My Lords, I am sure that the whole House will wish to join me in offering sincere condolences to the families and friends of Lance Corporal Adam Drane, of 1st Battalion the Royal Anglian Regiment and Acting Sergeant John Paxton Amer, of 1st Battalion Coldstream Guards, who were killed on operations in Afghanistan recently.

With the leave of the House, I shall now repeat a Statement made in another place by my right honourable friend the Defence Secretary. The Statement is as follows.

“I am announcing today changes to the defence programme which will enhance the support to our personnel on operations in Afghanistan, worth £900 million over the next three years, and reductions elsewhere to make these enhancements affordable and to match our expenditure against available resources. In doing so, I have made every effort to ensure that we balance the priority of supporting our forces in Afghanistan with our commitment to maintaining the capabilities necessary for the future, and that we do not take decisions on major changes that should properly be made in next year’s defence review.

As I have repeatedly said to the House, support to our operations in Afghanistan is our main effort. I saw for myself last week the contribution being made by our forces across Afghanistan, taking on the Taliban, and beginning to train and partner with the Afghan National Army. I pay tribute to their bravery, professionalism and dedication.

The defence budget has had the longest period of sustained real growth since the 1980s; it is now £35.4 billion, more than 10 per cent more in real terms than in 1997. As the Chancellor confirmed in the Pre-Budget Report last week, not a single penny is being cut from the defence budget in 2010-11. But despite this significant investment, acute cost pressures remain. There are a number of reasons for this, including rising fuel and utility costs, increases in pay and pensions, and above all cost growth in the equipment programme. A number of major projects, while providing superb military capability, have cost more than twice their initial estimate in real terms.

All this presents us with a significant challenge, both in this financial year and as we look forward. The NAO’s Major Projects Report, published today, describes the result of these pressures. Going forward, I am determined that defence takes action to deal with these pressures and to address the challenges head on. That is why we commissioned the hard-hitting Bernard Gray report, are taking steps now to implement his report, and are reforming defence acquisition better to match our priorities to our spending. Getting this right is critical. Tough choices are required, and we will be publishing the strategy in the new year that will provide a planning and management framework to produce an affordable equipment plan.

I am determined to ensure that those who put themselves in harm’s way on our behalf remain properly supported and resourced. Our priorities in Afghanistan are to provide the best levels of personal equipment and protection to meet the fast-changing threat, and to increase investment in key capabilities, including helicopter capability and our strategic airbridge.

I am therefore pleased to announce a number of capability enhancements to support our mission in Afghanistan. These are in addition to the operational costs paid for by the reserve, which continues to increase year on year, and has risen from £738 million in 2006-07, when we deployed to Helmand, to more than £3.7 billion this year. By the end of 2009-10, the reserve will have contributed more than £14 billion to operations in Iraq and Afghanistan, including some £5.2 billion on urgent operational requirements.

However, my decision to fund these enhancements from the core defence programme reflects our determination to ensure that defence is supporting the current campaign and our belief that we expect such capabilities to feature in a range of future conflicts our forces may face. The enhancements total some £900 million over three years. They include: an improved dismounted close combat equipment package, making equipment such as state-of-the-art body armour and night-vision goggles available to 50 per cent more troops, so that they can train with them before deploying to Afghanistan; more Bowman tactical radios and patrol satellite systems to improve communications between troops and their commanders; an additional £80 million for communications facilities for our Special Forces; increased funding for our intelligence, surveillance, target acquisition and reconnaissance—or ISTAR—capabilities, doubling REAPER capability, and, as the Prime Minister announced yesterday, further improvements to our counter-IED capabilities, particularly intelligence and analytical capability to target the networks. The enhancements also include an additional C-17 aircraft to strengthen the airbridge, and improvements to defensive aids suites and support arrangements for the Hercules C130J fleet to maximise its use. There will be 22 new Chinook helicopters, with the first 10 arriving during 2012-13, as set out in the Future Rotary Wing Strategy which I also announced today.

In addition to this package, the Treasury has signed off the latest funding from the reserve—more than £280 million—to support a range of additional equipment for Afghanistan. This includes more new vehicles, such as a 31 per cent increase in Husky tactical support vehicles and a 40 per cent increase in Jackal fire support vehicles to be deployed to Afghanistan, and additional equipment to combat the IED threat, including more than 400 hand-held detectors, robots, and other kit. This one-off package is on top of the resources already allocated for urgent operational requirements for this financial year and the protected mobility package that has previously been announced.

The pressures on the public finances mean that we need to prioritise carefully within our own resources. We need to make reductions in lower-priority areas to fund these enhancements and better to match the defence programme to available resources. This has meant stopping or slowing spending in other areas and pushing down hard on headquarters costs and overheads. Inevitably, these measures will have an impact on some capabilities but we judge that these are manageable.

We will continue to reduce the number of civilians working in the Ministry of Defence. We recognise the importance of the civilian workforce and the critical outputs it delivers. That is why at the Pre-Budget Report we announced an independent study into the shape and size of the civilian workforce, including the distribution of tasks between civilian and military personnel. This study will be undertaken by Gerry Grimstone and will inform the defence review. Without prejudicing its outcome, we would expect that we will be able to continue reducing the overall size of the civilian workforce, above the 45,000 reduction already made since 1997. This is not just about doing more with less. We will also need to make hard decisions about what we can stop doing, and how we can bear down on other costs.

The other key adjustments we are making to the current programme are as follows. In line with our current aspirations to reduce to two fast-jet types—the Typhoon and Joint Strike Fighter—we will pursue without delay the Typhoon future capability programme phase 2. This is fundamental to development of its multi-role capability and integration with the latest weapons. We will reduce now the size of our Harrier fast-jet force by one squadron, close RAF Cottesmore and consolidate the Harrier force at RAF Wittering. This will maintain our joint carrier-based combat air capability. We plan to reduce our Tornado and Harrier force by a further one or two squadrons. Decisions on the make-up of our future force will be taken in the defence review.

We intend to withdraw the Nimrod MR2 force 12 months early and slow the introduction of the MRA4 force. This will have an impact on our use of RAF Kinloss, but there is no change to our assumptions on the future basing of the MRA4 force at this stage. The decision to withdraw MR2 has been taken for financial reasons and is unconnected to the report by Mr Haddon-Cave into the circumstances that led to the tragic loss of Nimrod XV230 in Afghanistan. Mr Haddon-Cave was very clear in his report that the aircraft remains safe to fly. I will be making a further Statement to the House in respect of Mr Haddon-Cave’s report tomorrow.

We intend temporarily to reduce some aspects of Army training which are not required for current operations. We will also take one survey ship and one minehunter out of service early; cancel the current competition for unprotected utility vehicles and defer the programme for two years; and bring forward the planned reduction of some of the older maritime Lynx and Merlin Mark 1 aircraft, prior to the transition to the more capable Wildcat and Merlin Mark 2. We will spend less next year than previously planned on the wider defence estate but will continue to prioritise investment in both service family accommodation and single-living accommodation.

The measures I have set out will also have implications for service personnel numbers. The details have not yet been finalised, but the emphasis will be on prioritising our manpower for operations in Afghanistan. Changes will be targeted to avoid affecting personnel involved in current operations. Reductions in service personnel numbers will be managed mainly by slowing recruitment and releasing some personnel in accordance with their contracts. I appreciate that these changes will be difficult for many service and civilian personnel, their families and the communities in which they are based. I am fully aware of the consequences and will support those affected.

In making these choices, I have had to consider that the Government and the Opposition parties are committed to carrying out a defence review after the next election. The Green Paper, to be published early in the new year, will explain the Government’s vision of what that review should encompass. The measures reflect our stated priority of support for the Afghanistan campaign and continued investment in new capabilities with enduring military benefit.

This is a difficult balance to strike, but I am confident that we have got it right and that that will be demonstrated where it matters most—on the front line, where our brave service men and women, supported by MoD civilians, are fighting for the future of Afghanistan and the security of our country”.

My Lords, that concludes the Statement.

We, too, on these Benches send our condolences to the family and friends of Lance Corporal Drane of the 1st Battalion The Royal Anglian Regiment and Serjeant Amer of the 1st Battalion The Coldstream Guards.

I start by thanking the noble Baroness for repeating the Statement, although many noble Lords will have read much of it in today’s media. This morning Quentin Davies said on the BBC news that,

“the Tories have made it quite clear that they will cancel the carriers and the A400M”.

I want to make it absolutely clear that no member of the Opposition Front-Bench defence team has ever said that we will cancel the carriers or the A400M. I would be grateful if the Minister could confirm that the Government clearly understand the Opposition’s position. I know that we are close to a general election, but it is unacceptable that a defence Minister of the Crown should be peddling untruths like this for political gain. It is very damaging to the morale of our Armed Forces.

Turning to the Statement, the Government tell us that they have sought not to cut capabilities in advance of the SDR, but many people will see today’s Statement as a mini SDR in its own right. What will be the effect of the Pre-Budget Report on the MoD core budget, given that the Institute of Fiscal Studies has said that non-protected government departments, including defence, must bear cuts of 16 per cent over the three-year period of the PBR? We welcome the announcement of new Chinook helicopters but it would not have been necessary had the Prime Minister not, against all advice, cut £1.4 billion from the helicopter programme from 2004. Those Chinooks could have been on the front line today. Instead they will not be available until at least 2013 when, according to the Prime Minister, we will, I hope, have transferred overall responsibility to the Afghanistan national army.

Can I be absolutely clear that we are procuring a further 24 new Chinooks—that is 22, plus a further two to replace those destroyed in Afghanistan? What version will these new Chinooks be? Will they be the same as our mark 3s or will they be built to US army specifications? Can the noble Baroness confirm that they will be fully supported with the correct number of adequately trained pilots and maintenance staff?

In light of the NAO report and numerous other projects that have been delayed, what assurances can the Minister give the House that these Chinooks will not also be cut or delayed in arriving? How will our submarines be protected following the withdrawal of the Nimrod MR2 next spring? How will the requirement for long-range rescue and maritime reconnaissance be provided once the Nimrods are gone? Can the Minister confirm that the production timetable for the Astute submarines will not be slowed down? Do the Government intend to subscribe to the €5 billion cash call by EADS to fund the cost of the five-year delayed A400M?

We welcome the additional £80 million for communications facilities for the Special Forces, ISTAR and the doubling of Reaper capability, as well as a new C-17 to strengthen the air bridge, which is absolutely vital for the morale of our Armed Forces. To succeed in Afghanistan we must win the counter-IED fight, and I declare an interest as the honorary colonel of a TA regiment with a speciality in this field.

I therefore welcome the pledge of new money to cover the cost of 400 high-tech hand-held devices, which will help soldiers to find IEDs and allow the Army to set up a new analysis centre to scrutinise intelligence from the combat zone. Can the noble Baroness confirm that there will be no cut back in the training of soldiers to counter IEDs? Training of this sort is expensive and is therefore constantly a target for savings measures, but it is vital as our enemy is constantly adapting and has the ability to do so as fast, if not faster, than ourselves.

To enable these changes to happen there will have to be huge cuts across the board. Today the Prime Minister has blithely promised £1.5 billion to sign up to the Copenhagen climate change deal. However, despite the fact that we are fighting a very nasty war in Afghanistan, there is no new money for defence.

My Lords, first, I enjoin these Benches in the earlier tribute. I also thank the noble Baroness for her Christmas card which I received this morning.

Today’s Future Defence Programme Statement, heavily leaked, as the noble Lord, Lord Astor, mentioned, and produced just before we rise, is yet another example of the spin and shambles which characterise this Government’s defence policy. The macro story is of a Government who have steadily reduced the spending on defence as a proportion of gross domestic product, have failed to carry out a defence review for over 10 years, and yet have involved our nation in two major and controversial conflicts.

We have had a Chancellor of the Exchequer and now Prime Minister with little interest in defence, who remained semi-detached from the war in Afghanistan until very recently. He now tells us that he has drawn “great confidence” from his recent Afghan visit. No doubt we should be reassured by that. However, I note more seriously the observation by David Richards, the Chief of the General Staff, in the Sunday Times on 6 December:

“I’d characterise what has happened over the last eight years as strategic failure”.

The Gray report on procurement, confirmed by the National Audit Office, discloses a massive underfunding of our current procurement programme. The MoD is effectively bankrupt. Knowing the state of its finances, how could the Government go ahead with our major new carriers, whatever their merits, without providing additional resources? It is rather like a family threatened by the bailiffs, the bank and numerous credit card companies, deciding that the right course of action is to order a new Rolls Royce.

Of course, like the noble Lord who spoke earlier, we welcome much in today’s Statement, particularly the 22 new Chinooks and the additional C17 to strengthen our overstretched transport fleet, and additional equipment to combat the IED threat. It is no good the Prime Minister now masquerading as Father Christmas in a flak jacket. The Government have been in power for 12 years. We have all been pleading for more helicopters for years. Why place the order for more Chinooks only now?

I ask the noble Baroness specifically what aspects of Army training will be temporarily reduced. Which areas of the defence estate will have less spent on them compared with what was previously planned? Will we not, once again, end up paying more in the long term? Approximately what number of RAF personnel will no longer be required following the base closure, the focus on just two fast jets, the Nimrod force changes and helicopter rationalisation?

Virtually all the announcements in today’s Statement should sensibly have been made after a defence review, not before it, aligning the review’s conclusions with appropriate funding. As with the recent volte face on Territorial Army training, this Government’s defence policy is all over the place, and the sooner we have a general election, the better.

My Lords, I start by welcoming the areas where there was some agreement. It is clear that the decision to have an extra 22 Chinook helicopters, together with the decisions on the C-17 and the extra investment in work against IEDs, which are of course very dangerous for our people in Afghanistan, have all been welcomed. It is important to remember the changing nature of the situation that we are facing on operations. Indeed, the noble Lord, Lord Astor, acknowledged that the enemy is adapting very quickly. That is one reason why we have to be responsive, why we have urgent operational requirements and why it is right that we step back from time to time and look at our equipment priorities. We are now trying to make sure that we concentrate our attention on areas where operations lessons have been learnt but where there are longer-term implications. None of us can say exactly what the future threats will be, but we know that we will have to be adaptable and flexible in all that we do. It is right that we learn those lessons and think ahead as we do so.

Perhaps I may pick up on what the noble Lord, Lord Astor, said about my colleague, the Minister with responsibility for defence equipment and support. I did not hear that particular radio interview but I am certainly aware that no single party has said that it will increase defence expenditure, although there have been rumours about what will and will not be cancelled by others. I should like this House, and indeed the other place, to have a very mature debate on what the priorities for defence should be and what equipment decisions should follow from that, as from many other decisions. That is one reason why it is very appropriate that we have a Green Paper in advance of the Strategic Defence Review, and I hope that we will be able to debate that in this House with those who have a genuine interest in exploring the future. The one thing that we do know is that the next threat will not be the same as the previous one: we are in a very fast-changing situation with globalisation and new challenges. The noble Lord, Lord Astor, mentioned money being spent on climate change, but there are of course security implications in climate change. Given the nature of the possible contributors, I hope that this House will look forward to having a non-political, mature and wise debate on that Green Paper in advance of any decisions made in the Strategic Defence Review.

I repeated in the Statement the spending that the Secretary of State announced when he made his Statement in another place. Defence expenditure is not being cut. So far as concerns defence expenditure, the Comprehensive Spending Review settlement stands—that is, £35.4 billion, which, as I said, is 10 per cent more in real terms than in 1997. The extra £14 billion that the Treasury has put in for operations since 2002 is an exceptional amount of money. It has been very important and shows a degree of commitment that perhaps belies the noble Lord’s description of the Chancellor, now the Prime Minister. He suggested that the Prime Minister was semi-detached. A Chancellor who allows that amount of spending from the reserve, and a Prime Minister who has overseen an increase in spending from the reserve, is hardly semi-detached. His weekend visit to the front line, which I understand is the first such visit by a Prime Minister for a very long time, shows a very high level of commitment.

The noble Lord, Lord Lee, asked how we could allow the carriers to go ahead. We allowed the carriers to go ahead because they allowed for a level of deployability that could perhaps not be matched in any other way, which was important.

The helicopter issue has been raised by both of the noble Lords. They do not think that the Ministers at the time plucked a cut in anticipated spending on helicopters out of the air. That was part of a review that was going on at that time about what was appropriate. Since that time we have had very significant changes and improvements in our helicopter capability; indeed, the number of platforms and the percentage increase in flying hours in Afghanistan have increased very dramatically in recent years. It is true to say that we are now spending more on helicopters than was anticipated in 2004 to 2005. We are consolidating four types of helicopters, which should improve our position in terms of support, maintenance and the training of pilots and all those required.

I was asked whether we would make sure that the Chinooks that we are buying off the shelf from the United States and then making adjustments to—the quickest way of obtaining them and making them deployable—would have adequately trained pilots and maintenance staff. Of course we need all of that back up. The improvements that we have been able to make in flying hours in Afghanistan have been precisely because we have invested in maintenance crews and the training of pilots. That is important and something that we can do.

In terms of Astute, we are looking at the production drumbeat. We are having a review of that with industry, which will be reporting in spring of next year, not least because of the practical difficulties that industry has been encountering. It is extremely important that we have a sustainable drumbeat that meets everybody’s needs.

In terms of A400M, we all know that this has been a very difficult and ambitious project. It should be a very good plane. We are very keen to have it, but we are not keen to have it at any price. We have to make sure that we can afford it and that it will deliver, in a timely way, some of the capacity that we believe we need.

I was asked whether we should be looking at training for the Army and where there might be cuts. The Statement itself says that the priority will be given to all training that is relevant to the operations in Afghanistan. Cuts will come on more routine exercises that are not pertinent to Afghanistan. In terms of the estate, I was asked where there we will be spending. We are giving priority to service family accommodation to Project SLAM. Office accommodation and things of that kind will be affected.

I am not in a position to say what the situation is in terms of RAF personnel. It is very early days. We will be happy to keep people posted. At the moment it is not possible to make proper estimates. I was asked whether it would be better if we were doing this after the defence review. The decisions that we have made, which have the support of the Chief of the Defence Staff and all the service chiefs, make sure that we do not take out any vital capability and that we do not in that way pre-empt the Strategic Defence Review. That has been one of the priorities in looking at this whole process. Therefore, we have made very balanced decisions.

My Lords, the noble Baroness asked for a mature debate. Does she recognise that the first mature point to make in the defence field is that if you are fighting a war, you do not take the cost of it out of the peacetime defence budget? She says that defence expenditure has not been cut, but if the war is not being funded fully out of the reserve then the defence budget is being cut, and that is precisely what is happening.

Although some of the items of equipment are welcome, and some are long overdue, we are in the eighth year of a war and the Government have just announced an order for new helicopters which, if we are lucky, we will receive in the 11th year of the war. So we face a very grave situation. The courage and bravery of our troops deserves a united and consistent approach to the challenges we face and a recognition that a war of this kind must be funded. I address merely the first Gulf War: not only was it funded out of the reserve, a number of the allies whose interests were supported by our activities helped to fund it as well. It certainly did not come out of a peacetime defence budget.

This is a most muddled Statement. It says that a number of decisions have been taken but also states,

“our belief that we expect such capabilities to feature in a range of future conflicts our forces may face”.

Is that not pre-empting a defence review? It is quite clear that such a review is now urgent, as are the earliest publication of the Green Paper and the earliest possible addressing of these issues. While the Government jump backwards and forwards between what may be our future capabilities and what are our urgent priorities, it does no service to the courage and bravery of our forces, who are facing a very difficult time.

My Lords, I recognise the expertise that the noble Lord brings to this debate, but I would remind him that the C17 and indeed the new helicopters that we have announced today are not just for Afghanistan; they will be used in any potential conflict. They will be part of the core defence equipment for a very long time. Therefore it is appropriate that some of this funding should, as has always been the case, come from the core budget. I also remind him that the Statement says that today the Treasury is giving another £280 million from the reserve for some of the extra items that he and others have welcomed. I return to a point that I made earlier: £14 billion from the Treasury in the past eight years is no mean amount of money by anybody's standards. It shows the very high level of commitment that everyone in government has in this regard.

The noble Lord asked for the earliest possible publication of the Green Paper. The work on that is very well advanced and a great deal of thought—including some outside consultation—has been given to what should go into it. It will deal with the broad issues of the nature of the threat and what we might have to face in the future. While I am not a business manager in this House, I would hope that we can find time for a debate so that all who want to contribute can have their voices heard.

My Lords, I thank the Minister for repeating the Statement. Eighteen months ago, I asked the then Defence Secretary about the need for a defence review. He assured me that it was not then required. How wrong he was. What a pity that the work that should have been done on the SDR has not been done. Without that we now have these panic intentions to rein in current overspending in the MoD, really putting the cart before the horse. We should all welcome the new C17 and additional helicopters, which are clearly needed. But I must point out that all ground and naval forces can only fight effectively when their side has air superiority. Yet further major cutbacks are planned now for the fast jet force, which alone has the capability of fighting for and sustaining air superiority. The further reduction in the front line by a Harrier squadron and one or two Tornado squadrons must be seen against the earlier reductions of the whole of the Jaguar force and other Harrier and Tornado squadrons. Does today’s announcement mean that the Government have no intention or expectation of ever again having to confront an opponent equipped with offensive air power? They are dangerously arriving at a position where we could not sustain effective air power over our ground and naval forces.

I am glad that the noble and gallant Lord accepts the wisdom of buying the C17 and the helicopters. I recall what he said previously about the need for a Strategic Defence Review, as have others. I think that the timing of a Strategic Defence Review must always be difficult, particularly when you are in a conflict situation, but the approach that has been adopted, with a Green Paper in advance, which will allow for the more mature debate that I would like to see, is probably a very good way forward. On his questions about air superiority, I draw his attention to the fact that we have made a very clear commitment that we will have, in the medium to long term, two fast jets, namely Typhoon and the Joint Strike Fighter, both of which have an undoubted reputation and aspiration to be the best possible available. We announced today an upgrade of Typhoon’s attack capabilities, so I do not think that we are making ourselves vulnerable in the way that the noble and gallant Lord fears.

To what factors does the Government attribute the doubling of cost of certain important defence items to which the Minister referred in her Statement? Will the defence review investigate the potential cost savings of pooling more of our procurement of defence capability with our European allies?

Increased costs on specific defence projects can come about for a number of reasons, partly because some of the projects are extremely ambitious and it is not always clear at the beginning exactly what the end product will be, not least because the pace of change is so great. There are often many upgrades during the lifetime of a project, which might be over several years. The capability of the end product has often been significantly enhanced compared with what was originally envisaged.

As for pooling projects and working more with Europe, or indeed with other potential partners, there is scope for pooling projects, but it is not always easy. You have to have the same requirement as whoever you are working with, you have to have the same budgetary availability and you have to be working to the same timescale—that is assuming that there are no other difficulties involved. So far as Europe is concerned, there are some projects within the European Defence Agency that we are working on and that we think could help in, for example, certification of airworthiness, which could bring benefits across the board to a number of countries. On specific projects, it is often a lot more difficult than people think to get a proper alignment of the needs and requirements of all the countries involved, but this is something that we always look at, especially on some of the larger projects.

I have a very simple question for the noble Baroness. Is the survey ship referred to, which is to be withdrawn, the one that operates around the Falklands? If so, it will be sending the same signal to the Argentines as it did last time.

My Lords, I cannot remember the name, off the top of my head, of the one that is there. It is not “Endurance”; “Endurance” came back for other reasons. We are not envisaging reducing any key capabilities. There are other aspects of that work and we will make sure that we are covered in the area she suggests.

I visited Afghanistan in 2004—I went to Helmand province, Mazar, Kandahar, Herat; all kinds of different places—and wherever the British soldiers were, they were doing a very professional job. I pay tribute to them and to those who have been killed. Given the increased number of fatalities—I know that the Minister is talking about future defence; I am not asking her to prophesy whether there will be no more deaths, that is not what I am asking—can the Government, hand on heart, be certain that, in the present theatre of war in Afghanistan, all the necessary equipment is available and can be procured? During the Second World War our factories worked flat out to make sure that our forces were given the necessary equipment. In terms of the modern world, money needs to be made available now, not in the future. We may learn lessons for the future in Afghanistan, but I am worried about the number of fatalities. The future will happen, but can the Minister tell us whether we can be confident that in the immediate theatre of war in Afghanistan, our soldiers have what they need to do the job that they are doing?

My Lords, I thank the most reverend Primate for his comments. I am glad that he was able to visit Afghanistan. I know that a number of Members of this House have had that opportunity, which can lead to more informed debate and discussion and a greater understanding of the nature of the conflict. I am glad that he paid tribute to those who are working there and who have worked there in the past. It is right that we should do that on all occasions.

The most reverend Primate asked me if I can be certain that all the equipment that is required will always be available and can be produced. The analogy that he drew with the Second World War is a difficult one in these circumstances because, as I mentioned earlier, the pace of change and the changing aspects of the threat that we are facing are so great that we need constant upgrading, because—to quote the noble Lord again—the enemy are very adaptable. Indeed, they have assistance from different places and have information. They are not little old men in caves taking pot-shots at us, they have very sophisticated advice and information. The kind of equipment we need for Afghanistan is very often the kind of equipment that cannot be bought off the shelf. We have to buy a core capability, enhance it and provide all the extras to try to get the best security possible. It is never possible to be certain on any of these things that a new threat will not emerge, because that is what we have seen time and time again. What I can be certain of is the commitment of everybody in the Armed Forces, in the Ministry of Defence and in industry itself to do everything possible to keep ahead in countering the threat. However, we should not underestimate how difficult that can be.

My Lords, can the Minister say a bit more about intelligence, which was mentioned in the Statement? Does she agree that effective intelligence is an essential ingredient in support of the fighting forces? Can she say to what extent we are getting as much support as we would wish in intelligence material from Pakistan and from the relevant authorities in Afghanistan?

My Lords, it may be known that I chaired the Intelligence and Security Committee, as did the noble Lord, Lord King. Anyone who has held that position would confirm the absolute importance of intelligence and would always want to see that getting a high priority. We talk about Reaper in the Statement and the fact that we will seriously improve the availability and capability there. I do not think that anyone can overestimate how important ISTAR is. We get support and co-operation from other partners and we are trying, in what we are doing here, to use ISTAR and whatever information we can get not only to identify IEDs but to get to the network of those who are providing them. In the long run that will be an effective use of resources.

My Lords, I appreciate that the Secretary of State has a very difficult, not impossible, balancing act, but can the Minister confirm that, however much it is dressed up, £1 billion is going to be removed from the defence budget in year 1, when we still have an all-embracing war on our hands? Will she be a little more explicit on priorities and explain what exactly is meant by,

“stopping or slowing spending in other areas and pushing down hard on headquarters costs and overheads”,

which the Secretary of State believes,

“will have an impact on some capabilities”?

What are those capabilities? The noble Lord, Lord Lee, asked an important question about training. It is easy to refer to training that does not affect Afghanistan, but the whole professional competence depends on all-round training. It would be nice to know exactly what training is going on. Finally, how much less will be spent on the wider defence estate? The Statement says that family accommodation and single living accommodation will be given priority. What is being affected and how will this affect the covenant that the Government and the country feel is so important? Does the Minister agree that, if these temporarily and seemingly less important items are unduly affected, they store up endless problems in the future?

My Lords, on the last point I have to agree with the noble and gallant Lord that some of these problems, if not tackled, could create unduly difficult problems in the future. Indeed, I would suggest that that is one of the reasons why we have had to spend so much on the defence estate in the recent past. The backlog of underinvestment in that area was dramatic, but I am pleased to say that we are now in a situation where 90 per cent of service family accommodation is at grade 1 or grade 2, which is a significant improvement. However, I am told that when the service chiefs have asked about this, the priority that they have identified is the project called service personnel first, which gives an accommodation uplift for those who are returning from operations. It is quite understandable that that should be the priority. As to the Strategic Defence Review, the nature of the accommodation that we provide is one of the issues that I think will have to be discussed. An appropriate model in the past might not be an appropriate model for what we want to provide in the future or for the lifestyles of those in the Armed Forces.

The noble and gallant Lord says that £1 billion is being cut in year 1, but I have to say that I do not recognise that figure. The Pre-Budget Report said that not a single penny will be cut from the defence budget in 2010-11, which is as far as the Comprehensive Spending Review goes. He asked where we can make cuts, when we talk about priorities, in headquarters costs. Since 1997, we have reduced the number of civil servants in this area by 45,000. That has shown significant scope for reductions. We want to see that developed further, which is why we have the review under Gerry Grimstone. We will look forward to seeing what he comes up with. In our discussions on operations in Afghanistan, we have looked to slow down some projects. I hope that the whole House agrees that those projects that are important for operations should always have priority.

Further to my noble friend’s reference to the civilian workforce, I warmly welcome the importance that the Statement attaches to the work being done by a very dedicated workforce. She referred to the review that is taking place. Can she give us any indication of how long that review will take and when it is likely to report?

My Lords, we hope to have the report, which will cover the size and shape of the workforce, next year. As I have said, 45,000 is a big reduction and that has taken place already. Over the next four years, 4,500 more posts are planned to go, but we have to strike a careful balance. Some of the roles of those in the civilian workforce are critical to supporting those on operations. Therefore, we cannot just say, “All military posts good, all civilian posts bad”. We should appreciate that a lot of important work goes on and we should bear in mind the fact that it is much more expensive to employ military personnel on comparable jobs. We need to step back and look at that issue as a whole.

My Lords, would the Minister like to comment on the independent report that said that the procurement budget will be overstretched by £36 billion over the next 10 years? Does this not denote systematic failure of the procurement process? Does it not indicate that very large items of procurement have been ordered when clearly the funds were not available?

My Lords, there are problems with procurement, as the noble Lord will know. I mentioned earlier some of the reasons why certain projects accelerate in cost, not least because they end up being very different from how they started. I do not recognise the figure of £36 billion as being likely in reality, whichever Government were to get in. It assumes a flat-cash situation in so far as defence spending is concerned and I do not think that anybody believes that that is a likelihood.

My Lords, can the Minister reassure the House that those service men and women who have been severely injured but who are able, after coming back to this country and being healed, to be reabsorbed into the armed services will be, as has been the general practice in the past, and that reports to the effect that this will not be continued in the same way are unfounded?

My Lords, I think that we would all wish to pay tribute to those who have worked so hard to save the lives of those who have been seriously injured. We would always want to try to absorb those people back into the Armed Forces. It is not always possible and it is not always what they want, but the courage and determination of some of those who have managed to rejoin the Armed Forces and be active again have been quite remarkable and have impressed everyone.

My Lords, I feel that it is necessary now to resume the debate. Unless the noble Baroness, Lady Greengross, is here, which I believe she is not, we should move on to the most reverend Primate the Archbishop of York.