asked Her Majesty's Government:

Whether they intend to reduce the size of the Defence Intelligence Staff; and, if so, why.

My Lords, I am sure that the whole House will wish to join me in offering sincere condolences to the families and friends of Marines Robert McKibben and Neil Dunstan and Colour Sergeant Krishnabahadur Dura, who were killed on operations in Afghanistan this week.

As part of the Ministry of Defence's streamlining exercise, Defence Intelligence Staff elements based in central London will be reduced in size by around 20 per cent. DIS establishments outside central London, which constitute nearly 90 per cent of its overall manpower, are not affected by streamlining. Streamlining will improve the way in which the MoD head office works, creating a smaller, more agile and efficient organisation.

My Lords, I thank the Minister for that Answer. She will recall the Butler inquiry four years ago, of which she was a member. It said:

"DIS is a vital component of and contributor to the national intelligence machinery ... DIS is crucial to MoD in everything from strategic planning through equipment acquisition to the conduct of military operations".

Is not any reduction in intelligence provision to our Armed Forces akin to committing them to combat with inadequate or inferior equipment? With ongoing operations, surely that is both operationally and morally indefensible.

My Lords, the noble and gallant Lord knows very well the work done by defence intelligence, as do I. He mentioned that I served on the Butler review. The review said that if increased funding to the single intelligence account was required to commission DIS expert resources, that funding should be found. Most of the extra funding that has gone to the single intelligence budget has been for counterterrorism work. We are satisfied that the changes that we are making will not have an adverse effect. As I said, 90 per cent of the staff of DIS work outside London, and they are not at all affected.

My Lords, we on these Benches also send our condolences to the families of the two soldiers killed, both serving with 2 Battalion the Royal Gurkha Rifles. The noble and gallant Lord raises a very important Question. What assessments have the Government made of the impact of the proposed cuts on intelligence sharing with friendly nations?

My Lords, there has been significant consultation about the proposals. We work very closely with our allies in this field. It is not just the MoD that is involved; work very closely with other government departments, and all the potential customers for DIS have been consulted. Many of the reductions will be made because we are significantly reducing the business support staff, and that can be achieved as a result of the planned co-location in London, where we are going from three sites to one site, which in itself will have significant benefits in London. As I said earlier, 90 per cent of those working for DIS do not work in London and are not affected at all by streamlining.

My Lords, first, let me associate these Benches with the condolences given. Will the Minister assure us that the Government have a bottom line as to how many cuts can be made, and that the bottom line will reflect the fact that we have to occasionally act independently and thus will not be able to tap into the resources of our allies' intelligence?

My Lords, I can give an assurance. The chief of defence intelligence said recently:

"The area is funded for what it is being asked to do from the central defence budget and will continue to support the Armed Forces and contribute strongly to the intelligence community's work across government".

As I said earlier, we discussed this with our allies and with other customers, and we are confident that DIS can be a stronger organisation.

My Lords, is the Minister aware that her Answer fills me with considerable concern? I am not clear what the prime motivation is and whether it is to save money. If there is one thing that this Government should have learnt, it is that with serious shortages of resources in many areas, intelligence has never been more important when prioritising whatever resources you have and in facing new ventures. As new ventures come—for example, now there is the threat of hijacking and piracy—there are new challenges that intelligence will have to face.

The noble Lord, Lord West, who is sitting beside the Minister, knows perfectly well, as a former chief of defence intelligence, the importance of this. This Government could have saved the nation a huge amount of money if, before the weapons of mass destruction issue arose, they had listened rather more carefully to the Defence Intelligence Staff.

My Lords, I must rebut very strongly the last comment. As a member of two of those inquiries, I do not think there was any problem in terms of people listening to defence intelligence at that time. The Government definitely recognise the significant importance of intelligence, both to us and to our allies. The degree of co-operation we have, both across government and with our allies, is very good. We have a highly respected and capable Defence Intelligence Staff, of which we are proud and intend to remain proud.

My Lords, would my noble friend remind the House, particularly the noble Lord, Lord King, by how much the single intelligence account has risen in the past few years?

My Lords, the defence budget is £34.1 billion. We have just seen the longest sustained growth in that budget for over 20 years. In 2010-11 it will be 11 per cent higher than it was in 1997. That does not include all the money for operations and urgent operational requirements which comes directly from the Treasury.

My Lords, was the Minister correct in putting that statement about rises in the defence budget in the past, thus implying that those increases are now over?

My Lords, I was anticipating what the situation would be by 2010-11.

My Lords, perhaps the Minister would like to say what percentage of GDP the defence budget will be in two years' time, compared to 10 years ago?

My Lords, I do not have the figures in front of me, but I recall that we are the second largest spender on defence in the world, second only to the United States. That shows this Government's commitment.