Defence Spending

Clive Betts Excerpts

Tuesday 16th July 2019 Westminster Hall

[Several hon. Members rose—]

[Mr Clive Betts (in the Chair)]

Order. There are slightly more speakers than we had anticipated, so I will introduce a time limit of three minutes to try to get everyone in. We may have a squeeze at the end if people do not follow that.

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[Mr Jones]

No, I will let others make their speeches.

Ministers kept repeating that claim. I kept asking them about it, but never got an explanation. I think it came from a National Audit Office report from 2009 that said that if the equipment budget was flat over the next 10 years, that might get us to £36 billion; if it rose with inflation, it would be about £6 billion in the defence capital budget. The hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) was talking about the two budgets conflated.

We then saw slash and burn, with stupid decisions such as the scrapping of Nimrod and the Harriers, vicious cuts made to people’s pay, and redundancies. That led us to a situation where we have an Army that, at 82,000 personnel, is the smallest it has ever been. No one has yet explained to me how that figure was set.

We are told that the defence budget is rising, but the foundations are shaky. If we look at the 2015 SDSR, we see a huge amount of it is based on billions of pounds of efficiencies that have not yet been and cannot be met. To return to the claim that Labour somehow left a £38 billion black hole, if the situation was so terrible, it is strange that two years in, the right hon. Member for Runnymede and Weybridge (Mr Hammond) eliminated it overnight.

In defence, we need honesty. There is a degree of consensus across the House on the support needed for members of our armed forces and for defence. What we need now is an honest stocktake, looking at our commitments and what we want to do in the world, and ensuring that, as the hon. Member for Berwick-upon-Tweed (Anne-Marie Trevelyan) said, we fund not just the capital side—equipment is important—but the people. I hear all the time that we can do more with more sophisticated equipment, but as any military technician will say, mass and people are still important. We must invest in them over the long term.

[Mr Clive Betts (in the Chair)]

The hon. Gentleman can have an extra minute, because the Front-Bench spokespeople have agreed to take only five minutes, so hon. Members have four minutes each.

[Mr Jones]

I always liked the Minister; he is very good.

Investment in people does not just mean balancing the in-year budget, which I suspect is what has happened. How was money taken straight out of the defence budget in 2010? It happened in two ways: by taking equipment out, as the Government did by putting a wrecking ball through the Nimrod and Harrier programmes; and by slowing the recruitment pipeline. That will lead to problems in future years as people develop and we find that we have capability gaps, not in equipment but in people’s skills, which are important.

Regarding the Conservative party’s commitment to defence expenditure, let us hope that the promises made by the two contenders to become the next Prime Minister hold water. I will support any Government who want to increase spending and, more important, invest in the people we rely on every single day for our peace and security.

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[Dr Lewis]

I had better not, because of time pressure.

Secondly, to coincide with the debate, the Defence Committee has updated its April 2016 report, “Shifting the Goalposts? Defence Expenditure and the 2% pledge”, in which we set defence spending in context. We showed that, while we spent similar amounts on education, defence and health in the mid-1980s, we now spend 2.5 times more on education than defence, and 4 times more on health.

Our latest report, which was published today—HC 2527, for those who are interested—has recalculated the figures for the last few years and brought them up to date. It shows that, in the last three years, we have spent 2.1% on defence, if we calculate it from NATO’s point of view and bring in extra things such as war pensions, which never used to count towards the total. If we exclude them, the new report shows that our like-for-like defence spending is only 1.8%. Is that credible in an age when the profile of the threats we face includes an adversarial Russia and the revival of a terrorist threat in the form of Islamist terrorism? When we compare it with the 1980s, when we regularly spent 4.5% compared with 1.8%, or 5% compared with 2.1%, we can see the shortfall.

[Mr Clive Betts (in the Chair)]

Slightly unusually, if an hon. Member takes an intervention, I will not add on time, because that would push somebody else out at the end and they would not be able to speak.

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[Bill Grant]

I recognise that there has been little or no comment about defence for Scotland from the SNP, but I welcome the investment in Scotland by the Ministry of Defence, not least in my hon. Friend’s constituency.

Finally, in relation to the defence transformation budget of £160 million ring-fenced from the defence budget, I would be grateful to know if the Minister expects the stated possibility of a further £340 million to be raised as part of the spending review.

Our regular servicemen and women, in addition to the reservists who balance a civilian life with commitment to the armed forces, are talented people from a diverse range of backgrounds. They deserve our fullest support. That means investment in our armed forces and those who serve in them.

[Mr Clive Betts (in the Chair)]

We now come to the contributions from the Front Benches. Please do not exceed the guideline of six minutes, as that allows a minute for the mover to wind up.

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[Gerald Jones]

I was not attacking the comments of the candidates for the Conservative party—they are welcome. I was saying that it is galling that they voted for cuts. The Leader of the Opposition has highlighted, as did the last Labour party manifesto, our commitment to a 2% minimum for defence spending, in line with the NATO commitment. He has also said that we cannot do defence on the cheap. He is as committed as our party to spending on defence.

Added to the squeeze on defence spending is the fact that the MOD’s purchasing power has suffered from the fall in the value of sterling after the Brexit vote. Of course, what matters is not just what is spent, but how it is spent. As we debated last Thursday in this Chamber, we need to use the defence pound to support UK prosperity and to back UK defence workers. Labour wants more MOD defence contracts to be awarded here in the UK, and we would like to start with UK-only competition for the fleet solid support ships. As my right hon. Friend the Member for Warley (John Spellar) highlighted, that is a matter of political will. Not only is it vital that we support the UK defence industry to retain our sovereign capability; we also know that investing in the UK leads to additional revenue coming back to the Exchequer in taxation, higher national insurance contributions and lower social security payments—not to mention the value of apprenticeships and spending in the wider economy.

We know from reports by Oxford Economics that the UK defence industry has an output multiplier of 2.3, which means that a £100 million investment in the UK industry generates some £230 million to the UK economy. Its reports have also highlighted the fact that each additional job created in the manufacturing element of the defence industry results in a further 1.8 jobs being created in the wider economy. I am sure that the Minister will want to convey that message to the Treasury. Of course, sufficient levels of defence spending depend on an economy that is growing, so I hope that the Minister will join the Opposition in opposing a harmful no-deal Brexit, which would be damaging to our GDP and would therefore threaten all Government spending, including spending on defence.

[Mr Clive Betts (in the Chair)]

I thank all the Front Benchers for co-operating in reducing the time they take on their speeches.