Ministry of Defence

Debate between Tobias Ellwood and Lord Coaker

Monday 26th February 2018 Commons Chamber

[Vernon Coaker (Gedling) (Lab)]

I want, first, to say something about spending and then to say a bit more about some of the points that can be made from the actual estimates. I think that that would help the defence debate. I will refer to historical defence spending but, whatever the rights and wrongs of that argument, let me say this: there is no disguising the fact that this country is not spending enough on the defence and security of the realm. I have said that before and I will say it again. That is the frank reality. That is the truth. That point has been heard—loud and clear.

My advice to the Minister is that he and the Defence Secretary use the power of this Parliament’s voice to go to the Prime Minister and tell her that we, the elected representatives, by and large do not think that we are spending enough on the defence and security of the country. As the Chair of the Defence Committee said, it is no good generals, admirals, national security people or whoever is responsible telling secret meetings that there is a real problem, and then, in three weeks’ or three months’ time, trying to tell the British public that £x million or £x billion more is needed and expecting them just to click their fingers on the basis of, “If you only knew what we knew.” It is not good enough and it is not satisfactory.

I have said at many meetings that the whole of Government need to shift their attitude and be clear what we are talking about. My hon. Friend the Member for North Durham (Mr Jones) will make this point in a different way. The tables are available from the House of Commons Library. Hon. Members can go back to when they want. One paper goes back to 1956, showing the percentage of GDP spent on defence at 6%. It is now at 2%. We can see the ups and downs within that time but, as my hon. Friend pointed out, the table is clear.

Let me give Members one stark reality. The out-turn figure for the defence budget in 2009-10 was £45 billion at 2016-17 prices. These are not my figures; they are the Library’s. If the Government think that they are wrong, they should tell the Library. The 2016-17 out-turn figures, at 2016-17 prices, were just over £35 billion. There are some notes at the bottom which, quite frankly, I do not properly understand: they talk about changes in accounting practices, and counting this or counting that. However, there can be no doubt that it is a huge reduction. I totally agree with the Chair of the Defence Committee that we are now in a position where we all need to say that more should be spent and more has to be spent. The drop in the figures in that table is frankly astonishing.

Let me ask a couple of questions of the Minister that I really want answered. One of the big things that came out of the defence debate that we had a few weeks ago was that the National Security Adviser said that anything he found—it did not matter what it was—had to be fiscally neutral. The Chair of the Defence Committee said, and I agree, that the state-on-state threats are much greater and more intensified than they were. But apparently that does not matter: it has to be fiscally neutral. Can I ask the Minister a direct question? If the modernising defence programme says that the Government should be spending billions of pounds more to secure the defence of this country, is that whole programme predicated on a fiscally neutral position, or is it predicated on the Government funding what their modernising defence programme tells them?

As the Chair of the Defence Committee said, the defence threats are not reducing but intensifying. It is not acceptable to me, or, I believe, to this House, to say that as we are now facing a greater state-on-state threat because the terrorist threat is apparently not quite as big as it was, we will take some money from this budget and move it to that budget. That is not good enough, because we do not know what will happen in three, four, five or six years’ time. We cannot take money from a capability that is not necessarily needed quite as much at this time in order to pay for something else. It is the methodology of madness.

[Mr Ellwood]

The hon. Gentleman will perhaps be surprised by how much I will say in my speech that—I hope—he agrees with, as I agree with him. The capability review was fiscally neutral, and we found that unacceptable. That was the first thing that the Secretary of State dealt with, perhaps breaking the trend that my right hon. Friend the Chair of the Defence Committee suggested was the case. Let me make it very clear that the study that we are doing now is not fiscally neutral, but we do have to decide what our defence posture is and how much it will cost.

[Vernon Coaker]

There we go—that is the power of Parliament. That is the point I am making. We had the debate before and this was fiscally neutral. The original review—the national security and defence capability review, or whatever it was—was not set up by accident; the Government set it up, and defence was included in it. Parliament said that that was not acceptable, and the Government responded and took it out. We then said that it was not acceptable for that review to be fiscally neutral, and now the Government are saying that it will not be. Of course no one is saying that we should buy chariots or whatever—what we have has to be relevant to the needs that we face. Before, the process was budget-driven: it was a case of having whatever it needed to be in order to meet the budget requirement.

It is going to be difficult for the Government to do this when, for example, we are told today that, even in their response to the Select Committee’s report on the F-35 programme, they will not put a figure on what one F-35 is going to cost. Then the Government say, “We’re buying 138 F-35s—that is the current plan—and 48 will be F-35Bs, but we’re not sure what variant the other 90 are going to be.” How can the Government talk about being fiscally neutral in their plans when they could not say to the Defence Committee a couple of months ago what the cost of the F-35 is and they cannot tell us in their response published today either?

[Vernon Coaker]

I completely agree with my hon. Friend. That is the point of the debate on estimates days. For the Minister to be able to say that we will have the capabilities that we need to meet the threats that we will face, we need to be able to say how much those capabilities are going to cost. My hon. Friend raised the issue of frigates; I am using the example of the F-35s. Cannot the Minister go back to the people who plan this and say, “We need some detail on these costs. Otherwise, how can we project forward what the equipment plan or any other plan is going to cost us?”

[Mr Ellwood]

The hon. Gentleman answers his own question in a way. He asked for, and supports, a fiscally open defence modernisation programme. That will pose the question as to whether we want A variants or B variants of the F-35s. The study needs to be done. On the individual cost, he knows from his own experience that it will vary, as the cost of prototypes does. There was not a unit cost for the F-16 because it was a prototype. It is very difficult to pinpoint the exact cost because the life cycles, the upgrades and the weapons systems that would be put on board vary. That is why we cannot provide the exact figure that he is seeking.

[Vernon Coaker]

I will leave it there, but the Government need to have a better idea, and make it public to the Select Committee and Parliament, of the individual costs. I say gently to the Minister that, otherwise, in a year’s time or two years’ time, he will find himself in exactly the same place that the Government find themselves now, where the National Audit Office is pointing to various gaps in the affordability of the equipment programme.

Let me give another example of where the Government need to be clearer with regard to their estimates. I again say this as something that the Minister and the Government should be saying to the Treasury and to the Prime Minister. The hon. Member for Belfast East (Gavin Robinson) mentioned this point. As the Minister knows, the Government have had to bring forward £300 million to pay for some more up-front costs with regard to the deterrent programme. When they were asked where that money has been taken from, there was a very vague answer, to put it mildly. In essence, therefore, it is an IOU for future programmes. I think that between 2006 and 2007—certainly in the last few years of the Labour Government—where there was an up-front cost that perhaps needed to be taken from future programmes, the Treasury came forward with an uplift to the defence budget to pay for it. That then gave some certainty to future programmes.

Because the Treasury has not uplifted the Ministry of Defence figure by that £300 million, there is already a potential £300 million gap in the future—next year or the year after. I say this to the Government, again trying to be helpful: the Ministry of Defence should go to No. 10 and say, “We believe that where there are additional costs with regard to our deterrent programme that were unforeseen, or there was a growth in those costs, the Treasury should fund that uplift in costs, as was previous practice”—for example, the £300 million. I use that as just one example.

--- Later in debate ---

[Mr Ellwood]

We have a programme—it is not fiscally neutral, as the last study was. This will allow us to make the changes and the recommendations that we need to take forward. I hope that the right hon. Gentleman will be able to get behind that, in order to make sure we can provide the service and the changes that we need to make, and which our armed forces deserve.

[Vernon Coaker]

What the Minister has just said is very important. Will he confirm what he just said: this modernisation of defence programme is not fiscally neutral?

[Mr Ellwood]

I can say it again and I think I am going to say it a bit later, because it is in my speech: I am happy to confirm that it is not fiscally neutral. That is exactly why we are doing this. I am not saying this just because the Defence Secretary is in his place, but the first thing he recognised was the fact that the capability review was fiscally neutral and it was prohibiting us. We saw a lot of the stuff that came out in the media and so forth. The challenges that that would have imposed on our armed forces were exactly why there was a requirement to look in more detail at what our armed forces are doing. We now have that opportunity and we have to make the case as to what changes we need, what our defence posture is and how we move forward—