Ministry of Defence

Stewart Malcolm McDonald Excerpts

Monday 26th February 2018 Commons Chamber

[Stewart Malcolm McDonald (Glasgow South) (SNP)]

It normally falls to the Scottish National party to break the consensual mood of these debates, but I fear that the hon. Member for Stirling (Stephen Kerr) has somewhat jumped our gun in that respect. Some of what he had to say was useful, but I will take no lectures on patriotism from a party that is presiding over the housing crisis that he describes, the recruitment crisis that he describes, or indeed the morale crisis that has been adumbrated by so many Members tonight. It takes a bit more than jumping on a tank with a Union Jack to be taken seriously on these issues.

Returning to the consensual points, however, I would like to thank the hon. Member for Gainsborough (Sir Edward Leigh) and congratulate him on bringing forward this estimates debate. He eloquently highlighted the miasma of despair that hangs over the finances in the Ministry of Defence, just as we have done fairly frequently in this Chamber and in Westminster Hall. I half-joked with the Government Whip earlier that the speech I am about to make was the same one I have been making for the past five months—[Interruption.] I have no intention of sitting down! I mean no disrespect to the colleagues who also take part in these debates, but much of what has been said this afternoon and this evening has been said before. And no doubt the response will be the same. We will be told that we have to wait for the review of the new defence modernisation programme, and that is something that we look forward to engaging in.

In one of my sadder moments, one night when I was suffering from insomnia, I was looking for something to listen to on Radio 4 when I came across a programme from 2011 featuring an interview with the right hon. Member for Barking (Dame Margaret Hodge), who was the Chair of the Public Accounts Committee at the time. It was a programme on defence procurement. Anyone listening to that programme tonight—I am sure that many Members will want to go and do just that when they leave the Chamber—would be forgiven for thinking that that interview was conducted last week. So dreadful is the state and condition of defence financing that we are repeating the same problems over and over again. I genuinely want to make a contribution that offers an alternative to the way in which the financing is done, so that we can avoid the shambles that the National Audit Office pointed out only a couple of weeks ago. I will return to that in a moment.

[Stephen Gethins (North East Fife) (SNP)]

My hon. Friend makes a good point. Other hon. Members have raised the point—I think it is worth repeating, and I know that Ministers will hear it with some sympathy—that when it comes to defence spending, the housing that is provided for service personnel and particularly for their families is of critical importance. A number of my constituents have approached me about the housing conditions in Leuchars, and I hope that my hon. Friend will urge the Minister to look into this to ensure that military bases are as family-friendly as possible.

[Stewart Malcolm McDonald]

I am quite confident that the Minister has heard my hon. Friend’s point, and that he will do just that. I shall go on to talk about the equipment plan report, but I think another National Audit Office report came out the day before that one, which covered the Annington deal on military housing. Admittedly, that does not affect Scotland, but the report states that if that deal had not been signed by the Conservative Government in, I think, 1996, the taxpayer could have saved some £4 billion. We could undoubtedly have had better military housing as a result.

I want to offer an alternative to the financing model, to which I have alluded in the past. The model that is used in Sweden and Denmark involves longer projections for funding and reaching defence agreements that last more than just 12 months. The Danish model, which admittedly is imperfect, has a defence agreement that involves all the political parties. The heat of the politics is taken out of the agreement, allowing the Government to sign up to a funding model lasting somewhere between five and six years, so that even when there is a change of Government, the model can still be adhered to. Obviously, there are caveats, such as that if the Parliament chooses to diverge from the plan, it ultimately has the power to do so, but it means that the Government are not constantly chasing their tail. I would encourage hon. Members who regularly attend these debates to consider that model, which we are certainly keen to see the Government explore.

[Angus Brendan MacNeil]

My hon. Friend makes a prescient point. At the Joint Committee on the National Security Strategy today, the experts were recommending the Danish model as something that the UK should follow, and I am sure that the Ministers are listening to that point.

[Stewart Malcolm McDonald]

I am grateful to my hon. Friend. I would hope that such a model could avoid some of the incredibly alarming passages in the NAO report, which have been highlighted by many right hon. and hon. Members. There is a funding hole in the equipment plan of up to £20 billion. To make that clear, that means that we cannot afford to buy the equipment we say we need in order to keep us safe.

I give all the weight I can to the Ministry of Defence in trying to get it the money that it needs—if not just to stand still, then certainly to move forward—but I do have some criticisms of how the Department has managed to get into this position. Why were the exchange rate projections so badly out—by up to a quarter in some cases?

[Mr Kevan Jones]

Brexit.

[Stewart Malcolm McDonald]

I understand that that was what caused it, but how did the MOD manage to get the calculations so badly wrong? When there is a funding hole of £20 billion just in the MOD’s equipment spending—before we get to estates, personnel and all the rest of it—why is no one being hauled over the coals? I cannot think of another Minister or Department that would be allowed to get away with that, but it is due to a fundamental problem in how this Government, this Parliament and Governments over many years have decided to fund defence. It needs radical change. Even if the solution that we think might be helpful is not the perfect solution, something has to give, because the situation is unsustainable. The NAO is clear that the result is that projects must be cancelled, delayed or scaled back. I therefore ask the Minister to make it clear to the House which projects are to be cancelled, delayed or scaled back. Can we have a guarantee that not a single project in Scotland will be cancelled, delayed or scaled back, because that is the road that the NAO says the UK Government is heading down?

The situation adumbrates the need for a new SDSR—one that takes account of the change in currency fluctuations and of the fact that Britain will no longer be in the European Union. Our current security policy is based on our being members of the EU, so we need a new one that takes account of the fact that we are coming out, because that undermines operational capability.

[Mr Sweeney]

The hon. Gentleman makes a point about the impact on real defence spending of things such as currency fluctuations. We are talking about the need for stability in the defence budget and for it to be fiscally neutral, which I think was the term used by the Secretary of State, so should the Treasury not give special dispensation to the MOD so that it is pegged to a certain real level of spending, which would be an automatic stabiliser that rises and falls automatically with changing valuations or with defence inflation rates?

[Stewart Malcolm McDonald]

There is nothing that I could add to make that point any better. The hon. Gentleman is absolutely right.

[Vernon Coaker]

The hon. Gentleman poses an interesting question. There was an SDSR in 2015, and the modernising defence programme, which will presumably have consequences, is going to be announced in the next few months. Just to be clear about what he is saying, is his argument that there should be another SDSR at the end of the five-year period in 2020 or before that?

[Stewart Malcolm McDonald]

I rather suspect that I cannot get the Government not to go ahead with its modernising defence programme. My preference would be for a proper SDSR, rather than this mini review, but we are where we are. Despite the supposed lifting of the fiscally neutral element, I fear that we are heading in the same direction. The hon. Gentleman will remember the statement: three of the four announcements were cuts. Let us not dress that up in any other language; they were cuts. I fully expect that to happen again when the announcement comes later in the year.

Setting aside our views on whether we should have the nuclear deterrent, the other alarming aspect of the NAO report is its rising cost. All of a sudden, it has gone up by £1 billion—overnight, it seems. It has gone up by so much that the MOD’s director general nuclear is having to review the costings, so I would welcome some information on when that review will happen, when an announcement will be made and when Parliament can expect to get the information.

I want to end on a note of consensus, so my final point is that the hon. Member for West Aberdeenshire and Kincardine (Andrew Bowie) made the very good point, with which I can find no reason to disagree, about making it easier for people from the British overseas territories to join up, instead of making them wait five years, which would be eminently sensible given the existing recruitment problems. Those problems have been well documented in the House, not least by the right hon. Member for Rayleigh and Wickford (Mr Francois) —I have just learned that I have been mispronouncing his constituency the entire time, but he is such a gent that he has not even told me.

This has been an important and informed debate, as it always is, and the House is better informed as a result. We look forward to the results of the mini defence review and to engaging with it. As the Secretary of State knows, the Scottish National party hopes that there will be a particular focus on the activity, or lack of it, in the high north. I look forward to hearing what the Minister has to say in his winding-up speech.

--- Later in debate ---

[Mr Ellwood]

The hon. Gentleman should refer back to Hansard to understand what I have actually said. I shall make some progress.

[Stewart Malcolm McDonald]

Will the Minister give way?

[Mr Ellwood]

Let me finish this part of my speech, then I shall come back to the hon. Gentleman. I am surprised by the way interventions are being made, because I am going through a series of acknowledgements of where things have gone wrong, another example of which is the challenge of flexing—the spending of future defence budgets today—which should be the exception, not the norm. CASD is a £31 billion programme and it has been necessary to bring forward some of that spending, which is why the budget has been increased by £300 million this year.

[Stewart Malcolm McDonald]

On the equipment plan, the Minister is right to say that the £20 billion black hole is the upper end of the estimate. He talked about taking that seriously, so what will it be this time next year?

[Mr Ellwood]

We have only just completed the budget for 2017-18, and I should be clear that we have yet to embark on the annual spending round for next year. Perhaps this differs from other Departments because we have an opportunity to make a case for additional spending. We have the opportunity to make the case for a defence posture and to say what is appropriate for Britain. I cannot answer the hon. Gentleman’s point at the moment, but the purpose of this entire process is for us, hopefully with the House’s support, to make the case to the Treasury and to the Prime Minister. That is what the modernisation programme is all about.