Armed Forces Readiness and Defence Equipment
Debate between Lord Beamish and Meg Hillier(9 months ago)
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Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
I really welcome this debate, in which five former Defence Ministers are speaking. That is probably a record—certainly in recent years. I very much thank the Chair of the Defence Committee for laying out the global challenges this country faces and some of the capability concerns. Given the expertise in the Chamber, I know that we will hear more about that.
I stand here as Chair of the Public Accounts Committee, which sometimes feels a bit like the second Defence Committee because of the amount of time we spend examining the vast expenditure that this country makes on defence. Taxpayers give this money to the Government trusting that it will be spent well, but sadly all too often we see that it is not spent as well as it should be. We see money going in but we do not see the capability coming out that we require. The PAC examines that defence spending and the delivery; our job is to look at the economy, efficiency and effectiveness of how taxpayers’ money is spent by Government. As I say, the Ministry of Defence too often falls short on that.
The Committee has huge concerns about the MOD’s ability to deliver projects on time and to budget. This report is only one of our latest on the subject. Just because we have war paint on ships or something is very important, interesting and exciting technology to support our men and women on the frontline does not mean that it should not be treated like any other major project in Government and be managed well and properly. There is no point in having something perfect but late if our frontline personnel need it. As our report highlights, recent global events, which I will not go into, as the Chair of the Defence Committee has outlined them, throw into sharp focus why it is so vital that we deliver on time and that we have the capability, including industrial capability, to ramp up when something, such as munitions, for example, are used apace.
The PAC has examined the annual equipment plan from the MOD for more than 12 years. We have done that throughout the time I have been a member of the Committee, for the past nine years of which I have had the privilege of being its Chair. The defence equipment plan is the 10-year programme for the capability that the MOD says it requires and it lays out how that will be funded, and where the challenges and gaps in funding are. All bar last year’s plan were deemed unaffordable, but the PAC took the view that even in the year when the plan from the MOD came out as affordable, it was based on assumptions that were not realistic, and we did not believe it was fully affordable.
In simple terms, affordability is about the gap between the capability the plan lays out and the money available. As the plan covers 10 years, there have been times when Ministers, including some of the former Ministers present and perhaps even the current Minister, might have come up with reasons for that. They say, “Over 10 years, it is fine. We’ll juggle it a bit. We will balance a bit. We’ll get efficiency savings here and there.” We have seen those arguments and excuses far too often, and the efficiencies do not arrive or issues arise and defence programmes are put off and delayed. By delaying them we see a reprofiling of the costs, but no real reduction in them, and we see those chickens coming home to roost.
This year, the gap between the capability required and what is affordable is £16.9 billion—so it is nearly £17 billion over the 10-year period. We can then add in what the Army would deliver. It is perhaps worth my explaining that for some odd reason—the PAC has taken a strong view on this and even the permanent secretary at the MOD has acknowledged that there was an anomaly—when the Commands and the MOD put in their costs for the programmes, most of them put in the full costs of all the capability required, but the Army puts in only the costs of what it could afford. If we add in the capability that the Army actually requires, we are adding a further £12 billion to that nearly £17 billion, thus making the gap even bigger. There has been a clear deterioration in affordability. It is fair to say that £10 billion of that is because of inflationary costs—we partly know the reasons for that, but I am not going to go into them now—and about £2 billion is to do with foreign exchange costs. Again, the PAC examines those regularly with the MOD and the Treasury, but however we hedge it there will be some challenge on foreign exchange because of the nature of some of our defence procurement.
Mr Kevan Jones (North Durham) (Lab)
Does my hon. Friend agree that that has been made worse by the MOD’s tendency to purchase off-the-shelf solutions from the United States in dollars, which is now accounting for a huge amount of the defence budget? As she says, even with hedging, this is a deadweight around the defence budget.
Dame Meg Hillier
My right hon. Friend raises an important point, and we could almost have a whole debate about that. We do not have time to go into the full detail today, but I will touch on our defence industrial strategy. That is what a lot of this comes down to; if we are buying things off the shelf, it can sometimes be more cost-effective, but we need to be careful and cautious, because the longer those projects are for, the greater the risk of foreign exchange challenges. There is also sometimes a risk to our own sovereign capability and the longevity of some of our defence industries.
We recognise that, with our allies, we work in an international world on this. So there is no straightforward answer, but defence industrial strategy is an area that not only the MOD but the whole of Government should be looking at, as it is vital. Both the Chancellor and shadow Chancellor talk about growing the economy, and our defence industries are based in areas where, if we could up the skills and jobs available, it could provide a major boost to the economy. So there are a lot of opportunities there.
The MOD has not credibly demonstrated how it will manage its funding to deliver the military capabilities the Government want. Our latest report says that they need to get “firmer control of defence procurement” because of this very large deficit in respect of the capability requirements needed. The budget has increased, and I am sure the Minister will stand up to tell us how much extra money is going into defence, but this is about not just the money, but how it is managed. The budget has increased by £46.3 billion over the next 10-year period compared with what was set out in last year’s equipment plan. As I said, the PAC has warned that the deficit is even bigger than expected, so that extra budget will be taken up by the deficit if it is not managed down. Part of the reason for that deficit is inflation, but another major impact on it is the costs of the Defence Nuclear Organisation, which is responsible for the vital nuclear deterrent. Those costs have increased by £38.2 billion since last year’s plan.
One of our Committee’s other concerns is that the MOD has been putting off making decisions about cancelling or reprofiling programmes. Reprofiling is not always a good thing, but sometimes we have to trim according to what is necessary. If the MOD cannot afford the plan, it should take a hard decision, but it has optimistically assumed that the plan would be affordable if the Government fulfilled their long-term aspiration to spend 2.5% of GDP on defence each year, despite there being no guarantee that that will happen. Of course, in an election year there is not even a guarantee as to which party will be in government to consider that. We know, and the Defence Committee will know even more than the PAC, how much the MOD is increasingly reliant on the UK’s allies to protect our national interests. That means that we also have to play our part by making sure that we are delivering that.
For all the time that I have served on the PAC— 13 years this year—the MOD has been led by optimism bias, and it is now pressing on based on not optimism but the sniff of optimism, as there is so little left in that approach that will deliver. We must call that out and call a spade a spade, by saying that the MOD can deliver only what is affordable. So either the money goes in or the MOD trims what it is trying to do, because the approach of trying to do everything all at once and not being able to afford it is just not going to work.
Budget Resolutions
Debate between Lord Beamish and Meg Hillier
Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
Today’s Budget makes promises on NHS investment and on investing in education, and promises to tackle businesses rates and look at the security and dignity of work, to quote the Chancellor. We have had promises to put areas in charge of their local economic destiny. Those headlines may seem appealing, but I want to unpick the figures behind them, starting with the national health service.
The Public Accounts Committee has spent a lot of time in the past year and a half raising concerns about the underinvestment and lack of a sustainable plan for the NHS, particularly in the light of the increasing demand of a growing ageing population. The figures speak for themselves. We need look only at the financial data for NHS England trusts and clinical commissioning groups in the past few years. The deficit for trusts increased from £91 million in 2013-14 to a whopping £2.5 billion in 2015-16. There were huge shenanigans as the Department of Health struggled to ensure that the books balanced. The measures were criticised by the National Audit Office and the Comptroller and Auditor General as one-off and unsustainable, as even the permanent secretary acknowledged.
The Public Accounts Committee is concerned about the funding. Any additional funding is welcome, but let us look at what the Chancellor has promised on social care. He promised £2 billion over three years—front loaded because £1 billion is available in 2017—but the Local Government Association, representing local authorities that have to spend the money on social care estimates that the current shortfall is £1.3 billion. Even the 2017 figure, then, is not enough, and it drops off after that.
It is an irony that this injection of cash follows a 10% reduction in social care funding since this Government came to power in 2010. The latest survey of local authority directors of social care says that only around a third believe that they can deliver their statutory duties this year—and it falls to 8% next year. Even with the injection of cash, I do not think that local government can have 100% confidence that social care can be delivered.
Let us look at the capital injection that the Chancellor promised for sustainability and transformation plans. That may be helpful—£300 million sounds like a lot of money—but if it is spread across the 44 STPs around England, it is very little to fund what might be needed. The fact that capital budgets were raided for resource funding in the last Budget settlement shows a contrary approach and a lack of planning. We keep seeing pots of money thrown at different parts of the NHS and social care system, but what we need is a long-term sustainable solution. I hope that the Treasury will watch closely as the Department of Health and local health bodies spend this money to make sure that it is spent as sustainably as possible. What we really need is that long-term settlement.
On education, I proudly represent the Borough of Hackney, which has excellent schools. We have some of the best results and some schools in the top 1% in the country. The Chancellor talks about focusing on the quality of our children’s education, but we are already doing that in Hackney—without a grammar school in sight. The focus on the creation of selective grammar schools is disappointing, partly because we can show what works in Hackney and other boroughs that have excellent education, but also because if we look at the existing free school programme, we see a real problem.
Let us debunk the myth that the Government are putting more money into education. Yes, they are in cash terms, but with pupil numbers increasing, this amounts to an effective cut per pupil of over 8%. That poses a key question about how the Government present their figures, as well as a key question about what price the Government place on choices.
In making this announcement, the concerns expressed in the NAO’s recent report on the capital funding of schools have not been taken into account. By 2015, the Department for Education had spent £1.8 billion on 305 free schools; winding back to what was promised, it was estimated that the Government would spend £900 million on 315 of them, so it has doubled in price already, and this compares with the total estimate for the existing programme of £9.7 billion by 2021.
The Education Funding Agency is one of the biggest purchasers of land nationally. We have a property market going on, with land prices often increasing because of a bidding war in which the EFA plays a role. If, as my hon. Friend the Member for Leeds West (Rachel Reeves) highlighted, we measure this, we find that the cost of improving other schools is substantial. The estimated bill for returning all school buildings in England to a satisfactory or better condition—satisfactory rather than very good—is £6.7 billion, with an estimated further £7.1 billion to bring parts of school buildings up to satisfactory or good conditions. This applies to a school that might be generally good but has an area that needs attention. I recognise that more school places might be needed in some parts of the country, but free schools are not always located in the areas of the greatest demographic need, and there are too many of them.
Mr Kevan Jones (North Durham) (Lab)
Does my hon. Friend agree that this means diverting funds from schools that badly need improvement? St Leonard’s School in the constituency of my hon. Friend the Member for City of Durham (Dr Blackman-Woods), for example, also serves some of my constituents, and it has been in need of capital improvements for many years, but the need will not be met because of the diversion of funds to free schools.
Meg Hillier
My hon. Friend raises an important point. It is a matter of concern when too many free schools do not fill their places and in many cases are not required to pay back to the Government—indeed to the taxpayer—for those empty spaces. Some 46 secondary free schools—a fifth or 21% of the total—are in local authority areas in which no new capacity is needed up to 2020. Free school places are also much more expensive than places provided by local authorities, mainly because of the land purchasing that the EFA is pursuing.
A place in a primary free school opening in 2014-15 cost an average of £14,400—a third more than one created by a local authority through a more planned programme. A place in a secondary free school cost £19,100, 50% more than a local authority place. Taxpayers’ money is being overspent, and it is not delivering results. We have seen a number of failures of free schools, and we have seen free schools undersubscribed. In Suffolk, for instance, more than half the total number of places in three free schools have not been filled. Two schools in Greater Manchester are also having problems. My hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams) mentioned Collective Spirit, which is set to be broken up because of educational and financial failings.
In Hackney, what has worked is good leadership, good education and committed pupils and parents. The structure of a school is much less important than those things. However, spending this amount of money on a hell-for-leather delivery of 500 schools, a numerical target that must be met by 2020 whatever the cost, is not sensible, and spending money on selective free schools—grammar schools—on top of that beggars belief.
Business rates are a big issue in my inner London constituency. There were more than 10,000 signatures to a petition from small businesses throughout east London that we presented to Downing Street yesterday. Those businesses are concerned about the impact of business rate increases of up to 250%. It is very difficult for someone who is running a bike shop, a coffee shop or a small jewellery company to increase prices to cover such overheads. The reliefs are welcome, but we need to know more about the long-term review and what it will mean for businesses. One year of relief will do no more than stave off problems and save them up for the future.
The problem is that the Government have banked that money in their local government settlement, and councils cannot then reduce business rates themselves. There is no magic pot of money, and they did not see this coming. In our area, we are proud of our diverse high streets with their many small independent businesses. More than 96% of businesses in my constituency employ fewer than six people, and most employ only one or two. Because they are so small, the business rate increases are a real issue for them.
Electoral Registration and Administration Bill
Debate between Lord Beamish and Meg Hillier(12 years, 5 months ago)
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Meg Hillier
I thank my hon. Friend for that. We need to ensure that we tighten this law now to make it fairer for electors. They would be upset that, having gone to the expense of another election and having come out to vote again, the election result and the will of the people could be affected by such a situation. That is indeed a serious concern. Rather than repeat the excellent arguments made, I rest my case there. I hope that the Government will introduce this change in this Bill to ensure that electors in my constituency never have to have this terrible experience again.
Mr Kevan Jones
I congratulate the hon. Member for Epping Forest (Mrs Laing) on tabling the new clause. She explained clearly that what we need to do is include in this Bill—we have an opportunity to do it—what is “reasonable” and “practical”, as she put it. We are not asking for any major changes to the system we use for elections in this country, but it was quite clear in 2010 that large numbers of people in some constituencies were denied the right to vote even though they intended to wait in queues to get into the polling stations, as the hon. Member for Harrow East (Bob Blackman) said.
One issue that needs to be clarified is that the new clause would help returning officers to know exactly what the law is, as there were different responses in different parts of the country. My hon. Friend the Member for Penistone and Stocksbridge (Angela Smith) mentioned Sheffield. In the Sheffield Hallam constituency, long queues of students waited to vote for the now Deputy Prime Minister. I doubt they will have that problem at the next general election, but if they have such problems when they turn up to vote him out, those who have turned up to vote in reasonable time should be able to cast their ballot.
One issue mentioned by the hon. Lady, with which I agree, concerned the preparation for elections. For nearly 11 years, I was a councillor in Newcastle upon Tyne and in 2010 I went back to help with the general election in my old ward of Walkergate. I was shocked by what the Liberal Democrat administration had done to that ward by reducing the number of polling stations. Not only did people have to travel large distances to get to the polling station, as I mentioned the other day, but there was a capacity problem in trying physically to deal with the number of electors. Making the law clear would be helpful. As I understand it, in one polling station in Newcastle the returning officer took what was referred to afterwards as a “practical” and “common sense” step by allowing people into the polling station if they had arrived at 10 o’clock, locking the doors and allowing them to vote. If the law was clear, it would, as the hon. Lady said, be quite simple to know where the end of the queue was.
The new clause is long overdue and would help not only returning officers but the many thousands of constituents who were denied their vote in 2010. As we have said on numerous occasions during the passage of this Bill, that vote is the core of our democracy.