Strategic Defence and Security Review

Debate between Dai Havard and Liam Fox

Monday 21st June 2010 Commons Chamber

[Dr Fox]

The value-for-money study on Trident has begun, as has the SDSR, and it will be concluded long before the SDSR. I hope that it will be concluded before the summer recess.

I want to be as open as I can about the backdrop to the SDSR. To take one aspect, the defence budget itself, the future programme is entirely unaffordable, especially if we try to do what we will need to do in future while simultaneously doing everything in the way that we do it today. The legacy that the new Government have inherited means that even if defence spending kept pace with inflation, we would face a deficit of many billions of pounds over the life of this Parliament and more over the next decade. To make things worse, there are additional systemic pressures on the defence budget that exacerbate the situation, including the trend of pay increases above inflation. The previous Government’s approach was too often characterised by delay-to-spend rather than invest-to-save. The decision to slow the rate of the Queen Elizabeth class carriers in 2009, for example, increased the overall costs by more than £600 million at a stroke.

The bottom line is this: no matter how hard we bear down on the costs of administration and drive up efficiency, we cannot expect to bridge the gap by those means alone. The problem is structural, so the response must be structural to put defence on a stable footing. The Ministry of Defence, as a Department of State, must itself face wide-ranging reform. We intend to reorganise the whole organisation into three pillars: first, strategy and policy; secondly, the armed forces; and thirdly, procurement and estates. We intend to create a more efficient and leaner centre, in which everyone knows what they are responsible for and to whom they are accountable, with clear deadlines and budgetary discipline. Major reform of our procurement practices will be accompanied by a number of industrial consultations that I will shortly outline to Parliament.

As much as structural reform is required, however, I am equally determined that the armed forces be reconfigured to meet the needs of the evolving security environment and satisfy the expectations of this country. Although the SDSR is necessarily financially aware, it is policy-based, and I wish to set that policy out to the House.

[Mr Dai Havard (Merthyr Tydfil and Rhymney) (Lab)]

I apologise for interrupting now, because what the Secretary of State has just said is hugely important, but may I go back to what he said about the review of the deterrent? May we be clear that the financial review of the nuclear deterrent is due to take place before the recess, that it is a one-off activity and that it will not be part of a continuing review at each of the various stages of the programme that has been outlined, including the main gate stage? Will the Secretary of State clarify that point?

[Dr Fox]

As part of the coalition agreement, we agreed that we would have a value-for-money study to examine the costs of the programme and see where we could achieve better value within it. That is the process that is now ongoing.

The Foreign Secretary has set out the new Government’s distinctive British foreign policy, which has at its heart the pursuit and defence of UK interests and a recognition that our prosperity and security is bound up with that of others. That will require the enhancement of diplomatic relations with key partners, using Britain’s unique network of friendships, bonds and alliances and working bilaterally as well as multilaterally. That does not mean that we must be able to do all things at all times. We will need to be smarter about when and how we deploy power, which tasks we can undertake in alliance with others, and what capabilities we will need as a result. That must be based on a hard-headed assessment of the current security environment and the growing threats to peace and stability.

We live in a period in which direct military threats to UK territory are low, but in which the wider risks to our interests and way of life are growing. Over the coming decades, we could face weak or failing states creating new focal points for exportable Islamist terrorism that threatens our citizens and our allies, as we have seen in Yemen and Somalia. We could also face a nuclear-capable or nuclear-armed Iran destabilising Shi’a-Sunni and Arab-Persian fault lines, as well as those with Israel and the rest of the world. That could create an uncontrollable cycle of nuclear proliferation and, at worst, the erosion of the post-Hiroshima taboo against nuclear use by both Governments and terrorists. Elsewhere, we could see the emergence of old or new regional powers and the return of state-versus-state competition and confrontation. More immediately, competition for energy and other resources, including fresh water, could take on a military nature.

It is conceivable that we will negotiate the next half century without confronting any of those risks—I certainly hope so—but it is equally possible that the UK could face security policy decisions relating to any or all such risks during the course of the next Parliament. That is the reality of the world in which we live, and we must break away from the recent habit of planning for the best-case scenario and then hoping the worst never happens. Unlike what happened during the cold war, we cannot be confident about how and how quickly such trends may evolve. I shall therefore conduct a thorough stocktake of our contingency plans in the months ahead.

Of course, responding to such events would not be for Britain alone. Britain’s relationship with the United States will remain critical for our national security; it is the UK’s most important and prized strategic relationship.