Strategic Defence and Security Review

Viscount Trenchard Excerpts

Friday 12th November 2010 Lords Chamber

[Viscount Trenchard]

My Lords, I am grateful to my noble friend the Minister for securing this debate and privileged to be able to make a contribution to it, given that my own experience and knowledge of military matters are so limited compared with those of the many noble Lords and noble and gallant Lords who are contributing today.

I firmly believe that the maintenance of excellent Armed Forces is one of the reasons why Britain punches above its weight in the world. This is of inestimable value to our international trade and business and a prime reason, together with our strong and respected diplomatic presence around the world, for the continued prosperity of the City of London.

I spent 11 years representing a British firm in Japan. I always felt comfortable in the support that I derived from our embassy and from the perception of Britain and the kind of country it was as informed in part by my Japanese counterparts’ understanding of our diplomatic and military capabilities. I am certain that this support provides some relative business advantage to British nationals and representatives of British organisations overseas.

More directly, our defence industry comprises a significant part of our diminished manufacturing base. It will be very difficult for us to retain our technological supremacy and market share if our Armed Forces are reduced to the level of those of countries whose overseas interests are on a much more modest scale than ours. It is doubtful that defence exports can entirely make up for cancelled or reduced orders from the MoD. This will undoubtedly threaten our leading defence manufacturers’ position in the market, particularly as their American competitors are now aggressively stepping up their overseas sales efforts.

Surely, if the Government really believe, as they claim in the national security strategy, that,

“the first duty of government remains: the security of our country”,

and given that defence expenditure has already been cut by some 60 per cent as a proportion of GDP since the Falklands War, are there not now compelling reasons to freeze defence spending in proportionate terms?

The national security strategy also tells us that we are a country whose political, economic and cultural authority far exceeds our size. Surely it is therefore necessary to maintain Armed Forces commensurate with that authority in order to avoid depletion. Actually, to argue that we meet NATO's target of 2 per cent, which applies to all NATO members, most of which have many fewer international interests, is misleading. If you strip out the costs of the nuclear deterrent and the operational costs of being in Afghanistan, the future spending on core defence capabilities falls to significantly less than 2 per cent.

Worse than that, I ask my noble friend to tell the House whether he has considered the cost of the destruction of the value of military equipment already owned or purchased. The SDSR shows us that unfortunately defence is less important than deficit reduction. Furthermore, the SDSR also considers expenditure in cash flow terms. If you consider Defence plc to be a company whose shareholders are the taxpayers, the management would have looked at the balance sheet as well and taken much more account of the need to protect shareholder value. Management would surely never contemplate scrapping or selling at a discount valuable assets, quite apart from the loss of capability that results.

The SDSR admits that the resources allocated to defence over the next four years will result in the reduction of some capabilities that are less critical to today's requirements. I ask my noble friend by which criteria he judges that the retention of our ISTAR capabilities are in any way less than critical. Indeed, with changing emphasis in homeland defence and overseas commitments, the Nimrod MRA4 was destined to make a significant contribution to the fight against terrorism. The decision to scrap the Nimrod project is completely incomprehensible and wasteful, as £3.8 billion have been spent on the project to date and the fourth aeroplane out of nine is now being painted. The cost of maintaining the force amount to some £200 million a year and even if we could not afford that, will my noble friend explain why the Government did not decide to put it into a state of extended readiness similar to the second aircraft carrier where the same logic applies?

The destruction of shareholder value of Defence plc resulting from scrapping the project is serious. The serious impairment of our marine surveillance and reconnaissance capabilities that will result from it significantly increase the operational risks faced by our Trident nuclear submarines, our surface fleet, our new aircraft carrier when it eventually enters service, and indeed our merchant fleet.

As for search and rescue, the Government have claimed that the C-130 Hercules can replace the lost capability. That, unfortunately, is not true. The Hercules may be capable of throwing out a 12-man dinghy, but that is all. Does the Minister agree that it is accepted in the MoD that if we lose Nimrod’s capabilities now we will definitely need to recover them in the future and at much higher cost? Does he not agree that it is illogical to ring-fence spending on the nuclear deterrent but to scrap the capability necessary to protect it?

Other decisions that make little sense are the decision to scrap the existing carrier and Harrier early rather than keeping them until the new carriers and the Joint Strike Fighter are ready, and the decision to scrap the Sentinel ground surveillance aircraft after the end of the Afghanistan campaign, although there is at least time to reverse that decision. If it is not essential for us to have these capabilities now, why is it essential for us to replace them?

I congratulate my noble friend on his commitment to reduce waste and improve efficiency and procurement at the MoD. That is very necessary. Finally, I welcome the recognition given in SDSR to the Reserve Forces, which are increasingly integrated with our regular forces and are extremely cost-effective. In particular, the Royal Auxiliary Air Force is already configured around a range of specialist skills, which enables regular squadrons at home and in theatre to fill gaps with experienced reservists possessing the relevant training and skills. I am confident that this model will be endorsed by the forthcoming review of the Reserve Forces.

Time does not allow me to comment on many other points more ably covered by many other noble Lords. While I congratulate my noble friend on having reduced the cuts from the levels initially sought, as the noble and gallant Lord, Lord Boyce, and other noble Lords have said, it has been disingenuously put about that expenditure is being cut by only 7.5 per cent. Real cuts to core capabilities will be much more than this. In short, I join other noble Lords in regretting deeply that the SDSR pays insufficient attention to Britain’s strategic interests and that, if implemented as proposed, it will weaken our ability to continue to punch above our weight in the world, which will damage both the security and prosperity of future generations.