Defence Industry and Shipbuilding

Debate between Lord Spellar and Tobias Ellwood

Wednesday 11th July 2018 Commons Chamber

[Mr Ellwood]

There is so much choice that I do not know where to start. Let us go with the right hon. Member for Warley (John Spellar).

[John Spellar]

Will the Minister confirm that the Korean shipbuilder that took this contract, DSME, underbid and actually lost significant sums of money on the contract? It was not a fair contract, and because of its general business practices, it came very close to going bankrupt and had to be bailed out.

[Mr Ellwood]

I am glad that the right hon. Gentleman put it like that, because I was worried that he was going to say that state aid had been involved. I am sure that he would not suggest that that was the case, because I know him better than that, even though that was hinted at by those on his Front Bench. That was the commercial decision that the company took, but we are left in a situation where Britain is getting value for the taxpayer’s money.

--- Later in debate ---

[John Spellar]

Not true.

[Mr Ellwood]

I suggest that the right hon. Gentleman reads the report by my hon. Friend the Member for Ludlow to understand the full picture. My hon. Friend is correct that EU regulations provide guidance on building those ships. The regulations do not apply to royal naval ships because, from a security perspective, every sovereign nation is allowed to bypass them, but the rules absolutely apply to non-royal naval ships—as in Royal Fleet Auxiliary ships—that employ civilians on board. I encourage hon. Members to read the report before judging what my hon. Friend has just said.

Moving back to what I was saying, we must have an honest debate about what is happening, which is why we need to develop a modern, efficient, productive and competitive marine sector that allows us to build on the work that has been done on the Clyde, in the north, in Belfast, in Barrow, in the north-east, in the north-west and in the south-west of England. We have incredible capability, and I am pleased to see so many hon. Members representing constituencies in those areas in the Chamber today.

Our new shipbuilding strategy sets out exactly how we can achieve such a marine sector. We will continue to build Royal Navy ships only in the UK while encouraging international collaboration in harnessing open competition for other naval ships. Our new framework will ensure that the impact of UK prosperity will be considered as part of our procurement decisions. The 2015 strategic defence and security review created a new security objective: promoting our prosperity. Competition and strategic choice remain at the heart of our approach, but we recognise that there are several different models for working successfully with the industry, and we need to take further steps to bolster that and make the right decisions to enable a strong partnership between the Government and industry.[Official Report, 23 July 2018, Vol. 645, c. 7MC.]

That is part of the whole Government approach, spearheaded by the national industrial strategy, with its mutually reinforcing focus on driving productivity and supporting innovation, which provides a strong and clear policy framework in which industry can invest and grow. Key to that is how defence procurement might build economic value by strengthening UK productivity and industrial capability, including at a local level, and boosting exports sustainably. We recognise that responsible exports are now widely accepted as having a part to play in our wider national defence and prosperity objective. They are considered to be an opportunity, not a burden.

Sir John Parker’s 2016 independent review made a series of recommendations about improvements we can make, and, as I said, I am pleased that we will be accepting all of them. He did place emphasis on the dysfunctional relationships between government and industry. Old ships were retained in service well beyond their service date, with all the attendant high costs, and it is important that that changes. So our new strategy is founded on three pillars. The first is better planning, giving industry greater certainty and predictability. We are providing a 30-year Royal Navy shipbuilding masterplan to guide all future naval shipbuilding decisions, and to document the number and types of ships in which we will invest over the next three decades.

The second pillar is a new approach to design and construction. We want to challenge naval standards and introduce new ones, forcing through advances in design, in new materials such as composites, and in manufacturing methods. Our new carriers are a prime example of that. They are built in blocks, with parts built in different parts of Britain, drawing on the expertise of 10,000 people, and being brought together from centres of excellence from across the country. Thirdly, we want to focus on building exports, where there is an opportunity, as the Type 31 will be the first frigate for export since the 1970s. We know that more sales can cut costs in procurement over time and give us the potential to buy even more cutting-edge ships.[Official Report, 24 July 2018, Vol. 645, c. 8MC.]

For now, for reasons of national security, the shipbuilding strategy sets out that warships will be built and integrated in the UK via competition between UK shipyards. However, for the purposes of shipbuilding only, the national shipbuilding strategy defines warships as destroyers, frigates and aircraft carriers. All other naval ships, including the Royal Fleet Auxiliary ships, as well as other Royal Navy manned ships, such as patrol, mine countermeasures, hydrographic and amphibious ships, will be subject to open competition—that means international competition. That remains where the difference lies between us and the Opposition, but it is the cornerstone of our defence procurement policy. I remind the hon. Member for Llanelli that she talked repeatedly about value for the taxpayer, and it is important we understand that. I hope that there is a compromise whereby where we want to and can, we will utilise British shipbuilding capability, but when it comes in at twice the cost of an overseas opportunity, we will have to be very careful about which decision we make.

Ministry of Defence

Debate between Lord Spellar and Tobias Ellwood

Monday 26th February 2018 Commons Chamber

[Mr Ellwood]

I am pleased the Defence Secretary is in his place, because this is very much of concern to him, as it is to all of us in the House, and it gets raised regularly. The last time he was in Brussels he raised it, and our allies in the United States are concerned about it too. The hon. Gentleman raises a very important point. Let us be honest: we know that, for varying reasons, the financial year has been tough. We are grateful to the Treasury for recognising the fiscal pressures the MOD is under and providing an extra £200 million window to allow us to close the books on the financial year 2017-18. I make it clear that this is new money; it is different from the £300 million that has been brought forward to assist with the continuous at-sea deterrence programme.

Looking ahead, there continues to be a lot of debate, as has been expressed today, about the pressures on and size of the armed forces, their annual budget and the 10-year spending plan. I thought it would be helpful to place things into context following the defence and security capability review and the defence modernisation programme, and to flag up some realities that are not for this budget, but which are coming around the corner. The Defence Secretary has spoken of the need to look at outputs, rather than inputs. We must not just set out the number of tanks, ships or personnel that we need; we must first ask ourselves what we actually want to achieve. That leads us to determine the size of our armed forces and the defence posture we wish to show. This should reflect our duties, both domestic and overseas; our ambitions as a force for good; and our international responsibilities as a permanent member of the UN Security Council and lead member of NATO.

We also need to adapt to the changing circumstances, as the threats we face become complex and intertwined. We must recognise that the world has become more dangerous since the publication of the 2015 SDSR. The risks and threats we face are intensifying and diversifying faster than expected, hence the purpose of the defence modernisation programme. It will allow more time to carefully consider how defence works, as well as what defence needs; it will aim to improve how defence operates; and it will focus on achievable efficiency and create different arrangements with suppliers. This modernisation will allow us to take the necessary long-term decisions about our military capability.

For clarity, let me say that the defence modernisation programme consists of four workstreams: the delivery of a robust MOD operating model, creating a leaner and more efficient MOD; a clear plan for efficiencies and business modernisation; a study of how we improve our commercial and industrial strategy, building on, for example, the shipbuilding strategy and the recently announced combat air strategy; and a focus on our defence policy outputs and our military capability—arguably the most important of the four.

[John Spellar]

That is all well and good, and all long term. Given that, why are the Government not sorting out the Capita contract on recruitment, which is clearly, visibly, obviously and lamentably failing the country, our armed forces and the recruits?

[Mr Ellwood]

The right hon. Gentleman touches on something that I am not going to disagree with, but it is pertinent to and included in the workstreams I have just mentioned; we will be seeking more efficiencies and business modernisation. That means looking at our relationship with the contractors we work with, in order to improve the service we need to provide for our service personnel.

The work I have described will be led by the MOD, working closely with the National Security Secretariat and the Treasury, and engaging widely with Parliament, think-tanks, academics, defence experts, international allies, the media, devolved Administrations, the defence industry and, of course, the public.

[John Spellar]

Having all of those other worthy people involved does not get to grips with the problem of the here and now; it is pushing everything off to the right and over the horizon—again. Why will the Department not get a grip of just this programme and sort it out, because it is crippling to our armed forces?

[Mr Ellwood]

We have a programme—it is not fiscally neutral, as the last study was. This will allow us to make the changes and the recommendations that we need to take forward. I hope that the right hon. Gentleman will be able to get behind that, in order to make sure we can provide the service and the changes that we need to make, and which our armed forces deserve.

Defence

Debate between Lord Spellar and Tobias Ellwood

Thursday 11th January 2018 Commons Chamber

[Mr Ellwood]

I am grateful to my right hon. Friend. He asks an operational question about the amphibiosity of our capability. I stress to the House that we must maintain our amphibiosity, a capable Royal Marine presence and, dare I say it, a capable Para presence as well, so he can rest assured. I will not go any further than that because we are getting into the weeds of operational decisions, and more will become clear very soon.

[John Spellar]

Going back to the point made by the Chair of the Defence Committee, if the capability was vital last year, when we were given an end date, what has changed in the meantime to put that capability in any way in question?

[Mr Ellwood]

The right hon. Gentleman is trying to pre-empt the capability review and what will follow. All I can ask for is patience, because the answers will be forthcoming.

Turning to a couple of other contributions, this has been a tough time for recruitment and retention, and we should be honest about the challenges, something which my right hon. Friend the Member for Rayleigh and Wickford (Mr Francois) studied in detail in his report. Nevertheless, I am pleased to say that recruitment is moving forward. We do have to change our approach, and we need to recruit specialists as well, because the art of war is fundamentally changing. The requirements for what is needed on the battlefield mean that we should not necessarily have to train somebody from start to finish. It may be easier to have somebody with the technology, understanding or detailed knowledge instead. For example, a subject matter expert for a country in the middle east could be brought in and trained and then could join our armed forces to provide that intelligence detail. That is exactly what 77th Brigade does, and it provides huge value away from the teeth arms, with which the right hon. Member for Warley (John Spellar) and I are more familiar.

We need to adapt and to reflect society as a whole. We have now opened up all roles to women, and our new campaign has led to a rise in applications of 20% since 2016-17. Reserves are also up by almost 5% on last year. The offering must also change, and some worries have been raised about accommodation, but we are looking at a new accommodation model, and I am concerned about what is happening with Carillion. We need to give individuals more opportunity. Do they want to stay in a garrison, do they want to rent, or do they want to own their own house? That is what other people aspire to, so why should somebody who joins the armed forces not be able to do the same? That is what our accommodation model is looking at. Many hon. Members have participated in the passage of the Armed Forces (Flexible Working) Bill, which will allow somebody to step back from what they are doing in the armed forces for a period of time, perhaps to spend more time with their family or possibly to have a child. That proposal is proving hugely popular.

The enterprise approach is about attracting people on sabbatical, such as someone with a senior engineering, cyber or linguistic capability whom it would not be cost-effective for us to train from the bottom ranks all the way through. The veterans’ package has been mentioned, and I am proud of this Government’s work in supporting the armed forces covenant, which over 2,000 companies have signed. We also have the Veterans’ Gateway which, if hon. Members are not familiar with it, is the online portal that allows any individual to comprehend the myriad military-facing charities that are there to support our brave armed forces as they make the transition into civilian life. It is an excellent bit of work, and I recommend that all hon. Members look at it. Finally on that front, through our mental health strategy we are trying to remove the stigma from someone stepping forward if they are suffering from any form of mental health issue.

A couple of comments were made about the public sector. Pay is obviously up to the Armed Forces Pay Review Body, but the cap has been lifted and there is the freedom to go above 1%. However, it is for the pay review body to make recommendations.

The last contribution that I want to comment on came from my hon. Friend the Member for Isle of Wight (Mr Seely). His pertinent point was that if the armed forces are not being used, they can be perceived as redundant. As Sun Tzu wrote in “The Art of War”:

“Supreme excellence consists in breaking the enemy’s resistance without fighting.”

Having an armed force, a posture and a strong capability that backs up our soft power can do much to influence the world around us without our having to leave it to war fighting or military engagement.

I would like to give a couple of minutes to the hon. Member for Gedling, who moved the motion, so I conclude by thanking all Members for their contributions. I hope the House will agree that we are deeply indebted to all those who choose to wear the uniform and, if required, stand in harm’s way in defence of our country and values and in aid of those in need across the world.

The professionalism of our defence people forms the hard power that is respected by our allies and feared by our adversaries, and it is that hard power that sits behind the country’s soft power that allows us to continue playing such an influential role on the world stage.

As the world moves faster and becomes more dangerous, we must not be naive about the durability of the relative peace that the UK has enjoyed over the past few decades. Our country, our open international economy and our values are vulnerable to a range of growing world threats that have no respect for our borders. It is critical that Britain’s defence posture remains credible and that we maintain our military edge. That is exactly what the Secretary of State is working to achieve.

I end by reminding the House that President Reagan said:

“Freedom is never more than one generation away from extinction.”

Let us not take our ability to fight and the security we have for granted. All of us in this House should make the case for strong and credible defence.