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House of Lords Hansard
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Brexit: Armed Forces and Diplomatic Service
08 December 2016
Volume 777

Motion to Take Note

Moved by

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That this House takes note of the impact of the withdrawal from the European Union on the United Kingdom’s armed forces and diplomatic service.

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My Lords, all who join the armed services need to have total belief that they are the finest trained, equipped and motivated fighting force in the world when going to engage in combat. I hope this debate takes that into account. Today we use too many words that are euphemisms, such as “collateral damage” and so on. Padres in World War I, World War II and today see their role as to help people going into battle to handle the horror of war, and deal with death and injury.

On 21 November, the noble Lord, Lord Touhig, asked whether the Government were,

“intending to review the Strategic Defence and Security Review in relation to maintaining the size of the army at 82,000 personnel and increasing the size of the Royal Navy and Royal Air Force”.

My noble friend Lord Howe replied that,

“the Government have no plans to reopen the strategic defence and security review. The national security strategy established clear national security objectives and the SDSR set out a funded plan to achieve them, all based on a clear-eyed assessment of the risks and threats that we face. Our energy is now devoted to its delivery, including the desired size of each of the armed services”.—[Official Report, 21/11/16; col. 1721.]

Our foreign policy statement was finally developed in 2015. Surely today’s foreign policy should take account of the dramatic changes and increased dangers we face, together with the great opportunities in a fast-changing world. The military use a process called “Estimate”, which is a checklist for long-term planning. The key question in this list—question 4—is: “What has changed?”. In 2014, the Queen’s Speech stated the need to re-engage.

Following the referendum in June, the Prime Minister, Theresa May, outlined a vision of global Britain, in which the UK will play its,

“full part in promoting peace and prosperity around the world”.

It would,

“with our brilliant armed forces and intelligence services—protect our national interests, our national security, and the security of our allies”.

She added that the UK’s new relationship with the EU would,

“make us think about our role in the wider world”,

and give the country its “self-confidence” and freedom,

“to look beyond the continent of Europe and to the economic and diplomatic opportunities of the wider world”.

A powerful economy, of course, is an absolute prerequisite to achieving long-term hard power. Our Chancellor, Philip Hammond, is determined to reach that goal.

Our Armed Forces and our excellent foreign service have been key institutions in the United Kingdom’s rich history. They will play a vital part in delivering our re-emphasised global role. The United Kingdom is still greatly respected worldwide and carries great weight through moral influence and, of course, our rich links with the Commonwealth. We must truly re-engage at all levels, with special emphasis on world trade, on which this country has led for hundreds of years.

Boris Johnson, the Foreign Secretary, said on 2 December 2016 that the UK would be a “protagonist” following its withdrawal from the EU,

“a global Britain running a truly … foreign policy”.

In November 2016, in evidence to the Foreign Affairs Committee, chaired by Crispin Blunt, Sir Simon McDonald stated that the Government’s policy was:

“To defend and promote British interests around the world, which is what we have been doing since 1782”.

As a matter of interest, I happen to have charts from that period which clearly demonstrate how strong was our naval and military presence throughout the world.

In a letter to the committee on 21 July, Sir Simon had stated that his priority in the coming months would be to have the staff and capability to promote a global Britain post the referendum. He said:

“In future we will not be seen as a player on the wider international stage through Brussels. We will be acting on our own behalf, so Global Britain is a re-emphasis of what was there before”.

Sir Simon also told the committee that the entire annual FCO budget was only twice the sum spent every year on aid to Ethiopia alone. As a matter of interest, the FCO budget in 1977 was 0.5% of public expenditure; in 2016-17, the core budget is 0.3%, but in practice it will be lower.

As Boris Johnson told the committee, the UK would be,

“going out again to places where perhaps people haven’t seen so much of us in the past, and places where they thought we had forgotten about them”.

Sir Michael Fallon, our Defence Secretary, said on 4 October:

“We will step up, not away from, our global responsibilities”.

It is well known—I happened to be involved in both reviews—that the 2010 SDSR was a hard cost-cutting exercise from which our armed services are still recovering. Although SDSR 2015 should deliver a much better equipped force by 2025-30, in cash terms it is widely reported that the programme is not fully funded. The hollowing-out is still taking place throughout the MoD, together with the further efficiency savings which the MoD has been asked to achieve and has to achieve. To complete SDSR 15, some £2 billion must be found.

Figures and percentages are all very well but, clearly, committed cash flow is critical to the programme being met. If not, I am afraid that the MoD could fast become a JAM: just about managing—the new soundbite. I hope not dry bread. This programme will be fully effective only by 2030. That is three Parliaments away—three times the length of World War II. Do we really believe that we can control events?

Sir John Parker’s excellent but sobering National Shipbuilding Strategy refers to the new Type 31E frigate for the Royal Navy, to which the noble Lord, Lord West, referred in Questions. Without interference—I have built enough ships in my time—the design could be agreed within a year and British shipyards could plan to execute this excellent project in the very near future, but the moneys must be assured without any possibility of their being delayed or withheld.

A report that I commissioned some two years ago from the King’s College London Policy Institute on the economic benefits of hard power stated that sovereign procurement was of national benefit and not a burden. In other words, it should be regarded as a net value to the United Kingdom and not purely a cost.

Sovereign defence spending will have a galvanising effect on so many of our industries and universities, particularly leading-edge technology, including of course cyber. As a nation, we have a huge shortage of trained engineers. Their recruitment would have a dynamic effect on encouraging many, particularly women, to enter the field. Fast and positive decision-making on all fronts is key to morale in our Armed Forces. Our people deserve nothing less. It must be remembered that in addition to those serving, some 2.5 to 3 million people nationwide are involved through family, livelihoods and, most importantly, pride in our service men and women.

As a matter of interest, in August in the United States Gallup published an extensive study on the roots of Donald Trump’s support. One conclusion that received little attention was that Mr Trump drew heavily from the support of veterans and their relatives. The study states that when Senator Jim Webb, who has a splendid military record, announced that he was switching from supporting Mrs Clinton and would not run as an independent, turning instead to support Donald Trump, many hundreds of thousands followed him. The military is, arguably, the most significant social institution in the United States. It is unquestionably likewise in our country. In my view, the big difference is that we do not allocate to it the same degree of financial support.

We need hard presence not words. Even one workhorse frigate which through its operational life may never fire one shell in anger is a deterrent. We live in a troubled and dangerous world. History records that dictators and democratic leaders of weak economies often seek power by getting involved in foreign exploits. Powerful conventional capability is itself a crucial deterrent. Without it, there must be an increased likelihood of a fall back to the use of chemical, biological or even nuclear warfare. I cannot help but think that some recent examples of tokenism in terms of hard power and diplomacy suggest weakness.

Stronger capability in our Armed Forces and an enhanced foreign service will undoubtedly carry serious political weight. During our negotiations in Europe it will clearly demonstrate our commitment to defend Europe via NATO and further cement our excellent relationships with the Pentagon and Washington. On 21 September 2016, Dr Julian Lewis, chairman of the House of Commons Defence Committee, wrote in a letter to the Times:

“The 1980s marked the last time this country faced a threatening Russia as well as a major terrorist campaign. From the start of the decade until the conclusion of the 1987 intermediate-range nuclear forces treaty, the UK invested between 4.3 per cent and 5.1 per cent of GDP on defence ... It is a measure of how low our expectations have fallen that we are supposed to celebrate just managing to meet the NATO minimum of 2 per cent in our most recent budgeting”.

Frankly, the NATO minimum of 2% is itself open to question.

A reappraisal of our aid programme could provide much of the needed money to reach the realistic figure of 3% GDP strongly advocated by the House of Commons Defence Committee and others with knowledge and authority. It goes without saying that we will always help those in crisis but charity starts at home. Finally, in five to 10 years’ time, such a commitment will prove to have been the right judgment call both in defence and to support the nation’s decision to reclaim its place in the world. I hope my noble friend the Minister will be kind enough to give consideration to these views, which I hope others speaking today may support. I beg to move.

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My Lords, we will all have seen the Prime Minister aboard HMS “Ocean” earlier this week in Bahrain. Did she know, as she spoke to the assembled ship’s company about the Navy and the importance of its global role post-Brexit, that that ship will be paid off in 2018, after a recent £65 million refit, with nothing to replace her? It is yet another cut to our perilously reduced fleet.

We inhabit a dangerous world in which illiberal power is growing and liberal power declining. It is a world made dangerous by Europe’s retreat from power and its wilful refusal to invest in power. The Brexit decision compounds the problems relating to the UK’s defence and security. The dramatic rise in numbers of migrants either fleeing war and persecution or economic hardship is a stark reflection of all these pressures. In addition, we cannot be sure how much longer the United States will remain the ultimate guarantor of a rules-based international system. Russia is a particular concern, after events in the Crimea and Ukraine, cyberattacks across Europe and threats to the Baltic states. What is it doing? President Putin is a revisionist. He believes in areas of control and he understands and respects power.

In this highly dangerous world, we also have responsibilities for our 14 dependencies and for global shipping run from London. Post-Brexit, we will have to enforce our sea borders and exclusive economic zone much more fully than in the past. We have five Border Force vessels for about 8,000 miles of coastline. To give an example, the Netherlands has 16 for 280 miles of coastline. Perhaps we have got it wrong.

Faced with these global challenges, what are the Government doing? SDSR 2010 cut our military capability by 30%, as has been mentioned, and it has not recovered from that. It is no use pretending otherwise. There is not enough money in the defence budget. In particular, the Navy has too few ships and men, and is having to make incoherent cuts to keep within its budget; for example, paying off “Diligence” and “Ocean” and not having any surface-to-surface missiles. Far from increasing in numbers, as was stated by both the Prime Minister and the Defence Secretary in 2015—they said it would increase in numbers by 2035—the Navy is actually shrinking. I fear the Royal Navy is not capable of doing what our nation expects it to do.

We have only 19 escorts, which is a national disgrace, as I have said before. Two of these are tied up alongside because of lack of manpower due to the cuts made by the coalition in 2010. Of the 17 remaining ships, five destroyers have major intercooler problems and there is no rapid programme fixed for exactly when they will be repaired. The reality is that we have 12 escorts fully capable of operations, of which at least one will be in major repair. These 12 are Type 23 frigates. The oldest is 25 years old and the youngest 14; the ships were designed for an 18-year life. The Ministry of Defence has yet to explain how it will replace these ships, which are due to leave service at the rate of one per year from 2023 onwards, let alone increase the total number of escorts by the 2030s, which the noble Earl kindly confirmed is the Government’s aim.

Our forces are underfunded. There is no new money—it is, in theory, being produced by efficiencies. These efficiencies are impacting on the lives of our sailors, soldiers and airmen. I was given a recent example of an Army football team which could not go to a match because there was no bus because of the efficiency measures. This is unacceptable for a nation such as ours.

The Royal Navy has ensured the survival and wealth of our nation over several hundred years. We need to wake up to the fact that successive cuts have gone too far. No matter how stalwart the people—and, my goodness me, they are stalwart—or their professionalism, and we have the most professional forces in the world, without sufficient ships, it is as nothing. We are taking risk upon risk and suddenly, quite unexpectedly—because that is what happens in this chaotic and nasty world—it may affect our nation’s survival.

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My Lords, I welcome the debate introduced by the noble Lord, Lord Sterling. It is timely and important and follows a whole series of debates about the implications of Brexit for the United Kingdom. Over the past weeks and months, we have spent many hours talking about the economic implications of the decision to leave the European Union. Last week, the noble Lord, Lord Ricketts, in his maiden speech, pointed out that we need to think about bilateral relations and security relations. The noble Lord, Lord Liddle, pointed out that the economics were important because without the right economic foundations, we will not have the economy that will enable us to have security and a global reach.

It is important that we think about what the global role of the United Kingdom will be in the event of Brexit and what impact that will have on our Armed Forces. We have heard from the noble Lord, Lord West, that there is already a major issue for the Navy, but there are wider issues for security and, as the noble Lord, Lord Sterling, pointed out, for our Diplomatic Service.

One thing that is absolutely clear about leaving the European Union is that the security aspects of our relationship with the European Union will become no less important. The security questions for our European NATO allies in Poland and the Baltic states are already profound. The United Kingdom’s decision to leave the European Union has given Russia the sense that perhaps a little exploration in Europe could be of interest. What role do Her Majesty’s Government envisage for the United Kingdom as part of the European security jigsaw once we have left the European Union?

There are clearly suggestions that we could still play a part alongside the common security and defence policy of the European Union by doing as Norway does, which is simply to follow what the other European states are doing. But surely nobody on either side of the Brexit debate intended that the United Kingdom should model itself on Norway—that we should simply follow what the European Union’s security and defence policy does and not have a seat at the table. Can the Minister say whether the Government are planning to discuss with the European Heads of State and Government the possibility of rather closer defence and security relations with the European 27 when we leave the European Union? It would not be a deal like Norway’s but a bespoke deal that really speaks to the global role that the United Kingdom seeks to play, and the important military role that it has already played in the European Union.

Moving forward from the general European level of multilateralism, what bilateral relations are the Government thinking about? We have clearly had strong relations with France over defence in the last 10 to 15 years, which clearly fits with our two countries having similar aspirations to play a global military role—a role that none of the other EU member states seriously aspires to play. In the event of the UK leaving the European Union, do the Government envisage strengthening defence relations with France? Do they intend to strengthen defence relations with the Netherlands or other member states? Do they envisage our working closely with the United States in NATO, or do we need to say that when Trump takes office the United States will be rather less committed to NATO and the United Kingdom therefore needs to play an even greater role and have closer co-operation with our European partners and allies?

Finally, on diplomatic relations, bilateral relations within the European Union are vital—something the previous Prime Minister, David Cameron, perhaps failed to understand, to his cost and ours. But when we leave the European Union, strengthening bilateral relations with the 27 member states will surely become even more important, because we will have to rebuild the sort of embassies that we have with third countries. We will no longer have the day-to-day contact that our civil servants and Ministers have had by virtue of membership of the European Union. Can the Minister tell us what provision Her Majesty’s Government will make to strengthen the Foreign and Commonwealth Office in the run-up to leaving the European Union, and when we leave? More money is vital if we are to play the global role to which we all seem to aspire.

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My Lords, I too commend the noble Lord, Lord Sterling, for instigating this debate and for the way in which he introduced it. There are two impacts, as he has termed them, to consider. First, how should the UK’s Armed Forces relate to their opposite numbers in the European nations? Secondly, what needs to be done to further our military-to-military relations in the wider world?

Thanks to the many years that we have trained and worked together, both through NATO and the large variety of bilateral contacts with European forces, there is a solid professional foundation to the relationship to sustain and build on. Brexit is largely a political, economic and diplomatic animal. On the last of these, there are many highly experienced individuals in your Lordships’ House speaking today, so I shall not go there. Following our withdrawal from the EU, every effort should be made to continue our multilateral and bilateral military relations with our European neighbours. This can be an ongoing process, with exchange visits and exercises at all levels co-operatively sustaining those contacts. Combative occasions may arise, but I think they may be largely confined to the golf course.

Turning to the future beyond Brexit, there is a need to continue and strengthen our wider global contacts, particularly with Commonwealth and other political friends and trading partners. These activities might include more involvement in the five-power defence arrangement, which would be well received, particularly in Australia and New Zealand. The recent highly commendable and successful deployment of RAF Typhoons to the Far East and the first ever engagement in air exercises with the Japanese are indicative of what can be done already. When the carrier “Queen Elizabeth” is operational, the opportunity for the Royal Navy to deploy a task force, maybe with the RAF embarked, for training and exercise in the Far East should again be seized. The soft power contribution of the Red Arrows, who have just returned from displays in China and the Gulf, is a further demonstration of highly flexible and positive military contributions in the global arena. Such gestures and engagements will be helpful to building and sustaining new political and trading agreements.

Before getting carried away by such thoughts and plans, however, there is a serious problem: the deficit in the numbers of ships, aircraft and personnel in all three services to sustain such global presence over a continuous period, even in the small-scale numbers that have been used in recent months. The ongoing operational commitments for the RAF’s half dozen or so front-line fighter squadrons are highly demanding, not just on airframes but on the air crews and ground crews who fly and service them. The 24/7 immediate air defence in the UK, the Falklands and Cyprus, offensive operations in Iraq and deployments for NATO in the Baltic and, soon, Romania all require combat-ready aircrew and ground personnel.

Inevitably, thought is being given to how to speed training and shorten the time taken for combat preparation of new air crew, which is essential to help ease the pressures on those who have already been in operational mode for months and years. Fortunately, these missions have enjoyed almost complete air superiority, with little risk of combat loss, but any unfortunate accident, a loss of air crew due to a terror attack on a mess or even a serious hangar fire could cause a significant percentage loss in airframes and/or crew availability to undertake the variety and current tempo of activities. The forces are stretched, with the attendant risk of a sudden serious loss in the Armed Forces’ operational capability.

Further expansion in front-line numbers—and, as has already been said, such arguments apply to fighting ships as well as aircraft—is becoming more rather than less necessary as we move to the post-Brexit scenario. I also remain concerned about other areas of overstretch and overcommitment being faced by the Armed Forces. In the time available, let me highlight just one of a number: Reaper crews operating remotely piloted aircraft systems have the task of being legalised assassins operating far from the scene and commute from home daily to undertake their work. Little experience is yet available of how this type of commitment over an extended period will affect those involved, but they are so few in number that replacements to allow stand-down and recuperation periods are virtually non-existent. I hope the Minister can reassure the House that these individuals have combat or legal immunity in their work.

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My Lords, I thank my noble friend Lord Sterling of Plaistow for introducing this important debate. I agree that the most fundamental function of government is to protect the security of the realm. Post-war, the United Kingdom was first to the table when Harry Truman promulgated the North Atlantic Treaty, but we were all too slow in signing up to the development of the European political movement.

There is little point in lamenting the lost opportunities of history, especially when the challenges of the future are so severe. The post-war settlement is now unravelling. The referendum result, the disobliging comments about NATO from President-elect Trump and the rise of far-right populism in Europe all make that abundantly clear. If NATO and the EU are now in danger of crumbling away, we need an urgent rethink of our domestic policies and priorities. I am conscious of the considerable burden of responsibility that our Armed Forces place on us to safeguard their interest. I want to focus on three points.

First, there is a great deal of misleading information available about our defence capability which could make us complacent. I have studied our own Library Note for this debate, and was surprised to read the summary of current equipment on page 2. I fear it is fanciful in the extreme to claim that maritime forces could generate 76 surface vessels, that land has 31 regular and 14 reserve battalions and that air has 724 fixed-wing and 372 rotary-wing aircraft. Would that it were true.

My second point is that conventional, or non-nuclear, forces act as a considerable deterrent in the current world. We would be foolish in the extreme to suppose that potential aggressors do not monitor our military naval and air strength very closely indeed looking for signs of weakness. This conventional deterrence is delivered in many ways, more often than not by the presence of a company of infantry, a section of Tornados or a frigate quietly patrolling an area of perceived tension. We have a clear, unequivocal responsibility to ensure that these forces are suitably equipped, armed and supported to be able to carry out these tasks and to react with appropriate force if threatened. We also have to have enough of them. I certainly did not enjoy seeing those pictures of HMS “Ocean” taking over from the US navy carrier in theatre with a solitary helicopter.

Thirdly, we must not take the relative silence of our Armed Forces as acquiescence in inadequate support. In this modern age of instant communication, I marvel at how the young men and women in the services and their families maintain their dignity and composure in the face of significant provocation. They do not react, because they place their faith in us to make their case, and we have an obligation to do just that. I was therefore delighted to see that moves are now under way to remove the dreadful pursuit of unwarranted claims against service personnel by unscrupulous claims firms.

My contacts tell me that there is considerable concern in the services about fighting capability and our willingness to invest in enough of it to keep them safe and in a position to respond to the demands that government makes of them. We must not forget that. We need to dig below the oft-quoted headline figures for investment in defence and to ensure that operational capability is maintained, particularly in ammunition and missiles for all three services. Nothing corrodes morale more quickly than a failure to invest in real fighting capability. It must not be hollowed out, and it must be capable of living up to the strong reputation that our service men and women continue to earn and deserve from the rest of the world. Having expressed those fears, I feel confident that, in his closing remarks, my noble friend will put my mind to rest.

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My Lords, I too congratulate the noble Lord, Lord Sterling, on getting this debate today, only two days after an almost historic statement by NATO Foreign Ministers in Brussels on relations between NATO and the EU. In the statement, they said they would,

“strengthen our strategic partnership in concrete areas”.

That builds very much on the Saint-Malo declaration of 1998, which I played a part in, and on the Berlin-plus arrangements. That unique set of arrangements, although at the moment being adhered to in spirit rather than in the letter because of Cyprus, allows the European Union to use NATO assets—that is, American assets—when NATO does not wish to be involved.

The Statement this week is of considerable importance. I ask the Minister to explain why, last night, it was still not yet on the Foreign Office website. I got a copy of it from a retired American admiral who had spotted it on the NATO website but, given its significance, and given that the Foreign Secretary was there—when he was not going around insulting other countries—one might have thought some attention would have been paid to it. It is good stuff. It is concrete, sensible and practical. I believe it will reinforce the ability of the Europeans to do more, as indeed they should.

That brings us back to the question posed by the Motion of the noble Lord, Lord Sterling: will our leaving the EU affect our Armed Forces and our Diplomatic Service? My opinion is firmly this: it will certainly affect our Armed Forces and Diplomatic Service, and not for the better. Our leaving will damage the UK and its reputation and influence; it will damage the EU and its partnership with NATO in tackling the myriad problems, challenges and perils that face us in the world today; and by opting out as a key player in the EU side of that partnership, which was reforged this week, leaving will weaken NATO at a time when, historically, the alliance has never been more needed. I remind noble Lords of the letter to the Times during the referendum debate from five previous Secretaries-General of NATO, of which the final paragraph reads:

“While the decision is one for the British people, Brexit would undoubtedly lead to a loss of British influence, undermine NATO and give succour to the West’s enemies just when we need to stand shoulder to shoulder across the Euro-Atlantic community against common threats, including on our doorstep”.

People should listen carefully to these words of warning from Carrington, Solana, De Hoop Scheffer, Rasmussen and myself.

The fact is that as a non-EU NATO member we will be in a small party. That role is recognised in this week’s Statement. I can tell noble Lords, from my own experience forged in the flames of the early part of this century, that Britain being in the group of nations that consists of Norway, Iceland, Canada and Turkey clearly unbalances that equality of purpose that existed with Britain in both organisations. In the event that the EU has to act in its own interests and in its own area, and the United States does not want to be involved—you can bet your life now that that will be a frequent occurrence—Europe will need the UK and its Armed Forces. An endeavour in which the EU was involved, and that British forces did not form part of, would be a very limited one. But here is the rub: who will decide what is necessary? Who will set out the political objectives? Who will lead any military force? Who, if anyone, will determine an exit strategy for any operation? Since we will not be full members of the EU, what say can we really expect on these critical issues? The fact that there is no answer to that question at the moment should give us all serious concern.

It is a tragedy that, just as the problems we face—migration, terrorism, a resurgent Russia, pandemics, proliferation and much else—have gone global, the politics have gone local and far too parochial for the safety of our people.

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My Lords, it is a privilege and a pleasure to follow the noble Lord, Lord Robertson. I look back with great affection and gratitude at the work that we did together and the way he helped me when he was Secretary-General of NATO and I was the high representative in Bosnia and Herzegovina.

One thing seems crystal clear: having taken the decision to Brexit, Britain is now much more alone and our defence choices are far starker than they were in the hours before President Trump was elected one month and one week ago. Before, during the Brexit debate, we argued that we did not need the European Union because we had NATO, but we will now have an isolationist American President who has made it perfectly clear in his speeches that he does not much believe in NATO and would not even mind seeing it unstitched.

I have a suspicion that in the next few weeks words will be dragged out of Mr Trump’s mouth, saying he did not really mean that and that he does believe in NATO, but NATO and alliances do not depend as much on words as they do on will. No one can doubt that the will of an isolationist American President who admires President Putin will not be the same as the will we have experienced before from our partners across the Atlantic by any measure. The reliance we have placed on NATO in its present form has to be weaker than it was before.

We are left with two very stark choices: either we find a means to work with our European partners to integrate as far as we can; alternatively we will have to be more dependent on the United States, led by a President in favour of isolationism. The effect of his election, and that decision, and the effect of Brexit, taken to improve our independence, has, on the contrary, made us more dependent on the United States. Is that what we really want? Do we believe that that is right?

There is a way round this, of course. The Government can declare that while we will follow through with the Brexit decision and withdraw from political and economic co-operation in Europe, we will nevertheless deepen our integration on defence. If the Minister says that, I will feel comforted, but I do not believe for a moment that that is a spirit of the Government or that they will say that. In that case, we will be increasingly dependent on America led by an isolationist President, whose relationship with Britain might well be judged from the fact that he now believes he can appoint our ambassador in Washington. That does not seem to be any other than a relationship that in its end will turn out to be one of subservience, if not something worse, for our country. I do not believe that that is the right way to go, and I do not believe anyone else can either.

Let me widen the debate a little to a second issue which now confronts us, which depends on us having friends and contacts. Here is a little bit of history. When the Wright brothers turned up in London and sought to sell to the Admiralty their new invention—the design for their aeroplane—the Admiralty was somewhat shocked and perplexed and had an inquiry The inquiry went on far too long—it took two years—and on 7 March 1907, the First Lord of the Admiralty wrote to the Wright brothers, saying,

“I have consulted my expert advisers with regard to your suggestion as to the employment of aeroplanes, and I regret to have to tell you, after the careful consideration of my Board, that the Admiralty … are of the opinion that they would not be of any practical use to the Naval Service”.

That was a mistake and we soon recognised it. But we then made a second mistake, which was that we believed that these were add-ons that we could put on to the Army and the Navy.

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My Lords—

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The time is limited. I know that the noble Lord wants to defend the Admiralty.

We discovered during the Second World War that they were not add-ons but an entire new theatre of war—not only a theatre of war but the vital ground in winning a war. In the first 3,000 years, the winner was who won on the land; for the next 100 years from Trafalgar, the winner was who won on the sea; since Guernica to the present day, who wins in the air wins the war. Now I believe that he who wins in cyberspace wins.

We have to recognise that this is not just an add-on; it is not just a gadget. We have to recognise it as the new theatre of war. Unless we do, dedicate a service to that and commit resources to it we will not be able to succeed where we need to in any future conflict. Unless we look at it in that synoptic fashion, in that same way that we understood about air, then I fear that if our Armed Forces are weak in that arm, however strong they are in all other arms, we will find ourselves crucially weakened. The whole point about winning in cyberspace is that we have to have a policy that crosses borders, links up with others, and which cannot be conducted in isolation because our enemy is now inside the gates as well as outside. That means that if you deliberately remove yourself from a framework for active co-operation with your neighbours and with those who share your interests, you are bound to diminish and weaken your own nation’s defence. The consequence of Brexit, by removing that possibility with our European partners, and with a NATO now weakened by an isolationist US President, cannot other than mean that the long-term defence of this country will be weakened. The measure of the modern age is that what you do is less important than what you can do with others, and we have just deliberately decided that what we can do with others is less than it was previously—and for that I fear we shall pay a very heavy price.

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My Lords, it is a great privilege to follow the noble Lord, Lord Ashdown, who I remember as a young Royal Marine officer in the Far East very many years ago. Equally very many years ago, as youngsters leaving primary school, a kindly headmaster gathered us together and made the point that, although we had reached the top of our first school, our destiny was to start again at the bottom next term and, having worked our way to the top again, to leave, and recommence at the bottom. “In fact”, he said, “that will be your destiny throughout your life”. In joining your Lordships’ House, I feel like that small boy, with the principal difference that, instead of the usual treatment meted out to new boys at secondary schools, I was greeted here with the utmost warmth and kindness. There were only a few frightening adults, and I could find no obvious sneaks and bullies, despite Black Rod’s warnings—only myriad corridors and staircases, guaranteed to leave you feeling very foolish when trying to find someone or something. My sincere and grateful thanks are due to all of those who have assisted me in this fascinating learning process, from doorkeepers and House staff to mentors and colleagues. No names, as they say, and no pack drill, but thank you all.

The long and winding road to these hallowed portals has taken me via 15 years in the Royal Navy, 10 of which were in submarines, where I came across the Special Boat Service, including command during the Cold War of the 1970s. This was followed by 30 years in the City in a global trade house, where I spent many years as a member of the Baltic Exchange. I followed that with a period of cathedral custodianship, which is not a bad precursor to coming to this place, in many ways.

I wish to concentrate today on a relatively narrow aspect of the effects of leaving the European Union—the effect on our coastal and border defences. The new UK economic exclusion zone, or 200-mile limit, did not even exist as such in 1973, when we joined the EEC. It will consist of some 770,000 square kilometres of sea when we leave the EU, and many nations will cast covetous eyes on our riches, both fishy and oily. At the same time, we are faced with myriad considerations in defence of the border, many of which will be exacerbated by our newly independent status. We have to contend not only with serious organised crime, including drug-, people- and firearms-smuggling, but also with modern slavery, terrorism, immigration and, last but not least, fisheries protection and anti-poaching activities. There is a very large Spanish fishing fleet that will be very discomforted by the lack of access—in theory at least—to our parts of the north Atlantic.

The Government’s aim is to secure our borders while still allowing legitimate trade to continue unhindered. This is, of course, an admirable objective, but we do need better funded and co-ordinated command and control facilities. Our border is a unique point of intervention and a critical line of defence, where the UK can, and does, identify and disrupt threats to our security. Brexit will throw our existing facilities and organisation into stark relief, and we need to be prepared for it. Without close and continuing liaison with our closest maritime collaborators and neighbours—Spain, France and the Netherlands—we will struggle to remain masters of our space, so we must maintain this at least as a part of our divorce settlement with the EU.

The National Maritime Information Centre, or NMIC, formed at Northwood in 2010, I believe under the aegis of the noble Lord, Lord West, is an essential tool in the garnering of information, but it is neither funded nor equipped to act as the national command and control centre for the maritime assets committed to border defence, which we urgently need. This funding, which would normally come from Home Office resources, is badly needed—I know this is another rant on the subject of funding our forces—and could transform the capabilities of NMIC. Of the many force elements which go make up NMIC, some are volunteer charities, such as the RNLI, but the majority could contribute, in addition to the Home Office.

The asset base that we have for dealing with all this is minimal and will require reinforcement if we are to be successful in defending our borders against such threats. We currently have a situation where the Border Force has three coastal cutters operating on our 11,000-mile coastline. It owns two more but budget constraints mean that it cannot operate them, so they have been lent temporarily to DfID and are currently in the Mediterranean in support of the refugee effort. The Border Force has also ordered eight high-end RIBs for coastal and riverine patrolling. However, the same constraints will allow it to take delivery of only four of them at this time. It does not currently own or operate any aircraft in a maritime patrol role—partially because of the aforementioned budgetary constraints—although the RAF is eventually due to receive nine new Poseidon long-range maritime patrol aircraft.

The Royal Navy has four larger offshore patrol vessels, suitable for fishery protection in the north Atlantic, although one is permanently stationed in the Falkland Islands, which leaves us with three. The new series of OPVs—called the Batch 2 River class—are under construction and five have been ordered. The fate of the first four, once the new vessels come into service, depends on who you ask, but the 2015 SDSR implies that they may be offered to the Border Force.

The Royal Navy also has a total of 15 mine countermeasures vessels, all of them minehunters. Most of these, as your Lordships are aware, are deployed either in the Clyde—which has seven—to protect the deterrent, or in the Iranian Gulf, which has four. That leaves four, which is clearly inadequate to protect our harbours from mine attack, let alone to assist in the defence of our inshore waters, which has historically been one of the primary roles of MCMVs.

The main objection to providing more assets for the defence of our border, apart from finance, appears to be that we cannot man more vessels, given present low rates of recruitment and retention. However, one asset that seems to be largely overlooked is the Royal Naval Reserve. This force has been allowed to wither on the vine, in contrast to the Army Reserve. Currently, the target is to have 3,000 members of the Royal Navy Reserve. In 1993, the RNR’s squadron of 12 MCMVs was disbanded and sold to foreign buyers. This squadron, based in 11 separate operating bases around our coasts, provided an excellent focal point for volunteer mariners to train and develop their skills and produced some superb seamen. The vessels were used for a multitude of tasks, which included coastal patrolling and defence. Instead of selling or scrapping the four Batch 1 River class OPVs when the Batch 2 vessels become available, why not transfer them to a revitalised Royal Naval Reserve, which could provide much needed back-up to the Border Force, and provide the Royal Navy with a ready source of trained personnel to supplement its very stretched manpower resources? The appeal of joining the current RNR and being trained to act, at most, as an armed guard on board an RN ship is low, but give them their own vessels and the chance to develop as a team and watch recruitment take off, especially among those trained by the RN but leaving for other reasons.

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My Lords, there has been some criticism of some recent appointments to the House, but having just had the pleasure of hearing his maiden speech, no one can be in any doubt of the qualities and qualifications—including a sense of humour—that my noble friend Lord Cork and Orrery brings to our business. In true tri-service spirit, as a solider I am delighted to welcome another ex-serviceman to these Benches, noting that in choosing a naval career he was following a most distinguished family line. What makes his choice of today’s debate to make his maiden speech most appropriate is his particular knowledge of commercial shipping. The noble Lord, Lord West of Spithead, never misses an opportunity to raise the fragility of the Navy’s small ship strength but, in the context of controlling our own borders, my noble friend speaks with authority on equally concerning fragilities, namely the numbers of fishing protection and Border Force resources. On behalf of the House, I welcome my noble friend, congratulate him on his excellent maiden speech and assure him that we all look forward to many further contributions from him in the future.

I join others in thanking the noble Lord, Lord Sterling, for obtaining this important debate. I noted his emphasis on global aspects in his excellent introduction. I propose to concentrate on the Armed Forces in a reflective as much as a looking-forward mode, as other speakers have concentrated on that. I could not help reflecting that in 1989 our contribution to the defence of Europe was based on the army of 55,000 that we were required to maintain in Germany under the terms of the 1956 Brussels treaty. The end of the Cold War saw the collapse of the Warsaw Pact, the war-fighting organisation of the Soviet Union. However, it did not see the end of NATO, although at the time I well remember many people suggesting that NATO should go too because, as the war-fighting organisation of the West, it was the one organisation that Russia could not join, and if we were going to welcome Russia into the family of European nations it was essential that it was able to join all the organisations connected with it. Warsaw Pact countries were given the opportunity to join NATO and, indeed, many of them have.

The end of the Cold War saw an uneasy situation in which, initially, I well remember people suggesting that the United Nations should take a lead. Indeed, thinking back to the intervention in former Yugoslavia, the OSCE led on that. I well remember the noble Lord, Lord Carrington, being its distinguished envoy. The OSCE, as a Chapter VIII organisation under the United Nations charter, is equivalent to the OAS and the OAU. As far as European defence was concerned, its main benefit was that it included the United States. Some wished that NATO might have gone, to enable Russia to join more closely in European defence, but others felt that America’s presence was an absolutely crucial reason why NATO should remain. In fact NATO was unnecessary because, in OSCE terms, America was already involved, but of course, as we all know, the United Nations is not really a capable organisation for defending Europe, not least because of the presence of Russia on the Security Council. I well remember being a member of a committee formed by Kofi Annan, then the Under-Secretary-General for Peacekeeping, which tried to strengthen the military committee in the United Nations and make it more like what the founding fathers of the United Nations had envisaged—in other words, being the co-ordinating organisation for the use of armed force throughout the world.

My worry about the present situation was touched on by my noble and gallant friend Lord Craig. We have very strong defence relationships with individual countries in Europe but, when you look at what is actually going on to co-ordinate everything, you see that it is co-ordinated currently by NATO, not Europe. A number of noble Lords have already commented on the uncertainty facing NATO’s future after Mr Trump becomes President. Echoing what others have said, I hope that, whatever happens with Brexit, nothing is done to destroy that very close relationship which has been established with other European countries, because we are a European country and the defence of Europe includes us. We must do nothing to risk being excluded from the planning that is an essential part of that defence. If we do so, the impact will be even worse than anyone imagines at the moment.

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My Lords, I too congratulate the noble Earl, Lord Cork and Orrery, on his maiden speech. He complains that this place is very difficult to find one’s way around, being something of a rabbit warren. I have very bad news for him: they are going to spend billions of pounds revamping the whole place, but as far as I can gather, it will still be a rabbit warren when we all get back. I do not think that that will include me. I am grateful that, as all rumours have it, we will move to the Westminster conference centre. Maybe it will be rather easier to find one’s way around there. We very much look forward to the noble Earl’s future contributions on defence debates and the expertise that he brings to them.

I congratulate my noble friend Lord Sterling on giving us the opportunity to discuss these important issues. We have just had the presidential elections in America, and there are many similar issues of populism involved in both that vote and the Brexit vote in the United Kingdom. My noble friend Lord Hunt of Wirral has already referred to the sweep of populism, which may not be confined to the Anglosphere and which looks as though it could well spread across Europe as well, where a number of elections are being held: a general election may be held in Italy next year, the Dutch will have one in March, the French in April, and of course the Germans in November. Is there not quite a large possibility that one of those elections will produce a populist leader, who may well decide to hold votes on whether their country should remain in the EU? By the time we reach November next year, the EU may be completely unrecognisable from the EU it is today, which puts the question of our negotiations in a rather more interesting light.

Let us look at the promises that President-elect Trump made during his campaign. Some of them struck most of us as being somewhat over the top. However, a very easy one he can fulfil is the question of the defence of Europe. By “easy” I mean that he is pushing at an open door when it comes to Congress—the Senate and the House of Representatives—if he suggests that the Europeans should play a much bigger role in defending their own borders. When the NATO Parliamentary Assembly was in Istanbul, we were addressed by Jens Stoltenberg, the Secretary-General of NATO. It is interesting that he pointed out to us that once the United Kingdom is outside the EU, 80% of NATO expenditure will come from countries outside the EU and 20% from those inside the EU. Therefore when the noble Lord, Lord Ashdown, goes on about European defence and how important it is, it is 20% of NATO’s expenditure.

What form does European defence take? It means the French and the Germans getting together—naturally, because they are the only two members spending serious money on defence—but do they have similar political objectives? As we know, it is no good getting together as a defence unit unless your political will is aligned as well. The Germans will be keen on confronting Russia—it is the old enemy—but the French are less keen on that. The French are keen on expeditionary forces and taking on ISIL, and they are playing a big role in Mali as we speak. But are the Germans keen on doing that? The answer is that there is very little alignment of political will between the French and the Germans, which is why the whole concept of European defence is distinctly faulty. We must rely on NATO, and European NATO, for our future. However, of course the Americans are pivoting away, looking much more at China as a future enemy, and in those circumstances it is up to the United Kingdom to lead NATO in Europe. That means spending a lot more money than 2% of our gross national product on defence. We have to spend more; this is the future of this country.

I have a confession to make. At one stage, I was rather dodgy about renewing Trident, not because I do not believe that the United Kingdom should have an independent deterrent but because I thought that we could do it much more cheaply. The fact is that I was completely wrong in every conceivable way. My argument was: could there ever be a moment when we would fire a nuclear weapon and the Americans would not? However, with President-elect Trump’s attitude towards Putin, it seems essential that we maintain our nuclear deterrent, because—let us face it—it may come in very useful in the future.

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My Lords, we have had a sterling opening speech and a well-reasoned maiden speech. My starting point is this. On 23 June, the people spoke. It is uncertain what they said but the Prime Minister has given the helpful steer that “Brexit means Brexit”. At least in the fields of domestic policy, the economy and border control there was quite a substantial pre-referendum debate and areas of concern were revealed.

However, foreign affairs and defence figured much less. I recall, for example, Mr Farage saying that he was a “Commonwealth man”, although all the Commonwealth countries were against leaving, and indeed the only Commonwealth country with a vote—Gibraltar—voted very much to remain. Miss Mordaunt, who is still a government Minister, told us that Turkey, with a teeming population, was about to join the EU. That was not true then and is still less true today. I therefore conclude from this lack of pre-referendum debate that in the areas covered today the Government have a much freer hand in making deals which are clearly in our national interest, and similarly in seeking co-operation in fields such as migration and counterterrorism—a point made by the noble Lord, Lord Ashdown.

I make the following reflections. First, for over 40 years we have worked with the EU at every level—from the European Council to constant co-ordination at post level. This has led to harmonisation of policy, which has not prevented divergence, such as we saw at the UN General Assembly in respect of recognition of Palestine, with the EU splitting three ways. This habit of working together has given us more clout—for example, on Iran—and the question is whether we now face the danger of being excluded from a lead position on such issues. With our departure and the likely policies of the Trump Administration, will we not see an increasing fraying, for example—even abandonment—of the sanctions against Russia because of its occupation of Crimea?

My second reflection is that Brexit should give an enhanced role to our embassies in EU countries and perhaps even to institutions such as the Council of Europe. There will be staff implications. I note that the total FCO budget is only twice the sum of our development aid to Ethiopia, where there is an alarming deterioration in human rights. Presumably our secondees to the EEAS will return. Do we accept any obligations to our other UK nationals in the service?

My third observation is that the FCO is, of course, only a part of our representation overseas. On cultural diplomacy, the British Council has shown its concern. Will Erasmus be continued for the UK? On DfID, the 2016 statistics show that we paid 30% of our multilateral ODA to the Commission’s development budget and the European Development Fund. Will these contributions come to an end or be reduced? What new mechanisms will be devised for co-ordination with the European Union, even if we are almost certainly outside the room when priorities are decided?

Fourthly, there is the security aspect. In the Times of 11 June Sir John Scarlett wrote, concerning Brexit, that,

“we risk losing automatic access to counter-terrorist data”,

and,

“exchanges of information becoming less expertly targeted”.

How will the Government prevent this?

But have no fear: Boris Johnson told Chatham House on 2 December that the referendum was a country “taking back control”, a country “galvanised by new possibilities”. History will show whether this is again pure Johnson bluster. His claim of a greater global reach begs the question: what are the constraints now that prevent us, with our allies, having a global reach?

Similar considerations arise on the defence side. There will be calls, of course, for a new European defence organisation, most stridently from those European countries that make the least credible contribution to defence, such as Belgium, at 0.9% of GDP, and Luxembourg, at 0.4%. What are the prospects for our joining future CSDP operations such as Sophia and Atalante? How will we influence their mandate from outside? Will we continue our relationship with the European Defence Agency? How will Berlin Plus be affected by the change?

My conclusion is simple. We travel in hope. If there is good will on all sides, and given our flexibility in this field, we may be able to preserve much of the present co-operation—unless the hard-line Brexiteers prevail. What assurances can the Minister give us on these points?

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My Lords, there are few constants or certainties in Brexit other than that Britain’s future will be markedly different. Brexit will have far-reaching implications for our place in Europe and the wider world. From a security perspective, the decision to leave the EU represents as significant a shift as the decision in the late 1960s to withdraw from bases east of Suez. If that was not daunting enough, Brexit also represents the biggest administrative and legislative challenge that a Government have faced since 1945, and is likely to shrink government departments’ bandwidth to engage with other issues. During the referendum campaign the subjects of foreign policy and defence and security received scant attention. When defence was mentioned, it was in apocalyptic terms. The then Chancellor claimed that leaving the EU would trigger World War III, while the then UKIP leader argued that staying would see the UK in an EU army commanded by tin-pot generals from Brussels.

Sadly, because of understandable political sensitivities, the November 2015 defence review did not assess the defence and security implications of a UK exit from the European Union. In view of the profound strategic shift that Brexit signals, there is a strong case for government to undertake a fresh, measured review of key strategic judgments and policy choices. The SDSR set out that the Government will,

“invest more in our relationships with our traditional allies and partners and build stronger partnerships around the world, to multiply what we can achieve alone”.

Does this remain consistent in a post-Brexit world? Is the unilateralism of Brexit compatible with the ambition of developing with other nations a rules-based international order?

The Foreign Secretary spoke about this at Chatham House only last week, when he said that we must,

“redouble our resolve … to defend and preserve the best of the rules-based international order”.

He continued by explaining the importance of such an aim in preventing a return to,

“an older and more brutal system where the strong are free to devour the weak”.

His suggestion that we shall need to redouble our effort indicates some understanding that confidence in us as a partner has been dented, at least, by Brexit, which has left some confusion about our ambition. This will be a challenge, and it also presents a trap, as there may be the temptation to indulge in demonstrations of national defence virility.

There is some ambiguity in the political rhetoric. For instance, the chair of the Foreign Affairs Select Committee in the other place explained his decision to support Brexit on the following grounds:

“Yes we would lose the benefits of being part of an emerging superstate but our vision would be global as we have the weight to count, if not to command, alone”.

The United Kingdom’s Armed Forces and Diplomatic Service will need to navigate such speculation, if not confusion, as to Britain’s role in the world, and the uncertainty of Brexit at the very time when political and financial resources continue to be stretched and the international security and diplomatic environment is ever-more challenging. It will be important to be clear about our driving objective. Very many here and elsewhere, including me from this Bench, welcomed the Government’s commitment to spending 2% of GDP on defence. That totemic target is now seen in its true light: 2% of what? We already face the uncertainty of variable exchange rates and the OBR’s forecasts of future GDP growth. Since we import defence, or at least some of it, and economic growth is uncertain, we may get less for our 2% commitment. Our commitment must not be to a particular spend or symbolic percentage, nor based on a new US President’s reported, and at best confused, thinking on NATO, but to what is needed for our security and defence. That is surely what our people expect.

Clear and articulate strategy, with investment in capabilities that have been hollowed out over the years, is essential so that there is consistency of word, will and action.

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My Lords, I congratulate the noble Earl, Lord Cork and Orrery, on an excellent maiden speech, and thank my noble friend Lord Sterling for initiating this timely debate. I begin on a rather more optimistic note than some previous speakers by championing the Armed Forces and everything that they do. I am constantly struck by their collective extraordinary commitment to their duties, their loyalty to each other and their love of this country. We cannot do enough to demonstrate our support for them, but we can properly equip them, incentivise them and reward them for their exceptional contribution in our fragile world.

I was heartened by the announcement of the Secretary of State, Sir Michael Fallon, on 21 July, when he laid out the three key themes of the Government’s approach to defence in the wake of the EU referendum: defending the UK’s values of democracy, the rule of law and freedom; ensuring a stronger NATO for a stronger defence; and the US-UK partnership, about which I am more optimistic than others who have spoken today. He also announced that the UK would remain a key player in European defence, through the prism of NATO. It was also reassuring to hear from the Secretary of State:

“We will step up, not away from, our global responsibilities”.

However, I wonder whether it would not be sensible to at least revisit and carefully think through the SDSR 2015 to ensure that it is now, and will be, fit for purpose as we leave the European Union.

In addition to all our current partnerships and shared responsibilities within the EU framework, there are other practical considerations. For example, already we have a weaker pound post the EU referendum, which can be good for exports but tough on imports of raw materials. Are we comfortable that there is sufficient flexibility in the defence budget to safeguard the necessary investment in our defence hardware for the coming years?

A key capability must be to procure effectively, and there has already been substantial and welcome reform to the process. However, the independent report by Sir John Parker to inform the UK’s national shipbuilding strategy advises that yet more can be done. Sir John states—it is his own view—that building ships takes too long from concept to delivery compared with other complex industries, with a lack of pace and with time and cost impacted by a non-assured capital budget. In addition, he says:

“In sharp contrast to the commercial sector, Defence does not own major, capital intense projects at the highest level in the Client organisation”.

I interpret this to mean that it is not clear who is accountable and responsible for all projects. I ask my noble friend: is accountability and responsibility for each project delegated to key individuals in the MoD? The structure for funding is not helpful. Why is it that we allocate large capital sums to build our roads, but capital for shipbuilding and other defence projects is not consistently assured? One quickly understands why Parker stresses the need for a master plan to include well-informed oversight of the total enterprise incorporating the industrial and supply chain base. Sir John’s observations make tough reading, which I hope will be viewed by the MoD in a positive light and, having spoken to various suppliers, I believe that they, too, would welcome more rigour in the whole procurement process.

Returning briefly to the SDSR, in the light of the significant demands overall, are we ensuring that the needs of our Armed Forces remain paramount, not those of industry or our economic prosperity? This has continued to concern me in the SDSR. Are we also ensuring that we are not just building the “for” without the “with”; that is, are we investing in the right equipment and systems to do the right job and to employ in all our three services?

On a separate note, the theatre of war is ever-changing. We know that social media play a vital role in the fight against Daesh as well as other emerging and present dangers, in which case I applaud the existence of a new approach and a new piece in our armoury to reflect modern warfare: 77 Brigade, set up in 2014 to lead on special influence methods, including providing information on activities, key leader engagement, security and media engagement. I urge my noble friend to ensure that 77 Brigade is fully funded and sufficiently equipped to meet its objectives.

There is now a strong focus on ensuring cybersecurity, judged by the national security risk assessment 2015 to be a Tier 1 risk for the next five years. To be effective, it must be embedded in thinking, activity and preparedness across government and, by extension, the private sector. As the risk assessment states, cyber risks underpin many of the other crucial risks we face.

In conclusion, during the process of leaving the EU, it is crucial that we regularly make clear to our Armed Forces that their future is assured and that a focus on Brexit will not diminish other challenges which the MoD must confront, including the pressing need to improve the whole process of recruitment, training and retention of our personnel. After all, our ability to defend our nation and reach out to assist others will only be as good as the men and women who serve.

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My Lords, first, I join other Members of the House who have thanked the noble Lord, Lord Sterling, and congratulated him on getting this debate this morning. It is very timely and terribly important in this whole area of Brexit. It is good that we in this House examine the issues that face us as we do, because, unfortunately, we appear to be in a period in our country when opinions are polarised. If we talk about needing more funding for defence—and I believe we do—we are warmongering, trying to make people scared and stressing something that is not necessarily a priority. The responsibility of this House is to address these issues, and we owe a debt to the noble Lord.

One wonders sometimes just what we learn from history. Here we are today at the crossroads of a very important and hazardous period for our nation, yet our Armed Forces are stretched to the limit; the country appears not to regard that as important; we have uncertainty because of Brexit; and we have the result of an American election that most people never thought would happen, with a President-elect who, a bit like the song, “First he says he will and then he says he won’t”, as regards NATO.

I shall concentrate on the Armed Forces. A briefing paper from the other place in August this year was entitled Brexit: Impact across Policy Areas. Tucked into it was a section on defence entitled:

“Impact on UK defence budget and future equipment plan”.

It refers in particular to the impact of the decline of sterling on the budget and therefore on procurement, mentioning in particular the Joint Strike Fighter, which is a crucial part of our defence strategy. It raises the issue of whether we can afford it. It also questions whether we can continue to spend 2% of GDP on defence. That is a question I should like the Minister to answer in his winding-up. As the right reverend Prelate asked: what is 2% of GDP? It is a sum we need to ensure we have, and perhaps should be converted to an actual figure, because GDP is now being questioned. Of course, it is also about procurement of personal equipment for our Armed Forces, on which at times we have not had a proud record, although it has improved in recent years.

In a report of 10 July, the Joint Committee on the National Security Strategy expressed concern and referred to a report in May, before Brexit, from the Institute for Fiscal Studies. It highlighted analysis that GDP may reduce by between 2.1% and 3.5% by 2019. I think we are probably in the honeymoon period over Brexit: we will start to really feel the economic impact over next year and the year after. The result of that would be a decline of between £20 billion and £40 billion in the money available to us. That is more than our defence budget, if it is at the upper end. One has to ask: will that 2% be maintained, and what is it?

In 2004, the European Defence Agency was set up. Its role was to defend member states in Europe—I take the point made by the noble Lord, Lord Hamilton. Will we seek to stay in the European Defence Agency? Will we be seeking to maintain that in our Brexit negotiations? Any security threat to Europe has to be a security threat to the UK. We are not in isolation; we are part of Europe, whether we like it or not and whether we are politically linked or not. At the moment, we are in a very insecure world. Britain holds the leadership of the battle group concept, which was set up at the same time, until the end of December this year.

In conclusion, I ask the Minister: just what are the plans? I know he will not give them line by line, but what is the general approach? In view of the fact that there were some answers in the other place yesterday, perhaps we can get one or two today. Will the Ministry of Defence be reviewing the strategic defence and security review, given that its requirements have changed considerably in view of the changed circumstances we face as a nation?

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My Lords, like others, I congratulate the noble Earl, Lord Cork and Orrery, on his maiden speech. Having been through that ordeal myself last week, I thought he performed with flying colours, as befits a former naval officer.

This debate has been enriched with a lot of eloquent speeches, mostly on the defence aspects of the Motion. In particular, I associate myself with the words of the noble Lord, Lord Robertson of Port Ellen, on NATO, where I had the privilege of working with him. The Motion in the name of the noble Lord, Lord Sterling, also refers to the Diplomatic Service. I put in a word for that, declaring an interest as a former head of the Diplomatic Service—I hope not a bias.

The FCO and its staff are a great national asset. It is probably the fate of all foreign ministries to be underrated in their own country, but abroad there is no doubt that the British Diplomatic Service is seen as one of the best, if not the best, in the world. The country is going to need our diplomats and the expertise they have even more if we are to go through successfully the dislocation in our foreign policy that confronts us. Our embassies in Europe will, of course, have to track every nuance of the debate on Brexit in their countries. They will have to advise Ministers here, and do what they can to build a climate in favour of the best possible relationship bilaterally with these countries in future. As the noble Baroness, Lady Smith of Newnham, reminded us, the bilateral relationships in defence, security and other areas will be all the more important.

In the wider world, we will need our diplomats working in the UN, NATO and the major capitals to be at the forefront of showing that Britain remains actively engaged in promoting a rules-based international system, makes a serious contribution to reduce tensions and conflict, and champions free trade. At home, the FCO will have to play a crucial role as the glue holding together the rather baroque structure we have in Whitehall for dealing with Brexit issues.

To be an influential global player is hard work. It takes initiatives, risks and mobilising international support behind ideas. We can have full confidence in the professionalism and commitment of the staff in the FCO but, if Britain is to carve out the new international role that Ministers talk about, the Government will need to have a fundamental look at the resources available to the FCO.

The FCO’s budget has been cut successively over the last 20 or 30 years. I experienced that as Permanent Secretary. At the same time, the budgets of other government departments doing international business have been rising. If you put together the delegated budgets of the four main departments dealing with international affairs—the MoD, DfID, the intelligence community and the FCO—you come out at around £40 billion a year. The FCO’s share of that total is 2.7%. I ask noble Lords to reflect on whether 2.7% of the available money is the right share for the department that will have to spearhead Britain’s new post-Brexit independent role in the world.

The FCO’s budget is not only tiny but tied up in knots. So, 30% of the FCO’s budget has to be spent on what is known as overseas development assistance rules—that is, spent on or in the poorest countries in the world. Fully one-third of the FCO’s budget is dependent on successful bids to interdepartmental funds for conflict and security. At a time when our diplomacy will need to be more agile and more flexible than ever, this makes no sense.

The FCO has always been a good corporate citizen in Whitehall. In keeping with that tradition, the excellent current Permanent Secretary of the FCO told the Foreign Affairs Committee in another place recently that the FCO had made a joint bid with the international trade department for new funds of £10 million to reflect these heavy new responsibilities. They got that in the Autumn Statement, so each received an additional £5 million.

It is probably not fair to ask the Minister to comment on whether the FCO’s budget is adequate to meet the ambitions set by the Government in a post-Brexit world, but I ask him to take back to colleagues this modest suggestion from the UK’s first National Security Adviser. The National Security Council might consider whether the current balance of spending among the four international-facing departments is right at a time when Brexit will throw so much weight on to British diplomacy. To paraphrase Sir Winston Churchill, give our diplomats the tools and they will do the job.

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My Lords, it has become almost a cliché to say there are tremendous similarities between the period leading up to the Second World War and the present time: economic instability; a dictator wanting to distract his own countrymen by foreign adventure, practising his tactics, strategy and his new arms in somebody else’s civil war; talk of minorities of his country, which is a potential aggressor, living in countries surrounding it; even a British tennis champion striding the world on both occasions. As with all clichés, this is not the only part of the story. As I understand it, there is no massed army on the borders of Russia waiting not only to invade but to occupy and subjugate surrounding countries. What there is is a great deal of mutual fear and of lack of confidence in oneself on both sides. As my noble friend Lord Sterling mentioned, this can itself be dangerous and lead to war by default. The analogy might well be with the First World War, perhaps, rather than the Second World War.

I will give two simple anecdotes as to what I am trying to get at. The first concerns a BBC film of a British warplane intercepting a Russian plane in British airspace—an event that, as I have just learned from a letter from my noble friend the Minister of 24 November, occurs regularly. This particular film not only showed the images, but you heard the voice of the British pilot, which went something like, “Good evening, gentlemen. I represent Her Majesty’s Government and on behalf of Her Majesty’s Government I have to tell you that if you don’t turn around in half a minute, I’m going to shoot you down”. Apparently even at the height of the Cold War we said something slightly different—something like, “Good evening. We represent Her Majesty’s Government. It looks as if you’re a bit off piste, and it would give us great honour to escort you back to your normal course”. In this particular anecdote, the temperature has undoubtedly increased enormously.

The second anecdote I wanted to refer to concerns an admiral I met recently, who was very taxed by the fact that four Russian warships got out of “their sea”, as he called it, the Black Sea, came into “our sea”, the Mediterranean Sea, and pointed their guns at our ships. He had to point his guns at their ships. This was a nasty moment all round. The point he was making was that it is not just the Royal Air Force that is constantly having to intercept Russian planes. We come very close to some nasty occurrence. Turkey did shoot down a Russian plane, just before the British anecdote I referred to.

There is a real danger of mutual fear and a mutual sense of not being up to the job. The Russians are fearful of their economy being the problem; on our side is the fear that we cannot keep up with Russian armament. That is serious. There is a very clear antidote to it. In our case in the West, we have to rearm. What my noble friend Lord Hamilton said about NATO is absolutely right and what has been said before was wrong: we have to have a strong NATO and to rely on the Americans. If one really looks between the lines, the new President-elect is really saying that Europe is not playing its part. My noble friend is absolutely right when he said that if we argue for a muddled chain of command, with the European Union being muddled with NATO, we really are in for a mess.

We have to look strong in the West. We would then be in a position, for instance, to take away the embargo on the Russian economy. The other side of the coin is that we should allow it to have back its self-esteem. When we come to a point where the two sides are looking each other in the eye from a position of self-confidence, we will then have some hope of continued peace.

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My Lords, I want to speak about the challenges facing UK diplomacy and defence resulting from economic, natural and technological factors.

The UK Government deal with changes, risks as well as opportunities, through diplomatic collaboration with other countries and with companies, especially and to a growing extent with those in the EU and the rest of Europe—as we saw last week with the common European patent policy being introduced even into the UK.

I have experienced governmental collaboration through my work at the Met Office, where I was chief executive. We were involved in many meetings with UK diplomats as well as with other civil servants. I have also worked with the NGOs and companies listed in my declared interests.

Dealing with climate change and the global environment is now regarded as a primary overall role of the Foreign and Commonwealth Office, as it is for almost all national Governments, even in the United States, where it is a major concern for the Department of Defense—if not for the future occupant of the White House. The Foreign Secretary has a special climate adviser and a scientific adviser, who recently addressed the House of Lords Science and Technology Committee. The FCO has an overall role in co-ordinating and stimulating the international roles of UK government departments and agencies, especially in the United Nations agencies and in the European Commission. It would help if the FCO were to report more regularly to Parliament on this aspect of its work. In the 16 years that I have been here, there have been two debates, which I organised.

Currently, the environmental and scientific European intergovernmental organisations play a key role in space, weather forecasting, fusion energy and biology. They are important for their function and for building up the international capacity of UK industries. As chief executive of a major UK government agency, where I experienced its interaction with several other government departments, including the Ministry of Defence and the Foreign Office, I was the permanent representative at the World Meteorological Organization. This agency of the United Nations is based in Geneva, where the FCO has an office to assist the work of the UK delegations to all UN agencies. These agencies play an essential role in the modern world, from science, trade, health and labour relations to intellectual property. Increasingly—this is an important point—the European Commission sends delegations to those agencies, and these EC bodies are very effective in connecting their rather well-funded programmes to the less well-funded programmes of the UN agencies, notably in health, development and technology. In future, when the UK is no longer part of the European Union, a primary role of the Foreign and Commonwealth Office should be to maintain special links with the European Union, which doubtless will appreciate UK input.

I want to mention some aspects of defence, because the current defence strategy depends on our allies in NATO countries and significantly benefits from EU science, technology and intergovernmental organisations. Perhaps I may depart slightly from the story told by the noble Lord, Lord Ashdown. At about the same time, in 1910, the Admiralty made full use of the Italian Mr Marconi’s radio. However, as we commented in our report, the Germans were also using this and always put out their weather forecasts one hour earlier than the Brits. In terms of a new threat now, we will use all the technologies that we have on computing, satellites, weather forecasts and climate monitoring to consider the tracking of diseases associated with global warming—this is of great concern to the US Department of Defense.

Leaving the EU makes it quite likely that the UK will no longer be at the centre of European decision-making, as the noble Lord, Lord Robertson, emphasised. I understand that European air traffic control, which is currently an EC organisation, may operate with less UK influence after Brexit.

Another strategic challenge for the FCO and MoD is the changing environment of the Arctic regions, where the MoD is operational and the FCO is concerned with treaties and agencies affecting environmental activities and future commercial developments. These issues were discussed in the House of Lords report on the Arctic. By leaving the EU, the UK will no longer be part of the EU’s combined activities in the Arctic, but the FCO should still work with the EU on the strategic objective of Europe joining the Arctic Council. Hopefully, special arrangements will enable UK researchers to be part of the EC co-ordination network for polar research, which the EC has said it would welcome. The FCO polar office will continue to represent the UK as an observer in the Arctic network, which is to be welcomed.

I hope that the UK’s diplomacy and the Royal Navy’s hydrographic service will be of use to the noble Lord, Lord Sterling. They may be able to contribute their expertise to the sustainable development of the Arctic. Perhaps the noble Lord’s shipping companies will make use of the developing Arctic shipping routes and of the hydrographic survey—which reports at the moment that it is not quite sure what the depth of the bottom is.

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My Lords, I have a difficulty in that I should disclose a number of interests. I am first and foremost the secretary and treasurer of the House of Lords Yacht Club. As your Lordships will know, by tradition all British-flagged vessels are entitled to the protection of the Royal Navy, Her Majesty’s ambassadors, consuls, proconsuls and plenipotentiaries—although we are slightly short of plenipotentiaries at this moment—wheresoever they may be on the face of this earth. In terms of British-flagged vessels, we have 3,600 commercial vessels, 6,500 fishing vessels, 20,000 yachts and 320,000 small ships.

International law, which I am not very good on, recognises, as stated in the relevant Admiralty publication, that,

“every vessel afloat has a national character, and places duties on flag states to regulate and restrict the legitimate use of flags that indicate national character. The regulation of the use of British national colours is not therefore an outdated ritual, but Britain’s duty as part of the international community”.

As for my noble friend on my right, I have decided myself, because there is no committee around, that we will make him an honorary member of the House of Lords Yacht Club. However, the difficulty, as we know, is the use of flags. Every vessel afloat has this national characteristic. That places duties on different people, and to find the flags is a problem.

In the past, we in the House of Lords Yacht Club found several things that we were concerned about. The first was coastlines, of who went where and when. The UK and Commonwealth together have a coastline of 44,000 kilometres. France and the French territories have 31,000 kilometres. The former Soviet Union had 44,000 kilometres and the United States has only 22,000 kilometres. Does this matter? Effectively, the United States has a much shorter coastline than I thought when we were looking at this matter.

There are more than 60,000 British-flagged vessels which, by tradition, are entitled to the protection of the Royal Navy—we have had very few incidents, other than man over board from time to time or, perhaps more important, the loss of the ensign, because to get a new ensign is quite complicated as they almost have to be made by hand.

A question to have come up recently is that of illegal fishing, also by private boats. The costs of illegal fishing are somewhere between £10 billion and £24 billion a year, so I am advised. These are not particular issues, but it is when we come to the economic exclusion zone, or EEZ, that we have a certain difficulty over how we may be protected. An EEZ, which effectively cuts across the channel, is legally meant to be something you observe. However, the data and ability needed to follow the rules and regulations is pretty considerable.

As I said, I have sailed a lot and I had the privilege to follow my favourite thing, which was the travels of St Paul. That took quite a bit of exercise and wore out quite a lot of young feet—my own would not wander about—until I realised that the travels of St Paul were around the same places as the travels of the illegal immigrants at this particular point in time. I had entered and come out successfully of a point of considerable danger.

I am grateful for the chance to have this debate, and in particular to my noble friend Lord Sterling. I am also grateful to the noble Lord, Lord West, for introducing me to NIMIC, where I came across some of the most impressive people I ever met in the maritime field. They are down in Portsmouth at the moment, fortunately with new equipment and services. The Navy that will emerge in the next few years will, without doubt, be the strongest and best Navy we have had in this country for some time. If the amateurs can help, I am sure almost all my members would willingly accept a new junior commission if there are insufficient officers to go to sea again.

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My Lords, unlike other noble Lords, I am no expert. I am just a citizen who has felt increasingly anxious over the last 20 years. Brexit must mean that the UK’s influence in international affairs will increase and our reliance on our Armed Forces will be even more vital. We will no longer be one voice among 28 countries with different foreign policy aims. We will have our independent voice in international organisations and pursue our own foreign policy in co-operation with our own choice of bilateral allies.

The importance and vulnerability of NATO have been emphasised since the election of Mr Trump, and now is the time to put all our energy into strengthening that organisation and giving him no excuse to say that we are not pulling our weight. It was embarrassing, especially since it was correct, to have it pointed out that most NATO members have not met the target of spending 2% of their GDP on defence, as agreed in 2006. Only Greece, Poland and Estonia of the other EU members met that target in 2015. Slovenia, Spain, Belgium and Luxembourg spent less than 1%. The US and the UK have consistently met or exceeded the target and are de facto the real contributors. In the face of those figures, how could the European Union maintain an army? We should therefore continue to oppose any such notion and instead encourage it to strengthen NATO.

It is often said that the EU brought and maintained peace in Europe since its establishment. The award of a Nobel Peace Prize to the EU in fact had about as much foundation as the award to President Obama and less credibility than the award to Bob Dylan. It was the EU that stood by while Yugoslavia, on its borders, fell apart with genocide and massacres. According to Sir John Nott, a sceptic,

“The only time the EU actually took charge of security was during the Bosnian War. Its mishandling of that crisis led to more than one million people being displaced and up to half a million being killed or wounded”.

What is the EU’s policy towards Russia and its annexation of Crimea and the destabilisation of Ukraine? One would have to search hard to find out. Apparently, it amounts to cold-shouldering, with little comfort to the people of Ukraine and certainly not amounting to a deterrent to Russia. I see no evidence of UK influence on the EU in this particular episode.

What of security and intelligence gathering? Belgium is a byword for inability to collect and use intelligence even between two states. The barriers to intelligence gathering and sharing between 28 states are complex, and frankly there is reluctance to share details on security with countries that have close ties to Russia or appear to be incompetent. Only the Five Eyes, the intelligence alliance between the UK, the US, Australia, Canada and New Zealand, gives one any confidence.

The four major crises that the EU has faced since 2009—concerning the euro, migration, the rise of right-wing extremism and terrorism—have shown that it is largely ineffective in responding to external challenges and presenting its case to its own people and the wider world. Europe’s open borders, its failure to screen passports and the stolen and fake passports that abound have eased the passage of terrorists across Europe and ultimately into this country. Jews are fleeing France and Belgium in the face of anti-Semitic and terrorist incidents. The EU has been irrelevant to the aftermath of the Arab spring and to the Syrian and other Middle Eastern catastrophes. However, there is now the prospect that an independent UK can take its own decisions in relation to the threats from Russia and the response from the US in the Middle East.

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My Lords, this is a topic of great importance, and I am grateful to my noble friend Lord Sterling that I am able to speak on the subject. Like many others in this place and the other place, I was deeply disappointed to hear Jean Claude-Juncker put forward proposals for a European army in his speech to the European Parliament. This idea has rattled around Brussels and Strasbourg for decades but has been sensibly dismissed for years due to fears that it would undermine the NATO alliance, the transatlantic bridge which has underpinned our security for more than half a century.

Spending large sums of money to replicate existing structures would be damaging enough to the reputation of the EU, even at a time when trust in the institutions was not at a worrying and persistent low. I and many other former remainers in this place are now committed to making the most of Brexit. An important part of that is respecting the path that our European allies choose to take. However, this does not mean that we should cease to give counsel to them on matters like this which underpin the security of us all. If such a proposal should pass, I would be interested to hear more from the Minister on what he thinks the future military relationship with European armed forces would be.

Given that the UK is one of Europe’s two major military powers and existing collaborative schemes are already deeply entrenched, it would be prudent to try and maintain as close a relationship as possible while maintaining effective control over all British forces. The relative silence of EU treaties on matters of defence makes this a very achievable goal.

There will also be a heavy and continuing responsibility for the UK to continue to guarantee the safety of the Baltic states, with a revanchist Russia to the east. In this context, I welcome the stationing of additional troops in Poland and Estonia, although far more needs to be done to reassure our allies and generate good will before Brexit negotiations. I should clarify that I do not recommend this purely for reasons of getting a better Brexit deal. There is an obligation to these young democracies so that their way of life and liberal values can be defended. To withhold co-operation at such a critical time would come off as mean-spirited as well as alienating those we wish to keep as friends. Does my noble friend intend to maintain the military presence in the Baltic states and continue to work effectively with them?

My other point also concerns Russia. At present, the UK has been a consistent voice arguing for tough sanctions on Russia due to its annexation of Crimea and continuing belligerence in Ukraine. Sanctions have been levied and are showing effectiveness in damaging the Russian economy and giving Putin reason for thought. However, when the UK leaves, there are signs that the consensus around this could start to break down. A number of EU countries, including Hungary and Finland, have expressed interest in softening or fully lifting sanctions, as their trade with Russia continues to decline. Recently, the French parliament voted to urge Brussels to drop the sanctions. Italy’s senate also voted to oppose any automatic renewal of sanctions. The precarious financial situation in Europe is not a good enough excuse to, in effect, turn a blind eye to Russian aggression, given that this is the only major action the West has taken.

Co-ordination of sanctions with the EU post-Brexit will be crucial. As well, the UK will need to ensure that its highly specialised sanctions team will continue to work with the EU. These civil servants are spread across the Treasury, the Department for International Trade and the Foreign Office, and have been doing much of the heavy lifting on British and European sanctions policy. Were we to leave without a continuity deal in this area, it would become much easier for those who wish to drop sanctions to make a convincing case, pointing to a lack of expertise at their disposal. I trust that the Minister will look into this when the Brexit negotiating position is being planned out.

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My Lords, I had better start off by not so much declaring an interest as reminding the House of the parts of my past that may be thought to—indeed, must—inform or influence what I say on this subject. My first job was in the Diplomatic Service, until I resigned when I was 29. I was successively a third secretary in the FCO, a second secretary in Moscow, and a first secretary and section head in the FCO. Much later I was opposition defence spokesman in the House of Commons and then Defence Procurement Minister in the previous Labour Government until 2010.

I want to add my voice to those who have already paid tribute to the noble Lord, Lord Sterling, for the brilliant idea of having a debate on this subject because it enables us to look at this Brexit issue from a rather original perspective. Nevertheless, it is one which has the same effect: Brexit offers the country a very large number of risks and costs and absolutely no gains whatever. It has been noticeable that in this whole debate no one has argued that there are any gains in Brexit—except the noble Baroness, Lady Deech, with whom I profoundly disagree but I do not have much time to go into her arguments. The suggestion that a security relationship with New Zealand was a compensation for security relationships with our continental partners was a little bizarre.

It seems absolutely clear and obvious that we shall lose influence the day we leave the European Union. Of course, the object of the Diplomatic Service is to maximise the influence of this country abroad. It is difficult to see how one could more dramatically reduce the influence of this country abroad than by leaving the European Union. We shall no longer be sitting on the Council of Ministers or the Foreign Affairs Council. If the EU decides on some new initiative, such as it has done very productively in recent years—for example, the Quartet in the Middle East, the contribution to the Iranian deal and the Minsk negotiations with Russia—we shall not even know what is going on, except to the extent to which somebody tells us, and we will have no stake in either conceiving or carrying out these initiatives.

I realise that the Government do not see things that way. They think empty chairs are an attractive prospect. They have tried to anticipate Brexit. The Prime Minister has cut a European Council in the brief time she has been in No. 10. The Foreign Secretary, Mr Johnson, cut the dinner before the last meeting of the Foreign Affairs Council. It is a very strange approach to British diplomacy. It is not in the tradition of this country at all. The House will recall that Castlereagh played a major part in the Congress of Vienna, that Salisbury and Disraeli played a decisive part in the successful Congress of Berlin, and that Ernie Bevin played a historic role in the foundation of NATO. They did not believe in leaving an empty chair in the councils of Europe and they were right. What they would have thought about Mr Johnson is another matter, which I will not speculate on. Every Member of the House can make up his or her mind on that.

Apart from the high-profile, high-level summit issues that I have just mentioned, with our membership of the European Union there is a constant dialogue on a weekly, sometimes daily, basis, involving embassies right across the European Union, about current issues that we face—economic, political, security or whatever—that come up in an EU context. It means that our embassies in these countries have to keep very close relations with the Governments to which they are accredited. They discuss a wide range of topics, bring together alliances, do deals, and gain a deep understanding of where those countries are coming from and where they are likely to go. That will all be gone. That daily, routine work of active diplomacy can have enormously important consequences.

I remember Garret FitzGerald—a wonderful man to whom I pay great tribute, a great historical figure: the Taoiseach who signed the Anglo-Irish agreement with Margaret Thatcher—saying to me in the course of a long lunch, which I will remember for the rest of my life, that Britain and Ireland could never have a really successful relationship until Ireland had joined the EU. Once that had happened, after centuries—800 years—in which the British has successively persecuted, exploited, neglected and patronised the Irish, we suddenly found ourselves equal partners in the same venture, with a daily agenda of business to be dealt with, and that changed everything. If you reverse that relationship, you will reverse that effect. Indeed, it is rather sad that the Diplomatic Service will have particular problems to deal with if we leave the European Union, both with Ireland if we try to suggest the setting up of an international frontier dividing the island of Ireland for the first time in history, and with Spain if we do the same thing between Gibraltar and the rest of Spain. It is a very depressing prospect.

Even more depressing are the immediate financial consequences of Brexit, for both the Diplomatic Service and the Armed Forces; that is, the devaluation of the pound and the prospective reduction in our growth rate, which I think all economic observers agree is almost certain to be the case. Two per cent of a lower GDP will be 2% of less for our Armed Forces. We heard from the noble Lord, Lord West, who spoke so eloquently, that we are already spending far less than we should be on that. I hope that the Minister will respond to the question asked by the noble Baroness, Lady Buscombe, which I endorse: have the Government made new estimates to allow for an increase in the sterling budget of the Diplomatic Service and the Armed Forces to take account of devaluation?

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My lords, among the uncertainties that surround the United Kingdom’s departure from the EU, there is a constant—one thing that will not change—and that is the relationship between our security in these islands and the security of the rest of Europe. We cannot change our geography by referendum. The safety of Europe is our safety. We long ago gave up the idea of national defence in favour of collective security, and nothing that has happened over the past months has changed that. We may be looking to renationalise aspects of our economic and legal structures, but renationalising our defence is simply not practicable.

For many years now the main elements of our defence policy have been a strong transatlantic relationship and, associated with this, our membership of NATO. Some say that these are no longer valid and no longer have the relevance they once did, and that we should forge new relationships. But when it comes to the exercise of hard power, one needs capabilities and structures upon which one can rely in the most difficult of circumstances: the chaos of war. They are not easily achieved.

The safest route for us as a nation is to ensure that NATO remains a useful and credible alliance, but we face challenges in achieving this. In terms of the sum of its members’ capabilities, NATO remains a very strong military power. But not all of those capabilities are as large, as well trained or as supported as they should be. There is a degree of institutional hollowness that must be corrected. Inevitably, that means investing the necessary resources.

The United Kingdom has traditionally been an exemplar and a powerful voice on security issues within Europe, but I fear that Brexit may threaten this. Yes, we will remain one of the most important members of NATO and maintain one of the highest levels of capability within the alliance. But the strength of our voice, the weight of our opinions within the European fold, will inevitably be diminished. For some years, we have firmly resisted the desire of a number of our partners to create new military structures within the EU that duplicate those within NATO. We have argued that duplication wastes scarce resources and complicates decision-making, all of which would be to the detriment of NATO and of European security in the round. We have consistently won those arguments; we are now likely to lose them, with the unfortunate consequences that I have described.

We have, of course, long agreed that the EU has a useful military role to play at the lower end of the spectrum of conflict and we have participated in, and in some cases led, such operations. A number of them have indeed proved valuable. There appears to be an appetite within the Government for us to continue to contribute to CSDP missions after we leave the EU. I have no doubt that this would be possible but at the moment, we participate fully in the strategic formulation and direction of such missions. Ministers and officials meet at the EU level and hold considerable sway over the direction of policy. The Chief of the Defence Staff sits on the EU military committee, and has a strong voice in the strategic planning and direction of operations. That will not be the case after Brexit. If we continue to participate in CSDP missions it will be as followers, not as leaders.

How should we respond to these challenges? First, we must redouble our efforts with regard to NATO. We must be at the forefront of policy formulation, doctrinal development, capability enhancement and training initiatives. The UK is already doing much along these lines but we must do more. Secondly, we must strengthen and sustain our bilateral defence relationships within Europe. The Anglo-French initiative is making good progress; we must make it indispensable to both sides. We also need to do more with Germany and with other partners in this regard. Finally, of course, we need to invest appropriately in defence. The Government have made a start on this but it is only a start. It is worth recalling that the NATO figure of 2% of GDP, which we have heard cited so much today, was intended as a minimum investment in defence—a rock-bottom, not a ceiling to which members should aspire. We have to invest according to need, and the need is great.

Influencing Europe’s policies for the security and defence of the continent, so crucial to our own security and safety in these islands, will become more difficult for us after Brexit. We will lose avenues of approach and elements of leverage that we currently possess. We must do whatever is necessary to make up for those losses in order to safeguard our own national interest. I hope that the Minister can give us some indication of the Government’s intention in this regard.

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My Lords, I am grateful to my noble friend Lord Sterling for introducing this debate and I remind the House of my somewhat technical interest. Regarding the short procedural debate that we had this morning, I have to leave the Chamber at 2.45 pm to catch a train to see the doctor and I crave your Lordships’ indulgence to let me escape.

First, I share the concerns of all noble Lords who say that we are not spending enough money on defence, even though we are meeting the 2% target. If your Lordships should complain that this is only so with the assistance of accountants, we can be confident that other NATO states do exactly the same thing but still come up with only pitifully small numbers. I am not sure what the point is of having much closer co-ordination with other EU states when they have so little to co-ordinate. By the way, multinational battlegroups are political units and not military units. It seems that the more recent accession states, which get the most excited about pure free movement in the context of Brexit, are the very same states which are most reliant on the UK’s military muscle. With the exception of Poland and Estonia, they mostly fail dismally in terms of percentage of GDP spent on defence. Furthermore, many of these states rely upon the City of London to handle some of their sovereign debts, so they need to tread carefully with financial services and Brexit.

NATO will of course remain the cornerstone of our security and that is not likely to change. I suspect that reality will set in even with Mr Trump—unless of course Mr Putin manages to break that cornerstone, especially the Article 5 commitment. I cannot imagine our excellent Secretary of State, Sir Michael Fallon, allowing that to happen. The UK provides a very significant proportion of the total EU defence capability, and over the next few years that capability will be significantly enhanced. The EU absolutely needs the UK to remain prosperous if the UK is to continue to help keep everyone safe in Europe. It seems to me that much the easiest way of dealing with conflict is to deter it. On the other hand, if you suffer an incursion it is extremely difficult and expensive to deal with, as you would need to muster at least three times the combat power of your opponent to turf him out, if it is possible at all. That is why the Government’s measured approach to supporting the Baltic states and other states is right. It is a statement of resolve, without being too provocative.

While we may worry that we are not expending enough effort on defence, relative to most other EU states we offer an extraordinary capability which will be enhanced in the next few years. For instance, even the United States has only 11 full-sized aircraft carriers in operation and we will always have one available, which can operate in conjunction with the French “Charles de Gaulle”. This will be a huge leap in strategic capability. We have now stated an intent to be able to deploy at divisional level against a peer opponent. That is welcome although at 180 days, the period of notice is a bit too long. Most importantly, our forces are balanced so that, for instance, we do not have a row of shiny jets but not the foggiest clue where the enemy is. Not only do we have significant combat forces available, matched in the EU only by France; we are becoming increasingly effective at bringing to bear all the nation’s security apparatus to deal with current challenges in a well co-coordinated manner.

I want to draw your Lordships’ attention to the need for a large-scale divisional all-arms deployment exercise. First, we need to demonstrate to a potential adversary that we can deploy and manoeuver two brigades in the area of operation, and that this is not a pipe dream. Secondly, it is easy to forget how difficult and important logistics are. Some seem to think the new strike brigades will be able to move 1,000 kilometres in the area of operations without traditional levels of combat service support. We need to test that theory as soon as possible after the new brigades are operational. Finally, yes, we can do computer-simulated exercises to train and test the staff and commanders on their procedures and planning processes, but that is not the same as having thousands of troops and platforms manoeuvring around in the area of operations. I know that an Exercise Saif Sareea will take place in 2018 but I am concerned about its scale. Will it merely be a battle-group exercise, which will test nothing, or will it be a proper, fully bombed-up brigade manoeuvring around in the area of operations?

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My Lords, this has been a fascinating debate today and I join others in congratulating the noble Lord, Lord Sterling of Plaistow, on securing it, and in congratulating the noble Earl, Lord Cork and Orrery, on his excellent maiden speech.

Whichever serious analysis we read, it is anticipated that, for some considerable time after a Brexit, our economy will decline before improving to where we are now; then should come the hoped-for growth. The United Kingdom has an obligation to NATO, which we totally support, to put at least 2% of our GDP into defence. At the moment, there is little certainty about the US commitment to defence or NATO or indeed what we might identify as professional diplomacy, so we need to exert our influence on the 23 states which do not pay the 2% to meet this commitment, or we may find ourselves unready to meet the challenges that may face us in the future. Lack of clarity and certainty from across the Atlantic has made the Baltic states and Poland, which have Russia on their eastern borders, feel very anxious and vulnerable.

For the UK in a declining economy, 2% could well be less than it is now, which will mean difficult decisions will need to be made by the Secretary of State and the Chancellor if we are to deliver SDSR 2015, which goes beyond man and machines to include cyberdefence against China and Russia. Added to that, much of what we purchase comes from the US or Europe and, although exchange rates are better, they are not as favourable as they once were.

The financial system aside, the last SDSR was written in anticipation of us remaining within the EU. Extra border security will be required. Our coast will need patrolling, not just the Strait of Dover but elsewhere, where we know the unscrupulous traffic people and drugs. Fishery protection will become a serious issue, and we will need to carry out our own fishery protection patrols. Perhaps different circumstances, a smaller GDP and our old sovereign-state responsibilities will persuade the Government to look again and draw up a new SDSR—who knows? We do not have enough ships to protect our security, safety and trade.

We cannot ignore the presence of Russia on Europe’s eastern borders, and we are rightly sending our troops to Poland. It is worth noting that ultimately all those anxious states see their defence coming from NATO, not a European army, but lack of clarity, compounded by very mixed messaging from President-elect Trump on the US commitment to NATO, has exacerbated the concern, not diminished it.

I would appreciate clarification from the Minister on an EU army. At Chatham House last week the Foreign Secretary said a lot in his speech and was still suggesting that he was relaxed about the formation of a European army, whereas our preference would be for a strong NATO.

NATO is, of course, a nuclear alliance. France and the United States are our allies in providing the NATO nuclear umbrella, and I expect that this is one commitment that will be unchanged. We have spent a lot of time working with the French and other EU-partner states on several projects, operations and exercises over the past few years, and I would be sorry to lose this co-operation, which is mutually beneficial. Whether military co-operation agreements will need to be worked out with the EU or bilaterally with separate nation states remains to be determined.

A big area of uncertainty will be the common security and defence policy. It makes sense for it to be focused on the European continent. We will still be part of it. It is a matter of our geography which will not change, as the noble Lord, Lord Ramsbotham, said. As a state which currently contributes 20% to the total EU spend, our presence will be missed, and perhaps that is an area for negotiation. Should we not have a seat at this table, our only sphere of influence in European defence issues in the future will be through NATO, and the two organisations look at the world through different lenses. The only alternative is by negotiation with the EU or on a state-by-state basis, so we need to strengthen our UK diplomatic links with EU and non-EU states. The noble Lord, Lord Robertson of Port Ellen, outlined our vulnerabilities. Outside the EU we will not be at the table and will not be making the decisions.

That brings me to diplomacy. For the past few years there have been concerns about the quality, numbers, foreign language abilities and capacity of our diplomatic corps based in the UK or abroad. In 2012, Simon Fraser, head of the Diplomatic Service, told the Commons Foreign Affairs Committee that a panel had judged France to have the most effective diplomatic service, although the UK came second—there is a barb. We have rightly taken pride in our excellent ambassadors and their support teams, and they have led the world in our exercise of soft power. However, in 2015 Philip Hammond stated that the FCO was close to the minimum level of UK-based staff, and this summer the Permanent Secretary wrote that our embassies are very thinly stretched. This is not what we want to hear when we have stretching out in front of us a series of difficult and protracted bilateral negotiations with our EU allies. I echo my noble friend Lady Smith of Newnham’s call to strengthen the FCO. What plans are in place to recruit and train a diplomatic corps to carry out the duties required of it? I hope that we will take the opportunity afforded by Brexit to review our need for an enhanced FCO.

The irony is that, however negotiations pan out, we will need to devote an enormous amount of government and diplomatic resource to the EU in future, perhaps considerably more than now. Whether our Brexit is hard or soft—or indeed red, white or blue—we will still need defence and a Navy, Army and Air Force willing and able to carry it out, supported by the very best women and men in our embassies abroad and in the FCO at home. I am sure that they will do whatever is asked of them, yet my concern is that after nearly six months there is precious little clarity about what that might look like.

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My Lords, the House is indebted to the noble Lord, Lord Sterling, for securing this debate and giving us the opportunity to discuss these important issues. I join in the congratulations to the noble Earl, Lord Cork and Orrery, on an excellent maiden speech which was well informed and contained some good ideas. I have always worked on the basis of never rejecting a good idea simply because I did not think of it first.

As we approach the turn of the year, it is always good to look back—the most perfect view of all is the one looking back. I can say with certainty that this time last year few of us would have predicted the challenging turn of events of the past 12 months, from the EU referendum result in June to the US presidential elections in November to the most surprising but welcome outcome of all—Wales finishing ahead of England in Euro 2016.

Like most people in this House, I was surprised by the outcome of the referendum on 23 June, and it was certainly a wake-up call if ever there was one. While we continue to be told that “Brexit means Brexit”, we should not forget that for seven decades the defence of this country has been underpinned by NATO in particular and Europe in general. While that close co-operation has been welcome, some responsible for promoting the EU’s common security and defence policy have favoured more integrated European defence with the possibility of a European Union army. I am opposed to this, and so is the Secretary of State for Defence. In his conference speech in October, he said that,

“we will go on blocking an EU Army, which would simply undermine NATO”,

but the Foreign Secretary disagreed. He said:

“There is a conversation going on now about the EU’s desire to build a strong common security policy … If they want to do that, fine ... We are not there to block or to impede further steps towards EU integration”.

These two statements contradict one another. Will the Minister tell us what government policy is on this matter?

Creating a European army should not be a strategic goal; rather, we should be strengthening NATO. A non-NATO European defence force would be a gift to President Putin and anyone else who some time in the future may take an aggressive stance against us or one of our NATO partners.

I was glad that in SDSR 2015 the Government confirmed their commitment to spend 2% of GDP on defence. However, we must do more to encourage other NATO member states to do the same. This is more important following comments made by President-elect Trump, who said:

“We have many NATO members that aren’t paying their bills ... Many NATO nations are not making payments, are not making what they’re supposed to make”.

I note in the excellent paper prepared by the Library a quote from Jed Babbin, Deputy Undersecretary of Defense in George W Bush’s Administration. He warned that President-elect Trump,

“may not get the chance”,

to abandon NATO,

“because the EU may beat him to it”.

I do not want to see President Trump, when in office, pull back from the United States commitment to NATO and I am sure I am not alone in that.

Following the 23 June referendum, a RUSI investigation found that Britain could face a £700 million black hole in its defence budget due to the falling value of the pound against the dollar. It came to this conclusion by analysing several factors. Britain’s defence imports rose from $7.2 billion in 2002 to $11.8 billion in 2012, and RUSI concluded, using the exchange rate of £1 to $1.30, and with defence spending of £35 billion in 2015-16, that there would be an annual £700 million shortfall in Britain’s defence budget. The pound to the dollar today is now £1 for $1.27. Speaking in the other place on 11 July, the Defence Secretary said that,

“it is a little too early to be sure exactly where the sterling-dollar exchange rate will end up. Like any large … organisation, we take precautions against fluctuations in the currency, but it is too early to say whether that current level is likely to be sustained”.—[Official Report, Commons, 11/7/16; col. 52.]

Can the Minister outline what these precautions are and how the Government are planning to use them?

The fluctuating exchange rate may also be a problem for the cost of importing the raw materials needed to build our naval vessels. My noble friend Lord Hoyle, who is not in his place, recently asked the Minister about defence contracts and the use of British steel. In reply, the Minister stated that the Government were committed to supporting British steel but that there was,

“the need to source specific grades of steel, not all of which are available in the UK”.—[Official Report, 21/11/16; col. 1728.]

If we depend on importing this specialised steel, then we need to be concerned that the Ministry of Defence budget can cope with the possibility of having to pay more. A weak pound would cause significant problems for our imports of raw materials. What has the Ministry of Defence been doing to consider the impact of that?

In an uncertain world, the European continent faces twin evils: intolerance and poverty. Both have been at the forefront of many arguments surrounding the Brexit debate. The intolerance I speak of is fed by the perceived threat of migration: intolerance of people we see as different from us and intolerance of people from different backgrounds, cultures and traditions, whom some would have us believe pose a threat to our way of life. A dear friend of mind, the later Leo Abse, MP for Pontypool and then Torfaen for 30 years, said on the day he announced his retirement, “I only have one piece of advice for my successor”—he did not know then it was to be my noble friend Lord Murphy of Torfaen—“tolerate everyone, tolerate everything, but never, ever, tolerate the intolerant”. That was good advice and we should bear it in mind post-Brexit.

The poverty I have in mind has been, in the main, worsened if not entirely brought about by wars in Iraq, Syria, Libya and parts of Africa. These wars and poverty are driving tens of thousands of desperate people to Europe’s shores. The impoverished and dispossessed arriving here are seeking a better life, believing that Europe will give it to them. When it comes to poverty I am with James Maxton, who said:

“Poverty is man made therefore open to change”.

But if we are to gain the true measure of these twin threats—intolerance and poverty—and to find ways to combat them, and if Britain is to continue to play a major role on the world stage both in defence and as a trading nation with the fifth-largest economy on the planet, then a British trinity of an integrated foreign, defence and aid policy should be the bedrock for our future. In truth, I do not believe that yet exists. But my God, post-Brexit, we will certainly need it.

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My Lords, I am extremely grateful to my noble friend Lord Sterling for tabling this Motion and for his well-argued speech. I also thank all noble Lords—including noble and gallant Lords—who have contributed to this important debate. I pay particular tribute to the noble Earl, Lord Cork and Orrery, for his excellent maiden speech.

In recent weeks, your Lordships have debated several aspects of the UK withdrawal from the EU, including in the debate introduced on 20 October by the noble Lord, Lord Wallace of Saltaire, which my noble friend Lady Goldie responded to, on the implications of our withdrawal from the EU for foreign and security co-operation with European countries. However, this Motion addresses two specific groups of men and women who serve our country with professionalism, courage and distinction at home and overseas: our Armed Forces and our Diplomatic Service. I hope the whole House will join with me in paying tribute to them all for what they achieve on our behalf. Given what we ask of them, and how much they deliver, it is right that we pay due consideration to their future roles, responsibilities and duties.

I begin by making the most important point of all. The Government have made it clear that as we leave the EU, we will not be turning our back on the world. The UK remains a permanent member of the UN Security Council, the second-largest contributor to NATO and a leading member of the G7, the G20 and the Commonwealth. We take these responsibilities seriously and will continue to be a strong and influential European voice on the world stage, promoting and defending global peace and security, and promoting our trade interests.

We do that, as the noble Lord, Lord Davies, rightly said, through our international diplomatic network of embassies, high commissions, missions, delegations and representations, to name but a few of the nearly 270 diplomatic offices, employing over 14,000 people, across the world. Many bilateral relations are the product of years of international dialogue, and it is strong bilateral relations—including with those countries remaining in the EU—that often underpin our engagement in the multilateral organisations. The noble Baroness, Lady Smith, was right to single out two examples of many. Our defence relationship with France is growing all the time and is building on the Lancaster House agreement that underpins it. Germany is now a tier 1 country, with the United States and France, in the SDSR 2015, and we have growing relationships with many other countries. That will not change, but once—and only once—the UK has left the EU, our presence there will have to change. Several countries already have bilateral arrangements with the EU—for example, there is the United States Mission to the European Union—and Her Majesty’s Government will bring forward more detailed plans when the time is right. For now, we remain a full member of the EU and our UK representation team continues to lead our engagement with the EU.

On this point, our Diplomatic Service is, and will remain, at the forefront of our international engagement. The Foreign and Commonwealth Office continues to strengthen the network, rebalancing its resources in response to global changes and investing in the areas where the UK needs greater representation and influence. Working in partnership with the Diplomatic Service, our Armed Forces make a significant contribution to defence and security around the world. For example, the UK is a major military contributor to EU common security and defence policy—CSDP—operations. We provide the headquarters for Operation Atalanta, the counterpiracy operation off the Horn of Africa. Royal Navy ships support Operation Sophia in the southern Mediterranean in response to irregular migration. The UK also supports the maintenance of the safe and secure environment in Bosnia-Herzegovina.

The Government have repeatedly stated that we are leaving the EU but not turning our back on European security. We are maintaining our support for EU operations and missions, and continue to encourage other member states to do the same. Once the UK has left the EU, we will not be able to contribute in the same way. To answer the question posed by the noble Baroness, Lady Smith, and the noble Lords, Lord Ashdown and Lord Hunt of Chesterton, the specifics of the future relationship after we have left will be part of the negotiations once Article 50 has been triggered. For now, we are encouraging the other EU member states to refrain from taking decisions that would make it more difficult for the UK to contribute to CSDP missions in the future. After all, it would be a shame—and indeed a risk—not to take advantage of the resources we have and our willingness to use them. I remind noble Lords that our defence budget is the second largest in NATO after that of the US, and the largest in Europe, and we have committed to maintain defence spending at 2% of GDP—about which I shall say more. That raises an important point. I agree with the noble Lord, Lord Robertson, and the noble Baroness, Lady Deech: the UK’s contribution to the CSDP is valuable but it is just part of the significant wider contribution that we make to international peace and security though NATO, the United Nations, the counter-Daesh coalition, bilateral support activity and the many activities conducted under the auspices of defence engagement.

My noble friend Lord Sterling used the phrase “hard presence”. Next year 800 UK personnel in Estonia will deliver one of four battalions to NATO’s enhanced forward presence in the Baltic states and Poland; we will lead NATO’s Very High Readiness Joint Task Force; and Typhoons will be based in Romania, joining the southern air policing mission to offer reassurance to our Black Sea allies. For the United Nations we are doubling our commitment, with significant deployments to Somalia and South Sudan. In Ukraine we maintain up to 100 personnel delivering training to its defence forces. In the Far East, the five-power defence arrangement is unaffected by Brexit. Indeed, to pick up a point well made by the noble and gallant Lord, Lord Craig, the SDSR 2015 contained as a running theme the need for UK defence to be international by design. That includes more defence engagement. The activities I have listed are only part of what our Armed Forces are doing and will continue to do, and none of that is impacted by the UK leaving the EU.

Having said that, nothing I have said so far belittles the role that European countries can and should play. The joint declaration agreed at the NATO summit in Warsaw rightly asserted that a stronger NATO and a stronger EU are mutually reinforcing and can work together to provide better security for the Euro-Atlantic area. More diverse threats and greater uncertainty around the globe mean that this is not merely an aspiration but a necessity. It is important that these proposals are now carried forward and implemented through 2017 and beyond.

That brings me to the theme of our hard-power capabilities. A number of noble Lords, including the noble Lord, Lord West, my noble friends Lord Hunt and Lady Buscombe and the noble Baroness, Lady Jolly, argued that our Royal Navy fleet was too small, and the noble and gallant Lord, Lord Craig, called for more aircraft. As for the Royal Navy, careful and thorough consideration was given, through the November 2015 SDSR, to what capability we require across all platforms to best defend ourselves against the threats that we face. SDSR 2015 was positive for the Royal Navy, committing to an increase in the size of the service for the first time in a generation. It also set out our continued investment in a growing Royal Navy by building two aircraft carriers, a new Type 26 global combat ship, Dreadnought and Astute class submarines and offshore patrol vessels. We are also developing, as we debated earlier today, a new class of lighter general-purpose frigates so that by the 2030s we can grow the size of the fleet.

Let us not forget that the UK exceeds the NATO investment target of spending 20% of our defence budget on modernisation. We can look forward to some important capability enhancements over the next decade: our investment in power projection, including our commitment to man and operate two aircraft carriers, ensuring that one is available 100% of the time; bringing forward our procurement of F35s and a commitment to procure 138 aircraft over the life of the programme; the procurement of nine P8 aircraft to plug our maritime patrol aircraft capability gap; the procurement of 20 new UK-certified MQ-9 Reapers, known as Protector, doubling our fleet of these unmanned aerial systems, a capability that is proving so valuable to counter-Daesh operations; and collaboration with the United States on underpinning future combat air technologies, preserving the combat air interoperability built through the F35 programme. The noble and gallant Lord, Lord Stirrup, spoke of investing according to need. I believe we are doing that.

It is always a challenge—I say this particularly to my noble friends Lord Sterling and Lord Hamilton and the noble Lord, Lord West—to meet all the demands on the public purse. Of course I understand why noble Lords would wish to spend more on defence, a call that was echoed by the noble Baroness, Lady Dean, and the right reverend Prelate the Bishop of Portsmouth. The commitment to spend 2% of GDP on defence came after a thorough examination of threats and risks, after which the Government decided on an appropriate level of funding. I remind the noble Baroness, Lady Dean, and the noble Lord, Lord Davies, that apart from the 2% commitment we also committed to increasing the defence budget by 0.5% above inflation every year until 2020-21.

However, it is not just about how much we spend; it is about how we spend it. The strategic defence and security review laid out a clear and affordable strategy for delivering one of the most capable Armed Forces in the world, including an expeditionary force of 50,000 by 2025; £1.9 billion of cyber investment; new capabilities for special forces; and a commitment to spend over £178 billion on equipment and equipment support, £12 billion more than in previous plans. With respect, I do not agree with the noble Baroness, Lady Dean, or the noble Baroness, Lady Jolly, that the SDSR 2015 needs revisiting now. There will, however, be another SDSR in 2020.

My noble friend Lord Sterling rightly raised the issue of home-grown capability in defence procurement, and the shipbuilding industry in particular. I agree with him that the shipbuilding sector is a traction engine for its long supply chain for the regions where shipyards are significant employers. The sector provides high-wage, high-skill employment in relatively deprived areas of the UK. The MoD’s initial estimates are that it spends approximately £1.4 billion on shipbuilding and repair in the UK, and economic analysis suggests that that corresponds to around 15,000 direct jobs and 10,000 indirect ones. However, we have further work in hand on this aspect. It is worth observing that current policy sees warships being built in the UK. We are able to do that by securing an exemption under EU law for reasons of national security.

The noble Lord, Lord Touhig, and my noble friend Lady Buscombe asked what impact the falling value of sterling would have on MoD procurement. We build appropriate levels of contingency and risk into our defence budget and equipment plan. We carefully monitor fluctuations in currency markets and take steps to protect our budget from short-term volatility. Like any responsible large organisation, the MoD takes appropriate financial precautions in all its procurement contracts. We address the impact of short-term variations in foreign exchange rates as part of the routine financial management of the defence programme, and that includes the forward purchase of foreign currency at agreed prices.

A number of noble Lords spoke about the relationship between the UK and the United States in the defence field. Our co-operation with the United States is mutually supportive. It is too early, I suggest, to determine the precise stance of the new US Administration, although President-elect Trump is on record as emphasising that he is “all for NATO”. However, it is important to appreciate the extent and depth of US-UK co-operation. We can co-operate together and in wider alliances or coalitions around the world. Our collaboration extends across the full spectrum of defence, including operations, intelligence, nuclear co-operation, research and flagship capability programmes like the Joint Strike Fighter. Regarding the President-elect’s approach to NATO, he has made some encouraging comments, but he and indeed successive US Presidents have called for increased European spending on defence. We support that call. The NATO summit in Cardiff set the 2% commitment. I say to the noble Baroness, Lady Deech, and the noble and gallant Lord, Lord Stirrup, that an increasing number of European allies are raising their defence spending. When leaders made the pledge in 2014, only three allies met the 2% of GDP guidelines. Since then Estonia and Poland have increased their budgets and five allies now meet the guidelines. Ten now meet the guideline to spend 20% of their defence budget on equipment and R&D, which is three more than at Wales. The aggregate real-terms spending of European NATO allies was $254 billion in 2014 and is estimated to rise to $263 billion in 2016.

The noble Baroness, Lady Jolly and the noble Lord, Lord Touhig, referred to the concept of a European army. I would just like to make it clear that my right honourable friend the Foreign Secretary did not express support for an EU army. He was supporting EU member states’ commitment to increase their military capabilities which could then support EU CSDP operations and missions, or for those in NATO to strengthen NATO.

The noble Lord, Lord Ashdown, rightly raised the importance of cyber. Our national security strategy and the SDSR have made it clear that cybersecurity is a national priority. This is a classic example of NATO and EU collaboration. Only last month my right honourable friend the Secretary of State announced £265 million to boost the defence of military cyber systems. The UK is also at the forefront of strengthening NATO’s cyber posture—the cyber defence pledge, which was a UK initiative.

I congratulate the noble Earl, Lord Cork and Orrery, on his speech. He referred to the capabilities of border defence and contended that we need to do more with maritime reserves. I agreed with much of what he said and it illustrates the need for a joined-up, comprehensive approach across government. All that he said points up the value of our national security strategy and the National Security Council. In that context, I am sure he will recognise the value of reserves working with regulars—a theme of our future reserves policy. He may wish to know that today, my honourable friend the Minister for Defence Procurement has announced the signing of a £287 million contract with BAE Systems Maritime to build two more highly capable offshore patrol vessels: OPV4, which will be named HMS “Tamar”, and OPV5, which will be named HMS “Spey”.

Time prevents me answering further questions. I hope that noble Lords will forgive me for not having been able to address all the points raised in the debate or to refer to all speakers by name. I shall of course write to those speakers whose questions I have not answered.

In conclusion, I re-emphasise a point made by the noble Lord, Lord Ramsbotham, and the noble and gallant Lord, Lord Stirrup. Our commitment to European defence and security is undiminished. We will remain a key European power and we will continue to co-operate with our European partners to tackle shared challenge, quite simply because our interests are indivisible from theirs. Our new relationship with the EU and the way it functions will be developed through detailed discussions once Article 50 is triggered. Yes, the UK will need to amend its diplomatic and military engagement with the EU but we should have every confidence that this will not prove problematical to our Armed Forces and Diplomatic Service, for whom adaptability is a watchword.

Above all, I have every confidence that our Diplomatic Service and our Armed Forces will steadfastly remain a credit to this country, continuing to protect the freedom, security and prosperity of our nation, whatever the future may hold. I am confident that the whole House will join me in once again paying tribute to the men and women who serve in so many capacities stalwartly, conscientiously and professionally in the interest of us all.

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My Lords, I add my congratulations to the noble Earl, Lord Cork and Orrery, on his maiden speech. I have every intention of getting together with the noble Earl, because I share completely his views and am very interested in his ideas on using reserves. I also take this opportunity to say how grateful I am to the noble Earl, Lord Howe, who, in his usual, most courteous fashion dealt with all the questions and answered everything in the light of his great experience and knowledge of all these subjects. However, I am not saying that I totally agree with all his replies.

I have a couple of minutes, so I shall bring up a couple of things whether it is unusual or not. I do not agree with the viewpoint that somehow, when we leave Europe we will be in a mess. Business-wise I operate in every single European country. If we take the example of the FCO, it is not just in Brussels: it operates in 27 countries. In our business, we do not go to Brussels to ask what people want; we operate completely. In many of the organisations in Brussels, increasingly, it is Berlin which calls the tune, not Brussels.

I posed a question yesterday to the Secretary of State and others about the amount we allocate. I am troubled that there is no interest in considering increasing the amount of money for the armed services. I said, “As a matter of interest in these troubled times, if the Prime Minister asked you to call the chiefs together to say that tomorrow morning, we are going on to a war footing, what would you do? What does that really mean? That we wait? That we say, ‘Hang on a moment—we have some figures coming through in 2030’. What does it mean?”

In these debates, it is an enormous pleasure to hear so much experience and knowledge of so many subjects, such as diplomacy, that is much deeper and greater than mine. I shall tell noble Lords of an experience I had which had a huge effect on me. I head up Motability and a few years ago we had a gathering at Royal Hospital because I decided that we wanted aid for all the veterans who had been wounded, whom we help with mobility. The Queen and the Duke came to that. It was all military. We were walking among all the people on a beautiful June day and headed up to some young soldiers who were, sadly, at Headley Court Military Hospital recovering from some very serious wounds sustained in Afghanistan.

The Queen was ahead, and as I passed I saw a young marine in a wheelchair whose colour, sadly, was like this piece of paper in my hand. His carer was nearby, so I took him to one side and asked about his background. He said, “It is an absolute tragedy. This young man passed out as a Marine in Scotland nine months ago. His family went up and everybody went to see him and were absolutely proud. He was captain of the school, captain of cricket, captain of rugby. Nine months afterwards both his legs were blown off”.

I looked at him and thought, “That could have been my grandson”. I remember it as if it were yesterday. I leave with everybody the thought that, for all our people serving us in the way that they do and the risks they take, the least we can do is to make certain they have the firepower and enough people in the armed services to help them do their job.

Motion agreed.