Philip Hammond

It's fitting that this Conference begins with Defence.

Because the security of our country will always be the first priority of a Conservative Government.

In this job, I have the honour and the privilege to work alongside the brave men and women of our Armed Forces who guarantee that security, day in, day out in some of the world's most difficult and dangerous places.

I have met them on the frontline in Afghanistan;

Seen the fortitude with which they face the Taliban threat, risking their lives to keep us safe.

These young men and women are the bravest and the best of Britain.

Let's show them how much we admire their commitment and their sacrifice.

Of course, it is not just on the battlefield that our troops are delivering.

This summer, they stepped into the breach to safeguard the Olympics.

With their usual professionalism and good humour.

At home and abroad, our Armed Forces display daily their versatility and their commitment policing our skies and our sea lanes; deterring our enemies and reassuring our friends, from the South Atlantic to the Gulf and carrying out their vital mission in Afghanistan.

I have been in the job almost a year now, getting to know the extraordinary people who make up defence. And understanding the extraordinary challenges that we inherited at the MOD.

Ably assisted by my first-class Ministerial team: Andrew Robathan; Mark Francois; Philip Dunne; Andrew Murrison, Johnnie Astor and Defence whip, Mark Lancaster. And my outstanding PPS, Claire Perry.

This afternoon I want to address four things:

First, what we are doing in Afghanistan and why we are doing it;

Secondly, how we are dealing with Labour's budget legacy and transforming Defence for the challenges of the future;

Thirdly, what we are doing for the people that are Defence's greatest asset;

And finally, what our future Armed Forces will look like and what they will be capable of.

It is a decade, now, since British troops began operations in Afghanistan.

And, as we come towards the end of our mission, it is more important than ever to remind ourselves why they are there how much they have achieved and how we are going to get them out over the next two years.

Let me be clear: the reason we are in Afghanistan is to protect our national security.

In my book, that is the only justification for asking our troops to risk their lives.

We went into Afghanistan to root out the international terrorists responsible for 9/11.

Our presence in Helmand, once the most lawless province, has enabled government control to be re-established and essential public services - schools, roads, healthcare and justice - to be delivered.

And by building up the capacity of the Afghan Forces to maintain their own security we will deny the terrorists a safe haven in Afghanistan long after we are gone.

Our plan is clear: we are training the Afghan Forces to take over the burden so that we can bring British troops home.

And the plan is working.

The Afghans are growing in capability and confidence by the day.

For example, in the six months since April, we have handed over 52 of the 86 British-manned bases in Helmand to the Afghans.

The Taliban always knew they couldn't defeat the ISAF forces; now they can see that the Afghans we are training will also be a force to be reckoned with.

So to those who say "get out of Afghanistan", I say: "that is exactly what we are doing".

We will bring home another 500 of our troops by Christmas and we expect to make further, significant, reductions next year, with combat operations ending in December 2014.

But we are not going to cut and run.

We will not betray the sacrifice and the progress made by British troops, by abandoning it.

We will come out with the mission completed and British heads held high.

Leaving behind us well-trained Afghan forces to defend their country and protect our security.

Meanwhile, I am pleased to be able to tell you that British troops in Helmand do now, at last, have the equipment they need for the job the helicopters, protective kit and armoured vehicles they have lacked in the past.

The message from the canteen in Camp Bastion when I ask about kit is "no complaints". (same about the food by the way).

And one thing I've learned in this job is that if there are any complaints, I will know about them as soon as I sit down in the canteen!

This Government is clear that if we ask our brave troops to do a dangerous job, we have a moral obligation to equip them to do it.

And that brings me to my second point: the transformation of Defence and of Britain's Armed Forces.

Because the twin drivers behind our transformation programme are the need to change the culture in MOD so that Defence never again gets into the mess that Labour left us and to ensure that our forces are prepared for the very different challenges they will face post-Afghanistan.

Now, I know that most people in this hall most people in our party will feel instinctively uncomfortable about the reductions we have had to make to the Defence Budget.

About the difficult decisions we have had to take to balance the books and get defence back on track.

No-one more so than me.

The truth is, none of us came into politics to cut the Defence budget or to reduce the size of our Forces.

But in May 2010, we were faced with Labour's catastrophic legacy: one of the biggest deficits in the developed world and a black hole in the Defence budget bigger than many countries' GDP.

Faced with that legacy, we had to make some tough choices:

My predecessor, Liam Fox, grasped the challenge.

He ended the out-of-control equipment projects;

He cut unaffordable capabilities;

He recognized the need to reduce the size of our forces.

Two years on from those first steps, we have achieved a balanced Defence budget with an affordable equipment programme and a deliverable plan for the future of our Forces by 2020.

Backed by what will still be the fourth largest Defence budget in the world.

I want to pay tribute to the leaders of our Armed Forces.

They have understood the need for change - and they've got on with it.

With the professionalism that, all too often, is taken for granted.

I am determined that we will repay that professionalism by living up to our side of the bargain:

• keeping our word on the capabilities we have pledged;
• delivering the annual increases in the Equipment budget we have announced;
• never again asking our troops to carry out tasks that the nation isn't willing or able to equip them to do.

But it's not just the Armed Forces that are changing.

The MOD itself will shrink by more than a third - losing 30,000 civil servants.

A new Defence Board is in place;

A swathe of senior civilian and military desk jobs have already been abolished.

DIO, the body responsible for our 600,000 acres of land and our 146,000 buildings, is being radically re-shaped.

And scores of redundant sites and buildings will be sold.

We are in the final stages of planning a wholesale restructuring of DE&S, the 20,000 strong organization that buys our Defence Equipment bringing in private sector management skills to support the military and civilian specialists who form it's backbone.

All told, the biggest change programme anywhere in the western world.

Delivering Britain the Defence it needs for the 21st Century.

And what of Labour?

In the face of this radical programme, have they set out competing plans for transforming Defence and dealing with the mess they created?

Have they taken any tough decisions?

No - Labour isn't learning.

As far as Defence is concerned, last week's conference was not so much "One Nation" as "Two Denials".

They deny they created the black hole - and they deny we have fixed it!

Faced with a £38billion defence deficit

All they have come up with is £5 billion of savings over 10 years.

Jim Murphy's speech, rather like his leader's, was pretty much content free:

No apology for the mess.

No lessons learned.

No plan for the future.

Jim, I know you're a vegetarian,

But if you want to be taken seriously, you've got to give us some beef.

On the evidence of last week, this much is clear.

Britain's Defence would not be safe in Labour's hands.

Let me turn to my third theme: our people, and what we are doing for them.

Balancing the Defence budget is a hugely important achievement.

I am proud of it.

But I am also clear that the point of Defence is not simply to balance the books.

It is to defend our country, our interests and our values.

We do that thanks to the extraordinary people who make up Britain's Armed Forces, the civilians who support them, and the tens of thousands who work in our world-class Defence industry, supplying them with the equipment they need.

The truth is that our people have taken a pounding over the last couple of years as we have dealt with the legacy we inherited from Labour.

And I have got a big job on my hands to rebuild their trust and win their confidence.

This has been a time of change and uncertainty for them.

I have to be frank with you: I cannot avoid the need for change. The shrinking of the MOD or the reduction in the size of the Armed Forces.

I can't prevent the merging of units, or the redundancy of some individuals.

But what I can do is give people clarity and certainty about their individual futures as quickly as possible.

So before the end of the year we will announce the Army re-basing plan, so families will know where their future homes will be.

We will accelerate work on the New Employment Model which will make service terms and conditions more flexible, better reflecting the complexity of modern family life and delivering our goal of higher levels of home ownership among members of the Armed Forces.

And I promise this Conference, because I know it matters to you, as it does to me that we will do everything we can to minimise the number of compulsory redundancies as we bring the Army to its future size over the next couple of years.

Whether they are serving in Afghanistan or Aldershot, I want our servicemen and women to know that this Government, and the British people, recognise the debt of gratitude we owe to them and their families.

That is why we have enshrined the principles of the Armed Forces Covenant in law doubled the operational allowance to over £5,000.

Quadrupled the council tax discount for forces on operation established the community covenant and now appointed a Special Representative to help those making the adjustment back into civilian life.

But there is always more that we can do.

One of my most humbling experiences in this job was my first visit to Headley Court seeing the discipline and determination with which servicemen and women face and overcome terrible, life-changing combat injuries.

Last month, the £15m Jubilee Rehabilitation Complex was completed.

Today, I can announce a further £5 million investment by the MoD in Headley Court, continuing the improvement of the facilities on which our injured service personnel rely.

Increasingly, businesses are telling us that they, too, want to show their appreciation of our troops.

So I am delighted to be able to announce today the launch of a new discount scheme for members of the Armed Forces, their families, veterans and Reservists.

The new "Defence Privilege Card" is businesses' way of saying "thank you" to our troops and veterans, with substantial discounts on high street brands and leading service providers.

It's not just the private sector other Government Departments too, want to show their support.

George Osborne plans to hand £35m of fines levied on banks to service charities instead of following Labour's lead and handing them straight back to the financial sector.

Michael Gove has agreed to increase the Service Pupil Premium from £250 to £300 per pupil and to extend it to include all pupils whose parents have died in service since 2005.

And in future, the premium will be paid for up to six years after parents leave the Forces.

Proof positive that the covenant is now embedded as a whole-of-Government agenda.

There is one other group of service people I want to talk about before I move on.

Our Reservists.

In the new model, Reserves will be more important than ever before - a vital part of our forces.

We will increase the Army Reserve to a trained strength of 30,000 and integrate them fully pairing Regular and Reserve battalions to create a total land force of 120,000.

And unlike Labour, who disgracefully cut funding for the Reserves when the cash ran out, we have ring-fenced an additional £1.8 billion for their equipment and training.

An investment already starting to be seen on the ground with the delivery of Regular Army vehicles, radios and equipment to TA units across the country.

Too often in the past, the Reserves have been the forgotten part of our Armed Forces, despite thousands of them having fought in Afghanistan.

No longer.

I want to offer a new deal to Reservists:

Make the commitment; turn up regularly to train and be prepared to deploy.

And in return, we promise to equip you, train you and fund you.

A bargain that has been broken on both sides in the past.

And which has to be kept by both sides in the future.

A new deal, too, for employers: certainty about periods of liability for call-up.

A tailored offer, recognising that one size does not fit all, to allow employers to get the best out of Reserve training of their staff.

Success will depend on the commitment of employers.

And Government is one of the biggest.

So to lead the way, we have agreed to standardise how central Government treats its Reservist employees giving all of them a minimum 10 days' additional paid leave each year for Reserve training.

And I want to use this opportunity to challenge the wider public sector - the Health Service, Schools, Local Government - to match our offer and send a clear message of how much we value our Reserves.

And why stop at the public sector?

Let's ask Britain's biggest companies to join with us, to demonstrate that they, too, are Reserve-friendly employers.

Let's build a society where being in the Reserves, and employing Reservists, are both worn proudly as badges of honour.

Finally, where does all this change take us?

What will our armed forces look like at the end of it?

How capable will they be?

You wouldn't guess it from reading certain newspapers,

But at the end of this process, we will have the most capable, deployable armed forces outside the United States of America.

Yes, smaller than in the past but agile and highly mobile, better trained and disciplined than any other armed forces in the world and among the best equipped anywhere.

Underpinned by a close working relationship with the forces of the United States - which will remain our most important ally.

With NATO as the cornerstone of our Defence Police we will continue to reject anything which undermines, duplicates or threatens the Alliance on which our security depends.

So to those pushing the idea of a European Army I have a clear message:

Britain will never be part of it.

Many countries have more people in their armed forces than we do...

But few can begin to match our military capability.

By 2020, Britain will boast battle-hardened land forces with £5billion worth of new armoured vehicles;

An army re-based around modern garrisons in the UK with a large and capable Reserve fully integrated into it.

World renowned Special Forces.

State-of-the-art aircraft carriers with the world's most advanced jet fighter, the JSF, flying off them from 2018.

A fleet of brand new Astute submarines and world-beating Type 45 destroyers and beginning to take delivery of a new fleet of Type 26 frigates.

The RAF will have a modern transport and refuelling fleet - Atlas, Voyager and C17 to complement its fleets of Typhoon multi-role jets and JSFs.

Supported by the cyber, surveillance, intelligence and reconnaissance assets that set us apart from our neighbours.

And unseen beneath the oceans, our nuclear deterrent submarines will continue to patrol while we build a new fleet to replace them in the late 2020s because in an uncertain and threatening world, this party will never take risks with the deterrent that guarantees our nation's security.

Our coalition partners, of course, do not share our commitment to Trident;

They are looking for a cheaper fix.

I have heard a rumour about where their thinking is going.

And I have to say to them: threatening to launch Vince Cable at our enemies is not going to be the solution he may be cheap, but a deterrent has got to be effective as well.

Conference, we have grasped the challenge of Labour's legacy.

We have embarked upon the Transformation of Defence for the future: creating battle-winning Armed Forces underpinned by a balanced budget and a sustainable Equipment Programme and supported by a slimmed down MoD and large, better integrated, Reserves.

We've put the Armed Forces Covenant on a statutory basis guaranteeing the respect and recognition our forces deserve.

Over the next few years, as we carry this great project forward bringing our troops back from Afghanistan, and from Germany we will forge a formidable force:

• designed to face the future;
• to protect our interests around the world;
• and to reflect our values in the way we treat the men and women who make it up.

We have come a long way since May 2010.

A long way in assuring the future for our Armed Forces.

We know that they stand as the ultimate guarantor of Britain's sovereignty and independence.

That's why Defence will always be the first item on this party's agenda.

And why we will never forget the debt we owe to the brave men and women who deliver it.

Thank you.

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