HL Deb 26 July 1994 vol 557 cc603-96

11.41 a.m.

Viscount Cranborne rose to move, That this House takes note of the Statement on the Defence Estimates 1994–95 (Cm 2550) and of the Defence Costs Review.

The noble Viscount said: My Lords, this is for me something of a nostalgic occasion. There can be no greater honour for a British politician than to serve as Minister in the Ministry of Defence, for defending the realm is arguably the first duty of government and to be entrusted with part of that responsibility, in however humble a capacity, is a position to which any one of us should surely aspire.

It is also, as I soon discovered, not only an honour, but a rare pleasure. The quality of those who serve in the Ministry and the Armed Forces, both military and civilian, is something to which this House rightly often pays tribute. I make no apology for doing so again today. Although your Lordships on all sides of this House do not forget this, in times of peace it is all too easy for the country as a whole to forget the importance of strong defences and so for other priorities to prevail. We are lucky indeed to have them and we destroy the ethos that makes them unequalled at our peril. I unashamedly loved my time in the Ministry of Defence and I shall always be grateful to them for their courtesy and kindness to me.

That courtesy and kindness were all the more remarkable because my right honourable friends and I assumed office at a time of vertiginous change. There had certainly been change aplenty in the previous decade under successive Secretaries of State for Defence—even when the defence budget was increasing at over 3 per cent. per annum under the Prime Ministership of my noble friend Lady Thatcher.

Much of that change was what I could characterise as primarily managerial. Above all, it was driven by technological development and the consequent changes in the organisation of British society and the world situation. Defence is, as your Lordships well know, a high tech business and if we are to be credible our technology must at least be the equal of both our allies and our potential aggressors. For that reason alone, in an age when technological developments are taking place faster than ever before, defence ministries must institutionalise the management of change.

What has made the 1990's even more difficult for Defence Ministers was that to this technological accelerator was added a geostrategic earthquake: the Soviet Empire appeared to collapse—and I use the word "appeared" with due deference to my noble friend Lady Park.

Of course, the world did not become a stable place as a result—indeed, rather the reverse as many of your Lordships have been wont to observe in our debates. That is not an unexpected phenomenon in the wake of the fall of great empires, as I too have often observed to your Lordships. The new geostrategic situation was unpredictable and fast moving. It called for new security arrangements and more flexible and more mobile Armed Forces—capable of intervention outside Europe as often as within it—and as able to fight a Gulf War as to keep the peace for the United Nations.

At the same time no one could deny that the threat to the security of the United Kingdom and its dependencies had decreased. What the Ministry of Defence is in the habit of referring to as "Defence Roles 1 and 2" could no longer require the same level of resources for their fulfilment as heretofore, particularly at a time when the Government were quite rightly giving the highest priority, to their own considerable political discomfort, to reducing a worryingly large public sector borrowing requirement.

It is in this context that I hope that I can persuade your Lordships to view the measures that Her Majesty's Government have taken in the defence and security fields since the last general election. We have often been accused of ad hoc-ery —of a lack of consistency. However, looking back to Options for Change, to the Prospect study, the 1993 Statement on the Defence Estimates, and setting the 1994 White Paper and Front Line First in that context, I cannot see that as a charge that can stick.

It is true that we have made some adjustments to the military capabilities which Options judged to be necessary. Those adjustments have resulted in reductions in some areas but also in increases in others, notably in the planned fighting strength of the Army. However, I make no apology for that. My right honourable friend has also stressed that the very unpredictability of the international situation has demanded that we should keep the position under review—and that we shall continue to do.

The combination of technological advance and reduced strategic threat, to which I have already referred, brought with it two absolute imperatives: first, that we should define the tasks our defence roles demanded we should accomplish and, secondly, that we should perform them as cost-effectively as possible.

The 1993 White Paper set out our thinking in relation to the first imperative. That is confirmed and developed in one of the documents your Lordships are considering today—the 1994 White Paper. Much work needed to be done on the second imperative and that work resulted in what has come to be known as the The Defence Cost Study, or Front Line First in my right honourable friend's rather catchy phrase. With your Lordships permission, I shall come to the second exercise in a moment, but I should like to draw the House's attention first to the 1994 White Paper, which has perhaps been a little overshadowed by its rather more sensational brother.

In particular, the 1994 White Paper draws attention to the progress that the Government have made in developing our security policy—a policy which clearly has to be established, as the noble Lord, Lord Williams of Elvel, has frequently observed in this House, as a prerequisiste for establishing what our consequential defence capabilities should be.

In particular, I draw your Lordships' attention to the progress we have made in building new relationships with Eastern and Central Europe, including the launch of the "Partnership for Peace" initiative at the NATO summit in January this year. Of course, we hope that this policy will encourage the countries that belonged to the Warsaw Pact to become our permanent friends. However, Russia, in particular, has yet to convince us that she will certainly succeed in becoming a stable country.

The White Paper also emphasises our commitment to providing the country with Armed Forces of the highest quality. It emphasises something else, too, which is reflected more fully in the theme of The Defence Costs Study, or Front Line First. I should like to underline emphatically to your Lordships today that we do not plan to cut our front line capabilities any further. Therefore, if your Lordships will allow me, it is to the second document that I should now like to turn.

The House, I have often noticed, is in the habit of suggesting that any review of defence spending is, in the now time-hallowed phrase, a Treasury-driven exercise. Ministers have always, so far as I know, denied those accusations strenuously. I suspect it has become something of a ritual dance in your Lordships' House. Indeed, I have frequently issued a similar démenti to your Lordships over the past two-and-a-bit years. I have to say to the House that I do not retract a word of those denials. Your Lordships will forgive me for stating what is to this House, with its knowledge of the British constitution, something of a glimpse of the obvious: it is true that it is the Treasury's duty to guard the nation's purse; and a PSBR of £50 billion was not in any terms a sustainable proposition.

However, the overall judgment at the last public expenditure round was a Cabinet decision in which my right honourable friend the Secretary of State for Defence wholly concurred. He concurred because he was able to tell the Cabinet that the reduction in the defence budget it had judged appropriate could be delivered without reducing our overall defence capability. That he was able to do so was in very large measure because he knew, as all his junior ministerial colleagues knew, that there were a number of projects already under way in the MoD and in the services which had shown that very substantial changes in the way defence was managed were essential. The two most important examples of such projects that I can give the House are the Prospect Study of 1991 and the introduction of the new management strategy—two interdependent initiatives to which I have, perhaps too frequently for my own good, drawn your Lordships' attention, and which I shall not elaborate on again.

It was plain to all of us that we could build on such work to conduct an even more radical review of all activities within the department. That review, as your Lordships already know, came to be known as Front Line First, and although my right honourable friend's courage in those circumstances in undertaking to preserve our front line capability was remarkable, he was able to make it based upon the work that the department had already set in train. Indeed, the results of the defence costs study proved a ringing endorsement of that work.

There is one other point that I should emphasise here. Ministers come, and as we saw last week, Ministers go. Indeed, as a result, I wonder whether the MoD ought not to be rechristened, "The Rifkind School of Cabinet Ministers". If the reforms were to be implemented, and were to stick, the department as a whole had to be convinced of their worth. We therefore ab initio asked for suggestions and received between 2,000 and 3,000, nearly all of them extremely sensible. That kind of communal, collegiate approach informed everything that we did during the course of the defence costs study. I cannot emphasise that point enough, because it will be alleged, I have no doubt, during the course of the debate that we are imposing something on the MoD. That I would strenuously deny. The overwhelming majority of what we are proposing has received the ringing endorsement of the people who have to deliver the defence capability that this country quite rightly demands.

We consulted, not just the study teams but Ministers down to the lowest level. The more we delved, the more we were convinced that my right honourable friend the Secretary of State had been right; that there was scope for substantial savings in the administration and support sectors of the department and that by introducing modern management methods and advanced technology we could improve the way defence was managed and the front line was supported.

For instance, to take one example in an area in which I took particular interest, we found that we could reduce what we thought of as our head office—perhaps too corporate a term for a great department of state—to a core of between 2,500 and 2,750 posts in London. That is a reduction of roughly 35 per cent. in broad terms from 1990. To give another example, we propose to bring together all our major non-nuclear science and technology organisations into a single executive agency. That new organisation will extend the benefits that we have already begun to reap from transforming the Defence Research Agency into a trading fund and will lead to a far more cost-effective organisation.

I shall not weary the House with more examples. We have given a pretty comprehensive list in the documents that we have already circulated and which I hope your Lordships have had a little time to study. However, there is one area where financial savings may or may not occur, but which is very important for the direction of our future military operations. That is the emphasis we are now placing on what is called in the trade "jointery". It has become increasingly clear over the years that operations are more and more likely to be conducted on a joint service basis. The Falklands, the Gulf, and more recently the former Yugoslavia and operations in the Adriatic, underline that vividly. A number of our intended changes have taken that joint theme to its next logical stage.

At the highest level, we intend to form a joint headquarters at Northwood. That will allow us to react more rapidly and effectively to a developing crisis without the dislocation, upheaval or sending of political signals that the activation of an ad hoc joint headquarters inevitably causes. In training, at the senior level we propose to extend the principle by subsuming the services' four current command and staff courses into one and establishing a Joint Services Command and Staff College. We intend also to establish one defence helicopter flying school for all three services by 1997. I give those as examples of the range of "jointery" initiatives of which I am sure your Lordships will approve.

I could, of course, quote many other examples, but I hope that my point is made. Front Line First has certainly been radical, but I think that I have demonstrated—at least I hope I have—that it has certainly not been revolutionary. After all, I come from a party which believes in evolution rather than revolution, perhaps something of a different tradition when I look at the sansculottes on the other side of your Lordships' House. Many of the changes which have emerged would have happened anyway as normal departmental processes took their course, but the Defence Costs Study was the catalyst. It will change the pace, but not the direction, of change, and it will prove to be of direct and substantial benefit to our ability to defend our country and its interests.

Those changes will not be brought about without pain. There will be redundancies, and many regions will suffer. Your Lordships have already discussed the Rosyth naval base in Scotland. We are aware of the effect on the North East of the closure of Eaglescliffe, and to me of course, saddest of all, Portland in my old constituency. We have extended deliberately the consultation period to three months so that adequate representations can be made, particularly over a holiday period, before we confirm those proposals. I should like to assure your Lordships that the consultation, as I assured the trades unions earlier during the process, will be a genuine one. We know the sadness that such measures bring in their wake.

I think, too, that it is worth emphasising that the MoD will do its best to co-operate with local authorities, the private sector and other government departments in their efforts to find alternative sources of employment. I should nevertheless emphasise that the MoD's responsibility, and its only responsibility, is to provide the country's defence capability. The Front Line First study has succeeded in that the front line has been safeguarded at last year's level and although support will be streamlined, nevertheless, support is recognised to be an integral part of the front line without which the front line cannot function.

Indeed, it has proved possible to do better than that. Equipment orders already in the pipeline, which was commented upon by the noble Lord, Lord Williams, when I made the Statement, have been safeguarded and a number of enhancements have been made possible: for instance, a frigate originally to be put to "extended readiness" will remain fully part of the fleet; the training regiment at Bovingdon will become an armoured recce regiment, and 12 Harriers will be brought out of storage. Perhaps most important of all—and this was one of the services' first requests—training will be enhanced and the process known as "hollowing out" will be reversed.

This has been a difficult exercise. It was perhaps the most fascinating six months of my life. A very high proportion of civilians and servicemen have contributed to it. We owe it to them to keep faith with the exercise and with them. Of course, I cannot speculate on the outcome of this year's public expenditure settlement. However, I emphasise that our announcement of 14th July is a clear indication of the direction in which the Government intend to head. I, for one, will watch from what I hope will be a position of some advantage as our proposals are implemented and with the keenest of interest.

I conclude by wishing my noble friend Lord Henley the greatest of good fortune in one of the most enviable and interesting jobs in the Government. I know he could not be joining the MoD at a more fascinating time and, with a feeling more than a little tinged with envy, I wish him all good fortune. I beg to move.

Moved, That this House takes note of the Statement on the Defence Estimates 1994–5 (Cm 2550) and of the Defence Costs Review—(Viscount Cranborne.)

12.2 p.m.

Lord Williams of Elvel

My Lords, there is a long list of speakers today; it is the last day before the Recess; the weather is hot and sticky and your Lordships wish to get away. I do not propose to detain the House for a moment longer than I must. However, I am sure that your Lordships will recognise that in the Motion moved by the noble Viscount there is much material to debate. If he regards us as sansculottes, I can only respond as a sansculotte that he will find that soon he will suffer the fate of other aristocrats: the sharp and lethal blade of the guillotine.

I wish to raise three simple points, each of which I will put in the form of a question. First, if The Defence Costs Study was so successful, why had it not happened previously? Secondly, what is the real current state of morale in our Armed Forces? Thirdly, what is the general strategy behind our defence effort? Perhaps I may put the last question in another way and ask: are the rest of us caught in the classic political trap unique to the Conservative Party of trying to cut public spending on the one hand while trying to maintain unrealistic defence commitments on the other?

Let me consider my first question. The Defence Cost Study has revealed much inefficiency. We are now told that it costs between £500,000 and £600,000 to train an RAF pilot, as opposed to some £60,000 to train a civilian pilot to the same standard. We are told that it costs £300,000 to train a Royal Marine musician at Deal and anything between £5,000 and £15,000 to recruit each serviceman or servicewoman. The Ministry of Defence, we are told, is at all levels too large, too top heavy and too bureaucratic. And so it goes on.

Now, it is welcome news that these matters have come to light. But it is odd, to say the least, that during the 1980s, when government after government led by the noble Baroness, Lady Thatcher, were ruthlessly decimating manufacturing industry in the cause of greater efficiency and when a succession of Secretaries of State were riding on tanks and showing off the flak jackets that made them feel so grand—it is odd that those governments and those Secretaries of State were presiding over a Ministry of Defence that was too large, too top heavy and too bureaucratic. It is equally odd, again to say the least, that when those selfsame tanks went to war in the Gulf, there was paper strength of some 700 but only about a quarter of them turned out to be operational. There was not enough ammunition, spares and so on to keep the equipment in fighting shape. And this we find to be in parallel with the news that some 70 per cent. of spare parts of all kinds kept in stores are never used. "They have spares", said a Ministry of Defence source, sadly, "for everything except what was needed."

I do not want to be wholly negative. I recognise that with the ending of the Cold War reaction times have lengthened; and I further recognise that there have been worthwile savings. But I am bound to say that such was the extent of "hollowing out" revealed in the Gulf War that we will need a lot of persuading that the current Estimates or costs review have done much to reverse that process. Indeed, in one particular respect, "hollowing out" has been accentuated—and I refer to Rosyth. As I said in response to the Statement, if the North Sea is about to become an exclusive economic zone, which it will be our responsibility to protect and sustain, it makes no sense whatever to move the Fisheries Protection Squadron to the South of England and the other so-called "minor vessels" over to the other side of Scotland. Nothing could be hollower than that.

This brings me conveniently to my second question; the current state of morale of the Armed Forces. There are two points here. The first is that, whatever the Government may say, in terms of combat effectiveness the less glamourous support activities are not becoming less important but, on the contrary, are becoming ever more important. The truth is that savings in support services that may look good on paper can rebound with far greater financial and operational costs if the work is not done properly. It was, after all, a private company, Alvis, which said in evidence to the Select Committee on Defence in another place, when the committee was studying the lessons of Operation Granby, There are some support jobs that only the forces can perform and their capability to carry out these roles effectively must be maintained". And, of course—and this is where I come to the point about morale—failure to do so would lead inevitably to an effect on the morale of combat troops, since the one thing that combat troops, in whatever service, rely on is the effective and reliable discharge of functions such as equipment supply or second and third line maintenance.

That is the first point. But the second point is even more worrying. It is all very well to talk about Defence Role 1, 2 and 3, and so on, but none of that intellectual analysis is worth a row of beans unless those who are required to carry out the real-world tasks—in other words, go into action and face death (because that is what action means)—none of the analysis is worth anything unless the men and women of our Armed Forces are properly motivated. I wish I could say that they were, but the sad news that I have to convey to your Lordships today—and it is sad and I genuinely regret having to say this—is that in all the years that I have been defence spokesman for my party in this House, I have never received so many representations or, frankly, so many leaks from serving members of the Armed Forces as I have in the last few months.

The problem is in essence simple. It concerns the pay and conditions of Armed Forces personnel. Traditionally, individual servicemen and women have relied upon their superiors—ultimately the chiefs-of-staff—to provide them with sensible and fair conditions of service. But since the Prospect study of 1991, which the noble Viscount mentioned, the three posts of Service Director of Personnel have been done away with, and, at least up until now, pay, allowances, pensions and so on have been dealt with by the Deputy Chief of Staff (Programmes and Personnel). But now, in the defence costs review, it is proposed to integrate the Service Personnel Division with the Secretariat Division. The result is that the service personnel organisation will be headed by a Grade 3 civil servant. Admittedly the Deputy Chief-of-Staff (Programmes and Personnel) will have oversight, but his primary purpose—believe it or not—is the requirement to balance the budget!

But it gets worse as we go along. We now have the Bett review of service career and manpower structures—and terms and conditions of service. Of course, we are told that this is not going to be simply another Sheehy study, which was so unpopular with the police, and we must hope that we are being told the truth. But the Bett team has the power to recommend the termination of established conditions of service, a revised pension scheme, and the introduction of a completely new remuneration system including performance related pay. On top of that, I am told that it is seriously proposed to change the terms of reference of the Armed Forces Pay Review body to delete the word "comparability".

Under those circumstances, there is no confidence— no confidence at all—that the position of servicemen and women will be properly protected under these arrangements, and I believe that the Government must take serious note of that. Indeed, there is so little confidence that, like it or not—and I certainly do not like it—there is already growing talk of the need for an Armed Forced federation, analogous to the Police Federation, to represent properly the views of service personnel. Most other NATO countries have something like that, the argument goes, so why shouldn't we? The plain truth is that Ministers have lost the trust of the very people whose trust is fundamental to the success of any defence effort.

Now, of course, this simple but alarming truth undermines the whole concept of Front Line First. Even if we knew where the front line was—and I will come to that matter in a moment—no front line can be successfully defended on land, sea or air unless those who are sent to defend it are properly motivated and their morale is high. History has shown far too many times that we neglect the interests of the ordinary soldier, airman or sailor at our peril. The Sunday Times reported on 24th April this year that: top military and civilian officials have written to Malcolm Rifkind … to warn that morale could collapse. Senior officers talk in despairing terms about being unable to maintain control. I only hope that the Secretary of State received that letter and is paying attention to its contents.

My last question can be summed up quite simply: what is our real strategy? To some extent I follow what the noble Viscount said in his introduction. It has been said time and time again—and indeed it is perfectly obvious—that the cuts in our Armed Forces over the past few years have been Treasury-driven. It is equally obvious that once they have been told how much money they had to spend, Defence Ministers have cut the Armed Forces to meet that figure. But, as the noble Viscount quite rightly pointed out, it is not enough to say that, obvious though it is. The Treasury is not some body from outer space. The Treasury is a department of government, and the Government as a whole are responsible for both financial and defence policy. If the decisions seem from the outside to be random and incoherent, it is probably because that is what they are. In short, there is a direct conflict at the heart of government: a conflict between the desire to save money to reverse their own tax increases at the appropriate moment; and the desire to maintain what I would describe as "top table" commitments which are beyond the capability of our Armed Forces at present funding levels.

We hear endlessly of the need to cut public expenditure, but what about the other side? Let me put it in the words of one senior officer recently: The Falklands War was the death knell of the British raj. And I would add: "and it hasn't recognised it yet". Let me use the words of another senior officer: Today the UK has almost no capability to meet a new task without removing units from existing tasks … we no longer have an Army as such with true capability … all we have is a set of units rotating through emergency tours … this is not an Army". So either the Government cut the tasks or they increase the money. It really is as simple as that.

But the truth is that they are prepared to do neither, and it is that that I call the enduring psychopathology of the Conservative Party. To satisfy one part of its constituency, it wishes to maintain the illusion of ultimate defence self-sufficiency and the delusion of "top table" imperial power; and to satisfy another part of its constituency it wishes to be able to cut public expenditure to the bone—and deep into the bone—to try to retrieve its reputation as a tax-cutting party. The result is, I am afraid, inevitable: we are led into the sort of muddling through and short-term cost cutting that has for far too long been accepted as the British substitute for coherent planning.

There is no sign that it will all stop here. No Minister that I know of—not even the noble Viscount today— has said that the defence costs review will be the final word, or that we have come, at long last, to the period of financial calm that is so badly needed by the Armed Forces if they are to rebuild morale and to reorganise in a sensible and unhurried manner. The Treasury, I am told, has tasted red meat, and is coining back for more.

I have no doubt that we have not seen the end of it. I have no doubt that there will be more cuts to come. Equally I have no doubt that they will be dressed up with fancy titles and merry jingles—-Options for Change, Front Line First and so on. I offer my own suggestion for the title of a study of how to finish off the Royal Air Force—Pennies from Heaven. But at the end, the conflict between our commitments and our resources must be resolved in a rational and coherent manner, and if it is not resolved by this Government, I can promise your Lordships that it will be resolved by the next.

Lastly, while I am on the subject of titles, I would remind your Lordships of the old saying used by the people of Glasgow to describe Edinburgh. Apologising to your Lordships for the earthiness of the language and my accent, I quote it as follows: "It's all fur coat and nae drawers". And that, I suggest, is an apt title for the defence policy that we have today.

12.18 p.m.

Lord Mayhew

My Lords, as the two previous speakers have indicated, the key question in this debate is whether, after all those cuts —after Front Line First, Options for Change, the Knott cuts and other cuts too— our commitments can be honoured with the resources that we have left.

Before I turn to that matter. I should like to ask three specific questions about the Government's attitude to weapons of mass destruction. First, do they understand the implications of keeping secret the number of warheads which we have? With regard to the non-proliferation treaty, they will urge on the non-nuclear countries very strong and intrusive methods of inspection, including inspection of the civil nuclear capability of those countries. How then will the Government answer the question: how many nuclear warheads do the British have and why do they not say? We know how many the Russians and Americans have. We are out of step on that, and I should like to know the answer to my question.

Next, what is going wrong with the comprehensive test ban treaty negotiations? At long last in our last debate we welcomed the conversion of the Government to the need for a treaty and their support for the signing of a treaty. During the 14 years since I became a defence spokesman, there has always been a different reason from the British Government as to why they cannot support a test ban treaty. First, it was because it could not be verified. Well, they had to drop that when it became obvious that it could be. Next they put forward Trident as a reason, but then they had to drop that. After that they said that safety tests were necessary; but now they have also dropped that reason. Finally, when the Americans showed them that they could not test in any event, the British Government—welcome it was, but inglorious—agreed to support a comprehensive test ban treaty.

The last time we debated the matter we were all optimistic. It looked as though an agreed text was coming out of negotiations which would lead to the agreement of a treaty before the next year's conference on the non-proliferation treaty. Can the Minister say why things are now bogged down? Why is there no agreed text, and what is the attitude of the British Government?

There is a third brief point that I should like to make about the signature of the chemical weapons convention. There was a good letter in The Times last week from Professor Pullinger on the point. The position is that the British have taken the lead in chemical warfare disarmament; indeed, the Foreign Office and the Ministry of Defence have done extremely well. I believe that we congratulated the Government during the last debate in that respect. But now it is all stuck and we are failing to ratify the convention. Moreover, rumour has it that it is the Department of Trade and Industry which does not want new restrictions on the chemical industry at present.

If I may say so, this is a great opportunity for the noble Viscount. Now is the time for him to win his spurs in the Cabinet when the legislative programme for Queen's Speech is decided. Let the noble Viscount take on Mr. Heseltine. That would be excellent. Let us have in the new Queen's Speech the legislation needed for ratifying the chemical weapons convention. Those are three points of which I trust the Government will take note.

I turn now to the major point of the debate about matching commitments to resources. I confess that I have some personal feelings on the matter having belonged to the first territorial unit to land in France in September 1939. Our weapons, our equipment and our training were far below what we needed and what we deserved. In my view, the first duty of those involved in defence matters should be to ensure that that kind of thing never happens again. Well, it should be easy. Indeed, compared with those days, we no longer have an empire to defend and there is no external threat to the United Kingdom. Yet our forces everywhere are stretched.

It is helpful to think of our commitments in two groups. We are committed to the defence of Europe and we are committed to contributing to United Nations peacekeeping. Those are not open-ended commitments; they are shared with allies. But then we also have commitments which are open-ended and which we have to handle by ourselves. In practical terms that means Northern Ireland and the Falkland Islands. As regards the defence of Europe, it seems to me that it is a matter of making better use of the resources that we have. The Government are notoriously half-hearted about European unity. They paid lip service to Maastricht and to the idea of a common foreign and security policy.

However, if we had greater unity and if Maastricht were to be made effective, our present contribution to European defence would be vastly more effective. The burden of defence would be shared more widely. At present we pay more than our share in that respect. Our arms procurement could be handled to a much greater extent on a joint basis. Indeed, hundreds of millions of pounds could be saved there. Moreover, our forces would be more effective for being more integrated, mobile and versatile.

We are doing more than our share in Bosnia; indeed, more than we would have to do if Europe were more united. In fact, if Europe had been more united at the start it is possible we may never have needed to send an armed force to that country. The same is true of our commitment to United Nations peacekeeping. Again, our contribution is substantial. But it would be more effective if the United Nations had proper military planning staff; if the mandates for peacekeeping projects were better worked out, with better intelligence backing; if more member states in the United Nations earmarked units for UN service, keeping them more readily available and better trained; and if there were professional forces instead of conscripts. If resources were better used in those ways, I believe that our commitments to the defence of Europe and to United Nations peacekeeping, and the heavy but inevitable commitment in Northern Ireland, could be honourably fulfilled.

However, that leaves out another major commitment; namely, the defence of the Falkland Islands. I raised the matter during our last debate and the noble Viscount gave me a courteous but unconvincing reply. I hope that his successor who now occupies that well-known stepping stone to the Cabinet will give a more convincing reply. According to the White Paper, present deployment costs £700 million, plus a further £5 billion reinforcement capability cost for overseas dependent territories—which means, I believe, predominantly the Falklands. But, heavy as it is, is that enough and will it be enough in the future? The Government can argue that there is no threat at present. Indeed, the Argentinian leaders, who are democratically elected, have publicly forsworn the use of force to implement their claim.

However, the problem of the sovereignty of the Falkland Islands has existed for many centuries, has caused repeated tension and will not go away. We do not have to take President Menem seriously when he publicly declares that the islands will be Argentinian by the end of the century. But can we be certain that the Argentinians' present pacific attitude will last for ever? What do we do if it changes? The Government's answer is clear. Ministers have repeatedly and explicitly declared that British sovereignty will be maintained as long as the islanders wish it—that is to say, indefinitely.

However, what are the defence implications involved both now and in the future? Have the Government asked themselves whether, if things did turn sour, they and their successors would still have the back-up resources and the political will to launch a new expeditionary force? As we all know, the Falklands conflict was a close-run thing. Everyone, including the noble Baroness, Lady Thatcher, has declared that we could not have won without the generous military support of the United States.

Are the Government assuming that, if they continue to refuse to negotiate about the Falklands, they will yet receive political and military assistance from the United States? If they are assuming that they are deceiving themselves. The fact is that if a new challenge is made we would have to meet it with vastly reduced resources and without American aid. That is the position. I agree that it is an awkward position, but it is no answer to say that things are calm at present.

The time to resolve such a problem is before it turns ugly. This is the time when statesmen act to forestall trouble, and of course this is what the Conservative Government did 14 years ago. They announced a 25-year leaseback proposal which could have led to an honourable and peaceful settlement. Then, disastrously, under pressure from their Back Benches, they scrapped it and the war followed.

Today they are in the same position. They reaffirmed today that it is not the interests of the Falkland Islands which are paramount; it is their wishes. That is to say, we offer them a permanent veto on a settlement—a settlement which would be in the interests not only of this country, and not only of the regions, but I am quite sure, looked at in practical terms, in the interests of the islanders themselves. We have strong obligations to the islanders, and heaven knows we have honoured them at enormous cost. But as British citizens they have obligations to the mother country as well.

I think it is time the Government abandoned this refusal to negotiate this matter. At a stretch we can probably meet our European defence, our United Nations peacekeeping and our Northern Ireland commitments, but the Falkland Islands is one commitment too far. If the Government continue to refuse negotiations in defiance of world opinion, they will be guilty of the worst crime of defence planning. They will be imposing tasks on our forces which they cannot fairly be asked to fulfil.

12.32 p.m.

Lord Bramall

My Lords, let us be quite clear, the basic requirement of this latest cost-cutting exercise into which everything reasonable, and perhaps not so reasonable, has had to be fitted has come, as everyone knows, from the public expenditure demands of the Chancellor. If the noble Lord the Minister, who I warmly welcome to the defence scene, were to reply as I think he would—indeed, the noble Viscount the Lord Privy Seal, who I also congratulate most warmly and say how much he will be missed from that scene has more or less said this—I would largely agree with him: namely, "Ah, but this time, the Ministry of Defence has been looking into areas which badly needed scrutiny and even stirring up".

But the question has to be asked, as indeed it just has been by my old comrade in arms, the noble Lord, Lord Williams of Elvel, how on earth these things have been missed in the almost incessant cost-cutting and efficiency exercises over the past 10 years, and particularly of course since the collapse of the Warsaw Pact, under Options for Change when these more peripheral savings might have avoided the inroads into our front line which were then made and which were reflected, among other things, in the excessive cuts in Army manpower and a most unsatisfactory "hollowing out", which is the Ministry of Defence's own expression. In this respect, Front Line First, if its rhetoric is anything to go by, is determined not to make the same mistake again.

But that initial Treasury imperative is still critical because the MoD is now firmly locked into finding the £750 million, and indeed more, by and in 1996–97; and if the untried savings turn out to be too optimistic, or the implementation more difficult than expected (and the timescale of only two years is, as admitted, exceedingly short), what might have been just satisfactory alternative arrangements would then have to be scaled down and modified in a totally unsatisfactory way just to squeeze them into the imposed cash limits and timescale, or additional compensatory savings will have to be found which may affect the front line, or at least prevent the front line's enhancement. So there may well still be further financial slips between the cup and the lip before a firm verdict can be made on whether all the savings have been both sensible and, in the event, without detriment to our front line and the quality of our Armed Forces.

Moreover, however well these ambitious plans are implemented, they will initiate—as has been admitted— yet another period of intense disruption and upheaval just when the Armed Forces had hardly finished, let alone settled down from, the previous and painful series of re-organisations under Options for Change and its aftermath; and flesh and blood can only take so much, magnificently loyal as the Armed Forces have always been.

When it suits them, Ministers like to quote the loyal support of the somewhat awkwardly placed Chiefs of Staff for their own financially driven plans. But the Chiefs of Staff have equally made it clear, and publicly, that what is required now is stability in both numbers and programmes, and no more cuts, which in view of what I have just said would be doubly damaging and would sap further the waning confidence of the Armed Forces and distract them from the complex problems of making earlier re-organisations work and thinking deeply about the nature of future threats and the proper organisation, weaponry and tactics to meet them. That is difficult enough at any time and particularly so when one is permanently studying one's navel.

I hope therefore that the Chiefs of Staffs' views on these matters will be equally listened to with approval, for unless the Government make some such statement no one will believe that, as soon as this cull has been completed, another one—when the next public expenditure round comes along—will not be initiated. That certainly would be a bridge too far. But I do not want to sound churlish or give the impression that I am out of sympathy with everything in the government statement. It has a brilliantly catchy title, much good work has gone into it and it has been a penetrating and well-presented exercise, which I fully recognise. For the most part, it is written in an engagingly frank and thought-provoking style. However, even knowing all the cries backwards (as I hope I do), I found the chapter on organisation and management pretty confusing and obscure. Perhaps I was just put off by the term "head office" which I thought put the inappropriate analogy of the supermarket or building society too close for comfort.

But if the statement meant that the Office of Management and Budget, the brainchild—for reasons, I quote, of "creative tension"—of the right honourable gentleman the President of the Board of Trade, has grown too large, too independent and too powerful, and that the devolved single service management budgets should now be controlled and co-ordinated through the individual Chiefs of Staff and their boards' executive committees, I am sure that this is exactly on the right lines and I welcome it warmly. I also believe that an executive committee, including the Chiefs of Staff, of the once defunct Defence Council would also have a part to play.

There are also a number of other things contained in the statement which I could certainly support. The Royal Air Force, for historical reasons, has always been somewhat overmanned for a service which mans equipment, in comparison with the Army, which equips men and performs more manpower-intensive tasks. Therefore I would support some reduction there, as well as closing some of the bases, although not, of course, the operational squadrons thereon.

The only question that remains is, has the numbers game been overdone—as occurred with the Army—in view of the untried nature of the civilianisation and privatisation of the RAF's repair and supply? One cannot compare, for a host of reasons, as some try to do, the Royal Air Force with either the Israeli or the Swedish air forces. It remains to be seen whether, in the event, the operational readiness and safety of the now much reduced number of squadrons and aircraft will have been affected by the new proposals.

The news on the equipment side looks more encouraging than perhaps it would have been if the defence costs study had not taken place. The extra Challenger tanks will enable us to have a compact, although none too large, tank fleet of the highest quality, with commonality throughout and with full capability to operate against what I might describe as "first division" equipment which so many third world powers now have. It will see us well into the 21st century in a period when the tank is still a crucial weapon on any battlefield. It is excellent news and I think could lead to further overseas orders. The mine counter-measure ships are also most welcome since they have a peacekeeping, anti-terrorist and full war function, and the multi-purpose nature of our forces is highly important.

However, it must be pointed out that in most cases the enhanced equipment programme—no doubt to give the impression that we are going forward instead of at the best standing still—is merely a gleam in the Secretary of State's eye. The conception, let alone the delivery, will depend on future cash flow, which itself is dependent on how the Front Line First proposals fare in practice and on there being no further inroads into defence expenditure. Therefore, I question whether much of this long-term equipment programme can be fairly and honestly claimed as part of the Front Line First package.

Moreover, there are some important omissions. For instance, what answer do we have against surface-to-surface missiles aimed at our bases, or even at our cities, in a world in which tribesmen and even terrorists may have Scud missiles? Our tanks apart, is the Minister happy about our next generation of anti-tank weapons or indeed our attack helicopters which form such a necessary and complementary addition to our comparatively too few tanks and for which no firm order has yet been placed? There is nothing to be complacent about in our equipment programme, particularly since memories of 1944 remind us how often in the past our weapons have compared unfavourably with those of the other side. Therefore, stability in this programme is very important.

However, it is still Army manpower which concerns me most. Thankfully, this time it is not the Territorial Army, which it seems to me the Government have got about right. With a Regular Army strength of about 120,000, a reserve Army figure of about half that is not unreasonable if one wants to provide, as one should, a framework for regeneration, more immediate reinforcement of the Regular Army and a link between the military and the civilian community. The 59,000 strength now agreed gives the spread, catchment area and number of units which are needed to enable it to perform all those functions and provide enough ever-ready volunteers to react in emergencies. However, I have to say that removing for financial reasons the centralised Phase II infantry training of the Territorial Army by the regulars is a highly retrograde step which I hope will be corrected.

To return to the regulars, the Army, as I believe is generally recognised, has already been hollowed out, both in its training machine and its logistic support, to an unsatisfactory degree. There have been scarcely enough combat units to go round, resulting in continual overstretch and an absence of any serious collective training. Certainly few units have been strong enough to cope, without reinforcement, in even minor emergencies.

Your Lordships will remember that at first the Army was lumbered, purely at the Treasury's insistence, with a manpower ceiling of 116,000, coming down from a prior to Options for Change strength of 162,000. Then, by force of necessity, that had to be increased to 119,000. Then, temporarily, by means of robbing Peter to pay Paul and at the expense of the tail, it was pushed up to 122,000. Now we are told that, on the one hand, as a result of Front Line First, the Army is to make a net reduction of 2,200 and, on the other, in order to correct the admitted hollowing out, combat support is to be improved. Can the Minister clarify the situation by answering the four following simple questions?

First, how much money has been saved in the Front Line First exercise which can now be added back for the true enhancement of our front line promised by the right honourable gentleman the Secretary of State? Secondly, what will be the long-term manpower ceiling for the British Army on which all recruiting and redundancy has to be based? Is it 119,000, 122,000 or 122,000 less 2,200, or an altogether different figure still?

Thirdly, how much of this new figure will be used to enhance our combat support to see that we could sustain operations which last more than 100 hours (like the Gulf) or a fortnight (as in the case of the Falklands)? At the moment we certainly could not sustain a force of a brigade or more for anything like three months or more. That no doubt contributes to our frequent hesitancy in various aspects of our foreign policy. If one cannot sustain it or, as has been pointed out, does not have the will to use it, there is not much point in having a front line in the first place.

Fourthly, what, if anything, will be done to improve the strengths of our combat units to cure their current overstretch and render unnecessary their multi-capbadge reinforcement for even minor emergencies? In that context, is the firm forecast of the noble Viscount the Lord Privy Seal that by the end of 1995 no combat units of any arm would have to engage in unaccompanied tours more frequently than 24 months going to be met? If it is not, when is it likely to happen?—because until it does the overstretch in the British Army will continue to be manifest and extremely serious in terms of both training and retention.

So, my Lords, until satisfactory answers can be provided to those and other questions the jury must remain out. Is this merely another cost-cutting exercise, although rather better organised than some of the previous exercises, or is it a new deal for the forces, constructed with vision and due regard for the future in the very uncertain and dangerous world that we live in? If the latter, will it be allowed to work as it should before further cuts, no doubt in the name of still greater efficiency, make us infinitely weaker all round and virtually impotent to support an honourable and positive foreign policy and protect our national and international interests?

Sadly, all this occurred in the 'twenties and 'thirties when the Chiefs of Staff had repeatedly to warn Ministers that they must carry out a policy of appeasement, collective or individual, because we lacked the military strength to support any other policy and even to protect our own country. Echoes of that seem to me to be all too close for comfort today.

Certainly our Armed Forces remain deeply sceptical. They have seen all too much of this before over the past few years. Although of course one can go to operational areas such as Bosnia where, under the invariably good leadership of young commanding officers, one will find morale high, there is right across the services, particularly in the middle, great unease and discontent and considerable lack of confidence in the higher management of defence, which is not helped by the uncertainty and delay surrounding the Belt Report on pay and conditions of service. In addition the almost obsessional assault on senior posts, even when those are justified by responsibility and proper remuneration, has greatly cut down career prospects throughout the forces. That is bound to affect quality when we most need it. For instance, will we be able in future to produce, as we invariably have in the past, the Michael Roses, the Peter de la Billiéres and the other commanding officers whose abilities shine forth in places like Ulster, the Falklands, the Gulf and now Bosnia?

Finally, there is a term abroad in Whitehall, initiated I know not where but presumably by those who have no experience of military service, about "de-enriching" the services. If that is the hidden agenda—outside the Ministry of Defence, of course—and the real aim of Front Line First, I would only say "God help us", for if one de-enriches the services one will, as surely as night follows day, de-enrich the nation. If that happens we could live to regret it in a very short time indeed, and then this Government would have a great deal to answer for.

12.48 p.m.

Lord Younger of Prestwick

My Louis, this debate is both very timely and welcome, coming as it does after an extremely important Statement made by the Secretary of State a week or two ago and the speech which my noble friend Lord Cranborne made this morning. It is a most important time. It also comes at the end of one of the most difficult two years that anyone involved in the forces can remember. There has been so much change and difficulty.

Against that background, it means even more to say that I find the exercise that has been gone through on Front Line First to be extremely impressive by any standards. I congratulate the Ministers and the entire Ministry of Defence on the way in which they have tackled it. Not only has this been a difficult task, but it has been a most unwelcome task to many of those involved. No one likes reducing well known units. No one likes removing well supported bases. No one likes extreme change. Yet this extremely impressive performance by the Ministry of Defence, in particular on the planning and organisational side, deserves the thanks of this House for a thoroughly professional job extremely well done.

The exercise has succeeded in saving a great deal of money and, at the same time, in not directly affecting the front line. I have wrestled with the problem on many occasions. I only wish that I had been able to tackle it in the intelligent way in which it has now been tackled. I add my tribute to the distinguished role that my noble friend Lord Cranborne played in the matter. I can certainly say to him that wherever he goes in the future he will find the forces extremely pleased to see him. He has done a very good job. My noble friend Lord Henley is indeed the most lucky of people, being put into one of the very best jobs that anyone can have in Government. I wish him every success and happiness in what I know will be a most interesting appointment.

The reductions or changes in the methods of support are ingenious. If carefully worked through, I believe that they will work effectively. I wish to stress that, in achieving the carrying out of support tasks by other means, in particular by contracting out, and so on, it is important to remember that those new arrangements not only have to work during a time of peace, as of now, but also have to be able to be adapted to work when hostilities arise in one form or another. They have to be able to survive, or to have a transitional method of working in times of tension or leading to war. It is important that that point should be borne in mind.

I very much welcome the extraordinary feat, if I may say so, of the Secretary of State in convincing his colleagues, in particular his Treasury colleagues, that a large part at least of the savings so hardly won within the Ministry's efforts has been put back into new equipment, or into saving orders for equipment that were pending but not put through. Several noble Lords have referred to the morale in the services as a problem. Nothing could do more to help that problem than the knowledge that there will be new equipment, replacements for the amphibious ships, the final order for the Challenger 2 tanks to give us one type of tank in the Army and, even more importantly enhancements in fuel, ammunition, and so on for training. Nothing demotivates our soldiers, sailors and airmen more than the feeling that they cannot gain enough training to keep them stretched. If I may draw the attention of the noble Lord, Lord Mayhew, to the point, that factor is more important than pay and conditions, important though those are. Soldiers, sailors and airmen need to feel that the training they receive is properly supported. I greatly welcome the ability to put some of those savings back into that aspect.

Noble Lords have referred to some of the other changes. I wish to refer to one of the detailed changes: the issue of the Rosyth naval base. The subject has been very controversial in Scotland. It has been bedevilled by incredibly bad reporting in almost all the media. No one ever takes the trouble to spell out whether the reference is to Rosyth dockyard or Rosyth naval base. The two are quite different. All the controversy over the past few weeks referred to the naval base; it has not referred to the dockyard. That factor is important. Of course, it is unwelcome that the naval base at Rosyth has had to be a casualty of the changes. Certainly all concerned are sad about that. However, granted that something had to be done to keep the fleet support depot facility to support ships coming into Rosyth in future, if such is needed, and to transfer one of the mine hunter squadrons to Faslane on the Clyde, which is nearer to its normal operating position than was Rosyth, is a most ingenious solution. It keeps the economic benefits of having the base in Scotland which is welcome north of the Border.

I hope that we shall receive an assurance that the facilities that will remain—I refer to the fleet support unit where the naval base is at present—will, if necessary, support ships in the course of operations. I am sure that from time to time such support will be needed. I hope that the naval base will be able to respond to NATO visits because they are important too. It is also welcome that the solution which the Secretary of State managed to achieve will protect something like half the jobs at present in the naval base. While sad at the change, I think that the Secretary of State has listened carefully and intelligently to what was said. I welcome the fact that he was able to save as much as he did.

I have two small but important points to make about the disposition of our forces under the new arrangements. The noble Lord, Lord Mayhew, is quite right, of course, to mention the importance of recognising the need to watch closely the development of the capability of Europe to undertake some of its own defence. For years a major problem has been that even our friends in the United States have felt, rightly or wrongly, that they did not receive enough support from Europe for Europe's own defence. The development of more defence activity under a European banner — whether under the Western European Union or whatever—has to be approved of and supported so far as we can.

It is equally important—and this is a factor that I was anxious to stress when the matter arose in the late 1980s—that support must not be achieved at the expense of our contribution to NATO. Our contribution to NATO is not only important in itself, and greatly appreciated by our NATO allies, but it is also absolutely critical in persuading the less enthusiastic members of NATO to keep up their contributions. I hope therefore that the support and encouragement that we may give to European defence activity will not be at the expense of NATO.

It is also worth remembering that none of the joint operations undertaken by European defence forces—or European and North Atlantic forces for that matter— could be achieved without the background of the NATO systems: the NATO communications experience and the NATO compatibility which, although much less than many of us would wish, is nevertheless absolutely critical. It is true that no two NATO countries—for instance, France and Germany—could work together if they did not use the background facilities of NATO to help them. That factor is also important.

I hope that the Minister will take my final brief point as a constructive suggestion. I find lacking in the aims and objectives of our defence a specific recognition of the need to provide something towards United Nations support activities. For the foreseeable future, I do not believe it is realistic to think that there will ever be such a state of calm and peace throughout the world that there will be no demand for support of United Nations peacekeeping operations somewhere. Of course, I do not suggest that we have to contribute to all of them everywhere, or even that we must always be contributing somewhere.

However, I believe that it is unrealistic not to earmark in our defence planning something that can be made available to support United Nations activities without destroying all our other activities at the same time. In a sense, if we did that, it would help in another way. If we were seen to do that, we would then be better able to resist multiple applications from the United Nations for us to do more than one activity in different places, which I do not believe that we can easily undertake. If we provide something, we should say to the United Nations: "That is our contribution, that is what we can make available when we wish to do so. It is up to you to convince us that others have played their part."

I wish to mention the Territorial Army situation which was included in the debate by the noble Lord, Lord Bramall. As President of the TAVRAs throughout the UK, I warmly welcome the extremely effective way in which Ministers have listened to the advice which has been given to them by all concerned from the TA. We often complain that we are not consulted. I have to say that on this occasion we have been magnificently consulted. I do not say that purely because the answer has been satisfactory; I would say it, in any sense even if the answer were not so satisfactory.

The Territorial Army will not only have a firm number which is near to what it has now, but it will also have what it has always wanted: a general role of support for the Regular Army. Not only will that be useful on occasions to the Regular Army, but it will also give that basic element of interesting, fulfilling, top grade training for all the territorial units to feel that they are really appreciated and have a proper job to do. That is welcome.

I have to add that the new role depends upon the legislative changes which are needed to enable us to call on our territorials from time to time quickly. The regulations are quite antiquated and I realise that legislation is needed. I have also been long enough in government to know that it is extremely difficult to get time for legislation in Parliament. I hope that Ministers will impress upon their colleagues the enormous urgency of obtaining legislation at an early date. That is extremely important. Without the change in legislation, the drive of the TA to take on its new role will be held back. I hope that we can get the legislation. Is this not something which might command all-party support? Could we not persuade the Government to reach a time-limited agreement to get the legislation through? I hope that that will be regarded as very important.

For the reserve forces generally, we are sad that the Royal Naval Reserve and, to some extent, the RAF reserves have suffered severely in the reductions. But I am sure that those who remain will continue to do a good job. I urge the Government to fill in the last remaining missing link, which is the future of the Royal Marine Reserve. It is an extremely keen and efficient part of the reserve forces. I think it is more important to get the right answer there than a quick answer, and I hope that the Government, particularly in connection with the Royal Navy, will think very hard about the importance of the Royal Marine Reserve because I believe it is a resource which should not be lightly discarded or lessened.

In most warmly welcoming the statement, I wish to make two brief points. The first has already been mentioned by other noble Lords. It is essential that we now have a reasonable period of stability for all those in the forces. Carrying out the changes is difficult, worrying and disruptive, and it has involved redundancies. All units have wondered what will happen next. Of course, we know that the search for better value for money must continue, but may we have a period of stability for units throughout the country to re-group and reorganise in the light of the big changes? I think that that is the most important factor for the recovery of morale.

Finally, I make an appeal for the one missing point in an otherwise good story. With others, I have said for some time that in the initial enthusiasm of Options for Change, we went too far on the reduction in the infantry. That is amply demonstrated because the Government's aim of ensuring that no one goes on an active tour of duty at a quicker rate than 24 months after the last one has finished is miles from being achieved. To give one example, the present Northern Ireland Province Reserve, as noble Lords know, is a unit which is located in England but detaches parts of itself to Northern Ireland for reinforcement there. That battalion has to stay in England because there are no barracks over there. The present reserve is the King's Own Scottish Borderers, which was due to be relieved later this summer, but because of Bosnia it has had a seven-month extension to its two-and-a-half year tour. To find a relief for it the Ministry of Defence has had to nominate a new regiment which will be formed from the Queen's Own Highlanders and the Gordon Highlanders known as the Highlanders. Two-and-a-half months after its formation, it is being allocated to fulfil that role. But it is due to serve on a resident tour in Northern Ireland and its province reserve task will continue until it moves to Londonderry three months later. Hardest hit of all will be the Duke of Wellington's Regiment which is now in Bosnia. It will have only two months to take leave and retrain for Northern Ireland before it takes on the task from the Highlanders. Finally, the King's Own Scottish Borderers, with which we started in this account, is scheduled to return to Northern Ireland on a normal— so-called—six-month operational tour only 11 months after its extended tour as province reserve ends.

I suggest that that makes the case. Whatever else is good in this, we must still solve the problem of not having sufficient infantry for the task that exists. I know it is difficult. It is easy to make special pleading on the matter, but I hope that Ministers will keep addressing the problem and, if possible, redress the situation, for the sake of all those who serve so well in the forces.

1.7 p.m.

Lord Mulley

My Lords, I am glad to follow the noble Lord, Lord Younger, because I agree with much of what he said. There is a great deal in the White Paper with which I agree, but the noble Lord pointed to two important matters which are not in it. One is the need for a period of stability which, goodness knows, I think the Armed Forces deserve because on the evidence in. the document alone they seem to have spent most of their time in committees.

My first impression on reading the document, and looking at all the charts was not that it would reduce the bureaucracy in the Ministry of Defence but that it would increase it. In fact, in my opinion the biggest mistake that was made was some time ago when the job of the vice-chiefs for the three services was abolished. In my experience, the vice-chiefs were responsible for the management of their services to leave the chiefs free for strategic duties and also to get about and visit units around the world.

While I can understand that the Lord Privy Seal was unable, as he put it, to anticipate the public expenditure review later this year, I regard that as an ominous sign of what may well come. It occurs to me that now he is in the Cabinet he might preach to his colleagues that they should not expect Labour spokesmen, in the years between now and the general election, to be able to give chapter and verse and complete accounting on any policy statements that they make. That should be particularly so on the "Today" programme of the BBC which seems to have assumed the role of the House of Commons—at least in its own opinion—in cross-examining potential Ministers on such matters.

I believe that this whole exercise is fatally flawed for two reasons. First, it is putting the cart before the horse to try to plan the new formation of defence without at least a survey of the kind of responses for which we might be called upon in the changed circumstances since the end of the Cold War and all that that has meant. In fact, it did not make life easier; it made it much more difficult. While there have been appalling instances of problems in the last couple of years, my guess is that there are far more waiting to surface than we have already experienced.

While one is horrified at the pictures of suffering that is occurring in the former Yugoslavia, Rwanda, and everywhere else, it must be made clear that people cannot exercise the killing of their neighbours and then expect the rest of the world to supply them with food and no doubt later with funds for the repair to the infrastructure that they themselves destroyed—with ammunition from goodness knows where—in order to resurrect life in those areas when agreement is reached. Unfortunately, in Yugoslavia in many cases it is only a question of weeks or months before any agreement falls apart. In my view, that should be stated. I would never have consented to sending our troops into any of those areas without the ability to defend themselves and the authority to use force in that connection in order to carry out their missions.

The most frightening thing I can recall seeing is a television programme where a Bosnian Serb was holding up his hand thus preventing the movement of a whole row of armoured personnel carriers that were there protecting and conducting a humanitarian convoy. I do not think that we can go along with that for very much longer. Although one would like to see the United Nations with the power to have forces on call to intervene at an early stage, while the automatic veto we used to expect is no longer automatic I do not see any long-term commitment of forces upon which the United Nations can call or any system of rationing the commitments. In fact, many members of the United Nations still have not paid their dues to cover the management costs of the UN headquarters. I should like to feel more optimistic, but there are no signs to justify that.

The second flaw is that we have no idea of how the sums that are so casually mentioned—£20 million here and £30 million there—are arrived at. As far as I can see it is very much a matter of guesswork. There are no figures in relation to what the forces can expect, this year, next year or the year after. Although it is said that this or that is an urgent necessity, many of the changes are not calculated to be put into effect until 1999. That strikes me as being an odd way of going about business, particularly against the background of the uncertainty of the world.

More than any of that, I should like to see someone take hold of the Treasury and sort it out. One understands that the Treasury has an interest and obligation to sort out the other departments of state, but nobody does anything about sorting out the Treasury. As far as I can see, it is still open to the criticism that Mr. Gladstone made over 100 years ago that government accounts are still run on a penny notebook system. What is spent is put down on one side of the account and what is received by way of various taxes is put down on the other. No distinction is made between capital and revenue expenditure. The cost of a few pencils goes into the same accounting system as a fleet of new aircraft, with no distinction at all. In these days of advanced information technology that is quite scandalous. I should like to see the Treasury put its own house in order before being so tough with everybody else.

I must confess that I was never on very good terms with the Treasury in my ministerial days. For example, I can remember appearing before the Treasury Knights in order to explain to them that it was not feasible, simply because the number of children coming into school at five was less than the number that had passed into secondary school, to set one reduction off against the increase in the other in terms of equipment for schools. I had to explain that it was not on to ask 15 year-olds to sit in the desks and chairs provided for five year-olds. It is that kind of thinking which still exists. Most departments are run by a low level official within the Treasury who just reports up.

Treasury control must be examined. For example, my experience in the 1960s when we had tenders in to build three married quarters was that the Treasury objected because it said that the houses would be too large for the ranks that would occupy them. After prolonged discussions we had to agree that they had to be cut down and made smaller. However, because of the delay the new tenders were actually more for the smaller houses than the amount for which we could have built the larger houses if we had been allowed to get on with it.

I believe the Ministry now has power to move money around within its own various sectors. However, I campaigned, and I believe that some agreement was ultimately reached, on the ability to carry forward from one year to another some capital expenditure, though not very much. So the absurdity, not only for the Ministry of Defence but also for other departments, is the scramble in the last couple of months of the financial year to spend up to their limits. That is no real way to run any part of government. I wonder when somebody will look at these questions and do something about the situation.

It seems to me that the most interesting part of the report is paragraph 232 on page 19, which talks of more flexibility in finance. It states: A new running cost agreement with the Treasury provides end-year flexibility for all Top Level Budget expenditure". I hope that the Minister who is to reply—and I join with others in congratulating him on his appointment and wish him well—will explain what the new running cost agreement with the Treasury is. Will it spread money from one year to another? Also, at the present time there is no distinction between buying a few pencils and buying a new aircraft, so how will the distinction be made between top level expenditure and other expenditure? That is something that should be explained.

There is another point about which we need information. In my time I found it extremely difficult to stop the idea that all expenditure had to be divided more or less exactly equally between the three services. I was told that there was never any intention that it should be so; it was just a remarkable coincidence that it seemed to happen that way every year. Looking at the needs of the services I am not sure that that is the right way to do it. As I say, I hope that that will be considered. Also, perhaps I may say candidly that I do not believe that it costs £300,000 to train a Royal Marine musician. The document says that Deal costs £6 million and out of that come 15 to 20 musicians. Someone has just done the arithmetic and in the initial statement made by the Secretary of State he brought in the £300,000. I cannot believe that figure. There must be all kinds of other costs in the £6 million spent at Deal.

My experience is that the Navy begrudged every penny that went to the Royal Marines. I had the greatest difficulty restoring a commando which had been cancelled—it was very useful in the Falklands war—and which was later disbanded. I had representations at the highest level from the Navy on the very night before I was due to make the statement about the reinstatement of the Marine commando. While for historic reasons it would be unwelcome to separate the Marines from the Navy, their flexibility is such that they have a particularly valuable role in the kinds of areas which we shall have to face in forthcoming years. They are by far the most efficient and cost-effective part of the defence services. If one is thinking, as I would like to think, of strengthening the potential peacekeeping ground forces, an extra commando of Marines as well as another battalion for the Army would be very welcome indeed and money very well spent. I am not at all sure that extra warships or tanks will be very much in demand. Armoured personnel carriers might well be more useful if we are going to get involved in these peacekeeping operations.

The embodiment of this approach is to be found in paragraph 213 of the White Paper. It states that the three services currently include margins costing over £200 million a year —I do not know how that figure is arrived at—to provide extra manpower to cover individuals who are away sick, on training courses, on leave, or for compassionate reasons. The paragraph refers to longer waiting times. I do not know where it is thought that these longer waiting times are coming from. I had suddenly to go out and find a lot of people to go firefighting. I can envisage demands from Northern Ireland or aid to the civil power at very short notice. I felt obliged to increase the establishment of the infantry battalions, particularly the armoured battalions, when I discovered that it was most unlikely, if they had to go to war as a tank regiment, that they had enough people to man all their tanks, just as I stopped the specialists going to Northern Ireland to walk around the streets there and leaving their tanks rusting in Germany. We had that German reservoir which we always raided when we needed extra forces. That no longer exists.

Paragraph 213 needs careful study, particularly as the cost of £200 million is given at the beginning of the paragraph and then a saving is given of £30 million. I do not know what is going to happen but it is totally wrong to have an establishment for any unit that is not thought to be adequate to cover the inevitable sickness leave and other absences that can occur, and did occur, even when we were at war.

When we are talking about support to the front line forces we should not forget the importance of ammunition and other supplies. I went to France with a 45 revolver and had ammunition for 39. I could not change the revolver and I had to go around on a motorcycle with a rifle on my back. I reflect on what might have been the outcome of the Falklands war if the Argentinians, no doubt for cost reasons, had not bought a large number of torpedoes which happily did not go off. They had torpedoes and they had three new German submarines, but fortunately they did not choose to destroy our forces before they reached the. Falklands as they could well have done. I hope that we. shall not, by contracts and by buying things in the cheapest market, undervalue the importance of giving our forces not only the best weapons but also the necessary ammunition and other support to be effective.

1.25 p.m.

Lord Carver

My Lords, we are asked today to take note of two weighty and important documents, and allocation of the last day of term to this debate does not, I believe, encourage very thorough consideration of them. However, I am inclined to think that that is preferable to postponing discussion until after the Summer Recess.

I had hoped that the completion of the Defence Costs Study, or Front Line First as it is called, would have brought to an end the process started by the Options for Change study four years ago and that the Armed Forces could now look forward to a period of stability in which to complete and absorb all the changes which they will both have brought about, with all the effects they have had, are having and will have on the personal lives of that devoted body of men and women who faithfully serve their Queen and country at sea, on land and in the air. But there is still yet another considerable source of uncertainty in their minds, which was referred to both by the noble Lord, Lord Williams of Elvel, and by my noble and gallant friend Lord Bramall.

I refer to the Independent Review of Service Career and Manpower Structure and Terms and Conditions of Service, chaired by Mr. Michael Bett, and referred to in paragraph 515 of the Defence White Paper. Its effect on the morale of the services, in every rank, is potentially even greater and certainly more widespread than that of either Options for Change or Front Line First. I hope that the noble Lord will tell us when it is likely to be completed and will assure the House that the views of those affected will be fully considered before decisions on it are made.

No responsible person could suggest that, with the dramatic change in the international scene since perestroika became a reality, and with the departure of ex-Soviet forces from Germany, there should not have been a thorough reappraisal of our defence effort and an attempt to make a significant reduction in defence expenditure, especially when the need to keep a tight control of public expenditure was generally acknowledged to be essential to the health of the economy. There is no doubt in my mind that our poor economic showing over the past half century has owed a good deal to the attempt by successive governments, of both political complexions, to punch above the weight—to use a popular but rather ridiculous phrase— the weight within which it was in the real interests of the nation to choose to box.

The two principal purposes which the Armed Forces have long been designed to serve have now almost disappeared: the need to prevent the dominance of Europe by a power hostile to us and to our interests; and the need to provide for the external and internal security of our overseas dependencies and the interests with which they were involved. At long last we have a much greater opportunity to choose the extent of our commitment, and it is only right that a radical examination should have been made of what level of effort the nation should apportion to defence and of how, within that, the Armed Forces should best be organised and equipped to serve our interests.

On the whole, with some exceptions—the Government's nostalgic addiction to nuclear weapons is one of them—I think that in the Options for Change exercise and the recent Front Line First one the Government have got it about right. I congratulate the Ministry of Defence on having managed to meet the Government's public expenditure target without further cutting the front line and on the method by which it carried out the Defence Costs Study. Established procedures would never have revealed where the fat really lay. That is clearly shown in the figures given in Table 2 on page 39 of the report. However, I have reservations about some aspects of it and questions which I hope the noble Lord will be able to answer when he replies.

The first is about the joint headquarters to be established at Northwood, referred to in paragraphs 222 to 223. Will there be a commander-in-chief, and, if so, who? What will he and the headquarters do when there is no joint operation in train, which is likely to be most of the time? I foresee overlapping between it and the operations centre in the Ministry of Defence. Knowing the tendency of Prime Ministers and Foreign and Defence Secretaries to demand instant access to the most detailed information when operations are in train, I can see attempts to by-pass the Chief of Defence Staff and, even more so, the Chiefs of Staff. That way disaster lies.

My second point is about the joint staff college, absorbing the single-service staff colleges, referred to in paragraph 320. I have no objection to the concept—in fact, I welcome it—but it is essential that the first part of the course for all students should be a thorough grounding in the staff training and professional knowledge of their own service.

I fully recognise the desirability of seeing that officers, in command and on the staff, of all three services are conversant with the capabilities and problems of other services and well trained in the command and staff aspects of joint operations; but the fact is that the chances of the British Armed Forces acting together, in much the same proportion in the same operation are small unless we repeat the Falklands affair. All three are much more likely to be operating more closely with the same service of other nations than with their sister British services.

My third reservation is over the reduction in service medical cover, described in paragraphs 331 to 336. It is very important that enough good young doctors continue, through cadetships, to join the services to provide, as far as the Army is concerned, unit and field ambulance medical officers in peacetime and the medical cover for forces and their families overseas; that a sufficient number remain in the service to ensure that there are experienced senior officers of high quality to organise, direct and control medical and evacuation services—people often forget about the problems of evacuation—and give advice on all these matters to commanders at all levels; and that a reserve system is maintained which can provide additional medical cover and evacuation facilities at short notice for active operations, as was found necessary in the Gulf War. I have fears that, in the process of rationalising the provision of medical cover for the Armed Forces and their families in this country, the provision of those services may be prejudiced, and this applies equally to nursing and dentistry.

Finally, there is recruiting. Although I welcome the idea that steps should be taken to improve co-operation between the Employment Service Agency's jobcentres and the defence careers information offices, I fear that too great a reliance on them could have a serious effect on recruiting in terms of quantity but especially perhaps in terms of quality. It will still be necessary to persuade young men and women who might not originally have thought of joining the services of the advantages to them of doing so and positively to attract them. I fear that jobcentres might just present the services as a last resort if nothing else is available. I hope that the noble Lord in replying will be able to remove my doubts on all those points.

Having given Front Line First a qualified blessing, I must warn the Government that they should not attempt to go further down the road of civilianisation, privatisation and market testing. It is fashionable these days to celebrate anniversaries. May I remind the House that 14th September marks the 140th anniversary of the landing of British and French troops in the Crimea. There were two lessons drawn from that unfortunate campaign. The first was that we should never again allow the Army's combat forces in the field to rely on a civilian organisation for their supply and administration. The other was that we must not allow the views of the conservative old and bold, based on their reminiscences of the last war—40 years away then; 50 years today—to exert too great an influence on the organisation and operational methods of the forces of the present day. My illustrious great-great-great-great-uncle, the first Duke of Wellington, was still commander-in-chief at the Horse Guards when he died at the age of 83 in 1852, two years before the Crimean War.' His influence in that respect had been disastrous. He was very strongly supported in those views by many Members of this House at the time.

So we must look to the future, not the past. Changes brought about by technological innovation must not merely be accepted but actively pursued. In that respect I am concerned at what I believe to be a serious omission in the defence equipment programme set out in the Defence White Paper. Although in paragraph 419 it records the introduction of two anti-aircraft missile systems, they are both designed to attack aircraft. Today, and even more so in the future, warheads will be delivered by missiles fired, whether from aircraft or from other platforms, at some distance from the target. Defence against them is needed. The only mention I can find of that is in Table 8 on page 63 which lists principal anti-air missile systems as a collaborative project in the study phase with Germany and Italy. I hope that the noble Lord will urge his right honourable friend the Secretary of State to ensure that that is given a high priority.

In previous debates in this House, and in books and articles, I have urged a radical rethink of the organisation for European security within the framework of the North Atlantic alliance, incorporating a European security and defence identity. I have never received any comment, and hardly any acknowledgement, of my proposals. I do not have time to repeat them today, but I have noted the extremely cautious and hesitant dipping of the toe in this water represented by the inset on European defence on pages 15 and 16 of the White Paper. It is time for the Government to pluck up their courage and jump in to join France and Germany in the pool. They will find the water not as cold as they fear.

Finally, I hope that once the Bett review is out of the way, the Armed Forces will be allowed to enjoy, as other speakers have asked, a period of stability and that we shall be able to switch the defence debate away from the protection of vested interests and making party political points to the real defence needs of the nation; to the fundamental importance of maintaining professional armed forces with a capability across the spectrum of conflict, suitably equipped and trained, which young men and women of high quality will continue to join; and to the international framework within which they will be able to practise their skills and to which they will be prepared to devote, and if need be sacrifice, their lives. We ask a lot of them.

1.37 p.m.

Lord Boyd-Carpenter

My Lords, as the noble and gallant Lord, Lord Carver, has just pointed out, it is a pity that this most important debate should take place on the last day of the session. There could not be a more important subject than national defence. It seems to me a pity, as it did to the noble and gallant Lord, that, although we are at last given the opportunity to debate this matter, nonetheless it is relegated to what one might call "the last day of term".

However, it is a matter which we are absolutely right to debate. Twice in my lifetime this country has tottered on the edge of defeat because the British Government allowed our defences to be weakened unduly. In 1939 we were on the verge of being overcome by an enemy and it was only because of the great gallantry with which we fought on against the odds that it is possible for us still to be a free and independent country. If there is a lesson to be learnt from recent history it is surely this: the worst mistake that any British Government can make is to allow our defences to fall below the level at which they can really do their job.

Therefore, the question that must be asked on the present statement, as it has been the question on previous statements, is whether defence on the scale suggested in this White Paper is adequate for the modern world. We live in a very dangerous world. As was said earlier, it is perfectly true that some of the dangers which faced us have disappeared, but there are plenty more. Indeed, with the changes that have taken place in the technique of armed action, it is a fact that new and serious dangers are emerging. I have in mind particularly the widespread development of nuclear warfare, which enables quite small countries to constitute a very great danger to the world. About 20 years ago a country had to have a large army, based on a large population, to constitute a serious menace to its neighbours. Now, however, quite small countries, such as North Korea, Iraq and Bosnia, can, with the possession of destructive modern weapons, constitute a very great danger to the peace of the world and to the security not only of their equals in size, but of the so-called "great powers".

Therefore, it becomes all the more important that we in this country, with our very great past experience— and given the fact that twice in my lifetime it has been this country that has saved the civilised world from being overcome by oppression—should discuss and consider the position carefully. There are great dangers in the present situation, and it is a mistake to believe that, because certain of the other obvious dangers, such as the great Russian army, have disappeared, the position has become easier and safer. I believe that it is more dangerous. As I have said, I believe that the fact that quite small countries, equipped with the latest techniques of modern weaponry, can constitute a real threat to peace and to the wellbeing of other countries means that the study of what is a proper defence provision has become not less important, but more important.

That is why I welcome the fact that we in this House are debating this matter, however belatedly. Members of this House include the two noble and gallant Field Marshals and others who have very great experience and judgment in military and defence matters generally. It is because of that that your Lordships can contribute very considerably to helping the Government to have a wise and sensible policy at this very difficult time.

One rather curious question arises from the debate. If it is possible, as the Government are suggesting, by a transfer of effort and by cutting back on various other activities to maintain an adequate defence force with improvements such as are detailed in the White Paper, is not that an indication that in recent years effort has been placed in a direction where it has not been most profitably used? I fear that, if it is possible now to dispense with considerable aspects of our defence establishment, that must be an indication that, at any rate in the judgment of the Government, we did not get full value at that time for the resources that we allocated to defence.

That leads on to the question—I hope that my noble friend the Minister will feel able to deal with this—of whether, in the dangerous world of today, it is really possible to provide for defence adequately on the basis that is now proposed. There are people who believe— to some extent, the noble and gallant Lord, Lord Carver, appears to believe —that there are improvements which could and should be made. I hope that my noble friend the Minister and the Government will not feel any complacency about the provision that is now made.

Turning to another matter, I am very sorry indeed to note the encouragement which the noble Lord, Lord Mayhew, gave to the Argentinians over the Falklands. I think that it was a great mistake to indicate that we could consider handing over loyal British subjects in the Falkland Islands to the Argentine. I hope that we shall be able to dismiss absolutely any illusion in the minds of those who control the Argentine that they will be allowed at any stage to grab British territory in that way. Indeed, the position is such that I hope that we can make it abundantly clear to the Argentine that were they to make any further attempt to do what they tried to do some years ago, the campaign will not necessarily be fought only around the Falkland Islands, but that a good deal of the Argentine, including the capital city, will be very vulnerable to military action and that if they feel disposed to test the determination of the British people to safeguard British subjects and British territory, they may get a very nasty surprise. In any event, I am quite sure that it is very wrong—I hope that the noble Lord, Lord Mayhew, will forgive me for saying this—to give any encouragement to the idea that the Argentine will be able to obtain the sovereignty of the Falkland Islands by negotiation in the reasonably near future.

Lord Mayhew

My Lords, I certainly do not think that it is helpful to threaten the bombardment of Buenos Aires.

Lord Boyd-Carpenter

My Lords, it would be perfectly possible technically. If the Argentine indulges in aggression against British territory, as it has already done once, I hope that it will be prepared to take the consequences—and I hope that the consequences will be very serious indeed for it. It is only by getting that clear in their minds and by preventing woolly, hopeful illusions from forming in their minds, that they may be discouraged from bringing disaster upon themselves by aggression of that kind. It is as well to be blunt and plain about it—that they will not, despite the encouragement of the noble Lord, Lord Mayhew, be permitted to do anything of the sort.

I should like to touch quickly on a number of other aspects of defence matters. No mention has been made of one of our great assets in defence, the Gurkhas. I hope that my noble friend the Minister will be able to say something about them. I understand that it is the Government's intention to retain at any rate two Gurkha battalions—I hope that we might retain three. They are magnificent troops—loyal, efficient and brave—and I very much hope that there will be an assurance that we are determined to retain them.

I should value a response from my noble friend the Minister on another aspect. It is apparently proposed to stand down the second battalions of two or three Guards regiments; in particular, the Coldstream and the Scots Guards, in which I served. I wonder whether thought is given to the special position of Guards battalions; that they have two separate sets of training techniques: training in ceremonial—and their ceremonial is undoubtedly fine and impressive—and operational training. If we have only one battalion, it will be extremely difficult to find the time to give them both forms of training in sufficient degree. I wonder therefore whether thought should not be given to the retention of second battalions, at any rates in Guards regiments, where the peculiar commitment to ceremonial in additional to operational activities is so important.

The priority which we give now to adequate provision for defence is vital. I realise that defence provision is not necessarily popular with the public; that additional provision for social security and matters such as legal aid have a far greater appeal, but I hope that we have a government who are determined to maintain the defences of this country at an adequately high level. I hope that we have a government who recognise that twice in my lifetime we have come near to disaster by running down our defences, and I hope that we shall have an assurance that there will be no third mistake of that kind.

1.52 p.m.

Lord Greenhill of Harrow

My Lords, I hesitated to intervene in the debate since it is more than 20 years since I have participated in any significant way in the affairs of the MoD. In those 20 years, this country's military role has changed, and with it the way in which ministry should organise our defences. I shall take only a few minutes of your Lordships' time, as I know that you will be treated to more informed opinion by later speakers and many of you must be hungry.

I have read the ministry's Statement and digested as much as I can of the Front Line First document. Some of the proposals are not new, and the document makes good sense to me. I wonder why some of the proposed steps were not taken long ago. One sentence in the Statement struck me as deserving a little attention. It was mentioned by the noble Lord, Lord Williams of Elvel. It claimed that the MoD and other headquarters are, too large, too top heavy and too bureaucratic". I ask myself who must take responsibility for that. No doubt the Civil Service, so frequently picked upon by politicians and the public, will be made to take the blame, and indeed there may be some justification for that. But the sentence sounded to me suspiciously like an attempt to put the blame in one direction only. Are there not others, in particular Defence Ministers themselves, who must take a substantial share and not escape criticism?

Since the Government came to power in 1979, many Ministers have served in that highly important department. I have been unable to ascertain just how many, but I guess the number is substantial. Some have come and gone, and seem not to have detected the deficiencies and have failed to take the action now being belatedly proposed.

A recent memoir of a senior Minister in the MoD has attracted much attention, and has shown how one at least has spent his time going around the back of his chief and others. Can it not be justly claimed that this large and important ministry has not responded appropriately to the changing conditions of the world, and that leadership has in fact been lacking? I do not feel that that judgment is undeserved. Even the Falklands War and the Gulf War did not focus effectively and urgently ministerial attention to what is possibly the most complicated and important ministry in Whitehall.

Time and money have been wasted on going into the past—for example, post mortems, pursuit of war crimes, and so on —and that has diverted attention from the future. Contradictory reports have followed one another, culminating in Front Line First, which is now before us. I am not equipped to judge the details of that new report. They may well require some amendment, but if the Minister and his colleagues have now established a young, strong and determined team, let it be used to bring about, under the instructions of the Cabinet, with the willing co-operation of Treasury Ministers, sensible changes and bring an end to argument, conflict and waste.

There is just one final point I should like to make. There are important political problems ahead. I agree with the noble Lord, Lord Mayhew, that they must be faced. We must not delay discussing them and the future of the United Nations organisation in the light of this year's events. We must not delay discussing them in the House later this year.

1.57 p.m.

Lord Ironside

My Lords, if there are any flaws in the two White Papers that we are debating, they are difficult to detect. The Government have done an excellent job on this year's Estimates. They are laid out clearly and, following last year's analyses, the policy points this year have been well argued. However, we must scrutinise what goes on in the front line, and up the logistics ladder to it, by way of the servicemen, the defence service agencies, and the defence industrial base, before we can judge the output through the elegant prose of the White Paper.

Many of us in the House have had the opportunity to visit units and defence establishments at home and overseas. I should like to thank my noble friend the Leader of the House for arranging those visits. We have had many opportunities to meet servicemen and servicewomen and of being briefed first hand by them on their tasks, and of hearing what they have to say about their lives in the Armed Forces. Equally, they all have the opportunity to meet us and say things to us. That is also important. I hope that those parliamentary visits can continue to take place in the future. In my role as secretary of the All-Party Defence Study Group I try to align the visits with the changes taking place in our defence affairs. Two of the subjects to which we must pay attention at the moment are amphibiosity and air mobility. Without this insight into what goes on in the field, we can easily be accused of judging the Government only on their literary skills in the White Papers. What we should really be doing is listening to what the practitioner has to say, just as the Government have done in reaching their conclusions in The Defence Costs Study.

To me, the key messages that come out of the Defence Estimates this year and Front Line First are all contained in the management chapters. Furthermore, I believe that the thoroughness of the Equipment Programme chapter and the Front Line First summary sheet are a reminder to all of us of what lies behind the delivery of properly manned, equipped and trained forces. I am sorry that Front Line First was not as well received by noble Lords opposite as I believe it should have been, bearing in mind the degree of detail and well argued decisions that have been presented to us.

Their main complaint appears to be that the Government were freshening up old statements in order to make them sound new and that the Government were slow to realise that the stores holdings needed pruning. But I believe that they have missed the crucial points. The newsworthy items are that the landing ship docks have gone from feasibility to project definition and are now going on to design and build. Equally, Batch 2 Trafalgar submarines are now moving along the same path without any slippage. Confirmation that another batch of Type 23 frigates is still on course is also good news. Sandown class mine counter measures vehicles have gone from tender stage to actual order. If that is not good news, what is? The Tomahawk missile is now on the cards and will go through the staged procurement process. Let us hope that it will not fall at the first hurdle. Challenger 2 has made the grade to the finishing line and that is also very good news. I could go on, but the point is that each platform and weapon must justify its place in the budget at each hurdle or break point: feasibility, project definition, technical demonstration, engineering development and production and, finally, in-service date. So I believe that it is quite right to emphasise the milestones that have been reached.

In declaring my interest, I know only too well the hazards of competition. A first award is no more than winning a place at the starting gates and there is competition at every hurdle, so that the customer can pull out if the operational requirement changes, if the specification is not being met or if something better comes along. We have many examples of this. In the weapons field, for example, NAWS (NATO air weapons system) is out and PAAMS (principle anti-aircraft missile system) is in. In warships, the NATO frigate for the 1990s is out and the common new generation frigate is in. Upholder class submarines are out and Batch 2 Trafalgar nuclear submarines are in. Clearly, the Government must not be afraid of taking such decisions. They are painful to take, with the Treasury hovering in the background.

The future of the Upholders is now in question. They are up for sale and the Pakistan Navy seems to be the most likely customer. The Defence Export Services Organisation is in the ring to negotiate but it faces competition from France and Sweden. I imagine that if a successful deal is to be struck much will depend on the value which the Treasury attaches to the Upholders. I hope that my noble friend Lord Henley will give an assurance that this issue is being properly addressed.

What is newsworthy about stores is not the realisation that there is any overstocking but that government policy to raise levels of equipment reliability, availability and maintainability being supplied by industry has now paid off. Production time has shortened, not so many spares are needed, and therefore greater risks can be taken to reduce stocks. However, I believe that the most important factor is to ensure that surge capacity is available and that a liability is put on industry to provide services in emergencies. My noble friend Lord Younger referred to the fact that in contracting out we must make sure that we can contract in again when there is an emergency instead of pushing the problem aside into the depots and stores, where shelf life becomes the enemy of good management.

I recall a time in 1958 when the Director of Naval Stores tried to shake up the naval stores by saying that he would dispose of all stores more than 10 years old. When he discovered that 90 per cent. of them had to go he called off his plans immediately for fear of creating a crisis. There is always a fear in the minds of those in any department that a crisis can be created. We are now discovering the build-up of stores, which has been happening for many years.

Shelf life is a problem but it highlights another issue. We have entered an era where we have new platforms and weapons in service which are the envy of other nations and will remain so for decades. But there will come a time when much of it will fall due for renewal over a short bracket of time. I am therefore interested in what the Government are saying about strategic research. They predict a technological shift away from research on platforms to research on weapons and sensors, in spite of requirements for power and propulsion, better aerodynamics and hydrodynamics as well as structures and materials. I wonder whether this is right in the light of policy for mid-life updates for weapons and equipment. If platforms last as long as they do, we may well fall into the trap of having weapons and sensors design running well ahead of platform design and being unable to perform some of the military tasks required of us at the time they arise. A smart stand-off weapon may call for a stealthy platform and already the noble and gallant Lord, Lord Carver, has referred to the multiplicity of stand-off weapons which will appear in the future.

I see now a call for something less than full warship standards in the helicopter carrier design. I wonder whether a policy of a shift away from platform research makes sense when we are already seeing warships standards being put at risk in order to bring whole ship costs down to affordable levels. I hope that when my noble friend Lord Henley replies he will assure me that the right balance between platform and weapon research will be struck in the future.

There is excess capacity in our shipbuilding and repair yards and our naval dockyards are being rationalised. Therefore, I hope that in the long term, our warship construction capacity will not be jeopardised by an over-zealous desire to make competition policy work at all costs. There are signs in The Defence Costs Study that the Government now recognise that difficulty in their new quest for stability in that field. It is strange that we see that the defence industrial base, as well as the Armed Forces, is also asking for stability. That is being done in order to reduce the costs of holding competitions to both sides and the numbers of contractors bidding, so as to have more continuity of supply and by negotiating more single-source contracts in the process.

I believe that that is good news when we see the competition base being steadily eroded through industrial mergers. The NAPNOC procedures— NAPNOC being no agreed price, no contract—can be further streamlined to preserve the basic elements of competition policy. I hope that the 1994–95 research expenditure of £600 million will be applied carefully to ensure that we get into the enabling technologies when we should; that we collaborate when we must; and that we buy off the shelf when we can.

I shall conclude by saying that the statistical summary, to which no one has yet referred, which accompanies part one of the Estimates, is extremely helpful in analysing what is set out in part one. I believe that it can be seen that the Government's competition policy is justified by the numbers of UK firms featuring in the contractor's list. Foreign penetration appears to be mostly in the £10 million to £25 million per year group. It is a 20 per cent. penetration in that area. The changes which we face are above that level where the rewards for prime contractorships lie. I believe that there would be mounting concern if we were forced to rely on foreign companies as a matter of course to satisfy our major project requirements, except in isolated cases.

2.11 p.m.

Lord Craig of Radley

My Lords, foremost in many of our minds is the Defence Costs Study, Front Line First. I propose to concentrate on my reaction to that report which was published on 14th July.

I welcome the continuing pressure on so-called head office numbers and structure. Some good ideas which have been around for some time look set to be implemented. Seven years ago when I was Chief of Air Staff, I pressed extremely hard for the single service chiefs to be given overall financial responsibility for their single service budgets. It seemed bizarre, as we prepared to introduce the new management strategy and align financial accountability with operational responsibility, that single service chiefs were not to be included. I wanted to see them as the accounting officers for their service so that, at the very least, they would be held responsible for those aspects of the budget which their service used.

I was seen off at the time by the Office of Management and Budget—the OMB. It was going to cut too deep into its responsibilities. Had not Mr. Heseltine, as Defence Secretary in 1984, set up the OMB as a centre of "creative tension" with the military?

That ill-conceived approach has been given the heave-ho by the present Defence Secretary. He has rightly acknowledged that the civil and military staffs in the MoD are there to work together as a unified team. Co-operation and not confrontation is his watchword; and I agree with him. I could scarcely hold back a small cheer when I read that the OMB is to go and the single service chiefs are to be given financial responsibility at long last.

Indeed, it is instructive to recall that the Heseltine White Paper of July 1984 stated that: The primary objective of the OMB will thus be to achieve stronger control over the Ministry's corporate financial planning, the commitment of resources, and the financial and management systems which the Ministry follows throughout its work". The root cause of many of the Ministry's recent financial weaknesses do not lie at the doors of the three individual services, but at the inability of the OMB arrangements to fulfil the remit of 1984. OMB, and its predecessors, failed because financial authority and operational responsibility were divorced. I hope that the new arrangements will fare better.

One other recommendation that I made as I left the MoD was that as soon as they settled down after the reorganisations and the Prospect study it would be time to review the need for a second PUS and VCDS. The one-over-one nature of those posts with PUS and CDS is suspect after all the headquarters cutbacks. The MoD can still look too top-heavy.

Like the noble and gallant Lord, Lord Carver, I read rather less enthusiastically about the intention to form a new permanently manned joint headquarters. It is not clear—to me, at any rate—who is in charge of that creation. Who is the commander? Is he always there, or does he get found at the right moment? That would give just as large a political signal as the current arrangements when one of the existing single service headquarters is selected to control ongoing operations.

Are we to understand from the latter that Her Majesty's Government are expecting to commit forces to major joint operations year in year out? With three operational headquarters already formed and exercised and tested by successful live operations with the majority of operations starting low key and either single service (or bi-service at most) I have a nasty suspicion that the empty hole at Northwood, following the departure of CINCHAN, has proved to be a void looking for a role.

With such major reductions in our overall strength, I find it questionable that we are to create a new major headquarters. We are told that it would not prejudice or reduce the existing responsibilities of the services' own operational commanders-in-chief. The White Paper tells us that they will be able to concentrate on single service operations which, we are also told, are to become increasingly unlikely. It does not all seem to add up. Does the new arrangement have the full support of chiefs of staff?

Much is made in the Defence Costs Study about the greater need for "jointery", as though it were a new discovery. Anyone with a few moments to spare would find that jointery has been very much alive and kicking for several decades. It does no service to the understanding of the Armed Forces by the wider public to seek to extol today's ideas by suggesting that they are brand new and have never been thought about or acted on before. I expect better than that of our experienced Ministers.

Reading more deeply into the long list of topics which have been studied, a sense of déjà vu started to envelop me. Amalgamating staff colleges, joint service helicopter training, a civil reserve air fleet scheme and defence medical services are not sacred cows. They and many others are hoary old chestnuts, at least in the sense that in my time they have all been studied two, three, four or more times before.

The gut feeling, the back of the envelope calculation (inevitably no more than guesstimates because pressure of time precludes getting fully accurate costings) seem to favour the bright, obviously better idea. But as the number crunchers get out their calculators, and the complexities of the simple idea start to unfold, all too often the whole thing has to be shelved. It may be a brilliant idea, but it is not cost effective: it is not deliverable.

By the same token I have misgivings about costed proposals to be delivered in six to seven years' time. It stretches reality to believe that we are now able to cost and start to deliver that far ahead. Assumptions critical to the choices can prove to be wildly inaccurate. It is of course worth thinking about and, nearer the time, take a firm decision when the facts become clear. Before that, assumed savings are worth little more than the paper upon which they are written.

I well remember 15 years ago becoming quite enthusiastic about the civil reserve air police scheme. I made a lot of inquiries about the US arrangements. Basically, the airline is willing to have its aircraft flooring strengthened, provision made for special fitments, hard points and so on. The aircraft would be available at short notice. You have to pay any up front costs of modification and then an annual fee in addition to contract work because the airline is carrying your fittings, and so extra dead-weight, on all its commercial flights. One operator, Freddie Laker, was very keen to get involved with us and he made some tempting offers. Happily we did not take him up on them as he went into liquidation. We would have had nothing to show for our money! That is a cautionary tale and it is all in the files somewhere.

I do not want to sound too much of a Jonah. The details of an idea can of course change with the passing of the years. What could not be done then may be feasible this time. But the report is too full of those ominous quotes, such as "subject to further study", or "subject to investigation", or "further work is required". It all leaves me with an uneasy feeling about the viability of the package. Perhaps the Minister—I welcome the new Minister to his responsibilities—can reassure us. Are all these proposals cast iron financially and in timescale? Even miracles in the Ministry of Defence take time to deliver!

RAF manpower cut-backs come as no surprise to me. Since Options for Change, the Royal Air Force front-line fast jet force has been reduced rapidly by some 33 per cent., (approaching 50 per cent. in air defence); ground establishments are down from six to three, and flying training airfields go down to a planned three. Supply depots will be decreased from four to one by around 1997 and maintenance units will be reduced from three to two. Overall, some 16 squadrons and 26 stations will have been removed from the orbat. The manpower requirement obviously had to match as quickly as possible this reduced front line. Faced with this massive draw down, the Royal Air Force, far from fighting to the last desk, undertook a root and branch review some two years ago to establish its minimum manpower requirement for the future. I am saddened that the presentation of the Royal Air Force's manpower problem has implied that the RAF was hopelessly overmanned and quite unable to control its affairs. Nothing could be further from the truth, or be more hurtful or damaging to the service's morale.

The Defence Cost Study took on board the results of this Royal Air Force manpower review, which was praised and fully supported by the study teams. But where the study parts company with the Royal Air Force's own plans is in the speed with which the manpower savings are to be found. Too rapid a rundown, before alternative arrangements are in place and fully functioning, runs significant risks—risks to operational standards and in the field of flight safety. It also requires a much higher number of compulsory redundancies. It is a sad reflection—as we give thanks for the bravery and devotion to duty of those who fought and died for their country 50 years ago—on the value which Her Majesty's Government put on today's service personnel.

Thousands of men and women who voluntarily joined the services for a full career are suddenly faced with compulsory redundancy, or the fear of it, for an unprecedented period of six or seven years or more. Is this the way to look after people whose loyalty and sense of duty is the finest in the world? What is not clear to me—perhaps the Minister could inform us—is whether chucking people out of the Armed Forces by compulsory redundancy, thereby eventually saving on the Defence Vote, will not attract a potentially significant bill for unemployment benefits and so on elsewhere. Have the Government taken account of the net extra costs to the Treasury caused by service redundancy, or is the Ministry of Defence embarking on some questionable practice of creative accounting, saving money on its budget at the expense of the DSS? Perhaps the Minister can reassure us.

Many of us who admire and welcome the professionalism and dedication of the defence medical services are profoundly disturbed by the latest in a very long line of plans for reducing and reorganising the medics. There are many who say that we should leave it all to the National Health Service. However, one has only to think of the difference between surgery under canvas dealing with scores of wounded, perhaps under threat of chemical attack, and even the best NHS hospital faced with the results of a motorway pile-up to realise that wartime medical requirements are not the same as a peacetime disaster. One of the key factors which sustains the fighting confidence of the serviceman is the knowledge that if he is unlucky enough to be hit there is a strong and dedicated medical team to come to his rescue and perhaps save his life, his eyesight or one of his limbs.

During the Gulf crisis we sought to boost our regular capability by calling on NHS consultants who had a reserve commitment. But we could not tell them when the fighting might start or how long it would continue. Understandably, their hospitals were not at all keen to let them go on such vague terms. Nor were their NHS patients happy to see their promised operation suddenly cancelled for an indefinite period. It all sounds so simple to rely on the NHS until one begins to learn of some of the problems which may come in tow.

Therefore, I ask whether it is right to cut 750 posts from the Armed Forces' secondary medical care. What happens if we need that number again in a hurry? No one should doubt the importance of medical support's contribution to the strength of our front line.

What comes to my mind more generally from the Defence Costs Study is the importance of the institutional memory within the Ministry of Defence. As head office numbers fall, new ways of collating and retrieving the fruits of past studies which do not rely on individual recollection should be put in place. This Defence Costs Study seems to re-tread a number of well-trodden paths. Perhaps all of today's ideas have been explored with the benefit of previous work readily to hand. I hope that the Minister can reassure us that that is the case; otherwise the savings, which the Treasury has now backed, look suspect. To the extent that the Ministry of Defence cannot deliver by means of the Defence Costs Study, the services will face yet further squeezes. There is a crying need for a period of stability: that could prove to be illusory and a mirage.

The Government have been playing fast and loose with our Armed Forces' capabilities and manpower for a long time. How can they be so confident that reducing our offensive air power by a third and more since 1990 is justified? With its long reach, rapid response, precise fire power, swiftly inserted and equally easily disengaged, air power has become a more and more valuable adjunct to United Nations peacekeeping and other operations. It enables a nation like ours to make a meaningful response to United Nations requests without having to become heavily embroiled on the ground. Certainly the Americans now see it that way. But we are finding that mounting prolonged peacekeeping activities in addition to anti-terrorist tasks is increasingly difficult. We are in danger of losing that surge of sustained capability which is vital not only for defending ourselves against attack but also for safeguarding our wider security interests in peace time. I hope that we are lucky enough never to rue the day when the services and their uniformed and civilian support were so emasculated and so hollowed out by this Government.

2.29 p.m.

Lord Vivian

My Lords, in this debate I should like to concentrate on the operational effectiveness of the Army as the Defence Cost Study states that, There will be no reduction in the size of the front line, and the forward equipment programme, essential to its continued effectiveness, has been protected". Time allows me to focus on only a few issues, but if they are not addressed and speedy remedial action taken they will reduce the Army's operational effectiveness and its fighting capability.

However, before these matters are brought to the attention of your Lordships, I wish to pay a tribute to my noble friend the Leader of the House and my honourable friend in another place, the Chief Secretary to the Treasury, and congratulate them both on the outcome of the Defence Costs Study. My noble friends have produced a balanced and constructive report which is an immense achievement. Some aspects of the study will not please everyone—but then what review ever does? However, it goes a long way to streamlining many support and logistical functions and saving a considerable sum of money, over and above the requirement of the £750 million, which can be put to further enhancements for all three services. But, as has already been said, it begs the question of why the Defence Costs Study was not instigated before which might have saved some of the fine and proud ships, regiments and Royal Air Force squadrons from disbandment or amalgamation.

There is a genuine concern that more attention should be paid to the threat, as there appears to be little evidence of action being taken against the existing and ever-changing threat that challenges our security. In this instance, those concerns are Russia and the Commonwealth of Independent States, turmoil in the Middle East, fundamentalism from Iran, Central Asia and Mahgreb and the significant increase in weapon holdings by the Chinese. Russia's aim in joining Partnership for Peace is to weaken the NATO alliance by diluting it. Your Lordships should be reminded that Russia has achieved a large reduction in NATO force levels and weapon holding in a relatively few years— a target that it was not able to achieve in 40 years of Cold War.

Despite Russia's claim of a decrease in defence expenditure and diminishing resources, new weapons and equipment are being produced and provided for its 2 million armed forces. Recent Russian military doctrine implies that it will resort to first nuclear strike action; and it has confirmed that it will carry out its responsibilities not only in the near abroad but also in areas where it formerly exercised a sphere of influence, such as the East European countries.

I frequently hear that Russia is no longer any threat to the West. I disagree, as it is easy to draw the conclusion that the situation in Russia has changed for the worse in the past couple of years and it could once again be a threat to peace and stability in Europe.

The number of commitments and the manning levels required for the listed military tasks that stem from our defence policy lead me to the subject of overstretch. My evidence in the matter is taken from the Defence Committee's sixth report. However, before I repeat some facts from that very sound report, it is quite clear that, from the Chief of the General Staff down to commanding officers, all are trying their utmost to avoid overstretch. As noble Lords have heard already, overstretch is mainly caused by not having sufficient numbers to avoid sending troops on a second sixth-month unaccompanied posting within an in-balk period of 24 months. They are all more than aware that to send individual soldiers and units on six months' unaccompanied tours more frequently than once every 24 months leads to a high degree of turbulence, instability, a reduction of excellence in a unit's primary role and, sadly, unhappiness within families, sometimes leading to the breakdown of marriage.

There has been a complete misunderstanding of the minimum tour interval of 24 months as viewed by the Ministry of Defence, which now regards the 24 months tour interval as an average interval between emergency tours for infantry battalions. Servicemen and many others were clearly of the opinion that no soldier would be expected to undertake a six months' unaccompanied tour more than once every 24 months. There is, of course, a world of difference between a target of an average interval of 24 months for infantry battalions and a target minimum interval of 24 months for individual servicemen.

The current state, as reported by the Select Committee last June, amounted to the following major and minor units being called upon to do more than one unaccompanied posting within 24 months: in 1993–94, seven major units; in 1994–95, eight major units and four minor units; in 1995–96, 10 major units and eight minor units. However, it must be said that the average infantry battalion tour interval in 1995–96 could be 24 months. Regrettably, that will bring no comfort to the personnel of the 10 major and eight minor units deploying with shorter intervals, nor any comfort to their families, who perhaps suffer most. It is not right that the 24 months' emergency tour interval should be regarded as an acceptable average rather than a target minimum.

I should now like to turn to field training, and it is disappointing to note that no mention is made of this either in the Defence Costs Study or in the Defence Estimates. It was touched on by my noble friend in the parliamentary Statement where it was said that there would be a 50 to 100 per cent. increase in training at battle group level and that training areas in Germany and the United Kingdom would be improved. If the country is to have a fully operational and effective Army, it is essential that units and formations are well trained, well equipped and well led. For a number of years brigades have not been able to carry out realistic formation training with a full complement of units because of commitments to Northern Ireland and Bosnia and because of the shortage of large enough training areas. The skills acquired from many years of formation-type training are virtually non-existent and what remains is fading fast.

Battle group training at BATUS is realistic, with excellent scope for manoeuvre and live firing. However, individual armoured, artillery and infantry units are normally restricted to training on the Hohne impact area in Germany which, because of size, limits the reality of training. This poses the question that the reduction in training in Germany and the United Kingdom may be causing the sad deaths on training in BATUS. Could my noble friend say why it seems impossible to negotiate training right up to formation training level on old East German training areas such as the Letzlinge Heide? The small company level peacekeeping exercises in Russia, Poland and East Europe bear no resemblance to high intensity conflict training which is so essential.

A much-needed training package has been initiated to develop the Salisbury Plain training area and a similar package perhaps should be applied to the Stanford/Thetford areas. Simulation training has been introduced, which is of significant assistance, but it will never be able to replace the elements of the weather, the terrain, fatigue and the experience gained by the physical manoeuvre of vehicles. A somewhat negative attitude has been detected in the Community when attempts are made to find new field training areas or improve existing ones which are urgently required due to much of the Army returning from Germany. It is essential that funding is made available for these new and improved areas and that realistic track mileages and adequate spares backing are planned.

I am sure that there is no need to remind noble Lords that an Army that is not well trained does not have high morale. I welcome my noble friend to his new appointment. Will the Minister, when winding up, give an assurance that the necessary funds will be made available for the provision of suitable training areas and adequate field training?

I now turn to equipment enhancements for the Army, and time does not allow for comment on all of them. It is a welcome statement that the previously announced order for a further 259 Challenger 2 tanks has been confirmed, which will make the tank fleet an all-Challenger fleet. It is also particularly good news that the 9th/12th Lancers will be re-roled to make the third regular armoured reconnaissance regiment in the order of battle. However, there is now an urgent need to bring forward in-service dates of equipment wherever possible and to decide on the exact number of anti-armour Apache helicopters and the mix of new Chinook and EH101 support helicopters, which must be big and powerful enough to lift large and heavy loads. There is a complete void of real time battlefield surveillance devices such as airborne stand-off radar systems which would be critical in any future high intensity conflict. To a degree, this situation will be marginally redressed by the introduction of Phoenix in 1995.

The current reconnaissance vehicle fleet requires modernisation and modification even though a new vehicle named Tracer may be introduced in about 10 years' time. Both the poor standard of Challenger 1 and the outdated reconnaissance vehicle as observed in the Gulf are just two examples of mainstream equipment that had been allowed to fall behind in areas critical to real use in battlefield conditions, and that equipment has been geared to peacetime deployments after so many years of relative peace. It further illustrates the point that at present the Army does not possess all the high grade equipment it should have to give it its full potential, punch and high operational effectiveness.

Time is running out, but I should like to touch briefly on a few other points. First, it is essential that our amphibious capability is retained, and the helicopter landing ship and replacements for HMS "Fearless" and "Intrepid" are welcome additions. Secondly, it is essential that the United Kingdom retains its intelligence-gathering capability and that the coverage of countries that need to be watched is not reduced. Thirdly, the review of service conditions is worrying servicemen and servicewomen more than anything else at the moment, especially when rumours circulate implying that boarding school allowances may be withdrawn and future postings to Germany may be on a six-month unaccompanied basis. Those rumours are unacceptable and only damage morale and encourage some to leave the services.

Fourthly, Defence Role 3 involves peacekeeping activities and in March in the UN debate I identified a need for UN training schools. On reflection, there is a greater need for a UN training school for instructors, which should be established in this country.

My penultimate point is that an army of 120,000 is too small; one of around 130,000 would be more realistic. But it is encouraging that the Territorial Army will remain at 59,000. However, whatever the eventual strength, the Army priority is to be properly equipped, well trained and well recruited. It does not want ever again to be the subject of hollowing out, which, if it had continued, would have produced an army of no substance and with no punch.

Finally, I urge the Ministry of Defence to retain the Royal Tournament as an annual event. I pay tribute to all those taking part in it. It is a fantastic spectacle and few other military events can illustrate teamwork and precision timing so well. Surely no other military occasion can keep the military forces in the public eye to the same degree.

In conclusion, I welcome the announcement that the Defence Costs Study does not reduce the Army's present operational effectiveness. But it is questionable whether it is as high as it should be. There is room for a significant increase in its operational effectiveness which would be achieved if funds were provided to improve and find new training areas; if in-service dates were brought forward for a number of selected weapon systems; if the Army was sustained with sufficient personnel until commitments are reduced; and if the Army is never again allowed to be hollowed out.

Will my noble friend assure the House that Her Majesty's Government will make no further cuts to our Armed Forces? Will he ensure also that they will have a long period of stability free from political interference? If those guarantees are given, the Chiefs of Staff will be able to restructure systems, bringing maximum benefit to their own service. Otherwise, there could evolve poorly trained troops with low morale and low operational efficiency.

The Armed Forces of this country are the finest in the world and the envy of the world. Let Her Majesty's Government now allow them to build up their strength from all the changes that have been made to ensure that they remain the best trained and the finest fighting troops in the world.

2.44 p.m.

Lord Chalfont

My Lords, it might be appropriate and perhaps salutary today, the anniversary of one of his great victories, the Battle of Salamanca, to invoke the shade of the great Duke of Wellington. I think that the Duke would have enjoyed this debate. Indeed, I think that perhaps he felt he was engaged in some kind of Front Line First exercise when he sent his famously insubordinate dispatch from Spain to the Foreign Office in the summer of 1812, which he began with the words: We have enumerated our saddles, bridles, tents and tent-poles and all manner of sundry items for which His Majesty's Government holds me accountable". But, of course, the Front Line First exercise is much more serious and important than that. As an inveterate critic of the defence policy of the present Government, it gives me great pleasure to be able to give credit where I think credit is fully due.

Front Line First is an excellent piece of staff work and an excellent analysis of defence problems. Its attention to the future equipment requirements of the Armed Forces, its treatment of the problem of training, the setting up of joint rapid deployment forces, the future of the reserve forces—all these are points which those of us who are interested in these matters have been wanting to hear for some time. It is also an excellently written report, although I must say that the noble Viscount the Lord Privy Seal puzzled me slightly and conjured up images of a somewhat interesting surgical operation when he spoke of changing the face of the Armed Forces by cutting the tail.

My admiration for this document and for this policy would be even greater if I felt that it was wise to try to save £750 million from the Defence Vote anyway. I would be happier if that £750 million had been saved earlier and used to repair some of the damage that was done to the Armed Forces by the ill-conceived Options for Change. The Front Line First exercise, taken together with the Defence White Paper, gives a certain cause for optimism in the future. However, there are many issues on which it might be wise to place a finger and utter a mildly warning note. I notice that one of the Government's statistics about defence points out that we are now spending 5.4 per cent. of our gross national product on health and 5.2 per cent. on education but 3.7 per cent. on defence, reducing to 2.9 per cent. by 1996–97. To some people those might sound very attractive statistics. To me they sound something of a warning note and raise the question of whether we have all our priorities entirely right.

Similarly, if one looks at the external comparisons that are made, the 2.9 per cent. of our gross national product spent on defence in 1996–97 will take us below the NATO table: below Turkey, France, Greece and Norway and level with Portugal. I am not quite sure that we have our priorities right there.

Is it a good thing to be reducing the balance and proportion of our national resources spent on defence in quite this precipitate way—because precipitate it is? The answer is that it would be a good thing if the threats to our security had disappeared. But, as a number of noble Lords have said today and will undoubtedly say again, the threats have not disappeared. As the noble Lord, Lord Vivian, said a moment ago, we cannot ever be sure—we certainly cannot be sure at the moment— about the future policies of Russia. One has only to look at its relations with the Baltic states and at the speeches made not just by Mr. Zhirinovsky but by more moderate and sensible Russian leaders about their relationships with what they call the "near abroad" and the fact that they have not given up the thought that those countries are part of one integral whole.

I am sure that we cannot forget the threat posed by the proliferation of weapons of mass destruction and the missiles to deliver them, especially in some of the countries of the Middle East. We ignore at our peril the dangers of religious and ethnic extremism. We are faced now, as we have been for many years—and I suspect we shall be for many years in the future—with the problem of Northern Ireland. These threats exist and it is fair to say that the Defence White Paper sets out very clearly a series of military tasks. I believe that as a staff analysis it is an excellent piece of work. However, it does not entirely answer the question as to what the Armed Forces are for. I shall come to that in a moment. Their tasks are set out, but the overall philosophical question of why we have a defence establishment at all needs to be answered.

Before I come to that, perhaps I may make one point about one of the tasks set out in the Defence White Paper. It is Military Task 3.7 to be precise, but noble Lords need not look that up. It deals with the contribution which we make to international forces, including those of the United Nations. I would like to sound a warning, and perhaps a heretical, note about the assumption that what the United Nations necessarily does is a good thing and that we ought to be supporting it. There are 70,000 officers and men deployed around the world at the moment in pursuit of United Nations operations, with a total cost in 1993 of over £100 million. There are nearly 4,000 British servicemen deployed. It is a substantial proportion of our Regular Army. Before we are too ready to support United Nations operations and contribute to them, we have to ask ourselves some quite serious and profound questions.

To what extent nowadays is the United Nations going beyond its charter and beyond Chapter 7 into realms which are very close to interference in the affairs of sovereign states, to dealing with civil unrest in a foreign country as though it were the business of the Secretary General of the United Nations? There is a clear prohibition in the charter of the United Nations against interference in the affairs of sovereign states except under the Chapter 7 provision, which deals with instability and dangerous conditions in a given area.

We should ask ourselves a few questions about the UN before we are too ready to approve all that it does and to support, in operational terms, some of its military operations. Arguments about matters of that kind will go on endlessly.

What we have to consider is whether we have, as a result of these various defence reviews and analyses, put ourselves in a position where we can now guarantee and be certain that we can face the international future of our role in the world in the certainty that we shall not be faced with some operational disaster brought about by the need to do something which we do not have the military capacity to do. I still have some doubts in my mind about that.

I have doubts about the standard of training of the forces as a whole, but in the Army, especially with the insufficient facilities which there have been recently for training at brigade and divisional level, that leads to the great problem which has been mentioned by many noble Lords today; namely, the question of morale. Those of us who know the Armed Forces and move about among them recognise that morale is low. It would be foolish to deny that. It is not a self-fulfilling prophecy, as some people say, but a fact of life. If you move about the Armed Forces today among the regiments, squadrons and ships, you find that at all levels there is disquiet, which means in blunt terms loss of morale.

Above all, and leaving all those things aside, important as they are, I come to my real question. What national policy are our Armed Forces supposed to sustain? What are they for?

A moment ago I mentioned the Duke of Wellington and his Front Line First exercise. In the great dispatch that he wrote from Spain, he concluded the end of his exercise on Front Line First as follows: Each item and every farthing has been accounted for, with two regrettable exceptions for which I beg your indulgence. Unfortunately the sum of one shilling and ninepence remains unaccounted for in one battalion's petty cash account and there has been a hideous confusion as to the number of jars of raspberry jam issued to one cavalry regiment during a sand storm in western Spain. This reprehensible carelessness may be related to the pressure of circumstance, since we are at war with France, a fact which may come as a bit of a surprise to you gentlemen in Whitehall". The Duke went on more seriously to say: This brings me to my present purpose, which is to request elucidation of my instructions from His Majesty's Government, so that I may better understand why I am dragging an army over these barren plains". That is what we need. We need some elucidation.

We are not actually dragging armies over barren plains, but we are engaged in the intellectual exercise of trying to work out what those armies are for. What we need now is not another defence review. We do not need another White Paper or another exercise in cost cutting. In my view, what we need is evidence of some clear, concise and courageous thinking about the totality of our external policies. We must address ourselves as a nation—the Government must do so as the government of the nation—to our global role. We have to look at, for example, NATO. What is NATO's role in the post-Cold War world? It cannot be what it was in the Cold War, so what is it going to do in the future? How does the Western European Union come into this? How is the enlargement of the European Union to be linked to the defence and security arrangements of Central Europe? I have already spoken of the United Nations. What role does it play in international security? We now have to face all those issues and do some real, radical and original thinking about them.

This is not a matter for the Foreign and Commonwealth Office or for the Ministry of Defence alone. It is not a matter for the abacus of the bean counter or the computer of the realtime logistician. What it needs now is some profound, serious intellectual effort across the whole of government. It does not seem to be generally accepted that as well as the Foreign and Commonwealth Office and the Ministry of Defence— the two most obvious departments involved in this — this is a matter also for the Department of Trade and Industry, the intelligence agencies, the Department for Education, the Home Office and the Northern Ireland Office. All are involved directly or indirectly in finding a solution to the problem. They have a role to play in evolving a coherent national vision which embraces foreign policy, defence policy and the industrial strategy which follows from an elucidation of those policies.

This is not a static matter. You cannot solve it by writing a White Paper or signing a treaty and going home to tea. This is a dynamic matter. It goes on day after day, month after month and year after year. Indeed, it is arguable that it is a process that is not entirely possible—that cannot be entirely successful—under the present system of government of Cabinet decision and Cabinet committees. I should like to put forward for at least modest consideration the possibility that there is now a strong case for some kind of national security agency in this country which would be independent of the existing departments of state. We need some kind of organisation that is able to correlate and synthesise the views of the relevant departments and to present them, properly costed and properly politically researched, to the Cabinet committees, to the Cabinet and eventually to the Prime Minister, who has to make the final decision about these things.

The Duke concluded at the end of his dispatch from Spain that he had only two options as a result of his Front Line First exercise. He said: I construe that perforce it must be one of two alternative duties, as given below. I shall pursue either one with the best of my ability but I cannot do both". These were the options with which he regarded himself as being faced: 1. To train an army of uniformed British clerks in Spain for the benefit of the accountants and copyboys in London, or, perchance, 2. To see to it that the forces of Napoleon are driven out of Spain". Those are not exactly the options with which we are faced, but we must see to it that the forces of aggression, extremism, disruption and instability do not prevail.

Options for Change was a risky conception: Front Line First has done something to minimise the risks. But I hope that when my noble friend comes to reply he can assure us that future planning will be comprehensive and that so far as possible risks to national security will be removed altogether.

3.1 p.m.

Lord Campbell of Alloway

My Lords, having listened to so many magnificent, well-informed speeches, it is perhaps as well that I have to confess that I have lost my speaking notes. So I am going to ask your Lordships to consider just three matters. The first is the ethos of these proposals; secondly, the Rosyth naval base, in context with NATO refuelling strategy, not in context with fishery protection—I see that the noble Lord, Lord Williams, is no longer in his place— as that is understood to be wholly satisfactory as a result of the arrangements to be made with the Scottish Office; and, thirdly, the morale of those serving, or about to serve, in action, as affected by the introduction of new procedures to prosecute and investigate alleged war crimes. That is not morale in the sense referred to by the noble and gallant Lord, Lord Bramall, and my noble friend Lord Younger of Prestwick, with whom I agree, or in the sense referred to by the noble Lord, Lord Williams of Elvel, with whose contribution in that sense and in others, I am unable to agree. However, I agree with the noble Lord, Lord Greenhill of Harrow, that too much trouble taken delving into the past is really to no good purpose.

At the outset, I wish to support in its entirety what was said by my noble friend Lord Younger of Prestwick in approbation of government policy, and also the earmarking of contributions for UN peacekeeping was referred to by the noble Lord, Lord Chalfont, who delivered some requisite words of caution. I, indeed, over the past few days, have searched in vain in the trilogy of paperwork to find any provision for that exercise. The strings of that bottomless purse assuredly need to be tightened. Furthermore, I agree that there should be all-party support for legislation to call out the Territorial Army to fulfil its new role.

I agree that there should be serious reconsideration of the over-reduction in the infantry, the overstretched situation arising, and the examples given, including the Gordon Highlanders and the Duke of Wellington Regiment, referred to also by my noble friend Lord Vivian.

There is a need for a statement of reassurance in order to back up the assurance, which I understood was given today by my noble friend the Leader of the House at the Dispatch Box, that there shall be stability and no further cuts. That is essential to morale in the forces, as was said by the noble and gallant Lord, Lord Bramall, and my noble friend Lord Vivian.

I agree with my noble friend Lord Younger that the resolution for the naval base at Rosyth is ingenious, fair and reasonable, with facilities available for NATO visits. I shall return to that matter in a moment in context with NATO strategy in time of war. The fact that the relationship between the base and the dockyard is symbiotic has given rise not only to confusion but to misreporting.

As regards the ethos of the proposals, taken by and large, your Lordships, subject to informed reservations such as were expressed by my noble friend Lord Vivian, welcomed these proposals as the dawn of an enlightenment which reflects the serious objective studies to which my noble friend Lord Cranborne referred and which attracted the admiration of the noble Lord, Lord Chalfont.

As was said by the noble and gallant Lord, Lord Bramall, it is a new deal which is constructed with vision for the future. It is a sound, requisite and relevant re-appraisal of our means of defence, taking fully into account the foreseeable state of the art in the new dimension of imponderables, such as Russia, China and so forth, which we have entered in the wake of the Cold War. It reclaims the concept of global reach that the defence of our country is dependent upon timely but hazardous pre-emptive offensive action taken far away from our shores, with the ultimate in weaponry and training under a firm, integrated command with the capability to engage in defeat numerically superior forces. It is a reaffirmation of what my noble friend the Leader of the House said at the Dispatch Box during the debate on the future of the Rosyth dockyard: that defence of the realm is the number one priority of this Government.

It is understood that if cuts to the bone in the supply services should reach down to the marrow to inhibit the efficacy of Front Line First there is scope for review, in particular in context with the requirements of NATO strategy in time of war.

As regards the issue of the naval base, it is proposed that there shall be a transition so that at the end of March 1995 the base will have a minor forwarding role for war vessels and that the dockyard, which is under the management of Babcock Thorn at present, shall be sold by tender to industry by April 1996. Neither the naval base nor the dockyard is to close.

I am informed that recent NATO exercises have demonstrated that the refuelling of the over-thirsty gas turbine engines in time of war will be required at the naval base. Therefore, the election on allocation of expenditure as between ships in the front line and the naval dockyard supply services no longer arises and the relevant passages —from memory, they are 558 and 559 in the Statement on the Estimates—may perhaps require reconsideration. There are no major refits at the naval base, only at the dockyards. And in time of war, refuelling at the naval base and major refits at the dockyard go hand in hand.

At the time of the debate on the future of the dockyard, it was under threat of closure. It was saved only by the assurances of my noble friend the Leader of the House that there would be substantial allocation of major refits for the surface vessels. That undertaking and those assurances have been honoured to the full. A minehunter has just been delivered in the most excellent state of construction and contracts for the steelwork on the Forth road bridge and for overhaul of railroad stock have been concluded. The dockyard has reached commercial viability—I add, solely as a result of those assurances—in a highly competitive environment.

After the sale to the new owners, there will be ample scope for rationalisation and for better use of the site and the buildings. There is no reason whatever to doubt its ability to become a well-sited and wholly efficient engineering concern which is able to fulfil such functions as may be required by NATO in time of war.

In saving the dockyard from extinction, my noble friend has done a great service to Scotland and in particular to Fife. That is a service which should be acknowledged.

I conclude by referring to the question of morale. There is no doubt whatever that the manner in which the Falklands investigations were set up and conducted to establish whether prosecutions for murder should be laid in respect of alleged war crimes has had an effect on the morale of those who serve in action on the first front line. There is no doubt that those procedures, which departed from tradition, did not attract the approval of your Lordships or, it would seem, of another place.

On 14th July my noble and learned friend the Lord Chancellor stated in an answer to a Question asked by me that those procedures were correct. Therefore, there is no doubt that there is considerable anxiety—certainly I have considerable anxiety—that they may serve as a precedent. They are totally novel and inappropriate and the noble and learned Lord the Lord Chancellor, no less, stated to me, in answer to a Question asked by me, that those procedures are correct.

I shall not take up any more time. Surely that is a matter upon which the chiefs of staff, the Government and my noble and learned friend the Lord Chancellor should entertain the most serious discussions as a matter of urgency.

3.15 p.m.

Lord Wright of Richmond

My Lords, there are many speakers still yet to speak in the debate and, therefore, I propose to intervene very briefly. However, I should like to concentrate for a moment on Defence Role Three—on the indispensable, and I would argue, unrivalled role which Britain's defence forces play in helping, as the opening chapter of the Defence Costs Study puts it, to, maintain international security and stability, both in Europe and more widely". Britain ranks fifth in the world for international trade. With investments world wide worth some £150 billion—the largest stock of investment overseas of any country in the European Union—and with direct investment from abroad worth some £115 billion (the world's largest recipient of overseas investment after the United States) we arguably have as great an interest in maintaining international peace and security as any country in the world.

Of course the noble Lord, Lord Chalfont, is right to say that we should question carefully the deployment of, and our participation in, United Nations' military operations. But that is one of our responsibilities and privileges as permanent members of the Security Council. Quite apart from those responsibilities and our responsibilities as members of NATO and of the European Union, I believe that it is essential that we should retain sufficient front line forces to defend our vital economic interests. I therefore welcome the assurance from the noble Viscount, Lord Cranborne, that the Government do not intend to trim those forces further.

3.17 p.m.

Lord Lyell

My Lords, I should like, first, to thank two persons who are sitting on the Government Front Bench today in varying roles. To begin with, I thank my noble friend the Lord Privy Seal on my own behalf, and on behalf of all noble Lords who have interests in defence, for all that he has done for the defence of our country, for how he put over the case to your Lordships and for how he has overseen the enormous review of defence over the past two years. My noble friend has been responsible for all aspects of defence in your Lordships' House. His help and his courtesy have been of considerable help with all our queries. For myself, I am delighted to see that he has risen to such eminence. We wish him all good wishes in his duties.

I turn now to my noble friend Lord Henley. I am sure that all of us welcome him. Indeed, perhaps his role fulfils that of my honourable friend my own Member of Parliament who said that he did not come to Parliament to support social security, but far more national security. Well, no sooner said than my noble friend has made that particular leap. We welcome my noble friend and look forward to hearing what he has to say this afternoon.

The excellent document that we are studying today is called Front Line First. When I first heard about it I thought it was something like one of those slogans or a headline in what I call "an easy-read" newspaper that we read while having breakfast. The document is well worth studying. I looked first at paragraph 109. In the middle noble Lords will find references to all kinds of things that used to dog me during my accountancy studies and, indeed, have continued to dog me every since. For example, there are references to "stocks"— what in the United States they call "inventories". Little did I know that all of that would be relevant to defence. But having looked at the document and having listened to the excellent and concise speeches in today's debate, I think that it is of considerable relevance.

We can see that the readiness and sustainability of the Armed Forces is the main thrust of Front Line First. Paragraph 109 states: This meant considering not only whether we could reduce the size of stocks that would be required only in the event of a major European war, but also whether we needed to increase stocks that would be needed to support elements of forces required to deploy at short notice to take part in smaller scale operations". One example given is that of Bosnia.

I congratulate my noble friend, and indeed all those at the Ministry of Defence, on seeking and finding new methods of reducing stocks. The three word slogan "just in time" is a useful concept and indeed it is very much part of a management tool used in business in the 1990s. I am rather startled that it has been adopted by the defence forces, but I am considerably gratified by that.

Paragraph 209 in Chapter 2 deals with one aspect of the Ministry of Defence head office and the number of personnel working in London. Provided we have at least two—my noble friends on the Front Bench—and so long as they are both there and are able to give all the advice and help that we have come to expect, we shall be more than happy.

Paragraph 309 covers recruiting and training. One particular aspect of that paragraph chilled my blood. It stated that the changes should save £25 million per annum. Further, there was a reference to improving the management of defence public relations. Fortunately, I am not yet afflicted by high blood pressure but when I read that paragraph, and when I heard earlier this year that the Army, let alone the Royal Navy or the Royal Air Force, should be expected to recruit in job centres, I became considerably darker in colour. There is a proposal that job centres should now be the centres for recruiting of the Armed Forces. It was, of all people, a young military friend who now commands my regiment in Northern Ireland who told me to calm down and to lower my blood pressure. He told me that it is perhaps good sense to make the first contact with young personnel in a town centre—or, where I live in Scotland, in a travel centre—or even perhaps at school, and then to encourage the young man, or perhaps the young lady, to look at, visit and then decide the service which he or she might wish to join. That, of course, is a two way process because the forces must want his or her talents and abilities.

I believe there is one aspect of paragraph 309 which will be familiar to my noble friend the Lord Privy Seal; that is, the regimental system. This matter was referred to by the noble Lord, Lord Chalfont, in his excellent comments. I believe that the regimental system in the Army is an essential element in the enormous success, the professionalism, the courage, the devotion and the discipline of all our defence forces, but above all the Army. In the regimental system one tends to have new recruits who know more or less what to expect as their families have told them of their experiences over, say, the past 20 years. Further, new recruits in their arduous and ever-increasing duties, as spelt out both in Front Line First and in the 1994 Defence Estimates, will obtain support and help from their families and friends because through the regimental system—there may well be a family tradition of serving in the Royal Navy or in the Royal Air Force—they will know what to expect.

I believe that Front Line First can help in the area of training. Above all, it spells out training for recruits into the Army, basic infantry training and junior command training. It is the basic infantry training that I underwent 37 years ago as a young man doing his National Service. This basic infantry training which is constantly refined and developed is one reason for the success of our Armed Forces all over the world; for example, in Bosnia and in the Falklands. Over the past 25 years our forces have been in Northern Ireland and before that, during my time, in Cyprus and, just before my time, in Suez. When I was at school our forces were in Malaya and Korea. That has happened since the Second World War. Through all this runs the thread of the excellence of that basic infantry training. That is why I think paragraph 309 of Front Line First is particularly relevant.

Paragraph 409 brings us back briefly to Chapter 4 and financial matters. I hope that both my noble friends on the Front Bench will take great care as regards what I would call financial conjuring tricks. Paragraph 409 refers to leasing and private financing of items such as simulators and electronic equipment. I ask my noble friends to ensure that such measures work and that we cut out financial high jinks.

Paragraph 509 refers to the naval base at Rosyth. My noble friend Lord Younger of Prestwick put the case superbly. For all of us in Scotland that was an extremely painful decision. However, in that paragraph of Front Line First, which deals with our Armed Forces at a time when the demands on them, both financial and in terms of personnel, are fairly healthy, there is the unequivocal statement: The Royal Navy has concluded that there is no operational need to keep ships permanently at Rosyth". There are other aspects of that paragraph. Thank goodness 900 jobs will remain at Rosyth and 70 jobs will be created at Faslane as a result of the transfer. Those in Scotland are grateful at least for that.

In conclusion, I ask your Lordships to glance at the Defence Estimates for 1994. When I went to collect papers from the Printed Paper Office I was asked if I would like to look at those. Indeed I would. We shall have time during our nice long holidays to examine the document in further detail. Today I ask noble Lords to look especially at pages 35 to 39 of the Defence Estimates, and in particular at paragraph 10 on page 37 dealing with the training schedule. All of that aspect relates to one area of Front Line First which is about 300 to 350 miles from where we speak this afternoon— Northern Ireland.

Many noble Lords have spoken about overstretch, and none more so than my noble friend Lord Vivian. He put the case in respect of overstretch of the Army. That argument also applies to other elements of the Armed Forces in Northern Ireland. I ask my noble friend Lord Henley to take on board all that has been done by his noble friend the Lord Privy Seal over the past two years in connection with overstretch. Everything on those pages of the 1994 Defence Estimates bears out my keenness to stress the importance of infantry training and how that is reflected superbly in Northern Ireland.

Paragraph 308 of the Defence Estimates contains some bald statistics. In 1993 eight soldiers were murdered and 181 were injured in Northern Ireland. Six members of the Royal Ulster Constabulary were murdered and 109 injured. No fewer than 70 civilians were murdered and 391 injured. The news yesterday was that one more soldier had been seriously injured in South Armagh—I think in Crossmaglen. As we speak my regiment serves in Northern Ireland. That is one aspect of Front Line First. I am sure that we send our best wishes to all in Northern Ireland.

If the Front Line First White Paper and the 1994 Defence Estimates assist in producing any improvement, however small —and I believe that it will be considerably more than that —in the demands on our Armed Forces and in the equipment, training and encouragement that we can give them, and in the recruitment of new bright talent, old and young, to the Armed Forces to serve wherever they may be needed— in Bosnia, in continuing devotion in the Falklands, or in the United Kingdom—then I believe that all the work that has been done by my noble friend the Lord Privy Seal, and which I hope will be continued by my noble friend Lord Henley, will have been worthwhile. Perhaps this is the last day of term, but today we have the opportunity for a thoroughly worthwhile debate. I thank my noble friend.

3.30 p.m.

Lord Moore of Wolvercote

My Lords, the sad story continues: still more defence cuts. When will it stop? When will the Government stop gambling with our future? Do they really believe that the end of the Cold War means that there will not be more conflicts? There are two points; one follows from the other. First, there will be more wars in the world. No one can be sure how or where they will arise but it is more than possible that Britain will be involved. No one forecast the Falklands and Gulf conflicts.

The second point is that Britain was uniquely well placed with its superb Armed Forces to meet those last two emergencies.

In his introduction to Front Line First, the Secretary of State says: The United Kingdom Armed Forces are among the most impressive in the world". If I may say so, that is a typically British understatement. They are the best in the world. If anyone seriously questions the need for our Armed Forces, please read—it will not take them long—the excellent speech by the noble Lord, Lord Wright of Richmond.

So why do we go on cutting defence expenditure? This time the attack is on the tail—always a more popular target than the teeth. You have only to identify the enemy as "bureaucracy" and you are on a winner. But I wonder whether some of the reductions are wise, organisationally, operationally or for morale.

I see that there will be reductions in the senior civil servants in the Ministry of Defence. Those are men of very considerable ability and experience, dedicated to the service of the Armed Forces. They provide invaluable continuity in the Ministry of Defence since the service officers are inevitably changing all the time. I was delighted by the tribute paid to them by the noble Viscount the Lord Privy Seal. But surely it is not wise to reduce their number any more, I might say in passing, than it is wise to talk about throwing the top jobs in the administrative class of the Home Civil Service to outside competition.

On the operational side, I am deeply concerned by any suggestion of civilianising the immediate maintenance support for RAF squadrons. I seriously doubt whether in wartime civilians could give the same service as the RAF fitters and riggers who maintained our aircraft so superbly in World War II.

Morale-wise, those cuts will surely create the worst possible impression. Again, it is fashionable to criticise the amount of "top brass" in the services. But one must have a proper career structure if one is to attract the right people. What parent will encourage a son to enter an armed service when we have a continuous succession of defence cuts?

What I feel is so misleading about Front Line First is the suggestion that the Government have spared the front line. We have had appalling reductions announced in the size of the Army and in the numbers of ships and RAF squadrons. Those are grievous cuts and nothing that the Government can say will cover up the damage that has been done.

Having said that, I wish to congratulate the Government on a number of specific points highlighted in Front Line First. The Gulf War showed what a vital part missiles and aircraft play today, and I warmly applaud the decision to consider acquiring Tomahawk. I very much hope that we shall. Updating Tornadoes, purchasing advanced laser guided bombs, and looking for a new long-range air-to-ground missile is all admirable. The increased training for fast jet air crews is essential if those sophisticated weapons are to be used effectively. The further order for Challenger 2 tanks is good news. The recent D-day anniversary reminded us of the folly of matching Shermans against Tigers. The Territorial Army has mercifully been reprieved; a permanent joint headquarters is to be established at Northwood. All those are excellent decisions and will help to keep us as a first-rate military power.

However, can we be certain that this will be the end of the cuts? Can the Government give us an assurance that any further attacks by the Treasury on the Armed Forces will be resisted? I very much hope that in winding up the Minister will be able to give us such an assurance.

May I add this? As unfortunately I could not be in the House on Friday when the noble Lord, Lord Henley, answered a question about "Britannia", I have to say how dismayed I am by the Government's decision to decommission "Britannia" in 1997. It is a most unwise decision. "Britannia" is not just a yacht for the private use of the Queen and the Royal Family. She is an important symbol of the uniqueness of our monarchy and of the great maritime tradition of Britain, whether she is sailing up the Delaware River to bring the Queen and Prince Philip to Penn's landing in the heart of Philadelphia for the bicentenary of the USA; whether she is entering the heads of Sydney Harbour, escorted by a vast armada of small boats; whether she is spearheading a tour by the Queen of seven countries in South-East Asia and the Indian Ocean; whether she is acting as a conference centre all over the world to boost British business.

Alternatively, I wonder whether we might see "Britannia" at St. Petersburg, playing a unique part in the Queen's forthcoming state visit to Russia. On all such occasions, "Britannia" is enormously admired and wins great credit and prestige for our country.

We really must not throw away this priceless asset. "Britannia" could be effectively refitted. The plates of her hull are still in good condition as a result of having always been treated in her refits with a special anti-corrosive paint. She could be well worth the refit which would carry her into the next millennium. I trust that the Sea Lords appreciate the great credit that "Britannnia" reflects on the Royal Navy—well worth the officers and ratings it has to provide to man her.

So I hope that the Government will reflect very carefully before implementing that decision. I also urge them not to be too much influenced by sections of the press protesting about the cost of refitting or running "Britannia". I suspect that a decision to reprieve her into the next millennium might be very well received by the British people who are proud of their sovereign and of their country and do not like to see their traditions lightly cast away.

3.38 p.m.

Baroness Park of Monmouth

My Lords, I thank my noble friend the Lord Privy Seal for his graceful reference. It was just like him and he has nearly taken the wind out of my sails. However, I shall stick to my last, glad though I was to find that I had such an illustrious convert.

Before I move to my main theme, I should like to raise one anxiety which relates to morale and efficiency and the whole viability of the Front Line First ethos. I shall be brief about it. In April last year, a private firm, Airwork Limited—which still holds some 40 MoD contracts—proved to have severely damaged during modification a number of F3 Tornado aircraft. The firm held the contract to modify 134 of those aircraft. In another place the Secretary of State was asked on 20th July 1993 at col. 183 of Hansard to confirm that, first, the damage was discovered by aircraft technicians at RAF Leeming, only as a squadron of Tornadoes was preparing to fly to Bosnia; and secondly, that the technicians became aware of the huge quantities of aircraft Polyfilla known as Thiakol that had been used to cover up the damage only when they took down the undercarriage just before the aircraft was due to fly.

The Secretary of State's reply was an important point that the questionner failed to mention; that is, that the defects in workmanship were discovered in the normal and proper way by the RAF. It is noteworthy that in April this year questions were asked again, this time about the damage done by the same firm to 11 Hercules aircraft.

My question to my noble friend the Minister—whom I warmly welcome—is whether the massive cuts in manpower in the RAF threaten the service's maintenance capacity and the dedicated ground crews who are the only protection for the aircrew against such failures by the private sector. And are we justified in contracting out when such events can occur? I recognise that the Defence Costs Study has much to commend it and is the result of wide consultation. But like the noble Lord, Lord Moore, I feel great anxiety about the cost in human lives and in service morale of such examples of privatisation as the one I cited.

I turn now to my proper last. In the year since we last debated the Defence Estimates, Russia's power has grown while ours has declined. Let me quote three short statements which carry their own message. Grachev, the Russian Minister of Defence, on his way to Brussels in May to put forward Russia's terms for joining NATO's partnership for peace and her new military doctrine, listed what Russia would gain. One of those gains was this. He said, this would make it potentially possible to obtain more information about the military-political intentions, plans, and actions of NATO and other states involved … and to influence them in our interests". He added, Russia is a super power with enormous economic and military potential and would not of course toe NATO's line'". Let me now quote Kozyrev, the Russian Foreign Minister, one month later on 14th June. After discussing future work with NATO in the Partnership for Peace in the North Atlantic co-operation council, he added, in conclusion, the main aim is to direct every effort towards the formation of a single Europe in which the main role, NATO and Russia were agreed, would go to the CSCE". That 53-member organisation has now a number of small conciliation missions scattered through the CIS, but it has not yet resolved one conflict and has neither the power nor the muscle to enforce anything. It is an emasculated version of the UN with all its weaknesses and none of its limited strengths. It would indeed suit Russia that this, and not NATO, should be given the main role in Europe.

My third set of quotations comes from the CIS Defence and Foreign Ministers' meeting earlier this month where proposals for CIS citizenship and for, strict foreign borders for the CIS and transparent borders within it", were discussed. According to Lieutenant General Ivashov, the Secretary, the flywheel of disengagement of the former USSR republics, set spinning in the military sphere in recent years, has been stopped, and slowly but steadily the effect of centripetal tendencies is increasing in the military field". Earlier, on 4th July, he proposed a military political union for the countries of the CIS under a single command, a highly integrated defensive bloc with a military organisation of a supra-national nature". According to Ivashov, only the Ukraine, Turkmenistan and Moldova were not yet prepared for that. Within the CIS the Russian army alone will still be 1.5 million strong, a planned reduction from the present 1,917,000. Thus, in admitting all the so-called independent states of the CIS to the NATO partnership of peace, we are in fact admitting the Russian bloc with one allegiance, to Russia. After all, there will be 30 Russian military bases in those CIS countries. We are repeating the UN situation where the Ukraine and Belo Russia have enjoyed "independent" status and separate votes ever since the UN was set up.

It will be said that the defence budget in Russia, like ours, is being cut, that their defence industry is in disarray and that they must be helped to destroy their weaponry in compliance with the START 2 treaty. What are the facts so far as they are known? It is true that the Armed Forces asked for a defence budget of 55 billion roubles and got only 40 billion, with a further sum for the elimination of armaments. Those figures, however, exclude research, and funding for the 35 closed towns, 24 of which are MoD establishments, while 10 belong to the Ministry of Atomic Energy. Conversion does not seem yet to have taken place there.

Chermomyrdin has also spoken in July of 40 billion set aside for the military industrial complex in the federal budget as the maximum the sector could expect, noting that: We will support restructuring of military plants but only where this will have an effect and be in the state's interests". He makes the significant point that 70 per cent. of the former Soviet Union's defence industry lay in Russia. However, the Armed Forces will have any shortfall in funds between their bid and the sums agreed by the Duma paid for, by decision of President Yeltsin, the Prime Minister, the Leader of the Duma and the Minister of Finance from what are described by Mr. Yeltsin as "non-budget appropriations", a very nice concept. I wish we had it. Grachev has confirmed that the defence industry too will be financed with extra-budgetry funds. This will presumably cover the extensive debts owed by the navy and the other services to such installations as the Amur shipyard. Yeltsin gives as an example of non-budget appropriations the 500 million dollars due from the sale of 18 Mig 29s to Malaysia. May I add in passing that the Russian defence budget is 5.8 per cent. of the GNP, exactly twice what our own will shortly be.

So what about the defence industrial complex, defence sales, and the progress or lack of it in the destruction of existing weapons? It is clear that there are strikes all over Russia by defence workers who have not been paid for months, and these debts are settled from time to time. These difficulties, however, did not prevent the launch of a new nuclear submarine in the Amur shipyard this month, nor is it preventing the development of a fourth generation nuclear missile to be ready by the year 2000.

Russia is, in theory, destroying obsolete equipment and is reducing production of existing missiles, but these are being replaced with new and sophisticated weaponry both for use by its own forces and for sale. The pace of destruction, however, is very slow. Of 150 nuclear submarines due to be scrapped, under the treaty by the year 2000 only two a year are being scrapped, although Russia is disposing of some of its armaments in other ways. For instance, it is selling large anti-submarine ships and small missile-carrying ships as well as diesel-powered submarines to foreign buyers. Meanwhile Russia, despite strong pressure from the EBRD to "do as other countries do" and lease merchant ships from others, is building its own merchant navy— 45 new ships by the year 2000—to be built in Russian shipyards.

I note from the defence review that the UK is very successful in defence sales. Let us not forget that the Russians have now sold 18 Mig 29s together with air-to-air missiles to Malaysia and are pushing their wares throughout the Far East, where both Australia and Canada have urged Russia to play a part as a Pacific power, and where they were recently invited to the Asean Conference. I have earlier spoken of their successes in India and the Middle East, where Russia is now pressing for the lifting of sanctions against both Iraq and Libya. In expressing Russia's perfect faith that Iraq no longer has any chemical or biological weapons, and that its missiles have been destroyed, the Russian delegate to the UN says frankly that the raising of sanctions is in Russia's own economic and financial interests. Russia is also now selling needle-type rockets, surface-to-air missiles and, it hopes, AFVs to Brazil and is hoping to sell military helicopters to Colombia. Curiously, they are now also addressing themselves to a new arms market in Africa and have expressed their intention of sharing military technology with the Gambia and Djibouti, and reviving their former military links with Ethiopia—all this on the basis of payment or favourable investment opportunities. They have of course not been backward in establishing contact with South Africa.

What should be causing us grave concern, however, is, first, their rapprochement with China in terms of military co-operation and, secondly, the threat that the MIG 29 may pose for the future of the Eurofighter. MAPO, the Moscow Aviation Production Organisation claims that in combat training in Sardinia with the American F-15, F-16 and F-18 aircraft, the MIG 29 proved superior, and claimed that it was already superior to the Eurofighter. MAPO pointed out that the German Bundeswehr already has 24 MIG 29s, no doubt inherited from the DDR, and is considering purchasing new ones.

A strong German-Russian axis is developing, with the open approval of the United States, and we cannot exclude the possibility that Germany might well see some considerable advantage in joint development of the MIG 29 and a withdrawal from the Eurofighter commitment. This would be one more nail in the coffin of NATO as a power to deter. All I am talking about is the need to preserve the power to deter. The issue is not whether Russia goes to war. It will be enough for it to feel free to flout the international community with impunity. It can achieve that by neutralising NATO. Meanwhile the Visegrad countries look on in disillusion and alarm.

Turning briefly to the internal scene, there are causes for concern there. The recently promulgated decree providing measures to combat crime gives the FSK, the successor to the KGB, virtually the same unlimited, oppressive and intrusive powers it once had. Stepashin, its head, has spoken with satisfaction of the power it gives the local FSK offices in the regions to act "adequately".

The Russians have twice lied to the West about their continuing work on bacteriological weapons. It will be more dangerous now for defectors to emerge to tell the truth. Stepashin has also recently stated that many members of the FSK service share the views of Kryuchkov, the former head of the KGB, who was a major coup plotter. He says that they cannot be dismissed "for political reasons"—an interesting indication of the continuing underlying power of the KGB. We should also be deeply concerned about the risk of extensive pollution in Russian where other Chernobyls are waiting to happen.

My concern is that we are now looking at the same super power and a far more effective fighting machine. At present it appears benevolent, though I fear the smile on the face of the tiger where Russia's infiltration and neutralisation of NATO and it burgeoning relations with Germany are concerned. It will soon enjoy a very privileged position with membership of GATT and the G7, the demise of COMECON, the eventual collapse of NATO and special dispensation from the European Union from protectionist practices, unlike the Visegrad countries. Russia's diplomatic and commercial ventures in the Middle and Far East, Latin America and Africa, will enable it to become a major economic and political competitor.

What concerns me, however, is not this which, I suppose we must accept, but the potential military threat should its leadership change. There is no guarantee that it will not. Yet in the face of all this we are still reducing our defences so that we shall soon have about the same voice in world affairs as one of the CIS countries. I find this difficult to reconcile with any of the three defence roles or with any realistic hope of continuing to have influence in the world.

3.54 p.m.

Viscount Slim

My Lords, it would be very churlish of me not to thank the noble Viscount the Lord Privy Seal and congratulate him on this document. There are certainly many good points in it. There is no need for me to annotate them. The good points have been mentioned by so many speakers and particularly by the three noble and gallant Lords who know their business.

I believe that we have probably taxed the noble Lord, Lord Henley, sufficiently. He has a barrage of questions to answer. I shall ask him only one today. I have about six or seven, but it is fair to go easy on him at first. I can advise the noble Lord that the House of Lords' Defence Study Group, under the great chairmanship of the noble Lord, Lord Chalfont, is here to help him. I hope that he uses us. The noble Viscount, Lord Cranborne, has—and he has had our support over many matters.

The noble Viscount who is now the Lord Privy Seal may recall that in our last debate I mentioned the question of intelligence. I should like to know the state of the intelligence defence report that is supposed to be going strong. As stated in the document, the report should be out by the end of July. I should like to emphasise again that, if we reduce our forces—if we deplete our forces—in many areas, we shall need better and more timely intelligence. We shall need to be able to collate it—and to have not just a stream of guestimates but real, hard intelligence on which to plan the deployment of our defence strategy and our forces. I consider the defence intelligence report a very important document. I hope that the House will be apprised of its contents in due course, but, if possible, I should like to know from the Minister when that will be.

There are areas of great disquiet in the report. There is an overall weakening of Her Majesty's defence forces. Whatever the front line now, we cannot escape the fact that Her Majesty's Government have crashed the combat efficiency of our forces in the past—from the date of Options for Change.

I do not feel that sufficient attention has been drawn to the state of morale in the Armed Forces. We need to remember their whole ethos and what it means to be a soldier, sailor or airman today. We should be looking ahead, as the noble and gallant Lord, Lord Carver, mentioned. There is no need to go backwards.

I see a narrowing of everything that happens in the Armed Forces. That comes down in the end to small thinking. There is no big strategy or thought about development, which is what our Armed Forces training schools have sought to teach in the past. I think that we shall be the loser for that. Although I am happy with the document to a certain extent, I think that it shows a very narrow front, a very narrow concept, and involves very few actual fighting forces.

It may be of no consequence—it may have nothing to do with your Lordships' debate—but it is a fact that our Army and Royal Air Force are smaller than the total number in the United States Marine Corps as it stands today. I do not think that that is very good news for a. nation that considers itself influential or for a nation that is great. The noble Lord, Lord Chalfont, showed all of your Lordships that in terms of money spent we are very low down the list of nations—in fact, at the level of the small nations. That is why we have to look at the whole concept of a national strategy. Do Her Majesty's Government wish us to be a small nation?—for that is the way that it is going.

The document talks of a European war. I am not sure that we have everything that we need to take part in a European war, even with others. As the noble Lord, Lord Mayhew, said, if we have to assemble an armada to head for the Falkland Islands in order to defend or retake them—or whatever we feel that we want to do— how do we get there? Do we want to hire cheap Russian transports, with a fair sprinkling of KGB among the air crew? What do we do? The thinking is all so short term. We have serious enemies on the horizon. Are we dealing with them seriously? I feel that in many ways we are not.

We should have learnt by now, because we were once great and powerful, that influence, strength and power receive respect. Certainly we industrial people know that when we go around. Surely a politician should know it too. Where is our power? Where is our strength? What influence do we have? The answer is, not much.

I have a feeling that we shall be fighting shortly to keep our seat on the Security Council. We shall be considered one of the lesser nations, and our two greatest enemies of the past 50 years, whom we had to fight, will be fighting for that seat. If your Lordships like that, well then, so be it. But we face great dangers. We shall be losing our international clout if we do not show that we have sufficient strength to see through various obvious and difficult problems abroad and at home.

So what do we do? What happens to a nation when it gets like that? What is left? What do we have? What is there every time there is a crisis except appeasement? Do Her Majesty's Government want that? Do we have to go cap in hand everywhere? It is negotiation through weakness. We should take the advice of the noble Lord, Lord Chalfont, and others: there needs to be some deep thinking and precise strategies—something like a national security committee, as the noble Lord suggested. Professional politicians—I suppose we are just amateur, I am not sure—are not very good at that sort of thing. The average politician cannot see beyond the next election. We must look outwards. We should be looking ahead 10 or 20 years.

I learnt a good lesson in China the other day. I have an opposite number there. We get on very well. I said to him one day, "You walk like a soldier. I am impressed". He said, "Of course, I was a soldier. I fought in Korea". I said, "I am very sorry that I never met you because we might have got this joint venture together over the hills in Korea. We might have done some work together". He said, "Yes, that is going backwards. We in China think forwards". In all my conversations with him he has been thinking 20, 30, 40 years ahead. As short-termists we think no more than five years ahead.

I am a little fearful that the "Great" will come out of Britain unnecessarily because we have a government who have used the nation's defence forces in a political manner that has not been seen for some time to grab some money and put it in someone else's pocket. I wonder about the Treasury and I wonder who leads us these days as a nation. I wonder who has looked at the Treasury and what kind of cuts we could have there. There are hundreds of them.

Never mind getting rid of all the generals and admirals. I was told on fairly good authority—I cannot vouch for it because I am not allowed near the Treasury—that there are 40 to 50 civil servants who are between two and three-star rank according to their pay cheques at the end of the month. Who is looking into the Treasury? The Cabinet and the Government do not appear to be doing so—yet we have someone leading our country who has worked there. Is the right honourable gentleman the Prime Minister satisfied with his Treasury? I suppose that it brings in the lolly, but I wonder whether the strategies that are used are short-sighted.

Whatever has been said today, I strongly believe that this country must pull up its socks, look about and regain its confidence. It does not need to have an empire but it needs influence and strength so that it can talk and be seen to deal not through weakness but with confidence and strength in all the right places.

4.6 p.m.

Lord Ashbourne

My Lords, I have good news for your Lordships—I shall be extremely brief. I have no doubt that that will appeal to noble Lords because I sense that the end-of-term atmosphere is beginning to warm up. I had intended to be back in my seat in 180 seconds but I shall inflict a further 60 seconds on your Lordships and promise to be back in my seat in 240 seconds, for which I apologise.

I agree with the noble Viscount, Lord Slim. I am sure that the whole House appreciated his measured, balanced and effective delivery. I wish to ask the Minister a question but I too shall ask only one because it is "Be friendly to Henley" day. What plans did the Government make to combat the very unstable and volatile situation that was allowed to develop in the Korean peninsula last month?

I was in Korea last month taking part in a timely Inter-Parliamentary Union visit. We met people such as the Deputy Prime Minister and the Deputy Foreign Minister and they were very worried about the situation. We in the IPU delegation from Britain thought that they were absolutely right to be very worried about the situation in North Korea. Was the Ministry of Defence geared up to what could have been a disaster had the cookie not crumbled favourably, possibly as a result of the intervention of former President Carter? I personally was against the intervention, but he may have done some good. We do not know what the situation would have been had he not gone to Korea, but it was extremely volatile and unstable and it could have turned out for ill.

Perhaps I may quote from the Sunday Telegraph of 19th June, which stated: In choosing the successor Kim"— it refers to Kim II Sung, who was the President of North Korea on 19th June— decided that his son was the ideal vehicle for perpetrating his ideology. Little Kim has been the undisputed heir since 1980 and is known as the 'dear leader'. Western analysts speculate as to whether he is more rigid and erratic than his father". Your Lordships may not be aware of the nature of the man about whom we are talking, and it is important to have some comprehension of what he is like. In my judgment, Kim II Sung was the kind of man who could be equated with Saddam Hussein. He was of that ilk. His successor, Kim Jong II, who is now president, is quite a lot worse. When we were there, according to the South Korean press, he executed 14 members of the national guard. He did so by throwing petrol over them and setting them alight. I merely tell your Lordships that in order to enable you to judge what kind of man we are talking about.

It may be that that man has nuclear weapons. Your Lordships will recall that the problem arose because the North Koreans would not permit nuclear inspectors into their sites. Obviously that is contrary to the regulations. Hence, an extremely volatile situation arose. In fact, the inspectors were not allowed near the Yongbyon nuclear site, which is the principal nuclear site in North Korea.

Sometimes one has the feeling that Ministry of Defence people are so engrossed in defence costs studies and paper pushing that they have their heads down rather than their eyes up. I should be interested to know how the Ministry of Defence and the Government reacted to that very volatile and dangerous situation, which happily seems not to have erupted in the worst way.

I wish now to mention the Royal Yacht. I see that the noble Lord, Lord Callaghan, is in his place and I believe that he served on it. Therefore, he will know much more about her than I do because I have never served on the yacht. The noble Lord, Lord Molloy, tabled a Question last Friday about the future of the Royal Yacht. We were told that she is to be decommissioned in 1997 and will not go to sea thereafter, although she may be used in a more passive role.

I believe that it is a ghastly mistake to get rid of "Britannia". She is a real pearl in Britain's crown. Therefore, we should not get rid of her just because the defence budget cannot scoop up the odd few million pounds. It seems to me a terrible shame.

I have always felt it to be absolutely monstrous that the funds for "Britannia" should come from the defence budget. My noble friend will correct me if I am wrong about this, but she had no defence role whatever. When she was built she was to be a hospital ship in time of war, so she had a defence role, but even that is no longer valid. She was not used in the Gulf War because she had no hospital ship capability. It seems to me that when you have a "goodie" it is barmy to get rid of it just because it is not possible to scrape up a few million pounds from one pool or another.

The Minister was extremely open-minded on Friday and said that he was looking for ideas. I believe that we should consider very seriously building a replacement Royal Yacht which could carry out royal functions and be equipped for disaster relief activities. I have in mind the situation in Rwanda, although I realise that Rwanda is not on the coast. We could equip the yacht for the promotion of British business and for boosting export sales. It may even be possible to give it a hospital ship role, although I believe that that is the least attractive of the three options.

I urge the Government to use their imagination to see whether a pot of money can be found in order to fund the project. I do not believe that it should be defence money. It may be that the Foreign Office should pay because the people at the Foreign Office may have the most to gain. It may even be a trade and industry responsibility. I do not mind where the money comes from as long as "Britannia" is kept afloat.

Lord Callaghan of Cardiff

My Lords, before the noble Lord sits down, I fear that I must disclaim the honour of having served on the Royal Yacht. My father served on her predecessor, "Victoria and Albert", for 10 years from 1904 to 1914, but that was rather a long time ago. I have only ever been aboard as a passenger.

But while I am on my feet perhaps I may be permitted to say that some of the ideas that are now being discussed for a successor would be of great value to this country. I hope that the matter will be looked at with an open mind by the Government.

Lord Ashbourne

My Lords, I apologise to the noble Lord for my mistake. I was told that he had served on the yacht but obviously that was incorrect. When I look at the noble Lord I can see that he has salt in his blood, which is extremely welcome, and that may have put me temporarily off track.

4.15 p.m.

Viscount Allenby of Megiddo

My Lords, much has been said about the role, the morale and the pay and conditions on the Royal Yacht, in South Korea and so on. However, I shall not attempt to add to that debate except to say that, as our forces became immersed or even possibly lost in a multinational European defence force, the need continually to redefine the roles is as important as it has ever been. Through NATO, we freely and regularly assign our forces; but we must never surrender the control of our Armed Forces as that would be tantamount to the surrender of our sovereignty.

For the first time the Defence Costs Study, although in parts a somewhat vague document, deals with the real world. It is far-reaching and at last deals with, in DCS's own words, an overlarge bureaucratic headquarters structure", which, I would say, has largely existed since World War II. Some of the measures will be painful and, although all will undoubtedly produce short-term savings, some may well lead to a loss of efficiency in our Armed Forces. I believe that there must be sufficient flexibility in the system so that standards do not have to be lowered.

Many noble Lords have spoken about the loss of morale. I do not think that it is quite as bad as some have made out, but there is in certain areas the continual role-ing, re-role-ing and changing of direction so that some people are distinctly disinterested and are not performing quite as well as they have in the past.

I wish to confine my remarks to Chapter Three of the Defence Costs Study and say a word or two about the reserves. I should like to deal first with recruiting. Good recruiting is the very pivot on which our forces depend. Well motivated, fit young men are the very lifeblood of our Armed Forces; and, indeed, have been so since the very beginning when we raised forces in the country.

My concern is that the figures given in Table 2 on page 39 regarding defence refer to more efficient recruiting or manning—it does not specify which— leading to a reduction of some 3,700 service personnel but the loss of no civilians. Recruiters of all three services are the essential ingredient to get the right people into our Armed Forces. They are the people on the ground, in the street and in the schools, at shows, giving lectures and doing the leg-work, just to mention some of the very few functions which attract good young men into Arm Forces.

Paragraph 206 of the Defence Cost Study talks about a pilot study in selected regions of the country making greater use of the Employment Services Agency. I have to tell noble Lords that that has been tried before but at a lower level. Ministers and senior officers in the Ministry of Defence already recognise that: the agency simply cannot and will not replace careers information offices. Employment Services Agency centres are for finding jobs for the unemployed and those aged over 18. Over one-third of those entering the services are already in jobs and very many are under 18 years of age, many still at school.

I submit that the suggestion of a pilot scheme is a failure to examine the present system and to recognise the many and varied functions of recruiters and of recruitment and, in addition, how the careers offices actually operate to meet the service needs. Recruiting is about getting the best recruits—in other words, the right men in the right job—and doing so for the benefit of the Armed Forces.

At present the Army is looking for some 12,000 men and there is likely to be a shortfall in that respect; there is already a deficiency of about 139 officer recruits. For the Army alone that will mean a very rough filter of some 40,000 individuals, each involving some five or six visits to a proposed regional careers office. The sheer cost to travel will be enormous, let alone the cost of relocation, the reinstatement of leased premises and the sale of other properties. I suggest that the way ahead is not to retire behind the barbed wire of the barrack gate but to reorganise and rationalise careers information offices under a single service head, with bi-service and tri-service careers information offices throughout the country, rather than the many single service offices which exist today.

Paragraph 307 of the study recognises the value of cadets as a source of recruits and that there will be continuing support for these cadets. This is most welcome and greatly enhances the importance of the very worthwhile activities of the cadet movement and what it achieves as an important youth activity throughout the country.

Some noble Lords may recall the Unstarred Question debated in Lordships' House on 3rd February which was put down by the noble Lord, Lord Trefgarne, on the training of cadets, when the future of the cadet training teams was debated. I congratulate the Government on the fact that the importance of these teams has been recognised and that they are now fully established and are getting into inner cities where they are very popular and working extremely well.

As other noble Lords have done, I too welcome the statement that the role of the Territorial Army should in future be to act as a general reserve to the Army, with a strength of 59,000 formed units. As the noble Lord, Lord Younger of Prestwick, has said, it is much regretted that the future of the Royal Marine Reserve has yet to be announced. The Royal Marine Reserve is a comparatively small force, highly trained and effective, as is well demonstrated by its performance on operation haven in northern Iraq. Any reduction of the Royal Marine Reserve would make it an ineffective force and should be resisted at all costs.

As regards the Territorial Army, there remains concern about TA dependence on the Regular Army for tactical doctrine and the provision of permanent staff as instructors. I hope that these aspects will not be reduced. Also, there should be no reduction in the number of man-training days, which is currently 36.

A small point, but a very important one as regards the Territorial Army, is the future of the territorial decoration. I understand that this decoration, much valued by the territorial soldier, is presently under review. Some noble Lords hold that decoration and I think that they would be horrified if they knew that there was a possibility that in future the reserve forces would not be given the award. I hope that this very small saving will not be allowed to go through because the decoration means so much to so many people. That step should be resisted at all costs.

The Minister said that the Government remain committed to making greater use of the reserves. It is now well over two years since a study was done into the question of the legislation needed to call out our reserves. The one and only question I have for the Minister—like other noble Lords, I congratulate him on his appointment to the Ministry of Defence and I hope that he enjoys himself in that wonderful establishment— is when we can expect legislation to be brought before Parliament to facilitate the greater use of reserves. That legislation is very much needed.

The Defence Costs Study appears on the surface to be a prudent and sensible housekeeping exercise, but why was it not done before? There is still a great deal of study and work to be done to make it work and to produce the savings that are expected of it. We have some of the finest young men and women in this country in our Armed Forces. We must continue to recruit the best and equip and train them to the highest standards, as we have done in the past. My only plea to the Minister is that we should strongly oppose any further cost cutting exercise next year, possibly another sone of Options, or some frightful anachronism similar to that. Once the Bett review is out of the way, our Armed Forces richly deserve a period of stability away from the turmoil and change that we have seen since Options for Change was started four years ago.

4.24 p.m.

Lord Wedgwood

My Lords, I join many noble Lords in congratulating my noble friend the Lord Privy Seal. The recent Defence Costs Study has been a thorough review within our Armed Forces. The 33 study teams concluded with many recommendations, a number of which will enhance the operational ability of our forces.

The establishment of a joint headquarters is to be commended. Instead of activating a joint headquarters in the event of a crisis we can now respond more quickly and efficiently to a situation that needs rapid deployment—a crucial operational feature, as we saw in the Falklands and the Gulf.

However, such a recommendation should have been made by senior officers as part of their overall defence strategy. Instead, those officers are conducting defence cost studies in the absence of comprehensive defence strategy. In the interests of national security the Government should instruct service chiefs to employ their excellent skills and knowledge to specify their requirements for that comprehensive defence strategy. Once those are agreed, and the Treasury is instructed to provide accordingly, only then should we implement cost efficiency.

There is an interesting analogy in industry today. Due to the recession many companies needed to "downsize" to survive. While financial institutions and banks are able to dictate corporate policy, the shop floor is required to concentrate on cost efficiency. The combined effect has rendered many a management incapable of putting together sound plans for marketing and selling its products. I realise that administering the Armed Forces is not the same as managing a business, but the analogy helps to illustrate that the cost-cutting efforts aimed at the Army, Navy and Air Force are, indeed, Treasury driven. But who drives the Treasury?

Tennessee Williams in his play "Sweet Bird of Youth" has an ageing heroine say that she has become reliant on the kindness of strangers. Is that to become our fate? We have a proud history of defending the realm and we have always had a strategy to do that. For the first time we are dangerously close to relying on our allies to achieve our own military goals.

The Defence Operations Analysis Centre at West Byfleet is studying potential operational scenarios as far as the year 2015. God willing, some of us may be around to see it. We must allow our service chiefs the benefit of their skill, training and expertise to use those studies to plan comprehensively for the future, as the noble and gallant Lord, had Bramall, emphasised earlier.

The disastrous effects of overstretch resulting from Options for Change has been modestly relieved by the cancellation of the proposed mergers of four infantry regiments. However, most observers, including the noble Lord, Lord Williams of Elvel, my noble friend Lord Vivian and others, will detect that morale is still low among our troops. Soldiers, typical of many in the workforce throughout Britain, will tolerate much inconvenience and hardship but naturally fear the unknown. Every time the Government are questioned about the end to cuts they respond with rhetoric about responsibility and cost efficiency. We should put trust in our service chiefs, men and women of the highest calibre, to point the way forward and support their initiatives. If we combine those elements, our soldiers will see their future in a more positive light, with a significant boost to morale. We ask our soldiers to put their lives on the line. We must fully support them.

Adding to the great unknown are the proposals for future medical facilities. As an ex-soldier I would not be reassured to know that potential treatment and hospitalisation are to be negotiated and therefore are at the mercy of the National Health Service and the trade unions. Recent operations have certainly proved that a military medical facility infrastructure is essential, even if not at full capacity, during peacetime.

On a positive note, one of the great success stories has been resettlement. Currently about 30,000 men and women leave the services each year. That number will fall to 25,000 at the end of the current restructuring, although the effect of the current redundancies is temporarily to increase the figure by a few thousand. These are not charity cases. The armed services are the largest and best trained workforce in Britain. Through the services employment network, which is totally free, companies can find candidates who are extremely adaptable and capable of working in a team with inter-personal skills and with the ability to instruct. There is a wealth of talent available from among people with a "can-do" attitude.

Not since the return of the British Expeditionary Force has so much been done to resettle our service personnel. Most candidates are between the ages of 20 and 30. But let us not forget again the extremely high calibre of our senior officers. In fact, some of them might be too good. During preparation for an interview recently, a general, when confronted with the question, "Can you identify your single most important failing?", could not answer. He did not think he had any.

A well-planned resettlement programmes is beneficial to those leaving the services and to employers as well. But it requires considerable support and funding. Among recent studies is an interesting recommendation, to which my noble friend Lord Lyell referred to link recruiting with the Employment Services Agency. The extent of that network, and the potential to relieve much of the recruiting burden, must be attractive, and the numbers seem to work. However, it would seem prudent carefully to scrutinise candidates from those agencies to ensure the desired quality—and not merely those unemployable elsewhere.

It is clear that the Government are committed to making greater use of the reserves. It is time that we reorganised our Territorial Army in specialist roles— roles that can back up and support our mobile and flexible regular troops. In the United States the reserve forces have the important participation of many Vietnam war veterans, whose experience was invaluable during the mobilisation and subsequent support roles in the Gulf conflict. We should encourage and use the investment of well-trained regular soldiers in our reserves. We should offer employers incentives to take on our servicemen and servicewomen and encourage them to use their well-trained skills in the reserves. Employers should not be allowed to discriminate against those who wish to serve their country in such a manner.

The overall effect of the Defence Costs Study has been interesting. We should now approach defence through planning and training on a joint service basis. We learn that the Ministry of Defence and service headquarters have hitherto been overly staffed and bureaucratic and are to be restructured. We now know that our armed services should delegate more effectively, with improved communication systems, and our officers should be more accountable clown to the junior commander level. Those findings are useful and should be recognised. But the structure, acknowledged by many, is fragile. Our allies can be forgiven for thinking that our capability to play our part in the international arena is jeopardised.

It is time to invest in the future. We must continue to recruit the best and provide the most exacting training, with up-to-date equipment, and with a support system for all operational eventualities. None of that can be done unless we respect our past investments— especially, again in the calibre of our senior officer, who must now be allowed to complete a comprehensive defence strategy that will take us well beyond West. Byfleet (wherever that may be) and the year 2015.

4.34 p.m.

Lady Saltoun of Abernethy

My Lords, I, too, would like to add my congratulations on this document to the noble Viscount, Lord Cranborne, and congratulate the noble Lord, Lord Henley, on succeeding to the noble Viscount's former job. Like the noble Viscount, Lord Slim, and the noble Lord, Lord Ashbourne, I am going to ask the Minister a number of questions, but, unlike them, I did give him notice of them.

Much is made in Front Line First and the Statement by the Secretary of State on 14th July of the importance of training, particularly where new types of equipment are involved. The Secretary of State said: Equipment levels are themselves of little consequence unless they are backed up by intensive and highly developed training arrangements… For the Army we shall be improving our training areas in the United Kingdom and in Germany. This will enable there to be an increase in such training of between SO per cent. and 100 per cent. particularly at the battle group level".—[Official Report, 14/7/94; col. 1984.] So far so good, for training is of immense importance. It is important to remember that there is a continual turnover of personnel, to that one can never say that such a battalion has trained in that particular field last year or the year before and therefore it does not need any more training. The composition of any given battalion is constantly changing.

What worries me is that I cannot see how that increase in training will be achieved in the infantry, given the present level of overstretch. I found the figures given to a friend of mine in a letter from the Ministry of Defence in May explaining that when drawdown had been completed, the emergency tour interval would rise from 17 months to 24 months by next April and that withdrawal of one battalion from Bosnia would result in an increase to 30 months. That is absolutely incomprehensible. In fact, the two battalions, which are supposedly unavailable because they are awaiting amalgamation, were in use as the "spearhead battalion" and to provide back-up for it at the time. What guarantee do we have that one battalion will be withdrawn from Bosnia?

I do not believe that the average tour interval will increase sufficiently to allow such an increase in training, unless it is done in many cases at the expense of family life and with an unacceptable degree of stress and strain. I understand that most soldiers in the Northern Ireland Province Reserve are now spending six months of every year on operational duty. The noble Lord, Lord Younger of Prestwick, gave interesting details of exactly what had happened to some battalions. It really will not do.

Speaking of emergency tour intervals, the Defence Committee of another place and, I think, the infantry itself, originally understood that the aim of the Ministry of Defence was to achieve a minimum emergency tour interval of 24 months. Then—I am not quite sure exactly when—that mutated into an average emergency tour interval of 24 months. That is not the same thing at all, as the noble Lord, Lord Vivian, said, and it is not acceptable to those who either go almost straight from one overseas tour to another or face long periods at a stretch in Ulster.

Now there is another mutation creeping into the emergency tour phraseology. We hear that—I quote from oral evidence given by the Secretary of State to the Defence committee on 19th May: No soldiers will be expected to go on emergency tours more that once every 24 months". As I understand the English language, that is scarcely the same as having even an average interval of 24 months between tours. It is a very far cry from a minimum interval of 24 months between tours. Most important of all, it is simply not acceptable.

The noble Lords, Lord Williams of Elvel, Lord Younger of Prestwick, Lord Campbell of Alloway, and Lord Lyell, all spoke about Rosyth naval base. What will be the capital investment costs of moving one squadron of minehunters to Faslane and the other, plus fishery protection vessels, to Portsmouth? Will there be extra expenditure on base facilities and also on housing for personnel at Faslane and Portsmouth? Where will the minehunters train? Will they train in the Firth of Clyde or will they have to go to their training waters by a voyage through the Pentland Firth to the Firth of Forth? Where will degaussing be done if not at Burntisland?

The rundown of Rosyth is expected to save about £22 million a year. Presumably that is on the defence budget. Has any account been taken of what it will cost in terms of unemployment benefit, loss of business to local businesses and the drop in house prices? That part of Fife already has a high rate of unemployment and this will push it still higher. If, in consequence, there is a demand to move redundant nuclear submarines, what will the cost of that be, or do the Government think that they will be able to ignore it? Will the removal of the minehunters and fishery protection vessels affect the naval dockyard? Has radiation danger at Faslane been considered, or the folly of having too few bases from the point of view of security? The Ministry of Defence may have done its sums, but I wonder very much whether the Government have really done their sums, which must involve many departments.

I also wonder whether politically it may be a dangerous decision, unless the Government wish to push the Scots further towards separatism. As one who strongly supports the Union, that always worries me for I do not wish to live in a separate Scotland.

Finally, I have to say that I appreciate the Navy's wish to have guns rather than naval bases, but we should budget for both, even at the cost of increased taxation. The same goes for reducing the infantry to a level where overstretch is unacceptable.

4.40 p.m.

Lord Desai

My Lords, first, I join many noble Lords in double congratulations to the noble Viscount, Lord Cranborne, on his elevation to the position of Lord Privy Seal and the noble Lord, Lord Henley, who now has the tough task of being the man in charge of defence.

I speak as an amateur, a layman. When I joined the House I decided to speak on defence—not being a soldier, either a conscript or a volunteer—because defence is rather an important topic and as an economist I should take an interest in it. It is something that we should not neglect; we should always keep an eye on it.

In that respect, perhaps I may say, first, that in the broad outline of what we have discussed over the past three reviews, I welcome what has been done. I welcome the fact that the Government have managed, so far as I know, without too much damage to our defence capability, to get spending on defence down from roughly 5 per cent. to under 3 per cent. by 1996–97. I qualify that by saying that is has been done by giving the nominal figure of spending as being around £24 billion since 1991–92. Then we had a recession. If we had had a 3 per cent. growth, a target of roughly 3 per cent. of GDP spent on defence would allow for a little growth. The way the economy is going, I have no doubt that there would be a little room for manoeuvre in the future. I flag that up because not many people have noticed that most of the adjustment over the past three years has come at a time when our income has not been growing. The Government have done what they have done in other sectors like education. They have fixed a nominal sum, either zero or a low growth rate and asked for what we in the higher education system call productivity gains, efficiency gains. That is what has happened in higher education and in the community sector.

We know that education is important, but money is scarce. The Government have said: "If we get efficiency gains in the system it will give 2 per cent. growth; if we get 3 per cent. efficiency gain we will have 5 per cent." We have grumbled and complained, but we have adjusted; not, I am sure, because people do not think education is important but because money is scarce and when money is scarce we must justify things in terms of efficiency gains. As I said before, I welcome the explicit and intelligent discussion of defence expenditure in the past few White Papers, although my opinion does not always agree with the views expressed in those documents. I shall come to that in due course. However, I welcome them because they are explicit and I like the direction in which they are going.

We are in the background of a nominal level of low inflation. But, since the GDP is not growing, we have not had much real growth. I imagine that there would be an all-party concensus—though I hasten to add that I do not speak officially for my party—that we more or less spend around 3 per cent. of the GDP in the near future for the sake of stability. If we do that, there will be a little room for expansion as the economy expands. If the economy does not expand, unless there is an emergency, we can make do with that level. Everybody knows and everybody agrees that if there was an emergency the citizens of this country would be more than glad to volunteer a greater spending on defence. I have no doubt about that. The fact that the defence of the realm is important in the ultimate analysis is doubted by nobody. But, realistically speaking, nobody can envisage a really great emergency where the security of the nation is threatened. It is not impossible; but it is not probable. All one can do is allow for the probable. One cannot allow for every contingency in the world. So in a sense the spirit of the White Paper is correct in that regard.

Let me make one or two points quickly. As my noble friend Lord Williams of Elvel said, there is a little uncertainty about the vision of the strategic role. Drawing down the defence expenditure gives a signal that the Government recognise that we are no longer a first-rate imperial power. That is quite right. The economy does not allow it. As the Foreign Secretary said this morning, we are a medium-level power with global interests. That is quite right. We should not try to be a global power with medium-level interests. That is very important As long as we recognise our limitations and know where we deploy our forces, we are doing right.

However, in that respect I would say that reading the White Paper I found relatively less emphasis on the role of the United Nations defence forces than on the European role that they will play. We shall increasingly find that the defence forces will be asked to play more of a role as a United Nations reserve force than a combat role in the European theatre.

From that point of view, I should like to make a general observation. I hope that the Government are aware that they will be asked more and more to be ready to fly far away—perhaps to Rwanda, Somalia or elsewhere—rather than to be in the European theatre. That kind of army needs a different sort of capability and I hope that the Government are prepared for that.

I notice that in the excellent publication on UK defence statistics, we currently spend around 40 per cent. on personnel, about 38 per cent. on expenditure, and the remainder on works, buildings and so forth. I wonder whether there is any perspective on that. I say that because equipment in defence will become more expensive. It is one of the peculiarities of defence that every time an innovation occurs things do not become cheaper; they become more expensive. And they become more expensive in relation to personnel. We really have to make room to provide the latest and best equipment, which I believe we should have, though we may have to cut corners regarding personnel.

It is important that the Government should have a reserve bottom line in regard to spending a certain percentage on personnel—not civilian personnel but military personnel—and that they should have the best of equipment. I wonder whether any thought has been given to what the limits are in that respect. It is important that we have a certain minimum number of bodies and that those bodies are supplied with the best and most innovative equipment available. What research and development are we undertaking to minimise the cost of innovation?

I commend the White Paper. I like it, although I am sure I am in a minority in that respect. I hope that a limit of around 3 per cent. will be fixed on defence spending as a proportion of GDP, and that there will be a clarification of our strategic role and our global commitment, of precisely what our role is and what our ambitions are? Our ambitions should be tailored to meet our resources. Lastly, however much we supply our people with the best equipment, we should not lose sight of the fact that eventually it is people who matter in defence forces and not equipment.

4.51 p.m.

Lord Waverley

My Lords, the Ministry of Defence's administrative procedures and accounting techniques are too complex and need to be simplified. Far too many support staff are required to execute them. Moreover, a high percentage of expenditure is not clearly tagged but dropped into the sundries barrel, diluting accountability. The task ahead is clear—cut waste and introduce simpler and more manageable controls. The effectiveness of our front line capacity will not be reduced, and if done well need not undermine morale.

I wish to raise a matter of grave concern which illustrates the need for a strong defence policy. I thank the noble Lord, Lord Ashbourne, for raising it earlier. Can the Minister confirm that the North Korean missile system has a range of 9,000 kilometres? Do the North Koreans have 5,000 kilometres of tunnels dug under South Korea? Do they have 100,000 spetsnaz troops in readiness? If so, it is for this and other reasons that the Government must be encouraged to develop a space defence capacity in the interests of world peace. I gather that the Americans and the French are collaborating to an unusual degree in this area. What role does the UK have in such projects?

4.54 p.m.

Lord Monkswell

My Lords, we have had two notable examples of brevity this afternoon and I pay tribute to those noble Lords. Unfortunately, I do not think that I can match the brevity of one and two minutes precisely but I hope not to take too long.

We all welcome this defence debate and the opportunity to discuss defence because it is a very important subject. It enables us to pay tribute to the professionalism, commitment and expertise of our Armed Forces and military planners in the Ministry of Defence. Unfortunately, we cannot pay such a tribute to the Government. As many noble Lords have said, we seem to have a defence policy that is driven by Treasury cuts. I hope noble Lords will not get me wrong. We need to cut our defence expenditure, but it is sensible that we cut defence expenditure in a planned way not only in order to minimise the destruction to the defence capability, but also to ensure that the positive advantages that can come from a transfer of expenditure from defence to civil heads can be done to the benefit of the nation as a whole.

I join with other noble Lords on the question of Rosyth. As a maritime nation, to think of more than half of our coastline not having immediate access to a naval base is utterly ridiculous. We need to recognise that in naval terms we have three categories of activity. The first is inshore waters; and the second is the medium area, if one can describe it like that, and reference has already been made to the 200-mile nautical limit; and the third category is the blue water capability. We need to take those three areas of naval activity into account. I am sure that when that is done, the need for a naval base at Rosyth will be amply demonstrated.

Perhaps I may make it clear that we are not talking purely about a Scottish situation, although it affects the Scottish economy, and that of Fife in particular. We are talking about the defence of the United Kingdom and I would argue that Rosyth is an important and integral part of that capability.

I was interested in the report that we are to establish a defence helicopter flying training school. I gather that, according to the latest information, it is to be at Middle Wallop. Although it is suggested that it will have the increased involvement of civilian instructors, can the Government say whether they have any plans to undertake the training of civilian helicopter pilots at this establishment? One example is the increased use of helicopters by police forces. It is logical that the training of helicopter pilots in that sphere of activity should be undertaken by the defence helicopter flying training school.

What is going to be done about the defence establishments which are surplus to requirements? One can visualise with horror the idea that they may be turned over to local estate agents to obtain the highest rate of financial benefit. I suggest that some need to be passed directly to the National Trust. I am thinking of areas like the Pendine Sands, which is an obvious candidate for transfer to the National Trust. I suggest that other defence establishments which are surplus to requirements should be passed over to the local authority so that the planned development and use of those facilities for the benefit of the public as a whole rather than for the financial benefit of a few, can be established.

What is going to be done about surplus or redundant weapons? I hope that the Government will engage actively in a policy of scrapping them and not selling them off for short-term advantage to prospective buyers. We can look around the world and see the destabilising effect of weapons getting into the wrong hands over the past few years and the damage that can be done by selling off surplus weapons.

There was one shining beacon of positive action in the Front Line First paper. I refer to the way in which the planning of the midlife update for the Tornado has been used to help to preserve British Aerospace's manufacturing capability at Warton in the run-up to the production of the Eurofighter 2000. To my mind, that demonstrates our capability to plan things for the future and the need to ensure that we do not destroy capability in one area that we might need later on.

In conclusion, perhaps I may suggest two areas of redeployment that might beneficially use the expertise of our senior military and Ministry of Defence personnel who will be rendered redundant or surplus to requirements. My first suggestion is a government commitment to developing and supporting a central military general staff facility for the United Nations. That could harness the abilities of the senior military and defence planning personnel to whom I have referred. My other suggestion is that it would be marvellous if the Government could recognise the need to plan for the future in areas other than the Ministry of Defence and if they could redeploy some of the defence planners—who have obviously done a very good job, particularly with regard to the Tornado and in supporting British Aerospace—into the Department of Trade and Industry, for example. That might prevent the sort of situation that happened recently with the virtual destruction of our coal industry in the "Dash for Gas" which has left this country bereft of an industry of strategic importance. One hopes that the Government might learn some lessons for the future from that and ensure that we plan for a future that will be beneficial for the whole of this United Kingdom rather than taking short-term measures from the point of view of the Treasury balance sheet.

5.2 p.m.

Baroness Strange

My Lords, I should like to congratulate my noble friend Lord Henley on taking over defence, which I know he will do very well. When marching with the war widows at the Cenotaph it was my noble friend who kept us nearly all in step.

I also congratulate my noble friend the Lord Privy Seal on becoming our Leader. He has been to my certain knowledge a true friend to the war widows and I know that he will be a true friend to all of your Lordships. I congratulate him and his department on the very thorough way in which they have taken a long, hard look at our defence expenditure, form the bottom up, in the production of the Defence Costs Study. It is a slimmer, less glossy publication than we have been used to in the past, but with a great deal more meat on it.

Paragraph 105 states quite clearly the two major differences: the thin red line is not getting any thinner, and everyone in the department has been involved. The result is amazing—a saving of £7545 million a year, if my arithmetic is correct.

Interestingly, the greatest saving are on defence procurement which, with its vast budget of £5 billion to £6 billion a year, is already saving one-fifth, and with competition and NAPNOC—such a pretty acronym for No Agreement on Price, No Contract: surely the basis of all successful bargaining—hopes to achieve another £120 million saving, and further savings by keeping on older vehicles and leasing simulators of £37 million.

The second greatest savings are on spares. Closing the ammunition depot at Bracht in Germany, 17 British depots and keeping fewer spares on the stocks would save £80 million. And so it goes on. Most of your Lordships have already spelt out the detail and summarised the effects.

Where I attempt to do so it would not only be presumptuous but boring. It says much for the stamina of your Lordships and for the importance which we all place on defence, and personal duty, that we are here at all today while those in another place have already fled with their buckets and spades to some far corner of a foreign beach which is for ever—or at least until the end of the Recess—British.

There are three things that I should like to mention— some interesting savings, some welcome reprieves and of course some sadnesses. In the first category, under recruiting, the closing of the 219 Careers Information Offices and using instead the 1,300 Job Centres, already paid for by another government department, to funnel suitable recruits to central regional offices, while sad for the dedicated personnel who will have to go, makes enormous financial sense, with a saving of £25 million.

Good news that the Defence Animal Centre at Melton Mowbray is to stay. When I was lucky enough to visit it, I was impressed with the dog training, indoor riding ring, veterinary operating facilities, and farriery, and the cheerful efficiency of the personnel. Good news too that no more military bands are to be axed, although certainly if it costs £300,000 per annum to train one military bandsman at Deal, that does seem rather excessive. Good news that the Red Arrows are still to thrill us, flying in perfect formation through the skies.

Rosyth is a bit like Jupiter, battered, but at least parts of it still in place, and 900 jobs saved. A happy occasion abroad the third newest frigate, HMS "Montrose", last week in Dundee was tinged with sadness by the presence together for the last time of the RNVR HMS "Camperdown", to be disbanded nine days later. Another happy and glorious occasion, the drumhead service of thanksgiving to mark the 50th anniversary of the Army Benevolent Fund at the Royal Hospital Chelsea, attended by Her Majesty Queen Elizabeth and a fanfare of Field Marshalls, was also made poignant when representatives of the entire British Army, resplendent in scarlet against the bright green of the lawns, the Gordon Highlanders, marching as a regiment for the last time, paraded off, a thin red line indeed, to "Old Comrades" and "Will Ye No come back again?"

So while applauding and congratulating the Ministry of Defence on its long, and hard look at itself, I should like to say that it is a bit like going along in a sledge pursued by wolves. Some of the best horses have already been thrown to the wolves. Now we are sorting through the baggage, and throwing some of that too. But the question is, will the wolves, having tasted blood, not want more? And can we be certain that the; driver of the sledge is not himself a wolf?

The prime duty of a state is to defend its people. We still have a sure and safe defence. But, from now on, we tinker with it at our peril.

5.8 p.m.

Viscount Ridley

My Lords, I realise that as tail-end-Charlie in this debate everything has been said 25 times. I want only to underline one or two things briefly. I must apologise to the House that owing to a four-line Whip elsewhere this morning I was unable to attend the opening speeches. Like everyone else, I should like to congratulate the noble Viscount, Lord Cranbourne, on his elevation to the Cabinet. During his two or so years at the Ministry of Defence I believe that he earned the respect of everyone involved there. He suffered what must have been the most difficult and painful period in the history of our Armed Forces since the Battle of Waterloo. I have a second reason for wishing the noble Viscount well. It was exactly 99 years ago that his great-great-grandfather, as Prime Minister, promoted my great-grandfather to the Cabinet. So without his family I should not be here today.

I am sure that there is a great sense of relief that the review is over. For many people it may have turned out not to be as bad as had been threatened. For that everyone will be grateful. I have no doubt that the Army, the Navy and the Air Force will make the reviews work as well as they possibly can, as they have always done. But, as has been said so often, let us all ask that there should be no more reviews, studies or similar upheavals. There have been far too many in recent years. It was said that as regards the Territorial Army, 28 different studies were being undertaken at one time. All of these unsettle and worry service people. Morale, as I have seen for myself, is low and a period of stability is badly needed—for at least five years if possible.

Perhaps I may give one small example, as mentioned by my noble friend Lord Allenby. There is now a study into the future of the Territorial Declaration and other reserve declarations. That seems to me to be triviality which has succeeded only in annoying and irritating everyone involved. It serves no discernible purpose and cannot save any money at all. I ask the Government please to stop it at once.

I turn briefly to the reserves, especially to the Territorial Army. The figure of 59,000 is much better than the pessimistic rumours that were flying about. It is a realistic figure and everyone is immensely grateful for the end of the uncertainty. It is not secret that certain generals were arguing for a lower figure and the Government must be thanked for resisting that.

The noble Lord, Lord Younger, referred to two matters that still need to be decided. The first is the Royal Marine Reserve. It now consists of about 1,200 men who are based in only five centres in the United Kingdom. They are fully trained to the highest commando standards and they wear the green beret. Their task is to fill gaps in the regular Royal Marines, and many did just that in the Gulf War.

If Front Line First means anything at all, to me it means having these men available at once at a cost of about one-eighth of their regular comrades. Yet there is a threat to reduce their number to about 400 or 500. That would inflict such damage on their morale that they would probably effectively cease to exist. I ask the Government to give urgent thought to retaining this small but highly effective force at its present strength. It is probably the most readily available and useful of all our reserves.

Secondly, if reservers are to be used more effectively, or as the Chief of the Defence Staff recently said, To make fuller use of them in peacetime in operational roles", new legislation is needed to amend the Reserve Forces Act 1980. Work on drafting this legislation has gone on for two years. It covers such matters as job protection, compensation for employers and the fuller use of reserves for helping the civil power in emergencies. Without this legislation there can be little progress. Now it is being said that it may be difficult to find parliamentary time for it in the next Session. It is hoped that the legislation will be brief, and I hope that the Government will do all that they can to introduce it as soon as possible, even perhaps supporting a Private Member's Bill, because it would be most unfortunate if it were long delayed.

5.13 p.m.

Lord Bonham-Carter

My Lords, I too join your Lordships in congratulating the noble Viscount, Lord Cranborne, on his elevation to the Cabinet and the noble Lord, Lord Henley, on his move to the interesting and challenging post at the Ministry of Defence.

As the 29th speaker at the end of a long, hot day, and towards the end of a long, hot summer, I suspect that your Lordships would like from me a short, cool speech and I shall do my best to provide that. It will be easier than it might otherwise have been because most of the questions that I wished to ask have already been asked. What your Lordships want to hear are the answers.

It might be worth reiterating briefly some of the questions that are more important than others. First, I shall deal with the three questions asked by my noble friend Lord Mayhew in connection with the number of our nuclear warheads, our failure to ratify the chemical warfare treaty and the delay surrounding the comprehensive test ban treaty.

The other questions focus more closely on the contents of Front Line First and might possibly be expressed as follows. For those of us without access to professional advice, to the Chiefs of Staff, to the books and so on, it is very difficult to know whether the substantial cuts announced in Front Line First will, as the Statement repeats over and over again, have no effect on: the fighting strength of our armed forces That is repeated about seven times in the Statement and that makes me wonder whether the tongue is touching where the tooth may be aching.

Of course, it is difficult to believe that such substantial cuts can have no effect on the fighting strength of our Armed Forces. And yet that is what we are asked to believe. For example, is it possible to make the kind of Cartesian distinction between cuts in support services and what the Secretary of state likes to call "the UK's fighting effectiveness"? How is that distinction made? How does one categorise a doctor, a. cook, a stretcher-bearer or a quartermaster sergeant in the Armed Forces? Are they effective fighting forces or are they support troops? They are certainly necessary but I do not find that an easy distinction to make. For example, how does that distinction apply to our troops in former Yugoslavia? Does the Minister remember the Gulf War, where I am told that 70 per cent. of the RAF personnel deployed there were logistics specialists. Less than half of the First Armoured Division were support personnel. That seems to me significant. Could those troops in the First Armoured Division or those airmen in the Gulf War have operated as effectively without those support troops and would not the absence of those troops have affected their fighting efficiency?

Let us suppose that that question can be answered satisfactorily. We then move on to the question asked so cogently by the noble Lord, Lord Williams of Elvel. If those very substantial cuts can be made with relative ease, what in the name of fortune has been happening at the MoD over the past 10 to 15 years? How is it that successive Secretaries of State have allowed the MoD and other headquarters at all levels to become "too bureaucratic" and "top-heavy"? Finally, in accordance with my promise to be brief, I turn to a matter which was raised by the noble Lords, Lord Younger and Lord Desai, and the noble and gallant Lord, Lord Carver. Although the White Paper sensibly takes account of the fact that future defence operations are likely to be carried out on a joint service basis, it does not note the equally obvious fact that most future defence operations will also be multilateral and are likely to involve working with the forces of other powers, primarily in Europe.

Thus, while we are committed to developing a common security policy, a common foreign and security pillar, that aspect of defence policy receives hardly any attention at all in Front Line First. Paragraph 616, which is two paragraphs from the end, refers to it by stating: Consultation with Allies in NATO and Western European Union on points of direct interest to them is in hand". If we are serious about developing a common security policy and a common defence policy, the whole of Front Line First, the whole of the White Paper, must be of direct interest to our allies in WEU and NATO. If we are to pursue a rational procurement policy and we have allies on the continent of Europe with whom we are concocting a common security and defence policy, the joint purchase of arms must be no more than common sense. However, I can find no reference to that in the paragraphs dealing with procurement policy and processes. That seems to me to be a curious omission. I should like to have an explanation in that respect.

We have said how good it is that we should have a complete Challenger fleet of tanks. But is it sensible that Europe should have three different models of tank? Is it sensible on economic grounds? Moreover, if we were engaged in a conflict, would it be sensible for three sets of spares to be necessary? I cannot believe that joint procurement should not be very high on the agenda of our defence policy.

I am bound to say that I cannot but think that the Germans and the French were wiser than us in preparing their defence White Papers in close collaboration. It is that kind of collaboration in an area where we are obviously, inevitably and inescapably mutually inter-dependant that I believe signifies being at the heart of Europe. I am afraid that the absence of any reference to that—or, indeed, a slight reference to it—in Front Line First shows how far from that heart the present Government stand.

I have one further point to make. The noble and gallant Lords, Lord Carver and Lord Bramall, and the noble Lord, Lord Younger of Prestwick, who all have close and deep experience of defence matters, pointed out the paramount need for stability. Moreover, all of them, including the noble Lord, Lord Williams of Elvel, noted the low morale which our forces now exhibit. As I understood it, they thought, suggested and proposed that a period of stability was essential if that morale was to rise, and added that one of the elements undermining it was the review of the terms and conditions of service which has been undertaken. I hope that Ministers will take those words into account. I also hope that they will take those words into account. I also hope that they will reassure us that they will take some action to help solve the problem.

5.22 p.m.

Lord Graham of Edmonton

My Lords, I shall begin by making a joint declaration. I extend a warm welcome to the noble Viscount, Lord Cranborne, and the noble Lord, Lord Henley, regarding their new responsibilities. They have both earned our respect and appreciation in their past services. We very much look forward to their continuing to earn our respect, if not our admiration, in the future.

As was once said by a speaker in a long list, perhaps in a position not dissimilar to my own, by now everything that can be said has been said, but not by everyone. It would be invidious to seek to single out too many of the speeches that we have enjoyed and profited from, save to recognise the fact that today must be acknowledged as a major contribution to the wider debate in which the experience of your Lordships' House has once more proved outstanding. Ministers can be in no doubt that this House cares deeply, even passionately, for the defence of our nation and for those men and women who serve us so gallantly.

Following a lucid exposition of government policy by the noble Viscount, my noble friend Lord Williams of Elvel set out a sharp critique of that policy and raised a number of important questions to which we expect the noble Lord, Lord Henley, to reply. In case the noble Lord may have missed some of those questions, I intend to reinforce them so that their importance to these Benches is plain to see. But not before underlining the cry for a period of stability and calm for the Armed Forces which was made so authoritatively by the noble and gallant Lords, Lord Bramall and Lord Carver, and by many other speakers, including the noble Lord, Lord Bonham-Carter.

The Secretary of State said in another place that he had reduced the size and adjusted the balance of our Armed Forces. He went on to assert that he as determined not to drop our guard or to reduce the fighting strength of our Armed Forces. Would that those fine aspirations would come to fruition. If so, we on these Benches would not cavil. But with no disrespect, they are phrases or slogans yet to be proved right—or wrong. We shall have to wait and see, and hope.

We have to set all this in the context of an expenditure of £23 billion, which, as the Secretary of State has said, is a greater proportion of our gross domestic product than in most other NATO countries. However, we are told that all this expenditure will be the subject of what is called "the most rigorous analysis". But that begs the question of what has prompted this rigorous analysis. Has there ever been a time when such rigorous analysis was not part and parcel of an ongoing scrutiny?

How is it that there has been a discovery that the Ministry of Defence and other headquarters at all levels are, too large, too top heavy and too bureaucratic"? The noble Lord, Lord Greenhill of Harrow, raised that very point. Surely the position cannot be that the Minister and his colleagues have watched and presided over a situation which they tell us they have now discovered has become, too large, too top heavy and too bureaucratic"? In a so-called cost conscious government, how could this have happened? No doubt the Minister will tell us.

The future of the Territorial Army has been mentioned. We on these Benches fully support the Territorial Army and can see sense in the intention to make better use of this valuable defence resource. I certainly hope that the Minister will tell us that he shares the enthusiasm for the Territorial Army voiced by, among others, the noble Lord, Lord Younger of Prestwick, and recently by the noble Viscount, Lord Ridley. We support their call for clarity on the status of the TA within its legislative framework.

The summary of the Defence Costs Study concluded, The detailed structure of the TA is also being examined. This may lead to proposals for re-roling units or other changes. The TA itself will continue to be directly involved in this work, and a further announcement will be made later in the year". Can that later announcement also include reference to legislation? I believe that that point was made most effectively by the noble Viscount, Lord Ridley.

Can we be told a little more about the amazing figure of between £5,000 and £15,000 to recruit every man and woman into the Armed Forces? That figure—an average, shall we say, of £10,000 per recruit—is needed horrendous. It is indeed good news that using other employment resources within the state sector can result in a saving of £25 million, but how did the figure reach £100 million in the first place? Surely the present network of 200 recruitment points has for some considerable time been far too many.

Again, I note proposals to rationalise the service hospitals which, we are told, have "substantial over-capacity" and that the solution proffered is to reduce their number from three to one. However, I become uneasy when I see that the coverage is to be secured by spatchcocking service hospital facilities into existing NHS hospitals. That concern was voiced particularly by the noble and gallant Lord, Lord Craig of Radley. Can we be told if these proposals have been seen not only from the service point of view but from the view of even more overloading onto an already overstretched NHS? The noble and gallant Lord, Lord Craig, voiced anxieties from the service point of view. Can we be told what kind of consultations took place both with the service and with the NHS?"

As an ex-Royal Marine who got his corporal's stripes as the result of training at Deal in 1943, and to whom "A Life on the Ocean Wave" is more than a jolly marching tune—it is the march of the premier corps in Her Majesty's fighting forces—may I ask when the astronomical cost of £300,000 per trained musician was first perceived? And can we be given a clear commitment and assurance that transferring Royal Marine music training by 1996 will not diminish that fine contribution to service morale?

As we engage with the Government, who pride themselves on their cost-conscious approach to all things, with defence expenditure high on the list, what answer will we receive to the devastating report by the Comptroller and Auditor-General on the draw-down of equipment and stores as the Rhine Army proceeds to withdraw? The report began by saying that the largest peacetime movement of troops and equipment is: at risk of serious breakdown in control". We are told that as a result perfectly usable equipment is languishing in fields; records of potentially dangerous ammunition and detonators have gone missing; and vehicles are being cannibalised. The report tells us that the auditors discovered 1,800 surplus vehicles stored in the open with no plans on how to use them. Some 1,100 were unserviceable. A third had been left on site for a year, and it was discovered that 23 had been stored there for seven years. However, the severest criticism was heaped on the closure of a base workshop where £65 million of stores were held. One-third of the items stored there were missing. Some of the items have now been traced, although the auditors expressed concern that missing equipment included firearms and ammunition. I wonder how much of that ended up in the hands of terrorists, perhaps the IRA. How it is that the Government can pursue desperate and poor people for claiming what they are not entitled to while squandering millions of taxpayers' money in this profligate manner? Perhaps the Minister can give an answer to the House today.

In relation to the enormously significant changes affecting Rosyth, can we be told whether and important considerations raised by my noble friend Lord Williams and reiterated by my noble friend Lord Monkswell were viewed not only as MoD and Treasury consideration but that the Foreign Office was also consulted? To achieve MoD and Treasury objectives may be one thing, but to do so while possibly jeopardising Britain's crucial interests in the northern waters area—the north North Sea, the Norwegian Sea, the Barents Sea and the Arctic Ocean—calls for an explanation, if not a defence. There are a host of British interests for the present and for the future in that area and to switch our protective capacity from Scotland to the West and South West seems to me to be highly questionable.

For example, the overall North Sea management, with its fisheries interests, pollution monitoring and shipping control, becomes important, especially as the North Sea is about to become a European Union exclusive economic zone. There are other factors. The northern shipping route to the Far East is several thousand kilometres shorter than the southern route. Then there is shipbuilding. For instance, the Russian Arctic fishing fleet is in dire need of replacement and Swan Hunter knows how to build ships strengthened against ice. Then there is the whole potential of the development of the vast resources of Siberia. All these cry out for Rosyth, far from being denuded of potential, being expanded. Can we be given a better explanation than one we have had so far?

The key questions posed by my noble friend Lord Williams of Elvel remain as relevant now as they were when this debate started. I trust that in the intervening period the Minister will have secured some answers, any answers.

First, if the Defence Costs Study was so successful, why did it not happen before? That point was emphasised by the noble and gallant Lord, Lord Bramall. Secondly, what is the state of morale in the Armed Forces? That point was raised by many other noble Lords. Thirdly, what is the general strategy behind our defence effort? Again, that is a matter which caused the noble Lord, Lord Chalfont, much anxiety and unease, and he deployed his arguments to telling effect.

Front Line First is a euphemism of the first order. Where is the front line? What is the front line? How is it held to be first? The objective which the Government set out to achieve—the defence of the realm consistent with efficiency and safety—is laudable. However, we on these Benches are left with the uneasy feeling that our fighting men and women have been left, not for the first time, to carry the can. They face redundancies. They are to be thrown on the job scrapheap far too inadequately prepared for civilian life. That point was made most effectively by my noble friend Lord Monkswell.

But what of those who are left in post? Can they now look forward to a period of stability, of calm, of trying to adjust? Is this the last major cut, or will there be others, always Treasury-driven? If the Government really care for the morale of our forces, those who serve in them, and for us, the Minister can set their worries at rest. If not, he will know that he presides over a group of men and women upon whom we all depend but who are facing a depressing future. They deserve far better from us.

5.36 p.m.

Lord Henley

My Lords, I must confess to some trepidation as I rise to make the concluding speech as the 31st speaker on my first occasion as Minister in a defence debate which I believe has been of high quality. I begin by offering my thanks on behalf of both my noble friend the Lord Privy Seal and myself for the various salutations that have been made on our recent moves. I hope that I shall be able to respond to the debates as well as my noble friend has done on earlier occasions.

I hope that noble Lords will make some small allowance for my greenness on the issues and will appreciate that a recent draftee such as myself will not feel adequately able to respond to every single detailed point that noble Lords have put to me. I take some encouragement from the remarks of the noble and gallant Lord, Lord Carver. I believe that he referred to decisions of his eminent and distinguished predecessor the Duke of Wellington in saying that it is not always necessary to take excessive notice of those much older than oneself—and I speak as possibly one of the younger speakers in the debate.

In opening my response to the debate, I am grateful for the remarks of my noble friend Lord Ironside, secretary of the all-party defence study group. My noble friend the Lord Privy Seal appreciates all the support that the members of that study gave him over the years. I shall be grateful for any advice and encouragement that they can continue to give me. I shall also be keen to ensure that they continue to visit various parts of the defence establishment and inform the House of the expert knowledge that they so acquire.

We have covered many subjects. I believe that even if I wished to do so it would be slightly difficult to respond to all the points raised. I should be lucky if I were able to respond even to a tithe of those which have been put to me. I should try the patience of the House if I sought to answer all the points, even those raised by noble Lords who gave me advance notice of the specific: points that they wished to raise.

I shall divide the bulk of my response in the tripartite: manner in which the noble Lord, Lord Williams, divided his speech. There was, first, the reference to The Defence Costs Study and its ramifications. Noble Lords; asked why, if the strategy were so successful, we had not gone down that line earlier. Secondly, I shall address the questions broadly relating to morale and the effects of some of the changes on morale. Obviously there are concerns that the morale of the Armed Forces should remain as high as possible. Thirdly, the noble Lord, Lord Williams, spoke of our strategy. That matter was largely dealt with by my noble friend the Lord Privy Seal in opening the debate. Again, questions of overstretch and sustainability were covered by the noble Lord and a great many other speakers. I appreciate that many other concerns have been expressed, ranging from Her Majesty's Yacht "Britannia" to Rosyth (I hope that I shall be able to cover Rosyth), hospitals and so on. They are not subjects that I shall have time for today. Noble Lords will appreciate that we are about to start on a fairly long Recess and I shall have a great deal of time to write a great many letters to all noble Lords who feel that I have not dealt adequately with the points that they raised. Certainly, I give that assurance to the House.

Perhaps I may start on the point raised by the noble Lords, Lord Williams, Lord Greenhill of Harrow and my noble friend Lord Vivian regarding defence cost studies and the question of why we had not undertaken such a study before. My noble friend Lord Boyd-Carpenter asked whether we were satisfied that we had in fact received full value for money in the past and how could we make these savings now. The noble Lord, Lord Williams, acknowledged the change that had occurred with the end of the Cold War. His comparison with 1980 shows, I think, that he underestimates the magnitude and the implications of that change.

The success of Front Line First was only possible because it followed Options for Change and built on the improvements in efficiency set in train since then. It is difficult to see exactly how the exercise could have been completed earlier. We set ourselves a target of some £750 million of savings by 1996–97 and perhaps another £100 million in later years. That has enabled us to confirm both the previous equipment plans-—to which I shall come later—whose affordability had not previously been confirmed. There are in addition a number of new measures to increase training and activity levels—they were referred to by my noble friend Lord Younger, and I shall come on to them later, partly when I deal with questions of morale—to form the joint rapid deployment force and to increase Harrier numbers, to which I shall refer again later.

Calculating those figures is a difficult matter. It was referred to by the noble Lord, Lord Mulley, who, if I understood him correctly, to some extent called our figures into question. Obviously the figures given in the report are very much estimates, largely based on assessments made by the study teams. We shall now proceed to try to validate those savings both in costs and manpower through the Ministry of Defence normal costing and planning processes. I believe that it was the noble Lord, Lord Mulley, who referred to the running costs agreement. We have agreed with the Treasury a new running costs regime which includes all the expenditure within our top level budget system.

Lord Mulley

My Lords, my main concern was that throughout the document there was a great deal of information about lost jobs but no definite figures as to what the whole thing would add up to.

Lord Henley

My Lords, I was trying to make clear that these are estimates of costs. Obviously, one could be more precise about the number of jobs being lost. At the same time, as I shall make clear later when I come to the employment issues, we hope to see a considerable number of jobs retained elsewhere, particularly in the defence manufacturing industry because of those orders that we have been able to confirm.

To continue with the running costs agreement, which again was a concern voiced by the noble Lord, it will be eligible for unlimited end-year flexibility and will simplify financial management within the department.

With proposed savings of that magnitude, the noble and gallant Lord, Lord Bramall, was right to stress the potential difficulties of meeting those targets within two years. Many items that we suggest will create enormous challenges in meeting those targets. One, which I shall refer to later, is the £25 million that we might be able to achieve in savings as a result of using the employment service for elements of recruiting. I understand that that caused concern to a number of noble Lords. I shall come to that point later. We recognise that there will be challenges over the years but we are confident that savings can be achieved, even though the estimates that we gave are very much broad estimates and, as I said earlier, are in need of detailed validation.

5.45 p.m.

Turning to the question of morale within the Armed Forces, it is obviously a matter of high importance. The noble Lord, Lord Williams, was right to stress that and it has been emphasised by virtually every other speaker. There is little point in having Armed Forces where morale is very low. Many things will affect the morale of our Armed Forces. All I should like to touch on at the moment is, to some extent, the effect of the Defence Costs Study and a few other matters on morale. I appreciate the point mentioned by my noble friend Lord Campbell about the prosecution for alleged war crimes and the effect that has had on the morale of certain units and within the Army generally. I would be more than happy to discuss that subject with my noble friend on some other occasion.

As the noble Viscount, Lord Allenby, said, it is easy to overstress the effects of the Defence Costs Study on morale. No one pretends that our restructuring programme has been easy for the Armed Forces over the years. Front Line First contains very bad news for individuals, particularly those who are losing their jobs, wherever they may be. But everyone in the forces— whether service or civilian—supports the aim of Front Line First, which is to get the greatest military output from every penny that we spend on defence. For that reason, I am confident that in due course the overwhelming majority of our personnel will welcome the success of the Defence Costs Study.

Turning to the Bett review and the concerns that the noble and gallant Lords, Lord Bramall and Lord Carver, raised that it was creating uncertainty and was therefore obviously bad for morale, I can confirm that it is at a fact-finding stage. It is too early to speculate about what it may recommend. The current arrangements in both pay and allowances have evolved over many years and I believe need thoroughgoing and radical examination. For that reason, the Armed Forces Pay Review Body has welcomed the independent review which it regards as timely. I understand the concerns raised by both noble and gallant Lords, about the uncertainty creating problems for morale. All I can say at the moment is that I believe that it starts in April and is due to report in about a year's time; but I cannot be more precise than that. If I have any further news, I shall be the first to let both noble and gallant Lords know.

Turning to the question raised by my noble friend Lady Park, and others, about privatisation and contractorisation in the RAF and their effect on morale, again I can assure the House that our implementation of those proposals for RAF repair facilities will be most carefully overseen to ensure that safety and operational effectiveness are not compromised. We remain committed to exacting quality standards. I accept that we have encountered problems over the years with some private contractors, but only in a small minority of cases. I can give an assurance that corrective action is in hand.

I said that I would make some brief reference to the recruiting proposals referred to by the noble Viscount, Lord Allenby, and others, and the effect that can have on morale. As the noble Viscount was right to stress, we are spending around £100 million a year on recruiting. As I said, that represents a cost of about £3,000 per recruit in a normal year. Obviously, at times of low demand, such as now, the cost per recruit can rise, because they are very much fixed costs, to some £5,000 or £15,000 per recruit. In the past, that system has worked well, but it is fairly expensive and relatively inflexible. Our proposal is to involve the Employment Services Agency in recruiting and as a result we will be able to save £25 million year. If I may, as someone who has only recently come from the Department of Employment, I can give an assurance to the noble Viscount, Lord Allenby, that the Employment Services Agency is not merely involved in the recruitment of unemployed people; it has also been involved for many years in working with employers and finding new recruits for them. I think that the noble Viscount will find the modern-day Jobcentre very different in terms of what it can provide and the attitudes of the staff from what he might have known many years ago.

I can certainly assure all noble Lords, that we are well aware of the critical need to provide suitable young men and women for all our forces, and we shall certainly not take any risks in that regard. We seek as a first step to establish the viability of our proposals through a pilot scheme in selected regions of the country. Again, if I may repeat what I said earlier to the noble and gallant Lord, Lord Bramall, we appreciate the difficulties of meeting our targets within the timescale we allowed. For that reason we shall have to move extremely fast on schemes such as this to allow ourselves a suitable time for a pilot scheme and for that pilot scheme to be evaluated in the appropriate manner if we are to meet the savings at the appropriate stage.

Turning to the third part of the tripart division of the questions of the noble Lord, Lord Williams, the broader questions on strategy were dealt with by my noble friend the Lord Privy Seal. However, I shall be prepared to look again at what noble Lords said and write to them if necessary. Again, I appreciate the genuine anxieties of most noble Lords as to whether our forces will be sufficient to meet all the commitments that will be imposed upon them. The noble Lord will be aware that the landmark analysis in the 1993 White Paper, which was very much updated in this year's White Paper, clearly shows that we believe our commitments, capabilities and resources are in balance. Obviously those are matters which have been kept under constant review, I do not believe that there is a parallel to be drawn between the situation in the 1930s and today. Unlike then, we have been restructuring our Armed Forces to take account of the reduction of the threat as a result of the end of the Cold War. As this year's White Paper points out, we are immeasurably safer than we were in those early years. It would be irresponsible to maintain the force levels and structures needed when we faced the hostile Warsaw pact.

Turning to out-of-NATO commitments such as resources to the Falklands, referred to by the noble Lord, Lord Mayhew, I am grateful to him for his comments. I did not agree with all he said and would show considerably more sympathy for the comments of my noble friend Lord Boyd-Carpenter. But I can assure the noble Lord, Lord Mayhew, that we shall certainly maintain our forces at a level necessary to meet all our military targets and all our duties and obligations to both the Falkland Islands and the Falklanders themselves.

I wish to mention one last point on meeting our commitments and the sustainability of our Armed Forces—a point raised by the noble and gallant Lord, Lord Bramall. As I said, the security landscape of the post-Cold War world is markedly different from that of the past 45 years, in two ways. First, the threat of massive external attack—the hallmark of the Cold War—can now be measured in years rather than in months and days. That will give us time to expand and regenerate our Armed Forces to meet the threat of general war not only in terms of supplies to support them but also in terms of manpower and the necessary stocks. Secondly, we need to ensure that we have the ability to sustain forces in theatre over an extended timescale if necessary; for example, on largescale peacekeeping operations. Those two requirements mean that we have to reshape our sustainability planning and the requirement for stockholdings will obviously vary from item to item. Our aim is to ensure that against the more immediate uncertainties of the post-Cold War environment we are able to support contingency forces which can offer a graduated response to crises, operating either nationally or, more likely, as part of a NATO or ad hoc coalition. We believe that we have struck the right balance.

The House will recall the substantial programme of investment in new equipment announced in the House on 14th July by my noble friend. I should like to emphasise that it included firm orders, not just plans, for seven new minehunters, 259 Challenger 2 tanks, 142 Tornado strike aircraft upgrades, mortar ammunition and substantial laser-guided bomb capability, among others. I do not think that I need elaborate on the capabilities of this equipment or what it means in terms of jobs. But without the Front Line First studies those plans might well have been unaffordable. The noble and gallant Lord, Lord Bramall, doubted whether the equipment could be attributed to the Defence Costs Study but the savings in our defence administration and support outlined in the Statement earlier this month have made them a reality.

The Statement also signified our commitment to a modern and powerful amphibious capability, as stressed by my noble friend Lord Ironside. A further invitation to tender reinforced our commitment to a strong nuclear-powered submarine flotilla—the Batch 2 Trafalgar class will be capable of deploying rapidly and unobtrusively in support of British interests anywhere in the world. We also announced, as noble Lords will remember, our examination of the case for acquiring a. new capability in the form of conventionally armed Tomahawk land attack missiles.

I would ask the House to consider the significance of these numbers. They mean that we can equip all eight of the Army's front line regiments with Challenger 2 and update sufficient Tornados to sustain our eight front line squadrons of these aircraft well into the next century. The decisions are therefore significant for our defence capability, for the morale of our servicemen and, just as importantly—the noble Lord, Lord Ironside, stressed this—for the morale of the defence industry itself. The numbers have depended not only on the continuing negotiations with the companies involved but also on affordability being confirmed. Therein lies the importance of Front Line First.

There has been concern, particularly in relation to Rosyth, about the employment and unemployment implications of the Front Line First announcements. As someone who has just moved from the Department of Employment, these are concerns of my own. I reject the analysis of the noble and gallant Lord, Lord Craig, which seemed to be supported by noble Lords on the Benches opposite, that there is false accounting and that money saved in the defence budget will merely fall to the Department of Social Security budget. The argument that any government could solve all the problems associated with unemployment by creating new government jobs is an example of economic illiteracy. I have to stress that some two-thirds of those who become unemployed will find work again within six months. It is not the case that someone who has lost a job will be on unemployment benefit in perpetuity. The Department of Employment figures show that around two-thirds of those becoming unemployed find new jobs within six months. The figures are somewhat higher in relation to ex-servicemen, who bring particular skills to the jobs market. Considerably more of those will find new employment compared with the two-thirds I mentioned earlier.

Returning to the question of Rosyth, I understand the concern of various noble Lords. The noble Lord, Lord Williams, asked why we are moving ships from Rosyth given the imminence of the exclusive economic zone. I think the noble Lord misunderstands the operational role of the vessels currently at Rosyth. The minehunters going to Faslane and Portsmouth are moving closer to their normal or likely operating areas. The fishery protection vessels which are going to Portsmouth will again be closer to their operating areas. I understand that the Scottish Office provides fishery protection around the Scottish coastline and therefore the Scottish Office will be dealing with that.

My noble friend Lady Saltoun asked some rather detailed questions on Rosyth. I prefer to write to her with detailed replies. I understand that a great many of her questions are covered in the consultative document which we have issued, but I shall write to her in greater detail in due course.

I do understand the concern about the Union. I believe that the noble Lady is a passionate supporter of the Union, as, I can assure her, are all of us on these Benches. I can also assure her that Scotland as a whole will still be getting very much its fair share, if not more, of defence expenditure. I understand that, even after these changes, naval expenditure in Scotland, for example, will still be about 17 per cent. of the total, dropping from about 20 per cent. before these proposals. I can also give an assurance to my noble friend Lord Campbell of Alloway, who asked about the possible uses of Rosyth in time of war, that, if the need ever arose, that naval base could be used as a forward operating base for Royal Navy ships, given the continuing presence of the dockyard.

As I said, there was quite rightly concern about the employment implications of Front Line First. Less evident perhaps were the 10,000 jobs which are expected to be directly sustained by the equipment decisions which my noble friend announced some weeks ago. The Tornado orders safeguards about 1,600 jobs at British Aerospace and its sub-contractors, providing work at Warton in Lancashire until the production of the Eurofighter 2000. Vickers estimates that, in total, taking into account the impact on local communities around its Leeds and Newcastle factories, the Challenger 2 safeguards around 4,000 jobs for many years to come. The benefits, of the tank order will also be felt adjacent to Rosyth itself, where GEC-Marconi plants will be working on Challenger 2 gun control and training systems.

More is still to come. Later this year we expect to announce decisions on the replacement or refurbishment of Hercules aircraft and on the purchase of new support helicopters. We plan to issue the invitations to tender for Type 23 frigates and hope to take forward weapon programmes for the Royal Air Force.

If investment in new equipment is vital to the future, I believe that most noble Lords would agree that so too is investment in training. As many noble Lords made clear, it is vital for morale reasons. The Armed Forces are at present involved in a demanding programme of operational commitments in order to reduce stress on individual personnel, increase the quality of their skills and the preparedness and competence of their units. I can assure noble Lords that the Government are placing priority on measures which will spread the pressure of current commitments and improve facilities for operational training.

I am aware of the concerns raised by many noble Lords about the emergency tour intervals and the strain that that imposes on soldiers and their families. However, we expect that the average tour interval—I stress that it is an average tour interval that my noble friend referred to and not a maximum tour interval—for the infantry will be about 24 months next year.

With these priorities in mind, the successful conclusion of Front Line First has enabled additional Harrier GR7 aircraft to be moved from the reserve fleet to the front line and significant increases in operational flying training for all fast jet crews—a gain with positive effects on morale.

For the Army, the majority of personnel increases announced last December will be concentrated on enhancing the size of the field army units and thus making a direct contribution to meeting operational demands.

Perhaps I may say a word or two about the further expansion of the contribution of the TA to peacetime activities. I understand the concern of various noble Lords that the role of the TA should continue and be expanded. I can assure noble Lords that I am personally more committed to the Territorial Army.

As regards legislation, I believe that all noble Lords will understand that it is obviously very difficult for me to comment on any future possible legislation. We attach considerable importance to such legislation, which will be brought forward at an appropriate stage.

Perhaps I may end by saying a little about the defence budget, which has been reduced by about 14 per cent. since the start of the decade. We plan to spend around £23 billion on defence this year, or 3–4 per cent. of GDP. By any measure, that is a substantial sum, well above the current European NATO average of 25 per cent. It reflects the scale of the United Kingdom's commitments and highlights the importance that this Government continue to attach to defence and to our role in NATO.

Under the plans announced last Autumn, defence expenditure is expected to fall to 29 per cent. of GDP by 1996–97. But this reduction is less than that planned by the United States and Germany, two of our main NATO allies, and even by 1996–97, we shall continue to rank with the top NATO countries in terms of defence spending per capita and as a percentage of GDP.

Because of the success of Front Line First in securing savings within the support area, we shall be able to maintain the front line at the levels set out in this year's White Paper. As we heard on 14th July, the savings secured will also enable us to proceed with a programme of investment necessary to maintain the operational effectiveness of the front line. Our aim, of course, must be to secure a stable resource base for our forward plans, if we are fully to reap the benefits of Front Line First. But in a changing world we must expect our spending plans, in common with those of other departments, to be kept under review. Where inflation changes and new efficiencies are identified, spending plans may need to be adjusted, but this need not affect the underlying stability of the defence programme, a concern of many noble Lords.

My noble friend said in his opening speech that he could not speculate on the outcome of this year's public expenditure survey. I am sure that the House would not expect me to do so either. But I can assure the House that we are determined to ensure that the commitments, capabilities and resources of our Armed Forces remain in balance. The programme of new equipments and operational improvements announced on 14th July underscores this determination. As my noble friend has already said, it is a clear indication of the direction in which the Government intend to head.

The House may be assured that the Government intend to take no risks within the nation's security. Our Armed Forces remain properly manned, well trained, well equipped and well supported, fully capable of fulfilling the wide range of operations that they currently undertake. They are, and will remain, world-class. In the words of the White Paper, they are a valuable and prestigious national asset—a necessity, not a luxury, vital for the security and reputation of this country. I commend my noble friend's Motion to the House.

Lord Bramall

My Lords, I do not want to be difficult at the end of a long day and I certainly do not want to harass the Minister who I appreciate is in a very difficult position, but I asked him two extremely simple questions about how much money has been saved which has been genuinely added back to the enhancement of the forces, as promised by the Secretary of State, and about what is to be the manpower ceiling of the Army. If the Minister cannot answer those questions, can he give me an assurance that he will write to me on those two matters?

Lord Henley

My Lords, along with many other noble Lords, the noble and gallant Lord asked a very large number of questions. Even where noble Lords asked specific questions, it was within my own right to decide how I was going to wind up this debate. However, I can give the noble and gallant Lord an assurance that I shall certainly write to him on those particular issues.

On Question, Motion agreed to.

Forward to