All 19 Parliamentary debates in the Commons on 13th Mar 2023

House of Commons

Monday 13th March 2023

(1 year, 3 months ago)

Commons Chamber
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Monday 13 March 2023
The House met at half-past Two o’clock

Prayers

Monday 13th March 2023

(1 year, 3 months ago)

Commons Chamber
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Prayers mark the daily opening of Parliament. The occassion is used by MPs to reserve seats in the Commons Chamber with 'prayer cards'. Prayers are not televised on the official feed.

This information is provided by Parallel Parliament and does not comprise part of the offical record

[Mr Speaker in the Chair]

Oral Answers to Questions

Monday 13th March 2023

(1 year, 3 months ago)

Commons Chamber
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The Secretary of State was asked—
John Baron Portrait Mr John Baron (Basildon and Billericay) (Con)
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1. What recent assessment he has made of the adequacy of the UK’s (a) number of military personnel and (b) range of military capabilities.

Ben Wallace Portrait The Secretary of State for Defence (Mr Ben Wallace)
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The armed forces’ capabilities allow the Ministry of Defence to meet a range of domestic and global commitments. Defence is reorganising and re-equipping to face future threats. However, as I have previously stated, as the threats change, we need to change with them. Any specific changes related to personnel numbers or military equipment capabilities will be determined once the update to the Defence Command Paper has concluded, which I expect to happen in June.

Lindsay Hoyle Portrait Mr Speaker
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I call John Baron—good to see you back.

John Baron Portrait Mr Baron
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While I am conscious that my right hon. Friend has accepted the conclusions of last year’s 1922 defence committee report in drafting his Command Paper, I am also conscious of the fact that there is real concern, as we are about to hear, about the integrated review and, indeed, one-off increases. What does he think it will take for this House to sustainably increase defence spending, given geopolitical events?

Ben Wallace Portrait Mr Wallace
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I am grateful to my hon. Friend. First and foremost, we have been sustainably increasing our defence since 2020. The Prime Minister recognises the dangerous world we are in, and in the autumn statement both the Chancellor and the Prime Minister recognised the importance of increasing defence spending. The Prime Minister has obviously talked over the weekend about defence spending. There will be a Budget later in the week, and then I think there will be some further discussions to have.

Andrew Gwynne Portrait Andrew Gwynne (Denton and Reddish) (Lab)
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Of course, the former head of the British Army, Lord Dannatt, said last month:

“The planned cuts in the strength of our army must be stopped...and fresh investment must pour into our artillery, air defence, communications and logistic capability.”

What is the Secretary of State, who has overseen some of these cuts, now going to do to reverse and build back the capacity Lord Dannatt and others are calling for?

Ben Wallace Portrait Mr Wallace
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If the hon. Member had been listening, he would know that, in our Defence Command Paper, we are investing in air defence, electronic warfare, signals intelligence and communications—all the things he has just reeled off—but maybe he did not bother to listen originally. [Interruption.] I think it is interesting that Labour Members are heckling. We have not heard about a single penny of their defence plans in the last few years. Even the Royal United Services Institute speech by the shadow Secretary of State himself could not put a finger on the money. First and foremost, we are investing in our defence, and we have had a record increase since 2020. That compares with the Labour Government record: in 1997, they inherited 2.7% of GDP, which continued to fall all the way through, and only at the very last minute, when they had a £36 billion black hole, did they try to rectify it.

Eleanor Laing Portrait Madam Deputy Speaker (Dame Eleanor Laing)
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I call the Chair of the Defence Committee.

Tobias Ellwood Portrait Mr Tobias Ellwood (Bournemouth East) (Con)
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I am conscious that there is a statement to follow, but may I just pause and say thank you to the Defence Secretary and his team for the tireless work they have done in trying to secure additional funding of £11 billion and an increase in defence spending of 2.5%? It was not to be, and our military will be affected by that, not least our land forces. However, I do welcome the AUKUS agreement, which will secure hundreds of highly skilled jobs up and down the country. Is any part of the £3 billion of additional funding for the nuclear enterprise part of the £10 billion reserve for Dreadnought, or is it ringfenced for the AUKUS procurement programme, and is any of the £5 billion coming through subject to VAT, which would of course mean that one fifth of it will go back to the Treasury?

Ben Wallace Portrait Mr Wallace
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My right hon. Friend makes an interesting point about the details of the announcement. Obviously, the details will come forward in the Budget. What I can say is that the £2 billion-plus is new money. It is not part of the reserve or anything else, and it is separate from the £2.3 billion for Ukraine. It also comes on top of the £560 million of extra money for weapons and restocking announced in the autumn statement. On the nuclear chapter, the £3 billion is a recognition of the need for increased defence capability in that space, but also of the need to invest now in infrastructure, which, if we do not start now, will not be fit for purpose when AUKUS starts towards the end of the decade.

Richard Foord Portrait Richard Foord (Tiverton and Honiton) (LD)
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As we understand from the press, and as the right hon. Member for Bournemouth East (Mr Ellwood) said, we anticipate an additional £5 billion for defence between now and 2025. The Ministry of Defence has said that the Secretary of State is delighted with the settlement, which represents a commitment to an upward trajectory. Given the impact of defence inflation and the full-scale invasion of Ukraine, what does he make of plans to reduce the size of the Army to 72,500 by 2025?

Ben Wallace Portrait Mr Wallace
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The reduction in the size of the Army was coupled with record investment of £24 billion in the armed forces at the same time. It was also a recognition that the most important thing is to ensure that we give the men and women of our armed forces, whichever service they are in, the correct equipment at the correct time, and create a 360° armed forces. There is no point in playing a numbers game if we do not equip, house, care for and deploy people properly. The hon. Gentleman might want to play a numbers game, but I do not want to turn our soldiers into cannon fodder.

James Gray Portrait James Gray (North Wiltshire) (Con)
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The whole House will be delighted to see you back in your seat, Madam Deputy Speaker. I pay tribute to the Secretary of State and the entire team for the battle they have fought with the Treasury over the past few weeks, but the £5 billion is disappointing, particularly if £3 billion goes to AUKUS, and £1.9 billion goes to filling up our warehouses. It actually means a cut in defence spending, rather than an increase. Nevertheless, I was encouraged by what the Secretary of State said a moment ago about the Budget on Wednesday, and various other remarks that seem to indicate that there may be more money to come. Am I being over-optimistic?

Ben Wallace Portrait Mr Wallace
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As my hon. Friend will know, all Departments are within their current comprehensive spending agreement, and the next comprehensive spending review is due in 18 months to two years’ time. Although all Departments, including those of Defence, Transport, and Health and Social Care suffer from pressures with higher inflation, it is right to ensure that we live within the envelope and, where possible, seek relief for a range of challenges. That is what I have been seeking for the next two years with the Treasury. I have also said consistently that the most important thing is the headmark for the long-term direction of defence spending, so that it is no longer declining, as it has done for the past three decades, but is on an upward trajectory. Since 2020, it has been on that upward trajectory. This grant of extra money continues that momentum, which is incredibly important, and I hope that the headmark will soon be announced in detail.

Eleanor Laing Portrait Madam Deputy Speaker (Dame Eleanor Laing)
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I call the shadow Secretary of State.

John Healey Portrait John Healey (Wentworth and Dearne) (Lab)
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In November, the Defence Secretary told the Defence Committee that

“yes, the inflationary pressure on my budget for the next two years is about £8 billion”.

From the media briefing at the weekend, we know he has a welcome £5 billion earmarked for stockpiles and the UK’s nuclear programme, but the armed forces will see that funding as a defeat for the MOD in Government. There is no new money for pressures on the core defence budget or to help deal with capability gaps, or even to deal with that inflation. The National Audit Office has already said that the MOD cannot afford the capabilities needed in the 2021 integrated review, so how will the Secretary of State ensure that precisely the same does not happen again with today’s 2023 integrated review?

Ben Wallace Portrait Mr Wallace
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What I am going to do, which the right hon. Gentleman’s Government failed to do, is ensure that the Defence Command Paper reflects the budget I have. I have always been consistent that the Government’s ambition should match their stomach, and match the money. If we do not get that in tandem, we will discover that black holes grow over the years. The right hon. Gentleman’s Government was part of that last time, as were previous Conservative Governments. I have come to this House consistently to take responsibility for what our Governments have done in the past, and I would be interested to see whether he will.

John Healey Portrait John Healey
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In 2010 when Labour left government, we were spending 2.5% of GDP on defence—a level that has been nowhere near matched in any of the 13 years since. The Secretary of State is now the Conservative party’s longest serving Defence Secretary, which means he has a track record of his own. He has cut the Army to 76,000 with more cuts to come. The Ajax armoured vehicle is six years late, with still no in-service date. He has cut and delayed new Wedgetail and Sentry planes, and he has growing doubts from allies about Britain meeting its NATO obligations in full. Last month he admitted to the House that forces have been hollowed out and underfunded with Conservative Governments. Will he accept that his extra defence funding today can only mean more of the same?

Ben Wallace Portrait Mr Wallace
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If people came to this House with real, genuine honesty about the track record of the Governments they were part of, the armed forces might be in a better position. What we should strive for is for the men and women of the armed forces to know that their political leaders are prepared to be clear about past mistakes and to talk about the future with some honesty. The National Audit Office report gave a view on the Labour party’s governance of defence. I have it here, because Labour Members often forget it. It said that the Department’s poor financial management had led to a severe funding shortfall of up to £36 billion in defence spending over the next 10 years.

Ben Wallace Portrait Mr Wallace
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So what the National Audit Office says is not true, Madam Deputy Speaker—it made it up. It said that when the Department signed the contract for the aircraft carriers, it was aware that the overall defence budget was unaffordable. Labour Members were party to the crime at the time, but they will not come to the House now and be honest about their role in it and the things that need to be done to fix it in the future.

Eleanor Laing Portrait Madam Deputy Speaker (Dame Eleanor Laing)
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Order. We will not have interventions from people who are sitting down. There are plenty of opportunities to ask questions when you are standing up.

Richard Drax Portrait Richard Drax (South Dorset) (Con)
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Madam Deputy Speaker, may I say how nice it is to see you back in your place? It is a very great pleasure.

I commend my right hon. Friend the Defence Secretary and his excellent Front Bench team, because I know for a fact that they are fighting for every single penny they can get. However, as has been said, and I must agree, £5 billion is not sufficient to ensure that our core armed forces are properly equipped and prepared for—God forbid—something we all dread, as the world potentially totters towards world war three. What on earth is going through the minds of Treasury officials?

Ben Wallace Portrait Mr Wallace
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In defence of my colleagues in the Treasury, the Treasury is trying to balance an economic situation post covid that means we have to make sure that we cut our cloth and return to an economic credibility that is so important for growing our tax receipts and our income. One role I can play is to come to the House and be honest about the state of our armed forces. I can be honest about what caused the 30 years of challenge that both my hon. Friend and I experienced serving in the armed forces, and honest about what we can do to fix things. That is the first thing. The Defence Command Paper will ensure that we are very clear on where we will spend the money to make sure that the future is secure for the men and women of the armed forces.

Eleanor Laing Portrait Madam Deputy Speaker
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I call the SNP spokesman.

Dave Doogan Portrait Dave Doogan (Angus) (SNP)
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On military personnel, what is the Secretary of State’s understanding of the recruitment crisis in defence, with the Army in particular and especially in the Royal Regiment of Scotland? The 4th Battalion the Highlanders satisfies almost 20% of its vacancies from the Commonwealth. Is it the poor service accommodation, mediocre pay, lack of career opportunities or substandard equipment that is driving young Scots away from a career in the British Army?

Ben Wallace Portrait Mr Wallace
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As an officer in a Scottish regiment, I remember distinctly not being allowed to recruit in towns or schools where SNP councillors ran those schools. I distinctly remember that the SNP was so unwelcoming to members of the armed forces it was having a detrimental effect on recruitment. I would be very interested to know if the SNP has now changed its tone. It certainly has on NATO membership. We remember that it used to not want to be part of NATO; it now does. I do not see the Army categorised as the hon. Member has just described it. If he carries on talking the armed forces down like that, no wonder people are not that keen to join. There has been a recruitment challenge for the infantry for as long as I was serving in the Army. That is over many, many years under both Labour and Conservative Governments. We have to ensure that the offer is improved. That is one reason why we did wraparound childcare to reflect how people live, and why we are investing in both married and single accommodation.

Dave Doogan Portrait Dave Doogan
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The Secretary of State says that he does not recognise the characterisation, but it is based in fact. Sticking to reality, where Germany allocates an extra €100 billion in response to Ukraine, the UK allocates an extra £5 billion. The United States is frustrated that the British Army is no longer a top-level fighting force. The RAF takes 10 years to train a pilot in combat, Army procurement could not order a pizza and get it delivered on time and on budget, and the Navy barely has enough F-35s for one aircraft carrier much less two. Is it not the case, to the great frustration of men and women in uniform, that this Tory Government over the last 13 years have created an ornamental defence force—nice to look at; don’t ask it to do very much or sustain it for very long?

Ben Wallace Portrait Mr Wallace
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I am getting lessons from the SNP on procurement, when Ferguson shipyard is clinging on by its fingernails. When push comes to shove, Scotland buys its ferries from Turkey, not from Scotland, when it has a perfectly good Clyde in which to build them. The hon. Gentleman goes on about all the things that he thinks are wrong with the armed forces, yet he will campaign to break Scotland away from the UK, reduce the Scottish armed forces to a rubber dinghy and tell everyone else that it is all the fault of the English. The reality is that Scotland is a proud contributor to our armed forces—it has been in history and is today. Also, the accommodation, the experience and the equipment that the soldiers have today are far better than many of us had in the early ’90s. It would be nice if, once in a while, the SNP in Scotland did more than stand in front of ceremonial troops, and instead got out there and helped to recruit soldiers and helped the schools to talk about what is important about defence, rather than always talk it down.

Chris Elmore Portrait Chris Elmore (Ogmore) (Lab)
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2. What steps he is taking to ensure that the UK meets its obligations to NATO.

Samantha Dixon Portrait Samantha Dixon (City of Chester) (Lab)
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12. What steps he is taking to ensure that the UK meets its obligations to NATO.

James Heappey Portrait The Minister for Armed Forces (James Heappey)
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Our commitment to NATO and Euro-Atlantic security is unconditional. In response to Russia’s illegal war in Ukraine, we have enhanced our force posture in Estonia and have sent warships and fighter aircraft to south-east Europe and the Mediterranean. We contribute to every NATO mission and declare the UK’s nuclear deterrent to NATO. The UK is committed to remaining NATO’s leading European ally.

Chris Elmore Portrait Chris Elmore
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A recent report by the Defence Committee raised concerns about the UK’s lack of ammunition reserves. The Committee said that the inability to restock our supplies puts at great risk our own defence, along with our commitments to supporting Ukraine. The Minister will say that the Department is announcing today that there are £2 billion-worth of stockpiles, but he cannot magic up munitions off the shelf—they can take years to be created. What assurance can he provide to me and the House that the shortage will not impact our domestic abilities and our wider commitments to NATO?

James Heappey Portrait James Heappey
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The hon. Gentleman makes a sensible point. The Select Committee’s report is being read at the moment and will be responded to as would be expected. There is an important distinction to make: only a small proportion of the equipment and stockpiles that we are providing to the Ukrainians come from the current active inventory and stockpiles of the UK military. A very large proportion of the ammunition is at or slightly beyond the date by which we would normally seek to dispose of it, and an even larger proportion of it—the majority—is sourced or manufactured from stockpiles or manufacturing capabilities overseas.

Samantha Dixon Portrait Samantha Dixon
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Notwithstanding the Secretary of State’s earlier unwillingness to play a numbers game, the reality is that Ministers plan to cut the size of the Army to 73,000 by 2025, at a time that NATO has agreed to increase its high readiness forces to 300,000. Will the updated integrated review halt cuts to Army numbers?

James Heappey Portrait James Heappey
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My right hon. Friend the Secretary of State has been clear all along that if the facts change, so will our approach to force structure. It is important to note that force size and readiness are not necessarily directly connected. A future force may require fewer people because of automation and artificial intelligence, or it may not. We are studying the lessons from Ukraine carefully. We came to a clear judgment in the last IR. As we work towards the publication of a refresh of the defence Command Paper, we will look at whether the assumptions of the last Command Paper are still sound.

Bob Stewart Portrait Bob Stewart (Beckenham) (Con)
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Could I ask my very good friend the Minister whether the additional money for defence will allow us to provide more teeth arm units, plus the support arm units—enablers—to NATO?

James Heappey Portrait James Heappey
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It may do. The reality is that we are still providing a large number of frontline units to NATO, particularly in the maritime and air domains, but my hon. and gallant Friend’s principal concern will be about land forces. Even there, the UK continues to provide the most credible high readiness formations to the alliance. He made an important point that we can have as many fighting units as we wish, but without the logistics and the strategic enablers that get them to the front line, they are not worth having. The Secretary of State, Front-Bench colleagues and I have been clear for years that what urgently needs reinvestment is not a regrowth of our fighting echelon but a re-fleshing out of the logistics and the enablers, which—for good reasons—over the last 20 years have not been needed, but now so desperately are.

Robert Courts Portrait Robert Courts (Witney) (Con)
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On the point about logistics and enablers mentioned by my right hon. Friend the Member for Beckenham (Bob Stewart), when we look at our obligations to NATO and to Ukraine, particularly on stockpiling and ammunition, are Ministers looking at what procurement can be done commonly with NATO allies?

James Heappey Portrait James Heappey
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Absolutely. As the House might imagine, the UK is not alone in rediscovering the importance of stockpiles and strategic enablers over the last year. It is also not alone in finding out that industrial capacity cannot be turned on just like that, so working with allies around the alliance, both through the alliance itself and bilaterally, is clearly a very attractive option.

Luke Pollard Portrait Luke Pollard (Plymouth, Sutton and Devonport) (Lab/Co-op)
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In this weekend’s newspapers, a senior British military officer raised doubts about whether the UK could still claim to be a leading NATO member, because of the hollowing out of the Army’s war-fighting capabilities. The Minister has so far evaded the question, but with today’s funding announcement limited to nuclear enterprise and stockpiles, can he confirm whether it is still his Department’s policy to cut troop numbers by 10%, to cut the reserves and to provide no additional funding to plug the gaps in Britain’s war-fighting capability?

James Heappey Portrait James Heappey
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As the representative of a naval constituency, the shadow Minister does our armed forces a huge disservice in focusing on simply the Army when looking at our contribution to NATO. The UK is the only country to commit its entire nuclear deterrent to NATO; in any given year, the UK commits a number of maritime task groups to NATO—more than almost any other NATO ally; the UK commits handsomely to air policing and other air deployments; and, through the Allied Rapid Reaction Corps, the 3rd (United Kingdom) Division and the various high-readiness Army formations, the UK contributes prominently in the land domain as well.

Robbie Moore Portrait Robbie Moore (Keighley) (Con)
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3. What assessment his Department has made of progress on improving veterans’ welfare.

David Simmonds Portrait David Simmonds (Ruislip, Northwood and Pinner) (Con)
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10. What assessment his Department has made of progress on improving veterans’ welfare.

Andrew Murrison Portrait The Minister for Defence People, Veterans and Service Families (Dr Andrew Murrison)
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Madam Deputy Speaker, may I say what a pleasure it is to see you back? I declare my interest as a veteran.

On 2 March, I jointly commissioned with the Minister for Veterans’ Affairs a review into the role and scope of Government welfare provision and services for veterans. This will include provision by the Ministry of Defence under Veterans UK. The review will focus on examining the effectiveness and efficiency of welfare services for veterans, and help it to do better as part of a programme of continual improvement.

Robbie Moore Portrait Robbie Moore
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Armed forces breakfast clubs provide vital support and social opportunities for veterans and serving armed forces personnel. We have one in Keighley and we are hoping to get one off the ground in Ilkley. Will the Minister join me in praising those who are involved in organising them and set out what additional support the Government can provide for these fantastic veteran-led organisations?

Andrew Murrison Portrait Dr Murrison
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I am really grateful for my hon. Friend’s question. He is absolutely right that armed forces and veterans breakfast clubs are an excellent initiative that have taken root across 14 countries, with 150,000 members. They provide a sense of belonging and community to many who have served our country. On a personal level, I like a good Yorkshire breakfast and, if the opportunity arises, I would love to visit his breakfast club.

David Simmonds Portrait David Simmonds
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My constituent Steve Graham served in our armed forces for over 20 years, travelling the world and finally settling overseas, at the site of his last posting. Despite being a UK taxpayer, with a UK home, when he sought to retrain he was required to pay the full overseas rate and treated as a foreign student in order to re-educate himself for his post-services life. Will my right hon. Friend meet me to discuss the case of Mr Graham and other people who may seek to retrain following long service in our armed forces, but find themselves facing significant financial barriers to do so?

Andrew Murrison Portrait Dr Murrison
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I have every sympathy with my hon. Friend’s point, and of course I will meet him. At the moment, for an adult to be eligible for funding for further education, they must ordinarily be resident in England on the first day of the first academic year of the course, and throughout the three years immediately preceding that date. The matter is primarily one for the Department for Education, as he will know, but I am happy to discuss it with him and my right hon. Friend the Minister for Veterans’ Affairs to see what we can do on this matter.

Owen Thompson Portrait Owen Thompson (Midlothian) (SNP)
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What efforts will be made through the recently announced review of veterans’ experiences? Following the excellent work of the survey carried out by the all-party parliamentary group on veterans, of which I am a vice-chair, what attention will be paid to the different experiences of veterans in the four nations to ensure the best possible outcomes? Sadly, they appear in many cases to have been overlooked and ignored.

Andrew Murrison Portrait Dr Murrison
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I look forward to seeing the hon. Gentleman and his co-chairs later this week, I think, when we can discuss the matter in some depth. I am absolutely sympathetic to the notion that we need to do more for veterans, of course, which is one reason why I have instituted the review to which I have referred. We need to be consciously aware of the lived experience in each one of the four nations of this country.

Rachel Hopkins Portrait Rachel Hopkins (Luton South) (Lab)
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A review of veteran welfare services is long overdue, but I might remind the Minister that it is his Government who have been responsible for worsening veterans services over the past 13 years. Veterans’ mental health waiting times are a week longer than last year, veterans are having to rely on charitable support just to get by, and veteran ID cards are nowhere to be seen for many. Action is needed now to fix these failures, so will the Minister tell the House when we can expect the review to be completed and its findings to be published?

Andrew Murrison Portrait Dr Murrison
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We are recruiting a person to run the review right now. I anticipate the review being completed within three months, if that gives the hon. Lady an idea of timelines. Just so that there is no misunderstanding, may I give an indication of the appreciation or otherwise for the services provided by Vets UK? There were 122 complaints since April last year, versus 1,715 thank you letters. To be clear, the people at Norcross who are working on behalf of veterans—I have visited them; she probably has not—are doing a sterling job and are highly committed to what they do.

Fleur Anderson Portrait Fleur Anderson (Putney) (Lab)
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5. What steps the Government are taking to support NATO allies in responding to the invasion of Ukraine.

Liz Twist Portrait Liz Twist (Blaydon) (Lab)
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7. What steps the Government are taking to support NATO allies in responding to the invasion of Ukraine.

James Heappey Portrait The Minister for Armed Forces (James Heappey)
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The UK has provided substantial support to our NATO allies as we continue a united response to Russia’s aggression in Ukraine. Over the past 12 months, the Royal Air Force has been deployed in Romania and Lithuania and across the Mediterranean and has completed patrols over the Black sea. We continue to contribute to NATO air activity across Europe. The Army has been deployed in Bulgaria, Romania and Estonia, where we have our enhanced forward presence battle groups. The Royal Navy has completed a major European deployment from the North sea to the Mediterranean. Our UK armed forces continue to strengthen interoperability with Finland and Sweden in anticipation of their accession to NATO. Beyond the US armed forces, no nation has contributed more.

Fleur Anderson Portrait Fleur Anderson
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Are the Government working with NATO allies to set up a full 2023 action plan for Ukraine specifically—for military, economic, diplomatic and humanitarian support to help to give Ukraine confidence in a sustained stream of future supplies, to urgently ramp up our own industry, to encourage allies to do more across NATO and to make it clear to Putin that things will get worse, not better, for Russia?

James Heappey Portrait James Heappey
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The hon. Lady asks an excellent question, but I hope that she will not mind if I draw an important distinction. NATO is not involved in the planning of or in direct support of the Ukrainian war effort. That is a really important point, because Putin claims the exact opposite to the Russian public and is entirely wrong to do so. Those who support Ukraine do so as an alliance of friends of Ukraine outwith NATO, but of course NATO is invariably supportive of the work that we are doing.

The hon. Lady is right to observe that NATO has a job of work to do to strengthen its eastern flank, to provide wider deterrence against any sort of growth or escalation in the conflict and to make sure that the lessons of modern peer-on-peer war fighting in Ukraine are learned by the entire alliance, and learned quickly.

Liz Twist Portrait Liz Twist
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Labour has fully backed moves to bolster NATO allies in response to the illegal invasion of Ukraine. What steps is the UK taking to ensure that our NATO obligations in respect of enhanced forward presence are completely fulfilled?

James Heappey Portrait James Heappey
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In the immediate response to Russia’s illegal invasion of Ukraine, we doubled the size of the battle group in Estonia as a further show of support for the Estonian Government and recognition of the importance of the enhanced forward presence category. We have also contributed to EFP battlegroups in Poland and Romania in the last 12 months. What will change, and what was announced at the summit in Madrid, is that there will be a new NATO regional defence plan, which will be an evolution of the in-place EFP battlegroups, alongside national defence plans. Of course the UK will be very supportive of the plan in the region that NATO assigns to us, but that is very much under review, and the UK looks forward to hearing the details from NATO once it has finished its work.

Stephen Crabb Portrait Stephen Crabb (Preseli Pembrokeshire) (Con)
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Following the very successful Franco-British summit at the end of last week—which was the fruit of an enormous cross-Government effort—does the Minister agree that renewing the bilateral defence partnership with France, the second largest European contributor to NATO, is an important part of not just strengthening the NATO alliance but enhancing European security, particularly in the east?

James Heappey Portrait James Heappey
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I really do. It is noteworthy that while relations elsewhere in Government may have been slightly more fraught, within the UK and French Defence Ministries the relationship has remained very tight, and necessarily so. The interdependence between the UK and France is very obvious. Our industrial collaboration is widespread, and will grow as a consequence of last week’s summit—and it is not just in the far east that the UK and France can work together, but in west Africa, where our interests are also very keenly aligned.

Bill Esterson Portrait Bill Esterson (Sefton Central) (Lab)
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6. What assessment he has made of the effectiveness of the defence procurement system.

Ben Wallace Portrait The Secretary of State for Defence (Mr Ben Wallace)
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We are driving the delivery of capability in the frontline. Most of our programmes are delivering on time and on budget. For the second year in a row under my stewardship, the Ministry of Defence has set out an affordable 10-year equipment plan to ensure that our armed forces are being given what they need while living within their means.

Bill Esterson Portrait Bill Esterson
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Defence procurement is essential to the success of a domestic steel industry, but, as the Secretary of State will know, the UK is currently the only country in the G20 in which steel production is declining. Given that steel is a vital industry of national security importance, will the Secretary of State ensure that we do not see a repetition of what happened with the fleet solid support contract, under which an overseas lead contractor had no obligation to use UK steel in the construction of UK Navy ships?

Ben Wallace Portrait Mr Wallace
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We always try to use as much UK steel as possible where we can, and when we do not, it is often because we do not manufacture the type of steel that needs to be used in a certain type of product. As for the fleet solid support ships, whether Navantia is part of the consortium or not, the hon. Gentleman should not listen to the union briefing. He will find that across the provision of those ships there will be plenty of British components—in fact, they will be in the majority—and the full integration of the ships will take place in a yard in Northern Ireland.

Philip Dunne Portrait Philip Dunne (Ludlow) (Con)
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Will the Secretary of State update the House on the status of the Ajax procurement programme? I understand that the supply chain is being geared up to produce 589 vehicles.

Ben Wallace Portrait Mr Wallace
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As my right hon. Friend will know, the Ajax was decided on in, I think, March 2010, under a Labour Government. As I have often said, it has been a troubled programme. Since I have taken over this office, we have sought to rectify the issue on almost a weekly basis, and with the determination of both the former Minister for Defence Procurement, my right hon. Friend the Member for Horsham (Jeremy Quin), and the current Minister, my hon. and learned Friend the Member for Cheltenham (Alex Chalk). The vehicle has passed its user validation trials and is now undergoing its basic field trials. It is doing extremely well, and I am given a weekly update.

Although the programme is being delayed—and we are doing our best to rectify that—overall it has not cost a single extra penny, because the contract, which was agreed under the Conservative Government after the selection of the vehicle by the Labour party, involved a fixed price. Yes, the programme is being delayed, but we are fixing it, and it is showing good progress.

Kevan Jones Portrait Mr Kevan Jones (North Durham) (Lab)
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May I say first that if the Secretary of State is going to quote the National Audit Office, he should read the entire statement rather than doing so selectively?

In large, multibillion-pound contracts in the private sector, a project lead with expertise is usually put in place for a number of years. In defence procurement, well-meaning and committed individuals with very little expertise in project management are there for a short period. Is it not time to look at the ways in which we project-manage these large multi-year contracts, and to move from what appears to some to be an amateur approach to a more professional one?

Ben Wallace Portrait Mr Wallace
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I do not disagree with some of the right hon. Gentleman’s observations. Consistency in these programmes is incredibly important. As he will know, some of them, even when on track, can be 20-year programmes, and consistency is important. It is not just about the senior responsible owners, by whom those programmes are led, but he is right to suggest that we are seeking to see whether we can have more longer-term or permanent SROs. They are accompanied by programme deliverers from Defence Equipment and Support in Bristol, who are more permanent.

There are lots of lessons to be learned about procurement, some of which are within our gift to fix. Some of them, sadly, have been observed as problems for decades, and we only have to the read numerous reports from the last Labour Government and my Government to know that they have not always been rectified. Some are out of our control owing to inflation, change of threat or changing technology, or because they involve an international consortium in which we have less control when we start. An example is the Typhoon, which is a four-nation project. Sometimes it is harder to control those projects. Overall, in my experience the key is that we have to manage expectations, get our pricing right, seek consistency of skills and reward that skills base for the long term. I agree with the right hon. Gentleman entirely on that.

Alec Shelbrooke Portrait Alec Shelbrooke (Elmet and Rothwell) (Con)
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Would my right hon. Friend agree that defence procurement is a complex issue but not the total disaster that it is often presented as? When compared with the naval procurement of some of our closest allies—for example, the United States ended up spending $5 billion per destroyer in the Zumwalt class and the Canadians took over 30 years to procure a ship—the MOD produces Type 26s, Type 31s, aircraft carriers, hunter-killer submarines and more under a fixed price, showing that it tries to do its best in always tight financial circumstances.

Ben Wallace Portrait Mr Wallace
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I am grateful to my right hon. Friend, who served with me in the Department. I miss his time in the Department. One of the biggest drivers of cost overruns is a decision by the Government of the day to defer decisions about whether they should cut or delete something. Deferring the aircraft carrier under the Labour Government cost £1 billion. Deferring the F-35 buy under this Government cost about £500 million. If we defer things, they cost more in the long run. That is always the battle that the MOD has with the Treasury and others. That is one of the fundamental challenges and one of the cost drivers. However, many other projects are delivered on time and successfully and our men and women in the armed forces have some of the world-leading equipment they need to do their job.

Eleanor Laing Portrait Madam Deputy Speaker (Dame Eleanor Laing)
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I call the shadow Minister, Chris Evans.

Chris Evans Portrait Chris Evans (Islwyn) (Lab/Co-op)
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May I join the other voices welcoming you back to your position, Madam Deputy Speaker? I think I speak on behalf of everyone when I say that the House has missed your ability to turn people to stone with just a few words when they fall foul of the rules in this place.

Much of the innovation in the defence industry comes from the small and medium-sized enterprise sector. However, many SMEs tell me that there are real barriers to entry and to gaining access to Government contracts, and that when they do gain that access, they find that some primes are slow to pay, especially when projects are delayed. This leaves them demotivated and demoralised and with a poor experience of working with the Ministry of Defence. How will the Secretary of State ensure that SMEs have better access and are encouraged to be involved in a thriving British defence industry?

Ben Wallace Portrait Mr Wallace
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I recognise some of those characteristics of SMEs. For decades they have said that there is a challenge in engaging with wider Government procurement, whether it is in defence or anything else. I also recognise, as the guardian of the taxpayer, that one of the challenges is that risk is involved. If we commission an SME to build something large, the amount of risk it takes in relation to infrastructure is a challenge; we cannot get halfway through a project and then have the SME fail.

However, I think that changes to the battlefield will open the aperture much wider for SMEs to engage with Defence. What we have seen in Ukraine through Operation Kindred is that the winners are the SMEs. The ability for us to cut through the regulations that normally govern procurement, because we are procuring for someone else in a warzone, has enabled us to effectively go straight to the marketplace and straight to SMEs, and some of the big winners have been SMEs in innovation and space. We will know the results and whether they work when they get to Ukraine.

I think this is an exciting time. I recognise the narrative that the hon. Gentleman mentions, which has been around since I worked in the aerospace sector, but of course we should and must do more. When we have a big exciting project, such as the next generation of fighter aircraft—the global combat air programme—or the carrier alliance, it is important that something sits over the top of it to ensure that SMEs are forced in if the primes get in the way.

Alex Norris Portrait Alex Norris (Nottingham North) (Lab/Co-op)
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8. What recent steps Veterans UK has taken to support veterans and their families.

Angela Eagle Portrait Dame Angela Eagle (Wallasey) (Lab)
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9. What recent steps Veterans UK has taken to support veterans and their families.

Andrew Murrison Portrait The Minister for Defence People, Veterans and Service Families (Dr Andrew Murrison)
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I look forward to the outcome of the review of welfare services, which was cited earlier. In the meantime, the Ministry of Defence is investing more than £40 million in digitising old paper-based practices, improving processes and creating a single entry point for pensions and compensation by the end of 2024. We have successfully launched a new digital claims service for compensation and pension schemes, making it easier for our people to process their claims. Over time, this will make a very big difference.

Alex Norris Portrait Alex Norris
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The Minister says the review is under way. Of course, a review is already under way on the armed forces compensation scheme, with its initial findings stating that the processes are burdensome and even distressing for claimants, which is especially concerning as there has been a fall in the proportion of successful claims from 66% to 47%. Can the Minister confirm that the review is still ongoing, when it might report and what he thinks is happening?

Andrew Murrison Portrait Dr Murrison
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The hon. Gentleman is correct that the final report will be delivered within, I hope, a few weeks. He will have to await the Government’s response, of course, but it ties in with some of the findings of the all-party parliamentary group on veterans, which we discussed earlier. I am concerned about any reports that the service is not as good as it ought to be. I will take that review and the APPG’s findings extremely seriously, but I am bound to cite the fact that there were 122 complaints versus 1,715 thank you letters, which I find persuasive in forming a conclusion that the people working for Veterans UK are working hard and doing their very best in quite difficult circumstances in the interests of people who serve or have served our country.

Angela Eagle Portrait Dame Angela Eagle
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It is great to see you back in the Chair, Madam Deputy Speaker.

My constituents have had similar problems trying to engage with the quinquennial review of the armed forces compensation scheme. They find it slow to make decisions, difficult to engage with and not user-friendly. When the Minister publishes the review’s findings, I hope he will come back to the House to explain how he will make the system much easier for veterans to engage with, as my constituents have told me it is very difficult indeed.

Andrew Murrison Portrait Dr Murrison
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The hon. Lady is right to raise this. As I said earlier, I cannot overstate how important it is that we are increasingly digitising the service. When people go to Norcross and see the mountains of paperwork that Veterans UK is having to cope with, they begin to understand how vital it is that we properly digitise the service and bring it into the 21st century, which is our intention.

The hon. Lady might like to know, because it is a barometer or litmus test of how the service is doing, that the proportion of armed forces compensation scheme cases going to tribunal has been falling since 2014-15, which balances some of the remarks we have heard about Veterans UK not being up to scratch. We need to review it, which is what we are doing, but I am convinced that the service will be better than it is at the moment, if that is of any reassurance.

Alistair Carmichael Portrait Mr Alistair Carmichael (Orkney and Shetland) (LD)
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T2. If he will make a statement on his departmental responsibilities.

Ben Wallace Portrait The Secretary of State for Defence (Mr Ben Wallace)
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Today’s questions have rightly focused on support for our friends in Ukraine, but it is important to remember that threats are growing elsewhere in the world. The middle east continues to harbour terrorism, which is why the UK still supports the Government of Iraq as part of the global coalition against Daesh.

I want to update the House on a strike that took place a few weeks ago, as is our agreement on strikes under Operation Shader. In late December, an RAF Reaper remotely piloted aircraft conducted a strike against a leading Daesh member in al-Bab, northern Syria. The individual’s activity was related to chemical and biological weapons. The Reaper’s crew minimised potential risk to civilians before firing two Hellfire missiles, both of which struck the target accurately. These actions are vital to degrading such terrorist threats, protecting British citizens and supporting our international partners.

Alistair Carmichael Portrait Mr Carmichael
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I think we can all accept that there is a legitimate role for the security services in combating disinformation campaigns from foreign, hostile states. However, a recent report from the campaign group Big Brother Watch showed that in 2020 a number of British citizens had their social media posts featured in monitoring reports produced for the Cabinet Office by the British Army’s 77th Brigade. Will the Secretary of State tell the House: is the 77th Brigade still monitoring social media posts of British citizens, and, if so, for what purpose and under what authority?

Ben Wallace Portrait Mr Wallace
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One part of the 77th Brigade’s role is to challenge disinformation, not opinion—its role is not to monitor or counter opinion, as that is about the freedom we all enjoy in our society. The 77th Brigade is on the lookout for media manipulation of misinformation or lies from abroad, and where that is found, it is flagged to the appropriate authorities. I am happy to write to the right hon. Gentleman with fuller details about what legal authorities it functions under, but I assure him that if at any stage I have seen anything that I think crosses that line, I have, in writing, made sure that is known and it is stopped.

Julian Lewis Portrait Sir Julian Lewis (New Forest East) (Con)
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T3. Welcome back, Madam Deputy Speaker. It is great to see you.I was going to put to my right hon. Friend the Secretary of State the statistics that he has heard many times about proportions of GDP spent on defence both during and after the cold war—they are a lot higher than those of the present day. May I instead ask him to bear in mind when negotiating with the Treasury that any investment made in defence now for the purposes of conventional deterrence will be miniscule compared with what we would have to spend if, heaven forbid, the war in Ukraine escalated into a war with NATO? Such spending is an investment; it is not expenditure that should be lightly considered. It is essential for our future security.

Ben Wallace Portrait Mr Wallace
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I completely concur with my right hon. Friend. Defence is not a discretionary spend and not an add-on; it is a core function of any state and especially of this Government. I have been very grateful since 2020 that we have turned the corner on this and started to rebuild that momentum. The extra money that I have got for this week is continuing that momentum, but he is right to say that the important thing here is that deterrence is cheaper than having to go to fight the war if it goes wrong, as we see when we look at the cost to the people of Ukraine and to their economy. We need to make people change this culture that we have got used to since probably the early 1990s where somehow defence is discretionary—it is not. I am pleased that the Prime Minister recognises that, as he did when he was Chancellor in 2020, and we need to continue on that trajectory.

Eleanor Laing Portrait Madam Deputy Speaker (Dame Eleanor Laing)
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I call the shadow Secretary of State.

John Healey Portrait John Healey (Wentworth and Dearne) (Lab)
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The House will be thankful and grateful to the Defence Secretary for updating it on the latest Op Shader activity. If there are any questions that cannot be raised this afternoon, we will return to them. On tonight’s AUKUS announcement in San Diego, does the Defence Secretary recognise that this has Labour’s fullest support? We want Britain to play the biggest possible role in building the new Australian submarines. But beyond the subs, how will he develop the pillar 2 collaboration on artificial intelligence, cyber and hypersonic missiles?

Ben Wallace Portrait Mr Wallace
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I am grateful to the right hon. Gentleman for his support for AUKUS, which is a decades-long commitment. People talk about procurement challenges, and when we start this journey on submarines that will be delivered in the 2030s and 2040s, with some going on to the 2050s, it is not a journey we can stop halfway along or stop for a break in. To go back to the comments made by my right hon. Friend the Member for New Forest East (Sir Julian Lewis), let me say that sometimes parts of the Treasury struggle with that concept, so I am grateful for the extra money. AUKUS pillar 2 is incredibly important. It is about the next generation’s technology. One of the most important works we are doing—and we met in the Pentagon in December—is clearing away the International Traffic in Arms Regulations challenges that for so many years have held us back in being able to share our own technology with the United States or to collaborate properly to make a step change to give us the strategic advantage we need. We are going to be working on that, and I am happy to brief the right hon. Gentleman in detail on the future of the pillar 2.

Andrew Jones Portrait Andrew Jones (Harrogate and Knaresborough) (Con)
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T5. France is our closest security partner other than the United States, so can my right hon. Friend update the House on his meeting with his French counterpart? How will we continue to ensure that our historic defence partnership is ready to take on the threats of the future?

Ben Wallace Portrait Mr Wallace
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My hon. Friend is incredibly right to point out how important France is to us. It is our main partner in Europe. It has similar-sized armed forces, with a similar expeditionary status and ambition. I speak to my colleague almost every two weeks—sometimes every week. I spoke to him twice last week, including my visit at the beginning of the week. A partnership on which we worked was more of the CJEF—the Combined Joint Expeditionary Force—where we work with them, training and exercising together; there is more work on complex weapons through MBDA, which is a great international consortium with factories in Bolton and Stevenage; and we are working together to make sure that we have the same requirements in shared operations, where we can work together in areas such as West Africa, where British, French and European interests are under threat from the likes of Wagner.

Eleanor Laing Portrait Madam Deputy Speaker (Dame Eleanor Laing)
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I am grateful to the Secretary of State for giving such thorough answers, which I am sure the House appreciates, but I ask him to be a little quicker, because it would be good if we managed to get everybody in. I call Ruth Jones.

Ruth Jones Portrait Ruth Jones (Newport West) (Lab)
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T4. Thank you, Madam Deputy Speaker. It is good to see you back in your rightful place.Labour’s dossier of waste in the MOD has found that at least £15 billion of taxpayers’ money has been wasted since 2010, so can the Minister explain to people in my constituency of Newport West why this Tory Government have failed to get a grip of the defence procurement process and have failed to secure value for money for the taxes that they pay?

Ben Wallace Portrait Mr Wallace
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I would point the hon. Lady’s constituents to the 2010 National Audit Office report on her Government which gave some really interesting clues about why procurement was so bad. It said that the Department under her Government contracted for aircraft carriers when it knew that that was not affordable. Or perhaps I could point her to the Public Accounts Committee, then chaired by the right hon. Member for Barking (Dame Margaret Hodge), who said:

“Delays and cancellations to programmes”—

this is about the land systems under her Government—

“have resulted in gaps in armoured vehicle capability that will not be filled until 2025.”

There are lots of clues for the hon. Lady’s constituents—she should direct them to those reports.

Mark Francois Portrait Mr Mark Francois (Rayleigh and Wickford) (Con)
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T8. May I, too, say that it is great to see you back in your place, Madam Deputy Speaker?I will try to keep this brief for the Secretary of State. The Clive Sheldon KC review of management information surrounding Ajax has been with the Department for over a month, I think. Given its importance, can the Minister guarantee, first, that it will be published by the Easter recess, and secondly, that it will be published fully unredacted?

Alex Chalk Portrait The Minister for Defence Procurement (Alex Chalk)
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I thank my right hon. Friend for his proper concern about this issue. The Sheldon review was and is entirely independent of Government, and it provided an initial draft to the MOD at the end of January. Since then, Mr Sheldon has been conducting a fact-checking and Maxwellisation exercise as part of the final stages of drafting. The timeframe, in an independent review, is not a matter for the Department. Once received, however, I can say that it will be published with all expedition, accompanied by a statement to the House.

Dan Jarvis Portrait Dan Jarvis (Barnsley Central) (Lab)
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T6. It is good to see you in your place, Madam Deputy Speaker.The Prime Minister spoke to journalists earlier today about the integrated review refresh, so we know that there is no target for reaching the 2.5% of GDP for defence spending and that the Army will not get the £3 billion that it needs to avoid making further cuts. Is this a good deal for Defence?

Ben Wallace Portrait Mr Wallace
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First, I am not sure where the hon. Gentleman gets that we will not get the 3% to avoid the cuts. At the moment, it will be a decision on the balance of investments. He will see in the Command Paper how we apportion any savings that we have to make as a result of inflation, but overall, as I have said, our equipment programme and, indeed, our envelope are on track, subject to inflation pressures and extra operational commitments that we have made. He will also be aware that we have had an extra £560 million on top of that for restocking ammunition, and we have also had commitments from the Treasury on new for old and much of the gifting. I believe that the Army will be in a good state throughout this process, and I will make sure that when it comes to the Defence Command Paper, he gets a full read-out of why and how we make those decisions.

Jack Lopresti Portrait Jack Lopresti (Filton and Bradley Stoke) (Con)
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T10. What steps is my right hon. Friend’s Department taking to support small and medium-sized enterprises in the defence sector that are adversely affected by the application of environmental, social and governance criteria, making it very difficult for them to raise capital to invest in their business and expand?

Alex Chalk Portrait Alex Chalk
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My hon. Friend is a champion of SMEs, and rightly so: they are at the heart of a vibrant and flexible UK defence industry. That is why this Department helps to find and fund exploitable ideas from SMEs. To his point, however, there is nothing contradictory between the principles of ESG and the defence industry. On the contrary, strong national defence is the ultimate guarantor of the freedoms that all too often are taken for granted—human rights, democracy and the international rules-based order.

Matt Rodda Portrait Matt Rodda  (Reading East) (Lab)
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T7.   It is good to see you in your place, Madam Deputy Speaker. Thousands of retired Gurkha soldiers who left the Army before 1997 live in considerable poverty, many of them in my constituency. I understand that there are ongoing negotiations between the Ministry and the Government of Nepal, and I would be grateful if the Secretary of State or a Minister could update me on this important issue.

Andrew Murrison Portrait The Minister for Defence People, Veterans and Service Families (Dr Andrew Murrison)
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As the hon. Gentleman probably knows, I recently set up a joint committee, chaired by me and the Nepalese ambassador, to consider outstanding Gurkha welfare issues. I must tell him that retrospective pension changes in respect of the Gurkhas have been through the system several times, including the High Court, the Supreme Court and the European judicial institutions, and the long-standing position of the UK Government has been upheld. However, I am keen to see that we do everything in our power to ensure that we give Gurkhas and Gurkha veterans living in the UK and in Nepal the very best we reasonably can to support their welfare.

Danny Kruger Portrait Danny Kruger (Devizes) (Con)
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I am delighted to hear that the Government are committing £2 billion to resupply the armed forces for the munitions and equipment sent to Ukraine. That is very positive news. What my right hon. Friend the Secretary of State said about the importance of investing in Army accommodation will also be very welcome news to my constituents in Tidworth, Bulford and Larkhill. In the spirit of honesty that he spoke about, can he tell us what he thinks it would take to convince the Treasury that we must do more than simply resupply our armed forces, and that we need a bigger Army, not a smaller one?

Ben Wallace Portrait Mr Wallace
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I do not need to do much more to convince the Treasury; the Chancellor and the Prime Minister said at the autumn statement that they recognised that Defence would need more spending. They have crossed that line, and in fact they already knew that: the Prime Minister, when he was Chancellor, gave us the extra £24 billion, and hon. Members will remember that the current Chancellor stood on a platform for a greater percentage of GDP when he stood for the leadership of the Conservative party. The key is now to ensure that we lock that spending in to get a long timeframe, so that we can start the investment and planning that will be required at the next comprehensive spending review and beyond.

Toby Perkins Portrait Mr Toby Perkins (Chesterfield) (Lab)
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T9. It is great to see you back in your place, Madam Deputy Speaker. To be fair to the Defence Secretary, he has been very candid that 13 years of this Government have, in his words, “hollowed out and underfunded” our armed forces, but why should anyone believe that, in their final gasps, the exhausted Government who underfunded them over 13 years will actually put right the hollowing-out they have put in place in that time?

Ben Wallace Portrait Mr Wallace
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Maybe the hon. Gentleman cannot hear: I did not say “13”; I said there had been “30” years of hollowing out, which includes his last Government, a Government I served under as a soldier. His Government spent a lot of money going to war in the middle east, which hollowed us out too, because we were not properly refunded. If he wants to come to this House and start a debate about Defence, I would appreciate it if he did so with a bit of candour about his own Government’s role in it. We have done that—I have had the courage to do that—so maybe he might.

Elliot Colburn Portrait Elliot Colburn (Carshalton and Wallington) (Con)
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I thank Carshalton and Wallington residents who have opened their homes to Ukrainians. Can my right hon. Friend give me some assurance that the kit we are sending to Ukraine will indeed come with the specialist support and training needed to operate it?

Ben Wallace Portrait Mr Wallace
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In the UK, we have thousands of British armed forces, joined by Canadians, Norwegians, Dutch, Swedish, Lithuanians, Australians and New Zealanders—endless numbers of people—helping the Ukrainians with that training. We ensure that not only do they train there, but when they go to somewhere such as Germany they get combined arms training. It is important that training accompanies equipment and, where we have had feedback, we have corrected the training as well.

Barry Sheerman Portrait Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
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Madam Deputy Speaker, I have really missed you. Can I ask the Secretary of State what he makes of what President Xi has been saying over the past few days? I urge him today not to do what people are rumouring that he might do—that, given the present situation, he might be thinking about resigning. Will he stay with us, but fight for more money for our armed forces?

Ben Wallace Portrait Mr Wallace
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As a Tory, you think about resigning most of the time—over the years. I am interested in trying to deliver for the men and women of our armed forces. I went into politics because the men and women of the armed forces needed and deserved better, and I am determined to try to stick that through. But I am also worried about the direction of threat for this country and for the world: not only what we have seen in China, as I think has been quoted—equipping for war, as they announced last week—but we have seen 83.4% enriched uranium being discovered, as the International Energy Agency has published in its report. That is weeks away from 90%, weapons-grade, should that be a decision. I have seen a growing problem with Russia and its violent extremism spreading across Africa. The threat is going up across the world, and we are more anxious and more unstable. I think that means long-term investment from whoever the Governments are over the next 10 to 15 years.

Eleanor Laing Portrait Madam Deputy Speaker (Dame Eleanor Laing)
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I call Flick Drummond to ask the final question.

Flick Drummond Portrait Mrs Flick Drummond (Meon Valley) (Con)
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Thank you very much, Madam Deputy Speaker; it is lovely to see you back. As a former chair of the south-east region for the Veterans Advisory and Pensions Committees, I have seen at first hand the long shelves at Norcross where Veterans UK is based. Can the Minister assure me that the digitalisation of veterans’ records will proceed quickly, so that veterans can get quick decisions on their welfare and their welfare claims?

Andrew Murrison Portrait Dr Murrison
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I pay tribute to my hon. Friend’s service with the VAPC. Like me, she has been to Norcross and seen the extraordinary files of paperwork. There is no way that we can provide the 21st-century service that our veterans deserve while things are in that state, so the £40 million digitalisation—though it may sound banal—will most certainly make a huge difference. Where we can, we will also address the other things that delay claims; I am thinking particularly of the difficulties we often have with our medical advisers getting reports from GPs in the NHS. I am afraid that that is one of the major hurdles to getting these things dealt with in a timely way, but I am resolved that we should do our level best to make sure things are better going forward.

Integrated Review Refresh

Monday 13th March 2023

(1 year, 3 months ago)

Commons Chamber
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15:37
James Cleverly Portrait The Secretary of State for Foreign, Commonwealth and Development Affairs (James Cleverly)
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With permission, Madam Deputy Speaker, I will make a statement on the 2023 integrated review refresh. I smile because it is a genuine delight to see you back in this House and back in your place.

Two years ago, the Government’s integrated review set out a clear strategy on how the UK would continue to thrive in a far more competitive age. Our approach is the most comprehensive since the end of the cold war. It laid out how we would bring together the combined might of every part of Government to ensure that our country remains safe, prosperous and influential into the 2030s. The conclusions of that review have run as a golden strategic thread through all of our activities across defence and deterrence, diplomacy, trade and investment, intelligence, security, international development, and science and technology over the past two years.

Our overall analysis was right, and our strategic ambition is on track. On every continent of the world, the United Kingdom walks taller today than it has done for many years. We are meeting our obligations as a permanent member of the UN Security Council and as a leading European ally within an expanding NATO. We have strong relationships with our neighbours in Europe, and we will build on the Windsor framework to invigorate those relationships even further. We are deeply engaged in the Indo-Pacific and active in Africa, and enjoy thriving relationships with countries in the middle east and the Gulf.

As I am sure this House recalls, today is Commonwealth Day, and I will be meeting my fellow Commonwealth Foreign Ministers in London over the course of the week.

We have maintained our position as a global leader on international development by pursuing patient, long-term partnerships tailored to the needs of our partner countries, and we succeed because those partnerships draw on the full range of UK strengths and expertise, in addition to our official development assistance. As this House will of course be aware, the severe global turbulence forecast in the 2021 integrated review has indeed come to pass, but events have moved at an even quicker pace than anyone could have imagined just two years ago. Russia’s full-scale invasion of Ukraine and attempts to annex part of its sovereign territory challenge the entire international order. Across the world, state threats have grown and systematic competition has intensified. There is a growing prospect of further deterioration in the coming years.

Due to the far-reaching consequences for the security and prosperity of the British people that these changes have brought, it is right that I update the House on what the Government are doing to respond. In our “Integrated Review Refresh 2023”, we set out how we respond to an even more contested and volatile world. Rightly, our approach is an evolution, not a revolution. I know that the House will agree that our most pressing foreign policy priority is the threat that Russia’s full-scale invasion of Ukraine poses for European security.

The UK has provided huge quantities of military support for Ukraine’s defence. We led the G7 response on Ukraine, co-ordinating diplomatic activity and working with our allies to impose the toughest ever sanctions on Putin’s Government. Thanks to the wisdom of this Government’s original integrated review, we have intensified our training for thousands of brave Ukrainian troops, who repelled Russia’s initial onslaught. That momentum must be maintained until Ukraine prevails and the wider threat that Russia and other states, such as Iran or North Korea, pose to the international order with their aggression or potential aggression is contained.

The 2023 integrated review refresh also sets out how the Government will approach the challenges presented by China. China’s size and significance connect it to almost every global issue, but we cannot be blind to the increasingly aggressive military and economic behaviour of the Chinese Communist party, including stoking tensions across the Taiwan strait and attempts to strong-arm partners, most recently Lithuania. We will increase our national security protections and ensure alignment with our core allies and a wider set of international partners. We must build on our own and our allies’ resilience to cyber-threats, manipulation of information, economic instability and energy shocks so that we remain at the front of the race for technologies such as fusion power, which will define not only the next decade, but the rest of this century.

My right hon. Friend the Chancellor of the Exchequer will say more on Government spending commitments in his Budget statement on Wednesday, but today I can set out a number of immediate and longer-term measures that will help us to deliver on our priorities. We will increase defence spending by a further £5 billion over the next two years. That will bring us to around 2.25% of national income and represents significant progress in meeting our long-term minimum defence spending target of 2.5% of GDP. Today’s announcement of £5 billion comes on top of the commitments made by the Chancellor in his autumn statement, on top of the £560 million of new investments last year, and on top of the record £20 billion uplift announced in 2020.

Later today, the Prime Minister will announce, alongside President Biden and Prime Minister Albanese, the next steps for AUKUS, including how we will deliver multibillion-pound conventionally armed nuclear-powered submarine capabilities to the Royal Australian Navy while setting the highest proliferation standards.

We will provide an additional £20 million uplift to the BBC World Service over the next two years, protecting all 42 World Service language services.

We have established a new directorate in the Foreign, Commonwealth and Development Office, incorporating the Government information cell, to increase our capacity to assess and counter hostile information manipulation by actors, including Russia and China, where it affects UK interests overseas.

We will double funding for Chinese expertise and capacities in government so that we have more Mandarin speakers and China experts. We will create a new £1 billion integrated security fund to deliver critical programmes at home and overseas on key priorities such as economic and cyber-security, counter-terrorism, and the battle to uphold and defend human rights.

We will establish a new national protective services authority located within MI5. It will provide UK businesses and other organisations with immediate access to expert security advice. A new £50 million economic deterrence initiative will strengthen sanctions enforcement and impact, and will give us new tools to respond to hostile acts. We will publish the UK’s first semiconductor strategy, which will grow our domestic industry for that vital technology, as well as an updated critical minerals strategy.

The 2023 integrated review reconfirms that the UK will play a leading role in upholding stability, security and the prosperity of our continent and the Euro-Atlantic as a whole. It underlines that this Government’s investment in our Indo-Pacific strategy is yielding significant results across defence, diplomacy and trade. Through those initiatives and many others that we have set out over the past two years, the United Kingdom will out-compete those who seek to destabilise the international order and undermine global stability. Our approach is imbued with a spirit of international co-operation and a pragmatic willingness to work with any country that does not seek to undermine our way of life.

We live in a competitive age, and the security challenges that the British people face today are the most serious in at least a generation. Time and again in our history, we have seen off the competition from countries that wish to do us no good. We were able to do so because the United Kingdom has always had more allies, and better allies, than any of our rivals or competitors. It will always be the policy of this Government to ensure that that remains the case. I commend the statement to the House.

Eleanor Laing Portrait Madam Deputy Speaker (Dame Eleanor Laing)
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I call the shadow Foreign Secretary.

15:47
David Lammy Portrait Mr David Lammy (Tottenham) (Lab)
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It is very good to see you in your place, Madam Deputy Speaker. I thank the Foreign Secretary for advance sight of his statement.

Just over a year ago, Russia’s full-scale invasion of Ukraine marked a watershed moment for European security. In the time since, 25 NATO countries have revisited their security strategies. Germany announced a fundamental shift in its security policy. Finland and Sweden have taken the historic decision to join NATO. For a year, Labour has urged the Government to revisit the integrated review, so this announcement is overdue but welcome.

We are living in an era of intensifying geopolitical competition in a multipolar world. The interdependence of the global economy is increasingly being weaponised. There has been a blurring of the distinction between foreign and domestic policy. This is a challenging moment for our security and that of our allies, and for our place in the world. The refreshed integrated review, and the decisions that it will inform, are therefore important to us all in this House. We all have an interest in the Government making the right long-term choices for our country.

Any future Labour Government will inherit the consequences of those decisions. Since the invasion, the Government have had our fullest support in providing military, economic and diplomatic support for Ukraine to defend itself, but we have pressed the Government where they have fallen short, and it is in that spirit that we approach the review today.

The original integrated review contained plenty of analysis that was sound and that could enjoy wide support in the House, but it did have serious shortcomings. It made no mention of the risk of the Taliban taking over Kabul, just months before it happened. Nor did it foresee the risks of a full-scale invasion of Ukraine, or mention risks related to Taiwan. It had little to say about Europe beyond NATO, and it said almost nothing about the European Union, which was given one substantive reference in the entire document.

In too many areas, from the fight against kleptocracy to the importance of international law, rhetoric and ambition contrasted poorly with Government inaction or hypocrisy. Significant and regretful decisions, such as that to cut official development assistance spending to 0.5% of GNI and the merger of the Department for International Development and the Foreign and Commonwealth Office, were taken before the review had even been concluded.

In security and defence, there was a clear mismatch between ends, ways and means. With threats increasing and a promise of “persistent global engagement”, the Government announced plans to cut another 10,000 troops, scrap Hercules planes and drop to 148 Challenger tanks. Those are the troops now reinforcing NATO allies, the planes used in the Kabul airlift, and the tanks being sent to Ukraine.

In the two years since the integrated review, in too many areas its promises have not matched reality. The so-called Indo-Pacific tilt has apparently been completed, but the UK’s diplomatic presence in key countries in the region, including India and China, has been cut by up to 50% over the past eight years. The review promised to maintain the UK as one of the world’s leading development actors; however, not only has aid been cut from 0.7% to 0.5%, but it is now being used to prop up the broken asylum system. By some estimates, less than half of bilateral development assistance ever leaves the United Kingdom.

Rather than standing up for international law, Ministers have come to this Chamber to explain how they plan to break it. Successive crises, from the pandemic to the war in Ukraine, have demonstrated the vulnerability of international supply chains, but we have not seen a new diplomatic drive to reflect the shifting resourcing economy. Britain is falling seriously behind. United States chips legislation will provide $52 billion in subsidies for US chip manufacturers and the EU’s Chips Act will provide €43 billion, but the Government have put aside just £700,000 to commission a research project, and they still have not published their promised semiconductor strategy.

Today’s refresh is an opportunity to address these flaws and reset the Government’s approach. A test of the integrated review is how it contributes to making Britain secure at home and strong abroad, and that is how we will judge it.

The Government will continue to have Labour’s full support over Ukraine and reinforcing our NATO allies. Labour’s commitment to NATO remains unshakeable and our commitment to Britain’s independent nuclear deterrent is total. The review’s emphasis on building partnerships and alliances is welcome after a period of drift away from multilateralism. Britain is always a stronger and more effective force for good when it works with others. That is why Labour’s foreign policy vision is for a Britain reconnected. I am glad that the Government have been taking notes.

Nowhere has the sense of disconnection been stronger than in our post-Brexit relationship with the EU. It is good to see, on page 22, the Government finally acknowledge its importance. Labour would go further, seeking a security pact to co-operate on global challenges and keep us safe.

On China, we recognise the scale and complexity of the challenge that its rise represents and the breadth of our interests that are at stake. The initiative to improve understanding of China in government is vital, particularly given that the Foreign Office has been training only 14 people a year to speak fluent Mandarin. We need a strong, clear-eyed and consistent approach to China, working with partners and allies, and engaging with China where our interests align to do so. It feels that after years of inconsistent and shifting approaches, this is at least something we can welcome.

It is good to see a new economic deterrence unit to help enforce sanctions, as is mentioned on page 48, because not a single individual or entity—not one—has been fined for breaching Russia sanctions since the invasion. Sanctions without enforcement are useless. I note the plan for a new Russia strategy, but the Government have not yet implemented all the Russia report’s recommendations.

On Iran, the Government are right to recognise the increasing threat, so it was disappointing that they opposed our amendment to create a new mechanism to proscribe hostile state actors such as the Islamic Revolutionary Guard Corps.

In an era of disinformation, the BBC World Service is a unique and unparalleled platform, so the additional funding is very welcome. However, on defence spending, today’s announcement provides funds only for AUKUS and Ukraine replenishment. That is why we welcome it, but it does not answer growing questions concerning capability gaps that weaken our national defence and undermine the UK’s NATO contribution. The National Audit Office said recently that the Ministry of Defence

“cannot…afford to develop all the capabilities set out in the 2021 Integrated Review”.

How does today’s announcement ensure the same does not happen now that the new 2023 integrated review has been published?

The reality is that the Government are dragging their feet on the big decisions. The long-term goal to spend 2.5% of GDP on defence sounds, I am afraid, a little bit like a hollow promise. There is no plan and there is no timetable. I can tell the Secretary of State that the last Labour Government left office with defence spending of 2.5% intact. The reality is that too much of the Government’s effort is focused on undoing their mistakes: the Windsor framework to fix the protocol they negotiated; a Franco-British summit to repair relations damaged by his predecessor’s clumsy diplomacy; a £16.5 billion investment in defence swallowed up by a blackhole in the budget they mismanaged; removing the Chinese state’s role in our nuclear power industry, after the Government invited it in in the first place; and trying to strengthen our leadership in international development after the Government squandered it.

We welcome this refresh, but we will continue to provide robust scrutiny where necessary to ensure that our country’s foreign policy and defence systems are secure for the next generation.

James Cleverly Portrait James Cleverly
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I am not a religious man, but I understand that there is a phrase in the Bible about how there is more joy in heaven over a sinner who repents, and it is really good to hear—[Interruption.] As I say, I am not a religious man, but I am joyful that those on the Labour Front Bench have finally, perhaps kicking and screaming, come to such a realisation.

Let us take official development assistance. At its lowest point, this Government are still spending a larger proportion of GDP on ODA than at the highest point under the Labour party when it was in government. I remember when the Russian state was instrumental in poisoning British citizens and the leader of the Labour party at the time was saying that we should share our intelligence with the very state that was poisoning British people. I am now glad, finally, to hear a commitment from the Labour Front Bench about maintaining the nuclear deterrent and about support for NATO. It is interesting that we are being criticised for getting defence spending to 2.25% of GDP with a commitment to 2.5% of GDP, because I hear no such commitment formally from the shadow Defence team.

The simple truth of the matter is that the right hon. Gentleman made a number of points about what Labour would do differently, and then said that, broadly, he agrees with this strategy. I am glad that he agrees with the strategy, because we have been working on this, we have been implementing the 2021 integrated review and we have seen the positive impact it has had on our relations in the Indo-Pacific. The signing of the FCAS—future combat air systems—agreement between Italy, Japan and the United Kingdom is testament to that, as is the fact that the carrier strike group’s maiden voyage was to that region. The fact that we are seen absolutely at the forefront of the international support to Ukraine in its self-defence against Russia’s invasion is also testament to that.

This Government will always be an internationally focused Government. We will always make sure that we act in close concert with our international partners and we will build greater partnerships around the world. That is what this refresh is about. It builds on the work of the original integrated review, and I am very proud that we have put it in the public domain.

Eleanor Laing Portrait Madam Deputy Speaker (Dame Eleanor Laing)
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I call the Chair of the Foreign Affairs Committee.

Alicia Kearns Portrait Alicia Kearns (Rutland and Melton) (Con)
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It is a joy to see you back in your place, Madam Deputy Speaker.

I welcome much of this pragmatic refresh, and it is good to see recommendations by the Foreign Affairs Committee embraced, such as making resilience a key pillar, the Mandarin capability, the criticality of critical minerals, deterrence diplomacy, and the importance of science and technology. However, the threat of China cannot be seen primarily as an economic one, because that is to fail to recognise that it is trying to undermine our security and sovereignty. The asks are: greater resolve when dealing with transnational repression. That means shutting down illegal Chinese police stations, and closing down the Iranian regime’s cut-outs that are operating in London and across our country.

I welcome the creation of the National Protective Security Authority to tackle techno-authoritarianism, but that is support for the private sector. I hope, therefore, that the Government will accept my amendment on support for public sector procurement when the Procurement Bill comes forward in a couple of weeks. Finally, the Government rightly talk about the reconstruction of Ukraine in the refresh. Will the Foreign Secretary commit to using frozen central bank funds? The Government seem to claim that we do not have the law in place to do that, or that it is not legally tested. Tell us what law change is needed, we will make it, and let us test it in the courts.

James Cleverly Portrait James Cleverly
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The Chair of the Foreign Affairs Committee highlighted a number of important areas, and I commend her and the Committee for the work they have done in putting forward ideas. We always take those ideas seriously and, as she recognises, it is no accident that some of the conversations and thinking that her Committee has put forward are woven into this report. We always listen to constructive feedback from colleagues, whatever side of the House they come from.

We are conscious that the threat from Chinese activity is not just in the economic sphere, and I assure my hon. Friend that on our security—not just economic security —we are thinking across a full range of threats and risks. We must also recognise that there is the need and opportunity to engage with China in areas where we can work more successfully. I assure her that protecting ourselves against risks in that economic sphere will not be limited just to the private sector—we will of course look to give advice to the private sector, and more broadly, and I assure her that we will continue to think across the whole range of threats and risks.

Lindsay Hoyle Portrait Mr Speaker
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I call the SNP spokesperson.

Drew Hendry Portrait Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
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Mr Speaker, while the Deputy Speaker is still in the Chamber, may I too welcome her back to her place? It is nice to see you here, Madam Deputy Speaker.

I thank the Foreign Secretary for advance sight of his statement. There are clear things to welcome in the review, and I think everyone can say that funding for the BBC World Service is a good move. Measures to tackle and counter hostile information and manipulation are things we should be doing, and it is good to see them in the report. It is sensible to develop more expertise on China, although there are gaps in the strategy. It is painfully obvious that we need a reassessed Russia strategy, and it is important to come forward with that in detail. Support for Ukraine must be ongoing, and I repeat the call for frozen assets to be used in the rebuilding process.

The Secretary of State also needs to reflect on where his golden thread has frayed. The Government were flatfooted in the crisis over Afghanistan, and there is still the issue of British Council workers. What lessons have been learned for the future from that debacle? What are his ambitions in rebuilding with the European Union, and where is the detail on dealing with the global climate crisis? It is barely mentioned in the documents. International aid should not be used as a trade lever, yet that is still part of the UK Government’s plans. Increased military spending needs more detail. When will that come to the House? Security expert Edward Lucas has warned:

“Britain’s military cannot sustain a global role”,

describing UK armed forces as a

“clapped-out army, serious problems with…our naval vessels, and an air force short of planes and pilots.”

The presence of nuclear weapons in NATO countries did not deter Putin from invading Ukraine. Why would spending more on new nuclear be a good idea now? Does the Foreign Secretary agree that spending in conventional areas would be better than wasting on new nuclear, or has the £5.5 billion shambles of the Ajax tanks procurement left the Government afraid of that kind of investment?

James Cleverly Portrait James Cleverly
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On who will ultimately pay for the terrible damage across Ukraine, it is absolutely right that the aggressor pays. We will work closely with our international partners to make sure that those who cause the damage repair the damage. The exact vehicle for doing so will be discussed and decided internationally, because it demands an international response.

On the nuclear deterrent, the hon. Gentleman has very much drawn the wrong lessons. He says that NATO having nuclear weapons did not prevent Russia attacking Ukraine. Ukraine is not a member of NATO and Ukraine gave up its nuclear weapons arsenal. It was Russia’s failure to abide by the commitments made in the Minsk agreement—[Interruption.] He says it did not stop it invading Ukraine. Ukraine is not a member of NATO. I can draw him a map if it helps. Ukraine is not a member of NATO. Our nuclear deterrent is absolutely the foundation stone of the Euro-Atlantic defence, and the UK will always abide by its commitments to its friends and neighbours in the region. We will ensure the standing we currently enjoy as one of the most significant contributors to the Euro-Atlantic defence relationship is maintained and enhanced, in terms of both our nuclear deterrent and conventional means.

Lindsay Hoyle Portrait Mr Speaker
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I call the Chair of the Defence Committee.

Tobias Ellwood Portrait Mr Tobias Ellwood (Bournemouth East) (Con)
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Defence posture matters. If we want to play a role on the international stage, then our hard power counts. We have to be honest. The last integrated review saw a swathe of cuts to our land, sea and air assets, which I think many in the House hoped would be reversed today. Page 8 of the review summarises the threat:

“There is a growing prospect that the international security environment will further deteriorate in the coming years, with state threats increasing and diversifying in Europe and beyond. The risk of escalation is greater than at any time in decades”.

We are sliding towards a new cold war and threats are increasing, yet here we are staying on a peacetime budget. My right hon. Friend has two days before the Budget is announced. Please, can we move to 2.5% of GDP now?

James Cleverly Portrait James Cleverly
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We committed to 2.5% of GDP as a sustainable baseline. We announced the additional £5 billion to address the immediate impact of Russia’s invasion of Ukraine. As I said, that is on top of the £20 billion uplift announced in 2020 and the over half a billion pounds of new investment announced last year. We will continue to work with our international allies to ensure our collective defence posture is one that genuinely deters aggression against NATO and its member states. We have been successful in doing that, but we will, as this document has done, assess the likely and possible threats and make sure that our defence posture aligns with them.

Kevan Jones Portrait Mr Kevan Jones (North Durham) (Lab)
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Having ambition and slogans such as “global Britain” are fine, but without resources behind them they are pretty meaningless. Between 2010 and 2021, the Government cut the defence budget by 16%. A £5 billion increase in the defence budget was announced today—the Prime Minister is trumpeting it all over social media—but the Defence Secretary told the Defence Committee, on which I sit, that he needed 11% just to stand still. It is interesting that he is not here to defend it. Can I ask about the £5 billion? Is the £3 billion for the nuclear deterrent new money or part of the existing £10 billion already put aside for the deterrent? If that leaves £2 billion additional expenditure, that is a long way from the Defence Secretary’s claim that we need 11% just to stand still.

James Cleverly Portrait James Cleverly
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The Secretary of State for Defence was just at the Dispatch Box welcoming the money.

Kevan Jones Portrait Mr Jones
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Where is he now?

James Cleverly Portrait James Cleverly
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He has gone to Japan, with which we have recently signed a defence agreement for the next generation of fighter aircraft. The slightly childish and raucous calls from the Opposition Benches would have more impact if it were not for the fact that on the Government Benches we are getting on with building those international defence relationships that will keep us, our neighbours and our friends right across the globe safe.

Henry Smith Portrait Henry Smith (Crawley) (Con)
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I very much welcome the commitment to spend 2.5% of GDP on defence, and the recommitment with our American and Australian allies to AUKUS. Will the Secretary of State assure me that there will be absolute alignment of our defence and foreign policy positions, to ensure that global Britain delivers in the way that it must for our own freedom and that of our allies?

James Cleverly Portrait James Cleverly
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My hon. Friend makes an important point. That is why we have moved to integrated reviews, recognising that defence, diplomacy, international development and trade policy are all interwoven. To have a truly effective international posture, all those functions of government need to go hand in hand, in close co-ordination with non-governmental organisations such as the BBC World Service. That is why we had the integrated review in ’21 and the integrated review refresh today. I assure him and the whole House that we will continue to work in close co-ordination across Government to deliver on it.

Liam Byrne Portrait Liam Byrne (Birmingham, Hodge Hill) (Lab)
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I welcome what I heard was the recognition that when it comes to China we need to do far more to defend our values, while recognising that there are global public goods that we need to work on together, such as climate change, nuclear proliferation in the Pacific and global development. Since the last integrated review, the so-called “tilt” to the Indo-Pacific has entailed £3 million extra in FCDO staff, three extra British high commissioners in the Pacific, two extra warships and less than 1% of the MOD headcount. That it not a tilt but a glance in the right direction. Could the Foreign Secretary tell us how big the package will be to finance the tilt needed to an area of £4.3 billion people?

James Cleverly Portrait James Cleverly
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The right hon. Gentleman seems have embedded in his question the idea that our posture to the Indo-Pacific is a one-off event. It is not; it is a permanent recalibration of our foreign and defence policy. My first set of bilateral visits as Foreign Secretary was to Japan, South Korea and Singapore. The Defence Secretary is flying to Japan at the moment to build upon the agreement that we have made between the UK, Italian and Japanese Governments. We have made a long-term commitment that is being resourced. The carrier strike group’s main voyage to the region is building towards what is a permanent recalibration of our international focus, to recognise that the centre of gravity of world affairs is moving eastwards and southwards. We are responding to that.

Mark Francois Portrait Mr Mark Francois (Rayleigh and Wickford) (Con)
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I welcome the Foreign Secretary’s crystal-clear commitment that from 2025 we will spend 2.5% of our GDP on defence. I will be interested to know whether Labour will match that. Part of that spending, referred to in the document, is the AUKUS programme, which will be a world-class collaboration between the United States, Australia and us. Does he agree that that not only will help deter Chinese expansionism in the Pacific, but is a perfect example of global Britain?

James Cleverly Portrait James Cleverly
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My right hon. Friend makes a very important point. When I was running through the list of things that underpin our Indo-Pacific focus, I did not mention AUKUS, because I know that the Prime Minister will do so extensively later on today. My right hon. Friend asked whether I think the Labour party will match that commitment of 2.5% on defence spending. I say no, for two reasons: first, no shadow Defence Minister has made such a commitment; and secondly, the Labour party will not be office in 2025—we will.

Derek Twigg Portrait Derek Twigg (Halton) (Lab)
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We have faced our most perilous moments since the second world war and the height of the cold war, and we have seen a clear strategy from Russia, China and Iran to undermine democracy and western values. What we have before us today is a strategy that does not give any sort of signal or sign to Russia, China or Iran that we are serious about taking them on. We need to do what it takes. The Government, and this Parliament, need to decide that and do what it takes. Instead, what we have today is a paltry £5 billion—[Interruption.] The Secretary of State for Defence has made it clear that he wanted £8 billion to £11 billion. Back in November, when he was asked about inflation by the Defence Committee, he argued for an increase of £8 billion over two years. Here we have got £5 billion, which does not even cover the inflationary part of the cost. It is an absolute nonsense and the Government should be ashamed of themselves. They are letting down this country.

James Cleverly Portrait James Cleverly
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I struggle to find a question among that stream of consciousness, but the simple truth is that the Secretary of State for Defence was at this Dispatch Box only few minutes ago welcoming this announcement. The hon. Gentleman says £5 billion is a “paltry” sum. I was just reminded by the Minister for Defence Procurement, my hon. and learned Friend the Member for Cheltenham (Alex Chalk), that that sum is larger than our budget for prisons. The hon. Gentleman’s attitude towards public money demonstrates the classic problem with the Opposition; suggesting that £5 billion is an insignificant sum demonstrates a blasé attitude towards public expenditure, which is sadly the hallmark of the Opposition.

Saqib Bhatti Portrait Saqib Bhatti (Meriden) (Con)
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I thank my right hon. Friend for the refresh, which makes the country stronger today. Many of my constituents are concerned about the rise of China. Does the Secretary of State agree with me that China is one of the greatest challenges we will face in the 21st century? Will he confirm that we must build on our relationships in the Indo-Pacific, not just with our existing friends, such as Australia, India and Japan, and that we must find new friends and allies to strengthen our hand?

James Cleverly Portrait James Cleverly
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My hon. Friend is right that it is important for us to build on our existing friendships and develop new ones in the Indo-Pacific region. Those friendships and partnerships are a good thing in and of themselves, not just in response to China’s activity. He is also right that China has demonstrated a range of behaviours that we oppose. I have raised those directly with representatives of the Chinese Government, so it is right that this review looks carefully at our relationship with China, those areas where we need to defend ourselves and our partners, and those areas where we need to work more closely with them.

Dave Doogan Portrait Dave Doogan (Angus) (SNP)
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It is a fine, glossy brochure, but we have waited an awfully long time and there is not a lot in it. The harsh realities are that at a time when inflation is denuding the defence budget in the way that it is, and when the Euro-Atlantic posture of the United Kingdom needs to redouble more than ever, the United Kingdom has committed itself to the Indo-Pacific. We have a war in mainland Europe and the response is £5 billion. It is not serious, especially not when £2 billion of that is to replenish stocks, which is non-discretionary so not a policy position, and the other £3 billion is for nuclear. Why is there always money for nuclear?

James Cleverly Portrait James Cleverly
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I will tell the hon. Gentleman why there is always money for the foundation stone of the Euro-Atlantic defence posture; it is because it is the foundation stone of the Euro-Atlantic defence posture. When he starts to talk about expenditure on the armed forces, my heart goes out to those brave men and women in our British armed forces stationed in Scotland, who pay more tax than any other members of the armed forces in the country.

Alec Shelbrooke Portrait Alec Shelbrooke (Elmet and Rothwell) (Con)
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I very much welcome the review that my right hon. Friend has announced today. He spoke about the relevance of the critical minerals strategy. May I highlight something for him to take back to other Departments that work alongside his? We all recognise the lessons to be learned from our reliance on Russian minerals, and how we have had to change that, but 95% of the elements used in renewable energy—solar panels or whatever—are processed in China. We cannot escape the science, but we can ask other Departments to diversify how we do renewables. Will my right hon. Friend take back to other Departments the message that we need to look at investing in and working on things like hydrogen combustion, so that we are not entirely reliant on minerals coming out of China?

James Cleverly Portrait James Cleverly
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My right hon. Friend is absolutely right. Russia’s use of energy supplies is a tool of coercion—that is something that we have witnessed. We must ensure that we do two things. First, we must wean ourselves off our global addiction to hydrocarbon energy, for the reasons that we have seen. Secondly, we must ensure that, in doing so, we do not inadvertently create a dependency on any one other country, particularly China. Our critical minerals strategy will bear that in mind. It is clear from conversations I have had—for example with leaders of the countries in Africa from which these minerals are mined and shipped to China for processing—that it would be better for them, for us and for the world if more of that processing were done on the continent of extraction rather than on the other side of the world.

Holly Lynch Portrait Holly Lynch (Halifax) (Lab)
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The integrated review refresh recognises the challenge from Iran, which has been behind 15 kidnap and assassination attempts in the UK since January last year. The Foreign Office is widely understood to be blocking attempts to proscribe the Islamic Revolutionary Guard Corps. Can the Foreign Secretary confirm whether that is true? Given the seriousness of the threat, can he explain why we have not yet proscribed the IRGC?

James Cleverly Portrait James Cleverly
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We respond to the threats posed by Iran in the region, against people in the country and internationally. The hon. Lady is right to highlight the numerous attempts that have been made on the UK mainland; I pay tribute to our security services and our policing services for preventing a number of attempted attacks here. The decision whether to sanction or proscribe is always one that we discuss across Government. Any decisions on future designations or sanctions will be made across Government, and I am not going to speculate on what future actions this Government may take.

Richard Drax Portrait Richard Drax (South Dorset) (Con)
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The velvet glove of diplomacy must cover the iron fist. Does my right hon. Friend share my concern that even 2.5% of GDP on defence will simply not be enough to give the Foreign Office the support it needs to do its job?

James Cleverly Portrait James Cleverly
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My hon. Friend makes an incredibly important point about the close working relationship between defence, diplomacy and international development. I can assure him that the Defence Secretary and I, the Prime Minister and the Chancellor are in close co-ordination to make sure that the money we spend defending our nation and defending our interests overseas is used most effectively. That will always underpin the decisions that we make. I recognise my hon. Friend’s desire for greater spending on defence, but ultimately we need to ensure that we protect the public purse in a way that protects our interests and values.

Richard Foord Portrait Richard Foord (Tiverton and Honiton) (LD)
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The 2015 strategic defence and security review estimated that the Dreadnought acquisition programme was

“likely to cost a total of £31 billion…including inflation”.

We have learned in the past week that the programme remains within budget. However, the SDSR set a contingency of £10 billion. How much of that £10 billion contingency is being used on Dreadnought? Is the £3 billion announced today for nuclear separate from that £10 billion?

James Cleverly Portrait James Cleverly
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Future expenditure will be set out in more detail by my right hon. Friend the Chancellor of the Exchequer, as I have said, and the ways in which the Defence Secretary will spend the money allocated to him will be set out by Defence Ministers. I have to say that I am still completely lost as to what the Lib Dems’ defence posture is. When I look back on our time in government together, I certainly cannot help thinking that if we had not had the sea anchor of the Lib Dems in coalition, we would have progressed much more quickly in securing the defence of this country.

Robert Courts Portrait Robert Courts (Witney) (Con)
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The extra money for stockpiles and for AUKUS is indeed welcome. The Foreign Secretary rightly spoke of a challenge to the entire international order, and when we look at just two areas of capability in isolation—the size of the Army and the capability of the Air Mobility Force—we have to face the unpalatable fact that neither people nor equipment can do two things at once. Will he be working with his ministerial colleagues to ensure that our investment matches, and provides, the capability to be set against the challenges of which he rightly spoke?

James Cleverly Portrait James Cleverly
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My hon. Friend is very knowledgeable about this subject, and the points that he has made are points to which we listen carefully. I can only repeat that we will continue to work together closely, as we have done for a number of years, to align our foreign affairs and diplomacy posture—and, indeed, our international development posture—with our defence posture to ensure that we use most efficiently and effectively the public funds, the taxpayers’ money, given to us by the Chancellor to protect the British people and our friends and interests overseas.

Dan Jarvis Portrait Dan Jarvis (Barnsley Central) (Lab)
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The Foreign Secretary referred to a further £5 billion over the next two years, and to the commitment to spend 2.5% of UK GDP on defence. Let me ask him, very simply, when the 2.5% commitment will come into effect, and where that leaves the British Army. Will there be further cuts?

James Cleverly Portrait James Cleverly
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I thank the hon. and gallant Gentleman for his question. The details of how the Secretary of State for Defence will spend his budget I will have to leave to the Secretary of State for Defence, but the Integrated Review Refresh sets out the broad parameters. The £5 billion brings us up to about 2.25% of GDP, which is well on track to that 2.5% commitment. As I have said, I will leave it to the Defence Secretary to give further details of the nature of that expenditure and the capabilities and equipment that it will cover.

Iain Duncan Smith Portrait Sir Iain Duncan Smith (Chingford and Woodford Green) (Con)
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I welcome some of the report, but I want to return to the issue of China, in which, as someone who has been sanctioned, I take a particular interest.

I have to say that I am somewhat confused about what the Government’s position actually is. It was the Prime Minister who, when standing for election, said:

“China…poses a systemic threat”

—there was then a backdown to “systemic challenge”—

which we would meet with “robust pragmatism”. That “robust pragmatism” means that we have sanctioned no one in Hong Kong while America has sanctioned 10; that we have sanctioned three low-level officials in Xinjiang while America has sanctioned 11, including Chen Quanguo, the architect of that terrible atrocity; and that we did not kick out the Chinese officials who beat people up on the streets of the UK. Now, however, I understand that “systemic challenge” has moved on to “epoch-defining challenge”. The document that the Prime Minister has produced today does refer to that “epoch-defining challenge”, but then goes on to use the words

“in the face of that threat”.

Does that now mean that China is a threat, or an epoch-defining challenge, or a challenging Government epoch, or even none of that?

James Cleverly Portrait James Cleverly
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I reassure my right hon. Friend that in every meeting I have had with representatives of the Chinese Government, I have raised specifically their sanctioning of him and others in this House as being completely unacceptable behaviour. I have challenged them on every single occasion that I have had conversations with the Chinese Government.

I understand the desire to have a simple, short phrase or a single word to describe our posture towards China, but with a country as big, influential and significant as China, it is impossible to distil it down to a simple set of words or a phrase. That is not something we do with any other country in the world. We recognise that international relations are more complicated, so in the IR refresh there is more of a narrative than a single-word description. We want to describe the areas where we can and should work more closely with China, the areas where we need to defend ourselves and our interests against China, and the areas where we want to steer China into a different course of action. So there will always be descriptors, plural. I understand my right hon. Friend’s desire for clarity on this, and he will see through our actions that we will respond robustly to China when it behaves in a way that we disagree with, but we will also attempt to steer China in a better direction.

Hilary Benn Portrait Hilary Benn (Leeds Central) (Lab)
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Given the close way in which we have been working with our European allies to resist Russia’s invasion of Ukraine, is it not now time to seek a formal foreign policy and security partnership with the European Union alongside our leading role in NATO?

James Cleverly Portrait James Cleverly
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I have just come back, at the tail and of last week, from the UK-France summit in Paris, and our closer defence co-operation was one of the main topics we discussed, as was our broader co-operation with the member states of the European Union on our collective self-defence, but ultimately NATO has shown itself to be the most effective mechanism for the defence of the Euro-Atlantic region. The UK has demonstrated its full commitment to NATO, and through the announcements we have made today and the previous announcements we have made, we will continue to be one of the leading contributory nations to NATO. That is the primary vehicle for our collective self-defence.

Bernard Jenkin Portrait Sir Bernard Jenkin (Harwich and North Essex) (Con)
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I thank my right hon. Friend for his statement and for the presentation of this paper, which shows a far greater strategic awareness of the vulnerability that the whole of the west faces than we would have seen in any document just a few years ago. But is not the ghost at the feast still the money? I very much welcome his commitment to 2.5% of GDP for defence, but when are we going to see our armed forces restored to the critical mass that is capable of deterring the kind of aggression we are seeing in Ukraine and the kind of aggressive policies we are seeing from China? The £5 billion announced today will patch up what we should have been spending already, but it is not going to make a huge difference.

James Cleverly Portrait James Cleverly
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My hon. Friend is right to say that all defence postures need to be paid for, and that is why I am proud that we have the additional £5 billion that we have announced on top of the money previously announced in 2020. Obviously, when we are talking about expenditure as a percentage of GDP, one of the best things we can do is to grow the economy, which is why I full support the Prime Minister’s priority to grow the economy so that we can have a larger defence budget in absolute terms, because it will be a percentage of a growing economy. I highlight the fact that that is in stark contrast to the lack of commitment to a proportion of defence spending from those on the Opposition Front Bench, along with no credible plan to grow the economy. I take the point my hon. Friend makes to heart.

Anum Qaisar Portrait Ms Anum Qaisar (Airdrie and Shotts) (SNP)
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Does the Foreign Secretary agree that, following his Department’s devastating international aid cuts, the UK Government cannot claim to be fully safeguarding vulnerable communities around the world?

James Cleverly Portrait James Cleverly
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In absolute terms and in percentage terms, the UK is still one of the largest—[Interruption.] In absolute terms and in percentage terms, the UK is still one of the largest official development assistance donating countries in the world. I can assure the hon. Lady that, from the conversations I have with partners around the world, they hugely value the UK’s contribution, our expertise and the co-operation we have with them.

John Baron Portrait Mr John Baron (Basildon and Billericay) (Con)
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Many aspects of this statement are welcome, including the increases in our hard power and soft power capabilities, but does the Foreign Secretary accept that one-off increases are ad hoc, sporadic and make long-term planning difficult? What is required is a fundamental, threat-based review backed by long-term funding. To properly defend ourselves requires long lead-in times across many aspects of our defence.

James Cleverly Portrait James Cleverly
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My hon. Friend is right. We have published the integrated review refresh to set the framework for the risks and opportunities in the international sphere. Of course, we need discrete responses to one-off events such as Russia’s invasion of Ukraine, but those are within a wider framework of international posture. The Prime Minister has made it clear that this is part of the journey towards our baseline of spending 2.5% of GDP on defence, which is a commitment to which we will adhere.

Stephen Kinnock Portrait Stephen Kinnock (Aberavon) (Lab)
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Building on the question asked by the right hon. Member for Chingford and Woodford Green (Sir Iain Duncan Smith), does the Foreign Secretary agree that we need an in-depth strategic audit of every aspect of our country’s relationship with China, from defence to diplomacy, technology, education and cyber-security? Will he assure the House that there will be no return to the utterly failed “golden era” strategy?

James Cleverly Portrait James Cleverly
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I can assure my right hon. Friend the Member for Chingford and Woodford Green (Sir Iain Duncan Smith) and the hon. Member for Aberavon (Stephen Kinnock) that we are looking at how China interacts with the British state, both at a Government level and in other areas, including the commercial world, the public sector and education. That is not to say that we should never, or must never, have Chinese investment in the UK, which would be unrealistic and counterproductive, but it must mean that we go into whatever relationship we have with China with our eyes open. We have to properly assess the opportunities, risks and threats, and that needs to be done across Government. I can reassure the hon. Gentleman and other Members that this is exactly how we will approach our relationship with China.

James Gray Portrait James Gray (North Wiltshire) (Con)
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I welcome the document’s strength and robustness with regards to Russia’s threat elsewhere than Ukraine but, following my quick reading, I am a little disappointed by how little it says about the Arctic. More than half of Russia’s navy and all its nuclear defence is in the Arctic, on which it has a 25,000-mile coastline, and most of Russia’s economic wealth also comes from the Arctic, yet only one paragraph is devoted to it. Frankly, I think the threat is quite substantial, so I am disappointed by the oft-repeated hope

“for the Arctic to return to being a region of high cooperation and low tension.”

Am I right in thinking that is more of a hope than a belief that it will actually happen?

James Cleverly Portrait James Cleverly
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I have had conversations with my Scandinavian, Baltic and Canadian counterparts on the risk to the Arctic and the high north. Obviously, in a document that we are trying to make modest in page number but wide in aspiration, we have to be disciplined in how much we put across. I can assure my hon. Friend that we are very conscious of that risk. The joint expeditionary force and my conversations with my Nordic, Baltic and Canadian counterparts are testament to that.

Paula Barker Portrait Paula Barker (Liverpool, Wavertree) (Lab)
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The extra funding being made available to the BBC World Service is particularly welcome. The World Service does an admirable job of supplying news in a world of disinformation, so why did the Government decide to cut its funding in the first place?

James Cleverly Portrait James Cleverly
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When the impacts of covid were felt across the world, every Government of every political persuasion had to make difficult decisions, just as we did. I am pleased that we have been able to work with the BBC World Service to ensure it delivers its services in the most efficient manner and that we are able to support it with this increase in funding.

Kit Malthouse Portrait Kit Malthouse (North West Hampshire) (Con)
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Given that the biggest killer of our people, the most frequent breaches of our border and, arguably, the most significant impact to the integrity of our economy result from the work of overseas organised criminal gangs, why is there hardly any mention of them in this document? Where is the resource to allow the National Crime Agency to deal with threats that are felt on the streets of the Secretary of State’s constituency and mine every day?

James Cleverly Portrait James Cleverly
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My right hon. Friend is right to say that organised criminal gangs have an international component. This document is predominantly but not exclusively focused on state-level threats. However, I assure him that the role of international organised crime gangs is very much part of our interactions with our interlocutors internationally. We did not have the opportunity to put every single element of what we do internationally into this review, and of course a large of part of what he refers to lies within the home affairs area of responsibility. However, we liaise closely to ensure that we discuss with international interlocutors the threat posed within the UK by international criminality.

Andrew Gwynne Portrait Andrew Gwynne (Denton and Reddish) (Lab)
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I refer to my entries in the Register of Members’ Financial Interests.

I was pleased that the Foreign Secretary referred to today being Commonwealth Day, but a little disappointed that there was only a passing reference to the Commonwealth, in that he is meeting Foreign Ministers from member states in the coming week. He was right to highlight the growing influence of China across the globe, which includes economic, political and security interests among many of the 56 members of the Commonwealth. How does he envisage the integrated review refresh in terms of Britain developing a modern, dynamic, refreshed friendship with many of those Commonwealth countries?

James Cleverly Portrait James Cleverly
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I genuinely thank the hon. Gentleman for raising that issue. Although we have not made many references to the Commonwealth discretely in this review, the Commonwealth is interwoven through much of what we do. The geographical nature of the Commonwealth means, inevitably, that our Indo-Pacific tilt will be delivered in partnership with Commonwealth countries, as of course AUKUS will be with Australia. This morning, I spoke to the Singaporean and New Zealand Foreign Ministers, and I have had meetings with the Malaysian Foreign Minister. I assure the hon. Gentleman that the UK wants to see the Commonwealth being a meaningful, active and useful vehicle for the member states, particularly the small island states that disproportionately create the membership of the Commonwealth. I reassure him that even if this is not written down explicitly, it is absolutely interwoven throughout this document.

John Whittingdale Portrait Sir John Whittingdale (Maldon) (Con)
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Does my right hon. Friend agree that soft power can often be as effective as hard power, if not more so, and that it is usually a lot cheaper? I therefore strongly welcome the additional funding for the BBC World Service, but will he go on to look at strengthening the support for other soft power projections, such as the British Council and the Chevening scholarship and John Smith Trust fellowship programmes?

James Cleverly Portrait James Cleverly
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I suspect that my right hon. Friend, my near neighbour in Essex, knows that he is pushing at the most open of open doors on that. I do not particularly like the phrase “soft power”, because it sometimes implies a subordinate relationship to hard power. He is right to say that the UK’s projection of soft power—I have to use the phrase as I have not thought of anything better yet—is incredibly powerful and cost-effective. He made the point about Chevening, Marshall and other scholarships. All those things, along with football, arts, theatre and so on, are incredibly powerful and absolutely at the heart of UK foreign policy.

Stewart Malcolm McDonald Portrait Stewart Malcolm McDonald (Glasgow South) (SNP)
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William Gladstone’s third Midlothian speech said that good foreign policy started with “good government at home”. We can see that in the US with President Biden’s Inflation Reduction Act and the CHIPS Act, and even in the European Union being jolted into responding with similar initiatives. But the somewhat vague promises in the document published today of a protective security authority, an economic deterrence initiative, a critical minerals strategy and a UK semiconductor strategy leave me somewhat wanting more. Can the Foreign Secretary expand on those things? If he does not and there is no meat on the bone, we will fail to have met the moment that the White House and the Commission in Brussels have given us.

James Cleverly Portrait James Cleverly
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There is a phrase, “Always leave them wanting more.” Is that not what they say? [Interruption.] Politics is show business for ugly people. I can assure the hon. Gentleman that it will remain, as I said in my statement, absolutely at the heart of the UK’s foreign policy to work in partnership and with partners. We need to make sure that we maintain our tradition as an open, free-trading nation, working closely with those countries that share our values and protect our interests, as we do theirs. He referred to further iterations which I have highlighted, including semiconductors and our critical minerals strategy. More details will be forthcoming, and he will see that those things are interwoven, not just through the UK foreign policy structure, but in close co-operation with our friends and allies internationally.

Fiona Bruce Portrait Fiona Bruce (Congleton) (Con)
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A commitment to promoting freedom of religion or belief was included in the last integrated review, and it is good to hear from the Foreign Secretary that the approach to working on this refresh has been one of evolution. Does he agree that the UK continuing to take a leading role in promoting and protecting freedom of religion or belief across the world, and working with like-minded countries to challenge abuses, are even more important today than they were in the 2021 review, bearing in mind the increased abuses that are happening across the world, not least Russia’s misuse of religion in its attacks against Ukraine and the growing use of increasingly sophisticated technology to control, coerce and oppress people, and restrict their freedom of religion or belief?

James Cleverly Portrait James Cleverly
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I pay tribute to my hon. Friend’s work in this area. She is right: freedom of religion or belief is a litmus test for good behaviours by Government. Where those freedoms are impinged, that is typically the canary in the mine for other human rights abuses. She is right that we highlighted that in 2021, and we have not lost our commitment to it. This is a refresh—we did not attempt to cover off everything that we covered in the ’21 integrated review, otherwise the document would have been too large.

Patrick Grady Portrait Patrick Grady (Glasgow North) (SNP)
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Will the Foreign Secretary confirm that it is no longer Government policy to view the aid budget as a giant cash machine in the sky, and does he recognise that where cuts have been made, they have had a tangible and negative impact? Why will he not show the same ambition to return to 0.7% gross national income for aid spending as he is showing to get to 2.5% GNI for defence spending?

James Cleverly Portrait James Cleverly
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The hon. Gentleman should listen when we make statements at the Dispatch Box, because we have made the commitment to get back up to 0.7%. As I said in response to the hon. Member for Airdrie and Shotts (Ms Qaisar), we remain, both in percentage and absolute terms, one of the largest aid donors in the world.

Richard Graham Portrait Richard Graham (Gloucester) (Con)
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I welcome the integrated review refresh. On China’s capabilities, as, I think, the only Mandarin and Cantonese speaker in the House, I encourage the Foreign Secretary to increase the number of Great Britain-China Centre courses, both for civil servants and for parliamentarians. On the integrated review’s assessment of middle-ground powers of growing importance, which include the three south-east Asian nations and ASEAN, which I serve, as he knows, does he agree that although our national interests are not always the same, we all share a strong interest in an open, international order, so we should, as my right hon. Friend the Member for Maldon (Sir John Whittingdale) suggested, sharply increase FCDO Chevening scholarships, British Council scholarships, armed forces’ course scholarships, and Westminster Foundation for Democracy programmes in the Indo-Pacific region to make those closer partnerships for which the review calls?

James Cleverly Portrait James Cleverly
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It is incumbent on us to make sure that we understand China better. I am not fatalistic about our future relationship with China. The job of foreign affairs and diplomacy is to try to influence and improve. We certainly seek to influence China’s decisions. It is clear that we need to increase the number of people who speak Chinese and intimately understand China, which is why we have made a commitment to do so. With regard to the schemes that my hon. Friend highlighted, he is absolutely right that the more people understand us well, the better.

Margaret Ferrier Portrait Margaret Ferrier (Rutherglen and Hamilton West) (Ind)
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Some analysts believe that a war over Taiwan’s sovereignty could occur in the second half of this decade. Although the Prime Minister has voiced his wish over the past 24 hours to continue to engage with China, does the Foreign Secretary agree that conflict in that region would have devastating impacts and that we must protect Taiwan’s rights as an independent nation?

James Cleverly Portrait James Cleverly
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The hon. Lady is right that a conflict across the Taiwan strait would be disastrous not just for the region but for the global economy, because of the interconnected supply chains that would be at stake. The UK’s position is long standing and well versed: we do not agree with any unilateral change of posture across the Taiwan strait and we will continue to work to de-escalate where there are tensions and to try to ensure peace in that region.

Jack Lopresti Portrait Jack Lopresti (Filton and Bradley Stoke) (Con)
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Does my right hon. Friend agree that the Government’s commitment to increase defence spending to 2.5% of GDP will not only help to keep us safe, but create much more certainty for the 390,000 UK jobs, many of them high paying and high skilled, in places such as Filton and Bradley Stoke, which rely on our defence spending?

James Cleverly Portrait James Cleverly
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We have fantastic defence industries here in the UK. I think the reason countries are keen to work with us on projects such as AUKUS, the future combat air system and others is that internationally they recognise the huge value added to defence systems by the engagement of the UK, whether at governmental level or in the commercial sector. We value the jobs based in the UK’s defence sector, and of course this is about preserving those jobs, which are more geographically dispersed than in other sectors of the UK economy. Good value, high-paid, high-skilled jobs across the whole of the UK is something we will continue to focus on.

Jim Shannon Portrait Jim Shannon (Strangford) (DUP)
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I thank the Secretary of State very much for his statement and welcome the Government announcement regarding the increase in defence spending—something for which I, along with many others in this House, have been asking for years. I note that the increase is in response to Russia and other global concerns and that the Secretary of State in his statement referred to the increase in cyber and technology, but it is also important to have an increase of soldiers on the ground. Is it not possible to have both cyber and technology, and boots on the ground?

James Cleverly Portrait James Cleverly
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The hon. and gallant Gentleman makes an important point: just because new threats have emerged, as we have seen with Russia’s invasion of Ukraine, the old threats do not go away. We are seeing a full-spectrum attack by Russia, including cyber-attack, missile attack, tank attack and, sadly, first world war-style trench warfare around Bakhmut. We have to understand that it is not a case of either/or; it has to be both. This integrated review refresh recognises that, and I can assure him and the House that we will make sure we cover all the areas where we need to defend ourselves.

James Morris Portrait James Morris (Halesowen and Rowley Regis) (Con)
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As my right hon. Friend has already said, Britain’s soft power is a strategic asset. Does he agree that it is important for two reasons—first, it gives us a strategic advantage in the world, and secondly, it gives us a platform to build relationships with allies to contain and resist the trend towards anti-democratic and authoritarian regimes around the world?

James Cleverly Portrait James Cleverly
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My hon. Friend is right that the UK is proudly one of the most significant defence contributors to NATO and, as I have said, in absolute and percentage terms it is one of the largest aid spenders in the world. However, the one area where we are without risk of being contradicted is in our soft power. We recognise that, and we will continue to invest in that and to ensure that it is at the heart of our foreign policy.

Simon Fell Portrait Simon Fell (Barrow and Furness) (Con)
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The £5 billion investment in defence spending in the upcoming AUKUS announcement offers substantial opportunities for those engaged in the nuclear enterprise and submarine-building programme, but it also makes clear the challenges we are going to face in skilling up people for that multi-generation-long programme and getting our supply chains ready to deliver on it. Can my right hon. Friend outline what cross-Government discussions are taking place now to make sure we are fit for that challenge?

James Cleverly Portrait James Cleverly
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My hon. Friend is absolutely right. This is not just a cross-Government endeavour but a cross-society, multi-decade-long endeavour, meaning that we will need people who are perhaps currently in primary school to be developing the technical skills that will still be needed in 20 or 30 years’ time. I suggest to careers advisers around the country that advising boys and girls to gravitate towards that area of work is a very good investment, because the jobs are going to be there—they are going to be high-paid, high-skilled jobs scattered all around the UK that are going to be there for a very long time. My hon. Friend is right that this needs to be a whole-of-society approach, and that is exactly the attitude we are taking.

Silicon Valley Bank

Monday 13th March 2023

(1 year, 3 months ago)

Commons Chamber
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16:56
Andrew Griffith Portrait The Economic Secretary to the Treasury (Andrew Griffith)
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With your permission, Mr Speaker, I will make a statement on the steps His Majesty’s Government have taken to limit risks to our tech and life sciences sector.

Following the rapid deterioration of Silicon Valley Bank, and working in concert with the Bank of England, early this morning we facilitated the purchase of the UK subsidiary of Silicon Valley Bank by HSBC. Serving 39 million customers globally, and headquartered and listed here in the UK, HSBC is Europe’s largest bank. Those affected are now secure in the knowledge that their deposits are protected and that they can bank as normal. Customers should not notice any changes, while the wider UK banking system remains safe, sound and well capitalised.

Using stabilisation powers granted by the Banking Act 2009, which afforded us the ability to safely manage the failure of banks, we have forestalled disruption in the tech sector and supported confidence in the UK financial system. The resolution action was taken by the Bank of England in consultation with HM Treasury, using its powers to transfer the UK business of SVB to a private sector purchaser. As required by the Act, the Bank of England consulted the Treasury, the Prudential Regulation Authority and the Financial Conduct Authority on its assessment that all required conditions for that transaction had been met.

We have been able to achieve this outcome—the best possible outcome—in short order without any taxpayer money or Government guarantees. There has been no bail-out, and the actions taken are a win for customers, taxpayers and the banking system. The transfer of SVB UK to a buyer has allowed the Treasury to limit the risk to public funds by ensuring that shareholders and creditors, rather than depositors, bear losses. To help achieve that result, the Bank of England has made a related instrument bringing about a mandatory reduction of capital instruments in SVB UK, restoring it to viability. It is my view that in this situation, the system worked as we would hope.

In order to ensure that the sale could proceed, the Government are using their powers under the Banking Act to provide HSBC with an exception to certain ringfencing requirements. That was crucial to ensuring that a successful transaction could be executed, that the bank has the liquidity it needs, and that deposits and public funds are protected.

The outcome will provide security for some of the UK’s most innovative, fast-growing firms. The UK’s tech and life sciences sectors are world leading, hundreds of thousands of people are employed in them, and they make a very substantial contribution to the economy as a whole. My right hon. Friends the Prime Minister and the Chancellor have been clear throughout that we will look after our high-tech sectors, and that is what we have done. The Bank of England has confirmed that, as a result of the swift, decisive action we have taken, depositors will be able to access their accounts. It is worth reiterating that, as the Governor has said, the wider UK banking system remains safe, sound and well capitalised.

In concluding, I place on record my sincere thanks to my fellow Ministers across Whitehall, to officials at the Treasury and to regulators. They worked tirelessly through the weekend to grip the situation, to deliver this solution and to prevent real jeopardy to hundreds of the UK’s most innovative companies.

Lindsay Hoyle Portrait Mr Speaker
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I call the shadow Minister.

17:00
Tulip Siddiq Portrait Tulip Siddiq (Hampstead and Kilburn) (Lab)
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I thank the Minister for giving me advance sight of his statement today. Labour welcomes the announcement by HSBC that it will be buying the UK arm of Silicon Valley Bank, or SVB UK, in a rescue deal. As the shadow Chancellor, my right hon. Friend the Member for Leeds West (Rachel Reeves), said over the weekend, the UK life sciences and tech sectors play an indispensable role in driving growth and innovation across the economy.

Now that those who bank with SVB UK have some certainty, the Government should examine how we got here in the first place. For example, when SVB UK was granted a separate banking licence last year, what assessment did the Treasury and Bank of England make of the significant liquidity risks arising from its deposit base being a small number of high-value corporate deposits?

The effects of the collapse of SVB are still being felt across the UK market and the Minister said in his statement that HSBC’s purchase of SVB has “supported confidence” in the UK financial system. What assessment has he made of the fact that London’s FTSE 100 was down today, while the UK bank index fell by almost 5% this morning and by more than 10% over the weekend? What will the disruptions in the banking sector mean for confidence, the wider economy and the ability of high-growth companies to access the credit that they need to thrive?

The Minister also said that disruption in the tech sector has been “forestalled”, but what reassurance can he provide today that, under HSBC’s ownership, the bank will continue to be able to support early-stage tech and life sciences businesses in the UK? He also said that HSBC has been given an exemption from certain ring-fencing requirements. Will that be a permanent exemption?

Perhaps the most important question, I am sure the Minister will agree, is this: how can we avoid this happening again? With inflation at record levels, the Bank of England has had to take steps to tackle rising prices, but Ministers must make an assessment of the risk that sharp changes to UK interest rates might pose to our financial system. It is time for the Government to launch a systemic review of the risks that sharply rising interest rates pose to the UK financial sector, and I hope the Chancellor will return to the House having made that assessment.

Finally, the events of this weekend further underline the importance of ensuring that UK start-ups have access to the patient capital that they need to grow, as proposed by the Labour party’s start-up review. I hope that the Minister will return to the House soon to update us with a broader assessment of the risks to the financial sector arising from sharply increasing rates, and with a plan to address the longer-term problems holding back growth and the provision of patient capital to our growing businesses.

Andrew Griffith Portrait Andrew Griffith
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I think concealed within that was grudging support, and I am sure that the hon. Lady would like to add her voice to those of so many in the sector who have welcomed this announcement today, which provides the important confidence and stability that are needed. She raised the point that SVB UK has a separate banking licence, and it is precisely because of that mechanism that our regulators and the Treasury have been able to take the action we have taken over the weekend.

I think the hon. Lady understands the disruption and volatility in the sector, but she should be reassured that the Governor of the Bank of England has confirmed that this is not indicative of systemic risk. I can confirm that, in order that the Silicon Valley Bank, now within HSBC, can provide the broad range of services that our life sciences and tech sector value so much, the exemption from the ring-fencing requirements will be permanent.

The hon. Lady asked about a systemic review. Of course, these are always opportunities for us to learn and look again, but, as I said in my opening remarks, the system has worked as intended.

Finally, and with the greatest of respect, we on the Conservative side of the House need no lessons on patient capital. We are unlocking capital for our important tech and life sciences. Only last week, the Under-Secretary of State for Pensions, my hon. Friend the Member for Sevenoaks (Laura Trott), brought to this House regulations to remove the charge cap and to allow our pension funds to invest in some of the fastest-growing sectors of our economy.

Lindsay Hoyle Portrait Mr Speaker
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I call the Chair of the Treasury Committee.

Harriett Baldwin Portrait Harriett Baldwin (West Worcestershire) (Con)
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May I put on the record my gratitude to the Minister, his colleagues and officials, and to people at the Bank and in the City in general, who have obviously worked flat out all weekend to deliver what turns out to be the best possible outcome in these difficult circumstances?

On the importance of the sector to the UK economy, did the Minister and the Bank treat this situation any differently because of the sector in which SVB was operating, or would they have tried for the same sort of solution for a bank in any sector? Was the Minister as concerned as I was about reports that investors required the firms that they were funding to put money into the bank as a condition for investment? Finally, given that other banks have collapsed in the US—other small banks, including one that specialised in crypto—does he think that crypto is in any way contributing to financial instability?

Andrew Griffith Portrait Andrew Griffith
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I thank my hon. Friend, one of my predecessors and the Chair of the Select Committee, for her support and comments. The degree of concentration in a particular sector is unusual—it was an unusual feature. The business model of Silicon Valley Bank in the UK was different from that in the US, partly because of the tight regulations that we have here. For that reason, I have not seen any evidence that the banking of crypto-asset companies was something that contributed. Rather, once the Fed had taken its action, we saw the impact on the bank here. That is why it was right for the Bank to act to give us the space to protect that bank and to achieve the outcome that we announced this morning.

Lindsay Hoyle Portrait Mr Speaker
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I call the SNP spokesperson.

Stewart Hosie Portrait Stewart Hosie (Dundee East) (SNP)
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One of the key lessons of the 2008-09 financial crash was that the conduct of business and liquidity issues could very quickly morph into systemic risk with contagion across a variety of transmission channels, so I very much welcome the speedy way in which the SVB UK issue was resolved over the weekend. However, that bank’s business model—and it is not alone—involved it holding a large number of low-interest-bearing bonds at a time of rising bond yields. It was required to sell those at a loss, which exacerbated the liquidity problems that it had. Would it not be prudent now to ensure that our regulators have another look at UK banks to ensure that comparable low-interest-bearing assets are stringently priced and marked to market to ensure that tier 1 capital is just that, and of sufficient quantity and quality that any liquidity problem does not morph into an insolvency and system risk problem?

Andrew Griffith Portrait Andrew Griffith
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I thank the right hon. Gentleman for his recognition of the speed and decisiveness with which the whole Government have come together, worked together and acted to deliver this outcome—that is kind of him and it is appreciated. If I may, we should not conflate some of what we read about the balance sheet in the US with the regulated balance sheet in the UK, which was a separately regulated balance sheet. Again, on the business model in the UK and the backing, and the bonds and collateral that were being held, I am not aware that their forced sale, and the losses on it, were a contributory factor. The reality is that we saw a withdrawal of deposits. The Bank had the ability, because of the relatively ringfenced balance sheet, to protect the bank and take the necessary action. Had the Bank not done so, we could have been in a very different situation, so we were right to act as we did.

Lindsay Hoyle Portrait Mr Speaker
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I call the Chair of the Science and Technology Committee.

Greg Clark Portrait Greg Clark (Tunbridge Wells) (Con)
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I strongly welcome the decisive intervention that has been described, which has saved many UK tech businesses and jobs. Will my hon. Friend consider how the responsiveness of UK regulation, which was demonstrated overnight, combined with the strength of the City of London and our tech sector, provides an opportunity to attract more businesses to do their financing in the UK and means that they do not need to go overseas to get the financing that they require to start up and grow?

Andrew Griffith Portrait Andrew Griffith
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My right hon. Friend, who does such good work for the science and technology community through his Committee, is absolutely right. The technology and life sciences sectors want our Government to be joined up and decisive, and to remove unnecessary regulations, while still operating in a high-quality regulated environment. We now have the opportunity to go a lot further—to deliver the Edinburgh reforms and to combine our aspirations to be a science superpower with the ferocious financing strength that we have here in the United Kingdom.

Angela Eagle Portrait Dame Angela Eagle (Wallasey) (Lab)
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I commend the quick and effective action. However, although the collapse of SVB in America was partly due to liquidity issues, there is also the issue of the changes that were made to the threshold at which banks are considered systemically risky, which increased from $50 billion to $250 billion. That meant that SVB could continue in America without the very focused regulation that might have spotted this problem earlier. Does the Minister think that the Edinburgh reforms present any similar risks, and will he say a little about the exemption from ringfencing that he announced today for HSBC? Is he content that that does not present any risks either?

Andrew Griffith Portrait Andrew Griffith
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I must be very careful not to comment on matters as they relate to the United States. SVB UK was a separate bank. It was regulated here, and it was as a result of that regulation, and the fact that we have taken back control of our financial regulatory rulebook, that we were able to act so decisively. The hon. Lady will forgive me if I do not talk about matters in the United States.

In respect of ringfencing, it was the view of the Bank of England and the Treasury, in the circumstances and to protect public funds, that to provide a permanent exemption for what is a very small part of the much larger HSBC—I think less than 1% of its pro forma clients on an enlarged basis will be former Silicon Valley Bank clients—was appropriate. I do not think it puts inappropriate levels of risk in the system. By streamlining the rulebook, and by bringing back control and dispensing it to UK regulators, with accountability to Parliament—she will know about that through her membership of the Treasury Committee—I think we can have better regulation and deliver better outcomes for the sector.

Andrea Leadsom Portrait Dame Andrea Leadsom (South Northamptonshire) (Con)
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I congratulate my hon. Friend and all who were involved in the rescue. It was vital that we acted urgently to prevent the fear and the risk of contagion that were apparent over the weekend. Does he feel that the fact that SVB UK was a separately ringfenced bank and that ringfencing is a UK-specific regulation brought to bear any protection for SVB UK? He will recall only too well, as I do, that Lehman sucked capital out of the UK when it was in dire straits, which to a large extent caused the ultimate contagion. Will ringfencing continue to protect the UK banking sector as we go forward, even through the Edinburgh reforms?

Andrew Griffith Portrait Andrew Griffith
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My right hon. Friend speaks with great authority on these matters, and I can give her that assurance. It was constituted as a subsidiary in the UK, it had its own separate balance sheet and it was regulated as such. Because of that fact, the Bank was able to make the decisive intervention it did. There were assets within the subsidiary to which we were ultimately able to restore viability by successfully finding, over the weekend, a very large bank—Europe’s largest bank—to step in and buy, and to put its balance sheet behind, this entity.

Alison McGovern Portrait Alison McGovern (Wirral South) (Lab)
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While we are all full of admiration, particularly for all our officials who worked through the weekend to make this happen, I am afraid I find the statement a bit long on self-congratulation and a bit short on explanation. What questions has the Minister asked about why this happened? Why were all these companies banking with this particular bank and what cultural aspects were there to the case? What do we need to uncover that will be important for the sustainability of both banking and technological firms in the future?

Andrew Griffith Portrait Andrew Griffith
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It is not uncommon for banks to have a particular specialism. Labour Members have worked to bring forward regulations that will help us have more credit unions, which tend to have a geographical concentration, and there are agricultural banks and other wholesale banks, so it is not of itself an unusual feature. In this case, we were able to take action precisely because of the UK regulatory structures and the interventions we can make. We will learn any lessons, but this is a Government who are on the side of technology companies and the life sciences, and we have been proud to deliver this outcome—this important certainty—and to remove the jeopardy they otherwise faced at the opening of business this morning.

Desmond Swayne Portrait Sir Desmond Swayne (New Forest West) (Con)
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What estimate had the Bank of England made of the health of SVB before the events of the weekend?

Andrew Griffith Portrait Andrew Griffith
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It would not be right for me to answer on behalf of the Bank of England, if my right hon. Friend will forgive me. We have an independent regulator that looks at these matters. The Treasury Committee regularly takes evidence from the Bank of England, and I am sure it will do so in future.

Sammy Wilson Portrait Sammy Wilson (East Antrim) (DUP)
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I am sure that many firms across the United Kingdom will welcome, and breathe a sigh of relief at, the decision that was made over the weekend. However, this was done in haste. I ask the Minister: what kind of due diligence was done by HSBC when arranging this takeover, and is he sure that we are not walking into a situation similar to what we had with Lloyds and HBOS in 2008, when a quick decision led to a domino effect in the banking system and resulted in bail-outs by the taxpayer?

Andrew Griffith Portrait Andrew Griffith
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I cannot speak for the due diligence that was done for HSBC, but it has got itself comfortable with it. We should also understand the relative scale of HSBC, which is an extraordinarily well-regulated, global and diverse bank. My understanding is that if we add all of the important clients of Silicon Valley Bank UK, which we had in the front of our mind as we sought to act over the weekend—if I may say so, we make no apology for acting in haste, because haste was absolutely the required procedure in this particular case—they would in their entirety be less than 1% of the overall client base of HSBC. With respect, I do not think that was the case in the examples to which the right hon. Member referred.

Anthony Browne Portrait Anthony Browne (South Cambridgeshire) (Con)
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The sighs of relief across South Cambridgeshire this morning were so loud that they were almost deafening. Dozens of my technology companies, which had been in contact with me over the weekend, thought they were going to be wiped out this morning, but they can now operate as normal because of the decisive action by the Government. I very much congratulate the Minister, the Bank of England and the Treasury on that action.

I have also had questions about whether this is a sign that all the reforms of the financial system in the wake of the global financial crisis have failed or are failing. Does my hon. Friend the Minister agree that this is not a sign of the reforms failing, but a sign that they are working, and that without the reforms we would not be able to do a rescue in this way? Can he also confirm that the reforms that are coming through—the Edinburgh reforms—will not make future collapses more likely, or future rescues more difficult?

Andrew Griffith Portrait Andrew Griffith
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My hon. Friend knows a great deal about the sector, and it is due to past reforms that we were able to take this decisive action. Parliament has given—in extremis, and with the agreement of the Bank of England, the PRA, the FCA and the Treasury—sweeping powers to enable this sort of transaction to happen at great pace. Let me be clear that it is the shareholders and creditors of the bank, not depositors or the taxpayer, who have lost. In the system that we have, that is the right outcome, and I am pleased we were able to achieve it.

The Edinburgh reforms are designed to give this country the ability to continue to grow and to be internationally competitive with other markets, while adhering to the highest quality regulatory standards, and with the UK at the absolute cornerstone of organisations such as the Financial Stability Board. They will not put any more jeopardy into the financial system. Indeed, having good healthy businesses that grow and are profitable is the best way to avoid jeopardy.

Paula Barker Portrait Paula Barker (Liverpool, Wavertree) (Lab)
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First pension funds and liability driven investments, now the collapse of SVB UK. Is it not time for a systematic review of the risks that sharply rising interest rates pose to the UK financial sector?

Andrew Griffith Portrait Andrew Griffith
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With the greatest of respect to the hon. Lady, the issue here was a subsidiary of a US bank, and I will not be commenting on US policy, interest rates or anything else from this Dispatch Box. The important fact is that we were able to restore the bank to viability and, over a small number of hours and days, to find a successful buyer. We did that because of the strength of the UK regulatory system, and because of the conviction of this Prime Minister and this Chancellor that this is a critical sector, and one of the ways that we will continue to grow the UK economy.

Danny Kruger Portrait Danny Kruger (Devizes) (Con)
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I pay tribute to the exemplary orchestration of all the different stakeholders and decision makers that the Minister led over the weekend. It is helpful to distinguish between decisions taken by the American Government and by ours in respect of this bank. The American taxpayer is guaranteeing the deposits of SVB account holders there; in our case, another bank has bought them and the taxpayer is safe. I pay tribute to the Government for that. I appreciate that the Minister cannot comment on American policy, but in the hypothetical instance of another bank in the UK failing, or another sector getting into trouble, will he give an indication of his thinking on whether the taxpayer would ever need to step in? Will he guarantee that that will not happen?