NATO and the European Union

Lord Davies of Stamford Excerpts

Monday 7th December 2015 Lords Chamber

[Lord Davies of Stamford (Lab)]

My Lords, I congratulate the noble Lord, Lord Wallace, on bringing this Motion forward, and he could not have found a more pertinent moment to have done so. We all need the Armed Forces, and we have had a reminder in horrifying terms just recently of how much we need them.

We do not just need Armed Forces; we need the best Armed Forces. That is to say that we need to select people very carefully, pay them decently, look after them properly and, above all, give them the best training and equipment that we possibly can. We cannot ever fight in this country, or in any democracy, labour-intensive warfare; it must be capital-intensive warfare. We must make sure that, to the greatest degree possible, human lives are protected and that we achieve maximum effect through the capitalisation of the equipment that we provide. That has been the principle on which we have based our defence policy and defence procurement policy for quite a long time, and it was certainly the principle we adopted when I was Defence Procurement Minister during the Iraq and Afghanistan engagements.

The trouble, of course, is that such a policy is extremely expensive. The defence cuts that we have had over the past five years have been egregious and quite disgracefully irresponsible—thoroughly irresponsible. Reference has already been made this evening to the problems raised in the maritime surveillance area. Of course, we always have constraints. We had financial constraints in our time, and there will always be financial constraints. At present, the RAF supposedly has eight squadrons of combat aircraft. That should mean 96 combat aircraft. What have we actually been fielding in theatre? For a long time, there have been eight Tornado jets and there may be two Typhoons as well—a tiny proportion of the aircraft that should be available. That shows how much our defences have been, sadly, run down. We cannot now sustain deployment of more than about 5,000 men—a brigade, really, with various supporting units. I am afraid that, as a result of the defence cuts, we are in a very thin situation.

Nevertheless, there will always be financial constraints and we have to think intelligently about how we can save money. Far and away the greatest potential for saving money in defence—and this has never been properly exploited—is international collaboration. That is a field of which I know something. When I was Defence Procurement Minister, I negotiated some substantial projects involving international collaboration in procurement. For example, I negotiated tranche 3 of the Typhoon programme, which has been a great success, and the renegotiation of the A400M programme, which had run into problems but is now doing very well and will be the greatest turboprop transport aircraft in the world for the next 30 or 40 years—replacing the Hercules in that important role. In my time, although I did not start it, I was also concerned with the F35 programme, which is a splendid piece of co-operation with the United States in which we provided, for the first time, $2 billion towards the R&D cost. That programme is also going well, although I am afraid to say that our uptake of the aircraft is much lower than it should be.

I had a particularly good relationship with my American counterpart, who was then Ash Carter, and with my French counterpart, Laurent Collet-Billon. Laurent and I managed to do together quite a lot of things in terms of common collaboration and providing various naval systems. As a result of that, I was the first Minister—probably the only British Minister—invited to go to Île Longue, the French SSBN base. Of course, I invited my counterparts to Faslane with the full knowledge and support of the Americans. We entered into a collaboration in that area, of course not involving anything to do with the weapons or the weapon delivery systems, which has been very promising. I also brought the French into the Mantis programme to develop an unmanned interceptor. We started to discuss with them something that has always been close to my heart, which is a theatre or tactical anti-ballistic missile capability. That project was completely buried when the new Government came to power in 2010, but I was delighted to see it revived and mentioned again in the SDSR the other day.

So a lot has been going on, but we have not really done more than scratch the surface in terms of getting those very valuable savings. The Typhoon programme, like all previous programmes, was based on a system known as “juste retour”, which meant that each participant in the programme expected to get back, in terms of the work on the project and the employment that flowed from that in his own country, exactly the proportion that corresponded to the money that he put up front to pay for the development of the particular system or platform concerned. That is a very inefficient system. It means that you deprive yourself at the outset of the benefits of competition and the economic pressures on suppliers that you can get through competition, so that is no good. We then set up a body called OCCAR, which is supposed to be an objective body based in Paris, which had some good civil servants from various EU countries seconded to it. It was supposed to act as an agent on behalf of procuring countries to deal directly with suppliers and solve their problems. The trouble was that countries had very little inclination to give major projects to OCCAR because they wanted to go back to the juste retour system.

This matter should be taken very seriously. Although I have never done a study of it myself, it is quite clear that savings to be made by intelligent joint and collaborative procurement run into the tens of millions. They are enormous and it is utterly irresponsible for us not to do what we can to try to secure them. Two things need to be done, and in the time that I have I will mention them. They are both very important and both politically extremely difficult. They are both obstacles in front of us, and we must find a way to surmount them.

One is that, in due time, we need to aim to remove the protection that exists in the treaty of Lisbon—in the Treaty on European Union—for defence procurement, which protects it from the principles of public procurement policy, which apply in every other sector. In other words, we should be prepared to lift all protection of our defence industry. Our defence industry is extremely capable, productive and innovative. Of course, there would be losers along the way, but, on balance, we would do very well from that. I do not know why we are so reluctant to go down that route. We should be championing such a move. It would have enormous economic benefits and dividends for us all.

The second very difficult thing that we need to do, which we must grasp in good time—I hope in my lifetime that we see some real progress towards it—is to go in for defence specialisation to make sure that we do not all have to have exactly the same parallel range of equipment. We can actually expect certain of our allies to deliver certain inputs. It is perfectly all right if we have that sort of relationship with the French for them to provide maritime surveillance aircraft, and we might be permanently out of the business. It would be very unsatisfactory to do that on a unilateral one-off basis, but as a general rule it could have been a practical possibility. We have so many helicopter systems, most of which I bought—I bought 22 Chinooks, and the new Government cancelled 10 of them. We have Pumas, which I got re-engined. We have the Wildcat, which I ordered. I think we still have some Sea Kings but we have got rid of the Lynx. We have Merlin—even I can hardly remember all the types of helicopter. It represents a fantastic logistical cost to keep all those different systems going and to keep men and women trained to operate them. It is very inefficient and something that should be spread over a much wider range of countries.

That is a very difficult thing to do politically, and initially everyone has 10,000 arguments why it cannot and should not be done, but it will be have to be done if we want to go on being able to defend our civilisation effectively, be able to make a success of our alliances and go on being able to respect that essential principle that our young men and women in uniform go into battle with the best possible support that money can buy.