Strategic Defence and Security Review

Lord Hammond of Runnymede Excerpts

Thursday 26th January 2012 Commons Chamber

[The Secretary of State for Defence (Mr Philip Hammond)]

rose—

[Mr Arbuthnot]

I can quite see my right hon. Friend answering, “Well, this is a funny way to go about it,” but I will give way to him none the less.

[Mr Hammond]

I am tempted to say that it is even a grotesque way, Mr Deputy Speaker. In the spirit of my right hon. Friend’s remarks, perhaps I can try to help him. I understand his concern about the voluntary and compulsory redundancy numbers, but the simple fact is that we have set out a trajectory of headcount reduction among the civilian employees of the MOD and among the armed forces. At each tranche we have called for volunteers, and enough volunteers from the civilian population have come forward for no compulsory redundancies to be required. There has been an insufficient number of volunteers from the military population so, regrettably, compulsory redundancies have been required. I do not rule out the possibility that compulsory redundancies will be required among the civilian work force in future.

[Mr Arbuthnot]

My right hon. Friend is, as always, helpful. I hope that he will now address the issue on which there is some dispute of fact—whether those in the military on whom compulsory redundancy is imposed are allowed to offer themselves for retraining; we have heard variously both that they are and that they are not. That is an important issue.

I now turn to the strategic defence and security review—although I do not want to take too much longer because a large number of people would like to speak. One of the main aims of the Defence Committee is to see how the next strategic defence and security review, in whatever year it will be—2014, 2015, 2016; we do not yet know—can be better than the last one. Our criticisms of the last one included the fact that it was rushed to fit in with the comprehensive spending review, and was therefore undertaken without sufficient consultation with academia, industry, Parliament or the country. I heard my right hon. Friend the Prime Minister say that taking longer over decisions does not necessarily make them better, and that is true, but having proper full discussion in the country before such decisions are made would make them more informed.

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[The Secretary of State for Defence (Mr Philip Hammond)]

Let me begin by paying tribute to Signaller Ian Sartorius-Jones of 20th Armoured Brigade Headquarters and Signal Squadron, who died on operations in Afghanistan on 24 January. Our thoughts at this difficult time are with his family and friends. All of us in this House are acutely conscious of the sacrifices being made in Afghanistan on a daily basis by the men and women of our armed forces. The experience of my first 100 days as Secretary of State for Defence has only reinforced my admiration for their selflessness, dedication and bravery, as well as for the commitment and professionalism of the civilians who support them. They are rightly a source of great pride to the nation.

I congratulate my right hon. Friend the Member for North East Hampshire (Mr Arbuthnot) on securing this debate on behalf of the Select Committee on Defence, and on his speech, most of which I wholeheartedly agreed with. I am delighted to have the opportunity to address the House on the defence reform programme that I have inherited, on my approach to it, and on how I will take forward the delivery of the defence outputs required under the strategic defence and security review.

[Mr Gray]

Does my right hon. Friend remember—perhaps he would do so nostalgically—the days when we had at least three debates annually on defence on a Government motion in Government time? Does he agree that this should be a Government debate rather than a Back-Bench one?

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[Mr Hammond]

My hon. Friend will know that the Government took a decision to give a large slug of parliamentary time to the Backbench Business Committee, to be allocated according to the priorities that Back Benchers identify. That was a bold decision for a Government to take. The result is that we have that defence debate today. I hope the Committee notes, as my right hon. Friend the Member for North East Hampshire said, the strong attendance, and that that will mean we have more defence debates on Thursday afternoons in future.

I am delighted also to have the opportunity to address the House—I have said that once so I will not say it again.

[Mr Jim Murphy (East Renfrewshire) (Lab)]

It was pretty good.

[Mr Hammond]

I agree.

Today’s debate is about the reform of defence. That reform is for a purpose. Sometimes, amid the minutiae of budgets and organisational structures, we need to take care not to lose sight of that purpose: the defence of this nation and our dependent territories against those who threaten our security and our national interest.

The challenge we face is to deliver that defence on a sustainable basis within a resource envelope that the country can afford. That challenge must be set in the context of the fiscal and economic circumstances, as other Members have noted. History tells us that, without a strong economy and sound public finances, it is impossible to sustain in the long term the military capability required to project power and maintain defence. The debt crisis is therefore a strategic threat to the future security of our nation and to the security of the west. Restoring sound public finances is a defence imperative as well as an economic one, and defence must make its contribution to delivering them.

[James Morris (Halesowen and Rowley Regis) (Con)]

Does the Secretary of State agree that, in times of economic austerity, it is important that we develop collaboration with our NATO allies to enhance capabilities, so that we can engage with allies to combat some of the threats that we face?

[Mr Hammond]

My hon. Friend is absolutely right. Part of the answer to the questions raised by the hon. Member for Bridgend (Mrs Moon) is collaboration with NATO allies. They can share assets that they have and that we do not have, and we can reinforce their capabilities in other areas. The smart defence agenda is an important one—it involves collaboration among NATO allies in procurement to ensure that we get the best defence effect we can get with the limited budgets available.

As I have said, defence must make its contribution to delivering sound public finances, so even if the defence programme that we inherited had been in good shape, the spending review and the SDSR would have had to find savings to contribute to overall deficit reduction. However, the defence programme that the Government inherited was very far from being in good shape. At its heart, it had a £38 billion black hole filled with procurement projects that were at best hopelessly over budget and out of control, and at worst pure fantasy. They were projects announced by politicians—actually, mainly one politician—without any budget cover or prospect of ever being delivered, in a programme that had no proper contingency, no effective recognition of risk, and no provision for the “conspiracy of optimism” that was evident in MOD equipment cost estimates. The support programme systematically underprovided for the proper maintenance and sustainment of the equipment that was already in service. In short, Mr Deputy Speaker, it was a shambles.

[Hugh Bayley (York Central) (Lab)]

Will the Secretary of State give way?

[Mr Hammond]

I will give way to the hon. Gentleman, who will perhaps explain his way out of that.

[Hugh Bayley]

Were the capital programmes that the right hon. Gentleman’s Government inherited supported or opposed by the chiefs of staff at the time?

[Mr Hammond]

I am obviously not privy to the advice given to Ministers in the previous Government by their defence advisers, nor should I be, but if the previous Government were succumbing to recommendations from the defence chiefs, they were doing them no favours by pretending that they could deliver equipment programmes for which there were no funding lines or budget cover, and when there was no prospect of their materialising.

[John Woodcock (Barrow and Furness) (Lab/Co-op)]

rose—

[Mr Hammond]

I am going to make some progress.

Does it matter that Labour’s programme was stuffed full of projects that would never and could never be delivered? I would argue that it did matter, because so long as the fantasy persisted, the doctrine and philosophy of our armed forces—[Interruption.] If the hon. Member for North Durham (Mr Jones) listens, he might understand the point being made. So long as the fantasy persisted, the doctrine and philosophy of our armed forces were built around the notion of those platforms being delivered, when what the forces really need is a realistic programme that we can deliver and that they can have confidence in, so that they can start rethinking their doctrine and operating philosophy for the future around the platforms and capabilities that we will have.

[John Woodcock]

To aid this debate, could the Secretary of State just remind the House whether his party in opposition argued for a smaller or larger Army than the then Government were prepared to support?

[Mr Hammond]

What I say to the hon. Gentleman is that we face the situation that we face. We came into office with a massive deficit, which we inherited from the previous Government, and as I shall argue, we have taken the tough decisions that, frankly, the previous Government shirked over the last few years, thereby doing the armed forces and the country no favours.

By 2010, Britain’s armed forces had endured a decade of high-tempo operations without a formal defence review and were faced with a period of acute fiscal pressure. The case for reform to ensure that the armed forces were restructured and re-equipped to protect our national security against the threats that we would face, within a budget that the nation could sustain, was unanswerable. Tough decisions were necessary to deal with problems on the scale of the inherited defence deficit, and this Government took them. I am clear, as the Prime Minister and my predecessor have been, that whatever the pain, our first duty is to put our armed forces on a sustainable basis by restructuring them for the future and putting the budgets that sustain them on a stable footing. As the SDSR acknowledged, the process of transitioning to Future Force 2020 will require us to take some calculated and carefully managed risks against certain capabilities, most prominent among which are wide-area maritime surveillance, to which the hon. Member for Bridgend referred, and carrier strike.

I regret in particular the cuts in personnel that are required to deliver that rebalancing and make the armed forces sustainable. However, in case any confusion has been created over the last few days, let me clear up one point. The headcount of military personnel will have been reduced by around 18% by 2020 compared with the 2010 baseline. That is in contrast to a 38% reduction in civilian headcount. Regrettably, some of that reduction will have to be achieved by redundancy. Where that is necessary, every opportunity is being given, and will continue to be given, for military personnel at risk of redundancy to retrain for alternative roles of which there are shortages in the armed forces.

I heard the comments of my right hon. Friend the Member for North East Hampshire earlier. Following the publication of the Select Committee’s report, I have asked for a specific briefing on the point that he raised. I would be happy to share that with him after the debate—[Interruption.] I will share it with the right hon. Member for East Renfrewshire (Mr Murphy) as well, if he wishes. It includes a list of the shortage trades for which suitably qualified individuals who are facing redundancy are invited to apply.

[Damian Collins (Folkestone and Hythe) (Con)]

The large number of redundancies in the Gurkhas has inevitably caused concern among them and in my constituency. Will the Secretary of State give me a commitment that the Gurkhas will remain a unique and important part of the British armed forces?

[Mr Hammond]

The Gurkhas remain a very important part of the British armed forces. I think that my hon. Friend understands exactly the problem that we face in regard to Gurkha numbers. Their terms of service were changed as a result of decisions made by the courts and the campaigning pressure that was placed on the previous Government. That means that most Gurkhas have elected to extend their service to 22 years. Consequently, the numbers of Gurkhas in service are projected to be above the levels needed to sustain the two brigades that we wish to sustain. That has given rise to a larger number of Gurkha redundancies than we would have expected to see. That is regrettable but, I am afraid, inevitable.

We are making tough decisions to tackle the massive deficit left by the previous Government and the unfunded defence programme. If those decisions had been easy or popular, you can bet your life that the Labour Government would have taken them years ago. They did not do so, however, and it now falls to the coalition to do the right thing in the long-term national interest. Translating the strategic prescriptions of the SDSR into decisive actions was always going to be a process rather than an event. Turning the corner on a decade of mismanagement will take time and determination.

To shine a bit of light into the end of the tunnel, the Government announced in July 2011 that the MOD could plan on the budget allocated to defence equipment and equipment support increasing by 1% a year in real terms between 2015 and 2020. That amounts to more than £3 billion of new money over the period. Importantly, that commitment was renewed by the Chief Secretary to the Treasury after the autumn statement. That will enable investment in a number of programmes, including the procurement of new Chinook helicopters, the refurbishment of the Army’s Warrior fleet, the procurement of the Rivet Joint, or Airseeker, intelligence and surveillance aircraft, and the development of the global combat ship.

The MOD is currently undertaking its annual budget setting process, which is known as the planning round. I am personally engaged in that process, and I am increasingly confident that we are close to achieving a sustainable and balanced defence budget for the first time in a decade or more. That would be an immense achievement, and would allow us to plan with confidence and to spend well over £150 billion on new equipment and equipment support over the next decade, as well as delivering the force restructuring and rebasing that we have announced. A turnaround on that scale requires a major cultural shift. Defence must change the way in which it does things and the way in which it addresses problems. It must challenge the received wisdom around the doctrines used to deliver defence tasks and around the management of defence itself.

Last month, the Government published the first annual report on the SDSR, which set out in full the progress that is being made. Let me address a couple of salient areas of what the MOD calls “transforming defence”—that is, the journey from the mess that we inherited towards achieving a sustainable, capable, coherent and adaptable force, built on balanced budgets and disciplined processes, by 2020. As I have said, I am clear that the Ministry of Defence must balance its budget. I am equally clear that it does not exist to balance its budget; it exists to deliver effective defence within a sustainable budget envelope.

[Sir Bob Russell (Colchester) (LD)]

Will the Secretary of State give way?

[Mr Hammond]

I cannot resist taking one last intervention.

[Sir Bob Russell]

Does the Secretary of State accept that morale is very important, and if our soldiers, sailors and air personnel and their families are given accommodation that is not fit for purpose, that does nothing to help the Government’s objectives?

[Mr Hammond]

I reassure my hon. Friend that I absolutely agree that morale is very important. I shall come to morale in a moment, and I understand that accommodation plays an important part in that. He will understand that there are thousands of moving parts in the defence budget, and trying to bring them back into balance is a massive challenge. Inevitably, people will always ask us to do more, more quickly, whether on accommodation, front-line equipment or any other area. We must try to balance the equation and get the judgment right.

As I said, the Ministry of Defence exists to deliver an effective solution within a sustainable budget envelope. NATO membership and our defence relationship with the United States and other key allies, such as France and Australia, are a vital part of the strategic solution as we move to Future Force 2020. It will, of course, be a smaller force, but it will be equipped with some of the best and most advanced technology in the world. It will be configured to be agile, focused on expeditionary capability and carrier strike, able to intervene by airborne or amphibious assault, and with the ability to deploy, with sufficient warning and for a limited time, a whole-effort force of about 30,000, or to maintain an enduring stabilisation operation at brigade level while concurrently undertaking one complex and one small-scale non-enduring operation. It will be a formidable regular force, supported by better trained, better equipped reserves who will play a greater role in delivering defence effect on the back of the extra £1.8 billion that we will invest in them over the next 10 years. All that will be underpinned by the expectation that, in most circumstances, we will be fighting alongside allies, and it will be supported with doctrines that will effectively address the threats of the future with the assets that we will have.

The proposal is about finally moving on from cold war reliance on mass to the “lethal and light” doctrines of flexibility and agility that the challenges of the new century require. It is not just the armed forces that need to reconfigure; the management of defence needs to change too, by developing a laser focus on delivering defence cost- effectively and accountably, protecting the front line and the taxpayer at the same time. Under my predecessor, that transformation had already begun. The recommendations of the Defence Reform Unit under Lord Levene were broadly accepted. Many have been implemented and others are in the pipeline. The Defence Board has been reconfigured to provide for a clear, single, joint service voice on military priorities, and a greater role for non-executive directors under the chairmanship of the Secretary of State. I reassure my hon. Friend the Member for Canterbury (Mr Brazier) that the single voice for the military on the Defence Board is supported by an effective armed forces committee, at which the chiefs of the individual services are able to work together to determine their combined order of priorities for the Defence Board’s allocation of available resource. That priority order is then presented to the Defence Board by the Chief of the Defence Staff—a presentation that has become extremely effective, because it carries with it the authority of all three services and the joint forces commander.

The Defence Infrastructure Organisation has been stood up to rationalise the Ministry of Defence estate and reduce costs by 25%. Defence Business Services has been created to unify human resources and other back-office functions across the Department. The reform of the procurement process has begun with the appointment of—you guessed it, Mr Deputy Speaker—Bernard Gray, who has now had four name checks, I think, so far in the debate, as chief of defence matériel, and the establishment of the major projects review board to hold those responsible for failing projects firmly to account.

This year will see the transformation accelerate, with an evolution towards a leaner, more strategic head office; the introduction of a stronger financial and performance management regime across the whole Department; the service chiefs being empowered to run their individual services and their delegated services budgets; the new joint forces command being stood up on 1 April; and the start of the reform of the MOD’s defence equipment and support business on the basis of a new matériel strategy.

The next few years will also see the beginning of considerable change on the ground as the rebasing programme set out in July last year is taken forward and the Army begins its return from Germany, as well as its withdrawal from Afghanistan and its internal restructuring to deliver five multi-role brigades. I know those last changes, in particular, are of great interest to individual Members. The House will understand that many of the changes are interdependent and complex, but I can give a commitment that I will make further announcements on the details of individual elements of the transforming defence programme as and when it is appropriate to do so.

[Sir Menzies Campbell (North East Fife) (LD)]

Will my right hon. Friend give way?

[Mr Hammond]

I thought that might provoke my right hon. and learned Friend.

[Sir Menzies Campbell]

First, I should apologise for being unable to be present at the beginning of the debate due to other responsibilities.

My right hon. Friend is right to say that the basing decisions have caused a great deal of disappointment. In the case of my constituency, the closure of RAF Leuchars, which has provided nearly 100 years of service in aerial warfare, has been particularly difficult to accept. Part of the argument in favour of that closure was that there would be specific deployments of units of the Army to occupy the base. So far, very little detail has been made available. May I encourage my right hon. Friend to ensure that the announcements he has just foreshadowed will be made as soon as possible?

[Mr Hammond]

I can reassure my right hon. and learned Friend on that point. RAF Leuchars is not so much closing as transforming its role to become the home of one of the five multi-role combat brigades after the rebasing of the Army back to the UK.

The purpose of all the changes is to increase the investment we can make in service people and their equipment and training, to increase investment in the front line by making the back office more efficient and more accountable, and to deliver value for money in defence. I know that change is unsettling and that the threat of change and the uncertainty it brings can sap morale, which my hon. Friend the Member for Colchester (Sir Bob Russell) mentioned. I will make every effort to ensure that the people who are directly affected by the proposals are kept fully informed as they progress and that we get the changes made as quickly as humanly possible.

[Mr Gray]

Will my right hon. Friend give way before he moves on?

[Mr Hammond]

I will not give way to my hon. Friend a second time, as I am conscious that a large number people wish to participate in the debate.

People remain the greatest asset of defence and, despite the tough decisions that must be taken, we will do all we can to protect them. This Government understand our duty to the country and to our armed forces. We have made the tough choices necessary to put them on a sustainable footing for the defence of national security and of the United Kingdom’s interests around the world. We know that making those changes will not to be easy, but I have no doubt that the British armed forces that will emerge will be formidable, flexible and adaptable, supported by the fourth largest defence budget in the world, meeting our NATO responsibilities and equipped with some of the best and most advanced technology on earth.

To get there, we need not just the series of structural and organisational changes I have set out, but a cultural shift in the way the organisation thinks and works. We need a shift in military doctrine to deliver the defence effect we will need, using the capabilities we will have; a shift in civilian culture to one of discipline, individual accountability and delegated decision making; and a shift to a leaner, fitter, more empowered and more empowering organisation. This is a programme of renewal and change of a scope and on a scale greater than anything else being delivered across the public sector. It is a blueprint for a sustainable future for the UK’s armed forces as one of the world’s most capable fighting machines. That is what Britain needs and what our armed forces deserve, and as we move forward to deliver it we will never forget that at the heart of this organisation are the servicemen and women who are prepared to put their lives on the line for us day in, day out. We owe it to them to make sure that the transformation we have embarked upon delivers its full promise.

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[Mr Murphy]

I have learned from experience that it would never be wise to misrepresent the words of the shadow Chancellor, and I dare say the hon. Gentleman is doing just that. We have been pretty clear; we cannot commit to reverse specific cuts that the Government have made. Similarly, before the 1997 election we said we would stick to the size of the state for the first two years of a Labour Government. It is important to be clear: before that election, we committed not to reverse individual spending cuts.

On defence reform, we know that we must meet the ambitions for our forces that we share across the Chamber, and which the Secretary of State referred to at the end of his comments. Reform is more important than ever before and when the Government make the right choices, they will have our backing. I listened carefully to the hon. Member for Canterbury (Mr Brazier), who spoke with real passion about an important issue that can often be quite dry. Much of the restructuring of the MOD announced in the Levene report was as welcome on the Opposition Benches as it was, in the majority of cases, on the Government Benches, in particular, greater financial powers for service chiefs. Some of the rebalancing of the equipment programme, notably cutting tank regiments, was necessary and has our support.

Unfortunately, that is not the case for every decision taken in the Government’s controversial and much criticised defence review, which has set our country’s defence policy on an uncertain path. However much some try to depict the process as a success, the evidence to the contrary is striking. The strategic defence and security review was immediately reviewed in a three-month study that announced thousands of further redundancies in our forces and the civil service. There are new unfunded liabilities on the balance sheet and further cuts to the equipment programme appear imminent. The conflict in Libya saw military equipment planned for the scrapyard recalled. The UK has been left with serious capability shortfalls for a decade, most notably the carrier strike capability gap. Military experts have repeatedly been open in their criticisms, and all in all it is a cuts package still in search of a defence strategy and there should be a rethink.

On forces welfare, I welcome much of what the Secretary of State has said in the announcements that he has made in advancement of forces welfare, but last week saw 400 Gurkhas being made redundant—the second painful cut they have had to endure in just a few months. The whole House will recall that the Prime Minister championed those remarkable soldiers in opposition, and many will agree with the Defence Committee’s statement that the level of compulsory redundancies among those in uniform is “grotesque.” That comes alongside cuts to front-line allowances, and permanent changes to pensions that will disproportionately affect members of the armed forces and their dependants, who rely on their pensions at an earlier stage in life than almost anyone else.

[Mr Philip Hammond]

rose—

[Mr Murphy]

I will happily give way, because I anticipate that the right hon. Gentleman’s fidgeting—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. One standing up, one sitting down, not two standing at once.

[Mr Hammond]

I am sorry, Mr Deputy Speaker. The right hon. Gentleman says he is giving way, then stays standing up for another three sentences. I am confused. He says the redundancies in the armed forces are grotesque, but he says he will not reverse the spending cuts that the Government have announced. Which is it? Is he going to reverse the cuts or is he going to accept the redundancies?

[Mr Murphy]

As the right hon. Gentleman knows, I am echoing the assessment and the assertion of the all-party Select Committee, and now that the right hon. Gentleman and his friends have sacked those soldiers, we cannot re-employ them. That is very clear indeed.

[Mr Hammond]

The right hon. Gentleman is not going to wriggle out by putting it in an historical context. A tranche of military redundancy is going on right now, and regrettably there will have to be further tranches. Would he scrap them and, if so, where would he get the money from?

[Mr Murphy]

It is ironic and peculiar that the current Secretary of State is seeking a commitment from the official Opposition to reverse cuts that he has not even yet announced. It is a ludicrous way to conduct politics and economics.

This cut comes alongside cuts to front-line allowances, and permanent changes to pensions, which will detrimentally affect those who require to take their pensions earlier in life. A corporal who has lost both legs in a bomb blast in Afghanistan will miss out on £500,000 in pension and benefit-related pensions. War widows will also lose out enormously. A 34-year-old wife of a staff sergeant killed in Afghanistan would be almost £750,000 worse off throughout her life.

Ministers blame deficit reduction but the argument does not add up. These changes are permanent, so the impact will be felt long after the deficit has been paid down and the economy has returned to growth.

I believe it is uncomfortable for us all that Sir Michael Moore, the chairman of the Forces Pension Society, has been moved to say:

“I have never seen a Government erode the morale of the Armed Forces so quickly”.

What has been the Prime Minister’s response? It has been a Cabinet Sub-Committee of his Ministers. To those in the front line, that will be little consolation. Indeed, given some of the decisions that have been taken, they are likely to want fewer, not more ministerial meetings. As I have previously said, I think there is a case for fewer Ministers in the Ministry of Defence in and of itself.

As the Secretary of State has rightly said, UK armed forces are a “force for good” across the globe, bringing peace to the Balkans, promoting stability in Sierra Leone, building capacity across Africa, supporting the actions around Libya, the normalisation of Northern Ireland and counter-terrorism at home and overseas, including in Iraq and Afghanistan. We want our forces to continue to play such a world-leading role, but their ability to do so is being challenged by the decisions of the Government.