I call to order today’s Defence Committee evidence session on the work of the Secretary of State. It is a pleasure to welcome once again the right hon. John Healey MP, the Secretary of State for Defence. Also appearing for the first time is the permanent secretary for the Ministry of Defence, Mr Jeremy Pocklington, and it is a pleasure to once again welcome General Dame Sharon Nesmith, who is Vice Chief of the Defence Staff. Secretary of State, I know at the outset you wanted to pay tribute to Lance Corporal George Hooley who sadly died in Ukraine last month. On behalf of our Defence Committee, I would also like to put our recognition for his service on the record. Obviously, we have all read the final letter published at the request of his friends and family and we were all deeply moved.

Thank you for that welcome. You rightly describe this Committee as a critical friend, partisan about defence but properly demanding of us in Government. Can I place on record my and our appreciation for the work that you, your members and your staff do and for the constructive challenge that you offer to the work that we do in the Defence Department? Chair, I would like to mark this occasion before the Committee just with a short tribute to Lance Corporal George Hooley. As you say, he lost his life in Ukraine last month in the cause of peace and freedom. He served our nation with distinction and honour. One of his comrades who I spoke to and was with this month described him as, “The best bloke I have ever worked with.” When I met with President Zelenskyy a couple of weeks ago in Kyiv, I said I hoped that he would see the tragic loss of Corporal Hooley as confirmation that we in Britain are ready to send our best to support his nation, that Britain continues to be Ukraine’s closest, most reliable ally, and that we will stand with Ukraine for as long as it takes. A secure Europe requires a strong Ukraine, and as Defence Secretary, I can confirm for this Committee that our mission continues. Support the fight today, secure the peace tomorrow.

Thank you very much for that. If I may, I just want to kick off the questions on the changing strategic context. Obviously, there has been a lot going on within the last few weeks with regard to the ongoing illegal invasion of Ukraine by Russia and the Defence Committee was recently in Ukraine to see for ourselves what is happening on the ground. We have also seen for the first time a NATO ally threatening to annex NATO territory with regard to Greenland—I know that we have debated that within the chamber as well—not to mention the publication of the new US National Security Strategy and National Defense Strategy. With respect to all that—we all acknowledge that the US is our number one ally—the sands are shifting. We were also very perturbed by the awful, hurtful comments with regard to our brave servicemen and women, 457 of whom perished, and we never thought a US President would be using such words. With regard to all that is going on, how do you think that has affected your own agenda with regard to the modernisation and transformation of our armed forces?

It has reinforced the case that we have made as a Government since July 2024 and the vision and imperative of transformation that was set out in last year’s Strategic Defence Review. In the context that we see and that you outlined there, Mr Chairman, we have certainly seen demands on defence rising and uncertainties increasing over recent months. That doubles down on the way that we have tried to approach this new era of threat and uncertainty as a Government, which is to fashion a new era for defence. That is within the context of a Government that recognises this is an era that requires hard power with greater investment in defence, stronger alliances, resetting our relations with key European allies and sure diplomacy. We have seen this very clearly from the Prime Minister over the last fortnight in the midst of the concerns over Greenland, the new publications of the National Defense Strategy and previously the National Security Strategy in the US, and of course the increasing commitments that we are ready to make in support of Ukraine.

Will you be investing more in our own sovereign capabilities? A lot of us are concerned that we seem to be beholden to other allies and do not have sufficient sovereign capability. That was also part of the Government’s agenda to bolster the defence industrial base. You have often intimated that defence is an engine for growth. What are you doing to ensure that we have more sovereign capability?

Will we be investing in more UK sovereign capability? Yes. An argument I made for several years before the election and we declared at the election when we were elected to Government is that we would look to direct British defence investment first towards British-based firms, new jobs and innovation in this country. That is exactly what we have been doing. Over the last year, you have seen over 1,100 major contracts let, 84% of that going to British-based firms, and a rise in the direct defence investment into British firms by over 6% above inflation.

With regard to the Prime Minister, I know that he and the Chancellor will be visiting China. Can you confirm whether the Prime Minister is willing to sacrifice defence and security concerns at the altar of economic prosperity with the second-largest economy in the world?

No, this is a Prime Minister who refuses to be drawn on what he sees as false binary choices, US or Europe, China trade or China concerns about security. In this complex world—particularly with a complex country like China—there are both enormous, important trading opportunities with China and security concerns that are deep-rooted and continuing, and he and we will balance both.

Just on that capability, Secretary of State, the armed forces are suffering as the Government retired the Puma in March 2025 leaving a medium-lift helicopter capability gap. So what is happening with awarding the medium-sized helicopter contract? As you say, there are thousands of British jobs within the SME supply chain that are relying on this decision and industry needs the certainty now.

I understand that. First on the Puma, that was a decision I took last year. We are in a process. It is a big challenge for a new Government to deal with what was a defence equipment programme that was heavily overcommitted, badly underfunded, and in many areas unsuited to the changing threats that we face. As we make our defence investment decisions now to implement the vision of the Strategic Defence Review, there will be tough decisions that we need to make. Puma, along with Watchkeeper, HMS Bulwark and Albion were all decisions that were long overdue in my view. They were necessary decisions to help set up and reprioritise the defence budget for the future. On the new medium helicopter contract, that competitive process is still under way. We are considering that in the context of the wider investment plans and priorities that we are balancing at the moment.

As I understood it, there was only one successful candidate left in the contract.

You will understand that there is a contract process under way and that has not been completed yet. I am deeply aware of just how important the skills of the workforce are and the potential that they have to play a part in the transformation that we need to see, in the technology we develop, the manufacturing we produce and the kit that we get much quicker into the hands of our war fighters for the future. As you would expect, both the Minister for Defence Readiness and Industry, Luke Pollard, and I are talking regularly and closely with the most senior Leonardo UK managers and directors; I was discussing this with the MD just last week.

Secretary of State, talking of contracts, where are we with Ajax? Billions of pounds of public money invested and it is an absolute shambles. Who is to blame and what are you doing to resolve the situation?

Luke Pollard, Minister for DRI, updated the House quite properly last week. I am furious that vital information was withheld.

Ministers were lied to.

It is clear we did not have the full facts in the lead-up to decisions about the initial operating capability. That IOC has been withdrawn. The Army is no longer in charge of this programme. A new senior responsible officer, SRO, is now in place. I have been clear that we must back it or scrap it. The work is being done at the moment in order to put us in a position to make that decision. While I really want to see the way that we procure for the future being more innovative and rapid, first and foremost the safety and protection of our forces personnel will be my concern.

Secretary of State, in your answer to the Chair’s first question, you mentioned several times the desire to invest in British-based companies and manufacturers in defence. In opposition, you spoke about buying British and the Labour manifesto spoke about that as well. You are now using language that is British based. Does that reflect a policy within the Department to accept that it is sometimes too difficult to contract directly to British companies and that there is an acceptance that if a foreign company from, let us say, Europe or America has a British subsidiary, we are now accepting that being British-based is good enough to fall in with that buy British mentality?

Three points. First, buy British is clearly a shorthand. What it signifies is a termination and a first focus on the role that defence can play as an engine for growth, creating new jobs and opportunities, skills, and backing good British-based businesses and innovators for the future. Second, it is not always possible to buy entirely British. There are certain capabilities that we need that are best produced by other countries or produced in combination and collaboration with industries in other countries, allied countries. Third, I would just encourage the Committee and the public over the next two to three years to judge us on what we do, not just on what we say. I have already given the Committee the figures in the first year in Government for the way that we have increased defence investment into British firms. I have made a series of announcements that will lead to more British jobs and opportunities. In Ms Scrogham’s constituency here, there are over 1,000 extra jobs in the Barrow shipyard just since the last election because of the extra investment that we are putting into defence. I am announcing a new programme today to find the next UK defence tech unicorn in this country. That is a pot of up to £20 million that we will go after and invite those entrepreneurs that may not have done much or any business within defence before to come forward with the innovation and ideas that they may have that we can help develop and support. This is part of the Office for Small Business Growth opening its doors today and is, if you like, a way of finding new entrants and entrepreneurs in Britain for a programme that we are set to spend £2.5 billion in directly supporting small SMEs each year. This is Britain as our first focus with our sovereign capability—as you put it, Mr Thomas—as a priority. Fundamentally, it is also a recognition of what we can draw from Ukraine, which is that when a country is under threat or forced to fight, its armed forces are only as strong as the industry, innovators and investors that stand behind them in their own country and with their close allies. In this period where we face increasing threats and rising demands on defence, then there is a strong economic case for directing our investment to British-based firms and there is a strong security case for doing the same thing.

I will just move on to ask you about the much-delayed Defence Investment Plan. You said just now to judge us on what we do. You also alluded to the requirement—come any potential wartime scenario—to have a strong manufacturing base behind you that you cannot just magic up. This Defence Investment Plan has obviously been widely reported on along with the unconfirmed meetings that may or may not have happened in No. 10. What we have heard from people within your Department—on record in this Committee room—is that it is a question of prioritisation. Taken as read that basically the SDR is a range of options and that there is not all the money in the world to do everything within it, what is your priority within the SDR to get funded within the investment plan?

The SDR is a vision with a set of 62 recommendations, all of which we have accepted. It is a vision for transforming defence over a decade. Centre to it is the imperative to raise the levels of warfighting readiness in this country in order to better deter the increasing threats we face and to work more closely with the allies that we may need to fight with in the end.

In terms of prioritisation, is it more important for you to make sure that Britain is ready to fight and win in a potential combat scenario in eastern Europe in the next 12 months or is the priority further down the line into the 2030s?

The vision and the programme for the next decade will be raising levels of warfighting readiness alongside—as the SDR laid out—making defence an engine for growth in this country. Those are exactly the fine judgments that we are making at the moment as part of this investment planning process. It is not simply about producing a new defence equipment programme and plan, which this Committee and your predecessors have been so critical of under previous Governments. This is the first line-by-line defence planning—almost a zero-based review, if you like—the Department has carried out for 18 years. It is a challenge not just to deal with what was in place at the last election, which was hugely over-committed, underfunded and in many areas not suited to the challenges that we face. It is also one that will not just deal with the capabilities but with the infrastructure and our people.

I am just trying to get a sense of this. You have these teams and the COD working for you and trying to get this dip ready. Something happened and it got delayed. Your staff—NAD and CDS—said on record it was a question of prioritisations and that they were not able to give that prioritisation and they worked to it. Are you able to give us any sense of what the priority is, aside from the very big-ticket items of saying readiness and an engine for growth as concepts, which most people would not disagree with?

Mr Thomas, those were not the two lodestars that you saw driving defence decisions under the last Government. We set this out as a Government in the manifesto that you and I were elected on and we have captured it in this first-ever of its kind Strategic Defence Review published last year. It is that Strategic Defence Review that sets out both the vision and the priorities for transformation that you will see reflected in the defence investment planning because this is the way that we put the SDR into practice over the next decade.

Are you able to give any more sense of the drive that you give people in the Department to work towards, other than very big-ticket strategy items like readiness and engine for growth as big concepts? For example, do you say to them, “I want to be absolutely ready should we have to deploy people in six months’ time. I want to know that they’ve got the most advanced, up-to-date, contemporary technologies to fight with and that is the most important thing to me, and then we can worry about very large platform procurement that will have effect in 20 years’ time after that?” or is it the other way around and you say, “We need to make sure that we’re ready for 10-15 years’ time and we can take a bit of risk in the next year?”

With respect, those are quite narrow questions. You asked me for priorities. I am saying to you that those are set out quite clearly in the Strategic Defence Review, including in the 62 recommendations we have accepted. You asked me whether I can evidence any of the priorities; I can do that with the actions and decisions we have already taken.

You cannot have 62 priorities.

In the last three months, we have confirmed a decade-long £9 billion injection and a new Defence Housing Strategy. We did the first stage of the legislation for a new housing service yesterday in the House. That was a major priority that goes beyond the capabilities that have always been looked at in the past. In my view and the SDR’s vision, that is fundamental to raising morale, helping deal with the recruitment and retention crisis we inherited from 14 years of failure on all those fronts, but fundamentally also helping equip our forces to be more flexible, settled and able to fight better in the future. I could point you to the Military Intelligence Service and the Counter-Intelligence Unit that we have set up and recently launched. I could also point you to the Cyber and Electromagnetic Warfare Command that has been established. They are all recommendations in the SDR that are regarded as important enough to act on now. So if you want an indication of the priorities, I am afraid I will refer you back to that SDR and the recommendations and imperatives that run throughout that because that is what we will follow. The Defence Investment Plan will be the implementation of that SDR.

It is good to hear about those particular priorities within the SDR but it is said that the Prime Minister was livid when he found out that the Strategic Defence Review was not fully costed and that is why The Times reported that there is apparently a £28 billion shortfall. Do you agree with that assessment? Can you corroborate that? What cuts in capabilities are you planning in order to meet the rest of the prioritisations within the Strategic Defence Review?

Mr Chairman, you have been around long enough to know not to take what you read in the press at face value. When it was completed and published, the SDR was fully affordable within the financial commitments that we made; that was confirmed by the Prime Minister when he published it. You will know that there is £6 billion extra in the defence budget this year compared to last year. This Committee above all will know that as things are, we will be spending £270 billion in this Parliament alone. Like any organisation, the challenge for us is to make sure that we are directing that investment to the things that matter most and we are doing it in a way that allows us to control and manage our budgets for the future because that is exactly what the taxpayer would expect of us.

Secretary of State, you have said that you absolutely recognise the importance of this Committee as a critical friend of the MOD. I think you also recognise that we treat all information we have been given in confidence; there have been no leaks of any kind that I am aware of, certainly from this Committee. The amount of information we have had from MOD over the years has gone down rather than up. In the context of assisting us in our work, would you be willing to let us have the annual budget cycle documents that MOD produces so that we can scrutinise some work you are doing and have a better sense of the priorities that you have come to?

This Committee will receive the information it has traditionally had on budgeting, annual reports and accounts and you will be able to take me and the new permanent secretary to task on the areas that you want to cross-examine.

Can I just add something to aid the Committee because I know a previous Secretary of State raised this in a hearing last week? As part of a defence reform, we are actually changing our approach to how we manage the budget in MOD. The annual budget cycle to which you are referring was based on the annual update to deliver the defence plan under the previous regime. We are moving our approach to a strategic planning cycle that actually brings together the strategy and finances in a single cycle, which will help us improve our alignment of resources and priorities. It is a significant change; it will be moving away and perhaps there will be less focus on those isolated budgeting rounds as we move to the integrated multi-year approach. That is why the Defence Investment Plan is going to be at the heart of that. Just to help the Committee it is worth noting we are shifting our approach to align with defence reform.

That is very helpful and we will be able to judge it when we have the details. Will you commit to briefing the Committee staff so that we are completely on top of the technicalities of that but also letting us have a baseline so that we can then judge what progress you make against your strategic priorities under that new schema?

We will set out the information in the Defence Investment Plan. I am very happy to brief the Committee on how we have constructed our approach but we will of course provide information that the Committee needs as MOD has in the past and as Parliament requires.

But you have said you cannot do it as you have in the past because you have changed the system, so I am asking whether we can then have a benchmark so that we know what basis you are starting from with this new system that you have developed.

First, we will set a new benchmark and that will be shared with the Committee. To be fair to us, Mr Chairman, when the Committee has asked for briefings in private and with a degree of confidentiality, we have always tried to respond.

Yes, I want to place on record my gratitude for that.

You have been positive about the way that we have been able to do that to this Committee and there were complaints that the previous Committee did not get that information. If it is a briefing that the Committee is looking for on the way that we are trying to change what the permanent secretary describes as a strategic decision-taking cycle, then of course we will do that.

Briefings would be great. The trouble is that we will not get institutional memory and accountability if we do not have documents showing what the basis was when you started and how you are going to work out the numbers. In a year or two’s time, we can look back and say, “Well, that was the baseline, this is how it changed, and that was what the system was.” We need some documentary basis for what you are deciding as you go. We can have it in retrospect but we must have some kind of grip as a Committee as to what is actually going on.

Of course. You are a one-man institutional memory for this Committee if I may say so, Mr Norman.

I wish that were true, but I am certainly unreliable if so.

If we can just go back to the Defence Investment Plan, obviously it is widely awaited with speculation on why we are waiting so long to see it, but that aside, my concern is businesses. We have a fairly large supply chain and many of those businesses rely on the orders coming through; they do not survive on hints and ideas on what might come through. Talking to businesses recently, there are some out there that are shedding staff. That is the opposite of what we would be looking for at the moment, but they are doing that because they do not know what signals are going to turn into actual orders. Can you tell me what we are doing to protect those businesses while they are waiting for this information to feed through, whether it is next week, next month or spring? They need that information so what are we doing to make sure that they have the support they need now?

I understand those concerns that businesses sometimes voice. I would just say that this is in the context of a greater certainty that this sector has not had. There is no one working in the defence industry today who knew they would be working in the certain decade of rising defence spending ahead. No one working within the defence industry has the certainty of the vision within which our priorities and decisions will be taken with the Strategic Defence Review. I would just say confirmation of important decisions will be part of the Defence Investment Plan but that is not stopping us from getting on with a good deal of the contracts needed and the action that is required. I said to the Committee earlier that over the last year or so we have let over 1,100 major contracts. Just last week I was in Edinburgh with Leonardo announcing a £450 million contract to upgrade our Typhoon jets. That is investment decisions now, straight into the manufacturing of the new radars. It is not just about making our own Typhoon fleet more lethal and better able to outmanoeuvre and have the edge on adversaries; it is about reinforcing the ability for us to make British-made Typhoons attractive to other countries as well. As proof of that, I would just say look at the £8 billion deal we agreed with Turkey for Typhoons in the autumn last year. It was part of more than £20 billion of a boost to British defence industries that we won in exports in the last year alone. That is a record level since records began nearly 40 years ago.

I am going to take you back a few steps. You arrived in Government and the equipment plan is there waiting for you with what the MOD put as between £7 and £29 billion out of whack. The NAO reckons it is about £16 to £17 billion out of phase. Why was that not formally resolved or recognised prior to the SDR process commencing?

Are you talking about the equipment plan produced under the last Government? Why on earth would we continue with something that was as badly flawed as that? It was not just that the NAO regarded it as underfunded and unlikely to be delivered; it also pointed out that the whole way that defence was previously putting that together was not even consistent between the three services. We were a new Government with a set of new strategic priorities for the UK, a strategic shift if you like, just like the US is undergoing some sort of strategic shift. With the UK it was a recognition that we had to make our overriding defence strategy a NATO first strategy, do more lifting alongside other European allies—heavy lifting within NATO—step up our support for Ukraine and build a new deal for European security within NATO, and that is what we have been doing. Frankly, even when you come to the equipment plan—before you come to the detail that I have touched on about it being overcommitted and underfunded—it was unsuited to the threats we face, the transformation required and the rapidly accelerating technological change that you, Mr Bailey, are really well on top of and an expert on. We have to do things differently.

I recognise that. My question was why was this not upfront? Some of us sat on the Public Accounts Committee to try to get after the detail of that business and we did not have a baselining in the way that Mr Norman put out. That would have been a really useful thing because the programmes or elements of the programme that were not funded and were pie in the sky in the first instance would have been quite clear. Arriving in the SDR process, there is an effort to not compound that error even though we did not have the necessary public discussion to understand just how bad things were anyway. But in attempting to not compound the error, the TORs for the SDR said, “The review will identify where reprioritisation of roles, capabilities, activities and support may be made in the current Defence programme.” Is that correct?

Yes.

Last week CDS was unclear that that was the case. I know we will talk about the ABC later, but that is entirely contrary to how your new design works. It is very definitely that CDS should be providing some prioritisation internally to you. The question I have is who took the decision to remove the reprioritisation from the SDR, when was that decision made and under what rationale?

You have lost me. The SDR was a reset of this country’s strategic defence and security approach. It was done so to reflect the framework of priorities that we had set out in our manifesto.

With the greatest respect, Secretary of State, my point was that in the TORs the reprioritisation was part of the activity. We observed this in our two Committees, when the team first came out in front of us and Lord Robertson said, “That’s part of what we are being asked to do,” and then when they came back, General Barrons said, “Actually, I don’t have to worry about this,” meaning that is for them to do. When was that changed between those two meetings? Under what rationale did that change come about?

I may be being a bit slow but I am still not following you. Of course the Strategic Defence Review was a review and a resetting of Britain’s strategic priorities. We left behind—we said at the election we would—the bombast of a global Britain under Boris Johnson. We were recognising the increasing threats, that America was rightly requiring European nations to step up and do more within NATO and that a Britain that had burnt its relations, sometimes wilfully so, in the Brexit process had left Europe without the strength of alliances that we need for the future. This is why, since the election, you have seen the Trinity House Agreement with Germany that was not there before, a reboot of the Lancaster House Treaties with France and the Lunna House agreement with Norway, all with strategic, security and defence relations at their heart but also big economic opportunities for Britain.

Again with the greatest of respect, all those things are wonderful but they are built on the foundations of a £7 [Billion.] to £29 billion 10-year plan, so it was already running into the programme. A year in, you have already been working in the annual budget cycles, which would have been prefaced on that flawed plan. The SDR then arrives and adds all this new ambition and we do not know at which point the SDR team was told not to apply that ambition within the SDR or why, and there is no evidence of reprioritisation after the SDR. The question again is at which point was the prioritisation removed from the SDR team?

I am still failing to understand your question. Chair, perhaps if you need to, you can write to me on this.

My friend Emma will be able to advise on that.

I am sorry, Mr Bailey, I am just not following what you are saying.

Secretary of State, if I can try to simplify it because I tend to speak quite bluntly and straight. The SDR was supposed to identify reprioritisation but it did not; the reviewers were clear with us that that had been removed. Why did the SDR go from its terms of reference saying that it should identify what defence should and should no longer do to then changing? That is what we are trying to understand here. Is that fair?

There are no down arrows. The SDR does not say what it is not going to do. More worryingly, you also have programmes in there that you knew were unfunded but your language was, “They’re heavily overcommitted and badly underfunded decisions,” and there is no evidence that they have been removed. In the question prior to me, we tried to ask what those things were, but what is most important is where was the decision made to not do that and when?

The Strategic Defence Review was always a strategic review. It was not there to make the detailed investment decisions; that is my job, our job. That is the job we are now doing to implement the Strategic Defence Review through the defence investment planning process. What it did was recognise that there were priorities that the previous Government might have pursued reflected in the defence programme and the programme of record, for instance, a global Britain role or a kit that was just not recognising the very rapid technological change. It is one reason that I made those decisions I referred to earlier on things like Watchkeeper, Bulwark, Albion and Puma while the SDR review was going on. We do and have to make disinvestment decisions as well as investment decisions, but those are for us, not the strategic reviewers.

I am looking at the terms of reference from the SDR now and what you are saying does not align with them. What Calvin and I are trying to understand is what changed from the terms of reference to the SDR being produced?

The work of the SDR. It worked within the terms of reference and the financial envelope it was given and it produced the Strategic Defence Review. You can take a view about whether it fully met its terms of reference or not. It was a fundamental review, the first of its kind done in that way. It had an extraordinary input of challenge and review from experts right across the field as well as being led by the three independent reviewers. It worked very closely with Defence in order to come to its conclusions. The job now for me as Defence Secretary in the Defence Department is to take that vision and the recommendations, which we have accepted, and put them into practice. We are doing that already and have done in a number of areas in the first six months since the Strategic Defence Review. We have big decisions that we are in the process of taking and are working flat out to complete the DIP process because that is the way that we implement, not just for this Parliament but for the decade that they set out the vision for.

Obviously there seems to be some misunderstanding but we want to bring this to a conclusion.

The reason why this is important is that in the previous Healey review in the late 60s, those programmes that entered an unaffordable defence plan came under immense pressure because of the ability of the Government to separate them. The one that was most notable was the cancellation of the TSR-2. The concern now is that we do not have adequate assurance or visibility of how GCAP—which will occupy the greater part of the programme—enters or exits the SDR. Can you provide us some assurance that that programme remains a valid programme that we will see in the Defence Investment Plan?

I am still working on GCAP and am absolutely determined that the momentum of the programme is maintained. I have been in communication with both the Italian and Japanese Defence Ministers within the last 24 hours. To come to this really important point that you are making here, this investment plan—the plan for defence for this Parliament and the next decade—will be affordable. It has been a fundamental flaw of the way that previous Governments have recently done their defence planning and equipment plans. This will be affordable and will reflect the priorities and strategy vision set out in the SDR. I am determined and see it as my job to make sure that when we make those commitments and decisions, they are deliverable and that is what we do.

Secretary of State, the issue around reprioritisation is a key one in terms of reference. Perhaps you could write to the Committee to clarify so that we can clear any misunderstandings that there may be on this particular issue. I want to move on from the Defence Investment Plan. There are three very quick supplementaries before I want to move on to defence reform.

Secretary of State, I can see that you want to keep this big picture. Following in that theme, I noticed across the Quads you have four budget holders and all their spend is categorised as either invest, readiness or operate, and that seems like a very sensible innovation. Could you tell me the balance or percentages of how departmental spend is split between those three categories of invest, readiness and operate?

Between the permanent secretary and I, we can give you a feel for that. I do not know if this takes us into the reform territory but you are quite right: part of the most important elements of the reform have meant we have four budget holders instead of 10 and we have one investment budget. If you look at the budget of the NAD group, for instance, which holds that investment budget, as part of the reforms we have actually now created a FTSE 100 scale company just within that NAD group.

What would the percentages be across those three?

I am very happy to share that with you. The invest budget is essentially very close to the CDEL budget, which this year is £23.2 billion of £62.2 billion. The readiness and run budget and the operations budget are very close to the RDEL budget, which is £38.9 billion, but let me get you a note on the precise figures.

That would be very good.

The run, readiness and operate come together. That is broadly the position and that is all public information.

Is that going to be different in one, two or five years’ time? Do we see that shifting?

While we obviously have a settlement for CDEL and RDEL, the splits within the budgets are decisions that we will need to make in the usual way alongside the investment plan. There is public information on how our CDEL budget in particular is rising. We have allaruded to some numbers. It is scheduled to rise to £31.5 billion by 2028-29.

So that shift is going to move from less investment, more operational—

Proportionally, CDEL is a greater proportion of the budget on the settlement that the Department has.

Secretary of State, regarding the MOD budget, have you announced any in-year savings? If so, are you diverting money away from our people at the expense of big, shiny capabilities? I am talking about medical services, especially because we all focus on programmes—Typhoon, GCAP, AUKUS—but I never hear anything said about the medical services within the armed forces. From our experience on some inquiries I am picking up, we are not actually investing enough in the medical capabilities within our own armed forces. Could you just tell us what your plans are there?

The short answer to your question is no and no. The budget this year is £6 billion bigger than it was last year so we are spending more. Of course, as you would expect—as the public would expect—we are trying to make sure that we spend that well, that it reflects the priorities and rising pressures on Defence at the moment, and where we can, we are giving priority to the operational demands and options that are being required of Defence. That is increased commitments, preparing for what we hope will be a peace in Ukraine, and potential options for stepping up action on shadow shipping. As you have seen in the last—

Medical services in particular.

I am going to ask General Nesmith to talk about that. So no to savings. We are making decisions about controlling and managing our budgets within the year, as you would expect us to. And no to prioritising shiny big platforms over the operations and concerns to put the men and women in uniform at the heart of our defence plans.

Under defence reform, I am now the armed forces people person, which I think I said the last time we met. While we go through managing the in-year budget, the Secretary of State holds us to account very strongly around protecting some people measures—as you might have described them—for which I am very grateful as the armed forces people person.

Just a quick one from me, and it might seem a bit obvious, but since the Government accepted all 62 of the recommendations in the SDR—which included 12 new F-35As, the 12 SSN-AUKUS nuclear subs, six munitions factories, £6 billion in munitions procurement, 7,000 long-range missiles, and £1 billion for homeland air defence—will they all be in the Defence Investment Plan or not?

They will be part of what we plan to deliver over the next decade, which is, of course, the period of the SDR.

So will they be in the Defence Investment Plan?

They will be part of what we look to pursue over the next decade because we want to implement those parts of the SDR.

Is the money there for all those things, Secretary of State? Because that is a lot of costly items.

When you look at the £270 billion we will be spending in this Parliament, the fact we will hit 3% in the next Parliament and we have made a commitment like the other 31 allies as members of NATO to 3.5% on Defence by 2035, this gives us that certain decade of rising defence spending, which I talked about to Ms Scrogham earlier, and it allows us to plan within that for the way that we pace and prioritise the investments that we make.

What I am trying to pin you down on, Secretary of State, is that you accepted those recommendations, so are the things that I have just read out going to happen?

They are not all going to happen in the first year; they cannot. The SDR was a vision and essentially an outline strategic plan for the next decade, and that is what we will pursue.

I want to move on to defence reform with Mike Martin after this very quick supplementary from Lincoln Jopp.

All the service chiefs and Commander CSOC as part of the Chiefs of Staff Committee.

Secretary of State, what does success look like for defence reform? We are probably a year, 18 months into it now.

First, it is a Parliament-long programme. I could tell you what progress looks like after 18 months. A Chief of the Defence Staff who now commands the service chiefs for the first time. A newly defined, powerful and appointed National Armaments Director for the first time in this country. A new Military Strategic Headquarters that is up and running. A new leadership group, the Quad leaders, which is playing such an important part alongside Ministers in the defence investment planning process. A NAD group with a £20 billion budget that is as big as a number of FTSE 100 companies. A reduced number of budget holders, which we touched on a moment ago. Instead of having 10 different budget holders making disparate defence investment decisions in different parts of defence, four budget holders corresponding with the Quad. To give you an example of the way we are consolidating what fragmentation and duplication were, instead of having 27 of what could loosely be described as different programmes and portfolios that were about stepping up our ability to be more lethal—weaponry, systems, torpedoes, long-range—that is consolidated in one.

What does the end of the defence reform process look like when it has achieved its goals?

Reform never ends. What I will do is bring General Nesmith and the permanent secretary in in a moment because they can talk about how what we do now and how we do it is different to 18 months ago, particularly General Nesmith. For me, the purpose of this is that we have a defence system that is better able and quicker to get the technology and equipment into the hands of our war fighters.

Can you give some specific examples?

Perhaps I can bring to life how it feels different today from how it felt about 12 months ago. From my perspective in the Military Strategic Headquarters, it feels very different. As the vice chief, my role is very different to that of my predecessors. The Secretary of State has talked about the game changers, as I have referred to them: the Quad accountability, having a National Armaments Director and having the chain of command under the Chief of Defence Staff. But the thing that is making it work is having a Military Strategic Headquarters. While we have difficult conversations around the implementation of the SDR and the Defence Investment Plan, my responsibility in that headquarters is to carry on delivering stuff. I have referred to keeping the show on the road and keeping focused on delivery. I colloquially call the board that I run that we have not had previously the Getting Stuff Done Board because while all this is happening, we need to keep delivering. Some has already been alluded to, whether it is our housing strategy, industrial strategy or some other contracts. From my perspective, if we had not reformed into a Military Strategic Headquarters, we would not have delivered on the SDR deliverables that we already have. For instance, I know some of you have been up to RAF Wyton, but there is the Military Intelligence Services, the Counter-Intelligence Unit, and the Defence, Cyber and EM Force, which we would not have been able to corral around. This is different. We take an integrated force or pan-defence view and prioritise how we align resource with either warnings and indicators or priority threats. We did not have a mechanism or the authority to do that before. In some of the people part of our organisation, it feels very different having an armed forces people person who sits on that board. We would have struggled to deliver things like the Cyber Direct Entry and some Foundation gap year pieces.

That is the good. What is the bad? What frustrates you about the process? How would you tweak it or what tweaks have you made as you have been rolling this out?

We are building the team. That is my first thing. We want a very lean Military Strategic Headquarters. What we do not need is a load more people adding more layers.

How many people are needed?

I would need to confirm, but in the central pillar part of it, it will be less than 20 in terms of how we bring together what was already in existence through our military operations and commitments and what we did in our force development. Those two pillars remain. The secret sauce was bringing those two things together so that we were able to have a prioritised view of what we do today, armed forces plan, and what we plan in the future. We are building the muscle. We have an armed forces plan. This last year was the first time that we had a draft plan. For all the reasons we have talked about, it needs to be balanced with resource. As we enter April, we look for that to be a more balanced armed forces plan and deliver against it. We have more to do about some performance and risk reporting. I could go on. There is still a lot more to do, but it feels very different to how it did 12 months ago.

Can I just add a couple of things if you do not mind? I took over as principal accounting officer on 1 December. This is the sixth Department I have worked in and the third I have run as permanent secretary. So I have seen a lot of Government Departments and Defence has such an important but complicated mission that it is delivering. I can really see the advantage only in the few weeks that I have been there of having those simpler, clearer accountabilities that come from the heart of defence reform. All the changes that the Vice Chief has referred to and having the Vice Chief and the Chief of the Defence Staff really pulling together the different services and that responsibility for resourcing and tasking that comes with defence reform really makes a difference. This year is obviously a transitional year, which partly relates to the answers to your questions on the budgeting regime. But I would worry about defining end states to organisational change. Organisations continually need to change and evolve. It is wrong to say that reform concludes. At a certain point, we will need to make a decision when you mainstream the changes that you are making, but never ever assume that you can draw a line on delivering change; it is about continually improving organisations as complicated as they may be.

Secretary of State, since you have been in the job have you actually had a formal briefing on NATO facilities—the NATO Support and Procurement Agency, the NATO Communications and Information Agency—and how the UK could use them?

I have not had a specific formal briefing on those, Ms Baker, but those have been part of some of the discussions I have had when I have been in NATO headquarters and we have been meeting as defence Ministers, particularly on the margins of some of those meetings.

I ask you about that because Government are clear that we take a NATO-first approach. When he came to see us before Christmas, the NAD told us that multilateral, joint procurement is definitely part of the solution of how we move forward. We get all these services and facilities through our NATO membership. We are paying for them already, yet from everything I can see, the UK does not use these facilities. Germany has just procured eight Sea Guardian remotely piloted aircraft—getting all the tax benefits and cost benefits—Spain and Italy, these countries are all using these agencies yet, from what I can see, the UK are not engaged at all. Given money is tight, can we really afford to be paying for a facility then not using it, and instead replicating through our own Departments the services that we could use through NATO?

One of the top priorities of Mark Rutte when he became Secretary General of NATO, quite rightly, was a greater drive to see more joint commissioning and interoperable standards through NATO across our defence systems, something that I and we are really strongly behind. If you will allow me, Mr Chairman, I will provide the Committee with a note on how far we are using those.

Thank you.

But where there are multilateral mechanisms like the OCAR system, and we can use them and they are appropriate, we do use them. But I would just say, the principle that we do not do some big things alone is not just about using the multinational systems. If you look at the Lunna House Agreement—the biggest ever British warship deal that we have struck with Norway—at its heart it is not about us selling to Norway. That is about two nations now jointly commissioning our anti-submarine hunting frigates, the future upgrade of systems that we will need, and doing it together because that allows us not just to have interoperable standards and equipment, but to effectively have combined navies that will help keep the North Atlantic and High North safe in the future. So the combination and the principle that we do things with allies where we can and where it produces better security or better value for money is a really sound and important one.

Great to hear. I just fear that we are not using these agencies because we generally think we know best and that actually we have had a tradition of not using them, so we continue to not use them. Would you commit to going and actually taking a fact-finding mission to look at those NATO facilities, and whether we could use them going forward?

Let me first commit to providing you the chapter and verse in the areas you are interested in, then take a view about whether you think we are using them effectively or sufficiently, and at that point I will do the same.

It is a part of the SDR efficiency programme. Just to be precise, the commitment is to reduce between 2026-27 to 2029-30; a reduction in civil service workforce costs of 10% is the aim that we set out in the SDR. The reassurance I would give you and the Committee is that the numbers are declining. The latest information I have is we were just a little over 55,000 full-time equivalent civil servants at the start of December 2025. I would note though, that this is best as part of a serious efficiency programme, which is the thing that we need to put in place. Civil servants provide incredibly valuable work. Something that I have heard clearly from military colleagues is that at times there can be benefit in civil servants taking on roles that the military has historically done, and that ultimately that can be a better way of creating an integrated force. The vice chief may want to talk about this. We need to approach this carefully, in a way that optimises value for money, makes sure that we can provide the support we need and that, in particular, the National Armaments Director has a group that has the scale and expertise that he needs in order to ensure that we can deliver the equipment that our military need.

Going back to the SDR, why has the MOD not agreed with the Committee’s recommendation that we should produce a publicly available annual report on the progress of the SDR implementation?

We have an annual cycle of reporting the work of the Department in full, and the SDR is not a subset of that. The SDR is essentially the framework and vision within which Defence will now make its decisions, set its priorities and deliver the programmes and the aims that it has set out. So it fundamentally sets the direction for the Department itself, Mr Twigg, rather than being something that you can separate off, report on and pursue separately from the work of the Department.

What of the Defence Investment Plan? Has the Department implemented all the SDR commitments due to be completed by the end of 2025?

We have largely done that, yes, and I can provide a running log of where we have been hitting the SDR report-attached target timelines for the Committee; I can give the Committee a rundown on those.

Can we not play on words?

Which one do you want to ask me about?

You used the word largely, which suggests that some have not, or some parts of it have not been completed, so could you enlighten us on that?

Yes.

You could have said, “Yes, in full,” but you did not.

Okay, so there is a recommendation with a very exacting timetable over reworking and revamping certain elements of military training, and we are off the pace on that. But to my knowledge and recognition we have been determined to act where we can, make decisions where we need to and implement the SDR—including the recommendations where they have early timescales—and in some cases we have exceeded what they have set out. If it is helpful to the Committee I can give you, if you like, a six-month audit.

It would be useful to know. I am not sure whether you are going to say, “Well, I cannot tell you what the problems are with training because it would give away some sort of secret.” But I just wonder what the specific obstacles are there to completion?

I refer to the military head of training.

Yes, I was going to use that as an example: there are two in my mind that I know we said we would do by the end of 2025 and have not delivered against. The particular one around our training review, if I am perfectly honest, was being very clear about defining what the question was, and then how we proceeded with that across our reformed areas. Because as you will recognise—

Sorry to interrupt. Did you say, “Define what the question was”?

Yes, part of it was what the scope of the recommendation is, what is the good that we are going to get out of it? Part of it also, in all honesty, was making sure that we were clear who in the reformed world was leading that work. As you will recognise, some is very much connected to Department of State business, some was connected to Military Strategic Headquarters, so we are slightly behind the curve in defining that one.

Is Professor Malcolm Chalmers heavily involved in the SDR and the Defence Implementation Plan? He was obviously brought in as an exceptionally experienced and knowledgeable person; what has his involvement been?

Yes, as you say, Mr Twigg, he is an exceptional person with exceptional experience. He played a major role in chairing one of the review and challenge streams of work in the SDR. Since we have been fortunate enough to bring him into the Department as a strategic adviser and head of SONAC, in old money, he is playing a part in the big strategic decisions and debates we are having within the Department. He is advising me and contributing to the defence investment planning process.

What has he brought to the tail in terms of anything additional that the Department did not already have?

I can let the two representatives of the Department offer you a view on that. For my money he is bringing what he and a number of others, but he in particular, brought in the Strategic Defence Review process: a deep expertise and a degree of external challenge that we have been able to bring inside.

What has he actually added? What has changed as a result of his involvement? What is different and better?

For me, it adds to the blend of different perspectives and advice that, as Secretary of State, I am able to draw on.

Before I finish, you will notice that Civitas has today published an understanding of the UK’s transition to warfighting readiness, co-authored by Sir Bernard Jenkin and Chris Donnelly. There were a number of key issues, and one goes back to the CDS’s comments that we are basically not ready enough yet to deal with an all-out war. I just wondered what your take is on where we are, not just in defence terms but in a whole-society government approach to moving to a war footing and dealing with the current challenges today. Where do you think we are at this point in time?

First I would always argue that I have total confidence that if we had to commit our troops to fight tonight, they would do so. The observations in the SDR, reinforced by a good report that Bernard Jenkin and Chris Donnelly have authored and published today, if I may say so, reinforces that recognition that in a period where threats are rising and demands on defence are rising, then the level of warfighting readiness, which was at the heart of the SDR, needs to be increased. The question that the SDR set out is a recognition that we learned from Ukraine or, if you like, are reminded of from Ukraine: when a country is seriously under threat or forced to fight it is not just its forces, it is the industry, the innovation and the society behind it. That requires some of the responses that you will see in the Armed Forces Bill that had its Second Reading yesterday in the House of Commons with the change outline, and indicated in the SDR the way that we approach and develop our reservist forces.

Yes, but again you are focusing on defence alone, which we know, but it is not about just defence: it is about the whole society government approach, going down to the finance sector, right across through industry as well. So I am just trying to get your take on where you think we are; are we some way off yet and lots more work needs to be done? Or do you think real progress is being made?

Some progress is made; there is clearly still a lot to be done. You are quite right to say this is whole of government; it has to be driven from the centre. My concern is to make sure that where defence can make the most telling and important contributions, we get on and do that. So we are doing that on reservists, on new ways of bringing people into the forces, such as with our Cyber Direct Entry, and by stepping up the work we are doing, including legislative changes on drone threats or threats to undersea critical infrastructure. We are doing that with some of the action we want to take on shadow shipping as well.

I would like to draw the Committee’s attention to my registry of interests. We are some way in, Secretary of State, I would be grateful if you and the team could be relatively clipped if you can because there is a certain amount to get through. You have spoken about defence spending, £6 billion here, and I think you said £270 billion over the life of the Parliament. One of the problems of talking about defence spending in percentage terms of GDP is that it does not really help when GDP is barely growing. Would it not be a much better system to just identify specific numbers that Government are committing to over the length of a spending review, so that everyone can work to those numbers on the CDEL and RDEL side and you know exactly where you are, therefore it becomes a plannable, manageable process rather than just juggling around within percentages of GDP?

We do both, Mr Norman. But you will know that the currency, if you like, the yardstick in particular for NATO members is a percentage of GDP commitment. You will also know that certainly economic growth over the last 15 years has been very sluggish, and that has a disadvantage if you are interested in and concerned about the quantum. That is why I have stressed to this Committee not just that we have made the biggest increase in defence spending since the end of the Cold War, or that we are hitting 2.5% of GDP three years earlier than your party was proposing and anyone expected us to do, as the Prime Minister announced a year ago, but in this year alone there is an extra £6 billion in the defence budget, so it is just over £60 billion. In this Parliament alone we will be spending £270 billion on defence and we will hit 3% in the next Parliament.

I was asking about a technical matter and you have made a slightly party political response, which is a pity for the Committee. Let us just talk a little about what the Prime Minister said. In a speech last year, he said that he wanted to see security and defence as a central, “Organising principle of Government;” “The first thought in the morning and the last at night.” So there is a sense that he is explicitly calling for—as you and the SDR have done—a national conversation about security and defence. The question is, how much of a priority is that national conversation for you and for the Government?

You could define what a national conversation might be about defence in many ways, and actually the very challenges we have seen the Prime Minister and the Government dealing with over the last fortnight are part of that. It is one of the reasons that we have seen that defence is now rising to be the third most issue of concern in the country, alongside the NHS in recent public opinion surveys. The question for me as Defence Secretary is how we help people recognise the nature of the changing world—the era of new threat, the imperative for greater vigilance and resilience in this country—but also how we demonstrate that when we are willing to invest more in defence as a nation, as we must, then that is making us more secure and safer. It is also bringing direct benefits to areas, jobs and young people, which is why the defence role in helping drive economic growth is so important.

But who is responsible for leading that national conversation?

If you are having a national conversation, as Mr Twigg was asking about, with the whole of society about the nature of the challenges and threats that we face, which is undoubtedly the case when you look at cyber or at the concern about critical national and underseas infrastructure, then that has to be an effort that is led by Government as a whole, from the centre.

No, no, which individual? Is that the Prime Minister?

That will be for the Prime Minister with his Cabinet, and for the National Security Secretariat and the National Security adviser.

Okay. You have said it is amorphous as to what a national conversation means; it is a term that was introduced into the SDR and Government have been talking about it. The Prime Minister has spoken about a national effort. How many speeches has the Prime Minister given on the national conversation and the need to broadcast the importance of defence and security to the nation?

I am afraid you will have to ask No. 10 for a record of those, I do not keep count of the number of speeches the Prime Minister makes. He probably gives half a dozen a day.

I suspect the answer is zero on this. How many public engagement events have been held, to your awareness, out of either MOD or No. 10 or the Cabinet Office? In other words you have talked about the importance of a national conversation, and it is proper to ask what is being done about it, so how many public engagement events have you held? Okay, how many public threat assessments—

I am pausing only because you draw the parameters so wide that it is quite difficult to know how to answer. I am perfectly prepared to reflect on that.

Have you made a lot of speeches up and down the country, Secretary of State, saying that this is a national problem here? We need to be thinking of this in the Prime Minister’s words: first thought in the morning, last at night. We need people to understand we are potentially in a pre-war situation. Have you given those speeches, and how many have you given? How much engagement has there been?

The thinking of the SDR, that sort of concern, the Prime Minister’s absolutely accurate description about how defence is now central to the thinking and the duty of this Government in a way imbues almost everything I say everywhere I go on every occasion.

But I am talking about the levels of communication: what you are doing to raise awareness. For example, do you publish threat assessments so that people in the public can see how the threats from China and Russia are increasing in line with the concerns that the Prime Minister has articulated?

The Government have risk registers, they have threat assessments and they publish what they can of that as a regular element. This House, this Committee and the Intelligence Security Committee play a part in exactly that sort of national conversation and that awareness-building of what we are facing.

Do you not think it is astonishing how little has been done when you consider that you have just raised the reservists’ age from 55 to 65? I have not seen any major discussion of the rationale for that or embedding it in the national conversation. Let us ask another question.

With respect, that was discussed yesterday in the House of Commons when we had the Second Reading of the Armed Forces Bill. It is set out in the Explanatory Notes of the Bill that we welcome your contribution that way as this Bill goes through Parliament.

No, no, no, I am talking about Government getting out there to the people in this country; I do not think it is a parliamentary matter, it is a matter of Government discharging the Prime Minister’s obligation to think about this first thing in the morning and last at night as a national effort, which is what he said. So here is a question: this is supposed to be cross-Departmental so it might include the Department of Health, the Department for Science, Innovation and Technology, and the Department for Business and Trade. Which Departments have been formally tasked with working on the national conversation alongside the Ministry of Defence?

That is Government work in progress.

Okay. Has any policy or spending commitment been changed as a result of this inter-departmental Government working that you and he have called for?

There have certainly been commitments that we have made in Defence that reflect exactly that.

No, but in other Departments. We are talking about the Department for Science, innovation and Technology, and the Department for Business and Trade.

I can answer for the Defence Department as Defence Secretary. I can try to get you answers from other Departments. I am not here to and I cannot, I am afraid, answer for what other Government Departments have done.

No, but you are in charge of the national Defence Strategy with No. 10. They have talked about a national conversation, it is inter-departmental and these Departments are looking to you to establish the outlines of this national Defence Strategy. I am asking you what has been done and you are not able to answer. I would be grateful if you would write to the Committee, but I think it is telling that not only has nothing been said publicly in any great scale about raising public awareness of this vital issue, but very little has been done within Government, it appears, to ensure that Departments are properly aligned. Let me ask you a final question: how long are we going to have to wait before we can judge whether this initiative and national conversation has succeeded or failed?

That is a good question. Rather like reform, I do not see there is a point of success or failure. I do not see a point of completion, particularly as we know that the threats and the challenges that we are facing are evolving the whole time. You are quite right to challenge me and the Government on this important area. It will be an area where we hope we can achieve cross-party consensus because it requires a whole of Government and a whole of politics effort to this. But I genuinely do not think there will be a point where it is done and it can be declared a success or failure.

I may be able to assist you on that, Secretary of State. The Strategic Defence Review said it was two years.

No, no, the serious fundamental point here is that if a country is stepping up to the challenge that Mr Norman is quite rightly outlining here, that is a challenge that is defined by the threats we face and the security environment. That does not stop changing, evolving or reach a point where it is done, whether or not the SDR may have suggested two years.

Yes, it was in Recommendation 26 where it said it would be completed within two years as part of the process. But anyway, given the lack of time, let us move on swiftly to Lincoln Jopp.

I did not, no.

First, you encouraged me to read their evidence. But part of my mission as Defence Secretary—before the election, at the election and since—has been to draw attention to the threats we face, to argue that this is a new era for defence and that steps need to be taken. The Government have demonstrated a seriousness for that by making this big commitment, not just to boosting defence budgets in this first year but making the commitment to raising defence spending. As politicians from whatever party, we know that is unsustainable unless you can take the public with it, and there is a public recognition that this is required. There is a recognition that hard power is required alongside good alliances, and that has characterised the approach we have tried to take as the new Government over the last 18 months.

I am sorry, that is exactly what the Foreign Secretary did when we made the decision that next year we would switch 0.2% of GDP out of direct overseas aid into defence. That was a decision that the Government took: very clearly a down arrow in a different path. If you look at the decisions that the Chancellor made in her last budget, there was a squeeze on the spending in this spending review period of all Departments with the exception of defence and the NHS. That is the Government saying, “We are putting the sort of priority that this Committee would argue needs to be put on defence, and we are doing that over and above the needs of other Departments.” I cannot account for the way that James Heappey and Ben Wallace may have washed their hands of any sort of responsibility for what happened in their period in Government. What I would say is that your description of their characterisation of how we are approaching, and how seriously, this in defence does not correspond with the leadership we now have in defence, with the decisions we are taking, and the challenges that we can see that we must meet.

Secretary of State, let us talk about defence finance. Can you talk to me about what you think are the main problems for industry with defence finance, particularly when it comes to banks’ ability to lend money to defence?

It is partly a recognition in the investor community—the banks—of the discussions we have just been having in the last half an hour; that actually there is a national and an allied challenge with defence and security that is not just a matter for the armed forces and defence. We are moving away from a period where investment in defence and security for this nation and the people in this nation is seen as not unethical, but an ethical investment; an investment that is not just about the interests of the defence industry but of the nation. Having spent as much time with investors as I have with industry in the 18 months of being Defence Secretary, the argument I have made is, frankly, you do not have economic stability without national security, and nor do you have a stable society. We are moving through that period. My interest now is not just what commitments we need to make with public taxpayers’ money in defence investment, but what leverage we can get from sources of private finance to put alongside that. We will be driving a harder deal with defence companies when they get contracts with defence. We are looking to new sources of venture capital to invest in the potential of Britain’s defence tech base. We have changed the arrangements in Government so that we now have a new defence exports office consolidating all the Government’s efforts behind defence exports. We are winning new export deals for Britain, which pumps potentially billions into the British economy and our defence industry.

But there is still a problem because our banks cannot lend easily to industry, and that means that our industry cannot get the capacity that we need to actually build stuff as they cannot get access to the cash because there is a load of international regulations making it absolutely impossible for banks to lend. Now, our banks get around this and I recognise that actually progress has been made, but fundamentally there is an issue because money is not moving in the way it needs to.

I absolutely applaud the work that you personally are doing on this territory; the way that you are championing fresh ideas like the Defence, Security and Resilience Bank. One thing that I know you will have noted—Mr Chairman, you will see the results before too long—is we set up a defence finance investment group, something defence has not had before. This is a way of trying to tap into understanding where there are barriers, such as you cite, and better understanding of where there are opportunities for private sources of investment, as well as what Government are doing, the way that we go about making our investment decisions and the way that we need to change, to take maximum advantage of those.

Having attended that group, I am really impressed at the engagement we are getting. Historically, there are those barriers but we need to work through the proactive, positive engagement, such as getting from the banks, sources of finance, looking to find solutions to some historic barriers that you find.

I keep raising this with Government and what Government keep coming back to is that there is a whole myriad of options out there. It is going to take some sovereign-backed credit guarantees; that is the only thing that is going to actually get money moving. Yet, when I speak to different Government Departments, I am just not convinced there is actual understanding of this issue. What do you think?

There is an understanding and that understanding is growing. The recognition of its importance is underlined by this advisory group we set up and by the fact that the Chancellor and I are working very closely on this and have been over the last 18 months. We work with the CBI specialist group and a task force that reported to us jointly. The Defence Department has traditionally only looked at what the Government are putting into contracts and its relations with industry to the wider potential that we have to build; we will do that.

Do you accept that, actually, all we are going to do is drive inflation if we do not fix this issue? We are going to buy the same amount of kit; it is just going to cost more.

That is a really big risk if we do not do our procurement better and in different ways and if we do not leverage the investments that I believe are potentially there, including foreign direct investment into the defence industry in this country, which hit record levels last year at £1.4 billion. These are all big opportunities for our investors as well as our industry in the period ahead.

Obviously, the Committee heard from the previous Ministers around the interaction between the secrecy within the MOD and the unwillingness to let Parliament know some surroundings. In fact, James Heappey said he found himself “Increasingly uncomfortable with the amount that we were saying we could not disclose to the Committee on the basis that it gave away classified information.” He went on to say, “I would argue that there were two things: first, if the armed forces are not as ready as they should be, Parliament should know that because from that comes Parliament pressure on the Treasury to increase the defence budget; second, if the armed forces are as ready as they should be, there is a deterrent effect to Parliament publishing data and information to that effect, so our adversaries know.” One thing you did, which I will say was a good thing and we should do more of, was make public the threat from the Yantar, the Russian shadow fleet, and gave that operation. The public were aware of that threat and the seriousness of the threats that we are facing. Should we be doing more of that? Should you be doing more of that?

I will call out the Putin threats to us when I think those are needed. It is part of priming the national conversation that we have discussed before. It is part of treating the public properly, making sure that they are aware of some threats that we face. Should we do more in disclosing to Parliament and trying to ensure that we are able to give the Committee the sort of briefing and information that you need to do your job? Should we do more on shadow shipping? Yes, we should. I have now identified further military options that we can use to target shadow shipping; I am discussing these with Cabinet colleagues. The UK will host a meeting shortly of JEF nations, the military legal experts that allow us to look at the legal basis on which we can act against shadow shipping and sanction ships, and the military options that we might use. This is part of actively stepping up the action on shadow shipping that you have seen us do with allies in recent weeks, and it is part of making sure that Putin is not so easily able to fund his war machine in Ukraine through the sale of sanctioned oil. Frankly, I would want to see any oil revenue that could be raised from seized sanctioned ships recycled and put into Ukraine in order to fight Putin’s invasion. We have had a strong record on sanctions and on sanctioning vessels, both under the previous Government and this one. We sanctioned a total of 544 ships: around 250 in the last year alone. We have seen the way that we can take a couple of hundred of those off the seas with allies and the way that Russian oil revenues have been cut by a quarter in the last year. So it is clear that we can do this, and if we step it up further we put pressure on Putin and help that position of strength that Ukraine needs to come to the negotiating table and settle this with a proper peace deal.

Do you think the term of the all-society approach—bringing the public along with us on defence—will help them understand that we need to spend more money on defence and allow parliamentarians to put more pressure on the Treasury to assist in the role of getting that extra funding for those capabilities that are needed? Can we talk more about some operations and not hide behind, “It is operational,” “It is classified”? I thought of the Yantar example because that really, really got the public talking about the threat that was faced from Russia in particular.

I take that point and I am glad you see it had that impact, Mr Roome. I thought it was an important signal to Putin as well as information that the public deserved. And the answer is yes, we should do that and I will do that when it is important to call it out. I will do that because I want the public to be as well-informed as possible. That conversation is not just for me as Defence Minister; it is for all parliamentarians and others who care about the national security and defence of this country. But I am also not interested in the way that previous Ministers that you heard from used to use the public—the media—to try to put pressure on the Treasury. I have a really good, close working relationship with the Chancellor; you have seen us working together on defence driving growth, making announcements about increasing defence spending, and I have been in Cabinets and shadow Cabinets before now. There has to be private space where public policy and public decisions are taken. For my money, the way that Government properly settle these things is within Government and that is the way I have been conducting how defence and the Treasury work in an unprecedentedly close way together.

Secretary, just to build on what Ian Roome and Lincoln Jopp have intimated: when giving evidence to our Committee, former Defence Minister James Heappey said that the institution—namely the Ministry of Defence—was actually stopping him from providing information and transparency for parliamentary scrutiny, including to the Defence Committee. Are you able to actually implement your priorities? Are you being held back by the institution or the deep state from doing that?

Yes, I am able to implement my priorities. I have a lot of confidence in the leadership we now have in place in defence. No, I am not being prevented from doing that and I am not sure that I recognise the description of some deeply resistant, hostile, deep state. That is working against the interests of democratically elected Members of this House or of Government.

So you will be looking to become even more transparent, in particular with the Defence Committee?

You have had my commitment from the outset for that. You have seen the way that I have responded when you have asked for briefings, when you have asked for information, and I will continue to do that.

I just want to move on to Ukraine and the coalition of the willing. Secretary of State, do you have a strategy for parliamentary engagement in advance of a vote on the coalition of the willing? As you will know from your statement in the House, there are multiple unanswered questions regarding the actual detail of the UK’s commitment. Also is there any possibility that deployment of troops could happen in advance of a parliamentary vote?

Two things, if I may. First, the very detailed military planning that the UK and France have led with over 200 military planners and conversations—the latest coalition of the willing had 39 nations involved—means that if there is a peace deal, we will be ready from day one to move to help secure that peace in Ukraine. The Prime Minister confirmed with President Zelenskyy and President Macron that we are ready to deploy UK forces into Ukraine if the circumstances of the peace deal allow us to do that. It is the circumstances and detail of the peace deal that will largely define the specifics of the commitments that we make. So in a way it is at that point rather than now; now would be premature to be able to have that sort of discussion. Secondly, I would just point to the commitment that the Prime Minister made, which is a recognition that if, in the circumstances of a peace deal, the UK will commit troops and forces into Ukraine, the House will want and will have a debate and a vote on that decision before those troops go in.

What if things are fast-moving and it is recess or that is just not possible? There is every likelihood that troops could be deployed without a vote in Parliament under royal prerogative, is there not?

No, I am not getting into those sorts of hypotheticals. That is going to be a challenge for us as Government: to uphold the commitment the Prime Minister has made, and a challenge for Parliament to make sure that we can do that.

If that does happen, would you commit to coming back as soon as possible afterwards to give the details?

Our commitment is to do what the Prime Minister said: to recognise this House will want to debate it and should vote on it before the commitment of forces is made.

Out of the coalition of the willing, why do you think other members have not given the same commitment that the UK and France have given?

Our two nations have set out to lead the coalition of the willing. The commitments that other nations have made are commitments that they have made and collectively we are not publicising or releasing details because, quite honestly, that would only make Putin wiser.

Sorry, Secretary of State, I am just checking: have other countries made commitments that are just not public and it is only the UK, France and the US’s commitments that have been made public?

There are 39 nations involved in the discussions and conversations of the coalition of the willing; the majority of those nations have made commitments as part of the military plans in the event of a peace deal that we would together be able to ensure the safe skies, the safe seas and the regenerations force that would help Ukraine rebuild to the point that it must and it would be the best deterrent and defence against any future Russian aggression. As previously stated to the House, we have a number of UK personnel in Ukraine. They are providing support to the embassy and to Ukraine for its defence against Russia’s illegal invasion, and this has been the case since we reopened the defence section in the embassy in April 2022. Since the election, that number has grown as we continue to step up UK support at Ukraine’s request.

I will leave it there, Chairman, in the interest of time.

Secretary, you announced last year that there had been a 30% increase in Russian activity in UK waters. Can you tell us how much of that increase was subsea?

That was a headline figure. I gave about a 30% increase in Russian vessels intruding and active in wider UK waters; you would not expect me to give a detailed breakdown of those in public. The general may want to add something on the military front of that. The main point is not just that the level of Russian attacks in Ukraine is increasing, but the levels of Russian aggression and activity—incursions into NATO airspace, menacing critical infrastructure, shadow shipping and malign Russian maritime activity—have all been increasing.

Obviously, it is fine if you do not want to go into details on what level was subsea, but what threats do you see that posing to the UK?

It would perhaps be inappropriate to try to delineate proportions but suffice to say that we recognise the uptick in the threat and therefore the need for us to do more about it in the High North, either at surface or subsurface. You have heard from the First Sea Lord and what he has talked about in terms of how he is responding to drive transformation in the Navy to be able to respond to that uptick in threat and to be able to do it more quickly than we were perhaps planning to do before. That is around the Atlantic Bastion, which is a whole host of things that are different capabilities that would contribute to meeting that uptick in threat.

Are we seeing threats from other adversaries in those areas too? China, for example?

I wonder if we should come back and answer some questions rather than answering them here. I do not have the detail of the answers to your questions, but we perhaps just need to make sure that it is appropriate that we share that detail.

The short answer is yes. If you look at cyber, in the last year alone we have had 90,000 separate cyber-attacks for defence. The large majority of those are linked to states and state activity, or state-linked activity. The nature of some cyber-attacks may be different, depending on the states that are behind them. Russia, China and Iran are all linked to some of those attacks. If you look at the recent debate where we started this afternoon, Mr Chairman, with concern about Greenland, the Arctic security, and the High North, that is about rising levels of Russian activity and aggression in that area, but also rising levels of Chinese interest because, as climate change opens up that northern sea route, it opens up the link. We have of course also seen Russia working more closely together with certain allies through the war in Ukraine.

Coming back to what my colleagues were raising about public awareness and defence spending, this is something that I have raised on a fairly frequent basis. I do not believe the public are as aware as they should be of just how high the threats are and how many attacks are being made on the UK on a regular basis. When you talk about the cyber-attacks and other things, people might see that Marks and Spencer was attacked and it is inconvenient for their shopping not being delivered. But I do not think the understanding that that is a direct attack on our supply chains is being put across quite as strongly as it could. I understand that we do not really want to alarm people, but when we talk about whole of society resilience and defence, surely that is something that we should be doing more work on to ensure that people understand exactly what the threats are, where we are, and that we are already being attacked in the grey zone. It might not trigger Article 5, but these events are occurring and I do not think the public are as aware as they should be.

I see that as a fair, sound point and argument to make.

I tend to agree that we need to have a different national conversation and understanding some threats without scaring the nation is an important part of that conversation, particularly around some cyber threats. Of course, it is a balance of how we attribute some of what we see from a defence perspective but it is a very fair challenge about raising awareness so that we have a better understanding and a better national conversation.

You mentioned the Atlantic Bastion; there were due to be contracts and deployments this year. Has that been pushed back with the defence investment plan not being published?

I do not believe it has. My job is making sure that we still get stuff done while we are continuing to do some broader investment planning.

They are on track with where they should be?

Yes, and because it was a strong feature of the SDR you will undoubtedly see the defence investment planning transformation to more autonomy accelerated: the creation of an Atlantic Bastion that is a combination of the traditional hard power ships with the new technology of surface and undersea autonomy. That will be part of not just rapidly reinforcing and raising our levels of warfighting readiness, but it will also be a part of putting our British military at the most innovative edge of NATO nations.

Secretary of State, there has been lots of discussion about the country’s awareness—or lack of—of the threat. What is your sense of the understanding and awareness of your Cabinet colleagues around the table of the threat this country is under?

Their awareness is good. The Prime Minister, the Foreign Secretary and I provide briefings and have discussions with the Cabinet to help ensure that. Their acceptance that we must do more is very strong. I have to say, having served in Cabinet and shadow Cabinets before, the unity of purpose of this Cabinet is second to none.

Is this the same Grant Shapps who renewed the superinjunction in May, just before the start of the general election?

The answer to your direct question is no. But at the point where the renewal was required, Government and I were working on a fresh assessment that had not been done, which allowed us to take a view of the time period. The extremely heavy-handed nature of having a superinjunction in the first place allowed us to take a fresh view of the apparent risk to those whose data might be on that data set. It was that report that this Committee—if it has not already—will take evidence from. It was on that basis that I was able to ensure that we could change government policy, we could change the argument to the court, and that we could get to the point where we should get to: have the superinjunction removed and we could take the other action that was required in order to deal with the flow of ARAP applicants.

If this Committee has its own inquiry into this area, as part of the evidence, if it is helpful, I can outline the steps that I took when, having become Defence Secretary, I was concerned about a pattern of data lapses and data breaches in this area; the steps that I took to make sure that those systems were timed up.

I am sure that would be part of the perspective and the evidence that you will look for as part of your inquiry.

Thank you very much. Well that has been an absolutely fascinating evidence session. I am very, very grateful to your good self, Secretary of State, to the Permanent Secretary and the Vice Chief of the Defence Staff for your invaluable time. I know that that will have helped to inform not just parliamentary scrutiny but also to enlighten the wider British public about some threats that we face and what the Government are doing to keep us safe and secure. With that I bring the session to a close.