Reserve Forces

Lord Davies of Stamford Excerpts

Wednesday 3rd July 2013 Lords Chamber

[Lord Astor of Hever]

My Lords, I can confirm both points. We consider the footprint absolutely vital. Where we have had to close places it is because there has been a very small uptake in recruitment. We have managed to close fewer than we planned. I agree with my noble friend’s point about employers, and in particular small companies. In finishing, I pay tribute to my noble friend for the important work that he did.

[Lord Davies of Stamford]

The noble Lord was characteristically thorough and conscientious in informing the House and in answering my noble friend’s questions. However, I think that he left out one point. Will the £5,000 joining-up bonus be repayable if the officer does not do a minimum amount of service? I would be interested in the answer to that. I think that it will be quite a challenge to get to 35,000 but an ever greater challenge to get to a point where the reservists are on the same footing as the regulars and do not suffer a higher rate of casualties on active deployment. In that context, it is very important that we should put everything behind them in terms of equipment and training, and the noble Lord gave us some assurances on that point. Equally valuable is the promise by the Government to strengthen the defence of reservists against dismissal. However, would it not be a good idea for the Government to go further and to protect reservists not just against the danger of unfair dismissal but against discrimination in terms of remuneration or promotion? The American national guard has that kind of protection. Surely it is very important that reservists, or those who are planning to join the reserves, are confident that they will not suffer discrimination of that kind in the job market.

[Lord Astor of Hever]

My Lords, as regards the noble Lord’s first question about the £5,000, I do not change my answer. The reservists who join up are free to leave whenever they want. We are very confident that those regulars who become reservists will stay and will not leave the minute they get their money. We are also very confident that by 2018 we will get up to the figures that we need. I have spent a lot of time being briefed and our recruiting figures are going better than we expected. Noble Lords will see in the White Paper all the inducements that we are giving to the reservists and their families, and the encouragement that we are giving to employers. We realise that we have to work much more closely with employers than has happened in the past and we will endeavour to do that.

Armed Forces: Redundancies

Lord Davies of Stamford Excerpts

Thursday 20th June 2013 Lords Chamber

[Lord Astor of Hever]

My Lords, all personnel who have been graded permanently below the minimum medical retention standard were exempt from redundancy and, where appropriate, will be medically discharged in due course. Every case of wounded, injured or sick will be assessed individually. No one will leave the Armed Forces through redundancy or otherwise until they have reached a point in their recovery where leaving is the right decision, however long it takes.

[Lord Davies of Stamford]

My Lords, is it not disingenuous and absurd to suggest that you can reduce the Army from 102,000 to 82,000 with no reduction in the nation’s defence capability? Will the noble Lord set out the figures clearly and frankly? What was the maximum military force that we were able to sustain over a number of years—for example in Iraq or Afghanistan—with an Army of 102,000, and what will be the maximum military force that we can deploy on a sustainable basis under the new arrangements for an Army of 82,000?

[Lord Astor of Hever]

My Lords, this was not being disingenuous. This level of capability was agreed by the SDSR and the National Security Council.

Defence: Procurement

Lord Davies of Stamford Excerpts

Monday 18th March 2013 Grand Committee

[Lord Palmer of Childs Hill]

My Lords, I thank the noble Baroness, Lady Dean, for instigating the debate. We are obviously not the popular debate in this and the other House today. I thank in advance my noble friend the Minister who, as the noble Baroness has said, gives us such good briefings. I am also grateful for the briefings that we get when we have such eminent speakers, which have always been incredibly useful.

The noble Baroness, Lady Dean, has covered a wide area in her 10 minutes. I will try to add a few things, having made notes as I have listened. The sad fact is that defence procurement has for far too long been a drag on our forces’ expenditure and national expenditure. Purchases have proved sluggish and inflexible, delivering equipment and resources late and over budget. That is not only the case now; it has been in the past as well. That is why the coalition Government have been right to challenge the way in which defence procurement has operated. As the noble Baroness has just said, the Government have a full battery of reviews to consider. She mentioned a couple: the Levene review, Bernard Gray’s materiel strategy work and the procurement review of the noble Lord, Lord Currie.

The Government have also had the benefit of what is described as the,

“large number of responses with a wide variety of views”,

to their own Green Paper, Equipment, Support, and Technology. As has been mentioned, there comes a point when decisions must be made, improvements found and efficiencies delivered. One example is the question of the future of defence equipment and security examined in detail by Bernard Gray, as the noble Baroness has just said. His proposals for government-owned contractor- operated procurement created wide ripples, and the Government need to be clear, as the noble Baroness, Lady Dean, said, how they intend to take that forward. That is obviously very important.

How will the Government respond to the broader concerns about the skills required to reform our process of defence procurement: finance, engineering and project management? Above all, the skills of estimating cost, both on expenditure and available resources, must be strengthened. We are pretty weak in estimating the cost of the final bill. Overall, procurement for our forces must meet our responsibilities both to our service personnel under the Armed Forces covenant and to the British taxpayer in securing value for money. The coalition Government have much overdue work to do on both fronts.

How much value, or cost, do we have in store on the shelves, and how often are these stores called upon? Does the MoD just order from suppliers rather than look around the shelves on some stock control system to see what we have? Very often it is easier to ring up your supplier rather than take it off the shelf. What of value do we have on our shelves and would we be wise to seek a buyer, or buyers, for this equipment if it is not moved or even required for a long time?

I thought hard about an example, which came to me because I was talking to some United States Air Force colonels who came to this House a few days ago. I talked to them for 30 minutes. They use Harriers. Do we have spare parts for Harriers? The noble Baroness, Lady Dean, mentioned them when she spoke. If we have spare parts for Harriers, perhaps we should sell them off to the United States Air Force. When we spoke about parts, it said, “We need Harrier parts”. I did not initiate that; it is what it said.

Before the Government go on even a moderate ordering or buying spree, all in the correct defence of the realm, what work is done on estimating what conflicts are likely? Procurement cannot be taken in isolation; it is about estimating what is going to happen. I could give many examples but I do not think you can divorce the discussion on procurement from what is going to happen with Trident, which is a very expensive weapon. I know that a review is being undertaken, supervised by Danny Alexander MP, but the actual cost of Trident is going to weigh down on a lot of our procurement strategy, whether we have it or not and whether we have like-for-like renewal.

Do we want armoured vehicles for hot or cold climates? Should they be for coping with roadside explosive devices? The old vehicles used to get blown up because they could not cope with that. Can we think what conflicts are going to happen and where those vehicles will be needed?

The noble Baroness, Lady Dean, talked about the Armed Forces covenant. Uniforms and other personal equipment are also part of our procurement strategy. Do we need uniforms for the Arctic—there was a piece on television recently showing our forces training in Arctic circumstances—or will they be needed in the desert? We may have the horrible feeling that they are training in the Arctic, as I saw on television, but the next conflict may be on sandy terrain. Perhaps we need to know what equipment and uniforms they will need when a large proportion of them will be based on Salisbury Plain. Salisbury Plain, the Arctic, the desert—we have to make a good guess at where the conflict will be.

The noble Baroness, Lady Dean, mentioned carriers and various other warships. It is no good harking back to the past, but we have two carriers. The expenditure on them gave lots of good employment—but did we need them and do we need them? We do not have the right aircraft to fly off them at this time. Our estimation of what we need is easily exemplified by the fact that the previous Government made a decision to build carriers when we did not have the need for them, the facilities to build them or the aircraft to fly off them. The defence picture facing the United Kingdom is changing rapidly.

[Lord Davies of Stamford]

I am sorry to interrupt but I cannot let that remark go unchallenged. The previous Government indeed committed themselves to buying two new carriers. We would have continued to have the aircraft to fly off them—the Harriers—and we ordered the F 35s to replace them. It was an entirely coherent, responsible and balanced decision.

[Lord Palmer of Childs Hill]

I thank the noble Lord for his intervention, but the fact is that we have two carriers that are not well used at the moment, and there is also a story that one of them will be sold off or mothballed. That is the situation now, but I take the point that the decision on aircraft was changed. That had an effect, and the Minister may wish to reply on that point.

To conclude—which is what I was about to do when I took the intervention—the defence picture facing the United Kingdom is changing rapidly, and our Armed Forces demand and deserve equipment that is up to date and responds to the risks and challenges that they face on our behalf. Nothing is more important than working out what conflicts there might be, where we estimate that they will be, what equipment will be needed for them, whether we should buy off-the-shelf equipment manufactured in this country or use the goods we have in store, and whether we should realise the money invested in the goods in store if we are not using them.

--- Later in debate ---

[The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Astor of Hever)]

My Lords, I thank the noble Baroness, Lady Dean, for securing this debate to discuss the important issue of defence procurement. It is a privilege to wind up in such an informed debate, and I am very sorry that the noble Lord, Lord Davies of Stamford, was not able to speak, because I always enjoy hearing his contributions.

[Lord Davies of Stamford]

The Minister is very kind. I was not intending to intervene in his speech, but I take this opportunity to apologise to the Committee for having got the timing so badly wrong and arriving late for this debate, which I thought was going to start a little later than it did.

[Lord Astor of Hever]

The noble Baroness suggested that we should have another debate on this issue, and I would very much welcome that. A lot of noble Lords have mentioned the GOCO issue in particular. When the situation is clear on that, maybe we could return to it in a more detailed debate.

Today’s debate provides me with an opportunity to explain our policies and priorities for defence procurement and to set them in the wider context of our ongoing defence transformation programme. The noble Baroness has spoken many times in support of our Armed Forces and demonstrated her steadfast concern for the welfare of our service men and women and their families. I know that those concerns are also shared by other noble Lords here today, so I start by paying tribute to the men and women who serve in Her Majesty’s Armed Forces, who provide the ultimate guarantee of our security and independence. That is also why defence procurement, particularly defence equipment acquisition and support, is vital. We need to be able to adapt and configure our capabilities to address tomorrow’s threats and to build more agile forces for the future. Support operations will always be our first priority.

Our approach to defence acquisition is a key element in delivering military capability and ensuring future operational success. The Government’s strategic priority remains to bring the national deficit under control. In defence, we must play our part in meeting that objective. However, we must also meet the commitment in the 2010 strategic defence security review to deliver well resourced and well equipped Armed Forces. To achieve that, the Ministry of Defence is in the process of delivering its largest and most far-reaching transformation programme. We are reforming defence procurement to ensure that we do it better in future and derive better value for money from the defence budget in so doing. We continue to contribute to the goal of reducing the deficit by looking for ways to conduct our business more efficiently, and expect to make £13.5 billion of efficiency savings over 10 years.

As announced in May last year, we have addressed the black hole in the defence budget. Through implementing changes flowing from the SDSR, we have brought the budget into balance. That means that, for the first time in a generation, our programme is affordable within the resources that we expect to have available to us. It provides a necessary foundation for our future approach to defence procurement and the implementation of the reforms recommended by the noble Lord, Lord Levene.

Having established a core equipment programme last year, we are now concentrating on its delivery. We will spend around £160 billion on equipment over the next 10 years, covering our current commitments, the major equipment programmes announced in the SDSR, and deterrent and equipment support costs. In January this year, we published for the first time a detailed summary of our equipment plan, setting out priorities and budgets for equipment procurement and support over the next 10 years. This was accompanied by a National Audit Office assessment of its affordability, and we are delighted that, in its report, the NAO recognised the progress that we had made in putting in place the changes needed to achieve and maintain affordability.

The core programme delivers the major force element set out in the SDSR. This, with the headroom and contingency provision that we have built in to protect the programme from emerging risks, will provide us with the flexibility to determine our procurement priorities in accordance with operational priorities and not simply on the basis of immediate affordability. It will also provide the defence industry with greater clarity on which to plan for the future.

Through the equipment plan we will deliver significant enhancements to our fighting capabilities, including completion of the two Queen Elizabeth class aircraft carriers, significant investment in the Lightning II aircraft—which together will provide a high-end power projection capability for decades to come—completion of the Astute class attack submarine programme, an upgrade to our fleet of Warrior infantry fighting vehicles, continued development of the Scout and significant enhancements to air transport through the new A400M aircraft.

Our first priority for defence procurement has therefore been to establish a solid foundation from which we can deliver the necessary capabilities for our Armed Forces to do their job. We have made good progress in this and, as an ongoing priority, will continue to apply rigorous management to ensure that the budget remains in balance in the years to come.

I would highlight that the latest NAO Major Projects Report, published in January this year, stated that annual cost increases for our 16 biggest programmes in the financial year 2011-12 were only one-seventh of what was in the comparable report two years earlier. Although we have much more to do, we are moving in the right direction.

We have also sought to reform our approach to how we conduct procurement. In February last year, the Government published their White Paper, National Security Through Technology. This provides a framework for equipping our Armed Forces with the best possible capabilities that we can afford through the equipment plan and, in so doing, for achieving the best possible value for money.

We will seek to fulfil the UK’s defence and security requirements through open competition in the domestic and global market and buy off the shelf, where appropriate, to take full advantage of the competitive international market. However, where capabilities are essential to our national security, such as nuclear submarines and complex weapons, we will seek to protect our operational advantage and freedom of action. We will also maintain our investment in science and technology. In taking this approach, we recognise the important part played by the UK defence industry. Our policy, through the White Paper, is designed to provide the catalyst for making UK industry competitive and therefore able to win a large proportion of additional orders within the global market through successful exports. A healthy and competitive defence industry in the UK is able to sustain many UK jobs and thus make a vital contribution to growth and a rebalanced economy. We are also opening up opportunities for small and medium-sized enterprises. In the last financial year, some 40% of contracts by volume were awarded to small and medium-sized enterprises, and there is scope for this to increase still further.

Looking to the future, reforming the acquisition system is a key priority and a core element of our work to transform defence. We will take a major step forward in April, when the new defence operating model goes live and the newly empowered service and joint forces commands assume responsibility for setting equipment and support requirements. This is an important part of our work to implement the recommendations of the defence reform report of the noble Lord, Lord Levene.

Major structural reform of defence equipment and support organisation is also central to this process. It will ensure that we have the structures, management and skills necessary to deliver the right equipment to our Armed Forces at the right time and at the right cost. Preliminary work undertaken to date has identified a government-owned, contractor-operated entity known as GOCO as the preferred future operating model for defence equipment support. This needs to be tested further before any final decisions are made. A decision will be made shortly on whether to move into an assessment phase. If agreed, this would see the GOCO model tested against a robust public sector comparator. This would work towards producing a final business case that will recommend a future operating model for defence equipment and support. We would expect a decision to be made in 2014.

A lot of very important questions were asked. I will do my best to answer them, but I am conscious that I may not be able fully to answer all of them, so in some cases I will write to noble Lords in more detail. The noble Baroness and other noble Lords asked about GOCO and whether a compelling case had been made for reform. Proposals for an assessment phase are currently being considered. If approved, the assessment phase will involve developing GOCO options through negotiations with potential private sector partners. A robust public sector comparator will be developed in parallel. As I said, a decision will be made shortly.

The noble Baroness asked whether a final decision on GOCO had been made. The answer is no. We are currently considering whether to move into an assessment phase that will allow us to make a comparison between GOCO and an in-house comparator. It will look at how far defence equipment and support can be improved in the public sector. The noble Baroness also asked about our allies’ views on GOCO. We are working closely with our international partners to assess the impact of any potential changes and will continue to do so.

The noble Lord, Lord Touhig, asked whether one partner could cope. We envisage that there is likely to be a consortium to cover a diverse range of activities. He asked whether there was an appetite in the private sector. We have engaged with potential partners throughout, and they seem keen. He asked about bankruptcy and falling short. We will ensure that procurement activity does not collapse.

The noble Baroness asked whether there was a government plan to ensure both skills and an affordable programme, and what new skills would be required. The noble Lord, Lord Rosser, also asked about skills and apprenticeships. For defence equipment and support, we are ensuring that we have the necessary skills to ensure that safety is not compromised. We place the highest priority on filling safety-critical posts with suitably qualified people. We continue to recruit apprentices, for example in the field of engineering, to continually refresh our skills base and ensure that we will have the right skills in future to support our Armed Forces.

The noble Baroness asked about the 1% rise from 2015. This applies to the equipment part of the budget, which is 40% of the overall defence budget. It is not a 1% year-on-year increase from 2015. We have taken what we thought was adequate for the equipment budget and increased it by 1% from 2015. The equipment programme is now affordable within available resources.

Finally, the noble Baroness asked about science and technology. A White Paper, National Security Through Technology, recognises the importance of science and technology. The Government are committed to sustaining investment in science and technology at a minimum of 1.2% of the defence budget. The publication of our 10-year equipment plan will enable industry to plan future investment with greater confidence.

I have run out of time. I am aware that I have not been able to answer every question, but I will write to noble Lords.

Somalia: Piracy (EUC Report)

Lord Davies of Stamford Excerpts

Monday 11th March 2013 Grand Committee

[Lord Davies of Stamford]

My Lords, it is a pleasure to follow the noble Lord, Lord Jopling, and I think I agree with everything that he said on this subject. I learnt from him—no doubt there is something wrong with the way that I get information on these kind of incidents but I had not heard about it—about the 950 pirates being amnestied by the Government of Somalia. I totally share his anxiety, indeed his horror, at that news and put it to the Government that it should have consequences. Unless there was consultation with the EU in advance of that decision being made by the Somali President then consequences really ought to flow, because it is quite inconsistent with the kind of collaboration and mutual confidence which one had understood had been developed over the past few months between the EU on the one side and the Somali Government on the other. The consequences should be in terms of aid or other forms of support which will be felt, in measured degree, by the Government of Somalia. If we just allow this incident to go uncommented on and unsanctioned, we shall be encouraging similarly bad behaviour in the future and shall lose that sense that we need to act as a team and keep in close co-operation with the Somali Government—we need to consult them about things but they need to consult us as well, and we expect their support. The cost of capturing these pirates is very considerable and the idea that they should be released in this way is quite horrific.

I will make three points, two of which will be approving—indeed congratulatory—points about the report and one of which will be more hortatory, or perhaps slightly critical. First, although there are other very good examples which I will not mention but which we all have had before our eyes, this seems to be an extraordinarily and particularly good example of the success of the European common foreign and security policy. We have managed to make considerable progress—the figures have already been mentioned—in dealing with this great threat and have managed to do so with tremendous leverage in the case of this country. We have almost not contributed any military units at all. We have contributed one of Her Majesty’s ships, a Royal Naval vessel, for a few months and of course contributed very importantly by providing command and control and logistical management of the exercise from PJHQ. We have obviously done an extremely good job there, and I add my own words to the words of congratulation that have already been spoken. I am of course very familiar with PJHQ—it is a wonderful body and a superb organisation, and it is not surprising to me that it has done such a good job. On top of that contribution, we have got all these vessels together. It would have been nice to have even more resources but we have contributed very considerable resources. It is an example of the leverage that can be generated by the common foreign and security policy and of the success that we can have.

Eurosceptics tend to say that we do not need an explicit EU policy and that we can just have a series of ad hoc coalitions where a lot of countries agree in their assessment of the problem and are prepared to do something about it. That is a very inadequate answer indeed. If you do not have a common foreign and security policy, you do not have the mechanisms and the tried and tested procedures there for, first, evaluating the threat, which is very important, and then for managing the response. You do not have the long-standing commitment and sense of solidarity; everybody just starts off saying, “Is it really in our national interest to do this? Do we really want to do it? How much will we be compensated by allies if we do it?”. You have to start afresh again, negotiating all these things from scratch, and every operation has the weaknesses and dangers of an experiment rather than being an ongoing, tried and tested policy where people have the confidence, know the procedures will work, and are familiar and happy with the decision-making process. This is a very good example of how we need a common foreign and security policy. I do not know that the Government are particularly interested in my contribution to their balance of competences review—they would probably dismiss me as a Europhile and anyway a member of the Labour Party, and so would not be interested in what I say—but I hope that the point gets included in the evaluation of the balance of competences review when it comes to the European common foreign and security policy. In fact, it would be monstrous if this was not taken into account as one of the examples of the success of that policy.

The second point I wanted to make, which is again very much approving, is to congratulate the committee on having been pragmatic enough to review its original position on two matters. One was the attack on the pirates’ land bases and the second was on having armed guards on ships passing through the pirate zone. The committee reviewed its original position in the light of evidence and experience and came up with absolutely the right policy solution. It strongly supports—as do I—the initiative taken to deal with some of the land bases. I agree with the noble Lord, Lord Jopling, that it may be necessary to take further action. If it is, I hope that the authorities concerned will be encouraged to do so.

Equally, armed guards have proved their worth. It is not necessary to carry heavy armament for this purpose: a couple of general-purpose machine-guns, one on the port side and one on the starboard, will be enough effectively to deter the sort of pirates with whom we are dealing in the Indian Ocean. The committee was very good on that. It did not just come up with an initial response but looked carefully at the developing situation, and its report is the stronger for it.

On my third point, about ransom payments, I take issue with the committee. I have spoken on this in the Chamber, so noble Lords may be familiar with my views, which have not changed. The committee’s recommendation comes in paragraph 51 on page 18, which states:

“We reiterate our previous conclusion in our 2009 report that those involved in assembling ransoms in the United Kingdom have a duty to seek consent for its payment and that not to do so, if necessary by filing a Suspicious Activity Report, may result in the commission of a criminal offence. We request that the Government now respond substantively to this recommendation”.

This is woefully inadequate and thoroughly pusillanimous. It does not even begin to address the reality of the situation, which is that these are criminal payments. They are rewards to criminals for criminal activity that endangers life.

They are also very substantial—not that that makes a difference to the principle—and run into tens of millions of dollars on a regular basis. It has become something of an industry and is now a regular feature of the insurance market in London. Lloyd’s makes ransom payments that are transported by all sorts of dramatic means to the pirates in Somalia. This is simply not a situation about which we as legislators should be complacent. It is quite clear that these are criminal offences. They are payments to criminals for criminal purposes and they should be illegal. It should not be a question of reporting the matter through a suspicious activity report. The payments should be seized by the Serious Fraud Office or whichever arm of the police is responsible for monitoring illegal payments of this kind, and we should make sure, if the law is not robust enough to deal with the matter in this way and does not make it a criminal offence to make ransom payments to terrorists, pirates or any other form of criminal, that we change the law to make sure that it does exactly that.

I am very disappointed and very sorry that the committee did not come to that conclusion. It does not explain why it did not, and in its report did not even examine the suggestion that I am making—unless I missed it, and I hope I did not. I would be very interested during the rest of the debate to hear from Members of the Committee about why they feel that the present legal situation is adequate, and why a suspicious activity report is the furthest they envisage going in dealing with this matter—which after all, if it is not dealt with effectively both by the physical measures about which we have been talking and by measures controlling flows in the financial markets, will become a criminal industry affecting commerce throughout the world.

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[The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Astor of Hever)]

My Lords, I begin by acknowledging the quality of the contributions to this debate. Noble Lords have demonstrated a keen and impressive grasp of this very complicated issue. I praise in particular the excellent work of my noble friend Lord Teverson and the other committee members in compiling the report on Operation Atalanta.

Operation Atalanta has successfully contained, constrained and deterred acts of piracy. None the less, the UK’s longer-term aim is to eradicate the underlying causes of the instability that affects Somalia and gives rise to acts of piracy, and several noble Lords have made that point today. This can be achieved only by addressing the root causes of the problems in Somalia. EUTM Somalia and EUCAP NESTOR, launched as part of the EU’s contribution to an overall strategy for the Horn of Africa, aim to provide a comprehensive solution to Somalia’s problems. In time these missions, alongside AMISOM, will create a secure and stable Somalia, remove the incentives for piracy and develop the capacity of coastal states in the region to police their own coastlines.

The UK remains fully supportive of Operation Atalanta’s mandate and is committed to the continued command of Operation Atalanta from Northwood for the current mandate, which expires in December 2014. International pressure on the pirates must be maintained in order to prevent a significant resurgence of activity. While any formal decision to extend Operation Atalanta’s mandate beyond 2014 is unlikely to be taken in the immediate future, the EU has demonstrated a firm commitment to its counter-piracy efforts, including through enhancing the mandate with agreement on the use of autonomous vessel protection detachments and the disruption of pirate logistics dumps. Additionally, the launch of EUCAP NESTOR and a growing EU diplomatic role send further strong signals of increasing EU engagement.

The degree of maritime co-operation between the three core international counter-piracy forces—the EU’s Operation Atalanta, the US-led Combined Maritime Forces Combined Task Force 151 and NATO’s Operation Ocean Shield—is among the best that we have ever seen. The three operations provide a variety of effective framework opportunities for third-state contributions to anti-piracy efforts to further enhance international co-operation, evidenced recently when Royal Thai naval forces commanded a Combined Maritime Forces task force from a UK vessel. The shared awareness and deconfliction mechanism has also helped to ensure that military efforts in the region are effectively co-ordinated between international partners.

The threat from piracy remains a serious problem, but results and trends suggest that Operation Atalanta, in conjunction with other measures to counter piracy, is proving effective. For example, as of 7 March this year, two vessels and 60 hostages were being held off the Somali coast, the lowest levels held by pirates since September 2009. I hate to correct my noble friend but two vessels and 48 hostages were released over the weekend, so the figures that I have quoted are the accurate ones. This compares favourably with May 2011, when 23 ships and 503 hostages were held. Attacks and pirating of vessels are down by over 75% during the past 12 months. However, I emphasise that these gains remain reversible and it is vital that we do not relieve any of the considerable pressure that is currently being brought to bear on the Somali pirates.

The ability to prosecute and detain convicted pirates is an important element of our strategy to combat piracy and is an effective deterrent. Over 1,200 suspects or convicted pirates are being held in 21 states across the world. The Seychelles currently holds 101, representing some 20% of its prison population, while Kenya holds 147. We continue to support regional partners in developing local prosecutorial capacity.

Capacity-building assistance is being provided to the Seychellois justice sector by the international community. For example, the UK has provided funding to the UN Office on Drugs and Crime for the work of its counter-piracy programme, which has included work with Montagne Posée prison in the Seychelles. A new 60-cell block was opened there in September 2011 to help with the detention of suspected and convicted pirates. The UK has provided assistance to the Attorney-General’s Office by seconding two prosecutors from the Crown Prosecution Service to assist with the prosecution of suspected pirates.

A longer-term solution to develop Somali capability and ownership of the piracy problem is being implemented by the UNODC’s post-trial transfer programme, which returns pirates convicted in regional jurisdictions to Somalia to serve out the balance of their sentences. The programme has so far transferred 59 convicted pirates from the Seychelles to Somaliland under the terms of a bilateral memorandum of understanding, the agreement of which was facilitated by the United Kingdom at the London conference on Somalia. Further transfers from the Seychelles are anticipated this year.

I turn to the specific questions asked by noble Lords. The noble Lord, Lord Jopling, asked what political progress had been made in Somalia. Real political progress has been made there in recent months. The transitional period concluded on 10 September with the election of a new president, Hassan Sheikh Mohamud. This was a significant moment in Somalia and an important step towards a renewed political process. The London Conference on Somalia in February 2012 brought the international community together to support this process and, for the first time in years, it was run in consultation with the Somali people through their elders. They led a process to draw up a new constitution and formed a new parliament which elected a new president.

It is clear that, after two decades of conflict and instability, the people of Somalia want to usher in a new era of peace, security and democracy. Recent political progress marks a new chapter in their history. The end of the transition is the best opportunity in years to make progress towards peace and stability. Already, people are rebuilding their properties and businesses; confidence is increasing; and the diaspora is returning.

My noble friend Lord Jopling and the noble Lord, Lord Radice, mentioned the 959 pirates who were released. They asked what was the basis of the amnesty and why did this not apply to the “godfathers”. This amnesty referred to the boys who had committed acts of piracy at sea but did not apply to the financial backers or the senior leaders of the pirate action groups. My noble friend Lord Jopling asked for the Government’s response to the committee’s recommendation for an increased contribution from the Gulf states. We are working closely with a number of the Gulf states, particularly the UAE, Bahrain and Oman, and organisations such as the Organisation of Islamic Cooperation. The UAE has commanded the Combined Maritime Forces Combined Task Force 151 and Bahrain, Oman, Kuwait and the UAE all provide bases for Royal Navy ships. They all share information with coalition forces.

My noble friend Lord Jopling also asked whether, as the number of attacks reduces, there is a temptation to relax our presence there. Military response must remain proportional to the threat until the root causes of piracy have been addressed ashore. This is now occurring via EUCAP NESTOR and other capacity-building initiatives. Meanwhile, Operation Atalanta, NATO and the CTF 151 continue their deterrent patrols which deliver the time and space to allow development activity to take place ashore.

My noble friend asked whether pirates would be returned to Somalia. The committee did not consider this to be sensible given the level of prison security. He asked would the UN prison remain unused. The UN has refurbished a prison in Somaliland which is currently housing convicted pirates returned from the Seychelles. Work is on the way to building additional penal facilities. This is crucial to Somalia’s ongoing development. Building justice and the rule of law is a priority for the new Somali president.

The noble Lord, Lord Davies, pointed out that the example of success on Operation Atalanta should be included as part of the balance of competences review. Operation Atalanta will be part of a case study on common security and defence policy activities in the Horn of Africa. The noble Lord said that the committee’s conclusion in respect of ransom payments was wholly inadequate because these are criminal payments. Companies assembling ransoms in the UK must seek consent from the Serious Organised Crime Agency prior to payment. The Government do not make or facilitate substantive concessions to hostage-takers, including the payment of ransom. I would point out that it is not against UK law to pay piracy ransoms.

[Lord Davies of Stamford]

On that point, do the Government believe that it is a satisfactory situation that these payments are not illegal?

[Lord Astor of Hever]

We agree with the noble Lord that it is not a satisfactory situation.

The noble Lord, Lord Jay, asked whether the United Kingdom continued to strengthen the African Union in Somalia. Support through the EU training mission will continue. The UK continues to support AMISOM in Mogadishu, which is the military arm of the AU in Somalia and was critical to the recent successful retaking of Kismayo that forced al-Shabaab out of one of its key strongholds and away from a key source of revenue. I am very grateful to the noble Lord, as a former ambassador to Paris, for his encouraging words on our support to the French over Mali.

The noble Lord also mentioned west African piracy. The situation there is much more maritime criminality than piracy—the theft of cargo, illegal bunkering et cetera—and should not be seen as similar to that in Somalia. As such, it is clearly the role of national police forces to deal with it. The Royal Navy is taking action where it can, predominantly in terms of training and capacity-building: HMS “Dauntless”, HMS “Edinburgh” and HMS “Argyll” have all recently worked in this area. The noble Lord asked what effect the destabilisation of Mali might have on wider UK interests. It would allow ungoverned space from which terrorists could operate, plan and launch attacks with impunity, and could also destabilise other parts of Africa such as Nigeria and Sierra Leone.

The noble Lord, Lord Radice, asked what the United Kingdom and the EU are doing to meet the threat in west Africa, whether the Royal Navy will deploy assets to west Africa and whether we will apply the lessons from Somalia to west Africa. Lessons are being learnt from Somalia and applied to west Africa. The UK is supporting the industry initiative to create a regional maritime trade information-sharing centre. The Royal Navy deployment has helped build capacity aboard vessels and it is helping to train maritime law enforcement officers and develop maritime legal frameworks to prosecute maritime crime. Corruption locally is the biggest threat.

The noble Baroness, Lady Young, and the noble Earl, Lord Sandwich, asked how EUCAP NESTOR is progressing. The answer is: as well as can be expected. Building capacity where none has existed for 20 years is a great challenge. It involves preparing assessments of what is required, identifying key leaders who will have to drive forward development on behalf of the Somali Government and people, working in conjunction with various institution-building initiatives and prioritising where EU funds need to be spent.

The noble Baroness asked what the Government’s view is on dumping toxic waste off the coast of Somalia. Historical reports of toxic dumping in the early days of piracy cannot be denied, but it has reduced significantly owing to the naval presence in the area. Recent reports to the UN Security Council have failed to provide evidence of toxic dumping off the Somali coast. This Government remain committed to working with international partners to tackle all the reasons used to justify committing acts of piracy.

The noble Earl, Lord Sandwich, asked me to congratulate Kenya and the Seychelles on their efforts and asked what the Government’s attitude was towards Operation Atalanta. Regional partners are an essential part of the UK’s counter-piracy strategy. The Seychelles are leading the effort, having recognised the threats from piracy to tourism and their fishing and maritime industries. We commend their continuing efforts and those of Kenya.

The noble Lord, Lord Rosser, asked whether there was a change in the department responsible, as I am responding to this debate, and whether it reflects a change in the Government’s approach to piracy. There is no change in the department. The Ministry of Defence led the written response to this committee, and it is therefore fitting that I attend this debate now. This Government remain committed to countering the threat of piracy in the Indian Ocean and to working with our international partners.

The noble Earl, Lord Sandwich, asked whether the Puntland maritime police force would be allowed to resume its activities. The Puntland maritime police force is a local militia trained by a private security company and it received weapons in breach of the UN sanctions regime in force for Somalia. The decision to employ or allow the activities of the PMPF rests with the new Government of Somalia.

The noble Lord, Lord Rosser, asked whether the Government’s allocation of ships to Atalanta remains as per the report. The answer is yes. We allocate ships on a case-by-case basis, and it may not be the most effective use of ships to allocate them to Atalanta rather than to other coalitions. This is kept under constant review and plans made accordingly. A Royal Navy helicopter is currently assigned to Atalanta, working from a front ship. The noble Lord asked whether, given the current situation, the Government would support extension of Atalanta’s mandate. The EU is beginning a strategic review of Operation Atalanta, and we remain committed to supporting this mission.

The piracy threat cannot be dealt with through military means alone. It will require a sustained international effort that addresses not only the threat from pirates but institutional incapacity. The UK is ultimately seeking greater coherence between EUTM, Atalanta and Op NESTOR within the overall EU Horn of Africa strategy but also with other international and UK unilateral activity. All the symptoms—terrorism, piracy and migration—are a result of the causes of instability in Somalia. EUTM does not currently link directly to the other CSDP missions but rather to the wider EU strategy as part of the comprehensive approach to Somalia. Linking missions with diplomatic and developmental tools should enable the EU to take a lead internationally in seeking to bring stability and governance to the country and wider region.

Armed Forces: Army Basing Plan

Lord Davies of Stamford Excerpts

Tuesday 5th March 2013 Lords Chamber

[Lord Astor of Hever]

My Lords, I can confirm for my noble friend that the runway at Leuchars will be kept in operation. I think that a university air squadron is based there and will continue to use it. Once the Typhoons have moved up to RAF Lossiemouth, we would want it as a failsafe runway for Lossiemouth.

[Lord Davies of Stamford]

My Lords, it is the wrong decision to bring back the Army from Germany at present, and to do so at very considerable cost. The Minister mentioned the figure of £1.8 billion. That would have been enough to have kept Nimrod going, to have maintained a Harrier strike force and to have bought all 22 Chinooks. The Government have demonstrated a very perverse order of priorities in this decision. It also deprives the Army of the training opportunities available in Germany which are much more extensive than Salisbury Plain, as the Minister knows very well, and of course of the opportunity for close collaboration in Germany with the Bundeswehr and the American army units stationed there, so it was the wrong decision. However, perhaps I may ask the Minister for a figure that he has not given. What is the estimate of the incremental costs in the future of flying our troops for training in Germany, Canada or in other places where they need more extensive training grounds—a need that would not have arisen had we maintained our position in Germany?

[Lord Astor of Hever]

My Lords, I am sorry that the noble Lord always finds something wrong with the announcements I make, but he forgets the very difficult financial situation that we inherited. I would point out that although we are spending a certain amount of money on bringing our troops back from Germany, huge savings of at least £240 million a year will be made from there on. I would much rather see the money spent in this country than in Germany.

Armed Forces: Redundancies

Lord Davies of Stamford Excerpts

Tuesday 22nd January 2013 Lords Chamber

[Lord King of Bridgwater]

My Lords—

[Lord Davies of Stamford]

My Lords, the Government’s record in this area is not a good one. Within a few months of getting rid of our carrier strike capability, we found ourselves regretting the absence of a carrier in the Libyan operation and were forced to spend even more money hiring an Italian naval base and providing in-flight refuelling which we would not otherwise have needed. In the present state of affairs, is there not all too great a chance that we might soon regret this hasty decision to reduce our Army, which was taken in rather different circumstances a couple of years ago?

[Lord Astor of Hever]

My Lords, I am sorry to hear that from the noble Lord. These redundancies are not new, and were part of the difficult decisions that had to be made to tackle the multi-million pound defence deficit which we inherited from the previous Government.

Armed Forces: Long-Term Care

Lord Davies of Stamford Excerpts

Wednesday 19th December 2012 Lords Chamber

[Lord Astor of Hever]

My Lords, I can answer my noble friend. In Iraq, of the 222 UK casualties listed as having serious or very serious injuries, 25, that is 11%, were members of the Reserve Forces. In Afghanistan, of the 591 UK casualties listed, 22—4%—were reservists. Those reservists who sustained wounds or illness while mobilised will be retained in service prior to being demobilised and returning to work, to ensure that they receive the best possible welfare support and care and are eligible for the full range of Defence Medical Services care. Once reservists have been demobilised, their local reserve unit continues to ensure that they have access to welfare services.

[Lord Davies of Stamford]

My Lords, when we were in government there was a rule that no one would ever be fired from the services as a result of wounds sustained in the course of duty. Anybody in those circumstances always had a choice of taking a compensation payment and an immediate pension if he or she preferred or taking a compensation payment and remaining in service. I will never forget the occasion when, talking to someone doing an important job in Camp Bastion, I suddenly realised that what he had in place of a left leg was a wheel. Is that rule still in force and will the Government commit to maintain it?

[Lord Astor of Hever]

My Lords, to the best of my knowledge that rule is still in place. If it is not, I will write to the noble Lord.

Future Reserves 2020

Lord Davies of Stamford Excerpts

Thursday 8th November 2012 Lords Chamber

[Lord Astor of Hever]

My Lords, I thank the noble Lord for his support. Over the years I have very much enjoyed chatting to him about his distinguished military experiences over 12 years, and I very much hope that he will give his input into this consultation process. We want to change the situation. The noble Lord was critical of the past. We want to change all this, whereby employers, regulars and reservists all have a clear view of where they stand and have plenty of warning if there is mobilisation. That is important. I cannot comment on the noble Lord’s question about the Foreign and Commonwealth Office.

[Lord Davies of Stamford]

My Lords, it is a pleasure and a considerable relief for once to be able to welcome a government Statement on defence policy, and I do so unreservedly. As the noble Lord knows, I am very much in favour of this initiative and I congratulate him on it. I also congratulate General Houghton and Julian Brazier, whose initial study has led to these proposals and provided some of the background. I have just two concerns that I should like to put to the Minister. First, is it not the case that if our reservists are even slightly less well trained and experienced than regulars, we may have more casualties in future operations? That risk can be mitigated only by rigorous and probably more extensive pre-deployment training. Are the Government focused on that?

Secondly, incentives are splendid and, of course, no one would wish coercive legislation on employers, but is it not the case that this will not work at all unless reservists have complete legal protection, as they do in the United States, against discrimination by employers or potential employers in the matter of recruitment, promotion and remuneration? That system seems to work extremely well in the United States. As the noble Lord knows, it has been in operation for a long time; it seems to be widely accepted by American employers and by American society as a whole; and, of course, as we all know, the National Guard plays a vital role in American overseas operations. Does the noble Lord agree that that issue cannot be ducked and needs to be accommodated in the legislation the Government propose?

[Lord Astor of Hever]

My Lords, I am very grateful to the noble Lord for his support and I will pass on his words too to the Vice-Chief of the Defence Staff, General Sir Nicholas Houghton, and Julian Brazier, the Member of Parliament for Canterbury, who both work very hard. I attended a number of meetings and they were very grateful for the noble Lord’s support. He asked if reservists would be put at greater risk. For reservists doing specialised roles for which they will be trained, pre-deployment training will bring them up to the required levels. The training for reservists will obviously be much greater and they will go into any mobilised operation as well trained as regulars—they will have the same kit, the same uniform—and we will do our very best to ensure that that does not happen.

The noble Lord’s last question, I think, was whether there will be any change to legislation. The integration of reserves within the whole force means that reservists will routinely be part of military deployments at home and abroad. In order to enable this we propose changes to the current legislative power to use and call out reservists. Following the consultation in spring 2013 a White Paper will set out in detail our proposals on, among other things, any legislation necessary to underpin our vision for the reserves.

Armed Forces

Lord Davies of Stamford Excerpts

Monday 5th November 2012 Lords Chamber

[Lord Davies of Stamford]

I start by endorsing the tributes that have already been made in this House to our Armed Forces. I know, as everybody in this House knows and I hope the country knows, that those tributes are not ritualistic but deeply felt on both sides of the House.

I also thank the Minister for giving us this opportunity. He is extremely conscientious and serious in his duties to the House, and he has done very well by the House today in getting us this opportunity. I am not going to allow my great respect for the Minister to muzzle the things that I am about to say, but I want to say at the outset how much we appreciate that. I also welcome the noble Baroness, Lady Garden, to her new role on the Front Bench. Those of us who knew him, and all of us today, will be very sad that her husband, who had one of the most brilliant and original military minds that I have ever encountered, cannot be with us this afternoon to see her there, sitting on the Front Bench with those new defence responsibilities.

I am going to be very frank, because the situation requires frankness. The state of our Armed Forces is very depressing and worrying. All the serving officers and men whom I have had the opportunity to speak to recently—it so happens that I have not had the opportunity to speak to any servicewomen recently—are all of one accord. They say that morale is worse than it has been for at least 20 years, since the excessive cuts undertaken by the previous Conservative Administration in the 1990s, to which the noble Lord, Lord King, has already referred. In parenthesis, I may say that I opposed those cuts at the time in a pamphlet called Facing the Future, which I published jointly with a number of then Conservative Back-Bench colleagues, including Andrew Robathan and Julian Brazier. My views on defence have not changed since they were expressed in that pamphlet.

I used to think that the Conservative Party among all British political parties was the one with the best understanding of the importance of defence and the greatest sympathy for the needs of our Armed Forces. That was certainly true when I joined the Tory Party in 1974 and remained indubitably true, in my view, for quite a number of years after that. But in the 1990s, I began to wonder whether that was still true, and I wondered even more when I read the Defence White Paper of the noble Lord, Lord Robertson, in 1998. It is very difficult indeed to imagine that anybody would come to the conclusion that it is true today.

As the Minister said, the Government have made some tough choices; the trouble is that in my view those choices were completely wrong. For example, the Government decided to continue to give India £300 million in aid a year, a country that is building aircraft carriers and buying aircraft to fly off those carriers, while deciding that we could not afford to have a carrier strike force at all for the next 10 years. I think that was profoundly wrong. It might have been tough but it was absolutely wrong and a betrayal of the national interest. The Government have produced a situation in which our Army is now being reduced by 20%. That means that we can now deploy on a sustainable basis only something of the order of a brigade—say, 2,000 men and women with full supporting arms, as opposed to the 10,000 we have deployed in Afghanistan for many years past. That is a good example of the negative gearing effect of cutting your defence forces. I fear that our defence forces have now been cut to a point where they would simply not be able to respond to a whole range of all too easily conceivable scenarios.

The other problem with doing this is that you send quite the wrong signal to those people around the world who might be tempted to breach the international peace or even have designs on our own territory. I do not suppose for a moment that the Argentinians are at this moment planning to attack the Falklands. Cristina Fernández or Cristina Kirchner—I do not know which she prefers to be called—has said that she wishes to resolve the matter peacefully, but aggressors always have a way of saying at the outset that they intend to resolve the problem peacefully. I equally have no doubt at all that the raising of this issue in Argentina, and the terms in which it has been raised over the past couple of years, has not been coincidental. It is not unlinked to the fact that it is now clear that for 10 years we will not have a carrier strike force which would be required if ever the Argentinians succeeded in taking over the Falklands again. We would now be incapable of retaking the Falkland Islands in the way we did in 1982. It is a very serious matter which the whole country needs to take very seriously. That is why I am not muzzling the words that I am using this afternoon, as I believe that they are entirely justified.

The question arises of what you do about a situation like that. It is very easy for me to say, “Vote Labour at the next election and get rid of this awful Government”. I have said that and will continue to say it. However, I recognise that in reality you cannot entirely go back. It would be absurd to make a promise that we could entirely reverse the cuts that have been introduced and go back to square one. You can never entirely go back in history; we all recognise that. We need to think very carefully about what we do to try to make sure that we have the means to continue to make a positive contribution to the world’s peace. As several speakers have mentioned —I would say almost a majority of those who have spoken on both sides of the House this afternoon—we have played a decisive part in that in these many operations and difficulties over the past 60 or 70 years since the Second World War.

As I contemplate this matter, I think increasingly that the solution must be to do something which I know is counterintuitive for some people and would not be welcome to many distinguished members of our Armed Forces, but they might prefer it to having no effective defence at all: that is, to take very seriously the prospect of a European common defence policy. If such a policy is ever to produce any real savings and address the financial issues, which, of course, are real issues, it would have to be based on defence specialisation. You would no longer have everybody, including ourselves, having MBTs, light tanks, reconnaissance vehicles and utility vehicles or large helicopters, medium helicopters, small helicopters and so forth. There would have to be a degree of defence specialisation. That means that you would have to be certain in advance that everybody who was required would be there on the day when you needed to deploy within one coherent command and control system, which, of course, requires common foreign policy. These things are difficult pills to swallow for a lot of people and impossible, I think, for the Conservative Party because it is incapable of taking rational, pragmatic decisions on this subject as it is so imprisoned by its own emotional and ideological opposition to anything European.

[Lord Dobbs]

Will the noble Lord speculate on whether this European defence force that he is so keen on could under any circumstances defend the Falklands if there were another crisis?

[Lord Davies of Stamford]

Yes, indeed. First, it would not be a common defence force in the sense that you would have people from different countries serving in the same unit. That would be absurd. However, a common defence policy would require a guarantee on the part of all the other members of the EU with regard to all our domestic territories, including overseas territories. That would apply to the French, the Dutch and others who have overseas territories. That would be an essential part of the deal. I have no doubt about that at all. The noble Lord realises that that raises all sorts of issues but all of us need to look at these matters with a greater degree of realism because the alternative is impotence. We will all be spending a lot. The total defence spending in the European Union is in the order of about €200 billion, which sounds a lot but is very small compared with the United States. It must be something like a quarter of the United States defence spending. I cannot get the arithmetic completely right while speaking on my feet but it is a large amount of money. A lot of it is being spent completely ineffectively for the simple reason of the negative gearing effect to which I have already referred. These matters need to be considered. I cannot go into the detail this afternoon but we need to go into the detail on these matters. We need to consider them. I realise that this is considered in some quarters a revolutionary and, indeed, very obnoxious suggestion, but I have put it to the House that the alternative will be impotence, and that cannot be the right solution for Europe as a whole and for the future of a civilised world.

I would like to say a word or two about defence procurement. I say frankly to the Minister that I was pretty astounded by one of the things he said. I am sure that he was loyally mouthing the current government propaganda on the subject; that is what you have to do sometimes when you are a Minister, as I know. He referred to new equipment. I think that he said there would be new submarines, new ISTAR and new helicopters. What did he mean by that? As regards new submarines, as far as I know the Government—thank God—are continuing with the Astute programmes and the Successor-class submarine programme but are delaying both. That is not exactly new equipment. I suppose that by new helicopters the Minister means Wildcat and Chinook. It so happens that I was responsible for promoting, pushing through, negotiating and concluding both those projects. They are not new in any way. Far from adding to them, the Government are actually reducing them. They cancelled 10 of the 22 Chinooks that I ordered, so it is pretty rich to describe that as new equipment and put it to the credit side of the Government. I suppose that by new ISTAR the Minister meant the Predator system, for example, which we bought more of, and Watchkeeper, which again goes back to Labour’s time in office. One needs to be cautious about listening to some of the extraordinary government propaganda that comes out on this subject. We need a reality check from time to time.

We particularly need a reality check as regards the great deficit that the previous Labour Government are supposed to have left behind—the so-called £37 billion or £38 billion black hole. My next comment has been said before but it needs to be said again, because we continue to hear this dreadful piece of black propaganda. There is no such thing as the figures I have mentioned. You get to figures of that kind only if you make two assumptions which you cannot possibly make in good faith. One is that everything on our prospective procurement list would be procured. That never happens. I cancelled several things myself. I cancelled the medium helicopter project in order to finance the Chinooks, as the noble Lord no doubt knows. I cancelled the MARS tanker programme. One is always cancelling things for good military reason and switching to higher priorities in defence procurement.

The second thing which one can accept in good faith even less is the assumption, which has to be made to get to the figure that I have mentioned, that there would have been no cash increase. In other words, there would have been an enormous real-terms reduction in our military budget and our procurement budget for 10 whole years. In fact, the previous Labour Government increased defence spending by 1.5% per annum in real terms after inflation. Although the coalition will hold defence spending within a cash ceiling for the first five years it has always said that in the second five years it would increase the cash spending, so even the coalition is not pursuing a policy which would have led to the £37 billion or £38 billion figure. Therefore, it is time that we ceased to hear about the £37 billion or £38 billion.

I want to say something positive and helpful. I mean that sincerely. I hope it will be in the interests of the country that I say it now. You can always improve the defence procurement process. I think that we did so in my time, working very closely with General Sir Kevin O’Donoghue. We reduced the bureaucracy substantially, particularly the assurance process, and developed new models of open-book co-operation with some of our major defence suppliers, but you can always go further. However, there is one big problem that I identified which I was not able to resolve: namely, that we do not do procurement spending and procurement evaluation on a present-value basis. Noble Lords who have experience in the private sector will know that, in all significant-sized companies, investment appraisal and procurement is done on a present-value basis. In other words, what counts is the present value of the future stream of expenditure or the future return from investment and you compare that present value with alternative approaches or solutions to the same problem. That is not done in defence spending. In defence spending certain amounts of money are allocated to certain years and you have a limit you can spend within a particular year, which means you completely lack flexibility.

I will give the House two examples of where, in my time, we lost hundreds of millions of pounds for no good reason but the existing Treasury rules. One was during the shipping crisis in 2008. I realised that we could probably buy the MARS tankers that we had in the programme for two or three years later very much more cheaply by simply purchasing tankers on the open market rather than building them at enormous expense, which had already been examined and provided for. We had £1.2 billion in the budget for six tankers. I spoke to several shipping brokers and discovered that we could actually buy, on the second-hand market, tankers of the right capacity—30,000 to 50,000 tonnes, capable of refuelling at 15 knots at sea and so forth—for $50 million apiece. If you then spent some money putting on a helicopter pad, one or two bells and whistles, some armaments and so forth, it could not cost you more than $75 million as opposed to the £200 million which we had in the budget for each one of those tankers. It was a no-brainer but I was not allowed to do it. I went to the Treasury and said that we could save public money but it said, “No, no, no, that’s the rules, we can’t do it. Sorry, but you have to wait two or three years”. I told it that in two or three years’ time the shipping market would have revived and we would not be able to get that sort of deal. “Sorry, too bad”, it said.

The same thing happened with the Astute class. I wanted to buy the components and a lot of the systems for Astute-class boats 4. 5, 6 and 7 together in bulk, getting a considerable discount. I was told, “You can’t do it because all these things are allocated to individual years”. I worked up, with the National Audit Office, a proposal for the Treasury to change this and we had meetings with the Chief Secretary, Liam Byrne. I explained all this to my successor, Mr Luff, who was sadly sacked—I do not know quite why—at the recent reshuffle, but nothing has happened about it so I put it on the table now. This is something that needs to be examined. It can be done and I could go into great detail if I had the time. This is an opportunity and prospect which we cannot afford to ignore in the context of any genuine attempt to save public money and provide a more efficient basis for defence procurement.

[Lord Hamilton of Epsom]

My Lords, I should start by saying that I work for an American defence company called Curtis Wright. The Wright in Curtis Wright was the Wright brothers. Curtis Wright supplied many fighter aircraft to the US Air Force during the last war. After the war somebody came along and said, “We think you should look very closely at the whole idea of jet propulsion for fighter aircraft”. Curtis Wright looked at it very carefully and said, “No, this is not the answer”. Your Lordships will not be surprised to know that Curtis Wright are not in the production of fighter aircraft any more, but they are involved in a number of other technical areas in defence supply. It is always a great pleasure to follow the noble Lord, Lord Davies of Stamford, because—let us face it—he does not lack chutzpah when it comes to defending the actions of the previous Government.

I will deal, firstly, with the question of defence specialisation. This has a certain allure to it because what it means is that different countries in Europe would take over the sole supply of the capability of certain bits of defence. The very obvious answer to that would be that armour should be in the hands of the Germans. If the noble Lord, Lord Davies of Stamford, talks to his honourable friend in the other place, Gisela Stuart, who is German, she will tell him that the Germans have become completely pacifist. If we had this arrangement, and we decided we wanted to fight an armoured conflict somewhere, we could not do it because the Germans would not fight. There seem to be enormous problems. The noble Lord says that when this great unification of European forces was put together, they would have to sign up to looking after our colonies. The Spanish are extremely hostile to the idea of us defending the Falklands at all, and I am not sure that they are going to sign up to that in any way. There are enormous shortcomings.

I will move on to the great debate, which was raised by the noble Lord, Lord Davies of Stamford, about the size of the deficit inherited by this Government. Was it £37 billion or £38 billion of unfunded procurement over 10 years? Or was it a smaller figure? It must have been a pretty massive figure because otherwise we would not have had the devastating review of our whole procurement programme, cutting out ranges of procurement. The Harriers had to go, as did the maritime patrol aircraft and so forth. That would not have happened if there had not been a very serious problem which this Government had to address. I do not expect the Minister to answer this when she sums up, but perhaps she could write to me about it. Last Tuesday, my noble friend Lord Trefgarne gave lunch to Sir Clive Whitmore, who used to be the Permanent Secretary in the Ministry of Defence when I was there and in the time of my noble friend Lord King. Clive Whitmore, who understood politicians very clearly, was famous for saying all the time, “I have to remind you, Ministers, that I am the chief accounting officer of the Ministry of Defence, and if you want to spend money you have not got, I want a ministerial override”. As your Lordships know, a ministerial override is something that comes from the Permanent Secretary and has to be signed by a Minister. It basically says that “I, as a Permanent Secretary, advise against this particular procurement because the funds are not available and they have to be signed off by a Minister”.

The final signing off of the aircraft carriers was in 2009. The roof had fallen in on the whole economy, and we had complete disaster in every direction. It was obvious to a child of five that there was going to be no more money coming into the defence budget. At the same time, two aircraft carriers were ordered at a cost of around £5 billion. That was on top of a mass of other equipment which had been ordered but for which there were no funds whatever. What happened in the Ministry of Defence? Why were there no ministerial overrides? We look to our Civil Service to guarantee the continuity and solvency of departments of state. What went wrong that that did not kick in? What provision has now been made in the Ministry of Defence to ensure that this sort of thing does not happen in the future? Perhaps that could be put in a letter. We should be seriously concerned if we reach a position where things are being ordered in this way. This is always going to happen in political life as politicians believe they can buy people’s votes by putting out enormous orders and there could be no better way of buying votes than to have two aircraft carriers being built simultaneously in every shipyard in the country so the largesse could be spread as widely as possible. Why was there not a ministerial override saying, “The funds are not available for this, I therefore do not recommend it, and I am doing it only because I am ordered to by the Minister”?

[Lord Davies of Stamford]

Perhaps I can help the noble Lord and also defend civil servants whose reputations might otherwise be tarnished by what he has just said. We had the most conscientious and able Permanent Secretary and finance director in my time. There was no ministerial override because there did not need to be one as the carrier programme, like other parts of our programme, was funded and properly provided for within our defence budget.

[Lord Hamilton of Epsom]

That no doubt explains why the first thing this Government tried to do when they got in was to cancel the carrier programme, only to find that it could not be cancelled because BAS is very good at tying up such incredibly tight contracts that it would have cost more to cancel than to go ahead with it. I do not totally buy that: there is something seriously wrong here, and I do not think we would have the current difficulties if there had been a few more ministerial overrides in the past. Critics of my right honourable friend, Philip Hammond, the new Secretary of State, say that he is just a number cruncher who does not know anything about defence priorities. He understands very well the first defence priority, which is that you do not order kit if you do not have the money to pay for it. His second priority is balancing the budget, and he therefore takes total care that we are not going to run into any major crisis, such as the one we have experienced recently. His business experience will be valuable, and he is the ideal man to be holding the position of Secretary of State.

It is not just a shambles that we find in the administration of the Ministry of Defence. We used to be able to rely on men in uniform to do the right thing, but what have we seen? We have seen the humiliation of the retreat from Basra, which raises serious questions about the intelligence given to our military commanders before they went in. Was it a complete surprise that the Iranians decided to get involved in all the Shia militias there? The result was that we had to pull out. In terms of safe passage to get back to the airport, we had to do a deal whereby we would not go back in. The Americans were, to put it mildly, dismayed, and eventually the Iraqi Government took the view that such was the appalling shambles left behind in Basra that they had to go in with the Iraqi Army and US Marine Corps. Once they went back in, they certainly sorted out the problems there, and there has not been much of a problem there since.

Almost as a reaction to Basra, the British Army afterwards decided to deploy 3,500 men in Helmand province. What was the intelligence there? Did they not know that the Pashtuns in Helmand loathe all foreigners, and the foreigners they loathe more than any others are the British, because they still have not forgiven us for the wars we fought against them in the 19th century? The result was that we nearly lost that whole force of 3,500 men, but for the fantastic air power provided by NATO, which pulverised all the mud villages in front of it but would not have done an awful lot for hearts and minds in Afghanistan.

I am actually seriously worried about where the Ministry of Defence has gone in the past. My right honourable friend the Secretary of State has a serious problem of getting this thing back into some sort of order, both in terms of finances and, I hope, in getting involved in operational matters, because serious problems have been created for which we are paying a hefty price. I wish I could say that I looked to the future with confidence as regards the serious challenges facing my right honourable friend. He has an awful lot of work to do.

Armed Forces Day

Lord Davies of Stamford Excerpts

Thursday 28th June 2012 Lords Chamber

[Lord Astor of Hever]

My Lords, the independent review by Sir John Holmes of the rules applicable to the awarding of military medals is currently under way. He is considering all known campaigns for medals, including the case for a national defence medal, and will report reasonably soon.

[Lord Davies of Stamford]

I know the noble Lord is a great supporter of our Armed Forces and stands up for them on many occasions. Will he therefore join me in condemning the absolutely despicable behaviour of the publican of Browns bar in Coventry the other day who refused to admit two soldiers, who had been taking part in a military funeral, because they were wearing their uniforms? Will he look again at the recommendations—there were 40 in all—of the national recognition of the Armed Forces inquiry in the last Parliament? One of those recommendations was that we should outlaw discrimination against armed services personnel and provide the same kind of protection that we provide against discrimination on grounds of sex, race, sexuality or disability, so that these incidents never happen again.

[Lord Astor of Hever]

My Lords, I agree entirely with what the noble Lord said about that terrible act in the bar at the time of the funeral of the serviceman who was killed. I pay tribute to the noble Lord, Lord Davies, who commissioned the report of inquiry into national recognition of the Armed Forces when he was Defence Minister, which of course led to the setting up of Armed Forces Day.