Defence Spending

Peter Luff Excerpts

Thursday 12th March 2015 Commons Chamber

[Sir Peter Luff (Mid Worcestershire) (Con)]

As for others who have spoken in this debate, it is likely that this will be my last debate in Parliament. I am glad that it is on defence—the defining purpose of the state and of Parliament. I will seek not to repeat what others have said, but I want to say this. We have no more important role than to keep those who elect us safe from our enemies. This view is not as popular as it was. Elections, we are told, are not won and lost on defence; there are no votes in defence. I am not so sure. If the political establishment is seen to be playing fast and loose with our security, we will all pay a heavy price in further disillusionment and alienation.

The 2% NATO floor or target, to which we are all politically and morally committed, is the minimum that we should spend, yet it is far from safe. I do not generally favour targets for spending of any kind, and I certainly do not favour writing them into law, but the unavoidable truth is that if we are to achieve our current objectives, spending of that order is needed. I understand the scope for increased efficiency in the area of human activity; indeed the increased sophistication of the technology behind military equipment enables us to do more with less, which means that fewer people are needed to deliver the same effect than even a decade ago.

A Type 45 destroyer is considerably more capable than the Type 42 that it replaces and needs a smaller crew. And there are opportunities to do more with less. That is one of the purposes of the UK-French defence relationship. The application of the whole force concept could increase the effect and efficiency of defence. So our debate about national security must not lapse into sentimentality. It is not sentimental to speak up for defence. I want to do so by addressing three things—the financial background, the fact that defence is a long-term game and the threat to essential investment in science and technology.

The Chancellor is right to say that strong defence depends on a strong economy. That is why as a Minister in 2010, I swallowed hard and accepted significant cuts to defence capabilities, even though they led to some very challenging gaps in capability. But for a trading nation like ours, the protection of the sea lanes and the maintenance of an open rules-based trading system are crucial. So a strong economy also depends on strong defence. Prosperity is built on peace. The urgent question to both Front-Bench teams today is this. The funding post-2015 that is needed just to achieve Future Force 2020 is based on a 1% per annum increase in the equipment budget and flat real for the non-equipment budget. That is what the chiefs of staff and Ministers were promised at the time. So will Ministers and shadow Ministers commit today to both the equipment and non-equipment figures that we were promised?

The commitment on the equipment budget made only by my party is welcome. There is a long list of very important capabilities, but it is not enough on its own. The significant cuts that appear to be pencilled in for current expenditure—RDEL, or resource departmental expenditure limit—are deeply worrying. I commend Professor Malcolm Chalmers excellent paper, “Mind the gap; the MOD’s emerging budgetary challenge.” It is an objective, factual assessment of the cost pressures facing defence. I doubt that the Minister can offer reasons to disagree with any of its deeply worrying conclusions, but even in the optimistic scenario that Professor Chalmers outlines, under which defence is given the same protection as health and education, those cost pressures would still force a total cut of 8.7% over the next 10 years—about £35 billion in total.

If further cuts are to be made, they would sadly have to be based on a refreshed and less ambitious strategic approach. The decisions in the 2015 review, then, could redefine Britain’s role in the world. There are other strategies, depending more on diplomacy, soft power and development assistance, for example. They are all vital components of our national security, but are they credible without strong defences too? No. Not when, for the first time since the cold war, Europe faces a real military threat on its borders. The world is more dangerous than it has been for decades.

In some ways, though, the 2015 SDSR will be easier than the last one. Crucially, a major programme of reform has rebuilt the MOD’s credibility, and its performance on equipment acquisition has been transformed. From both the industrial and security perspectives, the 2010 SDSR succeeded in protecting the very special US-UK defence relationship, but will this last? President Obama, the US Chief of Staff and the US ambassador to the UN have all warned us and are sending us a clear message about what they fear is the future of UK defence spending.

So to my second theme—the need to take long-term decisions to protect our operational advantage and our freedom of action. In layman’s terms, that means making sure that we have superior capabilities to our enemies and that we can use them and sustain them whenever we want to. At the heart of this for me is the alarming engineering skills shortage that we face as a nation, especially in defence. This is the area of the 2012 White Paper on defence acquisition, to which I put my name, with which I am least satisfied. The ingredients were all there, but the urgency of the issue was not properly articulated and opportunities were missed. Crucially, commentators did not understand what the White Paper said. It made it clear that

“We will take action to protect our operational advantages and freedom of action, but only where this is essential for national security.”

Here is the commitment to invest in what industry calls the body of knowledge essential to sustain capabilities in the long terms. We cannot protect all the skills and capabilities that we need and would like to on current budgets, but there are areas of capability that we simply must invest in to sustain our security. Short-term budget cuts make this White Paper promise, which is essential to our security, impossible to deliver, with serious long-term consequences.

My third theme is the priority that we must attach to sustaining investment in technology. The centrality of research investment to UK national security takes on greater significance in a new global security context—a context defined by state fragmentation, asymmetric threats and technology proliferation. Belligerent non-state actors are increasingly using technology to counter the traditional technological advantage of conventional military and security forces. Since the end of the cold war, we have seen widespread development of technology by commercial organisations and individuals driven by a consumer society and business sector hungry for tomorrow’s technology today. This has lowered the bar for entry to conflict, espionage, terrorism and serious and organised crime, meaning that there are far more threats out there now than there were. As a result “conflict” will be far less predictable than we have seen before. It simply will not conform to set-piece scenarios in the same way that the west planned for in the last century or in the last SDSR.

If we are not committing to investing a realistic amount in science and technology, I see several things happening. First, we will become less relevant to our key strategic allies—the United States and France. Secondly, we will miss the opportunities to build capability by adapting the best of the commercial and international technology sector because we simply will not know what the cutting edge looks like. Thirdly, we will cease to act as an intelligent client. How do you know what you are buying if you do not know what good looks like? Fourthly, we will be unable to evolve during a conflict. This is potentially the most serious if we cannot defeat the novel threats deployed against us.

If the 2015 SDSR correctly prioritises science and technology, logically the MOD must spend more on it.

[Mr Havard]

The hon. Gentleman is making an important point. The Defence Committee in reports in this Parliament and the previous Parliament has talked about the MOD devoting 2% of the money that it has to S and T as well as R and D so that such spending is structured into budgets.

[Sir Peter Luff]

I could not agree with the hon. Gentleman more strongly. That is the precise figure that I have in mind for the level of resources from the defence budget that should be spent on S and T. It was 2.6% under the previous Government, but it declined under them to 1.2%. The White Paper on technology put a floor under it of 1.2%. It is far too low a floor, and what is more, as defence budgets have shrunk, the sum being spent has gone down too. It is only a third higher than what the Department for International Development now spends on research. Two per cent. is the bare minimum, of rising budgets as well. The trouble is that the Department sees S and T as the cash cow of the spending round. It is a resource that is easily cut because contracts are short term, but the consequences for our security are devastating.

If cuts to revenue spending happen, the science and technology budget will go straight back into the firing line of the Treasury and the bean counters of the MOD. We must not let that happen. Maintaining operational advantage is a race against time to take innovation from the lab and into the battle-space.

Our partners envy our ability to do more with less. Key to this is understanding the operational advantage of technology and moving it quickly into the hands of the military. As Bernard Gray, Chief of Defence Matériel, put it recently,

“The key question is, of all the desirable things in the world, which are the ones you can afford?”

But the country can afford more, as it should choose to do. In the end, this is not about votes, it is about leadership. We must all in this place do everything we can to sustain the national understanding that we maintain peace through strength, not weakness. That is why it is imperative that the next SDSR is well argued, persuasive and properly funded, and why all the political leaders of our nation must show their deep personal commitment to this outcome.

After every major conflict we have cut defence and regretted it. The Crimean war, the first world war, the second world war, the cold war—cut and regret, cut and regret, cut and regret, cut and regret. As Hegel said,

“We learn from history that we do not learn from history.”

In 2015 we celebrate the 800th anniversary of the foundation of our freedoms, Magna Carta, and the 750th anniversary of the beginning of our representative democracy and Simon de Montfort. It would be depressingly ironic if in 2015 of all years a timid Parliament, an intellectually feeble SDSR and another round of austerity combined further to weaken our defences and threaten our freedoms at such a dangerous moment in world history.

--- Later in debate ---

[Sir Richard Ottaway]

Perhaps I can start again.

What is behind this debate, I think, is a fear of cuts. I congratulate my hon. Friend the Member for Basildon and Billericay (Mr Baron), who is a valued member of the Foreign Affairs Committee, on bringing this debate. I agree with much of what he said during his opening remarks, except for the points that he made about intervention. It is a debate that we have had in the Foreign Affairs Committee and our latest report on the finances of the Foreign Office makes the point that the Foreign Office, like the defence budget, is at a crossroads. We have such a thinly spread diplomatic service around the world that either it needs to have more resources or it has to narrow its bandwidth and match its aspirations to the budget available.

Linking a percentage of GDP to any policy is, in my view, bad politics. It is not the way to run Government, and that applies equally to the aid budget and the defence budget. Economies go up, economies come down. Of course, we are not going to have the defence and aid budgets going up and down like a yoyo. These things have to be evened out over an economic cycle. As many colleagues have said, the defence budget has to match our requirements. We must look at it in the context of the threat. What is the threat to the United Kingdom?

I do not think anyone is arguing at present that there is any serious existential threat to the United Kingdom. If there were, the figure on the motion today would be 20%, not 2%. We can safely say that NATO and the EU have given us the longest period of peace for centuries. As my hon. Friend the Member for Beckenham (Bob Stewart) said very effectively on the “Today” programme today, we cannot ignore the impact and the deterrent effect of nuclear weapons.

[Sir Peter Luff]

May I clarify one important point of detail? Early-day motion 757 as originally printed referred to a 20% target. Desirable as that would be, it was a mistake. I think 2% will do for the time being.

[Sir Richard Ottaway]

I used the figure of 20% for effect, rather than for any serious argument.

On the defence budget in the context of NATO, the same point applies. Russia is now spending heavily. I believe that nearly a third of its federal budget is being spent on defence, though no one is arguing that we are going to see Russian tanks rolling across the central European plain in the foreseeable future. With hindsight, Russia’s intentions have been flagged up for longer than we realise. We should have realised that when the intervention in Georgia started. Then Russia’s focus moved to Syria and later to Crimea. Russia’s human rights record is appalling. It is a country under authoritarian and unpredictable rule at the top and in the Kremlin.

--- Later in debate ---

[Mr Jones]

No, it is not the same, because the Government and the hon. Gentleman have got the Chancellor of the Exchequer’s fiscal straitjacket around them—his commitments to reducing spending. There is a big difference, and it gives us a lot of leeway in making sure that we can deliver on our defence needs and foreign affairs commitments, whereas what the Government are putting forward will lead to a situation in which the budget is set, and there is no way that they can meet those commitments.

Something else has come out in this debate. The right hon. and learned Member for Kensington, the hon. Member for North Devon (Sir Nick Harvey), who is in a good position because he was a Minister in the Department at the time, and the hon. Member for Dewsbury (Simon Reevell) raised the idea that the Prime Minister convinced his Back Benchers and the military to take the pain of the 8% cut in 2010, and that somehow once we reached the sunny uplands—I think the hon. Member for Dewsbury referred to that—we would have an increase in the budget. That is clearly not going to happen if the Prime Minister’s commitment to deficit reduction is followed. We have come to expect such smoke and mirrors from the Prime Minister. We have had that narrative again; I do not for a minute question the former adviser of the right hon. Member for North Somerset (Dr Fox), who has written in today’s newspapers in a similar vein. It is clear that that commitment cannot be met if the Prime Minister is to keep to the deficit reduction process laid out in the autumn statement.

We need honesty from the Government on what they are going to do. My hon. Friend the Member for Gedling (Vernon Coaker) and I are not going to stand here and make the ludicrous promises we heard at the last general election from those now on the Government Benches. They promised a larger Army, more helicopters, and more of everything for the armed forces, but the Conservatives reverted to type, as they always do in government. The hon. Member for Dewsbury said that this was a right-left issue. No, it is not. The Conservatives’ record in office shows that they always cut defence, whereas Labour has always protected defence.

[Sir Peter Luff]

I genuinely want this to be a bipartisan debate, but could the hon. Gentleman clarify the shadow Chancellor’s comments in The Times on Tuesday this week, when he stated that his party would go

“nowhere near the huge scale of defence cuts you are going to see under the Conservatives”?

Does that mean that Labour will commit to at least the 1%-plus real-terms-equivalent budget increase?

[Mr Jones]

I know that the hon. Gentleman is not standing for re-election, but he needs to understand that the huge impediment to his party’s adopting the 2% target is the autumn statement. His party will have to bin that if it wants to commit to the 2%. This allows us a lot more flexibility. We will ensure that the findings of the defence review are what drive our defence needs. That is in contrast to what happened in 2010 and what is happening now, with the Chancellor of the Exchequer driving the debate with the support of the Prime Minister.

The right hon. Member for Lagan Valley (Mr Donaldson) made a clear commitment that his party would seek a commitment to the 2% expenditure target from any other party before supporting it in a future Government. The Prime Minister has employed a lot of diversionary tactics in the past 24 hours, because he knows that he has a problem in this area. He clearly wanted to massage the figures, but that has now been blown out of the water.

Then we had the nonsense last night of the Defence Secretary writing to my right hon. Friend the Leader of the Opposition about whether the nuclear deterrent would be up for negotiation in any future deal with the Scottish National party. I want to nail that one quite clearly: no, it would not. We are not going to do what the Conservatives did when they came into office in 2010. They played fast and loose with the nuclear deterrent by doing a deal with the Liberal Democrats to delay the implementation of the decision to replace Trident, which the Labour Government had already voted for. It was this Government, in the deal that was done in May 2010, who delayed that implementation, so I am not going to take any lessons from the Conservatives about doing deals, or using our nuclear deterrent in some kind of political poker game as a means of getting into office.

Oral Answers to Questions

Peter Luff Excerpts

Monday 23rd February 2015 Commons Chamber

[Michael Fallon]

The hon. Lady is right that ISIL needs to be defeated not just militarily, but diplomatically and politically with all the instruments at our command, and cutting off its financial sources of support is extremely important. We are working with our international partners to ensure that those financing streams can be cut off, and that proper sanctions can be applied where we can identify exactly where the funding is coming from.

[Sir Peter Luff (Mid Worcestershire) (Con)]

11. What budgetary assumptions he is making to inform the strategic defence and security review.

[The Secretary of State for Defence (Michael Fallon)]

The Government’s priority remains the delivery of the 2010 strategic defence and security review. The next SDSR will not begin until after the election.

[Sir Peter Luff]

Does the Secretary of State agree that all the major parties in the coming election should commit to a real-terms increase in the defence budget and to the 2% NATO target, because only in that way can we hope to keep our nation safe in an increasingly hostile and menacing world?

[Michael Fallon]

Since the 2010 SDSR, our planning assumption has been that real growth in the defence budget, with 1% growth on equipment, is required to deliver the highly capable and adaptable armed forces that we set out in Future Force 2020. The scale of our current operations in Kabul, the middle east and Sierra Leone underline the value of the flexibility that we encouraged in that review. So far as the future is concerned, we are spending £34 billion this year; we will be spending £34 billion next year. It is time we heard from Labour whether it will match that spending or whether it plans to cut it.

Oral Answers to Questions

Peter Luff Excerpts

Monday 24th November 2014 Commons Chamber

[Mr Brazier]

I shall have to write to my hon. Friend in order to give him a full answer.

[Sir Peter Luff (Mid Worcestershire) (Con)]

Thank you, Mr Speaker, for this unexpected boon. As he prepares for next year’s SDSR, may I commend my right hon. Friend the Defence Secretary on the merits of an open and inclusive process that maximises the involvement of the public, Parliament, industry and academics?

[Michael Fallon]

I certainly welcome that suggestion. I think there should be a wide-ranging process. The point I made earlier was that we cannot start the review now in 2014—it is scheduled for 2015—but it is important, obviously, that we consult widely when it gets under way, not least with our international allies.

Oral Answers to Questions

Peter Luff Excerpts

Monday 20th October 2014 Commons Chamber

[Mr Dunne]

As for every new class of Royal Navy warship, the naming of the Type 26 frigates will follow a theme. My hon. Friend will not be surprised to know that he is not alone in seeking to advance the cause of UK cities. He is also not the first to make such strong representations in favour of Gloucester, the city he so forcefully represents. I will ask the Ships’ Names and Badges Committee to note his interest in attempting to revive the name HMS Gloucester, given its impressive heritage.

[Sir Peter Luff (Mid Worcestershire) (Con)]

Names matter, but so do numbers. Can the Minister assure us that at least 13 of these fine ships will be built for the Royal Navy?

[Mr Dunne]

I thank my hon. Friend for that question. He is well aware that the strategic defence and security review 2010 is looking at the number of ships for the Royal Navy, to include up to 19 destroyers and frigates.

Oral Answers to Questions

Peter Luff Excerpts

Monday 14th July 2014 Commons Chamber

[Mr Speaker]

It appears not. Never mind, he is a model of calm and patience. We will move on—I think we will get Sir Peter Luff in.

[Sir Peter Luff (Mid Worcestershire) (Con)]

17. What plans he has to encourage public debate on the defence needs of the UK in advance of the strategic defence and security review in 2015.

[The Parliamentary Under-Secretary of State for Defence (Dr Andrew Murrison)]

Public debate on defence matters and Britain’s place in the world is always welcome and the Ministry of Defence encourages this through its frequent engagement with Parliament. We also routinely engage with the service community, academics, think-tanks and other stakeholders in the course of policy formulation and I would expect this to accelerate in advance of the formal Cabinet Office-led cross-Government SDSR.

[Sir Peter Luff]

Given the importance of winning the informed consent of the British people for the payment of the insurance premium that guarantees our freedom and security, will my hon. Friend commit to following the good, if somewhat belated, example of the previous Government and publishing a Green Paper to build consensus ahead of the next SDSR?

[Dr Murrison]

The precise questions to be asked and the nature of the asking are a matter for the next Government, since this review will take place after the general election. Of course, both parties, of which one is likely to form the next Government, are represented in the Chamber today and I have no doubt that they are listening to what my hon. Friend has to say.

Oral Answers to Questions

Peter Luff Excerpts

Monday 12th May 2014 Commons Chamber

[Mr Dunne]

On 1 April we established DE&S as the first bespoke Government trading entity with wide ranging freedoms from central Government controls, details of which I look forward to publishing before the House prorogues. We are introducing global best practice to the new DE&S through three work package contracts for managed service providers. We are today issuing the invitation to negotiate for the first work package for project delivery to eight world-class companies which have passed the pre-qualification questionnaire process, and we plan to award contracts for the four domains this autumn.

[Sir Peter Luff (Mid Worcestershire) (Con)]

25. I congratulate the Minister unreservedly on winning these freedoms for DE&S. In the absence of a proper contract with a contractor, how can he maintain his opposition to the Treasury’s natural instincts to abhor freedom and seize back power to itself and the centre?

[Mr Dunne]

I applaud my hon. Friend for the pioneering work he did in helping us take this reform of DE&S through. We are convinced that the work that we are doing in the new bespoke trading entity will bring significant benefits to defence procurement for the long term, but as he knows, we have retained in the Defence Reform Bill, which should shortly receive Royal Assent, the power for a future Government to introduce a GoCo, with suitable parliamentary scrutiny, should this be necessary to transform DE&S further in the years to come.

Oral Answers to Questions

Peter Luff Excerpts

Monday 16th December 2013 Commons Chamber

[Mr Dunne]

I am sure that you would agree, Mr Speaker, that the successor programme could scarcely be described as an urgent operational requirement.

[Peter Luff (Mid Worcestershire) (Con)]

Let me take the House back to urgent operational requirements and the fairly comprehensive answer given by my hon. Friend. Will he update the House on the progress of the Foxhound vehicle, which began life as an urgent operational requirement and is now part of the core programme and performing very well?

[Mr Dunne]

With great pleasure, as my hon. Friend played a key role in commissioning the Foxhound vehicle. As he will recall, it was commissioned under the urgent operational requirement procedure but was always regarded as a core piece of equipment. We are well on the way to delivering 400 Foxhound vehicles to the British Army.

Defence Procurement

Peter Luff Excerpts

Tuesday 10th December 2013 Commons Chamber

[Mr Hammond]

I have the Hansard quote in front of me. The former shadow Secretary of State welcomed the competition and said that we needed to test the two propositions against each other, which is what we have done. The hon. Member for Barrow and Furness (John Woodcock) makes an assertion that I can tell him is wrong. I have always recognised that there are significant risks to the GoCo proposition and significant potential benefits from it. The challenge is to weigh the risks and the benefits and we would not be able to do that until we received the bids, which is why we had to run a competition.

We have seen the proposal that has been worked up by the DE&S plus team only in the last three weeks. It has worked behind a Chinese wall and has made clear that it believes that there will have to be an injection of external private sector skills in the form of an external business partner, in addition to the freedoms and flexibilities that it seeks within the organisation. That is the model that we are now going to put in place.

[Peter Luff (Mid Worcestershire) (Con)]

Although I accept that the Secretary of State had little choice but to make the announcement that he has made today to the House, I am sure that he will share my deep sense of regret that we cannot move more rapidly to the greater savings and performance improvements that a GoCo would have delivered. Can he reassure me a little about the private sector’s role in this new organisation? Can he unpack for me a little how the private sector will operate within the GoCo model and the DE&S plus model, and particularly reassure me that this is not just a recipe for more contractors?

[Mr Hammond]

I am grateful to my hon. Friend—someone who, again, knows something about this from his long service in the Department. The key distinction is between a model that puts the private sector in day-to-day leadership of the organisation—working on an incentivised fee that places it at risk—and a model where the private sector provides specific skill sets to civil service decision makers. That is the distinction. What we envisage in the DE&S plus model is probably three separate contracts; one to provide us with programme management support, a spine for the organisation; one to provide us with HR support, an area of particular weakness in DE&S; and a task-and-finish project to install some additional financial control systems within the organisation.

Aircraft Carriers and UK Shipbuilding

Peter Luff Excerpts

Wednesday 6th November 2013 Commons Chamber

[Mr Hammond]

As a south-east MP, I understand well that not all of the south-east is affluent with high employment. There are areas that depend on specific industries which are as vulnerable as other areas anywhere in the country. I will endeavour to ensure that the points that my hon. Friend has raised are taken fully into account.

[Peter Luff (Mid Worcestershire) (Con)]

I commend the Secretary of State, the Minister for defence equipment—the Under-Secretary of State for Defence, my hon. Friend the Member for Ludlow (Mr Dunne)—the Chief of Defence Matériel and all those involved for making the best of a very difficult situation. Will my right hon. Friend clarify the purpose and capabilities of the three new very welcome offshore patrol vessels?

[Mr Hammond]

They will be more capable than the existing River class, as they will be able to take a larger helicopter and will be 10 metres longer. They will be able to undertake a full range of duties, including not only fishery protection but the interdiction of smuggling, counter-piracy operations and the protection of our overseas territories.

Oral Answers to Questions

Peter Luff Excerpts

Monday 4th November 2013 Commons Chamber

[Mr Dunne]

I add my support to the hon. Gentleman’s efforts to ensure that the NATO summit in Newport is a great success next year. The Scout vehicle is proceeding in its demonstration phase and has passed a number of milestones. As he is aware, it is due to be delivered as part of Future Force 2020. I will not be able to give him an update on the next placing of contracts until such time as the main investment case has been made.

[Peter Luff (Mid Worcestershire) (Con)]

It will not surprise the Minister to learn that I entirely agree with his answer, but may I ask him, on the day when Professor John Perkins’ review of engineering skills has revealed a serious shortage of those skills in this country, what assessment he has made of the impact of that shortage on the defence industries in particular, and on the nation’s operational advantage and freedom of action?

[Mr Dunne]

I thank my hon. Friend for all his work in stimulating interest among our young people in taking up engineering careers, particularly so that they can take up the many hundreds of engineering jobs for which the Ministry of Defence and the armed forces seek to recruit every year. We are doing a lot of work, not least through the Bloodhound initiative—a project with which he was intimately involved—to raise awareness of engineering skills in the armed forces, and to encourage young people to consider maths, science and engineering as future careers.