15 February 2000

THE DEFENCE WHITE PAPER

Mr Michael Colvin (Romsey): The whole House will applaud the passion with which the hon. Member for West Renfrewshire (Mr Thomas Graham) fights his corner on behalf of the Bishopton Royal Ordnance Factory. I very much hope that the shots he has fired today find their target on the Treasury Bench and that he at least gets the meeting with the Minister he wants so that the workforce can put its case directly to him.

There is another important factor to bear in mind – security of supply. From the minute that we begin to take supplies from overseas for military purposes, there will be a danger that some suppliers may say no. Our forces experienced that during the Gulf War when Belgian suppliers refused to give us the shells that were required. Any international contract entered into by the Ministry of Defence for the supply of any military equipment must guarantee that that supply is secure. Otherwise, we shall endanger our troops, which is wrong. It is all very well the Treasury chasing value for money – it is taxpayers' money – but quality of product and security of supply are paramount. I wish the hon. Gentleman well in the battle that lies ahead.

The Defence White Paper is the first since 1996 and the first for this Government. The Strategic Defence Review, which was promised during Labour's last two years in opposition, appeared in July 1998. It took 14 months to produce and some of us wondered why it took so long. No doubt the Government, like the opposition parties, were still hunting for the so-called ethical foreign policy on which it was supposed to rest. At least it contained one good thing: henceforth, it promised that there would be an annual Defence White Paper. It has taken some time for this one to arrive, but I hope that an annual White Paper will be the norm from now on.

Many other documents have been produced by the MOD and the Defence Committee has been able to make a judgment on them, but Defence White Papers are easier to compare and so achieve a clear rolling picture of how the Ministry is performing in its primary task of the defence of the realm. The Defence Committee had to move extremely fast to produce its report on this occasion. It would be entirely out of character for me to say too much about what is good about the Committee and its report; I leave that to others. There have been many congratulations on that report this afternoon and it has been quoted extensively by most speakers. That does great credit to our Chairman, the hon. Member for Walsall, South (Mr Bruce George), who I am sure will be present on Monday to hear the praise directly.

A great deal of the credit must also go to the Clerks who serve our Committee – there are only five; Governments and Parliaments overseas are amazed that House of Commons Select Committees can produce work of such quality with such a small staff. If ever there was an example of quality rather than quantity, that is it. I put on the record my praise for David Natzler, Andrew Kennon – the Committee Clerk when I was Chairman – and Paul Evans, who is the current Committee Clerk. Their work has been second to none. I should also like to mention Mr Simon Fiander, one of the five, who is a secondee from the National Audit Office. As much of our work involves considering how money is spent, particularly on projects, including those that are cancelled or delayed, the presence of a national audit officer within the ranks of the Committee is an enormous help.

The strength of the Defence Committee has been its broad view, its constructive criticism and its wide consensus. I think that on the first day it met there may have been a vote on some triviality, but throughout its 20-year life, the Committee has never had to resort to a vote. That says a great deal for the consensus that we have been able to reach.

I am sorry to have left the Committee, but I now wear another hat in the Western European Union, and I could not do both jobs properly. I am pleased that my hon. Friend the Member for New Forest, East (Dr. Julian Lewis), who took the larger part of my old seat of Romsey and Waterside, has now taken my entire seat on the Committee. If anyone were ever to query the breadth of political view on the Committee, and felt that there was a cosy consensus because we were all of the same persuasion, they should consider the vast party political gulf between my hon. Friend on the right of our party and the hon. Member for Leyton and Wanstead (Mr. Harry Cohen) on the left wing of the Labour party. For a Committee with such a broad spectrum to reach a consensus says a great deal for its deliberations and for the way in which it is led.

The words in the Defence Committee report on the White Paper are singularly tough, and the message is damning. The MOD is constantly bowing to Treasury diktat. The Committee still has a great deal on its agenda – the question of overstretch will not go away. I am glad that at last Ministers at least acknowledge that overstretch exists and are using that word. Up until a couple of years ago, they would not do so. I am glad to say that recruitment is now improving somewhat, but retention is not. The net effect on our armed forces is bad.

Related to recruitment and retention are questions of morale, families, married quarters, leave, pay and working conditions, particularly for those on active service. We must somehow get out of this vicious circle. To lop 18,000 off our reserve numbers by cutting TA units was not the right thing to do. The knock-on effect is that we are beginning to lose cadet units, so it is becoming more difficult to get recruits because previously many of them served as cadets.

The picture in the RAF is not as rosy as the Secretary of State painted. The RAF is 95 fast jet pilots short, which is 20 percent of total requirement. That is not a particularly good picture. The Royal Navy is short of 15 jet pilots out of 64. The manpower situation is bad right across the board.

We all realise that budgetary problems remain and that there is still a running battle with the Treasury. I am sure that the Defence Committee will continue to look into efficiency savings and cutting wastage. I am sure that there is still room for savings to be made. We critically examined the figures supplied to us, and we questioned whether the £500 million target for savings year on year were, in fact, savings or were disguised cuts in the budget.

The figures speak for themselves. The total budget for 19992000 was minus 0.2 percent; it is minus 0.2 percent in real terms in 2000-01; and minus 3.8 percent in real terms in 2001-02, which will be only – I say only, but it is still bad – a 2.8 percent cut if the proposed sale of Defence Evaluation and Research Agency goes ahead. The sale of DERA is another matter that I am sure the Committee will return to: we looked into it twice, reported on it twice, and have said clearly that the proposed part-privatisation of DERA is a fundamentally flawed plan. Many of my hon. Friends have explained why, so I shall not waste the House's time on that.

I hope that we shall continue to engage in our one-day debate on procurement. Many hon. Members will have specific points to make about procurement issues, and they ought to be dealt with in a special debate. Procurement now takes up 40 percent of the defence budget, and the percentage is constantly growing. The inflation rate as it affects defence equipment is much higher than the inflation rate outside, as equipment becomes more technical and advanced. Whether some of the difficulty can be overcome by means of smart procurement remains to be seen, but I suspect that in many cases "smart procurement" merely means pushing the product to the right and delaying delivery, but in the long run that merely increases the price.

As a farmer, I am experiencing a crisis at present. I have postponed the purchase of a new combine because I cannot afford it this year. Indeed, I may not be able to afford it next year. I can stomach that, but when the defence of the realm is involved, it is no use pushing things to the right because the Treasury says that the money is not available for procurement purposes.

A report has been produced by a quadripartite Select Committee consisting of those representing defence, foreign affairs, trade and industry and overseas development. The Committee studied the whole question of defence sales – exports. We look forward to debating its report here because it touches on the issue of security of supply; it also raises the matter of the free-for-all world market in which we now operate following the collapse of the iron curtain.

The market out there is much tougher than it used to be. Given the drop in defence budgets, it is now very difficult to maintain the viability of our defence industries without commercial links with overseas companies. Therein lies the danger: again, it is a question of security of supply. I am all in favour of cross-frontier mergers, many of which will take place – indeed, are already taking place – in Europe and across the Atlantic. In studying the overall question of the restructuring of our defence industries, we must not lose sight of the fact that our staunchest ally on the defence front is the United States. It always has been and always will be, and NATO must remain the basis of our security.

The Committee is almost bound to consider a number of projects. There are the delays in the Bowman contract – the successor to Clansman – the new generation frigate, the heavy airlift project mentioned by a number of hon. Members, and the aircraft carriers. Do we really need two Goliath aircraft carriers costing £1 billion each? So far, we have not even decided what sort of aircraft will fly from them. Furthermore, there is the question of anti-ballistic missile defence.

The subject of defence medical services will certainly be revisited. The last Government made a mess of that: they cut defence medical services far more than they cut the armed forces generally. "Defence Cost Studies" No. 33 was a failure. The Select Committee criticised the last Government, and has criticised the present Government. The present Government are not off the hook: defence medical services will certainly be considered again.

The one thing that I welcomed today was what the Secretary of State said about the IRA's decommissioning of arms. He said that there was no truth in the talk of a national day of reconciliation. The word "equivalence", which has been used in the press, is not on, and, according to the Secretary of State, there is no gun-swap plan. I am sure that everyone will welcome that.

The fact is that there have already been substantial reductions in the military presence in Northern Ireland. They began in 1995, with the previous ceasefire under a Conservative Administration. Thirty Army bases have been closed and the troop presence is the lowest since 1970. Long may that continue – but there needs to be movement on the part of the IRA. So far it has just been "take, take, take"; there must be much more of a balance.

A number of hon. Members have referred to our alliances, both transatlantic and in Europe. Hon. Members who serve on the Western European Union with me have already put down markers for future debate, but there is already a hot debate in Europe. I was always rather disparaging about the WEU until I was in it, found out what it did and recognised the importance of the WEU members which are not full members of the EU and NATO.

One has to acknowledge that NATO, which incorporates WEU members, has preserved the peace in Europe for the past 50 years and more. The Cold War was won without a shot by NATO members, but, freed from the glue of totalitarianism, many countries of central and eastern Europe face instability and strife. There is a growing number of regional conflicts. The southern flank of NATO – the north coastline of Africa, the so-called soft underbelly of Europe – is a potential flashpoint.

The peace dividend following the end of the Cold War was taken by the previous Government under "Options for Change", but many people argue that the peace dividend has been taken twice, if not more times. At the same time, Europe has found itself in a much more fluid security environment. We lamentably failed as Europeans to cope with the conflicts in the former Yugoslavia. Success in Bosnia and Kosovo came about only once they had become NATO operations involving American military resources.

The restructuring of European national defence forces, which began in 1989, coincided with a world recession. National budgets, particularly defence, were then reduced in order for some countries to meet the convergence criteria for economic and monetary union. That cut budgets even further. Some countries, particularly Belgium and Italy, will find it increasingly difficult to maintain the convergence criteria for EMU. No one has yet laid down the rules and criteria for failure of the euro. Some of us would like to see what those might be.

I should like to put it on the record that the combined WEU countries have 60 percent of NATO's population and two-thirds of the alliance's forces, but spend only 40 percent of NATO's total defence budget. The German Government have cut their defence budget in real terms and the Austrians, believe it or not, spend less on defence than on the opera.

Although the WEU needs the right to use NATO – and that means United States – assets, the Americans rightly complain about our failure to carry a fairer burden of the cost of collective security. WEU members combined spend $170 billion per annum. The United States spends $270 billion a year and Congress has just voted an increase of about 10 percent in the defence budget. Wherever we look on the European scene, we seem to be cutting our defence budgets. The United States defence capability has a global reach; it extends not just to Europe. It spends 3 to 4 percent of gross domestic product on defence, while the WEU average is only 2.2 percent and falling.

The Secretary of State made the point that the quality of the spend is important; it is not necessarily the quantity. To some extent he is right, so military credibility is the other related issue to defence budgets. For example, the United States provided 80 percent of the aircraft that were used in the recent Kosovo campaign. I was in Oslo the other day, and the Norwegians told me that they had sent six F16s to Kosovo for the campaign. Unfortunately, they were all grounded because they were inoperable – so the quality of the product is important.

The United States Defence Secretary described that fact as embarrassing. The Washington Post was even blunter, saying that it would take the Europeans two decades to catch up with the Americans in terms of credibility,

"even if they had the money – and the will to spend it".

Security and defence must remain the prime responsibility of national Governments, accountable to their own Parliaments, but in association with allies for collective strength. Although the treaty of Rome had its genesis in the desire to maintain security and peace in Europe through a common market, the 1992 Maastricht treaty was the first specifically to deal with security – in article 13, which has been quoted by many hon. Members.

Subsequently, however, in October 1997 – after the current Government had come to power – the Amsterdam treaty enabled the Common Foreign and Security Policy to develop by closer co-operation between the EU, WEU and NATO under the combined joint task forces concept, in which NATO-assigned assets were to be made available to the WEU for limited military operations consisting of humanitarian intervention, crisis management and peacekeeping – which are commonly known as the Petersberg tasks. It also introduced the principle of majority voting and proposed a central policy planning unit.

On 3-4 September 1998, the Anglo-French St. Malo declaration gave further impetus to the strengthening of a European defence identity. Subsequently, in April 1999, the NATO 50th anniversary summit in Washington gave still further support to a CFSP, essentially by moving the alliance to a new direct relationship with the EU that it currently holds with the WEU. After Washington, the likelihood of the WEU's role being absorbed into the EU increased significantly.

At the Cologne summit in June 1999, the CFSP took an even more tangible form with the appointment of Mr Solana as the European Commission's first high representative for foreign and security policy. Cologne also reiterated the EU's commitment and determination to develop the capacity to undertake the Petersberg tasks, and concluded that, if progress was made, the WEU would have completed its purpose by the end of 2000. It was about then that the alarm signals really started ringing loud and we began to think not only about how that organisation could be preserved, but whether it should be preserved.

I think that there are five options for change for the WEU. The first is to reorganise and revitalise the WEU by creating a more distinct and capable European security and defence identity within NATO. The second is to merge the WEU with the EU as a fourth pillar. Giving the WEU a permanent mandate to act on behalf of the EU could enable Europe to act more efficiently.

The third option is to merge the WEU's political and security responsibilities with the EU, and its military responsibilities with NATO. The fourth is to merge the WEU with the EU, but without the article 5 mutual security obligations of the modified Brussels treaty.

The final option is to merge the WEU with the CFSP – which is the European Union's second pillar – thereby giving it defence as well as foreign policy responsibilities. The only option that is not open to us is to do absolutely nothing.

The first option seems to stand the greatest chance of success. It uses existing structures as the basis for European security and defence identity within NATO, and it is important that those structures should remain within NATO. It is also intergovernmental, so that no fourth pillar would be required. It retains the WEU Assembly, including the WEU family of 28 European non-NATO nations, bringing eastern and central European countries into a European defence institution for democratic scrutiny. As hon. Members have already said, the ability to retain within the WEU those countries that are not yet NATO members and not members of the European Union is absolutely vital. To lose that feature would be disaster.

Another feature of the first option, which I hope the Government will follow, is that it retains article 5 – the mutual security obligation – of the modified Brussels treaty. I believe that article 5 presents serious problems for those countries – Ireland, Austria, Sweden and Finland – that are EU members but not NATO members. If the WEU were absorbed completely within the EU, that mutual security obligation would apply to them. However, many of those countries have long histories of military neutrality and would not be able to fulfil that obligation.

There is a great deal of debate in this field and the jury is certainly out on a resolution. In addition, we are receiving very mixed signals from the Government. The previous Secretary of State for Defence, now Lord Robertson, said one thing from the Front Bench in answer to questions from me, but the Prime Minister said something different in St. Malo. The position is confused even further by the White Paper.

In conclusion, I remind the House that the defence of the realm is the paramount responsibility of any Government. Defence policy cannot be determined by Treasury diktat. The Secretary of State inherited a bad hand of cards from his predecessor, but he now has the opportunity to demonstrate whether he is a man or a mouse. Will he stand up to the Treasury and demonstrate Britain's lead in Europe by reversing the damaging cuts in the defence budget? We owe that to our armed forces, which remain the best in the world.