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Mr. Hoon: I am grateful to the hon. Gentleman for his support, especially for the special forces.

Mr. Menzies Campbell (North-East Fife): It is hardly surprising.

Mr. Hoon: I could not possibly comment on whether that is surprising.

On retention, the hon. Gentleman is right. I have made no excuse at all: retention remains a challenge. We are doing remarkably well with recruitment in a very healthy economy, but clearly retention could improve. A number of specific measures have been taken, such as those relating to pilots, but we still need to do more and I make no apology for saying so. The Budget settlement will give us a degree of flexibility to address some of those issues, and not least the very difficult question of accommodation. As I have told the House before, some of the accommodation that is available, especially to single men and women, is in a shocking state and has been neglected for very many years. Sadly, accommodation is one of those areas on which it has been most easy for previous Governments to turn the other way and not allow

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appropriate investment. It is therefore important that we carry through the £1 billion programme for improving accommodation, especially single living accommodation.

I am also grateful to the hon. Gentleman for his comments about the Budget settlement. I emphasise that there is a five-year programme of steady increases in the amount available to defence in real terms. That will allow us to plan over a long period for the success of Britain's armed forces.

Mr. John Smith (Vale of Glamorgan): I warmly welcome my right hon. Friend's statement. I believe that it was a measured and realistic response to the dreadful events of 11 September. There is always a danger that Governments will give a knee-jerk reaction and do things for show that have no great effect.

I accept entirely the need for greater global reach, flexibility and versatility, and the ability to deploy rapidly. However, given the delay in the A400M aircraft, is my right hon. Friend satisfied that we have the lift capability to allow us to deliver that versatility for the future?

Mr. Hoon: I am grateful to my hon. Friend for his comments. In a sense, the document represents a continuation of work in progress, as it is a continuation of the work successfully conducted in the strategic defence review. Inevitably, further work is required to ensure that we have the right capabilities as the potential of the enemy with which we must deal develops and expands. That is why we have placed so much emphasis on global reach and flexibility.

On my hon. Friend's specific point about lift capability, there is a very attractive photograph of a C-17 somewhere in the White Paper. C-17s are certainly available and have performed magnificently since we first leased them. Clearly, they are preparing the way for the A400M aircraft, which will provide still greater lift capability to the United Kingdom.

Mr. James Arbuthnot (North-East Hampshire): More money for the defence budget, especially in the light of 11 September, is of course to be welcomed and the Secretary of State is to be congratulated on that. However, does he agree with the House of Commons Library, which suggests that in each year of the Conservative Government, the near-cash constant prices spending on defence was higher than in each year of this Government and each year that is planned? Does he not agree that that is a rather disappointing reaction to 11 September?

Mr. Hoon: More money was available for defence even before 11 September. In talking about a five-year period, I was referring not only to the current CSR round, but to the last one. In each of the three-year periods, there was a planned growth in expenditure. I have not seen the figures from the Library. I will certainly look at them very carefully, but it is extremely doubtful whether such a comparison could be made, as the figures with which we are dealing represent real-terms increases year on year.

The problem that I have with those on the Conservative Front Bench—I exempt the right hon. Gentleman—is that they do not appear to understand the basis on which the budget for defence is arranged. They have issued a series of statements, some of which have made their way into the newspapers, indicating that they are comparing the

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outturn figures for the budget with the planned figures. As a former Defence Minister, he will know that that is not an appropriate basis for comparison.

Harry Cohen (Leyton and Wanstead): When the Chancellor handed out a lot of money on Monday, he accompanied it with public service agreements, independent audit, statutory inspection regimes and tough policies for managements that fail. As the Ministry of Defence has wasted money on the rifle and the Army radio and is overspending on countless other projects, why is it exempt from those tough new inspection, audit and management failure regimes?

Mr. Hoon: The Ministry of Defence is not exempt from those techniques. Indeed, as I said in my statement, we are setting out on yet a further round of very tough efficiency arrangements. I hope that they will be more satisfactory than in the past, as they will deal with outputs and will therefore look at the ways in which we deliver military capability, rather than the amount of cash that goes in in the first place. That will have a very clear advantage not only for the Department at the centre, but for those responsible for the various devolved budgets, as it will mean that they get the benefit of any savings that they have generated through efficiency. I think that that is a much more sensible way of proceeding.

I must argue against my hon. Friend's suggestion that we have wasted money on the rifle or, indeed, on the radio. The current programme on improving the communications system available to the armed forces is proceeding very successfully.

Mr. Nicholas Soames (Mid-Sussex): I welcome the right hon. Gentleman's announcement that he has secured new money for defence. As my right hon. Friend the Member for North-East Hampshire (Mr. Arbuthnot) said, that is wholly to be welcomed. While the new chapter is extremely sensible in taking forward much of the work that needs to be done following 11 September, does he agree that it is important in this matter as in any other not to be too deluded by fashion at any one time or by the wonders of defence technology, and that at the end of the day there will be no replacement, particularly in the British armed forces, for basic grunt soldiering? Will he also assure the House that, when he comes to consider the future size, shape and structure of the armed forces—which clearly need to be adjusted—and the difficult decisions that he is going to have to take on the future of the main battle tank, on the structure of the Royal Armoured Corps and on Eurofighter numbers, nothing will interfere with the continuing, astonishingly brilliant achievements of the British armed forces of all three services? That success is achieved by the most demanding and rigorous training, which enables them to do what they do for us overseas in much easier circumstances than might exist for other people.

May I also ask the Secretary of State to examine the whole question of defence diplomacy again? Does he agree that it is one of the golden assets offered by this country, and that as many foreigners as want to should have the opportunity to train at our great military institutions—the staff college, the Royal College of

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Defence Studies, Sandhurst, Cranwell, Dartmouth and all the others? This facility is a great plus for Britain and a great driver for our interests overseas.

Mr. Hoon: I am extremely grateful to the hon. Gentleman for his observations, particularly those about the people involved in the armed forces, who, as he rightly said, do a tremendous job. I ended my statement with a proper tribute to the effort that they make, and I always strongly insist that that should include the civil servants in the Department, who perform magnificently alongside members of the armed forces.

The hon. Gentleman is also right to suggest that there is a risk, when producing a White Paper of this kind, that we simply reorganise our armed forces to fight the last battle. The most important theme of the strategic defence review was that we should have flexibility, and that we should have the kinds of armed forces and equipment that we judge will be necessary over the longer term. Adding technology to that, particularly the kinds of technology that are dealt with in the White Paper, is a crucial part of it, but it should not be—and will not be—at the expense of previous commitments that we have entered into and recognise that we have to deal with.

On defence diplomacy, I could not agree more with the hon. Gentleman. In the course of my travels—I have recently come back from Russia, for example—I am always enormously impressed by the way in which the expertise of our armed forces is welcomed, supported and sustained in other countries. In Russia, co-operation between the Royal Navy and the Russian navy has gone on, even in some extraordinarily sensitive and difficult times, and the men and women of our armed forces have continued to work with their opposite numbers in a way that can only enhance the United Kingdom's standing.

David Cairns (Greenock and Inverclyde): I welcome my right hon. Friend's statement today, especially the centrality that the review gives to conflict prevention and defence diplomacy. Does he agree that money and time spent on working with democratic Governments throughout the world, and with moderate regimes in places such as the middle east, to tackle the root causes of terrorism and to identify embryonic terrorist cells and deal with them in situ represent an investment, and that that is money well spent? What discussions is my right hon. Friend having with other arms of the British Government—the Department for International Development and the Foreign and Commonwealth Office, for example—and with our allies to ensure that the vital work of conflict prevention has a central role in the years ahead?

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