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20 Apr 2009 : Column 95

That sentence sadly sums up where the armed forces come on Labour’s list of priorities—and it gets worse.

Not only has funding not been brought forward; it has been put back. The equipment report of last December delayed the carriers, mothballed MARS, cut Future Lynx numbers and kicked FRES into the long grass. Even the compromise reduction in tranche 3 Typhoon, as discussed earlier, is being questioned, when it could maintain skilled jobs in the north-east throughout the recession. We can expect only more cuts and more delays when the results of the latest planning rounds are finalised—if ever they are. Defence must share the pain with other public services, but why is it, we may ask, that the only time when our armed forces seem to come first is when budgetary restraint is called for?

The Government’s attitude has forced the Ministry of Defence to prioritise current operations ahead of the long-term procurement of capabilities, as the national security strategy made clear. That has meant that the long-term equipment programme is increasingly unaffordable—the collective view of the Defence Select Committee. There is estimated to be a £2 billion black hole at the heart of defence budget. Everyone in the MOD, in the Cabinet, in the House and in the media knows that the Department is increasingly paralysed by the Government’s inability to deliver their stated policy on defence. I have a certain amount of sympathy for the Secretary of State, knowing, as we all do, that he comes to the House with his hands tied by the Prime Minister and the Treasury. Outside Downing Street, everyone recognises the need for a new defence review, but we all know that it cannot happen this side of the election because the Government know that a review will identify either the need for more money, more equipment and more troops, which it is now impossible to provide, or that the only realistic choices lie, at least in the short term, in what to cut from the programme.

The Secretary of State is reduced to falling back on the strategic defence review mantras. I echo the point made by my hon. Friend the Member for Mid-Sussex—that the SDR is a fine piece of work, but the Government have become too complacent about it. For example, the Government said:

The SDR was designed before Kosovo, before 9/11, before Afghanistan, before Iraq, before the Iranian nuclear programme, before we went to Helmand and before the Georgian war. There is a sense that all this has to move on, but it has not done so because the Government dare not because it would open up so many questions about what our defence policy should be.

The challenge we must face is: how do we escape from the straitjacket of SDR being funded inadequately, leading to vital decisions being delayed because of costs, where Ministers argue that dwindling numbers of platforms and troops do not matter? The Department remains obsessed with the SDR idea of capability over numbers in an age when numbers of platforms and troops matter as much as capability, if not just as much as they ever did. For example, the decision to extend the life of the Type 23s by up to eight years has been made because the future surface combatant programme will
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be slowed on account of budgetary constraints. Ministers still claim that the first FSC is expected to enter service “around the end” of “the next decade”, but it seems more likely that it will not be until the beginning of the following decade at the earliest. The Under-Secretary of State told the House at Defence questions before Easter that construction on the first FSC will begin

That is unlikely to be until 2015, so HMS Daring, the first Type 45, will have taken more than six years from first metal being cut to entering service—meaning that the first FSC is not likely to enter service until at least 2021—provided there are no further delays, which seems unlikely. What is two years between friends in the Ministry of Defence, we might ask, but between 2019 and 2021 three Type 22s are due to leave service, reducing our surface fleet still further. The decision to extend the lives of the Type 23s, with no answers to parliamentary questions about the cost implications of the decision, is merely another attempt to push cost decisions to the right.

It is the same story with the helicopter programme. Aware that there was a danger of the fleet being cut in half by 2020, the MOD has now announced plans to extend the lives of the Chinooks, the Pumas and the Sea King Mark 4s and 7s. Despite repeated questioning, however, Ministers—including the Under-Secretary who will reply from the Dispatch Box this evening—will not reveal how much these decisions will cost, or when the money will be made available for these life extensions. Again, decisions are shifted to the right so the financial consequences of today’s decisions will be felt only after a general election.

We have already discussed the carriers, but the decision to delay them reeks of money more than any other consideration. To argue, as the Minister did, that this leaves our defence capability “unaffected”—the word he used—is simply not credible. As elsewhere, cost pressures and political expediency mean shifting the cost of delays until after the general election. It was disappointing that the Minister was unable to furnish the Defence Committee with robust figures about how much the delay to the programme would cost. We now have the figure of £600 million floating in the air, to which the Minister will neither indicate assent or dissent. He is shrugging his shoulders. We know that this is likely to be yet another bill that will land on the Secretary of State’s desk after the next general election.

The MOD and the Royal Navy will not countenance cutting the carriers because they are a prestige programme, so they just delay them, but there is little indication that the Department has thought through the practical consequences of building these carriers and what sort of Navy we want to possess in the 21st century. My hon. Friend the Member for Mid-Sussex was absolutely right to question the purpose of these two 65,000 tonnes carriers. They seem to point towards ambitions for a powerful blue-water Navy, but at the same time we have seen the number of frigates and destroyers slashed and significant cuts to the number of attack submarines at a time when the Americans value most highly our minesweepers, for the capability that they can bring, rather than our larger capital ships.

Mr. Quentin Davies: Minehunters.

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Mr. Jenkin: Minehunters, I beg your pardon, Mr. Deputy Speaker.

The Royal Navy is facing in two directions and there is a real danger that our pretensions for it will not match our capabilities to deliver it. If the carrier programme is to go ahead—I very much hope it does—we must build a Navy fit to go with it. If we cannot afford to do this or do not want to play such a role on the world stage, the £4 billion would be better spent elsewhere and we will finish up getting out of blue-water naval capability. I cannot believe that that would be the right decision, but that is the nature of the decisions that we face on the current budget. Decisions of that type need to be faced in a defence review that must take account of the short and medium-term fiscal crisis from which defence will not be immune, however much ring-fencing we call for in our speeches.

How should we configure the armed forces for the type of country that we wish to be in the medium and long term, despite the pressures that we face in the short term? We must ask ourselves whether we really want to continue to play a global role—I echo the comments made by my hon. Friend the Member for Mid-Sussex. In the past 10 years, we have punched above our weight, but we have come close to exhaustion in doing so. We must decide whether we wish to slim down, cutting back on the carriers, JSF, the full complement of attack submarines, tranche 3 of Typhoon, FRES, future Lynx and FSC or whether our national interest demands that we maintain a global role, in which case the review must lay out a pathway to and the real costs of achieving armed forces capable of sustaining such a global role, in both Professor Strachan’s present war and the future war. In the long term, that means a bigger Army, more helicopters, more strategic and tactical lift, and a blue-water royal naval fleet.

For too long, we have sought to play a global role but without being willing to pay for it. In the short term, even our current expenditure plans are unaffordable, leaving aside any ambition to expand. In the long term, recent research by Decision Analysis Services suggests that by 2028 the defence budget would need to be around £88 billion at current prices to achieve the current equipment programme, but, given trend spending growth of merely 2 per cent., it will be under £50 billion by that date.

We cannot put off this choice any longer: either we play a global role and pay for it, or we do not, and we take the savings and risks that come with such a decision. I am convinced that we must maintain our global role, in which case the defence review must nurse us through the current crisis in the public finances.

The current procurement budget is around £5.5 billion and the next defence review will have to go through it with a fine-toothed comb. The Government have been frightened to cut programmes, but a new Government must have the courage to break the logjam and provide the MOD with some clear direction. That is bound to be extremely tough. Can the Trident upgrade be delayed? The hon. Member for Dunfermline and West Fife (Willie Rennie), who speaks for the Liberal Democrats, is asking a perfectly legitimate question. I am not minded to agree with him, but he is entering into a debate that we need to open up and discuss more than we have so far.

Although most of our costs for the Astute submarine have already been met, would it be possible or practical to slow down or delay the construction of boats 5, 6
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and 7? Astute is an essential component of a blue-water Royal Navy. Few navies would dare to put to sea knowing that the British, the Russians, the Americans or the French were operating submarines in their area. That is a powerful capability to have. Could we compromise it in the short to medium term to make ends meet?

Delays, however, are unlikely to be enough on their own. Some projects may have to be cut entirely. Could we abandon tranche 3 of Typhoon? Would it be worth the savings? Is there any point fighting the Treasury to keep the A400M? Again as my hon. Friend the Member for Mid-Sussex said, are we likely to be operating in any substantial theatre where heavy lift is not available from one of our allies?

Airbus—aware of the technical problems and delays that have hit that programme—has admitted that the programme may collapse. Its chief executive told Der Spiegel last month:

I wonder what the Under-Secretary of State for Defence, the hon. Member for Grantham and Stamford (Mr. Davies), who has responsibility for defence procurement, might say about that.

Up until the end of the last financial year, the MOD had spent £564 million on that programme, but the main expenditure is not due until 2011-12, and by putting the programme out of its misery we could save around £2 billion, much of which could be diverted to proven models such as the Globemaster or C-130J. Furthermore, 25 C-130Js could be purchased for around £1.1 billion, which would save the MOD around £900 million, assuming that we do not have to wait too long or have missed our place in the queue.

Mrs. Curtis-Thomas: Will the hon. Gentleman give way?

Mr. Jenkin: I am just winding up, if I may.

Defence must be prepared to make sacrifices in the current climate and current operations must take priority—that is certainly correct—but we cannot ignore the crisis in defence funding that has been building up over the past decade. The next defence review must place the armed forces on a sustainable footing and ensure that, once the fiscal crisis is over, we are ready to make the kind of investment that the brave men and women who serve in them deserve and which is necessary for the future security and prosperity of our country.

8.34 pm

Angus Robertson (Moray) (SNP): It is a real honour to follow so many hon. and right hon. Members who speak with great experience on defence matters. I listened especially closely to what the hon. Member for Mid-Sussex (Mr. Soames) had to say on Trident. It was echoed, I think in the same way, by the hon. Member for North Essex (Mr. Jenkin), and I read that the right hon. Member for Birkenhead (Mr. Field) has said something similar in recent days. So, I very much take the point made about the debate on Trident.

Perhaps I am one of the usual suspects who take a strong line against Trident, but I very much welcome the fact that people are, perhaps from a different direction, questioning whether it is the right thing to do in the
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context of such heavy financial pressures on the defence budget, but also in relation to the challenges of this century as we expect them to be.

I am also pleased to follow the speeches of the hon. Members for Chorley (Mr. Hoyle) and for Plymouth, Sutton (Linda Gilroy), who spoke with such conviction in support of their constituency defence interests. I want to echo that in discussing procurement matters as they relate to Scotland, and in particular the important role of defence aerospace and naval industries in Scotland.

According to SBAC Scotland—the trade association that represents the defence sector in Scotland—approximately 170 companies north of the border operate in the sector, employing about 16,000 people. Given that Scottish design engineering and manufacturing in general have a worldwide reputation for excellence, this industry in particular should and will go from strength to strength on the basis of its experience. It is a little-known fact that 59 per cent. of defence aerospace and naval output in Scotland is exported from the United Kingdom, which means that the overwhelming majority is not destined for the domestic market. The global reputation of Scottish engineering excellence will serve the industry well.

The industry in Scotland has a long history and heritage. That was highlighted by the very successful 90th anniversary celebration of the Royal Air Force Benevolent Fund at Edinburgh Castle, which was hosted by the First Minister, my right hon. Friend the Member for Banff and Buchan (Mr. Salmond), and attended by the right hon. Member for Edinburgh, East (Dr. Strang). In his address to the large group of supporters of the fund, my right hon. Friend drew particular attention to the production and development of the crucial gyro gun-sights that were used in Spitfires during the second world war. The tradition of technical excellence in defence procurement is a long one, and the development and manufacture of key aerospace defence and naval products and construction has continued to the present day—from world-leading optical and radar equipment to top-of-the-range sea-going vessels and even land mine-clearing equipment.

Undoubtedly the most important factor in that success is the people involved. It is due not just to one of the finest engineering traditions in the world, but to the steady throughput of trainees, apprentices and graduates learning the high standards of a very high-standard industry. Bearing that in mind, I am pleased that there is cross-party consensus in the form of support for the sector. Whether it is represented by the Prime Minister’s visit to Govan last week to see shipbuilders on the Clyde, or by Scottish Government Ministers engaging regularly with the sector to secure a competitive market advantage, all of it should be welcomed. Having said all that, however, I must add that I consider it important to deal with the funding realities of the domestic defence procurement sector.

The hon. Member for North Essex raised the issue of relative spending on defence matters, without going into the—I think—pretty frightening GDP-related statistics. Defence is the only major area of United Kingdom Government expenditure that has not experienced an increase in spending as a percentage of gross domestic product in recent years, despite high-tempo and high-cost
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operations in both Afghanistan and Iraq. As a percentage of GDP, defence spending has fallen from 7.1 per cent. to 2.4 per cent. in the last 50 years. That is understandable in general terms, but the fact that it has fallen from 2.8 per cent. to 2.4 per cent. since 1997 is less explicable.

In Scotland it is difficult to obtain official confirmation of procurement spending from the United Kingdom Government, although the Minister with responsibility for procurement may be able to answer some of the questions when he sums up the debate. Until the early 2000s, the Ministry of Defence was able to answer questions about defence procurement in Scotland, and I do not really understand why that is not the case now. On 1 February 1999, my predecessor, Margaret Ewing, asked a specific question. I will not give the details, but the question can be found in column 450 of the report. She asked how much the MOD was spending in Scotland on defence procurement and how much of that was passed by sub-contractors. The answer to that question was detailed and helpful, but since the introduction of accountancy changes—I understand that that is the excuse given for the impossibility of answering similar questions now—the MOD has been unwilling or unable to give equally detailed answers.

Amazingly, the MOD cannot tell us what overall MOD expenditure is in Scotland. It cannot tell us what MOD personnel expenditure or procurement expenditure is in Scotland. It also cannot tell us what the projected costs are of MOD contracts placed with companies in Scotland, or the cost of MOD research and development expenditure in Scotland, or about Defence Bills Agency spending in Scotland, Defence Bills Agency procurement related to spending or expenditure by MOD bases in Scotland. These are all questions that I have put to the MOD, but none of them has been answered. However, all the past evidence points to a significant procurement and wider defence underspend in Scotland relative to tax contributions from Scottish taxpayers.

The lack of transparency in that context is matched in respect of offset. I asked the Minister of State about this issue at the beginning of the debate, but, to be charitable, perhaps he had not been advised on it for today’s debate as he did not seem to understand why it is important. However, if one understands that military offset is a Government-negotiated agreement that requires a supplier of military equipment to direct some benefits—usually work or technology—back to the purchasing country as a condition of the sale, one understands why it is of importance. It is of such great importance to the United States Defence Department that it publishes annually a large document listing all information about offset arrangements, so that our colleagues in the US Congress and Senate can understand those offset contracts. We do not have that here, however, so we have very little understanding of the value that offset provides to companies operating in the UK in terms of their trade in this important sector. Frankly, that is not good enough.

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