Defence Spending

Lord Beamish Excerpts

Thursday 12th March 2015 Commons Chamber

[Mr Baron]

Whatever it is called, the glass of water is gratefully received.

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

Test it first.

[Mr Baron]

If I go down, hon. Members will know why.

Falling defence budgets across NATO have emboldened the Russian President, who has concluded that the heart has gone out of the alliance. This is dangerous, and it underlines the point that well-resourced and capable armed forces can, by deterring potential aggressors, make future conflict less likely. How many times have we foolishly discounted or underestimated that fact?

As we heard in the statement, the benefits of strong defence are not confined just to deterring potential aggressors. Strong armed forces can help us and others to face many of the emerging global challenges for which we need to be better prepared. Armed forces training has a wide skill base—everything from medicine and catering to construction and telecoms—and is a key component of our disaster relief capabilities, as shown by our response to the hurricane in the Philippines and the Ebola outbreak in Sierra Leone.

That skill base will be in increasing demand because the emerging global challenges include those posed by the fact that Africa’s population will be two and a half times that of Europe’s by 2050, the reverse of the proportions in only 1950; by resource scarcity, including water scarcity, which now affects one in three people; by temperature anomalies, which increasingly affect north Africa and the middle east; by fast-emerging middle classes who question political systems that struggle to deliver the goods; and by a growing tendency, aided by social media, for social unrest. Yet it could be argued that this is happening at a time when, in large measure, the international community is failing to produce co-ordinated responses on the scale needed to meet many of the most pressing challenges facing mankind, including poverty, organised crime, conflict, disease, hunger and inequalities. All that points to the need for investment in our foreign policy making and defence capabilities not only so that we are better sighted, but so that we can retain the maximum possible number of policy options by way of response.

How are we faring? Following a strategic defence and security review driven largely by financial pressures, rather than strategic design, the current Government have markedly reduced our armed forces. Plans to replace 20,000 regular troops with 30,000 reservists have created unacceptable capability gaps in the short term and false economies in the long term. Particularly given the fact that the original idea was to hold on to the 20,000 regulars until we knew that the plan to replace them with 30,000 reservists was going to work, I suggest that it was incompetent to let 20,000 regulars march out of the door while only adding 500 to the trained strength of the Army Reserve in the two years that the plan has been in operation.

--- Later in debate ---

[Sir Menzies Campbell (North East Fife) (LD)]

Thank you, Mr Deputy Speaker. I am not sure whether to call you colonel on this occasion.

I, like others, have been greatly impressed by the quality of the debate so far. I agree with much of what has been said, but let me pick up on a couple of points. First, it is right to say that defence does not win votes, but poor defence can certainly lose them if the public form the view that we are not fulfilling our primary objective—their protection. Secondly, the right hon. Member for Lagan Valley (Mr Donaldson) made an extremely eloquent speech, but I say to him that there was no option but to abandon the maritime patrol aircraft. The original decision to go with Nimrod was questioned by the Defence Committee at the time. Other alternatives were available, for example, the P-3 Orion, but the decision was taken, I believe by Mr Secretary Portillo, that Nimrod it should be. A final irony was that Nimrod, the mighty hunter, never actually fulfilled his responsibility.

Let us consider the following:

“The Ministry of Defence is being led by the nose by the Treasury towards reductions in Britain’s armed forces which have no rational basis”.

The House will not recognise that quotation, and neither did I until the BBC drew to my attention, in an article written for its website, that in my capacity as defence spokesman for the Liberal Democrats in August 1991 I had said just that. I do not introduce that to offer some support for the view that I am wise; I do so to point out that nothing seems to have changed. My proposition was put rather more pithily by my right hon. Friend the Member for Mid Sussex (Sir Nicholas Soames), who said that after four years as Minister of State for the Armed Forces he formed the clear view that the enemy was not the Russians, but the Treasury.

Some things have changed, though, and the point has been made by the hon. Member for Merthyr Tydfil and Rhymney (Mr Havard). When I first came into this House and took an interest in these matters, we had five days of the parliamentary year to consider defence. We had a two-day debate on the annual White Paper at the beginning of October, and then each of the services had a single day of discussion devoted to them. When the three service days were amalgamated we were confidently assured that it would not result in fewer opportunities to hold the Government to account—people can form their own view about the value of that assurance.

I have been through it all: “Options for Change”; Front Line First; and Labour’s so-called defence review of 1998. That came closest of all to being a proper defence review, except for one thing: Labour refused to publish its foreign policy baseline attributes or intentions. As a consequence, what was otherwise a first-class exercise, with consultation the length and breadth of the country, driven by the then Secretary of State, now Lord Robertson, and with Lord Reid, as he now is, a very important part of it, that was the closest we have come to a defence review. We have not, even in this Parliament, had a defence review. It is an open secret that in 2010 the MOD was told, “Here is a metaphorical envelope containing money. Go away and find a defence policy that fits that sum of money.”

[Mr Kevan Jones]

It is a fact that in spring 2010 the Labour Government produced a Green Paper, which would have fed into the defence—[Interruption.] What happened afterwards was what the Conservatives did with it, but we did produce the Green Paper to start the process.

[Sir Menzies Campbell]

The hon. Gentleman is right about that. I know a bit about this because I was invited by the then Defence Secretary to be part of the group of politicians, of all parties, who participated in debates with officials as to what should be in the Green Paper.

A defence review is not a hugely impossible concept to understand. What one needs to do is set out one’s foreign policy objectives; decide what military resources are necessary to fulfil those objectives; and then allocate the financial resources necessary to provide the military capability. We have not had a defence review that fulfils those three principles in all the time I have been in the House of Commons.

The hon. Member for Merthyr Tydfil and Rhymney made a sound point when he said that 2% cannot be described as a panacea for all the ills of defence. If 2% is to be spent, it must be spent wisely. We do not have to go far in Europe to see that several of our allies spend money, perhaps getting up towards 2%—there are not enough of those countries—which could much more readily be spent otherwise. For example, it could be spent on a greater amount of interoperability, force specialisation and such things. There is no point Mr Juncker talking about a European defence policy when European states have not yet properly fulfilled their responsibilities to NATO, of which almost all of them are members.

--- Later in debate ---

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

This has been a very good debate. We have heard 19 speeches from Members in all parts of the House, although, yet again, no Scottish National party Members have been present for a debate on defence. I congratulate the hon. Member for Basildon and Billericay (Mr Baron) on making the debate possible, and also on maintaining the role that he has played throughout this Parliament of political pain in the posterior of the Prime Minister.

I particularly want to mention four Members who spoke today: my hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr Havard), the right hon. and learned Member for North East Fife (Sir Menzies Campbell), the right hon. and learned Member for Kensington (Sir Malcolm Rifkind), and the right hon. Member for Croydon South (Sir Richard Ottaway). I understand that they will all be retiring at the general election, and I thank them not only for the speeches that they made today, but for their wisdom, and for their contribution to the House during their time here.

Another feature of the debate is that it has been completely void of Whips’ narks, although, in an intervention, the hon. Member for Skipton and Ripon (Julian Smith), who is no longer in the Chamber, produced the usual narrative of the “£38 billion black hole” that the Conservatives claim to have inherited. In a report published in July 2011, the Defence Committee said:

“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”

former

“Secretary of State’s assertion that ‘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.”

The debate has, of course, been dominated by the issue of the 2%. We have seen a great deal of “blue on blue” this afternoon, and I feel sorry for my hon. Friend—as I call him—the Minister. [Interruption.] Yes, he has drawn the short straw. However, he is passionate about defence, and he is very committed to it.

The right hon. and learned Member for North East Fife said that when it came to defence, the Treasury was always the problem. I am sorry, but that is not true in this instance. Last year’s autumn statement set out what the Government, including the Prime Minister, would need to spend between 2016 and 2020, not only to eliminate the deficit but to be in surplus by 2018-19. If, as we heard from the hon. Member for Penrith and The Border (Rory Stewart), there is flat cash over that period, we are talking about a £6.8 billion cut in the defence budget, not counting the other cuts to which the Chancellor referred in the autumn statement.As has been pointed out, health, education and overseas aid have been ring-fenced, so any further cuts made over that period would have to fall on Departments that have not been ring-fenced. That would bring us to a point at which defence spending would be not 2%, but 1.4% of GDP.

However, it is worse than that for defence. The Government’s policy is to ring-fence the equipment budget and increase it by 1%. Any cuts made will not be made to the entire budget; they will fall on 55% of it, which means operations. As we all know, the main cost driver in that area is people, notwithstanding the nonsense that the Prime Minister keeps reiterating—as he did during Prime Minister’s Question Time a few weeks ago in a reply to the hon. Member for Aldershot (Sir Gerald Howarth)—about the Army remaining at its current levels. Unless he has some magic formula to which we mere mortals are not party, I do not understand how he will ensure that that happens.

The Prime Minister now has a defensive strategy. It goes like this: “We try to massage the figures.” However, as the hon. Member for New Forest East (Dr Lewis) has said, that would be dishonest, and he is not alone in saying that. In The Times this morning, the former Chief of the Defence Staff, Sir Jock Stirrup, says he rejects including, for example, the intelligence budget in the figure:

“This is the kind of book-keeping for which you would go to prison if you were running a company.”

So clearly there is a concern. There are people in No. 10 who think if they massage the budget in some way, people will not spot the difference, but it appears from today’s debate that there are many on the Prime Minister’s own Back Benches with a lot of experience of, and commitment to, this sector, and he will find it difficult to pull the wool over their eyes.

I say to those on the Government Benches that I do not for one minute question their commitment to defence, because I know most of them very well, and they have spoken passionately over many years about their commitment to defence. But they have a dilemma, because in a few weeks’ time they will be standing on an election platform calling for a reduction in defence spending; they will have to somehow explain that to their electorate.

[Mr Gray]

I know of the hon. Gentleman’s personal commitment to defence; he is passionate about it, as we all are. He will also be standing for election in a couple of weeks’ time. Will he be standing on the platform that an incoming Labour Government will definitely commit to 2% or more on defence spending?

[Mr Jones]

Well, what I am not being is dishonest, which is what the Government’s position is. I shall reiterate the point that I made in the debate last week: what we have a commitment to, and will argue for, is maintaining the 2015-16 budget. Also, we will start the defence review—the detailed work that needs to happen, not the rushed job we saw last time—and that will inform the debate on future budgets.

[Mr Gray]

The same as us.

[Mr Jones]

No, it is not the same, because the Government and the hon. Gentleman have got the Chancellor of the Exchequer’s fiscal straitjacket around them—his commitments to reducing spending. There is a big difference, and it gives us a lot of leeway in making sure that we can deliver on our defence needs and foreign affairs commitments, whereas what the Government are putting forward will lead to a situation in which the budget is set, and there is no way that they can meet those commitments.

Something else has come out in this debate. The right hon. and learned Member for Kensington, the hon. Member for North Devon (Sir Nick Harvey), who is in a good position because he was a Minister in the Department at the time, and the hon. Member for Dewsbury (Simon Reevell) raised the idea that the Prime Minister convinced his Back Benchers and the military to take the pain of the 8% cut in 2010, and that somehow once we reached the sunny uplands—I think the hon. Member for Dewsbury referred to that—we would have an increase in the budget. That is clearly not going to happen if the Prime Minister’s commitment to deficit reduction is followed. We have come to expect such smoke and mirrors from the Prime Minister. We have had that narrative again; I do not for a minute question the former adviser of the right hon. Member for North Somerset (Dr Fox), who has written in today’s newspapers in a similar vein. It is clear that that commitment cannot be met if the Prime Minister is to keep to the deficit reduction process laid out in the autumn statement.

We need honesty from the Government on what they are going to do. My hon. Friend the Member for Gedling (Vernon Coaker) and I are not going to stand here and make the ludicrous promises we heard at the last general election from those now on the Government Benches. They promised a larger Army, more helicopters, and more of everything for the armed forces, but the Conservatives reverted to type, as they always do in government. The hon. Member for Dewsbury said that this was a right-left issue. No, it is not. The Conservatives’ record in office shows that they always cut defence, whereas Labour has always protected defence.

[Sir Peter Luff]

I genuinely want this to be a bipartisan debate, but could the hon. Gentleman clarify the shadow Chancellor’s comments in The Times on Tuesday this week, when he stated that his party would go

“nowhere near the huge scale of defence cuts you are going to see under the Conservatives”?

Does that mean that Labour will commit to at least the 1%-plus real-terms-equivalent budget increase?

[Mr Jones]

I know that the hon. Gentleman is not standing for re-election, but he needs to understand that the huge impediment to his party’s adopting the 2% target is the autumn statement. His party will have to bin that if it wants to commit to the 2%. This allows us a lot more flexibility. We will ensure that the findings of the defence review are what drive our defence needs. That is in contrast to what happened in 2010 and what is happening now, with the Chancellor of the Exchequer driving the debate with the support of the Prime Minister.

The right hon. Member for Lagan Valley (Mr Donaldson) made a clear commitment that his party would seek a commitment to the 2% expenditure target from any other party before supporting it in a future Government. The Prime Minister has employed a lot of diversionary tactics in the past 24 hours, because he knows that he has a problem in this area. He clearly wanted to massage the figures, but that has now been blown out of the water.

Then we had the nonsense last night of the Defence Secretary writing to my right hon. Friend the Leader of the Opposition about whether the nuclear deterrent would be up for negotiation in any future deal with the Scottish National party. I want to nail that one quite clearly: no, it would not. We are not going to do what the Conservatives did when they came into office in 2010. They played fast and loose with the nuclear deterrent by doing a deal with the Liberal Democrats to delay the implementation of the decision to replace Trident, which the Labour Government had already voted for. It was this Government, in the deal that was done in May 2010, who delayed that implementation, so I am not going to take any lessons from the Conservatives about doing deals, or using our nuclear deterrent in some kind of political poker game as a means of getting into office.

[Simon Reevell]

In passing, may I point out that the quotes recently attributed to me were not in fact mine? Is the hon. Gentleman in any way embarrassed by the fact that, within the space of 10 minutes, he has turned what was a sensible debate into a party political broadcast?

[Mr Jones]

Not at all, because I am actually on the hon. Gentleman’s side in trying to expose the Government’s illogical approach. I think I am right in saying that it was he who described the attempts of the Prime Minister or his advisers to massage the figures as “kindergarten economics”. There is an honest argument to be made to the British people about what we are doing on defence, but the hon. Gentleman cannot have it both ways. He cannot stand before his electorate in Dewsbury in a few weeks’ time and say that he wants his Government to commit to 2% when he has also signed up to the Chancellor’s deficit reduction strategy. I am on his side when we argue about defence—I have argued passionately about the subject from the very moment I entered this House, as people know, and I will continue to do so—but will he be able to look his electorate in the eye and say that his party is committed to 2%? No, he will not. The manifesto on which he will be campaigning will actually offer the opposite: it will propose reducing defence expenditure.

[Simon Reevell]

This afternoon’s debate has been contributed to by a large number of people who put a belief in defence above party politics, and they have been objective in their criticism of both sides. That mood has changed since the hon. Gentleman got to his feet, and that is a shame.

[Mr Jones]

I am a very thin-skinned individual, as people know, and I am wounded by the hon. Gentleman’s suggestion. However, if I have exposed the inconsistency in the Government’s—

[Simon Reevell]

This is party politics.

[Mr Jones]

Well, it might be party politics, but if I have exposed the inconsistency between what the Chancellor of the Exchequer and the Prime Minister have said about deficit reduction over the next five years on the one hand, and what the hon. Gentleman and others on his side have said about their support for the 2% on the other, then I am sorry, but I am guilty of that.

This is an important debate and I am glad that we have had it. May I also say that the Members who said we should have more of these debates made an important point? We used to have the Back-Bench debates annually, and they were important to Members on all sides in ensuring that defence went up the political agenda, and that we had the scrutiny we needed.

Let me finish with this final point: irrespective of party politics—the hon. Member for Dewsbury will have more of that in the next few weeks, if he is standing for re-election—if there is one thing that unites us, it is our thanks, support and admiration for the vital job the men and women of our armed forces do daily. We sometimes forget the sacrifice that they and their families make. That is one thing that, irrespective of our disagreements on the detail of defence policy, we should never forget.

[The Parliamentary Under-Secretary of State for Defence (Mr Philip Dunne)]

This has been a timely debate, secured by my hon. Friend the Member for Basildon and Billericay (Mr Baron), who, as the House knows, takes a particular interest in defence. I gently point out to the House that although the Backbench Business Committee is responsible for this debate and a number of hon. Members have said it is a shame there are not more debates on defence, there was a debate on Monday of last week on this very subject in Government time. Hon. Members need to recognise that the Government are giving due time to these important matters.

This is a timely debate because it comes as we prepare for the comprehensive spending review and the strategic defence and security review, which will follow the general election. There is no doubt about the support for our armed forces from all 20 Members who have spoken today, including the Opposition spokesman, and about the importance of defence to the nation’s security. Fittingly, this debate was used as an opportunity to speak by a number of hon. Members who are leaving the House later this month having served the House with particular distinction, particularly on defence. I pay tribute to my right hon. and learned Friends the Members for Kensington (Sir Malcolm Rifkind) and for North East Fife (Sir Menzies Campbell), who unfortunately has had to catch a train, although I told him I would mention him; to my predecessor, my hon. Friend the Member for Mid Worcestershire (Sir Peter Luff), who I am delighted to see in his place; to my right hon. Friend the Member for Croydon South (Sir Richard Ottaway), who has given considerable service to this House—I had not appreciated that he had also served on a carrier in an earlier career; and to the hon. Member for Merthyr Tydfil and Rhymney (Mr Havard), who has been a very influential figure on the Defence Committee. I am pleased they have all been able to participate, alongside the many other Members whose contributions I may or may not have time to commend.

Clearly, in a democracy, strong defence requires a strong economy, and as we head into the next Parliament, securing our economic recovery will be vital to securing defence spending. We do recognise—we were challenged by some hon. Members on this—that the threats we face have changed since the last strategic defence review, and they will be carefully reviewed in the next SDSR, which will help to determine the investment choices of the next Government.

I listened carefully to the Opposition spokesman, the hon. Member for North Durham (Mr Jones), a former Defence Minister, whose commitment to defence I do not doubt. I have, however, had the opportunity not only to listen to his remarks today, but to read the interim report—I believe it is described as No. 8—of Labour’s so-called zero-based review, the defence element of which was published only on Saturday. I gently remind the House that he was making some claims about defence being in a better place under a potential Labour Government, but the zero-based review’s foreword indicates that, were Labour to have the opportunity, it would carry out

“a root and branch review of every pound the government spends from the bottom up”.

The defence volume foreword says

“we will make appropriate savings in the Defence budget”.

I take that to mean that every pound of defence spending will be up for review and is not secure as a consequence.

[Mr Kevan Jones]

It is a sensible way forward to ensure, as I said in the debate last week, that every single piece of our defence expenditure is reviewed to ensure that we get maximum value for money. If we are going to meet the targets for 2015-16, savings will have to be made and that will be reinvested in what can actually be done. What we do not have is the fiscal straitjacket that the Minister has come 2016-17.

[Mr Dunne]

The only comfort that this House can take from the Opposition’s position is that one of the very few Government Departments that the shadow Chancellor would not abolish is the Ministry of Defence.

I wish to set out some context about how, since 2010, defence spending has required, and has undergone, significant reform. The situation we inherited from the Labour Administration was chaotic. There was a severely overheated programme with costs that outstripped the available budget, which left a black hole of £38 billion. Difficult decisions were routinely ducked. The Gray report, commissioned by the previous Government, identified that the average equipment programme overrun was five years, and with an average increase in cost of £300 million. The National Audit Office’s major projects report for 2009 evidenced an increase in costs in that year alone of £1.2 billion across the major projects, including the infamous decision to delay the carriers in a desperate attempt to cram that year’s spending into the available budget. To sort that out required one of the biggest defence transformation programmes undertaken in the western world. Today, the defence budget is in balance—

[Mr Kevan Jones]

rose—

[Mr Dunne]

No, the hon. Gentleman has had his chance. The defence budget is in balance and our plans are affordable. We are on track to deliver £5 billion of efficiency savings in the next Parliament, including £1 billion from the equipment support plan alone. Incidentally, the half-baked plans in the Labour review “A New Deal for UK Defence” would deliver only some 1% of what we are already saving in the Department. The proof of our transformation was set out in the National Audit Office major projects report for 2014, which showed a reduction in cost of £397 million across our 11 largest projects. That was the Ministry of Defence’s best performance on cost since 2005 and best performance on delivering projects on time since 2001.