Vol. 782 Tuesday No. 128 21 March 2017

PARLIAMENTARYDEBATES (HANSARD) HOUSE OF LORDS OFFICIAL REPORT

ORDEROFBUSINESS

Questions International Development: Forestry ...... 143 Police: Pension Rights ...... 145 Gaza Strip ...... 147 Schools: Funding Formula ...... 149 Parking Places (Variation of Charges) Bill Third Reading ...... 151 Broadcasting (Radio Multiplex Services) Bill Third Reading ...... 152 Armed Forces Act (Continuation) Order 2017 Motion to Approve ...... 152 Defence and Security Motion to Take Note...... 230 Brexit: Gibraltar Question for Short Debate...... 230

Grand Committee Greater Manchester Combined Authority (Fire and Rescue Functions) Order 2017 .....GC 1 Greater Manchester Combined Authority (Transfer of Police and Crime Commissioner Functions to the Mayor) Order 2017 ...... GC 7 Electricity Supplier Payments (Amendment) Regulations 2017 ...... GC 7 Electricity and Gas (Energy Company Obligation) (Amendment) Order 2017...... GC 15 Collection of Fines etc. (Northern Ireland Consequential Amendments) Order 2017..GC 23 Public Guardian (Fees, etc.) (Amendment) Regulations 2017...... GC 25 Judicial Pensions (Additional Voluntary Contributions) Regulations 2017 ...... GC 28 Judicial Pensions (Fee-Paid Judges) Regulations 2017 ...... GC 32 Judicial Pensions (Amendment) Regulations 2017 ...... GC 32 Industrial Training Levy (Engineering Construction Industry Training Board) Order 2017...... GC 32 Immigration Skills Charge Regulations 2017 Motions to Consider ...... GC 37 Lords wishing to be supplied with these Daily Reports should give notice to this effect to the Printed Paper Office. No proofs of Daily Reports are provided. Corrections for the bound volume which Lords wish to suggest to the report of their speeches should be clearly indicated in a copy of the Daily Report, which, with the column numbers concerned shown on the front cover, should be sent to the Editor of Debates, House of Lords, within 14 days of the date of the Daily Report. This issue of the Official Report is also available on the Internet at https://hansard.parliament.uk/lords/2017-03-21

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No party affiliation is given for Members serving the House in a formal capacity, the Lords spiritual, Members on leave of absence or Members who are otherwise disqualified from sitting in the House. © Parliamentary Copyright House of Lords 2017, this publication may be reproduced under the terms of the Open Parliament licence, which is published at www.parliament.uk/site-information/copyright/. 143 International Development: Forestry[21 MARCH 2017] International Development: Forestry 144

House of Lords Lord Bates: I do, and that is what DfID provides through many of its programmes and by working in Tuesday 21 March 2017 public/private partnerships in this area. We recognise that tropical forests regulate weather patterns and that 2.30 pm 25% of global greenhouse gases are a result of deforestation and land-use changes. It is therefore Prayers—read by the Lord Bishop of Leeds. crucial that we make efforts in this area. Regarding my noblefriend’sopeningpointabouttheUSAdministration’s International Development: Forestry policy, I would comfort him to an extent and say that Question that policy is a proposal. A full budget will be published in May and has then to find its way through Congress. 2.37 pm Lord Clark of Windermere (Lab): My Lords, I Asked by Baroness Parminter declare an interest as a former chair of the Forestry To ask Her Majesty’s Government, in the light Commission. As the Minister is aware, Britain has a of the Department for International Development’s unique reputation as one of the few countries in the Economic Development Strategy, whether they plan world that has successfully reforested its landscape. to commit to supporting forest programmes across Traditionally, the Forestry Commission has offered the globe to improve forest governance and reduce much expertise and experience to countries seeking to deforestation. reforest their landscape but of late, due to the financial cuts, it has been unable to sustain that at the level it The Minister of State, Department for International would like. Will the Minister look again at how we Development (Lord Bates) (Con): My Lords, stopping could use money to utilise the expertise of the Forestry deforestation is an essential part of global efforts to Commission to practically help countries grow more promote sustainable economic development. DfID already trees? supports programmes focused on governance, tackling illegal logging and related corruption, and working Lord Bates: I certainly pay regard to the noble with companies to eliminate deforestation from supply Lord’s great experience and commitment to this area chains for palm oil, cocoa and other commodities. over many years. However, I would also say that, This makes an important contribution to DfID’seconomic through DfID, we fund a number of programmes, development strategy. such as the international forestry knowledge programme, which does a great deal around the world in terms of Baroness Parminter (LD): My Lords, I pay tribute forest governance and partnerships in forests, and are to the work of both this Government and previous part of the forest investment programme with the Governments in the fight against global deforestation. World Bank. A key part of those initiatives takes place Given that we are losing an area the size of a football in areas such as Indonesia, for example, where 80% of pitch every two seconds, and that deforestation accounts forestry was formerly illegal but now 90% is legally for 10% of our global carbon emissions, will the audited. We want to see more of that type of work and Minister commit to the fact that the Government will I assure the noble Lord that that will continue to not lose any further funding to take forward this happen. important work? Lord Cameron of Dillington (CB): With DfID’s new Lord Bates: I am very happy to renew that and welcome emphasis on the promotion of agriculture commitment, particularly on the International Day of as the bottom rung of our wider economic agenda, Forests.The commitment is there not only in a government does the Minister agree that forestry and agri-forestry statement on such matters, but also in our signing up have a vital role to play in sustaining soils and encouraging to the sustainable development goals. Sustainable the sustainable management of water and grazing, development goal 15 puts sustainable managed forests, and that therefore forestry has a really important role combating deforestation and reversing land degradation to play in the wider economic agenda generally within at the heart of one of the key goals that need to be sub-Saharan Africa in particular? attained. The Government are committed to those goals, and through a number of different mechanisms Lord Bates: Absolutely. That is why it is such a seek to bring them about by 2030. prominent part of the sustainable development goals. As the noble Lord says, it is about livelihoods and Lord Crickhowell (Con): My Lords, the Washington- climate change. It is also about direct livelihoods, as based NGO Forest Trends has been working extremely about a billion people around the world depend on hard to save the South American rainforests. I declare forests for their livelihoods. That is a very important an interest: my son is in Brazil on its behalf at this part of our economic development strategy. moment. It has received support from the Obama Administration, but that is now almost certain to end Lord Naseby (Con): Will my noble friend look as a result of the policies of President Trump. Does again at the decision of DfID not to give any help to my noble friend agree that public/private organisations Chile, our greatest ally in South America, following of this kind, particularly those working in countries the extensive deforestation from the wildfires and the like Brazil, facing economic difficulties, deserve the subsequent difficulties of rehabilitation for the people widest possible support? who were devastated in that part of Chile? 145 International Development: Forestry[LORDS] Police: Pension Rights 146

Lord Bates: My noble friend and I have had a number and Wales who have died on duty. As a result, from of discussions on this. Of course, because Chile is not 1 April 2015, those survivors who qualify for a survivor ODA eligible due to its middle-income status, it is pension will now continue to receive their survivor’s difficult to do that. However, we have corresponded benefits for life, regardless of remarriage. and are looking at ways, through the Cabinet Office, to extend technical support and advice to the people Lord Bach (Lab): My Lords, I declare an interest as of Chile, who are of course great friends of the UK the serving police and crime commissioner for Leicester, and who we want to support in their hour of need. Leicestershire and Rutland. I thank the Minister for her Answer and for seeing me earlier today to discuss these Lord McConnell of Glenscorrodale (Lab): My Lords, matters with her and her officials. On 15 August 2002, do the Government agree that if their fine objectives two Leicestershire police officers—Police Constables in this strategy of securing greater prosperity and Andy Munn and Bryan Moore—were brutally killed tackling poverty are to be achieved, then tying aid to by a criminal driver on the A42. They not only both trade as part of any DfID economic strategy would be died in the same incident but both left young widows the wrong course of action? Will they support continued and small children. One widow remarried seven years improvements in the business environment in developing later in 2009 and lost her police widow’s pension. The countries, including in forestry, to ensure that there is other widow remarried in 2015 and, because of a greater prosperity in those countries in the future? change in the law, has kept her police widow’s pension. How in all conscience can it be right that two women, Lord Bates: The noble Lord is absolutely right that both of whose husbands were killed while bravely tying aid to trade benefits no one in the long run. We fighting crime and in the line of duty on the same want to get the most competitive people who can occasion, can be treated so differently by the country deliver the best services to the countries that are in that owes so much to both of them? Will the Minister need of our help. We remain resolutely committed to please look at this case again? Does she not agree that that. That was set out again in the economic development such obvious unfairness offends against every principle paper. this House believes in? Baroness Williams of Trafford: I thank the noble Lord Collins of Highbury (Lab): Global co-operation Lord for his Question, for the way in which he has is absolutely critical, as the Minister mentioned, in always constructively engaged with me, and for coming achieving the SDGs. Can he tell us how we will ensure to see me this morning. I pay tribute to him as Parliament’s that co-operation post Brexit? How will we maintain a only PCC. Without talking about individual cases, I relationship with our European partners in delivering say that it is absolutely tragic that police officers are the SDGs, particularly on deforestation? I must admit killed in the line of public duty. When it happens, we that on days like this, hearing his responses, I wish he should honour the officers’ memory and sacrifice. was the Secretary of State. That is why this Government have changed the rules so that all survivors of police officers who die on duty Lord Bates: Let me go straight to the points that the do not now face the prospect of losing their pension noble Lord has raised. As has been said many times on remarriage. That is a change that no previous from this Dispatch Box in recent years, we are leaving Government have felt able to make. However, we must the European Union, not leaving Europe. We work continue to have regard to the wider implications of a with Europe around the world on delivering those change to public service pensions. It is the duty of sustainable development goals, and we will continue government to ensure that any policy changes are to do so. We also have other commitments. There is legally and financially sound. I do not pretend that the the New York Declaration on Forests, which is an judgment is always easy but it is one that we must international commitment of 190 NGOs, Governments make. Successive Governments have maintained a general and multinationals that contribute towards that effort. presumption against retrospective changes to public We will be working with everyone in pursuit of those service pensions, and I am afraid that that remains in global sustainable development goals. place.

Police: Pension Rights Baroness Harris of Richmond (LD): My Lords, I declare my interest as an honorary member of the Question National Association of Retired Police Officers, which has been instrumental in championing this campaign. 2.46 pm Should the Government not recognise the principle Asked by Lord Bach that the widows and widowers of police officers who have given their lives in service to the community To ask Her Majesty’s Government what is their should receive pensions for life no matter when their policy with regard to the pension rights of spouses partners were killed? and civil partners of police officers who have been killed in the line of duty. Baroness Williams of Trafford: I agree with the noble Baroness that the Government recognise the The Minister of State, Home Office (Baroness Williams principle and that is why we made these changes back of Trafford) (Con): My Lords, in January 2016, this in 2016, to be applied from 2015. But as I have said, Government changed legislation to the benefit of widows, the retrospective judgment is not one that is made widowers and civil partners of police officers in England across the public service. 147 Police: Pension Rights [21 MARCH 2017] Gaza Strip 148

Lord Kinnock (Lab): My Lords, may I recommend Lord Hylton (CB): I thank the Minister for that full to the Minister the principle of “When the facts change, reply. The health situation inside Gaza is already bad I change my mind” as wise guidance in issues like this? under the partial blockade by Israel. In the interests of Does she accept from me that the principle of no all sides, will the Government keep calling for water, retrospection, although applicable in many circumstances, sewerage and electricity supplies to be addressed without simply does not meet the moral obligations that arise delay so that Gaza remains habitable from 2020 onwards? from cases like those which have been raised properly Will they make constructive proposals for all to consider, by my noble friend? given the help that is available from British doctors who visit Gaza regularly? Baroness Williams of Trafford: I agree with the noble Lord that, when the facts change, the Government Lord Bates: I reiterate that the Government will change their mind. That is why in 2016, after decades continue to make representations to ensure that the of widows who remarry not being able to claim the suffering of the Gaza people is alleviated as far as survivor’s pension, the Government did indeed change possible. We are doing a number of things, such as in their mind. The issue of retrospection is something the area of reconstruction. We are contributing to the about which no Government have changed their mind. Gaza Reconstruction Mechanism, which has rebuilt Lord Mackenzie of Framwellgate (Non-Afl): My 2,100 houses destroyed in the 2014 conflict. We are Lords, I declare my interest as a current police pensioner. urging the Israelis to honour the obligations they gave I have often heard Ministers both in this House and in in 2015 about the supply of water, which is critical to the other place, and indeed at conferences, committing Gaza. We are also urging them to progress with the the Government to giving priority to the victims of connection of the high-voltage 161 kilovolt transmission crime. Does the Minister agree that in homicide cases line to the area. At the same time, we urge those the definition of victim by necessity applies to the militant organisations in Gaza to restrain themselves spouses and partners, in this case of police officers and resist and renounce those violent attacks that are who have died in the line of duty? Is there not therefore at the heart of the cause of this conflict. a justified need to reflect that in the pension arrangements for those officers? Baroness Eaton (Con): Will the Minister outline what steps, if any, are in place to ensure that none of Baroness Williams of Trafford: I certainly recognise the £25 million that the UK has pledged to the Palestinian the difficulties faced by the families of members of the Authority for 2017 to fund salaries for 30,000 officials Armed Forces, the police service and the fire service in the West Bank health and education sectors goes and how they could be seen as the indirect victims of towards rewarding terrorism and teaching hate? crime themselves. The noble Lord talks about provisions for death in the line of duty. There most certainly are Lord Bates: This is a very good example of where awards under the police injury benefit arrangements we are working with our European colleagues. We which ensure that higher benefits are payable when an work through the EU PEGASE fund to distribute that officer is killed in certain circumstances. These are part of aid. There is strict vetting to ensure that the broadly if death resulted while seeking to apprehend a only people who receive that salary support are legitimately suspect, protecting life, or if the officer was targeted providing healthcare and other medical services and for the reason of being a police officer. I take this teaching support in those areas. It is very important opportunity to recognise the incredible public service that we make sure that British taxpayers’ money ends that police officers, fire officers and our Armed Forces up exactly where it is intended, helping those in need, make to public life. and not funding people who have been guilty of terrorist acts. Gaza Strip Question The Lord Bishop of Leeds: My Lords, does the Minister agree that the health sector in the Gaza Strip 2.53 pm is really on life support and that while the blockade Asked by Lord Hylton remains and while there is a lack of public water, this Toask Her Majesty’sGovernment what assessment will continue? Does he see any way of encouraging they have made of the present state of public health direct aid from the United Kingdom towards particular in the Occupied Territories of Palestine; and the hospitals? There are two Anglican hospitals, for example, prospects for agreed international action, in particular serving the whole community, often free of charge: the action by Israel, to keep the Gaza Strip habitable. Al Ahli Arab Hospital; and the Al-Wafa Medical Rehabilitation Hospital, which has had to be relocated The Minister of State, Department for International because of damage to St Luke’s Hospital in Nablus. Development (Lord Bates) (Con): My Lords, health These are beacons of hope in a fairly desperate place. indicators in the Occupied Palestinian Territories are Is there a way of enabling direct funding there as we relatively good in comparison with regional averages, continue to urge an end to the blockade? but they are at risk of deterioration due to conflict and restrictions on movement and access. Increased water Lord Bates: As the right reverend Prelate may know, and electricity supplies are a prerequisite to improving our support of healthcare in this area is directed life in Gaza. We welcome recent initiatives by Israel through the UN Relief and Works Agency, which to increase such supplies and are monitoring their channels support into the health sector there. A number implementation.Furthereasingof restrictionsonmaterials of hospitals, particularly in Jerusalem, are providing entering Gaza is also needed. help, particularly for those in Gaza, but there has been 149 Gaza Strip [LORDS] Schools: Funding Formula 150

[LORD BATES] TheParliamentaryUnder-Secretaryof State,Department significant difficulty, to which the noble Lord, Lord for Education (Lord Nash) (Con): My Lords, through Hylton, referred, in getting those in medical need our careful management of the economy, we have to those hospitals to get that care, so we have been protected the core schools budget in real terms. In providing help at the border through an access and 2017-18, schools will have more funding than ever—over co-ordination team, to try to facilitate that. The situation £40 billion—set to rise to £42 billion by 2020. The IFS is very fraught, tense and difficult, and there needs to analysis shows that per pupil funding in 2020 will be be a political solution very shortly. over 50% higher in real terms than in 2000. While we know schools are facing pressures, we know that there Baroness Sheehan (LD): My Lords, does the Minister is scope for schools to become more efficient and we share my concern that a lack of credible investigation are supporting them to achieve this. and accountability for repeated attacks on medical facilities, such as the destruction of the Al-Wafa Hospital Baroness Massey of Darwen (Lab): I thank the in Gaza in 2014, is hindering the development of Minister for that interesting reply.Could he say whether grossly overstretched health facilities? Can the Minister he recognises the concerns of teachers at schools with reassure me that the UK will support the resolution at more disadvantaged pupils, who are more likely to the UN Human Rights Council on Friday calling for suffer than others under this funding formula? Could accountability for such attacks so that hospitals can be he predict what the future for those schools might be? rebuilt with some guarantee of future protection? Lord Nash: I think that the EPI, to which the noble Lord Bates: For the people who are suffering so Baroness refers, supports our national funding formula terribly in Gaza in a situation that looks so bleak as we and agrees that we should proceed with it, and it move towards 2020, as the UN forecast, there should confirms that we will be focusing money on the be several steps in addition to our supporting resolutions disadvantaged. in various bodies. First, Hamas and the terrorist organisation should cease their terrorist attacks. Next, the Palestinian Authority should take over control of Lord Storey (LD): My Lords, in the next four years, the operation of Gaza. Finally, we need to see the the budget of an average primary school will be £74,000 opening of the borders, not just with Israel but the worse off. That is the equivalent of two teachers. The border at Rafah with Egypt as well. budget of an average secondary school will be £291,000 worse off, which is the equivalent of six teachers. Does the Minister think that it is wise to be spending Lord Anderson of Swansea (Lab): My Lords, the £240milliononexpandinggrammarschoolsand£320million situation in Gaza is indeed dire, particularly for children, on creating new free schools when these budgetary and this is due not only to Hamas. Do the Government pressures exist? at least recognise that on the latest WHO figures, albeit they are a little dated, over 4,000 Gazans have been received in hospitals in Israel and well over 90% of Lord Nash: All public services are facing budgetary applicants from Palestine as a whole are accepted by pressures. We are still trying to recover from the deficit Israel? Would it not be better if Gaza were to seek to that we inherited. The National Audit Office has made build bridges rather than tunnels to Israel? it quite clear that it is reasonable to look to schools to make efficiency savings. The Education Endowment Fund has said that there is significant scope for better Lord Bates: That lies at the heart of this situation. deployment of staff in schools. We find that many of There will be no relief for the people in Gaza, who are our best schools educationally are also running themselves suffering so terribly, until there is a political solution financially very efficiently. We believe that there is and an easing of the tensions, and those should be significant scope for saving, in non-staff costs in schools, based on mutually recognised rights to exist. That has of over £1 billion. to be the only way forward and the noble Lord is right to point to it as we try to apply these urgent humanitarian responses. There needs to be a longer-term political Lord Polak (Con): Will the Minister join me in solution. recognising that the current funding system for schools is fundamentally flawed? It is a postcode lottery, where resources provided to identical schools depend not on Schools: Funding Formula their needs but on location. This is unfair and needs to Question be addressed urgently.

3.01 pm Lord Nash: I wholeheartedly agree with my noble Asked by Baroness Massey of Darwen friend. As I have already said, the EPI, to which the noble Baroness, Lady Massey, referred, has agreed To ask Her Majesty’s Government what is their with him that the system as it currently stands is response to the Education Policy Institute report broken, is unfair and must be addressed urgently. on the new funding formula for schools which Underfunded schools do not have access to the same indicates that primary schools may lose funding opportunities as others do, and this cannot be right. equivalent to two teachers and secondary schools This is why we are introducing a much clearer, fairer may lose funding equivalent to six teachers. and more transparent system. 151 Schools: Funding Formula[21 MARCH 2017] Armed Forces Act Order 2017 152

Baroness Symons of Vernham Dean (Lab): My Lords, in the Chamber today—and Marcus Jones, the Local does the Minister accept that these proposals have a Government Minister, for his support. I particularly disproportionate effect on small primary schools in thank my noble friend Lord Young of Cookham for rural areas? I declare an interest because the school in his kind words in responding for the Government and my village, of Vernham Dean in Hampshire, will have the noble Lord, Lord Kennedy of Southwark, for suffered a cut of £64,000 in relation to the money that speaking in support of the Bill at Second Reading. I was available to it only a year and a half ago. I wonder also thank the RAC Foundation, the Federation of whether the Minister can accept that these proposals Small Businesses and the Association of Convenience will adversely affect young children in small, rural schools Stores for their support and, finally, the Department in relation to their counterparts in larger towns. for Communities and Local Government. I beg to move. Lord Nash: Rural schools are of course essential to their local communities and ensure that children do Bill passed. not have to travel long distances to school, but we are including an enhanced sparsity factor in our formula Broadcasting (Radio Multiplex Services) to target additional funding to our smallest and most Bill remote schools. This sparsity funding is over and above Third Reading the lump sum that all schools will receive to help them meet costs that do not vary with their pupil numbers. 3.09 pm Lord Evans of Weardale (CB): My Lords, while I Bill passed. welcome the additional efficiency and flexibility that come from the multi-academy trust system, and from Armed Forces Act (Continuation) trusts and free schools overall, does the Minister agree Order 2017 that a reduction in funding per pupil at a time when Motion to Approve greater skills are needed to compete internationally, and when mental health problems among young people 3.10 pm are increasing so rapidly and causing problems for Moved by Earl Howe many schools, is a bad allocation of money? That the draft Order laid before the House on Lord Nash: I am grateful to the noble Lord for his 20 February be approved. comments about the efficiency of multi-academy trusts. One study shows that multi-academy trusts can achieve The Minister of State, Ministry of Defence (Earl a saving of £146 per pupil. As I said, we are still Howe) (Con): My Lords, the brave men and women of recovering from the financial hole that we inherited in the UK’s Armed Forces are, even as we debate, stationed 2010 and we all have to adjust our resources. Schools around the globe keeping us safe. Yet, ever since the have had a huge increase in money in recent years. We 1689 Bill of Rights, the vital protection they afford us are trying very hard and have a lot of resources rests upon the consent of Parliament. The specific available on our government website to help them legislation governing our military is contained in the become more efficient. Armed Forces Act 2006. It provides the legal basis for the system of command, discipline and justice that Baroness Farrington of Ribbleton (Lab): My Lords, makes our personnel the best in the world. will the Minister apologise for the fact that the Every five years, that legislation must be renewed Government are taking money out for their own pet by an Act of Parliament and, in the interim, by annual schemes for grammar schools and depriving children Order in Council. Since the Act itself passed in 2016, in other schools in other parts of the country? Will he today our job is to consider, and I hope approve, the agree to go away and look at whether the Government’s order, which will extend the force of legislation until pet schemes should have additional money that is not May 2018. To appreciate its significance, one has only stolen from children in other schools? to imagine the consequences of allowing the Act to expire. The prospect of having our Armed Forces Lord Nash: I will not apologise any more than the unregulated and our nation no longer able to defend party opposite has apologised for the probably £10 billion itself is not to be contemplated. that it wasted on its Building Schools for the Future It is in all our interests to ensure a speedy renewal, programme. and I urge the House to agree to that, not least because the dangers we are facing are growing in Parking Places (Variation of Charges) Bill complexity, diversity, multiplicity and concurrency. Third Reading That was the expert opinion of our SDSR in 2015, 3.07 pm and I firmly contend that nothing that has happened since has given us cause to alter it. Let us consider just a few of the main security challenges that we face in Motion the world today: Daesh in the Middle East, and the Moved by Baroness Redfern prospect of its fighters returning to the continent; an That the Bill do now pass. increasingly aggressive Russia, menacing its neighbours in eastern Europe; an ever more assertive China in the Baroness Redfern (Con): My Lords, I would just South Pacific; and a belligerent North Korea, testing like to thank David Tredinnick MP, the Member in nuclear weapons and the patience of the international charge of taking the Bill through the Commons—he is community. 153 Armed Forces Act Order 2017[LORDS] Armed Forces Act Order 2017 154

[EARL HOWE] more to understand international perspectives. It is All the while, we are contending with humanitarian also about working collectively to strengthen our trade crises in Syria and South Sudan, mass migration in and increase our prosperity. Europe, rising Islamist fundamentalism, cyberwarfare, Since the decision of our people to leave the EU, we piracy on the high seas, and the perils of climate have become even more determined to step up to change. Individually, each represents a greater or lesser defend global security.So we are doubling peacekeeping threat to our nation. Collectively, they pose a direct support for the UN, as well as working more closely with danger to our international rules-based order—which, the OSCE, the African Union and the Commonwealth. in turn, underpins our values and our way of life. Above all, we are strengthening our support for NATO. As we have discussed many times before, the UK’s Sixty-eight years after the alliance was formed, it Armed Forces are working tirelessly to protect our remains as relevant as ever. As US Defense Secretary nation today. The real question hinges on their ability James Mattis said recently, it is, to react tomorrow. Indeed, that was precisely the focus “a fundamental … bedrock … for all the transatlantic community”. of our SDSR in 2015. Its response was to restructure That is why the UK continues to meet the 2% GDP defence to make us better prepared for the future, so it target. It is why we are leading the very high readiness is worth reflecting on three of its most significant joint task force—sending 3,000 of our own personnel elements. to join the 14-nation force. It is why we are contributing First, it ensured that we are investing in the full to the enhanced forward presence in Estonia and spectrum capability necessary to deter any danger. Poland, as well as policing Black Sea skies. Finally, it The Government chose to grow their defence budget, is why we are playing a key role building up the at a time of austerity and in the face of many other alliance’s cyberdefences as part of the Cooperative competing interests, so that they could spend £178 billion Cyber Defence Centre of Excellence in Estonia. on the best kit money can buy: digitally enhanced However, the alliance is only as strong as its weakest Ajax armoured vehicles, upgraded Apaches, new frigates, link. It is not enough for us to pull out all the stops; we a new fleet of drones and a regenerated carrier strike. need other nations to up their game. We agree with We are investing not just in conventional forces but in President Trump and General Mattis that it is time for nuclear deterrence, putting aside billions to build new the allies to pay their way.US taxpayers cannot subsidise Dreadnought submarines to provide our nation’sultimate European defence. Currently, 19 of the 28 EU member safeguard well into the 2050s.All the while,the exponential states are failing to spend 1.5% of GDP on defence. pace of technological advance means that we must Five—by no means the poorest five—do not even continually stay ahead of the curve. So we are putting spend 1%. It is salutary to think that, after we leave, our emphasis on innovation, using an £800 million EU countries will pay only 20% of NATO’s bills. fund to generate a wide range of disruptive capability NATO adaptation also goes beyond money. We in laser weaponry, cyber and big data. need the alliance to streamline its political and governance Secondly, the SDSR makes government far more structures to make faster decisions, just as we need it integrated. The global problems we are facing transcend to take a 360 degree view, offering total security against Whitehall borders and boundaries. Consequently, we threats both from the east and the south. have brought together all levers of government—whether The UK is also looking to develop combined military defence, diplomacy, development, trade or engagement formations with like-minded allies that complement —to pack a more powerful punch. So today we do not NATO. Our joint expeditionary task force working with just have a National Security Council offering collective our northern European partners—Denmark, Estonia, strategic leadership across Whitehall on national security Latvia, Lithuania, the Netherlands and Norway —gives and crisis concerns: we have cross-Whitehall funds us greater speed and flexibility to respond to crises. At and joint policy and delivery units covering defence, the same time, we are strengthening our ties with our the Foreign Office and DfID to focus our combined closest allies such as the US, France and Germany. energies on the most pressing issues. Together we are building a tapestry of capability to This holistic approach is paying dividends on the tailor our response to any threat. With France, besides ground. When it came to tackling Ebola in Sierra creating a combined joint expeditionary force, we are Leone, our Armed Forces built treatment centres staffed co-operating on future combat air systems, which will by NHS volunteers, while officials from DfID, the give us the most advanced unmanned combat air FCO and our charities educated villagers about system in Europe. prevention. Together with our international partners, No one would deny that the international environment we stopped a deadly disease in its tracks. Meanwhile, is becoming more challenging, that the dangers are today we are applying persistent simultaneous pressure increasing daily and that we need to do more. In fact, to the Daesh terrorists on multiple fronts—militarily, the great advantage of debates such as this is that we economically and in cyberspace. have the chance to listen and learn from the opinion of The third element of our SDSR was about ensuring our finest military minds and thereby become even that UK defence becomes international by design. In a stronger. world of complex global problems, it is vital for us to All that said, I believe SDSR 2015 has put us in a work more effectively with our partners. That means better position to deal with the unexpected. The UK is much more than collaborating to counter imminent investing more, integrating more and doing more to threats; it is about joining forces to stop crisis morphing work internationally. The future remains uncertain into regional chaos. It is about building the capability but we are now on a more secure path towards peace of partners to support good governance and doing and prosperity. I beg to move. 155 Armed Forces Act Order 2017[21 MARCH 2017] Armed Forces Act Order 2017 156

3.20 pm of reconfiguring our Armed Forces. Having worked for some time as Gordon Brown’s PPS, I know that is Lord Touhig (Lab): My Lords, the House will note Treasury-speak for cuts. that I am not my noble friend Lord Rosser. I apologise at the outset for my part in any confusion caused to Today our Army is smaller than the one we put in the very excellent staff who drew up the speakers list. the field against Napoleon. The latest figures show an The House will not be denied my noble friend’scomments; Armyof just75,840personnel.TheRoyalNavyisreduced he will speak at the end of the debate. to 19 ships, of which six have propulsion problems and two are laid up in Portsmouth because they are short Seventy years ago last month, on 24 February 1947, of crew as a result of spending cuts. On top of this, we the British ambassador to Washington was instructed havenoaircraftcarriers.IlookforwardtotheGovernment’s by Labour Foreign Secretary Ernest Bevin to deliver a response to the National Audit Office report published memorandum to George Marshall, the American last week on the carriers. We have no marine patrol Secretary of State. The memorandum made it clear aircraft and there are currently only seven RAF fighter that Britain’s economic position would no longer allow squadrons. Two of these exist only because the life of her to continue as the reservoir of financial military the Typhoon has been extended until 2040. support to Greece and Turkey. The shockwaves it There is an overdependence on recruiting reservists. produced throughout the Truman Administration were Despite millions of pounds spent on recruitment, just what Bevin wanted. He believed that, following targets for all three services have been missed. Morale the end of the Second World War, the United States is poor. Some 54% of service personnel are dissatisfied was in Europe but not yet of it in defence terms. His with service life. The most valuable asset that Britain’s memorandum forced the US Government to take a Armed Forces have are the men and women who decision that they had been unwilling to make up to serve. They have had their pay frozen and their pensions that time. It led to the creation of NATO, and it was a reduced, and their accommodation is in need of major Labour Foreign Secretary who was the midwife at that investment. According to the 2016 continuous attitude birth. survey, almost half believe that the quality of their Moreover, it was also Bevin who conspired with accommodation has fallen. The Armed Forces’ Prime Minister Clem Attlee to create Britain’sindependent Pay Review Body has revealed that almost every group nuclear deterrent, against opposition from some hard-left spoken to believed that their pay increases were members of the Labour Party—alas, so far as our nuclear unreasonable. The 2016 survey revealed that only one deterrent is concerned, some things never change. The in three of our Armed Forces personnel believed they decision was taken in secret by a small Cabinet committee. were valued and just one in three planned to stay as Arguing that Britain should have the atomic bomb, long as they possibly could. Bevin told the committee: The failings I have identified are not the responsibility “We’ve got to have this thing over here, whatever it costs. of our Armed Forces, but the consequence of government We’ve got to have the bloody Union Jack on top of it”. policy of cuts, mismanagement and poor forecasting. Labour has always had a proud record on defence Concern at the state of our Armed Forces is not the when in government. Indeed, the Defence Secretary, exclusive interest of this side of the House. In recent Michael Fallon, told The House magazine last year: debates,Conservative,Liberal Democrat and Cross-Bench “It was the Labour Party that gave us the two most important Peers have expressed their concerns. pieces of our defence architecture today—NATO and our independent While continuing my criticism of the Government, nuclear deterrent. It was the Labour Government who committed I want to say that the whole House values the work of to the 2% and the Labour Government who was the founding the noble Earl who has constantly demonstrated his member of NATO—every time Labour has been in Government commitment to the well-being of our Armed Forces. they have taken a responsible view of defence”. He comes to the Dispatch Box time and again, often Labour in government has committed resources to the to defend the indefensible, which he does with such defence of Britain, which this Government have failed great style that he is almost convincing. Those of us to do. In particular, we spent on average 2.3% of GDP who are the Government’s critics in this House have when we were in office. The present Government have nothing but admiration for him personally and value failed to match this, preferring instead to use creative the fact that he listens and responds. For this, we are accounting to massage the figures by including some all grateful. £1 billion of pensions in the 2%. Will the Minister’s The SDSR 2015 was a missed opportunity. It failed Government match my Government in this? As we to give a vision of the future which could have given us urge other NATO states to spend 2%, we would have confidence that the Government were tackling the more credibility if we were genuinely spending that problems that they had created in 2010. There is a amount ourselves. strong case for revisiting SDSR 2015. A revised SDSR The SDSR 2010 was the most misnamed of would afford the opportunity to look afresh at Britain’s government publications.In the foreword, David Cameron position in the world. We, on this side, happen to and Nick Clegg wrote about bringing the defence believe that defence and foreign policy are two sides of budget into balance. They meant cuts. They offered a the same coin. The SDSR 2015 should have been sop by saying that defence and security would contribute based on our key foreign policy objectives. It was not. to the deficit reduction on a lower scale than other These are bound to be revised now, as a result of departments. That document was not about our strategic Brexit, and this will impact on defence.If the Government defence and security; it was about cutting back on shared that view, we would not have the Foreign defence spending. It was a document promoted not by Secretary going around the Middle East proclaiming: the Ministry of Defence but by the Treasury. It talked “Britain is back East of Suez”, 157 Armed Forces Act Order 2017[LORDS] Armed Forces Act Order 2017 158

[LORD TOUHIG] today in supporting the Armed Forces Act (Continuation) and even announcing a military spend of £3 billion Order, to which the noble Earl referred in opening the over the next 10 years—all before the Ministry of debate. Defence has published its Gulf strategy. Coming full circle, I return to Ernest Bevin. His We cannot have major foreign and defence policy shock tactics led to the creation of NATO, but it also decisions made on the wing. Of course we have a role led directly to the Truman doctrine of 12 March 1947. to play in the Middle East, but we have interests in the For me, the most powerful part of the President’s Far East and around the globe. We are a maritime statement remains true today. He said that, trading nation. Keeping open the world’s shipping lanes “totalitarian regimes imposed on free peoples, by direct or indirect and being able to protect and defend our global interests aggression, undermine the foundation of international peace”. are essential. We are—and remain—a world power, The world is no safer today than it was in 1947, and we one with a nuclear capability available to deter and protect. must therefore be ever vigilant. If we have clear foreign policy objectives, linked to defence, we can answer the question: what do we want 3.31 pm our Armed Forces to be capable of doing? It is not Lord Wallace of Saltaire (LD): My Lords, I think rocket science. It is about asking the basic, obvious we all accept that we have moved on from the apparently questions about what we want from our Armed Forces. benign international context of the post-Cold War My noble friend Lord Robertson of Port Ellen years to a much more unstable international order in most skilfully set out how such tasks could be approached. which the advanced democracies of western Europe In a speech in 2015 about the NATO objective of and North America can no longer set the rules without spending 2% on defence, he said that, carrying with them the rising Asian powers. Multilateral co-operation with like-minded Governments who share “the 2% only makes sense if it is spent on the right things—deployable our values has been among the most important levers troops, precision weapons, logistics and specialist people”. of British foreign policy since the Second World War— This simple and basic approach sums up what needs to through NATO since 1949 and through the European be done. The SDSR 2015 could have set out those Union since 1973. It has been a force multiplier and an objectives clearly, made provision for the resourcing influence multiplier in international institutions and and funding and included the defence-industrial strategy. in negotiations such as the six-power nuclear negotiation Perhaps I may commend this booklet, A Benefit, Not a with Iran. We will need to work more closely with Burden, which clearly sets out the case for the strategic others as we face this global shift in power. value of Britain having a defence-industrial strategy. I The most significant change in the UK’s international am grateful to the noble Lord, Lord Sterling, for drawing environment since the publication of the 2015 strategic my attention to it. In this debate, I look forward to defence and security review has been the defection of listening to and learning from the noble Lord, Lord the United States from its position as promoter and Levene, whom I suspect might have a different view. protector of the rules-based international order, to Weface challenges not known by previous generations. which the Motion refers. We do not yet know what the Challenges posed by cyber have the capacity to change Trump Administration’s foreign policy will become or warfare into something we have never known or imagined. exactly their approach to NATO and their European The Government are right to invest in cyber, but we partners, but we have seen enough to know that Trump must be willing to use it in an offensive, as well as will put America first, as he promised throughout his defensive, mode if we are determined to deter. The campaign, and pay less attention to international order other threat is from terrorist groups such as ISIL, and North Atlantic security, and that Britain cannot which would turn high streets anywhere into a war expect any greater favours than such other close US zone. Some of the most evil and barbaric acts witnessed partners as Canada, Mexico, Germany or Japan. by humanity have been carried out by religious extremists I want to focus on the future relationship between who are in fact betraying the beauty of their faith. Britain and our other long-standing allies and partners We face a resurgent Russia, which has spent billions with whom we share values in promoting and protecting modernising its forces.Weface an economically ambitious the rules-based international order: our European NATO China, making dubious territorial claims in the South allies, which are also, with the exception of Iceland, China Sea and increasing defence spending, and we Norway and Turkey,our partners in the European Union. face the evil regime in North Korea, which enslaves its Successive Governments have kept from the public people and threatens the peace of the region. We face and the media how close and effective our security and the crisis of failed states such as Libya and Syria and defence co-operation with our European neighbours the awful consequences of civil war, which has forced has become. Tony Blair signed a bilateral treaty on millions to flee and try to get to Europe. defence co-operation with France in 1998, to add to our existing collaboration with the Netherlands and NATO remains the bedrock of our defence, and I Belgium, the most long-standing example of which hope that at the May summit, Britain will make it being the British-Dutch marine amphibious force. His clear to President Trump that, while we agree with him Government, with the then George Robertson—later that all states should spend 2% of GDP on defence, NATO Secretary-General and now the noble Lord, NATO is not obsolete, irrelevant or out of date, as he Lord Robertson—as Secretary of State for Defence, said during his election campaign. attempted to widen this into a network of European The first duty of the British Government is the care defence partnerships. He recognised that the UK could and welfare of our people, and at the heart of that is no longer afford to procure a full spectrum of military our defence. For that reason, we have no hesitation capabilities under UK sovereign control and that it 159 Armed Forces Act Order 2017[21 MARCH 2017] Armed Forces Act Order 2017 160 therefore made sense to share capabilities to meet and, shared threats. But when the Daily Mail dubbed this “the range and versatility of the EU’s tools, as compared with initiative “the European Army”, he backed off and other international organisations”. went quiet. Co-operation continued to strengthen but But again, No. 10 delayed publication until the day Ministers said as little as possible about it. after Parliament rose for the Summer Recess, and When the Conservatives came to power in coalition allowed David Lidington and me to brief EU ambassadors in 2010, they fought with their Liberal Democrat but not the domestic media. partners to keep from the public this pattern of undeclared Yesterday several newspapers carried the story that co-operation. Liam Fox, then Secretary of State for the Prime Minister is now seeking a defence pact with Defence, signed a new and closer defence co-operation Germany. No mention that we already have one with agreement with France but told the official responsible France, I noted: the Government still seem unwilling for UK-French co-operation that he would do his best to admit how close our security and defence co-operation to keep it out of the newspapers. Since then I have read with our neighbours has become. The Government, about major UK-French exercises in the French press, from the Prime Minister downwards, endlessly repeat but rarely in the British. I have been told of the the empty phrase, “We may be leaving the EU, but we exchange programmes under which British pilots fly are not leaving Europe”, with the implication that it French military aircraft and that one interception of a will be in the defence and security sphere that we will Russian plane not far from UK airspace was made by remain engaged as we cast all economic integration a French pilot in an RAF fighter. But nobody told the away. Daily Mail, of course. So can the Minister tell us what sort of defence pact The level of ignorance within the Conservative is now planned with Germany? Will it be modelled on Party about the extent of European defence co-operation the treaty with France? Do we plan any other bilateral was and is astonishing. I recall a meeting in Whitehall treaties of this sort—for example, with the Netherlands, in which a serving Minister repeated the common Spain or Italy, or with the Nordic states, which are prejudice about the uselessness of the Belgians, to be very grateful for the co-operation that the British asked by officials whether he was unaware that the strike quietly gave them in increasing their own multilateral in Libya which had just knocked out Colonel Gaddafi integration? Or do we even consider a network of had been a joint British-Belgian mission. Since the 2015 arrangements that might become in time a multilateral election, the latest SDSR has spelled out for those willing organisation—a sort of revived Western European to read as far as chapter 5 the importance of our links Union of blessed memory? with France, Germany, Italy and the Nordic and Baltic states, both through NATO and through the European Does this announcement mean that security in Europe Union which, it reminds us in paragraph 5.41, and around its neighbourhood remains the first priority for UK defence, in contradiction to Boris Johnson’s “has a range of capabilities that can be complementary to those promise that British forces are going to sail off again of NATO”. east of Suez to defend India and confront China? Do It goes on to say: we intend to remain a member of the EU caucus “Wewill ... continue to foster closer coordination and cooperation within the United Nations and other international between the EU and other institutions, principally NATO, in organisations, if it is possible to negotiate that? Are ways which support our national priorities and build Euro-Atlantic the Government willing to face down the hostility of security”. the Europhobes within their party to any continuing This underpublicised admission of the extent of links of this sort with our continental neighbours? our security interdependence with our neighbours did Unless the Government are willing to reassert our not prevent the leave campaign from repeatedly insisting commitment to continuing European co-operation in that the European Union has no security role or value, foreign policy, security and defence, clearly and publicly, and no relevance to NATO. When the noble Lord, our ability to meet the current challenges to the rules-based Lord Forsyth, repeated this piece of fake news in a international order, severe as they are, will be sadly debate in this Chamber I gave him a copy of the 2015 diminished. SDSR, with chapter 5 carefully annotated; he seemed genuinely surprised to read what it said. I made some 3.40 pm effort when in government to persuade Conservative colleagues to give more publicity to the impressive Lord Stirrup (CB): My Lords, this important debate UK-led EU operational headquarters for Operation comes at a crucial time for our country and I am Atalanta, the anti-piracy mission off Somalia, based grateful to the Government for making space for it in at Joint Forces HQ Northwood. Conservative colleagues the timetable. We will shortly be immersed in the agreed to invite ambassadors from other EU states to considerable legislative agenda attendant upon Brexit visit, and I understand that a number of Conservative and then there will probably be little time for anything MPs were also invited, but the press was kept well else. Yet while we are devoting our attention to the away. The same happened with the Review of the Brexit trees, it would be very dangerous for us to lose Balance of Competences between the United Kingdom sight of the whole wood. Much of our attention over and the European Union Foreign Policy, which stated in the next two years will understandably be taken up its executive summary that “the key benefits”of common with economic and trade concerns. Yet we stand at a action to the UK, time when our underpinning assumptions about the “included: increased impact from acting in concert with 27 other world in which we live, and in which we will need to countries; greater influence with non-EU powers, derived from trade and carry on business more widely, are threatened our position as a leading EU country”, in a way that we have not seen for decades. 161 Armed Forces Act Order 2017[LORDS] Armed Forces Act Order 2017 162

[LORD STIRRUP] themselves what sort of collective security arrangement Over the past three years we have been commemorating might replace it. Certainly, it will not be the EU. In various centenaries connected with the First World fact, there is no substitute for NATO—at least, not in War, and the Government are now thinking about the the near future. Our first response to the challenges of appropriate way to mark the end of major European the turbulent present must, therefore, be to ensure the hostilities in 1918. In doing so it will be important to solidarity and capability of the alliance. reflect on the fact that the war was a strategic failure NATO’s responses to the challenges posed by Russia’s for the supposed victors. This was not because of actions over the past few years have been rather slow, events on the numerous, blood-soaked battlefields, but although they go in the right direction, and the because the politicians of the day were unable to strengthening determination to stand behind Article 5 create a lasting political settlement. The treatment of is reassuring. To be successful, NATO needs the Germany, the retreat of the United States into its more wholehearted involvement of the United States, and traditional isolationism, and other such misjudgements, we cannot take that for granted. President Trump’s set us on the path to the Second World War and demands for European nations to spend more on defence another 60 million deaths. are neither new nor wrong. Germany does not, as he This is in contrast to the situation after 1945. The claims, “owe” money to NATO, nor should the United sustained engagement of the United States in setting States be “paid” for the large contribution it makes to up and supporting international institutions,the reduction the security of Germany—not least because it does so in barriers to trade,the economic and political resurrection to safeguard its own security. However, Germany owes of Germany, and even the sense of collective endeavour it to itself, and to Europe as a whole, to spend at least in containing the Soviet Union all contributed to the the NATO minimum of 2% of GDP on defence. Others development of stability and prosperity.Yet that post-war also need to do more, but Germany’s example in this order, which most of us in your Lordships’ House regard is crucial. I therefore welcome Chancellor Merkel’s have taken for granted for most of our lives, is being commitment to increase spending to that level. shaken. The foundations have not yet been destroyed, but the building is at serious risk. The threatened—and, However, we need to be clear about the significance to some extent, actual—retreat of the United States of the 2% figure. It is a bare minimum, designed to from a position of leadership in the wider world, the provide a clear baseline against which one can measure rise of nasty nationalism and xenophobia in many delinquency. It is not like some fundraising target, countries,the growing popularity of beggar-my-neighbour which we should celebrate reaching. I say to the noble trade policies and the pursuit of amoral opportunism, Lord, Lord Touhig, that while he is right to question particularly by Russia, have all left Europe in a state of what lies beneath our own figures,the present Government insecurity that some had rather naively hoped we are far from the only ones to have used creative would never see again. accounting when it comes to defence expenditure. Further afield, the increasing muscularity of China’s In any event, the UK’s commitment to the 2% floor policy in the Asia-Pacific region risks miscalculation merely raises us above the level of those who should be and conflict with its neighbours. Above all, North named and shamed; it does not imply an adequate Korea’s almost ineluctable progress towards a nuclear- level of investment in our future security. Indeed, I armed ballistic missile capable of reaching Hawaii and argue that our public expenditure on security remains Alaska poses a challenge that no US President could woefully inadequate in light of the present challenges ignore. Some people believe that these problems are to international order. We undoubtedly have first-class remote from the UK and should not concern us directly. military capabilities, as the Minister has said, but we They are wrong. War in the Asia-Pacific region would do not have enough of them. Our ships, ground combat have serious and possibly disastrous consequences for formations, aircraft and people are spread too thin, us all, and we must take the danger seriously. Within and it is obvious that financial pressures within the that wider context, we have a continuing threat to our MoD are mounting. We ought to be spending more security from extremist Islamic terrorist groups, and a like 3% of GDP on defence, not just the minimum of whole new dimension of conflict within cyberspace. 2%. We also need greater investment in diplomacy and Economic, resource and population pressures are all in other elements of soft power. There will always be contributing to increasing levels of instability in many arguments about how the money should be spent: parts of the world, and mass movements of people about the balance between platforms, weapons, people seem likely to be a feature of the international scene and new capabilities—such as unmanned vehicles and for some time to come; indeed, they could well become cyberwarfare. But when such arguments are about the worse. I could go on, but I have already depressed division of an already inadequate cake, they rather myself enough. miss the point. Of course, the world is not all bad. There are The mantra of the moment seems to be about developments that give one cause for hope and some taking back control. With control comes responsibility, problems that we once thought intractable have succumbed and with responsibility comes the duty to will the to patient persistence. But what worries me most about means as well as willing the ends.Successive Governments the current situation is not simply the scale and nature have paid lip service to the fact that preserving the of the individual challenges—it is the evident weakening safety and security of their citizens is their first priority, of our will to combat them vigorously and collectively. but their actions—particularly their spending decisions— For us, in Europe, the bedrock of such an approach have said otherwise. The Minister has pointed to all has long been our commitment to NATO. Those who that the present Government are currently doing in talk about the alliance becoming irrelevant must ask this regard, and I acknowledge that they have at least 163 Armed Forces Act Order 2017[21 MARCH 2017] Armed Forces Act Order 2017 164 reversed the miserable downward trend of investment easily understood and probably most helpful and accurate in recent years. They have made a start, but they must surveys of the situation at the moment, drawing attention do more. We cannot provide all the resources necessary to the political and military challenges or perspectives to tackle such a dangerous world ourselves, but we that we face. One point that he makes is that it is can—and should—set the example for others. It is incumbent on NATO to draw clear lines if we are to clearly in our interest to do so. maintain an international rules-based order.For example, If we are to be a great global trading nation we shall when the INF treaty is violated by Russia, even if we require a reasonable degree of stability and predictability think it will not go back on it, we should at least make in the world. Without that, not only our security but it clear that that is a violation of rules—a transgression also our prosperity will be at risk. Perhaps, as we over lines that have previously been drawn in the approach Brexit, it is time to remember,with Thucydides, sand—and perhaps attention should be drawn to that “that prosperity can be only for the free, that freedom is the sure a little more loudly. possession of those alone who have the courage to defend it”. The other point that he goes on to make is the I hope that the Government will find the courage to importance of keeping dialogue with Russia open, make that defence a financial practicality. including through back-door diplomacy, and this could be extrapolated to other contexts. When the divisions 3.49 pm are increasing in the foreground, how do we maintain those perhaps unofficial back-door routes where the The Lord Bishop of Leeds: My Lords, I hesitate to conversation can keep going? If we are to maintain a follow such eloquent speeches on so much detail, but I situation where the same rules can be adhered to want to make one or two general points about a more whatever the change in circumstances, that conversation specific area. I do so from an interest that began when will be essential. I was a Soviet specialist at GCHQ in a previous I end, noble Lords will be glad to hear, largely incarnation, although I realise that that is probably where I began. How do we enable our forces to have not the right religious phrase to use. the confidence that they are being set up to exercise It still seems to me that an SDSR should enable us power in a changing environment that has already to be flexible enough to cope with whatever changes changed from the assumptions that were set out when are likely to come. My fear, which I have expressed in the SDSR of 2015 was established? That is where the the House before, remains that in 15 to 20 years’ time challenge lies as we pay attention to some of the we may end up with a force that meets the demands of dynamics of relations with countries such as Russia. now but perhaps not the demands of the situation 15 or 20 years down the line because the world changes 3.54 pm so much. When I left GCHQ, the Soviet Union was intact, and we see what has changed since then. Therefore, Lord King of Bridgwater (Con): My Lords, the right I want to focus on Russia in particular. reverend Prelate ended on a challenging question, which relates to the success in recruitment that may be It seems pretty obvious that one of Russia’s tactics essential to underpin the programme that the Government at the moment, either deliberate or incidental, is to have before them. I start by echoing the tribute that the divide the allies one from another—and it seems to be noble Lord, Lord Touhig, paid to my noble friend Lord quite effective in that at the moment—enabling the Howe for the way in which he conducts defence matters. threat against Russia to be diminished, at least in its I shall also, if I may,pay tribute to the noble Lord himself, mind. When we talk about, for the very constructive and serious way in which he “challenges to the international rules-based order”— speaks from the Opposition Front Bench on defence the words of the Motion—this begs the question of matters, which I think the whole House appreciates. whose rules. There always are rules, but the question is Noble Lords, including my noble friend in his whose rules they are, on what basis and criteria they introduction, have already said—and I agree with are agreed and who adheres to them. What happens if them—that this is the most unstable world that we countries decide to change the rules and operate in a have seen since the Second World War. The threats are different way, which is clearly what is going on at the greater. I notice the changes since my time in office moment? and in defence. We never had global Islamic extremism, Two things that characterise Russia are not only which is a completely new variety of terrorism of a pride and the nature of glory—and there is much more particularly nasty and dangerous kind. Now we never that could be said about that—but the fact that Russians know where the next terrorist outrage in support of identify themselves through their suffering, which is Islamic extremism will be—whether in Australia, Brussels why I am still a little suspicious of the assumption that or New York. The range of this is challenging and the application of greater and greater sanctions will extremely difficult. have a big impact. That might be the case in the The range of problems is much greater than I material West but I think that in Russia a different remember in my time. The population explosion in the narrative is running. world undoubtedly underpins some of the mass migration How do we look through the eyes of Russia, for of people; I have referred to this in an earlier speech. I example, in determining our response to how we shape remember my noble friend Lord Hague saying that our forces for the future? I draw your Lordships’ although we may look at what is happening at the attention to an article by Richard Sokolsky from the moment and think that this may be near the end, it Carnegie Endowment for International Peace, entitled may be just the beginning of the problems of migration— The New NATO-Russia Military Balance: Implications underpinned in part by climate change, which does for European Security. I found this one of the most not make things easier. 165 Armed Forces Act Order 2017[LORDS] Armed Forces Act Order 2017 166

[LORD KING OF BRIDGWATER] grievances in those areas, handling that could pose a We can add to that the extraordinary complications major challenge. That is part of the dangerous situation of the internet and cyber, and the whole new dimension that we have. that they have introduced, including social media, The Prime Minister, in her speech to the Republican which underpin much of the communication of terrorist gathering in Philadelphia, referred to the phrase that activities in a way that we still have not suitably President Reagan coined to describe his approach to mastered. These are all new. Then there is the total President Gorbachev: “trust but verify”. Prime Minister chaos of Syria, the situations in Iraq, in Libya, in May said that her approach to President Putin is Yemen—and in Afghanistan, I believe, at the moment— “engage but beware”. I am not sure whether she said and in North Korea, including its possibly aggressive “beware”, or whether that was a misprint and she said activities. To pick up a phrase from the noble and “be wary”, but that is how it came out. gallant Lord, Lord Stirrup, I must not get too depressed about this—but it seems to me that it is all leading to a We have to look at the situations that we face. lack of confidence in the West. That has undoubtedly Others have referred to China. How ready are we to been made worse by Brexit, which, whatever its outcome cope with this situation? I worry that we are not very may be, introduces instant uncertainty into the world well prepared or ready. I am not going to say a word at present. about the naval programme, because the noble Lord, There are also uncertain signals coming out of Lord West, is about to follow me and he will cover that Washington, which I hope, with the help of General in some detail. However, I will be very interested to see Mattis, may become more reassuring shortly, to the what an old friend of mine from Northern Ireland, Sir effect that America is soundly in support of NATO, John Parker, and his national shipbuilding strategy notwithstanding the absolutely justifiable request by will produce. I understand that that is coming out in President Trump that the other members of NATO, spring 2017. Today is the second day of spring, but I including the European members, make their proper do not know whether we can expect an early delivery contribution. of the strategy. Looking at the naval programme and whether we will be ready for anybody by 2025—although The other danger that I see is the re-emergence of according to the latest report from the Defence Committee, Russia as it tries to reassert itself after the humiliation that might even be a bit late—I worry about the very of the collapse of the Soviet Union. I was briefly lumpy programme we have got involved in and whether Secretary of State for Defence, yet in my time I moved it has the flexibility that we need. from recognising a President of the Soviet Union— President Gorbachev—and a Berlin Wall, to, before When I was Defence Secretary, I was privileged to the end of my time in office, welcoming President have responsibility for considerably larger Army numbers Yeltsin of Russia, the whole Russian Soviet empire than we have now. I see the challenge that numbers having collapsed. We all know that part of President represent at a time of austerity and difficulties in Putin’s appeal to his own people is the fact that he is recruitment. However, I think that we need everyone creating a sense that Russia matters again in the world. we have got, and we probably need more. It underlines Russia was once a superpower, and he is determined to the importance of working with allies if we do not have it recognised as such again. We have to learn how have the resources that we might like for everything. I to deal with that. It poses major challenges to the say to the noble Lord, Lord Wallace, that I do not West. We are moving into Estonia. We are waving a regard Brexit as a reason to stop work on the common big flag called Article 5, as our 800 troops and those security and defence policy. I see every reason why we from the other contributing countries make the front should continue in the work we are doing against line of NATO. piracy and on helping refugees in the Mediterranean. There is no reason why we should not also lead some We are just in the process of commemorating the projects, which is a role we could well play. First World War and the various years of it. Any of us who have been involved in studying it, and the Second The other critical issue is the difficulties we face in World War, will realise how tragedies and terrible wars looking after NATO. We have to make sure that the occurred because people did not believe treaty obligations US stays firmly committed and that our European and had not properly understood the responsibility allies keep their contributions up. they had. That was certainly true in the First World There are other issues that I think are even more War for undertakings of that kind to Belgium under essential because of the present difficulties. One of the treaty, and in the Second World War for undertakings things that has kept us ahead so many times in the to Poland, both of which were dismissed by potential difficult and dangerous world we are in is our skill in adversaries because we perhaps would not really be intelligence. Intelligence co-operation with the United prepared to stand over them. States is vital. Everybody is familiar with the “Five Eyes” I do not want to depress the House too much, but partnership. We have a very high standard on that and we have a very similar situation now in which the we must ensure that it is not undermined any more humiliation and collapse of the Soviet Union has left than it has been—partly by Mr Snowden, and with the pockets of Russian citizens in various territories. We situation not helped by the recent row in the United saw what their activities were in Ukraine, when they States. Other issues are cyber defence and the Prevent were positively begging President Putin to get involved, programme at home against terrorism. Lastly, and and you can see their presence in the Baltic states, most importantly to avoid military activity, is soft where they represent about 25% of the population. power. I worry whether the Foreign Office is sufficiently They were abandoned in the collapse of the Soviet resourced in the light of the difficult problems it faces Union and have been left there. If they seek to stir up and now has to take on, as its role in Brexit and 167 Armed Forces Act Order 2017[21 MARCH 2017] Armed Forces Act Order 2017 168 thereafter is crucial. It is important not only for our In the face of the threats we face, what have the relations with other countries but for the defence of Government done? They have shown staggering our own country. complacency and self-delusion when it is quite clear to experts and laymen that defence needs more resources. 4.05 pm When in coalition they reduced our military capability Lord West of Spithead (Lab): My Lords, I thank the by 30% and our forces remain underfunded. Despite Government for the opportunity for this debate, which what the Defence Secretary says, there is minimal new is extremely timely. Indeed, there is so much going on money. It is, in theory, being produced by efficiencies. at the moment that our nation and the Government The HCDC has pointed out the creative accounting in seem to have lost sight of the growing threats to our the 2% figure, which has been mentioned by other security and, in the worst case, our very existence. speakers, for spending on defence. Spending on pensions I draw noble Lords’ attention to my speech in the does not win wars, and the 2% of GDP is not a target defence debate on 12 January when I articulated the perfect but the very minimum that any NATO nation should storm of threats and uncertainties threatening global spend. Our nation should spend more. security. I spoke in some detail of Russia, the Middle Others will speak about lack of Army numbers and East and the countries there, terrorism, Afghanistan, the inability to generate a fighting division in a meaningful Pakistan, North Korea, China and cyberthreats. Today, timescale, but I, as the noble Lord, Lord King, spotted, I am sure that many noble Lords will talk about the will focus on maritime, which I believe is crucial for significance of cyber in all of our considerations. As global reach and stability, as well as the protection of the country’s first ever cybersecurity Minister who our shipping and dependencies. The Defence Secretary produced the nation’s first cybersecurity policy, I am himself called this year the Year of the Navy. The well aware of that threat. However, I reiterate what I simple fact is that the Royal Navy has too few ships to said in the last defence debate: spending on cybercapability do what the nation expects of it. It has been underfunded is not an alternative to conventional defence spending, against its core programme by £250 million a year for as some, particularly the Treasury, seem to think. It is the last three years. That is three-quarters of a billion necessary spending, but it is additional. pounds. It also took a forced reduction of 4,000 men We are entering a hypercompetitive age in which in the dreadful 2010 SDSR, recovering only 400 in illiberal power is growing and liberal power declining. SDSR 2015. We must fully fund an uplift of people for It is a world made dangerous by Europe’s retreat from the Navy, I believe by around 3,000 people, and we power and its wilful refusal until recently to invest in need to put that in the programme and ensure that we power. There are real dangers of an even more chaotic recruit to it. The combined effect of a lack of funding and highly dangerous world developing over the next and lack of people, particularly engineers, is having a decades,not least within the context of possibly irreversible profound impact on our nation’s maritime capability. climate change and an ever-increasing competition for Before looking at the Navy in more detail, it is resources of all kinds amidst a rapidly expanding worth reflecting on the very real problems that exist in world population. That population pressure is enormous our procurement world—although I know that the and worrying. The dramatic rise in the numbers of Government are trying to tackle those. Indeed, there migrants fleeing either war and persecution or economic are some interesting articles in the House magazine hardship are a stark reflection of this. this week—I wrote one myself but there are some from Recent events have shown that the late 20th-century other contributors as well—on this specific subject. consensus that rested on the perception that the Moving back to the Navy, the decision to proceed with international system benefited both the US and global the Successor programme is fundamental to the ultimate interests seems to be breaking down. We cannot be security of our nation and I compliment the Government sure how much longer the US will be willing or able to on the fact that we are proceeding with it. However, bear the burdens of being the protector of last resort Trident is not a war-fighting weapon. I remain convinced for the free world and will remain the ultimate guarantor that the capital costs of the Vanguard replacement of a rules-based international system. Nor can we assume submarines should fall outside the defence vote and that the idea of a multilateral rules-based world for come from Treasury contingency funds. Such a move diplomacy and economics will necessarily survive the would remove the yawning cash black hole that is population and resource pressures of the early decades appearing in our defence programme. of the 21st century.Our human record in circumstances Two new Queen Elizabeth-class aircraft carriers are of intense competition across all dimensions has not being built and again I must congratulate the Government been good. Robust defence forces may prevent, contain on recognising their importance. The future carrier or mitigate the consequences of a uniquely threatening battle group is the only conventional asset our nation combination of global and strategic risks. will possess that has global strategic significance, and Our nation, despite what the chattering classes may the US cannot wait for them to be operational. But it say, unlike most countries in Europe is a global power, appears that there are problems. There seems to be no and global stability is crucial to the wealth and security certainty about when sea trials will commence and of our nation. Brexit, if anything, reinforces that fact. there is a lack of transparency over whether the delay Our soft power, with the all-pervasive English language, is being caused by a major technical problem or just the fact that the financial hub of London sits on the the sort of snags one would expect from a highly Greenwich meridian, the best universities in the world, complex programme of this type. Perhaps the noble the BBC World Service, a globally admired legal system Earl could update us on where the programme stands. and so on has great leverage—but, in many situations, The build-up of the Sea Lightning squadrons is crucial, it is as nothing without hard power to back it up. as is the operational availability of the Crowsnest 169 Armed Forces Act Order 2017[LORDS] Armed Forces Act Order 2017 170

[LORD WEST OF SPITHEAD] we need, and how command and control are to be early warning system and the new solid support ships. executed and by whom. There may be a role for the When will all this come together to allow us to deploy RNR and batch 1 OPVs in this. Will a study be a fully functioning carrier battle group? Perhaps the undertaken to look at this yawning gap in our nation’s noble Earl could tell us when we will be able to do that maritime border security? Having robust defence forces with our own resources. makes a war involving our nation less likely.If Ministers A carrier battle group, if facing a peer threat, needs get defence wrong, the nation will never forgive them. a nuclear attack submarine, two Type 45 destroyers The costs in blood and treasure are enormous. It can and two to three Type 26 frigates in company. At be argued that the planned saving of £16 million by present our great maritime nation with its huge maritime getting rid of HMS “Endurance” precipitated the history has in effect only 11 escorts fully capable of Falklands War,at a final cost of 300 lives and £6.5 billion. operations. When I joined the Navy it was 110. Today The Government have a choice in whether to spend we have 19 altogether in our order of battle, which is a what is required to ensure the safety of our nation, national disgrace—something I have said before. If dependencies and people, or not. At present, I believe five of the 19 are needed for the battle group, 14 are that they are getting the choice wrong. left to provide presence and stability in the south 4.16 pm Atlantic, around the UK, around the Horn of Africa, in the Gulf, in the Mediterranean and the Far East. To Lord Hennessy of Nympsfield (CB): My Lords, I provide one ship on task you need three, so simple declare my membership of the Chief of the Defence arithmetic shows that we need 30, not 19—and there is Staff’s strategic advisory panel and of the Foreign and no allowance in that for attrition. Commonwealth Office’s diplomatic excellence external panel, and that I shall shortly become, at an advanced In the Falklands we lost four escorts and 12 were age, an honorary captain in the Royal Naval Reserve. badly damaged. When you fight, you have attrition. Delays in ordering the Type 26 frigate have resulted in In the life of a nation, it falls to certain generations cost rises and the initial plan to build 13 has been cut to undertake a rethink of their country’s place in the to eight. The much-vaunted Type 31 frigate is still a world, its means of defence, its instruments for projecting doodle on the drawing board and we await the much- international influence,the limits as well as the possibilities heralded shipbuilding strategy with interest. It is difficult of what it can sensibly seek to do and the states of mind to see how the present Type 23s will be replaced one needed to reconcile aspiration and reality. The outcome for one on their present planned disposal dates. Perhaps of last June’s referendum on our membership of the the Minister will let us know when we need to start European Union requires us to be just such a generation cutting steel on the Type 31 frigates that will replace —a generation that truly rises to the level of events. the last of the Type 23s. The multiple resetting of our national and international dials, the plethora of overlapping uncertainties, is, I Our amphibious force is about to take a major hit. think, creating a growing and unsettling realisation that, Manpower and funding problems in the Navy have led for probably a decade to come, we will be a destabiliser to the decision to pay off HMS “Ocean” after a nation in the world. It is a condition we can scarce forbear £65 million refit to run her on until 2025. The Government to recognise in ourselves, for it cuts deeply against the appear to be most complacent and have said that grain of how we have imagined ourselves in the past, “Ocean’s”capability will be provided by other shipping. as a nation that strives to bring stability to others and This is rubbish. I have commanded task groups and tries to turn down the heat and to lower the noise in amphibious assault groups, and it is clear and well international affairs. But cut against that comforting known that the only way of providing simultaneous grain it does. two-company lift is to have a large deck with at least six spots that can be operated simultaneously and a In view of this, I should like to make the case this hangar that can carry up to 12 or 14 helicopters. afternoon for taking a long, hard look at ourselves in a Anything else will not achieve it, and that amphibious way that goes beyond the scope of our five-yearly capability is clearly laid out clearly in our doctrine. So cycles of strategic defence and security reviews. The we will lose our full amphibious capability until the model I have in mind is the Future Policy Study, part “Prince of Wales” starts operating in the mid-2020s. I of a series of post-Suez rethinks that Harold Macmillan beg the noble Earl, as I have done before, in this highly commissioned. He established the Future Policy Study dangerous world, the most chaotic I have known in my in 1959 and tasked it to take a searching forward look 50 years on the active list, to put “Ocean” in reserve in at where the United Kingdom would be by 1970 on the way we are doing with “Bulwark”, so that if there current policies. It was conducted in secret, reporting is a crisis we can pull her out and use her. in 1960, but saw the light of day only 30 years later, as it was a Cabinet document. But, at the time,it undoubtedly Delays in ordering Type 26s have led to the ordering added its weight to the tilt away from Empire and of extra, highly overpriced offshore patrol vessels to towards Europe which led the Macmillan Cabinet to fill the Clyde yard—but any ship is of value and has undertake the first application for British membership utility. Hence I find the decision to pay off the relatively of the European Economic Community in the summer youthful batch 1 River class offshore patrol vessels, of 1961, which began the long years of “Brentry” which are between 11 and 15 years old, slightly strange. negotiations that eventually concluded in 1972. It is quite clear that there are insufficient maritime In the cold light of “Brexit”, may I suggest that we assets to ensure the security of UK inshore waters, wait neither for the conclusion of the Article 50 process particularly post Brexit, and there is a need for an in 2019 nor for the next SDSR in 2020, but instead urgent study into what craft are available, how many encourage the Government to create a royal commission, 171 Armed Forces Act Order 2017[21 MARCH 2017] Armed Forces Act Order 2017 172 or equivalent, on Britain’s place in the world, peopled that we cease to be a destabiliser nation, the better. by a widely drawn and knowledgeable membership The first step to that is working out what we think our recruited to do in public what Macmillan’s study group global position should be and how best to conduct did nearly 60 years ago? It could, if so commissioned, ourselves in a vexing, testing world. divide its work into two parts. The first would be an audit of our assets as a nation, motivated by an 4.22 pm appetite, which I share, to play a careful but substantial Lord Astor of Hever (Con): My Lords, I echo the role in the world. The second would be to draw up the very warm words of the noble Lord, Lord Touhig, options and possibilities that our new, post-Brexit about my noble friend the Minister. geopolitical position will present. I want to say a few words today about legacy issues General de Gaulle famously opened his memoirs arising from the Troubles in Northern Ireland. This is by declaring, “I always had a certain idea of France”. relevant to the morale and recruitment of our present-day Each of us carries in our heads a certain idea of Armed Forces. I pay tribute to all those who helped Britain, of our country’s gifts, accomplishments and bring about the Northern Ireland peace process, and what it can bring to the international table. Here, am aware of the huge effort and difficult compromises briefly, is my own certain idea, and the ingredients of that brought about the current settlement. It is in our debate today are naturally central to that idea—to everyone’s interest that the peace process continues that audit of our assets that I mentioned earlier on. and endures. Along with the police, the Armed Forces We live on top of the world’s sixth-largest economy. paid a huge price for the part they played in the Troubles: 520 Army, Royal Navy and Royal Air Force Thanks to our history, we are a member of more regulars, reserves and veterans, and 243 from the international organisations than any other country, Ulster Defence Regiment and the Royal Irish Regiment, with, in addition, our permanent seat on the United including veterans, were murdered by terrorists.Countless Nations Security Council, though of course we are others were seriously injured, and left to bear the about to leave a mega-international organisation thanks mental and physical scars. to Brexit. We should not forget that the Army was originally As others in this debate have mentioned, we possess called to Northern Ireland to restore order and to a range of top-flight Armed Forces, albeit in my protect Catholics. Quite by chance, serving with the judgment not enough of them, including some stunning Life Guards I was one of the first soldiers sent to specialities—special forces, submarines and many more— Northern Ireland in August 1969. I can vouch that our plus a substantial nuclear deterrent. We have a cluster soldiers, mostly young men, conducted themselves to of top-of-the-range security and intelligence services, the highest possible professional standards, despite as well as a position as one of only three nations with some very difficult times. I am concerned, however, genuine global intelligence reach, thanks to our so-called about the legacy issues and, as an example, want to “Two Eyes” relationship with the United States and raise one particular case—that of former Life Guards our “Five Eyes” relationship when you add Canada, Corporal Major Dennis Hutchings, whose committal Australia and New Zealand. The other two powers hearing took place in Armagh today. I declare an with global reach are, of course, Russia and the United interest in that I am on the Life Guards regimental States, with China coming up fast. council and served with Dennis Hutchings in this We are served by a top-flight Diplomatic Service, country and in the Far East. However, I do not raise and a meritocratic and uncorrupt Civil Service. the issue for this one case alone. It is of great interest to other veterans who may face similar problems to his We undoubtedly think above our weight in the world. in the future. Just linger for a moment on the most stunning of our In 1974, the Life Guards were sent to Northern trade statistics: we have around 1.5% of the world’s Ireland. In June, Dennis was on patrol and came population with 5% of the world’s scientific papers and across an IRA unit with weapons being readied for an 15% of its most cited ones. attack. He exhibited great bravery in engaging the Wedeployaformidablearrayof soft-powerinstruments terrorists in a firefight; several terrorists were arrested. —what the noble Lord, Lord Bragg, has called our This shows that Dennis was an exemplary soldier who “cultural world service”, which goes far wider than the used proportionate force and exhibited great bravery. BBC World Service and the British Council. A couple of days later, while soldiers were sweeping a locality for terrorists who had escaped, John Pat This is but a sketch. The list could go on. It amounts Cunningham was shot dead. This was a tragic incident. to a remarkable national portfolio. We must strive to The soldiers who are alleged to have fired the shots, sustain, cherish and burnish it. In seeking so to do, we including Dennis Hutchings, were interviewed under must not think about those assets as a hubristic, caution at the time. A file was submitted to the Director wider-still-and-wider nation, but as a temporarily anxious of Public Prosecutions, who concluded: and perplexed people who, if the national conversation “I do not consider that the evidence warrants any criminal rises to the level of events, can find good, sensible and proceedings”. sustainable ways through into a new and valuable The incident was reviewed by the PSNI Historical geopolitical place in the world, to the relief of our Enquiries Team—the HET—in 2012, which concluded friends and the disappointment of our adversaries. that there was no new evidence and that nothing had But, first, we need that royal commission, fuelled by changed. On the basis of the HET report and following a high sense of purpose and shaped by a stretching a request by their solicitors, the MoD issued an apology and wide-ranging set of terms of reference. The sooner to the family of Mr Cunningham in January 2013. 173 Armed Forces Act Order 2017[LORDS] Armed Forces Act Order 2017 174

[LORD ASTOR OF HEVER] Although I was a Government defence Whip for The HET was disbanded by the PSNI and replaced several years in the last Labour Government and by a legacy unit, which again reviewed this case. There recently co-chaired the Parliamentary Labour Party’s was no new evidence. Nevertheless, the PSNI was defence committee, it has been some time since I took determined to arrest Mr Hutchings and in April 2015, part in a major defence debate in your Lordships’ without any warning, did so in an early morning raid House.As I focus again on our domestic and international at his home in Cornwall. He was immediately escorted responsibilities, I am reminded how like the 1980s it back to Northern Ireland, held in police cells and seems out there and how the Cold War did not really interviewed under caution over four days. He was then go away—yet how our response is still inadequate. charged with the attempted murder of Mr Cunningham. As Yeats put it in his poem “The Second Coming”, Dennis has now been on bail for nearly two years. “the centre cannot hold … Friends report that his health has been damaged by The best lack all conviction, while the worst the stress of this matter. He has had heart surgery and Are full of passionate intensity”. been measured as having 13% renal function. He went into hospital last November to receive surgery, in the The new and old forces ranging against the West today, expectation that he will start kidney dialysis soon. Yet and against NATO in particular, have a new strength the Northern Ireland PPS was determined that he and determination. Our major ally, the US, despite its should be in court, which is where he was today, having recent announcements on NATO and defence spending, been committed for trial in a Crown Court in Belfast seems very unsure of its value base when it comes to on a charge of grievous bodily harm with intent. its global responsibilities. The enfant terrible of cyber and hybrid warfare often appears out of control. Many members of the Life Guards, and of the Household Cavalry as a whole, believe this to be a I welcome our emphasis on NATO this afternoon. grave injustice and that scrutiny has been applied to Sweden, one of the shining examples of a modern the security forces in a way that has not been allowed democracy,is bringing in a new military service obligation, for others. In particular, John Downey was charged in which is being imposed on all men and women there, relation to the Hyde Park attack on the Household which allows us to see the anxiety it has for its borders Cavalry’s Queen’s Life Guard in 1982, when four in the face of the emerging Russian aggression. That soldiers and seven horses were killed by a nail bomb. anxiety is prevalent also in the Baltics, Poland and But John Downey’s trial collapsed after a ruling on a elsewhere. I welcome the deployment this past weekend letter sent to him by police, assuring him that he would of the first of 800 British troops to Estonia, and I not be pursued as a result of the Government of the know that we all wish them well in their extremely day’s secret amnesty for terrorists. One hundred and important work there. Could the Minister go into eighty-six other people wanted for terror-related offences more detail on the discussions the Secretary of State in the Troubles received similar assurances, yet no for Defence has had with the new US Defense Secretary, British soldier has received any assurances, despite James Mattis, on how we can reaffirm our joint 90% of the deaths being attributed to terrorism. commitments to our NATO allies in the face of Russia One could well ask: why was Dennis in court today in its new bastion mode and in the face of President but the case against John Downey dropped? Is it really Trump’s suggestion that he may not come to the aid of fair that soldiers should face trial for their alleged a NATO ally unless it has paid its dues? misdeeds more than 40 years ago, while the perpetrators I welcome the progress, albeit slow, that is being of terrorist activities are ignored and their victims made by NATO members towards meeting the 2% of forgotten? I really feel that the whole system of addressing GDP target for defence spending, agreed in Wales of the past in Northern Ireland is not balanced, and is course in 2014. I understand that five countries in unjust. Dennis was sent to Northern Ireland by our NATO now meet that target, while 10 meet the 20% pledge Government. They cannot now wash their hands of on major equipment and research. However, like my their responsibility and pass on the consequences to noble friend Lord Touhig, I would like to press the the Northern Ireland Executive. That is a fundamental Minister on his response to the defence committee’s breach of the Armed Forces covenant. findings that Britain can claim to meet the 2% target It must be very difficult being the magistrate who only by including areas such as pensions that were not hears cases such as this one, with so much riding on previously counted—certainly not during the last Labour the decision. That magistrate is someone who lives in Government. Can the Minister tell us what defence the local community and will have to be a very brave expenditure would be if we used the same accounting man or woman to find no case to answer. Does my rules that we did in 2010? Does the Minister agree that noble friend agree that a great deal of time, money and we would have more credibility when urging our NATO anguish on all sides would be better spent if an allies to meet their spending commitments, were we independent QC or judge were to be retained in all not barely scraping over the line ourselves? Surely, as similar cases in the future to review the evidence and other noble Lords have said, the proportion should be confirm whether there is a case to answer? whatever is required to allow the UK to respond to the threats of today. 4.30 pm Those of us who grew to adulthood under the chill Baroness Crawley (Lab): My Lords, I, too, welcome of the Cold War have seen our hopes for a stabilised this timely debate and thank the Minister, who has and globalised peace grow ever more threadbare in the great respect in the House,for setting out the Government’s last few years. Whatever is required should be the only thinking and spending on present and future UK limit to our spending. As someone who grew up in defence strategy. Plymouth—that great naval city—I was particularly 175 Armed Forces Act Order 2017[21 MARCH 2017] Armed Forces Act Order 2017 176 pleased to see that the Ministry of Defence has confirmed than organised friction, as we can be sure President that Plymouth will be the centre for the Royal Marines. Putin knows only too well. Brexit is a geopolitical windfall I ask: what additional naval expenditure will come the for the Kremlin and all who despise the West. While I wish way of Devonport in the near future? the Government well in their future defence policy, we However, does the Minister feel that there has been are all aware of how rocky that future is going to be. an adequate government response to the defence select committee’s report of last November, which concluded 4.40 pm that there was a woefully low number of Royal Navy Lord Craig of Radley (CB): My Lords, I should like warships? We could not possibly miss out on that for a moment to narrow the wide focus of this very position, as we have with us the noble Lord, Lord welcome debate and turn to an issue that I have West, who manages wonderfully and creatively to get repeatedly raised in debates in your Lordships’ House: the Royal Navy into most Questions in Oral Question combat immunity and the legislative fog that surrounds Time. As we look to the future, it is still the Government’s it. I have long argued that it is essential to tackle planning assumption, I take it, under the Joint Force incompatibilities between the Armed Forces, human 2025 of the SDSR 2015, that there will be a maritime rights and international humanitarian legislation—that task force centred on the Queen Elizabeth-class aircraft is, incompatibilities between international humanitarian carrier,with F35 Lightning combat aircraft and consisting law and the European Convention on Human Rights of 10 to 25 ships and 4,000 to 10,000 personnel. as interpreted by the European court in Strasbourg, While still on naval matters, I for one was content and incompatibilities between the current Armed Forces with the vote in the House of Commons last year Act and the Human Rights Act. I first raised this matter enabling the Government to take the Successor submarine in 1998 when the House was considering the Human programme forward into the manufacture phase. The Rights Act. Since then, and particularly in the past decade, Labour Party remains committed to a minimum credible I have pressed and encouraged the Government of the independent nuclear deterrent, delivered through a day to come forward with new proposals, particularly continuous at-sea presence. Will the Minister update to provide a clearer definition, understanding and the House on the various investment stages that will reach of combat immunity. replace the Vanguard class of submarines? A series of judgments handed down by the Strasbourg I add my heartfelt thanks and gratitude to the court about the geographic areas and the exercise, dedicated RAF crews who are working around the even for a limited time, of effective mandate of the clock to defeat Daesh in Iraq and Syria. We all wish European Convention on Human Rights,have overridden success to the coalition forces in the battle to liberate some of the judgments of our national courts and Mosul. I know that the Government are doing what blurred the primacy that is due to the lex specialis of they can to encourage, once Daesh is routed there, a international humanitarian law in combat situations. more lasting peace that has political reconciliation The Supreme Court judgment in Smith and others in between Sunni and Shia people at its heart. 2013 upheld the defence of combat immunity, narrowly Finally, we come to Brexit. We seem to be doing defined, but invented an area of middle ground edging that a lot. As we leave the European Union—and with the land of combat immunity, where the writ of Article 2 it the EU Foreign Ministers’ monthly meetings, the and other articles of the European convention were daily meetings of EU ambassadors and diplomats and deemed not automatically excluded. The judgment was the thousands of meetings that form the EU’s foreign not unanimous; three of the seven judges did not affairs co-ordination at the United Nations—what support the finding. They were concerned that the detailed planning is going on to set up a meaningful courts would be drawn into the judicialisation of structure for exchange of information, intelligence combat and potentially inhibit the actions of commanders and assistance between the UK and our EU partners and others in operations. on common positions in international policy? I will However, the majority finding of the Supreme Court, give an example from when I chaired the Women’s in the absence of any clear guidance from Strasbourg, National Commission at the UN some years ago. was that the boundary between combat immunity, Then, the UK always met with other EU countries to narrowly defined, and that putative middle ground form a common EU position—in that case on women’s had to be determined on a case-by-case basis. For the rights—before meeting with other UN members and service man or woman, however, that is not a clearly coming to UN decisions on issues such as abortion described or marked boundary. To them, the meaning rights, FGM and girls’ education. There was always a of the phrases “narrowly defined” and “the middle European common position—usually the most progressive ground”are unclear. It does not help them to appreciate position at the UN. It would be foolhardy in the in advance, or at the time, whether their operational extreme for this country to lose its influence and activity in the course of hostilities or a threat of partnership in EU decision-making on international hostilities is or is not combat-immune. The services matters. However, at present I am not optimistic. operate to, and respond to, executive direction. They Do noble Lords think that once the Brexit deal need to be clear what their mission is, what the constraints is done, the whole of NATO as a force for democratic on the exercise of force are and whether their actions solidarity—here I disagree with the noble Lord, can be deemed combat-immune. Faced with conflicting Lord King, for whom I have a lot of respect—will be interpretations of legislation, and the practical experience stronger, weaker or just the same as it was when the in the past decade or so of the complexities and referendum was but a twinkle in a badly misguided protracted nature of claims and counterclaims arising Prime Minister’s eye? This is a very bad time to create out of injury or death to their fellow service men and friction with our allies. I see a hard Brexit as little more women, this situation cries out to be clarified. 177 Armed Forces Act Order 2017[LORDS] Armed Forces Act Order 2017 178

[LORD CRAIG OF RADLEY] will surely have to be time-limited. Why not also have Indeed, as far back as October 2013, I asked, a similar time limit for allegations made about behaviour “will Her Majesty’s Government consider new legislation to when combat immunity obtains? These two proposals define combat immunity, in order to clarify the current position”?— clearly do not refer directly to the continuation order [Official Report, 23/10/13; col. 1003.] that is the subject of this debate and to which I give my Happily, after a number of false starts and some full support. indecision, the Government have set about doing just 4.49 pm that. The MoD’s consultation paper, circulated earlier this year, briefly set out their case and sought views on Lord Sterling of Plaistow (Con): My Lords, I have a variety of issues relating to the scope and definition been involved in international trade for pretty well all of combat immunity. The nub of their proposals is my working life and, since the Falklands War, heavily that the Government will legislate to enshrine the involved with the armed services. Indeed, I have the position that combat immunity should apply to deaths great honour of being an honorary vice-admiral. I or injuries that occur in the course of combat. This start by thanking my noble friends Lady Evans, Lord will be combined with awards of compensation for the Taylor and Lord Howe for agreeing to hold this debate. death or injury of entitled individuals equal to that There is an obvious difference between history and which a court would have awarded as if the Government memory, and we often confuse the two. History is and their servants had been negligent, even when no what we have been taught and read about. We are a negligence arises. This will remove a requirement to product of it but in danger of forgetting it. Nelson’s take legal action against the Government to gain the Navy, Wellington’s Army and Churchill’s Air Force fullest compensation for a death or injury in combat. are a reassurance. One thing we did in history: we I do not underrate the challenge of a statutory maintained our credibility. Memory is shorter term. It description and definition of combat immunity. The is what we are all imbued with as a product of our Government have put their mind to it and I welcome experience. It is the ability to have a visceral reaction that. This time they must see it through—no ifs, no to that which is within our experience; it colours all buts. Clearly, new legislation will be required. In so far that we do and the way we think. I believe that today it as the enlarged compensation package is concerned, is adversely affecting our credibility. Due to relatively this can be achieved by secondary legislation to the short-term financial expediency, we are in great danger Armed Forces (Pensions and Compensation) Act 2004. of undermining that credibility on which, I am sure This Act allows for the Secretary of State to make that your Lordships will agree, our reputation depends. orders about pensions and compensation schemes. Late last year, the noble Lord, Lord Touhig, said With an affirmative order,it would seem straightforward. that the world had changed to such a degree that the role and therefore the needs of our armed services had Combat immunity, however, will call for primary changed dramatically since the defence review in 2015, legislation, presumably led by the MoD, rather than and that a re-examination was therefore required. I by the Ministry of Justice, which had been involved stated that I totally agreed, but that this must also previously in the legislative considerations. The Bill of include the needs of our foreign and intelligence services. Rights—of forgotten memory—was trailed for some I am sure that many in both Houses concur. considerable time as a possible statutory vehicle for The timing of this debate is critical. One thing that combat immunity. Now that the MoD has the lead, it history teaches us is that we cannot dictate events. In should consider whether new legislation should be by 2010, it is worth remembering, the only major area of amendment to the Armed Forces Act, rather than by a conflict was Afghanistan. Ukraine, Crimea, the so-called new, free-standing Bill. Arab spring—Egypt, Tunisia, Morocco, Libya and The Armed Forces have been disadvantaged in the Syria—and the potentially more extreme ambitions of past by serious incompatibilities in primary legislation Russia were totally unknown. Our military chiefs must to which I have already referred. The existence of have the firepower and flexibility to react at a moment’s combat immunity, as defined by statute, would directly notice to the unexpected. relate to many of the disciplinary provisions in the As your Lordships are aware, defence has always Armed Forces Act. It would be helpful if those who had all-party support in both Houses, and many have have responsibility for and oversight of service behaviour participated in the armed services scheme. I have had —when deployed on operations—had all the statutory discussions with Dr Julian Lewis—who, by the way, provisions, including for combat immunity, within one has joined us tonight—chairman of the powerful Select service statute. I urge the Government to give this Committee on Defence, and with Bernard Jenkin, Crispin suggestion serious consideration. Blunt, James Gray and Graham Brady, who head A further suggestion for legislation is to enact a influential committees in the other place. They are all time limit to forestall historic investigations and the concerned that resources for our long-term needs are charging of individual service personnel many years inadequate, and are particularly troubled that our after they have been actively involved in a combat scenario. present capability is being heavily emasculated. Recent experience of historical allegations relating to I entirely agree with the views of the noble Lord, Iraq—and their inept handling—shows the obvious Lord West, on what is needed. Indeed, I would go further, problem of finding witnesses and reliable evidence if he does not mind me saying so: the £250 million he 10 years after the event being examined, let alone 20 or talked about is not just for the past three years, but even 40. This points to having some time limit, as the goes back to a major mistake in 2010. As he said, for noble Lord, Lord Astor of Hever, suggested a few 40 years the capital cost of the deterrent was carried moments ago. Combat immunity compensation claims by the nation, not by the Ministry of Defence. Following 179 Armed Forces Act Order 2017[21 MARCH 2017] Armed Forces Act Order 2017 180 what I hope will be a robust debate here, a strong realm and rule of law must be sovereign over all other debate in the other House will carry much greater needs. I would like to think that the Prime Minister weight. and the Chancellor were more than aware of that. I have thought long and hard whether there is a key I am sure that my noble friend the Minister will new factor that will galvanise the Government. Sadly, agree that the input metric—the famous 2%—is useful it appears that only the need to go on to an immediate in forcing other NATO Governments to pay their way. war footing would have that effect. But a real measure of military output or capability can Although today’s debate must concentrate on the be judged only against hard cash. Many of us consider present and future, it should be noted that the so-called that 3% of GDP is needed, and already that has been defence review of 2010 proved to be a highly damaging stated by the noble and gallant Lord, Lord Stirrup. major cost-cutting exercise. Our armed services are Before eyebrows are raised, I remind noble Lords that still recovering from those ill-thought-through decisions in practice, in the 1980s, it was a steady 4.5% to 5%. leading to unintended consequences. I vividly remember the immediate destruction of the Harrier jets on board I am not alone in considering that a serious analysis the “Ark Royal” in advance of taking it out of service of our foreign aid programme could deliver serious in days to stop any reversal of the decision. The money to be used by the Ministry of Defence and the massive reductions in Army numbers and Air Force Foreign Service. At the opening of Parliament in 2015, squadrons were brutal. Her Majesty used the word “re-engage”. Our allies in the continent of Europe, in the Commonwealth and The savage reduction in people across all services— indeed worldwide were fast coming to the conclusion salami slicing—has had the most damaging effect on that we were removing ourselves from the world scene, morale. In my experience, organisations are usually at losing influence and credibility. their best when they are growing and have a very clear view of their role in both the short-term and the The Prime Minister stated in her recent Lancaster long-term future. It was almost worse than receiving House speech that we are returning to a global role friendly fire. We were left without a carrier strike force and that we work together with our partners in Europe. for well over 10 years between that period and the An enhanced military capability in NATO will further early 2020s. strengthen our commitment to defend continental Europe as we have always done in the past. Public backing is How different history might have been if we had vital. In the United States, public support is unqualified retained that capability.Perception of our international and those serving in their Armed Forces are most standing could have been quite different. The last appreciative. It is key to the ethos of those prepared to defence review was infinitely more professional, and risk their lives for their country. Sadly, I am not sure covered the equipment needs for the future as then we could say the same here today. Positive public perceived, accompanied by a re-examination of sovereign backing is essential in encouraging parliamentarians procurement, namely the strategic value of Britain’s to insist on the requisite level of support for the defence industry,including a major uplift in cybersecurity. defence of the realm. However, the key logistical build-up is still under immense pressure, due to continued hollowing-out, Trade has been the driving force for this country together with the extra required savings to be made by throughout history.Since the 1660s, the role of the Royal 2020. I do not think it is fully realised by many just Navy and Royal Marines has been to protect the merchant how adverse an effect this is having. marine in delivering world trade. As the empire expanded, Like all major living structures, can the Ministry of the Army in general and, more recently, the Royal Air Defence improve on its use of moneys? The answer Force played vital roles. Enhanced hard power, together must be yes. It is clear to me that its present structure with our elite submarine nuclear deterrent capability, may be understandably, but not acceptably, that of is of critical importance and will only increase our peacetime and not that of wartime. Peacetime always influence in the Security Council. creates unnecessary bureaucracy and interference from Since leaving Aquitaine and Calais, our role in other departments. In time of war, a clear command Europe has, for several hundreds of years, been as a structure would demolish the present totally unacceptable power broker between France and Germany, mainly timescales. Ethos in our armed services is still to protect the empire. Such military capability could outstandingly high. Despite life changes in the last prove to be an important element of our coming 50 years, it must never be forgotten how crucial a part negotiations with those countries in the European pride in the cap badge plays in ethos. We must never Union where defence concerns have, to say the least, take those serving for granted and expect them to live been more than heightened. Wewill be the only European on love alone. Those of this nation who serve in our and global nation to operate two dedicated fifth-generation armed services are truly special—the salt of the earth—and aircraft carriers, and these will represent the nation’s we need the finest of our young men and women to conventional strategic deterrent. Although we are no volunteer. longer a superpower, our future role, as outlined by It goes without saying, having been in business all the Prime Minister, requires a larger Army, more my life, that long-term economic strength is of overriding squadrons for the Royal Air Force and, for example, a importance. Without it, you cannot have hard power considerably larger number of the new Type 31 frigates— capability.The USSR, as has been mentioned, discovered the workhorses—if we are to have a real presence east this in spades. But fundamentally this is a wealthy of Suez, in Asia, et cetera, particularly serving with country and we must ensure that sufficient of its the Commonwealth where necessary. China’s possibly wealth is allocated to its protection. Protection of the increasing ambitions must not be underestimated. As we 181 Armed Forces Act Order 2017[LORDS] Armed Forces Act Order 2017 182

[LORD STERLING OF PLAISTOW] that means. It is a tremendous tribute to the ability, are the USA’s closest allies, this would undoubtedly be determination and morale of the people working in warmly welcomed in Washington, particularly following the DE&S—people who were subsequently, quite its recently significantly increased military budget. disgracefully, attacked publicly by the man who the Finally, the positive, worldwide progress of mankind incoming Tory-led Government put in charge of them. over thousands of years has been quite extraordinary We also made some considerable breakthroughs in and the human brain has given us so much to wonder areas such as ground-penetrating radars, which were a at, not least music, the arts, science, medicine, philosophy vital part of the anti-IED programme. et cetera. However, the natural competitiveness of I did not neglect in any sense the core programmes. mankind is such a driving force that, unless controlled, When I arrived, I found that the two carriers were it still leads to the strong dominating the weak. Despite running into considerable cost overruns and delays. all these wonders, today this House still needs to debate The Defence Board had decided that the programme the defence of the realm as our number one responsibility. should be extended by several years—at an enormous Will peace ever prevail? We go to war in order to increase in cost, because you are doubling and trebling achieve peace; even better, our capability, and therefore the fixed cost as each year goes by. It was obvious to credibility, can deter war. I am sure we all agree that me that, if that happened, we would ultimately end up peace must be the goal of a country like ours. It is our cancelling the whole programme. I managed to persuade responsibility to achieve these aims, and they are the the Secretary of State—my noble friend Lord Hutton, right legacy to leave for future generations. I am sure who unfortunately is not in his place today—as well as the Minister, with his great personal sense of history, others in the MoD and indeed in the Treasury, in due would agree with these sentiments. time, that we should go for a quite different option which had not been considered by the Defence Board. 5.02 pm This was Option C, as the noble and gallant Lord, Lord Davies of Stamford (Lab): My Lords, it is a Lord Stirrup, may recall, which involved some delay great pleasure, and not for the first time, to follow the and some additional cost, but of a relatively manageable noble Lord. He brings to this House a whole lifetime kind. Fortunately, as a result, it was possible to save of experience both in business and in maritime affairs that vital programme. and defence. I very much agree with what he said. On the Type 45, I thought they were wonderful I think the whole House is well aware that I was the ships and I still think so. I believe three were launched Defence Procurement Minister in the last Labour in my time; they were ordered long before I arrived. Government, under Gordon Brown. In that role, I was But I admit to the House that I never asked—it never often, and continue to be, accused of having overspent occurred to me to ask—the brilliant naval engineers, and having created, or culpably presided over, a admirals, shipbuilders and ships’ architects that I was procurement deficit of £30-odd billion—the actual meeting on that programme the key question: are you figure varies from time to time. I have dealt with this quite sure you specified enough power to run both the matter in correspondence with the Minister and asked propulsion system and the radars at the same time? I him to put that in the Library. I do not know whether have no idea how such experienced people would have he did so: I found that only members of the Government reacted to a Minister asking a question of that type. can place correspondence in the Library. Briefly, I However, I say with culpability that I should have could not possibly have overspent because the Treasury asked it. It was a pertinent question. I still want to would not have allowed me to do so. What I never did, know what happened, and I think the public need to unlike the subsequent Government, was underspend. know what happened. There should be a public inquiry They did so on two occasions and a large amount of about it. I would look forward to taking a full part in money was permanently lost to defence. I would have such an inquiry to get to the truth. regarded such an action as a betrayal of the very important fiduciary responsibility which had been The other great naval programme was Astute, which confided to me. I shall come to. There is always a degree of uncertainty about the On the RAF, I found when I arrived that the MoD cost of a future programme, but the bulk of the was attempting to push forward as far as possible, in procurement deficit was created, when the new Tory-led order to save money, the purchase of tranche 3 of the Government came to power, by the simple expedient Typhoon. We managed to turn that one round, and I of changing, from 1.5% in real terms to 0% in real managed to negotiate with our partners for the tranche 3 terms, the rate of increase in defence expenditure, programme to move forward. I am glad it has done so, both currently and prospectively. Doing that, given because that aircraft now provides the cutting edge for compound interest and a defence budget of £35 billion, our air capability in the period between the retirement you can create a very large potential deficit and that is of the Tornado and the arrival of the F35. It will exactly what they did. continue—with the Meteor missile—to be the key When he appointed me, Gordon Brown said that power we have in the air-to-air area, prospectively into my first task was to make sure we got the right the 2030s. equipment out to Iraq and Afghanistan. We did that, I was also keen that we get into the unmanned and commissioned seven or eight new,bespoke armoured aircraft business. I brought the French into that, because vehicle programmes. On one occasion, we actually got it was important to have partners to share the cost down to six months between specification and delivery and, particularly, to secure longer production-runs than to the theatre, which was an absolute record. Anybody would have been possible if things were run purely on familiar with defence procurement will realise what a UK basis. In addition, we had to renegotiate the 183 Armed Forces Act Order 2017[21 MARCH 2017] Armed Forces Act Order 2017 184

A400M programme. I believe we did so successfully. I will purchase by the thousands or tens of thousands, am a great believer in that aircraft—I think it will be which makes the economics completely different. We the Hercules of the 21st century—though at times it can achieve something in that direction only if we have too looked under threat. partners, not just to share the R&D but to make sure With Nimrod, I inherited something that has now that we have much longer production runs. I did that gone down in business schools as a classic example of successfully with the French on several occasions, and how not to procure a military project. At the time I it is something that we need to do more and more. arrived, as I recall, the cost was around £2.3 billion for Incidentally, I am delighted to see that OCCAR—an four aircraft. But I believed then, as I believe now, that organisation that I strongly supported in every way economic decisions should be taken on the basis of that I could at the time—has been a great success. I marginal cost, not sunk cost. It was clear to me that think that it is now running about 30 joint European almost all the capital cost had already been incurred— programmes, including the A400M. It is under the certainly, by the time of the election, all the capital charge of one of my ablest civil servants, Tim Rowntree, cost had been incurred. Therefore,I looked open-mindedly and it has been a delight to see how successful that at whether we should stay with that, or buy the P3, whole project has been. which was another possibility in those days. I became convinced that the right thing to do in those circumstances Another thing that I want to share with the House was to stay with the Nimrod programme. Had the is that there are a lot of illusions about exportability. I Government done so—compared with what they are think that it was General O’Donoghue and I who first now doing in buying the P9—I believe they would laid down that exportability must be considered at the have saved a lot of money. What is more, we would not specification stage and reported on at the “initial gate” have this irresponsible gap in our long-range maritime stage. I am very much in favour of it and I commend surveillance capability which we have been running the Government for trying to do what they can to now for many years, and which is quite frightening. achieve some exportability for the Type 26. However, From these experiences, I am left with one or two again, because we need the best in this country, we will conclusions, which I want to share with the House. always tend to overspecify. Therefore, in practice the One is that an awful lot of nonsense is talked about opportunities for export will be really quite small, and how defence procurement would be much more efficient we have to face that uncomfortable fact. That may be if it were based on fixed-price contracts and if competition the case with the Type 26. If it is not, and even if we were involved. In most cases, you cannot do either of export some variants of that frigate, we may well find those things in defence procurement in our country that there are diseconomies of scale by virtue of the because we have to operate at the frontiers of technology. fact that we have split up that programme. We can send our brave young men and women to risk Finally, we must go over to modern accounting their lives only if we provide them with the very best principles, particularly present value accounting, in equipment that money will buy. That means investing defence procurement. I could have saved a large amount in new technologies, and you cannot speculate in of money—perhaps £300 million or £400 million—by advance what the costs or problems will be. purchasing all the supplies and components that we Every first of class is a prototype. If it costs £1 billion, needed for boats 3 to 7 of the Astute programme at like an Astute-class submarine, you cannot throw it one go in bulk, but that was impossible because the away, saying, “It was a prototype; we’ll start again”, Treasury would not let me bring forward the purchases but it is still a prototype. You are going to spend an in relation to subsequent parts of the programme, awful lot of money at the beginning of these programmes even if I paid it back, as it were, with a substantial and you cannot tell what the costs will be. If you force discount rate, which of course I was prepared to do, the contractors to accept a fixed price, as happened representing the costs of the capital involved. In the with BAES over Astute and Nimrod, they will just private sector, you would always make investment and blackmail you after a few years, saying, “We can go purchasing appraisal decisions on a present value bankrupt if you want but we can’t come up with basis, but we cannot do that in the public sector. £5 billion”, or whatever it costs to change the programme, so you have to renegotiate, as we did on those occasions. Another good example was the MARS programme However, that is the worst of all possible worlds. for naval tankers. I wanted to take advantage, opportunistically, of the collapse in the shipbuilding The solution to that problem is the one that we market after the Lehman Brothers disaster and so forth devised in the case of Astute—that is, to have a target and buy in the market, for about $50 million each, price with a reward for the contractor if it comes in tankers that were in the programme at £200 million. under it and a penalty if it comes in over it. The whole Even with the discount rate, the Treasury would not thing was kept under very close and constant review, let me do it. By the time of the election, I persuaded and that worked for the rest of the Astute programme. not only my own finance director but the head of the I think that that has a very wide application in defence. National Audit Office, Sir Amyas Morse, to move in Secondly, it is very important to have partners in that direction, and I was in the process of persuading this business, not just to share the costs of R&D, the Treasury to do so. I set out to my successor the which are enormous, but because the economies of importance of doing this and I thought that I had scale in production runs are so important. We tend to persuaded him as well. Sadly, I do not think that any buy both systems and programmes a few dozen or progress on that has been made but I raise it this perhaps a few hundred at a time, depending on what afternoon in the hope that that matter too will be we are dealing with. In the same area, the Americans looked at again. 185 Armed Forces Act Order 2017[LORDS] Armed Forces Act Order 2017 186

5.14 pm I am very much reassured by Sergeant Blackman’s acquittal. The Court Martial Appeal Court recognised Lord Burnett (LD): My Lords, it is a pleasure to the severe, grave and prolonged stresses that will affect follow the noble Lord, Lord Davies of Stamford, who even the best-trained, bravest troops of the highest has extensive experience of defence procurement as a calibre, impairing their ability to think through the Minister. I am grateful for the opportunity to debate consequences of their actions, with potentially lethal with him, and I draw the attention of the House to my consequences. Day after day, night after night, week entries in the register of interests. Like the speeches of after week, month after month, 42 Commando were the noble Lord, Lord Astor of Hever, and the noble dealing with an enemy which has no respect for human and gallant Lord, Lord Craig of Radley, what I have life, and has nothing but contempt for the rules of war. to say has a bearing on morale in the Armed Forces, The commandos were in continuous mortal danger. and the morale of veterans and their families. Whether in the dreadful conditions in which they were On 15 September 2015 we had a defence debate in living or out on patrol, they were under constant the Moses Room. I confined my speech to the case of threat of mortar fire, rifle fire and improvised explosive Sergeant Alexander Blackman, Royal Marines, and I devices that could blow them to shreds. And this was stated that he had been, all in the searing heat. “the victim of a terrible miscarriage of justice”.—[Official Report, 15/9/15; col. GC 228.] Mr Christopher Terrill’s excellent documentary Last Wednesday the Court Martial Appeal Court on “Panorama”, shown on the evening of Wednesday quashed the murder conviction of Sergeant Blackman 15 March—the day after the Court Martial Appeal and substituted a verdict of manslaughter due to Court had handed down its decision—gave the public diminished responsibility. I very much welcome this an insight, but no more than that, into some of the decision, and so will many others. terrible stresses inflicted on our fighting troops. Again, Right at the start, I pay tribute to all the men of no one is complaining about that, but allowances have 42 Commando Royal Marines who served in that unit to be made, and there will be many in the Armed during its 2011 tour of Afghanistan. It was a most Forces who are reassured by the Court Martial Appeal stressful, demanding and exhausting tour.Seven members Court decision, precipitated by the report of the Criminal of the unit were killed and 45 seriously wounded. I can Cases Review Commission. I and probably many millions do no better than quote Sergeant Blackman’s company of people in the country wish to ensure that no other commander, Major Steve McCulley, who has been member of our Armed Forces has to endure the medically discharged from the Royal Marines after ordeal that Sergeant Blackman and his wonderful wife being blown up by an IED. He said that his men were have had to endure over the past five years. operating, My first point is that when charges like this are “in the most dangerous square mile on earth”. contemplated, what mentoring and assistance is given He added: to a proposed defendant? He will have no idea of the “They were superb men and their skills were excellent”. criminal courts or courts martial and will need an Sergeant Blackman had an excellent, exemplary experienced individual to monitor and guide him through record, and has retained his dignity throughout this the maze so that he can choose the very best defence dreadful ordeal; he has been an exemplary prisoner. I team available. Remember that Sergeant Blackman also wish to put on record my admiration for Mrs Claire had served his country with distinction on active service Blackman, his loyal, courageous and steadfast wife. for years. He deserved to have a fair trial and a fair She has worked and campaigned tirelessly on his behalf. hearing right from the start. What level of assistance is I explained in my speech in 2015 that I had visited available at the start of criminal proceedings for someone Sergeant Blackman in prison and spoken to him for in that position? some hours. I also explained that: Secondly, was there any psychological testing right “To become a senior non-commissioned officer in the Royal at the start of this legal process to gauge the effect of Marines is an immense achievement. Being accepted for training the immense stress and demands made on him and in the Royal Marines is extremely competitive. The training is rigorous and long”.—[Official Report, 15/9/15; col. GC 229.] other troops in Afghanistan? As I have said, these troops are constantly shot at, existing in the most basic He would also have been selected for, and passed, long conditions in the searing heat. They suffer constant and arduous courses for promotion to corporal, and exhaustion, knowing that they are always in mortal thereafter promotion to sergeant. In addition, he would danger. I said in my earlier speech on this matter that have had to be selected for, and have passed, long and our troops must in all circumstances comply with the arduous courses for his specialist qualification. law. However, the law itself recognises that stress, Sergeant Blackman served for approximately 15 years provocation and other factors should be taken into in the Royal Marines and his behaviour would have account in assessing criminal liability. What tests were been observed closely and scrutinised throughout his offered or given to Sergeant Blackman right at the time in the corps, especially on the courses that he start of this process? I could list extensive, exceptional attended and passed. As I have said, he was an exemplary stress factors that impacted on both the unit and Royal Marine. In the years leading up to the incident Sergeant Blackman. in 2011, he had been deployed on operational service six times. That means six six-month tours involving My third point is that I read with interest my noble intense combat operations. As I have said before, no friend Lord Thomas of Gresford’s letter to the Times, one in the Royal Marines complains about that level published last week on Saturday 18 March. I am grateful of deployment—but it will have its consequences. to see him in his position today.I just ask whether it was 187 Armed Forces Act Order 2017[21 MARCH 2017] Armed Forces Act Order 2017 188 the duty of the court—in this case, the Judge Advocate- the noble Lord, Lord Astor, drew to the attention of General—to bring the possibility of battle fatigue and the House, some people have pieces of paper in their diminished responsibility to the attention of the panel. pockets that can override any evidence. The one group My fourth point is that my noble friend Lord Thomas of people who have not been identified are those who was in the Moses Room when I spoke on 15 September, have received royal pardons. Indeed, we understand when I raised the point that the Judge Advocate-General that the Government have lost the list containing the and others have criticised the fact that a simple majority names of many of these persons. at a court martial can convict a person. In Sergeant We have got things completely out of balance. This Blackman’s case, five of the panel found him guilty applies not only to Northern Ireland but more generally. and two found him not guilty. I went on to say that We have seen an unscrupulous lawyer prepared to that ratio would be insufficient to convict in a civilian profit at the expense of unfortunate members of the criminal court. We have a military covenant which security forces who were operating in that hell, as the states that the members of the Armed Forces should noble Lord, Lord Burnett, described it. We are all for not be disadvantaged in relation to their civilian fairness, but we need a level playing field and we do counterparts. The least that could be done is to change not have one. That is a matter of deep regret. the court-martial rules so that they mirror those that prevail in the civilian criminal courts. The 2% target, to which many noble Lords have My fifth point, which I also raised in my speech in referred, is a purely arbitrary figure. The figure should September 2015, is that the entire ethos of a court reflect what is necessary, not what is arbitrary. We have martial is that a person is supposed to be tried by their ring-fenced 0.7% of our GDP for international aid. peers, who fully understand through shared experience However,I am always against ring-fencing departmental all the surrounding circumstances. No one who has money because it usually ends in tears and it makes not served through the hell and horrors of the front some departments bear the brunt of reductions in line in Afghanistan or similar conditions can hope to spending in a totally disproportionate and chaotic appreciate the stresses and dangers that will affect manner.While I am in favour of well-targeted international even the strongest and best-trained human being. A aid, I do not believe that the scatter-gun tactics we are number of the panel members would have failed this using at the moment, whereby we pour millions of test—in other words, a number of panel members had pounds into all sorts of weird and wonderful projects, not served on active service, let alone even heard a are working. We should concentrate on certain things, shot fired in anger. such as clean water, trying to rid areas of diseases such My sixth point is that, after Sergeant Blackman as malaria, emergency relief to tackle what we are was convicted, it emerged that a member of the panel confronted with in Africa, disasters such as earthquakes sent a message to the effect that the panel had come and so on. I am in favour of all that, but it is ridiculous under immense political pressure to convict. If this is that while this country steps up to the plate in this, true, it is outrageous. other, wealthier countries are virtually not even on the pitch in terms of their contributions. Finally, I believe that the Ministry of Defence is going to inquire into the surrounding circumstances Given the international instability we face, the benefits of this case. I hope that it will look into all the matters that we say we are getting from soft power do not, I I have raised and that the findings will be made have to say, register particularly strongly with me. available to the public. When we are dealing with the North Koreas of this I put on record again my thanks to the members of world and a resurgent Russia, which many noble Lords the extensive Royal Marines family and the millions of have mentioned, the fact is that the capability of citizens throughout the United Kingdom and beyond hardware makes a difference. The one point that has who have supported Sergeant Blackman, including been made so blatantly obvious by noble and noble the Daily Mail’s defence and campaigns team and the and gallant Lords with their lifetimes of experience in readers of that paper who contributed so generously this area is that our surface fleet is wholly inadequate to his defence fund; to Mr Goldberg QC and his team; to deal with the circumstances that we face. When the and to Mr Frederick Forsyth and Mr Richard Drax, a aircraft carriers come on-stream, are we saying that we Member of the other place. I said in September 2015 could simultaneously send two battle groups off to that we owe it to our fine men and women who two different parts of the world to work with those continuously and selflessly protect us to fight for them carriers? Could we protect the carriers or is it the case in their hour of need. that if there was a conflict, they would end up alongside without the capability to protect them? There are huge 5.26 pm issues to face here and I do not believe that we will serve our country well if we knowingly, year on year, Lord Empey (UUP): My Lords, the brave contribution leave huge areas of our defence capability basically of the noble Lord, Lord Astor of Hever, drew to the out of action. We have not had the ability to seriously House’sattention the case of Corporal Major Hutchings. project air power for years and, as has been said, HMS In his contribution, the noble Lord, Lord Burnett, “Ocean” is to be retired early. We have no fixed-wing said that the military should not be disadvantaged and anti-submarine capability, yet the one thing we need to that this was part of the military covenant. I am afraid protect is our nuclear deterrent. that is not working out in practice. We know—it is always correct—that where new evidence comes forward, I just do not get it. We are fixated on keeping social whether in cases involving members of the security programmes going, but there has to be a balance in forces or potential terrorists, it is material and should these things. It has been said: look at what will happen be judged accordingly in a court of law. However, as in terms of persons and treasure if this goes wrong. 189 Armed Forces Act Order 2017[LORDS] Armed Forces Act Order 2017 190

[LORD EMPEY] 5.37 pm I think we have the balance wrong. I am 100% in favour of co-operation with our European partners Lord Hannay of Chiswick (CB): My Lords, it is with and 100% for joint projects to share costs because that some trepidation that I participate in this debate, makes sense, but we have the balance wrong and which is after all mainly about defence policy, but I do continuing to limp forward as we are will not work. so because in my view the international rules-based Yes, we are getting some great kit, and I do not doubt order is under greater and more existential challenge that that is good, but it comes down to the question of than it has ever been since our predecessors began to whether we go for gold-plated equipment at the expense piece it together amid the ruins of two catastrophic of having a spread of volume. That balance must be world wars. I do so also because those challenges and struck. the necessary responses to them cannot be confined to the spheres of defence and security policy; they need I turn to the issues with regard to NATO. I was to go much wider than that. encouraged by the comments of the American Vice- To understand this, along with the need for a wider President Mike Pence in Germany. He reassured us on vision and response, we need only look at the period the commitment of the US to NATO, but as many between the two world wars. Of course history does speakers have already pointed out, many European not repeat itself exactly, but it does contain plenty of countries are not stepping up to the plate. It is not that lessons that we would be foolish to ignore. The world they do not have the money, but as long as someone experienced then a perfect storm in which economic, else is prepared to do it, why bother? The message from political and military developments fused into a single the United States is clear: it is not going to carry the mass which overwhelmed the totally inadequate rules can any longer,and who can argue with that? Colleagues and international institutions that had been established in this part of the world have to realise that we have a after the First World War. The 1929 stock market resurgentRussia,internationalterrorismanddevelopments crash led to mass unemployment, trade protectionism taking place, whether in laser technology or weapons and tit-for-tat monetary devaluations. These and other that can be triggered from space to identify and damage factors fuelled the rise of populist political parties surface vessels.Not only unmanned aircraft but unmanned across Europe, while the weakened democracies averted naval vessels will be a thing of the future. We must their eyes and turned inwards. Does that sound familiar? spend enough on protecting our country. Even for an Is there any parallel with the faltering response to the issue such as immigrants trying to cross the Channel, financial crisis of 2008-09 and the emergence of political we have three vessels to deal with it. It is ridiculous for forces such as those which propelled Donald Trump to an island nation to be in that position. the White House and are fuelling the political bids of I ask the Minister to address some of these points Marine Le Pen, Geert Wilders and Beppe Grillo? It is when he sums up the debate. Of course, if we press not an exact parallel, of course, but it is quite enough Her Majesty’s Government to spend more on defence, to cause us to worry very seriously. they will have to take decisions to spend less on I will look at three pillars of our rules-based order something else. It is the inevitable piece of arithmetic which are under threat: the open global trading system, that has to be done. It will not be pleasant and, as has symbolised by the World Trade Organization; the been said by those who have experience of the military, nuclear non-proliferation treaty; and the functions of the price will be high. The Falklands have been mentioned, the UN with respect to international peace and security. in particular HMS “Endurance”—all to save a few The arrival in the White House of a President and a quid. Everyone looks for economies, but that was being trade policy team who seem to regard protectionism penny wise and pound foolish. There is a fundamental as a path to prosperity, and bilateral trade balances as error in the balance between our foreign and defence something to be eliminated by any means, including policies and our aid policies. They are closely linked by measures that would run roughshod over WTO rules, and it is important that we get the balance right. The is a challenge to all of us, and in particular to this noble Lord, Lord Hennessy, who is not in his place at country which has, quite rightly in my view, nailed its the moment, made a good suggestion. He has called post-Brexit colours to the mast of being a champion for a commission or whatever it might be. We should of free trade. That will require more than just words. It not have to wait for the next five-year defence review; will require standing up to the forces of mercantilism this is something we need to get on with now. and protectionism wherever they emerge and defending On that point, I would argue that unmanned vehicles the rules of the WTO. If we fail, we will end up poorer of all types are likely to replace pilots and surface and less able to generate the resources we need to vessel personnel. Where does the Minister think we defend ourselves and our allies, in NATO or elsewhere. are in all of that? Moreover, does he really believe that The nuclear non-proliferation treaty has been for a we have sufficient surface vessels to deploy simultaneously considerable time now one of the cornerstones of our two battle groups for the new aircraft carriers while at rules-based world, but has been under considerable the same time meeting our international commitments stress for some years, particularly from North Korea, and dealing with hot spots? You always need to keep a which cheated on its obligations under the treaty and contingency in reserve to deal with an emergency, but then withdrew,and from Iran, whose nuclear programmes we seem absolutely flat out. Some of our surface gave much legitimate cause for concern. The only vessels do not seem able to propel themselves adequately, thing the two challenges have in common, I suggest, is so how on earth are we going to deploy two aircraft that in neither case is a military response either sensible carriers with their battle groups with such a small or to be anticipated or planned for, other than as an surface fleet? extremely last resort. There is no doubt about the 191 Armed Forces Act Order 2017[21 MARCH 2017] Armed Forces Act Order 2017 192 immediacy and reality of the challenge from North technology, which has empowered the streets and the Korea. Clearly, our own position can only be an masses and transformed the balance of power throughout ancillary one, but do the Government share the view the globe; the fragmentation of states, which we have that China has to be a key player in any effective seen in the Middle East particularly; the vast shift of response? Antagonising China, either politically or in power, production and capital construction to the east trade policy terms, is unlikely to be the best way of and south and away from the north and the west in the securing its support. 21st century,away from the Atlantic powers and especially As to Iran, we have the rather oddly acronymed to Asia; and, above all, the vital need to win, and keep JCPOA. Can the noble Earl confirm that the winning, the narrative through adroit projection of Government’s policy is to remain committed to that soft power and through maximum connectivity, all the agreement and its rigorous implementation, whatever time and everywhere. It is what the Chinese call winning the US attitude may turn out to be? Is that policy the discourse war, or the information battle, and it is properly understood in Washington? Is it not time, now central in a way that it was not even five years too, that we began thinking about globalising and ago. generalising the constraints in the Iran agreement, The signals for a change of gear have been there thus extending its duration, which is rather on the long enough. None of what has happened now is very short side, and ceasing to make it so Iran-specific, new. Long before Brexit or Donald Trump, the need which makes it less attractive to Iran? for a fundamental rethink in our position was there. The United Nations, too, is under stress, even as it First, for example, it has been obvious for three decades has more than 100,000 peacekeepers, both military that power was shifting in the world, away from the and civilian, deployed worldwide. Often, as in South Atlantic hegemony of the 20th century and from Sudan, the Democratic Republic of Congo and the Governments and hierarchies of power generally.Major Central African Republic, they are the only forces that changes in the co-ordination and configuration of fulfil the responsibility to protect civilians—forces that Britain’sinternational policies were bound to be necessary. the rulers of those countries are either unwilling or unable In many ways, the whole pace of innovation and to provide. The Government’s decision to strengthen investment is being set at the other end of the planet. our commitments to UN peacekeeping in South Sudan Secondly,it has been equally obvious that conventional and Somalia is very welcome. Can the Minister say military size and big spend were going to be challenged somethingabouttheGovernment’smediumandlong-term everywhere by small and agile methods, and that the policies on UN peacekeeping? Is the shift in policy we whole scale of power and influence deployment has have seen in the last year here to stay? Is it built in to changed. The microchip has, among many other things, our security strategy and destined to play a more miniaturised weapons force and power dramatically. prominent part in it than has been the case in the The Davids have been vastly empowered against the recent past? Goliaths everywhere. Almost any small organisation, Others have covered the crucial issue of NATO and tribe or cell can operate a lethal drone. An inexpensive the uncertainties about its deterrent capacity as a shoulder-launched missile can destroy a $100 million result of some of the things that the new President of plane or disable a $1 billion warship. the United States said during his election campaign. My neglect of that issue merely shows, I think, what Thirdly, it has long been clear that in the digital age an extremely wide scope for debate today has offered military engagement has to accept entirely new rules. us and how important it is to focus on all parts of it. The battle may no longer be on the battlefield. The ubiquity of the web and total connectivity, on a scale never before known in human history, mean that 5.44 pm infinitely greater audiences have to be persuaded and Lord Howell of Guildford (Con): My Lords, it is a influenced. There are no clear decision points between pleasure to follow the noble Lord, Lord Hannay, with victors and vanquished. Trust becomes the new and whose analyses I almost invariably agree—although essential winning weapon. Subtle new mixtures of with his conclusions a little less than invariably. Like force and friendship have to be crafted and assembled him, I shall concentrate on the rules-based order part if permanent instability is to be overcome in any of the Motion we are discussing. I do so not because I theatre and any kind of settlement reached. question for one moment the crucial role of a fairly As I have already said, none of this is very new. funded NATO and a strong and agile military and Indeed, our own military thinkers and leaders have maritime power on a far greater extent than we have responded with growing vigour over the decades. I today, but because our defence and physical safety remember the days of Frank Kitson’s low-intensity now rely on so many other things, in a totally transformed warfare, the practice of which I was involved in in and disrupted world security environment that is unlike Northern Ireland in the 1970s. Profound and innovative anything that existed even five years ago, let alone a ideas have been continuously developed by military decade or so ago. thinkers in response to these new conditions and new A year ago the then Foreign Secretary, Philip types of engagement. Yet there seems to me to be one Hammond, observed that the distinctions between colossal piece missing from this plethora of activity military capability, intelligence agency capability, and all this dedication to new forms of power deployment diplomatic capability and capacity building through in a radically transformed international milieu. The development programmes et cetera, are “becoming more missing piece is clear: motivating purpose and cause. blurred at the edges”—in other words, very interrelated. What exactly is it all aimed at? What is the central To his list I would add: the sheer pace of digital story, the truly coherent, graspable, definable strategic 193 Armed Forces Act Order 2017[LORDS] Armed Forces Act Order 2017 194

[LORD HOWELL OF GUILDFORD] the same working language, language being, of course, narrative that should be the common and impelling the ultimate conveyor of complex ideas, common theme right across this landscape, and in the minds of understanding and trust—the default protocol of the every service man and woman at all levels all the time? planet? For deploying Britain’s undeniably immense A central lesson from our House of Lords soft but still underused soft-power assets, the Commonwealth power report three years ago, Persuasion and Power in —with its ready-made trust network—is the ideal the Modern World, from the many experts who gave forum and platform, although there are some backsliders. evidence to it, and from the current International To see things through this lens demands a changed Relations Committee inquiry into the UK Middle mindset among policymakers and those in all branches Eastern policy, is that for our power and influence to of government, civil and military, who are charged be effective, and our interests to be well protected and with safeguarding Britain’s security, and its global promoted, there have to be some defined policy priorities business, brand and reputation. We are talking about and goals. These can be derived only from a clear and nothing less than a grand repositioning of the United overall articulation of our national purposes and direction, Kingdom in a world utterly transformed by the digital against a background of an increasingly confused and age. For this we need a new strategic synthesis, ready to altered world. We need to be prepared for, believe in work bilaterally, with America as a partner, to a degree and be fighting for some definite goal. with China and closely with our European neighbours, As the noble Lord, Lord Hennessy, said, we need a but not permanently tied or overcommitted to any certain idea of the United Kingdom—to adapt, as he of them. said, General de Gaulle’s phrase—in the new networked The Army speaks rightly of its core purpose, but international landscape that has replaced the 20th-century whatever form power, deployment and projection take order. One has to ask what this certain idea, now in its nowadays, soft, hard or smart, one purpose above all British clothing in this age of global turmoil, is to be. others needs to be clear, inspirational and a source of Does the prospect of Brexit—possibly positively—and commitment at every level. This is to uphold the the arrival of Donald Trump, in a more negative way, nation’s changing role and interests in an age of global point to the answer? I believe that they do. We now turmoil, and to provide its security with a rock-solid have to build a partnership for European security, basis. That is the unambiguous message that our society although not under but liberated from the old EU and its leading voices need to send to all three branches treaties. This is plainly a major opportunity for creative of our armed services, so that they can perform at leadership in the digital age. their best, with a clear sense of direction. We owe We can cast off the image of a Britain of limited, them nothing less. downsized ambitions, as some American commentators keep saying we are signalling. They are frankly reading 5.55 pm the wrong signals. However, they can hardly be blamed, Baroness Dean of Thornton-le-Fylde (Lab): My Lords, when they see that we are spending less on our diplomacy I thank the Minister for introducing this debate. I through the Foreign and Commonwealth Office budget— would like to interpret in that also his support for its now about £800 million net—than we blow, for example, taking place, as it would be a foolish Chief Whip who on cavalier aid dispersals to international agencies or listed a debate without the Minister saying, “Yes, let’s on subsiding carbon reduction by the most expensive go for it”. conceivable means. Billions have gone in that direction I would also like to say how pleased I am that the with little to show for it. The sooner that these international noble Lord, Lord Astor, is back with us, debating departments dovetail, and in some cases even reunite—in defence issues. This House has been blessed in the past the words of my noble friend Lord Howe, to pack a 10 years with two Front-Bench Ministers, the noble more powerful punch—the better. Earl, Lord Howe, and the noble Lord, Lord Astor, as As for America, it is obvious that Pax Americana is defence spokespeople whom we have respected and finished, even if some Americans still believe otherwise. certainly find most helpful in the work that we are America, spending more than the next eight major trying to do. countries combined on defence, no longer wins wars. I declare an interest. I chair the House of Lords Anyway, I doubt whether President Trump is quite the defence study group, an informal grouping of about power everyone seems to think, as power slips away 60 Members, comprising experienced former military from all Governments into the hyper-connected worldwide Members, politicians who have worked in defence and network. His attempts to impose trade protection on the MoD, and also lay Members, such as myself, who, the fluid and revolutionised international trade scene while not working in either of those areas, have had are bound to fail in an age of internationalised production. some experience. I was chairman of the Armed Forces’ Should not our strategic and unifying vision be Pay Review Body. For the rest of my life I will carry something quite different from either of these 20th-century with me a recognition of the huge debt that we as a tableaux? Should not our story be of a more confident nation owe to our Armed Forces, young men and Britain, superbly placed to operate with agility in women, day in and day out, year in and year out, often today’s networked and heavily interdependent world, without being thanked for it. making full use of its huge experience and extensive A member of that group, possibly one of the oldest global friendships, and an amazing latticework of in it—not in years but in service—was Lord Lyell. I relationships, trust, common understanding and brilliant think that this is the first main defence debate that we connections all across the globe? Is not the inspiration have had since his passing. On behalf of the group I a resourceful Britain, wonderfully woven into the would just like to pay our respects and thank him for Commonwealth network of 2.3 billion people using the work that he did over many years. 195 Armed Forces Act Order 2017[21 MARCH 2017] Armed Forces Act Order 2017 196

In their assessment, National Security Strategy and because of the state of the world today. The chairman Strategic Defence and Security Review 2015, the of the Defence Select Committee in another place, who Government said that they had concluded that the was sitting with us until a short while ago, has called threat to our nation had not significantly changed. for 3% expenditure. He reminded us that when we were That is a view that many would challenge—and indeed last in a period of major terrorism and security threat—the it has been strongly challenged in this debate. A number 1980s, as has been referred to in this debate—defence of noble Lords have dealt with it quite factually, about expenditure varied between 4.3% and 5%. I do not how actually the threat has increased. The Minister think anybody is being so bold as to suggest that. The alluded to it, even if he was not blunt about it. I noble Lord, Lord Dannatt, another member of our suggest that, were it not for the distraction of the group, has called for 2.5%—which, on nearly £40 billion media with Brexit day in and day out, we would be of expenditure, is a not significant amount. seeing security issues much more on the front pages of This is not just about the pounds and pence; it is the press than they are at the moment. about what we need for the security of this nation. Introducing the debate, the Minister referred to the How do we properly resource our young men and 2% contribution to NATO, as a number of other women and our defence capability in a world which is noble Lords have, too. One of our House of Lords probably less secure now than it has been for many study group Members, who is absent—a number have decades? In fact, between 2010 and 2016 defence spending written to me to apologise and express regret for not reduced in real terms by 6.9%. We are still clawing that taking part—was the noble and gallant Lord, Lord back. We also face the drop of 15% in the value of the Richards of Herstmonceaux, recently the Chief of the pound since 23 June last year, which is having a Defence Staff, as we all know. He wrote: negative impact on the MoD budget of around £700 million. I hope that the Minister will be able to “I am sorry to report I am abroad until 24 March and therefore will not be able to take part. What I would have confirm in his response that that will not come out of emphasised is that while hitting the 2% target is a good thing, it the set budget and that the Treasury will find that money. has become a veil behind which Her Majesty’s Government is Talking of resources, is the Minister able to inform the obscuring the true state of the UK’s defence capability. In itself House how progress is being made on an issue which the 2% target means little if a country’s ambitions, or the perceived was very topical a short while ago but has gone quiet threat, require more, as would appear to be so in the case of the recently? I refer to the recruitment of reserves, up to UK”. the total of 35,000 that was talked about. I think that that is view with which many of us would Many Members of the House have taken part in agree. The noble Lord, Lord Empey, who I think is not this debate today and I respect hugely their expertise in his place at the moment, said that he did not agree and experience. I say to the Minister, as gently as I can, with the 2%, that we should not have it there and that that there has not been one demurring voice in this we should pay what we need to. I agree with the 2% as debate on the assertions, first, that we are in a more a base and a minimum entry to NATO. Certainly we insecure world and, secondly, that we need to look at need to pay more. our defence budget. That voice has come from across My noble friend Lord Touhig said in his excellent the House, irrespective of party or which Benches we opening address that the most valuable asset was the sit on. Can the Minister please pass that message people. Obviously I agree with that, having chaired back? I hope that a similar debate will take place in the the Armed Forces’ Pay Review Body. Two days after House of Commons, because only by raising our the strategic defence and security review in 2015, the voices in this joint, across-the-House way will we Government announced in their spending review stand any chance of being listened to. We are not and Autumn Statement that they had included in that warmongers or people who call for expenditure because Statement a decision to spend £11 billion on new it is politically convenient to have a go at the Government. capabilities,innovation and the defence estate.Good—but If we had a Labour Minister sat on those Benches now where was the money coming from? Well, £7.2 billion to answer the debate, my contribution would be exactly of it was from efficiency savings, including military the same. I hope that that message can be carried back and civilian pay restraint. That restraint continues—the to the Government. restraint, as I mentioned in our last defence debate, of a 1% maximum—yet other areas of public service, 6.05 pm including MPs, were not limited to it. It also included Lord Levene of Portsoken (CB): My Lords, it is a a cut in the civilian headcount in the MoD of some great pleasure to follow the noble Baroness, Lady 30%. So how can it be extra expenditure when it just Dean, whose wise words on defence are always worth shifts the deckchairs on the deck—and the people paying attention to. I thank her for her chairmanship paying for it are, in my view, the least able to do so—at of the group to which she referred, from which we all a time when as a nation, we face a higher security benefit. I also pay compliments to the noble Lord, threat? Lord Touhig, for the efforts that he always makes to It is no wonder that the Armed Forces’ Pay Review promote the importance of defence in Wales. He does Body talked in its last report about morale dropping, a great job on that. I declare my interests as chairman as has been mentioned in this debate. I am not at all of General Dynamics UK. surprised about that. Members of the Armed Forces At a time when there is so much uncertainty in see the statements that are made and what they themselves international relations, both in Europe and the wider experience. The reality is—we have probably been too world, our thoughts must always turn towards our defence small-minded to say this out loud as we are now—that to ensure that the nation is well protected. During this we need to spend more on the defence of our nation debate, with so many distinguished contributors, we are 197 Armed Forces Act Order 2017[LORDS] Armed Forces Act Order 2017 198

[LORD LEVENE OF PORTSOKEN] have to say, has been far from perfect, but it has taken learning much of how our Armed Forces and others years to find the right person to run DE&S and now are properly prepared. But for those Armed Forces to the Ministry of Defence seems to be looking for yet be prepared, that preparation can be most effective another person to run the submarine programme. I only when they are supplied with the best equipment believe that is fundamentally wrong. I know what has embodying the latest technology. The task of procuring driven it, but I do not agree with it. this equipment is undertaken by the Defence Equipment I hope that it is not too late for the Minister to and Support division of the Ministry of Defence, discuss this with his colleagues to see whether a more which is staffed by serving officers and civilians. For suitable arrangement can be arrived at. The nuclear years, that division and its results have been, all too submarine programme is a very complex one, involving often, the subject of uninformed criticism centred on the design, development and construction of the most perceived delays or excessive cost when, very often, a modern vessels. I can say from my past experience that fuller examination of these issues reveals a different this interface is complex but needs, in every way, to be picture. closely connected with the rest of our defence procurement Defence procurement around the world always gives programme. A separation is wrong, and I believe it rise to such feelings and countries have different will not deliver the outcome that we really need. approaches to dealing with it. The noble Lord, Lord I hope your Lordships may concur that we have West, recently asked a Question in your Lordships’ some extremely dedicated people working on both the House relating to defence industrial policy. I was at military and the civilian side in procurement, who pains to say that I did not believe that we should revert rarely attract praise but very frequently are blamed for to an approach of “national champions”, which we faults that often do not really exist or have been had some years ago and which failed. So I shall speak misinterpreted. As I said, we need the very best equipment today about the way in which we go about procuring to be procured. We need the best people to enable us to our equipment for the Armed Forces and the DE&S achieve this, and those people deserve our absolute organisation which is responsible for that task. It is a support. task for which some 30 years ago I had responsibility and, having been asked more recently by successive 6.12 pm Defence Secretaries to oversee a process known as Lord Jopling (Con): My Lords, I am sure this debate defence reform, I think that my perception of this area has been immensely enhanced by the contribution of is relatively up to date. the noble Lord, Lord Levene, who has just sat down, Defence procurement requires a thorough whose huge experience is of massive value to all of us. understanding of the interaction between technology, I begin by reminding the House that for many years I production and commercial realism. I have argued for have been a member of the delegation to the NATO a long time that this was not necessarily very different Parliamentary Assembly,where I am currently chairman from imperatives in other industries and that that of one of the committees. process should be led by an experienced businessman, It is only seven weeks or so since we had our last who understood both the development and the defence debate, but in view of continued tensions commercial imperatives. In my opinion, and at long which confront us it is timely that we have another one last, the Government have managed to recruit an today—I pay tribute to my noble friend the Minister outstanding individual to head the organisation in the for that. That is especially so when one contemplates person of Tony Douglas, the man who previously ran what I describe as the “arc of trouble”, which stretches the Abu Dhabi airport authority. Your Lordships will from the Baltic states in the north, through the Middle understand that that was no mean feat. This is a man East and North Africa, to the Atlantic Ocean, where used to getting complex projects completed on time Nigeria continues to struggle with Boko Haram. Not and on cost: precisely what is needed in the Ministry all of it, but much of this tension, which has increased of Defence post which he now holds. in recent times, stems from Russia’s increasing posturing Togive further credit to those making this appointment, and provocation, and I will concentrate most of my it was decided a little earlier to appoint a non-executive remarks on Russia. chairman to oversee the division. An inspired choice This increased provocation by Russia comes despite was made in choosing Paul Skinner to do this, a man a faltering economy, which we should remind ourselves whose reputation precedes him from his time spent at has been compared in scale to that of Spain and which Shell and Rio Tinto. The top of the organisation is is mainly a consequence of crude oil prices that are near now in place and we should be able to deliver what we $50 a barrel. At the same time we are seeing burgeoning need, on time and on cost. defence spending—admittedly from a comparatively So far, so good, your Lordships may think, but like low base when we remind ourselves that Russian defence any other efficient organisation, it requires a clear line expenditure only four years ago was less than that of of control. In my view, it requires the chief executive the United Kingdom—and an intensification of Moscow’s to have authority and control over all the parts of his military build-up throughout the entire region from organisation. I have therefore been greatly concerned the Arctic through to the Mediterranean. We have to look at the way in which the acquisition of the seen evidence of their tinkering in Libya recently. nuclear submarine successor programme is being largely Our allies in NATO and the east continue to feel hived off to a separate procurement organisation, over threatened by the hard power imbalance in their which DE&S will only have much reduced influence. It neighbourhoods. Russia has the ability rapidly to amass may be that that decision was driven by the Treasury, significant forces on its border, and continues to mount whose understanding of procurement in the past, I anti-access and area-denial capabilities in the Baltic, 199 Armed Forces Act Order 2017[21 MARCH 2017] Armed Forces Act Order 2017 200

Black Sea and Mediterranean regions. The Russians of the Canada-led one in Latvia, the German-led one have threatened nuclear strikes against NATO allies in Lithuania, and the United States one in Poland—will and have withdrawn from or violated key arms control be complete? These deployments, although small in agreements. In addition, very importantly, they have size, will provide an essential tripwire, which should developed a highly sophisticated propaganda and warn Moscow that to engage with them would have disinformation campaign, often blatantly distorting immediate Article 5 implications. facts and the truth—a matter I shall return to in a few Finally, I referred earlier to the propaganda and moments. misinformation programme which the Russians are so One cannot help feeling that, with the mounting good at. I ask the Minister to confirm that all preparations threat from Russia, the NATO allies are relatively have been made, alongside our Estonian battle group sleeping through all of this, and it is not helped by the deployment, to have adequate back-up of Russian continued uncertainty which comes from Washington. speakers and media facilities to counter the inevitable That is not only down to the wild and sometimes sniping and vilification which we can be assured that contradictory tweets and speeches from the President the Russians are bound to spray over them in the himself but down to this period of uncertainty in the months and years ahead. formation of a new Administration in the United States. In the past, it has often taken up to June before 6.22 pm all the political appointments are made, but last week, Lord Hunt of Chesterton (Lab): My Lords, this is an upstairs in the International Relations Select Committee, important debate about the very serious international of which my noble friend Lord Howell is chair, we situation facing the UK in terms of its capacity to heard evidence that the current appointments in the defend itself in collaboration with its allies. I declare United States are proceeding very slowly and that an interest as a scientific consultant to a defence some of the most senior Pentagon political offices contractor working for the MoD. I am also a consultant remain unfilled. with a university in Toulouse, working on new wings for Airbus, and some of these Airbus facilities are of Perhaps one of the few firm messages, though, to course important for the UK now. When I was head of come from Washington recently is President Trump’s the Met Office, I also saw a bit of how the MoD works— dissatisfaction at the poor response to the target declared some of which made your hair stand on end—and, at NATO’s Welsh summit of moving towards 2% of during that period of focus, the ability of the Met Office GDP going to defence. When the noble Earl, Lord to forecast the atmosphere and oceans greatly improved. Howe, opened the debate, he referred to the five states I should also declare that, when I was a professor at whose defence spending comes to less than 1%. The Cambridge, one of my research students used our noble and gallant Lord, Lord Stirrup, in his speech, research techniques to provide high-tech shelters for talked about the need to name and shame those that all the women protesting at Greenham Common. do not spend even 1%. Unfortunately, he did not name them, and therefore I will. It has been implied in the Since this is a debate on the politics of defence, I past that it is bad manners and not very friendly to should begin by asking HMG whether they are satisfied name the backsliders, but it is Belgium, Luxembourg, with the understanding and support of the British Spain, Slovenia and Hungary that currently spend less people for the main aspects of UK defence strategy. than 1%. That is a disgrace, particularly given that The first point of controversy has been about the size some of those countries are extremely wealthy and of the Armed Forces, which is now smaller in total really ought to be moving towards the Welsh summit than for many years and significantly lower than is target. Indeed, some of them, particularly Belgium, needed to confront the main opponents to the UK seem to be spending less each year, which again I and its allies, in Asia and the Middle East especially. would have thought was indefensible. This is a technical and financial question, depending on the choice of strategic goals, but we should learn This has been said before, but I repeat that it is a more about the arguments. sad reflection on our European friends that after Brexit The second major controversy, which is much more —I speak as one who was not in favour of it—80% of political, concerns whether the UK armaments should the spending on NATO’s defence will come from continue to depend on nuclear weapons systems. I non-members of the European Union. That is also a believe that this is essential. It is of course the official disgrace. However, one constructive and praiseworthy Labour policy,as my noble friend Lord Touhig mentioned development in recent times has been the decision to earlier this afternoon. The Labour and the Lib Dem deploy battalion-size battle groups in the three Baltic parties continue to be split about this, with many states and Poland. I have expressed concerns in the members inside and outside Parliament being opposed. past about the delay in their deployment, and I am Also, of course, many countries in the NATO alliance very relieved that the first of the UK-led contingent are opposed to the use of these weapons. has already arrived in Estonia. I have felt for some time that these months, which we are in the middle of A lesser but more recent controversy about the now, covered a dangerous period of change and UK’s defence is to what extent it should be used to uncertainty which could have encouraged Mr Putin to support Governments in the Middle East and Africa make another provocative incursion one way or another. where civil war is taking place, or where there are outbreaks of disease and civil emergencies such as the I have two particular questions to ask the Minister. breakdown of government systems in Libya and elsewhere. First, will he tell us when the Estonian deployment of The noble Earl, Lord Howe, in his introductory speech UK troops will be complete? Will he tell us when it is commented on how our defence forces are used for expected that the other deployments—I am thinking these civil issues—and very effectively too. 201 Armed Forces Act Order 2017[LORDS] Armed Forces Act Order 2017 202

[LORD HUNT OF CHESTERTON] 6.29 pm There is very little political controversy about the use of the UK’s world-class defensive capability in cyber The Earl of Cork and Orrery (CB): My Lords, in and security services to protect the UK and our allies. contrast to the large number of qualifications and I should like to make a suggestion that the Government interests which many noble Lords have professed, I need to build up support of their defence policies can only profess to having been a Cold War submarine among all parts of society,including schools, universities, commander, but I have the interests of the senior industry, trade unions and so on, in order to have service very much at heart. I thank the Minister for support for their defence forces and their infrastructure this debate, which has given us the opportunity to within government. There is also a need to build up revisit and examine the entire defence area. We have understanding about the role of the private sector. heard the challenges to the rules-based order listed by many. They include, among others that have perhaps I believe new approaches are necessary. I came to not been listed, famine of both food and water, nuclear this conclusion when visiting with my grandson the proliferation and, perhaps we should say, even the new excellent Royal Air Force Museum at Hendon, and I US regime. have told the noble Earl, Lord Howe, about this story. The technical and scientific aspects of the RAF over In times of peace, military expenditure tends to be the past century were well displayed, and I assume the Cinderella of government spending. Large parts of that there will be some centennial celebrations at this the population see it as neither necessary nor desirable, museum in a year or two. But there needs to be more and it falls to Parliament to persuade the voting public emphasis on current operational policies, as well as to accept spending on defence when so many other the developing technologies, and the existence of nuclear areas command their attention. History tells us that weapons in UK defence should not be ignored. It is although we are seldom fully prepared for conflict when also important, in museums and other places providing it arises, we occasionally get it right. Henry VIII regularly public information, to explain why the UK has defence ran out of money to maintain his forces; indeed, he forces in 2017—giving information about countries began wars only when he had received a new injection which are the UK’s allies and, controversially, which of cash. Elizabeth I’s expenditure on warfare was countries are not our allies. remarkably modest, but it cost the King of Spain In some schools, I am afraid to say, the governors two-thirds of the entire revenues of the Spanish Empire prevent school visits to defence facilities. The RAF in 1585 to build the Spanish Armada. Note that he Museum, as an example, provides information about started three years before the date on which the fleet our former enemies. Surely there should now be was to set sail. considerable emphasis in all such information displays Between 1690 and 1815 Britain was involved in a on how these former enemies are now our allies. There semi-continuous global struggle, generally against France is a great misunderstanding by many young people on and Spain. In this period, spending on the Royal Navy these issues. I look forward to the Minister’s response consumed the largest share of government revenues, to this question. with the results that we all learned about in school. I Demonstrations, museums, and videos about modern am of course assuming that most of us come from an defence forces and their infrastructure should also era when such matters as Napoleonic history and the include displays and information about their use of Industrial Revolution still formed a part of the history technology and scientific developments, including systems curriculum. In 1814, the last year of the Napoleonic collaborating with our allies. An example is the large wars, the British national budget stood at £66 million, Airbus transport plane I mentioned, one of which is of which £50 million was spent on the war. The Navy used by the UK Prime Minister now, who, I am glad to spent £10 million, but Trafalgar was behind it; the say, no longer goes on a Boeing. Army, pre-Waterloo, spent £40 million; and another However, it is not realistic to pretend that our forces £10 million was spent on mercenaries from Austria depend only upon UK industry and technical products. and Prussia. For example, the Met Office, which provides world-class Post 1815, and during the 100 years or so of the Pax meteorology and environmental data and forecasts for Britannica, we were probably the most confident country the UK forces, benefits from information provided on the planet—confidence has been mentioned in through NATO from other forces, but it also provides several contexts. The peace was substantially maintained its information to allied forces—such as weather by the large but increasingly outdated Royal Navy. forecasting, which is now used by the US Air Force. It Defence expenditure fell steadily as a percentage of is important that technical defence collaboration between GDP, partly because of the vast rise in GDP itself NATO forces should not be impeded by the UK during the 19th century, but by 1900 it stood at just withdrawing from the current EU technological projects, under 4%. The arrival of Admiral Jackie Fisher as First which other noble Lords have mentioned. That may Sea Lord in 1904 saw a complete change in defence happen without considerable diplomacy. Perhaps the thinking. Fisher was convinced that war with Germany Minister could say how this issue is also being addressed. was inevitable, and set about modernising the Navy and Finally,there should be greater collaboration between preparing it for war with enormous enthusiasm. He UK defence scientists and those of our allies. When I retired for the first time in 1911, with the job done so was at the Met Office—perhaps it is not the case now— effectively that defence spending, at 3% of GDP, was there were none on the Defence Scientific Advisory lower than when he had arrived, due to the massive Committee, DSAC, and I hope that may have changed efficiencies and savings that he had been able to make by now. while completely renewing the battleship fleet. 203 Armed Forces Act Order 2017[21 MARCH 2017] Armed Forces Act Order 2017 204

Fisher had the public on his side. He was such a has been dangerously upset by the post-Cold War lull popular figure that, as he bullied Parliament into in military need. I also argue that the 2015 SDSR has supporting his new building programmes, the public quite possibly already reached its sell-by date, and that coined the phrase, “We want eight, and we won’t wait”, another serious look needs to be taken at our defence referring to yet another class of Dreadnoughts. As a needs rather than looking through the other end of the result, the Royal Navy entered the First World War as telescope—or periscope—at what we can afford when probably the only military arm in Europe ready for the all the other budgetary pressures have been contained. conflict, and defence spending at 3.15% of GDP. The SDSR addresses development but fails to address There is a magic quality to this figure of three; it crops personnel recruitment and retention to any great extent. up time and again. From 1920 to 1935 it remained fairly To quote the Secretary of State for Defence: steady at around 3%, before rearmament began in “Nothing is more important than defending our country and 1936. The arguments of Churchill and others surrounding protecting our people”. that process do not need rehearsing in your Lordships’ I offer another quotation, which I think came from the House; suffice to say that they were highly controversial Prime Minister: at the time. I apologise to your Lordships for reciting “The first duty of the Government is the defence of the all this history, but I hope my point is clear: we ignore people”. the lessons of the past at our peril. The visionary In conclusion, I point out that while we aim to Fisher managed to revitalise the Navy within 10 years— spend 2% of GDP on defence, Russia spends 5.4%, the but it took him 10 years, in an age far less technologically US only 2.3%—but of course from a vastly higher GDP advanced than today. The equally visionary Churchill base—China 1.9% and Saudi Arabia a huge 13.7%. I managed to get the ball rolling in 1936, although we have a final question for the Minister, which has were far from ready when the war started. already been asked: what consideration has been given In more recent times, we entered the Cold War in to removing the costs of building, maintaining and the 1950s with defence expenditure at 6% of GDP, and operating the strategic deterrent from the defence it was still at 4% by the early 1990s. Since then, the budget to its own separate vote? so-called Cold War dividend has had the psychological Other than all of that, the main issue that seems to effect of lulling the country into a false sense of come across from noble Lords’ speeches is morale and security, which is now, 25 years on, starkly apparent. recruitment—the hollowing-out of services personnel. Other speakers have detailed, and no doubt still more Equipment can and will be built and budgets will will do so, the effects of the obvious lack of “mass”—that provide for that, but we have to create an attractive is, numbers—manpower shortages, the reduction in enough platform for recruitment to bring enough people the procurement for stocks of weapons and equipment, into the services and benefit them in order to create and the scrapping of useful equipment because its the kind of task forces and numbers that we have been maintenance or manning cannot be funded. talking about. My principal point is that we must start to think the 6.38 pm hitherto unthinkable of casting aside some of the shibboleths of 21st-century expectations and politics. Lord Robathan (Con): My Lords, it is a pleasure to Today, real spending as a percentage of GDP, in follow the noble Earl. He brings nautical experience to figures that are not widely understood by the public, our discussions but I bring rather more of an Army includes the following figures: pensions at 8%, health bias. He is also a relative newcomer to this House. As a at 7.4% and welfare at 6%. Add all those together and relative new boy myself, I note that your Lordships’ you get one-quarter of our entire GDP. Education House has taken a bit of a kicking recently in the press gets 4.4% but defence gets 1.76% for pure defence but, having sat through most of this debate, I have spending and 0.25% for other things that have been been extraordinarily impressed by some of the excellent creatively accounted into the defence calculation. speeches, which have been interesting, well-informed and informative. It is of course invidious to mention We simply do not have 10 years, or even three, to names but I shall mention in particular the noble prepare for the next conflict that may be forced upon Lord, Lord Hennessy, and the noble and gallant Lord, us.Despite the rapid advance of technologies,development Lord Stirrup, who I thought spoke particularly well. I times have lengthened. Fisher built “Dreadnought”, am glad to see that the Secretary of State and indeed the first of a new type of battleship, in a year. The the chairman of the Select Committee from the House latest “Dreadnought”, the first of the successor class of Commons are both here listening. I hope that I can submarines, will probably take 15 years. It took 10 years live up to that high standard, though I rather doubt it. from project start to launch of the first Daring class I shall make two points. The first relates to the destroyer. The Type 26 frigate project began in 2010 standing of the Armed Forces, which was partially and the first vessel has yet to be ordered. The numbers covered by the noble Earl. The second is about the of both these projects have been halved since inception. current international situation, which was mentioned The Type 31 frigate—perhaps you could call it the other in the Motion, and our preparedness for it. half of the Type 26—is still a figment of the collective imagination. I could start on the Astute class submarine It is a cliché to say—quite rightly—that our Armed programme, but embarrassment for my old service Forces are highly regarded. When I was working in the forbids further comment. MoD, they were probably more highly regarded than they ever had been in my lifetime, largely because of The elephant in the room is clearly social spending Afghanistan, Iraq and the tragedies there. To digress, a in all its forms. While most would agree that such friend of mine in the United States army told me that, spending is only right and proper,I argue that the balance after Vietnam, he flew back into Los Angeles airport 205 Armed Forces Act Order 2017[LORDS] Armed Forces Act Order 2017 206

[LORD ROBATHAN] by the tour de force from the Minister about the and, as he walked out in uniform, he was spat at. I am strategic threats we face, which was backed up by the glad to say that we have never got to that stage noble and gallant Lord, Lord Stirrup. I know that my here and I hope we never do. In the same vein, about a noble friend the Minister is in a rather difficult position, dozen years ago, when there were elections to the US but we all value his support for defence. I was part of Senate, it was said that there was no elected senator the SDSR 2010, together with my noble friend Lord with a child who had served or was serving in the armed Astor and the noble and gallant Lord, Lord Stirrup. forces. Of course, there were people such as McCain The noble Lord, Lord Touhig, is absolutely right. It who had served themselves. In contrast, on the Benches was driven by costs. Some people tried to deny it at the here and in the other place, there are people who not time, but it was about cutting costs. I say to the three only have themselves served in the Armed Forces but Labour Ministers who have spoken so far today, that who continue to have connections through children the situation we inherited in 2010 across the public and relations who serve. This means that we are closer, finances was dire. There is no question about that, nor in many ways, to our Armed Forces than is the case in any point in arguing about it. Not only was it dire but, some other places. I am glad to say that it remains a in defence,there were unfunded procurement programmes respected career and attracts a high quality of both going forward which we estimated at some £30 billion officers and men. It remains a profession of which to to £60 billion. It was an estimate, since nobody could be proud. Parents can be proud if their children join tell us what the funding was because it was so chaotic. the Armed Forces. The last, coalition Government, and Philip Hammond in particular—for whom I worked—brought defence Lord Hunt of Chesterton: And women, indeed. spending under proper control. They should be congratulated on that and on the SDSR as well. They Lord Robathan: The noble Lord is, of course, an had the assistance of the Liberal Democrats. I see the academic.Itusedtobe“mankind”butnow,apparently,one noble Lord, Lord Wallace of Saltaire, in his place. He has to say “personkind”. When my son rang up and was also there with me. SDSR 2015 is a step in the announced that he was thinking of joining the Armed right direction but we need to go a lot further. Other Forces, his mother said, “Over my dead body”. She has people have said so too. changed her mind now, I am glad to say. It is not by chance that we have respected professionals in the My noble friend Lord Jopling, who is not now in Armed Forces.When I served, there used to be something his place, talked about Russia. I will not cover other called KAPE—keeping the Army in the public eye. strategic threats but let us home in on that. Nobody This is very important. Unfortunately,with the reduction has been held to account for the murder of Litvinenko in the Armed Forces over a number of years, we have 10 years ago—not a mile from here—nor for the seen, for instance, good barracks being sold. I recall downing of a civilian airliner over Ukraine by Russian Chelsea. Hounslow, also in London, is on the market missiles. The Baltic states have a joke: “Visit Russia, as, I understand, is Woolwich. Nobody quite knows before Russia visits you”. They are worried, and with what is going on with Hyde Park barracks. The point is good reason. The other threat, closely linked to Russia, that if you consign your Armed Forces personnel to is from cyberattacks. We have heard about whatever the back of an industrial estate, the respect they are happened during the US election. We have heard afforded is less. Messes have been contracted out. about Montenegro. These attacks are non-stop, What used to be regarded as a home, particularly for asymmetric and will grow. officers, is no longer seen as such. Pay and conditions I say to my noble friends on the Front Bench that have continuously been eroded over many years. the situation has changed. When I joined the Army in We have heard about morale. Morale is a bit 1974, we had a complement of 150,000 or so. Some amorphous. If you listen to some people, it is always 55,000 were in West Germany, with tanks, missiles, low.I used to think that if soldiers were not complaining tactical nuclear weapons and aircraft facing the East. about something, they probably were not happy. To We spent about 5% of our GDP on defence throughout put it mildly, recruitment and retention are not good the 1980s. Now it is around 2%. I will not dwell at the moment. We have an Army that is not recruited on how this is accounted for. We have only a vestige to its 82,000 target. I urge the Government to look at of the BAOR left. We do not expect invasion forces this whole situation. It is not about people pitying crossing the Elbe or the Rhine, but we should expect poor soldiers who have seen awful things in Afghanistan asymmetric warfare, as it is called, be it by “little green and Iraq, as we sometimes hear. They do not want men” such as we saw in Crimea and the Ukraine, or by pity; they want to be respected. It is not about politically undermining the Baltic states by winding up their correct issues and diversity, nor about bad conditions Russian minorities. We should remember that the Baltic in which people live, although these too are important. states are guaranteed by Article 5 and an attack on It is about feeling valued and respected by the society one is an attack on all. one serves. It is about being challenged by adventure As a country, we need a bigger stick, as does NATO. and excitement, seeing a future career and lifestyle Much has been heard about how NATO’s spending that can offer a decent life for oneself and one’s family, should rise; of course it should. We need to up our and doing a worthwhile job. This means the Government spending as well. I pay tribute to the Government— seeing the value of some things rather than just looking although it might not seem like it—and especially to at the cost. current Defence Ministers. I know what they think, but My second point, which has been covered much we need to go further. The Chancellor of the Exchequer more in this debate, is our response to the current had rather a bad week last week, but I believe he international situation. I was particularly impressed understands the need to spend more on defence. 207 Armed Forces Act Order 2017[21 MARCH 2017] Armed Forces Act Order 2017 208

We need to educate our public, our politicians and I get very worried by some of Trump’s language. government Ministers that defence is the first duty of When Trump starts advocating waterboarding again government. There is always the danger that old men—and and talks loosely on Twitter about the acceptability of there are quite a few in this place—look back through torture, I get extremely worried. How many new recruits rose-tinted spectacles at the good old days. We need a for extremism has he made by those few ill-judged, balance and to understand history. We could draw remarks? We therefore have a great responsibility as a analogies with the 1930s, to which the noble Lords, long-standing ally of the United States to stand firm Lord Hannay and Lord King, have referred. There is in our position and not yield an inch. I know from my some validity in this—disarmament, isolationism, long-standing involvement with people in the United aggression and invasion of small parts of countries, States that many will rejoice if we do that. such as the Sudetenland. I urge my Government to up The Minister is absolutely right to emphasise the defence spending so that the Armed Forces feel valued; unpredictability,instability and complexity of the situation. so it becomes an attractive career for young men—and It is unnecessary to mention all the places in the world women; and, most of all, to ensure that British interests which have been listed several times in this debate, but are safe in this deteriorating world situation. The first I am glad that we have also talked about migration— duty of government has always been the defence of refugees and displaced people—and climate change. the realm. We all need to remember that. Those two factors taken together might make anything we face at the moment seem like child’s play by 6.48 pm comparison. We have also touched on the issue of world trade—of moving from an ordered approach to Lord Judd (Lab): My Lords, the noble Lord was a phase of possibly aggressive free markets, without absolutely right to drawattention to the non-accountability that moderating influence. That in itself becomes of the Russians for their actions. I was for some years threatening. rapporteur to the Council of Europe on the conflict in I congratulate the noble Lord, Lord Empey, on Chechnya. One thing that drove me to despair was not raising another point. We must ask ourselves whether only their brutal behaviour but the way in which they the carriers as we now have them and Polaris as it now were recruiting for extremists. People were driven into stands are not distorting the expenditure of the overall the arms of the extremists by their behaviour. defence budget compared to the real needs and threats It has been a very interesting debate, due in large that we will face and the action we may need to be able part to the thoughtful and wise speech by the noble to take to contain those threats. I am not and never Earl and the firm and trenchant speech by my noble have been a unilateralist. I have always been a friend Lord Touhig. We should in debates of this kind multilateralist on disarmament, but we have to ask always take some time to pay the warmest, unlimited that question, because it would be unfortunate if we tribute to the men and women of our armed services, end up muscle-bound because we are unable to respond the security services and the police, who carry so much to the real situation and the demands made of us. responsibility in such demanding and exacting The Minister emphasised working with others. That circumstances on our behalf. will be desperately important. I can think of few I should perhaps declare an interest. I had a short situations in which we can even contemplate acting service ground commission in the RAF during the alone. All of them, including terrorism of course, Cold War. I was subsequently Minister for Defence demand international collaboration. Therefore, working responsible for the Navy, when we still had Service out new ways of collaborating with the European Ministers. Despite the awful circumstances, I found Union, continuing our close collaboration with France that a very fulfilling and enjoyable role. and others and playing our role within NATO is Surely the first thing we should do in debating crucial. defence is to examine and define the threat. We should Before I conclude, I mention one other point of not start by talking about percentages of expenditure. which I am convinced. If we are to talk about effective We should ask: what is the real threat that faces us? defence policy, we have to see the relationship between What should we be doing to respond to that threat? arms control and regulation of the arms trade as What does that demand of us? How much is it responsibly central. In the situation in which we are operating, essential to pay to respond to that? We sometimes with extremism and terrorism as a factor, we cannot forgo that debate, which leads to a great deal of afford any danger of lethal weapons ending up in the misunderstanding. What is the threat? wrong hands or weapons being used in a way that For most ordinary people, one of the biggest threats recruits extremists. We have to be certain of the end in their lives is terrorism and extremism. What does use of arms that are exported; we need to be certain of that demand of us? It demands extremely good, accountability. That is not an alternative. It is central highly qualified security services—we are deeply grateful to the defence programme. How are we recognising for all they do on our behalf. It also requires a great the danger and significance of armaments and ensuring deal of support from the police. However, we have to that we are not inadvertently playing into the hands of ask what leads people into extremist positions. We people who will exacerbate the terrifying issues with have always to remember that we are in a battle for which we are confronted? hearts and minds. This can at times be extremely exacting, but it demands the highest conduct in the 6.58 pm values that we proclaim because, if we slip from Lord Walker of Aldringham (CB): My Lords, as we them, we play into the hands of the recruiters for the have heard from many noble Lords who have spoken, extremists. we are living in a very troubled and insecure world— 209 Armed Forces Act Order 2017[LORDS] Armed Forces Act Order 2017 210

[LORD WALKER OF ALDRINGHAM] seen the sabre rattling of Russia with its latest modern militarily,politically,economically and socially.Everything battle tank and enhanced capabilities across the board— seems to be in turmoil. It does not matter where you and only the other day Iran announced the development look, the landscape is littered with issues that Governments of its own version of the Russian tank. and international institutions are finding it increasingly We currently claim to have a set of forces structured difficult to handle. In this Chamber, we pray daily for to be capable of high-intensity warfighting as part of peace and tranquillity in the realm. But we are clearly an alliance. In this type of warfare, operations are not doing enough. conducted in five dimensions: in and from the air; in So what does all this mean for our military in the and with the electromagnetic spectrum; on the land; second decade of the 21st century? The most pressing and, if sea is involved, with both surface and subsurface item on people’s agenda is Brexit. At first sight it operations. Our contribution would in effect be a seems to us that Brexit itself is unlikely to have a vast one-shot weapon which would consume most of our impact on our Armed Forces—certainly on their roles available resources. and tasks. We are firmly attached to NATO and expect In a recently leaked memo, the last commander of to be able to continue to co-operate with our European our Joint Forces Command cast grave doubts on the allies. More indirectly, there are big unknowns. What efficacy of this capability. Even if only part of what he will happen within and to our defence industries? How claims about the shortcomings in our strategic thinking, will a change in the value and exchange rates of the cybercapability and fragile naval, air and land capabilities pound affect our ability to fund the ever-increasing is true, our ability to fight a conventional war must be costs of procurement of military equipment and in doubt. At the same time, there is much uncertainty manpower? about all our allies in NATO increasing their defence Addedtothatisthespectreof theScottishindependence spending, as we have heard from so many noble Lords, referendum. Should it become a reality, there will and the impact that it might have on our US ally’s presumably be a requirement to give Scotland her intentions. Were we to engage in an endeavour requiring share of the combat units and vehicles,aircraft squadrons, us to deploy this capability and fail, we would be faced warships, intelligence, logistics and maintenance assets, with one of two very unpalatable options: either accept and of course to sort out our nuclear base at Faslane. defeat or resort to our nuclear capability. That will all take some doing. I wonder whether the A capability for high-intensity warfare is high on Minister will be able to give us a view as to the cost—and getting higher by the day.Once that capability Government’s thinking, should that happen. is lost, it takes a long time, a lot of money and a lot of The central lesson of our experience of the last training to reconstitute it. Moreover, if Scotland votes 60 years is that forces equipped and capable of prosecuting for independence, the repair bill will be large and warfare at the highest-intensity level are absolutely could come sooner than expected. Everybody agrees capable of less demanding operations. But the reverse that the defence of our nation is the first duty of our is not true. That is why our national engine is and must Government. I believe that that duty to maintain such remain warfighting. Indeed, the Minister referred to it a capability should be followed, whatever the future as full-spectrum capability, so that we can change costs may be. down through the gears when demands require it. This I will talk briefly about one other aspect because it equation is as much about organisational attitudes has been touched on by a number of noble Lords. It is and methods as about the physical fabric of our about our people. Being a service man or woman is capability, although the former is nothing without the not better or cleverer, or necessarily braver, than being latter. To use an Army analogy, the sort of mentality in another occupation—but it is different. That is that can position an armoured division tactically in an because we require our youngsters to be sent off at a area equivalent to that inside the M25, supply it with moment’s notice to a place they may have difficulty 70 tonnes of food and 1,600 tonnes of ammunition on finding on a map, where they are required to risk life a daily basis and then use some 30,000 to 40,000 men and limb alongside an ally whose language they may and more than 10,000 vehicles to destroy or defend not be able to understand and in defence of an issue against an enemy at night, should be able to burn a that they may not even have begun to grasp. In this few sheep when everyone else is panicking. distinctive chemistry of the military world, men and However, you cannot hope to keep the peace if women, as we have already heard, wish to be valued. those who threaten doubt your will or your ability to They wish to be valuable as well. They are paid folk wage war. They will laugh in your face. Contingencies and they have a contract that takes them to the door of in which the enemy is an abstract noun, such as famine, death. terror, poverty and disaster, may be more likely at Nothing about the future suggests that tomorrow’s present, but we must never forget that we still have service men or women will have to be any less brave, potential enemies whose senses are stimulated only by less physically and mentally tough or less resilient than the weight of conventional force brought to bear on their predecessors. There will continue to be a premium them—and there are more than 120,000 main battle on the men and women who are prepared to put up tanks out there. High-intensity warfare is, thankfully, with the dreadfulness of an environment that is at best relatively low on likelihood, but we should not forget exceptionally unpleasant. There will be an equal premium that we used a version of this capability as recently as on those leaders capable of persuading others to accept the Gulf War in 1991 and again in Iraq in 2003—although that dreadfulness. thankfully both times against a very weak enemy. But These folk have hardly been highly rewarded by the the risk level has gone up a notch or two, as we have nations they have defended. The New Model Army of heard, particularly in the last couple of years. We have the 1640s—the most reliable force to emerge from the 211 Armed Forces Act Order 2017[21 MARCH 2017] Armed Forces Act Order 2017 212

English Civil War—was eventually driven to oppose states, possibly by using Russian-speaking minorities the Parliament for which it had fought so well by the as an excuse, as other noble Lords have said. I warmly fact that its pay was in arrears. Time and again, applaud the Government for not being overreactive servicefolk, who have been perfectly prepared to face and provocative and for avoiding the trap of deploying physical risks, have sulked, grumbled or even mutinied at medium scale. A battalion group lays out a thin red over pay and conditions. The feeling that their country line, or trip wire, while avoiding the expense of deploying is not honouring its part of the contract or the fear at medium scale, which would fix a large proportion of that the well-being of dependants is threatened, strikes our deployable combat power.At the same time, Mr Putin at the very basis of their loyalty. It is indeed ironic that is incurring the cost of having large numbers of troops our country has oft been best defended by those who deployed, or at least at high readiness. However, we owe it the least. need to take special care to monitor the position of In 1957, when conscription ended, the Regular Russian-speaking minorities, as referred to by my Armed Forces were some 700,000 strong; the defence noble friend Lord Jopling and other noble Lords. budget was some 7% of GDP; and the average per Several noble Lords have referred to difficulties capita cost of a service man or woman was some with the carrier programme. Yes, it is a capability that £41,000. By 2011, we had shrunk to186,000; the defence we do not yet have in place, but when we do have full budget was just over 2% of GDP; but the average per operating capability it will be game-changing. Of the capita cost was some £220,000. The full-time trained western states, only the Americans, the French and we strength as of December last year had dropped to just will be able to deploy a carrier battle group to support over 139,000—some 4% below establishment. The jury a brigade deployed out of area. We should be positive is out on whether full manning can be achieved. and look forward to the increased capacity to be a Today, after the last SDSR, one of the main areas force for good when the carriers come on stream. They in which savings are being sought is in personnel. are not in service today, but we do not face an existential Military pay will increase by only 1% over the next threat today. It is perfectly clear, however, that we do four years—well below projected levels in the private not have enough surface warships or submarines and sector. For a private soldier this is 1% on £18,000—some we need to do something about this. Perhaps addressing £7,000 below the national average. Service allowances this concern properly will be unavoidable when the are being targeted for savings, and the 30% savings in carriers start being deployed. The noble Lord, Lord numbers of MoD civilians could well require backfilling Empey, suggested that we might have to deploy two with military personnel. There are, too, concerns about carrier battle groups at once. Clearly, we could always the legal pursuit of 60 year-olds in Northern Ireland, have one carrier available, but I believe there is no as we heard from the noble Lord, Lord Astor, the intention to operate two groups at the same time. We damage done by the IHAT allegations, and concerns do not have the resources to do that. about service accommodation and work/life balance. I Many noble Lords have talked about manning, believe that we need to do better for our people, for it which is of great concern to me and others. I am seems that our country still seeks to be best defended content for Regular Army phase 1 soldiers to be by those who owe it the least. counted as part of the trained strength of the British Army. This is because most of them will be trained to 7.09 pm a basic trade standard quite soon—in most cases Earl Attlee (Con): My Lords, I remind the House of within, say, six months—after phase 1. In addition, my somewhat technical interest. I support the Motion they would have some military utility even if not fully in the name of my noble friend the Minister. I echo qualified at trade. Furthermore, in a period of heightened some of the observations about Russia made by my international tension it would be possible to retain noble friend Lord Jopling. We know that it is an fully trained regulars currently in service, especially in economic basket case with a GDP equivalent to that terms of PVR and manning control points. The same of Italy. It makes little that is good enough to export cannot be said for a phase 1 trained reservist. I have to to the rest of the world, apart from armaments, and is be blunt: they may well have attended only a few far too reliant on mineral wealth. To cap it all, it has a training weekends prior to a two-week recruits’ course. perfectly rotten system of justice and the rule of law, Conversely, a regular’s phase 1 training course would which will make it very hard for ordinary, decent be about 15 weeks. After reservist recruits’ course, Russians to construct a healthy, modern economy. The they will attend a few weekend training exercises, but right reverend Prelate the Bishop of Leeds made important they will gain military experience at a painfully slow points about the nature of Russia and its population. rate. They will really learn to be effective only after It is also important to understand that the Kremlin’s they have completed their initial trade course and at map of the world will look very different from the one least one annual camp. Anyone who thinks that a in the Ministry of Defence. Its leader has no regard phase 1-trained reservist has military utility is living in for an international rules-based world order and, a fool’s paradise. unfortunately, many of his population hold him in Everywhere I look outside defence, there is a problem high regard. That might change, however, if his armed with insufficient professional and technical engineers. forces took a number of casualties. In other words, Pay has been more or less frozen everywhere in public Mr Putin cannot afford to get a bloody nose. service and conditions reformed—we know what that Russian armed forces have some good capabilities means. Forgetting the problems with MPs and Ministers, but they are not balanced and have weaknesses as we see problems with getting QCs to be judges because well. Mr Putin’s strategic objective must be to break the pay is so poor that it is not worth doing. In up NATO and Article 5 by intervening in the Baltic Parliament, we have problems recruiting IT technicians. 213 Armed Forces Act Order 2017[LORDS] Armed Forces Act Order 2017 214

[EARL ATTLEE] I declare an interest as a former council member of We face similar problems in the Armed Forces. You the International Institute for Strategic Studies, because can have public sector pay freezes for only so long. the starting point of my contribution is the conclusion Careers advisers have a duty to school leavers to brief reached in the most recent publication in its Adelphi them honestly about career opportunities and the series, entitled Harsh Lessons: Iraq, Afghanistan and likely rewards. The Armed Forces simply do not have the Changing Charter of War, in which, as a former as good an offer as they used to. The Treasury appears soldier, I found it sad to read: to be interfering with the implementation of the “In both Iraq and Afghanistan, the United States and its allies conclusions of the Armed Forces’ Pay Review Body. I came extremely close to strategic defeat, due to inadequate leadership, agree with everything said by the noble Baroness, reconstruction efforts, political strategy,military strategy,operational Lady Dean. concepts, tactics and equipment. These shortfalls combined with failures, at every level, to adapt quickly enough to unforeseen There is something else that parents and careers circumstances, provided opportunities that were exploited by advisers need to take into account. The Armed Forces insurgents and militias”. were always a hard taskmaster. Nevertheless, a good serviceperson could be confident that, if they did the These are harsh and sobering words, particularly in right thing—especially on operations—they would be the context of today’s uncertain world, when the United backed by the chain of command and, ultimately, by Kingdom, whose Armed Forces are now weaker than Ministers on behalf of the sovereign. That is no longer at any time in the last 200 years, has embarked on the case: noble Lords need only to think about the leaving the Union of its closest geographical allies. IHAT inquiry. It also does not seem to be a problem to The other interest that I must declare is as a member torment an old-age pensioner about some incident of the Joint Committee on the National Security that occurred decades ago, which was thoroughly Strategy, in which capacity I have already voiced my investigated by the authorities at the time and many of concern that—despite the lessons of the imperfect the witnesses to which have since sadly passed away.There 2010 strategic defence and security review, and in is nothing wrong with our Ministers, but for one defiance of their undertaking to base SDSR 2015 on reason or another they are powerless to intervene. the national security strategy—the Government published Serving on military or aid operations is a risky both at the same time. I submit that, in the light of business, so we need courageous, able and prudent Brexit, SDSR 2015 is now out of date and ought to be risk-takers for this activity. Defence Ministers may reviewed. Of course, we remain a member of NATO, point to reasonable recruiting and retention figures, but it is feeling the draught of President Trump’s but I fear that prudent risk-takers will shy away from variance from the long-accepted wisdom that the provision the Armed Forces and the gap in numbers could, to of a large NATO commitment is vital for the security some extent, be made up with—shall we say?— of the United States, and not merely a favour to not such good quality.Of course, it will be exceptionally Europe. difficult to measure the difference, and impossible for The most visible evidence of that membership is the the Treasury. 2% of GDP that we guarantee to spend on defence—to I will say a few words about the need for large-scale— the inadequacy of which, in real terms, I am not more than one brigade—overseas deployment exercises. surprised that so many noble Lords have drawn attention. The whole point of having credible Armed Forces is to I note, too, that, in this year’s Military Balance, the be able to deter aggression. It is immaterial how much IISS has suggested that spending amounted only to is spent on defence if your opponent is not convinced 1.98%, because the actual amount is blurred by pensions that you can inflict unacceptable harm on him using and other associated, rather than actual, costs. In this conventional forces.There is also the risk of overestimating connection I must repeat what I have said many times one’s own readiness and capability and then overlooking in this House: namely, that, like the noble Lord, Lord any weaknesses. Of course these exercises have a marginal West, I regret the coalition Government’s decision to cost, but it might be better to spend slightly less on lay the cost of the nuclear deterrent on the defence capability and more on exercises if one can increase budget. I have also mentioned Field Marshal Lord one’s conventional deterrent effect. In this connection, Carver’s two definitions of affordability: whether you I pay tribute to my noble friend Lord Astor of Hever can afford something, and whether you can afford to for his work with Oman. I look forward to the Minister give up what you have to give up in order to afford it. I making an announcement about Exercise Saif Sareea suggest that the question of whether you can afford to at some point in the future. give up capabilities such as the size of the Army or the The world is far less stable than in the early 1990s, number of surface ships needs to be re-examined in when I first made a contribution to a defence debate in the context of today’s uncertainties. your Lordships’ House. Nevertheless, we should be Currently, the West, including both NATO and the proud of what we do and aspire to do even better. EU, are preoccupied with the production of cohesive responses to the various challenges being posed by Russia. In theory, this should encourage European 7.19 pm states, including the United Kingdom, to increase Lord Ramsbotham (CB): My Lords, in addition to their focus on defence, including defence spending. adding to the tributes to the noble Earl, I congratulate However, rather than just spending more, they need to the noble Lord, Lord Sterling, on his persistence in spend more smartly. Boosting R&D and equipment trying to persuade the Government to hold this debate— spending, and driving industrial collaboration, will the first one in which I have taken part whose title prove, in the long term, to be much more useful than comprises three separate subjects. simply aiming to meet arbitrary financial targets. 215 Armed Forces Act Order 2017[21 MARCH 2017] Armed Forces Act Order 2017 216

Post Brexit, I hope that the United Kingdom will globalist—has been at the heart of the international still be able to play a part in EU security structures. rules-based project. From the start, British Armed Europe’s defence R&D has long been fragmented, Forces, diplomats and lawyers devoted their lives’ with only minimal co-ordination and collaboration. work—and, sometimes, their lives—to build and protect But, in light of the European Commission’s plan—as the many institutions and values which are now part of the European Defence Action Plan—to boost unremarkable set pieces on the international landscape. defence procurement and establish a European defence fund for defence technology and equipment R&D, I Those values have guided our foreign policy for hope that we will also maintain access to EU-wide generations: the rule of law; respect for human rights science and technology developments. and the dignity of all people; and international relations driven by process, diplomacy and rules, rather than The only word one can use with certainty about the shows of aggression and force. This liberal international future is “uncertainty”. Currently, the NSS Joint order has not only allowed us to bend the arc of Committee is conducting an inquiry into the national history towards ideals we believe are right—it has cybersecurity strategy, in the context of which I have striven to move the world away from the games of been thinking about the whole concept of deterrence, “great powers”, wars of aggression and the rule of the to which cyber adds a new factor. Deterrence must strong. The institutions that have arisen out of this have a strategic goal of preventing crisis, not just post-war international order—many of which the UK responding to it. But what is required to wage deterrence helped to build and lead—have also directly benefited today is more complex than in the days of the uncertain the lives of UK citizens. stability of the Cold War. It includes not only operational analysis, strategy development, planning and execution, Nowhere is this truer than when it comes to defence but understanding and achieving the integration of and security. Our leading roles in the UN Security hard and soft power. In addition, Governments need Council and a host of other key international institutions to understand the potential uncertain regional and have allowed us to shape the international discourse. global effect that deterrent actions may have on NATO—and other treaty organisations designed to actors other than the adversary, including allies. More promote collective security—has allowed us to spend significantly, the rise of non-state threats and the less on defence while still being able to defend ourselves pursuit of offensive cybercapabilities and long-range and our interests abroad. precision conventional capabilities by some nuclear-armed states bring further risk and uncertainly to the efficacy In short, international laws and institutions have of nuclear deterrence. made the world, on aggregate, safer and more peaceful. Overall, that world is a more tolerant, wealthy and In addition to nuclear and cyber, we must not forget democratic place than the world of our parents and that conventional levers playan essential part in promoting grandparents. Britain’s place in this world has been our defence and security interests. As so much has assured, and the rules-based system has promoted the happened in the interim, it is easy to forget the so-called norms and values that have made that possible. That revolution in military affairs and its presumption that, order is as much a part of our defence as our Armed “greatly improved surveillance, communications and precision-strike Forces and intelligence services. It is not possible to weapons would produce superior knowledge of the enemy and better-targeted and more effective strikes and manoeuvre, allowing calculate the immense value that we reap from them a modernised and networked force to defeat a larger but less year on year. Yet we have heard many times today that modernised one”. this international order is under threat, and I feel it—a That was announced only in 2001, before the burgeoning protective safety net for seven decades, not guaranteed of wars among the people. Sadly, it will be some time to last another. before British forces are modernised sufficiently for Nor is it clear that we have the capacity to defend it. our contribution to NATO’s readiness action plan to It is clear that without today’s order we will not even allow a credible full-time spectrum combat capability have the capacity to defend ourselves. We must treat against a peer competitor such as Russia. threats and challenges to the international system as Returning to my earlier point about the size of the seriously as we treat direct threats to our own security. Army, any plans to increase the size of the forces we Some of those challenges have arisen naturally. We can deploy overseas—and the speed with which they live in an era of huge progress—the pace of change can deploy—as many other noble Lords have pointed near inconceivable to the international order’s architects out, are more likely to be limited by personnel numbers of the 1940s. Fast-paced developments have transformed than equipment availability. If we are to meet the international relations,armed conflict and the relationship challenges to the international rules-based order, and between individuals and states. increase our preparedness to satisfy defence and security interests, I agree entirely with my noble friend Lord Many noble Lords have spoken about developments Hennessy that we should take a cold, hard look at the in cyber technology which have left our infrastructure future, starting with an examination of whether the and secrets vulnerable. The expansion of the use of SDSR 2015 is fit for purpose. drones in conflict has put pressure on laws of armed conflict and human rights norms. The proliferation of technology allows individuals to threaten national interests 7.28 pm inexpensively. If the rules-based order is to avoid Baroness Jolly (LD): My Lords, over the last seven slipping into irrelevance and if our place on the world decades, the liberal international order has been a stage is to be assured, we must develop new international bedrock for promoting global stability and prosperity. laws—and reform old ones—to meet the challenges Throughout my life, this nation—outward-looking and brought by change. 217 Armed Forces Act Order 2017[LORDS] Armed Forces Act Order 2017 218

[BARONESS JOLLY] Lords have alluded to the 1930s. These demands are But not all of today’s challenges to our world order not compatible with the globalism, the multilateralism originate from the changing times. Wemust acknowledge and the idealism of shared values upon which our that there are those who seek to damage and destroy post-war order was built. the system. Vladimir Putin’s Russia has set out to Brexiteers and Trumpeteers alike have railed against aggressively delegitimise, discredit and undermine western institutions which have secured us for decades: the policies and institutions, as well as the entire post-Cold EU, the WTO and NATO—all have come under fire. War norms-based security order.International institutions We must commit ourselves to a political fight to and the entire European security architecture stand in protect those institutions which keep us safe. Though the way of Russia’s strategic aims, and Moscow is an inward-looking or isolationist foreign policy may determined to undermine and render them irrelevant. be comforting for many, the challenges that we face in At the same time, Russia is a repeat violator of today’s complex world cannot be solved by going it international laws—be they human rights laws, laws of alone. Tomorrow’s global powers are not guaranteed armed conflict or treaty laws—in its domestic actions, to share our values and most certainly do not share in its annexation of the Crimea, in Syria and across our interests. Preserving institutions which promote cyberspace. The noble Lord, Lord King of Bridgwater, the international rule of law and prevent the worst pondered how to deal with the Russians, and the noble excesses of power politics must be as important to our and gallant Lord, Lord Stirrup, had the answer: we defence as building new ships. Today, our building have to start by talking to them. blocks of peace and security are our alliances, our global institutions and an international order which But Russia is not alone. In the South China Sea, resolves most disputes without shots fired. China has taken “nation building” all too literally; Syria uses chemical weapons with alarming frequency; This is not idealism. The number of international and then there is North Korea. Other nations watch armed conflicts has fallen decade on decade since the abuses and annexations, and they wonder whether 1945, and the number of deaths as a result of war has they might reap similar results with impunity. How fallen consistently since the 1970s. Britain is a world- much chipping away can the rules-based order take leading soft power and has the hard-power levers before it is damaged beyond repair? The rise of non-state which come with permanent membership of the UN players such as the Taliban, Boko Haram and Daesh Security Council and key roles within NATO. These ignores the rules-based order altogether. levers must become our “smart power” to preserve the international rules-based order. But more than that, However, our soft power—second to none—can get the UK should take the lead in working to develop us only so far in defending those structures and laws those institutions and rules to suit modern realities. which have kept us so safe through our lives. In 2017 it Technologies may change but our commitment to is not clear that we have the capacity to defend vital values such as internationalism, openness, human rights interests or deter enemies. We must acknowledge that and peacebuilding should not. our Armed Forces have been hollowed out, and other noble Lords have spelled this out in detail: we have spent too little on defence, taking the peace dividend 7.38 pm for granted; that which we have spent has sometimes Lord Rosser (Lab): My Lords, as one could have been spent unwisely on pet projects built for yesterday’s safely predicted from the speakers list, this has been an wars; and we face a chronic shortage of personnel—young informed and thoughtful debate, during the course of people do not see a future with our Armed Forces as a which a number of different concerns have been raised, lifelong career. We may have state-of-the-art fighter to which no doubt the Minister will respond shortly. jets and capital ships but, without the men and women and funds to run them efficiently, we may struggle to As my noble friend Lady Dean of Thornton-le-Fylde defend our interests abroad. reminded us, the 2015 spending review and Autumn Statement said that the Government would invest Our Armed Forces are our national insurance policy £11 billion in new capabilities, innovation and the or our pension pot. Spending today is less painful and defence estate, of which some £7.2 billion would come expensive than spending when it is too late. Spending from efficiency savings.Those efficiency savings apparently on defence in a world of international rules, international included military and civilian pay restraint, which is institutions and NATO is much cheaper than spending an interesting definition of the word “efficiency” and, in a world without them. However, a great deal has as has been said, will inevitably have repercussions for changed since the 2015 SDSR. In the light of post-Brexit recruitment and retention, as well as for morale. In the currency fluctuations, a new spending review might be light of views expressed by the Joint Committee on the in order. The risk calculus from global threats is also National Security Strategy that the savings target presented different. There has been a great bonfire of the post-Cold “a significant risk” to the delivery capabilities set out War certainties these past few years, and our procurement in the strategic defence and security review, and a must be adjusted to address this. Of course, there is statement in a Royal United Services Institute paper also Brexit, and I thank my noble friend Lord Wallace that the Ministry of Defence is “struggling” to produce of Saltaire for so ably describing the possible impact the efficiency savings required, can the Government of our leaving the EU on our defence. say where those efficiency savings will actually come However, there is a third kind of threat to the from, and when? rules-based order. Throughout the West, populists In July 2015, the Government stated that they and nationalists are urging their populations to turn would meet the properly measured NATO pledge to inward, cut ties and put themselves first—several noble spend 2% of national income on defence every year of 219 Armed Forces Act Order 2017[21 MARCH 2017] Armed Forces Act Order 2017 220 this decade. However, concerns have been expressed the UK’s average proportion of GDP devoted to about how the 2% spending target is measured—not defence expenditure dropped from 2.6% to 2.1% between least by the House of Commons Defence Committee, 2010 and 2015. which stated that the Government had achieved their A further factor impacting adversely on the level of commitment to spend 2% of GDP on defence partly defence resources is the weaker pound, which appears by revising the criteria used to calculate the UK defence to have been the result of Brexit, and with it an budget reported to NATO so that it now included increase in the cost of defence imports. The National expenditure that had not previously been included but Audit Office expressed concern about that issue in a had been being incurred, such as, but not exclusively, report the other day. Can the Minister say what the fall pensions. According to the House of Commons Library, in the value of the pound since the referendum vote the Government’s Ministry of Defence net cash would mean in additional defence import costs over requirement for 2015-16 was £36.4 billion, compared the next five years, if the value of the pound against to the £39 billion on the UK’s NATO return. No other currencies were to remain unchanged? One estimate doubt the reason is that the NATO return includes from a Royal United Services Institute source has elements of the Government’s cybersecurity spending, suggested that, if the decline in the pound is sustained, parts of the Conflict, Stability and Security Fund the cost of our defence imports could increase by relating to peacekeeping, war pensions, and pension around £700 million per year from 2018-19—or around payments to retired Ministry of Defence civil servants. 2% of the total defence budget. However, creative accountancy and moving items Concerns have been expressed by the Joint Committee from one set of accounts to another will not ease the on the National Security Strategy about the ability of pressures on our Armed Forces, at a time when the our Armed Forces to fulfil the tasks given to them in world hardly seems to be becoming a stable and more the National Security Strategy and Strategic Defence secure place, with the threats to our country and our and Security Review 2015, in the light of the capabilities, interests diminishing rather than increasing. The manpower and funding allocated. A recently retired Government anticipate moving more items from one head of the UK’s Joint Forces Command was reported account to another in future years, in a bid to stick to last autumn as having said that the capability of our their commitment to increase defence expenditure by Armed Forces had been “withered by design”, and 0.5% annually over the next five years and keep pace with that there were capability shortfalls, dependence on meeting the 2% NATO target. Under the Government’s small numbers of highly expensive pieces of military projected growth targets, in terms of GDP defence equipment, and dangerously squeezed manpower. expenditure is likely to fall below the 2% figure by On top of this, we now have the potential impact of 2020-21, which means that fulfilling the 2% commitment leaving the European Union, which must surely have will require further financial contributions. Could the an impact on some of the assumptions and strategies Ministerindicatewhatthosefurtherfinancialcontributions in the 2015 strategic defence and security review, to to meet the deficit are likely to be, if the Government’s which the noble Lord, Lord Wallace of Saltaire, referred, most recent projected growth targets are hit? as well as on our foreign policy objectives, to which the The Government have already indicated that the SDSR should be closely related if we are to ensure deficit will be met by an additional inclusion of intelligence that the money spent on defence is spent on the right funding, on the basis that a significant proportion of things. Do the Government have a view on whether the annual expenditure that funds the UK intelligence our withdrawal from the EU will have an impact on agencies is in support of military activities, with further the tasks set out for our Armed Forces in the National sums coming from the new joint security fund, which Security Strategy and Strategic Defence and Security provides money for security-related activities. Again, Review 2015, and on our present alliances? If so, do this does not represent additional resources available they anticipate that fewer or more resources will be for increasing or even maintaining the capabilities of required by our Armed Forces to carry out their future our Armed Forces. It is simply moving existing items role post Brexit? Or is this another Brexit-related issue of expenditure around, from one account to another, on which the Government have no public view at all, in order to be able to claim that the percentage expenditure despite the fact that the Foreign Secretary has already commitment has been met. opined that we are now back east of Suez? The noble Lord, Lord Hennessy of Nympsfield, spoke about the Could the Minister say how much additional money need to reassess, determine and clarify our future role would have been available for enhancing the capacity and place in the world as it has become today. and capabilities of our Armed Forces if the additional money to bring us to the 2% of GDP figure on defence Before concluding, I would like to place on record spending had been new, additional money, and had once again our admiration for, and gratitude to, the not been achieved by including in the figures items of members of our Armed Forces, who protect our nation expenditure already being incurred but previously not at home and our interests abroad, and in so doing are included in the total? prepared to put their own personal well-being and safety on the line. As my noble friend Lord Touhig The reality is that defence spending has fallen, even said, the most valuable asset our Armed Forces have is taking into account the latest accountancy wheezes. the men and women who serve. Yet the 2016 continuous The House of Commons Library has calculated that, attitude survey revealed that only one in three of between 2010-11 and 2015-16, defence spending as forces personnel believes they are valued, with just one measured by the UK’s NATO return has, as my noble in three planning to stay in service as long as they can. friend Lady Dean of Thornton-le-Fylde pointed out, The noble Lord, Lord Robathan, referred to that been reduced by 6.9% in real terms. Using NATO’s data, issue. 221 Armed Forces Act Order 2017[LORDS] Armed Forces Act Order 2017 222

[LORD ROSSER] the role that I occupy in government, I carry with me One of the concerns that has often been expressed the reassurance that on all Benches in this House, in this House is how we address the issues faced by without exception, there is unshakable support for the many veterans—issues related, for example, to health, men and women of our Armed Forces and a passionate to employment and to housing. On the issue of housing wish to ensure that they are led, equipped, trained and for veterans, I want to refer to recent reports about the looked after to the highest standards in a way that disposal of parts of the defence estate and accommodation enables them to fulfil, credibly and well, the tasks in London, and apparent suggestions that it might be placed upon them by government. It is not surprising, sold off and developed as up-market luxury housing with so many contributors and a Motion that is so or offices. What are the Government’s intentions in deliberately broad in its scope, that the subject matter respect of the disposal of parts of the defence estate in of your Lordships’ speeches should have been equally London? There is a shortage of accommodation for wide-ranging. I shall do my best, as I always do, to those on low incomes in central London, not least respond to as many noble Lords as I can in summing among veterans, despite the fact that London is a up. All questions asked of me will receive an answer, major centre for jobs and employment. Can the Minister either today or in writing afterwards. give an assurance that, where parts of the defence Let me start with some key aspects of the big picture estate, particularly in central London, are disposed of, and, first, the topic raised by a number of noble every effort will be made to ensure that it is developed Lords: the UK’s defence budget. Not for the first time to provide low-cost housing for Armed Forces veterans, the noble Lord, Lord Touhig, raised questions around and not sold off to be developed only for those with the 2% spending target. In particular, he cast doubt on great wealth, whether from this country or from abroad? whether we are genuinely spending 2%, a question When it comes to considering bids, there can surely be echoed by the noble Baroness, Lady Crawley, and the no higher bidders than Armed Forces veterans and noble and gallant Lord, Lord Stirrup, who urged us to those on low incomes. spend more, as did my noble friends Lord Sterling and My noble friend Lord Touhig asked a question in Lord Robathan, the noble Earl, Lord Cork and Orrery, his opening contribution from these Benches, to which and the noble Lord, Lord Ramsbotham. Let me remind the Minister will no doubt respond. He pointed out the House that we spend in excess of the NATO that Labour in government committed resources to 2% minimum and are pledged to increase our defence the defence of Britain, and spent on average 2.3% of spending in real terms year on year during this Parliament. our GDP on defence between 1997 and 2010—a figure, incidentally, well below that called for by the noble ThenobleLords,LordRosserandLordTouhig,accused and gallant Lord, Lord Stirrup, in this debate. My the Government of creative accounting. As they would noble friend asked whether the Government would expect me to say, we do not accept those accusations. now give a commitment to match that figure of 2.3%—and The House of Commons Defence Committee’s own not through more creative accounting—in the light of report on the matter confirms that all UK spending on the many new challenges we now face. My noble defence, including intelligence, cyber, war pensions friend referred to those challenges in some detail. and others, falls firmly within NATO’s guidelines. Given They include cyber conflict and cyber warfare, and that defence spending will increase by £5 billion over they mean that the world can hardly be described as a this Parliament, it is nonsense to suggest that there is safe place today—as the Minister himself recognised, no new funding. Our plans will deliver more ships, and on which subject the noble and gallant Lord, moreplanesandmoretroopsatreadiness,betterequipment Lord Stirrup, my noble friend Lord West of Spithead, for Special Forces and more on cyber, to help keep and the noble Lord, Lord Howell of Guildford, among Britain safe. others, spoke so powerfully. However, I want to be fair. The question posed by a Particularly in the current climate of significant number of speakers is, essentially, whether 2% is enough change and uncertainty, it is vital that we are clear for the UK to be spending. First, the noble Baroness, about the role and capabilities of our Armed Forces in Lady Dean, rightly reminded us that 2% is a base figure. protecting our nation and meeting our foreign policy However, the commitment to spend at least 2% of goals. It is equally important that we then provide our GDP on defence came after a thorough examination Armed Forces with the necessary resources, manpower, of threats and risks, after which the Government training and skills to undertake effectively the objectives decided on an appropriate level of funding. I acknowledge we require them to meet and deliver. Doubts have the honourable motives of noble Lords who urge us to been expressed today about whether that is what is spend substantially more. However, I challenge the happening in reality,and we now await the Government’s Government’s critics to show how the strategic defence response to the many questions and concerns that and security review failed to set out a clear and affordable have been raised by noble Lords in this debate. strategy for delivering one of the most capable Armed Forces in the world. That was our aim, and the SDSR 7.50 pm did that by including an expeditionary force of 50,000 by 2025, £1.9 billion for cyber investment, new capabilities Earl Howe: My Lords, it is a mark of the experience for Special Forces and a commitment to spending more that resides in this House that we have had the privilege than £178 billion on equipment and equipment support, of listening to so many well-informed, constructive which is £12 billion more than in previous plans. and well-argued contributions to this debate today. It has been a truly memorable occasion in that sense. I The noble Lord, Lord Rosser,and the noble Baroness, begin by thanking most warmly all noble Lords and Lady Dean, referred to the drop in the exchange rate noble and gallant Lords who have spoken. In fulfilling since last year. I can tell them that we built headroom 223 Armed Forces Act Order 2017[21 MARCH 2017] Armed Forces Act Order 2017 224 into our forward plan to use in the SDSR, and that is equipment programme already delivering and we will what we did. Wehold more than £5 billion of contingency be making improvements to our cyber and intelligence in the equipment plan against an independently assessed capabilities well before the next Parliament. Policy financial risk of £4.8 billion. The forward purchase of changes, particularly innovation and efficiency, will foreign currency at agreed prices has provided cost take root immediately, as will international by design. stability in the early years of the programme. Longer-term Let me follow the latter theme. The noble Baroness, challenges will, if necessary, be met through the normal Lady Crawley, drew attention to the UK’s relationship planning process. with our most important ally, the United States. The In addition, the noble Lord, Lord Rosser, rightly UK and the US have the broadest, deepest, most referred to the MoD’s efficiency target. We have a advanced defence relationship of any two countries. demanding target, as we should, given the Government’s Our collaboration extends across the full spectrum of objective to drive down the deficit. We are absolutely defence, including intelligence and nuclear co-operation, focused on delivering it. scientific research and flagship capability programmes. This has continued under the new Administration. The noble Lord, Lord Empey, questioned our The Defence Secretary spoke to US Secretary of Defense, commitment to spend 0.7% of GDP on overseas Jim Mattis, on his first day in office. They had a development aid. The rationale for this is to enable substantial bilateral in the margins of the February government to prioritise prevention and preparedness NATO Defence Ministers meeting and teams are looking in fragile states and regions. By doing so we build at a future meeting in the next month. We have shared stability and tackle the root causes of conflict as part priorities. President Trump, Vice-President Pence and of a whole-government approach to national security, Secretary Mattis have all confirmed the US commitment alongside diplomatic, defence and law enforcement to NATO. I am sure that will be welcomed by my capabilities. That is particularly important for countries noble friend Lord Jopling, whose speech I listened to and regions at risk of instability. These strategies are with particular care and attention. co-ordinated and owned by the National Security Council. An expanded Conflict, Stability and Security Similarly, no one can listen to the noble Lord, Lord Fund now exists to direct cross-departmental effort in Hennessy, without paying careful attention to his advice. fragile states, and the MoD is able to draw from that. I listened to the noble Lord’s reflections about the UK’s place in the world with great interest and I noted I was grateful to my noble friend Lord Attlee for his with care the rationale he advanced for establishing a helpful comments on military capability.On that theme, royal commission. However,although eloquently argued, let me address my noble friend Lord Sterling’s concerns I cannot agree with his characterisation of the UK as about hollowing out and shortfalls in capability. No a destabiliser nation. Our exit from the EU does not one in this debate has referred to the clear plan set out equate to a retreat from the world stage—quite the in the SDSR 2015 of Joint Force 2025. The key to reverse. The policies that we committed to in the last understanding this concept is a simple proposition: it SDSR will bring us into closer co-operation with a is to strengthen our Armed Forces while increasing wider range of allies and partners. Brexit does not their adaptability. Joint Force 2025 is designed to meet change that. It reinvigorates—it does not diminish—our the more complex real-world challenges of today and capacity to bring stability to the vexing world that he to provide a greater ability to undertake the full range describes. of different operations, including warfighting under NATO Article 5. It will enhance our ability to work The noble and gallant Lord, Lord Walker, and the alongside our key allies and partners, including providing noble Baroness, Lady Crawley, asked about our defence a framework for the UK-led joint expeditionary force. and security relationship with the EU after Brexit. The negotiations with the EU Commission, of course, are With the joint force, by 2025 we will be able to yet to commence, but we want to use our tools and deploy a force of around 50,000 drawn from a maritime privileged position in international affairs to continue task group of around 10 to 25 ships and 4,000 to to work with the EU on foreign, security and defence 10,000 personnel; an Army division of three brigades policy. Defining the specifics of the UK’s future foreign and supporting functions of around 30,000 to 40,000 and security policy relationship with the EU will be an personnel; an air group of around four to nine combat important consideration as we leave. aircraft squadrons, six to 20 surveillance platforms The noble and gallant Lord, Lord Walker, asked and five to 15 transport aircraft, and 4,000 to 10,000 about the effect on defence were Scotland to vote for personnel; and joint forces, including enablers and independence after Brexit. I hope he will not be headquarters, of around 2,000 to 6,000 personnel. disappointed by the answer I am about to give. The This capability will allow us to meet the demands of people of Scotland have already voted to remain in the multiple smaller and geographically dispersed operations, UK. The UK Government continue to be strongly and to respond to the most significant challenges to committed to Scotland remaining in the UK, so the national security, including a call to warfighting under MoD is not making any plans for Scottish independence. NATO Article 5. I can, however, say that the Government are firmly The large, sophisticated expeditionary force of around committed to the future of defence in Scotland and its 50,000 at the centre of Joint Force 2025, combined continued vital role in defence. Scotland is home to with the development of our Special Forces, sends a military bases that provide essential capabilities for powerful message to our adversaries and, I am sure, the defence of the UK as a whole. It benefits from reassures our allies. While it is perfectly true that billions of pounds of MoD contracts placed directly various capabilities announced through the SDSR 2015 and indirectly with companies which sustain hundreds will not come online until the 2020s, we have a significant of jobs and careers. 225 Armed Forces Act Order 2017[LORDS] Armed Forces Act Order 2017 226

[EARL HOWE] with bringing the ship’s systems on line, but there is On the subject of Brexit, I am led to the speech of sufficient flexibility within the programme to allow us the noble Lord, Lord Wallace of Saltaire, who referred to complete the schedule on time. We still expect HMS to our bilateral defence links in Europe, as did the “Queen Elizabeth”sea trials to commence in the summer noble Baroness, Lady Crawley. The noble Lord asked of 2017. about Germany.The UK is committed to strengthening I welcome the remarks of the noble Baroness, Lady its defence and security ties with Germany. Germany Crawley, and the noble Lords, Lord Touhig and Lord is a key ally for us, as recognised in the SDSR, in which West, on the Dreadnought programme. I can tell them Germany was elevated to a tier 1 defence relationship that the construction of the first new Dreadnought-class alongside the US and France. Germany has since submarines is under way following the contract award reciprocated in the publication of its own 2016 defence announced by the Defence Secretary on 1 October. On review. We are enhancing our bilateral co-operation 20 December we published the 2016 annual report with Germany in the areas of operations, training and that updated Parliament on the United Kingdom’s equipment. Weare seeking to enhance our interoperability future nuclear deterrent. This was the fifth update as well. We are driving towards closer joint working on and, as with previous reports, it detailed the progress innovation and equipment projects—which should, in that we have made on the programme and its governance the case of common aircraft such as Typhoon and since the last update in the 2015 SDSR. A400M, for example, reduce support costs—improving our information sharing and working more closely in Also as set out in the SDSR, we are creating a new other areas such as cyber and capacity-building in submarine delivery body for the procurement and countries outside Europe. in-service support of all nuclear submarines, to stand up in April 2017. I recognise that the noble Lord, Lord Our bilateral links in Europe will grow in importance, Levene, has concerns about this delivery model. The as I have said. The UK and France have been bound establishment of the submarine delivery body reflects by mutual security commitments for over 100 years the Government’s commitment to the nuclear enterprise and we are now building an ever closer bilateral defence and the unique scale, complexity and importance of and security relationship through the 2010 Lancaster this national endeavour. Its establishment reflects lessons House treaties. These recognise that our history,interests, learned from successful capital programmes found values, challenges and capabilities are so closely aligned elsewhere in government which demonstrate that a and so deeply interlinked that it is the right strategic dedicated organisation with a single focus can make a choice, and plain common sense, to work together to major contribution to successful delivery. It will also address the security challenges that we face. enable targeted investment to further enhance our As I expected, the noble Lord, Lord West, challenged performance on procurement and support, building the Government on the size of the Royal Navy. I on work taken forward under DE&S transformation. entirely understand his perspective—as I do that of the noble Baroness, Lady Crawley, who spoke on a As an executive agency, the submarine delivery similar theme—but I do not share it. Not only is our body will have a clear cultural focus on delivering fleet set to grow for the first time since World War II submarine procurement and support, time, cost and but its high-end technological capabilities will allow it quality, and be the sole organisation responsible within to provide a better contribution and to retain a first-class the MoD for doing so. That provides for clear lines of Navy up to 2040 and beyond. accountability and allows us to create a closer relationship between the delivery body and its customers. Lord West of Spithead: I asked the noble Earl whether I depart from those noble Lords who argue that the there would be more ships in the Navy by 2025 or fewer deterrent should not feature in the defence vote. If the and, after a dialogue, we decided it would be one fewer. budget for the deterrent lay elsewhere, it is certain that So it might be growing in weight but not in numbers. the MoD budget would go down. However, it surely is right that the MoD pays for the nuclear deterrent Earl Howe: It is certainly growing in weight but our as the Royal Navy is responsible for delivering it 24/7, ambition is for it to grow in numbers once the Type 31E all the year round, and has done so without rest destroyer comes on stream. We will maintain a destroyer for nearly 50 years. and frigate fleet of at least 19 ships and we will look to increase that number by the 2030s. The Queen Elizabeth- The noble Lord, Lord Judd, asked what we were class aircraft carriers will be coming into service and doing to promote nuclear disarmament. In February 2016 the fleet will also be supported by a capable and the UK proposed a programme of work at the conference renewed tanker fleet, with four new fleet tankers to on disarmament in Geneva with the aim of reinvigorating add to our existing new fast fleet tankers in the short the conference’s work. The P5 process initiated by the term and three new fleet solid support ships in the UK brings together nuclear weapon states to build longer term. A fleet of up to five offshore patrol trust and confidence to help develop the conditions vessels will support our destroyers and frigates in which would enable disarmament. Over the coming delivering routine tasks and enhance our contribution year we will continue to press for key steps towards to maritime security and fisheries protection. multilateral disarmament, including the entry into The noble Lord, Lord West, asked about carrier force of the Comprehensive Nuclear Test Ban Treaty capability. The first of our carriers, HMS “Queen and successful negotiations on a fissile material cut-off Elizabeth”, will enter service in 2018, after which she treaty in the conference on disarmament. will conduct flying trials. As he knows, in relation to I agree with much of what the noble Lord, Lord the situation currently, where he asked about technical Levene, said about the principles underpinning our issues, there have been a number of issues associated approach to defence procurement, and the same applies 227 Armed Forces Act Order 2017[21 MARCH 2017] Armed Forces Act Order 2017 228 to the remarks of the noble Lord, Lord Davies of as the Iran nuclear deal. We will continue to work with Stamford. The noble Lord, Lord Davies, spoke about the United States on ensuring its implementation. As the propulsion issues affecting the Type 45 class. There regards the UK’s contribution to UN deployments, we is good news on that front about which I will write to are increasing our support for UN peacekeeping efforts him, and I will write to the noble Lord, Lord West, and we will continue to do so. As the noble Lord, Lord about Type 31E. The noble Baroness, Lady Crawley, Hannay, will know, we have current deployments in asked about Plymouth Devonport. The naval service South Sudan, Somalia, Mali and Cyprus, where we is developing a strategy that will focus on centres of have been patrolling the green line for 50 years. specialisation. This includes an amphibious centre of The noble and gallant Lord, Lord Craig of Radley, specialisation in the south-west based around Devonport. spoke about combat immunity, and I thank him for My noble friend Lord Robathan spoke about the his constructive comments and for his continued and importance of maintaining our efforts to recruit into long-standing interest in this matter. As he will be the Armed Forces, in particular into the Regulars, and aware, we have said that we will be bringing forward I agree entirely with his sentiments. I will write to him our proposals on combat immunity shortly. We are to flesh out the picture that we are now experiencing, considering the responses to the Government’s recently which is on the whole positive as official statistics concluded consultation, which did not propose specific indicate that intake levels are showing a steady increase. drafting terms for achieving a policy.He will understand The noble Baroness, Lady Dean, asked in particular that I cannot pre-empt the process or anticipate what about recruiting into the Reserves. Weremain committed the Queen’s Speech may say, but I can assure him that to reaching our target of 35,060 trained reservists by we share his desire to provide greater clarity on this 2019 and we are moving fast in that direction. Central matter. to that is an improved offer, including better training, My noble friend Lord Astor, in a powerful speech, equipment and remuneration along with an improved mentioned Northern Ireland and the issue of investigations experience for reservists. currently under way in relation to incidents that took The right reverend Prelate the Bishop of Leeds and place during the Troubles. There are many of his the noble Baroness, Lady Jolly,reminded us compellingly remarks with which I and the Government, and I am of the threat posed by Russia. Russia is seeking to sure many others present on these Benches, would re-establish itself as a great power. In doing so it has wish to associate themselves. Against that background become more aggressive, authoritarian and nationalist, I can understand his questioning the justice of pursuing and its risk appetite to take action in pursuing its criminal cases against members of the military over interests has increased, hence the decisions taken by events that may have taken place more than 40 years NATO at the Cardiff and Warsaw summits. My noble ago. It is a matter that concerns the Ministry of friend Lord Jopling asked about our enhanced forward Defence, as it concerns him, but I hope he will understand presence in Estonia. The UK will deploy an enhanced the limitations over what I can say in response to his forward presence HQ commanded by a colonel and an comments about the specific case he raised of Corporal armoured infantry battle group to Estonia from early Major Dennis Hutchings. I understand that the local next month on an enduring basis. The battle group magistrate in Armagh has today decided not to commit advance party deployed on 19 March and the main on the charge of attempted murder,but he has committed body will deploy in early April. The UK will also Corporal Major Hutchings to be tried in the Crown deploy a light cavalry squadron to Poland, and that Court on a charge of grievous bodily harm. The case deployment too will be completed next month. is now before the court and is clearly subject to a process that is independent of the Ministry of Defence My noble friends Lord King and Lord Robathan and indeed of the Government. That specific case and the noble Lords, Lord Ramsbotham and Lord aside, I accept absolutely what my noble friend said Touhig, referred to the importance of cyber. In 2014, about the need for the whole issue of criminal inquiries GCHQ dealt with 100 cyber national security incidents into conduct during the Troubles to be balanced and per month. In 2015 the figure had risen to 200 a month. that many perceive this currently not to be the case, a Each of these attacks damages companies,their customers point also made by the noble Lord, Lord Empey. My and the public’s trust in our collective ability to keep right honourable friend the Secretary of State for their data and privacy safe. The Government recognise Defence has previously undertaken to work with the that we must take steps to defend our national security Secretary of State for Northern Ireland to ensure that in cyberspace as we do in any other domain. We have a in any proposals he brings forward to deal with legacy substantial budget for this across government and, to matters, there is a fair, balanced and proportionate co-ordinate properly this whole-nation effort, the approach to investigating the past. Government created the Cyber and Government Security Directorate in the Cabinet Office, which runs the The noble Lord, Lord Burnett, asked me a number national cyber security programme. We have also of questions. I am being reminded that I have overshot announced the creation of a national cyber centre to the expected time but with the leave of the House I will provide a unified platform to handle cyber incidents. continue for another couple of minutes. He asked about Sergeant Blackman and what monitoring and I cannot do full justice to the speech of the noble assistance is given to a defendant charged with serious Lord, Lord Hannay, to whom I listened with great offences, such as those Sergeant Blackman faced, at respect, but I will write to him. He asked whether we the start of the process. Ensuring that those facing legal will remain committed to the agreement with Iran. We proceedings have the appropriate welfare and legal do remain committed to the full implementation of support is a responsibility that the MoD takes extremely the joint comprehensive plan of action, often known seriously. A wide range of welfare support is available 229 Armed Forces Act Order 2017 [LORDS] Brexit: Gibraltar 230

[EARL HOWE] put together, make a reality of the UK’s vision of to both current and former personnel and these policies being an outward-looking, global force for good, are kept under review. For suspects, legal funding for promoting stability, security and prosperity around service personnel and veterans facing criminal allegations the world. I beg to move. is provided through the Armed Forces Criminal Legal Aid Authority. Motion agreed. We understand that neither the prosecution nor Defence and Security Sergeant Blackman’s original defence team obtained Motion to Take Note psychiatric evidence before the start of his court martial, and that no psychiatric evidence was called during the 8.21 pm trial itself. The defence did obtain a psychiatric assessment Moved by Earl Howe for the purposes of sentencing. In the recent CMAC judgment the court stated: That this House takes note of the current challenges to the international rules-based order; the preparedness “If the expert evidence of the psychiatrists and other evidence set out fully at paragraphs 86 to 106 below had been before the of the United Kingdom’s Armed Forces and of the court martial, we are in no doubt but that the defence of diminished NATO Alliance; and the levers available to Her responsibility would have had to have been left to the Board and Majesty’s Government to promote this country’s that it could have affected their decision to convict”. defence and security interests. The Government have been successful in establishing, Motion agreed. both in the European Court of Human Rights and in the civilian courts, that the court-martial system is in Brexit: Gibraltar principle safe, independent and impartial. The current Question for Short Debate system of majority verdicts has been considered twice by the Court Martial Appeal Court in the last five 8.21 pm years and was on both occasions held to be fair and Asked by Lord Boswell of Aynho safe. The Court Martial Appeal Court, which is made up of the same judges as sit in the civilian Court of To ask Her Majesty’s Government what is Appeal, has held that there is no ground for deciding their response to the Report from the European that a verdict by simple majority of the lay members Union Committee Brexit: Gibraltar (13th Report, of a court martial is inherently unfair or unsafe. HL Paper 116). The rules regarding membership of the court martial Lord Boswell of Aynho (Non-Afl): My Lords, I am focus on and recognise the importance of experience delighted to have this opportunity to debate our report of command and the exercise of service discipline at a and I am hugely grateful to the business managers for sufficiently high level to enable lay members to assess making time available at such short notice. This short the actions of those who appear before them in the debate is particularly timely given the presence tonight court martial in the appropriate command and disciplinary in the Gallery of the Chief Minister of Gibraltar, the context. We have seen no evidence that a member of honourable Fabian Picardo, who gave eloquent evidence the panel allegedly sent a message to the effect that they to our inquiry, and the Deputy Chief Minister, the had come under intense political pressure to convict. honourable Dr Joseph Garcia. Although I cannot of We respect the court’s latest judgment in relation to course direct my remarks formally in their direction, Sergeant Blackman, which found no basis to criticise perhaps I may say to the House at large that I hope the original court martial and indicated that the issues they found our report constructive and helpful. I raised at the time were dealt with in an entirely fair underline my committee’scontinuing openness to dialogue and proper manner. with the Gibraltarian Government and people. In closing, I thank noble Lords once again for taking As our report states very clearly, Gibraltar is part of part in today’s debate. The message conveyed by noble the European Union and its citizens were able to vote Lords will not be lost on the Government. As ever, it in the referendum last June. Just under 96% of votes has been a valuable discussion around some of the cast in Gibraltar were to remain—but Gibraltar, as a most demanding challenges that face our nation today. dependent territory of the United Kingdom, is now I am struck by the fact that we all appear to agree on set to leave. In these circumstances, particularly, the the reality and nature of those challenges. They are United Kingdom Government, I suggest, have a unique the same ones that the Government wrote about in the moral responsibility to ensure that Gibraltar does not SDSR 2015. We believe that to meet these challenges suffer as a result of a Brexit that its people almost we need to strengthen the bonds of co-operation that unanimously opposed. I hope that the Minister will underpin the rules-based international order. I do not acknowledge that responsibility tonight. believe that any noble Lord would wish to divert us from There can be no question that Gibraltar has benefited that aim. We are doing more to lead and reform NATO; hugely during our membership of the EU. I say “during” we are intensifying our collaboration with allies and rather than “as a result of” our membership because I partners in pursuit of our shared objectives; and we do not wish to assert any necessary causality. But we are integrating the levers of power across government, just have to remind ourselves of the position in the so that the UK is more effective in these endeavours. 1970s, when Spain was still under the rule of General Through Joint Force 2025 we are making defence’s Franco and the border was closed, to see that Gibraltar principal contribution to the levers of government today, with its vibrant, service-based economy, is in a —the Armed Forces—more capable, versatile and far better place. The existence of an open border, deployable than ever before. Those programmes, when which allows more than 10,000 workers—40% of the 231 Brexit: Gibraltar [21 MARCH 2017] Brexit: Gibraltar 232 total workforce in Gibraltar—to cross from Spain EU 27. The challenge, in contrast, is to identify common every day, is absolutely fundamental to Gibraltar’s interests and shared practical solutions that will underpin long-term prosperity, as it is to that of Andalusia, the a durable continuing partnership. neighbouring region of Spain. Within the United Kingdom that partnership has We urge the Government here to do everything to be built up across our constituent nations and possible to maintain Gibraltar’s access to that pool of regions. It needs to embrace Gibraltar, the Crown cross-border workers. That will require intense diplomacy dependencies and the other British Overseas Territories, with Spain, the European Union institutions and the which each have a distinctive constitutional relationship other 26 member states, which have played an important with the United Kingdom and European Union. There part in promoting dialogue between Gibraltar and also needs to be a partnership between the United Spain and which have a strong interest in maintaining Kingdom and European Union—that is, the whole the prosperity and stability of Gibraltar going forward. European Union, including Spain—if we are to maintain That diplomacy will become even more important a fruitful relationship for the future. It is important to after our withdrawal, when United Kingdom Ministers acknowledge the strong bilateral relationship that the have ceased to participate in regular European Council United Kingdom enjoys with Spain and to accept that meetings, and have lost that forum for frequent and that relationship should not be seen solely through the informal dialogue with their Spanish counterparts. prism of the dispute over Gibraltar. I do not underestimate the challenges that the I will end as I began. Our view is that the United Government may face. Some are technical. The Kingdom Government have a unique moral responsibility Government will need to explore the options in legal to ensure that Gibraltar’s voice is heard and its interests terms for maintaining a free-flowing frontier and we respected as we approach Brexit and beyond. I look flag up the Chief Minister’s suggestion to us that the forward to the noble Baroness’s reply, in which I hope Local Border Traffic Regulation could provide a suitable that she will clearly set out how the Government plan basis for this. We also note that in the area of policing, to fulfil that responsibility. the land frontier becoming part of the European Union’s external border could create difficulties. As in Viscount Younger of Leckie (Con): My Lords, timings the case of the Irish land border, close co-operation are particularly tight for this 90-minute debate and I between police forces on both sides of the border and therefore request that Back-Bench speeches are wound flexible extradition arrangements will be vital. up as the Clock reaches four minutes, and no later. There are other important issues such as aviation, Gibraltar’s access to the single market in services, 8.29 pm particularly financial services, and Gibraltar’s territorial Lord Selkirk of Douglas (Con): My Lords, it is a waters. I am sure that other noble Lords will touch on great pleasure to follow the noble Lord, Lord Boswell, some of these tonight and I look forward to their the chairman of the EU Select Committee, on the contributions to this debate. Reaching solutions on needs of Gibraltar, which must not be overlooked. It these issues, in particular on the vital issue of the has long been popular to invoke the Rock of Gibraltar border, will require compromises on all sides and I as a symbol of steadfastness and safety. Now, as a hope that the Minister in responding to this debate result of Brexit, the Government must strive vigorously will take the opportunity to outline the Government’s to ensure that that massive limestone promontory, the approach in more detail than we have heard thus far. territory that surrounds it and its infrastructure should However,on one key issue no compromise is possible. remain in excellent condition and that the people will The Government have made a commitment never to thrive. enter into sovereignty discussions against the will of Greek myths describe the Rock as one of the Pillars the Gibraltarian people, and our Committee fully of Hercules. In more recent times, we have had 300 years endorses that commitment. The reaction in Madrid of shared history to uphold after Gibraltar was ceded immediately following the referendum was watched by Spain in the treaty of Utrecht in 1713. Since then, closely in Gibraltar and there is always the risk that like the ravens at the Tower of London, the Barbary someone will seek to inflame tensions with a view to apes that live on the Rock have often been depicted as their domestic political gain. The United Kingdom legendary guardians of Britain’s political fortunes. Government therefore need to be alert to any attempts Well aware always of the need to boost morale, during by Spain to advance territorial claims over Gibraltar, the Second World War Winston Churchill was anxious by whatever means. that the apes, whose numbers had fallen as low as I emphasise that the rest of the European Union is seven, were seen to continue to flourish. As the Battle potentially a useful ally in this process. The European of Arnhem was raging, he sent a message to the Union and its member states have invested in Gibraltar. Colonial Secretary demanding that action be taken to They have a real stake in the stability and prosperity of ensure that the troop of animals on the Rock should neighbouring states, and will not take kindly to any total no fewer than 24. attempt by Spain to derail a Brexit deal over Gibraltar. To return to the present day, clearly the United It would be unwise and potentially counterproductive Kingdom’s decision to leave the European Union has for the Government here to try to play off Spain raised complex and hugely important issues for the against the other 26 member states. I hope that the Gibraltarians, who voted by 96% to remain in the EU. Minister will agree that, as we approach the Article 50 Almost immediately, the Spanish Government once negotiations, the last thing the Government should do more raised the vexed issue of possible joint sovereignty is to try to undermine the unified approach of the to allow Gibraltar to stay in the EU. However, this was 233 Brexit: Gibraltar [LORDS] Brexit: Gibraltar 234

[LORD SELKIRK OF DOUGLAS] Lord Boswell, stated, a moral responsibility: 96% of angrily rejected by its Chief Minister, Fabian Picardo, the people of Gibraltar voted to remain, and I am who characterised it as the generosity of the “predator” puzzled that certain Brexiteers such as Farage, who towards a wounded prey.Borrowing words from President claim to be Commonwealth men, seem to indicate that John F Kennedy’s inaugural speech in 1961, the Chief they know the interests of Gibraltar better than the Minister movingly told the House of Commons Exiting Chief Minister, Fabian Picardo, and the Deputy Chief the European Union Select Committee that: Minister. What are the current benefits to Gibraltar, “Gibraltar will pay any price, bear any burden and meet any which led to such an overwhelming vote? The UK, as hardship in the context of ensuring that we have a future that is an insider, is its advocate in Brussels and of course in bright and exclusively British post-Brexit”. New York; in addition, UKRep is its eyes and ears in Gibraltar, through no wish of its own, finds itself Brussels, placating at an early stage proposals which on the front line of the consequences of our planned might harm the interests of Gibraltar. Clearly, these exit from the European Union. After Brexit, the UK two roles will no longer be possible, at least to the will have two land borders with the EU: one between current extent, when we are outsiders. Northern Ireland and the Irish Republic and the other Secondly, what then are the principles on which we between Gibraltar and Spain. Currently, around 12,000 should embark on negotiations? Clearly, we have to people cross that Spanish border every day to work in listen very carefully to the concerns of Gibraltar over Gibraltar, making up 40% of the workforce there. I the single market, financial services and the border, strongly support the report’s call for the maintenance and keep its Government wholly in touch with of a frontier between Gibraltar and Spain which is as developments. Tothis end, the proposed joint ministerial free flowing as possible following Brexit. It emphasises council must help. We must also make crystal clear to the need for all parties, our Spanish colleagues, with whom we otherwise have “to work together in good faith to reach an agreement that excellent bilateral relations, that there is no point in supports ongoing regional cooperation and trade, and avoids their seeking to make life more difficult for Gibraltarians undue disruption to the lives of thousands of border residents after Brexit, as El País appears to suggest. Indeed, any who cross the frontier daily”. such action would be counterproductive, as there is no The report also stresses—the noble Lord, Lord question of the British Government countenancing a Boswell, made this point firmly a moment ago—that change without the agreement of Gibraltar. We also the Government of Gibraltar have placed their trust in have to ascertain which EU benefits Gibraltar is likely the UK to negotiate on their behalf. It goes on to state to lose and consider ways and means of replacing that, them after Brexit. We should also stress the social and “the UK Government has a moral responsibility to ensure that economic benefits to both Spain and Gibraltar of a Gibraltar’s voice is heard, and its interests respected, throughout the Brexit process”. frictionless border and be ready flexibly to search for new structures to facilitate future co-operation. I believe that Britain’snegotiators must also be vigilant over any attempts by Spain to use the constitutional Thirdly, what are the prospects after Brexit? Who future of Gibraltar and the issue of sovereignty as a knows the likely spirit of our negotiations with our bargaining tool. partners in the European Union? The Prime Minister’s priority is immigration, which is not relevant to Gibraltar, EU funding has played an important role in Gibraltar’s but not the single market, which is. Our aims and development in recent years. Does the Minister agree interests are best served if we seek to improve our that there is an urgent need for the Government to bilateral relationship with Spain, emphasising the clarify what kind of UK financial assistance will be mutuality of interest. The heading of the final chapter available for projects in Gibraltar after Brexit, especially of the report carries the warning to all of us: “An uncertain beyond 2020? After Brexit, can we also be assured that future”. the Government will support opportunities for Gibraltar to benefit from any new trade deals which are negotiated 8.39 pm by the UK in the future? In conclusion—I am on my last sentence—I hope the Minister will be able to Lord Chidgey (LD): My Lords, I too congratulate promise us that in every way possible in the months the noble Lord, Lord Boswell, and his committee on ahead, the Government’s negotiators will shoulder their report, called simply Brexit: Gibraltar. I make no their historic responsibility and work to secure the apology for being a friend of Gibraltar, having been a best possible outcome for this uniquely patriotic and member or officer of the All-Party Parliamentary enterprising British Overseas Territory. Group for Gibraltar almost since it was established, some 20 years ago. 8.35 pm As a member of the Foreign Affairs Select Committee in the other place, I took part in the inquiry that Lord Anderson of Swansea (Lab): My Lords, this is revealed the attempt to pass the sovereignty of Gibraltar an admirable report, which sets out the key challenges to Spain without first engaging with the UK Parliament. facing Gibraltar after Brexit. The Government of I had the privilege to be invited to act as an official Gibraltar recognise the complexity of the issue and observer to the 2002 referendum on whether Gibraltarians call for a measured, multifaceted and indeed nuanced wished to remain British and reject joint sovereignty response. I will make but three observations. with Spain, in which 98% voted to remain. I have First, any deal following Brexit will carry more spoken at Gibraltar Day rallies in Casemates Square, risks and be less advantageous for Gibraltar than the addressing crowds of over 20,000 joyous Gibraltarians, status quo—hence the negotiations, in essence, will be fervently displaying their patriotic desire to remain about damage limitation. We have, as the noble Lord, British. Members of our family walked through the 235 Brexit: Gibraltar [21 MARCH 2017] Brexit: Gibraltar 236

Alameda Gardens in the 1920s, watching the Rock online gaming and financial services are well regulated Hotel being built. And I have stood beside the statue and transparent, in conformity with the standards of the young Gibraltarian family, commemorating the expected by the European Union and the OECD. This deportation of many thousands of women and children transformation is being brought about and led by two to the UK for their safety during World War II, only notable people: Sir Peter Caruana, the former Chief for many to find their safe haven turned out to be Minister,and the present Chief Minister,Fabian Picardo, London. Some were not allowed to return home until who may be listening to this debate. long after the war had ended. Gibraltar has faced many challenges in the past Her Majesty’s Government of Gibraltar, have no 312 years under British sovereignty; now it faces Brexit. doubt about the commitment of the UK Government It faces the dangers of Brexit and I therefore welcome and the British people towards protecting British this report led by the noble Lord, Lord Boswell. It sovereignty of Gibraltar, in accordance with that 2002 seems to me that there are three issues for Gibraltar. referendum. I agree that it is important, in the present First, there is access to the single market. As we have uncertain climate, particularly given recent statements heard, 90% of the financial services are with the United by Spanish Ministers, that this commitment continues Kingdom. Secondly, there is the need for the free flow to be publicly and robustly restated. Gibraltar has, of people and goods on the frontier, with 12,000 people since the early 18th century, been of great military every day going into Gibraltar from Spain, 7,000 of significance to the UK’s defence strategy, following them Spanish, with the EU Commission playing the the ceding of Gibraltar to the UK in perpetuity by the role of arbitrator regarding the flow of people across treaty of Utrecht. the frontier. Thirdly, there is the need for co-operation While the UK is re-establishing an interest in projecting in security and judicial matters—for example, the power east of Suez, access to Gibraltar’sairport and base, European arrest warrant. the harbour and the underground arsenal is integral to Against that background we have this excellent her ability to project power through the Indian and report, published under the chairmanship of the noble Pacific Oceans and beyond. There are two key issues Lord, Lord Boswell. I welcome the point that everyone— for Gibraltar: the freedom to provide services and a above all the noble Lord himself—has made, that Her free-flowing frontier. With regard to services, analysis Majesty’s Government have a moral responsibility to shows that 90% of her financial services industry relies the people of Gibraltar. It goes without saying that on trade with the UK. So far, the UK has committed Her Majesty’sGovernment must keep up the commitment to preserve and underpin the existing access to the UK on sovereignty but, as always, with the backing of markets.The UK Government have said they are prepared this Parliament. However, there are other practical to look to extending the scope of market access into recommendations, such as keeping the UK and Gibraltar the UK, and take account of Gibraltar’s priorities, as as a single state for the purposes of negotiation; suggesting they negotiate post-Brexit deals around the world. that we should strengthen Gibraltar’s financial and The Government must ensure that Gibraltar attains business links with the UK; suggesting that Her Majesty’s the same level of access to the single market as covered Government should underpin EU funding arrangements in the scope of any trade deal the UK secures. It in the future; and, if the frontier becomes an external should be the duty of Parliament to oversee any draft one, taking up the Chief Minister’s suggestion of deal that the Government bring back from the negotiating some kind of local traffic management plan that works table and to ensure that this condition is met. It will be in other areas. the duty of Parliament to ensure that the Government Our relations with Spain would benefit enormously stand ready to robustly defend Gibraltar if Spain from collaboration across the frontier, Gibraltar exerts heavy-handed border controls during the EU contributing 25% of regional GDP in the local Spanish negotiations. A fluid border is essential to cater for the area and being the second-highest employer in the movement of cross-frontier workers. region of Andalusia. The co-operation is enormous, Above all, there must be no attempt to compromise as are the benefits, so the choice for Spain is quite on Gibraltar’s sovereignty. Joint sovereignty was straightforward: either return to the stale old Francoist comprehensively rejected in the 2002 referendum by bullying and use Gibraltar as a diversion from political 98% of the population. Parliament must be on its problems, or recognise an overall mutual interest of guard to expose any attempt to hand over sovereignty close economic and political relations with the UK to Spain through the side door while attention is against the background of the EU negotiations and diverted by wider Brexit issues. the achievements of the previous Spanish socialist Government in collaborating more closely with Gibraltar to the benefit of all in that region—Britain, Spain and 8.42 pm Gibraltar. That must now be our aim. Lord Luce (CB): I declare an interest as a former Governor of Gibraltar and as the current chancellor 8.47 pm of the new University of Gibraltar. When I arrived as The Lord Bishop of Leeds: My Lords, I endorse all Governor, exactly 20 years ago this month, one of my that has been said so eloquently. The report is excellent, tasks was to help and encourage Gibraltar to transform but for me it raises a number of questions. The main from a defence-oriented economy—although defence one concerns the fact that throughout the referendum remains very important today—to a diversified economy, campaign, and subsequently, we have repeatedly heard in which it could be financially more resilient. During statements such as, “We will get a good deal”, and, that time this has happened. Today we have a resilient, “We will do this and we will do that”, when in fact we strong economy: tourism, port and bunker services, do not hold the power in a lot of this—it will have to 237 Brexit: Gibraltar [LORDS] Brexit: Gibraltar 238

[THE LORD BISHOP OF LEEDS] our referendum decision. Although all our overseas be negotiated. Despite urging that we get the best for territories have been affected in one way or another by Gibraltar, I want to be assured that the Government Brexit, Gibraltar is the only one in Europe and is most are stress-testing all the scenarios, including the worst-case at risk. I had always hoped that, under the umbrella of ones. We owe it to the people of Gibraltar to do that the European Union, it would have been possible to because it was not done in preparation for the referendum sort out some of the challenges and issues with Spain itself. which have made life so difficult for Gibraltar in the If you look through the eyes of Spain, you find that past. it is not good enough for us simply to say, “We mustn’t I also know Spain well and have many friends there. compromise on sovereignty”. What if the Spanish hold I find it hard to believe that the Spanish Government out sovereignty, play a long game and say, “We’ll just would try to exert undue pressure and heavy-handed sit this out. We won’t give equivalence”? What if the controls during the period of the Brexit negotiations EU does not give us equivalent status? What if Spain or, indeed, once we are out. I understand the fears. We wants to use sovereignty or cross-border access and have all had experience of the past, such as the queues frontier issues as a bargaining chip? We cannot simply and delays at the border and the airport problems. Let stand there and say, “Well, you can’t”. I want to know us hope that the newly arrived Spanish ambassador to that we are stress-testing this. Who has the power? this country will be watching or at least listening to After all, we have spoken of having a clean Brexit; what if this debate and the signals it sends out. the Spanish take us at our word? That has to be I welcome in particular the setting up of the dedicated thought through and our response to it considered. joint ministerial council, and I trust that it will ensure, Particular questions are raised here. As I indicated, to some extent, a less uncertain feeling about the if the EU declines to give equivalent status after future for Gibraltarians. I hope that it will also give Brexit, what then? What is the cost to the UK, already the Government of Gibraltar the realisation that the alluded to in this debate, if Gibraltar is given no access United Kingdom Government are giving Gibraltar a in future to EU programmes? Has that been costed special place and space in the negotiations. out? In paragraph 29 of the report, we read about the As has already been said, the key issue for Gibraltar strong economic links to the UK, specifically the is access to the single market and services, as well as City, should the single market be infringed in some the border issues and air flights. If a week is a long way. But what if the City effectively moves to Frankfurt time in politics, two years gives us an opportunity to or Paris? We keep saying, “Well, it won’t”, but what if use ingenuity, imagination and circumstances as they it does? We do not hold all the cards. change to find a solution. This has to be the main Paragraph 36 says that, if access to the single market concern of the joint ministerial council. If the Minister is restricted, could give us more information as to the council’s “the rest of the world beckons”. agenda, that would be very welcome. So does outer space. It does not mean that we can get My special interest in Gibraltar started when, after what we want. Where is the realism that comes from the first direct elections to the European Parliament in looking through the eyes of those who do not hold the 1979, as a newly elected MEP, I was asked to be one of best interests of the UK as their priority? a small cross-party group to keep an eye on Gibraltar’s Paragraph 50 says that, for Spain to intensify border interests. That was when Sir Joshua Hassan was First controls would be regarded as an “aggressive act”. Minister, and the late Lord Bethell led the group. At Frankly, why should it not? It did not choose this. I that time, the big issue for Gibraltarians was voting suspect that, if the boot were on the other foot, we rights to the European Parliament. Eventually,a solution might be rather aggressive as well. was found. I hope that those MEPs who benefit from I just want to be reassured that these scenarios are Gibraltarian votes are also looking to protect Gibraltar’s being stress-tested in the way that they were not before interests. we went into this business in the first place. We owe it It seems to me that anyone who knows Gibraltar loves to the people of Gibraltar. Gibraltar and its people, and that must augur well for the future. Loyalty should be repaid by loyalty. 8.50 pm Baroness Hooper (Con): My Lords, I declare an 8.54 pm interest as honorary president of the Friends of Gibraltar. Lord Hoyle (Lab): I am very pleased indeed to This is a UK-based group which brings together follow the noble Baroness: I know what a firm friend Gibraltarians and others who have lived and served in indeed she is of Gibraltar. I thank the noble Lord, Gibraltar and who are concerned about keeping in Lord Boswell, for an excellent report. It gives us this touch with what is going on on the Rock, politically, opportunity to ensure that the needs of Gibraltar are economically and especially in terms of its history and not forgotten. heritage. I am also a long-standing member of the First, I must declare an interest in Gibraltar: an All-Party Parliamentary Group for Gibraltar. interest of which I am very proud. I am a freeman of As an erstwhile member of the European Union Gibraltar. I announce that with great pride here tonight. Committee, I congratulate my noble friend Lord Boswell I am not suggesting for a moment that the Government on the way in which he introduced this debate and his have forgotten or will forget Gibraltar; nevertheless, it committee for its comprehensive, first class report. It is essential that we put the case here tonight and keep succinctly and clearly covers the economic, border and reminding them that Gibraltar is part of the negotiation, sovereignty issues and the uncertainties resulting from as well as us. 239 Brexit: Gibraltar [21 MARCH 2017] Brexit: Gibraltar 240

When we say that 96% of them voted to remain in An important consideration is that discussions and Europe in 2016, we must not forget that in 2002, decisions should reflect the wishes of the people most 98% voted to stay with us in Britain. They made their affected. Consent is key.The status quo is not an option position very clear: yes, they want to remain and have now that the Brexit negotiations are about to begin. access to the European market if that is possible, but, After all, as has been said throughout this evening, above all else, they want to remain with us. They are 96% voting to remain does suggest a willingness to remarkable people. When we think about it, it is not engage. While first and foremost it is clearly for the long ago that they were totally dependent on defence. people of the region to decide, I firmly believe that They have now turned around the economy so they are Gibraltar’s future long-term prosperity must be rooted no longer dependent just on defence; financial services in mutually beneficial regional co-operation. are very important to them. Some 90% of those depend Might I then suggest that the centre ground of on access to the British market, but we must not forget Seville be a convenient location for talks, and possibly the other 10% which are very important to Gibraltar. also an ideal location for a long-overdue Gibraltar It cannot be repeated often enough that the border representative office? A view held in certain quarters is essential to the economy. It has been said—but there among Spanish politicians has suggested that sovereignty is nothing wrong in repeating it—that every day 12,000 need not be on the table. Rather, matters including the people cross the border to work in Gibraltar, 7,000 of environment, free exchange of financial information whom are Spanish citizens. Gibraltar is the second and police co-operation—from terrorism to drugs—were biggest contributor to the GDP of the neighbouring considered more essential. Some time ago it had been region of Spain. So it is of great benefit to the Spanish agreed that access to medical assistance was on the people and the adjoining region. Emphasising that is table, including reciprocal recipient and donor transplant very important. exchange using Andalusian hospitals. We have been talking about the economy, but let us Interestingly, the socialist parliamentary group in not forget that every year 10 million people visit the Cortes, the Congress of Deputies, through its Gibraltar, and many of them come across that border. deputy for the province of Cadiz, presented on 9 March When we are having discussions with Spain—we have just past a non-legislative proposal in relation to the been good friends and allies of theirs—it is right that commercial customs checkpoint at La Línea de la we put that point to them. We have heard that they Concepción and the non-commercial frontier checkpoint have said—I do not know quite what this means and with Gibraltar. This will be submitted to debate and the Minister may explain it to me—that waving a vote in the Committee for Foreign Affairs and passport will not be sufficient. If producing a passport Co-operation, possibly as early as next week. If it is not sufficient, what are they talking about? Are they passes that hurdle, it could proceed to a vote and talking about limited visas? That is why this debate is possible adoption by the Cortes as a whole. This is a essential. development inviting close scrutiny and continued I will finish by saying that the people of Gibraltar interest. have always been good friends of the country. They The noble Lord, Lord Boswell, might wish to consider want to remain in this country and we must not let forwarding his committee’s report to Spanish local them down in our negotiations on Brexit. and national officials most exercised with Gibraltar, including the Parliaments in Madrid and Seville. 8.58 pm Engagement, after all, is everything at this critical juncture. I have little doubt that HMG recognise the Viscount Waverley (CB): My Lords, the Gibraltar anomalies and possible complicating consequences of quagmire is easy to define but mighty difficult to resolve. the country at large voting to leave. HMG will not The cocktail of complexities is varied and impacts on wish to have their overall Brexit negotiation strategy all participants, including the challenges of a determined frustrated but will also not wish to be held hostage to Madrid, the time immemorial socialist province of this complex issue. Positive results can come from Andalusia and that mother of all complexities, the dialogue and could divert looming dark clouds. Brexit negotiations; they combine to defy easy resolution. I see one of five possible alternatives. First, the 9.03 pm tempting old adage, “When in doubt, do nothing” seems in the circumstances unsustainable and should Baroness Harris of Richmond (LD): My Lords, I be discounted. Secondly, we could revisit 2004 when join other noble Lords in thanking the noble Lord, the El País editorial of the tercentenary, advocating Lord Boswell of Aynho, and his committee for this the benefits of tripartite talks, were given more credence excellent report on the challenges facing Gibraltar—and as both Madrid and London then hosted socialist the UK—after the decision to leave the European Governments. Thirdly, we could bring balance to the Union. As the report says—I quote from the summary— table and recognise that there is indeed a fourth participant “Negotiating on Gibraltar’s behalf, the UK Government will of equal standing to the people of Gibraltar: namely be responsible for ensuring that Gibraltar’s voice is heard, and its interests respected, throughout the Brexit process. The UK also the people of Andalusia. Fourthly, we could constitute has a responsibility to support Gibraltar in benefiting from any confidence-building initiatives resulting from regular opportunities that arise following Brexit, including by participating civil society-led discussions, possibly with bilateral in any new international trade deals”. members as observers. My interest in Gibraltar stems from having helped Red lines should be removed to allow co-operation the Gibraltar Defence Police a number of years ago to through civil society to take centre ground to define come to a happier place when it was being threatened—I and develop mutually beneficial goals and objectives. use the word advisedly—at that time with a merger 241 Brexit: Gibraltar [LORDS] Brexit: Gibraltar 242

[BARONESS HARRIS OF RICHMOND] the excellent report which we are debating this evening. with the Royal Gibraltar Police, in itself a seemingly A little over 45 years ago, I was part of the team which reasonable move. Unfortunately, it was anything but, negotiated the terms of the UK’s—and thus Gibraltar’s— and was being handled appallingly by our own MoD accession to the European Communities. In truth, we and the commander-in-chief on the Rock at that time. got a Goldilocks deal for Gibraltar: outside the customs Fortunately, a change of Government in Gibraltar, union, exempted from the requirement to introduce a and a change of personnel at the highest level—plus value added tax and inside what became, over the some timely and much-welcome advice—helped calm years, the biggest single market in the world. That deal things down and a few years later we found an amicable has stood the test of time, which is attested to by the move towards the merging of the two forces, which fact that 96% of Gibraltarians voted to remain last undertake different duties, to the mutual satisfaction June. To complete my declaration of interests, some and benefit of the security of Gibraltar and its citizens. 35 years ago I was sent to Madrid by Lord Hurd of I mention this as Gibraltar is a dependent territory Westwell—then Minister for Europe at the FCO—to of the UK, as the report says. We have an absolute persuade the Spanish Government that they needed to responsibility and a fundamental duty to ensure its open their border with Gibraltar if there was to be any security—militarily and economically—once we leave chance of their EU accession treaty being ratified by the EU. Chapter 3 of the report talks about the this Parliament. The Spanish Government were so frontier with Spain. As we have heard, this is one of persuaded, and the border was reopened. the most important areas we have to address. Gibraltar’s strategic location affords the Royal Navy unique naval This declaration of interests is no vanity project. It intelligence, including the ability to monitor nuclear- reflects the reality, recognised by the Gibraltarians capable submarines, which is crucial for our contribution themselves, that Britain’s—and thus their—membership to NATO. Spain has consistently sought to detract of the EU has been the basic cornerstone of their from Gibraltar’s military role, especially as it provides prosperity today. That cornerstone is, alas, about to be services to the US and NATO, and believes it is better removed. I do not know whether those who campaigned placed to control the Strait of Gibraltar than the UK, for Britain to leave the EU really understood what their and so displace the UK’s strategic role in the region. success might mean for Gibraltar. Given that many of Spain encroaches on British Gibraltar territorial waters them are among the most vociferous parliamentary frequently and this poses a very real threat to our supporters of Gibraltar, if they did understand then global military and strategic interests. this was a shameful act of betrayal. But let us give them the benefit of the doubt: they acted in ignorance. Brexit also poses an enormous challenge to the They threw Gibraltar under the wheels of that infamous economic status quo in Gibraltar. As we have heard, at battle bus, without having a clue what they were present more than 12,000 people cross the border doing. They broke it, and we own it. daily for work, making up 40% of the entire Gibraltar workforce. As noted in paragraph 48 of the report, What can be done? Well, there is no doubt what any arbitrary closing of the border will cause enormous would be best for Gibraltar—that is, the status quo. harm, and an abrupt exit from the single market—which But the status quo is not on offer, because Gibraltar’s this Government seem intent on inflicting—will have status depends on the UK’s status. If noble Lords do dire consequences for Gibraltar, with an immediate not believe that, they should read the treaties of Utrecht 10% loss of business. We must consider the needs of and of Rome and our own accession treaty. We are set the Government and residents of Gibraltar, who have to become a third country in 2019—and Gibraltar’s put their trust and loyalty in the UK. We have an border with Spain is set to become an external border absolute moral duty to do that, as the report states in of the EU, with all that implies. The Prime Minister paragraph 110. At the moment, Gibraltar is fearful of has stated that she excludes the possibility of Britain the future, as there is absolutely no clarity on how we remaining in the single market. will actually leave the EU. If the Government persist in telling us that they cannot divulge their negotiating So what can be obtained for Gibraltar from an EU stance, how does that help Gibraltarians? Do they shorn of our membership? That remains to be seen in have to spend the next few years wondering what their the negotiations about to begin but—in one of those future will be? superbly British understatements—the report we are Given the issues we face, we must ensure a smooth debating, in paragraph 111, states: and productive working relationship between the Governments of the UK and Gibraltar. This report “We note, however, that Spanish opposition may present highlights with utter clarity the realities of this need an insuperable barrier to any perceived special treatment for and I commend it wholeheartedly. We must recognise Gibraltar”. the inextricable bonds between the people of the UK There you have it; the report did not need to say a and the people of Gibraltar,whether at the governmental, word more than that. I wish the Government well in military or community level. Our histories are intertwined their endeavours to save something from this unintended and we must redouble our efforts to ensure that our shipwreck, but I do not envy them. Next time the futures remain so. Foreign Secretary makes one of his “sunlit uplands” speeches about Brexit, or says that it will be perfectly 9.07 pm okay if there is no deal, he might first take a look Lord Hannay of Chiswick (CB): My Lords, I begin towards the Rock of Gibraltar—at the dark clouds by declaring an interest, albeit one lost in the mists of gathering there, caused by the very success of his own time and, indeed, outside the timeframe covered by endeavour to remove us from the European Union. 243 Brexit: Gibraltar [21 MARCH 2017] Brexit: Gibraltar 244

9.12 pm talks is sensible, as is the rejection of a microstate-style status. The Government ought to bear in mind their Lord Suri (Con): My Lords, this report made for responsibility to Gibraltar, and I have all confidence fascinating reading. So often in the debate that has that they will. engulfed this place and another place, we are told of the importance of keeping a soft border on the island 9.16 pm of Ireland. However,Gibraltar is, as the Under-Secretary of State in DExEU said, “part of the British family”. I Lord West of Spithead (Lab): My Lords, I first was gladdened to see the Under-Secretary travel over visited Gibraltar by sea in September 1948 and have to Gibraltar recently to restate his commitments. done so dozens of times since, and I know it well. I Ensuring the softest possible border between Gibraltar intend to speak only on the military significance of and Spain must remain a priority of the Government, Gibraltar to the United Kingdom, the United States and I am pleased to see them take it seriously. The and NATO in this troubled and ever more chaotic and Spanish Government have used Brexit as another dangerous world. opportunity to call for joint sovereignty over the Rock, Gibraltar commands one of the world’s seven key but I repeat again the words of the Treaty of Utrecht, strategic global choke points for maritime trade. It is a which cedes to the Crown, southern outpost of Europe facing the north African “the full and entire propriety of the town and castle of Gibraltar, littoral, from which we are able to monitor all surface together with the port, fortifications, and forts thereunto belonging; and sub-surface traffic through the strait, and it is and he”— important in tension and war but also in combating the Catholic king— terrorism.OnethousandmilesclosertotheMediterranean, “gives up the said propriety to be held and enjoyed absolutely the Middle East, the South Atlantic and the West with all manner of right for ever”. IndiesthantheUnitedKingdom,itsstrategicallyimportant location has proved invaluable for three centuries. This report covers a number of important points. I welcomed the submission by the Government that EU With large dry docks,as well as oil fuel and ammunition funding commitments would be guaranteed by the storage supported by air links to the UK, its maintenance Treasury until 2020. However, given that the final capability has proved of crucial importance on numerous deal, if there is one, will come into force at roughly the occasions. Gibraltar’s naval docks and storage facilities same time, I would wish to see a more long-term are important today, with British and US nuclear commitment, perhaps until 2025, in order to start, submarines frequently visiting the Z-berths. Indeed, post Brexit, with a clearer base and offer more certainty. the US would like to make more use of Gibraltar, preferring it for security reasons to Rota, but it is As I have called for before in relation to arts funding constrained by the Spanish attitude to such visits. here, this report is refreshingly clear on the risks faced by Gibraltar especially from any cliff-edge removal Gibraltar’s position makes it important in combating from the single market. This should further focus minds Islamic terrorism based in the Sahel or north African on the importance of having a short-term transitional littoral. It is also a useful base from which to conduct deal, about which both the Secretary of State for trials and training in rather more benign sea conditions DExEU and the Prime Minister have signalled in favour. than are found around the western UK. Our military The fundamental point is that Gibraltarians were presence on the Rock has been reduced to a minimum given a vote in the referendum and are being brought but is sufficient to ensure maintenance of sovereignty. out despite being the most pro-remain voting district. Having said that, I believe that the Gibraltar squadron The ultimate responsibility for ensuring that Gibraltar boats need to be rather more powerful and heavier, so does not suffer lies with the Government. If its access possibly should be enhanced. to the single market is limited and prosperity is threatened, The constant infringement of Gibraltar’s territorial the Government should be prepared to further open seas by Spanish vessels is completely inexcusable, not up the British single market to ease financial pressure. least as she is a NATO ally. It is to be hoped that In any case, the vast majority of Gibraltar’s business Brexit will not be used as a reason to heighten tensions, in the single market is with the UK. because it is extremely dangerous when you do that sort of thing: things can escalate and go beyond what The border with Spain is already fairly hard, given anyone wanted. that Gibraltar is out of the Schengen zone and the customs union. It should be borne in mind that people In purely military terms, Gibraltar and its brave, having the freedom of movement to work in industries resolute people are important to the security and such as financial services and online gaming remains stability of our nation and NATO in this very dangerous an abiding concern. If Spain were to make it harder world. for Spanish citizens to go to well-paid, secure jobs in Gibraltar, that would be an act of extreme pettiness, 9.18 pm but it should not be ruled out. However, it would be Baroness Butler-Sloss (CB): My Lords, it is always a surprising, given the ameliorating tone that Spanish great pleasure to follow the noble Lord, Lord West of diplomats and their Prime Minister have taken, calling Spithead, who, I notice, has been engaged in something for “calm” and “good negotiations” with reference to of a marathon with this, his second speech this evening. Article 8 of the Treaty on European Union. I first went to Gibraltar in 1949 as a teenager with Overall, I welcome the assurances given by the my father, and I have been going there ever since. I Government on funding and keeping sovereignty with very much admired the report produced by the committee the Crown, and I think that the focus of this report on chaired by the noble Lord, Lord Boswell, as well as his negotiating as a single state with no bilateral Spanish very valuable speech at the beginning of this useful debate. 245 Brexit: Gibraltar [LORDS] Brexit: Gibraltar 246

[BARONESS BUTLER-SLOSS] reject Spain’s proposal for joint sovereignty as the only I am a vice-chairman of the Anglo-Gibraltar way for Gibraltar to retain its relationship with the parliamentary group, of which I am proud to be a EU—for it does not want joint sovereignty. member. This, of course, sets the main theme, which is that Gibraltar, as we all know, has a special position as of principle and the expression of democratic will. part of the European Union—but, as we also know, is Clearly these transcend economic and other issues. set to leave. It is staunchly British in its support of the Nor in any case are they necessarily even inconsistent United Kingdom and is a thriving centre of excellence, with other considerations. Democracy and human despite Spain’s constant interference and incursions, rights also form the priorities of the affiliation of which the noble Baroness, Lady Harris, mentioned. It 47 member states, including Spain, of the Council of is abundantly clear that during the Brexit negotiations Europe—of which the UK, post Brexit, remains an and post Brexit we must publicly and effectively support important member. Does my noble friend the Minister Gibraltar in all the situations that may arise in which therefore agree that it is within this simultaneous that will be necessary, including continuing threats context of principle and mutual practical advantage from Spain. The Government have, I am glad to say, that dialogue and understanding between the UK and promised again and again to do so, and they must Spain should now be progressed? carry out their promise. That is something that others There is also the need to protect sovereignty, not have said, and I just follow. just immediately but in the long term. The report I would also like to speak briefly about something draws attention to that distinction, and to Gibraltar’s completely different—the Criminal Finances Bill, which later vulnerability when, post Brexit, the UK is “out of I think has its Committee stage next week. Gibraltar, the room”. In view of this, what steps will the Government which is potentially affected by it, is happy with the take under international law to help prevent the intentions of the Bill, but is understandably concerned undermining of Gibraltar’s future preferences? about possible amendments. Some were tabled in the No doubt economic anxiety will persist for as long Commons, but fortunately they were unsuccessful. as it takes new deals to be struck. Yet does my noble Gibraltar has a commitment to transparency in the friend concur that there are a few commitments which, financial services sector, and is used as an example for if now given by our Government, would serve considerably other jurisdictions. It is committed to the central register to reduce Gibraltar’s current plight of economic of beneficial ownership under the EU anti-money uncertainty? Such are also recommended by the report. laundering directive; it works closely with the United First, there should be clarification of what future Kingdom Government on financial issues; it has an UK-based funding beyond 2020 can be accessed by excellent record on the exchange of information, Gibraltar if it should not be able to benefit from EU recognised by the OECD; and it has the same rating programmes after Brexit. Secondly, arising from our on that as the United Kingdom. I am sure that we in moral duty towards it, emphasised by the noble Lord, this House all hope that Gibraltar will remain a strong Lord Boswell, and others, there should be an undertaking financial centre, whatever may happen in the future. that, post Brexit, any new international trade deals for I must therefore tell Members of this House that it us will also be designed to benefit Gibraltar. Thirdly, is very important that inappropriate amendments, which there should be an early and timely negotiation with are being suggested by some Members, should not be Spain jointly to endorse the local border traffic regulation, allowed to have any adverse implications for Gibraltar. EC 1931/2006, and as pointed out by the noble Lord, This measure must not be allowed to be to the detriment Lord Luce, so guarantee the movement of labour of Gibraltar. I therefore ask your Lordships to watch between Spain and Gibraltar, in which regard Spain, what any amendments tabled to the Criminal Finances Andalusia and the Campo de Gibraltar region stand Bill actually say. We must be sure that they are not to gain along with Gibraltar itself. passed—because if they are, there will be an opportunity Then there is a much wider priority shared by Spain for Spain to denigrate Gibraltar’s financial services, and the UK: joint co-operation on security and policing which would obviously be to the detriment of Gibraltar. reflecting the importance of the European arrest warrant, We must not allow Spain that opportunity. to which the noble Lord, Lord Luce, has referred, and which prevents those wanted for crimes from escaping justice by crossing the EU’s external border, in either 9.22 pm direction. The Earl of Dundee (Con): My Lords, I begin by Does my noble friend concur that detailed government thanking the noble Lord, Lord Boswell of Aynho, and attention to these various matters, as advocated by the his committee for their excellent report. In referring to report and as strongly supported by many of us today, our obligations toward Gibraltar, I shall talk briefly would in itself help a great deal to construct a new and about the sovereignty question and how it connects to lasting framework, within which our responsibilities certain obvious economic priorities, yet how both can be discharged, good practice advanced and Gibraltar’s matters together perhaps call for a new approach and sovereignty and economy best protected? structure, which we should now start to devise. On sovereignty, the key aspect is the preference of the Gibraltarian people. They are fiercely loyal to the 9.26 pm United Kingdom. Post Brexit that is still the position, The Earl of Kinnoull (CB): My Lords, it is a pleasure although, as has already been said, 96% supported the to follow the noble Earl, Lord Dundee, who spoke case for the UK to remain in the EU. Correctly, the with his customary acumen and clarity. I remind the report endorses the UK Government’s view. This is to House that I am a member of the EU Select Committee. 247 Brexit: Gibraltar [21 MARCH 2017] Brexit: Gibraltar 248

I start by thanking the Select Committee staff for the My first visit to Gibraltar was in 1984, just prior to sustained high quality of their output. I note that this Spain fully reopening the border. I was there to meet was the 11th Brexit report, which now number 15, that T&G representatives of the 6,000 Moroccan workers has been produced since 24 June last year, with more who were then critical in maintaining the economy of in the pipeline. I also pay tribute to the noble Lord, Gibraltar. As we have heard, over recent decades Lord Boswell, for his leadership of the EU committee the development of Gibraltar’s economy has been structure and his continued and continuous good humour. underpinned by access to the EU single market and I want to make just three brief comments tonight. the pool of more than 10,000 workers who cross daily The first relates to the context of the report, and in into Gibraltar. particular the special nature of the relationship between However, what matters most to Gibraltar, and will citizens of the UK and those of Spain. I dare say that do in the future, is access to the UK market for its there are many here tonight who have, as I have, a long services. Britain and Spain have a mutual interest in history of enjoyable experience of both business and good relations. We invest and trade with each other on leisure in Spain. While I hang no argument on that, a huge scale. According to a leaked report to El País this proximity is borne out by the numbers: 310,000 from the Spanish Brexit commission, the UK’sdeparture UK citizens live in Spain and 125,000 Spaniards live in from the EU will leave Spain hugely exposed economically, this country. In addition, there was much evidence in with tourism and the food, pharmaceutical and our inquiry of this citizen engagement, not just the automotive industries being hit the hardest, together economic interdependence described by many noble with the innumerable repercussions for the hundreds Lords tonight but friendliness at the citizen level, of thousands of Britons who live in Spain and the including that described in paragraph 58 for instance: hundreds of thousands of Spaniards in the UK. I unofficial and commendable police and customs declare an interest as one of those citizens is my co-operation. It would be a travesty if politicians husband. mucked this up and a great detriment to many lives. I hope the committee’s aspirations for all parties to Can the Minister confirm that this citizen-led warmth work together positively and pragmatically to secure will be hammered home during the Brexit discussions? an agreement that reflects all their economic interests The second area that I want to touch briefly on is will be the primary factor in negotiations, rather than the way in which the Gibraltarians are approaching what Spanish sources allegedly told El País, which was matters. In evidence, we met three in person, including simply not to do mutual damage. The framework the Chief Minister and the Deputy Chief Minister, behind the Brexit negotiations must be the absolute who are here tonight. Other Gibraltarians gave us commitment of the UK Government never to enter written evidence. Their contributions were without into sovereignty discussions against the will of the exception measured, constructive and helpful, while Gibraltar people. remaining strong in advancing Gibraltar’s position. It In their White Paper on Brexit, the Government would be very helpful if the Minister recognised that said that Gibraltar’s interests and priorities will be and confirmed that the Government will maintain expressed and understood through the new joint their current level of engagement with Gibraltar during ministerial council. At the conclusion of its second the Brexit process. meeting held only a few weeks ago, the Minister, My third and final point concerns the local border Robin Walker, promised to continue engagement with traffic regulation. In our report we discuss this from Gibraltar throughout the negotiations. It is vital that paragraph 62 onwards and describe it in detail in box the people of Gibraltar have confidence in that process 1 and appendix 3. In the time available for our inquiry, and that its Government are fully involved. Will the we were not able to take any evidence on how such Minister give us more detail on the engagement process agreements are working elsewhere. However, our staff once Article 50 has been triggered next week? What did reference a 94-page report, a copy of which I have priority will be given to Gibraltar in the Government’s with me, published in November 2012, and the news is formal notice to trigger Article 50? Will the Gibraltarian good. The report, Ex Borea Lux?, on cross-border Government be part of the negotiation team when co-operation on the EU’s eastern border, was prepared matters affecting them are considered? by the Institute for Stability and Development and EU membership has seen police and judicial funded by the Finnish and Norwegian Governments. co-operation. What priority will the Government give It details the experience of a number of successful to this in the negotiations to ensure that the border situations where local border traffic agreements have with Spain cannot again be exploited by those seeking been concluded, particularly between Finland and to evade justice? As my noble friend Lord West said, Russia and Poland and Russia. Will the Minister we should not forget the military importance of Gibraltar comment on the use of this regulation as a potential and its brave and resolute people for the security and route to consider for the Gibraltar/Spain land border stability of the dangerous world in which we now live. post Brexit? 9.34 pm 9.30 pm Baroness Goldie (Con): My Lords, I begin by thanking Lord Collins of Highbury (Lab): My Lords, I too the noble Lord, Lord Boswell of Aynho, for tabling thank the noble Lord, Lord Boswell, for his excellent this debate. I also thank the European Union Committee introduction and for the excellent report of your for its report, Brexit: Gibraltar, which provides a valuable Lordships’ sub-committee. I also welcome the Chief analysis of the opportunities and challenges presented Minister, the Deputy Chief Minister and other to Gibraltar by the UK’s decision to leave the European representatives from Gibraltar who are here tonight. Union. The Department for Exiting the European 249 Brexit: Gibraltar [LORDS] Brexit: Gibraltar 250

[BARONESS GOLDIE] report as an important contribution to that process Union is considering the findings of the report and and we are pleased with its finding that the Government will publish its response in the coming months—I of Gibraltar have been satisfied with the UK hope sooner rather than later. I also thank noble Government’s engagement to date. Let me reassure Lords for their contributions to this debate, which has the noble Earl, Lord Kinnoull, that we very much been fascinating. welcome that relationship.It is positive and it is important. As noble Lords will know, my honourable friend Let me turn now to some of the issues and priorities Robin Walker, the Member for Worcester and the raised both in the report and by noble Lords over the ParliamentaryUnder-Secretaryof StateattheDepartment course of this debate. Perhaps not surprisingly, the for Exiting the European Union, appeared before the economy featured consistently. There are challenges committee in February of this year to discuss the and opportunities which EU exit presents to Gibraltar’s extensive engagement with the Government of Gibraltar economy. Gibraltar is rightly proud of the strong that has taken place since the referendum. We remain economy it has built for itself. It has the fourth highest steadfast in our support of Gibraltar, its people and GDP per capita and the second lowest unemployment its economy—the referendum has not changed that—and rate in the world. The committee heard how Gibraltar’s we have committed to fully involve Gibraltar to ensure economy has been transformed in recent decades from that its priorities are properly taken into account as we one dominated by military spending to a thriving and prepare to leave the EU. It is, as the report rightly resilient economy based on financial services, tourism notes, the Government’s responsibility to ensure this, and commercial port services. That is testament to the and I can reassure noble Lords that it is a responsibility hard work, creativity and ingenuity of all Gibraltarians. that we take very seriously. I wish in particular to If I may say so, it is testament also to that vision of reassure the noble Lord, Lord Boswell, on that point. 20 years ago conceived by the noble Lord, Lord Luce, This is demonstrated by the fact that the Prime to whom I pay tribute. Minister met the Chief Minister of Gibraltar on the The noble Lord, Lord Hannay,with some justification, day she took office, and has had regular engagement described Gibraltar’sposition in the EU as a “Goldilocks since. As a number of your Lordships pointed out, the deal”. I do not disagree; it is a fairly accurate description. Government have established a new joint ministerial But I also observe that the UK has been an important council for Gibraltar which is chaired by the Member support and bolster in that relationship. The UK for Worcester. It brings together Ministers from the remains and Gibraltar remains—and with that tandem UK Government and the Government of Gibraltar to of talent I am unable to share the pessimism of the discuss the opportunities and the challenges presented noble Lord, Lord Hannay. by EU exit. The first meeting took place on 7 December and the second on 1 March 2017, with both DExEU On market access, the report highlights the strong and FCO Ministers taking part alongside the Chief links between the economies of Gibraltar and the UK, Minister of Gibraltar, the Deputy Chief Minister and particularly when it comes to financial services. For the Attorney-General. I know that the honourable example, as others mentioned, 20% of UK car insurance Mr Picardo, his deputy and the Gibraltarian Attorney- policies are underwritten in Gibraltar and around General are taking a keen and tangible interest in 90% of Gibraltar’strade is with the UK. The Government these proceedings. Perhaps I may also say what a are clear that we should work together to maintain pleasure it was to meet them earlier this evening. and strengthen these economic bonds after we leave the European Union. When it comes to financial services There has been a wide range of other engagements it is important that the strong mechanisms already with the Government of Gibraltar at both official and underpinning Gibraltar’s access to the UK market are ministerial level. The Secretary of State for International enshrined in UK law. That is worth remembering. The Trade met with the Chief Minister of Gibraltar on Government’s clear intention is to maintain that access. Monday to discuss the valued links between our economies, and just last week the Parliamentary Under- Wehave also agreed that, together with the Government Secretary visited Gibraltar to get a first-hand view of of Gibraltar, we will take into account the priorities of its unique context and to speak to representatives Gibraltar and the other overseas territories as the UK from across its thriving economy, from the business looks to establish new trade and investment opportunities community to the trade unions. The Chief Minister of with the wider world. This is a very important aspect Gibraltar said of the visit that it, of what lies ahead. The Secretary of State for International “symbolised the relationship that exists between the Governments Development confirmed this position to the Chief of Gibraltar and the UK, and is a clear reflection of the real Minister of Gibraltar during their meeting yesterday. I action there is on the real pledge that Gibraltar would be fully hope that that reassures the noble Lord, Lord Anderson, involved in exiting the European Union”. that we approach these matters positively. It was an Mr Picardo also said that Gibraltar has had access to issue to which my noble friend Lord Dundee also the highest levels of the UK Government and believes referred. that that access will continue. I hope that that reassures On the issue of access, the Government have been your Lordships, not least the noble Lord, Lord Collins, clear that Britain is seeking a new, strong partnership who expressed a particular interest in how this process with the European Union: a partnership that maintains is working. I hope that it demonstrates that this is not the close relationship we have with member states and just a close but an informed relationship. builds further on them for both the UK and Gibraltar. Through our engagement with the Government of Although we are not seeking to maintain membership Gibraltar we have built an understanding of Gibraltar’s of the single market, this agreement should allow for particular priorities in the EU exit. We welcome this the freest possible trade in goods and services between 251 Brexit: Gibraltar [21 MARCH 2017] Brexit: Gibraltar 252 the UK and EU member states. The Government are approximately ¤4 million-worth of cannabis was seized confident that if we approach these upcoming negotiations in a joint operation on the waters. So there is a in a spirit of good will, we can deliver a positive mutuality of interest in trying to make these positive outcome that works for all, including Gibraltar. The arrangements continue. noble and learned Baroness, Lady Butler-Sloss, raised The issue that came out of the debate perhaps more a somewhat technical issue to which I confess I do not cogently than any other was that of sovereignty. A have the answer: I apologise for that. I undertake to number of noble Lords referred to this. I want to write to her to provide clarification. I noted her concern reiterate that the UK has reaffirmed its double-lock about what possible amendments to the Criminal Finances sovereignty commitment to Gibraltar. We will never Bill might mean and I will ensure that we look at that. enter into arrangements by which the people of Gibraltar A number of issues were raised in relation to EU would pass under the sovereignty of another State funding. My noble friends Lord Selkirk and Lord against their freely and democratically expressed wishes, Dundee wanted to know what lies ahead, post Brexit. nor will we enter into a process of sovereignty negotiations I am afraid that that is not something I can comment with which Gibraltar is not content. We will, in short, on in detail; it is too early to say what the position of continue to stand beside Gibraltar and its people. Gibraltar and the other overseas territories may be in That is the metaphorical foundation of the Rock. My regard to such funding, but we will continue to work noble friend Lord Selkirk made a colourful analogy closely with the Government of Gibraltar to understand when he equated the steadfastness of the Rock with their concerns in this important area. the steadfastness of our relationship with Gibraltar Not surprisingly, many contributors referred to the and its people. I could not have put it better. issue of the Gibraltar-Spain border. We recognise the I am conscious of time, which is a pity as there are importance of a well-functioning border to the economy, important issues here that I wanted to cover. The as well as to the surrounding Spanish region and to noble Lord, Lord West, asked about the strategic the thousands of Spanish workers who cross the border significance of Gibraltar in relation to defence and every day. We are clear that politically motivated delays free maritime passage. If he will permit it, I will write are unacceptable. They cause serious problems for to him in fuller detail on the points that he raised. people on both sides of the border and we stand ready Questions were also asked about the general intentions to work with the Government of Gibraltar and the of Spain. My colleague, my noble friend Lady Hooper, Government of Spain to ensure that the border continues made a very helpful comment in that respect, echoed to function well after we leave the European Union. by others, that is that there is a mutuality of interest in We approach these negotiations with good faith and the negotiations for both Spain and the UK. That has determination and in a spirt of good will. been reiterated by the Spanish Government. The indications are that they wish to take a pragmatic and A number of contributors raised points and I hope constructive approach. The Prime Minister of Spain that I have answered them. The noble Lord, Lord Boswell, has said that he is confident that the Government in made the point about the importance of the border Madrid are sitting squarely behind the objective of very powerfully, as did my noble friend Lord Suri and achieving a positive relationship between the UK and others. The issue of the Local Border Traffic Regulation the EU after Brexit. was raised by the noble Lords, Lord Boswell, Lord Luce and Lord Hoyle, my noble friend Lord Dundee In conclusion, this has been an important and and the noble Earl, Lord Kinnoull. The UK Government interesting debate, with many positive and helpful are working with the Government of Gibraltar to suggestions. I am sorry that I have not been able to consider all options on the crucial issue of the border. deal in detail with all the points raised by noble Lords. As the committee noted in its report, the Local Border I would like to end on a note of optimism. I was aware Traffic Regulation would, of course, require commitment that the noble Lord, Lord Luce, is currently Chancellor from Spain. of the University of Gibraltar. I had a look at its motto: “Scientia est Clavis ad Successum”. I know The noble Lord, Lord Luce, also raised the issue of that noble Lords are all scholars of Latin and do not police and judicial co-operation, as did my noble require a translation, but it is simple: “Knowledge is friend Lord Dundee. That is a very important area. the key to success”. We have been clear that we will do what is necessary to keep our people safe. One of the 12 objectives for the I suggest that knowledge by the UK of what Gibraltar negotiations ahead is to seek a strong and close and the Gibraltarian people need, knowledge of what relationship, with a focus on operational and practical our EU partners wish to achieve and their knowledge cross-border co-operation, to fight crime and terrorism. of what we seek to achieve make a good starting point for how we embark on these vital negotiations. If we By way of encouragement I can say that there have approach these matters based on knowledge, all will been some very good examples of how that partnership benefit. The UK will benefit—and if the UK benefits, with Spain and Gibraltar has been working. Spanish Gibraltar, too, will benefit. and Gibraltarian agencies often co-operate to tackle issues such as drug smuggling. In January of this year, House adjourned at 9.48 pm.

GC 1 GMCA Order 2017 [21 MARCH 2017] GMCA Order 2017 GC 2

Grand Committee Greater Manchester Fire and Rescue Authority to the Greater Manchester Combined Authority, with these Tuesday 21 March 2017 functions to be exercised by the directly elected mayor. Transferring oversight of fire and rescue functions to the mayor will provide direct electoral accountability 3.30 pm for the provision of this key public service. It should also facilitate closer working with other local partners, including the police. This is obviously consistent with Greater Manchester Combined Authority our desire to encourage greater collaboration between (Fire and Rescue Functions) Order 2017 the emergency services. Motion to Consider The order permits the mayor to delegate certain Moved by Baroness Williams of Trafford responsibilities to a fire committee, to be formed of members from the constituent councils of the Greater That the Grand Committee do consider the Greater Manchester Combined Authority. The committee is Manchester Combined Authority (Fire and Rescue intended to assist the mayor in carrying out their fire Functions) Order 2017. and rescue functions. At the same time, the order identifies a number of fire and rescue functions as strategic to the delivery of fire and rescue. These The Minister of State, Home Office (Baroness Williams functions must be personally exercised by the mayor of Trafford) (Con): My Lords, I shall speak also to the and shall not be delegated. These strategic functions Greater Manchester Combined Authority (Transfer of include approving the local risk plan and fire and rescue Police and Crime Commissioner Functions to the Mayor) declaration in accordance with the fire and rescue Order 2017. These orders give effect to the policing national framework, and approving contingency plans and fire elements of the devolution agreements between under the Civil Contingencies Act 2004. The elected the Government and the Greater Manchester Combined mayor will also remain personally responsible for decisions Authority. relating to the appointment of the chief fire officer. With the Committee’s permission, I will turn first Scrutiny of the mayor’s exercise of fire and rescue to the Greater Manchester Combined Authority (Transfer functions will be undertaken in line with the arrangements of Police and Crime Commissioner Functions to the for non-PCC functions. Mayor) Order 2017. The purpose of this order is to The changes to be made by this order have been make detailed provision in relation to the transfer of endorsed by the people of Greater Manchester in a responsibility for police and crime commissioner functions public consultation conducted by the combined authority. in Greater Manchester from the Greater Manchester The order was developed in close consultation with police and crime commissioner to the directly elected the Greater Manchester Combined Authority and has mayor of Greater Manchester. been formally consented to by the combined authority The transfer of these functions to the elected mayor and its constituent councils. I commend these orders will preserve the democratic accountability already to the Committee. established under the police and crime commissioner model. It will also join up oversight of a range of local Lord Stunell (LD): First, I thank the Minister for services, including fire and rescue, opening up her introduction to these orders. I agree with her that opportunities for broader collaboration. This is a chance there has been wide consultation and that it is appropriate to build on the strengths of the PCC model. The order for this Committee to bear that in mind when reaching requires that the elected mayor must personally exercise its decision in what I hope will be only a few minutes’ the core strategic functions of setting the police and time. I should declare a residency qualification, in that crime plan, take decisions on chief constable appointments I live in Greater Manchester and for 18 years I was an and set the policing component of the combined MP for one of the 27 constituencies. For eight years, I authority precept. was a member of one of the 10 constituent borough To provide additional leadership capacity, the order councils—and, to complete the full set, I was a Minister enables the elected mayor to appoint a deputy mayor in the Department for Communities and Local for policing and crime, to whom certain police and Government when the combined authority order was crime commissioner responsibilities may be delegated. set up in 2011. I know that the city deal that flowed from The order also requires that a new police and crime that was widely welcomed across Greater Manchester, panel be set up. This panel will scrutinise the decisions along with the steps that have been taken since to of the mayor in respect of the exercise of their PCC ensure that additional resources—funding what has functions in much the same way as the current panel traditionally been central government, Whitehall-directed does in relation to the police and crime commissioner. services—will be put into the hands of the combined This order has been developed in consultation with authority from the start of the new regime in May. the Greater Manchester Combined Authority and the The progress made so far has been much envied and Greater Manchester police and crime commissioner, imitated around England, where a steady stream of and the combined authority and its constituent councils visitors from other cities and for that matter rural and have given their consent. shire areas have been received by the combined authority, I will now turn to the Greater Manchester Combined asking it how the model has been developed and how Authority (Fire and Rescue Functions) Order 2017. it can be copied. All that is positive and very much a The purpose of this order is to transfer the responsibility direction of travel that my parliamentary colleagues for oversight of fire and rescue functions from the and I believe is right, with more decision-making and GC 3 GMCA Order 2017 [LORDS] GMCA Order 2017 GC 4

[LORD STUNELL] I not only thank the Minister for introducing the discretion over the delivery of public services in a orders, but welcome the fact that the Government given area in the hands of those who live there and are have put them together. To add to the points she elected from there. raised, it is not just about bringing together the blue I have a concern about the mayoral model, but that light services, which is important. We need to see particular ship has left port. A loss in cross-authority police and fire as part of general public service reform. representation and accountability flows from that, but Many of the issues the services face are related to the these orders do something to combat or respond to that. fact that people have problems across their lives. We Certainly, to replace the police and crime commissioner need to get the police and fire services engaged in the —somebody who, for all his qualities, was elected on a work we are doing in Greater Manchester across a wider 14% turnout across Greater Manchester—with somebody range of public services, not just in blue light services. elected to be mayor of the combined authority, and The answer to the question asked by the noble with a much more significant and wider role in the Lord, Lord Stunell, is that the arrangements are currently delivery of public services, is almost bound to increase handled through Blackpool but they are coming back the visibility and accountability of the person carrying to Greater Manchester. We asked for ambulance service out that role. I welcome that, as do the constituent commissioning to come back to Greater Manchester authorities. because, as we are now a devolved health area, we The police and crime panel, to which the Minister need to do this rather than working through CCGs in referred, is seen as a way of maintaining or improving Blackpool, for example. the police service’s accountability. There is a way to go There are actually two panels that look after the in that regard; it is to be hoped that a more visible PCC in Greater Manchester: the scrutiny panel, made mayor’s being in charge of the police service may lead up of members of the authorities, and the combined to the panel having more visibility and capacity to authority itself. We will need to find a mechanism to keep control, or a proper oversight of that service. continue that work, because it is important that the Nevertheless, it is a good thing to see that incorporated work of the police and crime commissioner, whether in the proposals. exercised by the mayor or anybody else, has consent As for the Greater Manchester Fire and Rescue across the whole of Greater Manchester on major issues. Authority, there is no equivalent commissioner but It may be my ignorance, but the documentation rather control by representatives of the 10 local authorities, does not make clear the deputy’s role. I would hope and there is no doubt that the new arrangements will that the mayor would appoint a deputy. He or she will give more visibility to the leadership of that service. In have a lot to do generally and we need to supervise the longer term, bringing the police and fire services what is going on in the police service. A day-to-day under common management must be a better way to role in running the police service would be too much provide a coherent and integrated service. Indeed, my for anybody, and the same is true for the fire service. I one question to the Minister relates to that. Today, the hope we will set up the committee to run that, but we Care Quality Commission has produced a report on need to understand the role of the deputy and how independent ambulance services. The ambulance service answerable they will be to various public bodies. in Greater Manchester is provided by an independent As the Minister is probably aware, I regret that the body based in Blackpool. Bearing in mind that these PCC can implement the Greater Manchester precept orders bring together two of the blue light services in without really consulting the 10 authorities. That needs Greater Manchester—and particularly in view of the to be changed. Unfortunately these orders do not do critical nature of that report, but more generally in that; they roll it on. It is also not clear in the fire order any case—have the Government looked at ways the whether the fire precept will need to go to the combined blue light services in Greater Manchester could be authority for approval, or the mayor will simply make brought together? Again, I remind the Minister that a recommendation and we will not have any control the combined authority in Greater Manchester will be over it. There has been a little dispute this year about taking over a significant amount of NHS commissioning how much the fire precept should go up by. With the for future years—a step that I very much favour. representative of Trafford, I was on the losing side of With that sole question to the Minister—I dare say that argument but we need to do that. she is not equipped to answer it off the top of her As the Minister said, we consulted on this across head; perhaps she would like to write to us about Greater Manchester. Wewelcome the changes. It will be bringing together the three blue light services—I am aninterestingchallengetohaveamayorwiththecombined certainly happy to support these orders. authority but I am sure we can all make it work to ensure proper devolution across Greater Manchester. Lord Smith of Leigh (Lab): My Lords, I declare my interest not merely as a member of the combined 3.45 pm authority and leader of Wigan Council; I am in a position to answer the question asked by the noble Lord Beecham (Lab): My Lords, I am sure the Lord, Lord Stunell, on ambulance services because mayoral system will be interesting—possibly in the I chair the Greater Manchester health partnership Chinese sense—but if it is likely to work anywhere, it board. The orders are very interesting. I have yet to see will undoubtedly be Manchester. I want to raise a in the manifestos of either of the two main mayoral couple of issues with the Minister. candidates what their policies are on the docking of First, of course the Government would like to see working dogs’ tails. That obviously is an important combined police and fire authorities. There are places consideration. where that might be suitable. But I take it that where GC 5 GMCA Order 2017 [21 MARCH 2017] GMCA Order 2017 GC 6 there is a different view locally—as there would be in and the Chamber. They are all different and sometimes the north-east, for example, where we have different you cannot work out why. We need a discussion about boundaries for the different services—there will not be where we are going with local government. All these any compulsion on authorities to go in that direction. positions are important, and it is important to have I am sorry to say that, having been spending my democratic control. Let us not forget that the individuals time on the next statutory instrument, I have forgotten involved will be spending huge sums of council tax what my second point was. Perhaps I will approach payers’ and taxpayers’ money. We must be clear who is the Minister afterwards. there, why they are doing it and how we engage with them. But that is a discussion for another time. Lord Kennedy of Southwark (Lab): My Lords, first, As I said, I support the orders and I certainly wish I make my usual declaration of interests as in the the new Manchester mayor—whoever it is, although I register; specifically that I am a local councillor and a hope, of course, that the Labour candidate gets elected— vice-president of the Local Government Association. the very best in their new role. The two orders before us I have no issue with, and my comments will be correspondingly brief. The Minister, Lord Beecham: My Lords, I have overcome my the noble Lord, Lord Stunell, and my noble friend senior moment. I wanted to ask whether any consideration Lord Smith of Leigh, who is a member of the authority, had been given to ambulance trusts, which are fairly are the experts here. unaccountable bodies but are, of course, part of the As we have heard, the orders transfer fire and emergency services. Has there been any discussion rescue functions and police and crime commissioner with either trusts or local authorities about a different functions to the mayor for Greater Manchester. I am relationship—keeping that phrase fairly neutral—as pleased that we are having an election for this position regards the future of that service? on the first Thursday in May. These functions will then be transferred to this new elected person to be Baroness Williams of Trafford: I thank all noble Lords accountable for the delivery of these very important who have taken part in this debate. I too must declare services to people living in the Greater Manchester an interest as a former councillor and resident of area. At the same time, the office of police and crime Greater Manchester. I pay tribute to Tony Lloyd who commissioner and the Greater Manchester Fire and has held the fort very well over the last couple of years Rescue Authority will both be abolished. in his role as interim mayor, and in all the roles he has I record my thanks to Tony Lloyd, who has been held previously in government and local government. the PCC for Greater Manchester since 2012. Before We have here three people who will be voting in the that he was a Member of the other place for 29 years, mayoral elections in May, so that is very good. The noble for both Stretford and Manchester Central. In that Lord, Lord Stunell, mentioned turnout. I recall an time, he also served as the chair of the Parliamentary experience I had in Greater Manchester of probably Labour Party, which is an interesting job to hold the worst turnout in history: the Benchill by-election down, and he managed to hold it for six years until he back in November or December 2001, where turnout left this place to become the PCC. was 8%. That was a depressing low. Looking forward to the mayoral elections, I was quite sceptical about Lord Beecham: Escaped. the Mayor of London, but that is not a position for which any political party is scraping round for candidates. Lord Kennedy of Southwark: Escaped, yes. Anyway, It is very sought-after and has gained a profile over the it is important to put that on record. For both policing years, and I fully expect that will happen in Greater and fire and rescue services, specific functions can be Manchester and elsewhere. As it does, visibility will grow exercised only by the mayor, although they will be able and accountability will become a lot more obvious. to appoint a deputy mayor for policing and crime. The noble Lord, Lord Smith—I was going to call The issue I have with these devolution deals in him my noble friend, but he is really—talked about general—not this one specifically—is that I sometimes blue light services being brought back down to GM. feel they are a little unclear and you get a sort of The noble Lord, Lord Beecham, asked about ambulance patchwork. I accept the point that areas can work with trusts. It is within the gift of whichever combined what they think they can cope with. Certainly, in this authority to request collaboration in that regard, or area, the Greater Manchester mayor will have considerable that those matters be part of the devolved model. powers, in many respects similar to those of the Mayor There are no limits to what the model may look at. of London. They will also have powers in respect of That brings in the point made by the noble Lord, Lord the health service. Kennedy: that the different devolution deals are a bit I am sure the three noble Lords present today fully of a patchwork. This is necessarily a patchwork because understand all the functions the mayor will take over, every area is different. For example, rural areas look but I am not convinced that every Member of your very different from urban areas; they have different Lordships’ House is fully aware, or members of the needs and different proposals. The noble Lord, Lord general public living in Greater Manchester and other Kennedy, is smiling at me slightly but I said that on the places. We need to have a much wider discussion about then devolution Bill, and I firmly believe it. I say to the where we are going with local government and all noble Lord, Lord Stunell, that the Liberal Democrats these functions. It is time for the Government to grilled me on accountability and scrutiny during the consider producing a Green Paper to enable proper passage of that Bill. We have very rigorous structures debate about these functions in England. I have approved in place, certainly in Greater Manchester and, I hope, a number of these orders in recent weeks in this Room elsewhere. GC 7 GMCA Order 2017 [LORDS] Electricity Supplier Payments GC 8

[BARONESS WILLIAMS OF TRAFFORD] TheParliamentaryUnder-Secretaryof State,Department The noble Lord, Lord Beecham, asked about the for Business, Energy and Industrial Strategy (Lord Prior compulsion to combine police and fire authority areas, of Brampton) (Con): My Lords, I beg to move that the particularly where they are not contiguous. There is CommitteeapprovesthedraftElectricitySupplierPayments absolutely no compulsion to do that. If they are not (Amendments)Regulations2017.Thisinstrumentamends contiguous, such a move would require structural regulations concerning the contracts for difference scheme change anyway. and the capacity market. Before diving into the specifics I think I have answered all the questions, but if not of the amendments we are discussing today,I will briefly I will certainly come back to noble Lords. explain these two schemes. Contracts for difference, or CFDs, provide long-term Lord Kennedy of Southwark: I accept entirely that price stabilisation to low-carbon generators, allowing different areas have different needs and may want to investment to come forward at a lower cost of capital tackle this issue in different ways. The point I was and therefore at a lower cost to consumers. The scheme making is that the Government have not made it clear ensures greater certainty and stability of revenues to where we are going. That is not to say that different electricity generators by reducing their exposure to areas cannot tackle this issue in different ways; of volatile wholesale prices, while protecting consumers course they can; they have different needs. However, from paying higher support costs when electricity prices the Government have never set out clearly in a document are high. The capacity market provides regular payments where they are going with this, which is why the to reliable forms of generation in return for such capacity situation is confusing. The West Midlands is a similar being available when needed, thus ensuring that enough conurbation to others, with similar problems and similar capacity is always in place to maintain security of areas, but the deal that was arrived at and the powers supply. A fundamental aspect of both schemes is the that were transferred are vastly different from those in competitive auction process for awarding contracts, other similar areas. Why? That information is missing. which drives down costs to consumers. There is no difficulty with having different arrangements, The next CFD auction, with a budget of £290 million but we need to know how the Government have arrived for less established renewables technologies, is on track at the present position. to open in April. This will result in enough renewable electricity to power 1 million homes and reduce carbon Baroness Williams of Trafford: As the noble Lord, emissions by around 2.5 million tonnes per year from Lord Smith, mentioned, we left it up to local areas to 2021-22 onwards. It will also allow developers of say what their version of public service reform looked innovative renewable technologies to deliver the best like—what did public service efficiency look like going deal for bill payers. Three main capacity market auctions forward and what was their plan for growth? Therefore, have been held each December from 2014 to 2016 to that might look slightly different in different areas, secure capacity four years ahead from 2018-19 to which is why I explained it in the way I did. However, 2020-21. The latest of these secured 52.4 gigawatts of there will be similarities: transport is a huge issue in capacity at a price of £22.50 per kilowatt per year. In Greater Manchester and the solution to that will be January 2017, an early capacity auction was also held huge in terms of growth, as it will be for other areas. to secure capacity for winter 2017-18. The auction secured Motion agreed. 54.4 gigawatts of capacity at a clearing price of £6.95 per kilowatt per year. Greater Manchester Combined Authority The regulations we are considering today will implement a second tranche of minor and technical (Transfer of Police and Crime amendments to improve the efficiency and transparency Commissioner Functions to the Mayor) of the CFD supplier obligation, the levy on suppliers Order 2017 that pays for the costs of CFDs. They build on a first Motion to Consider tranche of changes approved by Parliament last year, which became law in April 2016. These further changes 3.55 pm are being implemented later to allow time for necessary Moved by Baroness Williams of Trafford changes to be made to the settlement system, which determines the way that CFD payments are calculated That the Grand Committee do consider the Greater and paid. Both the changes under consideration today, Manchester Combined Authority (Transfer of Police and those implemented last year, were the subject of a and Crime Commissioner Functions to the Mayor) public consultation and received a largely favourable Order 2017. response. These regulations also amend the levies that Motion agreed. fund the companies established to deliver the CFD and capacity market schemes. Electricity Supplier Payments (Amendment) Regulations 2017 4pm I will now summarise how the supplier obligation Motion to Consider works and describe the amendments that are being 3.56 pm made. The supplier obligation is a compulsory levy on all GB electricity suppliers to meet the costs of clean Moved by Lord Prior of Brampton electricity generation under contracts for difference. ThattheGrandCommitteedoconsidertheElectricity The levy is collected by a private company, the Low Supplier Payments (Amendment) Regulations 2017. Carbon Contracts Company, of which the Government GC 9 Electricity Supplier Payments[21 MARCH 2017] Electricity Supplier Payments GC 10 are the sole shareholder. The levied funds are paid to rather than being recovered over the lifetime of the CFD generators for the electricity that they produce. asset through depreciation charges on the levy. Overall The levy rates are set on a quarterly basis and consist there is no difference in costs to suppliers.The operational of two payments. costs were subject to consultation, giving stakeholders The first is paid daily, based on every unit of the opportunity to comment, and remain unchanged supply, and the second is a quarterly reserve amount following the consultation. The regulations revise the that ensures that the Low Carbon Contracts Company levies currently in place to reflect the operational cost faces as little risk as possible in covering payments to requirements in 2017-18. Subject to the will of Parliament, generators. Both rates are set based on forecasts of the settlement costs levy for the Electricity Settlements payments to the CFD generators, and levied on suppliers Company is due to come into force by 28 March 2017, based on their market share. At the end of each the operational cost levy for the Low Carbon Contracts quarter, the supplier payments are reconciled with Company by 1 April and the changes to the CFD actual payments to generators. supplier obligation later this year. The changes being made through these regulations As a final point, I assure noble Lords that the will further improve the efficiency of the supplier Government will continue to evaluate and monitor obligation mechanism. The most significant of the the reforms following implementation to ensure that changes will speed up reconciliation payments to allow the measures put in place remain effective and continue overcollected funds to be returned more quickly after to represent value for money for the consumer. the end of a quarter so that suppliers face less cash-flow risk. Secondly,they will allow the Low Carbon Contracts Lord Deben (Con): I shall intervene for just a short Company to reduce the reserve amount without notice moment. Whenever we talk about these things there is when it has been overestimated, to ensure that suppliers always a kind of reticence—a fear somehow or other do not overpay unnecessarily for renewable generation. that the customer will be charged in an unsatisfactory This reduces their cash-flow risk. Thirdly, they will way for Britain to move to the low-carbon economy enable the Low Carbon Contracts Company to recover that we all seek. I remind the Committee of my interest funds from suppliers when a compensation payment as chairman of the Climate Change Committee. to generators is due in respect of generation that I will say three quick things. First, this is inevitably happened more than 10 quarters ago. Finally, they will a complex matter. Inevitably, anyone listening to the prevent double counting of the green import exemption Minister describing what was changing might have and the energy intensive industry exemption to avoid some difficulty in following, were they not absolutely suppliers demonstrating a negative market share and up to date with what it was changing from. That is one thereby avoiding payment of levies. of our problems: when we deal with these matters it is Taking these changes together with those introduced difficult to get them right and to get them simple. The last year,we estimate that the cost of CFDs to consumers Committee must accept that the Minister did a great will be reduced by £38 million over five years—a small job in explaining what is to happen. The regulations’ reduction of some 40p to 60p in consumer bills. This purpose is to do what I imagine we will go on doing set of changes alone was estimated to reduce bills by almost every year to make sure that we learn from the £22 million over the same period. lessons of the past and discover mechanisms whereby we can make the system work as cost effectively as The second objective to be delivered through this possible. I emphasise that all of us wish to support instrument is to set a revised operational cost levy for that process. Whereas we want some stability in the the Low Carbon Contracts Company and a revised overall system, we will be concerned if the basics are settlement costs levy for the Electricity Settlements changed more than is absolutely necessary. We are Company, the company responsible for collecting and perfectly happy if on each occasion we seek to tighten making payments to capacity providers under the some things and loosen others to make the system capacity market. The companies play a critical role in manifestly more effective. delivering the contracts for difference and capacity Secondly, however, I hope the Minister, in all the market schemes and it is essential that they are sufficiently times that he speaks on these matters, will refer people funded to perform their roles effectively.The Government to the work recently done by the Climate Change scrutinise their operational cost budgets closely to Committee, which shows that the overall effect of our ensure that they reflect the operational requirements low-carbon policy has been to reduce bills, not increase and objectives of the companies and deliver value for them. Roughly speaking it costs us about £9 a month money. more to pay for the costs of moving towards a low- The companies have performed well and the cost of carbon economy, but the bills are £20 a month less their core activities is slightly down from 2016-17. The than they would have been because of the effects of increase in both budgets is due to the cost of upgrading those policies. As people exchange old white goods settlement system software. The software upgrades are and other electrical goods for new ones, because of necessary to reflect a number of policy changes that our policies, the latter are much more efficient. We have simplify and improve the overall effectiveness of the pressed the technology. capacity market and the CFD scheme. For example, I remember going to buy a freezer at the beginning the changes to the supplier obligation being discussed of the European Union process of warning people today will need to be reflected in the settlement system. about the amount of energy used by new products—when The software upgrades are being treated as operational the little notices came in for the first time. The freezers costs rather than funded via capital. This means that on offer ranged from those with an A rating to those they will be charged in full to the levy in 2017-18, with a G rating. As a matter of fact, I did not buy a GC 11 Electricity Supplier Payments[LORDS] Electricity Supplier Payments GC 12

[LORD DEBEN] find out why that was, nobody could tell us. Of course, freezer in that sale. I waited a year for the next January the industry was unwilling to explain it—and one sales. I went around again and discovered that all the could understand why—and the Government admit freezers were now between an A++ rating and a that they do not have a ready answer. The Minister has B rating. In one year we had changed: people were said that the amendments address the cost of the told about the value of low-carbon, low-emission products necessary adjustment in how the market works and at a time when they could do something about it. They operating, as far as possible, a free market as we move were not just generally told about it, but told at the towards a zero-carbon electricity supply.In that context, moment when they could save so much a year by I hope he will spend a good deal of time concentrating making that choice. Manufacturers discovered that on the two factors that are independently assessed as they would not sell their products unless they made the reason for higher prices in the business sector. those technological changes. Otherwise, I am afraid that he may be led down the I raise these issues because the constant talk in the line that it is all about green taxes, when the opposite press is very trying—not just for those of us who are is true. concerned with them daily but for the Government and Opposition too—as if all this has made bills 4.15 pm heavier, when it has not. Had we not done this, bills Therefore, the big issue here is the welcome way the would be £20 a month more. That is not an imaginary Minister has introduced these changes, which suggests figure, but shows how the reduction in domestic use of that we should do the same in all the other things we electricity affects the bills of the majority of people—some do. In other words, given the reality of the costs, we 85% of the population—who use both gas and electricity. should find where money can genuinely be saved by In those circumstances, we have to go on talking about the mechanisms provided. If we can do that, we shall this, otherwise we lead people astray into thinking show that this united effort of government and they are paying £9 a month extra, instead of saving opposition—this issue is not party political—can lead some £11 a month in total. If they take a personal the world and show other people how to do it. decision to improve their energy efficiency, they can make even more savings, but we never take that into Baroness Maddock (LD): My Lords, it is always a account, of course, because it is a personal decision. pleasure to follow the noble Lord, Lord Deben, on However,the other two factors are a result of government these issues. I agree with much of what he has said. I policy playing back into how people pay their bills. had not intended to speak, but he reminded me, as did I want the Government constantly to quote this the Minister in his opening comments,of how complicated fact, because we have spent a lot of time on it, and it is the Bill that put all of this into place was. To this day, very objective indeed. I know how objective it is, some of us still find it quite difficult to get to grips because our opponents have attacked it and said that with. I thank the Minister for trying to explain it as it is outrageous, but have been unable to find a single well as he did. I miss Lord Jenkin who saw us through item that they can show to be outrageous, being unable that Bill. I was saying to my noble friend Lady to find a single fact with which they can argue. It is Featherstone, who was not here at the time, that Lord outrageous to them, of course, because it undermines Jenkin was the man who really understood what was their whole attitude and the campaigning they have going on and helped us all through a difficult Bill. I done—I am afraid—through a number of our popular put that on the record. newspapers. I hope that the Government will in future speeches include this simple matter to remind people, Lord Grantchester (Lab): I thank the Minister for so that they always know. explaining the amendments to these regulations. They My third point is that we hear from the press that seem eminently sensible, drawn from the experiences the Government are very keen on keeping down energy of operating the regulations, which are vital to reforming bills and will make significant investigations and possibly the electricity market and encouraging low-carbon take draconian measures to do so. I point out to the electricity generation to ensure the UK’s security of Minister that the report we have just produced shows supply. I also express my gratitude to the noble Lord, that business electricity bills in this country are significantly Lord Deben, for his helpful remarks as background to higher than in the rest of Europe. It is not true of the regulations, and for underlining the importance of domestic bills, as a matter of fact; we sometimes forget the progress we have made. that. It is more or less the same position with gas—the The amendments to the regulations should increase cost is somewhere in the middle of bills in the whole of the cost-effectiveness of the two main measures, the Europe, which suggests that we may find there is not CFD scheme and the capacity market, since they reduce much we can do about it. the heavy-handedness of the belt-and-braces approach I have already spoken about the fact that bills are of the CFD counterparty, the Low Carbon Contracts not greater, but less, because of our green measures, Company, and that of the Electricity Settlements but I want to point to something in the report that is Company for the capacity market. The Minister’s of considerable relevance to our discussion today: that introduction eloquently explained the improvements. electricity bills to business are higher in this country These companies exist only to make payments for low- than in the rest of Europe. It is quite clear why: partly carbon generation or demand-side responses, and to because we charge a higher distribution cost, whether collect these payments from suppliers. The companies or not it is a real cost, but also because our wholesale must also cover their costs. The regulations set up the market is higher than in the rest of Europe. There is a system to do this in as transparent, equitable and real problem here. When as a committee we sought to cost-effective a way as possible, allowing for a sensible GC 13 Electricity Supplier Payments[21 MARCH 2017] Electricity Supplier Payments GC 14 amount of reserves as some guarantee. One would costs budget of the two companies will increase, resulting hope and expect these payments to balance out through in an increase, albeit minimal, in household electricity the reconciliation process. bills. Will these two features balance out and the net Much of the debate on these regulations in the other effect on consumers be neutral? place focused on the probability of error. I could join Having said that, I am content to approve the in and tease the Minister by asking him about 20 scenarios, regulations. any one of which could be the one occurrence that could not be reconciled. However,that would be facetious. Lord Prior of Brampton: My Lords, I begin by echoing The modelling looks robust, indicating that the companies the comments of the noble Baroness, Lady Maddock, have the ability to raise the funding necessary in a about Lord Jenkin. I was reminded of the Schleswig- modern, technologically efficient manner and make Holstein question, to which the Duke of Wellington the payments required. said that only three people knew the answer—and one The regulations merely deal with the process of was dead, one had gone insane and the other one had funding. The bigger question is the accuracy of the forgotten it. Fortunately, my noble friend Lord Deben strike price, which is relevant to the setting up of this has not forgotten it and spoke very eloquently about compulsory regime. Noble Lords will know that that broader issues than those raised by the statutory is contained in the contracts agreements and is not instrument before us. part of these regulations. The two most controversial It was interesting to hear my noble friend’s story applications relate to nuclear power and the Hinkley about how shopping for a freezer had changed in the Point C plant, and onshore wind. space of a year—from being able to buy one rated The Government have shown how quickly they can from A to G, to one now rated A++ to B. That is just alter their assessments and mechanisms for adjustment one small illustration of how technology has helped through Part 2 of the Energy Act 2016 in relation to hugely in reducing the use of electricity.He is absolutely onshore wind and the compensation payments in the right that technology has significantly reduced bills. FIT regime. On the prevention of double-counting of exemptions in the measure, exemptions from payments are available to suppliers which import renewable electricity Lord Deben: I am sorry but it is not just that the from EU member states. This green excluded electricity— technology has changed; we have now shown people GEE—will not count towards electricity suppliers’ that it is not worth selling bad products. You have to market share for calculating their CFD liabilities. This use the technology and it is we politicians who have raises questions about security of supply; whether made that technology actually go into the marketplace, government policy is blind, whether British-based or because it has been worth while. The Government not; the relative pricing of renewable energy in the UK should take credit for what they have done. and in the EU; and whether security-of-supply policy should seek to encourage import substitution. It also Lord Prior of Brampton: That is true. The incentives begs questions relating to Brexit; I could ask the Minister need to be there, but the fact is that technology is various hypothetical questions about the internal energy remarkable. Technology is going to do it. If we are going market and any likely scenarios of tariff applications. to solve the problem of carbon emissions, technology I imagine he would say that further amendments can and incentives to use new technology—which is what be made as circumstances change. the CFD programme is all about, as I understand it I am grateful for the clarity provided regarding the —are crucial. operational budgets of the two companies and the My noble friend also spoke about the cost of electricity professional fees increase, brought about by the inquiries for business. It is an issue I take a particular interest in, of your Lordships’ Secondary Legislation Scrutiny given that it affects very energy-intensive industries, Committee. I very much agree with the Government’s such as the steel industry, the glass and ceramics financial policy to expense rather than capitalise software industries and other industries, including the potteries upgrade costs. in places such as Stoke. It is difficult to know why our I have a few questions about the regulations. First, costs are higher. It is partly because of distribution on the amendment to allow CFD reconciliation and transmission, we are told, and partly because of determination after the 10th quarter to be classified as the wholesale market, but I do not think we have a full non-generation payments, is a longstop provision of answer to that. I have not read my noble friend’s time envisaged, or is that included in the general report on this. It may suggest an answer. I will read it retrospective provisions? Could this be one of those with interest. It is certainly a question that we need to 20 unknown unknowns? Secondly,following the onshore answer. It is always very easy to blame the green lobby wind provisions in last year’s Energy Act and given for the extra costs falling on high-energy consumers. that onshore wind is now so much cheaper, are the My noble friend raises a question that needs to be Government any closer to allowing onshore wind to answered. participate in future CFD auctions now that the threat I thank the noble Lord, Lord Grantchester, for of UKIP has receded? Can the Minister update the supporting these regulations. He asked three questions. Committee on the position following the consultation I shall write to him on them. I have been given the on onshore wind in November 2016? Thirdly and answer, but I cannot absorb it and give it to the noble lastly, I understand that the net savings to be passed Lord at the same time without just reading it out on to electricity consumers are not a cash item and without thinking about it. He raised the more general cannot therefore be shown or guaranteed in some way. issue of the impact of Brexit on the internal energy However, the memorandum states that the operational market and what tariffs there might be. I will have to GC 15 Electricity Supplier Payments[LORDS] Electricity and Gas Order 2017 GC 16

[LORD PRIOR OF BRAMPTON] 4.30 pm give him the rather dull and predictable but honest This Government are facing up to the enormous answer that we will have to wait to see how the energy challenges our country faces over the coming negotiations turn out. years. With the overhaul of the electricity market and The regulations the Government are seeking to continued investment in renewable technologies, we amend through this instrument affect the CFD scheme are well on the way to making sure that the UK’s through making some fairly minor technical amendments energy is secure, low carbon and affordable. Improving to improve the efficiency of the CFD supplier obligation the energy efficiency of the UK’s homes is central to and to amend the operational costs levies of the Low this challenge and to addressing fuel poverty. Carbon Contracts Company and the Electricity Theenergycompanyobligationschemehelpsoccupants Settlements Company. As I read this, I do realise that keep warm, reduce their energy bills and protect their this is quite complex, arcane stuff. These companies health and well-being. It does this by obligating energy play a crucial role in delivering the CFD scheme and suppliers to reduce carbon emissions and energy costs the capacity market scheme, and they must be sufficiently throughinstallingenergy-efficiencymeasuresinhouseholds funded to perform their roles effectively. I have been across Great Britain. The supply chains involved in struck by how the cost of offshore wind has come this endeavour also provide economic benefits across down in the last auction and how the capacity auction the country. Since the introduction of the ECO in has driven prices down. The market is very powerful. 2013, the scheme has proved remarkably reliable and I thank the noble Lord for his support for this measure? cost-effective in upgrading our housing stock. Altogether, Motion agreed. more than 2 million energy-efficiency measures had been installed in more than 1.6 million homes by the end of December 2016, with around 1.2 million of Electricity and Gas (Energy Company thosemeasuresgoingto900,000low-incomeandvulnerable Obligation) (Amendment) Order 2017 households or households in deprived areas. This is a Motion to Consider significant investment in addressing energy efficiency and fuel poverty. Thanks to the amendment order we 4.27 pm are introducing today, we forecast that over half a million more insulation measures and around 45,000 Moved by Lord Prior of Brampton more heating measures will be delivered through the ECO by 2018. That the Grand Committee do consider the Electricity and Gas (Energy Company Obligation) The changes implemented by the order before the (Amendment) Order 2017. Committee were consulted on in the summer of 2016. The consultation received 236 formal responses, which were broadly supportive of the proposals.The government TheParliamentaryUnder-Secretaryof State,Department response was published at the end of January 2017. for Business, Energy and Industrial Strategy (Lord Prior The order will reduce the overall spend of the scheme of Brampton) (Con): My Lords, I am pleased to open from £860 million per annum currently to £640 million the debate on this draft order. The ECO order exercises per annum. This is done to constrain the impact of powers set out in the Gas Act 1986 and the Electricity government policies on all consumer bills. Although Act 1989 which allow obligations to be placed on energy the ECO provides the recipients of energy-efficiency suppliers in Great Britain. measures with long-term bill savings, it is important to In the Prime Minister’s first speech of her term in recognise that the upfront costs of the measures installed office, she recognised the hardships faced by poorer are spread across all bill payers. As such, it is right that households in Britain—hard-working families, who, we have sought to ensure that the ECO support is “can just about manage but … worry about the cost of living”. focused more on those most in need, while reducing As part of the response to that dilemma, the Government the overall cost from around £34 per bill currently to are committed to helping households in fuel poverty £25 per bill from April onwards. At the same time, it or on lower incomes living in homes which are expensive will still allow around 545,000 homes to be improved to heat. That is why this order is before the Committee across the 18 months of the extension. today. It will also make an important contribution to Wehaveincreasedtheperiodof theobligationextension the Government’s clean growth plan and to reducing from 12 months in the consultation to 18 months. This carbon emissions. is in response to the views of stakeholders and is We are making amendments to the existing ECO designed to make the transition as smooth as possible. order, which covers the period from 1 April 2015 to It will avoid costs associated with industry implementing 31 March 2017. The amendments extend the current changes within constrained timelines, and will allow scheme from 1 April 2017 to 30 September 2018 to lessons from the operation of the extended period to enable reforms to be introduced, while also allowing be fed into the design of the longer-term scheme from industry time before further improvements are made 2018. through a new longer-term scheme from 2018 to 2022. The separate carbon-saving community obligation Planning ahead to 2022, beyond the life of this Parliament, element of the ECO, part of which currently delivers reflects announcements on funding made in the 2015 energy-efficiency improvements in rural areas, will be spending review. This longer-term confirmation of brought to an end for reasons of simplification, but funding is designed to give greater certainty to energy there will be a safeguard guaranteeing a minimum suppliers, installers, local authorities and other energy level of rural delivery under the remaining carbon stakeholders. reduction obligation. GC 17 Electricity and Gas Order 2017[21 MARCH 2017] Electricity and Gas Order 2017 GC 18

The affordable warmth element of the scheme, which do that. I know from the briefing I received from places the greatest focus on targeting low-income and National Energy Action—of which I happen to be the fuel-poor households, is increased from 34% to 70% of honorary president, and therefore declare a limited, the overall estimated spend. This means that the carbon non-pecuniary interest—that this estimable charity emissions reduction obligation element, which allows has somewhat mixed feelings, which reflect my own. delivery to any home for carbon-saving purposes, will The Government seem to be doing a little bit with one be decreased to approximately 30% of the overall spend. hand, and then taking it away with the other. When we Changes are also being introduced to better target the see the reduction in boiler replacement, it is not because affordable warmth obligation towards low-income and the job is nearly ending—that we have completed the fuel-poor households. replacement of inefficient boilers—but simply because First, income thresholds will be used to determine the Government take the view that it costs too much. eligibility under affordable warmth. The process will There is also the fact that if you want to make be simple, while recognising differences in household households more conscious of the benefits of energy size. Secondly, eligibility for the affordable warmth efficiency, a dramatic change such as the replacement element has also been extended to allow the installation or introduction of a boiler is of critical significance in of particular measures to social housing occupants in this change of thought process. We know that in many the least efficient homes—those with an EPC band of respects the households that are most disadvantaged E, F or G. Thirdly, a new voluntary provision will are those which have so many problems that trying to allow local authorities to use their local knowledge to be energy efficient is very much a kind of finger-in-the-dyke determine eligible fuel-poor or vulnerable households operation, and they need assistance. Very often, when for up to 10% of a supplier’saffordable warmth obligation. we are able to secure the replacement boilers, we get a In particular, they will have opportunities to help change of step and a greater willingness to help. people with health problems living in cold homes. It is also fair to say that we have insufficient sums to Fourthly, mains gas boiler replacements delivered meet even the most modest of home improvements. under affordable warmth have been limited to the We are told by a number of bodies—including, for equivalent of approximately 25,000 per year. Our analysis example, the Committee on Fuel Poverty,the Committee suggests that other measures, such as insulation and on Climate Change, and Policy Exchange—that even first-time central heating, are more beneficial and cost to meet the very modest target of getting households effective. We will also require a minimum delivery of to EPC E level by 2020 will require £1.9 billion. To get the more expensive solid wall insulation, equivalent to households to EPC D level by 2025 will cost £5.6 billion. 21,000 homes a year, to protect the development of To get all households up to EPC C level by 2030 will that sector and improve some of the least efficient require £12.3 billion. These are large sums. However, homes. A key focus of the changes made by this order what the Minister is talking about seems to be nowhere has been simplification to reduce the administrative near what is required to reach these households. Indeed, burdens and complexities associated with the scheme. it has been suggested that a baby born today into This may allow more measures to be delivered under a inadequate housing would probably be about 75 before given amount of supplier spend. their home was properly heated. These are important changes to the existing ECO A number of the changes are sensible and not order but they will continue to drive large-scale investment unwelcome. However, the Government cannot get away in energy efficiency across the country. Support will be with the platitudinous nonsense the Minister spoke at targeted more at those who need it most: those living the beginning of his speech when he quoted the Prime in fuel poverty or on lower incomes and struggling Minister. If the Prime Minister really wants to help with bills. The order will promote measures that bring hard-working families and do something about this reductions to energy bills, simplify scheme delivery, kind of household, the Government will have to use and better target energy-efficiency funding to vulnerable central taxation as a mechanism to do it. It is not and low-income households. I commend this draft enough just to express pious hopes and, on occasion, order to the Committee. go for cheaper options. That seems to be at least part of the thinking behind a number of the changes in this Lord O’Neill of Clackmannan (Lab): My Lords, measure. this order is something of a curate’s egg. There are a Therefore, as I say, this is a curate’s egg. This number of aspects that one would be quite happy with Committee does not have the opportunity to overturn were it not for the fact that one player in this whole or amend it. I know that it has been the subject of scheme is absent: the Government. They are changing fairly wide consultation but I do not think that all the some of the regulations and arrangements but they are organisations that were consulted would necessarily providingnomoneythemselves,unliketheAdministrations embrace everything in the order. Therefore, as I say, in Belfast, Cardiff or Edinburgh. Therefore, we have to my welcome of it is highly qualified and I am somewhat say in the first instance, on the objective of moving the disappointed. An opportunity has been missed here—and starting time by six months, from 12 to 18 months, if not because the Government have rushed into this. we are to get a better scheme, that might be very well. They have had since 2015 to get something done and However, it is a delay, in fact from 2015, when the the best that they can come up with is this rather feeble opportunity to introduce an improved scheme first list of changes and a further six-month delay in bringing arose. about many measures that would be regarded as It begs the question: why is there a delay? If it is improvements. We cannot take any consolation as because the Government are wrestling with the complexity some of the less desirable aspects of this measure will of it, I submit that they have had plenty of time to continue for some time. GC 19 Electricity and Gas Order 2017[LORDS] Electricity and Gas Order 2017 GC 20

[LORD O’NEILL OF CLACKMANNAN] fuel poverty. As the noble Lord said, other parts of the As I say, I think that this is a missed opportunity for British Isles have additional schemes to help ensure the Minister. He and I are old friends from Select that more homes are better insulated. As the Minister Committee days in the Commons. I am trying to said, one of the good things about this measure is that chastise him as gently as I can as I know that he is new it will increase by 70% the number of places that will to the job and I expect that his influence over the get affordable warmth, but it will take longer. We have drafting of this order was probably minimal. However, heard of the change from 12 months to 18 months, I would like to think that in the months and years that which, I am advised, means a shortfall in activity of he may still be in the job he will be able to come up around £1 billion in lifetime savings for the poorest with something better before too long. households with the highest energy costs. It is important to point out—as did the noble Lord, Baroness Maddock (LD): My Lords, something is Lord O’Neill—that there are clearly limits to the extent better than nothing. We on these Benches, at least, to which levy-funded polices and those delivered by welcome this measure, although there are many “buts”. energy suppliers can exclusively be relied upon. As he There is no doubt that improving the quality of existing said—I apologise for repeating myself—in the rest of homes can play a very important part in increasing the British Isles there are other schemes, as well as warmth and comfort and help to make fuel bills far ECO, to deal with energy efficiency in homes. It is very more affordable, particularly for vulnerable occupants. disappointing that we cannot find more money from However—I think the Minister recognises this—it is the Government to do that. Various reports have also a highly cost-effective way of reducing carbon pointed that out, and what it means for those living in emissions and saving energy. In addition, ambitious fuel poverty. energy efficiency savings programmes can capture I end where I began: I am disappointed that here I substantial macroeconomic benefits. am, 20-odd years in Parliament later, in one of the I remember taking through the House of Commons richest countries in the world and we are talking about a Private Member’s Bill that became the Home Energy fuel poverty. We can find lots of money for all sorts of Conservation Act 1995, and saying that the job creation things, but somehow we seem to find it impossible to potential in making homes energy efficient was enormous. find the money to help those who live in cold homes. I regret that some 20-plus years later, we are still grappling with this issue and people are still living in Lord Grantchester (Lab): I thank the Minister for fuel poverty. As the noble Lord said, people born into his comprehensive introduction and explanation of fuel poverty today will probably still be in fuel poverty the order. The ECO is now the only government at the end of their lives. That is very sad. instrument to increase overall carbon emissions reductions targets for households and overall home heating cost 4.45 pm reduction targets by a statutory obligation on the Like the noble Lord, Lord O’Neill, I am a vice-president largest energy suppliers to install energy-efficiency of National Energy Action, a fuel poverty charity that measures for households in Great Britain. I approve of has been campaigning on this issue for a long time. I the order today and support the measures, as far as have been associated with it for my whole time in they go, to promote energy efficiency and the reduction Parliament, so it has been campaigning for probably of fuel poverty. Improving the quality of the housing 25 years now. In all that time, the mission—we are still stock is a highly cost-effective way in which to reduce trying to do it—has been to ensure that fuel poverty is carbon emissions, save energy, improve the lives of the eradicated and that nobody lives in a cold home. We fuel poor and capture substantial national economic have never managed to target that effectively. The benefits. However, I cannot disguise the widespread poor targeting of existing schemes and the lack of disappointment in the Government for their inability investment in energy-efficiency programmes mean that to meet their legal target to end fuel poverty by 2017. we are still in a bad position today. The noble Lord, Comments around the Committee today have reflected Lord O’Neill, gave us some of the figures. that view. The UK Government have in many ways been slow The Government are now extending the ECO scheme to respond to the scale of this challenge, but during in this intermediary fashion for a further 18 months, the coalition years, when my then right honourable to September 2018, before introducing further measures friend Ed Davey was the Minister, we managed to get to end fuel poverty by the end of the scheme in 2022. a fuel poverty strategy in an energy Bill. I and others The increasing focus on fuel poverty is to be encouraged, pushed very hard to get it—I think the noble Lord, but reducing the annual spend by 25% from £860 million Lord O’Neill, backed us—against the Conservative to £640 million reveals a lack of political will and the elements in the Government who were not very interested required proper funding. The Committee on Fuel in having it. That is why we have this order today, Poverty has estimated an investment requirement of which we welcome. I know that my colleagues at £20 billion to improve fuel-poor homes in England to National Energy Action welcome it and are trying to at least EPC rating C by 2030. The Committee on work with the Minister and his department to see that Climate Change considers that the current funding is we make a success of it, and perhaps get something less than half that which is required to meet these now even better in future. delayed commitments. At the moment, this mechanism is the only deliverer The Green Deal has been a failure, improving only of energy efficiency nationally. The noble Lord, Lord 15,000 homes. Last year, the Conservative Government O’Neill, touched on this. The scheme will be shifted scrapped the 2016 zero-carbon homes policy. The UK away from all citizens and focused on those at risk of ranks bottom, 16 out of 16, in western Europe for the GC 21 Electricity and Gas Order 2017[21 MARCH 2017] Electricity and Gas Order 2017 GC 22 proportion of people who cannot afford to heat their issue, whereas the noble Baroness, Lady Maddock, thinks homes adequately. While welcoming the change on that we could take money from other areas that we balance towards better funding of energy efficiency are spending money on to put more money into this measures, the cap on the installation of mains gas area. qualifying boiler replacements under the affordable To start with the noble Lord’s point, our response is warmth arrangements leaves a big gap in the provision not to increase central taxation. He mentioned a figure needed to replace or repair existing gas boilers. of £12 billion, and the noble Lord, Lord Grantchester, A big factor for being in fuel poverty is living in a came up with a figure of £20 billion to 2030. That level home off the gas grid. The worst properties are located of increased taxation is simply not an option—at least off the grid and are more likely to be located in rural not for our Government. Our response to the issues areas. Over the last Parliament, the number of major that the Prime Minister has focused on is not to raise energy-efficiency measures installed in homes fell by general taxation, but to try to address the issue by 76% as total investment fell by 53% between 2010 and improving the productivity of the country, which is 2015. The implications have been particularly crucial why we have an industrial strategy. Frankly, to load a to the NHS. Of the 43,900 excess winter deaths calculated lot more general taxation on to our economy cannot for 2014-15, at least 14,000 deaths can be attributable be a way to improve productivity. I do not know to the cold homes crisis. whether that view will be shared by the leader of the Are the Government confident that electricity Opposition—who knows these days?—But it is certainly companies can access the necessary data to target not an option for us to raise central taxation. The expenditure effectively? The data-sharing powers need noble Baroness, Lady Maddock, said that there must critical assessment. Hospitals need to join up outpatient be other areas that we could take money from. care with fuel poverty initiatives for patients at risk of recurrent visits. Local authorities must act on their Baroness Maddock: For example, we know that duties to enforce and monitor housing standards, and people who live in cold or damp homes, particularly basic energy-efficiency standards should form a critical elderly people, cost us a huge amount in the health part of existing licensing requirements. Additional service. Over the years, NEA has run various schemes national energy-efficiency programmes are urgently and has looked carefully at this. That is one area where needed to support the upgrading of lower rated properties, we could look to see whether we could get some notably for the installation of first-time central heating. money because it will save money in the long run. My noble friend Lord O’Neill and the noble Baroness, Lady Maddock, have highlighted how the Government Lord Prior of Brampton: I understand that argument, are alone among UK Administrations in not providing but it would take five minutes to have a whole list of additional funding towards this important policy. The other parts of the population, whether it is people who National Infrastructure Commission and the Government have mental health problems or learning difficulties or must respond and act on the strong case for domestic old people who are lonely. There are lots of people we energy efficiency to be regarded as a nationally important would like to do more for and from whom there will be infrastructure policy. knock-on benefits to the NHS, social services and the I shall ask only one or two important questions on like. As the noble Baroness will know well, the trouble this order. These amendments are an extension to the with politics is that choices have to be made. It is very present scheme and delays to meeting targets have easy to say that we should take more money from this been recognised. Will the Minister make clear how the group and give it to that, but if only life was so simple. statutory fuel poverty commitment will be met, with milestones along the way? Lastly, what additional Lord O’Neill of Clackmannan: I am almost reluctant energy-efficiency programmes are under consideration to make this point because it is a wee bit unkind and it by the Government? What is the timing of any policy is not the Minister’sfault. Weknow that the Government plan development between April 2017 and the end of have problems with raising taxes. We have seen that in this intermediary period in September 2018? In approving the past two weeks in the context of national insurance the order, I urge the Government to recognise their contributions. There was a willingness to raise taxes, shortfall in ambition in tackling fuel poverty and the but they discovered that they were raising the wrong energy efficiency of homes. ones as far as their supporters were concerned. Perhaps between now and next November the Minister can Lord Prior of Brampton: My Lords, I accept that look afresh at what sources of revenue could be secured noble Lords who have spoken regard this order as a to help the fuel poor and to meet the Prime Minister’s curate’s egg and that it does not go as far as they pious words about helping hard-working families who would like. I will try to address the more general are unfortunate enough to be living in hard-to-heat questions raised by all three noble Lords.The Government homes. feel that the supplier obligations have proven to be remarkably successful, but we have probably pushed Lord Prior of Brampton: I understand where the them as far as they can go. That is why we have noble Lord is coming from. I repeat, our approach is decided to cap the supplier obligation at £640 million. diametrically opposite to his. We do not want to raise The noble Baroness, Lady Maddock, and the noble taxes from any group of citizens in this country when Lord, Lord O’Neill, think that we should go further. If the alternative is to try to improve productivity. He I might slightly oversimplify it, I think I am right that will know from the time when he was chairing the the noble Lord, Lord O’Neill, feels that we should Trade and Industry Select Committee in the other consider raising taxation more generally to solve this place that productivity has been, and is still, a huge GC 23 Electricity and Gas Order 2017[LORDS] Collection of Fines etc. Order 2017 GC 24

[LORD PRIOR OF BRAMPTON] secure payment through an attachment of earnings issue for this country. I do not think that he seriously order, which is a court order made in Northern Ireland thinks that we are going to improve productivity by that requires a debtor’s employer to deduct specified taxing hard-working British people. That is a choice amounts from wages and pay them to the court to that we have to make. His party, during those long-off, discharge the outstanding amount. rosy days when Tony Blair was Prime Minister, had in The order will amend Schedule 5 to the Courts Act a sense got the message that there is a direct relationship 2003 to enable fine collection officers and courts in between high taxes and successful economic growth. Northern Ireland to obtain or verify certain information Raising taxation along the lines that he described is from HM Revenue & Customs, including the name simply not an option for this Government at this time. and address of any employer the individual may have and details of any earnings or other income that the 5 pm individual receives. This information will allow fine As I said at the start of this debate, the ECO scheme collection officers in Northern Ireland to determine has already helped to deliver more than 2 million energy- whether an attachment of earnings order is an appropriate saving measures to more than 1.6 million households, enforcement option to be pursued in respect of the including 1.2 million measures to 900,000 low-income debtor. and vulnerable consumers. It would be wrong to Schedule 5 to the 2003 Act already enables Her characterise the efforts that we have made, which were Majesty’s Revenue & Customs to make such disclosures supported by the coalition Government, as having in England and Wales, and the amendments made made no progress. Clearly our progress is not as much under the order will allow it to do so in Northern as some noble Lords would like, but we have made Ireland as well. Such amendments could not be made by significant progress. At a time of rising energy bills, it the Department of Justice in Northern Ireland through is right that support is targeted at those most in need. the 2016 Act because Section 18 of the Commissioners At the same time, the amendments we are making to for Revenue and Customs Act 2005 stipulates that the existing order should reduce the cost of the scheme conferring such powers on HMRC cannot be carried to bill payers to around £25 each year from £34 currently. in Northern Ireland legislation and can be done only With this amendment order ECO is expected to provide through Westminster. However, Section 84(2) of the 545,000 households with more energy-saving measures. 1998 Act allows for such amendments to be made by With this order, we will give a balance of improvements an Order in Council, such as this order, if “necessary and continuity to consumers and to the energy-efficiency or expedient” and I consider that the proposed industry for 18 months before further change is made amendments are necessary to facilitate the effective through a new longer-term scheme from 2018 to 2022 operation of the attachment of earnings provisions of I therefore commend this draft order to the Committee. the 2016 Act. I am happy to confirm to noble Lords that Ministers Motion agreed. and officials of the United Kingdom Government and the Northern Ireland Department of Justice have worked Collection of Fines etc. (Northern Ireland closely together on this draft order, which I commend to the Committee. Consequential Amendments) Order 2017 Motion to Consider Lord Browne of Belmont (DUP): My Lords, I thank the noble and learned Lord for his very comprehensive 5.03 pm explanation of the order, and I very much welcome the Moved by Lord Keen of Elie order, which will provide the courts in Northern Ireland with additional sentencing, collecting and enforcement ThattheGrandCommitteedoconsidertheCollection options. It will go a long way in helping to reduce the of Fines etc. (Northern Ireland Consequential number of people—I believe 2,000—who are jailed Amendments) Order 2017. each year for non-payment of fines by increasing the availability of community-based options in place of The Advocate-General for Scotland (Lord Keen of custody, by deducting money from their benefits each Elie) (Con): My Lords, the draft order, which was week. I believe that the vehicles of habitual offenders laid before the House on 6 February and which was can be seized. approved in the other place on 14 March, is made Can the Minister say how much money in unpaid under Section 84(2) of the Northern Ireland Act 1998. fines is owed to the Stormont Government, going The Northern Ireland Act allows changes to be made back over the last number of years, and how much to legislation that are necessary because of an Act of money in police time is spent in enforcing fines? Is the the Northern Ireland Assembly. This order is made in Minister confident that there are enough safeguards consequence of the Justice Act (Northern Ireland) with regard to the policy of possible seizure of vehicles? 2016, which was passed by the Northern Ireland Assembly However, these amendments will go a long way and on 14 March 2016 and received Her Majesty’s Assent will prove effective in saving money. on 12 May 2016. Part 1 of the 2016 Act fundamentally reforms Lord Beecham (Lab): My Lords, this order—one of arrangements for the collection and enforcement of five we are discussing today—is the only one so far to fines in Northern Ireland by creating a new regime have been taken in the Commons. In that place a very that provides additional ways for offenders to pay brief explanation was given by the Minister—the noble their fines. It includes powers for collection officers to and learned Lord has given a rather fuller explanation GC 25 Collection of Fines etc. Order 2017[21 MARCH 2017] Public Guardian Regulations 2017 GC 26 than was given then—and my honourable friend David The high uptake of lasting powers of attorney is an Anderson replied with a sentence only.I do not propose indication of the success of the Mental Capacity Act. to add to that except to say that the noble Lord who They allow individuals to plan ahead for a time when has just spoken has raised some salient points and I they may lack capacity to make decisions for themselves was interested to hear what he said. We certainly have and to appoint someone they trust to make those no objection to the order. decisions for them. It is, of course, positive that so many more people are now making powers of attorney, Lord Keen of Elie: I am obliged to noble Lords. I but it has led to a position where the income we receive will address the points raised by the noble Lord, Lord from fees charged is exceeding the cost of delivering Browne of Belmont. I do not have precise figures for the service. A detailed review of power of attorney outstanding fines, but if those figures can be collated I fees, together with an improved forecasting model for undertake to write to the noble Lord, although I am volumes of applications, taking into account the ageing not sure that they can be collated in the manner he demographic and the rise in dementia, has enabled us indicated. However,perhaps at a higher level of generality, to take decisive action to reduce fees and bring them I can say that at present we are dealing with about closer to the cost of providing the service. 20,000 cases a year where there is a financial imposition. As many more people have been registering LPAs Of those, more than 16,000 currently result in a default in recent years, increased volumes coupled with greater hearing, and the default hearing itself is an extremely efficiencies in processing applications have resulted in time-consuming exercise, taking up manpower and, in fees being charged above the operational cost of delivering particular, police time. It is anticipated that with these the service without our having exercised the power measures we will be able to reduce the number of provided by legislation to allow us to do this. Clearly default hearings to something of the order of 4,000 cases. this situation must be remedied, which is what these That in itself will bring about a significant saving in draft regulations seek to do. Furthermore, alongside time and money. I hope that goes some way to satisfy the reduction in fee, we will also introduce a scheme the points raised by the noble Lord. With that, I invite for refunding a portion of the fee to customers who agreement to the order. may have paid more than they should. Full details of the scheme will be announced in due course. We will Motion agreed. take such steps as are necessary to make sure that people are made aware of, and receive, the refunds to Public Guardian (Fees, etc.) (Amendment) which they are entitled. The Government’s aim is to ensure that the public Regulations 2017 guardian’s functions are properly resourced. Weconsider Motion to Consider that an enhanced fee will go towards funding vital wider functions carried out by the Office of the Public 5.10 pm Guardian. The enhanced fee will allow the public Moved by Lord Keen of Elie guardian to ensure that those who cannot afford to pay still have access to the key services offered by the That the Grand Committee do consider the Public Office of the Public Guardian; there is a remission Guardian (Fees, etc.) (Amendment) Regulations scheme in that regard. The fee will also contribute to 2017. costs of the public guardian’s safeguarding activities, including the annual costs of supervising deputies The Advocate-General for Scotland (Lord Keen of Elie) appointed by the court to manage the affairs of people (Con): My Lords, these regulations apply to England who have lost capacity to do so for themselves. I and Wales and reduce the fee for registering enduring therefore commend these draft regulations to the and lasting powers of attorney. The current fee of Committee, and I beg to move. £110 will be reduced to £82. The resubmission fee, paid when an application has to be resubmitted because Lord Beecham (Lab): My Lords, I am not sure of an error with the original application, will be reduced whether I need to declare an interest in this matter as to £41 from £55. If Parliament agrees, we intend these having registered an enduring power of attorney myself, changes to take effect on 1 April this year. which might entitle me, I suppose, to a rebate. It is The new fee will be an enhanced fee, allowing us to pretty unlikely, I suspect, but it is a possibility and I cover the full cost of registering a power of attorney as shall have my old firm explore it. well as to ensure the efficient and effective discharge of Obviously, therefore, I welcome the main thrust of the public guardian’s functions. The power to charge the order, which is to reduce the fees from their current an enhanced fee is contained in Section 180 of the level. The Government have acted perfectly properly Anti-social Behaviour, Crime and Policing Act 2014. in that respect. However, it is interesting that the There are currently more than 2 million powers of Explanatory Memorandum confirms what the Minister attorney registered. These comprise lasting powers has described as the Government’s policy—namely, of attorney and their predecessor enduring powers of that they have decided, attorney, which remain valid and may still be registered. “in view of the financial circumstances and given the reductions In October 2017, we will celebrate 10 years since lasting in public spending, that a fee above full cost is necessary in order powers of attorney were introduced. In that time, the to ensure that the Public Guardian is adequately funded and that Office of the Public Guardian, the body responsible safeguarding the vulnerable is protected in the long term”. for maintaining a register of powers of attorney, has That does not seem to be a logical explanation for registered nearly 2.5 million powers. retaining, albeit now reduced, a fee that is above the GC 27 Public Guardian Regulations 2017[LORDS] Judicial Pensions Regulations 2017 GC 28

[LORD BEECHAM] Judicial Pensions (Additional Voluntary full cost. It is a philosophy which I hope will not be Contributions) Regulations 2017 applied elsewhere in public services—namely, that you contribute not just to the cost but to an excess of the Motion to Consider cost. Have the Government made any estimate of how much they will benefit by this device over time? How 5.18 pm do they justify charging more than it actually costs to Moved by Lord Keen of Elie provide the service? They have been doing so, as it were, unconsciously for some time; now they will do so That the Grand Committee do consider the Judicial consciously. That strikes me as a very odd way of Pensions (Additional Voluntary Contributions) proceeding. Regulations 2017. 5.15 pm The Advocate-General for Scotland (Lord Keen of Lord Keen of Elie: The fees charged in respect of a Elie) (Con): My Lords, I will set out the purpose of the power of attorney in 2007, when the scheme came in, draft regulations in turn. were £150. They have reduced steadily since then, although they increased between 2009 and 2011, while First, the fee-paid regulations are required to establish transitional measures were being taken to upgrade IT a pension scheme for eligible fee-paid judges, to mirror for the Office of the Public Guardian. When they were the existing pension scheme for salaried judges established reviewed in 2013, they were brought down. Subsequently, by the Judicial Pensions and Retirement Act 1993. audit has indicated that they are still above a necessary This is required following the court’s decision in the and appropriate level. case of O’Brien v Ministry of Justice. These regulations make provision for a pension scheme for the benefit of However, with regard to the question about the those people who have held eligible fee-paid judicial enhanced fee, that allows for the fact that over and office between 7 April 2000 and 31 March 2015. They above the actual cost of dealing with a power of also establish the Fee-Paid Judicial Added Voluntary attorney, the Office of the Public Guardian also has to Contributions Scheme, the Fee-Paid Added Years Scheme deal with other costs and demands—namely, those and the Fee-Paid Judicial Added Surviving Adult involving the application of parties who get a fee Pension Scheme to enable members of the principal exemption and therefore the cost of their application scheme to pay voluntary contributions towards the has to be covered, as well as the cost of appointing costs of additional benefits under one of more of deputy supervisors by the court. I did not use the these additional schemes. correct term. It is not deputy supervisors but supervising deputies. Following the case of O’Brien v Ministry of Justice and subsequent decisions it is now established law that a lack of a pension and other specified benefits amounted Lord Beecham: Not that it matters. to less favourable treatment than some fee-paid judicial office holders in comparison to salaried judges doing Lord Keen of Elie: I am sure it does—to somebody. the same or broadly similar work, contrary to the Therefore, the limits in Section 180 of the 2014 Act are part-time work directive. The Ministry of Justice made there to ensure that although we can recover more a commitment to implement a pension scheme for than the actual costs of the operation itself, it is for the these fee-paid judges. This commitment was honoured purposes of funding the wider demands on the Ministry for future service, subject to transitional protection, of Justice. by the Judicial Pensions Regulations 2015. However, a new scheme is required as the remedy in respect of Lord Beecham: Is there any report of how that reckonable fee-paid service from 7 April 2000—the actually works in practice? I do not expect the Minister date when the part-time work directive ought to have to have the answer today but what is the amount that been transposed into UK law. The power to create has been raised in that way and where has it been such a scheme was created by Section 78 of the Pensions spent? Schemes Act 2015, which inserted a new Section 18A into the Judicial Pensions and Retirement Act 1993. Lord Keen of Elie: So far as the additional funding The draft fee-paid regulations have been the subject is concerned, I should have made it clear that it is of a detailed public consultation and were modified as funding for the Office of the Public Guardian and not part of that consultation process, taking account of wider than that. As to the precise sum, no, I do not responses and as part of our own review of the draft. have the figure to hand. A response to the consultation was published on 27 February alongside the final draft regulations. Lord Beecham: I am sure the Minister will write to The amendment regulations amend the Judicial me in due course. Pensions Regulations 2015 to take account of the creation of the fee-paid judicial pension scheme and ensure parity of treatment between individuals with Lord Keen of Elie: I will do that. entitlement in the existing Judicial Pensions and Retirement Act 1993 scheme and those with entitlements Lord Beecham: I am obliged. under the fee-paid scheme in respect of their pension entitlements under the 2015 regulations. In addition, Motion agreed. we are taking the opportunity to amend the 2015 GC 29 Judicial Pensions Regulations 2017[21 MARCH 2017] Judicial Pensions Regulations 2017 GC 30 regulations to make a number of other changes: to Pensions (Amendment) Regulations 2017 inasmuch as amend a drafting error in Regulation 1 of the 2015 they contain a rather rare provision for the Scottish regulations; to enable the Lord Chancellor to determine Government to request permission to join a national the eligibility of particular Scottish fee-paid judicial UK scheme, which is a remarkable volte face from the officeholders to join the pension scheme created by the present Administration in Edinburgh. No doubt the noble 2015 regulations; to remove negligence as a basis for and learned Lord will make that point on his next return forfeiture or set-off; to make a correction to the definition to that city, and I wish him well in such an approach. of index adjustment for revaluation purposes; and to The three regulations dealing with judicial pensions apply full and tapering protection for those judges are, of course, welcome so far as they go, but they who were in fee-paid office on 31 March 2012 but who come at a time when we face a shortage of judges and have subsequently been appointed to salaried office. apparent difficulty in finding sufficient numbers of The 2015 regulations were made under the Public suitable applicants to fill a rising number of retirements. Service Pensions Act 2013 to create a career average The Lord Chief Justice’s report of 2016 referred to, pension scheme for judicial officeholders as part of “serious concerns about recruitment to the judiciary, in particular the Government’swider reform of public service pensions. the ability to attract well-qualified candidates for positions in the This is the first time the 2015 regulations have been higher levels”. amended. He pointed out that this created an impact both on Thirdly,I turn to the additional voluntary contributions the administration of justice and the position of the regulations, the purpose of which is to make provision UK as a forum for international business litigation, to establish a judicial additional voluntary contributions where we are already facing growing competition from scheme. This is a money purchase scheme that enables other jurisdictions. scheme members to make contributions within a range The degree of unhappiness with the situation is of investment options. This is in addition to their reflected by results of a recent survey which shows contributions to the 2015 scheme. The AVC scheme is that nearly half of High Court judges plan to retire to be managed by the Lord Chancellor and the Judicial early.Respondents to that survey alluded to resentment Pensions Board will oversee the governance. The 2015 over loss of earnings, deteriorating working conditions judicial pension scheme was established on 1 April 2015 and even fear for their personal safety in court. The in response to the Public Service Pensions Act 2013. latter will not have been helped by the scurrilous The 2015 scheme applies to fee-paid and salaried campaign against the judges by sections of the media judicial officeholders. and the further reaches of the Conservative Party and The existing judicial pension schemes provided a of UKIP,which were roundly denounced by the Minister, facility to contribute to a money purchase pension much to his credit. scheme and the same facility is provided for members A survey of judicial attitudes last year showed that of the 2015 scheme through these AVC regulations. 42% of all judges would leave if they had a viable This includes the pension flexibilities contained in the option, nearly double the number of the previous Taxation of Pensions Act 2014 and the Pension Schemes survey in 2014. A more recent survey suggests that Act 2015. Amendments to the additional voluntary 47% of High Court judges and 36% of all judges contribution scheme established under the older judicial indicated they would consider early retirement from pension scheme, made by the Judicial Pensions and the Bench over the next five years. Their attitude is Retirement Act 1993, are being made in separate partly coloured by the large number—78%—who suffered instruments containing similar regulations, which also a loss of net earnings over the past two years and the give effect to the pension flexibilities. 62% who were affected by pension changes. The Lord To summarise, the fee-paid regulations are necessary Chief Justice warned in 2016 that a new High Court as the remedy to provide eligible fee-paid judges with judge would have a pension less than that of a District pension benefits that are equivalent to their salaried Judge, which is hardly conducive, one might think, to comparators. The amendment regulations are necessary retention or recruitment to the High Court. He also as they introduce a range of amendments required to felt that the situation was likely to have a considerable the 2015 judicial pension scheme.The additional voluntary inhibiting effect on promoting gender and ethnic diversity, contributions regulations are necessary to honour the which the survey disclosed. Significantly 43% of judges department’s commitment to provide such a facility to felt unappreciated by the public but, tellingly, only members of the 2015 judicial pensions scheme. I hope 3% felt they were esteemed by the media, and, shockingly, that noble Lords will welcome these three sets of only 2% felt they were esteemed by the public. regulations as necessary to make important provision If this were not bad enough, one-third complained for judicial pensions. This is in terms of the Government’s of the quality of court buildings and two-thirds referred legal obligations and to meet outstanding commitments, to the low morale of court staff. Just over half the and to ensure that all the necessary arrangements are judges expressed concerns for their safety in court, in place for a consistent approach relating to the partly due to the number of unrepresented litigants, relevant provisions across the judicial pension schemes. especially in somewhat fraught cases in the family side I therefore commend these draft regulations to the of the courts’ work. The same proportion said that Committee. out-of-hours work was affecting them—a rise from 29% in 2014. Lord Beecham (Lab): My Lords, I must declare a Currently there is a shortage of 25 High Court paternal interest since my daughter is a part-time, judges and between 120 and 140 circuit judges. Lord fee-paid district judge. The noble and learned Lord Justice Burnett, who is vice-chairman of the Judicial will, no doubt, be particularly pleased with the Judicial Appointment Commission, has complained that suitable GC 31 Judicial Pensions Regulations 2017[LORDS] Industrial Training Levy Order 2017 GC 32

[LORD BEECHAM] that these matters have to be addressed. That is not applicants for the High Court have been insufficient in what drives people towards the higher ranks of the the past two years, while the demands on the judiciary judiciary at a later point in their career. Rather, I continue to grow across the whole system. It would would suggest it is the desire to put something back appear that only 55 applications were made last year into a system of which they have been a part for many for 25 vacancies and only eight were filled. years. We are succeeding there. The noble Lord referred to the chair of the Judicial 5.30 pm Appointments Commission, the noble Lord, Lord This is also exemplified by the shortages in the Kakkar, who is taking steps to broaden the pool of tribunal system. In 2012 there were 347 fee-paid and talent that can be attracted to the upper reaches of the 132 salaried judges in the First-tier Immigration Tribunal. judiciary, including to the solicitor branch of the Last year the numbers had fallen to 242 fee-paid and profession, which has often been, if not ignored, perhaps only 77 salaried, while in the Upper Tribunal numbers overlooked to a greater or lesser extent when it comes had fallen from 40 fee-paid to 35. Unsurprisingly, this to judicial appointment. They also address direct has led to an increase in outstanding cases of 20% to appointment to try to ensure that people do not feel just under 63,000, with a nearly 50%, or 15 week, that they have to go into a judicial career part time for increase in the time for disposal of a case to a total of many years before they can find themselves eligible for 48 weeks. appointment to the High Court Bench. Steps are There are clearly serious difficulties in attracting therefore being taken. and retaining sufficient judges at most levels of our I infer from the noble Lord’s comments that he will judicial system. The Lord Chancellor recently stated welcome the Prison and Courts Bill that we recently that she appreciated, introduced in the other place and the developments “concerns raised around pay and pension”, that that will bring about in court reform, in particular and acknowledged that: digitisation of the court process. That will ensure that “Having a fair and effective remuneration scheme in place is a greater degree of judicial time can be made over to critical to the continued attraction and retention of high-calibre matters that should truly engage the requirements for judges”. our higher judiciary. I look forward to his assisting She went on to affirm that she was, with that Bill as it progresses through our House. I am “working with the Lord Chief Justice and senior judiciary to obliged to the noble Lord. address wider judicial concerns by providing judges with greater support in the courtroom, opportunities for development and Motion agreed. progression, and improving the environment in which they operate”. These are welcome words, but they are at odds with Judicial Pensions (Fee-Paid Judges) the current position, even after these regulations take effect. Regulations 2017 The noble Lord, Lord Kakkar,the recently appointed Motion to Consider chair of the Judicial Appointments Commission—who 5.35 pm is, ironically in the circumstances, a distinguished surgeon not a lawyer—has warned that there, Moved by Lord Keen of Elie “could be a serious shortfall”, That the Grand Committee do consider the Judicial in the pending appointments of 25 High Court judges. Pensions (Fee-Paid Judges) Regulations 2017. He went on to say that there is a serious issue here, that Motion agreed. these trends “are very worrying” and that, “it is becoming more difficult to appoint to the judiciary”. What steps will the Government take, and when, to Judicial Pensions (Amendment) fulfil the Lord Chancellor’s pledge? Today’s regulations Regulations 2017 are unlikely to make a significant contribution to the Motion to Consider growing crisis in our courts. The noble and learned Lord is unlikely to be able to give us a clear indication 5.36 pm of what the Government have in mind, but he could at Moved by Lord Keen of Elie least give us a timescale as to when conclusions will be That the Grand Committee do consider the Judicial reached. What is happening so far is not making any Pensions (Amendment) Regulations 2017. significant impression on a serious backlog and a serious prospect for the future. Motion agreed. Lord Keen of Elie: I thank the noble Lord for his Industrial Training Levy (Engineering observations. I appreciate that these regulations may Construction Industry Training Board) be only a small step in trying to ensure that we are in a position to maintain what is still a world-class judiciary Order 2017 that is respected around the globe, not just in this Motion to Consider country. 5.37 pm Recruitment to the Bench has often been an issue in circumstances where we seek to appoint only the best. Moved by Viscount Younger of Leckie There are competing issues when it comes to appointment That the Grand Committee do consider the to the High Court Bench. It is not simply a matter of Industrial Training Levy (Engineering Construction salary, nor of pension, although I readily acknowledge Industry Training Board) Order 2017. GC 33 Industrial Training Levy Order 2017[21 MARCH 2017] Industrial Training Levy Order 2017 GC 34

Viscount Younger of Leckie (Con): My Lords, I addressing. The board is running extensive careers start by setting the scene. The Government are committed programmes in schools and promoting female engineering to delivering a bold, long-term industry strategy. We role models and will continue to support the department start from a position of strength, as the fifth biggest in its continued drive to increase the number of woman economy in the world with an employment rate that undertaking STEM qualifications. The Department has never been higher and world-leading industries, for Education is also investing £20 million in business from car manufacturing and satellite engineering to mentors, which will help disadvantaged and vulnerable financial services and the creative arts. Engineering young people to access the right information about a construction is at the forefront of that industrial strategy. fulfilling education or training route that is right for To support delivery of this industrial strategy we are them. building a high-quality technical education system to Industry support is fundamental to the success of improve basic skills, address shortages in STEM skills the ECITB. The vast majority of employers in the and ensure that people have the skills that employers engineering construction industry continue to support are looking for, now and in the future. It is integral a statutory framework for training and the ECITB that through this system we provide opportunities for levy. The order will enable these statutory levy lifelong technical education learning. arrangements to continue. There are several ways in which we are doing this. I move on to how the levy is calculated. The Industrial The first is through the establishment of 48 university Training Act allows an industrial training board to technical colleges, with a further six in the pipeline to submit a proposal to the Secretary of State for raising provide high-quality technical education to 14 to 19 and collecting a levy on employers to ensure the year-olds. Secondly, there is the implementation of the effective provision of skills in the industries that they Sainsbury panel’s 15 new technical routes and wide- serve. This order will give effect to a proposal submitted reaching reforms to improve the apprenticeship offer. to us for a levy to be raised by the ECITB for levy We are committed to raising the prestige of further periods ending 31 December 2017, 31 December 2018 education and apprenticeships. Thirdly, the Engineering and 31 December 2019. Construction Industry Training Board plays a key role Given the history of this levy and our wider reforms, in helping delivery of this programme. The engineering the Committee may ask how the order interacts with construction industry encompasses much of the nation’s the apprenticeship levy. Let me explain. After the key national infrastructure work. We must ensure that introduction of the apprenticeship levy, the ECITB skills exist in the engineering construction workforce reviewed its levy arrangements and made the decision to deliver such critical new infrastructure projects as to reduce its rates as follows. The levy rate attributed Hinkley Point C and HS2. Much like mainstream to site employees will be reduced to 1.2% of total construction, engineering construction is characterised emoluments—and by emoluments I mean all salaries, by significant levels of project working, where demand fees, wages and any other earnings of an employee—plus can be unpredictable. Workers in the sector are often net expenditure on subcontract labour. This is down highly skilled, and in high demand both domestically from 1.5% of total emoluments in the 2015 order. The and internationally. rate in respect of off-site employees, often referred to The Engineering Construction Industry Training as head office employees, will be reduced to 0.14% of Board works to help retain these vital skills within the total emoluments, plus net expenditure on subcontract UK economy and to drive innovative working practices labour. This is down from 0.18% of total emoluments within the industry, such as the development of drone in the 2015 order. technology. The order enables the ECITB to raise and The Industrial Training Act requires the ECITB to collect a levy on employers in the engineering construction take reasonable steps to ascertain the views of persons industry. The board has been providing vital industry who are likely to be liable to pay the levy as a consequence support since its creation in 1991. Established under of the proposals. This involves ascertaining the views the Industrial Training Act, its core activity is to invest of the majority of employers who together are likely money that it receives by way of the levy in skills to pay the majority of the levy. The proposal for the training for the engineering construction workforce. levy obtained the support of the majority of employers The board develops the skills of the existing workforce in their respective industries. The three major employer and new entrants into the industry through providing federations in the industry, the ECIA, the OCA and training grants and puts in place strategic initiatives BCECA, supported the levy. All levy-paying members that will benefit industry over the long term and secure of the employer associations, 84 in total, were deemed a sustainable pipeline of skills. The ECITB is led by to be supportive. Of the 149 employers not represented industry and has a central role in training the workforce by these federations, 41 did not respond and only in the engineering construction industry. It provides a 10 declined to provide their support. On that basis, wide range of services including setting occupational 78% of levy-paying employers were supportive of ECITB’s standards, developing vocational qualifications and proposal, and such employers are likely to pay 87% of offering direct grants to employers who carry out the value of the levy. training. In doing all this, the Government look to the The Industrial Training Act also requires that the board to minimise bureaucracy and to ensure that board includes within its proposal a proposal for support to employers is relevant and accessible. exempting small employers from the levy. This order The ECITB also has a key role in encouraging greater therefore provides that small firms are exempt from diversity across the engineering construction industry. the levy if their total emoluments are below a threshold Currently, only 7% of the engineering construction that the industry considers to be appropriate. If the workforce are women. This lack of diversity needs total gross emoluments and total gross payments are GC 35 Industrial Training Levy Order 2017[LORDS] Industrial Training Levy Order 2017 GC 36

[VISCOUNT YOUNGER OF LECKIE] the exemptions, but they meet the needs of the industry. less than £275,000, no training levy will be payable in It is instructive that the consultation carried out by the respect of site-based workers.If the total gross emoluments ECITB found that 78% of levy payers were in favour and total gross payments are less than £1 million, no of the proposals, and together they will pay a total of training levy will be payable in respect of off-site based 87% of the value of the forecast levy. There is fairly workers. Those employers who are exempt from paying broad support, therefore; I certainly have not been the levy can and do continue to benefit from support made aware of any opposition. from the board, including grants. The ECITB determines As the noble Viscount himself pointed out, and I that 375 establishments are considered to be in the thank him for doing so, less than 10% of the engineering scope of the levy. Of that, 120 establishments are workforce is female. Again, going back to my days as a exempted due to their size, which means that 32% of trade union negotiator, I remember the attempts that establishments are exempted. This order is therefore were made to get more women into the union, particularly expected to raise around £78 million for the ECITB in the predominantly engineering-based union that I looked levy income over three years. after. It was very difficult, and I pay tribute to WISE— To conclude my opening remarks, this order will Women into Science and Engineering, which is backed enable the ECITB to continue to carry out its vital by my union, Unite. We want as many women as training responsibilities alongside the introduction of possible to come forward and fill jobs in the manufacturing the apprenticeship levy and, aligned to our wider skills sector, particularly in engineering. reform programme, it will help the Government meet This issue goes back to the requirement for their industrial strategy goals. Accordingly, I commend qualifications, particularly STEM qualifications, and it to the Committee. I beg to move. will impact on what I am going to say about the next set of regulations for consideration. The pressure on 5.45 pm schools to find enough teachers to make sure they can deliver teaching in these subjects cannot be ignored. A Lord Watson of Invergowrie (Lab): My Lords, I lot more work has to be done on that, because they thank the Minister for his introduction to this order, provide the building blocks to get the initial qualifications which I think it fair to say is not particularly controversial to get women into university, or through the technical and need not detain us for too long. routes into engineering. It is important that the Minister Preparing for this took me back some time. In a highlighted that, and it is to be welcomed. previous guise, I was the full-time official of a trade The order is not controversial and is to be welcomed. union in the engineering sector, and I well remember It has been welcomed in the industry, and on that basis dealing with many industry training boards on a number I can only hope it will achieve what it sets out to of different issues. When the Department for Business, achieve and assists the development of the industry. Innovation and Skills published its final report in December 2015 on the combined triennial review of the industry training boards, it mentioned the background Viscount Younger of Leckie: My Lords, I thank the to the industrial training levy itself, which was introduced noble Lord, Lord Watson, for his comments and for as part of the Industrial Training Act 1964. That is of his contribution today. I was particularly interested to course where the industry training boards can be hear of his background, which I did not know about. traced back to as well. I appreciate his general support for the order. It is to be regretted that there are now only three Before I make some very brief concluding remarks, industry training boards left. I certainly remember that I shall pick up on his very important point about the there were more than 20 in the 1980s, and they were need to encourage more females into engineering. I significantly reduced by the Industrial Training Act 1982. am delighted that my noble friend Lord Nash is in Apart from the film sector,only the Construction Industry Committee today because I am sure he agrees with me Training Board and the Engineering Construction that this is a very important part of what the Department Industry Training Board are still in place today, both for Education is doing. It is starting from the very of which are of course accountable to Parliament. early years to encourage more women to study STEM They raise most of their funds through training levies subjects and then, through proper career guidance, to and various commercial activities. In 2016, the ECITB encourage them to take roles in science and engineering. raised £32 million in levy and returned £28 million to It is one of the major priorities and major thrusts—the the industry. It is interesting that the ECITB itself noble Lord is right about that. made the proposal to reduce the industrial training Noble Lords will be aware from previous debates levy rate for employers, which appears to be a direct that the ECITB exists because of the support it receives result of the impending introduction of the apprenticeship from employers and employer interest groups in the levy. That is reasonable and I understand the thinking sector. There is a firm belief that without this levy, behind it. there would be a serious deterioration in the quality I made notes but if I read them out I would largely and quantity of training in the engineering construction repeat what the noble Viscount said in his introduction, industry,leading to a deficiency in skill levels. It continues and I see little purpose in doing that. However, the to be the collective view of employers in the engineering listed exemptions seem reasonable and are set at reasonable construction industry that training should be funded levels with regard to the overall pay bill of establishments. through the statutory levy system in order to secure a I was interested to hear the noble Viscount say that a sufficient pool of skilled labour. I commend this order total of 275 establishments would qualify for the levy, to the Committee. with 120 exemptions. I will not mention the details of Motion agreed. GC 37 Immigration Skills Charge Regs. 2017[21 MARCH 2017] Immigration Skills Charge Regs. 2017 GC 38

Immigration Skills Charge Regulations submissions and from meetings with more than 200 public 2017 and private sector employers. It considered that a flat charge of £1,000 per worker per year would be large Motion to Consider enough to have an impact on employer behaviour and 5.52 pm that this would be the right level to incentivise employers Moved by Lord Nash to reduce their reliance on migrant workers. That the Grand Committee do consider the Where the Government took a different line from Immigration Skills Charge Regulations 2017. the MAC was to protect the UK’s position as a centre of excellence for education and research and to support TheParliamentaryUnder-Secretaryof State,Department smaller employers. We announced the rate, scope, forEducation(LordNash)(Con):MyLords,thisGovernment exemptions and introduction date for the charge in are committed to a strong skills system that can drive March last year. The draft regulations implement the increases in productivity and improvements in social decisions taken last year. We believe that this has given mobility and help make a success of Brexit. We need to employers enough time to prepare for its introduction do more to support people into high-quality jobs and on 6 April, subject to parliamentary consideration. In help them gain world-class skills that meet employers’ deciding the scope and rate of the charge, we took into needs. Lack of investment in skills is damaging our account the MAC’s recommendations, but we also productivity and our economy. Employer investment responded to concerns raised in Parliament during the in training has been declining for 20 years. On average, passage of the Immigration Bill and from employers UK workers undertake 20% less continuing vocational to announce a number of exemptions and a lower rate training than those in the EU. According to the latest for charities and smaller employers. For that reason, available international comparison, the UK spends Regulation 3 introduces a reduced rate of £364 per 55% less than Germany and just over 70% less than individual per year for small and charitable sponsors. France per employee on vocational training. We are Regulation 4 provides for the exemptions. As the forecast to fall from 24th to 28th out of 33 OECD MAC recommended, sponsors of tier 2 intra-company countries for intermediate skills by 2020. We need transfer graduate trainees are exempt from paying the urgentlytoaddressthisunderinvestment,andtheimmigration charge. The Government have also exempted specified skills charge is one way we are doing so. PhD-level occupations, including higher education The charge was first announced in May 2015. The lecturers and researchers. In addition, those switching Immigration Act 2014, as amended last year, provides from a tier 4 student visa to a tier 2 general visa to take the Secretary of State with the power to require certain up a graduate-level position in the UK are exempt. employers who recruit skilled workers from outside This was welcomed by the British Medical Association the European Economic Area to pay an immigration as it will benefit doctors completing their foundation skills charge. These regulations provide for the amount training. These exemptions are designed to protect and obligation to pay the charge. Through the charge employers’ ability to recruit the brightest and the best. we want to incentivise employers to think differently For out-of-country applications for entry clearance, about their recruitment and skills decisions and the the regulations provide that the charge does not apply balance between investing in UK skills and overseas for leave of less than six months. recruitment. Regulation 5 provides that the sponsor must pay There is no doubt that skilled migration has brought the charge up front. This is for a minimum of 12 months economic benefit to the UK. It has boosted our ability and then in six-monthly increments, rounded up. It to compete in global markets and helped make us will be calculated according to the length of employment world leaders in many sectors. There are many examples the sponsor enters on the certificate of sponsorship. of good practice, but it seems that some employers Employers will pay the charge as part of the existing would prefer to recruit skilled workers from overseas sponsorship process, administered by the Home Office. rather than invest in training UK workers. Use of the tier 2 visa route grew by 37% between 2010 and 2016. Regulation 6 provides that part or all of the charge Our aim is to see UK workers with the right skills fill may be refunded or waived. Regulation 7 means that these roles. the charge will not be retrospective. Employers of When we first announced this policy,we commissioned individuals who are already in the UK on a tier 2 visa the independent Migration Advisory Committee to or have been assigned a tier 2 certificate of sponsorship advise on applying a skills charge to employers recruiting at the time the regulations come into force will not workers from outside the European Economic Area as have to pay the charge. This is also the case where part of its wider review of tier 2. As the Secondary these individuals apply to extend their stay or change Legislation Scrutiny Committee acknowledged, most job or employer. respondents to the MAC’s consultation were not in I turn to how the funding raised will be used. Based favour of a charge. It is not surprising that those who on Home Office analysis of the use of the tier 2 route, will have to pay the charge did not welcome it. Based it is estimated that the charge could raise £100 million on the SLSC’s comments, we revised and re-laid the in the first year. The Home Office will collect the Explanatory Memorandum accompanying the regulations charge and transfer it to the Consolidated Fund, less to reflect more of the evidence we considered. The an amount to cover the costs of collection. The population MAC, which is made up of independent experts in the percentages underlying the Barnett formula will be fields of economics and migration policy, supported it. used by the Treasury to determine the split of funding The committee analysed different levels of charge and between the Department for Education and each of took into account views from more than 250 written the devolved Administrations. GC 39 Immigration Skills Charge Regs. 2017[LORDS] Immigration Skills Charge Regs. 2017 GC 40

[LORD NASH] is appropriate to put these proposals in the context of The income raised from the charge will be used to the very tight brief which the MAC, as always, was address skills gaps in the workforce. It will make a given. It was required to advise on, contribution to the department’s skills budget, ensuring “significantly reducing the level of economic migration from that we can continue to make a significant investment outside the EU”, in developing the skills the country needs. The charge taking into account the impact on the economy,including will raise income but it is also designed to change on productivity and competitiveness, and was asked to employer behaviour, and that applies across all sectors. consider five issues, of which a skills levy was one. As I recognise the concerns about the impact of the the Minister said, at the time of the review the Government charge on health and education in particular. The had already signalled an intent to introduce the charge. MAC was clear in its recommendation that the public It is fair to acknowledge the MAC endorsement of the sector should not be exempt. As an employer like any proposal. It said in its review: other, it should be incentivised to consider the UK “We consider that the imposition of an ISC will serve to labour market first. This is in line with government incentivise employers to reduce their reliance on employing migrant policy.It is not sustainable to rely on recruiting overseas workers and to invest in training and upskilling UK workers”. staff. We are committed to building homegrown skills, But I also observe that, certainly in the health sector, to recruit from the domestic labour market and to that gives the term “incentivise” a rather new meaning. invest in training. The Explanatory Memorandum refers to a collapse in We recognise that immigration has a role to play in training. Will the Minister tell the Committee whether the supply of workers where there are genuine skills the Government have analysed why that has been the shortages, but that should not come at the expense of case? investment in skills in our country. The immigration The letter from the Minister, Robert Halfon, to the skills charge is designed to incentivise employers to Secondary Legislation Scrutiny Committee confirms invest in training and upskilling the resident workforce. that this is a tax. We know that the Treasury hates It will also raise funding to support ongoing investment hypothecation, but given its rationale it seems to us by the Government in their skills programmes. I hope that those who are paying it must be able to see how it that the Committee will support these regulations. is used and, more than that, be involved in decisions I beg to move. about the application of the funds, because they know what normally works best in their own sectors. There 6 pm must be a lot of sector-specific experience which should Lord Lucas (Con): My Lords, I welcome these be tapped, as well as this being in the interest of regulations. They are well targeted, have a good concept, transparency. good execution, with a sensible set of exemptions and The Institute of Directors recognised that “penalising remission for small businesses. I am disappointed that employers” who need to look to the “global talent they do not extend to hospitality and construction, pool” is, both areas where we have a substantial tendency for “not the answer to gaining more home-grown talent”. employers to bring in people from overseas rather To balance that, PwC said: than concentrate on training our own people. However, I entirely understand, given that most of that migration “The levy will not impact the way that companies recruit as is from the EU, why we do not wish to complicate our they require the skills they require”. Brexit negotiations by trying this on the continent just It raised the spectre of, in the long term, yet. However, when you talk to hospitality employers, “parts of businesses moving overseas, if mounting costs become they say, “We have to employ these overseas people prohibitive and companies risk damaging their brands by providing because the Brits just don’t know how to treat customers”. substandard products or services”. I say let us bring back the British Airways charm I recall that during the passage of the Bill an school, which is what I grew up with. We can do this; argument used against this, partly in the higher education we just need to train people properly. I do not think sector, was that some industries will pay the charge but that we should accept the excuses of our hospitality would not see any benefits because their sectors are industry. We should apply this principle to it to get it not apprenticeship-appropriate.That applied in particular to bring our own people up to speed. to the health sector. I will leave it to my noble friend However, within the industries this measure is aimed Lady Walmsley to deal in detail with the health sector. at, it is an excellent idea. It is largely, I think, aimed in I know that I will support everything that she says. practice at IT and industries round that. I would be During the passage of the Bill we also expressed very grateful if the Minister or his colleagues would concern about the costs of the bureaucracy of this agree to meet me and representatives of the tech exercise. Given the investment that the sectors in question industry to discuss how to craft training which will already make in training, there seemed to be a danger meet the needs of employers who are hit by this levy so of a charge being levied, having administration costs that the incentive which is provided by it can be deducted and the balance then returned to them. I directed at the provision of training which will ensure have been assured that the deduction will be small that the objectives of the levy are realised. because the Home Office visa system will be used, but there will be a deduction. We can add to that the Baroness Hamwee (LD): We are all being so polite. unquantified cost of the loading on to the Home Perhaps we have learned from the charm school with Office, which is overloaded. It probably feels that the which the noble Lord, Lord Lucas, grew up. We, of light at the end of the tunnel is that ever-present course, support investment in skills and training but it oncoming train. GC 41 Immigration Skills Charge Regs. 2017[21 MARCH 2017] Immigration Skills Charge Regs. 2017 GC 42

The MAC also said that, with essential staff, thereby putting patients at risk. “it is impossible to conclude, ex ante, whether the benefit arising I ask myself why the Government could not make to employers … will outweigh the costs imposed on Tier 2 those calculations. Perhaps it is because it is so politically sponsors”, embarrassing. because the Government have not yet determined how It is little wonder that the Secondary Legislation the revenue will be reinvested. That is clearly a significant Scrutiny Committee had serious concerns about the point. It is clear that the health sector has come to a measure, with particular regard to the fact that the conclusion, and it is not the positive conclusion that memorandum laid with the instrument said nothing the Government want to see. Robert Halfon, in his about the opposition to the measure voiced by those letter to the Secondary Legislation Scrutiny Committee, who were consulted. It was also provided with no said: information about the impact of the measure, particularly “The cost to the healthcare sector and to the NHS in particular on health and care employers, who are the sector has not been estimated”. fourth-most affected by the charge. It is no wonder That is quite an astonishing statement. that it was not provided with that information since, in One other area is that of intercompany transfers. reply to its questions, as my noble friend has just said, The Minister has referred to the exemption in the Robert Halfon MP confessed that the cost of the regulations, but the exemption is limited to trainees. charge to the NHS has not been estimated because it is Why is it so limited? Is it simply because they are classified as a tax. His letter also shows complete trainees? That fits in with the thrust of the proposals. I ignorance of the nature of the modern nursing workforce, ask that question and make the implied point because saying: we need to do all that we can to attract, retain and not “There is no direct impact on employers of care workers as deter international companies basing themselves in they do not qualify for entry to the UK under the Tier 2 route. Tier 2 has been reserved for graduate occupations since 2011”. the UK. I do not think that I need to fill in the gaps between the lines there. Yes, nursing has been a graduate occupation for a similar length of time. Does the Minister think that There are steps that the Government can take after care employers do not employ graduate nurses any taking through these regulations, particularly by way longer? of exemptions and by working with different sectors, The ISC was intended to deter employers recruiting which would make them more palatable to those who from abroad, but health and care employers have no find them unpalatable, and more effective, and might option, and they have no need for this. As the BMA help to avoid unintended consequences, as these charges letter says: are clearly going to be significant for some sectors. “Checks and balances are already in place to ensure posts are first offered to UK and EU nationals through the resident labour market test”. Baroness Walmsley (LD): My Lords, as my noble Although we are going to introduce apprentice nurses friend Lady Hamwee said, I would like to say a few later this year, doctors undergo long and rigorous words about health and social care. Report after report training, and it is impossible to upskill UK citizens shows the dire financial straits in which NHS employers overnight. find themselves, with 75% of hospitals already in deficit and A&E departments struggling to meet the 6.15 pm four-hour target for attending to patients. There is a Where is the money going? I understand that it will shortage of nurses, and retention is terrible. Doctors’ go into the Consolidated Fund, as the Minister said, rosters are not filled, resulting in cancelled patient and some will then be sent out to the Department for treatments, which puts a greater burden on existing Education and the devolved Administrations to help staff, who are acting as the shock absorber for the fill the skills gap. Will the amount raised from health system. GP practices cannot fill vacancies. Care homes and care employers be added up and go to Health providers are handing back local authority contracts Education England to ensure it is used to train more because they cannot provide a decent service within UK doctors and nurses? According to the BMA, the the amount of fees that they are paid. The number of Government have suggested that some of it will be care beds is falling while demand is rising, and 1.2 million reinvested in the health workforce but, as I understand elderly and disabled people are not receiving the care it, there is no guarantee, nor, as far as I can see, any that they need. mechanism to ensure that it goes to training health It is in this climate that the Government have professionals. decided to tax health and care employers for every The only solution to this mess is to add health and worker from outside the EEA who is on a tier 2 visa. care workers to the list of exemptions in Regulation You could not make it up. On top of this, they choose 4(a). I was interested to see the jobs which are included to do it at a time when they have removed the nurse in the exemptions. Is it really true that we have a training bursary and have no idea of the effect that it critical shortage of social scientists and research and will have on the number of nurses in training. It is no development managers? They will not be saving lives wonder that the BMA and the RCN have written to in our hospitals and nursing in care homes at any time the Home Secretary, laying out the damaging effects soon, will they? of the charge on health and care. The Government Thousands of doctors and nurses come to the UK may not have calculated how much it is going to cost every year to work in the NHS and care services, them, but they have—it is £7.2 million per year, which which would be utterly devastated without them. The will deter cash-strapped employers from filling rosters Government are being immensely short-sighted by GC 43 Immigration Skills Charge Regs. 2017[LORDS] Immigration Skills Charge Regs. 2017 GC 44

[BARONESS WALMSLEY] Last week, during the briefing session on the charge, imposing this tax. The NHS is not a business that can the Minister for Skills, Mr Halfon, explained that it absorb extra taxes by reducing profits. I call on the will be used to address skills gaps in the workforce. In Government to introduce exemptions from this charge terms of the resources available to do so, and to some for health and care workers. If they do not do so, they extent reflecting what the noble Baroness, Lady Walmsley, will be adding to the already unsustainable funding has said, the Minister said he anticipated an annual situation of our health and care services and to the surplus of around £100 million once the Home Office £20 billion black hole in the health budget and the had deducted the costs involved in collecting the charge. £6 billion black hole in the care budget by 2020. Identifying those skills gaps is at the heart of these regulations. The UK Commission for Employment Lord Watson of Invergowrie (Lab): My Lords, the and Skills’ Employer Skills Survey 2015 shows that, Labour Force Survey showed that by 2014 the number while overall employer investment in training, in kind of workers participating in training courses away from and cash, increased between 2011 and 2015, per employee their own workplace has collapsed since 1992. I will expenditure flatlined at £1,600, despite a period of not repeat the figures that the Minister gave, but this economic recovery and business growth. That was the feeds into a pattern. In general, UK employers underinvest last survey to be published, and I regret to say that it in training relative to comparable countries. It is therefore will remain the last survey to be published because understandable that the Government should decide to earlier this year the Government closed the UK incentivise employers to invest in training so as to Commission for Employment and Skills. We no longer maximise the number of jobs available to the domestic have a national overview. Perhaps the Minister will workforce. In that aim, we support what the Government explain the rationale behind what appears to be an are attempting to achieve through these regulations. extraordinary step. What will replace it? However, the Secondary Legislation Scrutiny The Employer Skills Survey 2015 highlighted what Committee was critical of the fact that the Explanatory it termed skill-shortage vacancies by sector and listed Memorandum laid with the instrument said nothing 13. The top five were: construction; manufacturing; about the opposition to the proposals voiced by most electricity,gas and water; transport and communications; of those consulted by the Migration Advisory Committee. and agriculture. Interestingly, health and social work The Secondary Legislation Scrutiny Committee was were only in seventh place, despite the regular reports also critical of the fact that the Explanatory Memorandum of difficulty in filling vacancies. The noble Baroness, provided little or no detail about the impact of the Lady Walmsley, has stolen a bit of my thunder here, so charge on those employers likely to be affected. That I will not repeat the thrust of her argument. Certainly, led the committee to conclude that the process of the proportion of NHS staff who are not UK nationals policy formulation for the proposals was not complete is high, although already in decline following last and that the Government were not in a position to year’s referendum. It seems questionable, at the very supply Parliament with sufficient information about least, that the list of exempted occupations listed in the implementation and impact of the proposed charge. the regulations does not include doctors or nurses at a If that is not the source of some embarrassment to the time when the NHS is under real pressure in filling Minister and his officials, then it ought to be. posts in these areas. I acknowledge that the noble As far back as May 2015, the then Prime Minister Baroness, Lady Walmsley, said that it goes wider than announced the intention to introduce the charge, and doctors and nurses. Enforcing the levy would effectively in March 2016 the scope of the charge was set out. penalise the NHS for recruiting workers from outside Why then was the DfE not ready when the regulations the EEA to fill gaps in an already stretched workforce came to be submitted? Given the array of staff in the in an essential public service. I accept that to some department, there is surely no excuse for this. I hope extent the NHS has over the years gone for the easier that the Minister will apologise and give an assurance option of hiring from outwith the UK, but the pressures that in future his officials will be better prepared. currently being experienced there will be as nothing Since the charge was first proposed almost two two years hence. I urge the Minister to consider what years ago, we can discount any suggestion that it had the noble Baroness, Lady Walmsley, said and what the its roots in what I regret to say is the increasingly pressures on the NHS will be if the charge is applied anti-immigrant rhetoric that since last year’s referendum across the board for that sector. has characterised some government policy. The Science, technology, engineering and mathematics Government’s generally hostile approach towards are also areas where there are skills gaps, not least in migration—and the definition of it, as evidenced by schools, where recruitment also remains a problem. I their attitude on the Higher Education and Research shall not repeat the comments I made in respect of the Bill in relation to international students—risks further Engineering Construction Industry Training Board in fuelling discrimination and social tension. a previous debate. Few teachers will earn above the Changes to migration policies should be developed £30,000 cut-off for the charge, and so non-EEA nationals through consultation with employers and trade unions will be unable to be used to help fill these gaps. From and, once agreed, should be introduced with adequate memory, Mr Halfon—or perhaps it was officials—said lead-in time to allow employers and employees to plan that there are only about 150 non-EEA nationals in accordingly. That allows short-term gaps in the labour that bracket. I accept that that is not a big number, but market to be filled while other measures are taken to none the less these gaps need to be filled. With maths address long-term training needs in the domestic labour and ICT demonstrating digital skills shortages for the market. It is to be hoped that that is what this charge jobs of tomorrow, there could have been a case for will achieve. relaxing the charge in these areas. GC 45 Immigration Skills Charge Regs. 2017[21 MARCH 2017] Immigration Skills Charge Regs. 2017 GC 46

One suggestion I shall make concerns the follow- health service. The MAC was clear in its view that the through on the charge, which we all hope will meet its charge should apply to the public sector. It is not aims. Could employers not be eligible for some sort of sustainable to rely on recruiting overseas staff and the rebate on the charge for employing a non-EEA worker? Government are committed to building home-grown There is an element of double-charging. If an employer skills. All employers need to look at how they meet has identified a gap for a group of employees, so that their longer-term skills needs, and the long-term strategy he or she has to take on workers from outwith the UK must be to train and retain our own nurses and doctors and, I assume in this case, from outwith the EEA, in the UK. Steps are being taken to address the while doing that, the employer is meeting the aims of shortage of nurses, including continued investment in this charge by bringing through young, or perhaps not training, retention strategies, and a return to practice so young, people to train them up to the necessary campaign. We are introducing a new nursing degree level. So he is paying the charge for them to be apprenticeship. Health Education England has increased employed and to be trained, and he is also paying a nurse training places by 50% over the past two years surcharge for those outwith the EEA who he is using and is forecasting that more than 40,000 additional temporarily. So in a sense he is training people for the nurses will be available by 2020. Similarly, Health long-term good of the business and of the UK economy, Education England is forecasting that more than 11,000 and there does seem to be an element of double-charging, additional doctors will be available by 2020. The noble particularly when the £1,000 rises over the years to a Baroness, Lady Walmsley, asked about the number of maximum of £5,000—leaving aside the charitable nurses impacted by the charge: 2,600 certificates of sector—when the employer is in fact doing what the sponsorship were used for nurses in the year ending Government want him or her to do: training employees. August 2015. My other question for the Minister is: when will the The noble Lord, Lord Watson, asked about the charge be reviewed? I do not know whether there is delay in publishing the impact assessment. As the any significance in the fact that the assumption in the charge is classified as a tax, we have not been required regulations is that it covers only non-EEA employees to carry out a formal impact assessment. It is also for up to five years. I am not clear whether that is to be difficult to do so because it is difficult to anticipate a maximum. But there may be a case for, in effect, a how employers will respond to the charge and to wider sunset clause so that after five years the regulations changes to tier 2. In addition, the charge does not sit could be reviewed and some assessment made of the as an isolated measure—it is part of a wider skills charge’s success. As I said earlier, all of us in this programme to develop a strong, productive economy. debate, whatever our views and however critical we On the noble Lord’s point about how we will assess have been, want to see the outcome that the Government and evaluate the impact of the policy and whether intend. I would be interested in the Minister’s views on the charge will be reviewed, we will monitor the that point. I do not expect him to respond just now. I operation of the charge and will undertake a review of do not expect his officials to give him a response just the policy after one year, as covered in the Explanatory now. If it is more convenient, I am more than happy to Memorandum. receive something in writing. Overall, I certainly want to see this charge introduced 6.30 pm effectively and fairly, leading to a situation where there To clarify some of the exempted occupations: intra- are more UK workers able to fill the gaps that are company transfer graduate trainees are exempt as they evident now and likely to be even more evident in the sit with the investment by employers in skills. Other post-EU years ahead of us. To that extent, I do not do exemptions which apply to the tier 2 general category this often but I wish the Government well because I also apply to ICTs: PhD-level jobs, visas for less than think their intentions are good, but there are certainly six months and transfer responses before 6 April this some rough edges in this charge which could perhaps year. be smoothed down to make it more palatable and The noble Baroness, Lady Walmsley, asked whether perhaps even more effective. the income would specifically go to NHS training. There have been discussions with the Department of Lord Nash: My Lords, I thank all noble Lords for a Health about how health education and training can really interesting debate. We welcome this feedback. I benefit from the Government’s wider skills reforms come back to my opening remarks: the investment in such as apprenticeships.The amount of funding generated skills is crucial to a productive, strong UK economy—an by the charge will depend on the use of the tier 2 economy which gives people from all backgrounds the skilled workforce route. The income raised from the opportunity to fill today’s skilled roles as well as those charge will be used to address the skills gap in the in the future. Migration has a role to play in supporting workforce. The immigration skills charge is making a the development and supply of expertise and skills contribution to the department’s budgets and is helping and we want to continue to attract the brightest and to sustain our investment in skills. the best, but through the immigration skills charge we I was very grateful to my noble friend Lord Lucas want to incentivise employers to invest in training. I for his comments in support of these regulations. I will am grateful for the support that has been expressed be very happy to meet him and representatives of the today for our desire to upskill our workforce. I am IT industry to discuss how we can ensure the appropriate afraid that I will not cover all the points that have been training in that sector. raised but I will write to all noble Lords present today. There has been broad agreement about the need to The noble Baronesses, Lady Walmsley and Lady invest and give people from all backgrounds the Hamwee, asked why this impacts particularly on the opportunity to develop and learn and be part of a GC 47 Immigration Skills Charge Regs. 2017[LORDS] Immigration Skills Charge Regs. 2017 GC 48

[LORD NASH] from whom they will eventually benefit. However, is highly skilled, competitive and successful economy. he aware of the very high level of commitment to That is why we are introducing this charge. I will write training that all health and care employers already to noble Lords to cover other points. make? It takes them a lot of time and costs them a lot of money. Every ward has training nurses on it; every Lord Watson of Invergowrie: Before the Minister clinical team has trainee doctors on it; most GP practices finishes, I mentioned the UK Commission for have GP trainees; most care homes also have trainee Employment and Skills, and that apparently it has co-workers. An enormous contribution is made already. been disbanded. Perhaps the Minister can give me a The noble Lord, Lord Watson, talked about double commitment that he will also write to me about that. charging—that is what we have here. I am happy to leave it at that just now. Lord Nash: I have listened to what the noble Baroness and the noble Lord have said but I cannot add any Lord Nash: I will certainly cover that. more at this stage. I commend the regulations to the Committee. Baroness Walmsley: Before the Minister concludes his remarks, I will make one point. Of course I agree Motion agreed. with what he said about the need for employers to make a contribution to the training of the workforce Committee adjourned at 6.33 pm.