Defence Expenditure (NATO Target) Bill

Sir Gerald Howarth: I thank my hon. Friend from the Army for reminding the House of my interest and experience in aviation.

I am genuinely delighted to open this important debate on defence spending and to introduce my Bill to give legal effect to the Government’s welcome commitment to meet the NATO target of spending 2% of gross domestic product on defence. It is an additional pleasure to do so as a former Defence Minister and the Member of Parliament for Aldershot, the home of the British Army, and for Farnborough, the birthplace of British aviation and the home of many of Britain’s finest and world-leading defence companies, whose contribution to our national security is invaluable.

It is also very good to see my hon. Friend the Minister for Defence Procurement, who is responsible for defence equipment and support. He is representing the Government today, but he is a very great friend of mine who is discharging his responsibilities with extraordinary dedication and professionalism.

By the same token, although I have not known the hon. Member for York Central (Rachael Maskell) for as long, I had the pleasure of meeting her earlier this week and I warmly welcome her to her role as shadow Minister. She will find that it is one of the most exciting privileges in this place to have some responsibility for the management of the defence of our country and I wish her well as she seeks to hold the Government to account, as, of course, do we on the Government Benches, fulfilling our constitutional duty.

Before I address the detail of the Bill, I want to set out the context as I see it. I am sure that you will understand, Mr Speaker, but the full force of my argument in support of the Bill cannot be made without reference to the context. Since my right hon. Friends and I produced the strategic defence and security review of 2010 there has been a massive change in the international scene. In a nutshell, we live in an increasingly dangerous world. The turmoil created by the Arab spring, the Syrian uprising, the Libyan campaign, Russia’s illegal annexation of the Crimea, which itself followed the illegal annexation of a part of Georgia in 2008, and the rise of ISIL has transformed the international landscape, but that is not the end of it. The jury is out on Iran’s intentions and North Korea remains an utterly irresponsible dictatorship, determined to develop further weapons of mass destruction. The stand-off between India and Pakistan, both nuclear powers, from time to time threatens to destabilise that important region.

Most importantly, in this, the week of the state visit by the President of the People’s Republic of China, that country is causing concern not just to the Japanese but more widely across the region. As I reminded the House again on Monday, China has recently embarked on a relentless process of colonising uninhabited but disputed atolls in the South China sea, where it is building runways and port facilities. In May, US Defence Secretary Ash Carter prodded China on its continued rapid reclamation efforts, which have resulted in 2,000 acres of land that China claims as sovereign territory but that the United States refuses to recognise. Although China claims this as sovereign territory, many of the islands, including the Spratly islands—that is a wonderful name; I always like putting it on the record—are claimed by other regional powers.

The US Defence Secretary said in some prepared remarks in May that

“China is out of step with both the international rules and norms that underscore the Asia-Pacific’s security architecture, and the regional consensus that favors diplomacy and opposes coercion.”

He reinforced that message more recently when he said that the United States

“will fly, sail, and operate wherever the international law permits… at the times and places of our choosing”.

Last night’s news that TalkTalk had been subjected to a massive cyber-attack serves as a timely reminder of the ever-increasing threat to our security and our intellectual property from such attacks, often committed by criminals, but from time to time committed by nation states, including the People’s Republic of China.

Sir Greg Knight (East Yorkshire) (Con): My hon. Friend is making an effective case for adequate and proper defence spending, but as he and I are both against unnecessary red tape I hope that during his remarks he will deal with why he feels we should have the straitjacket of legislation in this area.

Sir Gerald Howarth: I am grateful to my right hon. Friend and of course I shall come on to that. As I explained at the outset, in order to explain why I believe this Bill is so important, it is critical to set out the international scene as I see it, for defence can be undertaken only in the context of an analysis of the threats we face. That is why a strategic—I emphasise strategic—defence and security review is under way at present. We could not cover the strategic element in the last SDSR because we had only five months in which to prepare, our having come into government in May 2010. That review was largely Treasury-driven and needed to be Treasury-driven. The present one is different.

Bob Stewart: On my hon. Friend’s comment about China and cyber-warfare, I am sure he knows as well as I do that China has a dedicated cyber-warfare division, which it exercises—it last did so, as far as I know, three years ago—and practises attacks against the west.

Sir Gerald Howarth: Indeed. My hon. and gallant Friend has come to my support, for I was about to say that it was our recognition of the significance of cyber-security that led us, when my right hon. Friend the Member for North Somerset (Dr Fox) was Secretary of State—I am sure he is in the Chamber—to identify cyber as what he called an up-arrow. At the time there did not appear to be a threat from Russia, so heavy armour became a down-arrow—that is, an area where we felt we could take a hit—but cyber was identified in 2010 as being one of the areas we needed to prioritise. That led us to earmark £650 million over five years to address that threat. As the then Secretary of State and now Foreign Secretary, my right hon. Friend the Member for Runnymede and Weybridge (Mr Hammond), revealed last year, some of those funds are being directed at the development by the UK of an offensive cyber capability, which I thoroughly support.

To give the House a bit of the flavour of what we are talking about in the cyber-attack context, The Times published an article on 10 September headed “Cyber criminals make Britain their top target”. A company had analysed 75 million raids on international businesses over three months. It showed that Britain was the criminals’ favourite country, followed by America. Online lenders and financial services are losing up to £2 billion a year to hackers stealing passwords and creating false accounts. The scale of the challenge is highlighted by the volume of attacks, with all those attempts being recorded between May and July this year alone.

Mr Christopher Chope (Christchurch) (Con): It so happens that last weekend I was stopped in the street by a constituent who works at Roke Manor, who told me that this is a really serious problem. She raised it in the context of the Chinese visit.

Sir Gerald Howarth: I am grateful to my hon. Friend for two reasons—first, he reinforces my argument, and, secondly, he puts on the record an institution of phenomenal value to this country, Roke Manor Research, formerly owned by a German company and now very much in British hands. As I am sure the Minister knows, Roke Manor is doing outstanding work. It is an example of the leading-edge technology that is available to defence in this country and that it is so important we maintain.

Mrs Cheryl Gillan (Chesham and Amersham) (Con): I congratulate my hon. Friend on introducing this Bill for discussion in the House today. Does he agree that the situation is even more alarming when we look at the size of Chinese defence spending, which was recently announced to be $144.2 billion—a 10% year-on-year increase, approximately?

Sir Gerald Howarth: I am most grateful to my right hon. Friend for independently adding to the case on what we face around the world. Russia is engaged in about the same ramping up its defence spending and, accordingly, its capability. I am very grateful to her for making that point.

Significantly, the message for those engaged in drawing up defence planning assumptions is that in the space of barely three years the assumptions on which we worked in 2010 were blown apart. None of the events I listed earlier was remotely foreseen. For those of us brought up in the shadow of the iron curtain, over which two massive superpowers pivoted in an uneasy equilibrium—I was brought up in Germany—today’s outlook seems decidedly more complex and more dangerous. It is against that backdrop of a seriously turbulent world that we need to judge the priority we accord to defence of the realm.

There is no doubt that Europe’s security and peace for the past 70 years has been largely delivered by the North Atlantic Treaty Organisation—NATO. The North Atlantic treaty was signed on 4 April 1949 as a means of establishing enduring stability and peace in Europe. Under article 5, the new allies agreed

“that an armed attack against one or more of them…shall be considered an attack against them all”

and that were such an attack to take place, each ally would take

“such action as it deems necessary, including the use of armed force”

in response. Understandably, much has been made of article 5 as the foundation stone of north Atlantic peace, and the onus it places on all alliance members, but it is also worth considering article 3, which states that

“the Parties, separately and jointly, by means of continuous and effective self-help and mutual aid, will maintain and develop their individual and collective capacity to resist armed attack.”

Arguably, this set the precedent for the 2% target long before it was first mooted in 2006, and it has subsequently become the target for alliance members.

Dr Julian Lewis (New Forest East) (Con): May I urge my hon. Friend not to use the word “target”? It is in fact a minimum. Those countries that are below the minimum may have it as a target; those that have always been above it should not be ringing the church bells just because we have decided not to go below it.

Mr Speaker: Order. I think the right hon. Member for New Forest East (Dr Lewis) is pleading for terminological exactitude.

Sir Gerald Howarth: I quite understand that that finds the most enormous favour with you, Sir. My right hon. Friend is to be commended, I am sure you will agree, for his terminological exactitude. However, he anticipates something I shall say later.

The US and Britain have long been meeting this target given the necessity of a strong defence during the cold war. We were spending about 10% on defence in the 1950s and 4% to 5% in the ’80s, and we are hovering at 2% today. Of course, the higher level of defence spending was because of the cold war. While we are not in the same state of emergency now, Russia’s aggression in Ukraine led the then NATO Secretary-General, Anders Fogh Rasmussen, to whom I pay tribute for his work, to say in March 2014:

“We live in a different world than we did less than a month ago.”

However, it became clear that there was a perceived imbalance in the structure of the alliance, with the current volume of US defence expenditure representing 73%—almost three quarters—of the defence spending of the entire alliance as a whole. It spent 3.5% on defence last year compared with our 2.2% and Germany’s less than 1.5%. NATO would not continue under America’s patronage if the alliance were to meet its necessary credibility as a politico-military organisation, with all 28 members committed to the treaty and its requirements.

Today 28 states all stand committed under article 5 of the NATO treaty to come to each other’s defence if one of them were to be attacked by a foreign aggressor. Together with the commitment of the United States and the United Kingdom to maintain a continuous at-sea nuclear deterrent, article 5 has for the past 70 years served to preserve the security of all of western Europe and has been the central tenet underpinning Britain’s defence and security strategy for my entire lifetime. It is not the European Union but NATO that has been the guarantor of the peace in Europe. Furthermore, recent operations in Afghanistan and Libya have proved that NATO has a valuable out-of-area role to play.

It is essential for our present and future peace and prosperity that in all strategic decisions we make as a nation we show our unwavering support for the alliance. That includes ensuring we have the manpower to conduct operations such as those in Kosovo, Iraq and Afghanistan, as well as the hardware to defend alliance countries through the deployment of assets such as Royal Air Force Typhoons patrolling our skies and those of former Soviet satellite states such as Latvia, Lithuania and Estonia, which are under increasing pressure and hostility from Russia.

NATO requires all alliance members to meet its defence expenditure target of 2% of GDP. Currently only four do so: the United States, the United Kingdom, Greece and Estonia. This Bill, when passed into law, will ensure that the Government maintain their leading position in the alliance by ensuring that we keep spending at least 2% on our national defence. That is not an arbitrary figure. It is totemic in its importance for Britain’s standing in the world, Europe’s security and for maintaining our special relationship with our closest ally, the United States of America.

I am particularly pleased to see present some of my hon. Friends who argued so passionately in support of the Liberal Democrats’ International Development (Official Development Assistance Target) Act 2015 in the last parliamentary Session, to enshrine in law that we commit 0.7% of our gross national income to international aid. They are fulfilling the offer they made then to support this Bill if I were fortunate enough to secure a place in the ballot. I particularly appreciate the support of my hon. Friend the Member for Congleton (Fiona Bruce). She was a doughty champion of the 2015 Act and she told me that she agreed that we should do the same for defence, so I am grateful to her for her presence today.

Sir Edward Leigh (Gainsborough) (Con): From a public accounts point of view, the concept of protecting Departments is causing enormous stresses in Government. For instance, the entire budget of the Foreign Office is only twice the amount of aid we give to Ethiopia. We must address that, and surely the way to do so, particularly given the possibility of massive procurement overruns, is not for MOD accountants to aim for 2%. As my right hon. Friend the Member for New Forest East (Dr Lewis) has said, that has to be seen as a minimum; otherwise there will be chaos in procurement.

Sir Gerald Howarth: My hon. Friend is absolutely right, and that is why clause 1 of my Bill states that the figure should be at least 2%. It is therefore a base, not a ceiling.

Philip Davies (Shipley) (Con): I commend my hon. Friend for promoting this Bill. I am sure he will agree that the Minister is a good man. Does he share my hope that the Minister will not insult our intelligence by saying that the Government will not support the Bill and that it is unnecessary because we are already hitting the 2% target, given that we were already hitting the 0.7% target for overseas aid when the Government supported enshrining that into law?

Sir Gerald Howarth: My hon. Friend has the capacity for perspicacity and anticipates a point I shall make shortly. I agree with him entirely. My Bill seeks to follow, almost slavishly, the principle set by the 2015 Act. I did that intentionally, to encourage the Government to give this Bill, promoted by a Conservative, the same strength of support they gave to a Liberal Democrat Bill.

John Glen (Salisbury) (Con): One of the issues that concerns me is the inherent flexibility in the definition of what NATO says is acceptable as constituting part of the 2%. If for the first time this year war pensions, pensions of retired civilian MOD personnel and contributions to UN peacekeeping missions are deemed acceptable, is there not a risk that there will be flexibility in what is included in the 2% and that underlying expenditure on defence capabilities will be unclear?

Sir Gerald Howarth: My hon. Friend is absolutely right. I want to address that issue. The Bill involves a number of technicalities, and that is one of them.

I have always accepted that overseas aid has a role to play, but I have consistently opposed the extraordinary increase that the Department for International Development has enjoyed from Government ring-fencing since 2010—up from £8.5 billion in 2010 to £13 billion in 2014—to meet the figure of 0.7% of gross national income.

It may benefit you, Mr Speaker, and the House if I explain the difference between GDP and GNI. I am advised that GDP is the market value of all services and goods within the borders of a nation, the measure of a country’s overall economic output, and GNI is the total value produced within a country, comprising GDP plus the income obtained from overseas through businesses and so on that have foreign operations. GNI is therefore a more generous fiscal measurement, which naturally inflates the amount of overseas aid required to meet the 0.7% figure.

Mr Henry Bellingham (North West Norfolk) (Con): It is important to bear in mind the Government’s policy on overseas aid. They have made it very clear that as countries move to middle-income status, so aid will be withdrawn and we will move to more of a trade relationship. In theory, the 0.7% would therefore become redundant. Does my hon. Friend agree that the country’s duty to defend itself will never become redundant?

Sir Gerald Howarth: My hon. Friend is absolutely right.

The problem is that today’s policy is driven by a belief that a key way to respond to the challenges we face is to increase our intervention upstream so that, by providing aid to poor and dysfunctional countries, we reduce the causes of tension and thus our need for hard power. My response is twofold.

First, there is little evidence, despite committing the massive figure of £13 billion of public money, that such soft power delivers the effect sought. We have provided more than £1 billion to assist refugee camps to cope with the Syrian crisis, yet there has been palpably no reduction in the tidal wave of migrants, whether economic migrants or those genuinely fleeing persecution. I support what the Government are doing in Syria, which is noble and right. We should seek to maintain refugees near their country of origin, not to uproot them and import them into the continent of Europe. I strongly support that policy.

Secondly, there seems to be a quaint idea that the exercise of soft power offers an alternative to hard power. Make no mistake, Mr Speaker: without serious hard power, your soft power is completely non-existent. As Theodore Roosevelt said, it is better to “carry a big stick”, and then you can speak softly.

Kevin Foster (Torbay) (Con): My hon. Friend is making a powerful point. Does he agree that the two budgets are not mutually exclusive? As things such as Operation Gritrock have shown, military capability gives us choices to deliver humanitarian goals.

Sir Gerald Howarth: I could not agree more. There is an argument that we should combine all such budgets. I am not in favour of that, because it might turn out to be an excuse for reducing our defence budget. I am not opposed to overseas aid, which has a role to play. We are talking about priorities or quantum. In trying to establish our priorities, I am pointing out that soft power— overseas aid is a massive implement of soft power—has limited value in terms of the threats we face around the world.

Philip Davies: Is it therefore the case that the Government could claim to be spending one amount of money to hit both the 0.7% target on aid and the 2% target on defence, in effect double counting the same money?

Sir Gerald Howarth: That is entirely possible, but I am sure the Chancellor of the Exchequer would not be guilty of such double counting, for he is our right hon. Friend.

Some have said that my Bill has been rendered redundant because the Chancellor guaranteed in July that the Government would commit to the 2% target until 2020. Given my party’s reticence to make such a pledge during the general election campaign, I was naturally delighted by that somewhat surprising announcement. However, it soon became clear that to meet the 2% target, the Government had to engage in a certain amount of creative accounting by including several items in our NATO return for 2015 that had hitherto not been included in the defence budget.

Looking at the specific financial detail of our current defence expenditure is complex, as NATO does not have a clear set of parameters on what constitutes defence spending, unlike the OECD in its monitoring of aid spending. Furthermore, NATO’s definition of spending and the Government’s definition differ, in as much as NATO publishes its figures retrospectively and is thus able to include costs from military operations, whereas the British Government’s defence expenditure document is forward-looking and is unable to account for unforeseen operational requirements. The NATO figure is therefore higher than the Government’s. To simplify the debate, I am using the Government’s calculation of our defence expenditure.

The House of Commons Library, to which I pay tribute for the fantastic job that it does in serving us entirely impartially and incredibly professionally, advised me a few days ago that, according to figures published by NATO on 22 June, the United Kingdom is projected to spend just over £39 billion on defence in 2015-16. That is reckoned to be 2.08% of GDP.

However, when reporting to NATO, the United Kingdom included several items of expenditure that had not been included in previous years: provision for war pensions of about £820 million; assessed contributions to UK peacekeeping missions of £400 million; pensions for retired civilian MOD personnel, possibly amounting to £200 million; and much of the MOD’s income of about £1.4 billion, including £164 million received as a result of the sale of the Defence Support Group to Babcock, for which the Minister was entirely responsible and on which I congratulate him.

Although it is perfectly legitimate under NATO’s rules to include those items, their inclusion serves only one purpose: to assert that we are meeting the NATO target, albeit by the skin of our teeth. It adds no new money to meet the essential demands of defence. I understand that the Minister will tell us that the income of £1.4 billion is new money, and I am happy to accept that, but that still means that of the £39 billion, another £1.4 billion has been transferred in from other budgets. If that sum were stripped out, we would clearly fall below 2%.

In an excellent briefing paper from the Royal United Services Institute, Professor Malcolm Chalmers explains that if we had used the same parameters as in previous years, we would be on course to spend £36.82 billion on defence in the current year, including £500 million on operations. That amounts to 1.97% of GDP, meaning that we would have fallen below the NATO target for the first time. Thus, it is only by introducing the new accounting rules that we have pushed our defence expenditure over the 2% target.

Although NATO has accepted the changes, it is likely that further such changes will need to be made if the Government are to meet the 2% target for the next five years. As Professor Chalmers observes:

“While the MoD budget is set to grow by 0.5 per cent per annum over the next five years, national income (GDP) is projected to grow by an average of 2.4 per cent per annum over the same period. If these assumptions are correct, UK NATO-countable spending would fall from 2.08 per cent of GDP in 2015/16 to 1.85 per cent of GDP in 2020/21, assuming the recently introduced counting methods are still used. A further £2.7 billion per annum would be needed in 2019/20, and a further £3.5 billion in 2020/21, in order to bring NATO-countable defence spending up to 2.00 per cent of GDP.”

The Budget statement explained that the gap would be filled by including the single intelligence account, which is set to total £2.2 billion by 2020-21. That will close the gap until 2018-19. The further allocation of the £1.5 billion joint security fund by 2020-21 could be sufficient to cover the shortfall by the end of this Parliament, provided that NATO accepts all those additional accounts as being eligible.

Although funds such as the single intelligence account are committed to Britain’s security, the SIA will not equip conventional ground troops or build ships, and it is still unclear what will be included in the joint security fund and how it will be apportioned. I understand that the idea is that it will be up to the MOD, DFID, the agencies and the Foreign and Commonwealth Office to bid for the funds, so there is no guarantee that they will plug the gap in the apparent shortfall later in the decade, as predicted by Professor Chalmers, unless the MOD gets the lion’s share.

I acknowledge that NATO has allowed the inclusion of the SIA budget in our annual defence return, and that according to 2013 figures it is estimated that more than 90% of US intelligence programme spending is reported to Congress through the Department of Defence budget. It can justifiably be argued that if our main ally, and the main contributor to defence spending in the alliance, includes secret intelligence funding in its budget, we should be entitled to do the same. Nevertheless, the point remains that the Government are introducing into the defence budget funds that were previously allocated elsewhere.

I know the Government believe that they have met their obligation, but I am concerned by how it has been done. It is hard to see how we are not making ourselves more vulnerable by bringing in other budgets to shore up our 2% commitment rather than spending the money on manpower, equipment and combat readiness, which the increase in our projected GDP would demand by the end of the decade if we were to maintain the 2% spending.

As a direct result of that major shift in the accounting arrangements, I have included in my Bill a clause that is not to be found in the 2015 Act. Clause 4 provides that the Secretary of State be required to

“make arrangements for the independent evaluation of the extent to which United Kingdom defence expenditure meets the criteria established by NATO for determining whether expenditure qualifies as defence expenditure.”

The intention is to hold the Secretary of State to account for what is included in our NATO return and not allow extraneous funds to be included in our defence expenditure.

Before I leave the issue of accounting, I acknowledge that the Chancellor has committed to a 0.5% real-terms increase in defence spending during this Parliament. Although of course I welcome that commitment, I am not sure whether it is a departure from earlier policy. As I recall, when my right hon. Friend the Member for North Somerset was Secretary of State, he secured an undertaking from the Prime Minister that in recognition of our taking a pretty substantial hit, the MOD would receive a 1% per annum real-terms increase in the equipment budget from next year. As equipment accounts for about half of the total MOD budget, is it not the case that the 0.5% is no more than the fulfilling of that undertaking given by the Prime Minister in 2010? I know not the answer and would welcome the Minister’s response.

Dr Liam Fox (North Somerset) (Con): For the sake of clarity, the undertaking that was given was not just a defence budget rise. In fact, it was impossible to meet the commitments of Future Force 2020 without that increase.

Sir Gerald Howarth: I am grateful to my right hon. Friend, with whom I had the pleasure and honour of working for such a long time and to whom we all owe a debt of gratitude for having sorted out the mess that was the MOD’s accounts when we first arrived in government in 2010. That was a major achievement.

I recognise that this is all very dry stuff, but this debate provides the opportunity to drill down into an analysis of the detail underpinning the Chancellor’s trumpeted commitment to meet the 2% target. Why is that so important? There are two reasons. First, the Prime Minister made much at last September’s NATO summit at Newport of the importance of NATO’s European members stepping up to the plate and delivering effective capability by honouring the NATO obligation to spend 2% on defence. As a result of that Newport summit,

“every NATO member not spending 2% will halt any decline in defence spending and aim to increase it in real terms as GDP grows, and to move towards 2% within a decade.”

As the host nation, our failure to honour that Wales pledge would clearly damage seriously our leadership within NATO, so meeting the 2% target is not simply an accounting matter but goes to the heart of our resolve to prioritise defence in a dangerous world.

Secondly, in recent months, open concern has been expressed by the US about the UK’s spending levels and how they affect our ability to fight alongside it. We bring real value to the relationship, which goes beyond men and equipment, not least in the field of intelligence. Underpinning that relationship must be an ability to deliver a critical mass that is able to operate alongside the US.

The 2% target bears an element of the totemic, but the Bill provides for us to set that 2% national target as a minimum. Many of us argue that we should spend as much as we can afford, so as to provide Her Majesty’s armed forces with the equipment and manpower that they need to meet the threats and potential threats that we face. Only yesterday, one Labour Member—he is not in his place today; he shall remain nameless but he takes a keen interest in defence—told me that he wants a target of at least 3%, and I know that my right hon. Friend the Member for New Forest East (Dr Lewis), Chair of the Defence Committee, is in the same camp.

There have been plenty of stories about how DFID has struggled to find projects on which to spend the embarras de richesses from which it has benefited, with 62% of its budget being distributed through agencies such as the World Bank and the EU. One story earlier this year spoke of £1 billion being up for grabs before the year end in March. In contrast, our armed forces lost whole capabilities and suffered cuts in manpower to meet the Treasury demands that drove the 2010 SDSR. We desperately need a replacement for the Nimrod maritime patrol aircraft.

The RAF is operating at the very margin, as illustrated by the late reprieve for a Tornado squadron, without which we could not have conducted the current tempo of operations in Iraq. I welcome what my right hon. Friend the Secretary of State did with that squadron, but how on earth can we sustain more intensive operations, particularly against a more sophisticated enemy and where we have suffered losses? I simply do not buy the argument that was advanced some years ago by my great friend Geoff Hoon, former Defence Secretary, which was that platform numbers do not matter because each one is more sophisticated than previous generations of aircraft and ships.

Consider the Falklands war of 33 years ago. We lost six ships, two Type 42 destroyers, and two Type 21 frigates—the RFA Sir Galahad, and most critically the Atlantic Conveyor with its precious load of helicopters. In 1980 we had a complement of 48 frigates, destroyers and cruisers, but today the loss of two Type 45 destroyers would cut the fleet by one third. If a further third were in maintenance, just two ships would be left to provide one carrier with air defence. The Royal Navy is struggling to meet its standing commitments, and there are real manpower concerns with engineers in short supply and questions over the manning of two new aircraft carriers. The Minister is still unable to confirm whether the new Type 26 global combat ship fleet will be maintained at 13—I very much hope that it will be, but even if it is, 19 frigates and destroyers is woefully inadequate for a seafaring nation such as ours.

There is a decision to reduce Army regulars to 82,000—all of whom could fill Twickenham tomorrow night—as a cost-saving measure. Yes, we are contributing small numbers of personnel around the globe in pursuit of our welcome defence engagement strategy, but during operations in Afghanistan we could barely meet that commitment.

Let us not forget defence research. As the Minister’s predecessor, Lord Drayson, stated in his excellent policy document, “Defence industrial strategy”, so much of our leading battle-winning technology today is a result of yesterday’s investment. If we fail to invest today, how much risk do we assume for the future of our military power? Defence expenditure on research has fallen from £4.3 billion in 1980 to £1.3 billion in 2011-12.

As Sir John Major said to me earlier this week, it is remarkable and encouraging how favourably the United Kingdom is still regarded around the world. We are hugely respected, but much of that derives from our big stick, which in my view is much smaller than it needs to be. In that context, it is critical that the United Kingdom stands shoulder to shoulder with our closest ally, the United States. Its concerns about defence spending have been voiced publicly by a number of senior figures from President Obama down. General Raymond Odierno, head of the US army said in March this year:

“We have a bilateral agreement between our two countries to work together. It is about having a partner that has very close values and the same goals as we do…What has changed, though, is the level of capability. In the past we would have a British Army division working alongside an American army division.”

He feared that with any further cuts to Britain’s defences, the US military would have to work on the assumption that we would produce only half that number in the future, forming a brigade under US leadership rather than a division in its own right. This would, of course, be catastrophic for Britain’s international credibility.

I am encouraged that the Minister was well received in Washington following the Chancellor’s Budget commitment, but adding real money—not juggling the accounting—will be the only way to maintain that reassurance. It is no exaggeration, as Malcom Chalmers pointed out, that the US sees us in a special category of our own, a category we must continue to guarantee.

 

I submit that by enacting this measure we will be sending a clear signal to our allies about the seriousness of our intent.

We have to take note that the United States is seeking to re-evaluate its position. There was much talk earlier of its pivot to the Pacific, with the then Secretary of State Hillary Clinton, in 2011, recalling America’s commitment to Europe after world war two by saying:

“The time has come for the United States to make similar investments as a Pacific power.”

I am sure that Russia ramping up both its defence spending and its interventions, as in Ukraine and Syria, has tempered any tendency for the US to switch too sharply in the direction of the Pacific, but we should never place ourselves at risk of a sudden US reorientation, which could still occur if China continues its policy of military expansion.

Before I conclude, let me just address the argument that the Government’s commitment is enough and we do not need to enshrine it in law. Had it not been for the decision to enshrine our overseas aid target to 0.7%, I might have accepted that. However, as a Conservative who believes the first duty of Government is the defence of the realm, I really struggle to understand why they are prepared to enshrine the law on overseas aid yet doggedly refuse to apply the same principle to defence. It is not as though aid is unique in this context. In the previous Parliament, we were prepared to enshrine in law holding an in/out EU referendum by the end of 2017. Indeed, we all, including my right hon. Friend the Prime Minister, trooped enthusiastically through the Lobby on successive Fridays in support of my hon. Friend the Member for Stockton South (James Wharton). As recently as last week, we voted on the Charter for Budget Responsibility, requiring Governments in normal times to spend less than they take in tax. Much like the European Union Referendum Bill, this measure was seen as a way for the Government to provide a reassurance that they will stick to their commitment, in this case, to eliminate the deficit.

Why are the Government so eager to enshrine certain budgets in law and yet disregard the one that ensures our safety and security? Why have the Government been so keen to ensure future Administrations commit to the aid budget and yet refuse to offer a similar reassurance to the armed forces that they share the same commitment to defence? I fear that the only logical conclusion one can come to is that the Government prioritise overseas aid over defence.

I want to conclude, because I have spoken for rather longer than I had intended. I do not suggest for one minute that the United Kingdom is not a world leader—we are. We are the fifth most important defence power in the world. We have our nuclear deterrent and this Government are committed to the renewal of that deterrent. We have new carriers, which were ordered by the Labour party and are being delivered by us. We have the new joint strike fighter coming on stream. We also have a Prime Minister who entirely, properly and rightly wants Britain to help to shape the world and not simply be shaped by it. To that extent, as the world continues to be a very dangerous place and events clearly show the need for Britain to maintain its strong defence—with north Africa in turmoil, the middle east as fractured as ever, renewed tensions on the eastern border of Europe through Russia’s aggression, and with China engaged with adventures on the South China sea—this is not a time to be playing with the figures on our defence spending. We need to ensure that our armed forces are properly resourced to defend Britain and protect our interests abroad. Our commitment to NATO, the cornerstone of Atlantic peace, remains paramount for our future and the future of the alliance if the treaty is worth the paper on which it is written. We must commit to spend at least 2% of GDP on defence and not draft in other funds to the defence budget in a pretence that we are honouring this commitment. What is more, we must show we mean business by enshrining this commitment in law to send the key message to our allies, most importantly the United States, that we take our place and responsibility in the world extremely seriously, and that we are prepared to defend ourselves and our allies against attack.

At the Conservative party conference, the Prime Minister spoke of security, stability, opportunity. The first two of these can only be achieved through strong defence.

 

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