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Margaret Beckett: We are looking at how we can best develop and make use of the economic opportunity, and indeed the social as well as the environmental opportunities, of woodland. The policy responsibilities for the Forestry Commission will in future move to my Department, but the commission will work with the other agencies to establish delivery of policies on the ground in rural areas, and it will look afresh at the approach to woodland.
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Delivering Security in a Changing World: Future Capabilities

1.20 pm

The Secretary of State for Defence (Mr. Geoffrey Hoon): With permission, Mr. Speaker, I should like to make a statement about the need to transform our armed forces to deal with the challenges of the 21st century. Before I do so, however, I know that the House would want to join me in paying tribute to the bravery, professionalism and dedication of the men and women who serve their country in the armed forces, as well as those who support them in the Ministry of Defence and British industry. Their reputation is second to none. The transformation that I am setting out today will help to ensure that our armed forces can continue to respond effectively to the global challenges they are likely to face.

The Government are absolutely committed to Britain's defence and to our armed forces. That was made abundantly clear by my right hon. Friend the Chancellor's announcement last week of the Budget settlement for defence. The 2002 spending review provided the largest sustained growth in defence spending plans for 20 years. This year it has been possible to make even more resources available to defence, providing the longest period of sustained growth for over 20 years—a defence budget rising by £3.7 billion. It is this sustained investment that makes possible the transformation to which the Government and the armed forces are committed.

In the 1998 strategic defence review we set out plans to develop defence capability to match the needs of the post-cold war world. We built on this with the SDR new chapter, published after the appalling events of 11 September 2001, and we confirmed this direction in the defence White Paper of December 2003. That White Paper makes it clear that the threats to Britain's interests in the 21st century are far more complex than was foreseen after the disintegration of the Soviet empire. That is why the defence White Paper signalled that we should continue to modernise the structure of our armed forces, embrace new technology and focus on the means by which our armed forces can work together with other Government agencies to meet the threat of international terrorism and the forces of instability in the modern world.

Our armed forces have enthusiastically embraced this process of transformation. It will see a shift away from an emphasis on numbers of platforms and of people—the inputs that characterised defence planning in the past—to a new emphasis on effects and outcomes, and on the exploitation of the opportunities presented by new technologies and network enabled capability. We measured numbers of people and platforms in the cold war because we were preparing for an essentially attritional campaign, holding back Soviet forces. That kind of campaign has fortunately passed into history as technology has moved on.

The capability of our armed forces is growing year by year as intelligence is combined with target acquisition, modern communications and precision weaponry to produce results that have changed the nature of modem warfare. These new capabilities involve the rapid communication of actionable intelligence to the
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commander in the field to deliver a range of combined effects, involving all three services and our allies acting efficiently and effectively together.

We are also able to respond more rapidly to crises through the improved deployability of our forces. We saw that in 2003 when forces were moved to the Gulf in less than half the time that it took 12 years before. With better target acquisition and precision weaponry, our Air Force was able to hit its targets with less ordnance— and hence fewer aircraft—than in the first Gulf war. The same tasks can now be completed in much less time, with far greater accuracy and correspondingly lower risk to our armed forces.

The defence White Paper makes it clear that this shift in investment towards greater deployability, better targeted action and swifter outcomes would involve a reduction in the numbers of tanks, aircraft and ships. Drawing on our experience of operations since the strategic defence review, the Ministry of Defence and the armed forces have been identifying which parts of the armed forces are most in demand, and which are less well utilised. As a result, we have developed new plans to ensure that our armed forces can retain maximum effectiveness. I have set out those plans in detail in the Command Paper on future capabilities, which is published today.

The majority of reductions will affect not the front line, but support operations. We will exploit greater efficiencies in the delivery of logistic support and the modernisation of infrastructure. We plan to accelerate this process over the years ahead. Efficiency savings of £2.8 billion are included in our plans. All this money will be recycled to enhance our front-line capabilities and other modernisation initiatives.

Of course, we are investing more new money in defence. This investment will, for the Army, enable us to fund its transformation into a force which is structured and equipped to meet the demands of multiple, concurrent operations across the full spectrum of tasks. This involves a shift from the current structure, which is strong at the heavy and light ends of the spectrum but thinner in medium forces, to one that is better balanced right across the capability spectrum.

The balanced land force of the future will consist of two heavy armoured brigades, three medium-weight brigades, based around the future rapid effects system family of medium-weight vehicles—FRES—and a light brigade, in addition to the air assault and commando brigades. We launched the assessment phase of the FRES project in April this year and we expect to sign a contract for technology demonstration work to start later this year.

The shift in emphasis to more agile, deployable forces means that we will establish an additional three light armoured squadrons, re-role a Challenger 2 regiment into an armoured reconnaissance regiment and re-role an AS90 regiment into a light gun regiment. Later, we will equip three artillery regiments with the new light mobile artillery weapon system. At the same time, we will seek to improve our ability to engage land targets with precision and at range. The first Apache attack helicopter will go operational later this year, which is an important first step down this path.

That will be followed by improvements in our missile inventory, through the progressive introduction of the Brimstone air-to-ground missile, a new infantry
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anti-tank guided weapon—Javelin—and improved artillery rounds to allow precision indirect fire over the second half of the decade. Collectively, these improvements will be balanced by a reduction of seven Challenger 2 armoured squadrons and six AS 90 heavy artillery batteries by early 2007.

Critical as these new weapons systems are, at least as important are the changes that we are making to enhance the Army's network enabled capability. Digitised communications systems provide the network links. The entry into service of Bowman at the tactical level, and the Cormorant and Falcon systems at the operational and strategic levels, will represent a step change in our capability to pass data between commanders and the front line. We are also continuing to invest in improved electronic warfare capabilities such as Soothsayer, and in developing stand-off sensors, such as the Watchkeeper unmanned air vehicle. I announced yesterday that the preferred bidder for Watchkeeper is Thales Defence Ltd. This will provide battlefield commanders with high quality, timely and accurate information. The new joint surveillance aircraft Astor recently made its first test flight successfully.

Our battlefield and maritime helicopter forces, arguably the most capable in Europe, have demonstrated their versatility by supporting the full spectrum of recent operations. Over the next 10 years, we plan to invest some £3 billion in helicopter platforms to replace and enhance our existing capability. This substantial investment within a relatively short time frame will make it possible to produce a future helicopter fleet focused on the key capability areas of lift, reconnaissance and attack, central to future expeditionary operations.

The dominance in the air by alliance and coalition air forces shown in recent conflicts, together with our judgment about the likely threat on deployed operations, and our continued investment in Typhoon and its advanced air-to-air weapons, mean that we can plan to reduce our overall investment in ground-based air defence. We will meet our requirement in future from 24 Rapier fire units and 84 high velocity missile launchers. Rapier will be deployed by the Army, with the RAF Regiment relinquishing the role. Ground-based air defence will be commanded by a new joint headquarters within the RAF command structure. We are reviewing the implications of these force structure changes for our future equipment plans. In the meantime, I can announce the procurement of additional missiles worth about £180 million for the high velocity missile system.

I come now to the infantry. We currently provide for operational and geographical variety for the infantry by moving battalions between locations and roles every few years, which is known as the infantry arms plot. This process inevitably takes battalions out of the order of battle while they are moving and training for new roles. It also adds to turbulence. We need to ensure greater capability from the infantry, improved continuity, better careers for infantrymen and more stability for their families. The infantry arms plot will therefore be phased out.
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In addition, as a result of the improving security situation in Northern Ireland, we announced last month a reduction in the number of battalions committed to the Province by two. The Chief Constable of the Police Service of Northern Ireland and the General Officer Commanding have conducted a further review of security requirements. As a result, I can today announce another reduction by a further two battalions, which will take place in the autumn. That will reduce the overall requirement for infantry battalions from 40 to 36. This reduction will comprise one battalion recruited from Scotland and three recruited from England.

Those changes necessitate a new infantry structure that must preserve the best aspects of the regimental system, but produce an organisation capable of adapting for the future. The new structure will be based on regiments of two or more battalions, in largely fixed locations, allowing individuals to move easily between those battalions. Details of the new organisation will be worked out by the Army and announced by the end of the year.

The Army board wants to establish an infantry organisation that will last for the foreseeable future. The manpower released by the reduction of four battalions will be redistributed across the Army to strengthen existing infantry units, but it will also be used elsewhere among the most heavily committed specialists such as logisticians, engineers, signallers and intelligence. The overall size of the Army will be around 102,000.

Our plans for the Royal Navy involve the further development of a versatile, expeditionary force capable of operating at distance from the United Kingdom and focused on delivering effect on to land at a time and place of our choosing. Two new large aircraft carriers deploying the joint combat aircraft will provide the heart of our future ability to project military power from the sea. On Monday, I announced the extension of the assessment phase to take forward further design work on the new carriers in the run-up to our main investment decision and that the principles of an alliancing approach have been agreed with our industrial partners.We are investing heavily in our amphibious capability. HMS Albion and HMS Bulwark, which was delivered to the Royal Navy last week, will provide a step change in our ability to launch the Commando Brigade and support other forces ashore.

By ensuring that our major warships are effectively networked and supported, we can deliver more capability from fewer platforms. Developments in network enabled capability—linking sensors and weapon systems—mean that we can meet future area air defence and command and control requirements from a force of eight Type 45 destroyers. With those hugely capable ships currently under construction, we can plan to pay off our oldest Type 42 destroyers, HMS Cardiff, HMS Newcastle and HMS Glasgow, by the end of 2005. We are still in the early stages of an ambitious procurement programme and are working with industry to define a timetable that best matches our capability requirements and the need for steady work in both the shipbuilding and repair industries.

The potential submarine threat to most future UK operations is likely to be low. Where a threat exists, however, we will still need the full range of advanced anti-submarine warfare capabilities to deal with it. We have therefore decided to reduce our overall numbers of
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platforms optimised for anti-submarine warfare, while continuing to maintain our technological edge over potential opponents, including through the introduction of the new low-frequency active sonar 2087. We will pay off three Type 23 frigates, HMS Norfolk, HMS Marlborough and HMS Grafton, by March 2006. That shift of emphasis also allows us to meet our maritime reconnaissance needs with 16 Nimrod MR2 aircraft. That requirement could be met in future by a fleet of around 12 Nimrod MRA4 aircraft, which are more capable, subject to industry demonstrating satisfactory performance at acceptable prices.

We require a total of eight nuclear attack submarines. The introduction of the new Astute class boats will hugely enhance the contribution made by nuclear-powered attack submarines across the spectrum of operations. Solid progress has been made on the first of class following the restructuring of the project, and work continues on boats two and three, as well as on long lead items for boat four, but more remains to be done before production orders can be finalised. We are also investing in the latest generation of Tomahawk land attack missiles and improvements to submarine communications to give our current and future submarines an improved land attack capability.

Our mine countermeasure vessels have made a valuable contribution to recent operations. Against that changing threat, we must retain a balanced force of eight Hunt class and eight Sandown class vessels. We plan to pay off HMS Inverness, HMS Bridport and HMS Sandown by April 2005. The improved security situation in Northern Ireland also makes it possible to pay off the Northern Ireland patrol vessels, HMS Brecon, HMS Dulverton and HMS Cottesmore by April 2007. As a consequence of those changes, the manpower of the Royal Navy will reduce to 36,000 over the next four years.

Air power is critical to the prosecution of modem warfare. Over the next 10 to 15 years, an accelerating transformation of our air power will enable quicker, more precise and more decisive operations at range, delivered by multi-role Typhoon and joint combat aircraft equipped with highly capable weapons. The Typhoon programme is now moving forward towards initial operating capability, with indications that the aircraft is demonstrating excellent performance and good reliability. We expect to sign a contract for the second tranche of Typhoon aircraft as soon as we complete satisfactory negotiations over price and capability.

The investment in our air forces is already producing substantial improvements in existing aircraft. The Tornado GR4 is now one of the most potent offensive aircraft systems in the world, fully capable of day and night operations in all weathers. The Harrier GR9 development programme is on course to deliver a significantly more capable platform with much wider versatility, including for carrier-borne operations. The tactical information exchange capability project will examine how the effectiveness of the GR4 and GR9 can be further enhanced by improving their networked capability. The Tornado F3 aircraft is now equipped with advanced medium-range air-to-air missiles and the world-leading advanced short-range air-to-air missiles and is fully networked through the joint tactical
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information distribution system. The new Storm Shadow long-range air-to-surface missile proved itself as a world-beater during the recent Gulf war. New precision-guided Paveway IV bombs will further enhance our overall capability in the short term.

With those significant advances in capability, we now judge that we must reduce the types and overall numbers of the RAF fast jet force, providing a firm baseline for transition to the multi-role era. We will reduce the number of the air defence Tornado F3 squadrons by one, and bring forward the withdrawal of two Jaguar squadrons to 2006, with the final Jaguar squadron disbanded in 2007. Those changes in the force structure and the achievement of planned organisational efficiencies will lead to a reduced RAF manpower requirement of around 41,000 by 2008, which will also allow us to close RAF Coltishall airfield by December 2006. We will also be undertaking an extensive review of our future requirement for airfields. Following an extended period of consultations, we have decided to rationalise the basing requirements of a number of RAF logistic support and communication units. My right hon. Friend the Minister of State with responsibility for the armed forces is writing today to those hon. Members whose constituencies may be affected.

The RAF also plays an essential enabling role in support of expeditionary operations through its strategic and tactical airlift capability. The core of that capability remains the fleet of C-130 aircraft and, from 2011, the A400M. To accommodate larger items, we were considering the options to retain C-17s after the A400M enters service, and I am pleased to announce that we intend to buy the current fleet of four at the conclusion of the current lease arrangement and to purchase one additional aircraft, bringing our C-17 fleet up to five aircraft.

Amidst those structural and major equipment changes, we must never neglect the more immediate needs of our armed forces in the field and in particular their personal equipment. We already have a major programme under way in the light of experience from Operation Telic, and I can announce some further enhancements. This year, we will procure additional light machine guns for the infantry, together with night vision and target acquisition systems for forces in land, sea and air environments, as well as further enhancements to our special forces capabilities. We will also make major enhancements to our asset tracking capability to ensure that the right matériel is in the right place at the right time—we have learned the lessons from recent operations in Iraq.

Alongside the modernisation of our conventional forces, as set out in last year's White Paper, the Government remain committed to maintaining the effectiveness of the nuclear deterrent, including making the necessary investment at the Atomic Weapons Establishment, Aldermaston, and to keep open the options for a successor to Trident until a decision is required, probably in the next Parliament.

In addition to the reductions in the armed forces' manpower, we envisage reductions of around 10,000 in civilian jobs. Those reductions flow from efficiencies as a consequence of the Department's change programme and other initiatives. The reductions in armed forces and civilian manpower will be achieved, as far as practicable, through natural turnover. We will also retrain and
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redeploy personnel wherever possible. We are committed to enabling our people to develop their skills and abilities, so that those who leave are well equipped for life outside defence and those who stay are properly trained for their roles. However, redundancies will inevitably occur, and we will use the normal consultation processes to achieve them.

The White Paper makes it clear that our reserve forces have evolved to become an integral part of the UK's military capability. We learned many lessons from operations in Iraq about how we mobilise our reserves and how we must strengthen the relationship between the services, reservists, their families and their employers. The Under-Secretary of State for Defence, my hon. Friend the Member for Hove (Mr. Caplin), will make an announcement tomorrow about our plans to consult on proposals to update financial assistance to reservists when they are called into service and compensate employers who incur additional costs as a result of their staff being called up.

Some will claim that the defence budget is under such pressure that it is impossible to sustain the Department's forward equipment programme. In fact, the spend with industry will continue at the same level as in recent years. It is of the utmost importance that industry takes the maximum advantage of that substantial investment to produce what the armed forces need at a price that the country can afford. We will take forward our defence industrial policy and implement those changes in conjunction with industry to ensure a healthy and competitive defence industry, one that continues to play the leading role in our economy, a leading role that it enjoys today. I am confident that it will respond to this challenge.

For the third successive spending review, the Government have been able to announce real growth in the defence budget. That is without precedent since the mid-1980s. Even with these additional funds, it is necessary to secure maximum benefit from efficiencies and make choices to ensure that our force structure matches the requirements of today's security environment. The plans that I have announced today show the Government's determination to make the choices necessary to ensure that the real growth in defence expenditure is targeted at what the armed forces require in the 21st century, rather than what they have inherited from the 20th. That will ensure that the armed forces are equipped and trained to continue to perform with success in the future the tasks that they have undertaken so admirably and successfully in recent years.

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