Defence Spending

My Lords, the defence investment plan published in the summer increased defence spending by £15 billion over what was agreed at last year’s spending review. This means that MoD spending over the next four years will total almost £300 billion. Under current plans, defence spending will reach 2.7% of GDP from 2027. By the end of the decade, the MoD budget will be 27% higher in real terms than in 2023-24. The Chancellor has said that at the spending review the Government will set out a clear path towards the NATO commitment to reach 3.5% of GDP on core defence spending by 2035. This will include a target date for increasing defence spending to 3% of GDP.

My Lords, in July, ahead of visiting the Trident build at Barrow-in-Furness, the Prime Minister said: “Keeping this country safe is the first responsibility of any government”. Yesterday, at Prime Minister’s Questions, he said “national security … cannot come at the expense of social security ”.—[Official Report, Commons, 9/9/26; col. 1036.] The Benches behind me, particularly at this critical time, are resolute that the first responsibility of any Government is keeping this country safe. Can the Minister explain why the Prime Minister has reneged on his priority?

Let me first say something that I have always said from the Dispatch Box: I do not believe that there is anybody in this House or the other place who does not want to keep this country safe—I just do not believe that. On the noble Baroness’s question, presumably about cutting welfare spending in order to put it into defence, this Government’s position is very clear. Of course we all want to reduce the welfare bill, but we will do it in a planned, methodical way that gets people into work, and we will act on what the Timms review and the Milburn review say. What I do not think is helpful for a debate on spending is to pitch welfare against defence spending; that is a really unfortunate way to frame the debate. Of course we want to reduce the welfare bill and to spend more on defence, and this Government will do both.

My Lords, can the Minister say whether the cost of working towards achieving the objectives set out in the Defence Diplomacy Strategy, published in March, are part of the 3% or whether there is a separate budget for the strategy?

In the overall MoD budget, there is funding for the defence diplomacy strategy. For example—I know this will be of keen interest to the noble Baroness—the strategy seeks to professionalise the integrated global defence network with better language training and professional training, and that will be funded in the normal way through the MoD budgets. It is an important part of what we do.

My Lords, there is understandable frustration that the Government set out a target but have delayed how they will implement it. Can the Minister address two specific and urgent questions? With the phasing out of our destroyers and their current lack of readiness, what action are the Government taking now to develop advanced layered ballistic missile defence for our country? What action are they taking now to replace depleted stockpiles of munitions and to scale up an always-on munitions supply chain?

I will take the last point first on what the Government are doing now. The noble Lord will know that, in the DIP, there was £11 billion-worth of investment announced, to be invested in six munition sites, to give us the stockpiles that we need. What we cannot do is magic them out of nowhere, but we are investing to deliver the very thing that the noble Lord rightly suggested. He will also see that in the DIP there is a whole range of ways in which we are building ships. To be fair, as I said, everyone wants to defend our country, and the previous Government started to rebuild and to replace the ship capacity that we need; we see examples of that on the Clyde. We are also looking at different ways to do the same thing through an increased use of drones and using a mother ship concept.

My Lords, does my noble friend the Minister agree with me that, in this debate on the level of defence expenditure, we should look at how we got to where we are today? Between 2010 and 2017, from the Tory-led coalition Government onwards, the then Government cut the defence budget by 16% and made people compulsorily redundant, leading to the smallest standing Army since Napoleonic times. Because of the Liberal Democrat veto, the then Government delayed the replacement of the Trident nuclear deterrent, leading to extra costs today. Does my noble friend agree with me that, in this debate, the Opposition should be a little humbler in their approach by taking some responsibility for why we have got to where we are today?

I accept the points that my noble friend has made. As the Defence Minister, I always lay out what the Government are trying to do to deal with the situation as it currently exists. One or two years on from the last spending review, the Government took really difficult decisions, within a spending review cycle, to increase the defence budget by £15 billion. Some of that has led to very difficult decisions. I will give him one example relevant to anybody who lives in and around the East Midlands, but I could cite examples from other areas. As a result of those decisions, the A38 and A46 road projects, which were about to start, were delayed to fund defence. Those are some of the tough decisions that the Government have taken, and there are other examples from across the UK about how we are seeking to deal with this. At the next spending review, watch how the Government will set out a path to 3.5% by 2035.

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My Lords, we will hear from the noble Baroness, Lady Foster, next and then the Conservative Benches.

My Lords, at the RAF town show in Enniskillen at the weekend, which the Minister was very kind to attend, there was a very welcome acknowledgement of the importance of our Armed Forces, not just to the safety and security of our nation but to local communities. How can we have that conversation with local communities right across the United Kingdom about the importance of increasing the defence budget spend?

I thank the noble Baroness for remarks about me attending the Royal Air Force show in Enniskillen last Saturday and for hosting me. Something the Government need to accelerate is the national conversation and the ability to explain to people why changes may be needed for welfare and other budgets right the way across government to fund defence. We need to set that out clearly, by saying that this is the threat that the country faces and these are the things that we need to do, and therefore difficult priorities will need to be made, including moving some things from areas where we would like to spend to defence. We need to make those tough decisions in a calm way, without referring to cheap headlines.

I have a straightforward question for the Minister. Will the damaging, dangerous and wholly unnecessary Chagos deal be funded by mainstream defence expenditure?

I have seen various figures around the Chagos deal and where the funding may go. The previous Government sought to ensure that the Diego Garcia base was maintained; they were in negotiations about that. This Government are determined that ,whatever the rights and wrongs of the debate—this debate will continue whatever the Government go forward with—the fundamental principle, accepted by both the previous Government and this one, is that we have to make sure that one of the most strategically important bases to our nation, and to the defence of democracy and freedom, is maintained at Diego Garcia. That is the intent of this Government.

My Lords, can the Minister tell the House what proportion of the money spent on defence is recovered by our selling arms to other countries?

I do not have the exact answer at my fingertips, but the defence industry is an important part of this country’s defence and what we do. There are thousands upon thousands of jobs right across the nation which depend on a legitimate defence industry contract, and that is also part of the defence of our country. I go to Select Committees where I defend those exports against the very strict criteria that we have. This country has a proud record of ensuring that, as far as we can, the defence industries comply with all the various international rules to which they should do. It is a legitimate business, and we seek to encourage it.

My Lords, given the pace of change in the nature of defence and warfare, does my noble friend the Minister agree that expenditure on defence research is increasingly important and that the establishment of the Defence Universities Alliance is a major step forward?

Yes, I do. My noble friend makes an important point, because research and development is a battleground as well. If we can get in front of our adversaries in terms of the technological battle, that will make a real difference. I will lay this out to your Lordships’ House: the drone technology space is a competing space. If you can block your adversaries from communicating with their drones, ships or warplanes, you are halfway towards defeating them. Therefore, the technological space is crucially important. That is backed by the world-class research that we have in our country.