asked Her Majesty’s Government:

Why, in light of Lord Drayson’s statement on 5 July 2006 (Official Report, col. 229) that defence expenditure as a percentage of gross domestic product had reduced, Lord Davies of Oldham stated on 17 January (Official Report , col. 649) that the Government had not reduced the percentage.

My Lords, the totality of defence spending as a percentage of GDP, as published in the Pre-Budget Report national expenditure statistical analysis of 6 December 2006, has remained roughly constant since 1997 at 2.5 per cent.

My Lords, I thank the Minister for that rather surprising reply, but since the GDP cake has been growing by 2.5 per cent per year since 1992 and the defence slice of that cake has been growing by only about 1.5 per cent, was not your Lordships’ Defence Minister surely right?

My Lords, I am glad that the noble Earl acknowledges that under a Labour Government there has been a real growth in defence expenditure during the past 10 years. The simple explanation for his misunderstanding of the position is as follows: the defence budget has been at the level that he stated, but I answered last time on defence expenditure, which includes military operations.

My Lords, while I recognise the slight increase in real terms in the defence budget, the tasking, too, has increased significantly during this period. The National Audit Office recognised that in its report and the Prime Minister said in Plymouth that it would mean the need for long-term extra expenditure. Will the Minister confirm that the Treasury is working with the Ministry of Defence on redefining and costing the defence planning assumptions?

My Lords, the first base is the Comprehensive Spending Review, which will culminate in the middle of this year. Defence expenditure and the defence budget for the next three years will be included in that. However, the Government of course take into account changes in priorities in the longer term. This is all part of the work that is done together by the Treasury and the Ministry of Defence.

My Lords, was not the Minister being unduly modest in his reply? Has not GDP been rising rapidly? Is not the fact that defence expenditure has stayed at the same percentage of GDP therefore really quite remarkable?

My Lords, we had a reduction in defence expenditure against GDP over the decade before we came to power. Since 1997, we have been spending on defence 2.5 per cent of GDP, which is almost exactly the same as the percentage rise in GDP.

My Lords, does the Minister recognise that, as the noble Lord, Lord Garden, said, it is also a question of commitments? I do not think that many of those serving in the forces will be impressed by the bandying around of statistics or the clever answers coming from the Treasury Bench, given that those forces are faced with shortages, increasing levels of commitment and an increasing abandonment of the harmony guidelines, which provide a decent interval between unaccompanied tours of duty. The Prime Minister’s comments in Plymouth, belated though they were, were at last a recognition of the serious shortfall in defence expenditure.

My Lords, the issue is not that the Treasury produces these statistics; the noble Lord who asked the Question called for the statistics. This derived from a Question about defence last week. I am, therefore, obliged to put the record straight. However, I recognise what the noble Lord says: of course it is important that we sustain defence expenditure to meet the commitments of our troops. It is quite clear that the extra cost of military operations reflects the deployment of our troops in Afghanistan and Iraq, and the noble Lord will recognise that that involves substantial increased expenditure.

My Lords, I do not know whether the Minister feels that he has yet understood the questions. Surely he will agree that a Government who saw the end of the Cold War were able to reduce defence expenditure, and a Government who involved our Armed Forces in only one relatively minor overseas war were able to contain defence expenditure. Does he not realise that the Government of which he is a member will probably go down as the most warmongering since the end of the Second World War? That is why defence expenditure ought to be far higher than it is today.

But, my Lords, the noble Lord is asking his question in a different context. I was replying last week in a context in which it was contended that defence expenditure was being cut. I said that it was not, and it is not.