Defence Supplementary Estimate 2021-22

John Baron Excerpts

Wednesday 9th March 2022 Commons Chamber

[Dr Lewis]

I quite agree with both my right hon. Friend the Member for Beckenham (Bob Stewart) and my hon. Friend.

Bearing in mind your advice, Madam Deputy Speaker, I will conclude with one point about the budget itself. During the period in which I chaired the Defence Committee, we produced two reports—one in 2016 called “Shifting the goalposts?” and the other an update to that report in 2019—with the purpose of setting very firmly on the record what the proportion of GDP spent on defence had been historically on a like-for-like basis. It is a fact that, in the aftermath of the Korean war, defence spending as a proportion of GDP at one point was as high as 7%. In about 1963, it crossed over with spending on welfare at 6%. That was all a long time ago, but as recently as the 1980s the spending on health, education and defence was roughly the same at just over 4% of GDP.

[Mr John Baron (Basildon and Billericay) (Con)]

My right hon. Friend, I and probably everybody present in the Chamber have been calling since we have been Members of Parliament for much higher defence spending. I think that is accepted. However, does he agree with me that once that higher level of spending is determined, we should not necessarily link it to GDP, because economies can go up and down? There have to be real-terms increases once that higher figure is decided, otherwise the armed forces will not know where they are and it will be difficult to plan.

[Dr Lewis]

I do agree with that point; using GDP percentages has always been only a very rough and ready guide.

What was absolutely shocking was the way in which, given that even within half a dozen years of the downfall of the Berlin wall—as late as 1993-94—we were still spending 3.1% on the old method of calculation and 3.6% on the new method of calculation, whereby the MOD is allowed to include certain things we never used to include, it then became an argument as to whether we would even manage to achieve 2% of GDP. Our expectations have been managed down so far that when, even in recent times, a number of us have called for 3% to be a target, it was regarded as being completely out of reach. It should not be out of reach. The sort of effort we put into defending this country is the most important investment we can make, so 3% of GDP should now be seen not as a target or as a minimum, but as a stepping stone on the way to a realistic investment to meet the threat that never really went away, the reality of which in Ukraine has now been proclaimed for all the world to see.

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[Chris Evans (Islwyn) (Lab/Co-op)]

I thank the right hon. Member for Rayleigh and Wickford (Mr Francois) for raising that point of order. If anything proves the heartlessness of Vladimir Putin, it is that news. I join the Prime Minister, as I am sure everyone in the House does, in condemning that action.

I begin by thanking my right hon. Friend the Member for Warley (John Spellar) for opening this timely debate. Like him, I wish the Chair of the Defence Committee a speedy recovery from his minor operation. In this debate we have also witnessed the unique sight of my right hon. Friend the Member for North Durham (Mr Jones) finally finding some common ground with the hon. Member for Plymouth, Moor View (Johnny Mercer)—those of us who know both of them will know that that is an amazing sight. Both spoke of how spending decisions affect the morale of our troops.

The management of MOD spending, our equipment and the numbers of our armed forces are always important, but in the current international climate there is no room for mis-steps. The Government must respond to the threats to the UK and to European security that a Russian invasion in Europe poses. Just as Labour reassessed defence spending after the 9/11 attack on the twin towers, we expect the Government to bring forward a budget boost when the Chancellor comes to the House in exactly two weeks’ time.

Other European allies have already made this move. In the light of Russia’s invasion, Germany has announced an increase in its defence spending, including a €100 billion fund to upgrade its armed forces. Denmark also announced at the beginning of the week that it will significantly increase its defence budget. I welcome these announcements. European countries have been quick to respond to Russia’s actions, recognising that they threaten the security of Europe. As my right hon. Friend the Member for Warley mentioned, Germany’s recent decisions have reversed defence and foreign policy positions that have been held for decades. Chancellor Olaf Scholz has described Russia’s invasion of Ukraine as

“a turning point in the history of our continent”

and made it clear that, in order to ensure the freedom and democracy of Europe, an increase in defence spending is needed.

I want to be clear that if the Government act to increase defence spending in the next Budget, they will have Labour’s full support in doing so.

[Mr Baron]

I was in the House when the shadow Secretary of State made that announcement during the Defence Secretary’s statement earlier today. If we are to move the dial on defence spending, we need the support of both sides of the House. Can the hon. Gentleman confirm that when the official Opposition ask for that increase in defence spending, it will not be just a one-off? It has to match our interests’ requirements, but it has to be sustainable.

[Chris Evans]

I think the hon. Gentleman has just written my speech for me. If he will allow me, I will develop that argument further.

Any increase in defence spending would benefit the UK economy. If done well, taxpayers’ money can be spent in a way that enables more apprenticeships, the growth of small and medium-sized enterprises, and for the UK to be a world leader in design, innovation and engineering. However, mismanagement and delays of contracts, or contracts being awarded to foreign companies, will damage the UK defence sector. Unfortunately at present, public money is not being used in a way that brings the most benefit to the UK. Without steady investment and supply of contracts, British shipyards, British aerospace and, ultimately, British jobs will suffer.

When I speak with industry representatives, they tell me they want fairness, not favours; all they ask for is a level playing field. UK bids are competing in a race to the bottom with international companies that enjoy state backing. The feast and famine cycles of defence contracts leave British companies unable to prepare, or to sustain investment in apprenticeships and jobs over a long period of time. If these companies suffer, we lose our domestic defence manufacturing sector.

Labour supports the UK defence industry, which is why we believe in a “British built by default” approach to defence procurement. Our shipyards and our steel industry are national assets, and we need to see a clear plan from the Government on how we enhance these capabilities.

Concerns have been raised by the National Audit Office, the Defence Committee and the Public Accounts Committee about the running of the MOD. Now more than ever, at a time when European security is most under threat, Ministers must ensure that the deep-rooted problems in the MOD are urgently addressed. As the NAO suggests, the Government’s new equipment plan still fails to ensure that our armed forces will get all the equipment they need. Sadly, value for money for the British taxpayer is not being guaranteed. Then, of course, there is the Ajax-shaped hole at the heart of the British Army’s future, which I am sure we will hear more about in the coming days.

In 2020, Labour welcomed the Government’s extra £16.5 billion investment in defence spending, with more scope for high-tech research and development, but the Government’s plan only papers over the cracks in the MOD’s budget. Too much of that new money will be swallowed up by the MOD’s budget black hole. The National Audit Office also states that too little has been done to reform the MOD’s controls in order to deliver this plan on time and on budget. There is also no plan to deal with massive MOD waste, despite at least £13 billion of taxpayers’ money being wasted through MOD mismanagement or misjudgment since 2010, with £4 billion wasted in the past couple of years alone while the present Defence Secretary has been in post. Unfortunately, it all points to the conclusion that the MOD is a uniquely failing Department.

If wasted expenditure had been avoided or reduced, funding would have been available to strengthen the UK’s armed forces. There would have been no need for the cuts to troops, planes, ships and equipment forced by financial pressures. For example, in last year’s integrated review, the Government cut main battle tank numbers by a third. Restoring the Challenger fleet to full strength would cost an estimated £430 million, equivalent to the money wasted by the MOD.