National Shipbuilding Strategy

Lord Dannatt Excerpts

Wednesday 6th September 2017 Lords Chamber

[Baroness Goldie]

I thank the noble Lord for making a very important point. Obviously, I cannot make any specific commitments and undertakings, and I know that he would not expect me to do so. However, I go back to what has been described by Sir John Parker as a sort of regional renaissance of shipbuilding. That, I think, is a very healthy indicator of where the shipbuilding industry is in the United Kingdom. When shipyards tender for these contracts, I know that there will be an interest in where they source the materials and equipment. Wherever it is practical and sustainable and not subject to specialisation issues, I think there will be an expectation, and we would like to hope, that as many of them as possible will be sourced domestically within the United Kingdom.

[Lord Dannatt (CB)]

My Lords, it may surprise some noble Lords that I welcome today’s announcement —I would welcome any increase in Armed Forces capability—but, as the noble Lord, Lord Campbell, suggested, one is properly fearful of not just the cost but the opportunity cost of this enhanced maritime capability, and I hope that it is genuinely an enhanced maritime capability. Costs always rise. I recall that, at the Defence Board in 2007, the two aircraft carriers were voted in at £3.6 billion; they are now costing £6.2 billion, and I am sure that that will be replicated.

In the 2010 SDSR, the Government perfectly reasonably put a priority on equipment programmes. But when one prioritises equipment, one has to find savings in manpower and most of the manpower is in the Army, so the Army has been reduced by 20%. I am concerned that, in order to meet this increased maritime capability, it is not at the expense of our land forces, or indeed our air forces for that matter.

Surely, is there not a case to increase our defence budget above the 2% of GDP, to 2.25% or 2.5%? I have raised that point in your Lordships’ House before. But when we are leaving the European Union, it would be a tremendous signal within the wider context of NATO for the United Kingdom to increase its defence budget marginally to show that we are interested not just in national security but in European security and in worldwide security to boot. I ask the Minister to take that message back. As someone who was formerly head of the Army, I welcome the increase in maritime capability, but if it is at the expense of other aspects of our Armed Forces capability, this is a bad day for the UK and not a good one. The solution is an increase in our defence budget.

[Baroness Goldie]

I thank the noble Lord, Lord Dannatt, for his question. I reiterate that the defence budget is rising. I suppose that many organisations, not least government departments, would like to be able to say the same thing. That the defence budget is rising is a reflection of the importance that the Government place on our defence capability.

On the specific issue of raising the percentage of budget that we spend on defence above 2%, that is a NATO commitment. We are one of the relatively few countries that have managed to do that. It is important that we are open and transparent about what we are trying to do, which is what this whole strategy is about, and how we are trying to attend to the issues of procurement, governance and fairness to the taxpayer, while attending to the very necessary needs of the security and stability of our country. At the same time, we must combine all of that in a way that gives value for money and which provides us with what we need.

I am sure that, like many other departments, the MoD would like a purse without any strings attached, but I am afraid that that is not the world in which we live. The Government have indicated that they have a responsible attitude to funding our defence needs, and this is a very positive contribution to what the Government are endeavouring to do on the broader front of defence.