Defence Procurement: Small and Medium-sized Enterprises
Chris Evans Excerpts(6 days, 1 hour ago)
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Chris Evans (Caerphilly) (Lab/Co-op)
It is a pleasure to serve under your chairmanship, Mr Stringer, and I congratulate my hon. Friend the Member for Newton Aycliffe and Spennymoor (Alan Strickland) on securing this timely debate.
I also welcome—quite belatedly—the Minister to her place. She has an extremely tough job, as was underlined by Sir Jeremy Quin, the former right hon. Member for Horsham, who had her role in the last Conservative Administration, when he said:
“Defence procurement is never easy—it is a tough thing to get right—and I have not yet found a state anywhere on earth that can really deliver to the kind of standards that I am sure the hon. Gentleman would wish to see.”—[Official Report, 18 July 2022; Vol. 684, c. 718.]
That is further underlined by the latest figures from the MOD about Government projects, which were set out in the portfolio in March 2024. That document said that 88 projects are on red, 18 are on amber and only one is on green. Behind those figures is a supply chain that will also be affected. Many firms in that supply chain will be small and medium-sized businesses that do not have large bid-writing or tendering teams. Under the Procurement Act 2023, if all goes according to plan, SMEs will spend less time bidding for contracts that they do not win and many of the tick-box exercises will be reserved for the company that is offered the work.
During my time in opposition, I was often told that the MOD has a tendency to change its mind at short notice. The best example of this, which I am sure the Minister has sleepless nights about, is the Ajax programme; it wasted £5.5 billion, including in my former constituency.
It is important to strike the right balance between removing unnecessary red tape and ensuring that contractors can prove that they are up to the job. When I was in opposition, the most important thing that I learned when speaking to SMEs was about late payments. In all the time that I shadowed the role of the Minister for Defence Procurement, I got angry only once, when a prime contractor stood in front of me and said, “Now we’ve finally been paid by the MOD, we can pay the supply chain”—18 months later.
The businesses involved in the supply chain are not large—very often, they consist of just five or six people being innovative—yet they lose out because prime contractors put the needs of other people above their needs. Of course, there will always be examples of good practice, but one major defence contractor operating here in the UK was, at the last count, taking an average of 101 days to pay its supply chain. Would any of us accept a three or four-month wait to get paid?
In 2020, multiple major defence firms were suspended from the prompt payment code for consistently failing to pay their suppliers on time. SMEs across all sectors spend a total of 50 million hours a year chasing payments. If the Government mean what they say about promoting productivity and growth in defence SMEs, addressing late payment must surely be a priority going forward.
Voluntary codes are all very well, but they are just that—voluntary. If we are serious about this issue, we must enshrine redress in legislation. It is unacceptable to pay our SMEs—the lifeblood of our economy—late, and there should be penalties for that. Late payments create cash-flow problems, which in turn affect SMEs’ access to finance. That cannot go on.
Defence Programmes Developments
Chris Evans Excerpts(2 months, 2 weeks ago)
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John Healey
I appreciate the right hon. Gentleman’s tone and his advice. On the savings I have outlined that will flow from the six decommissioning decisions, that money will be retained in full in defence. It will not go to the Treasury. He links finances to the strategic defence review. The Prime Minister has always been clear since the NATO summit in Washington in July that it is the strategic defence review first and the pathway to 2.5% second, and the Chief Secretary to the Treasury recently confirmed that we should expect that in the spring.
Chris Evans (Caerphilly) (Lab/Co-op)
I congratulate my right hon. Friend, and it is good to hear a Secretary of State finally getting to grips with the root and branch reform that we need in the MOD. I want him to cast his mind back to the dossier on waste that we produced in opposition. It showed that, since 2010, £13 billion of taxpayers’ money had been wasted by the MOD. Will he commit, as he did in that report, to a root and branch National Audit Office report on MOD waste, and to the MOD being the first Department to be referred to the Office for Value for Money? Will he also commit to continuing to update this House on his ongoing battle against MOD waste?
John Healey
I appreciate my hon. Friend’s comments, and the reminder to this House of the dossier of defence waste that we did indeed work on together in opposition. I can confirm to him and the House that I have commissioned an internal audit of waste, but I have not waited for the results of that; I have already reduced the consultancy spend by £300 million this year. It was set to be a ballooned £1 billion over three years for consultancy and extra staff. I have also scrapped the Tories’ £40 million VIP helicopter contract, which was money spent on moving VIPs around the country, rather than investing in our servicemen and women, which we can now do.
Oral Answers to Questions
Chris Evans Excerpts(3 months, 2 weeks ago)
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Luke Pollard
The Defence Secretary has clear instructions from the manifesto that Britain is to be better defended with a Labour Government. That is why within two weeks of taking office the Prime Minister had commissioned Lord Robertson to conduct the strategic defence review. The Prime Minister, the Defence Secretary and I have all made it clear that GCAP is an important programme. Not only do we have an amazing workforce working on it but I am pleased to tell the House that last month the UK ratified the GCAP convention, the international treaty that sets up the GCAP International Government Organisation. We will continue to make progress.
Chris Evans (Caerphilly) (Lab/Co-op)
GCAP will contribute £37 billion to the economy, but the Minister will know that the SDR being under review has led to a number of stories appearing in the press that the programme is about to cancelled. As someone who once represented General Dynamics, which built Ajax, I know that a belief that something will not happen tends to cause problems within the local and national economies. As the SDR goes ahead, will the Minister ensure that this House and the press will be kept up to date on how GCAP is developing?
Luke Pollard
GCAP is an important programme, and there will be further updates in relation to it as the SDR reports in the first half of next year. In the meantime, we continue to progress the project; indeed, work is continuing across a range of necessary and important defence projects, because we do not want the SDR to be an excuse to slow down progress. At a time when our troops and allies are operating in difficult and contested environments, we need to ensure that we invest in the kit that we need. That is what the SDR will set out: the future shape of the UK armed forces.