Defence Spending

Baroness Goldie Excerpts

Thursday 31st October 2024 Grand Committee

[Baroness Goldie (Con)]

My Lords, it is clear from the contributions today how informed about and engaged in the defence of our nation your Lordships are. That knowledge was manifest in my noble friend Lord Trenchard’s contribution, and I am grateful to him for bringing this debate before us.

I am not going to patronise noble Lords with a preamble about why defence is the most important obligation of any Government; it is, and we know why. I am going to examine how the current Government are discharging that responsibility.

It all flows from budget—the money—because, quite simply, that is what shapes the capability. Yesterday, after all the repeated rhetoric and reassurances over many months from the Prime Minister downwards that the Government believe in defence, are committed to 2.5% of GDP and will lay out the trajectory to that point, we held our breath and waited. Notably, the Minister for the Armed Forces, Luke Pollard, addressing air and space chiefs at a London conference in July this year, said:

“How we get to 2.5% will be laid out by the Chancellor, Rachel Reeves, at a fiscal event, which is government code for a budget, or an autumn statement. So looking at that, she will be setting up the path to that”.


We are still holding our breath. What did we get? Clarity? No. Leadership? No. Instead, we got a deafening and supine silence. We got a sticking plaster of £2.9 billion for 2025-26. In defence budget terms, we know that that is sticking a finger in the dam and hoping for the best. There is nothing strategic about it, no trajectory to anywhere. While this response says a lot about the Government, and I do not expect the noble Lord, Lord Coaker, to comment on that, I am much more concerned about what it says to our allies, friends and global partners.

We are a respected global power, a perception underwritten by our defence capability. As a Minister, regularly visiting south-east Asia, I saw at first hand how many of these countries value their relationship with the United Kingdom; how carrier strike group 21 had a massive impact in the region and on the stature of the UK in that area; how the legacy of the permanent deployment of HMS “Tamar” and HMS “Spey” through the region had a tangible effect; and how so many of these countries wanted to pursue a closer engagement with the United Kingdom. I know that the Minister has diligently and effectively prosecuted these relationships.

How is the Government’s ambivalence on defence spend likely to play out to our European friends, our NATO allies, our partners and friends across the globe? Well, 2.5%, as my noble friend Lord Trenchard indicated, is the minimum we need to spend to keep up with allies and competitors. The current NATO estimates for 2024 spending put the UK as the third highest spender in NATO, now overtaken by Germany, and we stand at 2.33% of GDP. The difference between 2.33% and 2.5% is significant but not massive, and the previous Government committed to that by 2030. Just to clarify for the benefit of the noble Baroness, Lady Smith, that is the position I supported then and it is the position I support now.

The present Government have been talking about this for months—they have now been in Government for nearly four months—and that is why the failure by the Chancellor yesterday to bring clarity is so serious. The Government are saying to our allies, “We cannot tell you anything about our strategic defence spend and we do not know when we will be able to”. What a message. What about our adversaries? They must be rubbing their hands in glee: this chaos is music to their ears. The only message any onlooker can infer from this mess is that neither the Prime Minister nor his Chancellor get defence. I know that the noble Lord, Lord Coaker, does get defence, and I have sympathy with him. He will put up a stout and loyal response to this debate, but his position is unenviable.

Let me mention the Government’s imposition of VAT on school fees having an immediate and deeply damaging impact on defence families. Approximately 4,000 children of service personnel get the continuity of education allowance, which is to mitigate the disruption to education of regular postings. It does not cover the full fees, and many parents, despite that CEA, will struggle to meet the additional cost created by VAT. All that has been offered is a proportionate increase in the CEA, but it is the balance over and above that that many service families will find unaffordable. I am at a loss to understand how the Chancellor does not get that. It seems an extraordinary insult to our Armed Forces personnel. The Government need to exempt the children of all military personnel from VAT on school fees with immediate effect.

I have the highest regard for the Minister, and I know that defence has a doughty advocate in him, so I exhort him to relay the pungent message that he has heard this afternoon to his colleagues in government.