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John Reid: Will the right hon. and learned Gentleman confirm that under the Conservative Government defence expenditure fell from a high of 5.4 per cent. of GDP to 2.4 per cent.?

Mr. Ancram: I have heard this argument on a number of occasions: that because the Conservative Government made cuts when commitments were coming down, this Government can continue to make cuts when commitments are going up. It is rather like saying, "Because you cut off a toe, I am entitled to cut off your leg." The situation is different, and the sooner the Secretary of State understands that, the better. The cold war ended; the commitments changed; we made reductions. Now the commitments are increasing again. Even his own report recently made that clear, yet we are seeing the commitment of resources going down.

John Reid: I am willing to engage in this discussion with the right hon. and learned Gentleman, who like me has always wanted as many resources as we can get. There are two differences between the two Administrations. First, his Administration cut the budget in absolute terms as well as in proportional terms: there was a 29 per cent. cut in absolute terms; and there was a 50 per cent. cut in proportional terms. In our
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situation, there has been an increase in absolute terms and one 10th of the cut in proportional terms under the Conservative Government.

Mr. Ancram: The Secretary of State always makes these figures sound as if there is an increase. I seem to remember that he was responsible for the strategic defence review, in which certain expenditure and commitment levels were set out. I think that he would agree that the commitment levels have risen beyond those projected in the review and that the resource commitments have gone down from what they were predicted to be in the review. For the first time, we have a Minister who, perhaps unfortunately for him, is having to defend the cuts that he has made in the face of what he said was necessary some time ago.

John Reid: In terms of the absolute amount in real terms, the money allocated has gone up by 1.4 per cent. per annum over the three years. In terms of the planning assumptions, although there is a high and challenging level of commitment, we are broadly within the planning assumptions that we set out in the strategic defence review. I hope that that clarifies both those matters.

Mr. Ancram: The Secretary of State and I could go on for a long time with this ping-pong across the Dispatch Box. I shall come in the course of my remarks to the effects of the reductions. We can all bandy figures. I want to show him the effect of that on the armed forces on the ground. If he is patient for a while, I shall come back to that.

David T.C. Davies : I have not been in Parliament long, but will my right hon. and learned Friend confirm that, during the 1980s, Labour Members were calling for a massive cut in our defence commitment, as they wished to get rid of our nuclear deterrent? Will he accept my congratulations on the fact that the previous Government held out against those calls and ensured that we had a commitment until the end of the cold war, when it was possible to make some reductions?

Mr. Ancram: My hon. Friend makes a good point. I am looking across the Chamber at certain Labour Members, who I think from how they behave now are rather wishing that they had behaved differently in the 1980s.

The Chancellor has become increasingly effective in clawing back much of the reluctantly granted increase that the Secretary of State is talking about. For example, thanks to the previous Secretary of State's inability to stand up to the Treasury, the Ministry of Defence must now pay for its use of the spectrum at a cost to the armed forces of £145 million up to and including this year. That is a clawback by the Treasury which I am sure, had the current Secretary of State been in post, he would have resisted, but unfortunately his predecessor did not have the strength to do so.

At least the Minister of State came clean, possibly inadvertently, when he said:

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That does not sound like a Minister who is talking about increased expenditure.

What is even more regrettable is that, to achieve those Treasury-driven savings, the MOD cuts take place wherever convenient, rather than where it is prudent to do so. I fear that the major project report—

Mr. Ingram: Will the right hon. and learned Gentleman give way?

Mr. Ancram: I will in a second. Let me finish the point.

I fear that the major project report 2005 will make further disappointing reading, bearing in mind that the 2004–05 winter supplementary estimates reduced the budgets of the front-line commands by £1 billion to pay for the delays in the equipment programme. Perhaps the Minister could explain the background to that.

Mr. Ingram: I think that I will go back to the right hon. and learned Gentleman's earlier comments. I indicated in an earlier contribution that defence budgets are always under pressure. They always have been and probably always will be, because our aspirations outstrip our resources at all times. Can he tell us, since he is criticising what we are seeking to do through a £2.8 billion efficiency programme, where he would have got the other £1.6 billion efficiency savings that he was campaigning on at the last general election? The Conservatives were seeking to take out £4.4 billion and I am telling him that it is very difficult to take out £2.8 billion.

Mr. Ancram: We made it clear that we were going to find savings of £2.7 billion, which we were going to transfer to front-line capability, but this debate is about the armed forces as they are today. I want to make it clear that the Minister of State's description of the armed forces as buoyant does not match the reality. Let us look at the effects of what has happened. Since 1997, the Army has lost 9,000 personnel, the Royal Navy has lost 10,000 and the RAF has lost 16,000. The MOD's own "Key Defence Messages" state that by April 2008 Army strength will be cut to 101,800, Royal Navy strength to 36,250, and RAF strength to 40,800. The manpower figures are coming down and no amount of rhetoric from the Minister of State can disguise that.

Mr. Peter Kilfoyle (Liverpool, Walton) (Lab): The right hon. and learned Gentleman makes much of the loss of manpower—politically incorrect, I know—in the armed forces, but is not much of that to do with, and I am sure that the Chief of the General Staff would agree, the quality of housing that is available? Was not it the Conservative Government who virtually gave away military housing to the Nomura bank for a knock-down price, a deal that the incoming Government could do nothing about?

Mr. Ancram: I know from my own constituency experience, because I have Tidworth in my constituency, that there has been much progress in terms of Army housing—I have been asking a lot of questions about that. I have been surprised to find out how many Army houses are empty at the moment. That is something that the MOD should address for the reasons that the hon. Gentleman gives.
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If the Minister hoped that the cracks in the armed forces could be papered over by the use of reserves, I suggest that he look again at the position in which the reserve forces find themselves today. They have done a tremendous job, but those serving voluntarily have been steadily leaving, causing a crisis for both the Territorial Army and the regular Army, which it increasingly supports. Can the Minister confirm reports that an average of 500 men and women a month have left the TA since October 2003? The TA's current strength is 35,500, the lowest since it was founded in 1907, whereas the required strength is 41,610. Can he confirm the report that the recent £3 million television advertising campaign, which shows that the Government know that they must have more men and women in the reserves, brought in fewer than 600 candidates?

Mr. Gray : Is my right hon. and learned Friend aware that the situation in the TA may be significantly worse than he describes? Quite a large number of people who are still nominally on the books have remained in the regiments for the purpose of receiving their bounty, which they get at the end of the year, but will be reluctant to be deployed again and may be thinking about leaving.

Mr. Ancram: My hon. Friend and neighbour makes a good point. It again highlights the difference between the Minister's rhetoric and the reality on the ground.

The Minister rightly said that equipment is important. One fifth of our tanks and a quarter of our surface ships have gone, as have 130 of our aircraft. Is that what he meant when he proclaimed that

It is not only the reserves but the regular forces that have had difficulty in recruitment and retention. The total intake for the three services, if we stop being selective about one or two Scottish regiments, has seen a steady drop in numbers, while the total outflow of United Kingdom regular forces has been increasing. That is the reality.

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