Integrated Review: Treasury Discussions

What discussions he plans to have with the Chancellor of the Exchequer prior to the conclusion of the integrated review of security, defence, development and foreign policy.

I have regular discussions with the Chancellor of the Exchequer about the integrated review, and will continue to do so on wider issues concerning defence.

The spending review made recent welcome changes to defence spending, particularly with cyber and other areas of resilience. It seemed strange, however, that those spending increases were announced before the integrated review. Are the new funds in the spending review part of the Government’s response to the integrated review, and is that a case of the cart coming before the horse? Or, is it a case of “That’s it”, meaning that the review will not make any new announcements backed up by spending commitments?

The hon. Gentleman asks a valid question about the timing of the integrated review, and there will be an integrated review at the beginning of next year. The defence announcement was a building block as part of that review, and it will obviously work towards the overall posture of global Britain when it is announced in the new year.

The extra funding was a welcome promise to upgrade Britain’s defences after nearly a decade of decline, so it is long overdue. The capital announcement is one thing, but what is the real-terms revenue funding for defence over the next four years?

Over the next four years, £188 billion will be spent on defence. Some £126 billion of that will be set for resource spending, while £62 billion will be for capital spending.

I asked the Secretary of State about resource funding, and he has to face that question. The answer is on page 67 of the Chancellor’s spending review report, which shows a 2.3% real cut in resource funding through to 2024-25. That means less money for forces’ recruitment, training, pay, pensions and family support, at a time when our armed forces are already 12,000 below strength after the last review. That could mean new ships, but no sailors. Will the Secretary of State recognise that high-tech weapons systems are essential for the future, but highly trained service personnel are indispensable? May I urge him not to repeat the mistakes of past Conservative reviews, and instead to put forces personnel at the heart of the current integrated review?

I know the right hon. Gentleman was a Minister in Mr Brown’s Government, who did not have the greatest reputation for financial accuracy. Although we can agree on the spending profile, his interpretation of the rates of inflation and alleged real-term cuts is not something that we recognise. On the “decade of decline”, as he calls it, I thought that before coming to the House I would read the National Audit Office “Major Projects Report 2010”, on the Government in which he was Minister of State, and the spending on defence. That report highlights that in one year up to 2009, the Government overspent by £3 billion. That is where the black hole that amounts to £38 billion came from, so before he throws stones in glass houses about managing defence budgets, he should be very careful.

Perhaps I could be very clear about how we went about getting to this settlement. We started, as I have said repeatedly in the House, with the threat and what we need to meet the threat and to fight tomorrow’s battles, not the last. We then took that request to the Chancellor and the Prime Minister, had a discussion, and it resulted in the record settlement that Members see before the House today.

Surely the review is meant to tell us what the threat is and then the Government respond with the spending, rather than the spending coming before the review is published. All that being said, I suppose we are where we are. I am grateful for one thing that the Secretary of State has done: he has finally listened to our policy of a multi-year defence agreement. May I ask him to go one step further? In other countries where those are used, they involve all political parties. Will he pledge to do so?

What would be good is a welcome from the Scottish National party that £1.76 billion will be spent with Scottish business, at least, year on year. That is something that the Union manages to deliver for Scotland through the United Kingdom armed forces. This record spending unlocks funding for Type 26, Type 31, Type 32, research vessels and the fleet solid support ships. Where they are to be built is obviously still a matter for decision in some cases, but I can guarantee that, right now, many ships of Type 26 and Type 31 are being built in Scotland. A welcome for that from the SNP would be great, but of course we know we will never hear it.

Someone’s put 50p in them today, Mr Speaker, haven’t they just? Let me ask the Secretary of State this. I have asked him time and again, and he usually just shouts back to me whatever is in his folder; let’s try answering the question. Of the spending announced for Scotland, at what point—he has only a few days of the year left—will the Government finally meet the promise they made six years ago of 12,500 personnel stationed permanently in Scotland? It is currently below 10,000. In all the projects he listed, he did not mention the promise of the frigate factory. [Interruption.] He laughs because he knows it is a promise that is not going to be met between now and 31 December, is it?

I laughed because, having examined the proposals, the frigate factory would have included the closing of Govan and the investment in Scotstoun. I am not sure, but I remember distinctly that Govan was originally a very proud Labour seat, obviously then represented by the First Minister of Scotland. Having done the review, BAE and, indeed, the MOD and others recognised that the best value for money was to invest in both Govan and Scotstoun, to make sure that we make the frigates and destroyers that the hon. Gentleman wants so much but does not want to use, and to sail them up to Scotstoun to be integrated. That is why we support over 10,000 jobs in Scotland, and we will continue to do so. Where the future basing of our armed forces goes is for the integrated review. All will be revealed to the hon. Gentleman.