---

Foreign Affairs and Defence

I am happy to be a channel for that question to be put to the right hon. Member for Richmond, Yorks. He has heard it, and if he chooses to intervene in order to answer it, I shall give way to him. I see that he wants to stay in his seat, and that does not surprise me. I shall try to deal with two matters that are exercising people considerably. The hon. Member for Woodspring asked me to explain urgent operational requirements. For those who do not understand how this system works, I must say that it is quite simple. When the armed forces deploy in operations, no matter how well equipped they are, we know that they will always face challenges unique to the specific geographical location or adversaries that they face. That is why Treasury funds are available to supplement existing capabilities. The facts are that since 2001, we have spent £2.2 billion doing just that. No urgent operational requirement has ever been refused on cost grounds; money is not the issue. Increasingly, however, we find that the threat that our troops face is evolving at a more rapid rate than previously envisaged. It is no exaggeration to say that the threat from improvised explosive devices evolved more quickly in 12 months in Iraq than it did in 30 years in Northern Ireland. This threat is no longer bounded in one place because al-Qaeda—[Interruption.] I shall come to the Defence Export Services Organisation in a moment, and if hon. Gentlemen do not interrupt me, they will get their answer. Al-Qaeda tries to pass knowledge on to terrorists around the world. I think that everybody agrees that the equipment programme needs to adapt to reflect this reality, and that means that we need platforms that can be easily upgraded and the funding flexibility to do just that. We need to rely less on what is, by definition, an ad-hoc arrangement to provide such capabilities, but we need time to build this into our plans. That is why we have agreed with the Treasury a new approach, and I shall explain it. Over the three years of the comprehensive spending review period, the reserve will continue to pay all additional costs up front and will pay outright for urgent operational requirements up to a mutually agreed total. Beyond that, the MOD and the Treasury will split the costs 50:50, with the MOD only having to repay its share two years later, by which time we will have begun to adjust the equipment programme. The Treasury has given us an extra £200 million in 2010-11 to ensure that the new arrangements are cost neutral to defence across the CSR period. The hon. Member for Mid-Sussex raised DESO, asking again many of the questions that have already been answered. Just to be clear, yes, I knew about the decision before it was announced and no, we did not consult on the principle of the decision because it was entirely a matter for Government and it was only right for us to set the strategic direction. As the Prime Minister said in his July announcement, we made this decision to enable greater institutional alignment across Government and to build on the success of UK Trade and Investment and DESO. This should improve the support that we give the defence industry, not detract from it, and it will do so. We are working across industry and across Government to implement the new arrangements as quickly as possible. Lord Drayson's name has been mentioned frequently in this debate. Some have implied—the hon. Member for Mid-Sussex indeed stated—that they knew why my noble Friend resigned and that it was not for the reason given in his resignation letter. My noble Friend is an honourable and honest man, and the explanation that he gave in his letter is the true reason. I do not recognise any of the other incidents that people are praying in aid, because they simply did not happen. I want to take the last minute to ensure—it is the first time that I have had the chance to do so in this House—that I record my appreciation of the contribution that Lord Drayson made to procurement. He was an excellent procurement Minister and he did a great job getting fantastic equipment out to our troops in the operational theatre, and he did it much quicker than any previous procurement Minister ever has. Today's debate has been wide ranging and it has highlighted the numerous and complex challenges we face. Debate adjourned.— [Mr. Watson.] Debate to be resumed tomorrow.