The Ministry of Defence is undertaking its annual budget-setting process, in which I am personally engaged. I am increasingly confident that we will achieve a sustainable and balanced defence budget for the first time in a decade or more, and I hope to be in a position to make an announcement to the House shortly.
I thank my right hon. Friend for that answer and for the good news that we will be balancing the budget. Will he say a little more about research and development co-operation with France on the unmanned fighter drone and on other matters? How will that affect our ability to balance the budget?
I am grateful to my hon. Friend for his question. As he will know, I was with the Prime Minister in Paris last Friday, when we confirmed that we will take forward the assessment phase of the medium altitude long endurance unmanned aerial vehicle with the French. Clearly, we can co-operate on many areas with France, a country with a broadly similar industrial base and defence budget to our own. Such co-operation will be to the benefit of both countries, and I intend to explore all those opportunities.
The military action over Libya showed that among the European members of NATO there was a shortage of precision guided missiles, of air-to-air refuelling capacity and of airborne drones to identify targets. Clearly we need to acquire more capacity in those fields, so how sure is the Secretary of State that his budget will enable the UK to play its part in building a stronger European capacity?
The hon. Gentleman correctly identifies one of the lessons from the Libya campaign. Much of what came out of that campaign was positive, but clearly some shortfalls were identified. I must say that the finger must point primarily at those European members of NATO that fail to spend the target 2% of their GDP on defence. We will be looking to them to contribute the additional resources required to make good the shortfalls.
I am delighted to hear that my right hon. Friend is close to balancing the books. Does that mean that we can look forward to an early set of accounts that are not qualified by the auditors, so that we can have confidence in what the books say.
Speaking candidly, I can say to my right hon. Friend that it will be a number of years yet, as the Department has made clear, before it is able to get an unqualified set of accounts. As Labour Members will know, that is largely due to a legacy problem associated with MOD inventory and the large quantity of stock items held in a form that the National Audit Office is not able adequately to audit. A solution is being put in place—a new IT system will resolve this problem over the next couple of years—and it should then be possible to get unqualified accounts.
Scottish taxpayers contribute more than £3 billion a year to the MOD, but according to its own statistics, nearly one third of that is not spent in Scotland. Why is that?
The last time I checked, most of the people we were needing to defend the UK against were not in Scotland. I think that Scottish taxpayers, like taxpayers in the rest of the UK, would expect that we deploy our military forces and structure our military posture to deal with the threats that we are facing.