Defence: 2.5% GDP Spending Commitment

Question

14:47:00

Asked by

To ask His Majesty’s Government, further to the remarks by Lord Coaker on 14 November (HL Deb col 1927), whether they are planning the fiscal event next spring which is to set the pathway to spending 2.5 per cent of gross domestic product on defence to take place before they publish the Strategic Defence Review.

My Lords, we remain committed to setting out a road map for defence spending to reach 2.5% of GDP. The strategic defence review is expected to complete next spring. We will set out the pathway to spending 2.5% at a future fiscal event.

I thank the noble Lord, and certainly, we have previously been told that the SDR will spell out what defence needs and that a spring fiscal event will confirm how and when we are going to pay for it. In a Written Statement yesterday, the Chancellor implied that there will not now be a spring fiscal event. Apparently, the OBR will publish in March an economic and fiscal forecast, to which the Chancellor will respond with a parliamentary Statement. This does not seem to be the same as a spending review. We need to cut through this fog of confusion. May I ask the Minister—I am very happy if he wants to double-check the position with the Treasury—will the forecast and parliamentary Statement to which I referred clarify when the 2.5% of GDP spend on defence will apply? If not, what will clarify it, and when?

I thank the noble Baroness for her Question. Of course, I always discuss with the Treasury questions asked by noble Lords and Baronesses. The position remains exactly the same. The defence review will be published, it will lay out the threats we face, and at a future fiscal event the Government will then determine the pathway to spending 2.5%. This is our real commitment.

My Lords, there is a suggestion that NATO, at its summit in The Hague next June, is going to look at a 3% target. Are His Majesty’s Government willing to think about this? If not, are they going to reject what might seem a very necessary change in the light of the global situation?

I thank the noble Baroness for her question. We have been very clear about NATO. Irrespective of the outcome of the American presidential election, European countries would have had to spend more on defence. As a first step towards that, all NATO countries need to meet the 2% target, which 23 out of 32 currently do. Our next step is to reach 2.5% and to set a pathway towards that. That will result in billions of pounds of this country’s money, as well as multi-billions of pounds across Europe, being spent on defence. That is the first step we need to take.

My Lords, arguably, one of the most difficult tasks of government is to determine the level of expenditure and therefore capability needed to reduce external threats to the country to an acceptable level of risk or tolerance. Therefore, how can it be right or logical to predetermine that 2.5% of GDP is the appropriate level of expenditure needed to achieve tolerable security? Does the Minister not agree that it is more sensible to remain open-minded as to what the level of resources required will be until after the SDSR has reported and the true risks to the nation are better understood?

I thank the noble and gallant Lord his question. He will know that one of the parameters of my noble friend Lord Robertson’s defence review is to look at the threats and at the capabilities needed within the envelope of 2.5%. Any country would have to determine what it believes it can afford and is necessary. The defence review will come forward with the threat assessment, and then it will be for the Government to determine, with the defence panel, how we meet those threats going forward.

My Lords, I have a high regard for the Minister—that may damn his career—and he will know that I was not entirely supportive of the previous Government’s defence spending. However, the time is now: the war is raging in Ukraine and, as he knows, it is getting worse and worse. Furthermore, as was just pointed out, the arbitrary figure of 2.5% of GDP is not nearly enough. We need to prioritise defence spending and to really up it—perhaps double it, for goodness’ sake—to where we were back in the Cold War, when we held the deterrent to keep Russia at bay.

Let us be clear: there is no question of the deterrent not being renewed. This is the problem we have: we have heard the figure of 3%, and now the noble Lord seems to be suggesting 5%. I know that he is committed to defence, as we all are, but there is a question about how much we spend on it. This Government have made a commitment to setting a pathway to 2.5%. In these debates, we should also recognise the huge contribution our country has made to defending peace and democracy in Ukraine, under both the previous Government—the noble Baroness, Lady Goldie, and other former Ministers—and this Government. Sometimes, as well as asking why we do not spend more, we should also recognise what the previous Government did and what this Government are doing for Ukraine. That gives a bit of perspective.

My Lords, does the Minister agree that when we rearmed in the 1950s, we deterred aggression and avoided conflict?

I absolutely agree with the point about deterrence, and I have been making it in various debates. The noble Baroness, Lady Goldie, has been present at those debates, and the noble Lord, Lord Dannatt, asked me about this during the previous Urgent Question we had on defence. We need to re-establish deterrence. We need people to know that there are lines which, if crossed, will result in consequences. Perhaps we have not given the priority to deterrence that we should have, but the noble Earl is right that it must play an appropriate part in future. Countries know that, with our allies, we stand up for certain things and that if those lines are crossed, there will be consequences.

My Lords, I refer to my interests as set out in the register, as chair of the National Preparedness Commission. Do we not have to look at defence holistically? It has to be a whole-of-society response that includes the resilience of the nation to all sorts of attacks and measures that undermine our future. Unfortunately, that is about the scale of not merely of our Armed Forces but our investment in other resources to ensure that we are resilient. The reality is that the 2.5% figure is probably not enough just for conventional forces, let alone for that whole-of-society resilience. I hope the Minister is considering that and will discuss it with his Treasury colleagues.

I thank my noble friend Lord Harris for his question. It is not just me who is considering that; the whole of government is considering the need for homeland resilience. Indeed, my noble friend has asked me about this issue on a number of occasions. Part of the remit of the defence review is to look at what we should do about homeland resilience; that is an important step forward. What do we do to prepare the population for the threats we may face in future? What about hybrid warfare? What about, as we have seen in Ukraine, attacks on critical national infrastructure? What about some of the other data breaches we have seen? These are wholly important issues to which we have perhaps not given the priority needed. My noble friend is absolutely right, and the defence review is looking at this. Homeland resilience will have to be a proper part of how we take our defence and security further in future.

My Lords, do the Government accept that there is a practical limit to the amount of additional funds that can be spent in one particular financial year? Do they agree that 3% is an amount which could be spent, and should be, in view of the situation in which we now find ourselves?

The noble and gallant Lord, Lord Craig, makes the point about the additional money that he and other noble Lords believe is required. The Government’s commitment is to set a pathway to 2.5%. I remind the noble and gallant Lord that, on top of the money we have already provided for next year, we have an additional £3 billion in the Budget next year. We are setting a pathway to 2.5%. That is why the Government recognise the need to spend more on defence and security, and that is what we will do.

My Lords, I declare an interest as a serving Army Reserve officer. Army cadet forces are vital to social mobility and community cohesion. I implore the Minister to speak with colleagues in the Department for Education about reversing the 50% cuts to the Army cadet force budget.

First, I congratulate the noble Lord on his service and all that he has done. He makes a good point about the importance of the cadet service. We all recognise the importance of cadets and their valuable contribution to social mobility, social cohesion and the rest. Certainly, I will reflect on the importance of that and see where we go to in discussions with government colleagues.

My Lords, if the strategic defence review recommends and the Government accept that we need to spend more on defence because of the deteriorating international environment, can the Minister assure us that the additional spending will be taken out of additional taxation and not out of cuts to domestic programmes such as education, prisons and local government, and that the Government will come clean to the public that this is what they are doing and therefore, the additional taxation will be necessary?

I do not think that I am going to answer that. We have no plans with respect to additional taxation. I am trying to sound like my right honourable friend the Chancellor now. On the serious point the noble Lord makes, the defence review will come forward and will put forward the threats we face as a nation and how best to meet them. We have set out the Government’s expenditure plans. I gently say to noble Lords who talk about the need for increased spending that it is important that we spend it on the right things, the things that will make a difference. Waiting for the defence review for us to determine how we best meet those threats is a sensible policy option.