To ask Her Majesty’s Government whether the Foreign Secretary’s speech at the Lord Mayor’s Banquet on 13 May represented a change in their policy on defence expenditure.

My Lords, the Government have committed to meet our NATO pledge to spend at least 2% of GDP on defence every year of this Parliament. We are one of only a small number of NATO countries to spend 2% of GDP on defence. We have the largest military budget in Europe and are the second-largest spender in NATO, behind the United States.

My Lords, that is a somewhat disappointing response from my noble friend. I will not blame him; I will blame the people who wrote it. The Foreign Secretary is in a position to see the threats and dangers that face world peace in general and the interests of this country in particular. When he called for a decisive, significant increase in defence expenditure, possibly doubling defence expenditure up to 4% according to the Guardian, which I do not often quote, many in this Chamber would have been very pleased. The relatively new Defence Secretary supports his leadership bid. The previous Defence Secretary pleaded for more defence spending. Will my noble friend please go back to the Government and to whomsoever becomes the next Prime Minister to say that many in this Chamber and across the country who show an interest in defence desperately want to see increased defence expenditure?

My Lords, I am in considerable sympathy with my noble friend. We can be proud of what defence has achieved over the last few years, but we must also be vigilant. We must respond to growing threats, especially the more persistent and aggressive state competition we face. The question my Right Honourable Friend said we should be asking ourselves is whether we should be spending more on defence. That is precisely the question that will be asked in the forthcoming spending review.

My Lords, is it true that additional resources will be required to fund the existing proposed defence programme?

My Lords, we recognise that there is an affordability gap in our equipment programme. I have said this before. If we did nothing, the programme would be unaffordable. But we are taking action and, with careful management, particularly using the contingencies we have and budgeting for efficiencies, which we are already scoring, we believe that the equipment programme will be affordable.

My Lords, I am afraid that the noble Earl’s Answer was rather complacent. There is no doubt that this is a clarion call from the Foreign Secretary. As was said, he is in the best position to judge what the balance between hard power and soft power should be. Soft power is very important, but we have whittled hard power down since 2010. It has reduced and reduced. We have a surface shipbuilding strategy with only three ships in the next 10 years, so far. If you have a shipbuilding strategy, you need ships. There is a hollowing out of defence. Can I ask the noble Earl what the plans are now within the MoD, bearing in mind that there are huge shortfalls because the savings measures to make good the figures that they are balancing are just not there, and the comprehensive spending review seems to be shot to ribbons? What are the MoD plans for actually moving ahead? Are they planning more cuts, or are they planning to enhance the areas where there have been reductions and hollowing out?

My Lords, we should not overlook the fact that we have a £39 billion core defence budget. That will rise to almost £40 billion by 2020-21. The Ministry of Defence’s budget will rise by at least 0.5% in real terms every year of this Parliament. However, we come back to my noble friend’s Question about the percentages of GDP that we should be spending. If there is a right number for defence, it is the amount of money that is necessary to fund defence outputs. What should those outputs be? The answer—which I hope the noble Lord takes comfort from—is that the modernising defence programme has established a set of policy approaches which will help keep us on track to deliver the right UK defence for the coming decade, against the background of the threats facing us.

My Lords, as I am sure the noble Earl remembers, the Foreign Secretary, in his Guildhall speech, not only called for new capabilities and higher spending, but went on to set the point of these new capabilities when he said that,

“strength is the surest guarantee of peace”.

Furthermore, last week, in the D-day proclamation, 16 countries, including the United Kingdom, committed to,

“work together to resolve international tensions peacefully”.

Given those two aims, of strong defence as a sure base for peace and the proclamation, does the noble Earl agree that the formation of the joint reconciliation unit within the Stabilisation Unit in the Foreign Office is a major step forward, in that averting war through orchestrated means—including both hard and soft power—is much cheaper than fighting it?

I agree, and am grateful to the most reverend Primate for drawing attention to the point he made so clearly and well in the debate we had a few weeks ago on the theme of reconciliation. This takes a mixture of efforts across Government, not only from the Ministry of Defence but also through DfID and the Foreign and Commonwealth Office. All those budgets contribute to doing precisely what the most reverend Primate is advocating. I fully concur with the prescription he laid out.

My Lords, it is clear that leadership elections give Ministers the opportunity to stray into other briefs. The Foreign Secretary was obviously talking about defence. There seems to be a lacuna in policy discussion in the current Conservative leadership debate—other than on Brexit. Maybe there is an opportunity for Ministers in the Ministry of Defence and elsewhere to ask the Conservative leadership candidates what their commitment to increasing defence expenditure might be, and who they are likely to have as Chancellor of the exchequer, because if they do not agree, defence expenditure will not go up.

The noble Baroness speaks wise words, as ever.

My Lords, I wonder whether we could build on that point, as I am a little confused. In the good old days, when a Secretary of State made a speech, one had reasonable assurance that he was speaking the policy of the Government. That is not so clear at the moment. Have the various statements by the Foreign Secretary been more in his role as a candidate for Prime Minister than as a representative of the Government?

As I said earlier, my Right Honourable Friend the Foreign Secretary was suggesting that it is right for the Government to ask themselves the question of how much they should be spending on defence. That is the question we are asking ourselves, or will shortly be doing, in the spending review that faces us this year.