Defence Investment Plan

My Lords, I am sure I speak for the majority of Members of this House when I say that at this time of turbulence, it is reassuring to see such a respected Minister as the noble Lord in his place. Since the strategic defence review was published a full year ago, the funding of the plan has been dogged by delay and uncertainty. Whatever the defence investment plan contains, the financial settlement was deemed to be inadequate by the previous Defence Secretary, himself a widely respected Minister, to the extent that he resigned. We are now told that his successor is to work within that same financial envelope, the one already rejected by his predecessor. In the space of this last year, we have come in a complete circle. Does the Minister agree that this is an impossible situation for the MoD, and may I ask him what his solution is to this conundrum?

I first thank the noble Baroness for the very kind remarks she started with. I thank the former Secretary of State for his work and wish the former Armed Forces Minister well. I know the whole House will also join me in paying tribute to the UK commando forces who intercepted a Russian shadow fleet vessel over the weekend. Their courage, skill and professionalism are what we have come to expect—but we should not just expect it. The DIP is now being finalised, and details of that will emerge in due course. On the conundrum that the noble Baroness mentioned, I draw the House’s attention to the comments made to the BBC by the Prime Minister on Friday, when he said directly to Chris Mason: “We have another spending review coming up before the end of this Parliament and defence will be a number one priority” in that spending review, which is in 2027. The defence investment plan is outside a spending review, so all I say to the noble Baroness is that we have already increased defence spending. Whatever the outcome finalised in the details of the DIP, there will be additional money contained within that. As the Prime Minister said, defence will be a number one priority in the spending review in 2027.

My Lords, the PM has promised that the DIP will be delivered before the July NATO summit—it is already a year late. All we get are promises and rhetoric, and also the threat of further cuts to the already hollowed-out aid programme. Do the Government no longer believe that aid contributes to our nation’s security? Cutting it to almost zero compromises rather than reinforces the effectiveness of our defence leadership. Do we not need leadership? Where is it? As the drift continues, are we not advertising weakness to our enemies and undermining the confidence of our allies?

No, is the answer to the last part of the noble Lord’s question. We are still spending a significant sum of money with respect to aid and development. The DIP does require a reprioritisation of resources, and that is what we are looking at currently, including ensuring that we get the resources needed to do that within an affordable framework. On the aid and development he talks about, the change to the priorities of the Government a year or so ago has led already to billions of pounds of additional money being added to the defence budget. Money has to come from somewhere. One of the biggest state development programmes you can have is to create security in various countries of the world which see conflict at the moment.

The DIP has a had a gestation period longer than an African elephant, and we are still no further forward. When they came into power, this Government said they were about growth, and a growth agenda for Britain. Does my noble friend agree with me that a growth agenda would be if we actually invested in our defence industries in this country, as opposed to what the Treasury keep doing, which is going for the lowest bidder and moving some of the contracts abroad? This is a great uncertainty for UK industries. If we are going to get the world-changing technologies we need for our defence, we need to get on with it.

As I say, we are finalising the details of the DIP at the moment with the new Secretary of State in post. I agree wholeheartedly with the point my noble friend made just now, and always makes quite rightly, that any increase in defence investment makes sure that it supports jobs and industry—both small and large—within this country. The other point my noble friend makes from his knowledge of the north-east is that we have to ensure that growth is around the whole of the UK, around the regions and nations, to ensure that we all benefit from that increase in spending.

My Lords, the Minister rightly said that the money must come from somewhere, so may I make a suggestion? Why will the Government not reduce current—not capital—departmental spending by 1% per year, little more than a rounding error for most departments, which would free up over £35 billion over the plan period and would be more than enough to pay for the defence investment plan?

That argument—which the noble Lord has made a number of times as one way of funding defence spending—will have been looked at by the Treasury. What the Government have done is to look at money they have available, as well as reprioritising various programmes across government. I am sure that that suggestion, as well as others which many people have made as to how any increase in defence spending could be funded, will be looked at.

My Lords, I was very sad indeed to see such a capable and committed group of Defence Ministers depleted by resignation, but very pleased—as was the noble Baroness, Lady Goldie—to see that the Minister remains with us in his place today. At the 2025 NATO summit, all allies agreed a core defence target spend for 2035 of 3.5% of GDP, which the Prime Minister explicitly accepted at the time. Is that still our target?

It is a NATO target, so obviously the government target obviously remains 3.5% by 2035. In my answer to the noble Baroness, Lady Goldie, I outlined what the Prime Minster said on Friday in answer to a question from Chris Mason, who asked about the 3.5%. He said that the current discussions taking place around the spending for the DIP are outside the spending review process, and we have another spending review in 2027 which can consider that as well. Of course, 2035 is a further eight years beyond that, so other spending reviews will take place, but it does remain the policy of the Government to reach that NATO objective.

My Lords, this has been a bit of an omnishambles—other terms are of course available. I will not ask my noble friend to agree with me, because that is probably a bit tricky. Can he confirm that already the Government have invested substantially in defence, unlike the previous Government, who ran it down consistently? Can he also confirm that the national conversation—I refer to my interests in the register as chair of the National Preparedness Commission—to bring the realities of the situation that we face into the forefront of the public’s mind will commence within the next few months and that that will include not just defence but the need for homeland resilience?

I will deal with the last point first. Yes, the national conversation will commence within the next few months, and we hope to involve a wide range of people. I say to my noble friend that this is before the DIP process and any further changes with respect to spending reviews in 2027. In 2024-25, the total DEL was £60.2 billion, and in 2028-29 the total DEL will be £73.5 billion. So, as my noble friend points out there has already been a significant increase in defence spending, and that is before any additional funds from the DIP or anything that may come from the spending review.

My Lords, I am sure the Minister will be aware that the nature of war has substantially changed, as we are seeing in Ukraine, and that it is changing with almost every week that passes. For us to meet that challenge, we need innovation. So, coming back to the question from the noble Lord, Lord Beamish, how will the Ministry of Defence change the way in which it procures things to make sure that Britain’s innovative supply chain can contribute fully to our defence?

Smaller industries can also contribute, because they make a massive contribution to the defence of our country. If you look at all the various policy papers that are produced by the MoD, such as the strategic defence review, you will see that it is about buying British but also about making sure that small and medium-sized companies have the option as well. One of the lessons from Ukraine is that you do not necessarily need huge, multibillion-pound conglomerates or the big companies of today; many smaller companies are providing the fighting material that is needed on the front line. The DIP will certainly take forward that lesson as well.