Defence Expenditure (NATO Target) Bill — House of Commons, 2015-10-23
Topic: Mixed Topics
Philip Martin Dunne (Conservative, Centre-right): I am grateful for that further endorsement of the progress being made Having congratulated the hon. Member for York Central on taking up her now post, I should also take this opportunity to welcome her remarks. For most of what she said, I found we had very little issue between us. It was a particular pleasure to hear her endorsement of the 2% NATO pledge. That is extremely welcome and clears up one of the apparent inconsistencies that have been flying around the media, in connection with a potential lack of support from the Leader of the Opposition for NATO. It is very welcome to hear that that is not the case, and I am sure the whole House will agree that that clarification was useful Having referenced the contributions made by hon. Members in general, let me turn to some of the specifics, in particular some of the calculations. Much of the talk in this debate has been about one half of the calculation of 2%. There has been hardly any reference to the denominator, in this case gross domestic product. Members are aware that in this country, thankfully, GDP has been growing faster than in any other G7 nation over the last two years. That is to be welcomed. Of course, each year that GDP grows, more challenges are placed on defence and Government spending as a whole if our spending is not able to grow at the same pace. From a purely arithmetic point of view, it becomes harder for defence to achieve a minimum threshold expressed as a percentage unless we are able to grow in tandem. Under present plans, we are likely to grow, but not at quite such a pace There are also changes from time to time in the way GDP is calculated. One important such change took place only last year. That was the result of the European system of national and regular accounts—ESA 2010, as it is known—which gives guidance on standardising public finance accounts across the European Union. Major differences to the way GDP is calculated include ESA 2010 counting weapons expenditure and R and D spend as capital spend, as well as including non-profit organisations that serve households and—this is a particularly big one that affected the UK—the proceeds from what used to be called the black economy, but is now, I gather, called the underground economy, such as illegal activities, including prostitution and drug dealing. When we add the apparent proceeds from prostitution and drug dealing to GDP, it makes achieving the target that much more difficult, with of course no cash consequence whatever We adopted the new accounting methods to bring the country into line with other EU members. This initially added £43 billion to the UK GDP, following the re-evaluation—the equivalent of a 3.6% average increase in GDP, which was subsequently revised upwards, to 4.1%. Those changes will make the difficult task of meeting the NATO guideline of spending 2% of GDP on defence even more of a challenge, and the impact of the change in the GDP denominator has been estimated as a 0.09%—so almost 1%—reduction in the defence calculation for zero cash effect Article 3 of NATO’s founding charter states: "In order more effectively to achieve the objectives of this Treaty, the Parties, separately and jointly, by means of continuous and effective self-help and mutual aid, will maintain and develop their individual and collective capacity to resist armed attack" Like any insurance policy, defence only pays out when you pay in. Some hon. Members mentioned the contribution that the United States makes financially to the NATO alliance and the increasing dependence that we have on it. We cannot expect US taxpayers to go on picking up the security cheque so that nations on the European side of the Atlantic can prioritise social welfare spending when the threats are on our doorstep, especially at a time when the US is under increasing pressure to meet its own debt reduction targets and is pivoting to face new threats in the Asia Pacific region. Moreover, the combined wealth of the non-US allies, measured in GDP, exceeds that of the United States Non-US allies together spend less than half of what the United States spends on defence, and the gap between defence spending in the United States compared to Canada and European members combined has increased since 9/11. Today, the volume of US defence expenditure effectively represents 73% of the defence spending of the alliance as a whole. So there is an over-reliance by the alliance as a whole on the United States for the provision of essential capabilities, especially when it comes to intelligence, surveillance and reconnaissance; air-to-air refuelling; ballistic missile defence; and airborne electronic warfare As it always has done in the past, the UK is once more taking the lead in turning NATO around. That is why we have committed to the readiness action plan. That is why we are playing a significant role in NATO assurance measures, protecting Baltic skies from Russian aggression and joining the transatlantic capability enhancement and training initiative, alongside the US and—yes—Germany, to offer reassurance to our allies and help to build regional capacity and capability. That is also why we are also a framework nation for the Very High Readiness Joint Task Force (Land) Brigade and are committed to providing it with thousands of troops a year. In fact, the Spearhead Force, as it will be known —a rather more useful short name than the usual military acronym—is currently being put through its paces in Exercise Trident Juncture before it goes operational next year. The UK is committing some 2,800 personnel including an Army Brigade Headquarters and Battlegroup, three Royal Navy warships and aircraft, including Typhoon fighter jets and helicopters, to those manoeuvres Above all, our leadership in NATO is illustrated by the fact that we are prepared to put our money where our mouth is. We have a budget of £35 billion, the second largest defence expenditure in the alliance. We are one of those five nations projected to spend 2% of GDP on defence in 2015, and the Chancellor has made the commitment to spend 2% of GDP on defence for every year of this decade. Make no mistake: our allies appreciate our efforts. It has been suggested in this debate that unless the Bill proceeds we will suffer opprobrium from some of our main NATO allies. I am afraid that hon. Members are misguided, because our principal allies in NATO have expressed on several occasions their pleasure that we are taking that lead. Let us not forget that President Obama was first on the phone to the Prime Minister after the Chancellor had made that major spending announcement.