Defence Spending

Viscount Trenchard Excerpts

Thursday 31st October 2024 Grand Committee

Asked by

[Viscount Trenchard]

To ask His Majesty’s Government what progress they have made in laying out the roadmap to spending 2.5 per cent of gross domestic product on defence.

[Viscount Trenchard (Con)]

My Lords, I must declare my interests as honorary air commodore of 600 (City of London) Squadron in the Royal Auxiliary Air Force, and as a consultant to Mitsubishi Heavy Industries Ltd.

It is timely that we have a chance to debate defence spending today. Since the passage of the Defence of the Realm Act 1914, three days after the start of the First World War, it has rightly been maintained that the first duty of the Government is to protect and safeguard the lives of their citizens. The Armed Forces covenant, promulgated in 2011, starts with these two sentences:

“The first duty of Government is the defence of the realm. Our Armed Forces fulfil that responsibility on behalf of the Government, sacrificing some civilian freedoms, facing danger and, sometimes, suffering serious injury or death as a result of their duty”.


Churchill was fond of quoting the Latin adage, “If you want peace, prepare for war”. In 1943 and 1944, more than 40% of GDP was spent on defence. If this country should again become directly embroiled in a major military conflict, it is reasonable to assume that the Government would again have to spend a huge proportion of our national output on defence to fulfil their first duty. Surely it is absolutely necessary to spend enough on defence now to make it as unlikely as possible that we will again become embroiled in a major war. We all know that we are already involved, with our NATO allies, in Ukraine’s fight for survival against the Russian invader; it is a conflict that we cannot allow Ukraine to lose.

Today’s debate is not the occasion to discuss yesterday’s Budget. It is deeply disingenuous of the Government to go on and on about the black hole against a background where tax revenues are £21 billion higher than the OBR had predicted. I expected that the Chancellor might take the opportunity provided by the Budget to set out the long-awaited road map to spending 2.5% of GDP on defence. I feared she might say that we would have to wait until the report of the strategic defence review by the noble Lord, Lord Robertson of Port Ellen—for whom I have the very highest regard—is published, but she did not even say that. She said that

“we will set a path to spending 2.5% of GDP on defence at a future fiscal event”,—[Official Report, Commons, 30/10/24; col. 822.]

but she has also said that there will be one Budget a year. Does this mean that we will not even know the pathway to spending 2.5% until the next Budget next autumn? In that case, how can the noble Lord, Lord Robertson, produce a coherent defence review next spring?

However, we surely know that we must anyway spend at least 2.5% of GDP on defence now. It is quite possible that the SDR will find that the military capabilities we need now will cost a lot more than can be afforded even by spending 2.5% of GDP on defence.

In the debate introduced by the noble Lord, Lord Robertson, on the SDR on 9 October, the noble and gallant Lord, Lord Stirrup, referred to NATO’s recent assessment that if its members are

“to contribute military capabilities adequate to the challenges that the alliance now faces, they will need to spend around 3.7% of GDP on defence”.—[Official Report, 9/10/24; col. GC 224.]

If NATO is correct, investment in defence needs to be above 3% of GDP, not the 2.5% that the Government say they aspire to but for which, even now, they have not so far set out a firm plan.

As the Committee is well aware, the world is in a more turbulent and unpredictable state than it has ever been since the end of the Second World War. The noble Lord, Lord Robertson, has described China, Russia, Iran and North Korea as the deadly quartet. As I pointed out in the debate on the SDR, the previous Government’s paper, Defending Britain: Leading in a More Dangerous World, published in April this year, explained that any delay in setting out a pathway to reaching 2.5% was likely to lead to front-line cuts at the worst possible time for our Armed Forces.

Spending more will not in itself be enough. Reform of the Ministry of Defence to build a less risk-averse department and improve its procurement process is also essential. Can the Minister confirm that the fact that the SDR was to be reported to not only the Prime Minister and the Secretary of State for Defence but the Chancellor of the Exchequer was not significant? On that occasion, the Minister said:

“The Government have an absolute commitment to 2.5%. I know that that is not what some people want to hear and that there is no timeline given to it, but there is an absolute commitment to 2.5%. It is not an aspiration”.—[Official Report, 9/10/24; col. GC 262.]


We now know what that means: merely setting a path at a future fiscal event.

The noble Lord, Lord Robertson, will assess what threats we face and what capabilities we need to address them, but his task has been made all the more difficult by the Chancellor’s signal that the uplift in defence spending is not the Government’s urgent priority, which it should be. It is at least welcome that the AUKUS programme is protected.

The UK has been one of the few NATO countries to meet the 2% spending target, and our response to the Russian invasion of Ukraine was much appreciated by our allies and by the Ukrainians. However, we are now placing our ability to provide leadership in military operations at risk, because we have in recent years been increasing our defence expenditure at a much slower rate than other nations. Germany, which in 2014 was spending only 1.2% of its GDP on defence, has committed to spend $97.7 billion on defence this year, which is an increase of 29.45% over 2023. France has increased its defence budget by 6.05%, and the United States by 7.21%. Against that, we have managed to provide an uplift of only 1.73% after adjustment for the implementation of the new accounting standard, IFRS 16. That is one of the smallest increases among NATO members. It means that Germany will be spending nearly 40% more than we are. The Chancellor announced an increase of £2.9 billion for next year, but that is not nearly enough given the serious threats we face and the current underfunded state of the Armed Forces. Recruiting is badly affected by inadequate, poorly maintained accommodation and facilities. It is shocking to hear that there are now more civil servants in the MoD than the total strength of the Royal Navy and Royal Air Force.

As a precondition of deploying our aircraft carriers, or indeed any major maritime or land-based assets, to any conflict zone in partnership with our allies, it is absolutely necessary to control the air environment. That is why we need the Global Combat Air Programme —GCAP. Its advantage over alternatives includes its greater range. It will bring a contribution to NATO that nobody else can bring. If we do not fulfil our commitment to our partners Italy and Japan to deliver this project by 2035, it will be disastrous for our international relations and will signal the end of our ability to bring in partners to major defence projects. Some 70% to 85% of our defence exports in the last five years have been combat air in nature, so to fail to honour our commitments to this project would have huge implications for our defence industrial base.

Will the Minister now give a much-needed commitment, or at least say more than the Government’s position on GCAP, which is that

“we continue to progress on that”?—[Official Report, 25/7/24; col. 723.]

That is not quite the firm commitment that our Japanese and Italian friends are seeking. Having heard the Chancellor’s disappointing words yesterday, their concerns and those of all our allies will be seriously heightened.

I thank all noble Lords who are to speak in this debate, and I look forward to their contributions and to hearing what the Minister has to say.