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Armed Forces: Future Defence Policy

My Lords, I first enjoin these Benches in the earlier tribute. I also declare a number of shareholdings in public companies that directly or indirectly supply the MoD, as listed in the Register of Members’ Interests. I was originally allocated 12 minutes for my contribution. I will do my best, and my noble friend Lord Addington will attempt to balance out our overall time contribution. Defence and defence spend are always contentious subjects for debate, but over the coming months our nation faces some particularly fundamental decisions. These will have to be taken against the background of an uncertain world, at a time when our forces are involved in a serious and complex conflict in Afghanistan, and from an already appalling financial position and with many other countries markedly increasingly their defence spend. For too long the Government have covered up the scale of the MoD's financial difficulties and refused to accept the word "overstretched" in relation to our Armed Forces. The Gray report has now confirmed and quantified the seriousness of the situation: a cost overrun of approximately £35 billion—equivalent to one year's MoD budget. Many people have the impression that government departments have total freedom of spend within their Treasury allocation. The reality is of course very different, as the Treasury has to approve virtually all significant departmental programmes. Thus, while the MoD can be criticised for the management of programmes, the Treasury should always be aware of the financial situation of the department. Under this Government we have experienced a steady reduction in the percentage of GDP spent on defence, now down to just over 2 per cent. It must be asked how responsible it was to place orders for the two new carriers, whatever their military attraction, given the scale of the MoD's financial problems that have now been confirmed. While I have considerable sympathy with Defence Ministers, pressured on three sides by the services, the Treasury and the media—indeed, I remember the pressures on the department when I was a Defence Minister some 25 years ago—the primary responsibility lies with Gordon Brown, first as Chancellor of the Exchequer and then as Prime Minister and First Lord of the Treasury. Historically, he has taken little interest in defence and was semi-detached for too long in the Afghan conflict, with the Government being behind the curve on both troops and equipment all along the line. Compared with the Falklands—referred to by the noble Lord, Lord King, and of which he has obvious experience—when industry worked around the clock to deliver equipment to the ports and with payments sorted out later, there has been nothing like the same sense of urgency in the war in Afghanistan. Can the Minister give me one example of any company in this country working 24 hours a day, flat out? There has just been no national leadership or co-ordination from Downing Street. Leaving aside personalities, the nation must make a fundamental decision. Do we maintain our first-division military status, being prepared to provide the additional resources necessary? Or do we drop down to a second-division status, albeit still with powerful but perhaps more focused and limited military capability? Linked to this is the issue of Trident and whether we maintain an independent nuclear deterrent. When we briefly debated the Gray report two or three weeks ago, I posed this specific question to the Minister: ""Finally, in broad terms, how do the Government intend to balance the books—by providing more resources or by cancelling major projects?".—[Official Report, 19/10/09; col. 454]." The noble Lord replied: ""Finally, the noble Lord asked how the Government intend to balance the books. The books may only be balanced through an SDR".— [Official Report, 19/10/09; col. 455]." How the Strategic Defence Review will provide the solutions to our financial problems is beyond me. It is certainly no panacea. I thought it would be helpful to look back at the 1998 Strategic Defence Review to see what it said and compare that which has actually come to pass during the ensuing 11 years. The noble Lord, Lord Robertson, was, of course, Defence Secretary at the time, but was obviously speaking on behalf of the whole Government. Paragraph 6 of the introduction to the 1998 SDR reads: ""So we plan to buy two new larger aircraft carriers to project power more flexibly around the world. New transport aircraft and ships will move our people and equipment rapidly to troublespots"." Well, the carriers are at best some years away and new transport aircraft are hardly on the horizon. Paragraph 8 says: ""We will also radically reorganise our procurement and logistics organisations to spur efficiency and drive through best business practice"." Paragraph 17 says: ""Too often in the past our new equipment has been too expensive and delivered too late"." Well, if we believe Gray, we are still at first base. Paragraph 13 states: ""All three Services have been overstretched because of the demanding pattern of our operations, and I am determined to put that right"." We are probably more overstretched today than we ever have been before. On force structure, paragraph 116 says: ""There will also be an impact on the number of destroyers and frigates we need. Taking into account their wide peacetime utility, our reassessment has concluded that the total force can be reduced from 35 to 32"" Just how many destroyers and frigates are currently in operation? Finally, paragraph 131 says: ""We will also be giving higher priority to improving the standard of single living accommodation"." Just what improvements have been made? Before moving to specific areas of defence co-operation, policy and procurement, I will comment on our overall national financial situation. I think it is common ground between all political parties and commentators that we have massively overborrowed as a nation and some very hard decisions will have to be taken, whichever party is in power. Many departmental budgets will have to be cut and programmes moved to the right. However, I do not accept that the pain should be evenly spread. The defence of our country, as indeed the noble Lord acknowledged, is the number one responsibility of government. In normal times I would argue for an increase in defence spend, particularly when we are in a serious conflict, as in Afghanistan. This may not be possible today, but I would argue strongly against any decrease in the defence budget, particularly when we start with a £35 billion overcommitment. This is not to say that the MoD cannot and should not make significant economies in its assets, processes and staff, but to slash its budget at present would be dangerous and irresponsible. In recent years, the MoD has increasingly moved to long-term partnerships with industry. The latest BAE Systems News includes the following headline: ""BVT"—" that is, the shipbuilding division— ""secures 15 year partnership with MoD"." It then refers to the Torpedoes Capability contract. I quote these two programmes not by way of criticism—indeed these long-term partner agreements are a sensible way forward and are designed to deliver savings for the taxpayer, though no doubt they are also good for BAE—but to make the point that we cannot just walk away from contracts without incurring heavy penalties. So politicians should beware before making superficial comments about cancelling this or that programme without being cognisant of penalty and redundancy implications. I turn now to Trident and the nuclear deterrent. In recent years I have become increasingly Trident-sceptic. I find it virtually impossible to conceive of circumstances in which we would launch a nuclear retaliatory strike. Unlike the two other parties, we do not favour replacing the Trident force on a like-for-like basis We would run on the present boats, perhaps seeking to develop a much more limited nuclear capability based on our Astute submarines. We must also work internationally to reduce nuclear stockpiles and do everything possible to prevent further nuclear proliferation. I view the French nuclear deterrent in exactly the same way. I understand it costs approximately twice what ours does because of our "favoured nation" relationship with the USA but that is France’s problem. Talking of France leads me to defence co-operation. Within Europe, Britain and France account for about half of all spending on defence and new equipment, and two-thirds of all research spending. So far little has been achieved on co-operative projects, save historically with the Jaguar and some missiles and, of course, there is the struggling A400M transport aircraft, which is a saga in itself. Sarkozy is not de Gaulle. We know that there is still protectionism in France but there has to be so much more that we could do together. Sooner or later the Treasuries of both countries will come to recognise that the pursuit of hugely expensive independent procurement programmes makes no sense. Perhaps the new world of unmanned aircraft will present a real co-operative opportunity. On co-operation with the USA, given the appalling casualties in Afghanistan from IEDs, my understanding is that the Americans have spent vast sums on devising countermeasures. I ask the noble Lord specifically whether all the United States R&D results are made available to us, and to assure us that there is no unnecessary duplication here. I also ask specifically about the new robot, Cutlass, which is eventually to replace Wheelbarrow and is being developed by Northrop at Coventry. I understand that full production is intended to start next year. Could the Minister confirm, given the crucial importance of this work, that we are prepared to fund round-the-clock working if necessary, given the situation in Afghanistan? I welcome the recruiting successes in our troops. Nearly 24,000 people joined all services in the 12 months to June 2009—an 8.7 per cent increase. I welcome the Lib Dem commitment to increase the pay of our lowest paid troops by £6,000 a year, placing them on £23,000 a year and an equal footing with a development-level firefighter or a new entrant police constable, with more modest increases for privates, lance corporals and higher NCO ranks. I also welcome the review of the Armed Forces Compensation Scheme under the leadership of the independent chairman, the noble and gallant Lord, Lord Boyce—who we will no doubt be hearing from later—with representatives from service and ex-service organisations, service family representatives and medical, academic and legal experts. It is to report within a few months. To conclude, we are at a defence crisis point. Our procurement budget is hugely underfunded. Our gallant forces are war-weary and overstretched. We just cannot go on like this.