Integrated Review: Update

Baroness Smith of Newnham Excerpts

Tuesday 31st January 2023 Lords Chamber

[Baroness Goldie (Con)]

My noble friend will have heard me say to the noble Lord, Lord Coaker, that neither I nor my ministerial colleagues deny that a challenge has confronted our land capability—a challenge spread over many years and created under successive Governments. We are cognisant of that and are doing what we can within the MoD to address it.

[Baroness Smith of Newnham (LD)]

My Lords, following a theme that has been echoing around the Chamber, will the Minister say what assessment the MoD and His Majesty’s Government have made of the fact that the IMF is predicting a recession in the United Kingdom? Given the nature of inflation and the unpredictability of the exchange rate, what impact is there likely to be on defence capabilities? In the light of all those things, is it not time to move beyond percentages of GDP as targets for defence expenditure and towards a real focus on actual capability and what the UK can deliver?

[Baroness Goldie (Con)]

The noble Baroness will be aware that a percentage of GDP is the model that has been adopted increasingly by other states in consequence of the approach that the United Kingdom has taken to defence expenditure. In relation to current expenditure, the noble Baroness is right that we face challenges of inflation and fluctuating currency, but we have been able to make greater use of index-linked fixed price contracts, and we use pricing mechanisms where inflation risk sits with suppliers. Indeed, that has prevented higher prices being passed on. We also have forward purchasing of fuels, utilities and foreign exchange—all of which mitigates the corrosive impact of inflationary pressures.