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Mrs. Mahon: Nearly 200,000 people were ethnically cleansed from Kosovo, including the minority Serb Roma and other members of the population, and those who are left live in enclaves and are subject to daily racial harassment. Sometimes, children cannot even get to school. What is the Government's strategy for getting the refugees back into Kosovo and making it a safe and democratic state where everybody can live?

Mr. Hoon: My hon. Friend is right to raise the reason why we intervened militarily in Kosovo: it was to prevent ethnic cleansing and ensure that the country was multi-ethnic. My hon. Friend rightly points out that the current challenge for multi-ethnicity in Kosovo is to protect Serbs. When I have been to visit British troops there, they have mostly been protecting Serbs in their villages around Pristina and in other parts of the country. To preserve that multi-ethnicity, we have to establish robust security arrangements for Kosovo and, crucially—I made this point earlier and I hope that my hon. Friend agrees—we need to take forward a political process to ensure confidence among what is now the Serb minority that they can live safely in their historic and traditional homes.

Mr. Crispin Blunt (Reigate) (Con): Will the Secretary of State give way?

Mr. Hoon: I need to make a little more progress.

A strong Euro-Atlantic relationship, founded on NATO, remains the basis of the United Kingdom's security policy. The continued strength of the alliance depends on delivering when and where it matters. NATO must maintain its ability to react flexibly beyond its borders, to deter and disrupt threats before they reach us. It must keep up the pace of its transformation, to ensure that it can provide modern structures and forces that are ready to deliver the right military responses. It also means improved mechanisms for generating such forces, with a strengthened commitment from our allies to providing them.

Against that background, we are working with our EU partners to improve European military capabilities. As the new constitutional treaty makes explicit for the first time, NATO remains the foundation of our collective defence. Our aim is to develop European
 
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military forces that enhance NATO as well as the European Union. The EU Battlegroups initiative, for which Defence Ministers committed forces at Monday's European Council meeting, will allow the EU rapidly to deploy troops, trained and evaluated to agreed standards. Open and transparent liaison will ensure that these battlegroups are fully compatible with the NATO response force. And in driving the development of the right capabilities by our EU allies, the battlegroups concept will be central to our efforts to manage overstretch.

Dr. Andrew Murrison (Westbury) (Con): The Secretary of State will be aware that in Iraq at the moment soldiers from Commonwealth countries are serving with the Black Watch. However, the EU constitution will make it difficult for us to recruit from Commonwealth countries and would not allow us to give preferential treatment to those nationals.

Mr. Hoon: The hon. Gentleman is simply and absolutely wrong. He raises yet again a scare story about the European Union that has no foundation in fact. I am sorry if Central Office has given him that line to take, but he should go back to the researcher who provided it and tell him that he has got it completely, absolutely and hopelessly wrong.

European defence complements NATO. The EU can bring together a range of crisis management responses—diplomatic, military, civilian, judicial, as well as economic. Its new civilian-military cell is an example of that potential. Such capabilities will fill crucial gaps in the mechanisms now available for handling the current complex security environment.

Our success in driving the agenda is a vindication of this Labour Government's approach to Europe. We are leading the debate and winning the argument, not sitting sulking on the sidelines, neglecting our national interest. If the hon. Member for Mid-Sussex (Mr. Soames) has anything serious to say about military capabilities, he needs to explain to the House and the country how his half-baked ideas on Europe would in any way increase the number of military forces available. That is what this Government have achieved through European defence, and he needs to face up to that.

At the start of this speech I set out our recognition that the strategic environment has changed, and now we need to ask what that means for the armed forces. The international community must confront the threats from international terrorism and the proliferation of weapons of mass destruction. But there is also an imperative to intervene for humanitarian or peacekeeping reasons in places such as Kosovo, Macedonia, East Timor and Sierra Leone. Even if the territory of the United Kingdom is not directly threatened, our interests and ambitions are increasingly interrelated with those of others: seldom will conflict in one area not spread to contaminate another. As a result, our armed forces are facing a wider range, frequency and duration of tasks than ever before. We need armed forces that are structured and equipped to deploy rapidly on multiple, concurrent small and medium-scale operations; armed forces that optimise platforms and
 
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units so that they have increased effectiveness across the full range of military effects—from war deterrence, to war fighting, to peace support.

The changed nature of the security environment demands that the shape and structure of the armed forces, and their equipment and doctrine, will have to adapt accordingly. To propose that we should do otherwise—in effect, to leave our armed forces structured and equipped to match an enemy and a threat that is no longer apparent—would be a grave misjudgment. The Conservatives risk turning our armed forces into a museum piece—an excellent display, but never taken out of their case for operational use. That would be a complete failure of our duty to the people of the United Kingdom, to our international allies and partners and to the men and women in our armed forces, of whom we ask so much. Not to engage in the modernisation of our armed forces would weaken our nation's defence, at precisely the time when it needs to be strong.

We have, therefore, embraced change. The armed forces themselves, under the leadership of the service chiefs, recognise the need for change; and that is why we have embarked on the process of modernisation set out in the future capabilities paper, published in July—modernisation backed by extra investment from a Labour Government committed to strong defence. The next three years will see the defence budget rising by £3.7 billion—an average annual increase of 1.4 per cent. in real terms and a continuation of the longest sustained period of increased spending on defence for 20 years.

The Government are investing in defence, and Labour's commitment to defence stands in stark contrast to the Conservatives' proposals. The shadow Chancellor has said that he will freeze defence spending—in effect, cutting defence spending by £2.6 billion, which is the equivalent of 70,000 armed forces personnel, or cancelling our two new aircraft carriers. To fill the gaps in their spending plans, the Conservatives claim that they could find £1.6 billion in efficiency savings on top of the £2.8 billion that the Government have already earmarked.

Tory proposals would mean drastic cuts in our logistics and procurement budgets. Are they seriously suggesting that £4.4 billion can be taken out of defence spending without some implications for the front line? Without logistics there would be no front line. Cuts in procurement spending would mean that our troops would not be getting the right equipment—never mind the implications for British industry and British jobs. Instead, we have drawn on our experience of operational commitments since the 1998 strategic defence review to identify those parts of the armed forces that are in the highest demand, and those that are less well used. As a result, we have developed new plans to ensure that our armed forces can remain effective. With modern communications and the fusion of intelligence, target acquisition and precision weaponry, the capability of our armed forces is improving exponentially.

The Royal Navy of the future will be a highly versatile, expeditionary force, with the emphasis on the delivery of military effect on to land at a time and place of our choosing. Two new aircraft carriers deploying the joint strike fighter, and new ships to support amphibious operations, will provide a step change in our ability to
 
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launch and support forces ashore. Let me highlight the fact that those aircraft carriers will be built in the United Kingdom, employing British workers, despite the best efforts of the Liberal Democrats who want us to buy them abroad. Taken together with the additional investment in new submarines and the Type 45 destroyers, those developments will ensure that the fleet remains a formidable fighting force for many years to come.

The Royal Air Force will be equipped with modern, highly capable, multi-role, fast jet aircraft, such as the Typhoon, which are able to deliver the offensive and defensive capabilities currently delivered by single-role aircraft. It will increasingly be able to exploit networked capabilities and will be equipped with a range of modern stand-off weapons.

The rebalancing of the Army will be vital as we optimise our force structures to respond to the challenge posed by today's strategic environment. The intention is to provide the Army with a better balanced mix of capabilities—from tanks and artillery at the heavy end, through enhanced medium and light-weight capabilities to increase the deployability of our land forces.

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