Defence Expenditure (NATO Target) Bill

Prayers – in the House of Commons at 2:15 pm on 9 January 2015.

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Second Reading

Photo of Christopher Chope Christopher Chope Conservative, Christchurch 2:18, 9 January 2015

I beg to move, That the Bill be now read a Second time.

This is my third contribution today to the manifesto development of the Conservative party for the next general election, and this Bill was inspired by the Bill of Michael Moore to introduce a target of 0.7% of GDP for international development expenditure. It occurred to me that if the Government are in favour of that Bill, surely they must be in favour of a similar Bill on defence expenditure, in line with the communiqué from the NATO conference in Cardiff and what has been enunciated on numerous occasions by Defence Ministers from both the main parties. If NATO’s policy is that each country in NATO should spend a minimum of 2% of GDP on defence and we support that, why are we not prepared to incorporate it in statute?

The argument traditionally deployed against such a move is that the Exchequer should not fetter its own discretion, and therefore it would be unreasonable to have various areas of earmarked expenditure. As the Government have abandoned that principle in favour of having earmarked expenditure incorporated within statutory limits, as in the case of overseas aid, why not do the same in respect of defence expenditure? This is a straightforward proposition and, as far as possible, the drafting of this Bill is designed to mirror that in the similar Bill on overseas aid.

Photo of Philip Davies Philip Davies Conservative, Shipley

Given that it was supposedly so important that we introduced a 0.7% target because it was supposedly an international commitment made in 1970, does my hon. Friend agree that this international commitment on defence made in the 1990s should surely take precedence over the one made in 1970?

Photo of Christopher Chope Christopher Chope Conservative, Christchurch

My hon. Friend makes a compelling point, and I am sure it will find favour with the Government. If the Minister is going to say that he cannot do this because the Liberal Democrat minority do not support the NATO target, let him say it. In any event, I hope that the Conservative party will have no inhibitions about making clear in its next manifesto its commitment to spending in each year of the next Parliament—when it is the governing party—a minimum of 2% of GDP on defence.

Photo of Philip Davies Philip Davies Conservative, Shipley 2:22, 9 January 2015

I do not support the Bill, because I do not believe any spending should be hypothecated in the way my hon. Friend Mr Chope is seeking to do. I understand his motives for introducing the Bill, and I certainly think that all those people who trooped into the Lobby to vote for our 0.7% target on overseas aid because it was an international commitment, albeit one made in 1970, should—if they are so bothered about international commitments—all be trooping into the Lobby to support this Bill, too. I do not see why one is so important and the other one is not, and I shall be interested to find out why people should think that is so.

I do not believe that spending should by hypothecated, but the point I wish to make is this: if we look at the Office for Budget Responsibility forecasts for the next few years, we see that the spending of every Department as a proportion of GDP will decrease, apart from the spending on overseas aid. That applies to health, education and everything else. There is a 2% target for defence, but the OBR says that by the end of the next Parliament—unless my hon. Friend’s Bill is accepted—defence spending will be down to 1.5% of GDP. I do not believe in hypothecated spending, but that amount of money is far too low and the Government need to address the situation. If it takes my hon. Friend’s Bill to do it, fair enough, but I would rather we did not have any hypothecated spending at all.

Photo of Edward Leigh Edward Leigh Chair, Public Accounts Commission, Chair, Public Accounts Commission 2:23, 9 January 2015

I oppose this Bill. I know where my hon. Friend Mr Chope is coming from, but hypothecating the expenditure of a Department in legislation is economically illiterate. It makes no sense at all, and we cannot right one evil by creating two evils. Although I am strongly in favour of the 2% commitment on defence expenditure, the Treasury must approach the defence budget in the same way as it approaches all other budgets: we decide what we would like to do, we decide what we can afford to do and we live within our means. Whatever our views on international development, I am strongly in favour of spending on humanitarian aid and of many other aspects of our budget. However, while we are going to cut expenditure on Lincolnshire police by £3 million, and we cannot afford to have more than one patrol car operating in my 600 square mile constituency at night, it seems that, because of the growing economy, we can afford to increase international aid development by £1 billion. I cannot believe that that is the right way to run the economy.

I understand why my hon. Friend has introduced this Bill. He is drawing attention to an appalling hole into which we are digging ourselves. We must get out of it and proclaim the principle that we believe in defence spending, international aid and all the other good things that we want to do, but, as a Government, we must live within our means and spend what we can afford to spend.

Photo of Kerry McCarthy Kerry McCarthy Shadow Minister (Foreign and Commonwealth Affairs) 2:25, 9 January 2015

The UK already exceeds the 2% target for defence expenditure. At the moment, we are one of the very few countries that meets its target. Obviously, it was on the agenda at the NATO summit in Cardiff, at which the allies agreed to aim to move towards the existing NATO guidelines of spending 2% of GDP within a decade. They also agreed that those countries that were already spending the minimum of 2% would aim to continue to do so. That is the international framework. The matter is now back on the political agenda after the global economic crisis slightly knocked it off course, with many countries being forced to make defence cuts.

Labour believes that the right time and place to take decisions on the future role, shape and capabilities of the UK’s armed forces will be in the next strategic defence and security review, which will take place in the next Parliament. We were concerned that the last SDSR was very much a Treasury-led exercise. It left the country with an aircraft carrier without any aircraft or maritime patrol capabilities. It is imperative that the next SDSR is strategically led and fiscally responsible. It cannot be just a Treasury-led exercise. Its fundamental starting point should be what we want our armed forces to do.

I wish to allow the Minister at least a couple of minutes on his feet, so I will conclude on that point.

Photo of Mark Francois Mark Francois The Minister of State, Ministry of Defence 2:27, 9 January 2015

I am grateful to Kerry McCarthy for allowing me to chip in briefly.

I commend my hon. Friend Mr Chope on introducing this Bill and on giving us the opportunity to discuss this important subject, albeit rather briefly. He has never been slow in making contributions to the Conservative party’s manifesto development process whether as a Minister or as a Back Bencher, and he has been most industrious in making a contribution today.

In the limited time available, I wish to point out that, as one of the 12 founding members of the North Atlantic Treaty Organisation, the UK adheres to the principles of its membership. According to NATO’s own figures, we have the second largest defence budget in the alliance, behind the United States, and the largest defence budget in the European Union. Moreover, the defence budget and the defence programme are in balance across the next 10 years. We have the assurance of a stable and well-managed budget, and confidence that defence is both affordable and deliverable, having taken some, at times, extremely difficult decisions to put right the mess that we inherited in the Ministry of Defence from the previous Labour Government.

The NATO summit in Wales proved a pivotal moment for defence spending and investment. It represented the first ever collective public pledge on defence investment made by NATO allied leaders and was a clear acknowledgement of the challenges we face from the rapidly evolving and diverse potential threats on NATO’s borders and the need to reverse the trend of declining defence budgets to tackle key capability shortfalls. Clearly, living up to the commitments made at the Wales summit on defence investment will be challenging for all allies and progress will take time. For many, even halting the decline will be a significant challenge. Importantly, however, along with reaffirming the continuing and unwavering commitment of allies to NATO as a transatlantic alliance, there is now a willingness and commitment among allies to try to turn around the decline in defence spending, particularly on the part of our European allies.

The Wales summit was a critical moment for the NATO alliance, coming as it did in the immediate aftermath of Russia’s adventurism in Ukraine, growing instability from the middle east to north Africa and the conclusion of the international security assistance force mission.

I conclude by pointing out that we still spend 2% of our GDP on defence. We will continue to do that to the end of this Parliament and going into the—

The debate stood adjourned (Standing Order No. 11(2)).

Ordered, That the debate be resumed on Friday 16 January.