Defence Spending

Lord Coaker Excerpts

Thursday 31st October 2024 Grand Committee

[The Minister of State, Ministry of Defence (Lord Coaker) (Lab)]

I start by thanking the noble Baroness, Lady Goldie, for that ringing endorsement. My colleagues always read your Lordships’ debates with intense interest and scrutiny, so they will no doubt look at that. I thank the noble Baroness, Lady Goldie, for the way in which she puts her remarks strongly but also in a proper and challenging way—I appreciate that.

I will come on to some of the specifics about the 2.5% but before I forget, I want to take on the point the noble Baroness, Lady Smith, made, and I will put my head above the parapet on this one. My understanding of employer national insurance is that the public sector does not pay it. I think that answers her question. I have given that answer out of my own knowledge and professional experience of these matters, plus the fact that I heard Kate McCann on Times Radio yesterday. The question was asked about the impact of employer national insurance on the National Health Service, to which the reply was that the National Health Service does not pay employer national insurance because it is a public sector body. If I am wrong, I will write to the noble Baroness and to every other member of the Committee, but I think I am right. If I am not, I will correct the record, because it is an important question, but I do not think that the Armed Forces pay it.

I will answer the specific questions of noble Lords, but the position of the Government is as was laid out in the Budget, and it is on the various pages in the Autumn Budget report, which noble Lords will have read. There is not a scintilla of difference between any of us about the desire to protect our nation, to have the Armed Forces that we need and to meet all those threats. There is a discussion and a debate about how we get to 2.5% and when we should do that. Indeed, as the noble Lord, Lord Bilimoria, raised, as well as the noble Lord, whose name escapes me—

[A noble Lord]

Lord Mountevans.

[Lord Coaker (Lab)]

Yes. They talked about 3% and beyond. I have even heard people then start to talk about 3.5% or 4% or whatever. So, there will be a debate on what one considers to be right, but the Government have said that we have seen what the policy is and 2.5% will be at a future fiscal event. That will be laid out, and the additional £2.9 billion for next year will be laid out with that.

Of course, alongside that, the defence review is looking at various issues. A number of your Lordships —the noble Earl, Lord Attlee, the noble Baroness, Lady Smith, and others—talked about the fact that how we actually spend that money is as important as the actual amount. What are the threats that we need to face in the future? With those few introductory remarks, that is the position of the Government, and that is where we are, so let me turn to some of the specifics raised in the debate. I know that the noble Baroness, Lady Goldie, will be disappointed, but that is the position of the Government, which I am reiterating to the Committee.

I thank the noble Viscount, Lord Trenchard, very much for ensuring that we have this debate. He was very fortunate that it came the day after the Budget—I might have preferred it the day before the Budget, but there we go. The serious point is that he has brought forward an important debate, he made the points about the Budget and I responded in the way I have by laying out the Government’s position.

I want to go through some of the questions that were raised, alongside the whole issue of the Budget. The noble Viscount is absolutely right about AUKUS and the importance of that within the defence review, and it is protected within that. There will be a debate and a discussion about the best way of delivering that. It was started under the last Government—the noble Baroness, Lady Goldie, was involved. That is protected within the overall strategy of the defence review, although there will be a discussion about the best way of delivering it, and the noble Viscount would expect nothing else.

The noble Viscount is a firm and stout defender of the Indo-Pacific. He will know that, notwithstanding the Government’s NATO-first policy, we also understand the importance of the Indo-Pacific. He will know that when I have been there, I have talked about the indivisibility of conflict: that what happens in the Indo-Pacific impacts on Europe, and what happens in Europe impacts on the Indo-Pacific, on the south of our globe and on the High North. All those things are interrelated. The challenge of the future and of funding for the future, not just for our country but for others, is how we establish that global alliance of free, democratic nations in response to the threat from Russia, China, North Korea and Iran. There will be debate and discussion about how we do that, but it is very important.

The noble Viscount, Lord Trenchard, talked about the sixth-generation global combat aircraft. Last week I was at the Italian embassy, and the week before at the Japanese embassy. He will know that, time and again, I go and discuss with them the sixth-generation fighter and its importance within the defence review, which will come to its own conclusions. He will also know that we have just signed the treaty allowing the governance of that project, and we continue to make progress.

I know the noble Lord, Lord Bilimoria, will be disappointed by my remarks about the Government’s position, but that is our position and it is an absolute commitment. Our Treasury Minister is here, who will also have heard it. The 2.5% commitment will absolutely be delivered. At present, we cannot give a timeline, but we are determined to deliver it and will do so when we are able. We all know how much the noble Lord has helped Ukraine, not just with military support but with the medical and other support that he has given. He is to be much congratulated on that work.

I cannot predict the outcome of the American presidential election. It is not for me to discuss that or say who we would want to win, but I will say that the importance of the US-Europe relationship is crucial to the defence of democracy and the free world. We will have to ensure that, whatever the outcome, we work with our American colleagues and friends, and the American system, to deliver that. I believe that the American system, founded on one of the greatest declarations of independence and the establishment of freedom, will not forget its roots.

The noble Lord and the noble Baronesses, Lady Buscombe and Lady Smith, mentioned the problem of recruitment and retention. A review is ongoing on that; it has not yet reported but it will look at many of the matters that noble Lords have mentioned, including the inability to recruit the numbers that we need, skilled labour shortages, retention and the important point about accommodation and welfare. All of those will be looked at as a package. We are starting to try to invest the money in housing, some of which is not acceptable.

[Baroness Buscombe (Con)]

I am sorry to interrupt, but is that review independent of the MoD?

[Lord Coaker (Lab)]

No; it is being conducted within the MoD. I am pleased that the review is taking place, and it is being done without fear or favour. We want it to come forward with proposals on those very real problems, and I have great confidence in that being done.

The noble Lord, Lord Mountevans, mentioned the crucial question of the defence industrial base. There is no doubt that we and our allies have not looked at how we ensure that we have the defence industry capability that we need to prosecute a war of some length. That has caused all of us to reflect on what we do about it. Our response has been to appoint a National Armaments Director—I believe we have already done so but, if not, we will—who will look at how we ensure that we have the armaments we need. One of the most distressing things about Ukraine—the noble Baroness, Lady Goldie, would have witnessed it; it might have happened when she was the Minister—was to read about Ukrainian troops having to retreat because they did not have sufficient ammunition or shells. That is not acceptable to us. Everyone is looking at what we do there.

The noble Baroness, Lady Smith, made a point about procurement. We absolutely need to look at that. She heard what I had to say about the National Armaments Director. She was right to make the point about economic growth: of course, 2.5% of a growing economy is more than 2.5% of a declining one. One of the arguments that might be made about the Government’s economic strategy is that, in the short term, they are making difficult choices to allow the economy to grow in a way it might not otherwise do; that will be of benefit, notwithstanding the short-term discomfort it may cause some of us.

I have, I think, dealt with most of the major points made. I finish on something said by the noble Lord, Lord Shinkwin, because it is a really important point that I want to make sure is heard by our allies and friends. It is important for us in these debates—in this Committee, in the Chamber and in the Commons—to have the confidence to let our allies know that, notwithstanding our debates and discussions on the right configuration of our Armed Forces and the right amount to spend on them, we as a country are determined, alongside our allies, to defend freedom and democracy wherever they are threatened across the world. That is the message Putin should hear and understand.

We will not relent or step back in the face of Russia’s illegal invasion of Ukraine. This country has never stepped back when it has faced an adversary in this way; that is the message we should take forward. The fact that we can discuss what we are debating today in a democracy, without fear or favour—even if our opinions are unpopular—is something that we have fought for long and hard. Whatever our disagreements about the Budget, that is the message that Putin, China, as one noble Lord mentioned, Russia, Iran and North Korea should hear. This country has always stood up for democracy and always will.