Baroness Smith of Newnham (LD)
My Lords, starting where the noble Baroness, Lady Anderson, left off, I think the noble Earl, Lord Minto, and I have the dubious distinction of being the last two people standing this afternoon, because we have the next two items of business as well. I am not quite ready to wish everyone happy recess, happy Christmas, happy holidays or anything else, and I am afraid I am going to ask the noble Earl a few more questions. In many ways, they are in a similar vein to those of the noble Baroness, except that I cannot take credit for any activities in the other place, never having served there.
From these Benches we welcome this treaty and the commitment, which is very clear, to the Global Combat Air Programme. I would be interested to hear, in addition to the answers that the Minister will give to the questions from the noble Baroness, Lady Anderson, a few more specifics about what this programme is going to mean in practice for the United Kingdom and for our wider relations with NATO and our other security partners. Clearly, one of the other partners in this trilateral arrangement is Italy. Japan is obviously an ally, and one with which we have strong bilateral relations, but how will this programme relate to our commitments within NATO? Is it enabling the United Kingdom and Italy to play a greater role, strengthening our positioning in NATO? The original Statement in the other place seemed to suggest that this is really about demonstrating our commitment not just to the Indo-Pacific but to the Euro-Atlantic area. I should like to hear a little more about the strategic thinking behind this.
Like the noble Baroness, I want to press the Minister a little more on the financial arrangements. We are in an unprecedented situation, with the present conflicts in Ukraine and in Israel and Gaza, and with further problems in the straits in the Red Sea—that is associated with the situation in Israel and Gaza but could potentially become even more difficult for our trading relations, and beyond that there are further ramifications for our naval commitments. What assessment have His Majesty’s Government made about this programme, alongside the carrier strike group and other commitments that we need to be thinking about?
I am sure the Minister’s briefing says something about the integrated review refresh saying X, Y and Z, but we need to move beyond that. The situation globally, and the commitments that His Majesty’s Government are rightly making, mean that many of the financial questions that might have been addressed a year or 18 months ago will not necessarily be adequate now. This is a programme looking forward, as the Statement says, not just for the next few years but for decades ahead, like AUKUS. Some sense of the long-term planning, relations with our wider allies and questions about interoperability are the key issues.
Furthermore, what work is being done with the defence industrial base to ensure that the contracts can be let, as far as possible, to companies that will give jobs in this country and to our partners in the European supply chain?
The Minister of State, Ministry of Defence (The Earl of Minto) (Con)
My Lords, first, I welcome the cross-House support, because this is a very important treaty and a meaningful allied programme. The launching of the Global Combat Air Programme in December 2022, along with Italy and Japan, our partners in this key initiative, was a significant moment in the future development of the new generation of military combat aircraft. In signing the GCAP treaty last week in Tokyo, my right honourable friend the Secretary of State for Defence proved that this programme is proceeding at pace, with a commensurate level of commitment that anticipates treaty ratification in early 2024, concept and assessment phase complete by 2025, and Tempest in service and operational by 2035.
This treaty is excellent news for the UK and our partners. It establishes the legal framework that allows contracts to be awarded, GIGO, and the joint business construct that is the government industrial delivery organisation. GIGO will be co-located here in the UK, alongside the joint business construct. Importantly, as a partnership of equals, the first CEO of GCAP will be from Japan and the first CEO of the joint business construct will be from Italy. On the noble Baroness’s point about the sharing out of the work programme, I think it is clear that the intention is that it should be joint, in so far as it is possible. Having said that, the choice of locating the GIGO and the joint business contract here in the UK is recognition of our ability within this area. Of course, international connectivity and all sorts of other things make the UK a sensible place to do this.
I will address some of the issues specifically. The noble Baroness, Lady Anderson, is right: so far, we have spent about £2 billion on this programme and industry has spent about £600 million. From the UK’s perspective, the expenditure is expected to be between £10 billion and £15 billion, running over the next 10 years. Remember, this is equal shares here.
The F35B is within the budget figures that we have been talking about, which noble Lords will recall were £228 billion over the next 10 years, of which only 25% is committed so far. There is still huge flexibility within the budget to ensure that the important priorities for this country are properly addressed at the appropriate time. It is too early to say exactly what percentage of the workforce will be in the UK, but the intention is that it should be equally shared between the three partners. We will have to see. It is a long time into the future, so who can tell?
On the question of whether other allies are to be involved, the base model programme, the platform, will be very flexible, so there is an absolute intention to involve other allies, whether they be NATO or not, and more customisation can be built into the programme as and when appropriate. The impact on NATO is an extremely good point. This is to do with the global situation that we face. As we all know, we are in an unstable place at the moment. There are issues popping up everywhere, Houthis attacking one of our warships and our warships downing a Houthi missile being the latest examples. These are uncomfortable times, and it is important that we address both the Far East and our responsibilities under NATO. There is no issue in this respect.
On the question of the financial arrangements and the cost of Ukraine, Israel and these latest commitments, Ukraine, as the House will know, is dealt with through a separate budget. Both the Prime Minister and the Defence Secretary have given an absolute commitment that we will carry on for as long as it takes. Our commitment is unwavering, and our support will be there. The situation in Israel and Gaza is a very moveable feast but we have given full support and are right there, ready to provide supportive aid whenever that is necessary. The movement of ships into the Red Sea and the Gulf is to act as a deterrent to any escalation in that area and to ensure that our forces are protected.
I think that I have answered the question on the global commitments. The last point outstanding was about the industrial base in the UK. There is a Team Tempest, which involves BAE Systems, Rolls-Royce, Leonardo UK and MBDA UK, but there are over 1,000 companies across the three countries involved, including academia and SMEs. We have huge strength in this country on digital design and additive manufacturing, both of which reduce lead times and costs. We can hope and aspire to this being an extremely successful and very important programme as we progress it, for UK defence and industrial strength in this country.
Lord Lancaster of Kimbolton (Con)
My Lords, I declare my interests as a serving member of the Armed Forces and as the Prime Minister’s defence and security advocate and add my congratulations to the Government on the signing of this very important treaty, hot on the heels of AUKUS. These together underline the United Kingdom as a partner of choice in the international defence community.
I have two questions for my noble friend, built on the latter part of his previous answer. First, the key cornerstone members of the treaty are, obviously, the UK, Italy and Japan, but is the door now closed for other founder members of this treaty? I cannot help but feel that with potential competition in Europe, the more founder members that we buy in from the start, the greater the security of this programme and decreasing costs for the UK going forward.
My second point concerns the industrial base. In the past, successive Governments have allowed various parts of our industrial base to atrophy. This is in part because, all too often, we have procured the exquisite in the United Kingdom, building, for example, ships such as the Type 45—undoubtedly the best in the world but simply unaffordable for other nations. The key to ensuring that the industrial base continues for many years to come is, as the Minister has hinted, ensuring that this platform is exportable. Sometimes, exportable variants do not have the same kit that we may want for ourselves, but the whole point is that we need open architecture so that variants of this platform can be exported, thereby ensuring the longevity of both the platform and the UK industrial base.
The Earl of Minto (Con)
My noble friend makes some good points. My understanding is that, as the treaty is now signed, the founder members are in effect locked in—although there is, I believe, a bit of flexibility. There is no question that this platform is being built with the view that it will be of interest to allies across the globe. As I am sure we all know, 85% of defence exports are combat aircraft, so it is extremely important that this is a successful and flexible platform that appeals to others. There may be a worry about us trying to be all things to all men. I do not believe that that is the case; I believe that the intention of the three equal partners is to ensure that the platform is definitely fit for purpose and will definitely be of interest to allied countries.
My noble friend made a good and salient point about the industrial base in the UK. I imagine that there will be stiff competition in deciding where the GIGO will be located because it will engender a lot of inward investment; some 1,000 people in various organisations have already been taken on to work on it. Obviously, a lot of new technology is involved, rather than older technology. Again, it is about this country having been chosen for the headquarters, which suggests a certain level of commitment to our industrial strength.