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Strategic Defence and Security Review

My Lords, with the leave of the House, it may be a convenient moment for me to repeat a statement that is being made in another place by the Prime Minister. ““With permission, Mr Speaker, I would like to make a Statement on the strategic defence and security review. There are four things to say up front. First, this is not simply a cost-saving exercise to get to grips with the biggest budget deficit in post-war history; it is about taking the right decisions to protect our national security in the years ahead. The two are not separate: our national security depends on our economic strength, and vice versa. As our national security is a priority, so defence and security budgets will contribute to deficit reduction on a lower scale than most other departments. Over four years, the defence budget will rise in cash terms and fall by only 8 per cent. And it will meet the NATO 2 per cent of GDP target for defence spending throughout the next four years. But this Government have inherited a £38 billion black hole in the future defence plans—bigger than the entire annual defence budget of £33 billion. Sorting this out is not just vital for tackling the deficit but vital to protecting our national security. Secondly, this review is about how we project power and influence in a rapidly changing world. We are the sixth-largest economy. Even after this review, we expect to continue with the fourth largest military budget in the world. We have a unique network of alliances and relationships: with the United States, as a member of the EU and NATO, and as a permanent member of the UN Security Council. We have one of the biggest aid programmes in the world, one of the biggest networks of embassies, a time zone that allows us to trade with Asia in the morning and the Americas in the evening, and a language that is spoken across the globe. Our national interest requires our full and active engagement in world affairs. It requires our economy to compete with the strongest and the best. And it requires, too, that we stand up for the values we believe in. Britain has punched above its weight in the world, and we should have no less ambition for our country in the decades to come. But we need to be more thoughtful, more strategic and more co-ordinated in the way we advance our interests and protect our national security. That is what this review sets out to achieve. Thirdly, I want to be clear that there is no cut whatever in the support for our forces in Afghanistan. The funding for our operations in Afghanistan comes not from the budget of the Ministry of Defence but instead from the Treasury special reserve. So the changes to the Ministry of Defence that result from today’s review will not affect this funding. Furthermore, every time the chiefs have advised me that a particular change might have implications for our operations in Afghanistan, either now or in the years to come, I have heeded that advice. In fact, we have been and will be providing more for our brave forces in Afghanistan: more equipment to counter the threat from IEDs; more training and training equipment; more protected vehicles such as the Warthog heavy protection vehicle, which will be out there by the end of the year; more surveillance capability, including unmanned aircraft systems; and crucially, at last, the right level of helicopter capability. Fourthly, this review has been very different from those before it. It has looked at all elements of national security, home and abroad, together, not just defence on its own. It has been led from the top, with all the relevant people around the table, and it will be repeated every five years. This review sets out a step change in the way we protect this country’s security interests: from a Ministry of Defence that is too big, too inefficient and too overspent, to a department that is smaller, smarter, and more responsible in its spending; from a strategy over-reliant on military intervention, to a higher priority for conflict prevention; from concentrating on conventional threats, to a new focus on unconventional threats; and from Armed Forces that are overstretched, underequipped and deployed too often without appropriate planning, to the most professional and most flexible modern forces in the world, fully equipped for the challenges of the future. Let me take each in turn—first, the MoD. Even though the MoD will get real growth in its budget next year, the department will face some significant challenges. So the MoD will cut its estate, dispose of unnecessary assets, renegotiate contracts with industry, and cut its management overheads, including reducing civilian numbers in the MOD by 25,000 by 2015. We will also adjust and simplify civilian and military allowances. The new operational allowance stays, but there will be difficult decisions, although these will be made much easier by the return of the Army from Germany. Taken together, all these changes in the MoD will save £4.7 billion over the spending review period. Getting to grips with procurement is vital. Take the Nimrod programme, for example. It has cost the British taxpayer over £3 billion. The number of aircraft to be procured has fallen from 21 to nine. The cost per aircraft has increased by over 200 per cent and it is over eight years late. Today, we are cancelling it. Second is the move from military intervention to conflict prevention. Iraq and Afghanistan have shown the immense financial and human costs of large-scale military interventions. While we must retain the ability to undertake such operations, we must also get better at treating the causes of instability, not just dealing with the consequences. When we fail to prevent conflict and have to resort to military intervention, the costs are always far higher. We will expand our capability to deploy military and civilian teams to support stabilisation efforts and build capacity in other states, and we will double our investment in aid for fragile and unstable countries. By 2015, just under a third of the budget of the Department for International Development will be spent on conflict prevention. Thirdly, we need to focus more of our resources not on the conventional threats of the past but on the unconventional threats of the future. Over the next four years, we will invest more than £500 million of new money in a national cybersecurity programme. This will significantly enhance our ability to detect and defend against cyberattacks and fix shortfalls in the critical cyberinfrastructure on which the whole country now depends. We will continue to prioritise tackling the terrorist threat, both from al-Qaeda and its affiliates and from dissident republicans in Northern Ireland. Although efficiencies will need to be made, we are giving priority to continuing investment in our world-class intelligence agencies and we will sharpen our readiness to act on civil emergencies, energy security, organised crime, counterproliferation and border security. Fourthly, from Armed Forces that are overstretched and underequipped, we need to move to the most professional and most flexible modern forces in the world. We inherited an Army with scores of tanks in Germany but that was until recently forced to face the deadly threat of improvised explosive devices in Afghanistan in Land Rovers designed for Northern Ireland. We have a Royal Air Force hampered in its efforts to support our forces overseas because of an ageing strategic airlift fleet, and a Royal Navy locked into a cycle of ever smaller numbers of ever more expensive ships. We cannot go on like this. The White Paper we have published today sets out a clear vision for the future structure of our Armed Forces. The precise budgets will be agreed in future spending reviews. 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. Between now and then, the Government are committed to the vision of 2020 set out in this review and will make decisions accordingly. We are also absolutely determined that the MoD will become much more commercially hard-headed in future and adopt a much more aggressive drive for efficiencies. The transition from the mess we inherited to that coherent future force will be a difficult process, especially in the current economic conditions, but we are determined to take the necessary steps. Our ground forces will continue to have a vital operational role, so we will retain a large, well equipped Army, numbering around 95,500 by 2015—that is 7,000 fewer than today. We will continue to be one of the very few countries able to deploy a self-sustaining, properly equipped brigade-size force anywhere around the world and sustain it indefinitely if needs be; and we will be able to put 30,000 into the field for a major, one-off operation. In terms of the return from Germany, half our personnel should be back by 2015 and the remainder by 2020, and tanks and heavy artillery numbers will be reduced by around 40 per cent. But the introduction of 12 new heavy-lift Chinook helicopters, new protected mobility vehicles and enhanced communications equipment will make the Army more mobile, more flexible and better equipped to face future threats than ever before. We will also review the structure of our Reserve Forces to ensure we make the most efficient use of their skills, experience and outstanding capabilities. That will be chaired by the Vice Chief of the Defence Staff, General Houghton, with my honourable friend the Member for Canterbury, who serves in the reserves, acting as his deputy. The Royal Navy will be similarly equipped to meet the challenges of the 21st century. We are procuring a fleet of the most capable nuclear-powered hunter-killer Astute class submarines anywhere in the world. Able to operate in secret across the world’s oceans, these submarines will also feed vital strategic intelligence back to the UK and to our military forces across the world. We will complete the production of six Type 45 destroyers—one of the most effective multirole destroyers in the world. But we will also start a new programme to develop less expensive, more flexible, modern frigates. Total naval manpower will reduce to around 30,000 by 2015, and by 2020 the total number of frigates and destroyers will reduce from 23 to 19. But the fleet as a whole will be better able to take on today’s tasks, from tackling drug-trafficking and piracy to counterterrorism. The Royal Air Force will also need to take some tough measures in the coming years to ensure a strong future. We have decided to retire the Harrier, which has served this country so well for 40 years. The Harrier is a remarkably flexible aircraft, but the military advice is that we should sustain the Tornado fleet, as that aircraft is more capable and better able to sustain operations in Afghanistan. RAF manpower will also reduce to around 33,000 by 2015. Inevitably, this will mean changes in the way in which some RAF bases are used but some are likely to be required by the Army as forces return from Germany. We owe it to communities up and down the country who have supported our Armed Forces for many years to engage with them before final decisions are taken. By the 2020s, the Royal Air Force will be based around a fleet of two of the most capable fighter jets anywhere in the world: a modernised Typhoon fleet, fully capable of air-to-air and air-to-ground missions, and the Joint Strike Fighter, the world’s most advanced multirole combat jet. This fleet will be complemented by a growing fleet of unmanned air vehicles, and the A400M transport aircraft, together with the existing fleet of C17 aircraft and the future strategic tanker aircraft, will allow us to fly our forces wherever they are needed in the world. As we refocus our resources on the most likely threats to our security, so we will remain vigilant against all possible threats and retain the capability to react to the unexpected. So, as we cut back on tanks and heavy artillery, we will retain the ability to regenerate those capabilities if needs be. While in the short term the ability to deploy air power from the sea is unlikely to be essential, over the longer term we cannot assume that bases for land-based aircraft will always be available when and where we need them, so we will ensure the UK has carrier strike capability for the future. This is another area where the last Government got it badly wrong. There is only one thing worse than spending money you do not have and that is buying the wrong things with it, and doing so in the wrong way. The carriers they ordered are unable to work effectively with our key defence partners, the United States or France. They had failed to plan so that carriers and planes would arrive at the same time. They ordered the more expensive, less capable version of the Joint Strike Fighter to fly off the carriers, and they signed contracts so that we were left in a situation where even cancelling the second carrier would cost more than to build it. I have this in written confirmation from BAE systems. That is the legacy that we inherited—an appalling legacy that the British people have every right to be angry about. But I say to them today that this Government will act in the national interest. We would not have started from here but the right decisions are now being made in the right way and for the right reasons. It will take time to rectify these mistakes but this is how we will do so. We will build both carriers but hold one in extended readiness. We will fit the ““cats and traps””—the catapults and arrester gear—to the operational carrier. That will allow our allies to operate from our operational carrier and allow us to buy the carrier version of the Joint Strike Fighter, which is more capable, less expensive, has a longer range and carries more weapons. We will also aim to bring the planes and carriers in at the same time. We cannot dismiss the possibility that a major direct nuclear threat to the UK might re-emerge so we will retain and renew the ultimate insurance policy—our independent nuclear deterrent, which guards this country round the clock every day of the year. We have completed a value-for-money review of our future deterrent plans. As a result we can: extend the life of the Vanguard class so that the first replacement submarine is not required until 2028; reduce the number of operational launch tubes on those new submarines from 12 to eight; reduce the number of warheads on our submarines at sea from 48 to 40; and reduce our stockpile of operational warheads from fewer than 160 to fewer than 120. The next phase of the programme to renew our deterrent will start by the end of this year. As a result of the changes to the programme, the decision to start construction of the new submarines need not now be taken until around 2016. We will save around £1.2 billion and defer a further £2 billion of spending from the next 10 years. So yes, we will save money, but we will retain and renew a credible, continuous and effective minimum nuclear deterrent that will stand constant guard over this nation’s security. Finally, the immense contribution of our highly professional Special Forces is necessarily largely unreported but their immense capability is recognised across the world. We are significantly increasing our investment in our Special Forces to ensure that they remain at the leading edge of operational capability prepared to meet current and future threats, and maintaining their unique and specialist role. This enhanced capability will allow them to remain at extremely high readiness for emergency operations through enhanced logistics, medical support and greater intelligence capability to support their operations. We were left a situation where we had: a budget £38 billion overspent; Armed Forces at war, overstretched, underequipped and ill prepared for the challenges of the future; and the biggest budget deficit in post-war history. I believe that we have begun to deal with all those things, sorting out the legacy and fitting Britain’s defences for the future. I commend the Statement to the House””. My Lords, that concludes the Statement.