Defence Bonds

8. If he will take steps with the Chancellor of the Exchequer to issue defence bonds to help increase funding for military capabilities.

14. If he will take steps with the Chancellor of the Exchequer to issue defence bonds to help increase funding for military capabilities.

This Government are making the biggest increase in defence investment since the end of the cold war. This year alone, we have more than £11 billion more in the defence budget than in the last year of the previous Government. As the Prime Minister said in February,

“we are going to have to spend more faster”,

and we will.

Building our military capability is vital in this world of increasing instability, where Putin continues to wage war in Europe—as we have heard—and Trump rips up the alliances that once kept us safe. Investment in deterrence is far better than fighting a war unprepared. Getting UK businesses access to the Security Action for Europe programme is vital, so will the Secretary of State confirm whether talks have restarted with the EU in that regard, and if so, what progress has been made?

As I mentioned in a previous answer, we are indeed looking to participate in, and be able to take advantage of, the European Union’s loan scheme for Ukraine. That is a way in which we could accelerate getting good kit into the hands of the Ukrainians and ensure that British-made kit and British firms can make a big contribution to that.

My constituent Fraser puts it best when he says,

“At a time when the world is increasingly dark and uncertain, and when the UK’s defence capability is well below the level required”,

defence bonds

“are surely one which would gain support across the political spectrum. I know that I would happily invest.”

With all of us in the United Kingdom paying the price every time we check out or pay a bill, the Liberal Democrat calls to issue £20 billion of defence bonds would mean an injection of funding in our security, but also in our economy, so what are the Government waiting for?

I remember that for at least six months after the election, the hon. Lady and her party were urging us to raise defence spending to 2.5% of GDP by 2030. We have done better than that—we are hitting 2.6% next year, three years before anyone expected, including her party. We will go further, and I will look for her support when we do.

I call the Chair of the Defence Committee.

Some hon. Members have advocated for defence bonds. As the Secretary of State will be aware, the Defence Committee has examined in detail various defence financing options, including a defence, security and resilience bank—the Canadians have stolen a march on us, even though the idea was developed by a former British Army officer. There are multilateral defence mechanisms, and other nations have opted for a loosening of the fiscal rules just for defence. Obviously, these are not either/or options, but given the increased threats and the level of volatility, we must accelerate investment in defence to 3% GDP spend in this Parliament. Given that context, what options and course of action are the Government pursuing? We cannot keep plodding along at the current pace; we must meet the moment.

With all due respect—and I have a great deal of respect for my hon. Friend—the biggest increase in defence spending since the end of the cold war is hardly the plodding path he describes. I welcome his Committee’s inquiry into defence investment and its report. I know that Gordon Brown, the former Prime Minister who has been commissioned by the Prime Minister to look at multinational financing of security, will use that report as an important part of his work, which I welcome. My hon. Friend will be aware that the Prime Minister said in his Munich speech in February that

“We must build our hard power, because that is the currency of the age.”

We know that we must spend more faster, and we will.