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Mr. Keetch: I seem to recall that when the hon. Member for Mid-Sussex was speaking I inquired six times whether he would give way. He was not courteous enough to do so, but I shall of course be courteous enough to give way to his Front- Bench colleague.

Mr. Howarth: I am grateful to the hon. Gentleman for his courtesy.

Mr. Soames: And charm.

Mr. Howarth: Indeed.

May I point out to the hon. Member for Hereford (Mr. Keetch) that Conservative Members repeatedly asked the right hon. Member for Birmingham, Ladywood (Clare Short), then Secretary of State for International Development, to come to the House and tell us the plan for post-conflict reconstruction in Iraq? The Government's signal failure to share those plans with the House and the country had chaotic consequences after the war.

Mr. Keetch: In the run-up to the war, history records, it was the Liberal Democrats and very brave Members from other parties who asked those questions. The Conservatives appeared to support the endeavours of President Bush, whatever he wanted to do, and it was the Liberal Democrats, some brave Labour Back Benchers, a number of important Conservatives, and Members from other parties who provided the real opposition.

Clare Short rose—

Mr. Keetch: I shall accept one final intervention.

Clare Short: There was a rather strange procedure, and I shall come to those matters if I catch your eye, Madam Deputy Speaker. For the record, I came to the House repeatedly and there was a Select Committee inquiry, so there were full preparations. A lie is being told now that the chaos in Iraq is all because I thought that we were rushing to war too rapidly. That is such a ridiculous proposition that it shames the mental capacities of anyone who seeks to make it.

Mr. Keetch: The right hon. Lady is more than capable of defending herself. On her actions, all that I would say is that she resigned from the Government after the war had begun. In fairness, many of us believe that her position would be strengthened if she had followed the example of the right hon. Member for Livingston

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(Mr. Cook), who resigned before the war. Nevertheless, she did an honourable thing, and history will record that fact.

Turning to the defence budget, I congratulate the Defence Secretary on the assurances that he has received from the Chancellor. I hope that the "real-terms increases" mentioned by the Chancellor are significant and not simply academic, and that any additional funds for operations in Iraq will come out of separate Treasury funds. Caveats attach to the Chancellor's commitments. How much of the cost of British forces' continuing commitments in Iraq will be funded by the MOD budget, and what extra resources will the Treasury make available? Estimates abound, some of them quite wild, about the cost of operations in Iraq, so I would be grateful if the Minister of State could quell the rumours and confirm the monthly cost of keeping forces on deployment in Iraq. If there are increased costs, will they be met from a separate Treasury fund or the existing MOD budget?

The procurement budget is still over-committed, and adjustments need to be made at some stage. It would be preferable if the Secretary of State could make them sooner rather than later. Liberal Democrats believe that there are potential savings in the defence budget in the area of procurement. For example, speculation continues that the third tranche of Eurofighter Typhoon is already dead in the water and that the Government are simply waiting for the right time to cancel. Can the Minister give a commitment to the third tranche of Eurofighter?

Some indiscriminate cost savings are proposed by the Conservatives. The shadow Defence Secretary says that there will be no cuts, but a two-year freeze in real terms is effectively a cut. In his speech, he gave commitments—I listed them—on infantry numbers, training, deployment and procurement. He will not be able to do that with a two-year effective freeze on defence spending. We have questioned the rather ridiculous approach to defence spending that seems to be the sole approach of the Conservative party.

We understand that tough choices need to be made. The third tranche of the Eurofighter programme should be reviewed. That alone could amount to a one-off saving of several billion pounds.

Mr. A. J. Beith (Berwick-upon-Tweed) (LD): May I suggest another saving? The MOD should not to seek to recreate the facilities of RAF Bulmer at another base, which would require substantial capital to replace capital that has recently been invested there. I have made the point in detail to the Minister. [Interruption.]

Mr. Keetch: I hear the Minister for the Armed Forces saying that that is being dealt with. I look forward to visiting Bulmer with my right hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith) in a few weeks. I know that it is an important base that the Royal Air Force and other forces want to keep, and I know my right hon. Friend's commitment to that part of his constituency.

Mr. Jack: When the hon. Gentleman comments on the third tranche—the 155 Eurofighters that his party

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seems to advocate cutting—will he put on the record the work share implications and the costs to the United Kingdom industrial base if that policy were pursued?

Mr. Keetch: We have asked detailed questions of the Government, some of which have not been answered. We want to know what the implications would be. Yes, we want to review the third tranche. That is a specific commitment from the Liberal Democrats. We would put some of the money that would be saved back into the defence budget to increase basic kit for our forces. That is in marked contrast to the swingeing cuts proposed by the Tories, who provide no details of the programmes that they would consider cutting and make bland commitments to our overall force plan.

The Secretary of State said in his speech to the Royal United Services Institute last year that

We understand that. We need to consider it in terms of the MOD budget. It is not a question of how much is spent, but how well it is spent. United States defence spending continues to soar far above that of the rest of the world. No matter what the Government's spending review eventually allocates to the MOD, the UK budget will always be a fraction of that of the US.

Clearly, however, much of the MOD's planning revolves around the UK working in conjunction with the US. The White Paper stated:

It is difficult to argue with that analysis—indeed, we support it, but it could have an immense impact on our armed forces. We cannot match US defence spending, so we cannot keep pace with the US in defence developments. At the same time, we are seen as the partner of choice in the Pentagon, and the MOD's planning is clearly based on that assumption.

The key to remaining fully interoperable, to remaining the partner of choice and to remaining able to link to US forces is what the Secretary of State calls network-enabled capability, or NEC. There is no doubt that NEC is a very important development in military planning and operations. The pre-eminence that it receives in the new chapter of the SDR and in the White Paper shows that it is at the forefront of MOD thinking. But there is also no doubt that it is expensive and that if we are to keep pace with the US, it will take an ever-increasing slice of the defence budget.

I should like a much clearer indication than the Government have so far given of the limits of that approach and how it will affect our ability to contribute to peacekeeping, stabilisation operations and so on. Our forces are overstretched. We know that from the Defence Medical Services and others. There is a balance to be struck between money going into NEC and money going into the basics of our infantry units. We believe that the correct balance may not have been achieved. As regards our reserve forces, we know from the debate yesterday and from the comments of General Walker and General Jackson that they are concerned about overstretch evolving.

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The series of reports from the National Audit Office, the Ministry of Defence and, most recently, the Defence Committee, shows that a number of areas—for example, asset tracking—have improved as a result of operations in Iraq, and the Government must make a commitment on those areas and not blindly follow the US into ever-increasing technological warfare. Whatever the technology, one cannot keep the peace on the streets of Pristina or rebuild Iraq from satellites, so one must have troops on the ground.

The White Paper discusses "medium-weight" troops that are well armoured but rapidly deployable, yet it does not dispute the continued need for some light and some heavy forces. We believe that tanks, fighter aircraft and several parts of the fleet are less important than they used to be, and that point is argued in the White Paper. However, the White Paper does not contain firm proposals for reshaping our armed forces, which is a recipe for instability and anxiety—it is an interesting pointer to the direction in which the armed forces may be heading, but it hardly charts their course. We believe that that deficiency should be addressed sooner rather than later in a spirit of consultation and consensus, and if the Government give us that, we will certainly participate in the process.

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