Fiscal Policy: Defence Spending

Debate between Luke Pollard and James Cartlidge

Monday 27th January 2025 Commons Chamber

[James Cartlidge (South Suffolk) (Con)]

(Urgent Question): To ask the Secretary of State for Defence if he will make a statement on the impact of Government fiscal policy on defence.

[The Minister for the Armed Forces (Luke Pollard)]

The Government’s plan for change says that we will

“set out the path to spending 2.5% of GDP on defence in the spring”.

I am genuinely grateful to the hon. Gentleman for asking this urgent question. It gives me the opportunity to reiterate what the Prime Minister has said, what the Defence Secretary told the House on Wednesday last week, and what the Minister for Defence Procurement and Industry repeated in the House on Friday, which is that this Government have a cast-iron commitment to spending 2.5% of GDP on defence, and that we are already delivering for defence by increasing defence spending. At our first Budget, we announced an extra £3 billion on spending on defence in the next financial year.

[James Cartlidge]

Thank you for granting this urgent question, Mr Speaker. Before I turn to the specifics, I hope you will indulge me and allow me to say on behalf of His Majesty’s Opposition that we join all colleagues today in marking Holocaust Memorial Day. May we never forget or be complacent about the lessons.

Last Wednesday, the Defence Secretary stood at the Dispatch Box and laid bare the extent of the Russian grey zone threat. This is not a distant threat, but one that has been lurking in our own waters, threatening the United Kingdom and our critical infrastructure. I heard what the Secretary of State said, and responded by confirming that he had our full support in standing up to the Russians. I said that this showed why we urgently needed to increase defence spending. But there is one big problem. The rest of us were listening, but the Chancellor of the Exchequer was not. Despite all the evidence before our eyes of the growing threat, we learned this weekend from multiple sources that spending 2.5% will be delayed beyond 2030. Can the Minister disown such talk, and specifically confirm that we will hit 2.5% during this Parliament?

The Treasury is not just failing to back more defence spending; it is hitting our armed forces with higher taxes on death in service benefits and education. The Secretary of State confirmed on Friday that the application of inheritance tax to death in service benefits for the armed forces would go ahead. We understand that to be causing deep alarm throughout the forces community.

As for the education tax, we knew that the continuity of education allowance would not be uprated to 100% of the VAT impact, leaving many service personnel thousands of pounds out of pocket, so since the summer I have called for a full exemption for children of armed forces families. However, in a written answer to me in November on the continuity of education allowance and schools VAT, the Minister for Veterans and People said that

“the new VAT policy does not offer any exemptions”.

Yet on Friday we learned that children of US armed forces families serving in this country and attending British independent schools are exempt from VAT on their UK school fees. I do not begrudge them that—US forces are based in our country to defend us—but we want the same treatment for our people.

Finally, can the Minister confirm that the Secretary of State will bang on the door of No. 11 to demand, first, that the tax on death in service benefits be dropped and, secondly, that British forces families be treated the same as their American colleagues and granted a full exemption from education VAT? Is it not time that Labour backed our armed forces with action, rather than just words?

[Luke Pollard]

I agree with the hon. Gentleman’s words about Holocaust Memorial Day. His Majesty the King has been in Auschwitz for the 80th anniversary, and he spoke for the nation when he said that we will remember this evil long after the survivors of the Holocaust have passed.

I have set out clearly that, in the spring, we will lay out a path to spending 2.5% of GDP on defence. We will also publish a strategic defence review, setting out what we will spend the money on and how we will respond to emerging threats. As the hon. Gentleman will know from the Defence Secretary’s statement last week, we will make it absolutely clear to those who threaten us that we will use the formidable capabilities available to us to defend the UK and our allies.

We inherited a situation in which, during their entire time in power, not a single Conservative Government spent 2.5% of GDP on defence. The last time that 2.5% of GDP was spent on defence was under the last Labour Government. We have inherited falling morale; a retention and recruitment crisis; service personnel living in mouldy, broken homes; and a hollowed-out and underfunded military. That is what the SDR will seek to fix, and I hope that the hon. Gentleman will be able to give us his full support.

Having listened to last week’s debate, the hon. Gentleman will know that those who die on active service are exempt from the inheritance tax provisions. He will also know that the Defence Secretary has uplifted CEA support to 90% for those who privately educate their children while serving in the military. We will continue to support our armed forces, renewing the contract between the nation and those who serve. We will publish the defence review in the spring, when we will also set out our path to spending 2.5%.

Chagos Islands: UK-US Defence Relationship

Debate between Luke Pollard and James Cartlidge

Monday 2nd December 2024 Commons Chamber

[James Cartlidge (South Suffolk) (Con)]

(Urgent Question): To ask the Secretary of State for Defence if he will make a statement on the impact of the Government’s Chagos negotiations on the UK-US defence relationship.

[The Minister for the Armed Forces (Luke Pollard)]

I congratulate the hon. Gentleman on securing this urgent question. The Secretary of State has asked me to respond on behalf of the Department.

On 3 October, the UK and Mauritius reached an historic agreement to secure the important UK-US military base on Diego Garcia, which plays a crucial role in regional and international security. The agreement secures the effective operation of the joint facility on Diego Garcia well into the next century. The agreement is strongly supported by our closest friends and allies, including the United States. It has been supported by all relevant US Departments and agencies, following a rigorous scrutiny process.

This base is a key part of UK-US defence relationships, as it enables the United Kingdom and the United States to support operations that demonstrate our shared commitments to regional stability, provide a rapid response to crises and counter some of the most challenging security threats we face. The President of the United States applauded the agreement. To quote him directly:

“It is a clear demonstration that through diplomacy and partnership, countries can overcome long-standing historical challenges to reach peaceful and mutually beneficial outcomes.”

Several other countries and organisations, including India, the African Union, the UN Secretary-General and others, have welcomed and applauded this historic political agreement.

Our primary goal throughout these negotiations, which started over two years ago under the previous Government, was to protect the joint UK-US military base on Diego Garcia. There will be clear commitments in the treaty to robust security arrangements, including arrangements preventing the presence of foreign security forces on the outer islands, so that the base can continue to operate securely and effectively. The operation of the base will continue unchanged, with strong protections from malign influence.

For the first time in 50 years, the base will be undisputed and legally secure. Continued uncertainty would be a gift to our adversaries. That is why the agreement has been welcomed by all parts of the US system, and other critical regional security partners. Agreeing the deal now, on our terms, meant that we were able to secure strong protections that will allow the base to operate as it has done. We look forward to engaging with the upcoming US Administration on this and many other aspects of the UK-US special relationship.

Finally, hon. Members can be reassured that the long-term protection of the base on Diego Garcia has been the shared UK and US priority throughout, and this agreement secures its future. We would not have signed off on an agreement that compromised any of our security interests, or those of the US and our allies and partners.

--- Later in debate ---

[James Cartlidge]

Thank you, Mr Speaker, for granting this urgent question.

At a time when we face the most challenging military threats for years, surely our top priority should be to preserve the strongest possible US-UK relations, given that this is so vital to our national security, yet it appears that the Government are seeking to agree a deal surrendering the sovereignty of the Chagos islands before President Trump is formally in post. We know that the new US Administration are concerned about the Government’s deal because presumptive nominee US Secretary of State Marco Rubio has said that the deal

“poses a serious threat to our national security interests”.

He has also suggested that

“it would provide an opportunity for communist China to gain valuable intelligence on our naval support facility”.

Let us be clear: our military base on Diego Garcia is a vital strategic asset for the UK in the Indian ocean, and it is critical to our presence and posture in the Indo-Pacific region. In particular, it is an especially important base for the United States, and we believe that anything that damages its defence posture, particularly in relation to China, also undermines our national security. We understand that the new Mauritius Government have now launched a review of the deal.

Will the Minister therefore confirm that the Government’s policy really is to try to rush through their Chagos deal before President Trump’s inauguration? Does he not see how that would be hugely disrespectful to the new Administration and President Trump’s democratic mandate? Given that we now know it is common for the MOD to state the cost of overseas bases, will he be transparent and finally tell the House how much we will have to pay to rent back the vital military base that we currently own?

Finally, although we would prefer the Government to cancel the whole deal, at the very least will the Minister pause any further ratification until the new US Administration are in place and the Mauritius Government have concluded their review?

[Luke Pollard]

I thank the hon. Gentleman for his questions and his strong focus on this matter. I think he has a bit of amnesia from when the Government he was a part of started these negotiations. They held 11 rounds of negotiations, and it took a Labour Government to conclude them. We have done so in the best interests of our national security, and the national security concerns of our closest allies. It would not have been possible to secure a deal and the support of the United States if all parts of the US security apparatus were not in support of it, and as a former Defence Minister, the hon. Gentleman will know that to be true, regardless of the politics he must play today.

The hon. Gentleman asked two quick questions. We intend to continue our dialogue with the new Mauritian Government and our friends in the United States. He will be aware, of course, that it is illegal under US law for us to engage directly with the new Administration until they come into place, but we will continue to have dialogue with our US and Mauritian friends.

I am surprised that as a former Defence Minister, the hon. Gentleman is asking about costs. He will know that it is usual for us to declare the operating and running costs of overseas bases, but it would compromise our operational security and long-term relationships if we were to declare the Government-to-Government payment for overseas bases. We have declared the operational running costs of our overseas bases, and we will continue to do so in response to parliamentary questions. Detailing the security payments for Government-to-Government interactions is not something that this Government do, and was not something that his Government did either.