter of your Lordships’ speeches should have been equally wide-ranging. I shall do my best, as I always do, to respond to as many noble Lords as I can in summing up. All questions asked of me will receive an answer, either today or in writing afterwards.
Let me start with some key aspects of the big picture and, first, the topic raised by a number of noble Lords: the UK’s defence budget. Not for the first time the noble Lord, Lord Touhig, raised questions around the 2% spending target. In particular, he cast doubt on whether we are genuinely spending 2%, a question echoed by the noble Baroness, Lady Crawley, and the noble and gallant Lord, Lord Stirrup, who urged us to spend more, as did my noble friends Lord Sterling and Lord Robathan, the noble Earl, Lord Cork and Orrery, and the noble Lord, Lord Ramsbotham. Let me remind the House that we spend in excess of the NATO 2% minimum and are pledged to increase our defence spending in real terms year on year during this Parliament.
The noble Lords, Lord Rosser and Lord Touhig, accused the Government of creative accounting. As they would expect me to say, we do not accept those accusations. The House of Commons Defence Committee’s own report on the matter confirms that all UK spending on defence, including intelligence, cyber, war pensions and others, falls firmly within NATO’s guidelines. Given that defence spending will increase by £5 billion over this Parliament, it is nonsense to suggest that there is no new funding. Our plans will deliver more ships, more planes and more troops at readiness, better equipment for Special Forces and more on cyber, to help keep Britain safe.
However, I want to be fair. The question posed by a number of speakers is, essentially, whether 2% is enough for the UK to be spending. First, the noble Baroness, Lady Dean, rightly reminded us that 2% is a base figure. However, the commitment to spend at least 2% of GDP on defence came after a thorough examination of threats and risks, after which the Government decided on an appropriate level of funding. I acknowledge the honourable motives of noble Lords who urge us to spend substantially more. However, I challenge the Government’s critics to show how the strategic defence and security review failed to set out a clear and affordable strategy for delivering one of the most capable Armed Forces in the world. That was our aim, and the SDSR did that by including an expeditionary force of 50,000 by 2025, £1.9 billion for cyber investment, new capabilities for Special Forces and a commitment to spending more than £178 billion on equipment and equipment support, which is £12 billion more than in previous plans.
The noble Lord, Lord Rosser, and the noble Baroness, Lady Dean, referred to the drop in the exchange rate since last year. I can tell them that we built headroom into our forward plan to use in the SDSR, and that is what we did. We hold more than £5 billion of contingency in the equipment plan against an independently assessed financial risk of £4.8 billion. The forward purchase of foreign currency at agreed prices has provided cost stability in the early years of the programme. Longer-term challenges will, if necessary, be met through the normal planning process.
In addition, the noble Lord, Lord Rosser, rightly referred to the MoD’s efficiency target. We have a demanding target, as we should, given the Government’s objective to drive down the deficit. We are absolutely focused on delivering it.
The noble Lord, Lord Empey, questioned our commitment to spend 0.7% of GDP on overseas development aid. The rationale for this is to enable government to prioritise prevention and preparedness in fragile states and regions. By doing so we build stability and tackle the root causes of conflict as part of a whole-government approach to national security, alongside diplomatic, defence and law enforcement capabilities. That is particularly important for countries and regions at risk of instability. These strategies are co-ordinated and owned by the National Security Council. An expanded Conflict, Stability and Security Fund now exists to direct cross-departmental effort in fragile states, and the MoD is able to draw from that.
I was grateful to my noble friend Lord Attlee for his helpful comments on military capability. On that theme, let me address my noble friend Lord Sterling’s concerns about hollowing out and shortfalls in capability. No one in this debate has referred to the clear plan set out in the SDSR 2015 of Joint Force 2025. The key to understanding this concept is a simple proposition: it is to strengthen our Armed Forces while increasing their adaptability. Joint Force 2025 is designed to meet the more complex real-world challenges of today and to provide a greater ability to undertake the full range of different operations, including warfighting under NATO Article 5. It will enhance our ability to work alongside our key allies and partners, including providing a framework for the UK-led joint expeditionary force.
With the joint force, by 2025 we will be able to deploy a force of around 50,000 drawn from a maritime task group of around 10 to 25 ships and 4,000 to 10,000 personnel; an Army division of three brigades and supporting functions of around 30,000 to 40,000 personnel; an air group of around four to nine combat aircraft squadrons, six to 20 surveillance platforms and five to 15 transport aircraft, and 4,000 to 10,000 personnel; and joint forces, including enablers and headquarters, of around 2,000 to 6,000 personnel. This capability will allow us to meet the demands of multiple smaller and geographically dispersed operations, and to respond to the most significant challenges to national security, including a call to warfighting under NATO Article 5.
The large, sophisticated expeditionary force of around 50,000 at the centre of Joint Force 2025, combined with the development of our Special Forces, sends a powerful message to our adversaries and, I am sure, reassures our allies. While it is perfectly true that various capabilities announced through the SDSR 2015 will not come online until the 2020s, we have a significant equipment programme already delivering and we will be making improvements to our cyber and intelligence capabilities well before the next Parliament. Policy changes, particularly innovation and efficiency, will take root immediately, as will international by design.
Let me follow the latter theme. The noble Baroness, Lady Crawley, drew attention to the UK’s relationship with our most important ally, the United States. The UK and the US have the broadest, deepest, most advanced defence relationship of any two countries. Our collaboration extends across the full spectrum of defence, including intelligence and nuclear co-operation, scientific research and flagship capability programmes. This has continued under the new Administration. The Defence Secretary spoke to US Secretary of Defense, Jim Mattis, on his first day in office. They had a substantial bilateral in the margins of the February NATO Defence Ministers meeting and teams are looking at a future meeting in the next month. We have shared priorities. President Trump, Vice-President Pence and Secretary Mattis have all confirmed the US commitment to NATO. I am sure that will be welcomed by my noble friend Lord Jopling, whose speech I listened to with particular care and attention.
Similarly, no one can listen to the noble Lord, Lord Hennessy, without paying careful attention to his advice. I listened to the noble Lord’s reflections about the UK’s place in the world with great interest and I noted with care the rationale he advanced for establishing a royal commission. However, although eloquently argued, I cannot agree with his characterisation of the UK as a destabiliser nation. Our exit from the EU does not equate to a retreat from the world stage—quite the reverse. The policies that we committed to in the last SDSR will bring us into closer co-operation with a wider range of allies and partners. Brexit does not change that. It reinvigorates—it does not diminish—our capacity to bring stability to the vexing world that he describes.
The noble and gallant Lord, Lord Walker, and the noble Baroness, Lady Crawley, asked about our defence and security relationship with the EU after Brexit. The negotiations with the EU Commission, of course, are yet to commence, but we want to use our tools and privileged position in international affairs to continue to work with the EU on foreign, security and defence policy. Defining the specifics of the UK’s future foreign and security policy relationship with the EU will be an important consideration as we leave.
The noble and gallant Lord, Lord Walker, asked about the effect on defence were Scotland to vote for independence after Brexit. I hope he will not be disappointed by the answer I am about to give. The people of Scotland have already voted to remain in the UK. The UK Government continue to be strongly committed to Scotland remaining in the UK, so the MoD is not making any plans for Scottish independence. I can, however, say that the Government are firmly committed to the future of defence in Scotland and its continued vital role in defence. Scotland is home to military bases that provide essential capabilities for the defence of the UK as a whole. It benefits from billions of pounds of MoD contracts placed directly and indirectly with companies which sustain hundreds of jobs and careers.
On the subject of Brexit, I am led to the speech of the noble Lord, Lord Wallace of Saltaire, who referred to our bilateral defence links in Europe, as did the noble Baroness, Lady Crawley. The noble Lord asked about Germany. The UK is committed to strengthening its defence and security ties with Germany. Germany is a key ally for us, as recognised in the SDSR, in which Germany was elevated to a tier 1 defence relationship alongside the US and France. Germany has since reciprocated in the publication of its own 2016 defence review. We are enhancing our bilateral co-operation with Germany in the areas of operations, training and equipment. We are seeking to enhance our interoperability as well. We are driving towards closer joint working on innovation and equipment projects—which should, in the case of common aircraft such as Typhoon and A400M, for example, reduce support costs—improving our information sharing and working more closely in other areas such as cyber and capacity-building in countries outside Europe.
Our bilateral links in Europe will grow in importance, as I have said. The UK and France have been bound by mutual security commitments for over 100 years and we are now building an ever closer bilateral defence and security relationship through the 2010 Lancaster House treaties. These recognise that our history, interests, values, challenges and capabilities are so closely aligned and so deeply interlinked that it is the right strategic choice, and plain common sense, to work together to address the security challenges that we face.
As I expected, the noble Lord, Lord West, challenged the Government on the size of the Royal Navy. I entirely understand his perspective—as I do that of the noble Baroness, Lady Crawley, who spoke on a similar theme—but I do not share it. Not only is our fleet set to grow for the first time since World War II but its high-end technological capabilities will allow it to provide a better contribution and to retain a first-class Navy up to 2040 and beyond.
Lord West of Spithead
I asked the noble Earl whether there would be more ships in the Navy by 2025 or fewer and, after a dialogue, we decided it would be one fewer. So it might be growing in weight but not in numbers.
Earl Howe
It is certainly growing in weight but our ambition is for it to grow in numbers once the Type 31E destroyer comes on stream. We will maintain a destroyer and frigate fleet of at least 19 ships and we will look to increase that number by the 2030s. The Queen Elizabeth-class aircraft carriers will be coming into service and the fleet will also be supported by a capable and renewed tanker fleet, with four new fleet tankers to add to our existing new fast fleet tankers in the short term and three new fleet solid support ships in the longer term. A fleet of up to five offshore patrol vessels will support our destroyers and frigates in delivering routine tasks and enhance our contribution to maritime security and fisheries protection.
The noble Lord, Lord West, asked about carrier capability. The first of our carriers, HMS “Queen Elizabeth”, will enter service in 2018, after which she will conduct flying trials. As he knows, in relation to the situation currently, where he asked about technical issues, there have been a number of issues associated with bringing the ship’s systems on line, but there is sufficient flexibility within the programme to allow us to complete the schedule on time. We still expect HMS “Queen Elizabeth” sea trials to commence in the summer of 2017.
I welcome the remarks of the noble Baroness, Lady Crawley, and the noble Lords, Lord Touhig and Lord West, on the Dreadnought programme. I can tell them that the construction of the first new Dreadnought-class submarines is under way following the contract award announced by the Defence Secretary on 1 October. On 20 December we published the 2016 annual report that updated Parliament on the United Kingdom’s future nuclear deterrent. This was the fifth update and, as with previous reports, it detailed the progress that we have made on the programme and its governance since the last update in the 2015 SDSR.
Also as set out in the SDSR, we are creating a new submarine delivery body for the procurement and in-service support of all nuclear submarines, to stand up in April 2017. I recognise that the noble Lord, Lord Levene, has concerns about this delivery model. The establishment of the submarine delivery body reflects the Government’s commitment to the nuclear enterprise and the unique scale, complexity and importance of this national endeavour. Its establishment reflects lessons learned from successful capital programmes found elsewhere in government which demonstrate that a dedicated organisation with a single focus can make a major contribution to successful delivery. It will also enable targeted investment to further enhance our performance on procurement and support, building on work taken forward under DE&S transformation.
As an executive agency, the submarine delivery body will have a clear cultural focus on delivering submarine procurement and support, time, cost and quality, and be the sole organisation responsible within the MoD for doing so. That provides for clear lines of accountability and allows us to create a closer relationship between the delivery body and its customers.
I depart from those noble Lords who argue that the deterrent should not feature in the defence vote. If the budget for the deterrent lay elsewhere, it is certain that the MoD budget would go down. However, it surely is right that the MoD pays for the nuclear deterrent as the Royal Navy is responsible for delivering it 24/7, all the year round, and has done so without rest for nearly 50 years.
The noble Lord, Lord Judd, asked what we were doing to promote nuclear disarmament. In February 2016 the UK proposed a programme of work at the conference on disarmament in Geneva with the aim of reinvigorating the conference’s work. The P5 process initiated by the UK brings together nuclear weapon states to build trust and confidence to help develop the conditions which would enable disarmament. Over the coming year we will continue to press for key steps towards multilateral disarmament, including the entry into force of the Comprehensive Nuclear Test Ban Treaty and successful negotiations on a fissile material cut-off treaty in the conference on disarmament.
I agree with much of what the noble Lord, Lord Levene, said about the principles underpinning our approach to defence procurement, and the same applies to the remarks of the noble Lord, Lord Davies of Stamford. The noble Lord, Lord Davies, spoke about the propulsion issues affecting the Type 45 class. There is good news on that front about which I will write to him, and I will write to the noble Lord, Lord West, about Type 31E. The noble Baroness, Lady Crawley, asked about Plymouth Devonport. The naval service is developing a strategy that will focus on centres of specialisation. This includes an amphibious centre of specialisation in the south-west based around Devonport.
My noble friend Lord Robathan spoke about the importance of maintaining our efforts to recruit into the Armed Forces, in particular into the Regulars, and I agree entirely with his sentiments. I will write to him to flesh out the picture that we are now experiencing, which is on the whole positive as official statistics indicate that intake levels are showing a steady increase. The noble Baroness, Lady Dean, asked in particular about recruiting into the Reserves. We remain committed to reaching our target of 35,060 trained reservists by 2019 and we are moving fast in that direction. Central to that is an improved offer, including better training, equipment and remuneration along with an improved experience for reservists.
The right reverend Prelate the Bishop of Leeds and the noble Baroness, Lady Jolly, reminded us compellingly of the threat posed by Russia. Russia is seeking to re-establish itself as a great power. In doing so it has become more aggressive, authoritarian and nationalist, and its risk appetite to take action in pursuing its interests has increased, hence the decisions taken by NATO at the Cardiff and Warsaw summits. My noble friend Lord Jopling asked about our enhanced forward presence in Estonia. The UK will deploy an enhanced forward presence HQ commanded by a colonel and an armoured infantry battle group to Estonia from early next month on an enduring basis. The battle group advance party deployed on 19 March and the main body will deploy in early April. The UK will also deploy a light cavalry squadron to Poland, and that deployment too will be completed next month.
My noble friends Lord King and Lord Robathan and the noble Lords, Lord Ramsbotham and Lord Touhig, referred to the importance of cyber. In 2014, GCHQ dealt with 100 cyber national security incidents per month. In 2015 the figure had risen to 200 a month. Each of these attacks damages companies, their customers and the public’s trust in our collective ability to keep their data and privacy safe. The Government recognise that we must take steps to defend our national security in cyberspace as we do in any other domain. We have a substantial budget for this across government and, to co-ordinate properly this whole-nation effort, the Government created the Cyber and Government Security Directorate in the Cabinet Office, which runs the national cyber security programme. We have also announced the creation of a national cyber centre to provide a unified platform to handle cyber incidents.
I cannot do full justice to the speech of the noble Lord, Lord Hannay, to whom I listened with great respect, but I will write to him. He asked whether we will remain committed to the agreement with Iran. We do remain committed to the full implementation of the joint comprehensive plan of action, often known as the Iran nuclear deal. We will continue to work with the United States on ensuring its implementation. As regards the UK’s contribution to UN deployments, we are increasing our support for UN peacekeeping efforts and we will continue to do so. As the noble Lord, Lord Hannay, will know, we have current deployments in South Sudan, Somalia, Mali and Cyprus, where we have been patrolling the green line for 50 years.
The noble and gallant Lord, Lord Craig of Radley, spoke about combat immunity, and I thank him for his constructive comments and for his continued and long-standing interest in this matter. As he will be aware, we have said that we will be bringing forward our proposals on combat immunity shortly. We are considering the responses to the Government’s recently concluded consultation, which did not propose specific drafting terms for achieving a policy. He will understand that I cannot pre-empt the process or anticipate what the Queen’s Speech may say, but I can assure him that we share his desire to provide greater clarity on this matter.
My noble friend Lord Astor, in a powerful speech, mentioned Northern Ireland and the issue of investigations currently under way in relation to incidents that took place during the Troubles. There are many of his remarks with which I and the Government, and I am sure many others present on these Benches, would wish to associate themselves. Against that background I can understand his questioning the justice of pursuing criminal cases against members of the military over events that may have taken place more than 40 years ago. It is a matter that concerns the Ministry of Defence, as it concerns him, but I hope he will understand the limitations over what I can say in response to his comments about the specific case he raised of Corporal Major Dennis Hutchings. I understand that the local magistrate in Armagh has today decided not to commit on the charge of attempted murder, but he has committed Corporal Major Hutchings to be tried in the Crown Court on a charge of grievous bodily harm. The case is now before the court and is clearly subject to a process that is independent of the Ministry of Defence and indeed of the Government. That specific case aside, I accept absolutely what my noble friend said about the need for the whole issue of criminal inquiries into conduct during the Troubles to be balanced and that many perceive this currently not to be the case, a point also made by the noble Lord, Lord Empey. My right honourable friend the Secretary of State for Defence has previously undertaken to work with the Secretary of State for Northern Ireland to ensure that in any proposals he brings forward to deal with legacy matters, there is a fair, balanced and proportionate approach to investigating the past.
The noble Lord, Lord Burnett, asked me a number of questions. I am being reminded that I have overshot the expected time but with the leave of the House I will continue for another couple of minutes. He asked about Sergeant Blackman and what monitoring and assistance is given to a defendant charged with serious offences, such as those Sergeant Blackman faced, at the start of the process. Ensuring that those facing legal proceedings have the appropriate welfare and legal support is a responsibility that the MoD takes extremely seriously. A wide range of welfare support is available to both current and former personnel and these policies are kept under review. For suspects, legal funding for service personnel and veterans facing criminal allegations is provided through the Armed Forces Criminal Legal Aid Authority.
We understand that neither the prosecution nor Sergeant Blackman’s original defence team obtained psychiatric evidence before the start of his court martial, and that no psychiatric evidence was called during the trial itself. The defence did obtain a psychiatric assessment for the purposes of sentencing. In the recent CMAC judgment the court stated:
“If the expert evidence of the psychiatrists and other evidence set out fully at paragraphs 86 to 106 below had been before the court martial, we are in no doubt but that the defence of diminished responsibility would have had to have been left to the Board and that it could have affected their decision to convict”.
The Government have been successful in establishing, both in the European Court of Human Rights and in the civilian courts, that the court-martial system is in principle safe, independent and impartial. The current system of majority verdicts has been considered twice by the Court Martial Appeal Court in the last five years and was on both occasions held to be fair and safe. The Court Martial Appeal Court, which is made up of the same judges as sit in the civilian Court of Appeal, has held that there is no ground for deciding that a verdict by simple majority of the lay members of a court martial is inherently unfair or unsafe.
The rules regarding membership of the court martial focus on and recognise the importance of experience of command and the exercise of service discipline at a sufficiently high level to enable lay members to assess the actions of those who appear before them in the court martial in the appropriate command and disciplinary context. We have seen no evidence that a member of the panel allegedly sent a message to the effect that they had come under intense political pressure to convict. We respect the court’s latest judgment in relation to Sergeant Blackman, which found no basis to criticise the original court martial and indicated that the issues raised at the time were dealt with in an entirely fair and proper manner.
In closing, I thank noble Lords once again for taking part in today’s debate. The message conveyed by noble Lords will not be lost on the Government. As ever, it has been a valuable discussion around some of the most demanding challenges that face our nation today. I am struck by the fact that we all appear to agree on the reality and nature of those challenges. They are the same ones that the Government wrote about in the SDSR 2015. We believe that to meet these challenges we need to strengthen the bonds of co-operation that underpin the rules-based international order. I do not believe that any noble Lord would wish to divert us from that aim. We are doing more to lead and reform NATO; we are intensifying our collaboration with allies and partners in pursuit of our shared objectives; and we are integrating the levers of power across government, so that the UK is more effective in these endeavours. Through Joint Force 2025 we are making defence’s principal contribution to the levers of government —the Armed Forces—more capable, versatile and deployable than ever before. Those programmes, when put together, make a reality of the UK’s vision of being an outward-looking, global force for good, promoting stability, security and prosperity around the world. I beg to move.
Defence and Security
(7 years, 8 months ago)
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Earl Howe
That this House takes note of the current challenges to the international rules-based order; the preparedness of the United Kingdom’s Armed Forces and of the NATO Alliance; and the levers available to Her Majesty’s Government to promote this country’s defence and security interests.
Brexit: Gibraltar
(7 years, 8 months ago)
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Lord Boswell of Aynho
To ask Her Majesty’s Government what is their response to the Report from the European Union Committee Brexit: Gibraltar (13th Report, HL Paper 116).
Lord Boswell of Aynho (Non-Afl)
My Lords, I am delighted to have this opportunity to debate our report and I am hugely grateful to the business managers for making time available at such short notice. This short debate is particularly timely given the presence tonight in the Gallery of the Chief Minister of Gibraltar, the honourable Fabian Picardo, who gave eloquent evidence to our inquiry, and the Deputy Chief Minister, the honourable Dr Joseph Garcia. Although I cannot of course direct my remarks formally in their direction, perhaps I may say to the House at large that I hope they found our report constructive and helpful. I underline my committee’s continuing openness to dialogue with the Gibraltarian Government and people.
As our report states very clearly, Gibraltar is part of the European Union and its citizens were able to vote in the referendum last June. Just under 96% of votes cast in Gibraltar were to remain—but Gibraltar, as a dependent territory of the United Kingdom, is now set to leave. In these circumstances, particularly, the United Kingdom Government, I suggest, have a unique moral responsibility to ensure that Gibraltar does not suffer as a result of a Brexit that its people almost unanimously opposed. I hope that the Minister will acknowledge that responsibility tonight.
There can be no question that Gibraltar has benefited hugely during our membership of the EU. I say “during” rather than “as a result of” our membership because I do not wish to assert any necessary causality. But we just have to remind ourselves of the position in the 1970s, when Spain was still under the rule of General Franco and the border was closed, to see that Gibraltar today, with its vibrant, service-based economy, is in a far better place. The existence of an open border, which allows more than 10,000 workers—40% of the total workforce in Gibraltar—to cross from Spain every day, is absolutely fundamental to Gibraltar’s long-term prosperity, as it is to that of Andalusia, the neighbouring region of Spain.
We urge the Government here to do everything possible to maintain Gibraltar’s access to that pool of cross-border workers. That will require intense diplomacy with Spain, the European Union institutions and the other 26 member states, which have played an important part in promoting dialogue between Gibraltar and Spain and which have a strong interest in maintaining the prosperity and stability of Gibraltar going forward. That diplomacy will become even more important after our withdrawal, when United Kingdom Ministers have ceased to participate in regular European Council meetings, and have lost that forum for frequent and informal dialogue with their Spanish counterparts.
I do not underestimate the challenges that the Government may face. Some are technical. The Government will need to explore the options in legal terms for maintaining a free-flowing frontier and we flag up the Chief Minister’s suggestion to us that the Local Border Traffic Regulation could provide a suitable basis for this. We also note that in the area of policing, the land frontier becoming part of the European Union’s external border could create difficulties. As in the case of the Irish land border, close co-operation between police forces on both sides of the border and flexible extradition arrangements will be vital.
There are other important issues such as aviation, Gibraltar’s access to the single market in services, particularly financial services, and Gibraltar’s territorial waters. I am sure that other noble Lords will touch on some of these tonight and I look forward to their contributions to this debate. Reaching solutions on these issues, in particular on the vital issue of the border, will require compromises on all sides and I hope that the Minister in responding to this debate will take the opportunity to outline the Government’s approach in more detail than we have heard thus far.
However, on one key issue no compromise is possible. The Government have made a commitment never to enter into sovereignty discussions against the will of the Gibraltarian people, and our Committee fully endorses that commitment. The reaction in Madrid immediately following the referendum was watched closely in Gibraltar and there is always the risk that someone will seek to inflame tensions with a view to their domestic political gain. The United Kingdom Government therefore need to be alert to any attempts by Spain to advance territorial claims over Gibraltar, by whatever means.
I emphasise that the rest of the European Union is potentially a useful ally in this process. The European Union and its member states have invested in Gibraltar. They have a real stake in the stability and prosperity of neighbouring states, and will not take kindly to any attempt by Spain to derail a Brexit deal over Gibraltar. It would be unwise and potentially counterproductive for the Government here to try to play off Spain against the other 26 member states. I hope that the Minister will agree that, as we approach the Article 50 negotiations, the last thing the Government should do is to try to undermine the unified approach of the EU 27. The challenge, in contrast, is to identify common interests and shared practical solutions that will underpin a durable continuing partnership.
Within the United Kingdom that partnership has to be built up across our constituent nations and regions. It needs to embrace Gibraltar, the Crown dependencies and the other British Overseas Territories, which each have a distinctive constitutional relationship with the United Kingdom and European Union. There also needs to be a partnership between the United Kingdom and European Union—that is, the whole European Union, including Spain—if we are to maintain a fruitful relationship for the future. It is important to acknowledge the strong bilateral relationship that the United Kingdom enjoys with Spain and to accept that that relationship should not be seen solely through the prism of the dispute over Gibraltar.
I will end as I began. Our view is that the United Kingdom Government have a unique moral responsibility to ensure that Gibraltar’s voice is heard and its interests respected as we approach Brexit and beyond. I look forward to the noble Baroness’s reply, in which I hope that she will clearly set out how the Government plan to fulfil that responsibility.
Viscount Younger of Leckie (Con)
My Lords, timings are particularly tight for this 90-minute debate and I therefore request that Back-Bench speeches are wound up as the Clock reaches four minutes, and no later.
Lord Selkirk of Douglas (Con)
My Lords, it is a great pleasure to follow the noble Lord, Lord Boswell, the chairman of the EU Select Committee, on the needs of Gibraltar, which must not be overlooked. It has long been popular to invoke the Rock of Gibraltar as a symbol of steadfastness and safety. Now, as a result of Brexit, the Government must strive vigorously to ensure that that massive limestone promontory, the territory that surrounds it and its infrastructure should remain in excellent condition and that the people will thrive.
Greek myths describe the Rock as one of the Pillars of Hercules. In more recent times, we have had 300 years of shared history to uphold after Gibraltar was ceded by Spain in the treaty of Utrecht in 1713. Since then, like the ravens at the Tower of London, the Barbary apes that live on the Rock have often been depicted as legendary guardians of Britain’s political fortunes. Well aware always of the need to boost morale, during the Second World War Winston Churchill was anxious that the apes, whose numbers had fallen as low as seven, were seen to continue to flourish. As the Battle of Arnhem was raging, he sent a message to the Colonial Secretary demanding that action be taken to ensure that the troop of animals on the Rock should total no fewer than 24.
To return to the present day, clearly the United Kingdom’s decision to leave the European Union has raised complex and hugely important issues for the Gibraltarians, who voted by 96% to remain in the EU. Almost immediately, the Spanish Government once more raised the vexed issue of possible joint sovereignty to allow Gibraltar to stay in the EU. However, this was angrily rejected by its Chief Minister, Fabian Picardo, who characterised it as the generosity of the “predator” towards a wounded prey. Borrowing words from President John F Kennedy’s inaugural speech in 1961, the Chief Minister movingly told the House of Commons Exiting the European Union Select Committee that:
“Gibraltar will pay any price, bear any burden and meet any hardship in the context of ensuring that we have a future that is bright and exclusively British post-Brexit”.
Gibraltar, through no wish of its own, finds itself on the front line of the consequences of our planned exit from the European Union. After Brexit, the UK will have two land borders with the EU: one between Northern Ireland and the Irish Republic and the other between Gibraltar and Spain. Currently, around 12,000 people cross that Spanish border every day to work in Gibraltar, making up 40% of the workforce there. I strongly support the report’s call for the maintenance of a frontier between Gibraltar and Spain which is as free flowing as possible following Brexit. It emphasises the need for all parties,
“to work together in good faith to reach an agreement that supports ongoing regional cooperation and trade, and avoids undue disruption to the lives of thousands of border residents who cross the frontier daily”.
The report also stresses—the noble Lord, Lord Boswell, made this point firmly a moment ago—that the Government of Gibraltar have placed their trust in the UK to negotiate on their behalf. It goes on to state that,
“the UK Government has a moral responsibility to ensure that Gibraltar’s voice is heard, and its interests respected, throughout the Brexit process”.
I believe that Britain’s negotiators must also be vigilant over any attempts by Spain to use the constitutional future of Gibraltar and the issue of sovereignty as a bargaining tool.
EU funding has played an important role in Gibraltar’s development in recent years. Does the Minister agree that there is an urgent need for the Government to clarify what kind of UK financial assistance will be available for projects in Gibraltar after Brexit, especially beyond 2020? After Brexit, can we also be assured that the Government will support opportunities for Gibraltar to benefit from any new trade deals which are negotiated by the UK in the future? In conclusion—I am on my last sentence—I hope the Minister will be able to promise us that in every way possible in the months ahead, the Government’s negotiators will shoulder their historic responsibility and work to secure the best possible outcome for this uniquely patriotic and enterprising British Overseas Territory.
Lord Anderson of Swansea (Lab)
My Lords, this is an admirable report, which sets out the key challenges facing Gibraltar after Brexit. The Government of Gibraltar recognise the complexity of the issue and call for a measured, multifaceted and indeed nuanced response. I will make but three observations.
First, any deal following Brexit will carry more risks and be less advantageous for Gibraltar than the status quo—hence the negotiations, in essence, will be about damage limitation. We have, as the noble Lord, Lord Boswell, stated, a moral responsibility: 96% of the people of Gibraltar voted to remain, and I am puzzled that certain Brexiteers such as Farage, who claim to be Commonwealth men, seem to indicate that they know the interests of Gibraltar better than the Chief Minister, Fabian Picardo, and the Deputy Chief Minister. What are the current benefits to Gibraltar, which led to such an overwhelming vote? The UK, as an insider, is its advocate in Brussels and of course in New York; in addition, UKRep is its eyes and ears in Brussels, placating at an early stage proposals which might harm the interests of Gibraltar. Clearly, these two roles will no longer be possible, at least to the current extent, when we are outsiders.
Secondly, what then are the principles on which we should embark on negotiations? Clearly, we have to listen very carefully to the concerns of Gibraltar over the single market, financial services and the border, and keep its Government wholly in touch with developments. To this end, the proposed joint ministerial council must help. We must also make crystal clear to our Spanish colleagues, with whom we otherwise have excellent bilateral relations, that there is no point in their seeking to make life more difficult for Gibraltarians after Brexit, as El País appears to suggest. Indeed, any such action would be counterproductive, as there is no question of the British Government countenancing a change without the agreement of Gibraltar. We also have to ascertain which EU benefits Gibraltar is likely to lose and consider ways and means of replacing them after Brexit. We should also stress the social and economic benefits to both Spain and Gibraltar of a frictionless border and be ready flexibly to search for new structures to facilitate future co-operation.
Thirdly, what are the prospects after Brexit? Who knows the likely spirit of our negotiations with our partners in the European Union? The Prime Minister’s priority is immigration, which is not relevant to Gibraltar, but not the single market, which is. Our aims and interests are best served if we seek to improve our bilateral relationship with Spain, emphasising the mutuality of interest. The heading of the final chapter of the report carries the warning to all of us: “An uncertain future”.
Lord Chidgey (LD)
My Lords, I too congratulate the noble Lord, Lord Boswell, and his committee on their report, called simply Brexit: Gibraltar. I make no apology for being a friend of Gibraltar, having been a member or officer of the All-Party Parliamentary Group for Gibraltar almost since it was established, some 20 years ago.
As a member of the Foreign Affairs Select Committee in the other place, I took part in the inquiry that revealed the attempt to pass the sovereignty of Gibraltar to Spain without first engaging with the UK Parliament. I had the privilege to be invited to act as an official observer to the 2002 referendum on whether Gibraltarians wished to remain British and reject joint sovereignty with Spain, in which 98% voted to remain. I have spoken at Gibraltar Day rallies in Casemates Square, addressing crowds of over 20,000 joyous Gibraltarians, fervently displaying their patriotic desire to remain British. Members of our family walked through the Alameda Gardens in the 1920s, watching the Rock Hotel being built. And I have stood beside the statue of the young Gibraltarian family, commemorating the deportation of many thousands of women and children to the UK for their safety during World War II, only for many to find their safe haven turned out to be London. Some were not allowed to return home until long after the war had ended.
Her Majesty’s Government of Gibraltar, have no doubt about the commitment of the UK Government and the British people towards protecting British sovereignty of Gibraltar, in accordance with that 2002 referendum. I agree that it is important, in the present uncertain climate, particularly given recent statements by Spanish Ministers, that this commitment continues to be publicly and robustly restated. Gibraltar has, since the early 18th century, been of great military significance to the UK’s defence strategy, following the ceding of Gibraltar to the UK in perpetuity by the treaty of Utrecht.
While the UK is re-establishing an interest in projecting power east of Suez, access to Gibraltar’s airport and base, the harbour and the underground arsenal is integral to her ability to project power through the Indian and Pacific Oceans and beyond. There are two key issues for Gibraltar: the freedom to provide services and a free-flowing frontier. With regard to services, analysis shows that 90% of her financial services industry relies on trade with the UK. So far, the UK has committed to preserve and underpin the existing access to the UK markets. The UK Government have said they are prepared to look to extending the scope of market access into the UK, and take account of Gibraltar’s priorities, as they negotiate post-Brexit deals around the world.
The Government must ensure that Gibraltar attains the same level of access to the single market as covered in the scope of any trade deal the UK secures. It should be the duty of Parliament to oversee any draft deal that the Government bring back from the negotiating table and to ensure that this condition is met. It will be the duty of Parliament to ensure that the Government stand ready to robustly defend Gibraltar if Spain exerts heavy-handed border controls during the EU negotiations. A fluid border is essential to cater for the movement of cross-frontier workers.
Above all, there must be no attempt to compromise on Gibraltar’s sovereignty. Joint sovereignty was comprehensively rejected in the 2002 referendum by 98% of the population. Parliament must be on its guard to expose any attempt to hand over sovereignty to Spain through the side door while attention is diverted by wider Brexit issues.
Lord Luce (CB)
I declare an interest as a former Governor of Gibraltar and as the current chancellor of the new University of Gibraltar. When I arrived as Governor, exactly 20 years ago this month, one of my tasks was to help and encourage Gibraltar to transform from a defence-oriented economy—although defence remains very important today—to a diversified economy, in which it could be financially more resilient. During that time this has happened. Today we have a resilient, strong economy: tourism, port and bunker services, online gaming and financial services are well regulated and transparent, in conformity with the standards expected by the European Union and the OECD. This transformation is being brought about and led by two notable people: Sir Peter Caruana, the former Chief Minister, and the present Chief Minister, Fabian Picardo, who may be listening to this debate.
Gibraltar has faced many challenges in the past 312 years under British sovereignty; now it faces Brexit. It faces the dangers of Brexit and I therefore welcome this report led by the noble Lord, Lord Boswell. It seems to me that there are three issues for Gibraltar. First, there is access to the single market. As we have heard, 90% of the financial services are with the United Kingdom. Secondly, there is the need for the free flow of people and goods on the frontier, with 12,000 people every day going into Gibraltar from Spain, 7,000 of them Spanish, with the EU Commission playing the role of arbitrator regarding the flow of people across the frontier. Thirdly, there is the need for co-operation in security and judicial matters—for example, the European arrest warrant.
Against that background we have this excellent report, published under the chairmanship of the noble Lord, Lord Boswell. I welcome the point that everyone—above all the noble Lord himself—has made, that Her Majesty’s Government have a moral responsibility to the people of Gibraltar. It goes without saying that Her Majesty’s Government must keep up the commitment on sovereignty but, as always, with the backing of this Parliament. However, there are other practical recommendations, such as keeping the UK and Gibraltar as a single state for the purposes of negotiation; suggesting that we should strengthen Gibraltar’s financial and business links with the UK; suggesting that Her Majesty’s Government should underpin EU funding arrangements in the future; and, if the frontier becomes an external one, taking up the Chief Minister’s suggestion of some kind of local traffic management plan that works in other areas.
Our relations with Spain would benefit enormously from collaboration across the frontier, Gibraltar contributing 25% of regional GDP in the local Spanish area and being the second-highest employer in the region of Andalusia. The co-operation is enormous, as are the benefits, so the choice for Spain is quite straightforward: either return to the stale old Francoist bullying and use Gibraltar as a diversion from political problems, or recognise an overall mutual interest of close economic and political relations with the UK against the background of the EU negotiations and the achievements of the previous Spanish socialist Government in collaborating more closely with Gibraltar to the benefit of all in that region—Britain, Spain and Gibraltar. That must now be our aim.
The Lord Bishop of Leeds
My Lords, I endorse all that has been said so eloquently. The report is excellent, but for me it raises a number of questions. The main one concerns the fact that throughout the referendum campaign, and subsequently, we have repeatedly heard statements such as, “We will get a good deal”, and, “We will do this and we will do that”, when in fact we do not hold the power in a lot of this—it will have to be negotiated. Despite urging that we get the best for Gibraltar, I want to be assured that the Government are stress-testing all the scenarios, including the worst-case ones. We owe it to the people of Gibraltar to do that because it was not done in preparation for the referendum itself.
If you look through the eyes of Spain, you find that it is not good enough for us simply to say, “We mustn’t compromise on sovereignty”. What if the Spanish hold out sovereignty, play a long game and say, “We’ll just sit this out. We won’t give equivalence”? What if the EU does not give us equivalent status? What if Spain wants to use sovereignty or cross-border access and frontier issues as a bargaining chip? We cannot simply stand there and say, “Well, you can’t”. I want to know that we are stress-testing this. Who has the power? After all, we have spoken of having a clean Brexit; what if the Spanish take us at our word? That has to be thought through and our response to it considered.
Particular questions are raised here. As I indicated, if the EU declines to give equivalent status after Brexit, what then? What is the cost to the UK, already alluded to in this debate, if Gibraltar is given no access in future to EU programmes? Has that been costed out? In paragraph 29 of the report, we read about the strong economic links to the UK, specifically the City, should the single market be infringed in some way. But what if the City effectively moves to Frankfurt or Paris? We keep saying, “Well, it won’t”, but what if it does? We do not hold all the cards.
Paragraph 36 says that, if access to the single market is restricted,
“the rest of the world beckons”.
So does outer space. It does not mean that we can get what we want. Where is the realism that comes from looking through the eyes of those who do not hold the best interests of the UK as their priority?
Paragraph 50 says that, for Spain to intensify border controls would be regarded as an “aggressive act”. Frankly, why should it not? It did not choose this. I suspect that, if the boot were on the other foot, we might be rather aggressive as well.
I just want to be reassured that these scenarios are being stress-tested in the way that they were not before we went into this business in the first place. We owe it to the people of Gibraltar.
Baroness Hooper (Con)
My Lords, I declare an interest as honorary president of the Friends of Gibraltar. This is a UK-based group which brings together Gibraltarians and others who have lived and served in Gibraltar and who are concerned about keeping in touch with what is going on on the Rock, politically, economically and especially in terms of its history and heritage. I am also a long-standing member of the All-Party Parliamentary Group for Gibraltar.
As an erstwhile member of the European Union Committee, I congratulate my noble friend Lord Boswell on the way in which he introduced this debate and his committee for its comprehensive, first class report. It succinctly and clearly covers the economic, border and sovereignty issues and the uncertainties resulting from our referendum decision. Although all our overseas territories have been affected in one way or another by Brexit, Gibraltar is the only one in Europe and is most at risk. I had always hoped that, under the umbrella of the European Union, it would have been possible to sort out some of the challenges and issues with Spain which have made life so difficult for Gibraltar in the past.
I also know Spain well and have many friends there. I find it hard to believe that the Spanish Government would try to exert undue pressure and heavy-handed controls during the period of the Brexit negotiations or, indeed, once we are out. I understand the fears. We have all had experience of the past, such as the queues and delays at the border and the airport problems. Let us hope that the newly arrived Spanish ambassador to this country will be watching or at least listening to this debate and the signals it sends out.
I welcome in particular the setting up of the dedicated joint ministerial council, and I trust that it will ensure, to some extent, a less uncertain feeling about the future for Gibraltarians. I hope that it will also give the Government of Gibraltar the realisation that the United Kingdom Government are giving Gibraltar a special place and space in the negotiations.
As has already been said, the key issue for Gibraltar is access to the single market and services, as well as the border issues and air flights. If a week is a long time in politics, two years gives us an opportunity to use ingenuity, imagination and circumstances as they change to find a solution. This has to be the main concern of the joint ministerial council. If the Minister could give us more information as to the council’s agenda, that would be very welcome.
My special interest in Gibraltar started when, after the first direct elections to the European Parliament in 1979, as a newly elected MEP, I was asked to be one of a small cross-party group to keep an eye on Gibraltar’s interests. That was when Sir Joshua Hassan was First Minister, and the late Lord Bethell led the group. At that time, the big issue for Gibraltarians was voting rights to the European Parliament. Eventually, a solution was found. I hope that those MEPs who benefit from Gibraltarian votes are also looking to protect Gibraltar’s interests.
It seems to me that anyone who knows Gibraltar loves Gibraltar and its people, and that must augur well for the future. Loyalty should be repaid by loyalty.
Lord Hoyle (Lab)
I am very pleased indeed to follow the noble Baroness: I know what a firm friend indeed she is of Gibraltar. I thank the noble Lord, Lord Boswell, for an excellent report. It gives us this opportunity to ensure that the needs of Gibraltar are not forgotten.
First, I must declare an interest in Gibraltar: an interest of which I am very proud. I am a freeman of Gibraltar. I announce that with great pride here tonight. I am not suggesting for a moment that the Government have forgotten or will forget Gibraltar; nevertheless, it is essential that we put the case here tonight and keep reminding them that Gibraltar is part of the negotiation, as well as us.
When we say that 96% of them voted to remain in Europe in 2016, we must not forget that in 2002, 98% voted to stay with us in Britain. They made their position very clear: yes, they want to remain and have access to the European market if that is possible, but, above all else, they want to remain with us. They are remarkable people. When we think about it, it is not long ago that they were totally dependent on defence. They have now turned around the economy so they are no longer dependent just on defence; financial services are very important to them. Some 90% of those depend on access to the British market, but we must not forget the other 10% which are very important to Gibraltar.
It cannot be repeated often enough that the border is essential to the economy. It has been said—but there is nothing wrong in repeating it—that every day 12,000 people cross the border to work in Gibraltar, 7,000 of whom are Spanish citizens. Gibraltar is the second biggest contributor to the GDP of the neighbouring region of Spain. So it is of great benefit to the Spanish people and the adjoining region. Emphasising that is very important.
We have been talking about the economy, but let us not forget that every year 10 million people visit Gibraltar, and many of them come across that border. When we are having discussions with Spain—we have been good friends and allies of theirs—it is right that we put that point to them. We have heard that they have said—I do not know quite what this means and the Minister may explain it to me—that waving a passport will not be sufficient. If producing a passport is not sufficient, what are they talking about? Are they talking about limited visas? That is why this debate is essential.
I will finish by saying that the people of Gibraltar have always been good friends of the country. They want to remain in this country and we must not let them down in our negotiations on Brexit.
Viscount Waverley (CB)
My Lords, the Gibraltar quagmire is easy to define but mighty difficult to resolve. The cocktail of complexities is varied and impacts on all participants, including the challenges of a determined Madrid, the time immemorial socialist province of Andalusia and that mother of all complexities, the Brexit negotiations; they combine to defy easy resolution.
I see one of five possible alternatives. First, the tempting old adage, “When in doubt, do nothing” seems in the circumstances unsustainable and should be discounted. Secondly, we could revisit 2004 when the El País editorial of the tercentenary, advocating the benefits of tripartite talks, were given more credence as both Madrid and London then hosted socialist Governments. Thirdly, we could bring balance to the table and recognise that there is indeed a fourth participant of equal standing to the people of Gibraltar: namely the people of Andalusia. Fourthly, we could constitute confidence-building initiatives resulting from regular civil society-led discussions, possibly with bilateral members as observers.
Red lines should be removed to allow co-operation through civil society to take centre ground to define and develop mutually beneficial goals and objectives. An important consideration is that discussions and decisions should reflect the wishes of the people most affected. Consent is key. The status quo is not an option now that the Brexit negotiations are about to begin. After all, as has been said throughout this evening, 96% voting to remain does suggest a willingness to engage. While first and foremost it is clearly for the people of the region to decide, I firmly believe that Gibraltar’s future long-term prosperity must be rooted in mutually beneficial regional co-operation.
Might I then suggest that the centre ground of Seville be a convenient location for talks, and possibly also an ideal location for a long-overdue Gibraltar representative office? A view held in certain quarters among Spanish politicians has suggested that sovereignty need not be on the table. Rather, matters including the environment, free exchange of financial information and police co-operation—from terrorism to drugs—were considered more essential. Some time ago it had been agreed that access to medical assistance was on the table, including reciprocal recipient and donor transplant exchange using Andalusian hospitals.
Interestingly, the socialist parliamentary group in the Cortes, the Congress of Deputies, through its deputy for the province of Cadiz, presented on 9 March just past a non-legislative proposal in relation to the commercial customs checkpoint at La Línea de la Concepción and the non-commercial frontier checkpoint with Gibraltar. This will be submitted to debate and vote in the Committee for Foreign Affairs and Co-operation, possibly as early as next week. If it passes that hurdle, it could proceed to a vote and possible adoption by the Cortes as a whole. This is a development inviting close scrutiny and continued interest.
The noble Lord, Lord Boswell, might wish to consider forwarding his committee’s report to Spanish local and national officials most exercised with Gibraltar, including the Parliaments in Madrid and Seville. Engagement, after all, is everything at this critical juncture. I have little doubt that HMG recognise the anomalies and possible complicating consequences of the country at large voting to leave. HMG will not wish to have their overall Brexit negotiation strategy frustrated but will also not wish to be held hostage to this complex issue. Positive results can come from dialogue and could divert looming dark clouds.
Baroness Harris of Richmond (LD)
My Lords, I join other noble Lords in thanking the noble Lord, Lord Boswell of Aynho, and his committee for this excellent report on the challenges facing Gibraltar—and the UK—after the decision to leave the European Union. As the report says—I quote from the summary—
“Negotiating on Gibraltar’s behalf, the UK Government will be responsible for ensuring that Gibraltar’s voice is heard, and its interests respected, throughout the Brexit process. The UK also has a responsibility to support Gibraltar in benefiting from any opportunities that arise following Brexit, including by participating in any new international trade deals”.
My interest in Gibraltar stems from having helped the Gibraltar Defence Police a number of years ago to come to a happier place when it was being threatened—I use the word advisedly—at that time with a merger with the Royal Gibraltar Police, in itself a seemingly reasonable move. Unfortunately, it was anything but, and was being handled appallingly by our own MoD and the commander-in-chief on the Rock at that time. Fortunately, a change of Government in Gibraltar, and a change of personnel at the highest level—plus some timely and much-welcome advice—helped calm things down and a few years later we found an amicable move towards the merging of the two forces, which undertake different duties, to the mutual satisfaction and benefit of the security of Gibraltar and its citizens.
I mention this as Gibraltar is a dependent territory of the UK, as the report says. We have an absolute responsibility and a fundamental duty to ensure its security—militarily and economically—once we leave the EU. Chapter 3 of the report talks about the frontier with Spain. As we have heard, this is one of the most important areas we have to address. Gibraltar’s strategic location affords the Royal Navy unique naval intelligence, including the ability to monitor nuclear-capable submarines, which is crucial for our contribution to NATO. Spain has consistently sought to detract from Gibraltar’s military role, especially as it provides services to the US and NATO, and believes it is better placed to control the Strait of Gibraltar than the UK, and so displace the UK’s strategic role in the region. Spain encroaches on British Gibraltar territorial waters frequently and this poses a very real threat to our global military and strategic interests.
Brexit also poses an enormous challenge to the economic status quo in Gibraltar. As we have heard, at present more than 12,000 people cross the border daily for work, making up 40% of the entire Gibraltar workforce. As noted in paragraph 48 of the report, any arbitrary closing of the border will cause enormous harm, and an abrupt exit from the single market—which this Government seem intent on inflicting—will have dire consequences for Gibraltar, with an immediate 10% loss of business. We must consider the needs of the Government and residents of Gibraltar, who have put their trust and loyalty in the UK. We have an absolute moral duty to do that, as the report states in paragraph 110. At the moment, Gibraltar is fearful of the future, as there is absolutely no clarity on how we will actually leave the EU. If the Government persist in telling us that they cannot divulge their negotiating stance, how does that help Gibraltarians? Do they have to spend the next few years wondering what their future will be?
Given the issues we face, we must ensure a smooth and productive working relationship between the Governments of the UK and Gibraltar. This report highlights with utter clarity the realities of this need and I commend it wholeheartedly. We must recognise the inextricable bonds between the people of the UK and the people of Gibraltar, whether at the governmental, military or community level. Our histories are intertwined and we must redouble our efforts to ensure that our futures remain so.
Lord Hannay of Chiswick (CB)
My Lords, I begin by declaring an interest, albeit one lost in the mists of time and, indeed, outside the timeframe covered by the excellent report which we are debating this evening. A little over 45 years ago, I was part of the team which negotiated the terms of the UK’s—and thus Gibraltar’s—accession to the European Communities. In truth, we got a Goldilocks deal for Gibraltar: outside the customs union, exempted from the requirement to introduce a value added tax and inside what became, over the years, the biggest single market in the world. That deal has stood the test of time, which is attested to by the fact that 96% of Gibraltarians voted to remain last June. To complete my declaration of interests, some 35 years ago I was sent to Madrid by Lord Hurd of Westwell—then Minister for Europe at the FCO—to persuade the Spanish Government that they needed to open their border with Gibraltar if there was to be any chance of their EU accession treaty being ratified by this Parliament. The Spanish Government were so persuaded, and the border was reopened.
This declaration of interests is no vanity project. It reflects the reality, recognised by the Gibraltarians themselves, that Britain’s—and thus their—membership of the EU has been the basic cornerstone of their prosperity today. That cornerstone is, alas, about to be removed. I do not know whether those who campaigned for Britain to leave the EU really understood what their success might mean for Gibraltar. Given that many of them are among the most vociferous parliamentary supporters of Gibraltar, if they did understand then this was a shameful act of betrayal. But let us give them the benefit of the doubt: they acted in ignorance. They threw Gibraltar under the wheels of that infamous battle bus, without having a clue what they were doing. They broke it, and we own it.
What can be done? Well, there is no doubt what would be best for Gibraltar—that is, the status quo. But the status quo is not on offer, because Gibraltar’s status depends on the UK’s status. If noble Lords do not believe that, they should read the treaties of Utrecht and of Rome and our own accession treaty. We are set to become a third country in 2019—and Gibraltar’s border with Spain is set to become an external border of the EU, with all that implies. The Prime Minister has stated that she excludes the possibility of Britain remaining in the single market.
So what can be obtained for Gibraltar from an EU shorn of our membership? That remains to be seen in the negotiations about to begin but—in one of those superbly British understatements—the report we are debating, in paragraph 111, states:
“We note, however, that Spanish opposition may present an insuperable barrier to any perceived special treatment for Gibraltar”.
There you have it; the report did not need to say a word more than that. I wish the Government well in their endeavours to save something from this unintended shipwreck, but I do not envy them. Next time the Foreign Secretary makes one of his “sunlit uplands” speeches about Brexit, or says that it will be perfectly okay if there is no deal, he might first take a look towards the Rock of Gibraltar—at the dark clouds gathering there, caused by the very success of his own endeavour to remove us from the European Union.
Lord Suri (Con)
My Lords, this report made for fascinating reading. So often in the debate that has engulfed this place and another place, we are told of the importance of keeping a soft border on the island of Ireland. However, Gibraltar is, as the Under-Secretary of State in DExEU said, “part of the British family”. I was gladdened to see the Under-Secretary travel over to Gibraltar recently to restate his commitments.
Ensuring the softest possible border between Gibraltar and Spain must remain a priority of the Government, and I am pleased to see them take it seriously. The Spanish Government have used Brexit as another opportunity to call for joint sovereignty over the Rock, but I repeat again the words of the Treaty of Utrecht, which cedes to the Crown,
“the full and entire propriety of the town and castle of Gibraltar, together with the port, fortifications, and forts thereunto belonging; and he”—
the Catholic king—
“gives up the said propriety to be held and enjoyed absolutely with all manner of right for ever”.
This report covers a number of important points. I welcomed the submission by the Government that EU funding commitments would be guaranteed by the Treasury until 2020. However, given that the final deal, if there is one, will come into force at roughly the same time, I would wish to see a more long-term commitment, perhaps until 2025, in order to start, post Brexit, with a clearer base and offer more certainty.
As I have called for before in relation to arts funding here, this report is refreshingly clear on the risks faced by Gibraltar especially from any cliff-edge removal from the single market. This should further focus minds on the importance of having a short-term transitional deal, about which both the Secretary of State for DExEU and the Prime Minister have signalled in favour. The fundamental point is that Gibraltarians were given a vote in the referendum and are being brought out despite being the most pro-remain voting district. The ultimate responsibility for ensuring that Gibraltar does not suffer lies with the Government. If its access to the single market is limited and prosperity is threatened, the Government should be prepared to further open up the British single market to ease financial pressure. In any case, the vast majority of Gibraltar’s business in the single market is with the UK.
The border with Spain is already fairly hard, given that Gibraltar is out of the Schengen zone and the customs union. It should be borne in mind that people having the freedom of movement to work in industries such as financial services and online gaming remains an abiding concern. If Spain were to make it harder for Spanish citizens to go to well-paid, secure jobs in Gibraltar, that would be an act of extreme pettiness, but it should not be ruled out. However, it would be surprising, given the ameliorating tone that Spanish diplomats and their Prime Minister have taken, calling for “calm” and “good negotiations” with reference to Article 8 of the Treaty on European Union.
Overall, I welcome the assurances given by the Government on funding and keeping sovereignty with the Crown, and I think that the focus of this report on negotiating as a single state with no bilateral Spanish talks is sensible, as is the rejection of a microstate-style status. The Government ought to bear in mind their responsibility to Gibraltar, and I have all confidence that they will.
Lord West of Spithead (Lab)
My Lords, I first visited Gibraltar by sea in September 1948 and have done so dozens of times since, and I know it well. I intend to speak only on the military significance of Gibraltar to the United Kingdom, the United States and NATO in this troubled and ever more chaotic and dangerous world.
Gibraltar commands one of the world’s seven key strategic global choke points for maritime trade. It is a southern outpost of Europe facing the north African littoral, from which we are able to monitor all surface and sub-surface traffic through the strait, and it is important in tension and war but also in combating terrorism. One thousand miles closer to the Mediterranean, the Middle East, the South Atlantic and the West Indies than the United Kingdom, its strategically important location has proved invaluable for three centuries.
With large dry docks, as well as oil fuel and ammunition storage supported by air links to the UK, its maintenance capability has proved of crucial importance on numerous occasions. Gibraltar’s naval docks and storage facilities are important today, with British and US nuclear submarines frequently visiting the Z-berths. Indeed, the US would like to make more use of Gibraltar, preferring it for security reasons to Rota, but it is constrained by the Spanish attitude to such visits.
Gibraltar’s position makes it important in combating Islamic terrorism based in the Sahel or north African littoral. It is also a useful base from which to conduct trials and training in rather more benign sea conditions than are found around the western UK. Our military presence on the Rock has been reduced to a minimum but is sufficient to ensure maintenance of sovereignty. Having said that, I believe that the Gibraltar squadron boats need to be rather more powerful and heavier, so possibly should be enhanced.
The constant infringement of Gibraltar’s territorial seas by Spanish vessels is completely inexcusable, not least as she is a NATO ally. It is to be hoped that Brexit will not be used as a reason to heighten tensions, because it is extremely dangerous when you do that sort of thing: things can escalate and go beyond what anyone wanted.
In purely military terms, Gibraltar and its brave, resolute people are important to the security and stability of our nation and NATO in this very dangerous world.
Baroness Butler-Sloss (CB)
My Lords, it is always a great pleasure to follow the noble Lord, Lord West of Spithead, who, I notice, has been engaged in something of a marathon with this, his second speech this evening.
I first went to Gibraltar in 1949 as a teenager with my father, and I have been going there ever since. I very much admired the report produced by the committee chaired by the noble Lord, Lord Boswell, as well as his very valuable speech at the beginning of this useful debate. I am a vice-chairman of the Anglo-Gibraltar parliamentary group, of which I am proud to be a member.
Gibraltar, as we all know, has a special position as part of the European Union—but, as we also know, is set to leave. It is staunchly British in its support of the United Kingdom and is a thriving centre of excellence, despite Spain’s constant interference and incursions, which the noble Baroness, Lady Harris, mentioned. It is abundantly clear that during the Brexit negotiations and post Brexit we must publicly and effectively support Gibraltar in all the situations that may arise in which that will be necessary, including continuing threats from Spain. The Government have, I am glad to say, promised again and again to do so, and they must carry out their promise. That is something that others have said, and I just follow.
I would also like to speak briefly about something completely different—the Criminal Finances Bill, which I think has its Committee stage next week. Gibraltar, which is potentially affected by it, is happy with the intentions of the Bill, but is understandably concerned about possible amendments. Some were tabled in the Commons, but fortunately they were unsuccessful.
Gibraltar has a commitment to transparency in the financial services sector, and is used as an example for other jurisdictions. It is committed to the central register of beneficial ownership under the EU anti-money laundering directive; it works closely with the United Kingdom Government on financial issues; it has an excellent record on the exchange of information, recognised by the OECD; and it has the same rating on that as the United Kingdom. I am sure that we in this House all hope that Gibraltar will remain a strong financial centre, whatever may happen in the future.
I must therefore tell Members of this House that it is very important that inappropriate amendments, which are being suggested by some Members, should not be allowed to have any adverse implications for Gibraltar. This measure must not be allowed to be to the detriment of Gibraltar. I therefore ask your Lordships to watch what any amendments tabled to the Criminal Finances Bill actually say. We must be sure that they are not passed—because if they are, there will be an opportunity for Spain to denigrate Gibraltar’s financial services, which would obviously be to the detriment of Gibraltar. We must not allow Spain that opportunity.
The Earl of Dundee (Con)
My Lords, I begin by thanking the noble Lord, Lord Boswell of Aynho, and his committee for their excellent report. In referring to our obligations toward Gibraltar, I shall talk briefly about the sovereignty question and how it connects to certain obvious economic priorities, yet how both matters together perhaps call for a new approach and structure, which we should now start to devise.
On sovereignty, the key aspect is the preference of the Gibraltarian people. They are fiercely loyal to the United Kingdom. Post Brexit that is still the position, although, as has already been said, 96% supported the case for the UK to remain in the EU. Correctly, the report endorses the UK Government’s view. This is to reject Spain’s proposal for joint sovereignty as the only way for Gibraltar to retain its relationship with the EU—for it does not want joint sovereignty.
This, of course, sets the main theme, which is that of principle and the expression of democratic will. Clearly these transcend economic and other issues. Nor in any case are they necessarily even inconsistent with other considerations. Democracy and human rights also form the priorities of the affiliation of 47 member states, including Spain, of the Council of Europe—of which the UK, post Brexit, remains an important member. Does my noble friend the Minister therefore agree that it is within this simultaneous context of principle and mutual practical advantage that dialogue and understanding between the UK and Spain should now be progressed?
There is also the need to protect sovereignty, not just immediately but in the long term. The report draws attention to that distinction, and to Gibraltar’s later vulnerability when, post Brexit, the UK is “out of the room”. In view of this, what steps will the Government take under international law to help prevent the undermining of Gibraltar’s future preferences?
No doubt economic anxiety will persist for as long as it takes new deals to be struck. Yet does my noble friend concur that there are a few commitments which, if now given by our Government, would serve considerably to reduce Gibraltar’s current plight of economic uncertainty? Such are also recommended by the report.
First, there should be clarification of what future UK-based funding beyond 2020 can be accessed by Gibraltar if it should not be able to benefit from EU programmes after Brexit. Secondly, arising from our moral duty towards it, emphasised by the noble Lord, Lord Boswell, and others, there should be an undertaking that, post Brexit, any new international trade deals for us will also be designed to benefit Gibraltar. Thirdly, there should be an early and timely negotiation with Spain jointly to endorse the local border traffic regulation, EC 1931/2006, and as pointed out by the noble Lord, Lord Luce, so guarantee the movement of labour between Spain and Gibraltar, in which regard Spain, Andalusia and the Campo de Gibraltar region stand to gain along with Gibraltar itself.
Then there is a much wider priority shared by Spain and the UK: joint co-operation on security and policing reflecting the importance of the European arrest warrant, to which the noble Lord, Lord Luce, has referred, and which prevents those wanted for crimes from escaping justice by crossing the EU’s external border, in either direction.
Does my noble friend concur that detailed government attention to these various matters, as advocated by the report and as strongly supported by many of us today, would in itself help a great deal to construct a new and lasting framework, within which our responsibilities can be discharged, good practice advanced and Gibraltar’s sovereignty and economy best protected?
The Earl of Kinnoull (CB)
My Lords, it is a pleasure to follow the noble Earl, Lord Dundee, who spoke with his customary acumen and clarity. I remind the House that I am a member of the EU Select Committee. I start by thanking the Select Committee staff for the sustained high quality of their output. I note that this was the 11th Brexit report, which now number 15, that has been produced since 24 June last year, with more in the pipeline. I also pay tribute to the noble Lord, Lord Boswell, for his leadership of the EU committee structure and his continued and continuous good humour.
I want to make just three brief comments tonight. The first relates to the context of the report, and in particular the special nature of the relationship between citizens of the UK and those of Spain. I dare say that there are many here tonight who have, as I have, a long history of enjoyable experience of both business and leisure in Spain. While I hang no argument on that, this proximity is borne out by the numbers: 310,000 UK citizens live in Spain and 125,000 Spaniards live in this country. In addition, there was much evidence in our inquiry of this citizen engagement, not just the economic interdependence described by many noble Lords tonight but friendliness at the citizen level, including that described in paragraph 58 for instance: unofficial and commendable police and customs co-operation. It would be a travesty if politicians mucked this up and a great detriment to many lives. Can the Minister confirm that this citizen-led warmth will be hammered home during the Brexit discussions?
The second area that I want to touch briefly on is the way in which the Gibraltarians are approaching matters. In evidence, we met three in person, including the Chief Minister and the Deputy Chief Minister, who are here tonight. Other Gibraltarians gave us written evidence. Their contributions were without exception measured, constructive and helpful, while remaining strong in advancing Gibraltar’s position. It would be very helpful if the Minister recognised that and confirmed that the Government will maintain their current level of engagement with Gibraltar during the Brexit process.
My third and final point concerns the local border traffic regulation. In our report we discuss this from paragraph 62 onwards and describe it in detail in box 1 and appendix 3. In the time available for our inquiry, we were not able to take any evidence on how such agreements are working elsewhere. However, our staff did reference a 94-page report, a copy of which I have with me, published in November 2012, and the news is good. The report, Ex Borea Lux?, on cross-border co-operation on the EU’s eastern border, was prepared by the Institute for Stability and Development and funded by the Finnish and Norwegian Governments. It details the experience of a number of successful situations where local border traffic agreements have been concluded, particularly between Finland and Russia and Poland and Russia. Will the Minister comment on the use of this regulation as a potential route to consider for the Gibraltar/Spain land border post Brexit?
Lord Collins of Highbury (Lab)
My Lords, I too thank the noble Lord, Lord Boswell, for his excellent introduction and for the excellent report of your Lordships’ sub-committee. I also welcome the Chief Minister, the Deputy Chief Minister and other representatives from Gibraltar who are here tonight.
My first visit to Gibraltar was in 1984, just prior to Spain fully reopening the border. I was there to meet T&G representatives of the 6,000 Moroccan workers who were then critical in maintaining the economy of Gibraltar. As we have heard, over recent decades the development of Gibraltar’s economy has been underpinned by access to the EU single market and the pool of more than 10,000 workers who cross daily into Gibraltar.
However, what matters most to Gibraltar, and will do in the future, is access to the UK market for its services. Britain and Spain have a mutual interest in good relations. We invest and trade with each other on a huge scale. According to a leaked report to El País from the Spanish Brexit commission, the UK’s departure from the EU will leave Spain hugely exposed economically, with tourism and the food, pharmaceutical and automotive industries being hit the hardest, together with the innumerable repercussions for the hundreds of thousands of Britons who live in Spain and the hundreds of thousands of Spaniards in the UK. I declare an interest as one of those citizens is my husband.
I hope the committee’s aspirations for all parties to work together positively and pragmatically to secure an agreement that reflects all their economic interests will be the primary factor in negotiations, rather than what Spanish sources allegedly told El País, which was simply not to do mutual damage. The framework behind the Brexit negotiations must be the absolute commitment of the UK Government never to enter into sovereignty discussions against the will of the Gibraltar people.
In their White Paper on Brexit, the Government said that Gibraltar’s interests and priorities will be expressed and understood through the new joint ministerial council. At the conclusion of its second meeting held only a few weeks ago, the Minister, Robin Walker, promised to continue engagement with Gibraltar throughout the negotiations. It is vital that the people of Gibraltar have confidence in that process and that its Government are fully involved. Will the Minister give us more detail on the engagement process once Article 50 has been triggered next week? What priority will be given to Gibraltar in the Government’s formal notice to trigger Article 50? Will the Gibraltarian Government be part of the negotiation team when matters affecting them are considered?
EU membership has seen police and judicial co-operation. What priority will the Government give to this in the negotiations to ensure that the border with Spain cannot again be exploited by those seeking to evade justice? As my noble friend Lord West said, we should not forget the military importance of Gibraltar and its brave and resolute people for the security and stability of the dangerous world in which we now live.
Baroness Goldie (Con)
My Lords, I begin by thanking the noble Lord, Lord Boswell of Aynho, for tabling this debate. I also thank the European Union Committee for its report, Brexit: Gibraltar, which provides a valuable analysis of the opportunities and challenges presented to Gibraltar by the UK’s decision to leave the European Union. The Department for Exiting the European Union is considering the findings of the report and will publish its response in the coming months—I hope sooner rather than later. I also thank noble Lords for their contributions to this debate, which has been fascinating.
As noble Lords will know, my honourable friend Robin Walker, the Member for Worcester and the Parliamentary Under-Secretary of State at the Department for Exiting the European Union, appeared before the committee in February of this year to discuss the extensive engagement with the Government of Gibraltar that has taken place since the referendum. We remain steadfast in our support of Gibraltar, its people and its economy—the referendum has not changed that—and we have committed to fully involve Gibraltar to ensure that its priorities are properly taken into account as we prepare to leave the EU. It is, as the report rightly notes, the Government’s responsibility to ensure this, and I can reassure noble Lords that it is a responsibility that we take very seriously. I wish in particular to reassure the noble Lord, Lord Boswell, on that point.
This is demonstrated by the fact that the Prime Minister met the Chief Minister of Gibraltar on the day she took office, and has had regular engagement since. As a number of your Lordships pointed out, the Government have established a new joint ministerial council for Gibraltar which is chaired by the Member for Worcester. It brings together Ministers from the UK Government and the Government of Gibraltar to discuss the opportunities and the challenges presented by EU exit. The first meeting took place on 7 December and the second on 1 March 2017, with both DExEU and FCO Ministers taking part alongside the Chief Minister of Gibraltar, the Deputy Chief Minister and the Attorney-General. I know that the honourable Mr Picardo, his deputy and the Gibraltarian Attorney-General are taking a keen and tangible interest in these proceedings. Perhaps I may also say what a pleasure it was to meet them earlier this evening.
There has been a wide range of other engagements with the Government of Gibraltar at both official and ministerial level. The Secretary of State for International Trade met with the Chief Minister of Gibraltar on Monday to discuss the valued links between our economies, and just last week the Parliamentary Under-Secretary visited Gibraltar to get a first-hand view of its unique context and to speak to representatives from across its thriving economy, from the business community to the trade unions. The Chief Minister of Gibraltar said of the visit that it,
“symbolised the relationship that exists between the Governments of Gibraltar and the UK, and is a clear reflection of the real action there is on the real pledge that Gibraltar would be fully involved in exiting the European Union”.
Mr Picardo also said that Gibraltar has had access to the highest levels of the UK Government and believes that that access will continue. I hope that that reassures your Lordships, not least the noble Lord, Lord Collins, who expressed a particular interest in how this process is working. I hope that it demonstrates that this is not just a close but an informed relationship.
Through our engagement with the Government of Gibraltar we have built an understanding of Gibraltar’s particular priorities in the EU exit. We welcome this report as an important contribution to that process and we are pleased with its finding that the Government of Gibraltar have been satisfied with the UK Government’s engagement to date. Let me reassure the noble Earl, Lord Kinnoull, that we very much welcome that relationship. It is positive and it is important.
Let me turn now to some of the issues and priorities raised both in the report and by noble Lords over the course of this debate. Perhaps not surprisingly, the economy featured consistently. There are challenges and opportunities which EU exit presents to Gibraltar’s economy. Gibraltar is rightly proud of the strong economy it has built for itself. It has the fourth highest GDP per capita and the second lowest unemployment rate in the world. The committee heard how Gibraltar’s economy has been transformed in recent decades from one dominated by military spending to a thriving and resilient economy based on financial services, tourism and commercial port services. That is testament to the hard work, creativity and ingenuity of all Gibraltarians. If I may say so, it is testament also to that vision of 20 years ago conceived by the noble Lord, Lord Luce, to whom I pay tribute.
The noble Lord, Lord Hannay, with some justification, described Gibraltar’s position in the EU as a “Goldilocks deal”. I do not disagree; it is a fairly accurate description. But I also observe that the UK has been an important support and bolster in that relationship. The UK remains and Gibraltar remains—and with that tandem of talent I am unable to share the pessimism of the noble Lord, Lord Hannay.
On market access, the report highlights the strong links between the economies of Gibraltar and the UK, particularly when it comes to financial services. For example, as others mentioned, 20% of UK car insurance policies are underwritten in Gibraltar and around 90% of Gibraltar’s trade is with the UK. The Government are clear that we should work together to maintain and strengthen these economic bonds after we leave the European Union. When it comes to financial services it is important that the strong mechanisms already underpinning Gibraltar’s access to the UK market are enshrined in UK law. That is worth remembering. The Government’s clear intention is to maintain that access.
We have also agreed that, together with the Government of Gibraltar, we will take into account the priorities of Gibraltar and the other overseas territories as the UK looks to establish new trade and investment opportunities with the wider world. This is a very important aspect of what lies ahead. The Secretary of State for International Development confirmed this position to the Chief Minister of Gibraltar during their meeting yesterday. I hope that that reassures the noble Lord, Lord Anderson, that we approach these matters positively. It was an issue to which my noble friend Lord Dundee also referred.
On the issue of access, the Government have been clear that Britain is seeking a new, strong partnership with the European Union: a partnership that maintains the close relationship we have with member states and builds further on them for both the UK and Gibraltar. Although we are not seeking to maintain membership of the single market, this agreement should allow for the freest possible trade in goods and services between the UK and EU member states. The Government are confident that if we approach these upcoming negotiations in a spirit of good will, we can deliver a positive outcome that works for all, including Gibraltar. The noble and learned Baroness, Lady Butler-Sloss, raised a somewhat technical issue to which I confess I do not have the answer: I apologise for that. I undertake to write to her to provide clarification. I noted her concern about what possible amendments to the Criminal Finances Bill might mean and I will ensure that we look at that.
A number of issues were raised in relation to EU funding. My noble friends Lord Selkirk and Lord Dundee wanted to know what lies ahead, post Brexit. I am afraid that that is not something I can comment on in detail; it is too early to say what the position of Gibraltar and the other overseas territories may be in regard to such funding, but we will continue to work closely with the Government of Gibraltar to understand their concerns in this important area.
Not surprisingly, many contributors referred to the issue of the Gibraltar-Spain border. We recognise the importance of a well-functioning border to the economy, as well as to the surrounding Spanish region and to the thousands of Spanish workers who cross the border every day. We are clear that politically motivated delays are unacceptable. They cause serious problems for people on both sides of the border and we stand ready to work with the Government of Gibraltar and the Government of Spain to ensure that the border continues to function well after we leave the European Union. We approach these negotiations with good faith and determination and in a spirt of good will.
A number of contributors raised points and I hope that I have answered them. The noble Lord, Lord Boswell, made the point about the importance of the border very powerfully, as did my noble friend Lord Suri and others. The issue of the Local Border Traffic Regulation was raised by the noble Lords, Lord Boswell, Lord Luce and Lord Hoyle, my noble friend Lord Dundee and the noble Earl, Lord Kinnoull. The UK Government are working with the Government of Gibraltar to consider all options on the crucial issue of the border. As the committee noted in its report, the Local Border Traffic Regulation would, of course, require commitment from Spain.
The noble Lord, Lord Luce, also raised the issue of police and judicial co-operation, as did my noble friend Lord Dundee. That is a very important area. We have been clear that we will do what is necessary to keep our people safe. One of the 12 objectives for the negotiations ahead is to seek a strong and close relationship, with a focus on operational and practical cross-border co-operation, to fight crime and terrorism.
By way of encouragement I can say that there have been some very good examples of how that partnership with Spain and Gibraltar has been working. Spanish and Gibraltarian agencies often co-operate to tackle issues such as drug smuggling. In January of this year, approximately €4 million-worth of cannabis was seized in a joint operation on the waters. So there is a mutuality of interest in trying to make these positive arrangements continue.
The issue that came out of the debate perhaps more cogently than any other was that of sovereignty. A number of noble Lords referred to this. I want to reiterate that the UK has reaffirmed its double-lock sovereignty commitment to Gibraltar. We will never enter into arrangements by which the people of Gibraltar would pass under the sovereignty of another State against their freely and democratically expressed wishes, nor will we enter into a process of sovereignty negotiations with which Gibraltar is not content. We will, in short, continue to stand beside Gibraltar and its people. That is the metaphorical foundation of the Rock. My noble friend Lord Selkirk made a colourful analogy when he equated the steadfastness of the Rock with the steadfastness of our relationship with Gibraltar and its people. I could not have put it better.
I am conscious of time, which is a pity as there are important issues here that I wanted to cover. The noble Lord, Lord West, asked about the strategic significance of Gibraltar in relation to defence and free maritime passage. If he will permit it, I will write to him in fuller detail on the points that he raised. Questions were also asked about the general intentions of Spain. My colleague, my noble friend Lady Hooper, made a very helpful comment in that respect, echoed by others, that is that there is a mutuality of interest in the negotiations for both Spain and the UK. That has been reiterated by the Spanish Government. The indications are that they wish to take a pragmatic and constructive approach. The Prime Minister of Spain has said that he is confident that the Government in Madrid are sitting squarely behind the objective of achieving a positive relationship between the UK and the EU after Brexit.
In conclusion, this has been an important and interesting debate, with many positive and helpful suggestions. I am sorry that I have not been able to deal in detail with all the points raised by noble Lords. I would like to end on a note of optimism. I was aware that the noble Lord, Lord Luce, is currently Chancellor of the University of Gibraltar. I had a look at its motto: “Scientia est Clavis ad Successum”. I know that noble Lords are all scholars of Latin and do not require a translation, but it is simple: “Knowledge is the key to success”.
I suggest that knowledge by the UK of what Gibraltar and the Gibraltarian people need, knowledge of what our EU partners wish to achieve and their knowledge of what we seek to achieve make a good starting point for how we embark on these vital negotiations. If we approach these matters based on knowledge, all will benefit. The UK will benefit—and if the UK benefits, Gibraltar, too, will benefit.