PARLIAMENTARY DEBATE
NATO Spending Target - 30 January 2017 (Commons/Commons Chamber)

At the Wales summit, NATO agreed that security depends on both how much we spend and how we spend it. All 28 allies committed to meeting the defence investment pledge. The United Kingdom already meets NATO’s spending targets, and will continue to do so for the rest of this decade. I regularly encourage all allies similarly to meet this commitment.

It is right for all NATO members to meet the 2% spending commitment which we make sacrifices here to meet, but in the course of his discussions on spending and NATO deployments, has my right hon. Friend met anyone who believes that deploying troops to a NATO ally’s territory is escalatory?

The battalions that NATO is deploying to the Baltic states and Poland are combat-ready forces, but they are defensive in nature, and constitute a proportionate response to deter Russian aggression in the region. The only people who believe this deployment to be escalatory are President Putin and the leader of the Labour party. It is extraordinary that the official Leader of the Opposition is not prepared to back the deployment of British troops in Europe, but now favours some kind of demilitarised zone.

Discussions are taking place in the European Union about an EU defence system. What steps is my right hon. Friend taking to ensure that commitments on the part of our European allies to this new so-called EU army do not contradict commitments to spending 2% of GDP on defence?

There is no agreement in the EU on the proposal for an EU army. We continue to make clear that nothing should undermine NATO, which remains the cornerstone of European defence, and we continue to press for closer co-operation between the EU and NATO. It is a fact, however, that 18 of the 22 EU members of NATO do not spend 2% of their GDP, and have much more to do to enable NATO to face the threats that confront it.

The Prime Minister played a blinder last week with the President of the United States in stiffening his sinews with regard to NATO, but President Trump’s vacillation in that regard over the last few weeks clearly exposes a weakness in NATO in respect of the many countries which do not pay that 2%. May I urge my right hon. Friend to make every effort that he can to ensure that those countries understand that we cannot always rely on the United States of America?

There we agree with President Trump. Since making the defence investment pledge, the majority of allies have increased their spending in real terms, but it is still too low: 19 of the NATO 28 spend less than 1.5%, and five NATO members—by no means the poorest—do not even spend 1%. We will continue, with the United States, to encourage all allies to meet those spending commitments.

As well as encouraging our NATO allies to maintain the spending of 2% of GDP on defence, will my right hon. Friend ensure that they do not achieve the 2% by including extraneous items such as pensions and other administration costs, rather than investing in frontline capability?

The expenditure that NATO classifies as meeting or not meeting the 2% is something for NATO to judge against its own guidelines. I note that our own Defence Committee commended the Government’s commitment to UK defence and found that our accounting criteria fell firmly within existing NATO guidelines, but ultimately, as I have said, this is a matter for NATO to judge.

Since the Wales summit, 22 NATO countries have increased their defence spending in real terms, and 20 of them have increased it as a percentage of GDP. The number of allies spending 20% of their overall defence expenditure on equipment modernisation has also risen from eight to 10. Is the real risk to NATO not, in fact, defence spending, but a move away from transatlantic solidarity, which the present President is in danger of taking forward?

Of course we welcome the increases in defence spending that have taken place—the baton is moving in the right direction—but I hope the hon. Lady agrees that a number of countries, including some that are quite wealthy, are still a long way from meeting the 2% target, and, in some cases, the 20% target as well. As for her latter point, I agree with her: this is a north Atlantic alliance, and it is extremely important for all of us to continue to assure the United States that that alliance is as much in the interests of the United States as it is in our interests here in Europe.

I think we should hear from a Lancashire knight: Sir David Crausby.

Now that the United States of America has clearly become a less stable and reliable NATO partner, how pragmatic is the 2% spending target, and what consideration has the Secretary of State given to allocating more time for European defence, or is European defence simply not fashionable any more?

So far as our partnership with the United States is concerned, it is the broadest, deepest and most advanced defence partnership in the world, and my aim is to continue to strengthen it with the new Administration, particularly in the shared programmes we have on the joint strike fighter aircraft and in the reinstatement of our maritime patrol aircraft capability.

So far as European defence is concerned, I believe that the President’s remarks during the campaign and subsequently are a wake-up call to all of us in Europe to make sure that when we make these commitments, we honour them.

I am sure the Secretary of State meant graciously to congratulate the hon. Member for Bolton North East (Sir David Crausby) upon his knighthood, but as he did not, I do so on his behalf.

The National Audit Office reports that the procurement budget will reach its peak in 2020-23, at a time when massive and vital projects such as the F-35, Ajax and the Type 26 and 31 programmes will reach their peak. Our NATO partners such as the United States have a much more thorough oversight of procurement projects, something that can be undertaken here only by the Defence Committee or the Single Source Regulations Office. What plans does the Secretary of State have to increase the oversight of these massive projects, to ensure that we not only meet the 2% GDP target, but our capability is delivered on time, on budget and—

I think we have got the general drift, and we are deeply obliged to the hon. Gentleman.

The hon. Gentleman knows that we are increasing the equipment budget with a programme of £180 billion of spending over the next 10 years, and we have taken a number of steps to improve the delivery of that programme to ensure that, as he says, these major projects are delivered on time and to budget. We have also, of course, established the SSRO to ensure we get best value for money for the taxpayer.

Despite the Government’s huffing and puffing, it is now very clear that their commitment to spend 2% of GDP on defence is more apparent than real. The Government are only able to say that they are achieving the 2% goal because they are including areas such as retired MOD civilian personnel pensions in their calculations, and my question is quite simple: will the Secretary of State instead commit to using the same method of calculation as Labour did at 2010?

On the return we file to NATO, I have already told the House that it is for NATO to decide whether or not that expenditure is properly allocated, and the allocations we have made have been endorsed by a Select Committee of this House. Let me remind the House that our defence expenditure this year is £35 billion; next year it will be £36 billion, the following year £37 billion, and in the last year of this Parliament, £38 billion. It goes up every year.

The Government are certainly not breaking any NATO rules in calculating the 2%, but may I remind Ministers and hon. Members that 2% is a minimum? It is not a target, and we used to spend much more than 2% in the cold war years, as recently as the 1980s. Does the Secretary of State agree that even if all our NATO European allies were to meet the 2% pledge as a minimum, we would still be unable to deter an aggressive Russia without the wholehearted involvement of the United States, which is why the Prime Minister’s visit to President Trump was so absolutely important?

I had been hoping over the last few days to find something on which my right hon. Friend and I can agree, and we have now done so, because I absolutely endorse both legs of his proposition. The 2% is a minimum, and we comfortably exceed it at the moment, but it is important that other countries meet it, and, overall, it is important that the alliance continues to improve its investment.

On Friday, the National Audit Office placed a serious question mark against the Government’s 2% commitment. Its report revealed that in order to fulfil the defence equipment plan following the collapse of the pound post-Brexit, the Ministry of Defence will have to use all its £11 billion contingency fund and make a further £6 billion of savings in defence spending across the board. Given that Trident is ring-fenced, will the Secretary of State tell the country whether it will be hard-pressed defence personnel and our conventional capabilities that will bear the brunt of those cuts?

No. We have always been able to maintain conventional and nuclear forces in the past. The hon. Gentleman is right to suggest that the scale and success of our equipment programme depends on our securing and releasing the efficiencies to which we committed at the time of the strategic defence review, and that work is now in hand.

The National Audit Office report cast further doubt on the Type 26 programme:

“Major changes to the requirement for the Type 26 Global Combat Ship mean that costings for this…will be unclear until 2018.”

With an ageing fleet in desperate need of renewal, a looming budgetary crisis and the uncertainty caused by Brexit, cuts to numbers, and delays, how does the Secretary of State intend to make good on the promise to maintain 19 destroyers and frigates in the Royal Navy? For how much longer does he believe that the Royal Navy can respond to global threats with its current fleet?

We set out our commitment to the size of the fleet in the strategic defence review. I am surprised that the hon. Gentleman is so concerned about the budget for the Type 26 frigate, which is designed to protect the deterrent that he does not want to keep; that seems an odd project to be worried about. The terms of that contract have yet to be finalised, but I can assure him that the expansion of the Royal Navy is fully funded.