Defence Spending

Paul Uppal Excerpts

Thursday 19th June 2014 Commons Chamber

[Mr Kevan Jones (North Durham) (Lab)]

I thank the Backbench Business Committee for proposing today’s debate and the hon. Member for Basildon and Billericay (Mr Baron) for introducing it. We have heard 11 contributions on the broad theme of the level of defence expenditure, while some of the new and developing threats to our nation have also been highlighted.

The debate is timely in light of last week’s National Audit Office report on Army 2020. I have seen many NAO and Select Committee reports over the years, but I have to say that this one has to be the most damning and critical I have ever read. The report is important, because it sums up all the shortcomings that characterise this Government’s position on defence. It also shows how the Defence Secretary simply failed to do his basic homework when it came to the Army 2020 reforms.

On page 7, the report says:

“The Department did not test whether increasing the trained strength of the Army Reserve to 30,000 was feasible”.

On page 8, it says:

“The Department did not fully assess the value for money of its decision to reduce the size of the Army.”

On page 19, it goes on to say:

“The Department…did not have a mature workforce model or good data to help it accurately assess how long it would take to recruit the required number of reserves”.

This is not rocket science—these are basic things that the Secretary of State for Defence failed to do in putting forward this defence reform.

Is it any wonder, then, that recruitment to the reserves is stalling? As of April 2014, the trained strength of the Army Reserve was 19,400 personnel, which has actually fallen in number since the plan was announced in 2012. That means that the reserves have recruited 67% fewer personnel than was planned for at this stage, and it is clear exactly how that has been allowed to happen. A series of preventable IT blunders were made because Ministers failed to follow through on their contractual obligations to Capita, the company selected to manage Army and armed forces recruitment. As a result of that basic incompetence, the taxpayer has incurred additional costs of around £70 million, written off an extra £6 million and, on top of all that, is spending an extra £1 million a month until the problem can be solved.

Since his first day in office, the Defence Secretary has prioritised the Treasury bidding and the need to ensure that the MOD meets the Chancellor’s deadline for cuts above all else. It is clear, and the NAO confirms, that there is only one element of the Army reforms on which the Government are making steady progress. It will not surprise Members to learn that, according to page 9 of the NAO report,

“The Army is ahead of its target to reduce its military staff…and deliver the staffing savings required by its reduced budget.”

Last week 1,000 more servicemen and women were made redundant, in addition to the thousands who had already lost their jobs. If Ministers had put as much effort into the detail of the Army 2020 reforms as they are putting into the issuing of P45s, Army 2020 might not be in its present parlous state.

[Paul Uppal (Wolverhampton South West) (Con)]

One sentiment has featured very largely in all the speeches that we have heard this afternoon. Obviously, much has been said about the 2% figure to which we aspire, but a deeper theme has emerged. It has been pointed out that modern politicians are often subject to short-term pressures, but these are, in fact, very long-term issues. I say that as someone who comes from a dual cultural background. When I speak to people in the east, they tend to say that we do not often have the stomach, the commitment or the long-term view to tackle these issues head on.

[Mr Jones]

This is not about a long-term plan; it is about basic competence, which the NAO report has clearly called into question. The report warns that there are “significant risks” to the Army’s operational capability because of the Government’s incompetence in handling these reforms. That is why we have called on the Government not to proceed with their redundancy programme until they have seen evidence that the recruitment of reserves has increased enough to fill the gap.

Defence Ministers have developed a habit of returning to a small number of stock phrases and soundbites, usually when their record is under pressure, and I look forward to the Minister’s trotting out a few of them today. No doubt we shall hear—as this has been their mindset from the start—that the Government had no choice but to make these reductions, because they had inherited a £38 billion “black hole” from their predecessors. Let me, for the umpteenth time, quote from the National Audit Office’s 2009 report. It states:

“The size of the gap is highly sensitive to the budget growth assumptions used. If the Defence budget remained constant in real terms, and using the Department’s forecast for defence inflation of 2.7 per cent, the gap would now be £6 billion over the ten years”—

not the one year that has been cited by some Government Members. No doubt the Government do not want to talk about the fact that the “black hole” has now increased to £74 billion because of the 9% spending reduction in 2010. No one seems to know where they got the £38 billion figure from. I suppose they think that if they repeat it for long enough, people will actually believe in it.

Remarkably, it was the former Secretary of State, the right hon. Member for North Somerset (Dr Fox), who first claimed, in September 2011, that he had eradicated the “black hole” in less than a year. Six months later, the present Secretary of State claimed that he had plugged the gap. Perhaps the Minister will tell us who exactly should be credited with this feat. Those two individuals have clearly missed their vocation: if they can make a £38 billion “black hole” disappear in less than 12 months, they should have gone to the Treasury rather than the Ministry of Defence.

At a time when the Government are sacking highly skilled, experienced and brave servicemen and women and scrapping key elements of defence equipment, Ministers must be honest with our forces and the public about why they underspent their 2012-13 budget by almost £2 billion. They also tell us that the UK still has the fourth largest defence budget in the world. That may be true, but we on the Opposition Benches believe such a statistic has little meaning if the allocated budget is not actually being spent, and it is on this count that the Government have failed spectacularly. They gave us aircraft carriers without aircraft. They scrapped the Nimrod programme when three of the aircraft were almost 90% complete, leaving the MOD reliant on Twitter to counter the maritime surveillance threat. They have also sacked regular soldiers before waiting to see whether increased reserve numbers would be able to meet the shortfall.

As the NAO report summarises, the Government

“did not fully assess the value for money of its decision to reduce the size of the Army.”

If the Minister reads the report, he will see that the fact of the matter is that recruiting reservists will be more expensive than having regulars, and that cost will have to be picked up by the Treasury some time in the future. I refer him to page 8 of the report if he wants to read that later.

It is clear that when deciding the future size of the Army, the Government decided on cost savings as their first principle, rather than any strategic underpinning of their decision. The NAO report makes clear on page 6 that

“The future size of the Army was determined by the need to make financial savings”—

an approach which has characterised the MOD under this Government.

Commentators and the Select Committee agree that, blindsided by the desire to achieve savings above all else, strategic considerations have been sacrificed in favour of reductions in personnel and capability. Unfortunately, some people are having to carry the can for this—unfairly, I would suggest. The current Chief of the Defence Staff offered perhaps the most candid description of Army 2020 when he told the Select Committee on Defence:

“I remember the genesis very clearly. It was a financially driven plan. We had to design a new structure that included the run-down of the 102,000 Regular Army to 82,000, which is pretty well advanced now, to follow a funding line that was driven by the austerity with which everybody is very familiar…It triggered the complete redesign of the Army.”