Defence Spending

Philip Dunne Excerpts

Thursday 12th March 2015 Commons Chamber

[The Parliamentary Under-Secretary of State for Defence (Mr Philip Dunne)]

This has been a timely debate, secured by my hon. Friend the Member for Basildon and Billericay (Mr Baron), who, as the House knows, takes a particular interest in defence. I gently point out to the House that although the Backbench Business Committee is responsible for this debate and a number of hon. Members have said it is a shame there are not more debates on defence, there was a debate on Monday of last week on this very subject in Government time. Hon. Members need to recognise that the Government are giving due time to these important matters.

This is a timely debate because it comes as we prepare for the comprehensive spending review and the strategic defence and security review, which will follow the general election. There is no doubt about the support for our armed forces from all 20 Members who have spoken today, including the Opposition spokesman, and about the importance of defence to the nation’s security. Fittingly, this debate was used as an opportunity to speak by a number of hon. Members who are leaving the House later this month having served the House with particular distinction, particularly on defence. I pay tribute to my right hon. and learned Friends the Members for Kensington (Sir Malcolm Rifkind) and for North East Fife (Sir Menzies Campbell), who unfortunately has had to catch a train, although I told him I would mention him; to my predecessor, my hon. Friend the Member for Mid Worcestershire (Sir Peter Luff), who I am delighted to see in his place; to my right hon. Friend the Member for Croydon South (Sir Richard Ottaway), who has given considerable service to this House—I had not appreciated that he had also served on a carrier in an earlier career; and to the hon. Member for Merthyr Tydfil and Rhymney (Mr Havard), who has been a very influential figure on the Defence Committee. I am pleased they have all been able to participate, alongside the many other Members whose contributions I may or may not have time to commend.

Clearly, in a democracy, strong defence requires a strong economy, and as we head into the next Parliament, securing our economic recovery will be vital to securing defence spending. We do recognise—we were challenged by some hon. Members on this—that the threats we face have changed since the last strategic defence review, and they will be carefully reviewed in the next SDSR, which will help to determine the investment choices of the next Government.

I listened carefully to the Opposition spokesman, the hon. Member for North Durham (Mr Jones), a former Defence Minister, whose commitment to defence I do not doubt. I have, however, had the opportunity not only to listen to his remarks today, but to read the interim report—I believe it is described as No. 8—of Labour’s so-called zero-based review, the defence element of which was published only on Saturday. I gently remind the House that he was making some claims about defence being in a better place under a potential Labour Government, but the zero-based review’s foreword indicates that, were Labour to have the opportunity, it would carry out

“a root and branch review of every pound the government spends from the bottom up”.

The defence volume foreword says

“we will make appropriate savings in the Defence budget”.

I take that to mean that every pound of defence spending will be up for review and is not secure as a consequence.

[Mr Kevan Jones]

It is a sensible way forward to ensure, as I said in the debate last week, that every single piece of our defence expenditure is reviewed to ensure that we get maximum value for money. If we are going to meet the targets for 2015-16, savings will have to be made and that will be reinvested in what can actually be done. What we do not have is the fiscal straitjacket that the Minister has come 2016-17.

[Mr Dunne]

The only comfort that this House can take from the Opposition’s position is that one of the very few Government Departments that the shadow Chancellor would not abolish is the Ministry of Defence.

I wish to set out some context about how, since 2010, defence spending has required, and has undergone, significant reform. The situation we inherited from the Labour Administration was chaotic. There was a severely overheated programme with costs that outstripped the available budget, which left a black hole of £38 billion. Difficult decisions were routinely ducked. The Gray report, commissioned by the previous Government, identified that the average equipment programme overrun was five years, and with an average increase in cost of £300 million. The National Audit Office’s major projects report for 2009 evidenced an increase in costs in that year alone of £1.2 billion across the major projects, including the infamous decision to delay the carriers in a desperate attempt to cram that year’s spending into the available budget. To sort that out required one of the biggest defence transformation programmes undertaken in the western world. Today, the defence budget is in balance—

[Mr Kevan Jones]

rose—

[Mr Dunne]

No, the hon. Gentleman has had his chance. The defence budget is in balance and our plans are affordable. We are on track to deliver £5 billion of efficiency savings in the next Parliament, including £1 billion from the equipment support plan alone. Incidentally, the half-baked plans in the Labour review “A New Deal for UK Defence” would deliver only some 1% of what we are already saving in the Department. The proof of our transformation was set out in the National Audit Office major projects report for 2014, which showed a reduction in cost of £397 million across our 11 largest projects. That was the Ministry of Defence’s best performance on cost since 2005 and best performance on delivering projects on time since 2001.

[Mark Hendrick]

Will the Minister tell the House how much money was wasted in the Government’s decision to move two cats and traps for the two aircraft carriers and then to back away from cats and traps?

[Mr Dunne]

Yes, it cost just under £100 million to make that decision, which is substantially less than the £1.2 billion cost of the deferral to which I referred earlier. I should congratulate the hon. Gentleman on his contribution today. I had not appreciated that, like me a few months ago, he faced some impediments to getting in and out of the Chamber. I hope that his leg gets better soon.

Even the chair of the Public Accounts Committee, not known for lavishing praise on this Government, said only last week that she had

“seen a step change and improvement in performance, which is incredibly welcome.”

She was referring to the transformation in defence.

[Sir Nicholas Soames]

I congratulate Conservative Ministers on making such a tremendous improvement to the capital budget. May I urge them to seek big savings in the bureaucracy of the armed forces? There is no bureaucracy in Whitehall that is worse than that in the Army, Navy and Air Force, and those services really need sorting out.

[Mr Dunne]

I thank my right hon. Friend for his advice. It is the case that vast majority of the headcount reductions across the Ministry of Defence have taken place within the bureaucracy—as my right hon. Friend calls it—of civil service support to the armed forces.

The lesson here is that it is no use having a budget of £34 billion if it is not spent efficiently. Driving efficiency savings out of our budget is an important part of what we have achieved, which is to get more capability for our armed forces out of the money that we spend on defence.

In 2010, the defence budget was the second largest in NATO, and the largest in the EU. In 2015, it remains the second largest in NATO and, by some margin, the largest in the EU. Using NATO’s figures, the UK defence budget is now some $8 billion larger than the next largest EU budget, which is that of France. That gives the UK one of the most effective and deployable armed forces in the world. This very day, the UK has more than 4,000 military personnel deployed overseas on 20 key operations, in 24 countries worldwide.

Our funding also enables the UK to be and remain the most reliable partner to the US in NATO. Since August, we have been the US’s largest partner in the coalition air strikes against ISIL, conducting more than 10% of air strikes. A key capability in the effort, for example, has been the result of investment in the Brimstone missile, the most advanced precision missile system in the world. We are now working to integrate Brimstone on to other platforms such as Typhoon. This is just a single capability within our £163 billion costed, funded, affordable equipment plan, which in turn enables the UK to be one of only four NATO countries consistently to meet the key metric, spending 20% of defence expenditure on major new capabilities.

The clarity of this plan allows us to invest in next-generation capability. I shall give a few brief examples. Our new aircraft carriers will deliver a step change in capability. They are half as long and weigh almost three times as much as the previous Invincible class, yet will deliver their cutting-edge capability with the same size crew. They will have the next-generation F35 aircraft flying from them, and we have ordered four aircraft to form part of the operational squadron in addition to the four currently in test and evaluation in the United States. That platform will be far more capable than the Harrier that they replace. As the Prime Minister confirmed again yesterday, the Conservative party is committed to maintaining a continuous at-sea deterrent and will build a new fleet of ballistic missile submarines, with the final investment decision due in 2016, of which I am sure my hon. Friend the Member for New Forest East (Dr Lewis) will approve.

[Ms Gisela Stuart]

Yesterday I suggested to the Prime Minister that he might be just a tad embarrassed by the fact that less than a year ago he lectured other NATO countries about not reaching 2%, yet we were falling below it. He failed to answer that question. Would the Minister like to add anything?

[Mr Dunne]

I will come on to the issue of the 2% in a moment. We are not falling below it and we do not intend to do so in the period of the spending review. We have also presided over the modernisation of our air mobility fleet, which is now the envy of the world. Many of our NATO allies rely on our capability during operations. The Voyager air-to-air refuelling capability is being used today across Iraq by a number of our allies, not only the RAF. We are transforming our helicopter fleets. As I saw earlier this morning, we have invested £6 billion over the past four years in state-of-the-art lift, attack and surveillance capability, on time, on budget, providing flexibility so that more can be done with less.

For the Army, last year we placed the Scout vehicle contract—the biggest single order for a UK armoured vehicle in 30 years. It will provide the Army with its first fully digitised armoured fighting vehicle to give it the kind of manoeuvrability that the Chairman of the Select Committee and other hon. Members have called for. I can also confirm to my hon. Friend the Member for Mid Worcestershire (Sir Peter Luff), who did such a good job in laying the foundations for this transformation work, that we remain committed to spending at least 1.2% of the defence budget on defence science and technology. We achieved more than that last year and will do so this year. This will include more investment in disruptive areas of technology such as directed energy weapons and others, where we have committed to shift more of the balance of science and technology investment as we move into a contingent posture.

The Government’s position on the motion before the House this afternoon is clear. We will meet the 2% commitment in this financial year. We will meet it in the next. As we have been consistent, after the general election this will be a matter for the next spending review. The Prime Minister has been clear. We are committed to a 1% year-on-year real-terms increase in spending on defence equipment for the next spending review period. He has also been clear that the size of our regular armed services will remain at the level it is now, with a continuing commitment to grow the reserves to 35,000. It is not just about 2% of GDP; it is about how you spend it and what you are prepared to do with it.

The results of our reform programme speak for themselves. Four and a half years ago, we were in chaos. Today, we have earned a strong reputation across Whitehall for competence and have transformed defence capability for the better. The Treasury, even, has granted the Ministry of Defence the largest delegated budget of any Department. So we have replaced Labour’s chaos with Conservative competence. Where there was a deficit, now there is a balanced budget; where there were cost overruns, now there are cost savings; and where equipment programmes were late and over-budget, now they are overwhelmingly on time. The MOD is on far firmer foundations as we head into the next SDSR and spending review.