Defence
Debate between Lord Beamish and Mark Francois(7 months, 2 weeks ago)
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Mr Francois
The right hon. Gentleman, a former Armed Forces Minister like me, is absolutely right. Many of them still have half their so-called airframe life remaining. As I have said, they are more than capable of intercepting and shooting down the threat aircraft that they would have to match. That is all the more reason to keep them against a rainy day, rather than flogging them off or breaking them up for parts. Crucially, creating such a war reserve would demonstrate a sign of intent to any potential aggressor that after many years of doing the opposite, the UK is now preparing to fight a sustained conflict with a peer enemy, should that become necessary. Hopefully, in so doing, we will make that eventuality far less likely.
Linked to the vulnerability of our radar stations and the shortage of fighter aircraft are the extremely worrisome delays in airborne early warning. The Royal Navy’s early warning aircraft, Crowsnest, is many years late. It has only recently entered service for the air defence of the fleet. For the Royal Air Force, the Boeing E-3 Sentry AWACS aircraft were withdrawn shortly after the integrated review was published in 2021, leaving us without a mainstream airborne early warning aircraft. The E-3 was meant to be replaced shortly thereafter by the Boeing E-7 Wedgetail, but the programme has been subject to multiple chronic delays and is still not in service.
The RAF is clearly embarrassed by this and is attempting to deploy chaff between in-service dates, when the aircraft could take off the runway, and an initial operating capability, when the aircraft might actually be ready to fight. The latest information I have is that the ISD could now be in autumn 2025, whereas the IOC could be in the first or even the second quarter of 2026, which is still two years away. That leaves a critical gap in our air defence capability for which the MOD, and Boeing in particular, must be held robustly to account. Moreover, the initial buy of five Wedgetail aircraft was inexplicably cut to three several years ago by ministerial fiat, even though we were contractually obliged to buy all five radars, which themselves were very expensive.
In short, the Boeing E-7 Wedgetail is rapidly becoming the RAF’s equivalent of the Army’s Ajax programme—a procurement disaster that has gone on year after year at vast expense to the taxpayer, without actually entering operational service, as Ajax still has not. The Defence Committee, alarmed by that, has invited the head of Boeing Defence, Space and Security, Mr Ted Colbert, to appear before the Committee at Westminster to provide an explanation, although we are still attempting to finalise a precise date for his personal appearance.
Boeing is an organisation in crisis after the sad deaths of more than 300 people caused by the two crashes of its 737 MAX aircraft. We have seen further serious safety incidents, most recently in January when a door flew off an Alaska Boeing 737 MAX 9 in mid-flight. That incident was followed by a number of so-called whistleblowers, involved either at Boeing or in its supply chain, coming forward with very serious allegations about failures in the way the company builds its aircraft. No doubt partly as a result, Mr Dave Calhoun announced that he will step down as chief executive at the end of the year. In the first quarter of this year, Boeing reported a net loss of more than $350 million, and it is still experiencing serious production problems across a range of aircraft, both civilian and military, of which the UK Wedgetail is but one example. The US Air Force also has numerous issues with Boeing, not least in its much-troubled KC-46 air tanker programme.
For many years, Boeing as a company has done extremely well in winning major multibillion dollar procurement orders from the MOD, in return for which it has placed very limited amounts of work on those programmes with the defence industry in the UK. To give specific examples, according to the MOD’s recent figures, on the E-7 Wedgetail, the estimated UK content is around 10%; for the AH-64 Apache, it is only 7%; for the P-8 Poseidon anti-submarine aircraft, it is barely 4%; and for the original CH-47 Chinook helicopters, it was just 2%. According to the answer to a written parliamentary question I tabled, the UK content for the new order of CH-47 extended-range Chinooks for our special forces will generate a UK workshare of about 8%. Taken together with the purchase of the Boeing RC-135 Rivet Joint electronic reconnaissance aircraft, for which no workshare figure is publicly available, that represents some $10 billion of business for Boeing from the UK MOD for which the UK workshare has been 10% at best and 2% at worst. Boeing has done incredibly well out of the UK MOD, while UK industry has done incredibly badly out of Boeing.
Mr Kevan Jones
Does the right hon. Gentleman agree that that is also bad news for the defence budget? Those contracts are in dollars, and the dollar exchange rate puts huge pressure on the defence budget.
Mr Francois
Another former Armed Forces Minister is right, and he will know that the effect of the dollar exchange rate on buying so many big off-the-shelf items from the US has cropped up time and again at both the Defence Committee and the Public Accounts Committee.
The problem does not apply just to air platforms. Boeing had a major logistics contract with the MOD called the future logistics information system, or FLIS, which was due to run until late 2020. However, as was evidenced by the Public Accounts Committee, in late 2020 the MOD signed a five-year contract extension called “Bridging the gap”, worth £515 million to Boeing, which was not even competed. That raises questions about the degree to which the MOD seems to be mesmerised by Boeing as a company, to the detriment of value for money for the UK and for our industrial workshare. Indeed, the PAC subsequently reported:
“We are…concerned to hear that the MoD awarded the contract for this £515 million programme to a large defence prime contractor without a competitive tendering process.”
That is all the more surprising given that in the 1990s, the standard policy of the MOD was to ask for a 100% offset in major off-the-shelf procurements of military equipment from abroad, especially from the US. For instance, in the late 1990s, for the purchase of the C-130J Super Hercules, Lockheed Martin was required to place work to the equivalent of 100% of the multibillion-dollar contract value with UK industry. The work could take one of two forms: direct offset, which is work on the aircraft platform itself, such as propellers or undercarriages or logistics support, or indirect offset, which is other high-quality work to be placed with the UK defence industry over the life of the programme, but not necessarily directly related to the platform itself.
Under the Blair Government, for whatever reason, the policy was quietly dropped. That has allowed a situation to develop whereby the MOD has bought a number of big-ticket items from the US without receiving any legally binding guarantees of compensating workshare for the UK industry. I therefore suggest to the next Government, of whatever political colour, that if they are reviewing defence, they might want to look at reintroducing the concept of 100% offset for any further major offshore procurements.
In some cases, it is operationally the right thing to buy something off the shelf from the US. I would argue that Wedgetail—at least when it was five aircraft, anyway—was the right decision, but I do not think it acceptable that we hand out such handsome contracts to foreign suppliers without UK industry being given its fair share.
In conclusion, a cynic might say that Boeing is a company increasingly in crisis, which is falling apart even more rapidly than the aircraft it purports to build. That is serious for us in the UK, as like it or not, Boeing is one of our major defence suppliers and is responsible for supporting key equipment in service. We do not want that company to fail. Therefore, we can only hope that the incoming management will take a firm grip of the situation and turn it around—the sooner, the better.
Lastly, it is very good news that we are reversing the downward trend in defence spending and are now investing more, rather than less, in the defence of the realm. That is very much to be welcomed, but it is a question not just of how much we spend, but of how well it is spent. I very much hope that with the new integrated procurement model and perhaps a couple of humble suggestions that I have been able to offer this evening, we can put more of that money to good use to ensure that we, our people and our allies remain safe in an increasingly dangerous world. Si vis pacem, para bellum.
Armed Forces Readiness and Defence Equipment
Debate between Lord Beamish and Mark Francois(9 months ago)
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Mr Kevan Jones (North Durham) (Lab)
I begin by joining the Chair of the Defence Committee, the right hon. Member for Horsham (Sir Jeremy Quin), in thanking the men and women of our armed forces—we should never forget their dedication. It is often said that the first duty of government is to keep the nation safe and protect its citizens, but we have a Conservative party that has admitted that it has “hollowed out” defence. We have had a return to war in Europe and growing threats around the world, as has been explained, and we now need a clear-eyed vision of what we need to do in defence. It is about deterrence—there has been a lot of talk about warfighting, but the success of defence is in deterring action from happening.
We need to recognise how we have got to where we are today. I hear all the calls from Conservative Members for increases in defence expenditure. I do not question those individuals’ commitment or dedication, because I know that many of them are very committed individuals who believe in defence, as I do. However, I find it a little ironic that between 2010 and 2016, the defence budget in this country was cut by 18%. Even with the increase, the defence budget is still 7% lower than it was in 2010, and the Budget on 6 March included a cut in the defence budget. I hear all the stirring cries for increasing the defence budget, but we did not get into this situation by accident.
In 2010, we had a Conservative-led coalition Government who tried to scare the public by saying that they inherited a £36 billion black hole in the defence budget. That was absolute nonsense. The figure came from a 2009 NAO report on the equipment budget that said that there was a £6 billion black hole in that budget, and that if we had flat cash for the next 10 years, the figure would be £30 billion. The spin doctors added another £6 billion to that figure, and it became the myth that was reiterated.
That myth masked what the Government were really up to, which was slashing the defence budget over that period, and we are still seeing the consequences of those decisions. The right hon. Member for Rayleigh and Wickford (Mr Francois), whom I respect, talked about a 1930s moment. I agree that we are in a 1930s moment—the similarities are there. In the 1920s and 1930s, the Conservative Government cut defence expenditure, including Winston Churchill, who admitted it in later life.
Mr Francois
I hope this does not come across as nit-picking—it is important. The 10-year rule, which was a rolling 10 years, was not just a Treasury policy: it was the policy of the entire Government, and it was not rescinded by the incoming Labour Government in the 1920s. It was the policy of the whole Government, and it was only rescinded in the mid-1930s, a few years after Adolf Hitler became Chancellor of Germany. It is important to get that right.
Mr Jones
The right hon. Gentleman has got that on the record. I am not going to get into a history lesson about the 10-year rule—I think the history books tell the story—but we have seen what happened from 2010 onwards.
We have had a cut of 40,000 personnel in our armed forces, and it is not just about numbers; it is about experience. Individuals were made compulsorily redundant. If I had made people compulsorily redundant when I was a Defence Minister, The Sun and the right-wing press in this country would have been shouting from the rooftops, but they did absolutely nothing, and we lost experience. One in five of our ships was removed, as were more than 200 aircraft, and the satisfaction rating among our armed forces personnel is now below 50%. We have had a system over the past few years that has wasted money, as we have chronicled in our report, and we actually now have the £30 billion black hole in our equipment budget that was predicted in 2009, as the Chair of the Public Accounts Committee, my hon. Friend the Member for Hackney South and Shoreditch (Dame Meg Hillier), has referred to.
This is not about whether the defence budget is 2%, 3% or 5%. It is about looking at how we have got into this situation, and how we change it—how we face the challenges that confront us today. Whichever party is in government after the next election will have to face those challenges, but we have to get away from British exceptionalism. We have great ambitions to be a global power, like some kind of imperial power. I am sorry, but we are not. We can continue that myth ad infinitum, but unless we link the resource to the ambition, it is not going to work.
For the past few years, we have had the nonsense slogan of “global Britain”—some pre-imperialist view of what we are doing around the world. I am sorry, but it is absolute nonsense. We have to look at what we can do to protect our own defence. The idea that we are going to be a major player in anything that happens in the south-east of the South China sea—that having two offshore patrol vessels based in Singapore is going to deter the Chinese—is nonsense. If anything happens there, frankly, any commitment that we could give is like a gnat on the backside of an elephant compared with what the Americans would be able to do. We have to be realistic about that.
What do we need to do? We need to look at what we must deliver as part of our NATO commitments. We also need to get away from the myth—and it is a myth, in our Army in particular—that we will deliver a force of divisional strength under any NATO commitment. We cannot do it now, we have not been able to do it for quite a few years, and we just need to be realistic about that. We need to sit down with NATO and look at what we can contribute to European defence. Clearly, the nuclear deterrent is a key part of that. However, do we, for example, need a full spectrum Army? No, we do not. We need to plug into our NATO allies, and ask what we can deliver well as part of the overall defence against the threat coming not only from Russia in Europe, but increasingly from China in the north Atlantic as we get global warming and the opening of sea lanes.
There is an idea that we will be sending aircraft carriers around the world. No, we will not. We need to commit them to NATO, and that means some very tough decisions. It also means that we need a mindset change. We have to be honest with the public about this, and say that we will not be able to do everything. There are then some hard decisions to be taken about the armed forces. For example, we should say to the Army, “We’re not going to be doing that, but we are going to do this very well. We will dovetail that into NATO commitments, and actually make a real difference.” There are big decisions that will have to be taken by any Government, whoever gets in after the next election.
Please let us get away from the myth—and it is a myth—that we will be going around the world and intervening in every single conflict. For example, look at the air strikes on the Houthis in the last few weeks. We have contributed four aircraft because we want to be seen to be alongside the Americans, but I would ask: what is the strategy for doing that? There is no strategy. Okay, we have bombed the Houthis, but is that going to resolve the situation? No, it is not. Does it show that Britain is a global power? No, it does not. Frankly, we do not have the resources, unless someone will say that the defence budget is going to be 3%, 4%, 5%, 6% or 7%, but no Government are going to commit to that.
I say to Conservative Members and the commentariat in our right-wing press that they should just be honest with the British people about what we can do. We can and do have a valuable role to play in NATO and we have willing partners that want to work with us. I am certainly very excited about Sweden and Finland joining, although we need to make sure that we actually get those commitments. As I say, some hard decisions have to be taken and there are some home truths for our armed forces. As the Chair of the PAC said, there are capabilities that we will just have to get out of. We will have to say, “We’re not going to do that, but we’re going to do this and we’re going to do it well, and we are going to contribute,” and that will maximise our influence.
On China, people ask: do we just forget about the South China sea? No, we do not. We use our strong diplomacy, and our great and fantastic abilities with technology and other things in those areas, but it is not about deploying people or equipment out there. Frankly, the sooner we get the reality of such a wake-up call, the better. I will always call, and I have always called, for increased defence expenditure, but I will not do so if it is just to try to plug a vision that will never ever be achieved. We need to make sure that we spend that money well.
That leads on to the point about skills raised by my right hon. Friend the Member for Warley (John Spellar). We need to see any defence expenditure as potential growth in our economy. However, we are not doing that if we are giving contracts to the United States, or to Spain for fleet solid support ships, and not thinking about growing our defence industries here. I accept that there has to be international collaboration, but we must have give and take. The idea that the French would ever give an FSS ship contract to a Spanish shipyard, frankly, is just—