NATO: Member State Spending

Lord Soley Excerpts

Wednesday 1st February 2017 Lords Chamber

[Lord Soley (Lab)]

My Lords, this debate takes place at a time of considerable instability in the world, but it is easy to forget that, apart from the horrors of Syria and aspects of the Middle East and Ukraine, the world is far more peaceful than it has ever been. The danger is one of complacency. I would not accuse the noble Earl who has just sat down of being a sycophantic Back-Bencher—I will leave him to decide that—but I am just a bit worried about complacency.

I raised two years ago the rapid rise in Russian defence spending—I think that at that time it was 10%. I was concerned that such an increase indicated why Russia was thinking of developing its potential. We have seriously underestimated President Putin’s intentions, particularly in Syria and to a considerable extent in Ukraine and elsewhere, as well as—and totally unexpected by me—in the world of cyber warfare. Those are serious threats to the stability of the world. One then has an unknown entity in the form of President Trump and an unknown situation in relation to Europe and Brexit. So instability should be our watchword. If instability exists—this goes back to something my noble friend Lord Touhig said in his excellent introduction—we should be mindful of the statement that if you want peace, you should prepare for war. We should perhaps bear that in mind, too, in relation to defence spending, because 2% is probably too low in the present circumstances. I know of all the economic difficulties, but if we want peace—which I think we all do—we must recognise that until human beings have better ways of keeping peace, this is probably the best way of doing it.

There is another point which is profoundly important. My noble friend Lord Touhig referred to pensions, particularly civilian pensions, and contributions to United Nations peacekeeping and so on being included in the defence budget. The noble Lord, Lord Jopling, read out the excellent and helpful list that is available from the Library of the expenditure of other countries on defence. The issue is not just one of creative accountancy, as the noble Earl, Lord Attlee, said; it is also that if we are claiming that we can include those things in our defence expenditure then so also can those countries that the noble Lord, Lord Jopling, read out. If we think of how little some of them are paying and if they have the same practice, it would be very useful for the House to know—I am sure that the Minister will not be able to answer right now—what the accountancy procedure is in those various countries. If they are including things such as pensions and contributions to United Nations peacekeeping, the position is even more serious than I thought.

[Earl Attlee]

My Lords, that was exactly my point about gendarmeries and the carabinieri. I put it very clumsily, but it was exactly that point.

[Lord Soley]

I accept that clarification; it is very helpful. I must admit that I am more concerned in a way about things such as pensions, particularly civilian pensions. What on earth are we doing including those in defence spending? If I was in Luxembourg right now, I would be thinking very hard about our accountancy system. I say to the Minister and to my own Front Bench that we should ask all NATO members to spell out what is included in that defence spending. I would not expect to see pensions and contributions to United Nations peace- keeping. We should take quite a hard line on that because, if we did, the figures would look much worse, but at least we could address the matter more seriously.

[Lord Jopling]

It might be helpful to have what the noble Lord suggests, but also let us point out that if defence spending is 2.21%, which the Library says it is—that same figure appeared in the Times only a few weeks back—it is worth roughly £4 billion, which is a massive amount of spending on top of the 2%.

[Lord Soley]

I understand and accept that point, which the noble Lord made very clear in his contribution, but I simply say that if we have a system where we include such things as defence expenditure, first, it opens the door to other countries which are paying in very little to do exactly the same—if they are not already doing it—and, secondly, it does not really help to say, “Well, because we’re spending a bit more, it covers that up”. Covering it up is not the answer. We are here to hold Governments to account, as I am sure the Minister will know. The aim is not to have accountancy of this type. That is where the Government have to answer.

I want to conclude on a wider point which is entirely political. We have talked about the potential threat from Russia, terrorism and other issues. What we do not look at in this current debate about Brexit is how Europe will change. We are so focused on the changes that the United Kingdom has to make, but we need also to focus on what will happen in the European Union, which cannot stay the same as it is now unless it is to have more problems of the type it has had with Brexit. There is discontent in Europe for a variety of reasons—they are not all the same as those here, but many are similar.

One of my concerns in this context was brought out by Mr Tusk’s comments on Mr Trump. He said that we should now see the United States as one of the risks faced by Europe. That is a dangerously unwise statement to make, but where it is true is that there is a problem about the relationship now between the European Union, the United Kingdom and the United States. We need to think that through in other areas. My strong view is that we need a settlement where Britain comes out of the European Union—I do not think that there is any going back on that in the near future; some people may disagree—but it does not come out of Europe. We must recognise that we need, and Europe needs, a very close relationship—indeed, a special relationship—between the EU and the UK. One way to do that—and it is not discussed in the present debate about Brexit—is via our expertise and our contribution in defence and international relations. Europe needs that as much as we do. In the current situation, we need to do more than just step up to the plate; we need to take a lead on defence and international relations in a way that not only reassures Europe that we are not walking away from it but helps cement what will have to become a special relationship between the European Union and the United Kingdom.

For all those reasons—and I recognise the economic priorities around—we need to increase the spending, not to get back to Cold War proportions but to recognise the threat from President Putin and the threats in the rest of world. I would also make a special plea for paying a bit more attention to how all the nations within NATO account for the money they provide. It is not sufficient to say that it is all right to use it for pensions and United Nations peacekeeping. If we allow that philosophy to go any further, let us not be surprised if other countries use it, too. That is a seriously bad idea for all of us.

[The Minister of State, Ministry of Defence (Earl Howe) (Con)]

My Lords, I congratulate the noble Lord, Lord Touhig, on his Question and on highlighting the importance to the alliance of all member states meeting the NATO target to spend at least 2% of their GDP on defence. I am grateful to all noble Lords who spoke this evening.

The alliance remains the world’s most powerful defensive organisation. For 68 years it has kept the UK and our allies safe. Today, it plays a critical role in deterring Russian aggression, strengthening Iraqi institutions, training local troops to stop Daesh and helping Afghanistan rebuild its security structure, to name but the most important of its current tasks. However, as a number of noble Lords today stressed, in today’s world of growing dangers, NATO is becoming more important than ever. It is worth mentioning what the new US Defense Secretary, James Mattis, said at his confirmation hearing:

“If we did not have NATO today, we would have to create it”.


The trouble is that in recent decades we have seen a marked decline in defence spending. Today, the UK remains one of only five nations to meet the 2% target. The best estimate for 2016 is in fact 2.21%, as my noble friend Lord Jopling pointed out. I also take the opportunity to remind noble Lords that the budget will increase by 0.5% in real terms each year of the Parliament. However, five countries in the alliance invest less than 1%. That approach is no longer sustainable. In the face of multiple and diverse threats, NATO must become adaptable by design: that is, transparent, flexible and able to take tough decisions swiftly. In turn, that requires us to spend more, more consistently and more efficiently. That is why from the Wales summit in 2014 through to the Warsaw summit in 2016 and beyond, the UK, alongside our US counterparts, has led efforts to encourage nations to put their money where their mouths are.

So, on the noble Lord’s Question, what progress have we made? Here I depart slightly from my noble friend Lord Attlee, with great respect to him, because the answer is quite a significant amount. Thanks to the defence investment pledge signed by NATO nations in Cardiff, we not only halted NATO’s decline in defence spending but reversed it. In addition to the five allies who meet the alliance target, a further 20 increased their defence spending and seven others plan to reach the 2% target by 2024. At the same time, we should not forget that overall spending is not the only metric we use to measure NATO progress. Three other factors are worth mentioning.

First, we have also seen 10 nations increase the proportion of their investment dedicated to new capability. The noble Lord, Lord Clark, was absolutely right to highlight how critical that is. At a time when our adversaries are making exponential advances in fifth-generation airframe technology and advanced communications, NATO must dedicate itself to developing vital disruptive capabilities, from cyber to space, and from autonomy to big data, to avoid obsolescence and keep ahead of the curve.

Secondly, NATO is becoming far more agile in being able to deploy its forces when the call comes, whether that is Daesh terror in the south or Russian aggression in the east. Since the Wales summit, NATO set up a very high readiness joint task force, the VJTF, to respond in short order to a full range of security challenges from crisis management to collective defence. We have also seen NATO planes policing Baltic and Black Sea skies and we established an enhanced forward presence in eastern Europe. That is currently in train. I am proud that the UK takes a leading role in all these areas. We are leading on the VJTF, we are sending our Typhoons to safeguard Romanian and Polish airspace, and we are deploying around 800 troops to Estonia, alongside around 200 troops from France and Denmark. We are also deploying a reconnaissance squadron to Poland of approximately 150 personnel, who will come under US command.

Thirdly, we are seeing the alliance become more interoperable. One of the NATO alliance’s greatest achievements has been enabling multiple nations to communicate, plan and operate together. Yet there remains work to be done, especially when aligning the defence aspirations of the European Union and NATO. Rather than be distracted by the prospect of European armies or joint HQs, we encouraged our EU colleagues to build on progress already made on tackling migration, applying sanctions to Russia and strategic communications. The joint declaration at Warsaw was about making these two organisations complementary not contradictory, working together on countering hybrid threats, enhancing resilience, building defence capacity, cyber defence, maritime security, and exercises. Clearly, that declaration was a welcome step in the right direction.

The noble Lord, Lord Touhig, focused on the budget and in particular the 2%. He expressed his concern about creative accounting and, I was sorry to hear, accused the Government of shamelessly massaging the figures. I gently point out to him that the House of Commons Defence Committee disagreed with that view. It said that there had been no creative accounting. Indeed, the prime reason it said so is that NATO determines the definitions for categorising defence spending, not the Government. As with other NATO allies, the UK updates its approach to ensure that it categorises defence spending fully in accordance with NATO guidelines by capturing all spending contributing to the defence of the United Kingdom.

I take the point of the noble Lord, Lord Soley, on the necessity of comparing like with like. All NATO members are assessed using the same guidelines so it is right that we should complete our return along NATO’s metrics or we could not be compared accurately with our allies. Incidentally, only one NATO ally does not include pensions: Bulgaria.

[Lord Soley]

Do the other NATO countries include things such as pensions to civilians as well as to military persons, and UN peacekeeping operations? Is that the Minister’s understanding?

[Earl Howe]

That is indeed my understanding. We are clear that NATO wishes to quality-assure the figures that it receives so that it can compare like with like. We believe that the figures are broadly comparable as between the member states of NATO.

On another level, comparing like with like is a bit of a flawed approach. As I pointed out in the recent debate of the noble Lord, Lord Robertson, the nature of defence spending inevitably changes over time. In the past, for example, we reported significantly more operational spend, such as when we were involved heavily in operations in Afghanistan. Clearly, that type of spending has diminished considerably. At the same time, the noble Lord, Lord Murphy, questioned—he will forgive me if I got this wrong—the legitimacy of including new categories of spend in the analysis. Of course, he will recognise that new threats require new spending. We have not, historically, included any spend on cyber but we do now and it is right that we should. From time to time, like all NATO allies, we must ensure that we are capturing all appropriate spend.

The noble Lord, Lord Touhig, questioned whether the Army had the ability to wage war. It is important to say that the Army, in line with the strategic defence and security review of 2015, is ready and capable of deploying a potent, large scale, war-fighting force at divisional level providing there is sufficient notice.

The SDSR of 2015 took us a step forward because, along with a commitment to spend £178 billion on equipment and to increase the budget year by year, as I mentioned, it mandated a modernised war-fighting Army division that will be larger and able to use cutting- edge technology to harness all elements of Joint Force 2025. Altogether, it will be a significantly more potent force and I hope that the noble Lord, Lord Touhig, would not disagree with that vision.

In a darker, more dangerous world, NATO is more important than ever. Let me reassure the House that the UK has no intention of easing up in our drive to adapt the alliance. In our strategic defence and security review of 2015, this Government spelled out our plan to strengthen our involvement, and since the referendum vote we have seen our commitment to the alliance intensify. The noble Lord, Lord Soley, said that we should not allow ourselves to lapse into complacency. I entirely agree with that, but if the progress we have made in recent years is no excuse for complacency, it is considerable cause for encouragement. It shows that the will is there.

Even those sceptical of the new US Administration’s plans should have been reassured, I hope, by our Prime Minister who, during her recent press conference with President Trump in Washington, reiterated that the US was “100% behind NATO”. The Government have no doubt about that commitment. While we can reflect on what the President said during his campaign—remarks such as “NATO is obsolete”—surely what matters is what is being said and done now, which is a lot of joint work. We are working with all NATO allies, including the United States, to make sure that NATO is capable of dealing with the risks posed to us. We are encouraging all allies to meet those investment targets. In fact, we believe that President Trump’s election presents a unique opportunity to forge ahead with NATO reform. The allies now have a chance to invest in this vital organisation to make it more interoperable and expand its international role, showing that it makes a difference not simply to European but to global security.

For almost seven decades, NATO has been the bastion and the bulwark of our defence. By continuing to press our partners to modernise and adapt the alliance, in the face of the 21st century’s mounting demands, we will ensure that it continues to be the cornerstone of our defence for many years to come.