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Defence: Spending Review and Aircraft Carriers

My Lords, I do not agree with the characterisation of the Statement given by the noble Earl. I agree that GDP is growing at a faster rate, but that is not a reasonable basis for spending decisions. This is a real-terms increase in the defence budget. As we said when we announced the replacement for the nuclear deterrent, funding for it has been allocated and does not come at a cost for the conventional forces, so is clearly separate. To describe the FSTA in those terms is unfair. That project has passed into the fundraising stage for what is one of the largest PFIs ever in the City. Therefore, it has passed the stage of approval in the Ministry of Defence to allow that fundraising to take place. We hope and expect that fundraising to be completed this year. We will then be able to pursue that project, which is complex and innovative. It is on track, as I have described. Noble Lords will have noted from the Statement that funding for operations from the reserve will be maintained. That is a separate issue to the issues relating to the defence budget. I accept that the Armed Forces are under pressure. The sustained operations in both Iraq and Afghanistan test our ability to maintain this level of operations over a period and I accept that that is beyond the planning assumptions. However, through the success that we are having in both those operational theatres, I believe that we are showing our ability to do that. Of course, we take into account the fact that sustaining those over a long period is a significant challenge. I do not agree with the way in which the noble Earl characterised those points. We have the resources to make the decisions that we have to make in the circumstances with which we are faced in the world today. The announcements that we have made on the aircraft carrier and the naval base review show our ability to make those decisions.