Oral Answers to Questions
Debate between Gerald Howarth and Philip Dunne(8 years, 4 months ago)
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Mr Dunne
We have adopted the Government’s policy to ensure that defence contractors make all steel procurement opportunities available to UK producers. The amount of steel expected to be available for tender for future work is much reduced, because the most substantial amounts have been in the aircraft carrier programme and we will not be building vessels as big as that for the foreseeable future.
Sir Gerald Howarth (Aldershot) (Con)
I warmly welcome the Government’s commitment to spend at least 2% of GDP on defence, but will my hon. Friend confirm that this year and next there will be no increase in cash terms, and assure me that we will not find ourselves in the same situation as we did this year, where in order to meet our 2% commitment money was transferred to the Ministry of Defence from other Departments?
Oral Answers to Questions
Debate between Gerald Howarth and Philip Dunne(8 years, 7 months ago)
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Mr Dunne
The hon. Lady is very experienced in these matters, and she will know that, in 2010, the then coalition Government inherited a dire financial situation across the public sector, and especially in defence, and some very difficult decisions had to be taken to reduce certain front-line elements, including our aircraft carriers. She is also fully aware that we are in the midst of the largest shipbuilding programme that this country has ever known. Early next year, we expect to see the first of the Queen Elizabeth-class aircraft carriers moved out of Rosyth to take up their position with the Royal Navy.
Sir Gerald Howarth (Aldershot) (Con)
I proposed a private Member’s Bill last year requiring the Government to enshrine in law that we spend at least 2% of GDP on defence. May I welcome today’s announcement and hope that the hon. Member for Denton and Reddish (Andrew Gwynne) is wrong and that this really does represent new money? May I also take this opportunity to congratulate my hon. Friend on the important work that he has done, under the lead of the Prime Minister, in promoting defence exports, and to welcome the 24 Typhoons that have been sold to Kuwait and hope that that will contribute to the Ministry of Defence’s budget?
Oral Answers to Questions
Debate between Gerald Howarth and Philip Dunne(8 years, 10 months ago)
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Mr Dunne
The hon. Gentleman will be interested in the statement relating to Government measures in connection with British steel that will immediately follow this Question Time. Clearly, we are keen to ensure that British manufacturers have an opportunity to compete for defence contracts with significant steel components, and that will continue to be the case.
Sir Gerald Howarth (Aldershot) (Con)
Last Thursday I had the great pleasure of accompanying my hon. Friend the Minister for Defence Procurement when he visited the UK Defence Solutions Centre at Farnborough in my constituency. May I salute this innovation by my hon. Friend? The centre is doing fantastic work in assessing Britain’s defence needs as well as new technological opportunities, and in that context, will he give serious thought to continuing the Ministry of Defence’s support for Zephyr, the high-altitude record holder, which has fantastic surveillance capability, the technology for which my great and late friend Chris Kelleher did so much to develop?
Oral Answers to Questions
Debate between Gerald Howarth and Philip Dunne(8 years, 12 months ago)
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Mr Dunne
As with all major defence equipment programmes, the contractors determine the materials, which includes sourcing steel on the basis of competitive cost, time and quality. In 2010, no UK steel manufacturer was able to meet the prime contractor’s requirements, so no UK bids to supply steel for the Ajax programme were forthcoming. I can confirm for the hon. Gentleman, who takes a great deal of interest in this matter because the Ajax vehicles, after the 100th vehicle, will be assembled in Merthyr Tydfil, next to his constituency, that some 2,700 tonnes of steel—about 30% of the total requirement —remains open to competition, and that a competition is under way to supply sets of training armour that is open to applications from UK firms.
Sir Gerald Howarth (Aldershot) (Con)
A number of colleagues and I visited our magnificent new aircraft carriers in Rosyth last week. It was therefore with some interest that we learned this morning that the Government apparently intend to order a large number of joint strike fighters to equip not only those aircraft carriers, but the Royal Air Force. Will my hon. Friend confirm the truth about that substantial increase in our fighting capability?
Defence Expenditure (NATO Target) Bill
Debate between Gerald Howarth and Philip Dunne(9 years, 1 month ago)
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The Minister for Defence Procurement (Mr Philip Dunne)
It is a great pleasure to conclude this debate, and I congratulate my hon. Friend the Member for Aldershot (Sir Gerald Howarth)—a predecessor in my Department—on his commitment to defence. That commitment is well known not just in this House but to every citizen of Aldershot, whether they vote for him or not, and not least by the Royal Air Force, with which he spends a great deal of his time outside this Chamber. His commitment is much appreciated by all those who come across him.
My hon. Friend’s commitment to this Bill is in no doubt, and although the Government may have issues about legislating for such a commitment, we have none whatever with the intent to ensure that the country makes a full contribution to meeting our NATO pledges. Having secured such an elevated status in the ballot for private Members’ Bills, he chose defence as his topic, and we all owe him a debt of gratitude for the opportunity to hold this debate, even if we are not all in wholehearted agreement with the precise wording of his Bill—despite that, most of the people who have spoken thus far would appear to be.
The Government fully support the objective of spending 2% of GDP on defence and we are delivering on that, but I have some reservations that I will set out in my remarks. My hon. Friend’s desire to legislate for Government spending on defence to constitute no less than 2% of gross domestic product is founded on admirable intent, and reflects a sense of the absolute importance that we place on that guideline. It is yet another reminder of the Chancellor’s announcement in the July Budget that we will not only meet the NATO guideline to spend 2% of GDP on defence this year, but we will meet it each year for the rest of this Parliament.
In July the Chancellor also confirmed that our budget will rise by 0.5% above inflation until 2021, and that up to £1.5 billion will be made available by the end of this Parliament for the armed forces and the security and intelligence agencies to bid into. Those combinations, which I will touch on later, make us confident that we will meet the 2% target, which some hon. Members have questioned.
Sir Gerald Howarth
On the joint security fund, will the Minister explain how we get to £1.5 billion? Will there be a progressive increase, and what does he anticipate the bidding process will be?
Mr Dunne
My hon. Friend tempts me to venture into the inner workings of the comprehensive spending review that is being conducted by my hon. Friends in the Treasury, but he will not have too long to wait before we get a proper and comprehensive answer to his question. The profiling and allocation of the fund will be determined through the spending review and the strategic defence and security review, and all will be revealed before the end of the year. I am sure that he will scrutinise it with considerable interest.
Let me look briefly back in history and remind hon. Members about the origins of the 2% GDP guideline, which was a question raised by my hon. Friend the Member for Gainsborough (Sir Edward Leigh). The target was first found in NATO resource guidance during the cold war, and it underlined the political and military need
“to improve NATO’s conventional defence capabilities in relation to those of the Warsaw Pact in order to narrow the gap and reduce dependence on the early recourse to nuclear weapons.”
It stressed:
“Those nations which have not met it in the past should make every effort to do so in the future.”
When that ambition was set, the reasons for the guidance were self-evident. I am not the oldest Member in the Chamber. I was born in 1958, and that frames my recollections of the later stages of the cold war in the 1970s and 1980s. One or two Members might be able to go back a decade before that, but very few—with the possible exception of the Leader of the Opposition—could go back to the origins of the cold war in the 1950s. Those who lived through those dark times have not forgotten what it was like, with armies of the east and west facing off against each other, and the ever-present fear of not just conventional war, but a potential nuclear attack.
After the fall of the Berlin wall in 1989 and the downfall of the Soviet Union, attitudes to defence spending changed. Nations—including this one—spoke of a peace dividend, and chose to channel defence spending into social programmes rather than military hardware. Yet more recently, nations have begun to redress that position. In 2006 the then United States Ambassador to NATO, Victoria Nuland, referred to 2% as the “unofficial floor” on defence spending in NATO. One month later at the NATO summit in Riga, further comprehensive political guidance helped to redefine the role of the alliance, and 2% became a genuine aspiration. Despite that, the likelihood of reversing the downward trajectory of defence spending seemed remote until last year when, at the NATO summit in Wales, and as we faced the greatest crises since the end of the cold war, nations finally agreed to raise the profile of the 2% pledge to make it meaningful.
I am sure that Conservative Members at least will remember the Prime Minister standing shoulder to shoulder with President Obama at Celtic Manor in Wales last year, urging all 28 nations to step up to the plate, and signing a landmark declaration. It might be helpful to the House if I remind hon. Members of exactly what was said—I hope that you will indulge a longish quote, Madam Deputy Speaker. It was declared:
“We agree to reverse the trend of declining defence budgets, to make the most effective use of our funds and to further a more balanced sharing of costs and responsibilities. Our overall security and defence depend both on how much we spend and how we spend it. Increased investments should be directed towards meeting our capability priorities, and Allies also need to display the political will to provide required capabilities and deploy forces when they are needed. A strong defence industry across the Alliance, including a stronger defence industry in Europe…and across the Atlantic, remains essential for delivering the required capabilities. NATO and EU efforts to strengthen defence capabilities are complementary. Taking current commitments into account, we are guided by the following considerations:
Allies currently meeting the NATO guideline to spend a minimum of 2% of their Gross Domestic Product (GDP) on defence will aim to continue to do so. Likewise, Allies spending more than 20% of their defence budgets on major equipment, including related Research & Development, will continue to do so…Allies whose current proportion of GDP spent on defence is below this level will halt any decline in defence expenditure; aim to increase defence expenditure in real terms as GDP grows; aim to move towards the 2% guideline within a decade with a view to meeting their NATO Capability Targets and filling NATO’s capability shortfalls
Allies who currently spend less than 20% of their annual defence spending on major new equipment, including related Research & Development, will aim, within a decade, to increase their annual investments to 20% or more of total defence expenditures. All Allies will ensure that their land, air and maritime forces meet NATO agreed guidelines for deployability and sustainability and other agreed output metrics and ensure that their armed forces can operate together effectively, including through the implementation of agreed NATO standards and doctrines…Allies will review national progress annually, and that will be discussed at future defence ministerial meetings and reviewed by heads of state and government at future summits.”
Mr Dunne
I am grateful for that suggestion, and will happily take it up with Lockheed Martin, who I believe organised the event, to establish whether it would be willing to repeat it. On the issue of prosperity, I can give my right hon. Friend another sneak preview ahead of publication of the SDSR, in that there is likely to be a theme coursing through that document of how much defence contributes to our economy and the nation’s prosperity.
Sir Gerald Howarth
I would like to endorse what my right hon. Friend the Member for New Forest East (Dr Lewis) said about the F-35 cockpit simulator. I had a chance as a pilot to have a look at it, and I have to say that it was extremely impressive. I agree that that should be made available to more Members because this is going to be a very important programme in the Royal Air Force agenda and in the defence of the United Kingdom.
Mr Dunne
I am grateful for that endorsement. I completely agree with my right hon. and hon. Friends that the UK as a tier 1 partner has a unique role to play in the development of this programme over decades to come. It is the single largest defence programme in the world ever—in value terms, although that may be as much to do with inflation as anything else. We have a 15% share in the manufacture in this country of each and every one of those platforms as they come into service in air forces around the world. The contribution it will make to sustaining the vibrancy of our defence industry cannot be overstated.
Mr Dunne
I am delighted to welcome the hon. Gentleman’s intervention, and I am sure his Front-Bench colleague, the hon. Member for York Central will be as pleased to see him here supporting her. I am amused by his reference to what President Reagan said. In answer to his question, I should say that we are already delivering. It is important that we should deliver in a transparent way and I shall come during my concluding remarks to highlight the visibility of the 2% commitment to NATO and how it is assessed.
The defence budget, alongside other departmental budgets, is already approved by Parliament through the estimates process. I was highlighting some of Parliament’s other means of scrutinising defence spending and the proportion of Government revenues spent on defence. The Treasury is content that the estimates process is sufficient for setting in-year budgets. It is our strong view that the Government must safeguard their ability to retain financial flexibility to set forward budgets in line with the policy priorities of the day. The Bill would reduce the financial flexibility available to any Government of the day to set forward budgets in line with policy priorities.
Hon. Members are expecting me to conclude my opening observations. I will cite a quotation from a bit earlier than President Reagan’s. Winston Churchill said:
“Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.”
I shall take a few moments to respond to questions posed by my hon. Friend the Member for Aldershot about definitions. The definitions that we have used to meet our NATO spending commitment are not ours, but NATO’s. From time to time, like all member states, we make updates to ensure that we categorise defence spending fully in accordance with NATO’s guidelines. That is important, not least because it helps NATO compare like for like across the alliance.
I have touched on two aspects from the summer Budget that will help us meet those targets. The Chancellor announced two increases in defence budgets for the coming years of this Parliament. First, there was the 0.5% real- terms increase each year, and secondly, the opportunity to bid into a new joint security fund, alongside security agencies, that would reach £1.5 billion in 2019-20. My hon. Friend asked how much of that the MOD could secure to include within the 2% calculation. I am afraid that I cannot give him the answer today, but I can tell him that, as I said in reply to an intervention, the profiling and allocation of the fund are decisions for the SDSR so we will know before too long. However, we will be able to include within the definition the share of the fund secured by defence in our submission to NATO, although we cannot tell what the proportion will be until we know what is in the fund.[Official Report, 29 October 2015, Vol. 601, c. 1MC.]
Our 2015-16 NATO return included some categories of expenditure that we had not included in previous returns. I should like to address that issue, which goes to the heart of a concern behind the debate today. One of the items was MOD-generated income. I should like to explain what that is. The defence budget, £34.6 billion this year, is provided by the Exchequer to the Department; it is our core budget. In addition to that, the Department has for many years generated income that has not previously been declared to NATO although it is entirely legitimate to declare it because it is extra money spent on defence.
I draw my hon. Friend’s attention to the MOD’s annual report and accounts; I am sure he is one of the few Members to read it avidly each year. I happen to have the accounts for the year 2014-15 in front of me. In that year, the MOD generated just over £1.3 billion of its own income, as is clearly shown on page 143, table 6 of the report. That includes, for example, receipts from renting housing out to military personnel. Those living in married quarters pay for that benefit and we use the cash that comes into our coffers to spend on defence outputs. I am sure my hon. Friend would agree that it is legitimate to include that money in our returns to NATO.
Sir Gerald Howarth
I am grateful to my hon. Friend for his reference to the MOD’s accounts. He kindly suggested that I might understand those accounts, but I have yet to meet anybody who can, save for Mr James Elder—the only man I know who does. They are the most opaque documents imaginable.
I say with respect to my hon. Friend that the point is that we now classify a number of items as defence expenditure that hitherto we have not. It just happens that, lo and behold, including those items means we meet the 2%. Without them we do not. My hon. Friend owes it to the House to explain why those items have suddenly been included when previously they were not. It might help if he told us when the formula was last changed in that way.
Mr Dunne
I have sympathy with my hon. Friend’s comment about the accounts, which are just short of 200 pages long. But there are some helpful guideposts through them—including the photographs, which take up a number of pages; they include an excellent picture of the Red Arrows, which, were he here, my hon. Friend the Member for Gainsborough would surely applaud.
The short answer is that when scrubbing the numbers, as is done from time to time in making declarations, the Department realised that there was a significant gap of billions of pounds between what we spend on defence and what NATO said we spent on defence. We wanted to ensure that we got it right. An exercise was done ahead of this year’s submission to NATO on how much genuine cash was paid by the MOD for defence purposes— it is not the same as the amount of money we receive from the Treasury for spending. It is therefore entirely legitimate for us to take the opportunity to take that into account.
Another example from the income category is the £50 million paid by entitled personnel for food. I am sure my hon. Friend has had the opportunity to visit many messes, particularly in the RAF bases he has visited, and that he has enjoyed the food, for which some payment must be made. I suspect that he has often been the guest of the base commander and that he has not personally had to contribute to the MOD’s coffers, but personnel routinely contribute. That is hard cash that comes into the Department and is spent. It is entirely appropriate to include income we have generated, which for this year amounted in total to £1.3 billion.
We included other categories of expenditure this year when we did the exercise, one of which is Government cyber-security spending. We decided to include spending on some aspects of our cyber-security in the NATO calculation this year because the MOD is taking a more central role in providing cyber-defence and co-ordinating that work across Government Departments. Another category is those elements of the conflict stability and security fund relating to peacekeeping activities undertaken by the MOD. In 2015-16, that is estimated to be £400 million. That money is spent by Defence and is therefore eligible. We have also included the costs of defence pensions, because NATO recognises that that is permissible expenditure and other nations include it. That includes the cost of MOD civil servants’ pensions—such pensions are part of other nations’ calculations. Those are all legitimate expenses and are not a sleight of hand, as has been alleged.
In the same vein, I should like to address hon. Members’ concerns that there is a measure of double-counting in the figures for defence and international aid. Just as NATO sets the guidelines for defence spending, so the OECD sets the guidelines for our official development assistance. We adhere to both sets of guidelines. There is a modest measure of overlap between the two, but that is to be expected. As I will go on to explain in my concluding remarks, defence and development are two sides of the same coin.
The second element of my hon. Friend’s Bill is his desire to
“make provision for verification that NATO’s criteria for defence expenditure are met in calculating the UK’s performance against this target”.
I would argue that that, too, is unnecessary.
Mr Dunne
I am sorry that my hon. Friend regards my speech as a wittering one. He has a remarkably impressive credential in the House. His son is a serving officer—a pilot in the Chinook fleet—whom I had the privilege to meet on a base. I discovered that his father is my hon. Friend, which I had not previously appreciated. He takes a great interest in defence. I am sorry he was unable to be in the Chamber for the earlier parts of my speech with other hon. Members, but he will enjoy listening to me describe the Government’s commitment to defence as I continue my remarks on the subject of the verification of NATO figures.
We submit financial data to NATO annually in the form of a detailed, classified financial return. Our NATO returns are independently reviewed and verified by NATO staff, and are peer-reviewed by NATO allies during the defence planning process. That provides independent testing and impartial scrutiny of the UK’s plans, and builds confidence among allies that we will do as we say. It is entirely right that NATO and not the UK decides the definitions of defence expenditure. That is the only way to ensure consistency and build relationships across the alliance. Significantly, even if further verification is put in place, any such findings will be irrelevant, because NATO determines what can be counted as defence spending.
I accept that that is not to say that more cannot be done. I remind the House of the defence pledge from which I have quoted. At the NATO summit in Wales, we agreed not only to review national progress annually, but that the scrutiny would come from the very top—from the Heads of Government—at all future summits.
My hon. Friend’s suggestion of independent UK verification would merely add yet another administrative step to the process, an example of the creeping red tape that bogs down Departments in the very bureaucracy that he and most other hon. Members on our side of the House are keen to see eliminated. My hon. Friend the Member for Gainsborough, as a former Chairman of the Public Accounts Committee, is right to be concerned that enshrining the pledge in legislation would add to the burden of red tape that the Government are seeking to avoid.
Let me turn briefly and almost finally to the question of international aid. It is now becoming far harder to argue that aid does not matter. Globalisation has meant that instability in one part of the world has direct repercussions for us over here, whether in terms of terrorism, mass migration or disease. Whereas defence is essentially reactive, development is proactive. By investing early on, we can avoid counting the cost further down the line, stabilising countries and avoiding the future commitment of our troops.
My hon. Friend the Member for Congleton highlighted our leading work on Ebola in west Africa, which is an excellent example. We have funded laboratories in Sierra Leone to speed up the time taken to diagnose the disease and to help to stop its spread across the country. We have supported 700 Ebola treatment beds that provide direct medical care for up to 8,800 patients over six months and we are working with communities on new burial practices. Thanks to the pioneering work of the Defence Science and Technology Laboratory, in conjunction with the BBI Group, great British brains developed a rapid Ebola test to aid identification in the field and potentially help minimise the spread of the Ebola virus. I know that my hon. Friend the Member for south-west Wiltshire, who is unfortunately not in his place but was making interventions earlier, is a doughty champion for the work of the DSTL in his constituency.
Sir Gerald Howarth
May I correct my hon. Friend the Minister? I think that he means my hon. Friend the Member for Salisbury (John Glen).
Mr Dunne
I am most grateful. My hon. Friend the Member for Salisbury (John Glen) hosted a visit I paid to DSTL where I met some of the people who had invented the tests that identified Ebola from simple blood samples and were able to rule out up to 20 other diseases with a simple blood test. It was a remarkably efficient and impressive innovation that the military has brought about to the benefit of the civilian population.
The test uses the latest lateral flow technology. We have had some long words already in this debate, and I am now going to use another. The technology is known as lateral flow immunochromatographic assays, to give it its full title, and allows local health teams to complete a test at the bedside without the need for high-tech paraphernalia and yet still get a result within 20 minutes. Aid has not only helped a country tackle a major emergency that put stability at risk but prevented an epidemic from becoming a pandemic that would have threatened our own security.
The MOD has a vital role to play in supporting humanitarian efforts. The cost of conflict stability and security fund programme activities led by the MOD and security and humanitarian operations that are partly refunded from the DFID budget contribute properly to both the ODA and NATO guidelines. That is why the MOD has typically been funding directly up to £5 million only of ODA-eligible activity each year, including disaster relief training and international capacity building. I, for one, support the international definitions of ODA-eligible spending but we need to consider them. I know that the Under-Secretary of State for Foreign and Commonwealth Affairs, my hon. Friend the Member for Bournemouth East (Mr Ellwood), who is sitting on the Front Bench, has been doing that to ensure that they accurately reflect the role of Government today. The guidelines were drawn up nearly 50 years ago and it is appropriate that they should be reviewed from time to time, because there might well be other areas in which it is entirely permissible and appropriate for other Departments’ spending to be included in the effort.
I know that some Members remain concerned about the apparent disparity between our approach to defence and our approach to official development assistance, given that we have enshrined the 0.7% of gross national income commitment in law. But I believe that we are talking about a very different set of circumstances when considering whether to put my hon. Friend’s Bill into law. We have always met our 2% defence guideline and we have never needed the stimulus of legislative requirement to do so, yet the UK only met the 0.7% target for the first time two years ago. My hon. Friend the Member for Shipley (Philip Davies) made a brief intervention earlier—most unusually, he seemed to be present only for breakfast on this sitting Friday, although he is normally such an assiduous attender at our sittings on Fridays. He pointed out that the 0.7% international development target had been met prior to the legislation being concluded earlier this year. He is correct, but that was only after a very considerable increase in funding during the coalition Government, and throughout the 1980s and 1990s this spending was at about half the current level.
Oral Answers to Questions
Debate between Gerald Howarth and Philip Dunne(9 years, 4 months ago)
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Mr Dunne
My right hon. Friend the Secretary of State has already answered that question in response to a previous one. The workforce on the Clyde are currently manufacturing three offshore patrol vessels commissioned by the previous coalition Government. We want to make sure that before we enter the full manufacturing contracts, the contracts’ structures are robust and we can hold the contractors to account, unlike what happened with the aircraft carrier contracts, which blew up to more than double their original cost.
Sir Gerald Howarth (Aldershot) (Con)
I am a great fan of my hon. Friend and my right hon. Friend the Secretary of State, but we need a little more clarity on the question of defence spending. Paragraph 2.22 of the Treasury Red Book states:
“The Ministry of Defence budget will rise at 0.5% per year in real terms to 2020-21.”
Given that the economy is growing at about 3%, can my hon. Friend tell me how we are going to meet the 2% commitment when there is to be only a 0.5% increase in the budget? Is it to be done by raiding other accounts?
Mr Dunne
I am very much aware of my hon. Friend’s success in securing a position in the private Members’ Bill ballot to introduce legislation on this very subject. I have the privilege of confirming to him and to the House that I will be answering those debates, so we will have plenty of opportunities to discuss this issue. The bald fact is that we are meeting the 2% commitment this year, and as I have just said, we will meet it each and every year of this Parliament.