Lord Hammond of Runnymede
Main Page: Lord Hammond of Runnymede (Conservative - Life peer)Department Debates - View all Lord Hammond of Runnymede's debates with the Ministry of Defence
(11 years, 9 months ago)
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Derek Twigg (Halton) (Lab)
15. What assessment he has made of the likely defence budget post-2015.
The Secretary of State for Defence (Mr Philip Hammond)
The defence budget for the financial year 2015-16 will be set in the current spending round, which is expected to conclude in the summer. The budget for subsequent years will be set in the next spending review. The Ministry of Defence has an agreement with Her Majesty’s Treasury that we may plan on the assumption of a 1% real-terms annual increase in the equipment budget—about 40% of the current defence budget, rising to 45%—from 2015-16 to 2020-21. Our equipment plan, which we recently published, is based on that assumption.
Rosie Cooper
On 14 May last year the Secretary of State boasted that he had balanced the budget over 10 years. To prove his claims, he said:
“I have agreed with the National Audit Office that it will review the equipment plan and confirm that it is affordable.”—[Official Report, 14 May 2012; Vol. 545, c. 264.]
However, in January the NAO’s report damningly said that it could not
“offer a definitive view on the affordability of the Equipment Plan.”
Will the Secretary of State tell us how we can believe a word that this Government say on defence when their central claim to competence cannot be confirmed by the independent auditor?
Mr Hammond
I think the hon. Lady needs to go away and read the National Audit Office report carefully. To put it into context, she probably needs to read some previous NAO reports on equipment plans. For example, in its 2010 report the NAO discovered that in a single year under Labour just two programmes—Typhoon and the Queen Elizabeth-class aircraft carrier—rose by £3.3 billion in cost. In 2009, it said that
“the budget remains consistently unaffordable over the next ten years”
and that attempts to rebalance the defence budget had represented poor value for money. We are very happy with the NAO’s review of the equipment plan, which recognised the huge steps of progress that we have made and set out an affordability assessment model for the Department’s assumptions.
Mr Speaker
Order. Both the question and the answer are hopelessly long-winded; we need to get better.
Derek Twigg
The Prime Minister promised real-terms growth in the post-2015 budget. Can the Secretary of State confirm that that will still be the case for the equipment budget and the non-equipment budget?
Mr Hammond
The Prime Minister has made it clear that he stands by his view that the equipment plan budget needs to increase in real terms, and we have a pledge from Her Majesty’s Treasury that we may plan on the assumption of a 1% real-terms increase. Our planning assumption is flat real-terms growth for the remainder of the budget.
Mr James Arbuthnot (North East Hampshire) (Con)
I do not think that that was precisely what the Prime Minister said. Nevertheless, does my right hon. Friend the Secretary of State agree that if we possibly can we should continue to meet the NATO objective of spending at least 2% of our gross domestic product on defence?
Mr Hammond
I agree with my right hon. Friend. The plans that we have set out do indeed show that we will continue to comply with that 2% threshold.
Sir Gerald Howarth (Aldershot) (Con)
Will the Secretary of State enlighten the House on what discussions he has had with the Treasury in the light of the Prime Minister’s most welcome announcement last week that some of the aid budget might very usefully be diverted to peacekeeping operations? The Department for International Development is to have another £2.65 billion extra this year, but how on earth is it going to spend it when the Ministry of Defence is so short of cash?
Mr Hammond
I shall leave it to my right hon. Friend the International Development Secretary to explain how DFID proposes to spend its budget. There is already a high level of co-operation between the Ministry of Defence, the Foreign Office and DFID. It makes absolute sense to look at how we spend the budgets available across those three Departments in order to achieve their objectives and secure the UK’s vital national interests.
Mr Jim Murphy (East Renfrewshire) (Lab)
Last May the Secretary of State announced to an outburst of self-congratulation that he had balanced the MOD’s books and, as we have heard, he even called on the National Audit Office to validate his assertion. Instead, however, the auditors have declared that his costings are “over-optimistic” and his approach “not statistically valid”. Put simply, the NAO said:
“The costings are not sufficiently robust to support the affordability assertion.”
Is it not now time for the Defence Secretary, just like the Prime Minister, finally to admit that he has failed to deliver on his boasts on the MOD budget?
Mr Hammond
No, and I am sorry that the hon. Member for West Lancashire (Rosie Cooper) has stolen the right hon. Gentleman’s thunder. We now have an equipment plan that includes £4.8 billion of centrally held contingency, £8.4 billion of contingency in the individual projects, and £8 billion of unallocated headroom. The right hon. Gentleman might have noted that the right hon. Member for Barking (Margaret Hodge) recently said that, since the election, the MOD has made
“welcome progress…particularly on the purchasing of equipment”
and “great strides forward”. That is in marked contrast to the National Audit Office and Public Accounts Committee’s assessment of what happened under the previous Government.
Mr Murphy
The Secretary of State should spare us the lecture. This is the party that sold off the Harriers, that could not decide which aeroplanes to put on the carriers, that sends our one carrier to sea without any aeroplanes and that cost the country tens of millions of pounds.
To return to the budget, we now know that when the Defence Secretary told this House that the defence budget was balanced, he meant that only 40% of it was costed. The National Audit Office looked at just £1 in every £5 of the MOD’s budget, and even then it discovered a £12.5 billion black hole in the plans. The NAO said:
“Achieving affordability is…contingent on savings being achieved elsewhere in the budget.”
Will the Defence Secretary confirm the NAO’s figure for the new black hole and that his plans to boost the equipment budget will fall on the back of further cuts to our armed forces and their welfare?
Mr Hammond
No. The right hon. Gentleman is simply wrong. The figure of £12.5 billion is from CAAS—the internal cost assessment and assurance service. It was quoted by the National Audit Office and has subsequently been reassessed at £4.4 billion. [Interruption.] No, it was by CAAS and has been reassessed at £4.4 billion. The right hon. Gentleman is simply wrong.
Labour has to decide whether it is going to engage seriously in this debate or not. At last year’s Labour conference, the right hon. Gentleman told his party that it
“must deal with the issues we would if we were in power…No smoke and mirrors, no delay in tough decisions”.
Just two weeks ago, however, he told The Daily Telegraph:
“I’m not going to say we will guarantee to overturn this cut or the other.”
Which is it to be: tough decisions or more ducking and weaving?
Mr John Baron (Basildon and Billericay) (Con)
The 2011 independent commission acknowledged the increased cost of collectively training Territorial Army units over their regular brethren when force generation factors were taken into account. Given that the Green Paper makes clear that TA units will be more frequently used, will the Government justify their claim that replacing regular troops with reservists is cost-effective?
Mr Hammond
As my hon. Friend knows, we have allocated £1.8 billion over 10 years for additional training, infrastructure and equipment for the reserves to try to rebuild the broken trust that resulted from the previous Government’s slashing of funding for reserve training and equipment. On the economics of using reserves instead of regular forces, it is true that, when deployed on operations, reserves are more expensive than regulars, but, held as a contingency, reserves are significantly lower cost than regular forces. We are simply trying, within the budget envelope available, to create the greatest amount of military capacity it is possible to generate.
Mr Crispin Blunt (Reigate) (Con)
Is the Secretary of State able to give any detail as to the exact consequences of the Prime Minister’s welcome statement on the use of the DFID budget alongside the budgets of the Foreign Office and the Ministry of Defence for the future of defence diplomacy?
Mr Hammond
As I have said, we already co-operate significantly. The conflict pool is a tri-departmental pool of funding that is used for upstream stabilisation and capacity-building operations. The Prime Minister was alluding to a commitment by all three Departments to look again at how we can do more of that to support the UK’s national interests, while at the same time support the development agenda. It is a simple fact that unless there is security it is not possible to have economic development or effective poverty eradication.
Jeremy Corbyn (Islington North) (Lab)
2. What his most recent estimate is of costs up to 2016 of the replacement of the Trident nuclear missile system.
Mrs Mary Glindon (North Tyneside) (Lab)
11. What plans he has for the non-equipment defence budget.
The Secretary of State for Defence (Mr Philip Hammond)
The defence budget was set for this Parliament in the spending review conducted in 2010. As I have set out, the budget for financial year 2015-16 will be set in the current spending round, which is expected to conclude in the summer. The MOD’s planning assumption is that the non-equipment element of the budget, about 55% to 60% of the total, will grow in line with inflation—that is, will remain flat in real terms—over the 10-year planning horizon that the Department uses for budgeting purposes.
Ian Mearns
The National Audit Office has called into question the Secretary of State’s projections, and MOD analysis shows that capability gaps could arise in some areas, particularly the Army. Will the Secretary of State publish the analysis to which the NAO referred, and will he guarantee to all future, current and past members of the Army that their livelihoods will not be cut to pay for miscalculations within the Department?
Mr Hammond
I can tell the hon. Gentleman that we have right-sized the Army to the budgets we have available, and having taken tough decisions we are in the process of drawing the Army down to its future size of 82,000. That size will allow us to equip and protect properly our service men and women when we ask them to go out and do a very dangerous job on our behalf, and we believe that is the right approach.
Mrs Glindon
Given that the National Audit Office did not confirm the affordability of the equipment plan, will the Secretary of State commit to publishing a more detailed summary of the plan with individual funding lines for individual programmes?
Mr Hammond
I remind the hon. Lady that the question is about the non-equipment defence budget. For the equipment budget we have published a plan that is more detailed than anything published previously, and certainly more detailed than any equipment plan published during the 13 years of the Labour Government. We have gone as far as we believe we can without compromising either national security or taxpayers’ commercial interests in negotiating with defence contractors, and I am afraid I cannot offer her any more detail than that already published without compromising those things.
Mr James Clappison (Hertsmere) (Con)
Although Ministers rightly never comment on funding for our special forces, does my right hon. Friend agree that the current operational capability of our special forces, in terms of both equipment and manpower, is a huge national asset?
Mr Hammond
Our special forces are a huge national asset, and their capability has been expanded very substantially in response to the needs of Operation Herrick in Afghanistan. It follows that as we draw down from our operations in Afghanistan we will want to review some of the supporting infrastructure put in place for that specific operation. As my hon. Friend will know, however, the MOD never comments publicly on the details of special forces numbers, funding or disposition.
Stephen Mosley (City of Chester) (Con)
Last week I met trade union representatives from Defence Support Group Sealand who are obviously concerned about the future of the maintenance budget. What future plans does the Secretary of State have for the maintenance budget, and in particular on whether DSG might be privatised?
Mr Hammond
The current intention is that DSG will be privatised, and we are in the process of achieving that objective. On the equipment support budget, one important innovation—hon. Members might have thought that this was standard practice, but it has not been until now—is to ensure that no equipment is allowed into the programme for procurement unless we also clearly have a budget to support that equipment over the 10-year horizon to which we budget. Achieving that will ensure not only that our equipment will be first class, but that we can maintain it in first-class condition.
Mr Russell Brown (Dumfries and Galloway) (Lab)
On an all-too-frequent basis, we hear of cyber-attacks on global businesses and Government Departments globally. Last month, the Select Committee on Defence published its report on defence and cyber-security, which appears to highlight a number of failings. Bearing in mind that cyber-security cuts right across the Government, does the Secretary of State recognise the need for even more investment in it? What percentage of any additional governmental spend will go to his budget?
Mr Hammond
Cyber-security is a cross-Government agenda led by the Cabinet Office, but the Ministry of Defence is heavily involved in the programme. The hon. Gentleman is right to draw attention to the increasing frequency and severity of attacks on industrial and civilian infrastructure targets not just in the UK but throughout the western world. The arrangements the Government have put in place for a quinquennial strategic defence and security review give us a framework within which to review our responses to cyber-threats and to make any adjustments in priority that we need to make for the next five-year period. The allocation of costs across Departments would be a matter for the next spending review.
Phil Wilson (Sedgefield) (Lab)
7. What plans he has for the future of the core equipment programme.
The Secretary of State for Defence (Mr Philip Hammond)
Having established the core equipment programme in planning round 12, as I announced on 14 May 2012, we are now concentrating on delivering that core programme. We will, however, continue to keep under review candidate projects for inclusion in the core programme in the future, bearing in mind that we have £8 billion of uncommitted headroom in the programme. However, before we include any further projects, we will need to be satisfied, first, of the capability need and, secondly, that we have sufficient room within the budget to see projects through to completion and sustain them in operation. Thirdly, decisions will be required to meet proposed in-service dates.
Phil Wilson
The National Audit Office has identified a £12.5 billion black hole in the Department’s equipment plan. Will the Secretary of State say how he will fill that black hole?
Mr Hammond
We have done this one before. As I explained to the right hon. Member for East Renfrewshire (Mr Murphy), the £12.5 billion quoted by the NAO is a CAAS figure, based on its assessment of early summer 2012. In October, CAAS reported that it had downgraded its assessment of the contingency requirement to £4.4 billion, which is rather less than we have allocated in the budget.
Peter Luff (Mid Worcestershire) (Con)
This is my opportunity not to ask a question on the defence equipment programme that I believed I would have to ask for a fourth time at Defence questions, but instead to congratulate my right hon. Friend on the programme’s publication. What has been the reaction from industry and elsewhere to the welcome detailed information in the equipment plan, and to its clean bill of health from the NAO?
Mr Hammond
I am grateful to my hon. Friend, who is an aficionado of NAO reports. Anybody who reads NAO reports regularly will recognise that, in context, the report was supportive and favourable. However, it does not make us complacent—we still have a great deal of work to do. I can tell him that the response from industry has been favourable. I chaired a meeting of the defence suppliers forum the week before last, which commented favourably on the report and the guidance it gives in directing its investment in future capability.
Alison Seabeck (Plymouth, Moor View) (Lab)
In a written answer on 11 February to my hon. Friend the Member for Coventry South (Mr Cunningham), the Under-Secretary of State for Defence, the hon. Member for Ludlow (Mr Dunne), who has responsibility for defence equipment, said:
“This Government will not blindly pursue projects, ignoring new information about defence equipment acquisitions.”—[Official Report, 11 February 2013; Vol. 558, c. 442W.]
That is obviously vital in core programmes, but the Defence Committee report on defence acquisition suggested that that was exactly what the Government have done. It concluded that decisions were
“rushed and based upon incomplete and inaccurate policy development…and…without the MoD understanding how the change could be implemented.”
Was the Committee wrong to question the Government’s competence?
Mr Hammond
The reference that the hon. Lady cites is specifically to decisions made in 2010. We have received the Committee’s report, we are studying it very carefully and we will publish our response in due course.
Richard Drax (South Dorset) (Con)
8. What plans he has for the training of reservists.
The Secretary of State for Defence (Mr Philip Hammond)
Our priority is and will remain the success of the operation in Afghanistan. Beyond that, my priority is to deliver the military tasks for which the MOD is mandated. The MOD is also engaged in a major project of transformation to bring about the behavioural change that is needed to maintain a balanced budget and to deliver equipment programmes, so that our armed forces can be confident of being properly equipped and trained. To deliver that project, we need to complete the rebasing of the Army from Germany, secure our target level of trained reserves and restructure the Defence Infrastructure Organisation and Defence Equipment and Support. In parallel with the defence transformation project, I am focused on the steps we need to take to restore confidence in the future to those who serve in the armed forces after a period of turbulence and uncertainty.
Andy Sawford
Why do the Government think it right that the pension age for firefighters in the defence fire and rescue service is to be aligned with the civil service pension age, rather than with the age for civilian firefighters, given that the job done by those serving in our defence services is no less dangerous, and certainly no less physically challenging, than that done by other firefighters?
Mr Jim Murphy (East Renfrewshire) (Lab)
When Ministers were last asked about the need to double the reserve force numbers, they dodged the question, instead talking about the increase in Territorial Army inquiries. Today we have heard from Ministers that they are hopeful that the policy will be a success. However, a policy that the country needs to be a success is being totally mishandled, with missed targets and too few businesses aware of the Government’s plans. Instead of talking about inquiries, will Ministers now place on record the fact that recruitment targets are being missed? Surely, in relation to this important issue, accepting that there is a problem would be the first step towards dealing with the problem.
Mr Hammond
Let me say to the right hon. Gentleman that the way in which we will not increase confidence in the Territorial Army, and will not increase reserve numbers, is arbitrarily cancelling its members’ training, cutting their kit and relegating them to the second division, which is what his party did in government. [Interruption.]
Mr Speaker
Order. The right hon. Member for East Renfrewshire (Mr Murphy) is assuming that there is an automatic link between what he says and what the Secretary of State says, which is itself the creation of a notable parliamentary precedent. However, it is not for the right hon. Gentleman to yell from a sedentary position. He asked the question; whether he likes the answer or not, he is getting an answer, and he owes the Secretary of State the courtesy of hearing it.
Mr Hammond
That is certainly not a precedent that I noticed during my 13 years of opposition.
Let me say this to the right hon. Gentleman. We know that we have set ourselves a substantial challenge in increasing the size of the Army reserve to 30,000. We have a number of measures in train, including a new recruiting campaign which started only 10 days ago. We expect to start to make significant progress this year. We will be publishing details of recruitment and retention figures, and as my right hon. Friend the Minister for the Armed Forces suggested earlier, we will do that periodically and regularly—not, I think, monthly, but probably on a quarterly basis.
Richard Drax (South Dorset) (Con)
T4. I understand that it costs about £14 million a year for HMS Bulwark’s sister ship, HMS Albion, to sit in Portsmouth doing not very much. Given the Prime Minister’s new-found enthusiasm for spending on our armed services, may I suggest that some of the money be used to put this wonderful ship to sea—if for no other reason than to help the Department for International Development?
Mr Frank Roy (Motherwell and Wishaw) (Lab)
Will the Secretary of State tell the House how many jobs will be lost at Faslane nuclear base if Scotland separates from the United Kingdom?
Mr Philip Hammond
As the House will know, the Government are confident that the Scottish people will decide in the referendum that the benefits of union far outweigh anything else on offer and will make the right decision. The hon. Gentleman is right to observe that significant numbers of jobs, not just in the immediate vicinity but across the whole of the west of Scotland—thousands of jobs—depend on the operation at Faslane. When I was last at the base, I made a specific inquiry about the geographical location of workers. People come to the base daily from the east coast, so such a change would affect the whole central area of Scotland.
Andrew Stephenson (Pendle) (Con)
T7. Constituents of mine, including Councillor Jenny Purcell, have raised with me the worrying case of soldier Harry Killick, who suffers from post-traumatic stress and has received recent press coverage. What steps is my right hon. Friend taking to provide support for personnel with post-traumatic stress disorder, such as Harry?
Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)
In response to my hon. Friend the Member for Gateshead (Ian Mearns), the Secretary of State said that he had “right-sized” the Army in line with the defence budget. How would he rebut the suggestion that that sounds like the strategic defence review was not strategic but budget-driven?
Mr Philip Hammond
It sounds like a Government who are rejecting the previous Government’s policy of sending people out to do a dangerous job without the kit, equipment and support that they need and deserve. We have a moral obligation not to put people in harm’s way unless they are properly equipped, and setting the size of the armed forces at a level the taxpayer can afford to support and equip properly is the morally correct and appropriate thing to do.
Tessa Munt (Wells) (LD)
I would like to ask the Secretary of State whether it is the case that when service personnel are accused of breaking the law their pay is stopped with immediate effect, which can cause real hardship to service families who are left unable to meet the costs of rent, bills and food, as well as of independent legal advice. If that is so, what is the justification for that and will he review the situation?