Defence Spending

Anne-Marie Trevelyan Excerpts

Tuesday 16th July 2019 Westminster Hall

[Anne-Marie Trevelyan (Berwick-upon-Tweed) (Con)]

I beg to move,

That this House has considered defence spending.

It is a pleasure to lead this important debate on defence spending, and to serve under your chairmanship, Mr Betts. I thank the Backbench Business Committee for granting us time to discuss the funding of our nation’s defence at a time when our world is more unstable than ever and detractors wish the western liberal way of life and our values harm.

It is rare for us to be able to discuss money in this place. Today, we must consider what value we place on our nation’s defence, how the huge sums of money allocated to it are used, the interconnectivity of the Foreign Office’s assessment of global instability, our world-class military tacticians’ understanding of how we can protect our citizens and allies, and what we need to have in place to do so. We need to understand why projecting our cultural and economic values and ethos, and promoting Britain’s and our allies’ economic stability and prosperity, is vital.

The question is: is a percentage figure the way to judge whether we are investing enough? We need to look ourselves in the eye and ask why there is so little appetite among politicians to invest properly in defence spending. The issue is simply not in our postbags. The NHS is now in receipt of a huge extra budget of £20 billion a year by 2024. The Prime Minister agreed to such an enormous increase because it was clear from the hundreds of colleagues who spoke up on the matter that their constituents had too much unmet need and that resources needed to be increased. We needed to address old age—that great success story of the NHS—and mental ill health, because we want a healthy and happy population, and we now realise that it makes economic sense. In wishing to improve the lives of our constituents, the Government assessed that a step change in funding was required.

Defence, on the other hand, does not feature in our postbags. Commanding officers are not allowed to talk to MPs about the problems they are experiencing, including a lack of investment in the sites that they manage and resources to support their serving personnel, who have no choice about their location and environment. There is no mechanism to share concerns about kit provision or whether we will be able to sustain a long conflict. Due to secrecy or national security, the politicians who should be speaking up about whether more investment in defence is needed have too few facts to assess the reality of the situation.

[Stephanie Peacock (Barnsley East) (Lab)]

I congratulate the hon. Lady on securing the debate. Does she agree that this is about not just how much money is spent, but where it is spent? The national picture is one thing, but there are huge regional disparities in defence spending. For example, it is just £60 per head in Yorkshire, compared with more than £900 in the south-west. That obviously has a huge impact on the jobs that are supported in the defence industry.

[Anne-Marie Trevelyan]

I thank the hon. Lady for that point. It is important to look at how we spend that investment for UK prosperity. The hon. Member for Plymouth, Sutton and Devonport (Luke Pollard) is nodding—he is thrilled that the south-west is doing particularly well out of the regional disparities. I agree that we need to think about how the funding is allocated.

In the busy life of a constituency MP, it is often too easy to assume that all must be well in our defence investment. Surely no Government would fail to meet their first duty of governing—to protect their people. When budgetary constraints are imposed, our military leaders cannot talk directly to MPs to tell them whether funding is getting to the frontline or into the investment paths that they need to deliver what we ask of them.

[Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)]

I congratulate the hon. Lady on securing the debate. I want to make a technical point about defence spend. We can spend now to save later, but I draw a distinction between capital spend and revenue spend. Everything I have looked at on defence spending in my short two years here suggests that the Ministry of Defence is not being very clever. Going down the capital route, rather than the revenue route, would be much more efficient in the longer term.

[Anne-Marie Trevelyan]

The hon. Gentleman pre-empts some of what I am going to talk about. He is absolutely right.

Our doctors and nurses tell us directly and bluntly if the funding systems for the NHS are not working properly so we can do something about it and advocate for them. However, that is not an option for our defence chiefs, so it is hard for us to know whether their resources would be sustainable and resilient if there were a major crisis. The question is not only whether enough funding is going into our defences but whether we are spending it correctly—a narrative that ran successfully after the strategic defence and security review in 2010, when the country was in dire financial straits and the former Member for Whitney had the unenviable challenge of trying to put it back on to a stable financial footing. SDSR ’10 declared—conveniently, perhaps, to match the financial crisis—that the Ministry of Defence, like other Departments, had to find efficiencies. There is no question but that that was the right thing to do.

[John Spellar (Warley) (Lab)]

First, I resent the use of the word “efficiencies”. Basically, that is Treasury speak for cuts, and it would not face up to that. Secondly, the hon. Lady is clearly under a misapprehension: the country was on a very steady path to reducing the deficit. Owing to the crash-and-burn tactics of Mr George Osborne, we went into a recession, which lessened the revenue coming in, deepened the crisis and worsened the deficit.

[Anne-Marie Trevelyan]

As ever, the right hon. Gentleman is a great defender of his party’s financial position. I would not choose to pick a fight with him, because he is a staunch defender of all matters defence.

[Mr Kevan Jones (North Durham) (Lab)]

I agree with my right hon. Friend the Member for Warley (John Spellar) on the use of the word “efficiency”. It is a fact—there is no reason to hide from it—that the Conservatives in the coalition Government cut the defence budget by 16%.

[Anne-Marie Trevelyan]

I thank the right hon. Gentleman for his comments.

The challenge is that the premise of SDSR ’10 was not just financial; it was that there was no longer an existential threat to the UK. It said that Russia was no longer a nation that we had to watch and fear. That has turned out to be a false premise, if it was ever anything other than an excuse to reduce defence spending. We were told that, owing to the sudden outbreak of global neighbourliness, we could return our Army from Germany. The freedom to move safely around international waters was assured because the middle east had become stable and unthreatening to the 20% of the UK’s energy requirements that travels by sea through the strait of Hormuz, so a reduction in the size of the ageing fleet was a perfectly sensible idea. Global airspace was going to be full of fluffy clouds and rays of sunshine, so there would be less need to patrol the skies or deliver force from the air to those who wish our allies harm, and we could reduce the number of airframes we would need. All that has, perhaps not surprisingly, turned out to be a false premise.

The Government seemed to make a conscious choice conveniently to forget that new equipment, recruitment and high-tech training takes time and money if we are to maintain our military advantage by having the best and most advanced equipment with the best-trained men and women in the world. I am afraid that SDSR ’10 was allowed to set out that false premise due to financial pressures. There was a realignment, as those in post realised that the position that was set out was not right. The work done for SDSR ’15 started to assess more honestly the instabilities across the globe and their risks to UK safety and prosperity, but the cash needed did not follow that strategic assessment.

It is a pleasure to see the Minister for the Armed Forces in his place; it is not him whom I challenge, but our Treasury Ministers. The pertinent question is, after setting out what was eventually understood to be required to meet minimum security risks in SDSR ’15, why have we not funded it properly to get the outputs that we know we need? We must be able to look our constituents in the eye and promise them that we can defend them. This is about not just the level of GDP that we use to invest in a larger force, but whether we are meeting future need.

In SDSR ’10, the MOD declared that we should reduce RAF aircraft numbers substantially while pushing forward with the aircraft carrier class of warship, but by SDSR ’15, those decisions had evidently proved incompatible, given that we need to increase aircraft numbers once again. We need to think holistically about transformation—the time it takes, the training requirements to achieve it and the best value-for-money methodology for doing it. As the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) said, that is the invest-to-save model, and the Treasury needs to help the Department. Short-term decisions for annualised cash-flow rules simply do not work for our defence programme and produce an output that meets our defence needs or our value-for-money rules.

[John Woodcock (Barrow and Furness) (Ind)]

The hon. Lady is making an excellent speech, and I congratulate her on securing this debate. Her point about through-life costs is very powerful. Does she agree that there should be more scrutiny—possibly independent—of the increase to the overall cost of projects caused by changes early in the cycle? I am, of course, thinking of the decision to delay the vote on renewing the deterrent submarines, which has added a significant amount of risk and cost to the project. Many of us said that to the Government at the time, but there was no ability to assess independently what the increased costs would be.

[Anne-Marie Trevelyan]

The hon. Gentleman’s point is well made. I will refer to submarines later. We need to challenge the Department continually on whether Committees such as the Defence Committee and the Public Accounts Committee, on which I sit, have the tools to look pre-emptively at the risks of those sorts of decisions.

There is also a mantra that technology is changing how we do everything and that it will, as if by magic, solve all challenges. It is implied that it will make everything cheaper, and that we can stop doing things the old way because there will be a whizzy, less manpower-hungry solution. Although it is true that world-leading UK defence businesses are creating extraordinary cutting-edge kit, that is not the only tool for solving our defence challenges. From Florence Nightingale and her medical advances to Alan Turing, the urgent need to gain advantage over the enemy has always brought out the brilliance of our citizens’ inventive genes. Defence has always been at the forefront of innovation because defence in action stretches human ingenuity under the insane pressures of war.

[John Spellar]

I congratulate the hon. Lady on her excellent speech. However, for industry to be able to respond, there needs to be an industry. That requires the British armed forces and the Treasury to put orders into British factories and British yards, rather than applying a model of international competition that takes no account of the prosperity agenda and no account of the long-term sustainability of the defence industry and its ability to innovate.

[Anne-Marie Trevelyan]

That question of sovereignty and the prosperity agenda—the third pillar of defence’s remit—is one we need to continue to challenge. As a Brexiteer, I am happy to say that I think we will have more authority to speak in how we choose to do that—

[John Spellar]

That’s not true.

[Anne-Marie Trevelyan]

Well, that is my opinion. Leaving the EU will give us more flexibility to bring the various parties together and will enable UK businesses, which are world leading, to make their case as effectively as possible.

[John Spellar]

The hon. Lady should not allow herself to be misled by Treasury-speak. In both European regulations and the Treasury Green Book, the Ministry of Defence has all the tools it needs to support British industry. The problem is a lack of will. It does not help to blame the EU. The problems are in Whitehall, not in Brussels.

[Anne-Marie Trevelyan]

I thank the right hon. Gentleman. The Minister will have heard his perspective.

One of the key issues for defence is its people, who are flexible, selfless, uncomplaining and serve willingly—indeed, alongside the Minister, who puts his life on the line to serve his country. Equipment changes constantly—if it did not, we would still be sending our Navy to sea under sail—but the quality of our people is always critical. We spend more than a third of our defence budget on people. I say that that is an investment, since they are highly trained and we invest in their training throughout their careers, in a way almost no other employer does. However, we classify them as a cost, so departmental behaviour fails to look after them—our human capital—as assets.

We would not fail to repaint a warship—clearly, that would make her less seaworthy or less capable of dealing with the scars of battle—yet we are perfectly content to fail to invest in the personnel who serve, by not looking after their families and by failing to demonstrate what the armed forces covenant should mean: that if someone has served or is serving, this country genuinely thinks they and their family should not suffer disadvantage. It is imperative that we change the financial models the MOD is allowed to use so that our human capital can be classified as an asset. Service chiefs cannot determine how to reward their personnel, because they are not allowed to use their budgets freely to maximise the benefit to their people and their service. For small change—in both senses of the word—the behavioural changes achieved by flexibility would be substantial and immediate.

I believe the reason change is not happening is that the Department and the Treasury fail to understand the nature of military preparedness, and do not seem to question our resilience if we need to put our military under pressure. Although we put kit that is small, plentiful, cheap and speedy to resource on to the soldier, we put highly skilled men and women, who take years to train, into equipment in the Royal Navy and the RAF that takes years to build. A modern warship or fast jet cannot be whipped up in a few months. It is at the mercy of international supply chains, the risks of which, as the right hon. Member for Warley (John Spellar) mentioned, perhaps are not properly understood.

Importantly, that equipment would take a long time to replace if lost. Although bullets for small arms can be produced at speed if necessary, the missiles sustaining our warships and Air Force cannot be churned through a production line at speed if they are suddenly required. Training a submarine commanding officer or fast jet pilot takes years of investment—it takes time. Too often, it feels like the Department’s financial models simply refuse to acknowledge that and fail to understand the human capital investment that is being made, leaving us with huge risk from poorly assessed decisions.

We must consider the key tenets of successful defence and assess whether we are investing enough to sustain them. The first is deterrence. Deterrence works. Nuclear is the ultimate deterrent, but we must never forget that conventional deterrence has greater utility and that strong power generates respect. Let us consider for a moment our nuclear deterrent in its 50th year in our Royal Navy. Our continuous at-sea deterrent is an extraordinary feat. I always refer to it as our best weapon of peace, because the threat of nuclear war has ensured that we have had no more global wars. Humanity understands genuine existential threat, and the CASD is the embodiment of the UK and USA’s global policing, which reminds any rogue state why using a nuclear weapon would be a bad decision. But do we invest properly in our submarine service?

[John Woodcock]

indicated dissent.

[Anne-Marie Trevelyan]

The hon. Gentleman shakes his head violently. I have talked about the CASD repeatedly in the House since I was elected in 2015. It strikes me as bizarre that the long-term nature of that critical weapon of peace is stuck in a funding framework that stubbornly refuses to allow long-term planning and flexible funding. All credit to the former Secretary of State for Defence, my right hon. Friend the Member for South Staffordshire (Gavin Williamson), for persuading the Treasury last year to bring forward £600 million of funding—not additional funding but simply to reduce future financial risk—to assist in making efficient decisions to move the Dreadnought programme forward a little more effectively. Deferred cost is always increased cost. I speak as an accountant who has done this many times.

[Mr Kevan Jones]

The money the hon. Lady refers to was already in the contingency budget. Does she agree that the delay under the coalition Government in making a decision to build the Dreadnought class of submarines not only delayed the programme but added cost to it?

[Anne-Marie Trevelyan]

I agree completely. Deferred cost will always be increased cost in such big projects. We need more financial flexibility to get better value for money. Why did we have to battle so hard last year to get the Treasury to move on that £600 million? Why is the Treasury not doing its long-term cash-flow thinking in a rational way? If we are going to keep the CASD—there is overwhelming support for that across the House and the nation—it would make financial sense to allow a multi-year rolling financial commitment so Ministers can make rational decisions.

[John Woodcock]

The hon. Lady is making a superb case. Is there not a case for going so far as to make good on the commitments, which have been made at various points of the successor programme but then conveniently forgotten when there have been changes of personnel, to properly insulate the programme and remove it from the conventional defence budget? That would allow it to be managed as a proper long-term national endeavour capital commitment, rather than being subject to the in-year in and out of defence spending on other programmes.

[Anne-Marie Trevelyan]

I completely agree. Both I and the hon. Gentleman have pushed that campaign. I would not dare to suggest that I want another general election in a hurry, but we attempted to put that in the Conservative manifesto at the last election to bring about a change. I will continue to do that as and when the appropriate moment arises.

The hon. Gentleman is absolutely right: the MOD is not like any other Department of State. It has these 20-year programmes, which should be funded in a different way—a more intelligent and stable way. We need to get the Treasury to hear us and realise that the financial models need to be separate so that, exactly as he says, those programmes are treated as national endeavours. In the same way we funded Crossrail through a separate fund so it could roll forward as effectively as possible, despite the often challenging technical issues as we create state-of-the-art kit, we should give those working on these programmes the best financial framework to work within.

[Mr Paul Sweeney (Glasgow North East) (Lab/Co-op)]

The hon. Lady is making a very effective case for multi-year spending and the need to reappraise entirely the Green Book principles. Does she agree that, in this instance, the restrictions on multi-year spending for programmes—particularly the Type 26—put at risk our sovereign capabilities, such as the electric motors factory in Rugby, which manufactures critical components for anti-submarine frigates? That may have been lost had the MOD not responded. We cannot continue to fight a war of attrition; we need a strategic approach.

[Anne-Marie Trevelyan]

I completely agree. We must continue to hammer home the importance of sovereign capability and work with industry to build opportunities. I say again, despite the criticism of the right hon. Member for Warley, that there will be opportunities once we have left the European Union to think more coherently than we have before—I think we have chosen not to do that—and for us parliamentarians to challenge the system more aggressively on the question of what sovereign capability should look like in the long term. Getting our shipbuilding strategy right will be critical to ensuring that we have throughput of work and know that, if we get into times of crisis, we have the supply chain we need within our borders.

[David Simpson (Upper Bann) (DUP)]

Some time ago in her speech, the hon. Lady mentioned the Army covenant. I am sure she agrees it is vital that the covenant is implemented in full to servicemen and women in Northern Ireland. Doing so may cost a little more money, but the benefit to those people suffering from post-traumatic stress and mental health issues far outstretches that.

[Anne-Marie Trevelyan]

I absolutely agree. In my role as chairman of the all-party parliamentary group on the armed forces covenant, I have spent some time in Northern Ireland, where we have some real challenges at the grassroots level—not the political level—to try to help those who need day-to-day support to look after themselves. I have met some extraordinary women and extraordinary wives—I take the opportunity to say they are extraordinary—who are looking after very damaged former soldiers, some of whom are the hon. Gentleman’s constituents. They deserve all credit.

The world is not a safer place, and while the nature of warfare may be changing, at the end of the day we need to be able to reach wherever the threat is, bearing in mind that, as my son always reminds me, five sevenths of the globe are covered in water. Ships are therefore a critical tool, and our shipbuilding strategy must reflect the importance we play as a United Kingdom, and a critical part of NATO.

The key point is that presence is influence, and with influence come positive outcomes. We cannot do deterrence if we are not there. We saw that demonstrated in stark images on our TV screens last week when HMS Montrose in the strait of Hormuz assured the safe passage of a BP tanker, protecting it from the insurgent threat of Iranian military attack. If Montrose had not been there, I dread to think what might have happened. Freedom of navigation around the world’s seas and oceans is critical to our economy: 95% of all our imports come by sea, and it is NATO’s navies that keep the sea lanes open for commercial traffic. We would all be very cross indeed and notice quickly if Felixstowe or Dover were shut down by enemy attack. In the same way, just because we cannot see the huge areas of oceans from which our goods and energy are being brought to us, that does not mean we should forget that we need to police those waters, too.

[Jamie Stone]

What the hon. Lady is saying about the Royal Navy is music to my ears. I look forward to participating in the armed forces scheme next year.

The F-35 is a splendid aircraft that I fully support us buying from the Americans, but the bitter fact is that, as we all know, we will never own all the intellectual property of that aircraft. We will never know exactly how it works because of security aspects. Why should the Americans tell us? That is one reason why keeping manufacture here in the British Isles as much as we can is crucial. Only if we make it, or do so in partnership with others, will we know everything there is to know, with that information being secure.

[Anne-Marie Trevelyan]

The hon. Gentleman’s point is well made.

The question today is defence spending. Let me therefore share with the House the assessment the Public Accounts Committee made of the latest equipment plan:

“In May 2018 we reported that the Ministry of Defence…did not have enough money to buy and support the equipment it needs.”

Bear in mind that buying is 50% and supporting is 50%. Our report continued:

“the Department has made little progress, continuing to delay the difficult decisions needed to make the Equipment Plan…affordable, particularly around which programmes to stop, delay or scale back. It now estimates a most likely affordability gap…of £7 billion across its Plan… It also estimates that the gap could widen to £14.8 billion, but even this looks to be unlikely and overly optimistic. The escalating and continuing affordability issues have led to short-term decision making which has only worsened the longer-term affordability risks.”

We continue to watch that on the Public Accounts Committee, but the sense of anxiety just builds as we keep seeing a lack of change in policy frameworks. Instability across the globe is increasing, so if we do not build the equipment we need to achieve our SDSR ’15 goals, let alone what those in SDSR ’20 might look like, we will simply not be able to meet politicians’ requirements.

Politics is about making choices and we need to think carefully about this one. Our military will always offer their political masters choices and solutions as required, but they may have to bend themselves out of shape with collateral damage, gaps and risks elsewhere in order to do so. I do not believe that we can expect them to do so if we, the politicians, do not give them the funds they need to meet at least the SDSR ’15 asks. If we do not show confidence in our military personnel with, in the scheme of things, a very small amount of cash investment in human capital, which is utterly vital to success in warfare, we will continue to lose too many people who have been willing to commit their lives to defending us and our families.

We must not leave our armed forces with the impossible decision of robbing Peter to pay Paul. Short-term decisions on finances can have long-term implications on recruitment, retention and equipment capability and availability. Defence is an insurance policy, so if we get our deterrence right, it stops wars and attacks on us or our allies. That is success, but it costs to achieve that, and it is invisible. No soldiers on our TV screens battling in the desert does not mean that we are not maintaining a global presence to deter those who would wish us and our allies harm. Military personnel are defending us and our way of life invisibly 24 hours a day.

We all have house insurance not because we expect our homes to burn down, but because a roof over our family’s head is so important that we plan to protect ourselves just in case. Our armed forces are our nation’s “just in case.” I worry about how our political leaders sleep soundly at night thinking that we have only a budget insurance policy and hoping that we will never have to claim on it. The budget is large at £40 billion a year, but, without the right decisions and an acceptance that that is not quite enough for what is needed to keep us all safe, the shortfall in funding and financial frameworks leaves us horribly exposed to unknown threats.

We must bring the defence budget up at least to the point where the political ambitions set out in our own SDSRs are matched by the funding for our military experts to deliver those for us. To do that, I estimate we need an increase of some £4 billion a year to the budget and, equally importantly, flexibility to fund long-term projects intelligently for best value and speediest output. It cannot be right that we allow our military personnel to be put at greater risk than they need to be by failing to invest properly in our Army, Navy and Air Force.

I do not mind if the Treasury wants to invest more because it is morally the right thing to do to ensure we can protect our people, our trade and our allies, or simply because it is the right financial method to make better use of taxpayers’ money over the long term to get real value for money. If the financial models set out in the Green Book do not deliver that, we should change them so that they do.

We are in charge of our country’s destiny and we can set the framework to maximise the positive outcomes for this great nation of ours, which is respected around the world for its military prowess and its people. I thank the Minister for his loyal support of our armed forces, and I hope that the Treasury is listening.

[Several hon. Members rose—]

--- Later in debate ---

[Anne-Marie Trevelyan]

I thank all colleagues and the Minister for their continuing commitment to the armed forces and for speaking out so that those who have no voice of their own know that many of us in the House understand the incredibly difficult role they play in our defence. As my hon. Friend the Member for Ayr, Carrick and Cumnock (Bill Grant) said, they run towards danger as most of us are running away from it. It is extraordinary that there are people willing to do that—as he did as a fireman—in defence of our nation, security and children. The issue is not a percentage figure; it is about making sure we can meet the operational requirements, whatever problems arise.

As ever, I thank the Minister for his support and his willingness humbly to agree that it is the Treasury we need to continue to fight. We will find a way, as the hon. Member for Glasgow South (Stewart Malcolm McDonald) said, to bring the Treasury to us to listen to the arguments. I think we all agree that funding for defence is not like funding for any public service Department and we must find new, more effective ways to spend taxpayers’ money.

Question put and agreed to.

Resolved,

That this House has considered defence spending.