Defence Spending

Part of Business of the House – in the House of Commons at 3:40 pm on 19th June 2014.

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Photo of Hugh Bayley Hugh Bayley NATO Parliamentary Assembly UK Delegation, NATO Parliamentary Assembly (President) 3:40 pm, 19th June 2014

The hon. Gentleman makes a good point, with which I agree, in relation to the Falklands. I certainly agree that one should not pluck a figure out of the air and say, “This is the target.” We need to look at the security risks we face and then at how we, perhaps on our own in certain circumstances but more usually in combination with allies, would deploy military force to counter those risks.

Are we spending enough? In the early 1990s, when I was first elected to this House, we spent considerably more on defence—4.2% on average between 1990 and 1994. It is perfectly possible for a Government, with all the pressures for public expenditure in a wide range of important and necessary fields, to spend more than we currently do if they believe that the security risks demand it. Of course, security risks constantly change. The question is whether we and our allies are spending enough, given the security environment that we now face. It is important to talk also about our NATO allies because, through article 5 of the Washington treaty, we have made a fundamental commitment: if we are attacked, they come to our defence, and if any of them are attacked, we come to their defence.

I am certain that defence spending should be on the agenda at the NATO summit in September. In the debate on the Queen’s Speech, I discussed Russia’s annexation of Crimea, its destabilisation of eastern Ukraine and President Putin’s threat to other countries in the neighbourhood with Russian-speaking minorities—the Baltic states and Poland—that he reserves the right to intervene if he in the Kremlin believes that the interests of those Russian speakers are under threat. The action in Ukraine follows the war between Russia and Georgia and, to my mind, tells us that a pattern of action is being established. A Russian foreign policy is being laid down that reserves to Russia the right to intervene and take territory from neighbouring sovereign states if Russia believes that it is in its interests so to do.

I believe that President Putin is testing us. He is biting off a bit of territory and seeing how we respond—whether he can go further or whether he needs to back-pedal a bit. As an alliance, we have to strengthen our position so that we deter further adventurous actions by Russia or anybody else.

It is 25 years since the fall of the Berlin wall. During that period, the west has put out the hand of friendship to Russia, helping it to modernise its economy, build stock exchanges and join the World Trade Organisation. As far as we have been able to, we have provided reassurance to Russia that we do not see it any longer as posing a military threat to us elsewhere in Europe. We have to reassess that now. We have to ask why President Putin feels that he can with impunity occupy the territory of neighbouring states. It is partly because his financial means are growing as a result of a petro-fuelled economy and partly because some European countries are not responding as robustly as they otherwise would, as they are too dependent on Russia for oil and gas. Europe as a whole, through the European Union, needs to address that by improving the diversity of our sources of energy.

President Putin may also feel that way because the United States has signalled that it is rebalancing its defence posture to pay more attention to the Pacific—it needs to, as there are real risks there, but the implication is less attention to Europe. There are also the defence cuts that so many alliance countries, including ours, have made since the banking crisis in the late noughties. Putin has also probably recognised a decline in public appetite or support for military action in many alliance countries.

Since 2008, Russia’s defence spending has increased by more than 10% each year—more than 50% over the five-year period. As we heard from the hon. Member for Basildon and Billericay, China is significantly increasing its real-terms defence spending too. Over the same period, defence spending by NATO’s European allies has been cut by almost 10%. According to the UK MOD defence budget plans, the departmental expenditure limit has fallen from £34.2 billion in 2010-11 to £30.7 billion in 2015-16—a fall of 8.2%. I asked the Library to deliver figures about defence expenditure rather than budgets, and those figures show a rather greater reduction. According to the public expenditure statistical analysis, our defence spending has fallen in real terms, at 2012-13 prices, from £39.1 billion in 2009-10 to a projected £30.7 billion in 2015-16—a fall of just over 18%.

It is absolutely essential that defence spending is on the agenda for the NATO summit. It is also essential that the Government give a commitment before the summit not only that our spending is at 2% but that it will remain at 2%. As some Members have pointed out, far too many of our allies spend considerably less than 2%. We need to persuade them to spend more, but we are in a weak position to do so if we are cutting our own expenditure. We would be in a much stronger position if we said: “We have reassessed the risks we face. We in the UK will spend more, particularly as a growth dividend enables the Government to spend more, and we expect others in Europe to do the same.”