I beg to move,
That this House has considered defence spending.
It is a pleasure to lead this important debate on defence spending, and to serve under your chairmanship, Mr Betts. I thank the Backbench Business Committee for granting us time to discuss the funding of our nation’s defence at a time when our world is more unstable than ever and detractors wish the western liberal way of life and our values harm.
It is rare for us to be able to discuss money in this place. Today, we must consider what value we place on our nation’s defence, how the huge sums of money allocated to it are used, the interconnectivity of the Foreign Office’s assessment of global instability, our world-class military tacticians’ understanding of how we can protect our citizens and allies, and what we need to have in place to do so. We need to understand why projecting our cultural and economic values and ethos, and promoting Britain’s and our allies’ economic stability and prosperity, is vital.
The question is: is a percentage figure the way to judge whether we are investing enough? We need to look ourselves in the eye and ask why there is so little appetite among politicians to invest properly in defence spending. The issue is simply not in our postbags. The NHS is now in receipt of a huge extra budget of £20 billion a year by 2024. The Prime Minister agreed to such an enormous increase because it was clear from the hundreds of colleagues who spoke up on the matter that their constituents had too much unmet need and that resources needed to be increased. We needed to address old age—that great success story of the NHS—and mental ill health, because we want a healthy and happy population, and we now realise that it makes economic sense. In wishing to improve the lives of our constituents, the Government assessed that a step change in funding was required.
Defence, on the other hand, does not feature in our postbags. Commanding officers are not allowed to talk to MPs about the problems they are experiencing, including a lack of investment in the sites that they manage and resources to support their serving personnel, who have no choice about their location and environment. There is no mechanism to share concerns about kit provision or whether we will be able to sustain a long conflict. Due to secrecy or national security, the politicians who should be speaking up about whether more investment in defence is needed have too few facts to assess the reality of the situation.
I congratulate the hon. Lady on securing the debate. Does she agree that this is about not just how much money is spent, but where it is spent? The national picture is one thing, but there are huge regional disparities in defence spending. For example, it is just £60 per head in Yorkshire, compared with more than £900 in the south-west. That obviously has a huge impact on the jobs that are supported in the defence industry.
I thank the hon. Lady for that point. It is important to look at how we spend that investment for UK prosperity. The hon. Member for Plymouth, Sutton and Devonport (Luke Pollard) is nodding—he is thrilled that the south-west is doing particularly well out of the regional disparities. I agree that we need to think about how the funding is allocated.
In the busy life of a constituency MP, it is often too easy to assume that all must be well in our defence investment. Surely no Government would fail to meet their first duty of governing—to protect their people. When budgetary constraints are imposed, our military leaders cannot talk directly to MPs to tell them whether funding is getting to the frontline or into the investment paths that they need to deliver what we ask of them.
I congratulate the hon. Lady on securing the debate. I want to make a technical point about defence spend. We can spend now to save later, but I draw a distinction between capital spend and revenue spend. Everything I have looked at on defence spending in my short two years here suggests that the Ministry of Defence is not being very clever. Going down the capital route, rather than the revenue route, would be much more efficient in the longer term.
The hon. Gentleman pre-empts some of what I am going to talk about. He is absolutely right.
Our doctors and nurses tell us directly and bluntly if the funding systems for the NHS are not working properly so we can do something about it and advocate for them. However, that is not an option for our defence chiefs, so it is hard for us to know whether their resources would be sustainable and resilient if there were a major crisis. The question is not only whether enough funding is going into our defences but whether we are spending it correctly—a narrative that ran successfully after the strategic defence and security review in 2010, when the country was in dire financial straits and the former Member for Whitney had the unenviable challenge of trying to put it back on to a stable financial footing. SDSR ’10 declared—conveniently, perhaps, to match the financial crisis—that the Ministry of Defence, like other Departments, had to find efficiencies. There is no question but that that was the right thing to do.
First, I resent the use of the word “efficiencies”. Basically, that is Treasury speak for cuts, and it would not face up to that. Secondly, the hon. Lady is clearly under a misapprehension: the country was on a very steady path to reducing the deficit. Owing to the crash-and-burn tactics of Mr George Osborne, we went into a recession, which lessened the revenue coming in, deepened the crisis and worsened the deficit.
As ever, the right hon. Gentleman is a great defender of his party’s financial position. I would not choose to pick a fight with him, because he is a staunch defender of all matters defence.
I agree with my right hon. Friend the Member for Warley (John Spellar) on the use of the word “efficiency”. It is a fact—there is no reason to hide from it—that the Conservatives in the coalition Government cut the defence budget by 16%.
I thank the right hon. Gentleman for his comments.
The challenge is that the premise of SDSR ’10 was not just financial; it was that there was no longer an existential threat to the UK. It said that Russia was no longer a nation that we had to watch and fear. That has turned out to be a false premise, if it was ever anything other than an excuse to reduce defence spending. We were told that, owing to the sudden outbreak of global neighbourliness, we could return our Army from Germany. The freedom to move safely around international waters was assured because the middle east had become stable and unthreatening to the 20% of the UK’s energy requirements that travels by sea through the strait of Hormuz, so a reduction in the size of the ageing fleet was a perfectly sensible idea. Global airspace was going to be full of fluffy clouds and rays of sunshine, so there would be less need to patrol the skies or deliver force from the air to those who wish our allies harm, and we could reduce the number of airframes we would need. All that has, perhaps not surprisingly, turned out to be a false premise.
The Government seemed to make a conscious choice conveniently to forget that new equipment, recruitment and high-tech training takes time and money if we are to maintain our military advantage by having the best and most advanced equipment with the best-trained men and women in the world. I am afraid that SDSR ’10 was allowed to set out that false premise due to financial pressures. There was a realignment, as those in post realised that the position that was set out was not right. The work done for SDSR ’15 started to assess more honestly the instabilities across the globe and their risks to UK safety and prosperity, but the cash needed did not follow that strategic assessment.
It is a pleasure to see the Minister for the Armed Forces in his place; it is not him whom I challenge, but our Treasury Ministers. The pertinent question is, after setting out what was eventually understood to be required to meet minimum security risks in SDSR ’15, why have we not funded it properly to get the outputs that we know we need? We must be able to look our constituents in the eye and promise them that we can defend them. This is about not just the level of GDP that we use to invest in a larger force, but whether we are meeting future need.
In SDSR ’10, the MOD declared that we should reduce RAF aircraft numbers substantially while pushing forward with the aircraft carrier class of warship, but by SDSR ’15, those decisions had evidently proved incompatible, given that we need to increase aircraft numbers once again. We need to think holistically about transformation—the time it takes, the training requirements to achieve it and the best value-for-money methodology for doing it. As the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) said, that is the invest-to-save model, and the Treasury needs to help the Department. Short-term decisions for annualised cash-flow rules simply do not work for our defence programme and produce an output that meets our defence needs or our value-for-money rules.
The hon. Lady is making an excellent speech, and I congratulate her on securing this debate. Her point about through-life costs is very powerful. Does she agree that there should be more scrutiny—possibly independent—of the increase to the overall cost of projects caused by changes early in the cycle? I am, of course, thinking of the decision to delay the vote on renewing the deterrent submarines, which has added a significant amount of risk and cost to the project. Many of us said that to the Government at the time, but there was no ability to assess independently what the increased costs would be.
The hon. Gentleman’s point is well made. I will refer to submarines later. We need to challenge the Department continually on whether Committees such as the Defence Committee and the Public Accounts Committee, on which I sit, have the tools to look pre-emptively at the risks of those sorts of decisions.
There is also a mantra that technology is changing how we do everything and that it will, as if by magic, solve all challenges. It is implied that it will make everything cheaper, and that we can stop doing things the old way because there will be a whizzy, less manpower-hungry solution. Although it is true that world-leading UK defence businesses are creating extraordinary cutting-edge kit, that is not the only tool for solving our defence challenges. From Florence Nightingale and her medical advances to Alan Turing, the urgent need to gain advantage over the enemy has always brought out the brilliance of our citizens’ inventive genes. Defence has always been at the forefront of innovation because defence in action stretches human ingenuity under the insane pressures of war.
I congratulate the hon. Lady on her excellent speech. However, for industry to be able to respond, there needs to be an industry. That requires the British armed forces and the Treasury to put orders into British factories and British yards, rather than applying a model of international competition that takes no account of the prosperity agenda and no account of the long-term sustainability of the defence industry and its ability to innovate.
That question of sovereignty and the prosperity agenda—the third pillar of defence’s remit—is one we need to continue to challenge. As a Brexiteer, I am happy to say that I think we will have more authority to speak in how we choose to do that—
That’s not true.
Well, that is my opinion. Leaving the EU will give us more flexibility to bring the various parties together and will enable UK businesses, which are world leading, to make their case as effectively as possible.
The hon. Lady should not allow herself to be misled by Treasury-speak. In both European regulations and the Treasury Green Book, the Ministry of Defence has all the tools it needs to support British industry. The problem is a lack of will. It does not help to blame the EU. The problems are in Whitehall, not in Brussels.
I thank the right hon. Gentleman. The Minister will have heard his perspective.
One of the key issues for defence is its people, who are flexible, selfless, uncomplaining and serve willingly—indeed, alongside the Minister, who puts his life on the line to serve his country. Equipment changes constantly—if it did not, we would still be sending our Navy to sea under sail—but the quality of our people is always critical. We spend more than a third of our defence budget on people. I say that that is an investment, since they are highly trained and we invest in their training throughout their careers, in a way almost no other employer does. However, we classify them as a cost, so departmental behaviour fails to look after them—our human capital—as assets.
We would not fail to repaint a warship—clearly, that would make her less seaworthy or less capable of dealing with the scars of battle—yet we are perfectly content to fail to invest in the personnel who serve, by not looking after their families and by failing to demonstrate what the armed forces covenant should mean: that if someone has served or is serving, this country genuinely thinks they and their family should not suffer disadvantage. It is imperative that we change the financial models the MOD is allowed to use so that our human capital can be classified as an asset. Service chiefs cannot determine how to reward their personnel, because they are not allowed to use their budgets freely to maximise the benefit to their people and their service. For small change—in both senses of the word—the behavioural changes achieved by flexibility would be substantial and immediate.
I believe the reason change is not happening is that the Department and the Treasury fail to understand the nature of military preparedness, and do not seem to question our resilience if we need to put our military under pressure. Although we put kit that is small, plentiful, cheap and speedy to resource on to the soldier, we put highly skilled men and women, who take years to train, into equipment in the Royal Navy and the RAF that takes years to build. A modern warship or fast jet cannot be whipped up in a few months. It is at the mercy of international supply chains, the risks of which, as the right hon. Member for Warley (John Spellar) mentioned, perhaps are not properly understood.
Importantly, that equipment would take a long time to replace if lost. Although bullets for small arms can be produced at speed if necessary, the missiles sustaining our warships and Air Force cannot be churned through a production line at speed if they are suddenly required. Training a submarine commanding officer or fast jet pilot takes years of investment—it takes time. Too often, it feels like the Department’s financial models simply refuse to acknowledge that and fail to understand the human capital investment that is being made, leaving us with huge risk from poorly assessed decisions.
We must consider the key tenets of successful defence and assess whether we are investing enough to sustain them. The first is deterrence. Deterrence works. Nuclear is the ultimate deterrent, but we must never forget that conventional deterrence has greater utility and that strong power generates respect. Let us consider for a moment our nuclear deterrent in its 50th year in our Royal Navy. Our continuous at-sea deterrent is an extraordinary feat. I always refer to it as our best weapon of peace, because the threat of nuclear war has ensured that we have had no more global wars. Humanity understands genuine existential threat, and the CASD is the embodiment of the UK and USA’s global policing, which reminds any rogue state why using a nuclear weapon would be a bad decision. But do we invest properly in our submarine service?
The hon. Gentleman shakes his head violently. I have talked about the CASD repeatedly in the House since I was elected in 2015. It strikes me as bizarre that the long-term nature of that critical weapon of peace is stuck in a funding framework that stubbornly refuses to allow long-term planning and flexible funding. All credit to the former Secretary of State for Defence, my right hon. Friend the Member for South Staffordshire (Gavin Williamson), for persuading the Treasury last year to bring forward £600 million of funding—not additional funding but simply to reduce future financial risk—to assist in making efficient decisions to move the Dreadnought programme forward a little more effectively. Deferred cost is always increased cost. I speak as an accountant who has done this many times.
The money the hon. Lady refers to was already in the contingency budget. Does she agree that the delay under the coalition Government in making a decision to build the Dreadnought class of submarines not only delayed the programme but added cost to it?
I agree completely. Deferred cost will always be increased cost in such big projects. We need more financial flexibility to get better value for money. Why did we have to battle so hard last year to get the Treasury to move on that £600 million? Why is the Treasury not doing its long-term cash-flow thinking in a rational way? If we are going to keep the CASD—there is overwhelming support for that across the House and the nation—it would make financial sense to allow a multi-year rolling financial commitment so Ministers can make rational decisions.
The hon. Lady is making a superb case. Is there not a case for going so far as to make good on the commitments, which have been made at various points of the successor programme but then conveniently forgotten when there have been changes of personnel, to properly insulate the programme and remove it from the conventional defence budget? That would allow it to be managed as a proper long-term national endeavour capital commitment, rather than being subject to the in-year in and out of defence spending on other programmes.
I completely agree. Both I and the hon. Gentleman have pushed that campaign. I would not dare to suggest that I want another general election in a hurry, but we attempted to put that in the Conservative manifesto at the last election to bring about a change. I will continue to do that as and when the appropriate moment arises.
The hon. Gentleman is absolutely right: the MOD is not like any other Department of State. It has these 20-year programmes, which should be funded in a different way—a more intelligent and stable way. We need to get the Treasury to hear us and realise that the financial models need to be separate so that, exactly as he says, those programmes are treated as national endeavours. In the same way we funded Crossrail through a separate fund so it could roll forward as effectively as possible, despite the often challenging technical issues as we create state-of-the-art kit, we should give those working on these programmes the best financial framework to work within.
The hon. Lady is making a very effective case for multi-year spending and the need to reappraise entirely the Green Book principles. Does she agree that, in this instance, the restrictions on multi-year spending for programmes—particularly the Type 26—put at risk our sovereign capabilities, such as the electric motors factory in Rugby, which manufactures critical components for anti-submarine frigates? That may have been lost had the MOD not responded. We cannot continue to fight a war of attrition; we need a strategic approach.
I completely agree. We must continue to hammer home the importance of sovereign capability and work with industry to build opportunities. I say again, despite the criticism of the right hon. Member for Warley, that there will be opportunities once we have left the European Union to think more coherently than we have before—I think we have chosen not to do that—and for us parliamentarians to challenge the system more aggressively on the question of what sovereign capability should look like in the long term. Getting our shipbuilding strategy right will be critical to ensuring that we have throughput of work and know that, if we get into times of crisis, we have the supply chain we need within our borders.
Some time ago in her speech, the hon. Lady mentioned the Army covenant. I am sure she agrees it is vital that the covenant is implemented in full to servicemen and women in Northern Ireland. Doing so may cost a little more money, but the benefit to those people suffering from post-traumatic stress and mental health issues far outstretches that.
I absolutely agree. In my role as chairman of the all-party parliamentary group on the armed forces covenant, I have spent some time in Northern Ireland, where we have some real challenges at the grassroots level—not the political level—to try to help those who need day-to-day support to look after themselves. I have met some extraordinary women and extraordinary wives—I take the opportunity to say they are extraordinary—who are looking after very damaged former soldiers, some of whom are the hon. Gentleman’s constituents. They deserve all credit.
The world is not a safer place, and while the nature of warfare may be changing, at the end of the day we need to be able to reach wherever the threat is, bearing in mind that, as my son always reminds me, five sevenths of the globe are covered in water. Ships are therefore a critical tool, and our shipbuilding strategy must reflect the importance we play as a United Kingdom, and a critical part of NATO.
The key point is that presence is influence, and with influence come positive outcomes. We cannot do deterrence if we are not there. We saw that demonstrated in stark images on our TV screens last week when HMS Montrose in the strait of Hormuz assured the safe passage of a BP tanker, protecting it from the insurgent threat of Iranian military attack. If Montrose had not been there, I dread to think what might have happened. Freedom of navigation around the world’s seas and oceans is critical to our economy: 95% of all our imports come by sea, and it is NATO’s navies that keep the sea lanes open for commercial traffic. We would all be very cross indeed and notice quickly if Felixstowe or Dover were shut down by enemy attack. In the same way, just because we cannot see the huge areas of oceans from which our goods and energy are being brought to us, that does not mean we should forget that we need to police those waters, too.
What the hon. Lady is saying about the Royal Navy is music to my ears. I look forward to participating in the armed forces scheme next year.
The F-35 is a splendid aircraft that I fully support us buying from the Americans, but the bitter fact is that, as we all know, we will never own all the intellectual property of that aircraft. We will never know exactly how it works because of security aspects. Why should the Americans tell us? That is one reason why keeping manufacture here in the British Isles as much as we can is crucial. Only if we make it, or do so in partnership with others, will we know everything there is to know, with that information being secure.
The hon. Gentleman’s point is well made.
The question today is defence spending. Let me therefore share with the House the assessment the Public Accounts Committee made of the latest equipment plan:
“In May 2018 we reported that the Ministry of Defence…did not have enough money to buy and support the equipment it needs.”
Bear in mind that buying is 50% and supporting is 50%. Our report continued:
“the Department has made little progress, continuing to delay the difficult decisions needed to make the Equipment Plan…affordable, particularly around which programmes to stop, delay or scale back. It now estimates a most likely affordability gap…of £7 billion across its Plan… It also estimates that the gap could widen to £14.8 billion, but even this looks to be unlikely and overly optimistic. The escalating and continuing affordability issues have led to short-term decision making which has only worsened the longer-term affordability risks.”
We continue to watch that on the Public Accounts Committee, but the sense of anxiety just builds as we keep seeing a lack of change in policy frameworks. Instability across the globe is increasing, so if we do not build the equipment we need to achieve our SDSR ’15 goals, let alone what those in SDSR ’20 might look like, we will simply not be able to meet politicians’ requirements.
Politics is about making choices and we need to think carefully about this one. Our military will always offer their political masters choices and solutions as required, but they may have to bend themselves out of shape with collateral damage, gaps and risks elsewhere in order to do so. I do not believe that we can expect them to do so if we, the politicians, do not give them the funds they need to meet at least the SDSR ’15 asks. If we do not show confidence in our military personnel with, in the scheme of things, a very small amount of cash investment in human capital, which is utterly vital to success in warfare, we will continue to lose too many people who have been willing to commit their lives to defending us and our families.
We must not leave our armed forces with the impossible decision of robbing Peter to pay Paul. Short-term decisions on finances can have long-term implications on recruitment, retention and equipment capability and availability. Defence is an insurance policy, so if we get our deterrence right, it stops wars and attacks on us or our allies. That is success, but it costs to achieve that, and it is invisible. No soldiers on our TV screens battling in the desert does not mean that we are not maintaining a global presence to deter those who would wish us and our allies harm. Military personnel are defending us and our way of life invisibly 24 hours a day.
We all have house insurance not because we expect our homes to burn down, but because a roof over our family’s head is so important that we plan to protect ourselves just in case. Our armed forces are our nation’s “just in case.” I worry about how our political leaders sleep soundly at night thinking that we have only a budget insurance policy and hoping that we will never have to claim on it. The budget is large at £40 billion a year, but, without the right decisions and an acceptance that that is not quite enough for what is needed to keep us all safe, the shortfall in funding and financial frameworks leaves us horribly exposed to unknown threats.
We must bring the defence budget up at least to the point where the political ambitions set out in our own SDSRs are matched by the funding for our military experts to deliver those for us. To do that, I estimate we need an increase of some £4 billion a year to the budget and, equally importantly, flexibility to fund long-term projects intelligently for best value and speediest output. It cannot be right that we allow our military personnel to be put at greater risk than they need to be by failing to invest properly in our Army, Navy and Air Force.
I do not mind if the Treasury wants to invest more because it is morally the right thing to do to ensure we can protect our people, our trade and our allies, or simply because it is the right financial method to make better use of taxpayers’ money over the long-term to get real value for money. If the financial models set out in the Green Book do not deliver that, we should change them so that they do.
We are in charge of our country’s destiny and we can set the framework to maximise the positive outcomes for this great nation of ours, which is respected around the world for its military prowess and its people. I thank the Minister for his loyal support of our armed forces, and I hope that the Treasury is listening.
Order. There are slightly more speakers than we had anticipated, so I will introduce a time limit of three minutes to try to get everyone in. We may have a squeeze at the end if people do not follow that.
There is one thing the Conservative party is, and that is consistent. Its Members call for more defence expenditure while in opposition, and when they come into power they cut defence expenditure. In 2010, defence was not immune from austerity and the budget was cut by 16%. The smokescreen the Government put up—that they had inherited a £38 billion black hole in the defence budget—was complete and utter nonsense.
Will the right hon. Gentleman give way?
No, I will let others make their speeches.
Ministers kept repeating that claim. I kept asking them about it, but never got an explanation. I think it came from a National Audit Office report from 2009 that said that if the equipment budget was flat over the next 10 years, that might get us to £36 billion; if it rose with inflation, it would be about £6 billion in the defence capital budget. The hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) was talking about the two budgets conflated.
We then saw slash and burn, with stupid decisions such as the scrapping of Nimrod and the Harriers, vicious cuts made to people’s pay, and redundancies. That led us to a situation where we have an Army that, at 82,000 personnel, is the smallest it has ever been. No one has yet explained to me how that figure was set.
We are told that the defence budget is rising, but the foundations are shaky. If we look at the 2015 SDSR, we see a huge amount of it is based on billions of pounds of efficiencies that have not yet been and cannot be met. To return to the claim that Labour somehow left a £38 billion black hole, if the situation was so terrible, it is strange that two years in, the right hon. Member for Runnymede and Weybridge (Mr Hammond) eliminated it overnight.
In defence, we need honesty. There is a degree of consensus across the House on the support needed for members of our armed forces and for defence. What we need now is an honest stocktake, looking at our commitments and what we want to do in the world, and ensuring that, as the hon. Member for Berwick-upon-Tweed (Anne-Marie Trevelyan) said, we fund not just the capital side—equipment is important—but the people. I hear all the time that we can do more with more sophisticated equipment, but as any military technician will say, mass and people are still important. We must invest in them over the long term.
The hon. Member can have an extra minute, because the Front-Bench spokespeople have agreed to take only five minutes, so hon. Members have four minutes each.
I always liked the Minister; he is very good.
Investment in people does not just mean balancing the in-year budget, which I suspect is what has happened. How was money taken straight out of the defence budget in 2010? It happened in two ways: by taking equipment out, as the Government did by putting a wrecking ball through the Nimrod and Harrier programmes, and by slowing the recruitment pipeline. That will lead to problems in future years as people develop and we find that we have capability gaps, not in equipment but in people’s skills, which are important.
Regarding the Conservative party’s commitment to defence expenditure, let us hope that the promises made by the two contenders to become the next Prime Minister hold water. I will support any Government who want to increase spending and, more important, invest in the people we rely on every single day for our peace and security.
In the four minutes available, I propose to make two points. First, I congratulate my hon. Friend the Member for Berwick-upon-Tweed (Anne-Marie Trevelyan) on a masterly introduction to the debate. Her timing could have been better—to secure a debate so close to the arrival of a new Prime Minister is perhaps chancing her arm. Nevertheless, if we are to get the issue in the news, we need to link it to that, so I will quote the responses of the two remaining candidates in the race to be the next Prime Minister to my letter of 26 June, which asked about their defence policies.
On 2 July, my right hon. Friend the Member for Uxbridge and South Ruislip (Boris Johnson), the former Foreign Secretary, replied:
“The armed forces have done some exceptional work of late in attempting to live within an increasingly stretched budgetary environment. I can give you an absolute commitment to fund defence fully. I believe Military spending should be dictated by the threats we face—and, it is clear that these threats have multiplied in both scale and complexity in recent years. I guarantee, of course, that we will exceed the minimum 2% NATO spending target and the Defence Budget will continue to grow at a minimum of 0.5% annually.”
On 8 July, the current Foreign Secretary replied:
“In this leadership campaign, I have given more attention to defence spending than any other candidate. I have pledged to increase the defence budget to 2.5 per cent of GDP over five years. I have argued that additional funds would need to be”—
made available, I think he means—
“for new capabilities and not simply plugging gaps in existing plans. Were I to become Prime Minister, I would consider the path of further increases in spending once the 2.5 per cent had been achieved.”
That is their position.
Will the right hon. Gentleman give way?
I had better not, because of time pressure.
Secondly, to coincide with the debate, the Defence Committee has updated its April 2016 report, “Shifting the Goalposts? Defence Expenditure and the 2% pledge”, in which we set defence spending in context. We showed that, while we spent similar amounts on education, defence and health in the mid-1980s, we now spend 2.5 times more on education than defence, and 4 times more on health.
Our latest report, which was published today—HC 2527, for those who are interested—has recalculated the figures for the last few years and brought them up to date. It shows that, in the last three years, we have spent 2.1% on defence, if we calculate it from NATO’s point of view and bring in extra things such as war pensions, which never used to count towards the total. If we exclude them, the new report shows that our like-for-like defence spending is only 1.8%. Is that credible in an age when the profile of the threats we face includes an adversarial Russia and the revival of a terrorist threat in the form of Islamist terrorism? When we compare it with the 1980s, when we regularly spent 4.5% compared with 1.8%, or 5% compared with 2.1%, we can see the shortfall.
Slightly unusually, if an hon. Member takes an intervention, I will not add on time, because that would push somebody else out at the end and they would not be able to speak.
It is good that the hon. Member for Berwick-upon-Tweed (Anne-Marie Trevelyan), who I call a friend, has secured the debate. We disagree on nearly everything except defence, so it is a good place to be.
As Devonport’s MP, I talk a lot about defence and defence spending—and rightly so, because it is the country’s largest naval base. It is home to the Type 23s with tails, which are soon to be replaced like for like by the new Type 26s; our amphibious capabilities, Albion and Bulwark, although sadly we lost the HMS Ocean due to Conservative cuts earlier in this Parliament; and the basing for the fantastic and underappreciated flag officer sea training arrangements. In Babcock, we have a refit capability that is second to none around the world; it is currently refitting HMS Vanguard and our hunter-killer class.
Devonport is also where we tie up old nuclear submarines; there are 13 awaiting spending to ensure their safe and sustainable recycling. That is why a defence spending debate is important, because those nuclear submarines—those big expensive tickets—frequently drop off the bottom of the priority list. They get left and tied up not only in Devonport but in Rosyth. That is why we need to get our defence spending level right.
The argument that I and the hon. Members for Berwick-upon-Tweed and for Dunfermline and West Fife (Douglas Chapman), who represents Rosyth, have made is that we should use a different funding mechanism to support the recycling of those submarines. We know that the defence budget does not have enough pennies in it and that there will always be a greater priority than recycling old nuclear submarines. Our cross-party argument is that, instead of putting pressure on the Minister, who already has many demands on his time and on the pennies in his budget, the civil clean-up programme that is cleaning up our civil nuclear power stations should be extended to those nuclear submarines.
We have to find a way to recycle those submarines. If we wait for the Ministry of Defence’s budget to provide the funds, I fear that we will wait as long again as we already have—many decades. The first submarine was tied up before I was born; we cannot wait that long again for it to be done sustainably. That is why we need to look at the issue carefully.
I agree with the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) on the need to value the whole-life costing and to invest to save. That is certainly what we need to do with our submarine programme and our future capabilities in naval warfare in terms of the basing arrangements.
I look forward to meeting the Under-Secretary of State for Defence, the right hon. Member for Bournemouth East (Mr Ellwood), to talk about the refit of the Stonehouse barracks as an interim measure. It is not right that when at home, not on operations, our Royal Marines are being asked to reside in blocks without hot water or decent heating. That is not acceptable to Plymouth, which is a military city that is proud of its Royal Marines, and it should not be acceptable to any hon. Member. I hope we can put cross-party pressure on Ministers.
We could go into the line-item spending on defence, but we need to start from the top. What are we trying to do with defence? Where is our strategy for it? The 2010 and 2015 strategic defence and security reviews were fronts for cuts; all hon. Members present know that, because we are the defence-focused MPs from every party. They were excuses for cuts and did not portray a decent strategic analysis of where we are as a nation or the threats against us. The hon. Member for Berwick-upon-Tweed was polite in her description of the 2010 SDSR, but we need a proper review that looks at the real threats that face us and that has a properly funded plan to address them, including long-term industrial strategies for combat air, naval procurement, autonomous marine and autonomous aerial. There is a lot to get right, and we should start with a decent strategy that enables us to look at it properly.
I congratulate my hon. Friend the Member for Berwick-upon-Tweed (Anne-Marie Trevelyan) on securing this debate and introducing it with such brio. I am delighted to see how many colleagues are present to debate these important matters.
On the defence budget, I was reassured to hear from the Chair of the Defence Committee, my right hon. Friend the Member for New Forest East (Dr Lewis), that my right hon. Friend the Member for Uxbridge and South Ruislip (Boris Johnson), who is most likely to win the leadership election, told that Committee
“I can give you an absolute commitment to fund defence fully.”
In the nicest possible way, we should bank that and endeavour to hold him to it if and when he becomes our Prime Minister.
Having been a Defence Minister—I have great respect for the Minister, as he knows—I have always believed that there is a kind of asymmetric conversation between the Ministry of Defence and the Treasury. I will exaggerate slightly for effect, but it essentially goes as follows.
The MOD view is, “Those people over the road don’t know what they’re doing. They don’t understand us. They don’t realise the relentless operational pressure that we have been under for 20 years, or the pressure on our people. They ask us to scrimp and save at every possible opportunity to make false economies that are injurious to the defence of the realm.”
The Treasury view goes something like this: “Those people across the road don’t know what they’re doing. They have £36 billion a year. They don’t manage it very well or control their contractors properly, and waste a vast amount of it on procurement programmes that go way over budget and come in years late. All they ever do is bleat like children for more money so that they can waste it on more procurement programmes that go wrong.”
Those are the asymmetric views, and the truth probably lies somewhere in the middle. If we are to deal effectively with the defence of this country, rather than that adversarial relationship, which is how I have seen it happen for so long, we have to get those two Departments to work together positively for the benefit of our country and its defence. In fairness, the MOD does have to be better at managing its budget. Some contracts are shocking and the MOD has been deficient in holding contractors to account. The military flying training system is a disaster, partly because of the unavailability of Hawk, and on that, BAE Systems needs to look to its laurels.
The Defence Infrastructure Organisation is not the most efficient part of the Ministry of Defence—the maintenance contract with Amey is awful. The other day, the DIO told the Public Accounts Committee that there was a 64% satisfaction rate, but there is not. In the armed forces continuous attitude survey, the satisfaction rate is actually 32%, which is an appalling statistic. The A400M has been an absolute procurement disaster—it is known as “the dog” by the crews that operate it at RAF Brize Norton—at a cost of £2.6 billion for aircraft with an appalling reliability rating, bad engines and gearbox, and an inability to deliver paratroops. Finally, as the Minister knows, it would be unlike me not to mention my great friends “Crapita,” whose army recruitment contract is utterly hopeless. While the number of applications goes up, the number of people joining goes down.
There is a way through this: whoever they may be, the next Defence Secretary and the next Chancellor—I wish our outgoing Chancellor the very best of luck in his posting in outer Mongolia—need to work together for the benefit of this country’s defence.
It is always a pleasure to speak in these debates. I congratulate the hon. Member for Berwick-upon-Tweed (Anne-Marie Trevelyan) on setting the scene, and thank all right hon. and hon. Members who have contributed.
Like others in this Chamber, I am massively concerned about defence spending, as every hon. Member in this place should be. We are known as a world leader, and for that to be in any way meaningful, it must follow that our defence is top class and that the men and women who wear the uniform of this great country—the United Kingdom of Great Britain and Northern Ireland—are irrefutably the best in the world. The very clear fact is that we do not do as well by them as they do by us.
We sit at the NATO target of 2% GDP for defence, but I cannot quite figure out why that figure means that we are doing okay. Some have outlined to me that while the paper trail can look like 2% GDP, the reality is very different. The Chair of the Defence Committee, the right hon. Member for New Forest East (Dr Lewis), mentioned the figure of 1.8%, which would not be in order.
Does my hon. Friend agree that when looking at historical defence expenditure, the UK’s defence spending as a percentage of GDP has been reduced by more than 50% over the last 40 years? That is a real indictment of Governments of all types and descriptions. We need to do better by our armed forces.
I would adhere to and agree with my hon. Friend’s figures.
The obligations on our armed forces are incredible. From war zones to giving aid in peace zones and every area in between, such as simply helping Commonwealth nations to do the right thing on the world stage, as we often do, our men and women are the first on the scene doing the best job, but we stretch our resources in every operation or every time we lend a hand. I put on the record that some of the other NATO countries need to make an effort to meet their obligations. Latvia, Estonia and Lithuania have met theirs, but where is Germany on its NATO contribution?
All that heaps pressure on the everyday running of the forces, on their recruitment processes, and on the training for the next generation. I am not stuck on a figure for military spending, although I would aim high, and while I understand that a bottomless budget is impossible, an adequate one is not—it is essential.
Between 2018-19 and 2019-20, defence spending is planned to increase by an annual average of 1.4% in real terms. Defence spending in 2019-20 is planned to be £1 billion more in real terms than in 2016-17. That is good news, but if that is the figure we are aiming for, will it do the business? Is it enough to ensure that our armed forces personnel have the right equipment at the right time for the battle, the right training for the situation and the right support for when the fighting is done?
At present, what I am hearing is that we simply are not there. Recruitment officials cannot afford to run high-end campaigns to attract the next generation. We do not have the funding to give new recruits the appropriate training in different situations to ensure that they are as prepared as possible. On the frontline, we are certainly lacking in top of the range and fit for purpose equipment.
On recruitment, the armed forces have always recruited highly in Northern Ireland and I understand that the campaign there is going well. Will the Minister give some idea of the recruitment figures? I commend the gallant Minister for his service and for his commitment and interest. I know that when he responds, we will get a reply that we will be happy with. Are we sourcing as much equipment as possible from our own shores to support local industry? Will the Minister ensure that everyone across the United Kingdom of Great Britain and Northern Ireland benefits? We also need funding to address the mental health of veterans of all ages.
Our Navy, Air Force and Army are simply the best. We need to do better by them and that is why I support the calls for an increase in defence spending above and beyond the schedule and the target.
I congratulate my hon. Friend the Member for Berwick-upon-Tweed (Anne-Marie Trevelyan) on securing the debate. As someone who represents RNAS Culdrose in my constituency, I cannot stress enough that base’s value to our local area, to our community and to the skills and opportunities afforded to our young people and those who work there.
My hon. Friend was right to challenge us to understand the full value of defence, both of the realm and of UK plc. I do not want to repeat what has already been said, but I will touch briefly on the issue of recruitment and retention of armed forces personnel, starting with where they live and work.
I have seen for myself the standard of accommodation that we expect our armed forces personnel to live in. If we value them as we say we do, and if we want them to join and stay in the armed forces, we must find the money to improve where they live. I challenge the Minister to challenge Government on how serious they are about the climate change emergency, because the Committee on Climate Change clearly recommended an improvement of our accommodation. It is right that we challenge the Government to fund quickly the improvement and retrofitting of armed forces accommodation. That would not come out of the defence budget, but would meet our national and international commitments. Is the Minister prepared to challenge the Government on their commitment to improving the living accommodation of our servicemen and women and their families?
On the working environment, one does not have to go to many bases—I have been to a few—to see that real investment is needed in the places that our armed forces work. There has been a multimillion-pound investment in RNAS Culdrose—it is an amazing piece of work but it has taken us an extremely long time to get there. We used to have hangars that had not been useable for some time. I am pleased to see the work going on there, but I recognise that more is needed there and elsewhere. That is not an easy thing to do when also trying to provide right kind of kit—the technical expression for our carriers and so on—but it is right that wherever our armed forces are based and work, we give them the safest and best working environment possible.
I will touch on one other area briefly. The armed forces community, as defined in the armed forces covenant, includes regular personnel, reservists and veterans, but not the merchant navy or the Royal Fleet Auxiliary Service. That is relevant to my constituency. The merchant navy is not the armed forces, but it is tough on the children. Mums and dads can be away for the entire school holidays, which will be the case for some of my constituents this summer. They can be caught up in aggressive and intimidating situations around the globe, in particular with attacks by pirates and other rogue individuals elsewhere on the planet. As a result, schools in my constituency have to handle difficult situations. That is not about defence spending, but I would like the Minister to consider whether modern-day threats and the modern-day role of the merchant navy justify including the merchant navy—such as those of my constituents who serve—in the armed forces covenant.
Thank you, Mr Betts, for calling me to speak. It is a pleasure to do so in this debate, which was ably introduced by the hon. Member for Berwick-upon-Tweed (Anne- Marie Trevelyan).
The figures are stark. Certainly in my lifetime, over the past 30 years, the defence budget has halved as a percentage of GDP. During the austerity programme in the UK over the past decade alone, it has in effect been cut by a quarter. Furthermore, looping in additional spending items such as pensions, as alluded to previously, is fanciful in the extreme as a way to save us from embarrassment by padding out the defence budget. It is certainly not reflected in operational capability, which is at the core of what the budget should be a measure of. Nor was I particularly enamoured of the claims by the possible successors to the Prime Minister of their commitment to defence spending. Even the most extravagant proposal will only return defence spending to the level under the previous Labour Government when it left office in 2010, at 2.5% of GDP. That is not a dramatic transformation of the defence budget, because even then defence faced significant resourcing challenges.
One of the biggest aspects of defence expenditure—and the measures applied to it by the Treasury—to have a deleterious effect on operational capability is multi-use and generational spending, as alluded to by the hon. Lady. That was a critical part of Sir John Parker’s report which, unfortunately, did not make it into the final national shipbuilding strategy—I wonder why. The critical piece of advice, or observation, on the failure of existing capital programmes was to do with the lack of an assured capital budget, as well as a lack of a grip on design trade-offs at an early stage in the programme. Crucially, the advice was not incorporated into the national shipbuilding strategy, and that will lead to significant increases in programme inefficiency.
The Ministry of Defence itself has calculated that an increase of 1% in the delay to programme time leads to a 0.38% increase in programme cost. Why then, for the sake of balancing the budget in year, was the Type 26 frigate programme’s drumbeat increased from 18 months to 24 months—a 33% increase? By my calculations, that leads to a baseline increase of 7% in the overall programme cost over that time. That does not include the fact that it also militated against investment in the capital infrastructure that would have delivered an upper-quartile shipbuilding industry in the UK—“upper quartile” refers to being benchmarked against other shipyards around the world. Getting our processes and methods correct—world-class—was militated against by the need to balance in-year budgets. That acted further against increased efficiency, throughput and, ultimately, combat effectiveness, and against the increased size of the Royal Navy.
That is the ultimate absurdity in the vicious cycle perpetuated by the existing funding model. That is why I welcome the Labour party’s commitment to tear up the Green Book, because it is thoroughly unfit for purpose when it comes to major defence equipment programmes. We therefore need a thorough review of how we ensure assured capital budgets for major defence procurement programmes. I hope that the Minister will allude to how the Type 26 programme’s increase from 18 to 24 months is an effective use of public money.
Also, why are this Government not invested in the upper-quartile shipbuilding facilities necessary to further maximum benefit to this country from the Type 26 programme? We have already seen its huge export success. Furthermore, the Australians and Canadians are investing in upper-quartile facilities, but the UK is not. That is a sad indictment of a failure of the investment cycle in UK defence procurement. The Government need to get a grip on that and to sort it out quickly. Moreover, Sir John Parker’s report is not reflected in the national shipbuilding strategy, and I encourage the Minister to consider that critical and glaring omission, and to incorporate it into revisions of the national shipbuilding strategy to ensure that we maximise the impact of our defence budget on operational capability.
It is a pleasure to serve under your chairmanship, Mr Betts. I join with others in paying tribute to my hon. Friend the Member for Berwick-upon-Tweed (Anne-Marie Trevelyan) not only for securing this debate but for her consistent championing of our armed forces.
It is worth putting the debate in the context of our international alliances. This year, NATO celebrated its 70th birthday. Despite discussion about its long-term future, I think that future looks bright. Since the 2004 Wales summit, non-US spending among the other member states has increased by $87 billion, and the UK’s record of consistently meeting the 2% target—although there is debate about that, which I understand—is symbolically and politically important.
NATO faces some real challenges. The UK’s spending commitments are therefore more important than ever. Given the geopolitical situation, it is no accident that Latvia, Lithuania and Estonia have been among those most keen to see their defence expenditure meet the 2% target that has already been met by the UK and US. Furthermore, as we leave the EU, 80% of NATO forces will be contributed by non-EU members. Given Brexit, however, our commitment to co-operate with our European allies must remain a key element of our strategic direction and spending.
Despite all the successes achieved as a result of British defence spending—whether our strong record of meeting our NATO target, the fact that we are the only country to meet both that target and the 0.7% on aid, or the Government’s increased support for our cyber-capabilities announced in last year’s Budget—we need to address the real financial strains faced by our armed forces, as we have rightly heard about. The Public Accounts Committee has identified a £7 billion funding gap in Ministry of Defence expenditure, which could double over the next 10 years. As hon. Members also know, the nature of defence procurement can often lead to a Catch-22, in which piecemeal spending on capital projects can cause delays and consequent increases in expenditure.
When the new Prime Minister, whomever it might be, gets his feet under the table, a real priority will be to make a clear-eyed and long-term assessment of those capital projects, with a commitment to increased defence spending. I was pleased to hear the potential new Prime Minister’s words in that respect.
As the Defence Secretary said recently, however, the value of our defence industries, supply chains and armed forces goes beyond what we think of as specifically military activities. UK defence spending provides employment right across the country, not least in my constituency. The £293 million contract signed between the MOD and Leonardo helicopters in Yeovil was welcomed across the south of my constituency, not just by Leonardo employees but by those whose companies are part of the supply chain. Beyond the purely economic, the Defence Secretary was right to highlight the role that our armed forces play in increasing social mobility, binding communities together and exemplifying those real values which they are called on to defend.
The three objectives set out in SDR ’15 remain of paramount importance: protecting our influence; projecting our global influence; and promoting our prosperity. As we take stock of whatever Brexit resolution is achieved in future, it is vital that it does not undercut either our commitment to the security frameworks that have guaranteed peace on our continent, or Britain’s ability to project its power in defence of our values and interests.
It is a real pleasure to serve under your chairmanship, Mr Betts.
I congratulate my hon. Friend the Member for Berwick-upon-Tweed (Anne-Marie Trevelyan) on securing this timely and important debate, and on her enthusiasm and support for and her commitment to our armed forces and veterans. That is fantastic.
I must respond to the remarks of the right hon. Member for North Durham (Mr Jones), whom I consider a friend, on how when Conservatives come into office we have to make some pretty tough decisions. The reason for that is very simple: every single Labour Government in history leave a mess to clear up, and we cannot defend our country if we are broke. As we regain our status as a sovereign, self-governing country—[Interruption.] I did not interrupt the hon. Gentleman, so I ask for the same respect.
It is important that the UK is both a credible partner and a reliable ally. That means that the UK has to remain a tier 1 military power. We must retain a global reach and, if necessary, a sustainable level of effort either as a coalition partner or unilaterally. To achieve that, we must be able to field top-of-the-range equipment that can go up against any near peer competitor. We must not return to the situation when we deployed troops to Iraq and Afghanistan, where our forces were nicknamed “the borrowers” because we did not have adequate funding from HM Government to deploy and protect our people on those operations. We must also understand the threats that emanate from non-state actors or terrorists who seek to undermine our way of life and denigrate our resilience by attacking our critical national infrastructure in a cyber-attack. All that requires investment and a sustainable defence budget.
In the time I have left I will focus on the benefits of defence spending to our economy. The Royal United Services Institute estimates that for every £1 spent by Government on orders in the UK defence sector, well over a third—36%—is returned to the Treasury via taxation. The UK defence industrial sector is one of the world’s strongest, with an annual turnover of £22 billion, and it supports 260,000 jobs, many of which are highly skilled and well paid. I am proud to represent a constituency that is home to many of our world-class defence manufacturers, as well as the Ministry of Defence’s defence acquisition service at Abbey Wood, which employs roughly 8,000 people.
I am passionate about social mobility and apprenticeships. The Ministry of Defence is the largest provider of apprenticeships in the country; it has enrolled 53,000 civil service and armed forces apprentices since April 2015. Over 90% of military non-commissioned personnel now gain an apprenticeship as part of their trade training and first assignment. In 2018 the UK defence sector employed 4,400 apprentices. They are crucial to develop and continue our sovereign defence capability, and to develop the skills of our military personnel so that when they go back to civilian life after their service, they have the electronic and cyber skills and all the things they could need in future. As I said, 250,000 jobs are supported, so there is a huge argument for having a sustainable, properly funded MOD when we get to the comprehensive spending review.
Most of us would agree that we should, at least, maintain our minimum commitment of 2% of GDP: most would argue it should be nearer 3% to sustain what we are trying to do on a global stage and to continue our global reach. For social mobility, apprenticeships are a vital route to provide engineers and scientists, of which we are already short, and to give employees the necessary skills for our country for the future.
It is an honour to serve under your chairmanship, Mr Betts. I congratulate my hon. Friend the Member for Berwick-upon-Tweed (Anne-Marie Trevelyan) on her passionate advocacy on all occasions and on the very valuable and insightful points that she made.
In the 1990s, we saw a supposed peace dividend. I suggest that was illusory then and, in the face of a revanchist Russia, is folly now. We live in a world of great power threats, where there are diversifying, multiple non-state actor threats, too. It is right that we invest properly in our armed forces.
We tend always to have this debate in the context of kit. I welcome the fact, as the Minister will probably remind us in due course, that we are due to see two new aircraft carriers coming on stream, and the F-35s too. Of course, we need enough to make sure that we can operate both carriers, but that may be a point for another day. I welcome the Poseidons coming on stream; the first British-marked example flew only last week. I very much value that, but we must not just see all those as expensive baubles that are signature-tick projects to show we are investing in defence. We need a holistic approach to our armed forces.
I am grateful that my hon. Friend mentioned deterrence—she is quite right—but she will realise, as I am sure most hon. Members do, that we need layered defence deterrents for them to work at all. It is no good simply relying on the nuclear deterrent, because that is devalued hugely if there are not the layers to support it. What we have done in the past is simply to salami-slice the defence budget—chop a programme here and a capability there, in order to make ends meet. That simply will not do. We need a strategic assessment of the threats we face and what kind of power we want to be: do we want to be a full-spectrum tier 1 power? If we do, we need to fund our forces appropriately for the threats we wish them to defend.
We have to see the value of the kit beyond just the capability it provides. I always refer to the glory of the 1960s aviation industry in this country—multiple companies producing wonderful multiple aircraft—but that world simply does not exist anymore. We could buy cheap, capable kit off the shelf from the Americans. That is one philosophical approach we might take, although I do not think we should and I doubt many of us do, because we would lose our sovereign capability and investment in industry.
We have to accept, therefore, that if we want sovereign capability, it requires the Government to invest not just in money but in strategy. In the past, we have taken neither approach; we have bought a bit of kit; we have invested in some kit; we have built some kit ourselves; we have collaborated in other kit, but with no overall holistic approach. My view is unequivocal: we should have that sovereign capability for reasons of national defence and because it employs hundreds if not thousands of people in our industries. We are very good at it, and it provides the skills that our young people would like, but it requires Government investment in planning.
I very much welcome the shipbuilding and combat air strategies but, as has been referred to, we need plans for a number of other things, including autonomous capability, helicopters, transport tankers, carriers and training—there are probably others. Above all, we need the Treasury to recognise the value of defence and not the cost. I see that when representing RAF Brize Norton. It is difficult to expect bright young people to serve if they cannot get a hot shower in the middle of winter, or if they see that their accommodation is nowhere near as good as what their friends have in the private sector. Those bright young men and women do have options.
I will just make a plug with the Minister for the REEMA sites at RAF Brize Norton, which need redevelopment—I know it is not his fault. We have brownfield sites there. It is having an effect on west Oxfordshire’s housing stock and on the young men and women who serve at RAF Brize Norton. I appreciate that is not the Minister’s fault but the Treasury’s. The Treasury must see the value, not the cost. It needs to revalue the Green Book and see defence not as a cash drain but a net gain to the UK economy.
I thank my hon. Friend the Member for Berwick-upon-Tweed (Anne-Marie Trevelyan) for securing this important and most interesting debate.
It is crucial that the UK has robust and reliable combined armed forces that are well trained, properly equipped and ready to respond as required to keep our nation and its people safe and secure. That is ever more important as the threats to our nation evolve in intensity, intertwined with ongoing scientific and technological advances. Hopefully, the modernising defence programme launched in January 2018 is taking account of those somewhat fast-moving developments.
Having worked in the emergency services, I appreciate that our armed forces personnel are going into situations that others are escaping from. Added to that, they will engage in conflicts where the norms on law, order and safety no longer apply. The Government must consider their duty of care to armed forces personnel prior to, during and after committal; no doubt, their health and wellbeing underpins any successful mission. Armed forces personnel may be called on to put their lives on the line to protect us from harm, and we need to afford them the best protection available. That certainly will mean spending more money on personal protective equipment or military equipment. Surely, it is preferable for all involved to spend money by choice than to be decreed by a court to pay compensation, which has an impact on the morale of our service personnel and those wishing to join.
The Government have taken much needed and welcome measures, as has been mentioned, to improve housing provision for armed forces personnel, increased allowances and tax reliefs, and facilitated access to rehabilitation centres. However, I hope they will not rest on their laurels, but continue to review that important aspect of defence spending as part of a continuous improvement programme. We heard earlier that there is much more to be done on housing for our service personnel.
Our involvement is further afield, too. As was the case with our forebears in the two world wars, our armed forces may be called upon to assist in defence partnerships with other nations. I hope—like many others, I am sure—that responding in anger will seldom be required in future, but with that will come a greater focus on peacekeeping assistance throughout the world and the opportunity for the armed forces to bring their unique skills to bear on local civil contingencies. That said, for our children and grandchildren, cyber-space may be the war zone of the not too distant future.
Let us be clear: funding for our armed forces depends on a strong economy, which only the Conservative Government can fund; not the fairy tale finances that we hear about from other quarters. UK defence spending over the last five years has been stable at around £36 billion in real terms, increasing this year to around £38 billion. Minister, is that really enough?
Despite the future of RM Condor in my constituency and jobs across Scotland being secured by the UK Government, does my hon. Friend recognise that we have not seen a firm commitment from the SNP that they would still be secure in an independent Scotland?
I recognise that there has been little or no comment about defence for Scotland from the SNP, but I welcome the investment in Scotland by the Ministry of Defence, not least in my hon. Friend’s constituency.
Finally, in relation to the defence transformation budget of £160 million ring-fenced from the defence budget, I would be grateful to know if the Minister expects the stated possibility of a further £340 million to be raised as part of the spending review.
Our regular servicemen and women, in addition to the reservists who balance a civilian life with commitment to the armed forces, are talented people from a diverse range of backgrounds. They deserve our fullest support. That means investment in our armed forces and those who serve in them.
We now come to the contributions from the Front Benches. Please do not exceed the guideline of six minutes, as that allows a minute for the mover to wind up.
It is always good to see you in the Chair, Mr Betts. I sincerely congratulate the hon. Member for Berwick-upon-Tweed (Anne-Marie Trevelyan) on securing the debate and the fine way in which she opened it.
The hon. Lady invited us to consider the issue of defence spending in its purest sense. How does one fund a public service, the most critical public service that the Government can fund and preside over? In her opening remarks, she urged us to consider not just the sum of money spent on defence but how that money is spent across the Department. As we say in Scotland, there has been a fair kick of the ball on that issue here today, but we again find ourselves with the Defence Minister—it is always good to see him on the Front Bench—and not with a Treasury Minister. For those who are new to defence debates, although most of us here are regulars, that is something we have yet to use our collective ingenuity to achieve.
When considering defence spending, in my mind there are three clear elements that the process should contain. The first is to analyse the threat picture. It has been mentioned this morning that it is increasingly complex, fast-changing and differing day to day, hour to hour. There is then a decision to be made on the capability that is required in order to meet the threats that we face. The third step is to fund, fund and fund that necessary capability.
There is an entirely legitimate political debate to be had—indeed, the public would expect no less—over how well served we are by the current set-up. It is a debate about which Members here today, certainly those in my party, have tried to encourage some thinking outside the box. At the moment, we have a Department that is constantly chasing its tail and is ill-served by political posturing, some of which regrettably has been on display here this morning; there are warring political factions in the governing political party and Government Departments are set off against each other.
Indeed, the right hon. Member for Rayleigh and Wickford (Mr Francois) said that the Treasury do not understand the Ministry of Defence. I will come back to that, but he said something even more revealing: he asked us to go to the bank with a promise from the right hon. Member for Uxbridge and South Ruislip (Boris Johnson), the likely next Prime Minister, that he would fund defence fully. Well, he is hardly going to say he will fund defence partially. The right hon. Member for Rayleigh and Wickford might run to the bank, but we need detail, and we have not had that from either of the prospective Prime Ministers, despite the warm words.
If we go back to the first step in how I see devising how much is spent and how it is spent, we need a greater, more robust and more sophisticated discussion in the House about the threat picture that we face. When we get on to how we fund the capabilities required, we need a shift to multi-year defence agreements—something I raise in just about every debate we have.
There have been interesting and subtle shifts in the language used, particularly by Conservative Members when they talk about multi-year arrangements. I have asked previously if the Government are looking at bringing in proper multi-year defence agreements, similar to the model used in Denmark, for example. The previous Minister for Defence Procurement, the hon. Member for Aberconwy (Guto Bebb), said that was being looked at; the current Minister for Defence Procurement says that is being looked at. I ask the Minister, when can Parliament expect to hear some more detail? I think that would lead to the end of tin-eared design and outcomes, such as the closure of the Royal Navy base in Rosyth, which is the only Royal Navy base in the north-east of these islands.
I disagree vehemently with other Members about nuclear weapons; look at how they have done nothing but haemorrhage money as though it were going out of fashion. That is before we get to other issues, such as submarine decommissioning, that I know the hon. Member for Berwick-upon-Tweed has an interest in. We would have an end to National Audit Office reports, detailing a black hole of up to £15 billion in the equipment plan.
People are the greatest asset the Ministry of Defence has; they are the real deterrent. When she opened the debate, the hon. Member for Berwick-upon-Tweed adumbrated the need for a long-standing SNP policy—perhaps she did not mean to—of having an armed forces representative body to better represent those in the armed forces, veterans and their families, and so get better outcomes for them. It is often said that defence does not win votes, but it can certainly lose them. I fear that collectively this House is getting that wrong.
Last, I encourage Members to read an excellent academic paper called “Military Strategy of Small States: Responding to External Shocks of the 21st Century” before they come to the next defence debate. It is written by three Swedish academics, and it is about the relationship between the threat picture, the money that is spent and the political discussion, which needs to be more sophisticated in this place.
It is a pleasure to serve under your chairmanship, Mr Betts. I congratulate the hon. Member for Berwick-upon-Tweed (Anne-Marie Trevelyan) on securing this important debate and for setting out the case. She highlighted the fact that defence does not feature in our postbags, as we are all aware, and as a result it does not get the focus it needs. She also talked about the conscious choice by Government in recent years to reduce Government spending on defence, which, as she said, was based on a false premise.
There were some excellent contributions to the debate, from my right hon. Friend the Member for North Durham (Mr Jones), the right hon. Members for New Forest East (Dr Lewis) and for Rayleigh and Wickford (Mr Francois), my hon. Friends the Members for Plymouth, Sutton and Devonport (Luke Pollard) and for Glasgow North East (Mr Sweeney), as well as the hon. Members for Strangford (Jim Shannon), for St Ives (Derek Thomas), for Somerton and Frome (David Warburton), for Filton and Bradley Stoke (Jack Lopresti), for Witney (Robert Courts) and for Ayr, Carrick and Cumnock (Bill Grant). One point of consensus that all the speakers highlighted in different ways was the need to increase defence spending.
Labour is committed to spending at least 2% of GDP on defence, in line with our NATO commitments. The last Labour Government consistently spent well above the 2% figure. Sadly, since then we have seen a sharp fall in the real-terms value of the defence budget. Independent analysis by the House of Commons Library has shown that defence spending in the last financial year was £9.3 billion lower in real terms than when Labour left office.
The debate is ongoing on the appropriate level of defence spending, with both candidates for the Conservative leadership adding their thoughts. That is particularly galling when both of them have consistently voted for budgets that have slashed defence spending to what it is today.
In his haste to criticise the leadership candidates for their commitments to increase defence spending, can the hon. Gentleman point to a single speech where the Leader of the Labour party—not its defence spokesman—has indicated that he wishes to increase defence spending?
I was not attacking the comments of the candidates for the Conservative party—they are welcome. I was saying that it is galling that they voted for cuts. The Leader of the Opposition has highlighted, as did the last Labour party manifesto, our commitment to a 2% minimum for defence spending, in line with the NATO commitment. He has also said that we cannot do defence on the cheap. He is as committed as our party to spending on defence.
Added to the squeeze on defence spending is the fact that the MOD’s purchasing power has suffered from the fall in the value of sterling after the Brexit vote. Of course, what matters is not just what is spent, but how it is spent. As we debated last Thursday in this Chamber, we need to use the defence pound to support UK prosperity and to back UK defence workers. Labour wants more MOD defence contracts to be awarded here in the UK, and we would like to start with UK-only competition for the fleet solid support ships. As my right hon. Friend the Member for Warley (John Spellar) highlighted, that is a matter of political will. Not only is it vital that we support the UK defence industry to retain our sovereign capability; we also know that investing in the UK leads to additional revenue coming back to the Exchequer in taxation, higher national insurance contributions and lower social security payments—not to mention the value of apprenticeships and spending in the wider economy.
We know from reports by Oxford Economics that the UK defence industry has an output multiplier of 2.3, which means that a £100 million investment in the UK industry generates some £230 million to the UK economy. Its reports have also highlighted the fact that each additional job created in the manufacturing element of the defence industry results in a further 1.8 jobs being created in the wider economy. I am sure that the Minister will want to convey that message to the Treasury. Of course, sufficient levels of defence spending depend on an economy that is growing, so I hope that the Minister will join the Opposition in opposing a harmful no-deal Brexit, which would be damaging to our GDP and would therefore threaten all Government spending, including spending on defence.
I thank all the Front Benchers for co-operating in reducing the time they take on their speeches.
It is a pleasure to serve under your chairmanship, Mr Betts. I congratulate my hon. Friend the Member for Berwick-upon-Tweed (Anne-Marie Trevelyan) on introducing the debate. There can be few in Parliament so passionate about the armed forces and I am not surprised that it is she who called the debate. It has been highly constructive and has demonstrated a gratifying commitment to the defence sector on both sides of the House. We should start on a note of agreement: clearly everyone in the Chamber wants the defence budget to continue to rise, and that is gratifying. It is tempting to pick up on another point where we all agree—that it is the Treasury that is the enemy; but I cannot possibly say that. With a reshuffle coming next week, I do not want to limit my options too far. They are already pretty narrow, so let us not go further.
I doubt it.
As has been said, the first duty of any Government is the safety and security of the British people at home and abroad. I am proud that the Government have delivered on their NATO pledge to spend at least 2% of GDP on defence. They will be spending more than £186 billion on equipment and equipment support between 2018 and 2028. Aside from ensuring that our armed forces have the latest and best capability, our investment of around £19 billion a year underpins a world- class British industry, providing direct employment for 115,000 people and nearly 400,000 more across the wider supply chains. That substantial and sustained investment is not only vital to our national capability and prosperity and to supporting economic growth. It is also vital to our ability to counter the rising threats that menace us and all NATO members, including a resurgent and increasingly assertive Russia, and extremist terrorism across the world.
This year NATO celebrates 70 years as the foundation of our mutual security. The UK is one of very few NATO members that meet both their core spending guidelines by spending 2% of GDP on defence, of which 20% goes on major equipment and associated research and development. Defence spending in many NATO states is still too low, and although our allies are making progress on burden sharing, they must do more. The increase mirrors rising defence spending across the world, which makes it vital that the UK maintains its position as a leading player on the world stage.
The upcoming spending review is an opportunity to reprioritise our national investments across defence, ensuring that we can meet whatever the future may throw at us in an era of intensifying threats. The Department has done a great deal to drive out inefficiencies in defence, and there is more to be done, but we must also invest in new capabilities and in transforming the way defence operates, so that we can continue to defend the UK and project our influence.
First, we must mobilise defence to meet rising threats. The international situation is darkening. The rules-based order that has kept the peace for so long is under constant pressure and the external threats that confront us increasingly come from multiple directions. Despite the coalition’s success in degrading the power of Daesh, the threat of terrorism is still with us, while malign cyber-warfare and proxy warfare are rapidly changing the face of conflict. The nation’s approach to future spending decisions must reflect those new realities.
Secondly, we have to modernise and innovate—to embrace new technologies to ensure we have a competitive edge over our adversaries and to identify opportunities to sustainably reduce our cost base, which will require some up-front investment. The Department is investing about £800 million through the defence innovation fund to keep us ahead of the curve, and ring-fencing £160 million of its budget this year for the new transformation fund. Thirdly, on efficiencies, defence has to transform the way it does business by liberating new industry thinking and tackling the behaviours and practices that have racked up excessive costs in the past. That means tackling the mindset of short-term decision making that leads to poor value for money. We must invest in technology now for long-term savings.
I want to answer a couple of points raised in the debate. The MOD does not collate defence expenditure figures for regions, but the average spend per person in the UK was £290 in 2017-18, and the MOD spends some £19 billion a year supporting 115,000 jobs. That means that one in every 220 jobs in the UK is in defence. On the accusation that there have been cuts under the present Government, since 2014 defence spending has increased year on year and we now spend £39 billion—rising to £40 billion by 2020. [Interruption.] I would also say to the right hon. Member for North Durham (Mr Jones), having served in Afghanistan in 2006, that the sort of commitment that we had, with so many of our troops serving on operations overseas in Iraq and Afghanistan, made for an environment very different from today’s. With the different threats we face at any one time, it is sometimes difficult to compare like with like. Our relationship with strategic suppliers in the UK defence and security sector is vital. The armed forces support an industrial base in the UK providing employment to about half a million people.
I was delighted that many Members raised the issue of mental health in the debate. In the autumn Budget the Chancellor announced £10 million to support veterans’ mental health and wellbeing needs, and in January the armed forces covenant fund opened a £3 million funding programme to fund innovations and improvements to veterans’ community centres. We are considering investing more in veterans’ mental health. Accommodation is another key issue for many service personnel. We are looking closely at the new accommodation model, which is aimed at giving choice to service personnel. Equally, on pay, the Armed Forces Pay Review Body has recently presented its latest findings, to which the Government will respond in due course.
I end on a note of consensus again. I am delighted that in this Chamber at least we are committed to armed forces personnel, and to a rising defence budget.
I thank all colleagues and the Minister for their continuing commitment to the armed forces and for speaking out so that those who have no voice of their own know that many of us in the House understand the incredibly difficult role they play in our defence. As my hon. Friend the Member for Ayr, Carrick and Cumnock (Bill Grant) said, they run towards danger as most of us are running away from it. It is extraordinary that there are people willing to do that—as he did as a fireman—in defence of our nation, security and children. The issue is not a percentage figure; it is about making sure we can meet the operational requirements, whatever problems arise.
As ever, I thank the Minister for his support and his willingness humbly to agree that it is the Treasury we need to continue to fight. We will find a way, as the hon. Member for Glasgow South (Stewart Malcolm McDonald) said, to bring the Treasury to us to listen to the arguments. I think we all agree that funding for defence is not like funding for any public service Department and we must find new, more effective ways to spend taxpayers’ money.
Question put and agreed to.
That this House has considered defence spending.