Defence: Nuclear Submarines

Debate between Lord Astor of Hever and Lord Roper

Thursday 6th March 2014 Lords Chamber

[Lord Roper (LD)]

My Lords, from these Benches, I add our condolences to the family of the soldier of 32 Engineer Regiment who died yesterday.

The matter of the Statement is obviously serious and the Government have been absolutely right to act in accord with the precautionary principle. I wonder whether my noble friend can say something about the possible implications for the other two Vanguard-class submarines. Is there any question of their having to be recalled at some stage and, if so, what would be the further cost? If that were to occur, would there be any other delays in the totality of the programme?

[Lord Astor of Hever]

My Lords, to answer my noble friend’s last question first, there will be no delay. This is a decision that we would take in 2018 and depends on the research that we are able to carry out into the prototype reactor core. I thank my noble friend for his support for the Statement.

Defence Reform Bill

Debate between Lord Astor of Hever and Lord Roper

Monday 3rd February 2014 Grand Committee

[Lord Roper]

My Lords, I would be grateful if my noble friend in replying to this debate could give us more information on why Clause 2 is necessary and what sort of financial assistance we are discussing here.

[Lord Astor of Hever]

My Lords, Amendment 7 would require the Secretary of State to withhold approval on any relevant contract price change until a detailed report has been laid before both Houses setting out the circumstances why the increased price is required. The amendment also requires the Secretary of State to write to the chairs of the relevant parliamentary committees, which I assume to be the House of Commons Defence Select Committee and the Public Accounts Committee, telling them that the report has been laid. Although I fully support the principle of being transparent with Parliament regarding the performance of the defence equipment programme, I do not believe that this amendment is appropriate, as it would significantly constrain the operational freedom of the Secretary of State and the department. The amendment is also not required as the performance of the equipment programme is already regularly reported on, including by the National Audit Office, and scrutinised by Parliament.

In addition, the proposal would introduce significant practical issues. Under the proposal, every change of price within a contract managed by the future GOCO would require a report to be laid before both Houses. Given that DE&S manages many thousands of contracts, this requirement could impose an unmanageable burden on the GOCO and the department. Gaining better control over the schedule delivery and cost of the equipment programme is a fundamental part of the likely future GOCO arrangements, and that will not be helped by imposing an excessively burdensome reporting constraint on the GOCO. Indeed, it could result in the opposite effect. The amendment also provides no mechanism for how contract price changes would be approved while Parliament is in recess. It is clearly unreasonable for the day-to-day operation of the department and GOCO in delivering equipment and support to the front line to be constrained in this fashion.

Turning to Amendment 9, it is important to stress that Clause 2 of the Bill is designed as a fallback option to be used as a last resort in circumstances where a GOCO company is in need of financial assistance and unable to obtain it from the commercial market at acceptable rates. We would expect a future contractor to be a financially robust company that would only very rarely need to seek financial assistance from the market and that, should it need to do so, the assistance required would be available on acceptable commercial terms. Therefore, the power to provide financial assistance to the contractor from the Secretary of State is anticipated to be required only in extremely rare circumstances and as a last option to prevent the business from becoming insolvent and ensure business continuity. Clearly, continuity is critical and must be ensured when the business in question is the provision of defence equipment procurement and support services that are vital to supporting our troops on the front line. That risk must therefore be effectively managed. A further important point is that the Ministry of Defence would seek to claw back any financial assistance provided under this clause through deductions from future contractual payments to the GOCO.

The effect of the amendment is to require the Secretary of State to withhold approval for the grant of financial assistance until a report has been laid before both Houses setting out why financial assistance is required and until he has written to the relevant chairs of the parliamentary committees telling them that the report has been laid.

The purpose of this amendment is about ensuring transparency to Parliament—a principle, as I said in my opening remarks, that I fully support. I understand and agree with the desire for Parliament to be kept fully informed and to have the opportunity to consider and comment on the provision of financial assistance from Government funds. However, although the amendment seeks only to constrain the ability of the Secretary of State to provide financial assistance—to the extent that he could not do so until the report has been provided to Parliament—it would have the effect of introducing a time delay to the provision of such assistance, which could have very significant consequences if assistance is required urgently to ensure business continuity.

--- Later in debate ---

[Lord Roper]

Before my noble friend sits down, could he explain—I thought I understood this but now understand it less—whether the reference in Clause 2 to “a contractor” is to the GOCO contractor or to an individual company that is supplying goods to the Ministry of Defence? That is not totally clear.

[Lord Astor of Hever]

My Lords, I totally agree with my noble friend. Before Committee I had a long debate with the team about this, and we changed my speaking notes radically. We changed “‘contractor” to “GOCO” in many cases. The answer to my noble friend’s question is GOCO, but the terms “contractor” and “GOCO” are interchangeable as far as the Bill is concerned. One can use both when describing provisions in Part 1 of the Bill, but for consistency and clarity we have decided, in my speaking notes, to use the term “GOCO” as far as possible. I note that a “contractor” slipped through the net.

In the light of what I have just said, I need to resist these amendments as unnecessary, and I hope the noble Lords will withdraw Amendment 7 and not move Amendment 9.