Defence and Security Public Contracts (Amendment) (EU Exit) Regulations 2020

Viscount Trenchard Excerpts

Tuesday 3rd November 2020 Lords Chamber

[Viscount Trenchard (Con)]

My Lords, I thank the Minister for introducing this debate on these regulations. I congratulate the noble Lord, Lord Dodds of Duncairn, on his excellent and interesting maiden speech. I look forward to hearing often from him on this and many other matters.

My noble friend explained the technical effect of these measures, and I welcome the increased confidence they bring that there will be no cliff edge as far as military procurement is concerned after the implementation period ends at the end of the year. It is welcome that the proposals will make it possible for the nation to decide its priorities for procurement partnerships in defence, removing the distinction of treatment between EU suppliers and other potential partners outside the EU. This will allow new partnerships to be formed. It was good to see the recent agreement with Australia in respect of its future frigate programme, and it should enable other potential partners, such as Japan, to be considered for future defence projects.

The fiscal challenges resulting from the Covid pandemic make it all the more important that we build new partnerships to share the escalating cost burden that each new generation of military equipment requires. In forming new procurement partnerships, we will be able to invest in the capabilities that the country really needs while taking advantage of the strengths that new partners can bring.

These regulations permit the Government to abandon the requirement to offer all defence procurement projects, and indeed other procurement projects, equally throughout the EU, unless there are good reasons for exemption on national security grounds. It is right that this exemption will still apply going forward, and it is highly desirable that the UK should possess competitive, world-class shipbuilding and aircraft manufacturing industries.

However regrettable it may be, at present, UK employment costs and productivity do not compete with global norms. It is important that political objectives to maximise UK involvement should be balanced against the overriding need to procure the best equipment at the best price and on time.

On 7 October, I asked the Minister if she could confirm that in the new fleet solid support ships programme, the priority would be best value for the UK defence budget. She confirmed that she was assessing the interest of those parties that had responded to the information notice process, but I do not think she made it clear that best value is the most important factor on which the contract would be awarded.

There is growing alignment between the aspirations of Japan and the UK interests in defence equipment. We know Japan also wants to build two or three similar support ships in the same timescale. At the same time, there are indications that Japan is increasingly looking at the UK as a potential partner in its future fighter programme. Does the Minister agree that the prospects for creating sustainable, competitive defence equipment industries in the long term would be enhanced by working together with partners such as Japan, not by applying too-prescriptive domestic content criteria or a requirement that there be a sole prime contractor, which must be a British company? Would not a partnership of British and foreign companies often provide the best way forward for such contracts, which become ever more expensive?

I look forward to other contributions and the Minister’s reply.

Armed Forces Personnel from Commonwealth Countries

Viscount Trenchard Excerpts

Tuesday 20th October 2020 Lords Chamber

[Baroness Goldie (Con)]

I thank the noble Lord for his kind remarks—he perhaps attributes to me greater powers than I actually possess. He is right to emphasise the significance of the issue, and I reassure him that I do not have to reiterate that to the department. There is active work under way, and I hope that something positive will emerge from that.

[Viscount Trenchard (Con)]

My Lords, does my noble friend not agree that, as an interim measure, Commonwealth service personnel should be granted exemption from visa fees and immigration controls for a grace period of, perhaps, two years after leaving the service, so that they may seek employment, claim benefits and register with a GP?

Fleet Solid Support Ships

Viscount Trenchard Excerpts

Wednesday 7th October 2020 Lords Chamber

[Baroness Goldie (Con)]

I feel slightly wounded by the noble Lord’s charge; I shall try not to take it personally. Of course, there was disappointment at the paucity of interest when the contract was originally put out. I think that it is now recognised that there were perhaps reasons for that. An internal review then carried out by the Royal Navy was helpful in ascertaining exactly what the role of the fleet support ships was to be and what they were meant to do, particularly in relation to the carrier strike group. Based on that review, we were able to make informed decisions as to the approach that best represents what we need to make a success of that support role. As he may be aware, the prior information notice, which set out the details being sought, indicated that there is a revised design for the ships. I am pleased to say that, in response to that notice, there has been a very healthy level of interest.

[Viscount Trenchard (Con)]

My Lords, will the Minister confirm that in the new support ships programme the overriding priority will be best value for the UK defence budget? Might this involve giving orders to consortia, including British and foreign companies working together? Has the impact of any delay in delivery of new ships beyond the end of the service life of Royal Fleet Auxiliary “Fort Victoria” been costed?

[Baroness Goldie (Con)]

We are aware of the scheduled end of service for “Fort Victoria”, which is in 2028. We are satisfied that we can make the necessary arrangements to continue the support which will be required. On delay, as my noble friend will be aware, the National Audit Office has made it clear that it is too early to say what impact stopping the original competition process might have on the entry into service of the fleet solid support ships. We will seek to mitigate any delay, and we shall certainly assess—as we are currently doing—the interest of those parties which have responded to the prior information notice process. We hope to proceed to make further information available to Parliament on the procurement strategy.

Reserve Forces and Cadets’ Associations

Viscount Trenchard Excerpts

Monday 27th January 2020 Lords Chamber

[Viscount Trenchard (Con)]

My Lords, I congratulate my noble friend Lord De Mauley on introducing this timely debate today. I should declare an interest as honorary air commodore of 600 (City of London) Squadron, Royal Auxiliary Air Force and my interest in the reserves and cadets as a deputy lieutenant of Hertfordshire and as a lieutenant of the City of London. I also have three years’ experience in the CCF and 10 years’ service in the TA.

I urge the Minister to be cautious in adopting a review which could be described as using a sledgehammer to crack a nut, with probable damaging consequences. As the draft review itself acknowledges, the RFCAs are actually working pretty well and it might be wise to heed the old maxim, already quoted by other noble Lords, “If it ain’t broke, don’t fix it.”

The draft review contains some important and sensible recommendations—for example, placing the Council of the RFCAs on a proper statutory footing, but surely such change could be achieved without the radical reorganisation presaged by the draft review. To change the 13 autonomous RFCAs into a single non-departmental public body would be to risk throwing the baby out with the bathwater. In 2007, the Cabinet Office took the view that the RFCAs did not fit into any of the classifications for arm’s-length bodies and that, in particular, they were not non-departmental public bodies. What has changed since 2007? The draft review offers no new evidence as to why the RFCAs should now be put into a Whitehall straitjacket.

The review claims that the RFCAs are not genuinely unique and unclassifiable and therefore, change is necessary: the status quo cannot be maintained. However, the Cabinet Office handbook Classification of Public Bodies: Guidance for Departments states:

“It is possible that for reasons associated with function or services, there may be a small number of ALBs that cannot be classified into one of the main categories without adversely impacting on the body’s ability to fulfil those functions/deliver those services.”


I do not think that anyone who has served in the Reserve Forces could hold the view that the RFCAs are not completely unique. There are no other bodies anything like them. I strongly believe that the unique nature of the RFCAs should permit them to continue to operate as unclassified ALBs. The Reserve Forces today play an increasingly important role as a fully integrated part of the Regular Armed Forces. The cadets provide opportunities for young people to serve their country, teach leadership and other skills to tens of thousands and provide a continuing source of recruits for the Regular Forces. They bridge the gap between the military and civilian communities. That gap has become much greater, given the much smaller numbers of personnel and establishments in the Armed Forces today.

The involvement of lord lieutenants would also diminish or even disappear if the RFCAs were to become mere advisory bodies to a centralised NDPB. I doubt that the application of OCPA appointments procedures would improve the leadership of the RFCAs. Paragraph 5.6.4 states that as the RFCAs are regularised into a single NDPB, future appointments should be fully compliant with OCPA procedures. However, I believe that the present system produces the right people to do this job. The proposed changes would result in increased costs, as many of those appointed under these procedures would expect to be remunerated.

I do not believe that many of the people who do this work on a voluntary basis at present would be willing to go through the OCPA process; nor would they be willing to give up their time for organisations shorn of most of their authority and independence. I consider it most unlikely that their replacements would have anything like the local connections that have ensured that our Reserve Forces and cadet organisations are today relatively well recruited and in such good shape. I ask the Minister to think again and take time to find a better way forward for the RFCAs to be brought up to date without condemning them to radical surgery of the kind which so severely damaged the St John Ambulance Brigade.

Lastly, the county fora, which provide a local focus with which many reservists identify, would wither on the vine, and other sub-associations, such as the City of London association, of which the lord mayor acts as president, would quickly lose their significance.

Queen’s Speech

Viscount Trenchard Excerpts

Tuesday 7th January 2020 Lords Chamber

[Viscount Trenchard (Con)]

My Lords, I join other noble Lords in congratulating the noble Baroness, Lady Ritchie of Downpatrick, on her interesting and thoughtful maiden speech.

The gracious Speech confirmed that the Government’s priority is to achieve Brexit at the end of this month. Even the most ardent remainers now accept that it will happen, and that it will be a real Brexit. The strong mandate given by the voters to the Prime Minister and the manifesto on which the new House of Commons has been elected make it abundantly clear that the constant pleading by the remain lobby that the people did not know what they were voting for in 2016, and so the result of the referendum should be discounted or diminished in importance, was complete fiction.

I normally agree with the wise contributions to your Lordships’ House made by the noble Lord, Lord Robertson of Port Ellen, but in his remarks on voting share in the general election, he did not include the point that 78.4% of the electorate did not vote for the Labour Party. Perhaps the Liberal Democrats, those strong proponents of proportional representation, should take note that the 100 seats they occupy in your Lordships’ House overrepresent their share of the vote by 63%.

There never was any point at all in half leaving the EU, such as would have been the case if a so-called soft Brexit had been pursued. I am delighted that we will properly leave the EU and regain our freedoms to make our own laws and regulations, which may or may not be the same as those adopted by the EU, but which will be those that we consider most appropriate for our businesses and our people, providing necessary protections to consumers and workers, while not encumbering businesses with red tape which may protect businesses in other European countries but does nothing to assist British entrepreneurs and innovators as they respond to the new opportunities open to them as Britain resumes its place as an independent country on the global stage.

The election result also permits a start to be made in rebuilding the trust and confidence formerly held by the public in our political institutions. The obstruction of the people’s decision to leave the EU by another place, aided, abetted and encouraged by your Lordships’ House, is the reason why Parliament has come to be held in such low regard by the people. I am happy that the process of recovery has already started, given the clear and decisive direction in which the Government have moved since the election, as articulated in

“the most radical Queen’s Speech in a generation”—[Official Report, Commons, 19/12/19; col. 44.]

to deliver on the priorities of the British people, in the Prime Minister’s words.

I welcome the Government’s statement regarding the trade Bill. To build opportunities for businesses and maximise the future prosperity of our citizens, we need our own independent trade policy. In his uplifting introductory speech, my noble friend Lord Gardiner gave me some comfort that the Government’s sights are set a little higher than their paper on the Queen’s Speech suggests. The paper lists four principal elements of the trade Bill. They are all entirely sensible and necessary, but they are defensive and have more to do with preserving our present trading arrangements and protecting British firms against unfair practices than with setting out an exciting new trading strategy for the country after Brexit. The negotiation of our future trade relationship with the EU is of paramount importance, but it is also important to start negotiations with our other major trading partners. I was delighted to hear the Minister confirm that the Government intend to start these quickly. This will doubtless assist our negotiating position with the EU.

In addition to this, I believe it is of enormous importance for our independent trade policy and our geostrategic place in the world that we should, as soon as possible, indicate formally our intention to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. Since the withdrawal of the United States, Japan has provided much of the leadership of the CPTPP, six of whose 11 members are Commonwealth countries. The CPTPP could thus provide basic trade agreements quickly with 11 countries on the basis already negotiated in detail by the present members, while negotiations on deeper bilateral agreements proceed in tandem with Japan, Australia and others, which may take longer to finalise. The Japanese and Australian Governments have both on several occasions indicated their positive stance towards UK accession to the CPTPP. Again, I believe that an early application for accession by the UK would strengthen our position in EU trade negotiations.

Defence Review

Viscount Trenchard Excerpts

Thursday 18th January 2018 Grand Committee

[Viscount Trenchard (Con)]

My Lords, I congratulate my noble friend Lord Sterling of Plaistow on introducing this timely, yet too short debate. As General Sir Nick Carter acknowledged recently on the “Today” programme, the security threats faced by this country have never been greater during his 40-year career. We are one of only five countries, including Greece and Estonia, which observe the NATO guideline to spend at least 2% of GDP on defence. I am not sure that we do still meet the 2% guideline, because we used not to include the intelligence and security budget within defence spending. Over the last several years, we have progressively moved the intelligence budget into defence, making it hard to compare present spending with that of 10 years ago as a proportion of GDP. Perhaps my noble friend the Minister could inform the Committee what is the current level of defence spending as compared with that of 10 years ago, on the same basis as we used to measure it? I suspect that it is more like 1.7% than 2%. Of course, I understand that we now conform to the NATO rules for measuring spending—so perhaps the Minister alternatively could tell us what defence spending would have been 10 years ago, if we had already at that time started including the intelligence budget within defence.

My noble friend referred to Mr Vernon Coaker, who expressed concern that, if the current national security capability review is to be fiscally neutral, and if spending on cyber and intelligence capabilities is to be increased, then it follows that the Government must be considering cutting pure defence expenditure or the capabilities of the Armed Forces. That would be extremely dangerous in the current climate. Could I ask my noble friend the Minister if the Government are still firmly committed to increasing pure defence spending in absolute terms, and as a percentage of GDP?

There are several reasons why the United Kingdom still punches above its weight around the world. Our country’s much-envied soft power does not depend only on the excellent quality of our foreign service personnel, highly skilled and effective though they are. Our soft power is considerably augmented by our hard power, or at least the perception that we still possess the highest-quality Armed Forces in the world—by no means the largest, but the most effective and well trained, man for man, in the world. Perhaps nowadays I should say “person for person”, which leads me finally to ask my noble friend the Minister whether he shares my concern that the attempt to recruit more people from different backgrounds, religions and orientations, and also to pander more to the emotional well-being of personnel at the expense of the traditional emphasis on physical fitness, threatens to backfire and may be counterproductive? Does he not agree that this new, politically correct approach may put off those potential recruits from traditional backgrounds, and that the Armed Forces may lose more than they gain? Does he not think it very important to continue to exhort our soldiers, sailors and airmen—I cannot bring myself to say air persons—to be the best? That would optimise the recruitment of suitable personnel from both traditional and the more diverse new backgrounds.

Armed Forces (Flexible Working) Bill [HL]

Viscount Trenchard Excerpts

Report stage (Hansard): House of Lords
Wednesday 11th October 2017 Lords Chamber

[Lord West of Spithead (Lab)]

My Lords, I rise to support the amendment of the three noble and gallant Lords. I very firmly share the view of the noble and gallant Lord, Lord Boyce, about whether there is really a necessity for this Bill, but it will happen. Having been in government, I know that these things get on tram rails and go along. But words are important and “part-time” is not a very good term to use; there is no doubt that it will be damaging. On that specific point, I disagree with the noble Earl, Lord Attlee. It can have a lot of impact and be very damaging. That is not the intention of the Bill, and such a minor change of wording has a huge impact. If the House divides, I will certainly be voting for the amendment. I spoke to the noble Viscount, Lord Slim, who was appalled by the use of the term “part-time” and wanted me to raise that if I spoke. He believes that being in the services is a vocation and was horrified that such a term should be used.

Before I sit down, I congratulate the noble Earl the Minister because, 235 years ago today, his ancestor relieved Gibraltar.

[Viscount Trenchard (Con)]

My Lords, I, too, have some sympathy with the amendment tabled by the noble and gallant Lords, Lord Craig, Lord Boyce and Lord Walker. I hesitate to intervene in a debate in which such illustrious military leaders have spoken, but I have some experience—10 years as a Territorial Army soldier and 10 years as an Honorary Air Commodore in the Royal Auxiliary Air Force. Therefore, all of my military service, limited as it is, has been part-time.

In spite of being part-time, in both my Army unit and now my Air Force unit, we have a great esprit de corps. It used to be that regulars were, without question, full-time— 24/7, on call day and night—and TA soldiers and reserve sailors and airmen were of course part-time. Now, in my No. 600 (City of London) Squadron, I have lots of reservists who want to work full-time. The dividing line between regulars and reservists is blurring and it is a pity that the Government did not choose the option of bringing the Regular Forces and the Reserve Forces closer together. In that case, the issue would not have arisen.

Of course, notions of flexible working have to be introduced in certain areas. They reflect modern patterns of life and could be helpful in reducing the divide between the Regular Forces and the community. Unfortunately, because not enough money is spent on defence, the Regular Forces are now absent from large areas of the country, with no presence at all. Indeed, when I was chairman of the Royal Air Force Benevolent Fund, our PR advisers told us that we had to give up all our logos that said “RAF Benevolent Fund” because young people did not know what the RAF was. We had to put “Royal Air Force Benevolent Fund” in all the logos. That shows how remote from the community today the Armed Forces have become.

In certain fields, such as IT and perhaps some intelligence roles, there are people the regular Armed Forces want to retain who want to work on a flexible basis. I also do not like using the term “part-time”, but I suspect that is what it means. I hesitate to disappoint the noble and gallant Lord, but I fear that I do not think the intention of the Bill is to provide only for personnel to take short-term breaks from regular service. The conversations that I have had with serving officers imply that they see in certain areas that this will be on a fairly long-term basis. Therefore, I am not sure that the noble and gallant Lord’s amendment has the perfect wording. I hope the Minister will say that the Government will try to find better wording to describe the flexible type of working that is necessary in the Armed Forces and which should be introduced.

The noble and gallant Lord, Lord Boyce, is absolutely right to warn us about how the media may treat this. The Daily Mail or some other organ might describe this as “a part-time army” and noble Lords can imagine what they might make of that.

There is a wish to introduce flexible working arrangements. It is a pity that this has not been combined with a rethink of the divide between the reserves and Regular Forces. I do not think “part-time” is the right wording, but I regret to say that I do not think that the noble and gallant Lords’ amendment has the wording absolutely right either.

Armed Forces (Service Complaints and Financial Assistance) Bill [HL]

Viscount Trenchard Excerpts

Monday 23rd June 2014 Lords Chamber

[Viscount Trenchard (Con)]

With your Lordships’ leave I would like to speak briefly in the gap. I hesitate to speak in a debate in which so many noble and gallant Lords have spoken because my own military experience is but nothing compared with theirs. When I was a Territorial Army officer in the 1970s the idea that there would be an independent complaints process was so far away from the reality of how we saw things that people would have laughed. If you did not like what was done you would just leave and not turn up at the drill hall next time. I realise that things have moved on and that we live in a much more litigious society, and I am very well aware of that in my present honorary role as an Honorary Air Commodore of 600 (City of London) Squadron Royal Auxiliary Air Force.

I am very grateful to my noble friend the Minister for introducing this debate. I, too, took considerable comfort from his assurances that complaints should be heard and determined at the lowest appropriate level, and that nothing should be done that would weaken the absolute integrity of the chain of command. I readily acknowledge that service complaints panels, including the use of independent members, have been found to be useful and have provided for more transparent decision-making. Service complaints panels are generally not thought to have undermined the chain of command. Is my noble friend absolutely certain that the ability of the putative SCO—the ombudsman— to direct the Defence Council will not have the potential to undermine the chain of command? I must admit that I fear that the upgrading of the commissioner to an ombudsman does of itself seem to challenge the essential premise that the Armed Forces should retain responsibility wherever possible for handing their own complaints within the services.

The Bill changes the process in other ways. It reduces three appeals within the service to just two chances. I am persuaded that streamlining the process is necessary but I wonder whether that will be helpful. I think that it will have the effect of reducing the amount of judgment of decision-making that is done within the service and increasing the amount that is done independently outside the service. Again, on the face of it that would seem to undermine the power of the chain of command. How can a service preserve the ability to hold a service complaints panel without referral to the ombudsman or without there having to be maladministration of the service complaint? Will the service have discretion to determine the level at which a service complaint is best dealt with? Oral hearings are useful to clarify disputed facts. Will there be provision in the new system for oral hearings? The ombudsman’s costs will rise as a result of additional work necessary to enable her to determine whether there has been maladministration of a service complaint.

Clause 4 is very welcome. The extent to which the main established military charities, in addition to providing assistance to their Second World War and other veteran communities, now provide direct help to the serving Armed Forces is not widely appreciated or understood. The RAF Benevolent Fund, which I had the privilege to chair for eight years has provided more than £20 million to fund childcare centres on all the principal RAF stations. In addition, we provide substantial sums for games areas and Relate counselling for those whose relationships are under strain, often as a result of separation. As the noble and gallant Lord, Lord Craig of Radley, told the House, this is a completely different subject. Nevertheless, I very much welcome it.

Defence: Reform

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Monday 27th June 2011 Lords Chamber

[Lord Astor of Hever]

My Lords, I am very grateful to the noble and gallant Lord for his support. I agree with him that it is an excellent report, and I pay tribute to the noble Lord, Lord Levene, my noble friend Lady Noakes and the rest of the team who did this excellent work.

The noble and gallant Lord asked whether I agree that the CDS alone represents the overall military view at the board. While the CDS will be the sole military representative on the new Defence Board, the advice of the single service chiefs will continue to inform the successful decision-making of the department. Their prime role will be running their services, but the Joint Chiefs of Staff Committee will sit in a new Armed Forces mode to allow the CDS to draw on the environmental advice of the chiefs in formulating his advice to the Defence Board. The CDS should not be constrained by that advice, but this forum will ensure that there is a clear mechanism for the views and advice of the chiefs to be articulated. The Chiefs of Staff operations committee will continue as now so that the single service chiefs’ advice is still heard on operation issues.

The noble and gallant Lord asked whether the CDS having more power would be too much to ask of one man. In the new model, the role of the CDS will be clarified and strengthened. However, in making the recommendations, the steering group has been mindful of the need for a balanced model in which the CDS and the PUS would continue to jointly lead defence and ensure that the CDS is not overloaded. His prime function will continue to be as the principal military adviser to the Defence Board, Ministers and wider government, and as the strategic commander of operations. It was because of the heavy loading on the CDS post that the steering group recommended continuing with a deputy for him, the Vice Chief of the Defence Staff, even though some of the VCDS’s responsibilities are being transferred to the joint forces command.

[Viscount Trenchard]

My Lords, I also thank my noble friend the Minister very much for repeating the Statement. I will not delay the House as long as I intended because the noble and gallant Lord, Lord Bramall, put the points that I was going to put far more eloquently and with far more experience than I—although it is a pity that the House was prevented from hearing the conclusion of his remarks.

I have one or two further questions for my noble friend the Minister. First, I am not quite sure about the joint forces command. Is this an additional command similar to land, air and fleet? Where will it be located and what kind of operations will it undertake? Secondly, I entirely agree with the noble and gallant Lord about the Defence Board. At present, the balance on the Defence Board is seven civil servants to five military personnel—the chiefs and the Vice Chief of the Defence Staff—and it will be seven to one. That is an extraordinary change in balance. Like the noble and gallant Lords and other noble Lords who have spoken, I wonder whether the Chief of the Defence Staff really can represent the interests of all three services, let alone the interests of the three services in relation to the civil servants.

Thirdly, on the role of the Defence Council, I understand that in law it is not the Defence Board but the Defence Council in which the statutory authority to control defence is vested. I understand that there is no intention to remove the Chiefs of Staff from their place on that.

Lastly, does the Minister think—

[Lord Campbell-Savours]

My Lords, we are about to have a debate to deal with these abuses.

[Baroness Anelay of St Johns]

My Lords, I thank the noble Lord, Lord Campbell-Savours. He is trying to remind us that there is a House full of people wishing to start the next debate. I know that the noble and gallant Lord and others see this change in organisation at the Ministry of Defence as also highly important, but I remind the House that during Statements,

“although brief comments and questions from all quarters of the House are allowed, statements should not be made the occasion for immediate debate”.

I agree with the noble Lord, Lord Campbell-Savours that questions and comments should be brief.

[Viscount Trenchard]

Briefly, my final question is whether the Minister thinks that the fact that the chiefs will spend more time with their services, and presumably in cars going to visit each other, and less time in offices next door to each other will lead to more “jointery” rather than less.

Strategic Defence and Security Review

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Friday 12th November 2010 Lords Chamber

[Viscount Trenchard]

My Lords, I am grateful to my noble friend the Minister for securing this debate and privileged to be able to make a contribution to it, given that my own experience and knowledge of military matters are so limited compared with those of the many noble Lords and noble and gallant Lords who are contributing today.

I firmly believe that the maintenance of excellent Armed Forces is one of the reasons why Britain punches above its weight in the world. This is of inestimable value to our international trade and business and a prime reason, together with our strong and respected diplomatic presence around the world, for the continued prosperity of the City of London.

I spent 11 years representing a British firm in Japan. I always felt comfortable in the support that I derived from our embassy and from the perception of Britain and the kind of country it was as informed in part by my Japanese counterparts’ understanding of our diplomatic and military capabilities. I am certain that this support provides some relative business advantage to British nationals and representatives of British organisations overseas.

More directly, our defence industry comprises a significant part of our diminished manufacturing base. It will be very difficult for us to retain our technological supremacy and market share if our Armed Forces are reduced to the level of those of countries whose overseas interests are on a much more modest scale than ours. It is doubtful that defence exports can entirely make up for cancelled or reduced orders from the MoD. This will undoubtedly threaten our leading defence manufacturers’ position in the market, particularly as their American competitors are now aggressively stepping up their overseas sales efforts.

Surely, if the Government really believe, as they claim in the national security strategy, that,

“the first duty of government remains: the security of our country”,

and given that defence expenditure has already been cut by some 60 per cent as a proportion of GDP since the Falklands War, are there not now compelling reasons to freeze defence spending in proportionate terms?

The national security strategy also tells us that we are a country whose political, economic and cultural authority far exceeds our size. Surely it is therefore necessary to maintain Armed Forces commensurate with that authority in order to avoid depletion. Actually, to argue that we meet NATO's target of 2 per cent, which applies to all NATO members, most of which have many fewer international interests, is misleading. If you strip out the costs of the nuclear deterrent and the operational costs of being in Afghanistan, the future spending on core defence capabilities falls to significantly less than 2 per cent.

Worse than that, I ask my noble friend to tell the House whether he has considered the cost of the destruction of the value of military equipment already owned or purchased. The SDSR shows us that unfortunately defence is less important than deficit reduction. Furthermore, the SDSR also considers expenditure in cash flow terms. If you consider Defence plc to be a company whose shareholders are the taxpayers, the management would have looked at the balance sheet as well and taken much more account of the need to protect shareholder value. Management would surely never contemplate scrapping or selling at a discount valuable assets, quite apart from the loss of capability that results.

The SDSR admits that the resources allocated to defence over the next four years will result in the reduction of some capabilities that are less critical to today's requirements. I ask my noble friend by which criteria he judges that the retention of our ISTAR capabilities are in any way less than critical. Indeed, with changing emphasis in homeland defence and overseas commitments, the Nimrod MRA4 was destined to make a significant contribution to the fight against terrorism. The decision to scrap the Nimrod project is completely incomprehensible and wasteful, as £3.8 billion have been spent on the project to date and the fourth aeroplane out of nine is now being painted. The cost of maintaining the force amount to some £200 million a year and even if we could not afford that, will my noble friend explain why the Government did not decide to put it into a state of extended readiness similar to the second aircraft carrier where the same logic applies?

The destruction of shareholder value of Defence plc resulting from scrapping the project is serious. The serious impairment of our marine surveillance and reconnaissance capabilities that will result from it significantly increase the operational risks faced by our Trident nuclear submarines, our surface fleet, our new aircraft carrier when it eventually enters service, and indeed our merchant fleet.

As for search and rescue, the Government have claimed that the C-130 Hercules can replace the lost capability. That, unfortunately, is not true. The Hercules may be capable of throwing out a 12-man dinghy, but that is all. Does the Minister agree that it is accepted in the MoD that if we lose Nimrod’s capabilities now we will definitely need to recover them in the future and at much higher cost? Does he not agree that it is illogical to ring-fence spending on the nuclear deterrent but to scrap the capability necessary to protect it?

Other decisions that make little sense are the decision to scrap the existing carrier and Harrier early rather than keeping them until the new carriers and the Joint Strike Fighter are ready, and the decision to scrap the Sentinel ground surveillance aircraft after the end of the Afghanistan campaign, although there is at least time to reverse that decision. If it is not essential for us to have these capabilities now, why is it essential for us to replace them?

I congratulate my noble friend on his commitment to reduce waste and improve efficiency and procurement at the MoD. That is very necessary. Finally, I welcome the recognition given in SDSR to the Reserve Forces, which are increasingly integrated with our regular forces and are extremely cost-effective. In particular, the Royal Auxiliary Air Force is already configured around a range of specialist skills, which enables regular squadrons at home and in theatre to fill gaps with experienced reservists possessing the relevant training and skills. I am confident that this model will be endorsed by the forthcoming review of the Reserve Forces.

Time does not allow me to comment on many other points more ably covered by many other noble Lords. While I congratulate my noble friend on having reduced the cuts from the levels initially sought, as the noble and gallant Lord, Lord Boyce, and other noble Lords have said, it has been disingenuously put about that expenditure is being cut by only 7.5 per cent. Real cuts to core capabilities will be much more than this. In short, I join other noble Lords in regretting deeply that the SDSR pays insufficient attention to Britain’s strategic interests and that, if implemented as proposed, it will weaken our ability to continue to punch above our weight in the world, which will damage both the security and prosperity of future generations.