Oral Answers to Questions
Lord Beamish Excerpts(5 years, 10 months ago)
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Mr Kevan Jones (North Durham) (Lab)
The Secretary of State for Defence (Gavin Williamson)
The Vanguard-class life extension and availability sustainment programmes are essential to maintaining the United Kingdom’s continuous at-sea deterrence and are prioritised accordingly. The programmes are managed using established Ministry of Defence processes and, as such, are routinely reviewed.
Mr Jones
April this year marks the 50th anniversary of continuous at-sea deterrence, and I pay tribute to the men and women of the submarine service for their dedication over those 50 years. Given the reported delays in the refurbishment programme of the Vanguard class, can the Secretary of State assure the House that CASD will be maintained into the future?
Gavin Williamson
The right hon. Gentleman is right to pay tribute to the men and women, both past and present, who have done so much to maintain that at-sea nuclear deterrence. I can give him an absolute assurance that the investment and resources that are needed are being made available to maintain this important deterrence, which has always had a lot of cross-party support.
Mr Kevan Jones (North Durham) (Lab)
Mark Lancaster
I am very grateful to the right hon. Gentleman for his acknowledgment. In cases like this, it is absolutely right that collectively across the House we should act in the way we have. I am delighted that we have managed to put things in place to help the family.
Modernising Defence Programme
Lord Beamish Excerpts(5 years, 11 months ago)
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Gavin Williamson
That is incredibly charming of my right hon. Friend. Over the last year, we have seen a commitment right across the Government from both the Prime Minister and the Chancellor to getting increased funding for defence, and that is to be welcomed. This keeps coming back to the simple fact that last year’s defence budget was £36 billion and next year’s will be £39 billion with the extra money that has been secured, but it is about investing in the capabilities and making sure that our armed forces have the mass and lethality that they need to keep us safe.
Mr Kevan Jones (North Durham) (Lab)
If military strength was based on management-speak and general waffle, the Secretary of State’s statement would make us a world-beater, but the reality he asks us to face is that since 2015, we have a smaller Army, with recruitment targets missed, ships in dock because they cannot have crews, efficiency targets met, and a £15 billion black hole in his equipment plan. When is the real money going to come forward, rather than the general waffle that he has put forward today?
Gavin Williamson
As I have pointed out, we are seeing an increasing budget. What we are doing, as we have outlined, is investing in those capabilities to make sure that we have better availability of assets, whether that means ships, armoured vehicles, submarines or aircraft. We are also investing in stockpiles to make sure that we have the depth of stockpiles that we need in order to deal with the increasing threats around the globe.
Oral Answers to Questions
Lord Beamish Excerpts(5 years, 12 months ago)
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Gavin Williamson
We always work very closely with all our NATO allies, looking at the broad range of threats that Britain and our NATO allies face. We often talk about nuclear deterrence, but we must not forget the importance of conventional deterrence as well, which is provided by all our forces, the Royal Navy, the Royal Air Force and the British Army, whether that is about our forces having the right capabilities or where they are deployed. We are leading NATO in terms of our deployments in Estonia, Poland and, through the summer, Romania.
Mr Kevan Jones (North Durham) (Lab)
In light of the press speculation about the financial position of Babcock plc, what assurances can the Secretary of State give not only that the company is able to carry out the current refits of our nuclear submarines, but about any threat that there is to our continuous at-sea deterrent?
Gavin Williamson
We always work incredibly closely with all our suppliers to ensure that there is uninterrupted supply and support for all our forces. That is what we will continue to do with Babcock.
UK Sovereign Capability
Lord Beamish Excerpts(6 years ago)
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Mr Sweeney
I thank the hon. Lady for that pertinent intervention, which drives home the point that I am trying to make. I am highlighting the landscape as I see it now, which is not what we want to achieve and is not optimal. That is not necessarily the fault of the Ministry of Defence, but of what Sir John Parker’s report refers to as the “total enterprise” of shipbuilding, which very much includes the Treasury as financial controller.
Mr Kevan Jones (North Durham) (Lab)
Further to the point raised by the hon. Member for Berwick-upon-Tweed (Anne-Marie Trevelyan), the MOD is at fault. It takes no account whatever, either in shipbuilding or in other procurement contracts, of the value added to the UK economy, not just in skills but in the money that the Treasury gets back through tax and national insurance.
Mr Sweeney
The Minister might have been hopeful that I was absolving him of all blame in the matter, but I did not quite mean that; I meant that it was not entirely the fault of the Ministry of Defence, because there is a combined silo mentality across Government. My right hon. Friend makes the important point that in shipbuilding and in major defence procurement programmes, there has been a failure to understand the total prosperity effort across the UK. Royal Caribbean would never approach financing the building of a cruise ship in the way that the Ministry of Defence finances its frigates. The MOD does not achieve anywhere near the sort of efficiencies that commercial operators such as Cunard or Royal Caribbean achieve.
The MOD and the UK Government’s considerations ought to be about what maximises industrial and economic benefit to the UK as a whole, but they have failed to incorporate that into their processes for making these critical decisions. To give a classic example, modelling done by the Confederation of Shipbuilding and Engineering Unions makes it clear that if major shipbuilding programmes were procured in the UK, the return of wage and supplier payments to the Exchequer would effectively achieve a 20% net material discount. The prosperity of those programmes would flow back into the UK economy instead of being bled out into another country.
Mr Kevan Jones (North Durham) (Lab)
I congratulate my hon. Friend the Member for Glasgow North East (Mr Sweeney) on securing this debate. He emphasised the lack of strategy on maritime sovereign capability, but we need to ask the broader question of why we are in this mess today.
Since 2010, this Government have had no industrial strategy on defence. Some of the short-term decisions that were taken in 2010, when the Government slashed the defence budget by 16%, have resulted in capability gaps. A revolving door has been put on the office of the Minister for Defence Procurement, which means that they have a life expectancy a bit longer than a mayfly. That is not helpful when we need a champion in that role who can argue against the Treasury.
Why is sovereign capability important? If we want to have certain capabilities for the defence of our nation, we need to invest in them. The right hon. Member for Birkenhead (Frank Field) has raised the issue of defence exports. He is right to say that if we are to nourish that industry, there is a defence export role to it. The Ministry of Defence and the Treasury have adopted Donald Trump’s mantra of “Make America great again”, because the procurements that have taken place are suggestive of an “America first” strategy. In the past few years, they have procured more than $8 billion-worth of contracts from the United States.
As my hon. Friend the Member for Glasgow North East and my right hon. Friend the Member for Warley (John Spellar) both said, those procurements were not put out to contract; they were simply awarded. There were no competitions. We have the Apache contract and the P-8 contract—direct foreign military sales—and we have the scandalous situation of the airborne warning and control system, or AWACS, and I understand the Department is now going down the Wedgetail route. From talking to colleagues in NATO, I know that the Ministry of Defence has had no role, and nor is it interested, in partnering the programme that is replacing the 15 AWACS NATO aircraft. It is going down the Boeing route again. I am not sure whether soon we will have a sign at the Ministry of Defence’s Main Building saying, “Sponsored by Boeing”, but that seems to be the way it is going.
We also have the joint light tactical vehicle contract that was awarded to Oshkosh, with £1 billion of sales to replace armoured vehicles. There was no competition at all. At the same time, the Ministry of Defence and the Treasury are saying that the contract has to go out to competition. This is dangerous for our capability. It is not just about jobs, which are important, but about our supply chain and investment in research and development in our technology. My hon. Friend the Member for Glasgow North East will not remember the Falklands war, where we faced the issue of kit procurement from abroad. It reached a situation where we wanted to use the kit independently but were told that we could not.
I have serious concerns about this off-the-shelf approach to defence strategy, because there is no commitment at all. It would not happen in any other country—it would certainly not happen in the United States. If we were to sell equipment to the United States, there would have to be some offset in terms of jobs or investment there. This Government have not even tried. They trumpet the £100 million going into Lossiemouth, but that would have had to go anywhere. Boeing is going round on a public relations exercise, with glossy adverts that say it is now a British company, but it is not. There is very little evidence of real investment going into jobs and technology. That is not just today; our technology in this important sector is in long-term decline.
The hon. Member for Berwick-upon-Tweed (Anne-Marie Trevelyan), who is no longer in her place, said that there is no indication that the Treasury or the Ministry of Defence recognises that if a contract is awarded in this country, the money will come back straightaway. That is a serious problem for them. Short-term decisions taken now will have long-term implications for our effectiveness not just at maintaining our sovereign capability in a whole host of areas including shipbuilding, which has been outlined by my hon. Friend the Member for Glasgow North East, but at maintaining our capability to use that kit in certain situations. For example, will we be able to get the upgrades on Apaches if a future US Government determine that we should not? That is why we need sovereign capability.
I hate to use the phrase “go back to basics”, but that is what the Treasury and the Ministry of Defence need to do. They need to make it clear that we need to procure and manufacture in the UK under sovereign capability, which should be the starting point for the defence industrial strategy. We have been promised it by the revolving door of Ministers for Defence Procurement, but it has never been put in place. It has to be a joined-up approach across Government that includes the prosperity agenda, which does not seem to matter when it comes to those huge contracts that have been awarded without competition. When there is a situation such as the fleet solid support ship contract, where we could have investment in UK jobs and prosperity, we put it out to foreign competition. My right hon. Friend the Member for Warley is right: no other nation in Europe would do such a thing.
Mr Kevan Jones
I am sorry; I am running out of time.
This scandal needs to be highlighted. I hope the Minister, in the time he has got in his new role, stands up to the knee-jerk “America first” reaction.
Stuart Andrew
There were issues with the start of the procurement process. We have reset that, and I reassure the hon. Gentleman that we are sticking to delivery of the first one by the end of 2023. We have made that commitment; this is an ambitious project, and we are determined and working incredibly hard to ensure that we catch up any time that may have been lost. Each time I have updates, I get more optimistic about how we are progressing.
Many Members have talked about the FSS. It is not quite true to say that the Norwegians are building theirs—they are not, actually. They are being put out to international competition and are being built in South Korea. Australia and New Zealand have taken the same approach as us. We have been clear that a warship is as characterised in the national shipbuilding strategy.
Defence Industry and Shipbuilding
Lord Beamish Excerpts(6 years, 4 months ago)
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Nia Griffith
I thank the hon. Gentleman for his intervention and I congratulate him on his excellent report, which he presented on Monday. I note that in it he recommends that UK prosperity should be taken into account in all major procurement decisions. I welcome that statement.
Mr Kevan Jones (North Durham) (Lab)
The hon. Member for Ludlow (Mr Dunne) raises an interesting point, but the issue is not so much about the policy as about the implementation of it. That is what the Treasury and others have got to start doing.
Nia Griffith
Indeed. When we speak to defence contractors, we find it is a sad fact that they are not being required to put those details into the bids they make. We very much hope to see that change. I hope that this is an urgent step on that way. The approach has been endorsed by the Defence Committee and has received the support of the trade body, ADS, as well as the defence trade unions such as Unite, GMB and Prospect.
The contract for the fleet solid support ships would bring immense value to this country if it were awarded to a UK bidder. Our carriers, frigates and destroyers will, of course, always be built in the UK, but with ships such as the fleet solid support vessels, the Government have a choice to make, and Labour Members believe that they are making the wrong one by choosing to put this order out to international competition. I know that some in the Conservative party like to blame everything on the European Union, but the fact is that the Government would be able to procure these ships in the UK under existing EU law, and there are compelling reasons for doing so. The GMB trade union has estimated that the ships would support 6,700 jobs if they were built in UK yards and up to £285 million of the £800 million potential UK spend would be returned to the Treasury through taxation.
The case for buying British is clear, and it would be a betrayal of our UK workers if this contract were allowed to go overseas, so we need to question what is really driving Ministers to put this out to overseas bidders. Perhaps it is the view that there will be a lower price tag for the MOD. We all want to get the best value for money, and we are aware of the difficulties that the MOD is having in balancing its budget, but this short-sighted, narrow, silo mentality about what might look good on the MOD’s balance sheet ignores both the benefits to the UK economy of building the ships in Britain and the costs of not doing so. We as taxpayers all want to see value for our money, and taxpayers up and down the country would far rather see that money spent on supporting skilled jobs for workers here in the UK than see it spent abroad, knowing that some 30% of the money spent on wages will come back directly to the Treasury as taxation, and that the spending power of those workers and their families will sustain local businesses in their communities.
Nia Griffith
As I just outlined, it is extremely important that we take into account the way that the money can be brought back into the Treasury, and I very much hope that the right hon. Gentleman’s message will be well understood by Government Front Benchers.
I will make a bit of progress. As taxpayers, we all want to see value for our money, but we recognise the consequences if we do not spend the money in the UK—the immediate impact on workers and their families, with workers unemployed or able only to find much lower-paid work, leaving them and their families much more reliant on social security payments and tax credits. All that is a cost to the taxpayer and, sadly, there are all too often the hidden costs of the increased risk of mental health problems and family break-up. While workers and their families will take the hardest hit, the wider consequences will be far-reaching and long term. Shipyards will close. We will lose a skilled workforce and a generation of apprentices.
If UK companies do not win these contracts, they will have less money to spend on research and development, and that bodes ill for the future. We have to stay ahead in this game to stay in the game. We know that UK-based companies are interested in putting in a bid, but they will be less inclined to if they think that this order will simply be handed overseas, as happened with the MARS—Military Afloat Reach and Sustainability—tankers. Bidding is a lengthy and expensive process, and companies understandably do not want to take that risk if there is no chance that they will succeed. Awarding this contract to an overseas manufacturer would be particularly galling when we note the subsidies, both direct and indirect, that benefit many foreign yards.
To those who argue that UK companies should simply compete on a level playing field with international bidders, I say that the point is that currently the field is simply not level. For example, the South Korean shipbuilding industry has been the subject of a great deal of criticism for the level of state aid it receives. Shipbuilding is a significant element of the country’s economy, and state-run lenders have injected billions of dollars into the industry. The Confederation of Shipbuilding and Engineering Unions has found that German yards benefit from targeted research and development, from funds for redeveloping and upgrading yards and from regional development funding, while significant potential bidders in Italy, France and Spain are owned in whole or part by their respective Governments. Rather than allowing this valuable contract to disappear overseas, the Government should do the right thing and put UK yards and workers first.
Of course, in this global marketplace, I recognise that not every contract can or should be delivered in the UK, and where we buy from abroad or work in collaboration with allies to develop assets, we should prioritise work-share agreements to create jobs and boost growth in the UK.
Mr Kevan Jones
Does my hon. Friend agree that the Government have a poor track record in doing what she suggests? Under the P-8 and Apache contracts with Boeing, for example, there is very little work share and very few jobs coming back into the UK.
Nia Griffith
Yes, indeed; as my hon. Friend says, the Government have a poor track record. It is a great shame that so many opportunities have been wasted.
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.
Mr Kevan Jones
The Minister is talking complete and utter nonsense. On the military afloat reach and sustainability contract, there was no UK bid, and the reason for that was that the industry was told that the contract was going abroad. As my right hon. Friend the Member for Warley has just said, the Korean bid was underbid and basically bankrolled by the South Korean Government.
Mr Ellwood
The right hon. Gentleman sits down and folds his arms, but there was a UK bid.
Kevin Foster
I will not, because I am conscious that there is quite a queue of Members wishing to speak. While this is an Opposition day debate, there are many Members with significant constituency interests who would like to speak.
In terms of the investment, it is welcome to see the new carriers coming into the fleet and the new Dreadnought-class submarines already under construction, which will hopefully be refitted in Devonport in the years to come, when they have entered the main service of the fleet. It is good to hear about other investment projects. We are seeing our Royal Navy become more competent and capable, with even more of a global reach. It is welcome to see that we are back in the South China seas, looking seriously at the British national interest out in the Pacific region.
While I have some sympathy with one or two parts of the motion, which I will come to, we have to think coherently about what we are saying. If we keep saying that these contracts—contracts that are not internationally recognised as something that should be national only—should be UK-only, we start to go down the path of the nonsense arguments that have been used in the steel industry in the United States. Donald Trump has used a nonsense argument about national security to put tariffs on Canadian and European steel. Let us be quite candid: Canada and the UK are some of the strongest allies of the United States. We share the most sensitive intelligence with one another, so it is an absolute nonsense to suggest that there is a national security angle to who sells steel from this country to the United States. That is where I part company with some of the Labour party’s arguments.
The part of the motion on procurement criteria is perfectly reasonable, and I will come to that, but if we keep saying that certain contracts must be UK-only, we begin a trend of protectionism. We cannot on the one hand rightly say that Donald Trump is talking absolute nonsense about steel, but on the other adopt a policy like that ourselves, potentially against foreign—
Kevin Foster
I thank the right hon. Gentleman for his intervention. Sadly for him, if he had waited until I got to a later part of my speech, he would have heard me talk about the Republic of Ireland, which is building naval ships at the Appledore shipyard in North Devon. He asked me to name one country in the world, and he has got one: the Republic of Ireland. I do not think I will take another intervention if knowledge is so limited that even our closest neighbour is not known about.
Mr Kevan Jones (North Durham) (Lab)
I welcome this debate and declare two interests: first, as a member of the GMB union; and, secondly, as the chair of the all-party group on shipbuilding and ship repair. This is a great opportunity to highlight a great industry encompassing not only shipbuilding, but maritime engineering, ship repair, design and combat systems. It is also an opportunity to celebrate the skills of the workforce in this sector.
However, the industry is heavily reliant on the direction of Government policy. The Government issued their shipbuilding strategy earlier this year and, unlike the Under-Secretary of State for Defence, the right hon. Member for Bournemouth East (Mr Ellwood), I have actually read it in detail. The all-party group is conducting an inquiry into it at the moment. I believe that it is a missed opportunity, because it is turning the clock back to what we had in the 1980s—more competition between the yards in the UK. The Government withdrew from shipbuilding in the 1980s, but the Rand corporation found in 2005 that, rather than driving better value for taxpayers’ money, that policy drove costs up. Francis Tusa, who gave evidence to our inquiry, made it clear that, looking as far back as 1945, we can see that striving for competition in the shipbuilding industry has led to increased costs and delays.
Unlike other industries, the shipbuilding industry needs a flow-through of work. A number of Members have already highlighted the importance of the regular drumbeat of work, and my hon. Friend the Member for Barrow and Furness (John Woodcock) gave a classic example of what happens when we get it wrong. When the last Tory Government stopped building submarines, they took away the ability for the industry to do that any more. If we do that again in other sectors, we will lose the flow-through of work there as well. The hon. Member for Torbay (Kevin Foster) mentioned Appledore, but Appledore has no work coming through, so he should be arguing vociferously for the fleet solid support ships to be built here, because there is a chance that Appledore would get some of that work.
To invest in the sector, companies need stability, and the only way to get stability is to have work coming through. We cannot turn the supply of complex skills needed to build complex warships on and off like a tap, and we have seen that in Barrow. People also forget that skilled people and apprentices go and work in other sectors of the economy, so investment in this sector means investment in other sectors as well. This is also about the supply chain, because small and medium-sized companies need confidence to invest. Overall, this is about sovereign capability and whether we want this country to be able build these ships, and I think that we should.
Furthermore, we should not just concentrate on hulls. The through-life support of these ships and many others is of vital importance not just for jobs, but for technology. If we look at the weapons systems that might go on the FSS ships and other combat ships, they will be exportable around the world. The design is exportable. BAE Systems has had great success recently with the Type 26 in Australia, and the design is a world beater. We can only achieve that, however, if we keep the designers in this country, and we can do that by ensuring a flow of work. However, where are those ships being built? They are being built, quite rightly, in Australia due to the Australian Government’s commitment to having a sovereign capability to build such ships. If we want to retain skills in this country, we need to be able to do that as well.
It is a no-brainer that FSS ships should be put into UK shipyards, because that would help to keep work flowing through and provide stability. The hon. Member for Dunfermline and West Fife (Douglas Chapman) made a good point about Rosyth, because it is a world-class facility thanks both to the skilled workforce and the investment that went in. However, having put all that together, what other country in the world would then rip it apart and sell off the cranes? No one would, and that is the sort of vandalism that we are likely to face.
The arguments for why the new ships should not be built here do not hold a great deal of water. The Minister who opened the debate was completely wrong about the MARS contract, and I will read from an article in Defense News from August 2016:
“The bidding proceedings saw no British contractors enter the final stage of the tanker competition, leaving the door open for the huge South Korean shipyard to outbid rivals for the work.”
So—[Interruption.] The Minister says “final” from a sedentary position. Yes, I know that, because I have spoken to some of them, and they were told by MOD officials not to bid. There is an opportunity here not only to ensure that the new ships, which we need for our defence, are procured from this country, but to support and see a renaissance in UK shipbuilding, ship repair and technology. I do not know why the Government do not want to do that. Future Government policy needs to involve more co-operation with and support for the sector, which will not only have benefits for our sovereign capability, but provide a major boost to our economy, which will certainly be needed in the next few years post-Brexit.
Rebecca Long Bailey (Salford and Eccles) (Lab)
The World cup semi-final starts in less than half an hour, so I shall make sure that my comments are uncharacteristically brief.
I thank all Members who spoke today; I apologise for not referring to them individually. I give a special mention to my hon. Friend the Member for Llanelli (Nia Griffith), who made the case for why greater Government intervention is necessary not only for defence manufacturing in the UK, but, in a broader sense, for manufacturing as a whole.
Manufacturing accounts for 10% of output, 44% of exports and 70% of business investment in research and development. Output per hour is £4 higher in manufacturing than the average for all sectors, and the average annual earnings of somebody who works in manufacturing are nearly £4,000 higher than average earnings from across the whole economy. Over the past 35 years, though, the UK has lost 3 million manufacturing jobs, which is 53% of all manufacturing jobs. Compared with 66% in 1991, some 81% of all jobs in the UK are now in service sectors, and only 8% of employment is in manufacturing.
The industries that, as we have heard, provided our parents and grandparents with employment are no longer an option for our children and grandchildren. There are many reasons for this shift, including Thatcher’s big bang deregulation of 1986 and the movement of production overseas in search of cheap labour. However, as time goes on the longer-term costs of this shift have become increasingly apparent, especially in three key areas. First, there is the loss of jobs and the rise of lower-skilled, lower-paid jobs. Young people growing up now are more likely to find work in services such as retail, hospitality and other low-skill, low-wage industries that often have poor terms and conditions.
The second key area is regional imbalance between areas devastated by the loss of industries and key service industry hubs such as London and the south-east. The shift to a largely service economy has not only impacted people on an individual level, but has profoundly affected entire communities. Industries that were once the sole employer and engines of local economic growth have disappeared, tearing the heart out of communities.
Let us look at Rossendale in Lancashire for example. In 1984, 58% of employees worked in textile manufacturing, but now that industry has almost completely disappeared in that area. A more recent example is Redcar, where steel runs through the veins of local people. The closure of the steelworks there has meant that thousands have lost their jobs. It is not enough to let industries fall by the wayside and simply rely on the financial sector to provide growth and then redistribute it to other areas of the country.
The third area that our industrial strategy must address is our deteriorating balance of payments. Our current account deficit currently stands at almost £18 billion, or 3.4% of GDP, and we import 41% of our manufacturing inputs. Research suggests that a rise of 10% in goods exported, and a 10% decrease in goods imported, would contribute £45 billion to the UK economy. It has been estimated that a £20 billion increase in domestic production would directly create between 100,000 and 200,000 high-quality jobs. What could the Government be doing to support British manufacturing and to encourage the building of products here in Britain? A key policy lever for supporting British industry is obviously infrastructure investment. Upgrading the nation’s infrastructure—
Mr Kevan Jones
This is all very interesting, but when is my hon. Friend going to reply to this debate? Some very serious points have been raised about defence issues, which are very relevant to defence workers across this country. I am sorry, but this is simply not answering them.
Rebecca Long Bailey
I thank my right hon. Friend for his contribution, but it has somewhat delayed my speech and stands in the way of the World cup semi-final. I am coming to those points.
What should the Government be doing to support British manufacturing? As I have said, infrastructure is a key tool in driving investment upwards. Upgrading the nation’s infrastructure in projects such as the Swansea Bay tidal lagoon, which the Government shelved recently, would have created more than more than 2,300 jobs in Swansea and paved the way for the creation of a new domestic industry with substantial export potential. Of course, the Government must ensure that they negotiate the best deal possible, but they must also, on projects such as this, start seeing beyond the short-term basic cost calculations and realise the wider benefits of infrastructure projects such as Swansea.
The most obvious start, so obvious in fact that it is shining like a Belisha beacon, would be using the enormous power of Government procurement to support British industry. The public sector currently spends more than £200 billion every year in the private sector, but sadly this Government have failed effectively to use procurement as an economic lever for supporting manufacturing. There are many examples of this, not least the failure to support British steel. It was revealed last year that the renovation of Big Ben clock tower is using steel from Germany, Brazil and the United Arab Emirates.
Mr Kevan Jones
On a point of order, Mr Deputy Speaker. I thought that it was customary in a wind-up to reply to the debate. I am sorry, but Big Ben has not been mentioned this afternoon. The many defence workers who lobbied Parliament yesterday on this contract expect us to respond to this debate.
Mr Deputy Speaker (Sir Lindsay Hoyle)
It is part of it, and I am sure that the hon. Lady is leading on to the debate that we have had.
Guto Bebb
I just want to place on the record a clarification of the comments made by the Under-Secretary of State for Defence, my right hon. Friend the Member for Bournemouth East (Mr Ellwood). He was correct in saying that UK companies were involved in the MARS tanker competition and procurement process, but Opposition Members are also correct in saying that there was no British company involved in a final bid. I hope that that clarifies the point of order made by the hon. Member for Caerphilly (Wayne David).
I welcome the fact that the shadow Secretary of State has brought this debate forward. The comments made by the hon. Member for Glasgow South (Stewart Malcolm McDonald) were also very interesting, and there is no doubt that the team from Glasgow have very much argued the case for their city on this issue. I also welcome the speeches made by the right hon. Member for North Durham, the hon. Members for Dunfermline and West Fife (Douglas Chapman), for Barrow and Furness (John Woodcock) and for Glasgow South West (Chris Stephens), and of course my hon. Friend the Member for Torbay (Kevin Foster), who made an important speech highlighting the fact that we have to understand the context in which these decisions are being made.
The truth of the matter is that we did recommend a shipbuilding strategy and we commissioned a report from Sir John Parker. We have accepted all the recommendations of that report, and it is important to highlight that we have done that in full. The crux of this issue and of this debate may come down to the comments made by the right hon. Member for Warley (John Spellar). I thank him for his kind words. He said quite clearly that he had no problem whatever in companies based in the United Kingdom that are not owned or held in the United Kingdom competing for these contracts. That goes to the crux of some concerns that Government Members have about this motion, because it says very clearly that that contract should be offered only to “UK-only competition”. There is no definition of what that means, so the right hon. Member for Warley was probably discontented with the Opposition motion.
It is very clear that the Government are fully committed to supporting our defence sector. The shipbuilding strategy was not developed in order to avoid our support for the shipbuilding sector. The whole point was to ensure that we did support, in a coherent manner, a shipbuilding sector that would be competitive on an international basis, that would be able to retain the skills about which hon. Members have spoken so passionately, and that would allow the qualities of our shipbuilding sector to be understood and appreciated on a worldwide basis.
The Australian Government’s order of the Type 26 frigates in the SEA 5000 competition is an acknowledgment of the design skills that we have on the Clyde. It is also an acknowledgment of the confidence that the United Kingdom has in saying very clearly that we want to compete on an international basis and to offer our products on an international basis, and that we want to do so with a degree of confidence. We do not believe that the way forward for our shipbuilding sector is simply to say that every single vessel has to be built in the United Kingdom, because we are more ambitious for our shipyards. We want to see our shipyards winning contracts on an international basis.
I want to correct something. When I first stood at this Dispatch Box as a Defence Minister, I was told by the right hon. Member for North Durham that we had not sold a warship design in 40 years, so what made me think that we would start now? Well, we have. That is an indication of the fact that our strategy is working. It is working because we have confidence in our shipbuilding sector.
Mr Kevan Jones
The Minister is being economical with his quote, because it was not about design—it was about the export of a vessel, which we have not done since 1960. Does he envisage a day when we will be building French, German and Italian warships in UK yards?
Guto Bebb
I remind the hon. Gentleman of the comment by my hon. Friend the Member for Torbay: we won the contest to build OPVs for the Irish navy. Again, that seems to be ignored. I find it very odd that Members who claim to speak up for shipyard workers throughout the United Kingdom seem to dismiss our success in ensuring that we had that contract delivered for the Irish navy.
NATO
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Mr Kevan Jones (North Durham) (Lab)
NATO was one of the great achievements of the 1945 Labour Government. Its creation was pushed through by the tenacity and force of will of Ernie Bevin and Clem Attlee, who had both lived through two world wars—Attlee was wounded at Gallipoli. The creation of NATO was based on our party’s fundamental principles of international co-operation and internationalism, and on the idea of solidarity with other nations. Irrespective of the people who today try to rewrite history, the Labour party has never been a pacifist party. NATO was put in place with the idea that pooling resources to ensure that nations could come together and take a collective approach to defence was the way forward. That idea has passed the test of the past 70 years.
When NATO was founded, the threat was clearly the Soviet Union, as it was right up until the 1990s, and it proved to work well as a deterrent. There is a narrative that says that NATO is now somehow the aggressor. I ask people to cast their minds back to the late 1990s, when NATO was in the driving seat in respect of co-operation with the new Russian state, with the “Partnership for Peace” process and the NATO-Russia Council. People forget that at the 2000 Moscow summit, Putin actually suggested to Bill Clinton that Russia could become part of NATO. There was a great will to ensure that co-operation and peace could move forward.
We live in a very different world today, with a resurgent Russia. Not only is there the cyber-threat, about which Members have spoken eloquently, but Russia is re-arming in respect of its nuclear capability, naval capacity and long-range nuclear missiles. People might ask what NATO’s response to those threats is. Our response has to be the traditional one of preparation and solidarity, and we need to ensure that we have a united front against any threat, including that from Russia.
We saw in the press a couple of weeks ago the cynical, terrible situation whereby the new weapons that are being developed are being test-bedded on the people of Syria. Anyone who tries to tell me that that is a state that is going to look for a peaceful way forward need only ask the people of Crimea to see what its way forward is. The threats are different now, though, and it is not just about Russia; the threats include Islamist terrorism, failed states and, as has already been mentioned, mass migration and economic disintegration in parts of the world.
Our response has to include—I know that this has already been said—spending, modernisation and ensuring that we deal with the threats that we face, not just on the battlefield, but in cyber-space and in the media. The Russian threat is quite clearly designed in doctrinal terms to destabilise the western alliance and it is one to which we need to react. I think that we have been rather slow in reacting to it.
May I also add to what was said by the right hon. Member for Newbury (Richard Benyon) and my hon. Friend the Member for Bridgend (Mrs Moon) and make the case for NATO? Most of us who grew up in the cold war really knew what NATO was for. We need to re-emphasise the case for why we need it today—not as an aggressive alliance, but as a body that stands up for the values that we all cherish dearly and have fought for over many generations in this country. I also reiterate the point that Labour is a party that looks outwards, believes in international co-operation, is not pacifist, stands up to aggression where we see it and also works with other nations to ensure that peace and democracy, which we all take for granted, are preserved.
Several hon. Members rose—
Oral Answers to Questions
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Guto Bebb
I can confirm that the Type 26 project is going extremely well. The first blocks have been built, the steel has been cut and the first three ships have been named. The really important point, which was highlighted in a recent Westminster Hall debate, is the fact that the last apprentices to work on the Type 26 project have not yet been born. That shows the long-term commitment to shipbuilding on the Clyde that the Type 26 project represents.
Mr Kevan Jones (North Durham) (Lab)
The NAO estimates that, of the £9.6 billion shortfall in the equipment budget, £1.3 billion is for the new Type 31e frigate. Can the Minister assure the House that, in the autumn, the budget line for the Type 31e will be included in the financial summary?
Oral Answers to Questions
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Gavin Williamson
My hon. Friend makes a very important point about the international nature of our defence industry. We have to be looking more and more at how we can develop partnerships with international businesses and, when we are looking at procurement decisions, how we can deliver not just best value for the MOD, but the very best for jobs here in the United Kingdom.
Mr Kevan Jones (North Durham) (Lab)
What discussions has the Secretary of State had with the Treasury about the awarding of contracts? The Treasury takes the view that the lowest price is the best way forward but, in many cases, money will come back to the Treasury straightaway in tax and national insurance contributions, so should not that be taken into account when we award contracts?
Gavin Williamson
The hon. Gentleman raises a very thoughtful point about how we approach the whole defence procurement argument with regard to the real benefits to UK plc. We should start to look at this. There are different approaches in various countries, and Germany’s approach is quite different from the United Kingdom’s. We need to think about what lessons we could learn as a Government and what approaches we can adopt.
Ministry of Defence
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Sir Edward Leigh
That is an extremely good point, and if I have time I will deal with amphibious capacity later in my speech.
This is a real challenge. As Professor Malcolm Chalmers, deputy director-general of the Royal United Services Institute, pointed out in his evidence to the Defence Committee:
“While the MoD budget is set to grow by 0.5 per cent per annum over the next five years, national income (GDP) is projected to grow by an average of 2.4 per cent per annum over the same period.”
That means that the current Government commitments to defence spending imply that UK defence expenditure will fall from 2.8% of GDP in 2015-16 to 1.85% in 2020-21. I believe that Ministers need to come clean and make it clear whether they intend to abandon the 2% commitment, as seems to be the case.
Mr Kevan Jones (North Durham) (Lab)
I am grateful to the hon. Gentleman for giving way. He says that the Government are committed to a 0.5% increase, but does he agree that that is just on equipment, not personnel? Something like 55% of the budget goes on daily running costs and people, and that will be completely constrained if no new cash is put into the people side of the budget.
Sir Edward Leigh
That is an extremely good point, and I will come on to deal with the people side.
As the Defence Committee has pointed out, there appear to be some shenanigans going on in relation to how we reach the 2% target, and this is a really good opportunity for us to discuss money in detail and for the Minister to reply to these points. The criteria seem to change from year to year, with new bits—war pensions and other expenditure—qualifying when they have not previously done so. NATO is apparently satisfied, but this rather gives the impression that we are meeting our targets only by means of creative accounting, and when it comes to the defence of the realm, surely creative accounting is not good enough.
Let me say a word about procurement. What are our procurement procedures, and are we getting value for money? Professor Julian Lindley French testified, again to the Defence Committee:
“If you look at the $90 billion being spent by the Russians as part of their modernisation programme, the $150 billion or so being spent by the Chinese and what other countries around the world are doing, what strikes me is how few assets—both platforms and systems—the UK gets for its money.”
As a former Chairman of the Public Accounts Committee, I am talking not just about more money for the MOD, but about spending the money more wisely.
The MOD committed itself to new purchases arising from its 2015 strategic defence and security review before it established how they could be paid for. This requires the MOD to generate £5.8 billion of new savings from within the defence equipment plan itself, in addition to £1.5 billion from the wider defence budget, which is already under pressure. We never of course know what crisis may happen, and if a crisis happens and our troops have to be deployed, where will the money come from? In such a case, will we end up taking money from procurement that we had not expected to take?
Mrs Madeleine Moon (Bridgend) (Lab)
It is a great pleasure to follow the fantastic overview that the hon. Member for Gainsborough (Sir Edward Leigh) set out of the defence estimates. For Members who do not find themselves—as many of us do—becoming defence-obsessed, due to our concerns at the lack of funding being sent into the defence of this wonderful realm, it was a fantastic primer on the concerns that we must face as a country.
I want to look at the reserve forces, an area that the hon. Gentleman also raised. I declare a sort of interest as the chair of the all-party group on reserves and cadets. I recently met an academic from the University of Bath, Dr Patrick Bury, who has been looking at the progress of the Future Reserves 2020 plan, the main purpose of which was to provide direct support to a reduced Army and to increase the reserves to 35,000. Following the meeting, I rather upset a Minister in the Ministry of Defence, who received more than 100 parliamentary questions in the lead-up to Christmas. He took me aside to remonstrate with me for giving him so much work. I pointed out that if he had answered some of the questions the first time around, there might have been 50% less questions, but that is the way of asking and pursuing parliamentary questions.
The information I will speak to in today’s debate is all provided—sometimes reluctantly, but it was provided eventually—by the Ministry of Defence following parliamentary questions. I am deeply concerned that the expenses involved in Future Reserves 2020 not only show a programme that is struggling to achieve its goals, but are such that we need either to redefine or to look at whether the money we are spending, given the outcomes we are achieving, would be better spent elsewhere. We all know that the Ministry of Defence cannot afford to waste that expense. Every penny counts in the Ministry of Defence.
To provide context and make the costs clear, what is the current reserve structure? The reserve model means that Army reservists sign a contract in which they commit to achieving a certain amount of training time, and to achieving training targets over a financial year. That involves 27 days’ training, including a two-week continuous period away, which is known as annual camp. If the reservists achieve that commitment, they are considered to be fully trained and up to date, and ready to fulfil their role in supporting the Regular Army—in other words, they are deployable—and are rewarded with a tax-free bounty cash payment.
It goes without saying that, for a reservist to achieve a high level of practice and well-honed skills, they would need to achieve that minimum level of training. It is only 27 days. Many members of the armed forces parliamentary scheme spend more than 27 days in the armed forces and do not qualify to be reservists. They nevertheless give that commitment. Unlike those in the armed forces parliamentary scheme, the reservist is not compelled to complete their commitment to get their pass-out certificate. They have only to complete a minimum of 27 days. The only compelling desire is achieving the tax-free bounty.
We can therefore use that tax-free bounty as a useful way of assessing how many people in the reserves are deployable. It is possible to be an Army reservist without achieving any training targets in a financial year, so if we want to know about the Army reserves, we need to look at how many achieve their bounties. Let us look at the cost of the programme. The easiest way to calculate the cost is to look at the bounty payments combined with the number of reservist service days claimed over the past few years. I am making a general assumption. A basic private’s pay in April 2017 was £46.42 a day—some will earn more, and therefore my numbers might be lower, but I am giving the benefit of the doubt and working on the assumption that everybody gets the minimum payment.
In 2016-17, 1,008,290 reserve days were claimed, and 14,930 reservists qualified for their bounty. That resulted in a spend of £68 million—it was nearly £69 million. In the year 2015-16, 957,390 reserve service days were claimed, and 14,990 reservists qualified for their bounty. In 2014-15, 884,050 reserve service days were claimed, and 14,270 reservists qualified for their bounty. Therefore, despite the rising costs, and despite continual recruitment, the true number of qualified reservists has remained stable, at just less than 15,000. It is not just that we are failing to meet targets year on year, as pointed out by the hon. Member for Gainsborough, but we are not increasing our numbers of deployable reservists.
The wages and the bonuses are low.
Mr Kevan Jones
What my hon. Friend is describing is fascinating. Does she agree that Army 2020 was really designed to give the Government political cover in the light of the reduction of the Regular Army to 82,000? It is not just a question of the retraining days; it is a question of whether the 15,000 reservists to whom she referred can actually be deployed alongside regular troops. I am told that in some cases there is no joint training at all.
Mrs Moon
My hon. Friend is absolutely right. What we have here is a consistent pattern of only about 15,000 deployable reservists. Despite the money that has been poured into the reserve forces, we have not increased their number, but we have massively decreased the number of regulars. Our Army capability is therefore shrinking. That is something that we must be very worried about, but what worries me even more is the fact that we are spending huge amounts of money while receiving little or no return.
Mr Kevan Jones
I hear what the right hon. Gentleman says about civil servants, but the decision to cut the defence budget by 16% between 2010 and 2015 was not a civil servant’s invention. It was the political decision of the Chancellor of the Exchequer and the Government at the time.
Dr Lewis
Yes, and I will come to the issue of how we can use the percentage of GDP to track what has been happening to defence in a moment. I hope that the hon. Gentleman—a former Defence Minister in the Labour Government, of course, and a very good one—will try to be non-partisan about this for the simple reason that successive Governments are responsible for what has happened.
What actually took place was, as has already been hinted at, something that has been going on over a very long period. Colleagues on both sides of the House have heard me recite this so often that I am afraid they might do that terrible thing and join in, singing the song with me. But I will just run through it again. In 1963, the falling graph of defence expenditure as a proportion of GDP crossed over with the rising graph of expenditure on welfare at 6%. So we were spending the same on welfare and defence—6%—in 1963. In the mid-1980s, as we have heard, we regularly spent between 4.5% and 5% of GDP on defence, and that was the period when we last had an assertive Russia combined with a major terrorist threat—the threat in Northern Ireland. We were spending at that time roughly the same amount on education and health. Nowadays we spend six times on welfare what we spend on defence, we spend four times on health what we spend on defence, and we spend two and a half times on education what we spend on defence.
We have to ask what we mean when we say that defence is the first duty of Government. If it is the first duty of Government, it is a duty that is more important than any other duty, because if we fail to discharge it everything else is put in jeopardy.
Dr Lewis
What I am looking for today is agreement across the House that we recognise that we should not be having almost theological debates about whether we are just above or just below the 2% minimum guideline that NATO prescribes to its member states for defence expenditure, but that we have to get back to the level—at the very least—of what we considered appropriate for so long, right up until the mid-1990s, when the Labour Government came in, which was 3% of GDP.
Mr Jones
The facts do not bear out what the right hon. Gentleman is saying. According to the Library, the last time defence expenditure was 3% was 1993-94. After that, there was a 7% decrease in 1995, a 1% decrease in 1996 and a 5.7% increase the following year. The Labour Government came in, following the Treasury rules laid down by the previous Government, and in 1998 increased defence spending by 5.8%. The idea that the last Labour Government were following a trend that had been set is just not the case.
Dr Lewis
It depends whether the hon. Gentleman is talking about absolute figures or percentages of GDP spent on defence. In 2016, the Defence Committee produced a unanimous report called “Shifting the Goalposts? Defence expenditure and the 2% pledge”. We had the Committee staff use all available sourcing to draw up a definitive table of what had been spent on defence by Britain as a proportion of GDP over the past 50 years. The figures for the period we are talking about are: 1990-91, 3.8%; 1991-92, 3.8%; 1992-1993, 3.7%; 1993-94, 3.5%; 1994-95, 3.3%; and 1995-96, 3%. It then dips below 3% in 1996-97 to 2.7%, and thereafter it is down and down, with little blips here and there, until it is hovering around 2.5% because the cost of operations were included.
The point about all this is that we should not be arguing about who did the most damage. We should be agreeing about what we need in the future. If we are hearing a chorus of voices from the Labour Benches—it is music to my ears—saying that we have not been spending enough on defence and we need to be spending more, that is what we should be saying loud and clear to those people who seem to be perfectly content to spend the existing inadequate sums.
I do not wish to prolong my contribution, but I do wish to speak briefly about the equipment plan that was alluded to in some detail by my hon. Friend the Member for Gainsborough. The equipment plan of 2016 is for £178 billion over 10 years. That includes a small number—nine, which some would say was too small a number—of new P-8A maritime patrol aircraft, replacing a capability that was quite wrongly dispensed with after 2010. We are also supposed to be replacing 13 Type 23 frigates and supplying mechanised infantry vehicles out of this budget, and we are of course engaged in resurrecting carrier strike capability—another capacity that was temporarily lost after 2010.
The first report of the Defence Committee in the new Parliament was entitled, “Gambling on ‘Efficiency’: Defence Acquisition and Procurement”. The word “efficiency” was in inverted commas because we believe that the affordability of the scheme is predicated on an estimate of £7.3 billion of theoretical efficiency savings that are to be made in addition to some £7.1 billion that was previously announced. As we have heard, the National Audit Office thinks that the equipment programme is at greater risk than at any time since reporting was introduced in 2012. The truth of the matter is that we encounter black holes everywhere we look in defence. This brings me to my concluding point.
Vernon Coaker
There we go—that is the power of Parliament. That is the point I am making. We had the debate before and this was fiscally neutral. The original review—the national security and defence capability review, or whatever it was—was not set up by accident; the Government set it up, and defence was included in it. Parliament said that that was not acceptable, and the Government responded and took it out. We then said that it was not acceptable for that review to be fiscally neutral, and now the Government are saying that it will not be. Of course no one is saying that we should buy chariots or whatever—what we have has to be relevant to the needs that we face. Before, the process was budget-driven: it was a case of having whatever it needed to be in order to meet the budget requirement.
It is going to be difficult for the Government to do this when, for example, we are told today that, even in their response to the Select Committee’s report on the F-35 programme, they will not put a figure on what one F-35 is going to cost. Then the Government say, “We’re buying 138 F-35s—that is the current plan—and 48 will be F-35Bs, but we’re not sure what variant the other 90 are going to be.” How can the Government talk about being fiscally neutral in their plans when they could not say to the Defence Committee a couple of months ago what the cost of the F-35 is and they cannot tell us in their response published today either?
Mr Kevan Jones
It is not just the F-35. Much has been said in the past few weeks about the procurement of the new Type 31e frigate. There is no line in the defence budget for that. Likewise, the P-8, which is being trumpeted as a vital need for our maritime patrol aircraft—I agree—is not capable of delivering the sonar buoys or torpedoes that are currently being used, so there is added cost there.
Vernon Coaker
I completely agree with my hon. Friend. That is the point of the debate on estimates days. For the Minister to be able to say that we will have the capabilities that we need to meet the threats that we will face, we need to be able to say how much those capabilities are going to cost. My hon. Friend raised the issue of frigates; I am using the example of the F-35s. Cannot the Minister go back to the people who plan this and say, “We need some detail on these costs. Otherwise, how can we project forward what the equipment plan or any other plan is going to cost us?”
Mr Kevan Jones (North Durham) (Lab)
I congratulate the hon. Member for Gainsborough (Sir Edward Leigh) on his introduction to the debate. I agree with him that it is important to secure more such opportunities to discuss defence and how it is financed.
I do not think that anyone who follows the defence world and the way that the MOD has conducted itself over the past few years would conclude that the situation is anything other than dire. It is fair to say that the new Secretary of State realises that as well. There is also, however, a collective sense of acute amnesia, certainly among those who were Government Members in 2010, about how we arrived at this position. It is clear that the mess that the defence budget is in today is a direct result of policies taken by the coalition Government and the present Conservative Government. Seven years of ill-thought-through, rushed cuts and, on occasion, very bad decisions are now coming home to roost. The new Defence Secretary has the unfortunate task of sorting it out—a task that I do not envy, to say the least. It is therefore worth recapping how we have arrived at this position.
The Chair of the Defence Committee, the right hon. Member for New Forest East (Dr Lewis), said that these were not political decisions. They were political decisions that led directly to the mess we have today. To ignore that is to avoid the evidence and means that we will not learn lessons for the future for how we manage our nation’s defence. In 2010, the new Conservative-led coalition implemented a number of deep cuts to the armed forces. The right hon. Member for North Somerset (Dr Fox), the then Defence Secretary, justified them by claiming that the defence budget had a £38 billion black hole, which somehow meant that rash and direct action would have to be taken straightaway. No one knows how he arrived at £38 billion. I have asked Ministers in this House to explain it on numerous occasions. The NAO and the Defence Committee could not arrive at a £38 billion black hole either, but it was used in every debate as the reason why cuts to our defence budget had to be made.
The Government stopped using the figure after a while, when they realised they could not justify it. I think it came about from a clear misinterpretation of the 2009 NAO report on major projects started under the previous Labour Government. The report was a snapshot of cost increases in 2009 and related primarily to the Queen Elizabeth class aircraft carriers, the A400M transport aircraft and the Astute submarine programme.
Mr Jones
It was a deliberate strategy, in the Cameron-Osborne Conservative party, to ignore the facts and spin—“If we keep saying it long enough, people will believe it.”
The 2009 NAO report said that if the equipment budget was not increased at all over 10 years, it might be possible to arrive at a figure of £36 billion. How did they then get an extra £2 billion? I think the then Defence Secretary just added some personnel revenue costs to get to the £38 billion figure. What the report actually said, however—this point was completely ignored—was that the scenario it envisaged, of the budget remaining constant in real terms over the 10-year period, would lead to a £6 billion funding gap, which could have been managed over that 10-year period.
My hon. Friend the Member for Bridgend (Mrs Moon) is right. The impression was given to the public, and to everyone else who wanted to hear this spin, that the £38 billion had to be found in year straightaway. That was a clear fabrication. We know that, because when the current Chancellor became Defence Secretary, following the resignation of the right hon. Member for North Somerset after two years, he suddenly announced that the black hole had disappeared. I do not know whether he was auditioning for his current job as Chancellor, but the idea that it is possible to get rid of a £38 billion in-year black hole in the defence budget in just two years is complete nonsense.
The Conservative Government used that as a smokescreen to allow them to cut the defence budget, as part of the Chancellor’s austerity drive, by 16%. The effect of that has been some of the decisions referred to earlier on, including the scrapping of capability such as Nimrod. Making people compulsorily redundant in our armed forces was completely inexcusable. Certainly, if the Government I was a member of had done that when I was a Defence Minister, we would have been rightly decried by the people who are always arguing for defence. Those decisions have had an impact on what is happening today. My hon. Friend the Member for Gedling (Vernon Coaker) referred to the increased expenditure on the Trident programme. The £1.2 billion to £1.4 billion in additional costs happened because that decision was delayed. The deal done by the then Prime Minister David Cameron to get the Liberal Democrats on board in coalition delayed the programme, which built in costs.
Mr Jones
The right hon. Gentleman is nodding. He and I kept raising that and asking why that decision had not been made. The costs arriving now are because of the decisions taken by the coalition Government. I accept all that has been said about increased defence expenditure, but we cannot get away from the core decisions that have led to the problems we have today.
The 2015 pre-Brexit strategic defence and security review announced an additional £24.4 billion spending on new equipment. Some of that, for example on the P-8, was to fill the gap the Government created in 2010 with a hasty decision to scrap the Nimrod. Reference was made earlier to the civil service making decisions. I am sorry, but it was not civil servants or generals making those decisions; it was Ministers making these decisions, including the right hon. Member for North Somerset and the current Chancellor, when he was Defence Secretary. They decided to reduce the size of the Army to 82,000. I asked a retired senior general, “Who came up with the figure of 82,000 for our armed forces?” He scratched his head and said, “We were just told that that was what the figure was going to be to fit the cash envelope.” We then had the construct of Army 2020, which is a complete political cover, to try to give the impression that we are going to keep the Army at nearly 100,000. As my hon. Friend the Member for Bridgend very eloquently outlined in her contribution to the debate, that is not only not producing the additional personnel required, but is actually costing more than if we had not done that in the first place.
Another point about the 2015 review is that, again, hasty decisions were taken in ordering the P-8. There is a gap, created by this Government, in maritime patrol aircraft. The P-8 was to be bought off the shelf—the Apache contract was announced at the same time—from the United States. That was pre Brexit. The added costs in foreign currency exchange are now creating pressures on the defence budget, and that is before we look at the effect on the economic and industrial base of our country. It may seem an easy option to buy off the shelf from the United States, but that lets our own industrial base decline, and that is what is happening. I have not yet seen any meaningful commitment by the contractors, Boeing, to create real jobs in the UK. What angers me is that if it was the other way around and we were selling equipment to the United States, we would be unable to do so without a clear commitment to jobs and investment in United States industry. That is where the MOD woefully and shamefully let down the British economy.
Mrs Moon
My hon. Friend will not be surprised to hear that during a visit to the Boeing factory in Charleston three weeks ago, I asked Boeing whether it regretted taking action against Bombardier and almost damaging and destroying the economy of Northern Ireland. Its response was, “We’re American, it’s what we do. It’s America first, second and third.” That is the sort of company that we were putting our trust in.
Mr Jones
It is. As an example, we have to look only at the sale of Airbus in the United States market. As part of that deal, it had to build a plant in Alabama, I think. We have the mindset in this country that somehow the ticket price looks cheap, but we are not thinking about the loss in tax revenue going back to the Exchequer and the fact that the defence industrial base is suffering.
Some decisions in 2015 were very strange. The Navy has been mentioned, and I accept that naval platforms are far more capable than they were 10 or 20—and certainly 50—years ago, but people are fixated on the number of hulls. The Government came up with the novel idea of having a cheap alternative through the Type 31e. This was literally just to deal with the idea that we have a certain number of hulls. I asked what the Type 31e is capable of doing. It cannot do NATO tasks and it is not clear what weaponry will go on it. Lo and behold, when I looked at the Ministry of Defence budget, I saw that there was no budget line for it at all—it has a £1.3 billion price tag on it—so again, how will it be paid for?
The Secretary of State needs to look not just at asking for more money, which the budget clearly needs, but at some of the ill-thought-out decisions. Take the P-8, for example. Buying off the shelf from the United States might look like a simple solution, but as I understand it, sonar buoys and missiles cannot be fired from the P-8 as it is configured, so we will have to redevelop the programme, adding more costs in. This is about looking at whether we have to revisit some decisions and take things out of the budget. I think that will be the case if we are to fit the budgets,
The issue of numbers is always contentious. When we were in government, I remember the hue and cry from the Conservative Front-Bench team—the right hon. Member for New Forest East was part of it—when we froze training days for the Territorial Army. The cost was £20 million. From looking at the headlines and at the way some Conservative politicians were going on, one would have thought that the world had stopped. If a Labour Government had slashed the defence budget by 16% and sacked people or made them redundant, as this Government have, they clearly would have been condemned.
It is the same old story. I understand the point that the right hon. Member for New Forest East made about arguing for defence—I have argued consistently for it in this House—but these are political decisions. When I was in the Ministry of Defence in 2010, I did not hear Conservative politicians stand up and say, “No, we do not need extra expenditure.” We were being condemned because we were not spending enough. In 2010, I did not see a single poster or anything in the Conservative manifesto saying, “We are going to slash the defence budget by 16%,” but these are the real facts and we cannot ignore them.
Let me turn to recruitment, which my hon. Friend the Member for Bridgend touched upon. I do not like to say, “I told you so,” but the decision on the Capita contract for recruitment was criticised at the time. My hon. Friend the Member for Gedling raised complaints, asking why armed forces personnel were being taken out of recruitment centres and why such centres were being closed in some areas. The position we find ourselves in now was bound to happen. We have heard some of the stories. The recruitment process is not only taking a year, but given the rate at which people are being failed, it is no wonder the Government are not meeting the targets. It is now time to revisit the contract and put uniformed personnel back into recruitment centres. The Capita contract should be scrapped, because it is completely failing to deliver what was outlined.
My hon. Friend the Member for Bridgend talked eloquently about reservists. It is time to rethink Army 2020. It was never going to work. It was political cover so that when the Government were cutting the Army to 82,000, they could still give the impression that they had an Army of more than 100,000. The issues my hon. Friend raised are not the only concern. I have never had an answer to the question about how we get formed units. How do we get training whereby regulars and reserves can train side by side to go on operations? I have not seen any evidence that that is happening in practice. If, in addition, it is costing what my hon. Friend says it is, it might be time to revisit it and see whether those resources can be put elsewhere. Let us come back to the suggestion that Ministers were asking advice from the Army about this. They were not; it was a political decision imposed on the Army.
Mr Francois
Before the hon. Gentleman moves on from recruitment, may I ask whether he accepts that the other main problem with Army recruitment is the very large number of people who are being failed on medical grounds, often for very minor medical ailments that date back to their childhood? For instance, in the year to February 2017, some 10,600 people—both regular and reserves—who wanted to join the Army were told, “No, you cannot join on medical grounds.” At the same time, the regular Army was 3,000 recruits short. Does he believe that the MOD should look at that area again?
Mr Jones
That situation was predictable when the system was set up. What is worse, I have heard stories about young people who have nearly got to the end of the selection process but do not get called back in, but then get a telephone call from some Capita call centre saying, “I’m sorry, you’ve failed. That is it.” I am sorry, but that is not the way to treat people who have tried to join the armed forces.
The right hon. Member for Rayleigh and Wickford (Mr Francois) makes a good point. When we had senior non-commissioned officers stationed in recruitment offices, they could work out how to handle the recruits and use their breadth of experience to explain what life in the armed forces is like. This situation could have been avoided. Unless something has changed radically in the last few years with injuries, I agree with the right hon. Gentleman. I had case in which someone had a childhood knee injury. That person had to wait six months for a decision and then the knee injury was flagged up as the reason why he could not join the armed forces. That cannot be acceptable.
Mr Sweeney
To give a personal example, I joined the Territorial Army back in 2006 with a good friend, who went on to serve in Afghanistan. He left the reserves and when he sought to rejoin, he was disqualified on medical grounds. That is someone who had actually served in Afghanistan and who did not have any obvious injuries.
Mr Francois
I am sorry to hammer the nail, but this is very important, and we have the Secretary of State on the Front Bench at the moment to hear this. Is the hon. Gentleman aware that in some cases, people have been failed and prevented from joining the Army for relatively minor issues such as asthma? Paula Radcliffe and Sir Chris Hoy would have failed on the same grounds.
Mr Jones
That prompts the question, “How are the tests being done, what criteria are being used and how are they being interpreted?” The problem is partly that if we have a civilianised and, as it has been described to me, bureaucratic, tick-box process, common sense does not kick in, and perhaps common sense is what we need as well.
The problem is that we need to look at the size of our armed forces from a strategic point of view. What do we actually need? A decision was taken suddenly that the answer was 82,000—the Army was told that that is what it would get because the budget required it—but we need to look at the strategic needs of our armed forces. Members of the Royal Navy are under severe pressure in terms of deployment. With smaller numbers, there is a bigger turnover of individuals. In addition, people are doing constant back-to-back tours, which is not good for morale or family life. If that is happening, the chances of people staying long term will clearly be affected.
We need to look at our Navy. The idea that we have a Navy that cannot deploy and that we have ships that are laid up—my hon. Friend the Member for Gedling said that we are not deploying ships—is a damning indictment. The sight this week of HMS Mersey, an offshore patrol vessel, escorting three Russian vessels through the English channel summed it up in one. We need to think seriously about what we need. The hon. Member for Gainsborough said that we are a maritime nation, and that it is about not just kit, but people.
Vernon Coaker
My hon. Friend makes a good point. If we do exactly what he says, we will be in a ludicrous position. We will be saying, “To facilitate scrapping Albion and Bulwark, we will modify our aircraft carriers,” which takes us into the realms of never-never land. What does that mean? We are not going to do a beach landing from an aircraft carrier. We might have a few more helicopters or a dry dock facility, but the idea of carrying out an amphibious landing from an aircraft carrier belies the point of having amphibious craft, which is to land on beaches and lay marines off on them.
Mr Jones
I do not disagree with my hon. Friend, but that goes to the point—this was the problem back in 2010—of the Treasury being let in the door of the MOD, and being in control and in the driving seat. When I was a Minister, I chaired the finance group in the MOD when we were looking for savings and dealing with the Treasury. I know exactly what Ministers are dealing with. The Treasury does not understand the value of our armed forces and how they operate. I am glad that the Secretary of State seems to have wrestled control of that element back. If our defence policy is determined by Treasury figures, we will have very strange decisions that will not match strategic needs.
We keep hearing from the Government that they are meeting the NATO 2%. As someone who is committed to NATO and who supports it—I am a member of the NATO Parliamentary Assembly—I can say that that is an academic argument. It is important in that we are trying to get people to spend a minimum of 2%, but it is also important to look at what our NATO partners spend that 2% on. It is clear that the Government have rejigged the figures. I am not saying that they have done something illegal or anything like that, but in 2015, they changed how defence spending was calculated. War pensions of £820 million were included; assessments of contributions to UN peacekeeping of £400 million were included; and the pensions of retired military personnel, which was another £200 million, were included. The thick end of £1 billion of that 2% is made up of things that the hardiest defender of Government policy would not think were frontline defence commitments.
It is about being realistic. It would be fine if we were spending only 1.8% on defence but spending it on the right things. There is a case for increasing the defence budget—that argument was made by the right hon. Member for New Forest East and by my hon. Friend the Member for Gedling—but we need to do it by setting strategic objectives that show why we need more than we are spending. There is also an onus on the MOD to ensure that what it is spending is not only efficient, but provides value for money for the taxpayer.
All hon. Members who have contributed to this debate have said that our armed forces are universally and rightly held in the highest regard. I agree, but it is not just national sentiment; it is because they are vital for our nation’s security and because they define our place in the world. I do not think for one minute that the new Secretary of State or his ministerial team lack commitment to the armed forces—they are all committed to defence and want to do the best for our armed forces, so I wish them well in the battle they will have with the Treasury—but without new money or a radical rethink about the commitments we ask our armed forces to fulfil, I fear for our forces’ future, and more importantly for Britain’s place in the world.
Mr Kevan Jones
Does my hon. Friend agree that when equipment such as ships is being ordered, the payback to the Exchequer in tax should be taken into account and the jobs should not be exported?
Mr Sweeney
Absolutely. My hon. Friend has made an excellent and salient point. He and I are both members of the all-party parliamentary group on shipbuilding and ship repair, which is currently undertaking a study of that issue. According to another study, conducted by the Fraser of Allander Institute at the University of Strathclyde, the overall benefit to the UK economy per annum from the shipbuilding industry on the Clyde alone is £366 million a year, in purely multiplier effects. As for the idea that we can competitively tender programmes overseas, we are losing the opportunity of industrial benefit as well. We are not just talking about the loss of core capabilities; we are talking about the loss of revenue and economic potential for our country.
Andrew Bowie (West Aberdeenshire and Kincardine) (Con)
During this debate, the subject of how much we should spend on defence and what we should be spending on has taken up a lot of the time, as is only right in an estimates day debate. I want to take this opportunity to put on record my agreement with the sentiments expressed by, among others, my hon. Friend the Member for Gainsborough (Sir Edward Leigh), the hon. Member for Bridgend (Mrs Moon), my right hon. Friends the Members for Rayleigh and Wickford (Mr Francois) and for New Forest East (Dr Lewis), the hon. Member for Gedling (Vernon Coaker), my hon. Friend the Member for Angus (Kirstene Hair), and the hon. Members for Chesterfield (Toby Perkins), for North Durham (Mr Jones) and for Glasgow North East (Mr Sweeney). Simply put, I agree that more needs to be spent on the defence of our nation, and that the continued speculation about cuts to capability and manpower not only weakens us in the eyes of our allies, but does untold grievous damage to the morale of our men and women serving today. I also want to mention something that has not been touched on this afternoon. I pay tribute to my hon. Friend the Member for Plymouth, Moor View (Johnny Mercer) and others for their tireless campaign to get more help and investment into mental health support for serving personnel, and to the MOD for the announcement this weekend of the creation of the new helpline operated by Combat Stress.
Today, however, I want to raise something different, which I estimate would cost the UK Government very little money at all. All Members are aware of the current problems in recruitment to the armed forces. I know that a great deal of time and effort is going into revamping and modernising the recruitment process and the new recruitment campaign. However, there is one group of people that, apart from in the rarest of circumstances, is very unlikely to be found in the ranks of the Army, the Navy or the Air Force: subjects from the British overseas territories. These territories are British by choice and their residents are British subjects. However, despite being loyal citizens and holders of a British passport, and being fit and able and willing, individuals are still ineligible to serve in the armed forces of this country unless they have resided on the British mainland for five whole years.
Let us put that into perspective. That means that an 18-year-old Falklander or Gibraltarian who wanted, like his compatriots on these islands, to have a rewarding career in the armed forces would be forced to move to the UK mainland and live, and presumably work, here until the age of 23 before being eligible to join up. Some might argue that, for example, the Royal Gibraltar Regiment and the Falklands Island Defence Force give the chance for rewarding careers in the armed forces for citizens of overseas territories, but if they wanted to join the Royal Navy, the Royal Marines, the Air Force or any regiment in the regular British Army they would be prevented from doing so for five whole years simply by virtue of not residing in these islands long enough. I put it to the House that that is not only daft, but is borderline discriminatory, and it is doing our loyal subjects in our overseas territories a huge disservice, and denying our armed forces willing volunteers at a time when we are struggling to fill the books.
Mr Kevan Jones
I am listening carefully to what the hon. Gentleman is saying, and I have no problem with it, but it was his own Government when they came into office in 2010 who turned off the pipeline of recruits from the Commonwealth. If he wants to increase the numbers and “fill the books”, as he said, there is an easy option in terms of Commonwealth recruits.
Andrew Bowie
I agree. That was a decision of my party and the previous coalition Government, and I am taking action on it with the hon. Member for Plymouth, Sutton and Devonport (Luke Pollard); he asked me to join him in attempting to change the situation, and I was only too keen to assist.
This is simply an unfair situation, so in late November the hon. Gentleman and I wrote to the Home Secretary expressing our hope that something might be done to arrest this wrong. We received a reply from the MOD, which was welcome of course, saying it could not do anything as this was a Home Office policy. We knew that, which is why we sent the letter to the Home Office. It obviously feels it has enough on its plate to be dealing with just now, which is understandable, but the fact is that this is not a tricky issue to solve; it requires a minor tweak, and it has precedent. Until 2006, citizens of British overseas territories had to pay “overseas” fees at British universities. In 2007, however, due to the fact that overseas territories do not have their own higher education institutions, the Government brought in legislation equalising the levels of tuition fees, so that now at British higher education institutions a student from Stanley will pay no more than a student from Southampton.
Surely it is possible to do something similar for those young people who want to serve their country in the finest armed forces in the world. In this 100th anniversary of the end of the first world war, a conflict that saw thousands of young men from across the then empire volunteer to fight for this country—76 from the Falkland Islands alone—we should do honour to those who fought under our flag by righting this wrong.
We have heard many times this year that Britain is charting a new course in the world, re-establishing relations with allies old and friends new. What better signal to send to the outside world that this truly is a “global Britain” than granting citizens of our overseas territories the same rights as citizens living on these islands? What better way of honouring the commitment to this country of citizens of our overseas territories throughout the years than by removing this residency requirement and allowing British subjects, wherever in our global family they reside, to serve without restriction in the armed forces of this country?
Stewart Malcolm McDonald
I am grateful to my hon. Friend. I would hope that such a model could avoid some of the incredibly alarming passages in the NAO report, which have been highlighted by many right hon. and hon. Members. There is a funding hole in the equipment plan of up to £20 billion. To make that clear, that means that we cannot afford to buy the equipment we say we need in order to keep us safe.
I give all the weight I can to the Ministry of Defence in trying to get it the money that it needs—if not just to stand still, then certainly to move forward—but I do have some criticisms of how the Department has managed to get into this position. Why were the exchange rate projections so badly out—by up to a quarter in some cases?
Stewart Malcolm McDonald
I understand that that was what caused it, but how did the MOD manage to get the calculations so badly wrong? When there is a funding hole of £20 billion just in the MOD’s equipment spending—before we get to estates, personnel and all the rest of it—why is no one being hauled over the coals? I cannot think of another Minister or Department that would be allowed to get away with that, but it is due to a fundamental problem in how this Government, this Parliament and Governments over many years have decided to fund defence. It needs radical change. Even if the solution that we think might be helpful is not the perfect solution, something has to give, because the situation is unsustainable. The NAO is clear that the result is that projects must be cancelled, delayed or scaled back. I therefore ask the Minister to make it clear to the House which projects are to be cancelled, delayed or scaled back. Can we have a guarantee that not a single project in Scotland will be cancelled, delayed or scaled back, because that is the road that the NAO says the UK Government is heading down?
The situation adumbrates the need for a new SDSR—one that takes account of the change in currency fluctuations and of the fact that Britain will no longer be in the European Union. Our current security policy is based on our being members of the EU, so we need a new one that takes account of the fact that we are coming out, because that undermines operational capability.
Mr Ellwood
I can say it again and I think I am going to say it a bit later, because it is in my speech: I am happy to confirm that it is not fiscally neutral. That is exactly why we are doing this. I am not saying this just because the Defence Secretary is in his place, but the first thing he recognised was the fact that the capability review was fiscally neutral and it was prohibiting us. We saw a lot of the stuff that came out in the media and so forth. The challenges that that would have imposed on our armed forces were exactly why there was a requirement to look in more detail at what our armed forces are doing. We now have that opportunity and we have to make the case as to what changes we need, what our defence posture is and how we move forward—
Mr Ellwood
I am not going to give way again. If I may, I will make some progress.
Let me make it clear that this approach will allow us to deliver a better understanding of the implications of the new threats. It will confirm what conventional capability is critical and it will place the MOD on a more sustainable, affordable long-term footing, optimising our relationships with the private sector.
Mr Ellwood
I am not giving way at the moment. As I have said, as has the Defence Secretary, the programme is not fiscally neutral. It allows us to expand and propose changes. It will assess the capabilities and the force structure we need to deal with the threats the UK faces. We will then consider the implications for funding.
When the Prime Minister, the Chancellor and the Defence Secretary met in December to confirm a way forward on the national security capability review and the defence modernisation programme, it was agreed that no changes would be made to our capability until the modernising defence programme was complete. With one eye on next year’s 2018-19 budget, I very much hope that that is still the case. The requirement for the defence modernisation programme is making sure that we understand the financial pressures affecting defence and looking into the future. If it is not the case, there would be no requirement for a defence modernisation programme. As the Deputy Chief of the Defence Staff for Military Capability told the Defence Committee last week, we are, unfortunately, seeing cuts to training exercises and
“a general suppression of some force generation across…frontline commands”
I stress that this is being managed without affecting prioritised units which are heading on operations, but if units are not training, it builds up a backlog of diminished capability.
Another issue raised in the Defence Committee last week related to the National Audit Office report on equipment, which cited a £20 billion deficit over the next 10 years. I make it clear that that makes some significant assumptions of risk, many of which will not be realised, and does not factor in the efficiency recommendations that the defence modernisation programme might make. Nevertheless—
Mr Ellwood
I am sorry that the hon. Gentleman does not listen to what I am saying, because it is important and pertinent. Perhaps he can hold on to his seat for a second and allow me to finish this important point about the NAO report. Is that okay with him?
The NAO report does not factor in the efficiency recommendations, but nevertheless we must acknowledge the financial pressure on our equipment programme. As has been mentioned, there are also new and emerging factors, such as cyber, space and complex weapons upgrades. We must respond to them all, which of course adds to the bill.
Mr Jones
I am grateful to the Minister for giving way. He says that this is fiscally neutral. He knows what the problem is now—[Interruption.] What was agreed in 2015 was fiscally neutral. It was unachievable because the efficiencies were unachievable and the land sales were unachievable. That is not my opinion; that is what the former Secretary of State, the right hon. Member for Sevenoaks (Sir Michael Fallon), said. If we know that, we know that in reality the only way that we can fix this is with more cash.
Mr Ellwood
The hon. Gentleman should refer back to Hansard to understand what I have actually said. I shall make some progress.
Armed Forces (Flexible Working) Bill [Lords]
Lord Beamish ExcerptsMonday 29th January 2018
(6 years, 9 months ago)
Commons ChamberRead Full debate Armed Forces (Flexible Working) Act 2018 View all Armed Forces (Flexible Working) Act 2018 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Consideration of Bill Amendments as at 29 January 2018 - (29 Jan 2018)
Mr Kevan Jones (North Durham) (Lab)
Does my hon. Friend agree that the reason why the female intake is so important is that we have a pretty atrocious record of females getting to senior positions in all three services? If we are to change that, we need young women joining now.
Gerald Jones
My hon. Friend is absolutely correct, and I wholeheartedly agree with him.
This highlights more than ever that active steps need to be taken if we are to reach the targets that are in place. The new advertising campaign for the Army is a good example of that. In spite of the negative reaction in some parts of the press, we welcome this new campaign and think that it is quite right that the Army does not limit its recruitment pool, but looks to get the best people from across society.
Toby Perkins
I could not agree more with the hon. Gentleman. I am too much of a traditionalist to call him an hon. Friend in this place, but he knows I call him a friend elsewhere. I agree entirely with what he says about the importance of locality. We could have a wider debate about whether the Sherwood Foresters should have been put into the Mercian Regiment. When I was on the armed forces parliamentary scheme, we talked about our local regiments, and it became clear that the Mercian Regiment is considered to be the local regiment for people over an incredibly diverse geographical split.
All the more reason, therefore, where information about the original home address of all the new recruits clearly exists, for that information to be made available. That would enable MPs to be part of the programme of trying to drive recruitment and to take pride in the level of recruitment in their area. Just imagine, if we had three MPs all within a few recruits of each other as we approached the end of the year, how much we could be driving such a programme. It would be a real force for good.
If geographical challenges were thrown up in relation to communities—religious or race communities—or areas where the Navy or the Air Force particularly recruit, and the figures were available to all of us, it would put positive pressure on the Government to take action on such things. We talk about diversity, and it seems to me that this is one of the ways in which we could drive it. To sum up, I would be very interested if the Minister would consider the idea of making the information that currently exists publicly available.
Mr Kevan Jones
As I said in Committee, I broadly welcome the proposals. At the top of the armed forces and obviously at ministerial level, there is a recognition that society is changing and that if we are not only to attract people to the armed forces but to retain them, we need flexibility in the way in which they are employed.
The new clause moved by my hon. Friend the Member for Merthyr Tydfil and Rhymney (Gerald Jones) is very clear, and I cannot understand what the objection to it could be. We need to ensure that one of the main aims of flexible working is to attract more women into our armed forces, but without being able to monitor that through the Department producing reports, I am not sure how we can gauge whether it is a success. The Minister may say that we could rely on tabling parliamentary questions, but I have to say that the quality of the answers from the Department recently has not been great, and it takes two or three attempts to elicit any answers. I do not see anything wrong with how the new clause is structured. It is a matter of making sure that we monitor what is going on.
The same applies to the new clause tabled by the hon. Member for Glasgow North West (Carol Monaghan). The other side of this issue is about knowing why part-time or flexible working is refused. In other workplaces, people refused this type of thing have a course of redress. It is important to be able not only to see whether flexible working proposals are being used, but the reasons why they are not being implemented, which could lead to a lot of dissatisfaction. It will be important to have some oversight to ensure that we know if, for example, people leave because at a certain level in the Army or other armed service they decide that they do not like it.
On the broader issue of armed forces recruitment, my hon. Friend the Member for Chesterfield (Toby Perkins) raised some interesting points. We are failing on recruitment, and the MOD is now reverting to the usual answer, which is to say, “The reason why we are not attracting people is the economic upturn and we are in a very competitive environment.” That is an old chestnut, and I think I even used it on some occasions when I was a Minister. I am sorry, but that is not the reason. The fundamental issue is that the privatisation model used for recruitment has failed and, as was mentioned earlier, it has also broken the link to local areas.
My hon. Friend the Member for Stoke-on-Trent North (Ruth Smeeth) raised the important point that flexible working is part of a bigger package, which is not only about career opportunities for individuals, but about accommodation. In Committee and when we debated the Bill previously, the Minister talked about the future accommodation model. I must say that he is going to have to get on with it, because anyone who reads today’s National Audit Office report on Annington Homes will find that it does not make for very pretty reading. This was one of the worst decisions ever taken by—I have to say—a Conservative Government in 1996, and the legacy it leaves for not just this Government but future Governments is quite frightening.
Ministers think that the future accommodation model is the way out, and I hope it is, but it will have to be done creatively. To look at one statistic alone in the report, if the discount the MOD currently gets is reduced from 58% to 38% when it comes up for renegotiation in 2021, that will cost the MOD and the taxpayer an additional £84 million from a budget that is already very restricted. There will have to be some very creative thinking about how to extract the Government from that contract, but it should not be done at the expense of servicemen and women who rely on accommodation as part of their package. As I said in Committee and the last time we discussed this in the House, I am not opposed to a new accommodation model, but there are two issues: one is that it will take time to introduce; and the other is that it will cost money.
I do not know whether the issue of accommodation will be a priority in the current MOD review, but I ask Ministers to consider it an important part. As my hon. Friend the Member for Stoke-on-Trent North rightly said, we concentrate a lot on equipment and it is quite right that we should have the equipment that people need. However, we can have all the equipment in the world, but if we do not have skilled, highly trained personnel behind the equipment—if we do not retain people and keep them, and more importantly their families, happy—we are not going to be successful.
To finish, I would urge that personnel are seen as an important integral part of our defence effort, and nothing should detract from that. The Government have created their own mess with the budget for it. I wish them and the Defence Secretary well in trying to sort this out and in pleading for more money from the Treasury. The current Chancellor was the Defence Secretary when some of these decisions—chickens that are now coming home to roost—were taken. At the end of the day, these are the people we rely on to keep us safe, and the men and women of our armed forces and their families are the ones we should always bear in mind.
The Parliamentary Under-Secretary of State for Defence (Mr Tobias Ellwood)
It is a pleasure to be in the Chamber for the Report stage of the Armed Forces (Flexible Working) Bill and to see again right hon. and hon. Friends and colleagues who have been on this journey from the very beginning. I have listened carefully to those speaking in support of new clauses 1 and 2 and amendment 1, which I will come on to specifically in a moment. Lots of views have been put forward that are technically beyond the scope of a Report stage, but that does not prevent hon. Members from raising such points, which are all valid. It reflects the House’s commitment to understanding and indeed scrutinising defence matters as a whole, as well as matters being considered on Report.
There has been much talk about recruitment on a geographical basis and understanding the numbers. I am pleased to be joined on the Front Bench by my right hon. Friend the Minister for the Armed Forces, who is responsible for this issue and is looking at it very carefully indeed. I say this as a former infanteer. The history of our armed forces—indeed, the Army—across Britain varies depending on whether the unit in question is a corps, a service, or indeed an infantry regiment. There are some huge and wonderful geographical connections, including with my own regiment, the Royal Green Jackets, going back to the Rifles and the Ox and Bucks regiment and so forth. Then there is the RAF and the Royal Navy, which recruit nationally.
Mr Ellwood
My hon. Friend, if I may call him that, makes an important point. I had the opportunity to visit Belfast recently for Remembrance Day, which was very moving indeed, and I know that the Minister for the Armed Forces is to visit Belfast shortly.
Let me turn to the group of new clauses and amendments we are debating. I welcome the opportunity to speak again about whether there is benefit to imposing a statutory requirement to evaluate and report on the impact of the new flexible options on the armed forces. The size and strength of our armed forces is of course important. It has been a recurring theme in recent debates, most recently in Westminster Hall. I congratulate my hon. Friend the Member for Aldershot (Leo Docherty) on securing that important debate, and I pay tribute to all who contributed. The Minister for the Armed Forces said in that debate that we must do everything we can to persuade our young people that the armed forces remain a great place to work.
Recruitment remains a challenge for the armed forces, as has been reiterated today. We face strong competition from other employers. We acknowledge that, but we also acknowledge that we can do more to encourage our people to stay, so that we do not lose their valuable skills and experience. That is why we are responding with a range of short and long-term initiatives to ensure that the offer of a career in the armed forces remains competitive. This Bill will help by enabling us to make the changes necessary to enable our armed forces to work flexibly, reflecting the realities of modern life.
The amendments and new clauses in this group revisit the theme of placing various obligations on the Ministry of Defence to publish reports on the effects of flexible working measures on the armed forces. These measures involve a major change of approach to the terms under which some of our brave armed forces serve this country and are an important part of how we modernise our armed forces. The changes are as important as some of the other modernising steps taken in recent years, such as our change in policy on homosexuality, introduced in 2000, and our decision in 2016 to allow women to serve in close combat roles. The measures we are considering are another positive step in the right direction and are aimed at making serving in the armed forces a more attractive proposition, both for those who already serve and those considering serving.
What we propose in this Bill lies at the heart of our armed forces covenant. For that reason, Earl Howe committed during the Bill’s passage through the other place to report on the impact of the new measures in future armed forces covenant annual reports. I commend this to hon. Members as an appropriate place for reporting on the impact of the new measures. Indeed, the latest report, published in late December 2017, trailed the introduction of the measures in this Bill. In debates and in the information we have published, we have been clear that the introduction of these measures is not a silver bullet that will instantly resolve the recruitment and retention challenge that we face—and that the hon. Gentleman who is about to intervene has raised.
Mr Kevan Jones
The publication of that information is obviously a welcome step. The Minister says that the report will talk about progress, but will it produce the statistics or, more importantly, the numbers declined and the reasons for that, as would be required under new clause 2? If the good intentions behind this Bill are not followed through, we could have people declined flexible working, which could lead to more disenchantment rather than success.
Mr Ellwood
If I may, I will come to how we recognise and acknowledge the impact of the Bill, which I think will answer the hon. Gentleman’s question.
We believe that these measures, along with a range of others that the Department is introducing, will impact on recruitment and retention, not immediately but in the longer term. We should also be clear that we are competing with other, wider societal factors that are affecting our ability to recruit and retain, such as record youth employment and a smaller number of 16 to 24-year-olds entering the workforce over the next few years. This is an ongoing journey of change, which will be undertaken at a steady rather than a high-speed pace, against a background of continuing societal change. However, we fully recognise the importance of maintaining effective metrics following the introduction of these measures, to enable us to judge how well they are working and whether we need to make other changes.
Mr Ellwood
My hon. Friend makes an important point, which I will perhaps touch on in more detail on Third Reading, when we come to it. It is important to recognise that the conduct of wars is changing. The type of people we need to recruit is also changing, and he gives an excellent example of the need for us to improve our cyber-capability. A great example of that is not necessarily to train in-house, but to recognise that there are high-end skills in the civilian sector that we can introduce through greater use of reservists.
Mr Kevan Jones
Let me ask a clear question: what is the resistance to producing these statistics? The Minister talks about a matrix, whatever that means in civil service-speak, but this is a pretty straightforward question.
Mr Ellwood
It is a straightforward question, and I did tell the hon. Gentleman that I would get to it shortly. I then gave way to another Member and he asked me the same question again. If I can make a little progress, before he asks me a third time, I am sure we will get to where we want to be.
We absolutely recognise the importance of keeping the effect of these changes under continuous review, in terms of the benefits to our personnel and the impact on recruitment, retention and diversity. I remind hon. Members that the overall number of personnel taking up the new opportunities will initially be small and that flexible working is but one of several initiatives aimed at improving recruitment and retention in the longer term. It would therefore be extremely difficult to isolate the impact on recruitment and retention that is due solely to the Bill. Introducing a system of measurement would be difficult and would delay what we are trying to achieve.
Mr Kevan Jones
That is complete and utter nonsense. I accept that the numbers might be smaller as the system gets going, but surely there must be a way of logging this. I do not know why the Ministry is so opposed to producing these statistics. Clearly, in the early days, it could say that the system was bedding in. The Minister is going to get freedom of information requests and parliamentary questions about this, so he might as well produce the information.
Mr Ellwood
I fear that unless I say something to win the hon. Gentleman over, we might go around this merry-go-round many times. I will certainly look at this, but in Australia and other countries that have successfully gone down this road, the initial take-up has been so small that introducing a measurement system would delay the initiative’s introduction, and the numbers will be so small that it would be difficult to determine whether the effect is the result of the initiative or others that are being introduced. To discourage him from intervening again in two minutes, let me say that I will be more than happy to look at this and discuss it with him in the future.
The Ministry of Defence meets its obligations under the public sector equality duty to provide information on the workforce in relation to the protected characteristics identified by the Equality Act 2010, through the disclosure of information relating to the gender, ethnicity, nationality, religion and age of personnel. Our new UK armed forces quarterly service personnel statistics will, like the monthly publications they replace, provide detailed information and analysis on the number of service personnel by strength, intake and outflow, and detail is provided for both the full-time armed forces and the reserves. The number of people who take up the new arrangements will be significant to us, because obviously they are the people we want to retain, but it will be modest at first— somewhere between 0.5% and 1% of the armed forces. We therefore judge that collating and reporting information on a cohort of such a size would not provide significant or beneficial data, particularly in the early stages.
Mr Ellwood
Before the hon. Gentleman intervenes again, let me say that as the system grows and develops, I will certainly consider whether introducing such a thing would be worthwhile.
The principal long-term aim of the Bill is that we attract, recruit and retain people from a more diverse cross-section of society with the knowledge, skills and experience that we need to deliver operational capability. Let me be clear that we will not see results overnight. We are proposing good, positive steps in the right direction, but this is one of several proactive initiatives that we are introducing as part of an ongoing journey of change. We need to modernise our armed forces if we are to attract and retain the right mix of people and skills, which is why we are introducing these measures alongside others, collectively managed under the armed forces people programme. That programme includes the future accommodation model, which has been touched on, and the enterprise approach.
The MOD has been transparent about the challenging recruitment and retention climate in which we are operating. British society is changing and, if we are to compete in the jobs market, so must defence. Shortages in our traditional recruiting grounds and record youth employment mean that we must modernise and make our offer more attractive to those who are already serving and those we want to recruit. These measures will benefit a small but significant cohort, such as women and men starting a family, those with caring commitments and those who wish to undertake long-term studies. We have a good body of evidence on the demand for such ways of working that has been derived from external reports, internal surveys and focus groups. Our ongoing flexible duties trial shows that providing our people with modern choices will help us to retain highly skilled personnel who might otherwise leave.
I should reassure hon. Members that intake and strength by rank, trade and specialisation are regularly monitored and managed at service level and centrally by the MOD. Commissioning an external body to evaluate the early impact of the flexible working measures would serve only to delay their introduction in 2019.
Mr Ellwood
If the hon. Gentleman had been here at the start of the debate, he would have heard me say that a pay rise is being considered by the Armed Forces Pay Review Body. The 1% pay freeze has been lifted, which is good news, and we look forward to the recommendations that will be made in March.
The MOD already gathers evidence on the impact that new forms of flexible working will have on our people. We think that that will provide more value than any evaluation from an independent contractor. We do not need to introduce more evaluation, further levels of statistics or additional reporting. It remains our view that imposing new statutory obligations would be unnecessarily costly, delay the introduction of the new measures and benefits for our people, and add little value to what we are trying to achieve. As I have said, we recognise the importance of keeping the effects of these changes under continuous review, in terms of the benefits to personnel and the impact on recruitment and retention.
Mr Ellwood
If the hon. Gentleman asks the parliamentary question or makes the FOI request, I will respond.
I said earlier that the introduction of the new flexible working opportunities falls firmly within the scope of the armed forces covenant, which I think the whole House can be proud of. I assure the House that we will monitor the introduction of the new measures during the first year of implementation from 2019, and report on the impact in future armed forces covenant reports. Given the reassurances that I have offered, I hope that the hon. Member for Merthyr Tydfil and Rhymney (Gerald Jones) will withdraw new clause 1.
Mr Kevan Jones (North Durham) (Lab)
I welcome the Bill. I was trying to work out how many armed forces Bills I had dealt with over the past 16 years, either as a Minister or as a Back Bencher. [Interruption.] As the Minister says, I am a veteran.
This, I think, is one of the simplest Bills I have encountered, but, as the Minister has said, it is important. It is intended to ensure that working practices in our armed forces are modern, but also attractive to those who are thinking of joining. The Minister may think me pedantic in wanting to know how its implementation will be monitored. However, I think we need to ensure not only that the armed forces are offered these opportunities, but that the information is cascaded down the chain of command, so that people are aware that they can ask for flexible working arrangements, and those who are in a position to make the decisions recognise that they can use them.
Training will be needed, and, in some cases, attitudes must change. I have no problem with the senior levels of the armed forces, who have, I think, bought into this, but the Bill must have an effect in practice, throughout the chain of command. That is why I think it important for us to monitor the number of people who take up these opportunities, and also when and why they are refused. Is there a good reason for that? I know that civil servants have convinced the Minister that such monitoring would be an onerous task, but I do not accept that for one minute. As the system beds in, the information will obviously need to be produced internally in the Department, for monitoring purposes, and I find it difficult to understand why it cannot subsequently be published. I think that in future, as a result of freedom of information requests or parliamentary questions, the Minister, or his successor, will have to publish it anyway. I also think that it would be positive to project the fact that the forces are introducing flexible working by giving examples.
Mr Ellwood
I am grateful to the hon. Gentleman for giving way. This is the first of five interventions that I intend to make.
The hon. Gentleman has raised an important point about the need to trickle information down to commander level to ensure that people are aware of the opportunities. That will be incentivised and supported by local commanders, but there will be a higher approvals authority. It is all based on operational capability, which we must not lose sight of. I hope that that clarifies the way in which the system will work.
Mr Jones
I accept that. I do not question for one minute what the armed forces will do in trying to ensure that the information is instilled in the chain of command, but this is a new way of working for them. I am not criticising them, because it is inevitable that when such a change is introduced in any company or other organisation, some people will not get it, and some will positively resist it. Some people will see it as a radical change. I think we should ensure that those who ask for flexible working are given good reasons why, in some cases, it cannot be implemented. I accept that there will be operational reasons.
Sir Hugo Swire (East Devon) (Con)
Does the hon. Gentleman agree that when we are considering introducing a new element of flexibility into service in the armed forces, we should look again at the maximum enlistment time? Although the military have moved towards extending the retirement age in view of our ageing population, perhaps it is time to revisit that as well. People who are well into their 60s, and even 70s, are quite capable of doing some of the modern jobs in the armed forces, which would not have been the case 20 or 30 years ago.
Mr Jones
I think it is a fact of life that the pool of 18-year-olds is becoming smaller. I hope the right hon. Gentleman was not suggesting that the hon. Member for Beckenham (Bob Stewart) should be brought out of retirement; I do not know whether that would be a good thing or a bad thing for the armed forces, but it would certainly be interesting for them. However, he has raised an interesting point. When I was a Defence Minister, people who could have made a further contribution were leaving the forces in their early to mid-50s, for reasons connected with, for instance, pensions. Given that that pool of 18-year-olds is getting smaller, we should also revisit the idea of recruitment from Commonwealth countries, which has been successful in the past. It has made a tremendous contribution to our nation’s defence over the last few years.
Ruth Smeeth
My hon. Friend has referred to serving personnel of a slightly more mature aspect. Might not the most effective way to ensure that flexible working proceeds as the Bill proposes be to ensure that at least one one-star officer takes the opportunity to sign up for it?
Mr Jones
That is an interesting concept, which returns me to an important point made by the right hon. Member for Sevenoaks (Sir Michael Fallon). We need new role models, and not just in the context of flexible working. We need, for instance, to see a senior general who is a woman. We can do all the talking we like about trying to encourage women to join the armed forces and take an active part in advancing their careers, but unless there is a career path that will help them to progress, many will assume that that will never be achievable. We need only look at our US counterparts and others, where female officers have attained the highest rank. I agree with my hon. Friend the Member for Stoke-on-Trent North (Ruth Smeeth): why can these provisions not be open to senior managers and others in the military and other armed forces? That would send a positive message that it is important.
I welcome the Bill, but disagree with the Minister in that I do not think it is a silver bullet, because people join our armed forces and are retained for reasons not only to do with work-life balance, but because of pay and other things such as career breaks, which other armed forces in the world offer, enabling people to leave the armed forces and then come back. That does two things: it gives the expertise that those individuals have learned in the armed forces to business, charity and other sectors, and brings a wealth of knowledge back into the armed forces, which is needed. Career breaks are not unusual in the United States and other countries. This Bill is a start in terms of flexible working, but I hope that that will develop through career breaks and other initiatives.
Carol Monaghan
Some countries make far better use of reservists for that same reason. They bring their armed forces skills into civilian life and vice versa. Some countries’ armed forces have huge numbers of reservists making up their ranks, as opposed to UK armed forces which have only a very small number.
Mr Jones
The hon. Lady makes a good point; reservists do add something, but I am talking about regular members of the armed forces being able to leave for a certain period of time on the understanding that they will come back. In the United States, many on senior military courses leave to do doctorates or work in business and do other things and then come back into the armed forces, and doing that is not seen as a black mark against their career; on the contrary, it is seen as enhancing both the armed forces and those individuals’ careers.
This Bill is a start, therefore, and I assure the Minister I will be scrutinising how it works in practice and the uptake of its provisions. I also join him in thanking the Clerks and everyone involved in the Bill on making sure it has gone through both Houses with a degree of consensus from all sides and with additions to the offer that we can now give to people who want to join our armed forces.
Several hon. Members rose—