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Lord Davies of Oldham: My Lords, I am grateful to my noble friend. As a distinguished economist, he is telling me that we have hit that halcyon day where marginal costs are absolute zero with regard to a policy. I can only rejoice.

Lord Monson: My Lords, while declaring an interest as a satisfied holder of a London bus pass, does not the Minister agree that it is somewhat ridiculous that well-to-do men and women of 60 plus, of whom there are now an enormous number in this country, should be able to travel totally free at the indirect expense of people who are, say, in their 30s or 40s and struggling to bring up a young family? There is no such thing as a gift horse, as the Minister suggested in his opening reply: someone has to pay.

Lord Davies of Oldham: My Lords, of course someone has to pay. That is why we have attached a price tag to the policy, which we think will command public assent for the benefits that it brings to those significant groups. The noble Lord suggests yet another area of policy where some form of means-testing would have to be imposed before one obtained a pass. The cost involved in that kind of exercise would be well beyond marginal. That is why we are introducing the policy in all its simplicity.

The Earl of Mar and Kellie: My Lords, bus pass schemes in Wales and Scotland will be universal
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schemes. Will the opportunity be taken to make the English bus pass schemes universal, or will we be left with hundreds of different schemes, as at present?

Lord Davies of Oldham: My Lords, the principle is universal, but local authorities will of course vary in how they operate the scheme. We have no objection if, for instance, a local authority decides that it does not mind meeting the costs in its area of the limited number who may travel at peak time, although the cost that we are meeting is that of travel after 9.30 am. If local authorities want to exercise that discretion, that is surely something in which the noble Lord's party would see merit.

Lord Roberts of Conwy: My Lords, do the Minister's earlier replies imply that if the noble Lord, Lord Peston, is wrong and there is a shortfall, the Chancellor will increase the £350 million that he is to make available?

Lord Davies of Oldham: My Lords, the noble Lord is a braver man than I to question the economic expertise of my noble friend Lord Peston, but the simple fact of the matter is obvious. Whereas one could see increased costs for rush hour travel when in certain parts—many parts—of the country our transport system is fully stretched, my noble friend suggested that, outside rush hour, capacity is available and using that capacity more extensively is unlikely to incur extra cost.

Allied Rapid Reaction Corps: British Deployment

11.22 am

Lord Astor of Hever asked Her Majesty's Government:

The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Drayson): My Lords, the deployment of the British contingent from the Headquarters Allied Rapid Reaction Corps as the International Security Assistance Force headquarters in Afghanistan will have no impact on UK forces deployed to Iraq.

Lord Astor of Hever: My Lords, I am grateful to the Minister for that reply, but does he accept that the National Audit Office's concern about the ability of the Ministry of Defence to take on more commitments underlines how inappropriate are cuts to the infantry at this time? Can the deployment to Afghanistan take place without the MoD eating into its own budget for Iraq?

Lord Drayson: My Lords, I am sure that noble Lords will want to join me in congratulating the noble Lord on his birthday today.
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The NAO report was positive. It showed that the MoD has a good system for reporting the readiness levels of the Armed Forces and that the position today, in managing what is a challenging situation, but one that is sustainable, shows the excellent work that the MoD is doing. With regard to the transfer of forces, we have previously announced that the Allied Rapid Reaction Corps HQ in Afghanistan will be taken over by us next year. That decision was taken back in June 2004. No decision has been made on the full level of forces to be involved in that, but we do not envisage that that will require us to make any changes to our contingent in Iraq.

Lord Garden: My Lords, I agree with the Minister that the NAO report is excellent and that the Ministry of Defence appears to have a good system for quantifying its problem. Does the Minister agree with the report when it states:

The report shows that in a graph covering the past six years. Given the Minister's Answer, we must assume that in 2006 it will again exceed that level. Is it not about time that the department considered uplifting the planned level so that, in the long term, the Ministry of Defence will provide the right resources to underpin the level of activity that the Prime Minister is imposing on it?

Lord Drayson: Actually, my Lords, the number of regular Armed Forces deployed on operations and other military tasks has fallen from 20 per cent to 18 per cent from a peak of about 35 per cent during the war-fighting phase of Operation TELIC. With regard to the resources that the Government are providing for the Ministry of Defence, the operations that we require our forces to perform are, as I said, challenging but sustainable. One must consider what this Government have done, making a significant commitment to our defences with the largest sustained increase in defence spending for more than 20 years, on top of the additional £3.7 billion provided. As the Chancellor said in the Budget speech, this Government have set aside £4.9 billion for activities in Afghanistan and Iraq and the activities against terrorism.

Lord King of Bridgwater: My Lords, I endorse what the noble Lord, Lord Garden, said about the quality of the NAO report. Is the Minister aware that it states that, even assuming that operational commitments in Iraq reduce during the next one to two years, the department does not expect completely to recuperate to normal levels of preparedness until beyond the end of 2006? I appreciate that the Minister has only recently taken on his important responsibilities but, given the current situations in Iraq and Afghanistan and our commitments there, despite the statistics that he is able to cite, he will find that people who are familiar with the situation are much more worried about it. He ought to give careful attention to that.
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Lord Drayson: My Lords, I recognise the concern about the commitments that our Armed Forces have been asked to undertake. However, one thing that is clear from the NAO report is just how good a job the Ministry of Defence is doing in managing what is a challenging situation and showing that it is sustainable. Some decisions have been taken to allow us to do that. The report gives a good review of the process that has been used and shows that, currently, the Armed Forces are in a good state of readiness.

Lord Craig of Radley: My Lords, I think that the Minister said that he was unable to give a precise figure for the number of troops—servicemen—that we will send to Afghanistan next year. Nevertheless, to be able to judge the impact on Iraq and other commitments, it would be helpful if he could tell us the approximate scale of commitment to Afghanistan next year.

Lord Drayson: My Lords, we anticipate that the headquarters group of the ARRC will be of an approximately similar size to the group that is currently there under the Italian leadership. However, no decision has been taken on what additional troops will be provided as part of our aim to move into the southern part of Afghanistan next year. No decision has been taken about that yet.

Earl Attlee: My Lords, I remind the House of my peripheral interest. The Minister mentioned the size of the budget but, as a percentage of gross domestic product, has the defence budget increased or decreased?

Lord Drayson: My Lords, the important point is that in a challenging situation—I recognise the challenge that exists—this Government have made a significant investment in defence. One should not underestimate the challenge, given the way in which the nature of warfare has evolved recently. The Strategic Defence Review recognised that change and reforms have been introduced to ensure that our Armed Forces are capable of responding to it. If we consider the investment in our equipment budget—£68 billion over the next 10 years—or the number of warships being built at present, there is no doubt about the commitment of this Government to the proper defence of our country.

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