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Mr. Hoon: We have certainly looked at that. By way of qualification, I should say that if we introduce such controls, it is important that they be introduced multilaterally. It is necessary that new nations should also be subject to the existing code of conduct, which could be reformed to take account of such particular illicit transfers, or to other international agreements. I would be concerned if the UK moved too far ahead of other countries that might then be tempted simply to step in and fill the trade void that we had left.

Mr. Tam Dalyell (Linlithgow) (Lab): Before we leave the subject of expeditions, may I add, as chairman of the all-party Latin American group, that we, the European delegates, were warmly welcomed by Vicente Fox? May I ask about the strange business of the servicemen who are caving in Mexico? What are we to make of it? Surely it would have been courteous and tactful to tell the Mexicans that servicemen were going there.

Mr. Hoon: I am always impressed by the range of my hon. Friend's interests and concerns and he has just added a new one to the long list with which I am familiar. I was referring to Latin America, not caving, but I am sure that my right hon. Friend the Minister will have noted those wise observations.

NATO of course remains the cornerstone of our security policy. Lord Robertson, in his capacity as Secretary-General of NATO, worked tirelessly to adapt NATO to the challenges that it is likely to face. His successor, whose appointment I welcome, has promised to continue this work. As technology develops, it will become even more important that we and our NATO partners invest in the capabilities that enable us to operate at the same tempo as the United States. We are actively encouraging this approach through the Allied Command Transformation and the development of the NATO response force, with its emphasis on flexible, deployable and technologically advanced and interoperable forces.

The Prague capabilities commitment is making progress. Our allies have committed themselves to improvements in key areas such as nuclear, biological and chemical capabilities, secure communications, strategic lift and air-to-air refuelling. Looking forward to this year's Istanbul NATO summit, we will try to ensure that our allies deliver these capability improvements. NATO needs to be leaner, more

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responsive and fit for new challenges. We therefore support a broad review of NATO structures, processes and decision making.

Where NATO as a whole chooses not to engage, it is likely that we will work with our European allies. Improving the military effectiveness of European nations therefore remains a key priority. Hence our proposal that EU member states should develop rapid response capabilities through the battle group initiative. Building on the progress towards achieving the Helsinki headline goal, member states, individually or on a multinational basis, will provide deployable and sustainable battle groups of around 1,500 troops, drawn from existing national forces. Having high readiness forces available will improve the ability of the European Union to respond effectively to emerging crises, particularly in support of the United Nations. We will ensure that this initiative is developed in a way that also strengthens NATO and the NATO response force.

There is no conflict between aspiring to strengthen both NATO and European defence and security policy. We will not agree to ESDP developing in a way that impairs the security guarantee established through NATO. The security architecture that we have constructed over the past six years allows for flexible approaches to crises either through a NATO operation or the EU using NATO assets under Berlin-plus arrangements, or indeed through an autonomous EU operation.

The EU and NATO have established a strategic partnership in crisis management that we want to see strengthened. The arrangements for EU-NATO consultation agreed last December were a significant step forward. Regular dialogue between the EU and NATO would be stepped up during a crisis. That ensures that the relationship between the two organisations is transparent and mutually reinforcing.

In directing our finite resources at those capabilities that are best able to deliver the range of military effects that we require, we will inevitably have to make important choices. As we indicated in the White Paper, we will look to create the headroom for highest priority investments in network enabled capabilities and medium weight forces.

Central to our thinking on network-enabled capabilities is the need to improve the collection of information on the battle space and enable those in charge of ships, tanks, aircraft and other combat systems to be able to share that information more quickly. The Watchkeeper unmanned aerial vehicle, for example, will provide a substantial increase in surveillance capability over the Phoenix system currently in service. The Bowman secure tactical voice and data communications system will markedly improve our ability to share information. Such improvements in equipment capability will enable those involved to understand the battle space more quickly, so that they can speed up the decision-making process.

Mr. Gerald Howarth (Aldershot) (Con): On the Bowman issue, it has been put to me that there has been some difficulty in communicating across hilly terrain. I understand that in those circumstances a high frequency channel will be used. This is a technical question and the

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Secretary of State may not have the answer at his fingertips, but, broadly speaking, is he satisfied that Bowman will deliver what he imagined it would?

Mr. Hoon: Recently I had an update on the arrangements for Bowman. The progress on introducing the system is extremely good and I am confident that we will resolve any technical difficulties as they arise. I am confident that this will be an extremely successful operation for UK armed forces.

To return to improvements provided by network-enabled capabilities, we need to match improved sensor performance and information exchange with a more decisive delivery of effect. During the Kosovo campaign, as recently as 1999, around 25 per cent. of munitions that the RAF used were precision-guided. Barely four years later, during Operation Telic, 85 per cent. of munitions used by the RAF were precision-guided. By taking advantage of such significant progress in the use of high technology, we will be better placed to ensure that our platforms are used to greatest effect and that the coherence of our military capabilities is enhanced.

If we are to have truly expeditionary forces, able to deploy quickly to deliver effect at significant distance from the United Kingdom, we need to rebalance our force structures. We must ensure that we can move our armed forces quickly to where they are needed with equipment that enables them to carry out the tasks we expect of them. The introduction of the future rapid effects system group of vehicles will provide our armed forces with battle-winning equipment that can be moved quickly by strategic airlift. As part of this rebalancing process, we have already been able to announce plans for a new light brigade, and the reduction of one armoured brigade—from three to two. This will enhance our existing light forces by offering a third choice in addition to 3 Commando and 16 Air Assault Brigade. Whenever such advances have been made in modernising defence equipment or capability it has always been necessary to make adjustments in the number of older platforms. It is right that we do this to ensure that our armed forces are properly equipped to meet the challenges of the future.

Mr. Blunt: In announcing the changes that will follow from, one hopes, the extra money that the Chancellor may make available in the comprehensive spending review and the extremely challenging long-term costings process or work strands process that is going on in the Department now, which appears to be on twice the scale of "Front Line First" of 10 years ago, there will plainly be some significant changes to follow the brigade changes that the Secretary of State has already indicated. How does he propose to announce the changes?

Mr. Hoon: I was about to deal with that point in my speech. In my statement on the publication of the White Paper last December, I set out to the House that I had asked the Ministry of Defence to undertake a significant examination of our capabilities and overheads. I anticipate that we will be in a position to make some announcement on the results of this work in the summer through the usual channels.

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The Government are committing significant extra financial resources to support changes envisaged in the White Paper. The 2002 spending review delivered the largest sustained increase in planned defence expenditure for more than 20 years—adding more than £3 billion over three years. Last week, my right hon. Friend the Chancellor of the Exchequer confirmed a further real-terms increase in the 2004 spending review. That does not mean we can afford to relax our efforts to use that money efficiently. In the challenging defence environment, we need to make every pound count.

Labour's record contrasts markedly with that of the Conservatives. During 18 years of government, the Tories imposed swingeing cuts in defence without any long-term strategic rationale. Spending was cut by nearly one third in real terms during the Tories' last 10 years in government.

There are always financial pressures on major Departments, especially during a demanding period. It is clear that the Conservative plan for a two-year freeze on defence spending would mean a £1.5 billion real terms cut in the unlikely event that the Tories returned to office. Members of the Opposition Front Bench need to come clean about how they plan to make that £1.5 billion cut. Will they withdraw British armed forces currently doing vital work in Iraq and Afghanistan? What part of the equipment programme would the Conservatives scrap—and what impact would that have on Britain's future defence capabilities and British industry?

Does the hon. Member for Mid-Sussex (Mr. Soames) stand by his comments on the Radio 4 programme "Today" on 6 January, when he said:

If so, why has the hon. Gentleman failed to explain that to his shadow Chancellor?

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