Defence Spending

Baroness Penn Excerpts

Thursday 16th March 2023 Lords Chamber

[Lord West of Spithead]

To ask His Majesty’s Government, further to their Integrated Review Refresh 2023, published on 13 March, whether they have any plans to increase spending on defence to three per cent of GDP.

[The Parliamentary Secretary, HM Treasury (Baroness Penn) (Con)]

As the Prime Minister said on Monday, we will move away from our baseline commitment of spending at least 2% of GDP on defence to a new aspiration of 2.5% when the fiscal situation allows. There are no plans to change this aspiration to 3%. To ensure that we continue to meet the threats we face, the Chancellor is providing an extra £11 billion over five years to improve the country’s resilience and readiness.

[Lord West of Spithead (Lab)]

My Lords, everybody knows that our defence forces have been underfunded for some considerable time and are not in the position they should be. One could argue, I think quite reasonably, that that is part of the reason we are in the mess we are with the war in Ukraine. Autocrats such as Putin watch what we do and think, “These people are not taking life seriously”. We also know that the percentage of GDP figure is totemic. It was useful because we were able to put pressure on European allies to increase their spending, but it depends totally on what one’s GDP is. Bearing in mind that we have insufficient money for defence, does the Minister not believe that the Government should now make a clear commitment of going for 3%—let us call it of GDP—but actually attach a figure to it and start that spending now so that murderous people such as Putin see that we mean business?

[Baroness Penn (Con)]

My Lords, I agree with the noble Lord about the need to increase our spending on defence and start that now. That is why defence received its settlement a year earlier than other departments in the spending review 2020. It is why, alongside the integrated review refresh, we have included an uplift beyond that, including £4.95 billion for defence over the next two years to improve readiness and resilience of the Armed Forces, including bolstering our conventional stockpiles, enabling an early investment for the AUKUS submarine alliance and modernising our nuclear enterprise.

[Lord Stirrup (CB)]

My Lords, does the Minister recall that as recently as 2010, we were spending 2.6% of GDP on defence? Given the accounting changes that have occurred since then, that probably equates to something more like 2.8% in today’s terms. So the recent announcements putting us on a trajectory to 2.5% really cannot be seen as scaling some new peak, but rather as clawing us a little further out of the hole into which we have sunk. Does she accept that not only is there more to be done but that it needs to be done with urgency, and that saying we aspire to 2.5% when fiscal conditions permit is about the same as Government Front-Bench spokesmen saying they will bring something to this House “in due course”? It is pretty much meaningless.

[Baroness Penn (Con)]

I would like to reassure noble Lords that there is more money now going into defence. It is the largest sustained increase in defence spending since the end of the Cold War and, in recognition of the changing picture globally, we announced at the Budget money on top of that investment: £4.95 billion over the next two years and an extra £11 billion over the next five years to improve the country’s resilience and readiness.

[Lord Robathan (Con)]

My Lords, while the money announced yesterday is of course very welcome and we thank the Chancellor for that, it is £11 billion over five years. This is jam tomorrow—we need the money spent today. Has nobody noticed what is happening in Ukraine, and that our bunkers are empty of ammunition? We need to spend the money today. Will my noble friend confirm that, as she speaks, we are still cutting the number of troops, ships and aircraft in the United Kingdom defence budget?

[Baroness Penn (Con)]

An additional £24 billion is going in now as a result of the spending review 2020. The £11 billion announced at the Spring Budget includes £4.95 billion over the next two years. That does not include the spending on our commitments to Ukraine, which was £2.3 billion last year and will be £2.3 billion in the coming year.

[Lord Tunnicliffe (Lab)]

My Lords, we have got figures, figures and figures. There is only one crucial question. The Defence Secretary said in February that the Government

“have hollowed out and underfunded our armed forces”.—[Official Report, Commons, 20/2/23; col.65.]

Yesterday, some new funding was announced. Do the Government believe that yesterday really represents a reversal of the Secretary of State’s analysis and, crucially, is sufficient to secure Britain’s national defence for the future?

[Baroness Penn (Con)]

I think the Secretary of State for Defence has been very positive about the money announced at the Budget and previously, and this Government have overseen the largest investment in defence since the Cold War. The British Armed Forces remain among the best in the world; that is why we are a leading NATO partner. Over the last 10 years, the UK has been NATO’s second largest defence spender, after the US, and we spent almost as much on defence as 20 other NATO members combined. Future Soldier, the Army’s response to the integrated review, will deliver the largest transformation of the British Army in more than 20 years. As the threat changes, we need to change with it, and we have set out a plan to do so.

[Lord Swire (Con)]

I very much welcome the Prime Minister’s recent announcement about the replacement and refurbishment of the nuclear submarine fleet. Can my noble friend say from which budget that money is coming and, critically, can she confirm that the other political parties have signed up to this, given the long-term impact and programme that it will require?

[Baroness Penn (Con)]

I will let the other parties speak for themselves, but this is a long-term commitment to investment in our own security. The money we are investing in the defence nuclear enterprise is additional funding; it is not coming from any existing contingency, and I am happy to confirm that to the House.

[Lord Campbell of Pittenweem (LD)]

My Lords, since the additional money is over five years, and since we are supporting Ukraine to the tune of £2 billion a year, that additional money will all be used up in the support of Ukraine, which invites and encourages me to ask two questions. First, when will the money be made available to replace the ageing armoured vehicle, the Warrior, with a new battlefield vehicle, having regard to the shambles of the Ajax programme? Secondly, when will the Royal Air Force be provided with sufficient F35s to train its pilots to fly that aircraft, never mind taking it into combat?

[Baroness Penn (Con)]

I am afraid that I will have to write to the noble Lord on those two specific questions, but I should make a very important clarification of the additional funding going into our Armed Forces. Our support for Ukraine is over and above the additional investment I have mentioned, so it will not be drawn on in future years when we continue that support for as long as the conflict lasts.

[Lord Anderson of Swansea (Lab)]

Does the noble Baroness agree that Poland has been a model in respect of additional expenditure, and does she share the concern about the delay in Germany fulfilling its commitment? She talked about long-term commitments. Does this mean that the new expenditure will be backloaded and there will be some for several years in the future?

[Baroness Penn (Con)]

We welcome the contribution from all our allies and partners. I think I have been clear that nearly £5 billion of the £11 billion of additional funding is over the next two years. We have provided clarity beyond the existing scorecard period to help facilitate long-term investment in our future defence.

[Lord Cormack (Con)]

Can my noble friend clarify a statement she made in answering the noble Lord, Lord Campbell of Pittenweem? Did she really say that none of this money is going to be needed to replenish the armaments we have sent to Ukraine? A simple yes or no will do.

[Baroness Penn (Con)]

I believe I said earlier that one of the things we will be able to do with our funding is bolster our conventional stockpiles. But I want to be clear with noble Lords that the £2.3 billion commitment we made to Ukraine in 2022-23, which we are also matching going into next year, is over and above the money I have set out today.

[Lord Reid of Cardowan (Lab)]

My Lords, I know the Treasury likes to speak in percentages and aggregate sums, but can we cut to the chase? Will the Minister confirm that, as far as the Treasury knows, over the next few years our Armed Forces will reduce the number of soldiers, ships and planes? She may consult her colleague from the Ministry of Defence if she wishes.

[Baroness Penn (Con)]

I am very happy to have my noble friend sitting next to me. We constantly review our capabilities, but the vision for the future of our defence as set out in the original integrated review remains the vision for defence in this country. However, additional resource has come in as a result of the integrated review refresh, in order to reflect the new circumstances in which we find ourselves.