Looking at infrastructure and connectivity both within the regions and to them, the first issue that we have to remember is that it will not happen without any great economic growth in this area, which of course we hope for. I think that the Department for Transport forecast is that rail growth, passenger and freight, will double in 20 years. I declare an interest as chairman of the Rail Freight Group. With all the ideas that noble Lords have come up with today, together with the congestion that we already see both on the network and within the coaches, which are too short and there are not enough of them, we have to remember that this congestion will double and therefore be twice as bad in 20 years unless something is done.

On the infrastructure, my experience is that the main lines to and from London have been upgraded over the years and are not bad but most of the other

17 Jun 2015 : Column 1201

ones are in different states of maintenance, or sometimes decay, and the speed restrictions are sometimes pretty slow. There are capacity constraints on those lines already. When it comes to more trains, you are going to get longer trains and you will probably want more trains to different places, so even before we start talking about HS3 there is an awful lot of work to be done. I hope that the Minister can tell us how that is going to be done by Network Rail, what the timing and costs will be and who is planning it.

Then of course there is the question of electrification, which several noble Lords have mentioned. That may be being delayed but the problem with electrification, which is a good thing, is that when you reach the end of it, either you have to change trains, which people do not like, or there is a new idea of a passenger train with what I am told is 2 million AA batteries in one end that drive it for the last stretch from Manningtree into Harwich. It is working; I do not know whether or not it is value for money or whether it would not be cheaper to put the wires up, but we have to think about all these things in looking at the rolling stock.

The other important issue that has been touched on is connectivity. It seems that some of the HS2 stations in phase 3 are being built in the middle of nowhere in the hope that there will be lots of economic regeneration there. That might be the case but we have to think about whether it is better for the trains to go into the existing station so that you get better connectivity, even if they are not going quite so fast and have a diversion around the side, which is what happens in most other European countries. You do not usually have stations on the edge to encourage people to drive there; the whole point of this is probably to reduce the car mileage that is used.

On the question of rolling stock, I share my noble friend Lord Snape’s view that Pacers should be brought south to the Uckfield-Victoria line. I have said that before and I will say it again. More seriously, we have a problem. If electrification is late Members of Parliament and your Lordships will say that we were going to get new trains next year or before the next election and we will not be now. The only solution is more diesel multiple units. It would be very helpful if the Minister would tell us whether it is possible to build them within the new emissions limits. I do not blame Europe for this, because the emissions limits for rail diesel locomotives or diesel multiple units are still one notch lower than what most HGVs comply with. The industry has to comply; it says that it is very difficult to get the exhaust scrubbers to comply, but for whatever reason we need to know that new diesel multiple units can be ordered and built at a reasonable cost and comply with the latest rules. I hope the Minister can tell us something about that, because it is a very important element of people being able to have a reasonable journey—I hope sitting down, be it in a Pacer, the new District line trains with diesel engines that the noble Lord, Lord Bradshaw, mentioned, or whatever.

This will not happen overnight; we will not get new infrastructure overnight. It will take a long time, as my noble friend Lord Smith said in relation to HS2. We had the same argument when I was building the Channel Tunnel, because the French got permission in six weeks

17 Jun 2015 : Column 1202

and we took three years. My colleague in France said, “If you want to build things quickly, don’t consult the Frogs”. There we are. It will take time and we will need more rolling stock in the process.

I will say just a word or two on freight. I am very pleased that the people running northern powerhouse transport are looking very carefully at rail freight. I hope that that is a precedent that can be used elsewhere if this comes to any other areas. However, we need to think about its demands for capacity, for gauge to take containers and resilience for passenger and freight. It is very easy to say, “There’s a track there; what happens if the thing goes wrong? You get on a bus”. I do not think that that is acceptable now. It certainly is not possible for freight. Immingham is, I think, the biggest port in the country. There is only one rail track into it. Another one could resolve the problem, because they had a derailment there about a year ago and the port was nearly closed for a week. That is not good for our import/export traffic. It really does need looking at.

The east-west traffic mentioned by my noble friend Lord Prescott is a really good growing potential if there is capacity. Biomass is coming into Liverpool now to go to Drax, which will partly substitute the reduction in coal that we all know about. In looking at emissions generally and the need to take more freight by rail, new ideas are starting now for more deliveries to city centres by rail into passenger stations—that started in a trial into Euston—and also for putting freight on to passenger trains in what we used to call guard’s vans on the 125s. It is already happening on the Midland Mainline between some of the cities in the north and central London for surprisingly new cargos such as medical samples—research into new drugs and everything—which they say is saving about three months in a year’s trial before these drugs are allowed on to the market.

It would be good to look at putting in a rail service that could take piggyback traffic across the Pennines, rather than have them grinding up on a motorway over a hill, or, probably worse still, going into a long tunnel, with all the pollution that that causes. All those things need to be built into a logistics plan. I was pleased that the Minister talked about a logistics plan, which I hope will look at all these things in the round.

I welcome this structure very much and hope that it happens reasonably quickly. That leads me on to other structures. Last week, the Chancellor said that the Midlands was the “engine for growth”. I do not know whether the engine is driving the northern powerhouse or the other way round; that was not quite clear to me. However, it does not really matter: the Chancellor has nailed his colours to the Midlands for, presumably, a similar project to the one we are talking about today in respect of the north. Therefore, I do not know whether we can have similar projects for other regions.

It occurred to me that one very important region which could do with a bit of help is Cornwall, where I live. I know that the noble Lord, Lord Teverson, comes from there as well. The economy there is not good. The expenditure on rail is only £41 per head, which is probably even lower than everywhere else. Passenger rail traffic is growing but we are still faced with a lack of resilience on the Dawlish section of the

17 Jun 2015 : Column 1203

railway. It is a very beautiful section but it gets closed occasionally. Network Rail did a very good job in reinstating it but it will never have the resilience of the rest of the network due to the presence of a very high hillside there, and it is structurally unstable. Given that more than 2 million people rely on one non-resilient railway line, something needs to be done. What is the Government’s position on this? Network Rail came up with options for a tunnel or reopening the Okehampton-Tavistock line, which would open up access to the railway for much of the population of Devon and north Cornwall. In fact, this week the CPRE has argued a persuasive case for “un-Beeching” the south-west railway line. I do not think the relevant report was drawn up for our debate, as it concerns the wrong end of the country for the purposes of this debate, but it is worth reading. I hope Ministers will take it seriously.

I wonder whether the Prime Minister would be keen to improve the connectivity of the south-west because he goes to Cornwall quite often. Indeed, his wife had a baby there. He clearly loves Cornwall and did a lot of campaigning there before the election, with very good results for him. He is so keen on Cornwall that last year, when he was in a café eating a sandwich and a seagull is reported to have removed it, he immediately offered a quarter of a million pounds to initiate a programme of seagull genocide. If he can do that, he really must love Cornwall. Perhaps it is time for the Government to make Cornwall the second or third hub—that is, a south-western hub—as everybody else seems to be getting one.

6.27 pm

Lord Shipley (LD): My Lords, I thank the Minister for giving us the opportunity to have this excellent debate. A very wide range of issues have been covered and I hope he will be able to reply to all of them when he replies to the debate. However, some of those replies may, understandably, need to be in writing.

I acknowledge and welcome the Government’s focus on the north. It matters greatly that both Whitehall and Westminster and those of us who live and work in the north of England think in a pan-northern way. I also acknowledge the achievements of the previous Government and the intentions of this one, which are in truth built upon what the previous Government set on its way. However, it is only a start. In the course of this year we need to ensure that the structure is properly in place for Transport for the North to be a single body with a single agenda, and that the problems and opportunities are understood and shared by all partners, and then that the real outcomes should start to be delivered.

There has been some discussion about what the northern powerhouse is and where it is. Cumbria has previously been absent from the debate. The noble Lord, Lord Inglewood, will be pleased to know that I have noted in my script that I should mention Cumbria and its importance as one of the first places you have to remember is in the north of England, not least because of its huge tourist industry. It is important that we do not think just in terms of the large core city regions but also include Cumbria, the Humber, Lancashire, Tees Valley, North Yorkshire and East

17 Jun 2015 : Column 1204

Yorkshire. Indeed, the Chancellor himself, in a recent speech in Manchester, defined the northern powerhouse, as I recall, as covering the whole of the north of England. As we have been reminded in this debate, it is about not just transport investment and connectivity within the north of England, but how we connect to the east Midlands, West Midlands, the south-west, Scotland and London.

There were two things that the Minister said that I would like to comment upon. The first refers to the suggestion that there might be a decision to bring forward HS2 extensions around Leeds and linking Leeds and Sheffield. If that happens, will the context of that decision also look at the north-east of England? There is a need to speed up trains on the east coast main line between Northallerton and Newcastle—I recall in a previous debate on high-speed rail that the noble Lord, Lord Faulkner of Worcester, explained how east coast main line trains could be sped up between York and Newcastle. Given that the north-east of England will have some high-speed rolling stock, although not tracks, it is important to look at it holistically. The second was that, in terms of investment, it is good news that the Government are investing so much more in infrastructure in the north of England. Even with that, however, we should not forget that the imbalance between investment in London and the south- east and in the north of England is very wide indeed.

We have had a helpful debate—a lot has been said about Pacers, with which I concur, and about ports. In discussing Liverpool and Immingham and Humberside, let us not forget the role that Teesport and the Port of Tyne—both of which are expanding fast—have made and, therefore, the connectivity for freight purposes with those east coast ports. There was discussion on the A66 and the A69. I am one of those who believes that it will prove essential to dual both those roads, though of course that relates to the dualling of the A1, particularly for the Scottish freight traffic coming down, some of which at present uses the M6 and the A69 to get to the Port of Tyne, while some uses the M6 and A66 to get on to the A1(M). There may need to be further research or work on the order in which they should be done, because they cannot all—or at least the A66 and A69 cannot—be done at the same time.

We have heard a great deal about air passenger duty and the no-detriment principle to airports in the north of England and I subscribe entirely to that. We have heard about the crowding of the trans-Pennine route—I can personally attest to much experience of problems caused by crowded trains—and the timetable for electrification of that route, which needs an urgent answer. On terminology, we sometimes refer to east-west routes as HS3—that is what the idea was at its birth—but I think that it has been converted into the term “trans-north”. By its very nature—high speed—HS3 would not stop at many stations; trans-north is what we actually need and I hope that, in future, we will always talk in terms of trans-north, because it can stop at many more places.

One issue that stuck in my mind, which came from the noble Lord, Lord Kerslake, was on strategic planning with HS2 and HS3 and the location of the Sheffield station. I do not want to comment because I am no expert on whether the HS2 station should be four miles

17 Jun 2015 : Column 1205

outside Sheffield or in the centre—others will examine that in greater detail—but I cannot understand our national strategic planning, which has an HS2 station four miles outside Sheffield but HS3 using the city-centre station. Of course, we have the same problem at Heathrow Airport, where HS2 will stop at Old Oak Common and join Crossrail but the link to Heathrow Airport will be a spur line. I seriously miss that strategic planning. I have said previously in your Lordships’ House that I could not understand why we had a roads strategy and a rail strategy but not an integrated transport policy for the country. I really think there is evidence now.

I turn briefly to the A1 and the dualling of it in north Northumberland. The Northern Powerhouse report reminds us on page 24 that we are going to have:

“34 miles of continuous Expressway”,

in Northumberland. But it goes on to say on page 26, in the list of schemes that will be developed for beyond 2020, that there will simply be an initiative to,

“examine the case for further extensions of the dualling of the A1 to the Scottish border”.

The A1, by its very name, was one of the very first trunk roads to be built, linking London with Edinburgh. It is going to be one of the last trunk roads to get dualled. I have come to the conclusion that this is in part a function of its distance from London. Seen from the perspective of Scotland and the north-east of England, it really is not good to have the disparity that such a major road has not got a clear plan to be dualled all the way through to Edinburgh. If the Minister cannot reply in this debate, I hope he will look carefully at the timetable for the dualling of the A1 and exactly what is planned, with some real dates that will be maintained. I look in particular for his confirmation that the announcement that was made a few weeks before the election that part of the route through Northumberland will be dualled will be adhered to.

In my final couple of minutes, I would like to say something about air connectivity. We have heard a little on this matter from the noble Lord, Lord Smith of Leigh, but not otherwise. For me, it is a pretty central issue. If the northern powerhouse is going to succeed, it needs to be more than just an exercise in rhetoric. I will take air connectivity as an example. If northern cities are to thrive, they need global connections. Across the north several airports have been locked out of Heathrow or have seen their routes deteriorate. Passengers cannot take a connecting flight from Heathrow to Merseyside, Teesside or Humberside, and if they wish to fly to Leeds they have only two flights a day to select from. In 1990 there were 18 UK cities with connections to Heathrow. Today there are just seven.

As the noble Lord, Lord Smith of Leigh, reminded us, it is true that airports across the north of England have had great success of late in growing direct routes to Europe, the Middle East, the Far East and the eastern seaboard of the US. But connecting to major and secondary cities in Asia and the Americas—the cities that are forecast to be the engines of global prosperity for the next half-century—will always remain an ambition too far for local demand alone to sustain frequent flights. I have concluded that access within the UK to a hub airport is essential.

17 Jun 2015 : Column 1206

I will conclude by going back to the principles underlying this debate. It is about devolving powers and responsibilities. It is also about capacity and money. It means that writing wish lists to government must become a thing of the past and that priorities should be defined, shared and agreed so that everyone knows what those priorities are and where the cash is coming from to pay for them. For example, 40 years ago, I well remember the opening of the Tyne and Wear Metro. It needs significant capital investment, not least in the train fleets, which are getting old. As a case study, it would be helpful to know what the plans are for funding that and how the funding will be guaranteed in the context of devolution.

I will stop at this point but thank the Minister again for enabling us to have this debate. There is a huge amount of detail and I look forward to hearing the Minister’s replies, either now in his response, or in writing at a later date.

6.40 pm

Lord Rosser (Lab): The Minister, whom I welcome to his first major transport debate, has painted a glowing picture of the transformation of the north of England which it is hoped will occur as a result of extensive projected transport improvements for passenger and freight traffic—primarily, but certainly not exclusively, rail services. A large number of points have been raised and questions asked in a series of fascinating and thoughtful contributions based on considerable first-hand knowledge and experience.

The objective according to the Government’s report some three months ago on the northern transport strategy is to create a single economy across the north, or, to use the words in the report:

“Our strategy is about using transport to aid change in future patterns of land use and economic growth, with the goal of creating a single economy in the North”.

No specific, single definition is given in the report of what a single economy across the north actually means. How, therefore, will anyone know exactly what is being sought and how will it be possible to say, at some stage in the future, whether it has or has not been achieved? Does a single economy across the north have the objective that gross value added will be the same across the different city regions in the north? Does it mean that levels of pay will be the same for similar jobs? Does it mean that levels of investment will be similar across each of the city regions? Does it mean that job opportunities will be the same? Does it mean that social inequalities will be narrowed? What exactly does it mean? No doubt the Minister will tell us in his reply and perhaps also say whether the Government think that, from the point of view of those who live there, London and the south-east, with its many different economic hubs—Croydon, Harrow, Brighton, Stratford, Rochester and Chatham, Reading, for example—is currently a single economy in line with the use of the term in the Government’s 2015 report on the northern transport strategy.

I suspect the phrase is, in reality, a bit of jargon for saying that city regions in the north should be looked at together and as one when it comes to major economic investment, planning and infrastructure decisions and that, as a result of doing this, it is hoped that economic

17 Jun 2015 : Column 1207

growth will be greater than would otherwise be the case. The Government have come to the conclusion that if the northern economy grows in line with official forecasts for the average across the United Kingdom between now and 2030, its GVA, or gross value added, will be £56 billion higher in nominal terms, or £44 billion higher in real terms, than if it grows at its historic average.

What proportion of this potential increase in value would be dependent on improved transport links of the kind proposed is not clear. Indeed, there is not yet a proper economic or cost-benefit analysis of the differing proposed new or improved transport links in the documentation currently available. No doubt the Minister will tell us the Government’s intentions and what the timetable is for providing this information. The documentation also does not identify, for example, what journeys will be made possible that cannot be made today or what the economic impact of this aspect of improved transport infrastructure will be.

The Government’s report talks about significant improvements in both the speed and frequency of rail services between the city regions and city centre to city centre, and improvements in the east-west road network. However, the report, which implies that London and the south-east is the gold standard, does not make it clear whether, in terms of speed and frequency, rail services in London and the south-east and the main road network are regarded as the level to be aimed for between the northern city regions; or whether rail links and the principal road network in London and the south-east are likewise regarded by the Government as a drag on economic growth in that part of the country as well.

Earlier this week, it was reported that less than 50% of Southern services carrying passengers from south London, Sussex, Kent and Surrey arrived on time in the first three months of this year, albeit that the major works at London Bridge would have had a big impact on this figure. The March 2015 report on the northern transport strategy refers to the importance of:

“Better commuting opportunities to the centres of economic activity”.

Are the commuting opportunities in London and the south-east regarded as the goal which the city regions in the north should seek to achieve, or are we talking about providing rail services which will be significantly better in speed and frequency than those in London and the south-east?

The Government’s report is pretty thin—three pages out of 41—when it comes to improving commuter journeys in the city regions in the north, since it seems geared more to transport links between the city regions than to improving transport journeys for commuting, educational and leisure purposes to and from the suburbs and hinterland of each city region. That omission no doubt explains why the report is largely silent about improvements to bus services, both between and within city regions. Even in the three pages entitled “Our Plan for Local Connectivity”, the word “bus” appears just three times. There are no specific new or improved future local transport developments identified in those three pages for any of the city regions in the north.

17 Jun 2015 : Column 1208

It is fine to seek to improve transport links between our northern cities, but encouraging the development of new business and attracting it is not just dependent on the speed and frequency of city centre to city centre journeys. It is dependent on how easily people can move around within those city regions, to and from their places of work or education. What are the Government’s intentions for providing new suburban rail and metro services or new tram links and fast busways, for example, within the city regions? Not much has been said about this key issue, so is it the Government’s view that existing transport links within the different northern city regions are as good as they need to be, and that they will be able to meet the presumably increased demand levels if, and when, the improved transport links between the city regions set out in the Government’s March 2015 document have been delivered?

Neither does the report even touch on the levels of financial support for the construction of the improved transport links or for their operation once constructed. It is no good having improved transport links if the fares have to be set at levels which deter people from making the journeys that would achieve the increased mobility between the different city regions in the north, which appears to be a key objective of the strategy. To do this means that expenditure has to relate to providing the infrastructure for projected levels of travel during the peak, which will impact on costs. To what extent do the Government expect improved transport links to be self-financing, as opposed to financially supported? Is it intended that the level of subsidy will be similar to that in London and the south-east, including in particular that for bus services in London?

While there is clearly much merit in improving rail links between the city regions in the north, one hopes that when it comes to any new high-speed routes, the process will be handled with a little more sensitivity than it has with at least some parts of the HS2 route. The Government’s March 2015 report talks about the option for a new high-speed line between Liverpool and Manchester, with a connection to the proposed HS2 network, a new trans-Pennine road tunnel and an,

“option … of creating a new rail alignment between Manchester and Sheffield”.

It also says that:

“All options for moving towards the 30 minute”,

rail journey between Manchester and Leeds are being considered. We are having this debate during a week when very strong representations are being made to the Commons HS2 Select Committee on the adverse impact on the lives of residents in some parts of the London Borough of Hillingdon—close to where I also have a house—of the construction of HS2 and the continuing likely impact once the line is open on its intended route. It will also result in the almost certain end of a major outdoor activity centre, used mainly by young people, that provides opportunities to experience sailing and rowing, since the HS2 route goes right across the middle of it. Whether the Department for Culture, Media and Sport is in reality lifting a finger to try to save or, more realistically, relocate this important facility, is far from clear.

17 Jun 2015 : Column 1209

The reason for making this point—and it is being made by someone who supports HS2—is that, if you do not work hard to address the concerns of those who feel directly threatened by a major new transport project, you will get legal action, lengthy challenges and delays, and negative publicity for the project as a whole. People faced with upheaval on their doorstep from the construction of a major new transport link that will provide no benefit to them—if it is a high-speed rail link, there is to be no nearby station that will enable them even to use the new line when it is completed; alternatively, if it is a new motorway link, there is no nearby junction giving them access to it—are inevitably going to view it all in a negative light. Serious consideration needs to be given to mitigating significantly the adverse impacts. A perceived attitude, whether fair or unfair, of a lack of concern about the impact on those most affected on the part of the body responsible for the planning of the project and public consultation only makes the situation worse. I hope that such points will be borne in mind in considering major new transport projects as part of the northern transport strategy.

At the moment, the Government’s northern transport strategy is not much further advanced than the proverbial back of a cigarette packet. As the report itself says, it is a vision and, at present, nothing more. The solid, researched analysis to support it is not there; nor is it even a vision for a total transport plan for the city regions of the north, since transport within each city region is effectively ignored, even though it is the part of the transport system that is most used. One assumes that the Government will seek to rectify this somewhat glaring omission, since one of the objectives of the new single body, Transport for the North, is stated as being to ensure that national and local bodies can work together. Can the Minister confirm that the reference in the report to the Government making,

“a multi-year commitment of funds to transport in the North”,

includes funds for improving the transport infrastructure and services within each city region as well as between city regions—or is it the Government’s intention that there will be a demarcation line in financing and decision-making between transport links between city regions in the north and transport links and services within those city regions?

Having said that, we welcome the broad intentions and objectives for improving transport in the north, as set out in the strategy or vision. No one can be opposed to improving transport links, which makes economic and social sense and is also intended to improve the quality of life of all parts and sections of the community. Only time will tell the extent to which the intentions and objectives of the northern transport strategy are achieved. It will be determined by the amount of money made available, and public sector-led investment over each of the next five years by this Government will be not much more than half what it was six years ago under the then Government. It will be determined by the levels of co-operation between the different authorities and bodies involved; the thoroughness with which the economic appraisals and cost-benefit analyses are undertaken, to ensure that future investment is made where it will provide the greatest benefit, whether economic, social, or both; the extent to which people in the northern city regions

17 Jun 2015 : Column 1210

feel that the proposed improved transport links will be of direct benefit to them, their standard of living and their quality of life; and the extent to which they can actually influence the decisions that are made as opposed to decisions being imposed on them.

If the northern transport strategy can play a part in bringing a better balance to the economy of our nation, it will achieve something worth while. But we need to remember that a “vision”, which is not much further advanced than just that, does not constitute a strategy that has yet been fully thought through or that will definitely be delivered, however desirable that vision may be.

6.53 pm

The Parliamentary Under-Secretary of State, Department for Transport and Home Office (Lord Ahmad of Wimbledon) (Con): My Lords, I thank all noble Lords who have taken part in this very extensive debate. We are three hours in since the debate commenced, which reflects the depth of knowledge, expertise and wisdom expressed during the debate on a very important issue. We have been talking today about transport for the north, and it was the right reverend Prelate the Bishop of Derby who said that he felt like an interloper. Imagine how I, someone from Wimbledon, feel talking about transport for the north. Nevertheless, we always seek to establish our true credentials. On transport, I am the son of a gentlemen, who when he arrived in the 1950s, was very much up in the north, in Glasgow, and was a railwayman. He went on to complete his career in the aviation industry, so perhaps something has been passed on from my dear father in terms of my standing here in front of noble Lords as a Minister for Transport.

We have discussed something very important. The noble Lord, Lord Rosser, talked about some of the challenges. He feels that the report does not outline the plans in detail. However, before you bring any strategy together, you need to have the vision, so let us not knock vision. He said that buses are mentioned only three times. Perhaps that is his experience of waiting for a bus because they say three come together—not that I am saying that that was the basis of the report. The report outlines connectivity not just in our transport system. Several noble Lords, including the noble Lord, Lord Smith of Leigh, spoke very eloquently about the importance of partnership in terms of local councils, the private sector, the Government, Transport for the North and all interested parties coming together to ensure connectivity in partnership to deliver connectivity in transport. Therefore, I think we need to be encouraged. I appreciate the fact that many noble Lords alluded to the positive nature of the Government’s strategy and its statement of intent.

Various noble Lords mentioned my predecessors. I pay tribute to those who have laid the basis for transport in the United Kingdom. In my opening speech, I alluded to the noble Lord, Lord Prescott. I see the noble Lord, Lord Adonis, in his place. I believe my private office will be in touch with the noble Lord about discussing issues of mutual interest. I hope noble Lords will appreciate that when I took on this responsibility, one of the first things I did was to meet the noble Baroness, Lady Kramer, to ensure consistency in the handover in the approach to important strategic

17 Jun 2015 : Column 1211

issues and decisions that we need to make. I am not daunted, but I respect the fact that many noble Lords sitting in this Chamber have fulfilled the Transport Minister’s role in various capacities with great aplomb. If I achieve half of what they achieved, I will be a happy man.

The issue we have discussed today is important. The right reverend Prelate the Bishop of Derby talked about connectivity in the north not being exclusive. I share that. He talked about how industry in the Midlands has been a big success story. It is important that in anything we do there is connectivity across the country. Certainly that is what we are seeking to achieve with our strategy. I assure my noble friend Lord Inglewood that we recognise that there has to be linkage across the board in transport connectivity and that for the northern franchise we have specified better services, extra trains, retimed trains to serve shift patterns at Sellafield and train services that operate the full length of the Cumbrian coast on Sundays by December 2017.

The noble Lord, Lord Rosser, talked of the report. I note his genuine concerns about the facility at Hillingdon. I assure him that we are looking very closely at that challenge and the land that is being acquired. The March 2015 report set out the Government’s aspiration in terms of working with our partners and connectivity in the north. The appointment of a chairman and its governance will bring the whole issue together in a more effective way. Subsequent reports will set out further proposals across the various modes of transport, and I ask noble Lords to bear in mind that this is the first step in ensuring that we deliver effective connectivity across the country.

We all recognise that transport is one of the most powerful tools. Decent transport does not just get people around but helps them get on and opens up opportunity for business and people. It provides access to education and jobs and connects businesses with customers whether the markets are in Bradford, Birmingham or Brazil. Therefore we will use transport to make transformation in the north a reality, with unprecedented investment in roads and rail, and with a clear strategy for aviation, ports and freight. The noble Lord, Lord Prescott, asked about the report on freight. I can tell him that, working with TfN, we intend to deliver that report in March 2016.

Moving forward, various issues, understandably, were raised about rail. In the time I have I will seek to answer some if not all of the questions. If I have not covered something in my responses today, I will write to noble Lords and copy in those who have participated in this debate, and will of course place a copy of my response in the Library. Nevertheless, I will seek to address some of the issues.

Several noble Lords—the noble Lords, Lord Woolmer, Lord Shutt, Lord Faulkner, Lord Snape and Lord Berkeley—all talked about the east-west rail integration and the delay to electrification. I assure noble Lords that we are committed to transforming the north through £1 billion of investment in electrification and the Northern Hub. I have of course noted all noble Lords’ concerns about the possible delays that have been alluded to, and if I can provide any further information in that respect I will do so in writing to all

17 Jun 2015 : Column 1212

noble Lords. I assure noble Lords that we do not take this lightly; it has been made quite clear that the electrification issue is a priority, and we will seek to move forward on that at the earliest opportunity. I also pay tribute to my ministerial colleague in another place, who has been mentioned: the Parliamentary Under-Secretary of State for Transport, Andrew Jones, for his work as chairman of the Northern Electrification Task Force. I am sure that as someone who has worked on the issue, he will be very much at the forefront of ensuring that the issues he raised in his report are brought to the attention of all concerned.

On train capacity, the noble Lord, Lord Smith, asked a specific question about legal limits on the number of passengers who can travel on a train. I am advised that trains are designed to operate safely and effectively to their own capacity, and that there is no such legal limit on the number of passengers. We understand that passenger overcrowding is an issue, which is why we are investing in increasing capacity in that important area, to which several noble Lords alluded.

The noble Lord, Lord Smith, asked about building HS2 faster. In a debate on connectivity, it is quite interesting that we are all talking about transport and improving its speed. One thing I can certainly take away from this debate is that it is not just about the delivery of speed with regard to ensuring that we have faster trains and connectivity, but about the speed of decisions. That point was well made by several noble Lords. We are of course committed to getting to the north sooner with regard to the HS2 development, and we are still working towards the opening of phase 1 in 2026.

The noble Lord, Lord Kerslake, raised the issue of Sheffield city centre. He is quite right to say that no decision has been taken yet, and the Secretary of State will announce the way forward on HS2 phase 2 later this year. Again, I noted some of his comments and concerns. He asked specifically about a meeting, and I will certainly bring that to the attention of Robert Goodwill, who is the Minister for HS2, to see if that can be arranged at the earliest opportunity.

The noble Lord, Lord Snape, raised the issue of manned stations and driver-controlled doors on new franchises, and also mentioned sending certain types of trains to Wimbledon. I must admit that if that was to happen, I am sure it would raise an eyebrow or two among the good people of the south-east and indeed Wimbledon. However, I am always inclined to think, when we look at replacing certain types of trains, that history is terribly kind, and that 10 years on they will probably become iconic pieces people will want to own, which will no doubt appear somewhere around the world on auction sites. We shall wait and see. On the specific issues he raised with regard to manned stations, it is important to note that staffing is a matter for the train operator. However, we are not specifying any staff cuts in the franchise, and we have emphasised the value of customer-facing staff on the railways. We are also giving drivers control of doors. Such control has been safely in operation on parts of the network for nearly 30 years, as I am sure the noble Lord knows. It also frees up on-board staff to provide the high levels of customer service which passengers expect.

17 Jun 2015 : Column 1213

The noble Lord, Lord Shutt, asked who is writing the northern transport strategy. As I said earlier, it is very much a question of partnership and of people coming together. As the noble Lord, Lord Smith, pointed out, everyone is aiming to ensure that the strategy, both in terms of writing it and in terms of Transport for the North, brings together all relevant partners. As I have already said, the Government will announce the way forward on phase 2 of HS2 later this year.

The noble Lord, Lord Beecham, was a bit concerned about whether certain transport deliveries would take place in his lifetime. I wish him well for a long and healthy life, and I pray for that too. He talked, in particular, about Highways England. He referred to it as the Highways Agency but I am sure he knows that the name has changed to Highways England. It is supported by the Government’s road investment strategy, and we have committed £2.9 billion to investment across the north by 2020-21. This is also reflected in our partnership with TfN.

My noble friend Lord Jopling mentioned the various experiences that he has had of different road networks. It was interesting that he referred to the M1. It reminded me that the Secretary of State himself spoke to me about travelling on the M1. Like all of us, he asked why there was a particular delay and why the speed limit had been reduced. It is important for Highways England to look at how it can inform the public more effectively.

I turn to specific questions about the M1. It will be upgraded to a smart motorway between junctions 32 and 35A and between junctions 39 to 42 to enable hard- shoulder running. The impact of current improvements on the M1 is also being assessed.

The noble Lord, Lord Shipley, talked about dualling on the A1 and I will come to the specific date for that in a moment. The noble Lord and my noble friend Lord Jopling also talked about the roadworks on the A1 around Gamston airfield being delayed. The noble Lord alluded to various factors which contributed to the delay. The contract is between Highways England and the contractor, and that means that the contractor will have to absorb a significant share of the cost increase.

My noble friend Lord Jopling and the noble Lords, Lord Clark and Lord Shipley, all raised the purpose of the northern trans-Pennine study. It is intended to look at upgrading either the A66 or the A69, or both, from the A1 to the M6, taking into account traffic demand, safety and resilience along these corridors. My noble friend talked about things being thrown into the long grass. It will not take that long—I am assured that the report will be ready by December 2016.

The noble Lord, Lord Prescott, raised an issue concerning the A63. My understanding is that Highways England’s delivery plan gives an anticipated start date for the work of 2016-17, with completion planned to take place by 2020-21.

The noble Lord, Lord Clark, asked about plans to improve the A595. This is an important route from west Cumbria and Sellafield, and it has been considered as part of the general upgrade. Highways England

17 Jun 2015 : Column 1214

will consider the road as part of its next set of route strategies, which will inform the next road investment strategy.

I alluded earlier to a question asked by the noble Lord, Lord Shipley, concerning the A1. The upgrade of the A1 will be completed to provide a continuous motorway between London and Newcastle. North of Newcastle, investment will bring the A1 up to modern dual carriageway standard as far as Ellingham, creating 34 miles of continuous expressway. This will be done within the next five years.

I turn to comments about the Pacer. This was an education for me. I must admit that I have not been on a Pacer but I have seen a photograph of it. Someone described it as a bus on tracks. It could be iconic—you never know; I would put in the bids now. However, I can confirm that Pacers will be replaced by 2020 and that at least 120 new carriages will be introduced.

The noble Lord, Lord Bradshaw, raised the issue of skills, which is a specific area in my portfolio of responsibilities for transport. It is important that we look at skills. Transport infrastructure will be a key part of the overall infrastructure of delivery over the next 20 to 30 years and it is important that we invest now and look at our schools, colleges and universities to ensure that we have the skill sets to deliver the engineering requirements and in other areas as well. In this regard, the HS2 skills college has been created, with two colleges, in Birmingham and Doncaster. I am hosting an event next week celebrating women in engineering. That will, I hope, act as a catalyst to attract more women into the field of engineering.

The noble Lord, Lord Bradshaw, also raised issues specifically about investment in skills and asked for further details on that. I will write to him in that respect, if I may, in the interests of time.

Various noble Lords raised issues about connectivity and aviation. I have talked previously from this Dispatch Box about the importance of regional connectivity through our airports in the north of England. The investment recently announced for Manchester, of £1 billion over 10 years, is reflective of that. It is important to ensure that our transport networks, be they rail or road, support that element.

As ever, the noble Lord, Lord Berkeley, raised several issues on a wide range of concerns that he has, and quite rightly so. I welcome his general expression of support for the Government’s strategy. If I may, I seek his indulgence on the specific questions that he raised and, within a reasonable timescale as he stated, shall seek to write to him in that respect.

I trust that I have covered at least some of, if not all, the questions that have been raised today. As I said, I will seek to write to noble Lords in respect of those questions that have not been covered once we have reviewed Hansard.

Some people perhaps say that the country cannot afford to invest in large infrastructure projects. Let me assure noble Lords of the truth: we cannot afford not to. Yes, we need to be bold and ambitious; only then will we be able to put right the transport problems that we face and that have gone on for far too long in the north of the country. Ultimately, only then will we

17 Jun 2015 : Column 1215

unlock the full economic potential of the region. If we want to build a new northern powerhouse, a north that can once again innovate, compete and outmatch the rest of the world, we need to invest in a modern, reliable, effective and efficient transport system. Roads, railways, ports or airports—they all provide excellent local, national and international links across the north. That is what we are committed to.

I will finish by quoting the noble Lord, Lord Prescott. He said that it is all right to talk but it is time to get on with it. We aim to do so. That is what we are committed to and that is what we will deliver. I thank noble Lords once again for their contributions.

Motion agreed.

Defence: Budget

Question for Short Debate

7.13 pm

Asked by Lord Sterling of Plaistow

To ask Her Majesty’s Government whether they consider that the current defence budget is sufficient to enable the Armed Forces to meet the needs of the United Kingdom’s long-term foreign policy.

Lord Sterling of Plaistow (Con): My Lords, may I say first how much I appreciated the help and advice of the noble Lord, Lord Astor, as Defence Minister in the last Parliament? I am delighted that my noble friend Lord Howe, our new Defence Minister, is going to continue the special briefings at the Ministry of Defence that many of us have found hugely useful over the years.

I am particularly grateful to have been given this opportunity to have an early debate on defence in advance of the Chancellor’s Budget on 8 July. I take it as rather a compliment that senior Members of the other place involved in defence have come here today because they are interested in this debate.

I understand that the new strategic defence and security review will be most thorough. I was very involved in the last review in 2010, which frankly turned out to be purely a cost-cutting exercise. The press has indicated that there will be a further cut this year of some £500 million, but I have no doubt that, in aggregate, this figure will turn out to be considerably higher. I fully understand the short-term expediency; nevertheless, I hope that this is not a strong indication of the Government’s approach to the long-term strategic requirements of the Ministry of Defence.

Many in this House and in the other place have been concerned for several years that the budget for the defence of the realm is inadequate to meet the needs of this country’s declared foreign policy, which was reiterated in the gracious Speech. Of late, this concern has undoubtedly accelerated and those in government must accept that the strength of feeling emanates from those who have considerable experience and knowledge of the subject and should not be taken as superficial observations.

17 Jun 2015 : Column 1216

A debate on defence and security cannot be held in the abstract. We have to consider the context—the full circumstances in which we find ourselves; the risks, the opportunities and all the Government’s wider ambitions and objectives, particularly in relation to foreign policy.

There are four crucial elements to that context now. The first is the Government’s commitment to a renegotiation of this country’s relationship with Europe. That is an election pledge and success depends on finding a truly new point of mutual advantage between ourselves and our European partners.

Secondly, there are unresolved conflicts around the world in many of which we have an interest, individually and as part of wider groupings, particularly NATO. As the Conservative manifesto said, the first duty of government is to keep us safe—and there is certainly no shortage of threats to that safety. In the Middle East there are unresolved conflicts—Iran, Iraq, Syria, Yemen—and also in north and west Africa, where we have a great commercial interest as well as a partnership with other EU member states. Then there is the development of international terrorism, which has roots in the Middle East but which has an impact that goes much wider and can hit us here at home. There is also, of course, the renewed hostility between Russia and the West, exemplified by what has happened in Ukraine. Afghanistan and Pakistan are still viewed with great concern, and China’s ambitions in the China Sea in relation to her neighbours are more than worrying.

The third element of the context is the surge in the humanitarian challenge caused by risks such as disease and forced migration. We cannot isolate, or wish to isolate, ourselves from these risks and our Armed Forces play a key role in these situations—hard power exercising soft power.

The fourth factor is the crucial need for financial strength, which is fundamental in order to achieve the first three. Reduction of the deficit and the full and sustainable re-establishment of a secure macroeconomic framework will give us that long-term strength. No one supports this view more than I do. Unfortunately, ring-fencing of government departments creates major distortions in the budget of those not ring-fenced and has the effect of losing the flexibility that one in management in organisations outside of government would always wish to retain. Indeed, the worst example is enshrining the DfID budget in law. There are areas where I certainly believe the utilisation of soft power is both worthwhile and morally correct and right, but there is much that I would heavily question.

Given all these factors, a clear, constructive, long-term defence policy, backed by an assured commitment of resources to the Armed Forces and underpinned by a modernised, long-term relationship with our defence sector is of key importance. In Europe, powerful, practical assistance on defence and security is the thing we can offer as we negotiate a new relationship. History has made some countries in Europe wary of all military activity. That is totally understandable. Others lack the necessary experience and capability. But Europe needs to be defended. It needs to be secure, internally and externally, and we are in a unique position to help. We are not in the euro but,

17 Jun 2015 : Column 1217

through defence co-operation, we can make a contribution to Europe which few, if any, others can match. Our history is such that we can build on our unique historic relationships with the Commonwealth, the United States of America and Asia, but we must have the long-term resources to do the job.

That does not mean intervening everywhere. It means retaining and using the ability to help others to help themselves. It means that first-class hard power has the effect to deter potentially hostile action by others and to provide help and assistance when it is needed. The quality of our hard power is of crucial importance to having the flexibility to deal with the unexpected. Without doubt, history teaches us that.

Although the Chancellor has stated publicly that the Royal Navy will be the,

“most modern navy in the world”,

that still begs the question: what size should the Royal Navy be—or indeed the Army and the Royal Air Force—in order to meet the expectations of our foreign policy? Well-targeted defence spending can help sustain the very welcome recovery in the economy right across the country. The Chancellor has spoken eloquently about the northern powerhouse. I agree with him about the need to spread prosperity beyond the Home Counties. Nothing does that more effectively than the defence sector, which is the source of tens of thousands of highly skilled jobs in places such as Barrow, Derby and Warton.

May I reiterate what I said recently? The report commissioned by Professor Nick Butler and myself and produced by the Policy Institute at King’s College London a few weeks ago clearly shows that defence spending in this country has a strong multiplier effect. The best available evidence suggests that for every £100 spent, £230 of value is generated. As the King’s report says, defence spending is an undoubted benefit, not a burden.

Investment in defence gives us the ability to develop and produce leading-edge technology in a whole range of fields, from unmanned aircraft and command and control systems to cryptography, thanks to great collaborative work between people working in companies, the armed services and universities. That technology enables us to defend ourselves without being dependent on imported technology over which we might not have ultimate control. It also enables us to develop and sell products, earning export revenue, and again sustaining highly skilled jobs.

Ultimately, this is all about people. We are most fortunate to have the finest of our young people being prepared to serve our country, and indeed if necessary to pay the ultimate price. Through Motability I often see the sadness of those whose lives and whose families’ lives have been changed for all time. Morale—a word that most of us have always been involved with—is based, as we all know, on much more than money. It is being assured that those in power—the Prime Minister, the Chancellor and other senior Ministers—care about and are passionately supportive of long-term endeavours on our behalf, because it is the long term that is key.

Finally, in a way I consider this to be an emergency debate because I believe that we are at a crossroads. The Government have the clear opportunity to strongly regain our standing and influence in the world, but if

17 Jun 2015 : Column 1218

we do not seize the moment, history will undoubtedly record that this was the time when we finally endorsed the decline of this great island nation. The choice is ours.

Lord Ashton of Hyde (Con): My Lords, I remind noble Lords that this is a time-limited debate. The remaining noble Lords except for my noble friend the Minister have a time limit of three minutes, so when the Clock shows three minutes, their speaking time is up.

7.24 pm

Lord West of Spithead (Lab):My Lords, the first thing to say is that our nation is still a world power. This is not popular with many parts of the media and the chattering classes, but it is a statement of fact. It is important for our people’s well-being that our nation should continue to play a leading role in world affairs, and a surprisingly large number of nations in the world want us to remain fully engaged. We cannot be sure how much longer the US will be willing or able to bear the burdens of being the protector of last resort for the “free world”, and we know that as a result of our defence cuts, the US doubts our ability to be a true and worthwhile global ally as the world becomes more dangerous. To put it simply, in this unpredictable and potentially extremely chaotic and dangerous world, we must keep our armour bright and not elect to forgo our independent nuclear deterrent or cut the defence forces any further.

However, what has happened over the last five years? Far from keeping our armour bright, we have cut defence spending by 9.5% and reduced our military capability by 30%. There is insufficient funding to meet the requirements for Force 2020, which was the stated vision of SDSR 2010. Would the Minister tell us what happened to the Prime Minister’s 1% increase in the defence budget that, in 2010, he promised the chiefs would happen by 2015 when the economy improved? This is not the 1% purely to the equipment programme. We seem to be witnessing an unedifying scramble by the Secretary of State for Defence to find expenditure that can be slid into calculations of defence spending so that he can make the NATO target of 2% of GDP being spent on defence. We told other European nations to meet that target but seem unwilling to commit to it ourselves. On that point can I ask for assurance from the Minister that war pensions will not be included in our defence spending submissions to NATO for 2015-16 or that DfID or the intelligence vote expenditure will not be taken into account?

The reality is that we should spend more than 2%. Britain’s GDP is 46% higher today than it was in 1990, when we had three aircraft carriers, 50 escorts and 33 submarines. Today we have 19 escorts and 12 submarines. Decline is a choice. Why have this Government made that choice? The world is less safe as a result and it is not a choice we should make. If Ministers get defence wrong, the nation will never forgive them and the costs in blood and treasure are enormous. Our leaders seem to have lost their backbone. The world is a safer and better place when the UK is involved. The impressive array of soft power tools possessed by the UK needs to be complemented by a

17 Jun 2015 : Column 1219

comprehensive hard power capability. Sadly, the current spending on defence does not allow for this and is insufficient to allow the Armed Forces to meet the needs of the United Kingdom’s long-term foreign policy. To put it simply, defence is in a crisis and needs an increase in funding.

7.27 pm

Baroness Smith of Newnham (LD): My Lords, I very much welcome this debate, initiated by the noble Lord, Lord Sterling. I also welcome the fact that the Government have decided to look at an SDSR at the same time as a comprehensive spending review. Looking at the two things together seems to make sense, on the face of it. I am also very grateful that, in the gracious Speech, the Government reiterated the importance of giving defence whatever it needs. Yet the Government have, so far, failed to commit to the NATO 2% figure, although we are currently spending 2%. This is at a time when threats to the United Kingdom and its EU and NATO allies are growing. The context of 2015 is quite different from that of 2010. As the noble Lord, Lord Sterling, has already pointed out, we have the situation of Putin’s Russia and its incursions into Ukraine and its near abroad, which also happens to be our neighbourhood. We have the rise of Daesh and the prospect of returning jihadis, not to mention issues of cybersecurity, plus a whole raft of other security questions going on to the agenda. All of these have financial implications. They join a whole set of long-standing questions which came up in the previous Parliament but which I would like the Minister to consider.

Do the Government believe we are getting value for money in our existing defence procurement? Is the revolving door between the MoD, the services and business not a problem? Is our policy on reserves versus regulars fit for purpose? In the last Parliament, cuts were made in the Regular Forces that were to be filled with reserves, but it is clear that we have not yet filled the gap. We are still 11,000 down and it is not clear when those reserves are going to be recruited. Financially, the decisions of the last Parliament might have made sense to the accountants and for cutting the deficit, but we are left with a situation where the cuts have had an impact and we now need a fundamental reassessment of the threats to this country. If the successor is going to be voted on next year, the implications of that for the defence budget—which is not ring-fenced at a time when the Chancellor is still trying to make further cuts—create problems.

Will the Minister reassure the House that the Government will deliver on their commitments to UK security, despite the unwillingness, so far, to make good the 2% defence commitment? As the noble Lord, Lord West, pointed out, the Prime Minister was keen to press that on other Governments at the NATO summit in Wales last year. It is vital for this country that we deliver on these commitments.

7.30 pm

Lord Dannatt (CB): My Lords, while congratulating the Conservative Party on winning a clear majority at the recent general election, but noting that senior

17 Jun 2015 : Column 1220

members of that party were quoted in the election campaign as saying that there were “no votes in defence”, and noting furthermore that, unlike the position in some other political parties, there was, and still is, a steadfast resistance to committing to 2% of GDP being spent on defence other than in 2015-16, I do not think I am alone in being genuinely concerned that our new Government are not showing sufficient commitment to the security of our country or their citizens at home and abroad.

I know that the noble Earl—who we very much welcome to his position—will echo his right honourable friend the Secretary of State for Defence in saying that all these issues are being addressed in the forthcoming strategic defence and security review, but I do not think that that is good enough. Will President Putin wait until our SDSR is completed before he decides his next move in eastern Ukraine or the Baltic? Are the leaders of the so-called Islamic State going to wait similarly before they decide their next moves? Of course not, but the danger of another six months of prevarication is that the UK’s position in the world will continue to look weak. The US will remain anxious that a once-reliable partner is now enfeebled, and other European states which look to the UK for a lead on defence matters will follow our limp lead and kick the issue of defence funding into the long grass.

The former Foreign Secretary, William Hague, said before the 2010 general election that he sensed no national appetite for strategic shrinkage. Appetite or not, the reality is that we have shrunk in terms of defence and security, while the world has become a less stable and more dangerous place. What I find so depressing about all this is that, if the Government were to show some determination and leadership in these matters and make the commitment to spending 2% of GDP on defence, we are talking about only a billion pounds here or there. That is the delta in all this. That is a comparatively small price to pay to secure our place in the eyes of our allies and be of note to our enemies. More worryingly, I have heard it quoted from a Minister in the other place that, even if we did commit to 2%, we would not know what to spend it on. That remark, if true, is as naive as it is dangerous.

Many noble and gallant Members of this House who have had senior responsibility for defence programming matters know that there is always a list of compelling new equipments and capabilities competing for funding in the defence programme. I name but one—the Army’s medium-weight vehicle replacement programme. Articulated in 2002 and effectively cancelled in 2007 with the exception of the Scout vehicle, our land forces, if committed today, would be woefully at risk in another conventional combat operation of any size. If we have learned anything from Iraq and Afghanistan, it is that we must send our young men and women into battle, on behalf of our nation, with the right equipment, right from the start.

7.33 pm

The Lord Bishop of Southwark: My Lords, I too welcome this debate and thank the noble Lord, Lord Sterling, for securing it. With the strategic defence and

17 Jun 2015 : Column 1221

security review we have an opportunity for a wider debate on the politics of defence that might help to reshape our understanding of the purpose and task of our Armed Forces. The fundamentals that have underpinned UK foreign policy and defence spending in the past will need to be adapted to the changed circumstances we face, especially in the Middle East and our European neighbourhood.

Responding to this agenda will need a greater commitment to resource and to UN peacekeeping missions. That means looking again at the skills and equipment that are needed to help create the space for conflict resolution and post-conflict stabilisation. In this, we must invest as much in our ability to understand the religious dimensions to the conflicts we face as in providing our troops with the necessary means to mediate between the warring sides. The work of the UN with local partners in this area is vital but could be much improved.

Syria is a case in point. Is there a sense of how we enable Syrian opposition groups to build a coherent political process that will ensure future stability and avoid any further descent into extremism? Will Her Majesty’s Government be willing to contribute to any peacekeeping mission to uphold any future settlement and seek to be an active player in post-conflict stabilisation and reconciliation? I most sincerely hope that strategic thought is being given to supporting fragile and vulnerable minority communities, should there be further destabilisation in Syria, and that lessons have been learnt from the lamentable outcomes in Iraq, for which we bear proportionate responsibility. The vulnerability of the people of Syria is well known, and the same is true of Libya. It is but one reason why people are risking their lives in the waters of the Mediterranean.

The commitment to stabilising local powers throughout the Middle East and recognition of the long-term nature of that work must continue to form an essential part of our overarching foreign policy objectives. Our excellent and gallant Armed Forces, which we look to in this important and dangerous work, deserve our support in ensuring that they are properly resourced and equipped to meet these ever-evolving challenges.

7.36 pm

Lord Howell of Guildford (Con): My Lords, I have two points to make. First, your Lordships have rightly come to recognise that in the modern age it is the powers of persuasion and influence—so-called soft power—that can play a major or even decisive part in projecting our influence, safeguarding our interests and ensuring our national security and safety. It is also being recognised by noble Lords that the UK has enormous soft power assets although, frankly, we are not using them nearly as well as we might be.

We are today a staggeringly successful world influence in many areas, and we remain more determined than ever to play our part internationally. Moaning American generals are quite wrong when they say that Britain is in retreat. That is nonsense: we are not. Frankly, though, it is extremely damaging nonsense and the mythos is catching hold. Where the generals have a point, and what our recent soft power report made crystal clear, is that without the back-up of efficient

17 Jun 2015 : Column 1222

hard military power our soft power is useless. The two work together. We call it “smart power”. Weak military power, or hard power with holes in it, simply undermines our authority and appeal, however persuasively we try to make our case.

My second point is that I am afraid I not at all fond of targets. This may be spitting in the wind when NATO is so keen on the 2% figure, but spending targets always distort. It is outcomes on which we should focus. Some of us opposed the 0.7% of GNI to be spent on aid; we argued that this might lead to millions being rushed into poorly planned international programmes just to meet the targets, and so exactly it is proving. As the official aid watchdog confirms, spending targets distort results—a point ignored by zealots who do not apparently care or understand how modern development works. Similarly, the much-vaunted 2% defence spending target may or may not produce solid national defence. A figure of 2% of GNP could well conceal huge procurement inefficiencies and has certainly done so in the past, while less than 2%, if well-designed and spent, may deliver a superior capability all round.

It is the results in terms of our efficient armed might that matter. What we just cannot afford, and what weakens us all across the board, are the kinds of gaps and hollowing out in our hard-power defence shield described so well and eloquently by my noble friend Lord Sterling.

7.38 pm

Lord Temple-Morris (Lab): My Lords, the defence budget is not sufficient, not least because we have no settled foreign or defence policy. We spiral down on defence before we have decided what we want to do.

At a time when the United States increasingly expects Europe to play a greater part in its own defence, we are failing America and Europe over the NATO 2% at the very time, as has been said, when it is most needed. The United States will do much less if it has to do so much alone. Moreover, it will do more of what it wants and less of what we might want.

I shall give two foreign policy examples where defence capability is highly relevant. The first example is Russia and Ukraine—and here I commend the excellent report of our European Affairs Committee of 2014-15. It should be painfully obvious that Russia will be alienated by perceived threats to its territory and historic areas of influence. Anyone who remembers the reaction to western deployment of intermediate-range nuclear and cruise missiles in the 1980s, with the almost paranoid cries of “encirclement”, readily appreciates this. Add to that the personal side—particularly important to a Russian—of the treatment of President Putin in the western media. Add to this his virtual isolation at the Australian G20 summit last year, and even the refusal of the Canadian Prime Minister to shake his hand, with the result that Putin left early. We still have the valiant efforts of Chancellor Merkel, but she does not have a helpful basis for a settlement of the problem of east Ukraine.

My second example is Iran, a country with which I have been long associated. From 1983 onwards, after the consolidation of the revolution, Iran, however

17 Jun 2015 : Column 1223

difficult, was there to be talked to. A little later, under President Khatami, dialogue was positively encouraged. The main response came not from the Americans but from the British Foreign Office under Jack Straw, who made worthy efforts with European allies. But again, without the Americans this could get only so far. To deal with the hatreds and rivalries of the Middle East we must all, including Israel, think long term. Iran is a major regional power, but we have ignored her, thus strengthening her extremes. We then invade Iraq, destabilise the whole area and let the Iranians into Iraq in the Shia interest. All we do is weakly try to help unseat Assad without paying sufficient attention to the rise of ISIS, our main enemy. We again come up against Russia and Iran. Ironically, they are as concerned about ISIS as we are.

This is but some of it. Without a long-term foreign and defence policy involving Europe and the United States on more equal terms we will not succeed. This means a unified approach and increases in European defence expenditure as a whole.

7.41 pm

Lord Craig of Radley (CB): My Lords, we know that the Government have a long-term economic plan; is there a long-term foreign policy plan? I suspect that the Minister’s brief will advise, “Wait for the SDSR”.

Let us surmise what cannot be in future policy requiring action by the forces. We claim to punch above our weight, but that is reality only if we have the strength to ride out the opponent’s counterpunch and still fight on to win. Thirty-three years ago we punched hard against the Argentinians. In less than a month we lost to their counterpunch six fighting ships, with others badly damaged, more than a third of deployed fighter aircraft and numerous helicopters. But we had the strength to ride out these setbacks—strength that had been procured many years previously and was operationally capable—and we beat the counterpunch. Now we lack strength in numbers to fight back so successfully.

We fielded a divisional force with air power in the first Gulf War. More than 50,000 UK personnel were deployed. The Iraqi counterpunch failed to materialise, but we still lost six Tornados and other aircraft. Then, those losses could be quickly replaced; today, even though we could field only a fifth of the 1991 level, nothing is left in reserve to beat off a counterpunch. In Afghanistan there was no Taliban air power to face. More airframes were lost to a freak hailstorm in 2013 than to enemy action.

In the past three decades surface ship numbers have gone down from nearly 60 to just 19 and the RAF is down from three dozen combat squadrons to a mere half-dozen. Platform for platform, fighting capability improves, but there is no scope for sustained fighting against any counterpunch—even hailstones. We need hard power to underwrite the credibility of the nuclear deterrent. By no measure of past experience are today’s Armed Forces large or resilient enough to do that, let alone to defeat a conventional counterpunch. This must be corrected. Does the Minister agree?

17 Jun 2015 : Column 1224

7.44 pm

Earl Attlee (Con): My Lords, when I arrived in your Lordships’ House in the early 1990s, there were many in both Houses who had fought in the Second World War—to name a few, Lord Whitelaw, Lord Callaghan, the noble Lord, Lord Healey, Lord Jellicoe, Lord Jenkin, Lord Mowbray, Lord Mackie of Benshie, the noble Lord, Lord Carrington, and of course, Lord Runcie. There were also some in your Lordships’ House who served in the First World War, and I will never forget Lord Houghton of Sowerby banging on about dangerous dogs with such skill and perseverance.

The problem today is that, so far as I know, none of our political leaders has ever been hungry or tasted defeat. Indeed, very few, if any, at the very top have any sort of military experience. Having been a special adviser is seen as being much more important. Opinion polls and focus groups tell us that the people are more interested in health, education and welfare than defence. However, I will wager anything you like that our people in 1940 bitterly regretted not having spent enough on defence, especially on the Army, when the Nazi regime was doing almost exactly what President Putin is doing now. The world paid dearly and the parallels with the present are uncanny.

The Minister will tell us that we have one of the largest defence budgets in the world. However, that includes the cost of the nuclear deterrent that we certainly need but will never use, provided we have enough conventional forces. We also have a relatively high cost of labour in the defence industry. If we maintain our current trajectory, I have no doubt that we will get our posterior kicked hard, and we will deserve it. Even if we do not have either to acquiesce to something unpalatable or to suffer a military disaster, so far as the Americans are concerned we will become militarily irrelevant.

7.47 pm

Baroness Dean of Thornton-le-Fylde (Lab): My Lords, I welcome the debate. We never have a defence debate without reference being made to the importance of our personnel, whom I wish to concentrate on this evening. They are facing a strategic defence and security review but, before that is completed, we will have the 8 July Budget and the spending review. Indeed, one of the first actions of the Chancellor of the Exchequer after the election was to take half a billion pounds out of the MoD budget. That is all very concerning, particularly given the letter in the Telegraph last week, which was signed by a number of former defence chiefs. This is all extremely concerning for those of us who believe that we need to spend more on defence—and we do need Trident as well.

Our Armed Forces personnel are the only members of our workforce who, when they sign up to join the forces, also sign up to being prepared to pay the ultimate price. That puts a huge burden on us as a nation. I will refer later to the Armed Forces covenant. We have the Armed Forces Pay Review Body because members of the Armed Forces are not allowed to join a trade union. I was proud to chair that review body some years ago. The report issued by that body in March stated that people felt demoralised because of

17 Jun 2015 : Column 1225

“continuing change and uncertainty”, and that many felt demoralised and “undervalued”. It stated that “personnel felt worn down”. I do not think that surprises any of us who have followed defence debates.

It is absolutely essential that this time the strategic defence and security review puts personnel right at the forefront of our considerations when our future policy is decided. I doubt very much that that was the situation last time. When the 2010 review was conducted, we did not have the problems of Syria, Libya, Ukraine and a whole host of other challenges. I make a plea to the Minister please to give a commitment that when we talk about personnel we do not talk just about their equipment and resources but also about their overall well-being and that of their families.

It is no good saying that we have the covenant. This year’s review from the Armed Forces’ Pay Review Body said that half the families had absolutely no idea that there was such a thing as a covenant. That is quite a challenge to the Ministry when it does the review this time.

7.50 pm

Lord Boyce (CB): My Lords, I declare my interests as in the register. SDSR 2010 was not sound. It failed lamentably in predicting the crises that have cropped up in the last five years and, for example, removed our carrier capability just as it could have been used to great effect off Libya. In all, it left our forces fundamentally weakened. This was acknowledged by the Prime Minister in 2010 when he said:

“My own strong view is that this structure will require year-on-year real-terms growth in the defence budget in the years beyond 2015.”

Notwithstanding that, and given the short time given to compile it, this SDSR looks like being a thinly disguised cuts exercise that will emerge with no properly thought-through strategic vision or recognition of threats such as those posed by Russia. Force 2020 is a distant pipe dream. It seems to be on track to reinforce the perception around the world that we are a “has-been” and no longer a serious player—especially on the part of the United States. We should be particularly alarmed by the latter; a huge, unquantifiable amount comes our way in defence terms, underpinned by the United States’ confidence in our capability. We are seriously imperilling this.

Much has been said this evening about the totemic 2%, and I use the word “totemic” advisedly. This is about more than just money; it is about leadership. It is no use Ministers saying that we are better on defence spending that other European NATO partners. Surely the United Kingdom should be above chasing the lowest common denominator. The Prime Minister set the 2% challenge at the NATO Summit in Wales—he needs to follow his own lead. We have, by the way, already sunk below 2% if you really look at the figures, even allowing for the creative accounting by the last Government in sweeping into the 2% items previously excluded, such as the costs of contingency operations. I have no doubt that further fudging is on its way.

If the Government are prepared to ring-fence aid to foreign countries, it seems bizarre that we are not prepared to do at least the same for the defence of our

17 Jun 2015 : Column 1226

own country. It is interesting to note that some difficulty is being experienced in spending the aid budget at the rate it needs to be of £30 million a day. I am not surprised—nor will I be about how much of that will be wasted. Perhaps the Minister would like to comment on that. Is he prepared to say whether part of our strategy is to be a global player? If it is, he should recognise that we need to see a commitment to a bigger defence budget—or at least 2% unfudged—to allow us to have a global footprint and, especially, our destroyer frigate force, which is, as I have said before in this place, anorexic.

Turning briefly to the nuclear deterrent, it is good to see the Government’s affirmation that we should replace our Vanguard-class Trident submarines with four new boats. I recognise that the main gate for this is not until next year, but perhaps the Minister could say why it is not possible to get this intent approved in principle now. Finally, I totally endorse the comments made my noble and gallant friend Lord Craig of Radley regarding attrition.

7.53 pm

Lord Glenarthur (Con): My Lords, I, too, welcome my noble friend Lord Howe to his new responsibilities at the Ministry of Defence, but I am afraid that this is the only welcome I can give to the Government’s apparent attitude to defence. Do the Government understand that defence, and the strategic and foreign policy imperatives that make it so essential, underpins the security of every other element of their domestic, let alone their wider, ambitions, or are they simply prepared to take the risk that sound defence is a luxury that will never need to be tested?

Strict economic and financial policies cannot be at any price. Taking responsibility for defence, at every level from the Chiefs of Staff down to perhaps the tank crew commander, is not simply a matter of management. It is about command, it is about leadership, and it is about exhortation to operate in ways that are not matched in any other walk of life. Is my noble friend aware of the deep pessimism that so many serving members of the Armed Forces, let alone other commentators, feel about the current reducing state of our defence capabilities, about the provision of adequate equipment for the future and about the difficulty of motivating all ranks to understand that a career in the services is more a calling and a duty than a job, the experience of which will serve well both the country and the individual throughout his or her life? Were the assumptions underlying the previous SDSR correct at the time they were made? If so, were Libya, ISIL, Ukraine and Syria foreseen? Of course they were not. What of further Russian military developments in both the nuclear and conventional fields? What of China’s expanding sphere of influence and military capability? These are stark illustrations of growing global instability.

What is there to give us confidence that the new SDSR is likely to be based on assumptions that are any more realistic than last time? Do the Government agree with the House of Commons Defence Committee report, Towards the Next Security and Defence Review: Part Three, which was published in March, and the

17 Jun 2015 : Column 1227

committee’s paper,

Re-thinking Defence to Meet New Threats

? Beyond the need to upgrade the nuclear deterrent, what are the foreign policy objectives that underlie our status as a nation, as part of the EU, as a member of the Commonwealth, within NATO and as a member of the permanent five?

Managing and developing defence capability within an even greater allocation of resources would be difficult enough. But the prospect of further cost reductions, which appear to have started already, with £500 million—perhaps more in reality—being cut before the SDSR is remotely complete, inevitably make it exceedingly difficult to match the 2% of GDP expenditure that the Prime Minister seems to exhort others to do. Not to commit to it or even more—or worse, to fudge the figure—is folly in the extreme. The Government have so far dodged every rational argument to halt, let alone reverse, the reduction in our defence capability and this is the height of irresponsibility. The current SDSR is an opportunity to arrest this perilous decline.

7.56 pm

Lord Bilimoria (CB): My Lords, last week, when I asked the chief of the Indian army, General Dalbir Singh Suhag—from my late father Lieutenant General Bilimoria’s regiment, the 5th Royal Gurkha Rifles—what is the strength of the Indian Army today, he said 1.3 million. Yet today we have cut the British Army to 80,000—not even enough to fill Wembley Stadium. I thank the noble Lord, Lord Sterling, for initiating this debate. As he said, the Chancellor has now asked for a further £500 million cut in defence spending even before SDSR 2015.

The US Defense Secretary, the head of the US army and the US President have warned Britain about the impact of defence cuts in no uncertain terms. In the debate I was privileged to lead on the 200th anniversary of the Gurkhas last week, I asked the Minister to confirm that there would be no more cuts to the Gurkhas. They are now down to 3,000. Even when pressed, the Minister could not tell us that they would be protected. I find this deeply worrying.

It has also just been revealed how out of tune the Government are with the public when it comes to defence. PwC has just prepared a report entitled Forces for Changeafter surveying the public’s views on defence. I declare my interest: PwC is the auditor of the Cobra Beer Partnership, my joint venture with Molson Coors. The PwC report says that 53% of the public want defence spending to be increased beyond the current £37.4 billion. Only 16% want the defence budget cut. Some 37% believe the cost of funding the military helps strengthen the economy. Frighteningly, 53% feel the Armed Forces are weaker than 20 years ago.

Words from the public that recurred throughout the survey were alarming: “underfunded”, “overstretched” and “unequipped”. The strategy of compensating for cuts in the numbers of full-time soldiers with reserves, as we heard from the noble Baroness, Lady Smith, is an oxymoron. Reserves are meant to be reserves and we have seen the challenge of recruiting high-quality reserves. Will the Minister confirm this? The PwC report said that 72% of the public had a positive view of the Armed Forces, and 69% rate the Armed Forces

17 Jun 2015 : Column 1228

as trustworthy versus only 23% when it comes to Parliament. Some 65% also felt that modern threats are the biggest threats to the UK: terrorist groups, cyberattacks, known unknowns and unknown unknowns. No one predicted 9/11. No one predicted the Arab spring. No one predicted Libya. No one predicted Syria. Barely a year ago no one had heard of Islamic State.

As we have heard before, Britain has amazing soft power: the BBC, our universities—I could go on. But soft power alone, without hard power, is useless. As Professor Joseph Nye of Harvard University said, a combination of hard power and soft power gives you smart power. SDSR 2010 was the opposite of smart. Quite frankly, it was negligent. We have no carriers, no Harriers, no maritime reconnaissance, cuts to our troops—means before ends. I urge the Government to be in tune with the British public, to listen to our steadfast ally, the United States, which has spoken out at the highest level, and to commit to the NATO 2% of GDP defence spending.

To conclude, this debate is on the eve of the 200th anniversary of the Battle of Waterloo. The Duke of Wellington’s motto was, “Fortune favours the brave”. One word the public mentioned above any other in the PwC report about our wonderful, best of the best, cherished Armed Forces—the best in the world—was the word “brave”. I challenge the Government to be brave.

7.59 pm

Lord Lyell (Con): My Lords, I thank my noble friend Lord Sterling for giving us the opportunity this early in the Session to say some words on defence. I am also very thrilled that my noble friend Lord Howe is back—I think he has done one earlier stint in the Ministry of Defence. With everything that he has done, and all the disciplines that he has covered, I christen him the multi-role combat Peer, because he will be able to cover all the detailed aspects, including the financial ones.

I have very little to add but will ask one or two small questions about what I call the kit. Could my noble friend let me know, possibly in writing later, what the position is with the F35 aircraft? Is it carrying on in development? Is it up to date and at the stage we hoped it would be? Could he also ensure that the weaponry for the Army is up to date and performing as well as it should do and has been doing in Afghanistan, Iraq and elsewhere? I have not heard of any major problems but I hope he can assure us that this is well under way and that there are no problems with supply.

As far as personnel and manpower is concerned, I understand that Army recruitment is still healthy. I hope young men and women are still welcome in the Royal Navy and that places, training and facilities are available for them. My noble friend Lady Dean—I call her my noble boss, as chairman of the All-Party Defence Group in your Lordships’ House—made a most important and powerful speech telling us that we must make sure that the families are in prime position when it comes to personnel. Some of the married quarters that I have seen—and which no doubt she and many of your Lordships have seen—need refurbishing. I hope that my noble friend will be able to keep his eye on that in particular. The facilities for

17 Jun 2015 : Column 1229

many of the single personnel and soldiers are second to none. With my noble friend’s help, no doubt we will make progress and there will be no slowdown in that progress over the next six months.

8.02 pm

Lord Davies of Stamford (Lab): My Lords, it is customary to begin an SDSR with an analysis of the threat, but we should never forget that capability and threat are not independent variables. There is a direct and inverse relationship between the two, and the situation with Russia and Putin is a very good example of that. It is quite incredible to believe that a serious factor in encouraging Mr Putin to become much more aggressive in trying to retrieve parts of the former Soviet and Tsarist empires was not that, over the last few years, we and other European members of NATO have been steadily cutting our defence expenditure and our defence capabilities. What an appalling signal to send—I am afraid that we bear some of the responsibility for the deterioration of the international situation and the threat to world peace that has ensued.

What do we do about it? First, we must support, more than we are already doing, the Ukrainian armed forces. What they need most at present, as I have discovered in my visits there, is anti-battery radars and drones. We should supply those sorts of things and the training that goes with them.

Secondly, we need to prepare sanctions to deter Putin if he goes any further; if, for example, he decides to seek to grab a land bridge between the areas he occupies in eastern Ukraine and the Crimea. I think I was the first person anywhere to suggest, after the invasion of the Crimea, that we should contemplate depriving the Russian banks of access to the SWIFT interbank system. The suggestion has been taken up by other people since then, particularly in the United States, and we should explore it further.

Thirdly, and very importantly, we must make a commitment to the 2% defence spending target. We look perfectly ridiculous with the Prime Minister having had the effrontery to lecture other NATO members on the need to respect that NATO guideline when we are not doing so ourselves. Quite apart from the important signal we need to send to the Russians about this, it is vital that we do it for our credibility with the United States, which has become rather frayed. We cannot simply wait for the SDSR to achieve that because in our relations with the United States, the scepticism that it feels about our defence capability and commitment is increasing the whole time.

Finally, we should be taking forward the development of a common foreign and security policy within the EU; but the Government will of course not do this, because their Eurosceptics will not allow them to do it. First, nothing would be a more effective signal to send to the Russians of our joint commitment. It would involve not merely the existing NATO members within the EU but the five members which are currently outside NATO. It is very important to involve them. Secondly, it would be the only way to get a joint commitment to a realistic level of defence spending and deal with the free-rider problem, which has always

17 Jun 2015 : Column 1230

existed, where the smaller countries have spent much less of their GDP on defence than larger countries, believing that they would always be defended by others. That is a very unhealthy and unsatisfactory situation. Thirdly, if we want to get value for money, it will be absolutely important to eliminate the waste and duplication in the armed forces of NATO and EU countries. That can be done only by a greater degree of specialisation and, therefore, of policy and decision-making integration. Finally, in procurement it is vital that we have much longer production runs, and gain the kind of economies of scale which the Americans achieve through those means, by joint procurement operations with our European allies. Again, that can be done only in the context of a distinct strengthening and improvement of a common foreign and security policy.

8.06 pm

Lord Luce (CB): My Lords, 25 years ago we saw the end of the Cold War and there were people who talked at that time about the end of history, whatever that means. Indeed, now we have the end of wars but a quarter of a century later, where do we stand? It seems that we face two main threats. The first, as many noble Lords have mentioned, is that in Europe, particularly in the Baltic states and Ukraine, we face a serious threat from Russia—a wounded bear which is steadily rearming. Secondly, in the Middle East we face failed states, power vacuums, fragmentation, severe humanitarian problems and religious wars: conditions which in themselves produce fanatical extremism such as we see in Daesh, with 20,000 foreign fighters. Overlapping those in north Africa and northern Nigeria are similar problems, with a rising threat of terrorism to us all.

One of the dangers that I see is that we in this country have been lulled into a false sense of security. Many people regard even the Baltic states as far-off countries of which we know very little. There is no leadership in this country on defence. There was little debate in the general election about defence, and we have watched a steady decline in forces in Europe as a whole, as well as in this country. Unfortunately, the perception in the outside world is that we in Britain, let alone in the West, are in decline. Added to that is the uncertainty of Britain’s position in Europe and the future of the United Kingdom. We seem to be talking ourselves into decline—into pulling up the drawbridge—which is a very serious message to give to the outside world. The British interest is that we use what influence we have in a constructive way. We must remember that we are still members of the Security Council, of the European Union and of NATO. We are part of the Commonwealth family and we have soft powers. The economy is improving—it is the sixth largest in the world —and we still have some military strengths.

I conclude, first, that as far as NATO is concerned the maintenance of international order is at stake. All of us who are NATO members must make it clear to all that we are committed to Article 5—that an armed attack on one member will be considered an attack on us all—and NATO must be strengthened accordingly. Secondly, we must play an active part in selective conflict resolution in the Middle East and Africa but working intensively, multilaterally and with coalitions

17 Jun 2015 : Column 1231

of willing regional partners and nations. We have had plenty of examples, such as reducing piracy in the Indian Ocean and Sierra Leone. We need to work with our friends in the Gulf and elsewhere. That will help to tackle terrorism and migration at source. I hope that the Minister will reassure us that we have a long-term set of foreign policy objectives before we make any decisions on our defence resources.

8.10 pm

Lord Selkirk of Douglas (Con): My Lords, our Prime Ministers have in the past often faced a dilemma over how much to spend on defence. Indeed, on 12 November 1936, Prime Minister Stanley Baldwin said during the debate on the Address:

“Supposing I had gone to the country and said that Germany was rearming and that we must rearm, does anybody think that this pacific democracy would have rallied to that cry at that moment? I cannot think of anything that would have made the loss of the election from my point of view more certain”.—[Official Report, Commons, 12/11/1936; col. 1144.]

The Prime Minister Winston Churchill took a very different view. He liked the Roman saying, “If you want peace, prepare for war”. The one who might give us the best clue as to what Governments should do today is Churchill. After all, he participated in more wars than any other world leader of the last century. Speaking in general terms, he was remarkably prescient. He said:

“It is no use saying, ‘We are doing our best’. You have got to succeed in doing what is necessary”.—[Official Report, Commons, 7/3/1916; col. 1427.]

By the way, I suspect that, as with us today, Stanley Baldwin would have liked to limit Churchill’s speeches on rearmament to no more than three minutes.

In the present situation, with the regular British Army at its smallest level for almost 200 years, the test of what is necessary should not be driven exclusively by Treasury considerations. There has to be significant recognition of strategic security requirements, and we subordinate these at our peril. When the President of the United States and the former Secretary-General of NATO both express grave concern at the possibility that Britain might fail to maintain defence spending at 2% of GDP, we can only hope that Ministers are listening to them and the concern of others who are Britain’s friends and allies—otherwise, I fear that the wrong signals will be given to those who do not wish us well. Just last weekend, former Chiefs of Staff revealed their concerns regarding further defence cuts. In the words of Admiral Sir Nigel Essenhigh:

“If the outcome of the Review is a further reduction in military expenditure and not a commitment to a sustained increase, then the Government will be neglecting its prime and overriding duty, the defence of the nation, by failing to halt the progressive decline of British military capability into penny packet numbers”.

He called on the Government to ensure that the forthcoming,

“Defence and Security Review does not degenerate into yet another cuts exercise”.

I note that the Secretary of State for Defence has recently warned in another place that,

“defence, to be deliverable, has to be affordable”.—[

Official Report

, Commons, 8/6/15; col. 885.]

17 Jun 2015 : Column 1232

My submission tonight is that affordability must not mean lowering our guard and losing the confidence of our allies.

8.13 pm

Lord Ramsbotham (CB): My Lords, in preparation for this debate, I looked again at the book that is regarded as the foundation of English common law, published by Henry II’s Justiciar in 1189, called The Treatise on the Laws and Customs of the Realm of England. I realised that it was an extremely good definition of smart power, as well. It states:

“Not only must royal power be furnished with arms against rebels and nations which rise up against the king and the realm, but it is also fitting that it should be adorned with laws for the governance of subject and peaceful peoples; so that in time of both peace and war, our glorious king may so successfully perform his office that, by crushing the pride of the unbridled and ungovernable with the right hand of strength and tempering justice for the humble and the meek with the rod of equity, he may both be always victorious in wars with his enemies and also show himself continually impartial in dealing with his subjects”.

I find that one of the saddest things about this debate, for which I thank the noble Lord, Lord Sterling, is the frequent mention of the decline of this country and the frequent reports of less than adequate forces to defend the realm. I found the same as a member of the Joint Committee on the national security strategy, because one of the things that worried me—and, I think, other members—was that when we looked for a national security strategy on which an SDSR could be based we found no evidence of any, and nor did we find any evidence of national strategic thinking in the Government which might give rise to a national security strategy. I take the description “long-term foreign policy” in this debate to include the national security strategy.

Like the noble Lord, Lord Howell, I deplore targets in this because I believe that it is only sensible to base defence spending on what the defence of the realm requires. Without having a national security strategy on which an SDSR can be based, you have no idea when you are going into these sums whether you have what is required. I am very glad that the noble Lord, Lord Selkirk, mentioned the word “affordable”. I, too, think that when you are thinking “Can we afford it?”, you also have to ask whether you can afford to give up what you have to give up in order to afford what you say you want. I think that great swathes of government spending come into that second category when we are considering the all-important defence of the realm.

8.16 pm

Lord Wallace of Saltaire (LD): My Lords, I want to follow the line that the noble Lords, Lord Ramsbotham and Lord Luce, have taken and focus on long-term foreign policy and national strategy—because we are not at all clear on what either of them are. In the course of this debate, it has been mentioned that we should provide military force against China and build up our forces in the Gulf. I am very surprised that noble Lords have not spent more time talking about the problem of Africa, where we are going to have to be engaged in conflict prevention, state rebuilding and active peacekeeping in the next 20 years, partly because as those states collapse their desperate people will try to flood across the Mediterranean to Europe.

17 Jun 2015 : Column 1233

We do not know what our foreign policy is about, and that means it is very difficult to have a coherent defence policy. A Conservative MP of my acquaintance said in a private meeting some months ago, “Of course, our problem is that we don’t know who we are and we don’t know where we want to be in the world”. That is a huge problem. We have lost our standing in Washington over the past five years. There is a strong perception in Washington that we are, as the noble Lord, Lord Luce, suggested, withdrawing from a wish to be a power in the world.

We are also renegotiating our economic relationship with the rest of Europe without recognising that the European Union was always a security system as well as economic arrangement: that our Foreign Secretary negotiates and consults on foreign policy and security policy with his opposite numbers within the European Union framework much more frequently than in any other multilateral framework; and that in Washington NATO is regarded as “the European allies” and the message from Washington is that NATO and the European Union should work more closely in containing Russia and dealing with Ukraine. The question of whether we wish to be involved in containing Russia and dealing with Ukraine is there in the Foreign Secretary not being present when our German and French counterparts negotiate with the Russians on Europe. That is as visible a sign of lack of cohesion, lack of coherence and withdrawal as one could possibly have.

The noble Lord, Lord Bilimoria, talked about the 200th anniversary of Waterloo. Waterloo was Britain with our allies: the Germans, the Dutch and the Belgians. The question of whether we are standing alone and how far we are working with others is also fundamental to our defence policy. I welcome the extent to which over the past 15 years we have built a close defence relationship with the French, reinforced our relationship with the Dutch and helped the Nordic countries and now also the Baltic states. I deplore the extent to which Conservative Ministers have attempted not to tell the Daily Telegraph, the Daily Mail or Parliament the extent to which we now co-operate with them.

I agree strongly that sharing facilities, assets and procurement is one way to make short defence money go further. That is an important part of where we should be. However, unless we know what our relationships with France, Germany and the Nordic countries are, we will not go far enough. So, yes, we need a coherence defence budget—but first, we need a coherent national strategy and foreign policy.

8.19 pm

Lord Rosser (Lab): The first priority of our Armed Forces is of course to defend and protect our own people. After that, it is a case of the Government deciding what further role they want our nation and require our Armed Forces to play beyond our shores, and having made that decision providing our Armed Forces with the capability to carry out that role. That is what the forthcoming strategic defence and security review and the spending review should be about. The last SDSR did not prove very accurate in forecasting many of the key events of the last five years. It was silent on the upheavals that have occurred in north

17 Jun 2015 : Column 1234

Africa, the rise of ISIL, and on Russian activity and aggression in the Ukraine. I hope that the forthcoming SDSR will prove to be a rather more reliable document in that regard.

We then have the issue of money; defence is not a protected department, and there will have to be very substantial cuts—18%, say independent sources—in non-protected departments if the Government are to hit their own deficit reduction target. The Government have already committed themselves to no further reductions in the size of our regular Armed Forces, at least a 1% real-terms increase in the defence equipment budget throughout this Parliament, and the renewal of our nuclear deterrent. Can the Minister say what areas, if any, of the defence budget are being considered for cuts in expenditure, and what level of cuts, if any, the Government expect to make in the defence budget in real terms? In the Queen’s Speech the Government stated that they would,

“continue to play a leading role in global affairs, using its presence all over the world to re-engage with and tackle the major international security, economic and humanitarian challenges”.

The recent comments by the US Defense Secretary that our reductions in military spending were,

“actions which seem to indicate disengagement”,

suggest that not everybody has been convinced by the Government’s statement about our future global role.

That is a further reason why the Government should be open and promote debate, including in this House, on their view of the threats we face, our global role, and the military capability we need, prior to final decisions being made on the SDSR and the spending review, and not simply say in effect that anybody is welcome to write in with their thoughts. The 2015 SDSR has to be a credible document, with regard first to defence and foreign policy objectives, and secondly to the resources needed by our Armed Forces to deliver those objectives.

8.22 pm

The Minister of State, Ministry of Defence (Earl Howe) (Con): My Lords, I thank my noble friend Lord Sterling for giving us the opportunity to debate a topic of fundamental importance for the security and prosperity of this country. He brings to our deliberations a wealth of experience in both business and politics, and I listened to him, as I always do, with the closest attention. However, he has also enabled me, as the new Minister on the block, to benefit from the wisdom of the other speakers here this evening, and I am grateful to all of them for their contributions. I shall of course write on those questions that I am unable to address tonight.

As this debate has shown, the House recognises that the first duty of government is to protect its people and promote our interests around the world. Therefore, I preface my remarks by making clear that the influence that this country continues to exercise globally and the respect that we command through our military, diplomatic and development capabilities are major national advantages that the Government are committed to maintain.

The defence budget, and the way we use that budget, are of course key components in the way we achieve this. Listening to noble Lords this evening, I cannot

17 Jun 2015 : Column 1235

fail to be aware of the anxieties that exist in some quarters about current and future defence funding. At the same time, I suggest that we need to take a realistic and measured view, both of what we are doing currently and of what we plan to do. At present, the UK has the fifth-largest defence budget in the world, the second-largest in NATO and the largest in the EU. That budget has enabled us to commit our Armed Forces, as we speak, to 21 operations in 19 different countries. It has enabled us to achieve genuine global reach in Iraq, Afghanistan, the Baltic, west Africa and, most recently, Nepal and the Mediterranean, to name only a few examples.

In Iraq we bring niche capabilities such as intelligence, surveillance and reconnaissance, air refuelling, counter-IED, and command and control to the US-led coalition which few other nations can replicate. We are the US’s largest partner in the coalition air effort against ISIL.

In Afghanistan we can be proud of what we have achieved in our largest coalition operation of recent times, Operation Herrick. We have helped to set the conditions for a more viable state, improving the lives of ordinary Afghans, while substantially reducing the terrorist threat to the UK from this region.

This year, our contribution to NATO assurance measures will be as significant as last year, with more than 4,000 UK personnel set to deploy on various reassurance exercises, including a number in eastern alliance territories.

In Nepal we demonstrated our disaster relief capabilities when we deployed one C130 Hercules transport aircraft, two C17 transport aircraft and more than 250 personnel to the region to support relief efforts, on top of our existing Gurkha presence. In Sierra Leone we led the fight against Ebola, committing 900 troops. In the Mediterranean we have demonstrated other elements of our naval capability, deploying HMS “Bulwark” along with three Merlin helicopters to rescue—so far—2,900 migrants in difficulty.

These are our Armed Forces as they are today—capable of responding to a complex variety of challenges quickly and effectively. But, as my noble friend has emphasised, we need to pay equal attention to the defence needs of the future. That is indeed why the Government are in the process of carrying out a full strategic defence and security review, along with a refreshed national security strategy. I say to the noble Lord, Lord Dannatt, that this is not prevarication. The SDSR will take as its starting point a hard-headed appraisal of our foreign policy, our security objectives and the role that we wish our country to play on the world stage. It will be informed also by a full evaluation of the risks and challenges facing us as a country.

Not all these risks can be foreseen but, through the work of the National Security Council and by ensuring that the national security strategy builds on the progress made since 2010, we will be well placed to define the military and other capabilities we need to ensure that Britain has the broad range of capabilities and strategies to respond to threats and maintain its position as a global leader. The noble Baroness, Lady Dean, can be reassured that this will indeed factor in the well-being of our personnel.

17 Jun 2015 : Column 1236

However, in so doing, the SDSR will need to balance strategic challenge with fiscal realities. It is unrealistic to think that any part of government can operate in a vacuum, without having regard to the resource constraints that the country faces. Economic security and national security are two sides of the same coin. I cannot therefore comment on what our defence spending will be after this financial year. Such decisions, as my noble friend will understand, will be determined by the spending review later this year, running alongside the SDSR. However, he should, I hope, be reassured in one respect at least. By its very nature, the SDSR will look ahead at the longer term as well as the short and medium term. And here, I suggest, we start from a good position. This Government were elected with a mandate to maintain the size of the Regular Armed Forces, to increase the equipment budget in real terms every year and to renew our four nuclear ballistic submarines.

We have committed to spending more than £160 billion on equipment and equipment support over the next decade; including on new joint strike fighters, more surveillance aircraft, hunter-killer submarines, two aircraft carriers and the most advanced armoured vehicles. We continue to spend 20% of our defence budget on major equipment and equipment support—one of only four NATO members to do so.

This equipment will be innovative and high technology, giving our Armed Forces a battle-winning edge. For example, our procurement of the Scout Specialist Vehicle will transform the way that the Army undertakes operations, enabling commanders to engage at ranges and at a tempo not previously possible.

The F-35 Joint Strike Fighter is a fifth-generation multi-role combat aircraft and marks a step change in capability for the UK. The Queen Elizabeth-class aircraft carriers will be the largest, most capable and powerful surface warships ever constructed in the UK, able to meet the widest range of tasks around the world. All these programmes have a positive impact on the UK’s defence industry, either through their manufacture or through many years of future support.

I assure my noble friend Lord Lyell that the equipment and weapons currently fielded by the British Army are genuinely second to none.

I have read the paper published by King’s College London and mentioned by my noble friend Lord Sterling. We know how important it is to be able to act independently. That is why key principles of the 2012 White Paper, National Security Through Technology, are open procurement and technology advantage. Where essential on grounds of national security, we will do whatever is necessary to protect our operational advantage over our adversaries and our freedom of action. This means being able to conduct combat operations at a time and place of our choosing with the assurance that capabilities will perform as required, when required.

We will spend 2% of GDP on defence in this financial year. But as my noble friend Lord Howell emphasised quite rightly, it is not just the size of the defence budget that is important but also how you spend it. That is why we are continuing with our successful defence transformation programme, which has balanced the defence budget, removing the £37 billion

17 Jun 2015 : Column 1237

black hole left by the last Labour Government, and committed the department to finding £5 billion of efficiency savings over the last five years, reducing administration costs and critically examining our defence equipment needs, helping us to achieve better deals with our contractors.

Lord Davies of Stamford: I am aware that the Minister is very new to this brief, but I regret very much that he is continuing to mention this complete nonsense and propaganda about a £35 billion black hole deficit. If defence expenditure had gone on increasing at the rate of 1.5% per annum in real terms, which we were committed to, there would have been no such black hole at all.

Earl Howe: My Lords, I totally repudiate that comment. Not only was there a black hole of that size, but I was briefed on it the other day and it is even greater than that figure—but we will not go into that now, if the noble Lord will allow.

There is no point in having a £34 billion defence budget if it is not spent efficiently. That is why it is important that we continue our work from the previous Parliament so that we can maximise defence spending on our Armed Forces. This is demonstrated in our 10-year fully funded equipment plan which we published in January. That plan gives industry certainty over MoD investment in different areas for the next decade, helping us to deliver the equipment we need for our Armed Forces. I say again, the fiscal challenge that

17 Jun 2015 : Column 1238

has faced defence has not impacted on our ability to conduct operations to support our foreign policy objectives —far from it—as I have already indicated with examples of our many military operations around the world.

As has been said, we are not only using military intervention to protect our interests and promote our values; we have a leading diplomatic network which spans 268 posts in 168 countries and territories, and nine multilateral organisations. These unique capabilities have enabled the UK to play a leading role in talks to address Iran’s nuclear programme, disarming Syria of its declared chemical weapons stockpile and establishing a global arms trade treaty. We are also the only G7 nation to meet the UN OECD target to spend 0.7% of gross national income on international development, building stability and supporting economic growth overseas and contributing, importantly, to the security and prosperity of the UK.

The achievements of our defence and diplomatic services speak for themselves. The UK can be proud to have such world-renowned services to call upon. As my noble friend Lord Glenarthur said, the upcoming SDSR is an opportunity to look again at our foreign policy objectives and ensure that we have the assets necessary to address these in the context of the resources available to us. As I said to this House earlier this month, in the words of Churchill, we will do what is necessary to keep Britain safe and will remain part of the international effort to defeat the adversaries that threaten us.

House adjourned at 8.34 pm.