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Mr. Bercow: My ears pricked up with alarm when the hon. Gentleman mentioned the word "inevitable" in the context of European integration. If, as part of the horse trading in the European Union, the sacrifice of the British national veto on defence becomes a precondition of British entry to the euro, will he confirm that that is a deal with which he is entirely content?

Mr. Rapson: I echo the words of the right hon. and learned Member for North-East Fife. The veto is secure. The organisation comes together for the benefit of defence in Europe. That does not mean giving up our sovereignty or handing over a veto, it means working together as a team to secure better defence in Europe.

Our experiences with NATO and in European crises show that there is much that we have to learn. There are shortfalls. For example, interoperability was shown up in such a way that we felt let down. We have not yet got interoperability to the extent that we want it; nor do we yet have the joint workings that we should have. There are several things for which we rely on America to an extent that we should not.

This country and Europe should have a heavy lift requirement and we should have the security surveillance that we need without having to rely on another nation. We should have such surveillance so that we can link in with America and NATO to make ourselves stronger. If we can put right the shortfalls in the European context, the whole system will become stronger.

I very much agree with earlier statements that we shall not give up our sovereignty. We are still a proud nation, but we are part of a team and we can work much better together. More bangs for bucks was mentioned earlier. The money that we spend on defence seems to be inefficiently used compared with what America does. If we can learn from that and become more efficient, we shall be better off all round.

I hope that the Minister has listened to my point about DARA. Although it is a parochial issue that affects me personally, it is also an issue to do with the way that we do things. I trust the actions that the Government have taken on agencies. They seem to be a lot better and are being run more realistically. Rationalisation is inevitable, but what is important is how we carry it out and how we treat people. If we are to lose many highly skilled people, that will be a sad waste for Gosport, and we will suffer. At the end of the day, however, our trade unions must be able to trust what the Government are doing.

4.10 pm

Sir Archie Hamilton (Epsom and Ewell): May I start by declaring my interests in defence? I am a consultant to Litton Industries and to GenCorp Aerojet, which are both

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American contractors, and to the consulting engineers W. S. Atkins, which play a serious role in the management of the defence of the state. I am also a director of Leafield Engineering Ltd., which is a small company involved in defence manufacture in Wiltshire.

My contacts in the Ministry of Defence tell me that they have never known a time when morale was so low and when the financial pressures were so great on everything that they are trying to do. Those problems are compounded by those of retaining our good, trained people and of meeting all our commitments.

I blame all that on the strategic defence review. Unlike my hon. Friend the Member for Chingford and Woodford Green (Mr. Duncan Smith), the shadow Secretary of State, I do not think that there should ever have been a strategic defence review. What the Ministry of Defence needed after the election was a period of stability. We had already had two defence reviews: "Options for Change", which made a massive reduction in the number of our forces, including halving the Rhine Army, and the defence cost studies, which took an enormous amount out of the defence budget. After that, the Ministry needed a period of calm and time to get itself into order.

The strategic defence review had to happen because, foolishly, it was included in the Labour party's manifesto at the last election. The result is that further disruption has taken place. The Government say, "Ah, but this is different. This is foreign policy-led." To me, that is a pretty laughable claim. Presumably, this is the Foreign Office that did not tell us that the Falklands were going to be invaded, and at the time of the Gulf war, that Kuwait would be invaded by Saddam Hussein. I have great difficulty in understanding what expertise the Foreign Office has that enables it to tell us about our deployment of troops.

I wonder whether the Secretary of State realises that when he talks about modernisation, he fills many decent people with dread and apprehension. Modernisation for this Government has come to mean that whatever exists, and has done so for some time, should be thrown up in the air so that it can all be changed rapidly, but one has absolutely no idea where it will all land. I pity the Ministry of Defence if the Secretary of State's objective is to modernise it because it will almost certainly mean prolonged chaos from which it will take a long time to recover.

There is no doubt that the SDR has been driven by the Treasury because it wanted its pound of flesh, but it was important that when the SDR was launched, it should all be dressed up to suggest that the cuts would not be as dramatic as they were. The theory was that there were savings to be found, and the spin was that the 3 per cent. that was saved would be ploughed back into the defence budget. One talked not about cuts but about increases in expenditure from the savings that had been made. The trouble is that it has not worked out that way.

I commend the Select Committee on Defence on its excellent report on the SDR and defence generally. It is one of the best reports that we have seen for a long time, but it is also a damning report of the Government's running of the Ministry of Defence since the last election. It is claimed that the target of £505 million of savings in 1998-99 was exceeded; the Ministry claims that it achieved £594 million of savings. However, the Select Committee regards that figure as completely implausible.

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What is an efficiency saving and what is a cut in expenditure? It is too easy to confuse the two, and we have all been subjected to a complete con trick with the 3 per cent. savings. There has really been a massive reduction in defence expenditure, which has resulted--as we have been hearing all afternoon--in training being cancelled and ships being told to go at low speeds so that they do not consume too much fuel. That, in the words of the Secretary of State, is keeping within the budget, but we know that there are serious restraints on the military in carrying out the training that is necessary if it is to produce the top-class troops that we have been used to having in the British armed forces.

Mr. Spellar: Can the right hon. Gentleman tell us what was the cruising speed of ships when he was Minister for the Armed Forces?

Sir Archie Hamilton: It was certainly a lot higher than it is now.

Procurement is also a complete shambles. We have heard nothing about the delayed decisions on major procurement items and the massive cost overruns. The Government say that they are introducing smart procurement, which means that everything should come through faster, cheaper and better. I should be grateful if the Minister, when he winds up, would tell us what items of procurement have come through faster, cheaper or better. We want some examples before we accept that we are entering a new world.

The problem with smart procurement is that if it works, one must start procurement two years later than one normally would; otherwise, if it comes through faster, one finds that one has to pay for it earlier. As my hon. Friend the Member for Chingford and Woodford Green said, in the Ministry of Defence cashflow is all, and if it is merely paying for things earlier, it is not solving any problems whatever; it is merely increasing pressure on the defence budget.

Perhaps the short-term strategic airlift is an example of smart procurement. We started off with five bids and they all proved unacceptable. Will the Minister confirm that we now seem to have a competition between the Antonov and the C17, but that the requirement for the C17 has now been reduced from four aircraft to two because that is what is likely to fit into the £500 million budget allocation for those aircraft? It strikes me that there are enormous problems with the short-term strategic airlift, and those need to be solved sooner rather than later.

Do we really need the C17, which is an all-singing, all-dancing aircraft, when in practice any lift of that sort would be escorted by other aircraft? Do we therefore need all the defensive aids on the transporting aircraft when there will be other aircraft around it to take it into any war zone?

The SDR also seemed to depend on certain lumps of capital sales, including the Defence Evaluation and Research Agency, which will bring in the not insignificant sum of £250 million. However, I gather that the Government are abandoning the idea of a public-private partnership for DERA, so what will happen to that £250 million, which is an essential element in the MOD's budgeting?

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The sale of the Duke of York's barracks was also supposed to raise more than £250 million. Is that sale going ahead? There is talk about negotiations taking place. Obviously, it is critical that the sale goes through, or there will be even greater pressures on the budget and the morale.

It is said that the cost of the Kosovo operation was some £400 million. Will all that money be funded out of the contingency reserve this year? Is that the total cost of the operation? Does it rebuild all our stocks of cruise missiles and the other weaponry that was used? If the answer to those questions is no, when will the money be produced to replenish the war stocks, which we might well need in the near future?

The strategic defence review claimed to be about matching resources to commitments; in fact, resources have been cut and commitments increased. The so-called savings have resulted from an overall reduction in available budget moneys, and Kosovo and East Timor have been added to our commitments.

The Secretary of State says that he has been able to reduce the number of troops in Northern Ireland to less than 16,000. That is extremely welcome news and we hope that that number can be maintained. The so-called ceasefire is not much of a ceasefire--49 terrorist murders have been committed since the agreement was signed and many people have been injured, mutilated and hospitalised as a result of the acts of terrorists--but let us pretend that there is a ceasefire. However, suppose that non-ceasefire broke down completely: more troops would have to be committed to Northern Ireland. It should be borne in mind that, when things are extremely difficult in Northern Ireland, we have more than 30,000 troops posted there. If things go badly wrong in Ulster, there will be a massive increase in our commitments there.

The one person I congratulate, even though he is no longer a Member of Parliament, is Lord Robertson, whose timing was brilliant--I commend him on it. Knowing when to go can be the best decision one ever takes in politics. The way in which the noble Lord managed to get out before the roof finally fell in was absolutely brilliant.

The reason why Lord Robertson was offered the job as Secretary-General of NATO was that he had been credited with having "a very good war" in Kosovo. Was it really a good war? Looking at it in the cold light of day, many people feel enormous reservations about the intervention in Kosovo. When it all began, the Prime Minister said that the objective was to stop the Serbs driving the Kosovan Albanians out of their homes. Yet, when the bombing began, what happened? There was a massive intensification of the ethnic cleansing of Kosovo, and people were driven from their homes at an even faster rate than they had been before the bombing began.

We were then told that the bombing was intended to hit military targets in Serbia. Soon, military targets started to mean bridges over the Danube and car factories that might have been making vehicles used by the military. Make-up artists were killed when television stations were bombed because they might have been broadcasting propaganda for Milosevic. In the bombing, many civilians, but few members of the Serbian military, were killed.

NATO claimed on our televisions every night that the Serb military was being degraded and its capabilities seriously reduced. However, when it was all over, we

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watched vast armoured columns emerge from shelters where they had hidden throughout the bombing. Ultimately, what really suffered was NATO's credibility. Will we ever again believe NATO spokesmen when they tell us how much the military capability of our opponent is being degraded, given that so much of what they told us during the Kosovan crisis turned out to be completely wrong? That is a serious problem that must be addressed. We always accuse our enemies of producing misleading propaganda; we do not expect such propaganda to emerge from NATO.

Now that the Kosovans have been liberated, they are free to persecute and kill the remaining Serbs in Kosovo. As the right hon. and learned Member for North-East Fife (Mr. Campbell) says, the whole area is on the brink of disaster. Whatever else happens, the region will become another Cyprus: 30 years from now, there will still be a massive United Nations contingent there, trying to keep the two sides apart.

I am worried, not only by what happened in Serbia, but by the whole question of what certain countries will do if they think that they might in future become victims of the sort of assault that was launched against Serbia. If we bring to bear on a small country the massive technology and military supremacy wielded by the United States specifically and by NATO generally, what message does that send to that country? There is no way countries can arm to defend themselves against that sort of capability; no country in the world could afford to do so, especially not small countries such as Serbia. What will such countries do? They will be inclined to resort to terrorism, as the Chechens allegedly did, blowing up blocks of flats in Moscow. They will be inclined to resort to hijacking, as in the recent hijacking in Afghanistan, in the face of which the Indians completely gave way, leading to who knows what--probably to many similar hijackings demanding the release of prisoners. Much more worrying is the possibility that such countries might turn to weapons of mass destruction.

I do not believe that any small country will get involved in the manufacture of nuclear weapons. Saddam Hussein wants to do that in Iraq, probably in an effort to gain some prestige in the region. However, it is much cheaper and easier to develop chemical and biological weapons. Perhaps such weapons will be loaded on rockets, the threat carried on interballistic missiles; but it would be far cheaper to put them into suitcases, so making them man-portable. I wonder what we started with our massive use of military power against a small errant nation. Where will it all lead in the longer run?

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