Foreign Affairs

Lord Stevens of Birmingham Excerpts

Tuesday 5th March 2024 Lords Chamber

[Lord Stevens of Birmingham (CB)]

My Lords, at this stage of the evening, I will make one point— I hope in less than five minutes—and in doing so will draw heavily on the stark and authoritative soundings and warnings that the noble and gallant Lord, Lord Stirrup, the noble Baroness, Lady Goldie, and others have laid before us. That point is that, as a nation, we are not yet facing up to the fiscal consequences of the defence capabilities we now require.

For all the reasons we have heard this evening, sadly, the era of the peace dividend is over—the noble Lord the Foreign Secretary may recall that when he was Prime Minister from time to time I helped him spend the peace dividend in the NHS. However, when the threat facts change, our defence posture needs to change with them. In fairness, of course, the Government can point to increasing military expenditure, support for Ukraine, a procurement pipeline, Archer artillery, the Type 26 and Type 31 new ships for the Navy and so forth, but the fact remains that we clearly have capability gaps.

Those were laid out starkly by the House of Commons Defence Committee in its report at the beginning of February and we must square up to them. For every five service personnel joining the military, the MoD reports that eight are leaving. When it comes to the Equipment Plan for the Ministry of Defence looking out over the next decade, which accounts for about half —49%—of forecast defence spending, we see, according to the National Audit Office, a funding gap of £17 billion, at least. Indeed, there is a rather curious feature of the way in which that forecast defence equipment budget has been established. In the case of the Royal Navy and the Royal Air Force, the full predicted costs of their equipment requirements to deliver the Government’s objectives, set out in the integrated review and the defence Command Paper, are priced up, but in the case of the British Army, they are not. I asked a Written Question as to why there was this difference in the internal budgeting between different parts of the Armed Forces in the MoD. I was told on 21 December that the Ministry of Defence’s operating model allows top- level budget holders

“to have different financial positions and to be at different stages of addressing their financial pressures”.

I think one way of interpreting that Answer is to say that, in effect, the Army is being used as the balancing item for a set of unbudgeted requirements. As a consequence, it is very hard for Parliament and the Government to have a transparent debate with the public about the costs of resourcing the military capabilities that we say we need as a nation.

Of course, better procurement and stronger economic growth would, to some extent, dissolve these trade-offs. We will have a Budget tomorrow, so it is possible that the Chancellor will answer the question of when we will get to 2.5% of GDP and rise beyond that. However, I rather doubt it, because we all know that at this stage of the electoral cycle what is going on is a torturing of the OBR forecasts until they confess. The likelihood is that, at best, these commitments will show up in manifestos. To the extent that they do not, it will be vital that at the start of the next Parliament—whoever holds the reins of power—we are in a position to have a frank conversation with the British people about the progress, the trade-offs and the trajectory required to give us the capabilities we need. As the most reverend Primate the Archbishop of Canterbury said at the start of the debate, to will the end is to will the means.