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Lord Wallace of Saltaire: My Lords, I have read the St Malo declaration with great care. I am unable to identify any element within any of that Franco-British exercise that might conceivably be thought to fan the flames of anti-Americanism. Will the noble Lord explain what he means a little more clearly?

Lord Burnham: My Lords, I thank the noble Lord for that intervention. By implicitly weakening NATO and implicitly denigrating, wrongly, the need for American involvement, St Malo has--I think this is fairly generally agreed--engendered a feeling that Europe has no need of the Americans and the quicker it can get rid of them, the better. I certainly do not accept that.

I was just about to mention the Territorial Army. Relationships between the TA and the Regular Army seem to be at rock bottom. However, the generals have to understand that the TA--and that means a 58,000-strong TA with all its infantry regiments intact--is absolutely essential to effective management of the manpower situation. Until the problems of overstretch and retention can be solved the Territorials are absolutely essential--I am sure that my noble friend Lord Attlee will comment on this--to fill the holes in the Regular units. I know that the percentage of Regulars on active service has been drastically reduced since the partial end of the Balkans conflict, but there, in Iraq, in Africa and many other places including Ireland we cannot rely on it not going wrong again. One answer would be for the British services to take a sabbatical and let someone else do the work, but I doubt whether this Government, or to be fair, any other would accept that solution. Talk about the white man's burden, this is the Briton's burden.

I am afraid that with Smart procurement we have not yet got the necessary up-to-date communications networks. It is clear that while logistic chains are being redesigned they are not working as well as they should and, more dangerous still, there is a refusal on the part of the Treasury to understand the investment that is required to provide these chains with the necessary amount of material to deliver.

What is clear is that with Smart procurement the evaluation role of DERA will have a key place in the assessment of equipment taken into service. Yet the Government appear to be hell bent on fragmenting DERA at the same time as they are bringing in Smart procurement. As this will involve major changes in the relationship between industry as supplier and the Armed Forces as user, this seems foolish. The simple effect of the constraints imposed on the defence budget lie in an adaptation to defence policy by the Government of the General Confession:

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I ask the Minister whether she and her right honourable friend the Secretary of State can alter the Chancellor's personal hostility to defence spending.

To sum up the views from these Benches, if the current structure and pattern of the defence and related budgets, and the relationship of those budgets to public expenditure as a whole, does not provide resources sufficient to meet the international commitments which the Government accept, the requirement for continuing year-on-year cuts in the defence budget must be stopped. If necessary, that budget must be increased in cash terms and as an element of public expenditure as a whole. If the noble Baroness and her colleagues stand up for this policy, they will have our wholehearted support.

Having said that, I again thank her most warmly for her informative and interesting speech.

11.51 a.m.

Lord Craig of Radley: My Lords, I, too, should like to express my gratitude to the Minister for the update on the difficult and very dangerous position in which our Armed Forces find themselves in Sierra Leone. I hope that what is being done will prove to be sufficient to stabilise the dangerous situation.

Turning to the White Paper, I hope that the noble Baroness will be able to answer some of the concerns which remain about the way in which Smart procurement is working. She rightly said that the Government must be judged by results.

In the Strategic Defence Review, much was made of the need to improve the way in which the MoD procures equipment and services. Many would echo those sentiments. Indeed, for those of us who have spent a lifetime in the services, there has never been a time when there has not been criticism of the MoD over procurement. It has been a rich seam for the Defence Select Committees in another place and for the Auditor General to mine, year after year after year. Delays, cost overruns, inadequate performance in service and costly modifications are but a few of the many problems which have been exposed and which have had to be faced. Each method of procurement--whether competitive, cost plus, overseas purchase, collaboration, hands on, hands off, and now Smart procurement--have all been tried and found wanting.

I think that there have probably been only two major equipment programmes in the past half-century which have reasonably successfully been run to time and budget. Those have been Polaris and Trident--although even these have not been without problems in the vastly expensive support facilities which are essential and unique to them.

The MoD has recently been deluged with yet another string of equipment problems and procurement delays. Why should this be? Those involved with procurement over the years are not idle, nor inefficient; they do their very best, as do the Ministers involved. But the history of mistakes and failures is too long, too repetitive and too serious to be

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dismissed, to be excused with protestations that they will not be allowed to happen again, and then happily forgotten about.

I am sure that the Minister will have given thought to this problem. I fear that, in far too many cases, analysis will show that the problem lies not in MoD at all, but in the way in which Whitehall--particularly the Treasury--comes to decisions, or fails to make decisions in a timely and positive manner. There seems to be no mechanism to cope with such procrastination, and key programmes run later than originally forecast. Look at what has been happening to the vitally important strategic airlift requirement and to the Royal Air Force's BVRAAM and future transport aircraft competition.

What so often seems to be overlooked or belittled in these delays is that they are not cost free. Equipment which should have been scrapped or paid off has to be kept going at considerable extra expense; ship refits cannot be put off any longer; major airframe overhauls have to be undertaken; training programmes and resources are not readily available or lie idle, and so on. The cost of not making a decision will frequently add a significant additional amount to the eventual outcome. I cannot attach any sense of success to the new look Smart procurement in the long and serious delays which have arisen over strategic airlift, BVRAAM and FTA.

However, when we are involved in a conflict, there is a sudden urgency in procurement. The difficult is achieved in a day; the impossible takes only a week. The expertise to resolve complex technical and demanding urgent operational requirements can be rapidly brought to bear, and the money is found. The beneficiaries, the men and women in the front line, see this happening and are greatly encouraged and delighted with the support which is evident at every level.

But what happens once the shooting stops is a different story. In the Kosovo conflict, for example, three serious problems were identified for the Royal Air Force: it could not bomb with precision through cloud; it needed a better anti-armour weapon; and, above all, it needed more secure communications. These and no doubt other shortcomings for all arms were identified in the lessons to be learnt following the conflict.

These problems must be tackled with similar urgency as if the front line was still at war. No one can any longer be confident that there will not be once more live operations in a week or two's time. Imagine the frustration of front-line crews when their identified and agreed critical needs are not being delivered with all dispatch. Is there any wonder that there is disillusion and, indeed, disgust at these poor response times?

I can think of no better retention initiative for our front-line crews than to get these identified shortfalls rapidly into front-line service. Then, and only then, will those whom we expect to fight for us and to risk their lives feel that their efforts are being recognised and supported. Without such support from higher

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formations, from MoD and from the Government, it is not surprising that those at the sharp end are becoming more and more disheartened.

They also realise that without better communications the time will soon come--it may have done so already--when the United States Armed Forces will no longer be willing to integrate with and operate alongside our own forces because we lack the secure communications to do so without risk of giving away vital intelligence information to an enemy.

Today's operations are no longer a one-off, never to be repeated, event. The prospect of expeditionary activity is with us for the long term. We must do better than follow the traditional and not always successful peacetime procurement procedures. Smart procurement made it sound as though the MoD was going to be better poised to obtain essential needs much more quickly, as well as more cost-effectively. We are not seeing such a universal result. Today, more than ever before, it really matters that we are not.

I was pleased to hear of the new steps--some of them, admittedly, only repetitions of previous announcements--to improve retention. But, when it comes to retention, one other area of concern is the serious financial position in which the MoD now finds itself over married quarters rentals and upgrades. I am not returning to the recent NAO criticisms about excessive holdings of quarters, which I felt were wide of the mark; rather I am referring to the repetitive delays and deferrals in upgrades.

No doubt the rising rentals which the contractor is now able to charge the MoD is a problem, but presumably this is a reflection of the housing market generally. As such it should have been anticipated and budgeted for. What is not going to help retention is never-ending deferral and delay in upgrading married accommodation to acceptable levels. It may not be the only factor which affects the serviceman and his family, but I fear that it will become the easiest to identify and blame for a decision to leave the service.

Strong and sympathetic leadership will always help individuals to cope with some of the inevitable stresses and strains of service life. But it is altogether wrong to leave everything to leadership and do too little or even nothing to resolve the problems, both operational and administrative, which budget squeezes and restrictions are now making more and more evident. So long as this Government, or any government, wish to punch their weight in the international arena, they cannot be confident of being able to continue to do so unless the services' critical needs are delivered on time and work to specification.

Without that, not only will there be equipment shortfalls, there will be manning difficulties as well. We have been extremely fortunate in recent conflicts not to have suffered serious loss of life or casualties. We must not presume that this is the norm. Every time our forces are committed, the chances of there being casualties does not grow any less. The effect of a serious loss of life in a future expeditionary action would put great strain on personnel and their families.

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We surely must not find out too late that some if not all of those casualties were attributable to inadequate equipment or supplies. The Government need to think these things through, or else they, or their successors, are going to find that the number of personnel who remain willing to volunteer for the forces, are confident that their families' needs are properly provided for, and who have the full-hearted support of their families to remain in the services, has dropped to levels which make it impossible to undertake demanding and increasing commitments of the kind on which governments, of both parties, have embarked in the past decade or two.

I feel sure that the noble Baroness the Minister, who shows such strong sympathy for service personnel and is highly regarded by them, will be aware of the dangers to which I have alluded. I hope that she will do all that she can to ensure that these dangers are recognised, and every effort is made to deal with them, by the Government as a whole.

In that well worn phrase, "Action this day, please!"

12.2 p.m.

Lord Gilbert: My Lords, I regret that I have to start by making an apology to your Lordships' House. I am unable to stay to the end of the debate because, at the very last moment, I am required to take part in a conference in Madrid. I assure noble Lords that it is only force majeure which prevents my staying to the end of the debate and I hope that I shall be acquitted of discourtesy in that respect.

I congratulate my noble friend and her right honourable colleague on their decisions with respect to DERA. I have always supported the change in the structure of DERA, although it is no secret in the Ministry of Defence that I felt considerable concern about the original proposals, which envisaged only about 1,000 of the DERA staff being retained in public service. My concern had nothing to do with the relationship between public and private service in this country. It was overwhelmingly to do with the attitude of our American friends to any new arrangements to be introduced for DERA. I cannot exaggerate to your Lordships the importance to this country of the intimate and long-standing relations at the cutting edge of defence research that exists between this country and our friends in the United States. We have similar arrangements with other countries but nothing like on the scale and intensity of those we enjoy with our American friends. If anything were to put those matters at risk, it would be deplorable and would have serious long-term consequences for our own defence capability.

I am glad to be able to tell the House that I spoke only yesterday to some of my friends in Washington. I wanted to check for myself whether the Secretary of State and my noble friend were getting the right advice. I am glad to be able to say to the House that, on present plans, the Americans are broadly satisfied with what is contemplated, although there are one or two points which they tell me have still to be negotiated. They are confident of success in making arrangements that will

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be congenial both to them and to the Ministry of Defence. I counsel my noble friend that it is very important in this context not to be satisfied merely that our contacts in Washington are content with these arrangements but also that the people who work in the laboratories at the lower level in the United States are also content. The danger is not that there would be any rapid rupture but that there would be an insidious refusal on the part of people at the coalface to continue with these arrangements and we would not know that it was happening. We must ensure that there is enthusiastic support among people at the coalface in American laboratories for our present contemplated arrangements. At the moment I am very relaxed about that possibility.

Secondly, I want to congratulate the Secretary of State, in contradistinction to what the noble Lord, Lord Burnham, said. I fully support the decision not to have a cannon in Eurofighter. It is preposterous for us to go on thinking that we are going to be using £40 million aeroplanes in a "Biggles" role of close land attack or air-to-air dogfighting. Those days have gone, just as the horse-borne cavalry have gone. We will be equipping Eurofighter with extremely sophisticated air-to-air missiles and air-to-surface missiles. These are the weapons of the future. They are stand-off weapons with a range of scores of miles. I hope very much that the Ministry of Defence will go for the European solution for the BVRAAM--the beyond visual range air-to-air missile. When it comes to fruition, it will be by far the most advanced air-to-air missile in the world. It would be marvellous if, for once, this country had what is beyond question the best weapons system in one context. It would be immensely valuable to our forces.

I hope very much--I am sure that my noble friend has her own views on these matters--that we will be contemplating an extension of the use of unmanned aerial vehicles, a subject on which I became rather a bore when I was at the Ministry of Defence. I shall go on boring your Lordships with the subject whenever I am on my feet. When I went to the Ministry of Defence people started saying, "Yes Minister--shades of Duncan Sandys, talking about unmanned aerial vehicles 30 years ago". We have seen what happened in Kosovo. The use of unmanned aerial vehicles was brilliant. There was quite rightly a huge hoo-ha when one American manned aircraft was shot down. There was enormous expense in recovering the pilot--quite rightly--and it was a brilliant operation. But during that operation in Kosovo any number of unmanned aerial vehicles were shot down and no one took a blind bit of notice because they were cheap and they were disposable. I hope very much that my noble friend will be pursuing an interest in those matters.

I shall detain your Lordships with only one or two other points. They relate to air power. With respect to the joint strike fighter, I can let the noble Lord, Lord Burnham, know that there is debate within the United States about whether or not that plane should have a cannon. I hope that those who take a modern view of these matters will win that argument.

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I should like to draw my noble friend's attention to one other aspect of the procurement of the joint strike fighter. I refer to its capability or otherwise in conditions of very high temperatures and high humidity. As I understand it, in the operating specifications for the joint strike fighter there is no provision for it to be able to operate in conditions simultaneously of very high temperatures and very high humidity. When I discussed this with my American friends, they said, "Oh yes, don't worry. She's going to be built and operate out of Edwards airforce base in California, and it gets very hot there". That is true, but it does not get very humid at the same time. I hope that my noble friend will give an assurance that she will look closely at this matter. We have a great interest in the future of the joint strike fighter in this country. The last thing we want is a joint strike fighter that suffers from the same disabilities experienced by many of our aircraft in the Gulf when operating in conditions of high humidity and high temperature.

The only other point on which I want to detain your Lordships is the question of our air transport capability. Fundamental to the Strategic Defence Review was the acquisition by this country of a new strategic airlift capability. I am quite clear that that capability can only be supplied by the C-17. There is no other aircraft with the range, the load-carrying capability and the speed of the C-17. It is possible to acquire--to keep some of our Euro-enthusiasts happy--the future large aircraft (FLA) that we have been discussing with our European friends. I am personally rather sceptical of the need for it. I am certainly sceptical as to whether the Royal Air Force will want a mix of C-17s, FLAs and C-130Js. In the C-130J, at last, we may be getting a really good aeroplane. But absolutely critical to the future strategic airlift capability is the C-17.

I know that the Ministry of Defence was saying four C-17s. I think that it may be saying three C-17s for the short-term requirement, or their equivalent. The only equivalent to four C-17s is four other C-17s. It is the only aircraft that can carry a modern main battle tank. It is the only aircraft that can carry AS-90. It is the only aircraft that can carry Chinook.

If your Lordships think that those are unnecessary luxuries, or that we shall never have enough C-17s to carry many of those assets, let me draw attention to the events of the past few months. We sent some helicopters to Mozambique. They had to be disassembled, flown to Mozambique and reassembled there. It took six days. With C-17s, we could have had them there overnight. As all noble Lords will agree, that was a period when the need to deploy helicopter assets was one of extreme urgency.

We have only to look at what is happening in Sierra Leone. We have sent some Chinooks there. They had to go to Gibraltar. From Gibraltar, they flew to the Canary Islands; from the Canary Islands, they flew to Mauritania; and from Mauritania, they flew to Senegal. By the time they arrived in the zone of action their crews must have been absolutely exhausted. It

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took many, many hours. We could have put a couple of them in each C-17 and had a bunch of them there overnight.

In regard to the main battle tank, I happen to think that the sight of a main battle tank rumbling down the street towards you is a very great deterrent to stupid young men doing something foolish. You would not need to engage the main battle tank--it is just the sight of the thing. We could have had a handful of Challenger 2s on the streets of the capital of Sierra Leone in a matter of hours if we had had C-17s ready to deploy them. I cannot emphasise too strongly to my noble friend, and I hope that she accepts my arguments, that the C-17 is an essential ingredient in our peacekeeping and peacemaking ability, as well as our war fighting ability.

The last point I would make to my noble friend--and here I agree with the noble Lord, Lord Burnham--is that in this country we do not spend enough on defence. I speak with a little authority on the subject. I believe that I was the only Member of another place in 30 years who voted against the Defence Estimates on the grounds that they were too low--unlike a few other members of my party with whom I found myself in the same Lobby who were voting against them because they were too high. I still believe that they are too low. I hope that my noble friend and the Secretary of State will fight vigorously for more resources for defence. In so doing she and he will have my full support.

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