Defence Programmes Developments

Statement

The following Statement was made in the House of Commons on Wednesday 20 November.

“I have now been Secretary of State for four months, and it is an honour and a privilege to have this job. Every day I meet staff from the military, the Civil Service and industry who are totally inspiring and dedicated to keeping this country safe, often unseen and unheard by us and by the public. We are proud of their professionalism and thank them for everything that they do.

This is a new Government getting on with delivering for defence. We have stepped up support for Ukraine, signed the landmark Trinity House agreement with Germany, and given forces personnel the largest pay rise in more than 20 years. We have confirmed defence as a priority sector as part of the Government’s industrial strategy, and this week we secured the Second Reading of the Armed Forces Commissioner Bill to improve service life. Labour is the party of defence, and we will make Britain better defended.

We know that these are serious times. We have war in Europe, conflict in the Middle East and increasing global threats. Technology is rapidly changing the nature of warfare, as we see right now in Ukraine. Before the election, we knew that there were serious problems with defence—one previous Conservative Defence Secretary told the House that our Armed Forces have been ‘hollowed out and underfunded’ over the last 14 years.

However, as I have told the House since taking office, the problems were even worse than we thought. The inheritance was dire: the state of the finances and the forces was often hidden from Parliament, with billion-pound black holes in defence plans, taxpayers’ funds being wasted, and military morale down to record lows. That is why we are taking swift action to inject investment, get a grip on Ministry of Defence budgets and kick-start much-needed reforms to start fixing the foundations for UK defence. I will update the House on what we are doing.

First, I will mention investment. In July, the Chancellor exposed the £22 billion black hole at the heart of the Government’s plans. There were hundreds of unfunded pressures this year and into the future. The first duty of the Government is to keep this country safe, which is why the Chancellor announced in the Budget that defence will receive a boost next year of nearly £3 billion to start to fix the foundations for our forces. The Chancellor also told the House that we will set a clear path to 2.5% of GDP on defence, which will be fully funded, unlike the Conservatives’ unfunded pre-election gimmick, which was never built into government finances. This is not just about how much we spend on defence; it is how we spend that counts. That is why we are conducting a strategic defence review at pace to assess the threats we face and the capabilities we will need in the future. That is also why I have introduced tight financial controls on the department, including a £300 million reduction in planned consultancy spending. We are getting a grip on MoD budgets and investing in people and future technologies.

Secondly, I will mention kit and capabilities. For too long, our soldiers, sailors and aviators have been stuck with old, outdated equipment because Ministers would not make the difficult decommissioning decisions. As technology advances at pace, we must move faster towards the future so, with full backing from our service chiefs, I can confirm that six outdated military capabilities will be taken out of service. These decisions are set to save the MoD £150 million over the next two years and up to £500 million over five years—savings that will be retained in full in defence.

Alongside this Statement, I have made a Written Ministerial Statement outlining the detail of my decommissioning decisions. They include decisions to decommission HMS ‘Northumberland’, a frigate with structural damage that makes her simply uneconomical to repair; 46 Watchkeeper mark 1s, which are 14 year-old Army drones that technology has overtaken; and HMS ‘Albion’ and HMS ‘Bulwark’, landing ships effectively retired by previous Ministers but superficially kept on the books, at a cost of £9 million a year. They also include decisions to decommission 14 Chinooks, some more than 35 years old, which will be accelerated out of service; two Wave-class tankers, neither of which has been to sea for years; and 17 Puma helicopters, some of which have more than 50 years of flying. Their service will not be extended. I recognise that they will mean a lot to many who have sailed and flown in them during their deployments around the world. They have provided valuable capability over the years, but their work is done, and we must now look to the future. All current personnel will be redeployed or retrained; no one will be made redundant. As the First Sea Lord said about the retirements:

‘The threat is changing so we must have the self-confidence to make the changes required’.

Of course, we should be in no doubt that the future of our Royal Marines and its elite force will be reinforced in the SDR.

These are common-sense decisions that previous Governments failed to take. They will secure better value for money for the taxpayer and better outcomes for the military. They are all backed by the chiefs and taken in consultation with strategic defence reviewers. Allies have been informed, and we have constant dialogue with NATO. Those will not be the last difficult decisions that I will have to make, given the defence inheritance that we were left with, but they will help us to get a grip on the finances, and give us greater scope to renew our forces as we look towards the strategic defence review and spending 2.5% of GDP on defence. I thank the chiefs for their determination to work with me on this.

Thirdly, I will mention reform. Defence reform has been of little interest to recent Defence Secretaries—it does not make headlines or advance careers—but the way that defence works must change to deal with the increasing and diversifying threats. I recently launched the biggest reform programme in defence for 50 years to create a stronger UK defence centre, secure better value for money and better outcomes for our Armed Forces, and better implement the strategic defence review. Central to a reformed defence will be our new, fully fledged national armaments director, whose recruitment is under way. The Chief of the Defence Staff will oversee a new military strategic headquarters, operating from the end of 2024, where he will formally command the individual service chiefs for the first time. He will be central in prioritising investment and spending between the services. The Permanent Secretary will lead a leaner department with more policy muscle and influence. These reforms will ensure faster delivery, better integration and clearer accountability across defence to make our forces fit to fight in the future.

Finally, I will mention our people. This Government are putting defence people at the heart of our defence plans. We inherited a Conservative crisis in military recruitment and retention; targets have been missed every year for 14 years and morale is at a record low. We cannot fix those deep-set problems overnight, but Ministers are on a mission to lift military morale. We have awarded the forces the largest pay increase in more than 20 years, and I can announce that from April I am introducing a new £30,000 retention payment for a cohort of tri-service aircraft engineers who sign up for an additional three years of service. It will be open to around 5,000 personnel in total. From January, we have a new £8,000 retention payment for Army personnel who have served for four years. That will support 4,000 personnel a year for three years—12,000 troops in total.

I have set out where we were, and where we are going. We are in a new era of rising global tensions, and we need a new era for UK defence. To achieve that, the Government are investing £3 billion extra next year and setting a clear path to 2.5%. We are driving far-reaching reform and fixing the foundations for our Armed Forces to make Britain better defended, strong at home and secure abroad”.

16:31:00

My Lords, I pay tribute to the marvellous men and women in our Armed Forces, and the civilian cohort who support defence in such an extraordinary manner and help to keep our country safe. Sometimes, in our political badinage, we are inclined to forget that. I know that noble Lords entirely support what defence is doing in our name and for us. I also pay tribute to the Government’s clear resolve to continue supporting Ukraine. I know, again, that this enjoys universal support in the House. Prompted by the Statement, there are so many questions that I could ask that I am going to try to keep this simple. Looking at the recent antics of the Government, you might think that the pantomime season had arrived early: an embattled Prime Minister and his Chancellor telling business and farmers, “We’re on your side”, to be met with a chorus of, “Oh no you’re not”; an isolated Secretary State for Defra being told, “Look behind you” as the Prime Minister and his Chancellor hover above British farmers with a guillotine. On defence, the Government’s approach is clearly predicated on the premise that ignorance is bliss. Defence spend will rise to 2.5% of GDP, but we do not know when. Will that decision, when it is known, inform the strategic defence review? We do not know. Will the strategic defence review inform the fiscal imperative of pinning down a date for 2.5% of GDP? We do not know. What impact is the imposition of VAT on school fees going to have on our Armed Forces? We do not know. Is it going to impact on recruitment? We do not know. What do we know? We know that any significant question asked of the Government about capability—GCAP, the progress of AUKUS, the development of drones—is met with, “Wait for the strategic defence review report next year”. That response might be disappointing to inquisitive nuisances like me but, in fairness, it is a sustainable position if consistently adhered to by the Government—but it is not, because without awaiting any SDR outcome, the Defence Secretary announced in the other place last week that we are scrapping ships, including HMS “Albion” and HMS “Bulwark”, and helicopters. Given the Government’s steadfast fallback on the SDR to explain their reluctance to talk about anything, this is an odd aberration. Let me explain, however, what makes it even odder. Earlier this year Luke Pollard, now the Armed Forces Minister, said that HMS “Albion” and HMS “Bulwark”, “play a key role in the Royal Navy’s ability to project power and deploy Royal Marines at scale”. He even criticised the Conservatives for not ruling out the mothballing of the two amphibious assault ships, which he said in January “are important for the Royal Navy and should be retained”. He also said on Twitter in January—this has been reported to me, because I have nothing to do with Twitter—that: “Mothballing HMS Albion and HMS Bulwark when they still have a decade of planned active service ahead is bad for Plymouth and bad for the Royal Navy”. I put the following questions to the Minister—or should that be Prince Charming? He is certainly one of the more acceptable faces of the Government. If his honourable colleague Mr Pollard was so right in January, how is he so wrong now? If, as he identified, these ships are a classic illustration of a capability that is not going to be used every day but must be held in readiness, to what extent is the operational mobility of the Marines compromised by this decision? Does the Minister anticipate, ahead of the strategic defence review report, more precipitate announcements about assets being scrapped and decommissioned? Lastly and in particular, will he reassure the House that there are no plans to mothball either of the carriers?

My Lords, I do not plan to engage in any pantomime discussions, which we are getting perhaps because we are slightly close to Christmas, because it is important that we remember the significance of defence. Something that is appreciated, not just in your Lordships’ House and the other place but by our Armed Forces, is the extent to which the political parties are united in the tributes that we pay to them, and the fact that we recognise their commitment to our country. We also owe them a duty to ensure that defence expenditure means that the equipment for our Armed Forces is the best appropriate and that we are putting the right resources into defence. We have a strategic defence review where we understand that there is a cap. As the noble Baroness, Lady Goldie, said, we do not know at this point when the 2.5% is going to be introduced, so that is an uncertainty. We welcome the fact that the Secretary of State brought forward a Statement on defence programmes and that the Minister is in his place today to answer questions on it, because a lot of questions that require further probing. The Statement from the Secretary of State seemed to suggest that the answer to a lot of the questions from the noble Baroness, Lady Goldie, is, “We didn’t know the state of either the Budget or our Armed Forces when we took office”, and that is why the issues about decommissioning are being brought forward now. Could the Minister say whether the decommissioning of equipment is being done now because the Secretary of State has discovered that the time has come and in fact it would cost more to keep these ships and other pieces of kit operational? How much is the decommissioning going to cost? Has that been taken into consideration? Are the further pieces of equipment part of an ongoing review programme? It is important for us to understand what the Secretary of State and the chiefs are actually looking at. Beyond that, what scope is there for the Secretary of State, and the Minister of State in your Lordships’ House, to tell us what is planned for defence procurement? In the Statement, the Secretary of State made the repeated point that the Treasury has understood the importance of defence for growth. We agree, yet the Budget increased expenses for the defence industry, like every other business, because of employers’ national insurance. The Minister has reassured me, both in Grand Committee and in private discussion, that the national insurance increase will not impact on the cost of the Armed Forces. We accept that, and it is very welcome. However, presumably the defence industrial base will pay the increased national insurance costs. While the primes might be able to take that as relatively small change, is that true of the sub-primes? What impact will it have on the small and medium-sized enterprises so vital for the defence industry? I turn to something that could be either a vicious circle or a virtuous circle. If defence is indeed able to contribute to the growth of UK plc and we see our economy grow, that will, by definition, also help with defence expenditure if the 2.5% is part of a growing GDP. But if the defence sector and the economy as a whole go into decline—and there have been suggestions that the Budget might lead to a decline in our national GDP—what impact is that going to have on our defence expenditure? These are some clear questions that we need to understand. They are not intended to be unhelpful, but simply to ask whether we are really giving the support needed to the defence industrial base. Finally, one of the things we heard across the Chamber in discussions about the G20 and COP summits was the importance of internationalism. The Secretary of State mentioned the Trinity House agreement on British-German defence co-operation. What are we expecting in terms of a Lancaster House refresh? Also, what is His Majesty’s Government’s assessment of the reports in today’s Financial Times that France has begun to step back from its attempts to veto non-EU countries such as the UK being part of the European defence investment programme? That, presumably, will assist the UK in strengthening our defence relations not just with France but with the European Union.

I want to start by thanking the noble Baronesses, Lady Goldie and Lady Smith, for their comments and by reiterating that defence is an issue that unites us across this Chamber: we all want the best for our country and for our Armed Forces, and here there is no division between us. I also thank the noble Baronesses for their ongoing support in respect of Ukraine, just as we supported the previous Government when we were in opposition. Again, this House is united in that regard, and I am grateful that reiteration. I hope the House will bear with me while I also pay tribute to the noble Lord, Lord Levene, who gave his valedictory speech a few days ago, when I was unable to be in attendance. We all know of the noble Lord’s work on defence, and I want to put my personal thanks to him on record and to wish him well for the future. The noble Baronesses, Lady Goldie and Lady Smith, paid tribute to our Armed Forces across the globe and they were right to do so. Not everyone in the Chamber will agree with everything I will say today, but there is no division between us on our respect for our Armed Forces and the work they have done, are doing and will do. The noble Baroness, Lady Goldie, was particularly right to remind us of that, and perhaps we should start every debate by saying it, because I know that many members of the Armed Forces read such debates. The noble Baroness, Lady Goldie, mentioned the 2.5%. As I have said, the pathway to the 2.5% will be laid out at a future fiscal event in the spring. She asked about the sequencing with respect to the SDR. The SDR will come prior to the 2.5%. I hope that clarifies that point. The noble Baroness mentioned my honourable friend Luke Pollard MP, who campaigned hard for clarity on the landing platform docks to which she referred. He fully supports the Government’s publicising and making it clear that, following the mothballing introduced by the previous Government, neither ship had been to sea since 2023—indeed, HMS “Bulwark” had not since 2017. On current planning, neither ship was due to go to sea again before their planned out-of-service dates of 2033 and 2034. In a sense, the previous Government had effectively got rid of those two platforms themselves, while all this Government have done is to announce something that had already happened. I would also point out that, as the noble Baroness will know, we have three Bay- class landing ships, “Lyme Bay”, “Mounts Bay” and “Cardigan Bay”, and a further RFA “Argus”, which will do virtually the same for us as the two ships that have been decommissioned. As the defence review will no doubt point out—I see that my noble friend Lord Robertson has walked in—the Royal Marines will play a full and proper part in the future defence of this country, as they have done already this year without the use of those two landing platform docks. They have been in Australia, in Gaza and all over the world, conducting their various activities. As the noble Baroness says, we should be proud of the fact that they have done that—and they have done it with two landing platform docks mothballed in Plymouth. In answer to the noble Baroness, Lady Smith, what the Government are trying to do is to get rid of outdated equipment that is no longer being used. All of this has been backed by all the chiefs in the Ministry of Defence, who have supported every single thing laid out in these proposals. If noble Lords object to it, they are objecting to something the professionals have told us they support. They support the decommissioning of the landing platform docks and of HMS “Northumberland”, which is beyond repair. We are trying to accelerate the replacement of the Type 23 frigates with eight of the world’s most advanced, Type 26 anti-submarine ships. The Wave-class tankers are being got rid of because we do not need them any more. Instead of having two that were last at sea in 2017 and 2022, we will have four RFA Wave-class tankers that will provide the same commitment and resource to the Royal Navy as the two that are being decommissioned. I would have thought that was a sensible thing to do. We are getting rid of Watchkeeper because that system has been in service since 2010 and, according to all the military chiefs, is out of date. The Ukraine war has shown that we need to replace it with something else. The Chinook helicopters are going—14 out-of-date helicopters that have been in service for more than 35 years. They are to be replaced with new, state-of-the-art helicopters. The contract for the Pumas is not being extended and they will have to be renewed in due course. These pieces of equipment are all currently on the books, and we believe they can be decommissioned and that new equipment can replace them, so that the Armed Forces of this country have the modern equipment they need to prosecute the conflicts we send them to work in on our behalf. I would have thought that all noble Lords could support that. If we do not support such decommissioning, we will have equipment that is 50, 60 or even 80 years old. That is ridiculous. You have to move on and, at times, take difficult decisions because that is the way to ensure that we move forward. The noble Baroness, Lady Goldie, mentioned the continuity education allowance with respect to providing for the education of the military. The CEA will be increased to be consistent with the current policy of meeting the increase in VAT fees. She will know, as will the noble Baroness, Lady Smith, that, notwithstanding the defence review, the Government have made a clear commitment that the nuclear deterrent and AUKUS will be protected. There might be better ways of doing both, and we would always search for savings within them, but it will not be at the cost of the ability of those systems. The noble Baroness asked me about the carriers. The thing to point out for this country is that next year the “Prince of Wales” will lead a carrier strike group into the Indo-Pacific with our allies, with ships all around it, taking hard power from this nation with our alliances, to show that we support the international rules-based order, the rule of law and the freedom of navigation on the seas. That is where the carrier the “Prince Wales” will be next year, and I think that is something we should be singing about and talking about. Not only will that be demonstrating hard power, but defence diplomacy will go on all around the world to reassure our allies that this country, along with America and everyone else, stands up for the rules-based order that seems to be threatened by others who seek to undermine it. The noble Baroness, Lady Smith, asked about procurement. Defence procurement will be at the heart of everything we do. Noble Lords can see the point we are making about new equipment. We hope that much of it will be built within the UK, across the whole of the UK, benefiting all the regions and nations. On national insurance, the noble Baroness will also know—again to confirm the point I made—the Armed Forces will not pay or will not have a cost, though there may be accounting issues. Of course, national insurance will have an impact on other firms as it will for all firms. The defence equipment plan before us seeks to decommission equipment that we believe is out of date. New equipment can be better placed to meet the threats we face, and it is those new threats that we need to face: it is the wars of the future we need to fight, not the wars of the past.

16:51:00

My Lords, I wonder whether the chiefs would have been happy to accept these cuts, as the Minister says, if there had been 2.5% available now—it is against the amount of money that is available. In addition to the equipment that has been taken, there are serious shortfalls in personnel, particularly engineers. What steps are the Government taking to overcome these particular shortfalls?

That is a really good question. On the first point about spending, the noble and gallant Lord will know that, notwithstanding the amount in the budget—there is 2.3% at the moment, and we have laid out and talked about the pathway to 2.5%—whatever amount of money the defence chiefs have to spend, they will always want to spend it in the best possible way. We have discussed with them a way of doing that ensuring that we have the newest and best possible equipment available to our Armed Forces, and that at times will mean decommissioning older equipment. On the noble and gallant Lord’s second point, in terms of retention payments for aircraft engineers, as part of the Government's commitments to renew the nation’s contract with those who have served, eligible tri-service aircraft engineers will be given £30,000 when they sign up for an additional three years of service. From April 2025, this will be applicable to around 5,000 personnel in total. That is one practical way we are trying to deal with the specific point the noble and gallant Lord raised.

Can I press the noble Lord on the number of fast jets that are currently in service and are expected to be in service, say, over the next five years, and also on the number of fast jets pilots that we are training? In one constituency alone, the Vale of York, which I had the honour to represent for 13 years, we had at that time RAF Linton-on-Ouse, RAF Leeming, Dishforth airfield and Topcliffe airfield as well, so I hope he will give me some encouragement that we are going to be on track for a number of fast jets going forward.

We certainly will be purchasing a number of fast jets—the exact number will obviously be subject to debate, but we expect a number of F35Bs to be purchased. On the training of pilots, which the noble Baroness raised, the training and retention of pilots is something for which we have an ongoing review within the Ministry of Defence; we are looking at that very carefully, but she is right to raise that as an issue.

My Lords, a bigger reason for the number of Royal Fleet Auxiliary ships stuck alongside is not the age of the vessels but the absence of seafarers to staff them. Can the Minister update the House on the ongoing industrial action affecting the Royal Fleet Auxiliary, which is obviously having a significant impact on the Royal Marines and the Royal Navy?

I thank the noble Lord for raising the point about the industrial dispute affecting the Royal Fleet Auxiliary. The only thing I can say is that discussions are ongoing. We obviously hope it can be resolved to everyone’s satisfaction in due course.

My Lords, the Statement says that “difficult decisions” are required. Should those difficult decisions—or at least, difficult considerations—not include giving serious consideration as to whether we should continue a nuclear weapons programme? Philip Stephens, a contributing editor at the Financial Times wrote in a piece this week that the defence review, as currently constituted, is “a necessary start, but an inadequate one” to considering our defence policy. Stephens says in that article: “A brave government would also ask whether it is wise to spend so many billions on a nuclear system maintained by the US”. Is this a brave Government?

We are certainly a brave Government, but it has been a consistent policy of whatever Government have been in power to support the nuclear deterrent. The nuclear deterrent will continue; we will renew the nuclear deterrent. I just say to the noble Baroness, who is quite entitled to the opinion she holds, that I think it incumbent upon us to do that, given the threats we are seeing from President Putin—the irresponsible threats at the present time raise the prospect of it. Let us be clear about this: we support the nuclear deterrent, and we support its renewal. That is an important part of our defence.

I draw Members’ attention to my relevant registered interest as a member of the Thales advisory board. I offer some sympathy to the Government regarding their defence inheritance, which must appear to be an appalling mismatch between requirements and resources. When I was in the MoD, when we needed to save money, it often had to be found where savings could be made—that is, in money that was uncommitted—as opposed to where savings should be found, often on money that was committed on historic mistakes. Can the Minister therefore confirm that the process applied has been truly rigorous in respect of operational priorities? Within those priorities, the Minister mentioned the deletion of Watchkeeper. Did its deletion recognise the potential associated sensitivities to defence export sales in the Middle East, including sensitivities that involve GCAP? Secondly, the Statement mentions a “fully fledged national armaments director”. Can the Minister perhaps offer the House some insight into what is the defining element of this fully fledged national armaments director? Particularly, what will define his relationship with the defence industrial primes? Will it be a relationship that ensures that, going forward, defence capabilities are principally bought in the context of benefit to the taxpayer and defence as opposed to shareholders of defence industrial primes?

First, we recognised the sensitivities around the deletion of Watchkeeper and they were a consideration. In terms of operations, the decisions around decommissioning were made in a way that would not compromise operations. The chiefs were clear to us that operations would not be compromised by any of the decommissioning taking place. The point about the national armaments director is an extremely important one. The national armaments director is to give greater strength to the idea that we need to rebuild our arms industry and ensure that the stockpiles we have are of sufficient size to meet the threats of the future. In doing that, the relationship with the defence industry—whether the primes or the smaller companies—will be important. The important point is that it is not to be something that is in the interests of the shareholders but something that we need to discuss, which is that it is to be in the national interest and in the interests of our international alliances. That is what is important to us all. We have to have an armaments director which drives forward an arms industry which gives us the weapons and stockpiles we need. In answer to the point from the noble Baroness, Lady Smith, I have not seen the Financial Times article with respect to the European defence industrial strategy, but that is certainly something we have been discussing with our European friends.

My Lords, in concluding his remarks the Minister pointed to the need to be prepared for future threats. The United Kingdom has extensive infrastructure within the contiguous exclusive economic zone around these islands, be that oil and gas pipelines, gas and electricity interconnectors, or the vital undersea cables that are so important for the City and the two-thirds of financial services and professional business activity conducted outside London. Britain’s leading industry is very vulnerable. In view of the events last week in the Baltic and the fact that there are three warships around this possibly offending Chinese vessel down off the Skagerrak, and the continuing grey zone activity of Russian vessels around our coast and this vital infrastructure, is the Minister content that we have it adequately protected for the future and for today?

That is certainly one of the questions the defence review is looking at: how we protect underwater cables, pipelines, et cetera. We are considering the capability that we have to deal with that. I hope I can reassure the noble Lord. I was in Copenhagen last week, where we discussed with the Northern Group of states what more we could do together to protect underwater cables and work together. Indeed, without going into too much detail, we have conducted a number of operations together to try to protect and deter with respect to these particular cables. He will also know that there has been other activity around the world where we have also sought to defend those cables from those who would do us harm and undermine the ability of our industry, and that of others, to operate in the way that it should be able to.