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Defence Spending — [Mr Clive Betts in the Chair]

Part of the debate – in Westminster Hall at 10:47 am on 16th July 2019.

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Photo of Gerald Jones Gerald Jones Shadow Minister (Defence) 10:47 am, 16th July 2019

I was not attacking the comments of the candidates for the Conservative party—they are welcome. I was saying that it is galling that they voted for cuts. The Leader of the Opposition has highlighted, as did the last Labour party manifesto, our commitment to a 2% minimum for defence spending, in line with the NATO commitment. He has also said that we cannot do defence on the cheap. He is as committed as our party to spending on defence.

Added to the squeeze on defence spending is the fact that the MOD’s purchasing power has suffered from the fall in the value of sterling after the Brexit vote. Of course, what matters is not just what is spent, but how it is spent. As we debated last Thursday in this Chamber, we need to use the defence pound to support UK prosperity and to back UK defence workers. Labour wants more MOD defence contracts to be awarded here in the UK, and we would like to start with UK-only competition for the fleet solid support ships. As my right hon. Friend John Spellar highlighted, that is a matter of political will. Not only is it vital that we support the UK defence industry to retain our sovereign capability; we also know that investing in the UK leads to additional revenue coming back to the Exchequer in taxation, higher national insurance contributions and lower social security payments—not to mention the value of apprenticeships and spending in the wider economy.

We know from reports by Oxford Economics that the UK defence industry has an output multiplier of 2.3, which means that a £100 million investment in the UK industry generates some £230 million to the UK economy. Its reports have also highlighted the fact that each additional job created in the manufacturing element of the defence industry results in a further 1.8 jobs being created in the wider economy. I am sure that the Minister will want to convey that message to the Treasury. Of course, sufficient levels of defence spending depend on an economy that is growing, so I hope that the Minister will join the Opposition in opposing a harmful no-deal Brexit, which would be damaging to our GDP and would therefore threaten all Government spending, including spending on defence.