Ministry of Defence: Expenditure

Lord Lancaster of Kimbolton Excerpts

Thursday 25th July 2024 Lords Chamber

[Lord Coaker (Lab)]

Of course we should remain open to any capability that is necessary. The noble and gallant Lord makes a very important point. We are open to all these considerations and factors in the defence of Ukraine, but also in the wider security picture that we face across the globe. No doubt that will be something that the review takes forward. I would welcome the noble and gallant Lord’s contribution to that review, to make the very point that he has just made.

[Lord Lancaster of Kimbolton (Con)]

My Lords, I declare my interest as director of the Army Reserve. The Public Accounts Committee identified a black hole of some £16.9 billion in our capital programme. That sounds a lot, but over 10 years it is actually less than 5% of the programme and manageable. However, as night follows day, there will be deferrals or cancellations of capital projects within the MoD. Normally, it is the smaller, short-term projects that are deferred or cancelled, as opposed to larger, long-term projects. In order to meet the Chief of the General Staff’s aim of doubling the lethality of the British Army in the next three years, it is these very short-term, small projects that are required. When it comes to the balance of investments, will this desire be taken into account?

[Lord Coaker (Lab)]

I thank the noble Lord for his question and for all the work he does in his position outside this House. He makes an important point. For me, it is not whether it is a small capital project or a large capital project; the important point is how it contributes to the lethality of our forces and how it contributes to us defending not only our country but freedom and democracy across the world. Whether it is a small project, a medium-sized project or a large project, its utility should be decided on that basis. The noble Lord makes a very important point, and I will make sure it is taken into consideration.

King’s Speech

Lord Lancaster of Kimbolton Excerpts

Thursday 25th July 2024 Lords Chamber

[Lord Lancaster of Kimbolton (Con)]

My Lords, I remind your Lordships’ House of my interests with the Ministry of Defence. What a pleasure it is to be able to follow the noble Lord, Lord Robertson. The greatest compliment I can give him is to tell him of the collective sigh of relief that went around the MoD when he was appointed, and the thought that there was a grown-up in charge of this review. Equally, I question whether we can continue to prioritise both NATO and the Asia-Pacific. If we are forced to make a choice, I hope that it is NATO, not least because of the potential change of government in the United States at the end of the year. I am sure that he will be the right man to make that unbiased decision.

I will say a few words on the SDR and perhaps look at it through the traditional grand strategy lens of ends, ways and means. I am delighted that it is threat-based. The noble and gallant Lord, Lord Peach, outlined the threats very eloquently, and I do not wish to repeat them. As an aside, I thank him for his call-out to an increased Army Reserve. I am delighted to report to your Lordships’ House that, during the last period, the Army Reserve did indeed increase in size, albeit very modestly.

Equally, I emphasise that, while we have woken the Russian bear, I am concerned that Russia is showing a degree of national resilience that I am not sure that we, the UK, could. It has very much put its economy on to a war footing, and we need to be very mindful of that. But what could and should we do? To me, we are a medium-sized MoD with a medium-sized budget. How do we get the most out of that budget?

To me, the answer is multidomain integration. The sign of any first-tier military is how it combines its domains. We have exquisite assets in land, air and sea, we lead the world in cyber, and we are developing on space. But operating in the joint space—where you combine those five domains together, rather like five strands of a rope—the strength is so much greater than the individual strands. We do that effectively, but we need to go one step further with multidomain integration.

That is easy to say, but what does it mean? To give a simplistic example, in the joint world a soldier on the front line may identify a target and then, through data or voice, call in an air strike or naval gunfire support or send it back to headquarters and have an artillery strike, and he may correct fire, and the target is eventually destroyed. With multidomain integration, the data that the sensors in the Ajax strike vehicle pick up is immediately shared with the F35 overhead, the Type 45 warship, or back to headquarters. Through artificial intelligence, the right asset to target that potential foe is identified, its threat is assessed as to where it should be in a priority, the strike is carried out, the fire is automatically corrected using a minimum amount of ammunition, and the whole process, rather than taking minutes, takes seconds. But it does not end there. The expenditure of ammunition is automatically sent back through the logistical train, initiating resupply, and back into the land industrial base. This is how we maximise our advantage.

On means, we focus on 2.5% but let us be clear: if we had 2.5% today, it would not solve our problems in the short term. For the next four years, we would still have a deficit in money in defence. From year five onwards, according to the Public Accounts Committee, we would probably then have headroom. But we continue to have principal challenges.

The first is nuclear: about 6% of our operational budget is taken up by it. We do not actually know how much the nuclear programme costs. We ring-fenced money for the Dreadnought submarines, but other aspects continue to grow. When the nuclear programme sneezes, the rest of defence catches a cold. I think the time has come when nuclear needs to be held outside the defence budget. I would rather have 2% without nuclear than 2.5% with it.

There has been much speculation about Tempest. I remind your Lordships’ House that we have signed a treaty on Tempest with Italy and Japan. How do we deal with that? The answer, of course, is that we need to go out and get more partners to join that programme so that we can temper the spending.

Finally, and very quickly, I pick up a point made earlier today by the noble and gallant Lord, Lord Stirrup, on revenue spending within the MoD. Revenue spending is the most vulnerable, yet it is the most important. If we do not have revenue to train, we cannot be a world-class military and cannot compete. While we do not know what the spending announcement of the pay rise for our servicemen will be, for every 1% it is £100 million. If we get, say, a 4% increase in spending, that is £400 million straight out of the revenue budget. We need to look carefully at how we balance capital and revenue spending within our defence budget.