Modernising Defence Programme

Lord Touhig Excerpts

Tuesday 18th December 2018 Lords Chamber

[Earl Howe]

We have not hedged all our defence budget, but we have hedged a substantial proportion of it, particularly that which is payable in dollars. I was speaking to our finance director last week about this. Although she could never be sanguine about the way the pound is moving, she is much clearer now that we have an affordable equipment budget over the next couple of years, which is the period over which she aims to hedge. I have already made it clear to the noble Lord, Lord Browne, that it is, unfortunately, impossible for me to enumerate at this point those projects which will come under the umbrella of the transformation fund. It was said that £160 million is not a great deal of money—it sounds like a great deal of money to me, I must say—but one should not think of transformation simply in terms of platforms and assets. One has to think of it in terms of different ways of working and of modernising practices within defence. That is where this fund will score most heavily.

[Lord Touhig (Lab)]

In the Statement we are told that the Government wish,

“to improve markedly the way we run Defence”,

and that:

“Based on our work to date, we expect to achieve over the next decade the very demanding efficiency targets we were set in 2015”.


Can the Minister remind the House of how much money the 2015 defence review said would be saved by efficiency savings and over what period? How much has been saved to date? Have any service personnel been deployed to work in the MoD to fill vacancies caused by civil servants leaving because of efficiency savings achieved to date?

[Earl Howe]

I am afraid I do not have the information in my brief to answer the last part of the noble Lord’s question, but the target we set ourselves in 2015 was £7.4 billion of efficiency savings. We have achieved 70% of our target; we have achieved £5 billion. That was the target over a five-year period. We are now looking further ahead to see what further efficiencies we can generate over a 10-year period. That work is ongoing.

[Earl Howe]

I am sorry that the noble Lord feels that way. I gently put it to him that the size of the document belies the depth and significance of its content. This was never going to be about a catalogue of future assets or platforms or number of ships in the Navy. As I said earlier, the programme is largely strategic, focusing on those key defence capabilities on which we think we should concentrate in the light of the threats facing us. In effect, it is a sense check of the SDSR of 2015.

The noble Lord rightly says that the spending review will be an important ingredient in our budget over the longer term, but the outcomes of the MDP will inform next year’s spending review in a helpful way. It provides a solid foundation on which to base the case that we will present for defence spending over the coming few years.

Noble Lords should not underestimate the importance of the Budget settlement. That settlement will undoubtedly enable our Armed Forces to modernise and meet the intensifying threats and risks that we now face, including prioritising investment in key capabilities. The spending review will come next year, but we have in the meantime the ability to move forward on a number of vital fronts, which is extremely valuable.

[Lord Touhig]

My Lords, the Minister was not able to answer my third point. Will he discover that information and write to me?

[Earl Howe]

Yes, gladly, my Lords.