Defence

Lord Beamish Excerpts

Tuesday 7th May 2024 Commons Chamber

[The Secretary of State for Defence (Grant Shapps)]

I beg to move,

That this House has considered defence.

In recent weeks, our armed forces have been required to use force to protect international shipping and to protect our allies. Our armed forces are the best of us; we increasingly need them, and we are increasingly asking more of them as well. When the threat picture changes, the first duty of Government is to respond, which is why this Government have committed to increase defence spending to 2.5% of GDP by 2030, the biggest increase in spending for a generation.

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

Will the Secretary of State give way?

[Grant Shapps]

I will just make a bit of progress first, keen as the right hon. Gentleman is. That will result in a £75 billion cash boost to our nation’s defences over six years from a flat cash baseline. Although we have had a long-held commitment to hit 2.5% when financial conditions allow, delivering that commitment now involves choices.

[Mr Jones]

If the Secretary of State is serious, can I ask him why next year, if we exclude the Ukraine funding from the defence budget, the core defence budget actually goes down?

[Grant Shapps]

It does not.

[Mr Jones]

It does.

[Grant Shapps]

No, it does not. The outcome from the defence budget, which must be the basis upon which the right hon. Gentleman is judging last year’s, includes supplementaries. In particular, it now includes the additional half a billion, which I can tell the right hon. Gentleman I chose to send to Ukraine as an active decision, rather than it coming into our main budget; I feel that that would have the support of the House. When we include all that, the budget increases. In any case, it already increased by 1.8%.

[Mr Jones]

It does not.

[Grant Shapps]

I know that the right hon. Gentleman wants to continue this debate, but the fact is that it does as soon as we include the supplementaries.

[Mr Jones]

Will the Secretary of State give way?

[Grant Shapps]

I will not for the moment, because this point has been discussed ad infinitum. In any case, we are offering another £75 billion in cash terms, which I note that the Labour party has yet to do because the funding requires a determination, in our case, to get the civil service back to pre-covid levels and to help pay for the expansion of our defence. It requires sound economic management and, above all, an understanding that an investment in deterrence today is wiser and less painful than paying to fight a war tomorrow.

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[Grant Shapps]

No, I still have not confirmed that because, before the extra half a billion, if we take the outcome from last year and the amount that was pledged for this year—including supplementaries, to be clear, which is the same basis as last year—it is an increase of 1.8%. However, this is rather beside the point, because since the time we debated this question at the Select Committee on Defence, we have committed to putting in another £75 billion in cash terms from the baseline over the next six years.

[Mr Jones]

Will the Secretary of State give way on that point?

[Grant Shapps]

I think the right hon. Gentleman will want me to complete this section. I would be interested to hear him apply that commitment to his own Front Benchers, because this Conservative £75 billion rise in defence spending is highly significant. It is precisely what our armed forces need to respond to axes of authoritarian states that are trying to reshape the world in their image, and it is the right thing to do.

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[Grant Shapps]

The hon. Gentleman will be interested to know that the way this is presented is entirely the usual way for the Treasury to present increases in spending. If I take him back to the previous cash boost for defence—I think it was £24 billion and it was described, I think, as being over five years—it was presented on exactly the same basis, and I do not remember the hon. Gentleman making the same point then. Regardless of the numbers, surely the point is this: will the Labour party commit to this timeline?

Labour Members said that they wanted to get to 2.5%, and that they would do it when conditions allow. We have now said that we know conditions will allow because of the management of the economy. Will they follow us, or will they send their Back Benchers out to criticise an increase, even though their own Front Benchers will not match it themselves? Perhaps we should not be surprised, given that the Leader of the Opposition, not once but twice backed Jeremy Corbyn—sorry, the right hon. Member for Islington North (Jeremy Corbyn)—to be Prime Minister. The Leader of the Opposition proclaims his support for our nuclear deterrent, yet he has stacked his Front Bench with anti-nuclear campaigners—I counted 11 who voted against Trident—while he goes up to Barrow and claims he is all in favour.

[Mr Kevan Jones]

The Secretary of State is doing, like last time he came out on this debate, his used-car salesman act. The fact of the matter is clear: the only way we get to £75 billion is if we freeze the defence budget for the next six years. Is he going to do that? Given what he announced last week, will he explain first where the money is coming from, and secondly what is the proportion of resource departmental expenditure limits and capital departmental expenditure limits? There is no detail at all. It is just an empty promise and a political slogan that he is batting around as his usual avuncular self.

[Grant Shapps]

The way the right hon. Gentleman tries to represent it is simply not true. If it were meaningless, why has his own party not taken the difficult decisions to get to the £75 billion which, to be clear, is the amount additional to what is currently programmed in? He is right that defence budgets may have increased over time, but £75 billion is still the additional figure. If it is so straightforward, why doesn’t he encourage those on the Labour Front Bench to do it? I think I know the answer. He asks how it will be paid for, and it will largely be paid for by cutting the civil service back down to pre-covid levels. Labour Members do not want to cut 72,000 from the workforce of the civil service so that it goes back down to pre-covid levels, and because of that they will not follow us in our commitment. That shows where their choices lie.

Labour Members say they want 2.5% and are keen to see that, but they are not willing to put in place the difficult decisions to reach that. By failing to take those decisions, they will be failing to fund our armed forces if they were to come into office. That would leave our nation more vulnerable, and play directly into the hands of our adversaries, including Putin.

In January, I set out a comprehensive case for increasing defence spending in response to what I described as “a more dangerous world”. After all, Putin is on the march, pursuing wars in the east of Europe while backing greater political influence and assassinations in the west. China has certainly become a lot more assertive in recent years. Russian mercenaries, Islamic extremists and military strongmen have overrun democracies and societies in Africa.

As Iran has nourished and manipulated its proxy militia and groups around the middle east, the Islamic republic itself has for the first time carried out an aerial assault on a democratic near-neighbour, Israel. Its Hamas terrorist allies brought mass murder to Israelis on 7 October, and they have brought pain to the Palestinians—both before and since—with the Hamas approach to running that area. Meanwhile, one of Iran’s other key allies—the Houthis—continues to hold global trade hostage in the Red sea. So, from Moscow to Tehran and from Beijing to Pyongyang, a network of authoritarian states is pressuring allies and our interests. Working together, they are more connected than they have ever been before.

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[Mr Kevan Jones]

Will the Secretary of State give way?

[Grant Shapps]

I have been quite generous; I will make a little bit of progress.

That is why this Conservative Government will act now. We are going to deliver the greatest strengthening of our national defence since the cold war. Some will argue that the threats we face are perhaps not imminent or existential. They may claim that increased defence spending is not a good use of money, which perhaps should go on other commitments—there are many to discuss—but I argue that we have seen the consequences up and down the country of the more dangerous world that I described in that Lancaster House speech.

In recent years, we have suffered terror attacks. We have also suffered cyber-attacks on business, on Government, as we were just talking about, and on critical national infrastructure. They were mostly not successful, but the amount that it costs to get around them increases all the time none the less. We have suffered intellectual property theft. We have seen Hong Kong protesters dragged into the Chinese consulate in Manchester and beaten. We have seen Iranian journalists threatened and stabbed in London. We have seen former Russian military officers assassinated in hotels in Mayfair and poisoned in suburban homes in Salisbury and, just last month, British citizens charged with setting fire to Ukrainian-linked business units in east London, apparently on the instructions of Russian intelligence.

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[Grant Shapps]

My right hon. Friend is absolutely correct. That is precisely the point, and that is exactly why it is right to invest in Ukraine. I do not want to make this a political speech—

[Mr Kevan Jones]

It’s the way you tell them.

[Grant Shapps]

This is a serious issue, and I am surprised by that sort of attitude. I want to ask, because it is a serious point, whether the Opposition are now ready to commit to that extra £500 billion if they were elected, because I have yet to hear that confirmed, and that is an important issue for our Ukrainian friends. I accept that the Ukrainians have the Opposition’s support, but they also need the pledge of money and the certainty that this House will provide it, come what may.

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[John Healey]

I am afraid there is nothing cast-iron about the figures, the plan or, indeed, the proposals for paying for it. I will come to that in a moment.

Before I took the first intervention from the hon. Member for North Wiltshire (James Gray), I wanted to pick up a final point that was made by the hon. Member for Westmorland and Lonsdale (Tim Farron) on the question of reviewing what we need to face the threats that we now face. The Defence Secretary is dismissive about the need for a strategic defence review, despite the fact that his own Department is preparing for exactly that, whatever the result of the next election. That was confirmed in the House last month by the Minister for Defence Procurement. He also made the point a month before, when the right hon. Member for Bournemouth East (Mr Ellwood) talked about a defence review and the Minister for Defence Procurement said,

“he makes an excellent point.”—[Official Report, 11 March 2024; Vol. 747, c. 27.]

The problem for the hon. Member for Westmorland and Lonsdale, who was involved in the five years of coalition government after 2010, and the problem for the Conservative Front-Bench team, who have been in government for the past 14 years, is that people judge Governments on what they do, not on what they say.

The Defence Secretary mentioned his January speech at Lancaster House, and he is right when he argues that what we do on defence sends signals to the world. What signal does it send to Britain’s adversaries when our armed forces have been hollowed out and underfunded since 2010, as his predecessor admitted in this House last year? What signal does it send to our adversaries when defence spending has been cut from 2.5% under Labour to 2.3% now, when day-to-day defence budgets have been cut by £10 billion since 2010, and when the British Army has now been cut to its smallest size since Napoleon?

[Mr Kevan Jones]

The present Defence Secretary was chair of the Conservative party until 2016. Is it not also a fact that, when the Conservative party was in coalition government, it cut the defence budget by 18% and not only reduced the size of the Army but made people compulsorily redundant? Had a Labour Government done that, we would have heard howls and cries from Conservative Members.

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[Mr Francois]

The right hon. Gentleman, a former Armed Forces Minister like me, is absolutely right. Many of them still have half their so-called airframe life remaining. As I have said, they are more than capable of intercepting and shooting down the threat aircraft that they would have to match. That is all the more reason to keep them against a rainy day, rather than flogging them off or breaking them up for parts. Crucially, creating such a war reserve would demonstrate a sign of intent to any potential aggressor that after many years of doing the opposite, the UK is now preparing to fight a sustained conflict with a peer enemy, should that become necessary. Hopefully, in so doing, we will make that eventuality far less likely.

Linked to the vulnerability of our radar stations and the shortage of fighter aircraft are the extremely worrisome delays in airborne early warning. The Royal Navy’s early warning aircraft, Crowsnest, is many years late. It has only recently entered service for the air defence of the fleet. For the Royal Air Force, the Boeing E-3 Sentry AWACS aircraft were withdrawn shortly after the integrated review was published in 2021, leaving us without a mainstream airborne early warning aircraft. The E-3 was meant to be replaced shortly thereafter by the Boeing E-7 Wedgetail, but the programme has been subject to multiple chronic delays and is still not in service.

The RAF is clearly embarrassed by this and is attempting to deploy chaff between in-service dates, when the aircraft could take off the runway, and an initial operating capability, when the aircraft might actually be ready to fight. The latest information I have is that the ISD could now be in autumn 2025, whereas the IOC could be in the first or even the second quarter of 2026, which is still two years away. That leaves a critical gap in our air defence capability for which the MOD, and Boeing in particular, must be held robustly to account. Moreover, the initial buy of five Wedgetail aircraft was inexplicably cut to three several years ago by ministerial fiat, even though we were contractually obliged to buy all five radars, which themselves were very expensive.

In short, the Boeing E-7 Wedgetail is rapidly becoming the RAF’s equivalent of the Army’s Ajax programme—a procurement disaster that has gone on year after year at vast expense to the taxpayer, without actually entering operational service, as Ajax still has not. The Defence Committee, alarmed by that, has invited the head of Boeing Defence, Space and Security, Mr Ted Colbert, to appear before the Committee at Westminster to provide an explanation, although we are still attempting to finalise a precise date for his personal appearance.

Boeing is an organisation in crisis after the sad deaths of more than 300 people caused by the two crashes of its 737 MAX aircraft. We have seen further serious safety incidents, most recently in January when a door flew off an Alaska Boeing 737 MAX 9 in mid-flight. That incident was followed by a number of so-called whistleblowers, involved either at Boeing or in its supply chain, coming forward with very serious allegations about failures in the way the company builds its aircraft. No doubt partly as a result, Mr Dave Calhoun announced that he will step down as chief executive at the end of the year. In the first quarter of this year, Boeing reported a net loss of more than $350 million, and it is still experiencing serious production problems across a range of aircraft, both civilian and military, of which the UK Wedgetail is but one example. The US Air Force also has numerous issues with Boeing, not least in its much-troubled KC-46 air tanker programme.

For many years, Boeing as a company has done extremely well in winning major multibillion dollar procurement orders from the MOD, in return for which it has placed very limited amounts of work on those programmes with the defence industry in the UK. To give specific examples, according to the MOD’s recent figures, on the E-7 Wedgetail, the estimated UK content is around 10%; for the AH-64 Apache, it is only 7%; for the P-8 Poseidon anti-submarine aircraft, it is barely 4%; and for the original CH-47 Chinook helicopters, it was just 2%. According to the answer to a written parliamentary question I tabled, the UK content for the new order of CH-47 extended-range Chinooks for our special forces will generate a UK workshare of about 8%. Taken together with the purchase of the Boeing RC-135 Rivet Joint electronic reconnaissance aircraft, for which no workshare figure is publicly available, that represents some $10 billion of business for Boeing from the UK MOD for which the UK workshare has been 10% at best and 2% at worst. Boeing has done incredibly well out of the UK MOD, while UK industry has done incredibly badly out of Boeing.

[Mr Kevan Jones]

Does the right hon. Gentleman agree that that is also bad news for the defence budget? Those contracts are in dollars, and the dollar exchange rate puts huge pressure on the defence budget.

[Mr Francois]

Another former Armed Forces Minister is right, and he will know that the effect of the dollar exchange rate on buying so many big off-the-shelf items from the US has cropped up time and again at both the Defence Committee and the Public Accounts Committee.

The problem does not apply just to air platforms. Boeing had a major logistics contract with the MOD called the future logistics information system, or FLIS, which was due to run until late 2020. However, as was evidenced by the Public Accounts Committee, in late 2020 the MOD signed a five-year contract extension called “Bridging the gap”, worth £515 million to Boeing, which was not even competed. That raises questions about the degree to which the MOD seems to be mesmerised by Boeing as a company, to the detriment of value for money for the UK and for our industrial workshare. Indeed, the PAC subsequently reported:

“We are…concerned to hear that the MoD awarded the contract for this £515 million programme to a large defence prime contractor without a competitive tendering process.”

That is all the more surprising given that in the 1990s, the standard policy of the MOD was to ask for a 100% offset in major off-the-shelf procurements of military equipment from abroad, especially from the US. For instance, in the late 1990s, for the purchase of the C-130J Super Hercules, Lockheed Martin was required to place work to the equivalent of 100% of the multibillion-dollar contract value with UK industry. The work could take one of two forms: direct offset, which is work on the aircraft platform itself, such as propellers or undercarriages or logistics support, or indirect offset, which is other high-quality work to be placed with the UK defence industry over the life of the programme, but not necessarily directly related to the platform itself.

Under the Blair Government, for whatever reason, the policy was quietly dropped. That has allowed a situation to develop whereby the MOD has bought a number of big-ticket items from the US without receiving any legally binding guarantees of compensating workshare for the UK industry. I therefore suggest to the next Government, of whatever political colour, that if they are reviewing defence, they might want to look at reintroducing the concept of 100% offset for any further major offshore procurements.

In some cases, it is operationally the right thing to buy something off the shelf from the US. I would argue that Wedgetail—at least when it was five aircraft, anyway—was the right decision, but I do not think it acceptable that we hand out such handsome contracts to foreign suppliers without UK industry being given its fair share.

In conclusion, a cynic might say that Boeing is a company increasingly in crisis, which is falling apart even more rapidly than the aircraft it purports to build. That is serious for us in the UK, as like it or not, Boeing is one of our major defence suppliers and is responsible for supporting key equipment in service. We do not want that company to fail. Therefore, we can only hope that the incoming management will take a firm grip of the situation and turn it around—the sooner, the better.

Lastly, it is very good news that we are reversing the downward trend in defence spending and are now investing more, rather than less, in the defence of the realm. That is very much to be welcomed, but it is a question not just of how much we spend, but of how well it is spent. I very much hope that with the new integrated procurement model and perhaps a couple of humble suggestions that I have been able to offer this evening, we can put more of that money to good use to ensure that we, our people and our allies remain safe in an increasingly dangerous world. Si vis pacem, para bellum.

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

Thank you, Mr Deputy Speaker. May I begin by putting on the record the whole House’s thanks to the members of our armed forces for the service they give selflessly to protect us all? It is often said that the first responsibility of a Government is to protect the nation, keep it safe and protect its citizens. I think we need to look at what has happened over the past 14 years.

My hon. Friend the Member for Halton (Derek Twigg) said in his contribution that the armed forces are being “hollowed out”—not his words or mine, but those of the former Defence Secretary, the right hon. Member for Wyre and Preston North (Mr Wallace). Have we got to that situation by accident? No, we have not. That has been a deliberate policy over the last 14 years, including the 18% cut in the defence budget up to 2015-16. Today, the defence budget is 7% lower in real terms than it was in 2010. As my hon. Friend said, we saw our armed forces personnel cut by nearly 50,000—they were not only cut; there were compulsory redundancies. If a Labour Government had done that, every national newspaper would have had a lot to say about it. One in five ships in the Royal Navy has been taken out of service. We have 200 fewer aircraft in the RAF now, and satisfaction ratings for service life are at an all-time low of 50%.

Is it a time for serious policy and serious money on defence? Yes, it is, but we have not got that from the Government or from the Prime Minister’s announcement, which is the usual smoke and mirrors. It is about soundbites that can be sold at the next general election. The Defence Secretary could sell snow to the Eskimos in his confident sort of way. I am not sure they would come back and buy more snow from him once they discovered what they had actually been sold.

If we look at what has been announced, an extra £75 billion is the headline. That will be repeated by every Conservative candidate in the general election, but we know they only get that figure if the defence budget would have been frozen for the next six years—something the Defence Secretary fails to admit. Also, where is the money? If my colleagues on the Labour Front Bench had announced this, straightaway people would be saying, “Where’s the money coming from? Where’s the detail?” There is no detail; it is just an aspiration—that is all it is. There is no separation between how much will be spent on resource and capital departmental expenditure limits. What we have from the salesman that is the Secretary of State is a whole shopping list of everything that will be put right by the supposed huge expenditure he has announced. It is pretty hollow.

Let us deal with facts. The Secretary of State does not like dealing with facts. It is like when he came before the Defence Committee. If we take the money to Ukraine out of the budget, the defence budget for next year—this was confirmed by the strategic finance director of the MOD—falls. The question that people need to ask at the next general election is: where is the money coming from? Why are our armed forces in such a dire state? We know the answer to that. It is because of the past 14 years.

We need to concentrate on three things: the defence of our homeland and the contribution to NATO, which has been mentioned; the capability of our equipment and how it can be delivered; and putting weight behind British industry and skills. The Secretary of State said earlier that the announcement meant a huge boost to UK defence expenditure, but the right hon. Member for Rayleigh and Wickford (Mr Francois) demonstrated what we have seen over the last 14 years: contract after contract given to the United States, without any commitment to UK skills. My right hon. Friend the Member for Warley (John Spellar) mentioned the case of the fleet solid support ship given to a Spanish shipyard. That would never happen in any other European nation. We must ensure not just that we have the right equipment and procurement procedures, but that decisions are taken to boost our armed forces and to help UK plc.

[Bob Seely]

Does the right hon. Gentleman accept that there is a balance? Clearly, one would like everything for the military to be produced in this country to support our industrial base, but at the same time we complain about procurement scandals when the kit turns out to be so much more expensive than elsewhere. We need a balance. When we can realistically produce stuff in this country, we should be doing so—obviously, I will make the case for radar on the Isle of Wight—but if we try to do everything in this country, we will need to increase the defence budget just to pay for poorer quality procurement. He does not seem to be addressing that point.

[Mr Jones]

I am sorry that the hon. Gentleman seems to be talking down the UK defence industry. He talks about radars in the Isle of Wight, which are some of the best radars in the world, but what are we doing? We are not giving long-term commitments to those capabilities. We are buying off the shelf from the United States and other nations. We are not just talking about buying British; it is about co-operation with our allies as well. The problem is that if we take a short-termist view, which is what has happened over the past 14 years, we do not get the commitments and the flow through of orders, nor the R&D, investment and certainty, that people on the Isle of Wight need.

The Secretary of State said that the UK is now on a war footing following this announcement. Why, then, did it take the Government nearly two years to procure the order for 155 mm munitions? That is not a war footing; that is a slow snail’s pace of procurement. We need to ensure that we get not only the finance and the increase in the defence budget, but that rapid throughput of work. That cannot be done just by placing one order this week and then leaving it for several years, thinking that somehow the defence contractors will still be there with their skills.

We need a thorough defence policy. One thing that has been missing in the last 14 years is a coherent defence industrial strategy. Even when the Government do come up with a strategy, such as the shipbuilding strategy, what do they do? The main argument for that strategy was that we needed to have a throughput of work at UK yards, so what did the Government do? They made an order where most of the work will be done in Spain. No other European nation would do that.

As has been said, this is a very worrying time, and I agree totally with my hon. Friend the Member for Halton that we need to make the case for defence. I have been doing that for 23 years in this House, as have others across the House. We need to make that case to show that the democracy that we take for granted is delicate and needs to be protected. We can protect it only if we invest in the capability to do so, because there are those, even beyond the immediate threat we see from Russia, who would happily see the precious democracy that we cherish snubbed out, not through argument and debate, but through violence and war.