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This Green Paper does not attempt to answer those fundamental questions. Instead, it is intended to set out our emerging thinking on the future security environment and other key issues facing defence ahead of the review. While there is no external direct threat to the territorial integrity of the UK, there is a wide range of emerging threats for which we must be prepared. We can work to diminish the threat of international terrorism and to counter the proliferation of chemical, biological and nuclear weapons. We can work to prevent emerging threats-for example, by improving our

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approach to cybersecurity-and to contain and resolve the threat from failing states. We can work to ensure that the impacts of climate change and resource competition are managed peacefully. But my judgment is that conflict and instability in this new age will be an ever-present risk. In the face of these threats, no nation can hope to protect all aspects of national security acting alone. We cannot simply defend from the goal line, and our defence posture must reflect this. In the coming decades, our Armed Forces must be prepared if called upon to protect our interests, often in distant places, and, most likely, as part of a coalition of international forces.

The paper therefore reaches two conclusions. First, that defence must accelerate the process of reform and be able to change swiftly to address new and unforeseen challenges as they emerge. We need to be more adaptable in how we structure, equip, train and generate our Armed Forces. We need a more agile defence organisation. We need more responsive strategic planning. So, today, I am proposing that we should legislate for regular defence reviews to ensure that the Armed Forces continue to adapt rapidly to changing trends and threats.

Secondly, the paper concludes that defence must improve its ability to work in partnership with our key allies and security institutions to make the most of our combined resources. Our alliances and partnerships will become increasingly important and define how successful we will be in meeting the challenges that we face. We strengthen our alliance with the US if we strengthen our position in Europe. We will continue to press our European allies to contribute more to our collective defence effort. But make no mistake: this is not about Europe taking precedence over the US or vice versa. The two are mutually reinforcing relationships. In the UK itself, we need to improve further our partnerships with key Whitehall departments and others to ensure the contribution of our Armed Forces is joined up with our diplomatic and development efforts.

In addition to the conclusions on adaptability and partnership, the paper poses six key strategic questions that the review will need to address. These are: where should we set the balance between focusing on our territory and region and engaging threats at a distance? How far are future conflicts likely to share the characteristics of our engagement in Afghanistan and, therefore, what approach should we take if we employ the Armed Forces to address threats at distance? What contribution should the Armed Forces make in ensuring security and contributing to resilience within the UK? How could we more effectively employ the Armed Forces in support of wider efforts to prevent conflict and strengthen international stability? Do our current international defence and security relationships require rebalancing in the longer term? Should we further integrate our forces with those of key allies and partners?

Although the defence budget has grown by more than 10 per cent in real terms since 1998 and not a penny will be cut from next year's budget, the forward defence programme faces real financial pressure. We need to rebalance what we do in order to meet our priorities. In December, I began this process; I made a series of decisions to ensure that we found extra resources for vital equipment for Afghanistan. This

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included 22 new Chinook helicopters, which will provide necessary strategic lift capability for Afghanistan and for other military operations in the years ahead. However, our commitment to reduce the deficit resulting from the global financial crisis means that future resources across government will be constrained.

The report of Bernard Gray into defence acquisition set out clearly the pressures facing the defence budget. It also set out the importance of improving our procurement processes and addressing the shortfalls in our acquisition systems. The Strategy for Acquisition Reform, published alongside today's Green Paper, sets out how we will tackle the challenges facing this major area of defence expenditure. The major reforms it proposes will deliver enduring change by introducing greater transparency. It will ensure that our equipment plans are efficient, strategically focused, affordable and achievable. But it is not just in equipment acquisition that we will need to do better. We are aiming to deliver efficiency savings of more than £3 billion over the current spending review period. We have a strong programme of work to achieve this, including an independent review into the use of civilians in defence by Gerry Grimstone.

Our biggest capability is our people. We rely on the ability of people, both military and civilian, to deliver defence. We need to attract the best people: highly motivated and highly skilled. Our people have already shown their capacity to adapt to new challenges. We must continue to ensure that the structures and training that support them are fit for purpose, including continuing to strengthen joint approaches across the services.

There has been a great deal of interest and speculation about whether any major capabilities will be confirmed in the Green Paper. This is to misunderstand its purpose. I can say that we do not plan to revisit the conclusions of the 2006 White Paper on the nuclear deterrent. We have committed to a wide range of major capability improvements over the past few years, including most recently signing contracts for two new aircraft carriers; and recent operations in Iraq and Afghanistan have demonstrated the importance of being able to deploy and sustain significant numbers of highly trained and equipped troops in a variety of roles, including providing the air and aviation support that they require.

Unless the defence review takes us in a very radical new direction, it is the Government's position that these capabilities are likely to remain critical elements of our force structure, but we need to know first what roles and missions we expect our forces to undertake in future before we can take final decisions about the capabilities that they will need. These will be key issues for the defence review.

Let us be clear. Change is needed. There are some tough and important decisions ahead. In my view, we must, as far as possible, put aside our special interests, in politics, in industry and in the services, to take rational decisions that benefit the defence and security of the nation.

In preparing the Green Paper, I consulted widely with academia, across government and with the main opposition parties. I am grateful for the help I received. I should like to thank, in this House, the right honourable

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Member for North East Fife and the honourable Member for Mid Sussex, and, in the other place, Lord Robertson of Port Ellen, who all sat on my Defence Advisory Forum. Where the defence of the nation is concerned, we must seek as far as possible to reach consensus on the main issues.

I hope that the Green Paper I am publishing today helps that process and leads to a mature and well-informed debate about the future structure of our Armed Forces".

3.54 pm

Lord Astor of Hever: My Lords, we, too, pay tribute to the families of the 253 service personnel who have been killed in Afghanistan, particularly those service men and women whom the noble Baroness has just mentioned. Of course, our thoughts are with those who have suffered life-changing injuries in Afghanistan.

I thank the noble Baroness for repeating the Statement. Over the last few days, I have spoken to a number of defence correspondents and experts, and they all appear to have seen copies of the Green Paper, and a number have attended briefings at the MoD. Why are we the last to have seen the Green Paper?

We on these Benches largely agree with the findings of the Green Paper, and its related paper on acquisition reform. Both are long overdue, and they will provide a good foundation for any future defence review, regardless of who forms the next Government. The Green Paper does a good job in highlighting the types of threats that we are likely to face in the coming years, especially cyber and space-based threats, and in stressing the importance of winning today's war in Afghanistan. However, there are a few areas of concern that I would like to address.

First is the apparent confusion inside the MoD. Last June we were told that there were no plans for a defence review. In July, the Government announced their plans to hold an SDR. Last December, the Government made cuts to the defence budget, totalling almost £1 billion. This month, we are told that the defence budget will be ring-fenced. On Monday, we learned that 10 Downing Street was briefing that the Government are committed to the two aircraft carriers, the full order of JSF, and tranche 3 of Eurofighter. But Paragraph 9 of the Green Paper clearly states:

"We cannot proceed with all the activities and programmes we currently aspire to, while simultaneously supporting our current operations and investing in the new capabilities we need. We will need to make tough decisions".

So who is right, Downing Street or the Ministry of Defence? If anything, it sounds like the Prime Minister has finally decided to fund the 1998 SDR-which, according to Geoff Hoon, was not fully funded to begin with.

There is no doubt that some of the challenges with which our Armed Forces have had to contend have been created by the Government's unwillingness to fund that SDR. As we have recently been hearing from various retired service chiefs and former Defence Ministers at the Chilcot inquiry-and just this morning, Sir Kevin Tebbit spoke of a permanent crisis budget at the MoD because of the Chancellor's cutting of defence expenditure six months after the invasion of Iraq-the "constraints" to which the Green Paper refers are not all externally driven.



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The Statement refers to efficiency savings over the current spending review period of some £3 billion. Can the noble Baroness give some indication of how this is to be achieved? Will these savings be directed to the front line, or clawed back by the Treasury? The Green Paper says that the MoD will aim to,

An example given in the Green Paper is that the Army can only deploy 10,000 soldiers, even though its total strength is more than 100,000. What do the Government have planned to increase the readiness and deployability of our Armed Forces, and to ensure the equipment is available to sustain them on operations? This also includes the use of Reserve Forces in future operations. Does the noble Baroness agree that the Green Paper should have made much more recognition of the importance of and contribution made by the Reserve Forces?

We support the Government's call for a more agile defence organisation. The challenges that Britain and our Armed Forces face need to be revisited from time to time, so we welcome the intention to incorporate into law the proposal for such a review in each Parliament. This is a Conservative suggestion, so it is especially welcome. We also welcome the announcement in the acquisition reform paper to publish an annual statement on the affordability of the equipment programme.

We agree with the Government that an increasingly uncertain world will require our forces to go overseas. While no one state is identified as a direct strategic threat, we know from recent history that some states see armed force as a tool to be used. Britain must not make the mistake of sending any signals that we are somehow less committed to our values and beliefs, nor that our treaty obligations are now worthless.

We support the Government's contention that defence must improve its ability to work in partnership with our key allies. I particularly praise the efforts of our Danish and Estonian allies who serve alongside our forces in Afghanistan and who I had the privilege to meet when I visited Afghanistan last year. We urge our fellow European members of NATO to increase their efforts in support of the alliance's objectives in Afghanistan.

We agree with closer co-operation with France. We should view France as our most important European partner and it only makes sense that we work closely in areas where we have shared sets of interests. Although that was widely reported in the press this morning, there is little evidence of this commitment in the Green Paper. Will the Minister please expand on this commitment in her response? Finally, we look forward, as does the Statement, to seeing a more joined-up approach to defence and security across Whitehall, embracing not just the MoD but the FCO and DfID as well.

4.01 pm

Lord Lee of Trafford: My Lords, I join these Benches in the earlier tribute to those who have fallen in Afghanistan. I also join with the noble Lord, Lord Astor, in requesting an earlier sighting of MoD documents, which would be appreciated. Today's Statement hardly warrants the banner headline in Monday's Times,

"Brown goes into battle with billions for defence".



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Indeed, we are in the defence overstretch that we are in today, militarily and financially, precisely because the Prime Minister, particularly when he was Chancellor, showed little interest in defence and kept the chequebook closed. We know that from the Chilcot inquiry, with the then service chiefs apparently considering resignation; from Geoff Hoon's failure to get funding for more helicopters at that stage; and, more recently, from the comments of John Hutton. Spending on defence has steadily declined under this Government as a percentage of GDP to just over 2 per cent.

We welcome today's Green Paper and the proposed strategic defence review. We, among others, have long been calling for one, but until recently the Government resisted, saying that it was unnecessary. We are pleased that regular defence reviews are proposed. Today's world is increasingly menacing, not only with concerns on nuclear proliferation, but the newer threats from international terrorism, from cyber assault and piracy. Everyone recognises that we cannot go it alone in the future. We have to work with our allies. No longer have we the resources to be the world's policeman. It has to make much greater sense to co-operate with France, which has a defence spend comparable to our own. Some of us have long argued for this, but little real progress has been made. What specific conclusions came out of the meetings apparently held in London last week by the outgoing French Chief of the Defence Staff? The semi-detached, rather Eurosceptic attitude of the Official Opposition towards mainstream Europe will hardly make serious co-operation with the French any easier, should they form the next Government.

We agree that the complex, brutal conflict in Afghanistan has to be given priority and acknowledge that thankfully most of our forces are now much better equipped. We agree also with the double-A thrust of the Green Paper that our forces need to be more adaptable and more agile. We particularly agree with the need to improve the working arrangements between our Armed Forces and our diplomatic and development activities which are so crucial in Afghanistan.

Turning to the strategy for acquisition reform, the reality, as Bernard Gray made so clear, is that we are massively overcommitted. As I have said previously, whatever the undoubted merits of the new carriers, was it sensible to go ahead with them before an SDR and when the MoD is, frankly, broke? The acquisition reform document makes the interesting point that 40 per cent of the £20 billion procurement spend is with just 10 companies. Can the noble Baroness confirm that there are severe penalty clauses in virtually all our major contracts which limit room for cancellation or manoeuvre? I support what was said by the noble Lord, Lord Astor, earlier; could she explain how the figure of £3 billion in efficiency savings has been arrived at by perhaps providing a breakdown? Not before time does the noble Lord, Lord Drayson, say in his foreword that:

"At the heart of the strategy is a radical commitment to greater public transparency by publishing annual assessments of the overall affordability of our equipment plans".

The independent audit referred to later is a huge step forward.



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Finally, I want to ask two specific questions. First, how concerned are the Government about the recent sacking by Secretary Robert Gates of the marine general in charge of the F-35 programme-the designated aircraft for our aircraft carriers-saying that the Lockheed-Martin programme had been plagued by problems, had failed to hit performance targets and that,

Secondly, will she comment on the story this lunchtime which quoted Sir Jock Stirrup, the current Chief of the Defence Staff, as saying that it was, "quite plausible that there could be a consolidation between two services within the next 10 years"? What is the current Government's stance on service consolidation?

4.07 pm

Baroness Taylor of Bolton: My Lords, I thank both noble Lords for the general welcome they have given this Statement. This is a significant opportunity to have a mature debate about the issues we will be facing in the future, and the Green Paper sets out clearly both the trends in the world that we have to cope with and the threats that we will have to take on board. While I could not possibly commit the business managers to a debate in this House, I am sure that there will be many opportunities for discussion. It is important that people from as many different backgrounds as possible take part in the debate.

I shall start with the last questions put to me. I have a piece of paper which tells me exactly what Sir Jock Stirrup said earlier. He was asked, "Do you think it is plausible that we will have three armed services?". He said, "Certainly it is plausible". It was the questioner who put forward the idea of only two, and as we are not pre-empting anything that the SDR might provide, we are not denying that anything is a subject for debate. But that was the only context in which the idea was put forward; it was not actively put forward by the Chief of the Defence Staff as something that he wants to see.

On the joint strike force programme, there have been difficulties with this complex programme, but it is also a very exciting one. I will not comment on any internal American decisions with regard to personnel because I do not think that that would be wise.

Many different issues have been raised. It is right that we should highlight cyber threats and the like because while it is difficult to be specific about them, and while the public may hear about them, they do not appear to be particularly tangible. We have to keep the entire range of threat in view when discussing these issues. The noble Lord, Lord Astor, mentioned that defence experts and correspondents had been talking about the Green Paper as if they had seen it. To my knowledge, it only went to the printers yesterday and late amendments were made earlier this week. But it is true that we consulted widely before finalising the Green Paper. Seminars with academics were held and the Defence Advisory Forum, of which his honourable friend in another place is a member, was involved. So while there were people who knew what our thinking was, the document was finalised very late in the day.



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I take issue with one point made by the noble Lord, Lord Astor. He talked about the announcement made in December, which he described as cuts to the defence budget. That is not the case. The defence budget has not changed at all for this current year. Spending will be £35.4 billion in 2009-10 and will rise to £36.9 billion in 2010-11. That money is ring-fenced. On top of that we have the very substantial contribution the Treasury will be making to operations. What happened last December, as the Secretary of State pointed out earlier today, was actually a realignment to ensure that current priorities were met. I think that was the right decision. As has already been mentioned, the lead time for many of the procurement projects is extremely long and that sometimes makes it difficult to adapt to what we need. That is one of the issues that we are trying to face in this Green Paper.

We have said for some considerable time that our Armed Forces have to be more adaptable, flexible and responsive. It is also incumbent on industry and the MoD to be more adaptable, flexible and responsive. When we talk what I think the Green Paper calls a "spiral approach" to contracting-I would call it more an incremental approach-that is probably one of the aspects we have to bear in mind in the future.

We actually have quite a good track record in terms of making efficiency savings within the MoD. Gerry Grimstone is conducting an inquiry; we think it right to bring in external people for this occasionally. It is important that we step up to the mark. I think that we probably can be doing that.

I was very grateful for the acknowledgment that the equipment that we have on operations is so impressive. Everybody involved in operations-the military, the civilians who have been helping, the contractors and industry-has worked exceptionally well together to make sure that our record on the delivery of urgent operational requirements has been very impressive. Some of our allies are wondering how we have been able to achieve that level of flexibility; they have been looking at our procedures and the way that we do things. It is good that we recognise the changes that have been made there.

I am glad that there has been general welcome for the idea of legislation to make sure that we have timely strategic defence reviews. I also welcome what has been said about the need to make sure that all departments link in together. We hear a great deal about the comprehensive approach and it is extremely important to operations. It is also extremely important to our long-term planning. One of our objectives is conflict prevention-how we use our defence diplomacy or what might be called "soft power" before we have a problem to influence areas of the world that are extremely difficult. We do that working with our allies.

The noble Lord, Lord Astor, mentioned the Danes and the Estonians. I, too, have met people from those countries; they have been extremely good allies, working well with us on operations and, indeed, suffering significant casualties. We should be happy to recognise the closeness of that relationship and pay tribute to the work that has been done there.



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The noble Lord, Lord Lee, mentioned that the outgoing French Chief of Defence staff had been over here recently. The chiefs of defence staff do meet from time to time-when they change over, when they have conferences or whatever. We have a lot of engagement with the French as we do with the Americans and many other countries-at CHOG level, but also at ministerial and other official levels. It is quite right that we should do so and that we should see how we can co-operate.

The noble Lord, Lord Astor, mentioned the discussions about working closely with the French. In the Green Paper we make it clear that we want to work within NATO, within the EU and also have bilateral arrangements. The fact that France has now rejoined the military side of NATO helps and is leading to more discussions of the kind to which we were referring earlier. It is the case, of course, that in the defence budgets that Governments have in European countries, only we and the French are big spenders. So it is right to see what we can do there, although, as we have said on previous occasions, collaboration on equipment can be very difficult, because of the alignment of so many factors. However, it is worth thinking about a long time in advance so that we know in which direction we are going.


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