AUKUS Defence Partnership

Lord Browne of Ladyton Excerpts

Thursday 16th March 2023 Lords Chamber

[Baroness Goldie (Con)]

The noble and gallant Lord makes a number of important points; let me try to deal with them.

On the management of contracts and the willingness to have teeth and bite where that is necessary, I think the noble and gallant Lord would be encouraged to see the complete difference in approach in the MoD now compared with some years ago. That is partially because the MoD has woken up to the need to be much more effective in how it manages these enormous contracts with vast sums of taxpayers’ money. To be honest, it is also because we felt the bite from teeth—from your Lordships in this Chamber, from our friends in the other place, and from entities such as the National Audit Office and the Public Accounts Committee. These were unpleasant experiences for the MoD but what they signalled was an absolute need to radically reform and revise what we were doing.

In addition to all that, the one word of comfort I can offer to the noble and gallant Lord is this: bear in mind that this is a trilateral arrangement and agreement. There is, therefore, a triumvirate interest in ensuring that nobody is slipping and everybody is keeping up to the mark. That will be an added enhancer to how we monitor and regulate the performance of the contract.

On the important matter of skills, industries are already engaged—I have seen it at first hand—in really imaginative programmes in their communities with young people. I have been hugely encouraged when I have seen how they operate in different parts of the country. They are engaging with both primary and secondary schools. They are making these critical connections with young people, many of whom then make the choice not only to follow a career in technology but to do it with a particular company. That is one very positive way of trying to increase the skills base available to our industry partners.

At government level, particularly in the Department for Education, there is a recognition of the unrelenting need to reappraise constantly how we seek to improve the provision of skills and ensure that education is aligned with what the economy and industry are asking for. I do not have at my fingertips the details of what we have done so far but I would be happy to write to the noble and gallant Lord about that.

[Lord Browne of Ladyton (Lab)]

My Lords, welcome as this Statement is, there is nothing at all in it about the financial or opportunity costs of this partnership. Is it true that it will cost $245 billion over three decades? How much of that cost will we bear? Which budget will it come out of? In answering a question today posed by the noble Lord, Lord Swire, on the fourth Oral Question, the Minister—the noble Baroness, Lady Penn—indicated that all nuclear capability would be charged from some other part of the budget. I do not understand that to be the case but, if it is the case, it is a change; if it comes with this, it is very welcome. How much is this going to cost, is it going to come from the existing Ministry of Defence budget and what will be the opportunity cost of that if that is correct?

Given that China poses threats in every domain, not just under the water, what assessment have we made of Australia putting so many of its eggs in this exquisite capability basket, given that we will depend on it in all these other domains to be an active ally with capability?

[Baroness Goldie (Con)]

On cost, the noble Lord will not be surprised that I am unable to give specific figures, for what I think are widely understood reasons. I imagine that differing levels of cost will apply because, for example, the role of the United States is based on it having an established Virginia class of submarine being built; as the noble Lord will be aware, part of the agreement is Australia seeking to buy three of those. There are now huge issues for Australia in creating the infrastructure that it will need to build the submarines, so, again, it is anticipated that its costs will be different from those of either the US or the UK.

For our own part, as is indicated, we in the UK have been investing in our submarine-building infrastructure. Some £2 billion was announced last year to support the Dreadnought class of submarines. The recent integrated review refresh announcement of £5 billion—obviously, I am rounding the figure up for ease of use—will be split into three, spread over two years, to sustain the nuclear enterprise. My understanding is that the additional £6 billion, which will be spread over three years—£2 billion per year—is also allocated to the nuclear enterprise, excluding the Dreadnought enterprise. That is money that we know is going to be there, and we are therefore able to budget appropriately.

It is important to go back to what the Prime Minister and the Chancellor have clearly indicated: that, having regard to the turbulent world in which we live, they see defence as a national primary responsibility and priority. They are prepared to work, even in difficult economic circumstances, to ensure that we do as much as we can to sustain a powerful and effective defence capability.

I turn to the last part of the noble Lord’s question, which was about this perhaps being a unique solution for Australia. Australia must make its own strategic decision about what it seeks and what it wants. Eighteen months ago, it identified that it had a need and that the best way to respond to that need was to seek a nuclear-propelled submarine. It is positive and gratifying that it then looked to the United Kingdom and the United States. As the noble Lord will be aware, we have a long-standing and close relationship on the construction of submarines. Australia has made a perfectly balanced decision that this type of submarine, propelled as it is by nuclear propulsion, offers huge advantages: it is far more effective in itself; it can circumnavigate the globe without coming up; it is difficult to detect; and it is much more efficient to run. For those who, naturally, care about the environment, it produces a cleaner form of emissions than, for example, a diesel-powered submarine.

Australia has looked at this closely and come to its own strategic, sovereign decision about what it wants. We should all feel very proud that it wants the UK to be part of this vital partnership in delivering what it seeks.