Defence Reform

Lord Beamish Excerpts

Tuesday 26th June 2012 Commons Chamber

[Mr Kevan Jones (North Durham) (Lab)]

I beg to move,

That this House recognises the need for defence reform; notes with concern the speed and depth of redundancies and the threat to historic regiments and battalions; supports the armed forces covenant but is anxious about the implications of changes to Service pensions and allowances and the effect of these and other measures on morale; further recognises the necessity of an advanced equipment programme but is worried about capability gaps, notably carrier strike; calls on the Government to end disadvantage and discrimination against the Service community in order to strengthen the covenant; and further calls on the Government to reassess the assumptions on which the Strategic Defence and Security Review was based.

Let me begin by acknowledging the courage and professionalism of our armed forces and recognising the invaluable support provided to them by their families. I know that that sentiment will be shared by all Members in the House. We ask servicemen and women to risk making the ultimate sacrifice, and to forgo many freedoms in the name of our national security. Their contribution to our safety must never be forgotten or underestimated.

Opposition Members recognise that our armed forces cannot be allowed to stand still. The combination of changing threats in an increasingly uncertain world with budgetary challenges means that we must be ahead of the curve in terms of technology and the tactics that we apply. We must be bold and practical in order to create an efficient fighting force which serves the primary requirement of our national security while also ensuring that we do the right thing on behalf of our servicemen and women and their families.

The major conflicts of recent history are drawing to a close. Meanwhile, a wave of popular uprisings throughout the middle east poses new challenges, as do new technologies and threats from cyber. Global changes will alter the balance of power, risk and how resources are allocated in the modern world. That is why Opposition Members support armed forces reform. Since May 2010, we have not opposed the Government simply for opposition’s sake. National security and support for our armed forces are worth more than cheap political point-scoring, although when we believe that the Government have made an error or strayed from their pre-election pledges, we will righty criticise and scrutinise their decisions.

We welcome the coalition’s commitment in 2010 to launch the security review. It built on the Green Paper published by the last Government, and our commitment in the last Parliament to undertake a defence review. Unfortunately, however, the one thing the coalition Government’s strategic defence and security review was not was strategic. The SDSR has unravelled quickly, displaying the same short-term, ad hoc and rushed decision making that is becoming characteristic of many areas of Government policy. The decisions that have been taken have left Britain with serious gaps in its defence capability. Events in the middle east last year—the Arab spring uprisings—were not foreseen, which meant the review was rendered out of date almost as soon as it had been printed. The Government were forced to use resources they had planned to scrap and bring back capability at very short notice.

[Mr James Gray (North Wiltshire) (Con)]

The motion calls for a reassessment of the “assumptions” on which the SDSR was based. Which assumptions does the shadow Minister not agree with?

[Mr Jones]

I know the hon. Gentleman takes a close interest in defence issues, but if he had read the Green Paper he would have seen that it takes a strategic look at the world. The SDSR was very rushed, and did not have the long public consultation and engagement with stakeholders that the 1998 review had. It was basically a Treasury-led review, which has resulted in some strange decisions that I shall describe later, which have affected the capability and capacity of our armed forces.

[Mr Gray]

I am simply focusing on the word “assumptions”. In the motion, the Labour party criticises the assumptions that lay behind the SDSR. My opinion is that those assumptions are absolutely fine—although I agree with the hon. Gentleman that some of the other detail was not so good. Which of the assumptions behind the SDSR does he not like?

[Mr Jones]

I would talk about the developing situation in the middle east, some of the decisions made post-SDSR in taking away maritime capability, and the whole issue of the deployability of our armed forces. All those decisions were taken within a financial straitjacket, instead of addressing questions such as where we need to deploy in the world and what our priorities are. That has overridden the security needs that are so vital and that were outlined so well in the Green Paper.

As a former Ministry of Defence Minister, I know only too well that the easiest ways to make the kind of in-year savings in the defence budget that are being demanded by the Treasury are to scrap capability or to make personnel cuts. However, the Government have scrapped important capabilities—Nimrod and the Harrier fleet—without any plans as to how they will be replaced. It appears that Ministers have been inflexible in their pursuit of short-term savings at the expense of our long-term security. Too often we are given the impression that the Government are presiding over decline, rather than planning for the future. The Government must reassess the security and spending assumptions on which the review was based.

[Mr Bernard Jenkin (Harwich and North Essex) (Con)]

How would a Labour Government have dealt with the £38 billion overhang that the Conservatives inherited from the previous Labour Government? Also, is the hon. Gentleman saying he would, in fact, spend more on defence than the current Government? He should be explicit about that, but his motion is not explicit.

[Mr Jones]

I am glad the hon. Gentleman has asked about the £38 billion black hole, because it has become folklore, but the Government have not produced any evidence to justify that figure. Let me quote from an excellent Defence Committee report—which I am surprised he has not read as he is a former member of that Committee. It says:

“We note that the MOD now state the genuine size of the gap is substantially in excess of £38 billion. However, we also note the Secretary of State’s assertion that the ‘for the first time in a generation, the MOD will have brought its plans and budget broadly into balance, allowing it to plan with confidence for the delivery of the future equipment programme’. Without proper detailed figures neither statement can be verified.”

We should also consider the evidence given to the Committee by the then Secretary of State. He promised the Committee he would give details, but the final report states, at paragraph 205:

“We are surprised that this assessment has not yet begun and expect to receive a timetable for this exercise in response to this Report.”

The £38 billion figure has been bandied around ever since it was spun out of Conservative central office in the election campaign. The Government have been asked on numerous occasions to justify it, but they have not done so. They should.

[Nick Smith (Blaenau Gwent) (Lab)]

On the subject of wasting taxpayers’ money, the Government said last week that almost £39 million had been spent on preparing the carriers for “cats and traps” and the variant carrier aircraft, but the media says a quarter of a billion pounds have been spent. How much money does my hon. Friend think the Government have wasted?

[Mr Jones]

As with the £38 billion figure, the Government are very good at not explaining their mistakes. The original figure was, I think, £37 million. It then rose to £39 million, but the MOD subsequently briefed that it was £100 million. However, some informed sources say that it could be upwards of £250 million. The Government should state how much was spent in respect of that disastrous decision, which was taken at a time when the defence budget was experiencing savage cuts. They seem to have swept this matter aside, however, as if it is not important.

[The Parliamentary Under-Secretary of State for Defence (Mr Andrew Robathan)]

The hon. Gentleman is right: £38 billion is a huge amount of money. However, I should draw his attention to a note entitled:

“Note to Ed Miliband: Defence team work update”.

It states that Labour needs to be

“credible on defence spending and neutralising the ‘£38bn’ charge, which is our biggest weakness.”

So the Labour Defence team think that that charge is Labour’s biggest weakness.

[Mr Jones]

The Minister is making various assumptions, which is not unusual for him. That note says precisely what I am saying today, which is that we need to shoot down this erroneous myth that has been put about by this Government. If he wants more evidence on this, he should read the National Audit Office “Major Projects Report 2009”. It says of the defence budget:

“The size of the gap is highly sensitive to the budget growth assumptions used. If the Defence budget remained constant in real terms, and using the Department’s forecast for defence inflation of 2.7 per cent, the gap would now be £6 billion over the ten years. If, as is possible given the general economic position, there was no increase in the defence budget in cash terms over the same ten year period, the gap would rise to £36 billion.”

Even the NAO did not reach the £38 billion figure, therefore. I acknowledge that the figure it gives is £2 billion out and this Government seem to think such sums are unimportant, but I have just quoted from the NAO report. That is possibly where Conservative central office first got the figure of £36 billion, but there is a big difference between £36 billion and £38 billion. The £36 billion is based on an assumption of a flat-cash budget over the next 10 years and every single item in the equipment budget being maintained, when everyone who has ever been involved in MOD matters knows that things come into the equipment budget and things fall out of the equipment budget.

[Mrs Madeleine Moon (Bridgend) (Lab)]

The Defence Committee was advised in one of its briefings that the projected figure of £38 billion included a roll-forward of all items on wish lists—not things for which contracts had been let, but items the MOD had expressed a possible interest in purchasing for the future. This was, we were told, the equivalent of an individual becoming bankrupt because they fancied buying a Ferrari but never actually bought one.

[Mr Jones]

I thank my hon. Friend for that. Let me quote from the evidence given to the Select Committee by the former Secretary of State. In response to a question from a Member, he said:

“There is a huge ability to reduce a very large proportion of that. My guess is that of that £38 billion we are talking of something like £8 billion to £9 billion, and that is a ballpark figure.”

During that evidence session, he gave a commitment to the Select Committee Chair that he would write giving details of how he arrived at that figure, but he did not. The Committee was still waiting for that information when the report was produced, but it did not appear. I heard one of the Government Front Benchers scoff when I said that certain things move in and out of budget, but they clearly do. My hon. Friend the Member for Bridgend (Mrs Moon) is right: the Government racked up everything in the programme over a 10-year period and assumed that it would all be delivered. That is similar to the argument used about pension black holes, the assumption being that all the money is paid out, today. That is not the way the defence procurement budget is structured.

[Mr Bob Ainsworth (Coventry North East) (Lab)]

The Government obviously intend to keep the myth going, and who could blame them for that? However, can my hon. Friend explain how, on two separate occasions—we should remember that this Government have only been in power for a little over two years—two separate Secretaries of State can have claimed that the £38 billion gap has already gone and that the budget is now in balance? If the imbalance was as large as they alleged, how on earth have two separate Secretaries of State been able to claim within two years that the budget is in balance already?

[Mr Jones]

My right hon. Friend, like me, knows the MOD budget very well. Clearly, what the Government have done is to take out in-year capability. We should also remember the reductions in armed forces personnel—the people who are paying for some of this. My right hon. Friend is correct: the idea that such a big black hole can be filled in two years is complete nonsense. [Interruption.] The Under-Secretary, the right hon. Member for South Leicestershire (Mr Robathan), says that it is 10 years, but that is not the impression the Government have been giving. All their decisions, such as slashing personnel numbers, are predicated on this £38 billion black hole. Earlier last year, the previous Secretary of State stopped using that figure—for a while. Suddenly, under the new Secretary of State, it has come back. The Government have got to explain their use of it, because it is the entire raison d’être for some of the cuts they are making.

[Mr Jenkin]

I remind the hon. Gentleman, the right hon. Member for Coventry North East (Mr Ainsworth) and the hon. Member for Bridgend (Mrs Moon) that the £38 billion figure was furnished to the Defence Committee under the previous Labour Government when the hon. Gentleman was a Minister in the Ministry of Defence. At the same time, Mr Bernard Gray produced a report saying that, on present plans, the MOD could order no new equipment at all for the next 10 years, so dire was the state of its finances. It is only by bringing defence spending within the Department back into balance that any new equipment has been able to be ordered at all.

[Mr Jones]

I am sorry but that is complete nonsense. The hon. Gentleman should read the NAO report that I referred to earlier, which makes the assumption that many people have made in respect of flat cash. I will read the quote again, because he has obviously not picked up the argument:

“The size of the gap is highly sensitive to the budget growth assumptions used. If the Defence budget remained constant in real terms, and using the Department’s forecast for defence inflation of 2.7 per cent, the gap would now be £6 billion”.

There is a huge difference between £6 billion and the £38 billion figure that the Government are claiming. Even if, in line with the NAO report, we assume a flat cash budget for 10 years, we only get to a figure of £36 billion. Where the Government get the extra £2 billion from, I do not know. This issue was also dealt with in Bernard Gray’s report, and as my hon. Friend the Member for Bridgend said, the £38 billion figure is based on the principle that every single piece of equipment that was planned for would actually be delivered. However, anyone who knows the defence budget knows that that is not how things work. [Interruption.] I am sorry, but the £38 billion figure is a fiction, and this Government have got to justify it, because they are using it to justify some of their most draconian cuts, not only in equipment but to the service terms and conditions of members of our armed forces.

[Christopher Pincher (Tamworth) (Con)]

The hon. Gentleman seems to accept that there is a gap and that it could be up to £36 billion. What is the gap?

[Mr Jones]

Let me read what the NAO report says—for the third time:

“The size of the gap is highly sensitive to the budget growth assumptions used. If the Defence budget remained constant in real terms, and using the Department’s forecast for defence inflation of 2.7 per cent, the gap would now be £6 billion.”

The figure of £36 billion is reached only if flat cash over 10 years is included. Ministers said that the £38 billion figure is over 10 years—that is not the impression they have been giving to the media, the armed forces and the public. Instead, they have been suggesting that we somehow have to lay our hands instantly on £38 billion. As my right hon. Friend the Member for Coventry North East said, the idea that that figure can be wiped out in two years is an accounting fantasy.

[Mark Lancaster (Milton Keynes North) (Con)]

Listening to this debate, the one thing that is clear and that the hon. Gentleman accepts is that there is a gap, be it £6 billion or £38 billion. Given that there is a gap, why did the last Government not balance the budget?

[Mr Jones]

We were on line in that regard. One of the jobs that my right hon. Friend the Member for Coventry North East gave me when he was Secretary of State—it was something of a poisoned chalice—was to draw up some reductions. Just before the general election, I had already identified some £1.2 billion of savings, but some of that involved investing money in order to save it. The problem at the moment is that the Treasury want instant cash out of the budget, and the only way to do that is to slash personnel and equipment straight away. The more sensible approach that we were going to implement was a planned phase of three to five years, involving some investment and some reductions. That is in stark contrast to the Government’s approach. What is driving this process is not defence strategy but the desire of this Government and the Treasury to take 8% out of the budget in years one and two. That has led to the short-termism we are seeing now.

[Mel Stride (Central Devon) (Con)]

If the gap is a mere £6 billion, as the hon. Gentleman is suggesting, does he believe that that in itself is acceptable—yes or no?

[Mr Jones]

Yes, because some of the programme was not committed. The former Secretary of State was asked by the Defence Committee how much of that budget was committed, and quite a large portion of it was not. One approach could be to delay projects, as this Government and the previous Government have done, or to cancel them.

When the previous Secretary of State took office, he said that he was going to save a load of money by renegotiating contracts with various suppliers. We have yet to see a single example of his having been able to renegotiate procurement contracts and make great savings. [Interruption.] I am sorry, but I am not going to take any lessons from the Conservatives on the carriers, given that they have wasted upwards of £100 million through a decision that—[Interruption.] Government Members are shouting, but I do not remember either the Minister for the Armed Forces, or the Under-Secretary of State for Defence, the right hon. Member for South Leicestershire, saying when in opposition that the carriers should not be ordered. That is the problem: they were calling then not only for the carriers, but for a larger Army and a larger Navy, but now that they are in government they are doing completely the opposite.

[Dan Byles (North Warwickshire) (Con)]

Is the hon. Gentleman interested in the fact that the Royal United Services Institute, which is known for being a very independent-minded organisation, stated in September 2011:

“Whichever detailed assumptions are made, however, there was no doubt that the funding gap was large and real. It would take considerable energy, and political cost…to escape from…It was, in a very real sense, a black hole.”?

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[Mr Jones]

That is fine—[Interruption.] Well, it is fine; if it was true that the previous Government were doing nothing to address the situation, that would not be the case. But if the Government are going to claim that the black hole is £38 billion, there is an onus on them to explain in detail exactly how they arrived at that figure, because they are using it to justify every single reduction in defence expenditure that they are making. It is important that they do that. We had plans to balance the budget.

[Christopher Pincher]

The hon. Gentleman seems to be accepting that there is a black hole. He denies that it is a £38 billion black hole, but he will not say whether it is a big black hole or a little black hole. What was the size of his black hole?

[Mr Jones]

The last Labour Government were committed to looking for efficiencies and reviewing the procurement contracts. So some of the things that were planned would not have been procured, which would have closed that black hole to which the hon. Gentleman refers. [Interruption.] He asks me what the size of the black hole was. He and others have kept saying it is a £38 billion black hole, but if that is the Government’s sole justification for what they are doing, they should have the guts to explain it to the public.

[Valerie Vaz (Walsall South) (Lab)]

One of the battalions that recruits from my constituency, 3rd Battalion the Mercian Regiment, is one of only two specialised mechanised infantry battalions. It is due to be disbanded under the current proposals, so is it a proper use of public money for it to be disbanded only for these specialised services to have to be recruited again?

[Mr Jones]

There are so many leaks coming from the Ministry of Defence, some official and some unofficial, and it is not helping the process. We are seeing a ludicrous situation whereby in order to claim that the headcount of MOD civil servants, in particular, is being reduced, people are being made redundant only then to be rehired as consultants, at huge cost to the taxpayer.

Last month, the Secretary of State told the House that he had brought the MOD budget “back into balance”. Every announcement or decision made by the Government is based on that claim; he says that he has “balanced the defence budget”. However, unless we get hard evidence soon, it will remain impossible for us to believe those claims. Ministers must be honest with our armed forces men and women, who deserve to know the full picture of the MOD budget so that they can understand why they are having to undertake the pain that they are taking under this coalition Government.

[Mark Menzies (Fylde) (Con)]

The hon. Gentleman has said that the previous Labour Government had looked at making £1.2 billion-worth of cuts. Will he share with the House details of where those cuts would have fallen?

[Mr Jones]

One example is that we would have taken some strategic decisions on basing around the world. I must say that, in the spirit of co-operation, I gave one of the papers to my good friend the hon. Member for Aldershot (Mr Howarth) to assist him in the process. Some efficiency savings could have been made, including some through restructuring the Army and other things. The other point to make is that some of these things also needed investment, and I had been given clearance by the Treasury in some areas to invest to make longer-term savings. They were not just in-year savings to try to satisfy the Treasury and the deficit reduction programme on which this Government are embarking.

[Pete Wishart (Perth and North Perthshire) (SNP)]

Can we leave black holes to one side for the minute and concentrate on the Black Watch? On Saturday, the colours of the Black Watch were lowered for the last time, marking its passing as a regiment. It was the Labour party that amalgamated the Scottish regiments and they are fighting for their survival now as a battalion with cap badges, insignia and the heritage and culture that has been maintained. The Labour party moots a threat to the battalions and our regiments, so will it support us in ensuring that their survival continues and that the fantastic heritage and culture will be continued in the Royal Regiment?

[Mr Jones]

I understand people’s emotional attachment to the regiments, and I understand the proud traditions and how they are held. However, I must say that I always find the Scottish National party talking about this issue difficult. If we had an independent Scotland, not only would many of these regiments doubtless have their cap badges removed, but they would be abolished altogether. The SNP’s so-called campaign on this issue is a little hollow, to say the least. The SNP needs to explain exactly what the new Scottish armed forces would be if Scotland were to be independent. Would the Navy be something like fishery protection vessels? Would the Army be downgraded to some type of border force to patrol the border between Scotland and Northumberland? [Interruption.] The hon. Gentleman comments from a sedentary position, but the SNP claims to be supporting these regiments and the onus is on him to say exactly what the SNP is going to do if there is to be independence in Scotland, not only on regiments, but what the shape and format of the defence forces of an independent Scotland would take. I am sure that they would be a lot smaller and a lot more ineffective than what we have now. I doubt whether they would be larger, and I am not sure what their role would be and whether they would be in or out of a NATO command structure.

[Anas Sarwar (Glasgow Central) (Lab)]

Will my hon. Friend give way?

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[Mr Jones]

That is right, but this point about an independent Scotland is not just about the regiments and the size of the armed forces; it is about all the procurement. I am sorry, but many English shipbuilders will be arguing strongly for contracts to be placed with English yards rather than Scottish yards if Scotland becomes a foreign country. We do not procure warships from foreign Governments.

The Secretary of State’s statement dealt primarily with the 45% of the budget that is spent on equipment and support. There will be no 1% real-terms rise for the 55% that is spent on other areas of defence, including personnel. We are very concerned that this will result in a real-terms cut to the armed forces personnel budget, particularly given that these costs tend to rise higher than the usual rate of inflation. Not only was the announcement therefore less comprehensive than it was spun to be in the newspapers, but it would appear that the limited investment in equipment budgets is coming at the expense of investment in personnel, who are already suffering under the Government’s cuts to personnel numbers, allowances and pensions. So it is becoming clear to many that the Secretary of State has balanced the budget on the backs of our brave service men and women, and Ministers will have to offer this House the information it needs to take these claims seriously. [Interruption.] The Whip says from a sedentary position that that is a silly thing to say, but I think I might have a little more knowledge of the intricacies of the defence budget than he has.

On the capital investment side, Ministers have not factored in the costs of the proposals to withdraw British military bases from Germany. They will have a significant short-term cost, which they seem to have conveniently just ignored. I considered that idea when I was a Minister and even four years ago the price tag was some £3 billion. Again, that seems to have been conveniently forgotten in this so-called new balanced budget.

On top of all that, the Minister has failed to substantiate the figure of £38 billion. I will not reiterate the points I have read out already, but I will add a third example. Mr Jon Thompson, the director of finance at the MOD, told the Public Accounts Committee that Ministers were committed to producing a report in autumn 2011 on the extent of the so-called gap in the budget. We are still waiting. That information is vital because the legitimacy of everything the Government are doing through the defence cuts is predicated on that so-called gap.

I would be grateful if the Minister could answer a few questions. As the post-2015 1% rise is an “assumption”, could it be revised between now and 2015? What rate of inflation was used to calculate the 1% real terms annual increase in the equipment budget between 2010 and 2020? When will we get the National Audit Office’s assessment of the MOD budget and, more importantly, when will the House have an opportunity to debate that report?

The Secretary of State also needs to factor defence inflation into his calculations. It would be interesting to know what figure he is using for the real-terms cuts to the 55% of the MOD budget that lies outside the equipment and support budget. Members might be aware of reports over the weekend, for example, that an ongoing study of British shipbuilding might result in the delay of one of the new aircraft carriers and the potential closure of Portsmouth dockyard, with a threat to some 3,000 jobs. That casts even greater doubt on the Ministers’ claim to have balanced the budget. It is hard to see how they can justify their triumph when such issues remain unresolved. The Minister’s comments on the Portsmouth report would be welcome.

We now hear announcements from the MOD by leak—either official or unofficial—and an interesting one is on the future of Defence Equipment and Support. The Chief of Defence Matériel is supposed to be pushing forward the Government-owned contractor-operated model. Restructuring is important in defence procurement, as we would all agree, but there are huge questions about the impact on accountability to Parliament of privatising decisions that deal with many millions of pounds of taxpayers’ money.

As for the carriers, the Government have sought to present themselves as economically competent and the Opposition will resist the temptation to take Ministers at their word. As was mentioned earlier, the costly, unnecessary and humiliating U-turn on the British aircraft carrier capability meant that we ended up with a policy that the Prime Minister had rubbished the year before and that millions of pounds of taxpayers’ money have been wasted at a time when the defence budget is being cut deeply. The Government must come clean and explain in detail how much was squandered by that reckless decision.

Britain is a proud maritime nation, but as a result of the decisions taken in the SDSR we are left with no maritime surveillance capability and with no carrier strike capability until at least 2017. Huge issues remain unaddressed. The Secretary of State has not decided how many aircraft he will purchase, just as he has deferred his decision on whether a second carrier will be operational. He stated to the House that he would be committed to “continuous carrier availability”, but that might now not be the case.

With such a backdrop, it is not surprising that morale in our armed forces is low. Morale has been described as in freefall as a result of some of the decisions on redundancies, cuts in allowances and permanent pension reductions. The Forces Pension Society has said that it has

“never seen a government erode the morale of the Armed Forces so quickly”.

I hope that right hon. and hon. Members have had the opportunity to look at today’s report on housing by the Select Committee on Defence. It shows that the cuts in expenditure on improvements in forces accommodation are leading to real pressures in Army housing.

[Dr Andrew Murrison (South West Wiltshire) (Con)]

The hon. Gentleman mentions pensions and a number of right hon. and hon. Members in the Chamber have a particular interest in service pensions. No doubt they will want to hear whether, if he were returned to office in 2015, he would reverse the changes that have been made.

[Mr Jones]

We need to consider armed forces pensions as a whole, which is something else that I considered as a Minister. Many people do not realise that although the armed forces pension scheme is non-contributory, members of the armed forces pay for it through abatement in their increases. As the Government have abandoned the Armed Forces Pay Review Body’s recommendations and our proud record on such recommendations when we were in office, it is time to look at how armed forces pensions are dealt with as a whole. Interestingly, when I wanted to look more closely at such issues, the Secretary of State who resisted was Lord Hutton, who is now advising the Government on pensions in general. The issue needs to be considered as a whole—not only pensions but abatement in pay, too.

In 2010, we were committed to spending £8 billion on accommodation in the next decade, £3 billion of which was for improvements and upgrades. In contrast, this Government have slashed spending on housing by some £41 million. I remember that when I was a Minister and when my right hon. Friend the Member for Coventry North East was Secretary of State, despite our record investment in accommodation, the then Opposition were highly critical of what we were doing. Many in the armed forces will now be dismayed by their actions in government.

It is also important to listen to the armed forces federations. Dawn McCafferty of the Royal Air Force Families Federation has commented that families felt as though the covenant had already been broken within months of its announcement because of the cuts. Until the fall in morale is acknowledged and acted on, many will question Ministers’ commitment to upholding the military covenant.

A particular concern for us is the way in which reductions in the number of armed forces personnel are taking place. Two weeks ago, the Minister ordered yet another tranche of redundancies affecting 4,100 personnel, 30% of which were compulsory. It is a great worry that we are losing not only important skills but expertise and capability that we can no longer afford to lose. The public and armed forces community are quite rightly angry that individuals who are ready to deploy to Afghanistan are being given their P45s, despite all the assurances given by the previous Secretary of State and by this one. I know from experience that if we had treated the armed forces in such a way when we were in government, Conservative and Liberal Democrat Members would rightly have pilloried that decision. We feel it is only right to hold them to the same high standard that they put forward when they were in opposition, which they seem to have conveniently forgotten now they are in government.

Many will be concerned by the rumours that are circulating about the Government’s plans to cut regiments and battalions. Our regiments embody our proud history and the national prestige of our armed forces. Many have served with distinction in the fields of Flanders, on the beaches at Normandy and, more recently, in the deserts of Iraq and Afghanistan. The Secretary of State’s now-trademark lack of sensitivity when dealing with this issue is understandably creating anger among many serving in the armed forces and those who have retired.

[Patrick Mercer (Newark) (Con)]

May I remind the shadow Minister that his Government cut and disbanded regiments while they were on operations? They also wholesale disbanded historic regiments and invented names from “Alice in Wonderland” for new regiments, so there can be no lessons from the Opposition about the maintenance of historic and honourable regiments. Many of us wear the scars to bear witness to that.

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[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. We are now on 46 minutes.

[Mr Kevan Jones]

Don’t worry.

[Mr Deputy Speaker]

I am worried. It is no use telling me not to worry because Members—I ought to warn them now—may be down to a five-minute limit or less if we are to get them all in. I wanted to let people know so they could alter their speeches.

[Mr Jones]

I will take your guidance, Mr Deputy Speaker, and not take any more interventions. On the comments of the hon. Member for Newark (Patrick Mercer), he knows that the recommendations put forward at that time regarding structure and names were put forward by the Army.

Any uncertainty needs to be clarified. It is almost a month since the Secretary of State told the Royal United Services Institute that some units will inevitably be lost or merged. Given that he has gone outside Parliament to light bonfires of rumours, it is not acceptable for him to throw more petrol on them by delaying. We are told that the Ministry of Defence has signed off on this issue now but that matters are being held up by Downing street for political reasons. That uncertainty is leading to a lot more rumours, which are causing more uncertainty.

In conclusion, when they were in opposition the Conservatives called for a larger Army, a larger Navy and increased investment in the armed forces. In government, their actions have been to do exactly the opposite. It is not surprising that they are losing the trust of the armed forces community and the public so quickly. We in opposition want to support strong reform on procurement and the principles of the military covenant and we want the equipment programme to be improved. Too often the Government have put austerity before security. I hope that in his response the Minister will not just answer the questions I have put forward but will also agree with the terms of the motion and the recommendations regarding the assumptions of the defence review to give those whom we ask to serve on our behalf the confidence and certainty they deserve.

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[Mr Kevan Jones]

The Minister is correct that the shadow Secretary of State is in Australia—unfortunately with the hon. Member for Devizes (Claire Perry), but I understand that they did not travel on the same plane so that is one good thing for him. He has stayed on after the defence visit because a member of his family there is seriously ill. That is why he is not here today.

[Nick Harvey]

I am sure we all wish the family member well. I did say that no criticism attaches to the shadow Secretary for his absence and I mean that most emphatically.

The matter before us is this nonsensical motion. It seems to say that the Opposition recognise the need to make the changes we are making, but the fact is that they ducked these changes year after year. They went for 12 years without a defence review, with pressure building up in the defence programme all the time, and there was a black hole of whatever size—we will come back to that in a minute—by the time of the strategic defence and security review. They left our armed forces overstretched, under-equipped and underfunded for the tasks they were set. That is the legacy of the Government in which the hon. Member for North Durham served. The blame for the need to remove platforms, reduce manpower and make the other reductions we have had to do sits very squarely at the previous Government’s door. They wrecked the economy, they wrecked the defence budget and they failed to make the changes necessary to prepare our armed forces for the future.

The hon. Member for North Durham made heavy weather of the black hole. When we began the SDSR process in the summer of 2010 we asked the officials who were presiding over it at the MOD, “What is our baseline and what is the true financial situation as we start this process?” The explanation came that if we took the manpower commitments, all the overheads and all the committed expenditure, including the contracts that had been signed for procurement and those that had been announced by the previous Government as Ministry of Defence policy, and planned to bring them on stream when the Labour party said they would be, over the 10-year period, there was a gap between all that and a “flat real” terms assumption on funding—not a “flat cash” assumption—in relation to the 2010-11 budget. We were told that the gap over the 10-year period would amount to £38 billion. It was a 10-year period because that is the length of time over which the MOD plans its budgets.

The hon. Member for Bridgend (Mrs Moon) said that that was an unreasonable thing to view as a starting point. She compared it with the situation of someone who was about to go personally bankrupt aspiring to buy a Ferrari, but I do not think that is very kind to the right hon. Member for Coventry North East (Mr Ainsworth). When he came to the Dispatch Box a few weeks before Christmas in 2009, he announced that there would be 22 new Chinook helicopters. He did not sign a contract or find the money to pay for them but he announced there would be 22 new Chinook helicopters. I do not know whether in the fantasy budget of the Labour party it does not think that that was a commitment, but it was one of the commitments that that Defence Secretary made, and it was on that basis that the £38 billion black hole was presented to us by officials.

I do not call into question the personal commitment of the hon. Member for North Durham, but he has to recognise that his motion opposes everything that this Government are doing and is pretty scant when it comes to proposing any alternatives. He says that he recognises the need for defence reform, but the only response in his motion is to be concerned, “anxious” and “worried” about how we are clearing up the mess he made. He has not presented one properly costed plan or given us a coherent alternative. He has not given us a plan A, let alone a plan B. He needs to recognise that he has to do better if he wants to hold us to account for what we have done.

[Nick Harvey]

I think it was a perfectly sensible alternative to explore the “cat and trap” option. As we said at the time, it would have given us the ability to project a much better aircraft type off the carrier. I think that to commission the detailed work on that proposal was entirely responsible. If it ends up costing us the maximum, as the Secretary of State suggested, of £100 million, that is a small sum compared with the £1.5 billion the previous Government added to the carrier project in one afternoon, when they announced from the Dispatch Box that it was to be postponed by a year. That was a far greater drain on the defence budget than the relatively small bounded study, which unfortunately concluded that the costs of going ahead with the plan were such that it was not viable.

The shadow Defence Secretary has identified £5 billion of cuts that he says he supports, but that would barely scratch the surface of the black hole that his party’s Government left behind. Of course, his cuts are not new; they are already being made. On Labour’s current public plans, the defence budget would still be in chaos. They have pledged neither to make any extra savings, nor to restore the cuts that have been made. What is interesting is not what they are saying in public, but what they are saying in private. Earlier, reference was made to the interesting correspondence between the Leader of the Opposition and the shadow Defence Secretary. It is worth quoting the letter from the Leader of the Opposition to his colleague, dated 23 January this year:

“You have powerfully made the case in your recent interventions that there is no easy future for Defence expenditure and clearly in the context of the current fiscal position we can expect to have to make further savings after the next election.”

In public, the Opposition are against the cuts that we are making, but in secret, they are planning even deeper defence cuts. Today’s debate is not simply opposition, but opportunism as well.

[Mr Kevan Jones]

We said that at the last general election. What we were not going to do is rush the process. I challenge the Minister of State to place in the Library of the House the details of how he arrived at the £38 billion figure. Today he has said something that no other Minister has ever said: that the £38 billion is over 10 years. The impression has always been given that it is there right now. Will he produce that information? Without it, some of the cuts he is making are not credible.

[Nick Harvey]

That is absolute nonsense. It has been clear from the outset that the £38 billion figure was over 10 years. I remember many a debate with the shadow Defence Secretary about whether we were talking about the 10 years being measured out on the spending side in flat real or in flat cash, and I have said again tonight that it was by reference to flat real. It has always been a 10-year figure, and the suggestion that we have magicked £38 billion out of spending in two years is clearly nonsensical; it has always been over 10 years. I am happy to give the hon. Gentleman further details of how we worked that out, but there is no getting away from the fact that the Labour Government left behind a massive black hole. The right hon. Member for East Renfrewshire (Mr Murphy) has identified a tiny number of cuts that he thinks need to be made and he has secret plans to make more, but he is not prepared to face up to the difficult decisions that have to be made to clear up the economic inheritance across the piece and specifically in defence.

Transforming Britain’s armed forces by implementing the 2010 SDSR is necessary to recover capabilities after a decade of enduring operations. It is necessary to prepare the armed forces for a future in which threats are diverse, evolving and unpredictable. It is necessary to help to tackle the fiscal deficit and to put the defence budget and equipment plan back into balance. We have to build for the future with strict financial discipline, making certain that the armed forces have confidence that projects in the programme are funded and will be delivered. As my right hon. Friend the Secretary of State announced last month, the black hole has now been eliminated and the 10-year defence budget is now in balance. I readily acknowledge that Future Force 2020 will be a smaller fighting force, but it will still be able to deploy a brigade-sized force on a sustained basis on operations, or a divisional-sized force on a best effort.

There was much criticism from the hon. Member for North Durham because we have had to reduce manpower numbers, but it is worth noting that in the memo the Opposition defence team sent back to the leader of their party, they said, in reference to Royal Navy and Royal Air Force personnel, that they recognised that there would be reductions in personnel numbers. On Army restructuring, too, the memo stated that they recognised the need for manpower reductions. So they recognise the need for the measures we are taking; they just do not like the grim reality of having to do it.

Despite all the changes that we are making, we will still be supported by the fourth-largest defence budget in the world, meeting our financial responsibilities to NATO. We will configure the armed forces for a world where threats to our homeland and allies are increasingly to be found outside Europe, rather than on the north German plain, and we will move from a heavily armoured force to a more mobile, adaptable and deployable force.