Future Reserves 2020

Lord Hammond of Runnymede Excerpts

Thursday 19th December 2013 Written Statements

[The Secretary of State for Defence (Mr Philip Hammond)]

I have today placed in the Library of the House a paper setting out the planned growth of the trained strength of the reserve forces, together with the enlistment targets for the next five years that will support that growth.

Oral Answers to Questions

Lord Hammond of Runnymede Excerpts

Monday 16th December 2013 Commons Chamber

[Eric Ollerenshaw (Lancaster and Fleetwood) (Con)]

14. What funding his Department is providing to improve the prosthetics available to military personnel who are amputees.

[The Secretary of State for Defence (Mr Philip Hammond)]

First, may I say that I am sure Members on both sides of the House would wish to join me in wishing our troops, wherever they are deployed around the world, a very happy Christmas and a safe new year? That applies equally to the families who support them.

In February, I announced £6.5 million of additional funding to allow all UK service amputees who have served in Iraq and Afghanistan to have access to the very latest prosthetics and, to date, 96 Genium microprocessor knee systems have been fitted to 57 patients at Headley Court. The programme to upgrade earlier prosthetics where it is clinically appropriate is expected to be completed within two years. A couple of weeks ago I had the pleasure of visiting Headley Court and meeting clinical staff and injured personnel who had been fitted with the Genium legs, and I saw at first hand the life-changing effects of these high-technology prosthetics.

[Pauline Latham]

I associate myself with the remarks made by the Secretary of State about Christmas and the troops and their families, many of whom, obviously, will be separated this Christmas.

What feedback has the Secretary of State received from service personnel using the Genium limbs about their effectiveness and whether they deliver greater mobility and control?

[Mr Hammond]

The feedback I have had has been universally positive, and often about the small things we might not think of. Service personnel using the Genium have told me that the most transformative thing is the ability to stand still, which is not easy to do on the traditional prosthetics. Being able to stand still and being able to take a pace backwards are key gains, and there is much greater mobility in negotiating steps and stairs and a general enhancement in mobility. This was a very worthwhile investment of £6.5 million.

[Eric Ollerenshaw]

I congratulate the Secretary of State on these advances and the speed with which they have been accomplished. What preparations have been made to support NHS prosthetics centres, which will presumably take over support for these personnel when they re-enter civilian life?

[Mr Hammond]

They will indeed; the arrangements we have made embrace the NHS. The NHS is establishing nine centres of excellence specialising in advanced prosthetics across the UK, and as service personnel and veterans pass out of military care at Headley Court, they will be able to choose whether they want to go to a local centre or to one of the nine regional specialist centres, where we expect that over time standards of skill and expertise will match those currently delivered at Headley Court.

[Bob Stewart (Beckenham) (Con)]

I assume, therefore, that someone either in the military or outside the military fitted with a Genium limb will have the latest version fitted to them throughout their life.

[Mr Hammond]

They will continue to be supported as clinically appropriate, and the phrase “clinically appropriate” is very important. The Genium limb is very beneficial for somebody who is in an active phase of their life and we hope many of these veterans and service people will remain active for long periods of their lives. It would not be appropriate for an older person who was less mobile and wished to be less mobile, however. The point of making the money available is so that the clinicians have the scope to prescribe whatever is most clinically appropriate, even when it is the very costly microprocessor knee solution.

[Andrew Jones (Harrogate and Knaresborough) (Con)]

5. What support local authorities have given to implementation of the community covenant.

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[The Secretary of State for Defence (Mr Philip Hammond)]

I refer the hon. Member to the statement I made in the House on 10 December, which explained that I have decided to terminate the present Government-owned contractor-operated competition for defence acquisition in view of the fact that only a single proposition was received. I was therefore unable to ensure a sufficient level of competitive tension in the negotiation stage of the process to ensure value for money for the armed forces and the taxpayer.

[Mr Bailey]

What has been agreed with both the Cabinet Office and the Treasury on the freedoms and flexibilities for the Defence Equipment and Support plus alternative option, and when does the right hon. Gentleman think it will it be match fit?

[Mr Hammond]

On the freedoms and flexibilities package, we have agreed that it will be possible to operate outside the civil service pay structures and that there will be flexibility in the appointment process so that we do not have to go through the overly bureaucratic civil service appointment process. The organisation will also be able to engage some private sector strategic support for specific areas of the business where we know weaknesses exist. On match fitness, we envisage a process that will take three years in round terms to get DE&S plus to the level of the competent and qualified organisation that we would like to see.

[Chris Williamson (Derby North) (Lab)]

Most commentators say that the Secretary of State has botched the GoCo process, wasted two years and squandered millions of pounds, yet he does not seem to be any closer to resolving the problems with procurement. Does he agree?

[Mr Hammond]

No, I do not, as the hon. Gentleman will not be surprised to hear. Defence acquisition is one of the most complex business areas in the country. It has a long history of challenge, as has been recognised under both Governments, and we are working on what I hope will be a long-term solution. The Gray report was commissioned by the previous Government, and we have sought to maintain a thread of continuity from the thinking that underpinned it. Unfortunately, it has not been possible to proceed to a GoCo at this time, but I believe that the exercise has been extremely valuable in informing this process, and it is clear that DE&S is making incremental progress, even though the step change that we were hoping for with GoCo was not able to be delivered.

[Harriett Baldwin (West Worcestershire) (Con)]

20. What recent discussions he has had with his NATO counterparts on security in the Baltic region.

[The Secretary of State for Defence (Mr Philip Hammond)]

I have regular discussions on Baltic security with my NATO counterparts. I met them at the NATO defence ministerial on the 22 and 23 October, I visited Estonia on 2 December and I attended a meeting of the Northern Group in Helsinki on 3 December. The Northern Group consists of the northern European NATO Allies with the addition of Sweden and Finland.

[Harriett Baldwin]

At those meetings, did my right hon. Friend discuss with his Baltic counterparts the recent Russian military exercise called Zapad 13?

[Mr Hammond]

My hon. Friend is obviously aware of the issues that are of concern to our Baltic and Nordic colleagues and the subject of Zapad 2013 did indeed come up. The stated intention of the Zapad 2013 exercise was to repel terrorists threatening Russia and Belarus. To that end Russia claims that it deployed 11,900 troops and 180 items of military equipment, including 10 tanks, 40 aircraft and 10 ships. Some of our Nordic and Baltic colleagues see that as a slightly excessive response to a terrorist threat exercise, but Members of the House will understand that the Baltic states in particular continue to express unease about a large-scale Russian exercise close to their borders.

[Mr James Gray (North Wiltshire) (Con)]

If Zapad 13 was a great success, it was nothing by comparison with Steadfast Jazz, the NATO exercise that occurred at more or less the same time. Leaving aside the question of who thinks up these daft names, does the Secretary of State agree that security in the Arctic in particular is a matter of huge concern for the future and not one to which we have yet given a great deal of attention?

[Mr Hammond]

I am grateful to my hon. Friend for his question, and I have to agree with him on the names. I have always assumed that they are chosen by a computer—if it is a person, something should be done about it. He is absolutely right to identify that we have huge strategic interests in the Baltic and, in particular, the Arctic, because a significant percentage of the UK’s primary energy supply now comes from Norwegian territorial waters in the Arctic, where significant strategic issues will play out over the coming years and decades.

[Mrs Madeleine Moon (Bridgend) (Lab)]

21. What research his Department has commissioned since 2010 on gender discrimination and sexual harassment in the military.

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[Mrs Madeleine Moon (Bridgend) (Lab)]

T1. If he will make a statement on his departmental responsibilities.

[The Secretary of State for Defence (Mr Philip Hammond)]

My first priority remains the success of our operations in Afghanistan. Beyond that, my priorities are to complete the Ministry of Defence’s transformation programme; to build confidence within the armed forces in the Future Force 2020 model; to make progress in growing the reserve forces; to reinforce the armed forces covenant; to maintain budgets in balance; and to reform the defence procurement organisation so that our armed forces can be confident of being properly equipped and trained.

[Mrs Moon]

My Bridgend council recently added to its military covenant a recognition of the service of the nuclear test veterans and called for the development of a fund for those veterans and their descendants in times of need. The idea was put forward by Councillor David White, whose father died when he was four, as he had been at Christmas Island and was one of the nuclear test veterans. What steps will the Ministry of Defence take to give that additional support and recognition to nuclear test veterans?

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[Mr Speaker]

I do not wish to disappoint the hon. Gentleman or the Secretary of State, but frankly I have no recollection of that exchange, and I expect that my experience is widely shared in the House.

[Mr Philip Hammond]

I may be suffering from early onset whatever, but I do not think that at any stage I have suffered from the delusion that the hon. Gentleman was ever Secretary of State for Defence. I have made it clear in answer to similar questions in the House that Defence is not funded to maintain a regular force at the scale of 94,000 through to beyond 2018. We are required for budgetary reasons to draw down the regular force as we build the reserve force, and that is what we are doing.

[Dr Julian Lewis (New Forest East) (Con)]

I welcome the update to Parliament on the United Kingdom’s future nuclear deterrent published today, which states:

“The Government policy remains to maintain a continuous at sea deterrent and proceed with the programme to build a new fleet of ballistic missile submarines.”

Will the Secretary of State confirm that the Government will in no way entertain any squalid deals with any other party if what is needed for continuous-at-sea deterrence is four submarines and if another party, conceivably the Liberal Democrats, tried to argue that three would do?

[Mr Hammond]

My hon. Friend may note that some people have even suggested that two submarines could provide some sort of deterrent, but the Government and the Prime Minister have made clear their commitment to continuous at-sea deterrence and to delivering the number of submarines required to provide proper at-sea deterrence, not some jumped-up, import alternative.

[Mr David Hanson (Delyn) (Lab)]

T5. My constituents who work for the Defence Support Group at Sealand in north Wales share the concern of my hon. Friend the Member for Gedling (Vernon Coaker) about this possible sale. The Under-Secretary of State for Defence, the hon. Member for Ludlow (Mr Dunne) does not need to comment on leaked documents; could he just tell the House whether or not the American Government have made any representations to him about the dangers of such a sale?

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[Mr Tobias Ellwood (Bournemouth East) (Con)]

As we approach the next strategic defence and security review, may I invite the Secretary of State to consider leasing the V-22 Osprey—a multi-mission tilt-rotor aircraft—from the United States? Its unique design means that it moves faster and goes further than a Chinook and I hope the Secretary of State will agree that it provides enormous expeditionary capability, including the refuelling from the carrier of the joint-strike fighter.

[Mr Philip Hammond]

My hon. Friend is right that the V-22 is an exceptional platform and incredibly impressive, but he will also know that operating an additional fleet of any kind imposes a huge burden on defence. Strangely enough, I am not approaching SDSR 15 on the basis of looking for additional commitments other than those that are already well known.

[Lilian Greenwood (Nottingham South) (Lab)]

T6. Press reports suggest the Prime Minister is increasing support for armed forces children in schools, which is, of course, welcome, but today’s armed forces covenant report says that “the need for more comprehensive, affordable childcare…needs to be addressed.”What does the Department propose to do about that?

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[Mr Philip Hammond]

First, a collision warning system on the Typhoon is currently under test and if that test is successful, we would expect to roll it out. The Typhoon is a platform with a very long life ahead of it. There is also now a plan to install collision warning equipment on Tornados. The hon. Gentleman has raised this issue in the House before in relation to the very regrettable Tornado accident in his constituency in July 2012, and I have, in consequence, looked at whether, if the original procurement had gone ahead, we would have expected that equipment to have been installed on Tornados by the time that accident occurred. The answer is that we would not have expected it to be installed by that stage.

[Mr Douglas Carswell (Clacton) (Con)]

My right hon. Friend has done some sterling work to make sure that we get much better value for money from the defence budget. What role does off-the-shelf procurement have to play in that and what steps is my right hon. Friend taking to make sure that it becomes more of a default approach?

[Mr Hammond]

We have been clear that there are some areas where we need to protect UK sovereign capabilities for reasons of strategic advantage or in order to protect strategically important industrial capabilities. In all other areas we will look to procure in the way that is most effective for delivering defence.

[Jeremy Corbyn (Islington North) (Lab)]

The Secretary of State will be pleased to know that I have looked at “The United Kingdom’s Future Nuclear Deterrent” report, which he has just placed before the House. Page 5 gives me great concern, however, because it seems to assert that the programme is on track and on budget, and then goes on to predict savings thereafter. Those two things seem to me possibly to be in conflict. Will he assure me that there is no commitment to spending money beyond this Parliament in 2016, in relation to making the main-gate decision, when the new Parliament will have the right to decide the future of the whole programme?

[Mr Hammond]

Yes. Some £3 billion has been earmarked for spending before the next election, and the expectation is that that will have been committed, but that is the total commitment that will have been made at that time. That includes money that will not be disbursed until some time during the next Parliament, but which will have been committed.

[Andrew Bridgen (North West Leicestershire) (Con)]

Does my right hon. Friend agree that the rebasing of British troops from Germany represents a further opportunity to give a much-welcome boost to the UK economy?

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[Sir Tony Baldry (Banbury) (Con)]

In respect of the defence estate, we are very keen to get on with building new housing on the surplus Ministry of Defence land at Craven Hill in Bicester, but there appears to be some confusion about where the new housing will go and where tank transporters will be stored. Will my right hon. Friend please intervene to make sure that that is sorted out as soon as possible? We want to ensure that he gets a financial receipt for his Department.

[Mr Philip Hammond]

I have, indeed, already done so. I think that there has been a miscommunication and a misunderstanding by Cherwell district council. We are clear that our proposals for the possible continued use of part of the land for military purposes will not have any negative impact on the wider proposed housing development. We hope to be able to proceed with the sale imminently.

[Nic Dakin (Scunthorpe) (Lab)]

Now that the MOD has taken back responsibility for the disposal of RAF Kirton in Lindsey from the Homes and Communities Agency, will the appropriate Minister meet me and representatives of the town council to be assured that the MOD will not make the mistakes in that transfer that it has made in other parts of Lincolnshire?

Successor Submarine Programme

Lord Hammond of Runnymede Excerpts

Monday 16th December 2013 Written Statements

[The Secretary of State for Defence (Mr Philip Hammond)]

On 18 May 2011, my predecessor, the right hon. Member for North Somerset (Dr Fox) made an oral statement to the House, Official Report, column 351, announcing the approval of the initial gate investment stage for the procurement of the successor submarines to the Vanguard class. He also placed a report “The United Kingdom’s Future Nuclear Deterrent: The Submarine Initial Gate Parliamentary Report” in the Library of the House.

This Government have committed to publishing an annual report on the programme and I am today publishing the second report, “The United Kingdom’s Future Nuclear Deterrent: 2013 Update to Parliament”. A copy has been placed in the Library of the House.

Public Service Pensions Act 2013

Lord Hammond of Runnymede Excerpts

Monday 16th December 2013 Written Statements

[The Secretary of State for Defence (Mr Philip Hammond)]

I am pleased to lay before Parliament today a report. It sets out the likely effect of section 10 of the Public Service Pensions Act 2013 on members of the defence fire and rescue service and the Ministry of Defence police.

The report has considered the effects—as far as they are known—on health and well-being, operational capability and the likelihood of early retirement in consequence of section 10.

I am clear though that it provides a basis for further engagement with both Unite and Prospect on behalf of the defence fire and rescue service and the Defence Police Federation on behalf of the Ministry of Defence police. Recent meetings with representatives of both groups have resulted in agreement as to how that future engagement will be conducted. This will begin in the new year.

I know too that, at the Adjournment debate of 26 November 2013, Official Report, column 231, the Under-Secretary of State for Defence, my hon. Friend the Member for Broxtowe (Anna Soubry) who is responsible for defence personnel, welfare and veterans agreed to meet my hon. Friend the Member for Argyll and Bute (Mr Reid) and the hon. Member for Telford (David Wright), the Defence Police Federation, Unite and Prospect in the new year. Action is in hand to make those arrangements.

Armed Forces Covenant

Lord Hammond of Runnymede Excerpts

Monday 16th December 2013 Written Statements

[The Secretary of State for Defence (Mr Philip Hammond)]

The armed forces covenant sets out the obligation that the Government and the nation have to the armed forces community. The covenant has two key principles: that those who serve in the armed forces, whether regular or reserve, those who have served in the past, and their families, should face no disadvantage compared to other citizens in the provision of public and commercial services; and that special consideration is appropriate in some cases, especially for those who have given the most, such as the injured and bereaved.

The Armed Forces Act 2011 enshrines these principles in law and places an obligation on the Defence Secretary to report to Parliament each year on the effects of membership of the armed forces on serving personnel, veterans and their families.

The Government are today publishing the second covenant annual report, which I am laying in the House today. The report’s main chapters are based around the fields specified in the legislation: health care, education, housing and the operation of inquests. Each chapter reports on some of the key achievements of the past year and records what more we plan to do.

Over the last 12 months, we have:

committed £17.5 million to ensure that Headley Court and nine specialist NHS facilities in England can provide state of the art prosthetics for injured personnel;

increased the service pupil premium to £300 per child from April 2013;

ensured that seriously injured veterans receive a new armed forces independence payment and will receive at least as much under this arrangement as they currently do from the highest rates of disability living allowance or personal independence payment;

revised the schools admissions code to allow infant schools in England to exceed the maximum class size in order to admit a service child;

purchased an additional 700 new high-quality properties for service families to begin occupying this year;

continued the community covenant, under which almost 400 local authorities in Great Britain have now pledged to work to bring the civilian and armed forces communities closer together;

allocated some £35 million through the covenant LIBOR fund to support charities and others in delivering 96 projects that will benefit the armed forces community; and

introduced the corporate covenant, which provides an opportunity for businesses and other organisations to declare their support for members of the armed forces community who work for and use their services.

Looking ahead, the report makes a number of commitments:

the new unified Defence Primary Healthcare Service will be fully operational from April 2014;

Ofsted will report on the use of the service pupil premium in schools with service children;

access to the standard learning credits scheme will be extended to all members of the reserve forces from April 2014;

a ministerially-chaired board will be established to oversee progress with improvements to the provision of service accommodation;

the MOD will consider whether there could be more flexibility in the provision of service accommodation, such as extending entitlement to those in long-term relationships; and

the MOD will provide a defined contribution for all paid service in the reserve forces to the future armed forces pension scheme with effect from April 2015.

The report has been compiled in consultation with the covenant reference group, which brings together representatives from Government Departments, the devolved Governments in Scotland and Wales, and from external members, including the three families federations, the Confederation of Service Charities, the Royal British Legion, SSAFA, the War Widows Association and Professor Hew Strachan of Oxford university. As in previous years, observations by the external members of the covenant reference group are published as part of the report itself. Once again, I am most grateful to the external members for their continued involvement and assistance.

Defence Procurement

Lord Hammond of Runnymede Excerpts

Tuesday 10th December 2013 Commons Chamber

[The Secretary of State for Defence (Mr Philip Hammond)]

With permission, Mr Speaker, I should like to make a statement on the Government’s plans for reform of defence procurement. The 2010 strategic defence and security review set out the Government’s vision of an agile armed forces designed to face the challenges of the 21st century. Central to delivering and sustaining that vision is the ability to procure and support the equipment the armed forces need. There is widespread acceptance that the present defence acquisition process is not good enough. While there have been notable successes, there have also been many examples of poor performance and sub-optimal outcomes for the armed forces and the taxpayer. Bernard Gray’s report for the previous Government identified three root causes of those problems: an overheated programme; a weak interface between Defence Equipment and Support and the rest of the MOD, too often leading to repeated changes to the requirement; and a lack of business skills in DE&S. This Government have moved to address all three.

In May 2012, I announced that we had resolved the £38 billion black hole we inherited and balanced the defence budget, with more than £4 billion of centrally held contingency to address risks as they crystallised and a much more disciplined and formalised approach to investment approval, committing funding only when project proposals were properly mature. As a consequence, DE&S effectiveness is no longer undermined by an overheated programme. We have also strengthened and improved the interface between DE&S and its MOD customers. We have accepted and implemented the recommendations of Lord Levene’s report on defence reform more clearly to define the customers of DE&S as the front line commands, and to give them substantial responsibility for managing their own budgets and prioritising their requirements. We still have further to go, but we can already see an improvement, and with a substantial reduction in the number of changes to requirements, that is already becoming less of a negative factor in DE&S performance.

We have also started to address the business skills gap within DE&S, through the appointment of Bernard Gray as the Chief of Defence Matériel, and by the recruitment of new senior finance and commercial staff from the private sector. We are beginning to see evidence of progress, and while I do not want to pre-empt the major projects review report that the National Audit Office will publish in the new year, I am confident that it will show significant improvement in respect of the period since we balanced the budget in May 2012.

We recognise, however, that there is still a long way to go. The reforms we have already instituted are only a start, and the challenge of recruiting and retaining the necessary business skills in DE&S is growing, not diminishing, and is likely to get bigger still as the economic recovery gathers pace. A more radical reform of DE&S is necessary if it is to sustain the skills it requires to support our armed forces effectively. That is why we developed the matériel strategy programme.

To address the skills challenge and improve delivery of complex programmes, DE&S needs the freedom to shape its work force to be world class and to engage effectively with the best of the private sector.

The matériel strategy is about removing the obstacles to bringing in critical skills and exploiting the capabilities of the private sector, by exploring alternative models for DE&S. I announced in April that the Government had concluded that a Government-owned, contractor-operated model, a GoCo, might well be best placed to deliver the changes required in DE&S, but that we needed to test the market’s appetite for that model and confirm that it would, indeed, deliver value for money, through a competition. In parallel, I announced that we would work up a public sector comparator, exploring the maximum extent of flexibility that could be achieved within the public sector—a model that we have called DE&S plus. The Government have maintained an open mind as to which option would prove, overall, to deliver the best balance of risk and potential reward once bids are received.

On 19 November, I informed the House that we had reached the detailed proposals stage of the competition, with only one proposal being received from the two consortia remaining in the process. That proposal was from the Bechtel-led Materiel Acquisition Partners. I further informed the House that the Government would consider carefully how best to proceed in the light of this development. I can confirm to the House today that I have decided not to continue the present competition.

The heart of our approach was to test the market’s appetite for delivering a GoCo along the lines we had set out, using the competitive process to drive innovation and value. We have always recognised that there are risks inherent in the GoCo approach. With only one bidder remaining in the competition at this stage, I have had to make a judgment about whether the public sector comparator alone would generate sufficient competitive tension to ensure an effective outcome for the armed forces and value for money for the taxpayer.

I wish to place on record the fact that Materiel Acquisition Partners has engaged effectively with the very challenging brief we set out. It has presented us with a credible and detailed bid, but we do not have a competitive process. I have therefore concluded that the risks of proceeding with a single bidder are too great to be acceptable.

We have gained many valuable insights from bringing the proposition this far and understanding the issues raised by both bidders and potential bidders. My conclusion is that a GoCo remains a potential future solution to the challenge of transforming DE&S, but that further work is necessary to develop DE&S financial control and management information systems to provide a more robust baseline from which to contract with a risk-taking GoCo partner.

We are clear that the only realistic prospect of resolving the challenges facing DE&S in an acceptable time scale is through a significant injection of private sector skills. I have therefore decided to build on the DE&S plus proposition, transforming DE&S further within the public sector, supported by the injection of additional private sector resource, thus ensuring that the organisation becomes “match-fit” as the public sector comparator for a future market testing of the GoCo proposition.

To do this, we will recognise the unique nature and characteristics of DE&S as a commercially facing organisation by setting it up as a bespoke central Government trading entity from April 2014; we will give the new entity a hard boundary with the rest of MOD, a separate governance and oversight structure with a strong board under an independent chairman, and a chief executive who will be an accounting officer, accountable to Parliament for the performance of the organisation—delivering another of Levene’s recommendations; and, crucially, we will permit the new organisation significant freedoms and flexibilities, agreed with the Treasury and Cabinet Office, around how it recruits, rewards, retains and manages staff along more commercial lines, to reflect its role of running some of the most complex procurement activity in the world. We will of course consult trade unions on the practical arrangements for implementation.

These changes will reinforce the customer-supplier interface between the military command customers and DE&S, facilitating a more business-like approach, allowing us to move earlier to a hard-charging regime and thus further addressing one of the weaknesses identified in the 2009 Gray report. They will allow DE&S to procure crucial private sector input through a series of support contracts to deliver key changes to systems and processes, and to strengthen programme management while organic capabilities are built. They will also permit the recruitment into DE&S of key commercial and technical staff at market rates and with minimum bureaucracy.

Bernard Gray has agreed to become the first chief executive of the new trading entity, thus providing a vital thread of continuity between the original Gray report and the continuing DE&S reform agenda. Alongside the changes to DE&S, we will continue with the reform of the MOD’s wider acquisition system, which is focusing on up-skilling our customer capabilities—a key role for our military, alongside the important role it will continue to play within DE&S.

These changes will drive significant incremental improvements in DE&S as well as delivering the mechanisms that will give the organisation a robust performance baseline. That will allow the MOD, at a future date, to re-test the market’s appetite for continuing the DE&S evolution into a GoCo, and its ability to deliver value for money against a significantly enhanced public sector comparator. On both counts, this course of action represents the best way forward, both for our armed forces and for the taxpayer, and I commend this statement to the House.

[Vernon Coaker (Gedling) (Lab)]

I thank the Secretary of State for advance and early sight of his statement.

For the second time in a few weeks the Secretary of State has been forced to come to the House to explain and clarify, and reassure Members about, key components of his Defence Reform Bill, which will be read for a Second time later today in the other place. This is the statement that the Defence Secretary did not want to make and did not think he would have to make. His flagship policy on defence procurement has come crashing down around him—not so much GoCo or DE&S plus, but a no-go and D-minus for the Defence Secretary. It is another embarrassing U-turn from the Government.

Will the Defence Secretary tell us when he decided that he could no longer proceed with plans for a Government-owned, contractor-operated model for Britain’s defence procurement? It is three weeks since the Portfield consortium withdrew from the GoCo process. Why has it taken so long for the Government to bow to the inevitable and admit the difficulty of proceeding with only one bidder?

The Secretary of State is in danger of making a bad situation worse by what he has announced today. The Government cannot run Britain’s defence and national security on an ad hoc basis. They cannot make it up as they go along. But is it not clear today that that is exactly what the Government and the Defence Secretary are doing? Why is this the first time that we have heard of this new proposal? What consultation has he had on his new proposed model? When and how will Parliament be able to scrutinise these proposals? What resources did he allocate, and when did he allocate them, to ensure the expertise and time to test the model for robustness and make sure it was properly costed and tested for viability and sustainability? When he talks about new freedoms and flexibilities, what exactly does he mean? What was the process for appointing the chief executive of the new trading entity? Can he update us on what discussions he has had with the Treasury about his new proposal and when they began? This is a mess, and it poses more questions than it gives answers.

Does the Secretary of State really expect the House and the country to think that this is anything other than a last-ditch attempt to rescue what is left of the Government’s credibility, and to try and hide the shambles and chaos that are engulfing the Ministry of Defence? The House need not take my word for that. Last Thursday, Lord Levene published his second annual review on the implementation of his defence reform report. The Secretary of State heralded it as a triumph for his political leadership. But can he explain why he failed to mention one significant part of what the report said about the issue of procurement? Lord Levene said:

“In my opinion, the quickest and most straightforward solution would seem to be via ‘DE&S plus’, and this needs to be developed to the very highest standards as a realistic option.”

Does the Secretary of State now agree with Lord Levene? He says that GoCo is a potential future solution. Is it on the table or off the table? Which is it? What will be the repercussions for part 1 of the Defence Reform Bill?

The Opposition support a DE&S plus model and have expressed similar sentiments on the record to Lord Levene. We were, and are, conscious of the need to reform Britain’s defence procurement. We want the best of the private sector to work alongside the best of the public sector, but we need to see more detail on the proposed DE&S plus model. To date, it has been the poor relation in the whole process. When will the Secretary of State provide that detail? Will he accept that throughout the Committee stage of the Bill we consistently raised poor management of the process and serious concerns about viability? Will he accept that it was wrong for Ministers to continue to insist that everything was fine when it clearly was not? That complacency and unwillingness to listen has cost the British taxpayer millions of pounds. We have been here before with the debacle over the aircraft carriers. Despite his waste and complacency, he repeats the £38 billion figure, which has never stood up to scrutiny.

Will the Secretary of State tell us exactly how much this has all cost and what further costs are envisaged? What discussions has he had with the remaining consortium, led by Bechtel, before making today’s statement, and what is its position? Is it eligible for compensation? What discussions has he had with his senior civil servants and the staff at Abbey Wood, who today must be feeling undervalued and demoralised, having seen colleagues made redundant because they were not needed, only for them to be re-employed as agency workers?

The Government could have pulled back from the brink. They could have taken the advice of distinguished military figures, senior figures from the defence industry, former Ministers from across the political spectrum and, yes, the Opposition. How and why did the Government get it so wrong? Given that, how can we have any confidence in the credibility, rigour and independent analysis that the Defence Secretary claims for his updated proposals? Is it not the case that the Government have wasted three years and millions of pounds in time and money? The Secretary of State must come forward with plans that stand up to scrutiny and are made clearly, concisely and rationally. Only then can we ensure the best way forward for much-needed reforms to defence procurement.

[Mr Hammond]

That was predictable stuff. The hon. Gentleman claims that we have wasted three years. When it comes to reforming defence procurement, his lot are responsible for wasting 13 years. If I can give him a bit of friendly advice, I would be very careful about using the words “debacle” and “aircraft carrier” in the same sentence if I was sitting on the Opposition Front Bench. Let us remember that it was his Government who, by delaying the programme for two years to manage an in-year cash-flow crisis, drove £1.6 billion of cost into it.

The hon. Gentleman tells us that the Opposition support the DE&S plus model, but until now they have supported the competition, which is exactly what we propose to do. The former Labour Defence Secretary, John Hutton, said:

“It is time for a radical rethink that can align the necessary project-management skills with the right performance incentives...This is precisely what the GOCO concept…can offer and why the British government would be well advised to pursue it.”

The former shadow Secretary of State, the right hon. Member for East Renfrewshire (Mr Murphy) said:

“There needs to be rigorous examination of all the possible options and a robust comparison between the two options of a GoCo model and DE&S+…we will support what we hope is a genuine competition.”—[Official Report, 10 June 2013; Vol. 564, c. 53-54.]

That is what we have conducted and the hon. Gentleman is standing at the Dispatch Box complaining about it.

The hon. Gentleman tells me that this is the statement I did not want to make. Well, he gets the prize—of course it is the statement I did not want to make. I hoped that we would find a wide field of GoCo competitors able to engage with the process of delivering a value for money proposition to the taxpayer, but let me tell him how it works. The Opposition can stand on the sidelines slinging mud and insults, but the Government have to deal with the situation as it exists in the real world. We have to take the situation as we find it and manage the risks. [Interruption.]

[Mr Speaker]

Order. The hon. Member for Plymouth, Moor View (Alison Seabeck) must calm down. She is shouting noisily and I can hear her above her hon. Friends, who are also misbehaving. They must calm themselves. Let us hear from the Secretary of State.

--- Later in debate ---

[Mr Hammond]

I will come to the hon. Lady in a minute.

We have to deal with the situation as it exists and we have to find solutions. What I have outlined today is the solution to the challenge facing DE&S in the real world.

The hon. Gentleman asked some specific questions. He asked me when the decision was taken. He says that we knew three weeks ago that we had received only one bid, and later asked me what the role of the Treasury had been. Since we received notification that we would not get a bid from the alternative consortium, we have been engaged in discussions with the Cabinet Office team, the Treasury team and my own senior officials to look not only at the risks inherent in trying to continue a contracting process with a single bidder, but how we can reinforce the DE&S plus proposition and the best way to go forward. I am sorry if he would have liked a decision more quickly, but I have to tell him that three weeks was the period it took to arrive at a robust conclusion on where we are and where we need to go. We have learned from the process. Talking to bidders and potential bidders has identified some of the challenges and issues we will be able to address to construct the DE&S plus process that I have set out today and, crucially, import private sector skills.

The hon. Gentleman mentioned Lord Levene’s report, but omitted to tell the House that the report gives the Department an excellent result overall for the delivery of the transformation process. He will know—I am sure he has studied this diligently—that Lord Levene explicitly had no remit to address DE&S plus, because it was being dealt with through a separate process driven from the Gray report. It is no secret, however, that Lord Levene, who once ran defence procurement, has always been a sceptic of the GoCo process. It is no secret that Lord Levene believes that only if DE&S plus has total freedom to hire, fire and remunerate on a fully private sector model can it succeed inside the public sector. As the hon. Gentleman and other Members with experience of Government will know, however, there are all sorts of public accountability reasons, relating to managing public money, why that is simply not possible to deliver in its purest form.

The hon. Gentleman asked me about GoCo as a potential future solution. All the evidence from this competition tells us that GoCo can deliver a value for money proposition for the taxpayer. To make it contractible, we will have to develop the DE&S proposition significantly so that it has a better and stronger baseline against which potential contractors can measure their return, and so the Department can be confident that we are not giving away public money in any contract we enter into. It remains a possibility for the MOD, once DE&S-plus is match fit, to consider running the GoCo competition again to test the proposition, in the interests of the armed forces and taxpayers, and to challenge the private sector to come forward with a proposal that will deliver value for money against the match-fit DE&S.

The hon. Gentleman asked me about part 1 of the Defence Reform Bill. Our intention is that it should continue as it stands. It will provide the legislative framework for testing the GoCo proposition, should a future Government wish to do so.

I anticipated that the hon. Gentleman would ask me, quite properly, about the costs involved in pursuing the GoCo competition. The calculation I have is that just under £7.4 million has been expended on the process.

The hon. Gentleman asked me what discussions had been held with Bechtel. He will appreciate that until the formal announcement was made to the House a few moments ago, what I could have said to, and discussed with, Bechtel was heavily constrained. In the interests of propriety, I have had no direct communication with Bechtel, but my officials have been in contact. The indication we have is that it is interested in being considered for the provision of support to the public sector DE&S plus entity through one of the support contracts that we will be letting. The invitation to negotiate that we issued for this competition made it clear that the Government could terminate the process at any point and that bidders would not be entitled to compensation or reimbursement of bid costs. The legal advice I have had is that if any such claim was received, we would be in a very strong position to resist it, and I would intend to do so.

Finally, the hon. Gentleman asked, quite properly, about the impact on staff at DE&S, not just in Abbey Wood —they are spread all across the world—but particularly in Abbey Wood. As I speak, Bernard Gray, the Chief of Defence Matériel, is, I understand, holding a town hall meeting for staff at Abbey Wood to explain to them the position and the plans for the future.

[Mr James Arbuthnot (North East Hampshire) (Con)]

My right hon. Friend has just said that these changes would

“permit the recruitment into DE&S of key commercial and technical staff at market rates and with minimum bureaucracy”.

What exactly does that mean? Does it mean that the civil service terms and conditions of service have been abandoned, and only for DE&S?

[Mr Hammond]

It means that the Treasury and the Cabinet Office have agreed that we will have a bespoke regime for this central Government trading entity, recognising that it faces one of the most commercial sectors of the marketplace. We will be able to employ people with technical and high-level management skills at market-reflective salaries and to recruit them through an accelerated process that does not require us to go through the usual nine to 12-month process required to recruit senior civil servants.

[Mr Bob Ainsworth (Coventry North East) (Lab)]

The part of Bernard Gray’s report with which the previous Government, who commissioned it, had the most difficulty was that concerned with the GoCo company, because at that stage we could not see how it could be made to work. The process that the right hon. Gentleman has been through has shown the difficulties with moving to that kind of model, but rather than taking it off the table, he says it could be enacted at some time in the future. What kind of reaction does he expect to get to that from industry and DE&S staff themselves? The Chairman of the Defence Committee just raised the importance of getting the right skills into this area. With the uncertainty that the Secretary of State’s announcement today leaves hanging over the future of the organisation, will that be enhanced or made more difficult? What kind of a reaction does he expect from industry to this uncertainty?

[Mr Hammond]

I am grateful to the right hon. Gentleman for his question, because he knows something about this. I recognise his concern, but it is my judgment that the kind of people we are looking to attract into DE&S—people with high-level commercial skills—will not be afraid of the possibility of a future evolution into a GoCo.

We can do a great deal to deliver significant change within the public sector—we can bring in people with the right skills, we can upskill staff, we can install new systems, processes and controls, all of which we will now commit to doing, and we can apply external resource to programme management—but we will still essentially be talking about a system where private sector skills sets are employed to advise but civil servants make decisions. Those private sector participants will be paid flat fees; they will not be “at risk” in the structure. That does not fundamentally change the culture. It is an open question whether we can get far enough through that construct or whether, once we have made DE&S as lean and fit as it can be within the public sector, we will need to test again what additional value for the taxpayer could be generated by making the culture shift that having a risk-taking private sector strategic manager take over day-to-day running of the operation would deliver.

[Sir Gerald Howarth (Aldershot) (Con)]

I congratulate my right hon. Friend on having grasped this particularly difficult nettle. Does he agree that in addressing the skills issue so ably highlighted by Bernard Gray, these proposals raise the prospect of having an intelligent customer in the Ministry of Defence and therefore of avoiding some of the ghastly procurement mess-ups created by Labour? Would he be good enough to indicate how he sees ministerial accountability being applied to the new agency? Will it report direct to Parliament, as he mentioned, or will it report to Ministers, who would then report to the House?

[Mr Hammond]

There were two questions there. First, my hon. Friend is absolutely right to point out that for a customer-supplier interface to work, we need skills on both sides. This is not just about upskilling DE&S; simultaneously, we are also carrying out a project within the MOD that will continue to upskill the customer side to ensure that we can be an intelligent customer. On accountability, of course Ministers will be accountable to Parliament for DE&S’s activity, but as I have announced, the chief executive will be an accounting officer with a direct line of accountability, via the Public Accounts Committee, to Parliament.

[Angus Robertson (Moray) (SNP)]

The long-standing inability of the MOD properly to manage procurement continues with this debacle, but what concerns me is not just the project or financial management of procurement, but the delivery of often life-saving equipment to our service personnel. Does the Secretary of State agree, therefore, that whatever emerges from this shambles, we cannot allow a situation where the MOD recommends potentially life-saving equipment, such as anti-collision systems for Tornado jets, but then does not deliver it for 15 years?

[Mr Hammond]

This is probably not the time for a discussion about anti-collision systems, which I know is a subject the hon. Gentleman has raised recently and no doubt will want to raise again. Hon. Members must understand the distinction, however, between failures of the procurement process and the difficult prioritisation of spending decisions. The latter is the responsibility of Ministers and cannot be derogated or laid off on to any other organisation; Ministers have to make those difficult prioritisation decisions, and we then have to hope for an organisation that can execute them efficiently. Today, we are essentially talking about the execution part of the process.

[Sir Nick Harvey (North Devon) (LD)]

I commend the Defence Secretary for the practical decision he has announced today and congratulate him on the progress he has already made in tackling the long-running problems of defence acquisition, not least in empowering the front-line commands, reducing the number of changes to requirements and upskilling the MOD as a customer. The entity he has described is indeed DE&S plus operating as a practical rather than simply a theoretical option. It is essential that those dealing with industry can do so with the same sorts of terms and conditions as those that industry enjoys, and this is a way of giving them that opportunity. I ask him, however, not to abandon entirely the possibility of a GoCo in the long term and to put those measures on the statute book so that a future Government, of whatever colour, could decide to take the model further.

[Mr Hammond]

My hon. Friend is absolutely right. There is a long history of failure in defence procurement by Governments of both main parties going back decades. We now have to construct a model that works. As I just said to the right hon. Member for Coventry North East (Mr Ainsworth), the former Defence Secretary, we can do a lot within the public sector in DE&S plus, but we cannot make the culture change that some people think is necessary. It is right and proper that we do what we can in the public sector to make DE&S, as a public sector body, as high a bar as we can for a private sector challenger to have to match and exceed, but we should not be afraid, once we have done our internal reform work, to allow the private sector to make proposals again to see whether it could deliver yet more value for money for the taxpayer. That is, after all, our principal responsibility.

[John Woodcock (Barrow and Furness) (Lab/Co-op)]

There was surely no reason the Secretary of State had to wait until the GoCo option had collapsed before coming forward with these amended DE&S plus proposals. Does that not show that he was never truly neutral on the choice between an in-house option and a GoCo, that he wanted to rig the process in favour of a GoCo, and that that bias has blown up in his face, costing taxpayers and his own personal reputation?

[Mr Hammond]

I remind the hon. Gentleman that his Front-Bench spokesman welcomed the competition and said that we needed to test the GoCo proposition against the DE&S plus proposition—

[Mr Kevan Jones (North Durham) (Lab)]

Read Hansard.

[Mr Hammond]

I have the Hansard quote in front of me. The former shadow Secretary of State welcomed the competition and said that we needed to test the two propositions against each other, which is what we have done. The hon. Member for Barrow and Furness (John Woodcock) makes an assertion that I can tell him is wrong. I have always recognised that there are significant risks to the GoCo proposition and significant potential benefits from it. The challenge is to weigh the risks and the benefits and we would not be able to do that until we received the bids, which is why we had to run a competition.

We have seen the proposal that has been worked up by the DE&S plus team only in the last three weeks. It has worked behind a Chinese wall and has made clear that it believes that there will have to be an injection of external private sector skills in the form of an external business partner, in addition to the freedoms and flexibilities that it seeks within the organisation. That is the model that we are now going to put in place.

[Peter Luff (Mid Worcestershire) (Con)]

Although I accept that the Secretary of State had little choice but to make the announcement that he has made today to the House, I am sure that he will share my deep sense of regret that we cannot move more rapidly to the greater savings and performance improvements that a GoCo would have delivered. Can he reassure me a little about the private sector’s role in this new organisation? Can he unpack for me a little how the private sector will operate within the GoCo model and the DE&S plus model, and particularly reassure me that this is not just a recipe for more contractors?

[Mr Hammond]

I am grateful to my hon. Friend—someone who, again, knows something about this from his long service in the Department. The key distinction is between a model that puts the private sector in day-to-day leadership of the organisation—working on an incentivised fee that places it at risk—and a model where the private sector provides specific skill sets to civil service decision makers. That is the distinction. What we envisage in the DE&S plus model is probably three separate contracts; one to provide us with programme management support, a spine for the organisation; one to provide us with HR support, an area of particular weakness in DE&S; and a task-and-finish project to install some additional financial control systems within the organisation.

[John McDonnell (Hayes and Harlington) (Lab)]

I said on Third Reading of the Defence Reform Bill that having one bidder stretched the concept of competition to absurdity, so I welcome today’s decision. However, there are 16,000 workers whose futures are still vulnerable following the Secretary of State’s statement. May I suggest that it is not just about bringing in expertise; it is about retaining expertise and skills as well? I would welcome the Secretary of State personally meeting the unions to assure them that, under his new proposals, there will be no detriment to their conditions of service.

[Mr Hammond]

I have personally met the unions and I am aware of their concerns. I have also explained to them the opportunities that this model will create for employees in DE&S. The core DE&S—that is to say the part of the organisation that is responsible for procurement —has about 9,500 people. The hon. Gentleman is absolutely right to say that one of the big challenges at the moment is retaining the highly skilled people. We are losing people to the private sector; worse, we are losing people to other parts of the public sector that have greater freedom to hire. That is why we must address this issue in the way I have outlined today.

[Bob Stewart (Beckenham) (Con)]

In 1984 I was a young major in the Ministry of Defence, and Michael Heseltine, as Secretary of State, definitively told us that he had sorted out defence procurement. It is clearly a basket case and very difficult. How will my right hon. Friend compensate majors and lieutenant-colonels who are doing equivalent jobs to those being done by people from outside the Army but are not getting the same sort of salaries? How will we balance that?

[Mr Hammond]

The military component in DE&S is vital. It is a relatively small number—about 1,500 military personnel. They will of course continue to rotate as part of a career development plan on normal military terms and conditions. For the kind of flexibility that I have talked about today, we will need to hire in specialist skills from the commercial sector and that will not alter or affect in any way the very important role that the military will continue to play.

[John Robertson (Glasgow North West) (Lab)]

The Secretary of State talked about mud-slinging from Opposition parties. I am sure that he slung some mud in years gone by when we were in government. I deal with real people and the great worry about procurement—as always, particularly on the Clyde and in shipbuilding—is that statements that have been made recently will now be shelved until we sort out the process. Can he assure me and the 2,000 people who work in the Scotstoun yard that after everything that has been said up to this point—barring the wrong result next year in the Scottish referendum—the Clyde is still secure?

[Mr Hammond]

The statement that I have made today has no impact on the announcement I made a few weeks ago about the rationalisation of the shipbuilding industry and BAE Systems’ decision to concentrate complex warship building on the Clyde.

[Mr Bernard Jenkin (Harwich and North Essex) (Con)]

I commend my right hon. Friend’s statement, not least because it is the statement that the Public Administration Committee wanted him to make, having expressed in our report on procurement some scepticism that the GoCo would work. Is not the DE&S plus plus proposal still something of a contortion to get round stupid, outdated and silly restrictions on the ability to retain senior civil servants in role as senior responsible owners over the lifetime of projects and on the ability to bring in new people with the right commercial skills? Why are we having to go through this exercise when we should be reforming the civil service so that this kind of flexibility is available to all Government Departments and all procurement projects?

[Mr Hammond]

I understand my hon. Friend’s position, which is long held and loudly expressed, but DE&S is, if not unique, a very unusual organisation within the civil service. It is almost wholly commercial in what it does. Most of its interaction is with the commercial sector and it is competing directly for skills with the private sector marketplace. It is not like a policy making department. It is absurd that we are constrained to deal with civil servants whose job is commercial in nature in the same way as we deal with policy making civil servants in a central Whitehall policy Department. The freedoms and flexibilities that the Treasury and the Cabinet Office have agreed for DE&S plus will free us from that constraint, which will make DE&S plus a much more credible and commercially focused proposition. However, as I have said, I would not like to rule out the possibility of challenging it in the future with a GoCo competition to keep it on its toes. Let us try everything and make sure we get the best value for money for the taxpayer.

[Mark Hendrick (Preston) (Lab/Co-op)]

How will the further involvement of the private sector and the introduction of the GoCo model square with the national interest of having a proper defence industrial strategy for the UK, or do the Government no longer believe in a defence industrial strategy?

[Mr Hammond]

We have a defence industrial strategy. The question from the hon. Member for Glasgow North West (John Robertson) about the Clyde yards will remind the House that, just recently, we made a very important step forward in allowing BAE Systems to explain to the world how it is going to manage complex warship building in the future to ensure that we retain a credible and viable complex warship building operation in the UK.

[Mr Julian Brazier (Canterbury) (Con)]

My right hon. Friend has won some important concessions from the Treasury, and not just on terms and conditions of service for these key people, but in other areas, such as partly restoring the ability for annual financial carry-over, which was lost under the previous Government. Does he think he would have been able to win those concessions had he not been floating a more radical alternative?

[Mr Hammond]

My hon. Friend raises a fascinating proposition: was this all some complex ruse to try to squeeze greater concessions out of the Treasury? I can assure him that that was not the intention. We genuinely wanted, and want, to explore the possibilities of using the private sector in a strategic role and, through DE&S plus, in a more traditional supportive role to get the best value-for-money proposition for the taxpayer—nothing more and nothing less.

[Nick Smith (Blaenau Gwent) (Lab)]

The Secretary of State has talked about the MOD becoming a better, intelligent customer, which is a good thing, but how will he get senior officers to adopt the different mindset and skills needed to do that?

[Mr Hammond]

There are two parts to that question. We have made substantial progress on the mindset by devolving budgets to the front-line commands, which now control their own budgets and have significant autonomy in prioritising their requirements. Front-line commands are therefore managing their own requirements, rather than having somebody else tell them what their priorities are. That has had a significant impact on the culture among the senior military cadre. As for skills, we recognise that there is an upskilling requirement, which is a key element of the intelligent customer project that we are currently running in the Ministry of Defence, which includes bringing in civilian specialist skills to support the military command budget holders in acting as customers.

[Dr Julian Lewis (New Forest East) (Con)]

This is a sensible decision, but one of the perennial problems with defence procurement under successive Governments has always been the way in which specifications for what is to be procured are changed by Ministers and especially by the military along the journey. Will the new model be any more capable of coping with that perennial problem than any of the previous iterations?

[Mr Hammond]

Yes. I hope we have already made good progress on this issue by introducing a much more disciplined boundary between DE&S and the customers, but the intention of setting up the body as a central Government trading entity is that there will be a hard boundary between it and its customers. We will be able to move—much more quickly, in fact, than we would with a GoCo—to a hard-charging regime, where the customer pays for the cost of the changes he is imposing. In my judgment, when front-line commands hold their own budgets and have to pay the cost of making a change, there is nothing more likely to cause them to think twice about making such changes.

[Toby Perkins (Chesterfield) (Lab)]

If I may return to the question that my hon. Friend the Member for Barrow and Furness (John Woodcock) asked a moment ago, it is now 22 months since the Government White Paper on defence procurement. Why is DE&S plus being considered as a serious option only now? Is it not because it was put on the back burner, as all the Government’s attention was focused on the GoCo?

[Mr Hammond]

No; the first phase of the overall project was about designing what we required in DE&S and looking at how the interface would work with the devolved customer—the devolution of budgets to the front-line commands is also a new step that we have introduced. We have also resourced the work on developing the DE&S plus model since we launched the MatStrat—matériel strategy—competition earlier this year, so that work has had proper resourcing. Although the proposal that has been put forward is nowhere near as detailed as that put forward by the private sector bidder for the GoCo proposition—as it is only right to expect—it is a sound framework for building a public sector solution to the challenge we face in DE&S.

[Mr Philip Hollobone (Kettering) (Con)]

Having visited Abbey Wood with the armed forces parliamentary scheme, may I congratulate my right hon. Friend on being bold and innovative in trying to reform the massive defence procurement system? Can he give the House his best examples under the current system of something that has been procured well and something that has been procured badly, and the lessons learnt from both?

[Mr Hammond]

There are countless examples of excellent procurement results in the UOR—urgent operational requirement—system. Indeed, it is common ground among Members who take an interest in this issue that we have to try to import some of the lessons from the UOR system into the routine procurement system. I do not want to pre-empt the major projects review that the National Audit Office will publish in the new year, but I can promise my hon. Friend that he will see programmes that deliver on time and within budget on a scale that he will not have seen before. That is a sign of the progress that is being made, although there is much further to go.

[Gavin Shuker (Luton South) (Lab/Co-op)]

Part of getting value for money for the taxpayer out of the defence industry must surely be about sending clear, consistent signals to that industry. Does the Secretary of State believe that this affair has met that test?

[Mr Hammond]

Yes, and if the hon. Gentleman talks to the defence industry, he will find that it is getting a clear and consistent signal. Let me be clear: this is—[Interruption.] I beg to disagree with the hon. Member for North Durham (Mr Jones): that is what the industry is saying. This is not about beating people up over their profit margins; it is about working together to try to ensure that we do projects in a way that can deliver value for money. It is about not letting contracts where the costs of any overruns are split 90% to the taxpayer and 10% to the industry. No wonder the industry is having a quiet word with the hon. Gentleman.

[Jack Lopresti (Filton and Bradley Stoke) (Con)]

Will the Secretary of State give the House an assurance that, although difficult decisions will be made, with potentially a detrimental effect on some staff at DE&S, these decisions will be made intelligently and with great sensitivity? Given what has been, to say the least, quite a long period of uncertainty, can he give an assurance about when staff at DE&S will receive some much needed clarity on how the plans will affect them individually?

[Mr Hammond]

We are 800 posts gapped in DE&S at the moment, so this is not some project to reduce the number of staff. The objective is to increase the number of staff by filling some of the gapped posts, but as the process takes place—this will not happen immediately—there will need to be a more robust approach to upskilling staff and monitoring their performance, to ensure we have the right people in the right jobs and with the right support to deliver the outcome we need. However, there is no transfer going on and no TUPE involved. I can give my hon. Friend an assurance that those concerned will remain in the public sector and remain covered by the public sector protections that they already enjoy today.

[Guy Opperman (Hexham) (Con)]

Everyone agrees that defence acquisition has troubled many Governments for many years. I welcome the Secretary of State’s statement today, but would he be so kind as to write to me in the near future about whether the decision will make any changes to the provision of equipment facilities or to the jobs of my constituents who work in Albemarle barracks, MOD Longtown or RAF Spadeadam?

[Mr Hammond]

I am happy to write to my hon. Friend, but as I have just said, there will be no changes as a direct consequence of today’s announcement in the numbers employed or the place of employment. However, obviously I cannot give him an absolute assurance that over time the organisation will not evolve, as it becomes leaner and more efficient.

[Jeremy Lefroy (Stafford) (Con)]

I welcome my right hon. Friend’s statement. He referred to more than £4 billion of centrally held contingency for defence procurement to address risks as they crystallise. Can he update the House on whether that has had to be drawn on so far and, if it is in future, whether it will be replenished?

[Mr Hammond]

The answer is no: the £4 billion—it is actually slightly over £4 billion—remains intact. As I told the House when I made the aircraft carrier statement, we originally provided a larger sum of contingency. We allocated part of that specifically to the anticipated cost increase in the aircraft carrier—that was fully provided at the time of the May 2012 statement—but we have not had to make any further call on that contingency. We will wait and see what the major projects review report says, but as I see it at the moment, I do not anticipate any call on that contingency in the foreseeable future.

[Mr Peter Bone (Wellingborough) (Con)]

I am sure the whole House would like to thank the excellent Secretary of State for making an oral statement. It is very difficult for Ministers to come and make statements that they do not want to make, and I am sure the House will welcome the right hon. Gentleman’s coming here and allowing us to put questions to him. The only issue I think the House has to deal with today is whether the announcement will improve defence procurement. If that is the case, it should be welcomed. Is it going to improve it?

[Mr Hammond]

I am happy to confirm to my hon. Friend that I am confident that the announcement will improve defence procurement and that it will set us on a path of evolution for the future, enabling us to keep our options open and allowing us to explore and continually challenge the organisation to deliver better things for our armed forces at better value for the taxpayer.

[David Mowat (Warrington South) (Con)]

The Secretary of State said that the DE&S plus bid was somewhat less detailed than the Bechtel bid, which presumably means that if they were both evaluated on a level playing field, the Bechtel bid would be likely to win. Will my right hon. Friend tell us whether the major learning points or good points in the Bechtel bid will be incorporated into what is now going forward with DE&S plus?

[Mr Hammond]

My hon. Friend asks a very good question. The material contained in the Bechtel bid is “commercial in confidence”, and Bechtel will have spent a considerable amount of money generating the bid, and would naturally not expect the Department to abuse that confidence. I can tell my hon. Friend that the broader process, the work we have done on DE&S plus and the preliminary discussions we have had with bidders and potential bidders have pointed the way to the future development of DE&S in a way that I think has been most helpful, and will inform the process going forward.

Central African Republic

Lord Hammond of Runnymede Excerpts

Monday 9th December 2013 Written Statements

[The Secretary of State for Defence (Mr Philip Hammond)]

The Government are increasingly concerned about the deteriorating security situation and growing humanitarian crisis in the Central African Republic. We are working with international partners, and through international organisations, to end the violence, deliver humanitarian support, and re-establish stability and security. As the Central African Republic is surrounded by countries that are still recovering or suffering from recent conflicts, engagement by the international community is vital to prevent a repetition of previous crises in the region. The scale of this challenge means that we must use all means at our disposal: our diplomatic networks, aid and trade, our political relations, and our military and security co-operation.

The Government have worked closely with France and other Security Council partners to agree a United Nations Security Council resolution on the Central African Republic; resolution 2127 was adopted on 5 December. UNSCR 2127 marks a critical step in restoring security and authorises the deployment of the African-led international support mission to the Central African Republic (MISCA). MISCA will contribute to: the protection of civilians; the vital restoration of security and public order; the stabilisation of the country; the restoration of state authority over the whole country; and the creation of conditions to enable the provision of humanitarian assistance. It also authorises French forces to take all necessary measures to support MISCA in the discharge of its mandate and, recognising the severity of the situation, imposes an arms embargo and encourages progress on the transitional arrangements initiated in Libreville on 11 January 2013.

Shortly after UNSCR 2127 was adopted, President Hollande announced that France would be launching operation Sangaris immediately, in conjunction with Africans and with the support of European partners. On 6 December, following this announcement and in response to a request from the Government of France to provide logistical support to their operation, the United Kingdom deployed a RAF C-17 transport aircraft to move French equipment to the Central African Republic. In the spirit of our strong bilateral relationship with France and in line with the undertakings of the Lancaster House treaty of 2010, the United Kingdom will provide a further two RAF C-17 flights between now and mid-December to help the rapid deployment of equipment for French forces in support of MISCA. The Government have no intention to deploy UK troops in a combat role and have therefore clearly defined the level of support that we will provide to France.

Our military support follows the announcement of a £10 million UK aid package, having already contributed £5 million in July. We are now one of the largest donors of humanitarian assistance to the people of the Central African Republic and will operate alongside the International Red Cross and UN agencies to help thousands of people gain access to food, water, shelter, sanitation and healthcare. We will continue to work closely with France and other partners to improve the security situation in the Central African Republic and relieve the suffering of its people.

Defence Reform

Lord Hammond of Runnymede Excerpts

Thursday 5th December 2013 Written Statements

[The Secretary of State for Defence (Mr Philip Hammond)]

The noble Lord Levene of Portsoken has conducted his second annual review of implementation by the Ministry of Defence of his defence reform report of June 2011, and has written to me setting out his conclusions, providing an independent view of my Department’s progress in implementing the recommendations. I am placing a copy of Lord Levene’s letter in the Library of the House, together with the MOD’s summary of progress against the 53 recommendations in his original report.

I welcome Lord Levene’s recognition of the substantial progress made since his last review in implementing both the letter and the spirit of his recommendations. His finding of clear evidence that the Ministry of Defence has become more business-like and finance-focused is very encouraging, and reflects the wide-ranging changes we have put in place under defence reform, a key part of which was the balancing the MOD budget in 2012. The elimination of the inherited imbalance in the defence budget is described as “remarkable” and an illustration of how a Government Department can be managed effectively when it has strong political leadership.

Lord Levene points out how the MOD head office has reduced in size by some 500 posts and is becoming much more strategic in its approach. The implementation of the delegated finance and capability operating model in April 2013, fulfilling one of Lord Levene’s key recommendations, has increased empowerment of the service chiefs and improved accountability. These changes, coupled with the full operating capability of the new Joint Forces Command, are highlighted by Lord Levene as successful examples of implementation of his recommendations.

With the key structural and process changes now complete, I fully acknowledge the need to maintain momentum, particularly in the area of behavioural change, as well as the continued development of the head office, improvements in management information and the implementation of the matériel strategy. We are making steady progress in the implementation of the change agenda in all of these areas.

The Ministry of Defence is committed to sustaining and building on the changes already made. I am grateful to Lord Levene for his continued support in this important work.

Defence Reform Bill

Lord Hammond of Runnymede Excerpts

Wednesday 20th November 2013 Commons Chamber

[Mr Brazier]

I am glad to see the right hon. Gentleman nodding.

More recently in Afghanistan, General John Lorimer—he is our current commander there, but at that stage he was a brigade commander—made the following comment on a Territorial Army company that was put under his command:

“Somme Company was an outstanding body of men: well trained, highly motivated and exceptionally well led.”

Sadly, however, for a number of years the Territorials have lost their voice and position. Crucially, in 2006, their control of recruiting was taken away from them and given to the Regular Army.

[The Secretary of State for Defence (Mr Philip Hammond)]

I am grateful to my hon. Friend for giving way at this early stage in the debate. I hope it might be helpful if I indicate to the House at this stage that we are minded to accept the principle of his new clause 1. Indeed—[Laughter.] The hon. Member for North Durham (Mr Jones) laughs. We have already made arrangements to receive independent reports from the RFCAs on an annual basis; my hon. Friend is suggesting placing that requirement in statute. On reflection, we consider that to be a sensible idea that will strengthen the programme for the growth and reinvigoration of our reserves. I hope that making that clear to my hon. Friend at the beginning will help to set the tone for today’s debate.

[Mr Brazier]

May I express my thanks to my right hon. Friend? I am delighted by that, and I know that the knowledge that the reserve units out there will once again have a powerful independent voice will make a difference. When I talk about some of the current problems, people will understand just how much that voice matters every bit as much as it did in 1914.

--- Later in debate ---

[Mr Philip Hammond]

I thank my hon. Friend for giving way again. I cannot resist following up the intervention of our hon. Friend the Member for Bournemouth East (Mr Ellwood). When I went to Upavon a couple of weeks ago, I found that a number of limbless ex-Afghanistan veterans had been integrated into the call centre and were managing the online process. I noted that they were able to use their own military experience to encourage and support the young recruits whom they were mentoring online.

[Mr Brazier]

My right hon. Friend is absolutely right to make that point. Not only is it good for the veterans to be integrated into the call centre while remaining in a military environment, but, crucially, the fact that the job is being done by people with military experience makes a huge difference. That is a message which, in a different context, I have tried to get across to our police force in Kent from time to time.

I do not want to speak for too long, because a great many other Members wish to contribute to the debate, but I should like to look abroad for a moment. It is no accident that the Haldane reforms came just after similar reforms in America which established the National Guard Bureau, just three years before the power was given to the forerunners of the RFCAs by the House of Commons. I have been privileged to visit National Guard units on operations in Afghanistan, and to see them doing various kinds of work. One airborne cavalry unit was mentoring the police, and an infantry unit from Virginia—whose origins, incidentally, date back to before American independence—was deploying its platoons along the Pakistani border, protecting aid posts there. Those units were able to bring to those jobs something that regular soldiers could not have brought to them.

“Losing Small Wars” is a book by Frank Ledwidge, who served in both Iraq and Afghanistan. It refers to a catalogue of things that went wrong with the British presence in Iraq and, in the early years, in Afghanistan. One of the saddest aspects of the book is that it paints a picture of the Army not as it used to be, when it was quintessentially good at dealing with civilian populations all over the world. The fact that our Army was entirely unable to relate to the population in Iraq—in particular, it failed to recognise the murderous nature of the Iraqi police—was fundamental to our problems there. By contrast, National Guard units, which contain, for instance, police officers, business men and farmers, related very well to their local areas.

--- Later in debate ---

[Mr Baron]

New clause 3 and consequential amendments tabled in my name and those of other hon. Members will, if successful, postpone the implementation of the Government’s reservist plans until their viability and cost-effectiveness have been scrutinised and accepted by Parliament. I should clarify what these amendments are not about, because a number of Aunt Sallys have been proposed by various interested parties. Contrary to some claims and implications, these are not wrecking amendments; they are not designed to scupper, reverse or tear up the Army reserve plans, and they are certainly not an attempt to recreate, or go back to, Victorian-style and size armies. These arguments are Aunt Sallys that do not do the Government’s cause any good.

I also want to make it clear that if these amendments are passed the delay to the Army reserve plans could be kept to an absolute minimum if the Government allowed prompt scrutiny of the report. There is no intention to drag this out or turn it into a campaign that goes on for months and months. The report could be produced the day after the Bill becomes an Act and we could have a debate in this place within weeks. I have to say that the stories that this is scuppering the Army reserve plans or reversing them are very wide of the mark.

[Mr Philip Hammond]

As the House may imagine, my hon. Friend and I have discussed these issues at some length. I think he will acknowledge that while a debate could be held in short order the requirement is for the Government to carry the House at the end of that debate. Will my hon. Friend acknowledge that the Government would have to get that vote through before we could progress with the reserves agenda, and setting out that hurdle today would send a negative signal to the reserves community, which has heard a message of reinvigoration and growth for the future?

[Mr Baron]

I will very directly answer both those questions. I completely agree that the report the Government would submit would be subject to the scrutiny of this House and a vote, but the fact that the Secretary of State seems concerned about that points to a bigger story about the reforms. If the Government are concerned that they might not carry the House as to the logic of their report, I suggest that that shows a weak point. I therefore suggest that the Secretary of State should, perhaps, not pursue that argument for too long, because for the Government not to accept this amendment because they are concerned they might not be able to carry the House tells a bigger story.

--- Later in debate ---

[Mr Baron]

I very much agree. I sometimes think in this place, where there is no shortage of former serving soldiers, that Front Benchers can be a little too sensitive about how stoical troops are. Their job is to get on with it, particularly if they are professional soldiers. They know these debates are taking place, but they get on with the job in hand, because that is what they are paid to do.

[Mr Philip Hammond]

Would my hon. Friend not accept, though, that there is no attempt to avoid scrutiny here? By indicating that I will accept the intention of our hon. Friends’ new clause 1 and legislate to require an annual independent report—not for a limited period, but as a permanent arrangement—we are in effect creating a mechanism whereby annually the House will receive a progress report on the state of the reserves, and I would expect the House to debate that progress report. That will provide the level of scrutiny that he seeks. What we cannot accept is the destabilisation of the programme that introducing an artificial hurdle—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. Interventions need to be brief. The Secretary of State is an experienced Member of the House, and he knows that. Also, it would be good if he addressed the whole House, particularly the Chair, not just the hon. Member for Basildon and Billericay (Mr Baron).

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[Mr Baron]

I completely disagree; it is not grossly unfair at all. In fact, my hon. Friend highlights the fact that we have fundamental problems with the way the system works. If people are having to wait 13 months for computer systems to talk to each other, then that, if anything, reinforces the case that we should be saying, “Let us pause for a moment and properly scrutinise these plans.” That is all we are asking for.

[Mr Philip Hammond]

I have acknowledged in this House recently and shall do so again later that we have challenges in the recruitment pipeline and problems with the IT systems. We cannot wait until next May to deal with them—we are dealing with them now on a daily, weekly basis. The senior management at the Department and the senior leadership of the Army are all over these problems; they cannot wait until next year for my hon. Friend’s pause.

[Mr Baron]

My right hon. Friend is ascribing a victory to me before it has taken place. The bottom line is that the new clause, like the Bill, would not take effect until the Act receives Royal Assent in the spring of next year. If he is as confident as he says that this is all going to work out, then he has until the spring of next year, before the Bill becomes an Act, to work on these problems. So I do not buy that one either, I am afraid—it is a not a particularly strong card to play when the new clause, like the Bill, would not take effect until the Act receives Royal Assent.

--- Later in debate ---

[Vernon Coaker (Gedling) (Lab)]

I hesitate to follow the peroration of the right hon. Gentleman, the Chair of the Defence Committee, but as always, we were informed by his remarks. I know that whatever his view on the amendments before us, his suggestion of a national debate and conversation about how to change the culture with respect to the reserves and to drive it forward in a national effort is one well made, and I think the whole House agrees with him.

I also thank my right hon. Friend the Member for Coventry North East (Mr Ainsworth), the former Secretary of State for Defence, for his contribution. He had all of us listening. Bringing his knowledge to the debate was worth while. He managed to lay to rest some of the Aunt Sallies that are being held up with respect to new clause 3.

I have heard people talk about the involvement of the hon. Member for Canterbury (Mr Brazier) with the reserves. He has achieved something that very few of us have managed to do, even with our own Governments—he has brought forward and had accepted an amendment to a Government Bill, and I congratulate him on that. He will disagree with my remarks on new clause 3, but we all recognise that new clause 1 will be an improvement. [Interruption.] He has heard what my hon. Friends on the Front Bench have said about his previous voting record, but his conversion on this matter is welcome. The fact that the Government have accepted his new clause is a good thing and will improve the Bill.

Let me explain to the House why we will support new clause 3 and the amendments tabled by the hon. Member for Basildon and Billericay (Mr Baron), why we have tabled some similar amendments, such as new clause 4, and why we have supported similar motions before. As the Secretary of State will realise from the tone of the debate, this House, including Her Majesty’s Opposition, will always put Britain’s security and national interest first. One of the first things I said when I was appointed shadow Defence Secretary was that when I thought the Government were doing the right thing on defence, I would work with them in a constructive and reasonable manner, and that is what the shadow Front-Bench team and I have done throughout the passage of this Bill. To be fair, the tone of the debate, notwithstanding the disagreements that exist between Members on both sides of the House, is one of reasonableness and constructiveness. We have been debating the best way forward with respect to these reforms and the proper defence of our country.

I am sorry to have to say to the Secretary of State that he should not try to turn the debate into a party political row. It is disappointing and unnecessary. Contrary to what he said, we have raised this issue in parliamentary questions, in Committee and, as recently as last month, on the Floor of the House, when we passed a vote to approve a motion almost identical to the new clause. Importantly, the Secretary of State knows that we are not calling for the reforms to be reversed. He knows that we are not saying the reforms should be shelved. Like Members on both sides of the House, we want to see an enlarged reserve force with an enhanced and more heavily integrated role alongside regular forces.

Let me once again praise and pledge my support, and that of the House, for our armed forces and the work they do. What we need is evidence that the reforms are progressing as planned and promised, and we are trying to get the Defence Secretary to take more responsibility for that. There is clearly an issue about viability. All signs coming from the MOD suggest that the plan has, to some extent, fallen off course. Members of the armed forces and of this House have justifiably and sincerely held concerns, and the Secretary of State has exacerbated those by his response to some of the concerns.

[Mr Philip Hammond]

I recognise some of the hon. Gentleman’s concerns, but does he not see that this is a long-term project? By accepting the substance of new clause 1, what we have put in place is a mechanism by which an annual independent report will be laid before Parliament and, we fully expect, give rise to a debate. That will allow the progress of this programme to be tracked over many years. New clause 3 would create a one-off hurdle, that sends a negative signal now. That is not an equivalent provision.

--- Later in debate ---

[Vernon Coaker]

I agree with the hon. Gentleman. The Secretary of State should have the confidence to put his reforms before Parliament. Is it not reasonable, when the Secretary of State and the Minister say at the Dispatch Box that they will publish recruitment figures for the reserves, that they should do so?

On 16 July, the Secretary of State told the House:

“I will be transparent about recruitment and trained-strength targets.”—[Official Report, 16 July 2013; Vol. 566, c. 958.]

Last month, the Under-Secretary of State for Defence, the hon. Member for Ludlow (Mr Dunne), told the Committee:

“We intend to publish the figure for the quarter to 1 October next month.”––[Official Report, Defence Reform Public Bill Committee, 22 October 2013; c. 434.]

That was due last week. As we have since found out, that has not happened and will not happen until next year. Why? The UK Statistics Authority states that the Government’s figures are not robust enough so there must be some delay in their production.

We do know that the overall trained strength of the armed forces reserve has fallen by 160 since last year and that time is slipping away, with the Secretary of State’s own 2018 target less than five years away. The last figures that were published showed that the Government were failing even to reach a quarter of the number of reservists they said they needed to recruit to meet their own targets.

[Mr Philip Hammond]

Let me clarify. The statistics that were published last week were on trained strength and on recruitment into the reserves. Those are the statistics for which the national statistician is responsible. She has indicated on her website that she intends to publish further data series once she is confident of their robustness. Separately, I have undertaken to publish for the House the targets to which we are working and I will do so before the end of the year.

[Vernon Coaker]

The whole House will be pleased to hear what the Defence Secretary has said. He said in his answer—I think I am quoting him, and Hansard will show whether I am correct or not—that the Statistics Authority had some doubt about the robustness of the Ministry of Defence’s figures and that once that robustness is sorted out, those figures will be published. That is my point.

--- Later in debate ---

[Mr Hammond]

I think the hon. Gentleman is referring to the figure for applications, not for enlistments or trained strength.

[Vernon Coaker]

It all needs clarification, which is my point. It is interesting that when we have a debate such as this, when the Secretary of State is feeling under pressure, we see amendments being accepted and more information being brought before the House. It is good that he is saying how he will publish this and how he will respond to that, but we now know that some robustness is lacking from the Government’s figures. That situation will no doubt be corrected much more quickly than it would have been before.

[Vernon Coaker]

We think that the hon. Gentleman’s amendment, although it is welcome, does not go far enough. That is why we support new clause 3.

When the Defence Secretary responds to the debate, I think the House would like to know a little more about what negotiations are going on with Capita, which is running the recruitment programme for the Defence Secretary. What are the problems? Will the IT issues be resolved soon? Are there any other issues? He will know that various rumours are circulating about the problems with regard to Capita and I think it would help the whole House to know where we are with those negotiations, what the Secretary of State intends to do about them and whether there are any penalty clauses for Capita should it continue not to perform as the Secretary of State and the House would expect.

New clause 3 does not call for a reversal of the cuts to the regular forces, despite some of the accusations from those on the Government Front Bench. We support it precisely because we want the Government to prove that their plans are both cost-effective and viable. For that reason, we deem it reasonable that both Houses of Parliament should scrutinise and approve a report that assesses the viability and cost-effectiveness of the reforms.

It used to be the policy of this Government that regular forces would only be reduced contingent on the required increase in reserve recruitment—

[Mr Philip Hammond]

rose—

[Vernon Coaker]

I will give way in a moment. We are clear that reductions to the Regular Army must take place only at a pace that allows adequate uplift in the reserves to meet the shortfall.

[Mr Hammond]

The hon. Gentleman has half answered what I was about to ask him. Is he making a commitment to retain Regular Army strength at a higher level than the 82,000 funded into the future? If so, how will he meet the £1 billion a year cost of doing that?

[Vernon Coaker]

The right hon. Gentleman is flying another kite. I am not making that commitment at all. We support the thrust of the reforms to the Regular Army and the uplift in reserves, but new clause 3 seeks to obtain a proper understanding of whether the reform is working, whether it is saving money, whether it is offering value for money and what is happening with the recruitment targets. We need much more clarity and openness about all those things. The Defence Secretary can say that these are spending pledges or things we do not know. He can attack the hon. Member for Basildon and Billericay for not properly understanding the reform. However, he needs to address what is being said rather than what he thinks we are saying, and that is the whole point.

We talk about allowing adequate uplift in the reserves to meet the shortfall, and we heard from the right hon. Member for North Somerset (Dr Fox). He remarked only last month:

“When I was secretary of state, I said we would only decrease the numbers of regulars when we had guarantees that we would be able to get the numbers—training and equipping up of the reserves—to match.”

Members of the armed forces and of this House deserve to know from the Defence Secretary when that policy changed and why.

We support new clause 3 because we want the Defence Secretary to take more responsibility for these reforms. We consider it better to pause until the MOD has managed to get recruitment back on track as a plan accepted by Parliament than to be forced to ditch the entire reform a few years down the line when it is clear that it is not working. A pause before progressing the reforms would give him time to fix the problems, to provide us with the figures, to prove his plan is cost-effective and to show that he can meet the time frame he has set.

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[Thomas Docherty]

No, I will not. We hear quite enough from the hon. Gentleman at other times.

It is not the Royal Army: we have a Royal Navy and a Royal Air Force, but a British Army. I make that point not to take up valuable time, but because the Secretary of State seems to think that it is the job of Ministers of the Crown, not of Parliament, to make decisions about the Army.

In an earlier exchange about the Back-Bench debate, the Secretary of State said from a sedentary position that it was a Back-Bench vote. The problem with his approach, and the one advocated by the hon. Member for Canterbury (Mr Brazier), is that if there is an annual report that Members of Parliament want not only to debate but to vote on, it is clear that the Secretary of State’s intention would be to ignore any such decision.

This is our last chance to tell the Government that although the House supports the broad thrust of the Army reforms, they are clearly not going according to plan. The Secretary of State has already demonstrated that he has the courage to change tack, as he did on the aircraft carriers, when something is clearly going wrong. I am genuinely surprised that he is not prepared to say, “This is not going as well as we want. We need to slow the rate of progress, so that we do not end up in a disastrous position.”

[Mr Philip Hammond]

For a moment, I thought that the hon. Gentleman was suggesting that we ought to slow the rate of progress on the reserves agenda, but if anything we need to speed it up. I would just tell the hon. Gentleman—seeing the Chairman of the Defence Committee, my right hon. Friend the Member for North East Hampshire (Mr Arbuthnot) in his place—that if he believes Ministers will not be regularly scrutinised from morning till night by the Select Committee and at Defence questions in this House throughout the implementation of the programme, I do not know what planet he is living on. Of course we expect to be scrutinised.

[Thomas Docherty]

If the Secretary of State had been paying a bit more attention, he would have heard me say that it is quite clear that he does not intend to respect any such vote in Parliament. I am sorry, but this Parliament, not Ministers of the Crown, should be sovereign. If he is not confident of carrying his plans for the Army in Parliament, something is fundamentally wrong.

--- Later in debate ---

[Thomas Docherty]

I am grateful for that intervention. I hope that it would not be a career-damaging move if I called the hon. Member for Beckenham (Bob Stewart) my hon. Friend, because I have had the pleasure of serving with him on the Defence Committee for the past three years. That is a perfectly reasonable suggestion and I am sorry that the Secretary of State has not offered that option.

There is genuine good will on both sides of the House. The armed forces and the defence of the realm are not issues that should be party political. This has been a good debate so far because we have managed, on the whole, to keep party politics out of it.

I agree with the Chairman of the Defence Committee about the growing value of cyber-warfare. When the Defence Committee visited the United States earlier this year, we went to cyber command and saw at first hand the key role that is being played by reservists. I think that Members on both sides of the House would agree that we need more such reservists coming through.

The problem is that the bald facts show that we are not recruiting sufficient reservists. When the generals appeared before the Defence Committee earlier this year, they said that we needed to recruit 6,000 reservists annually. I am sure that the Secretary of State has the most up-to-date figures, but I doubt whether a huge number of reservists have been recruited in the past few days. We are clearly falling short and we have been falling short for years. This is not just a teething problem; it is an ongoing problem.

As the Chief of the General Staff has said, there is no plan B on this project. It is therefore crucial that we get it right. At the moment—I say this in a genuinely bipartisan manner—the Government are not on track to meet these important targets. It is entirely sensible for the House to ask for a pause so that the Government can get back on track. The excellent observation was made earlier that that would help to focus minds. Having robust targets and the threat of a pause hanging over the Ministry of Defence might get it to pull the finger out.

The point on which I disagree gently with the hon. Member for Canterbury is that the problem until now has been that the regular generals have been siphoning off the money. They have not made enough progress.

[Mr Philip Hammond]

indicated dissent.

[Thomas Docherty]

The Secretary of State shakes his head, but the £180 million that was allocated to the reserves in the first year was spent on upgrading the regulars. The generals told the Defence Committee that that was what they did. The threat of a pause if they do not get things sorted might compel the generals to make greater progress.

--- Later in debate ---

[Patrick Mercer]

I thank my hon. Friend.

[Mr Philip Hammond]

As a supplementary to the intervention made by my hon. Friend the Member for Basildon and Billericay (Mr Baron), what he says is absolutely true. The fall was 130 over the course of 12 months—0.6% of the trained strength. That is unwelcome, but statistically not a relevant number.

[Patrick Mercer]

There we are: we see the opposing views of the two sides. All I ask is for the Secretary of State for Defence to be clear about it, and to continue to be clear about it. I find new clause 1 to be sensible; it has my complete support. New clause 3 posits some extremely interesting questions, and we have had a good debate about it this evening. However, I think that the point about the changing face of warfare is terribly important.

We have heard a lot of talk about cyber-warfare and other specialist forms of warfare. If we open our history books, we see that in the late 1920s there was a school of thought which held that the fighting of savage tribes could be done entirely from the air. That was tried by an emergent Royal Air Force in Wazirista, and it completely failed, because there were not the boots on the ground to support the Royal Air Force in the excellent work that it did.

Of course there are specialisations within the reserve forces and the Territorial Army which are desperately important, but what our regular forces depend on is a very high level of fitness, a very high level of training, and an ability to deploy instantly. One of my hon. Friends, who is no longer in the Chamber, observed that there was always a period of time before any reservist—any Territorial—was up to snuff. That is no criticism, but, as Members who have served in infantry battalions know, preparing an individual for combat is akin to training a professional athlete. The level of fitness is extraordinarily important. I challenge any civilian holding down a full-time civilian job—and I do not say this with any form of disrespect—to be at such a level of fitness for instant deployment.

What we want for the future is the ability to nip problems in the bud—to avoid confrontation and conflict—and we therefore require deployment that is instantaneous, or as near to that as we can make it. I must say, with the greatest respect, that no reservist can achieve that. It is not in the nature of reserve forces. The clue is in the phrase “reserve, not regular”. I say that with profound respect for all Territorials and all reservists, and for their naval and air force equivalents.

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[Sir Edward Garnier (Harborough) (Con)]

I defer to the military knowledge and experience of those who have spoken before me. The House has had the particular advantage of hearing the remarks of my hon. Friend the Member for Penrith and The Border (Rory Stewart) and it will now have the advantage of not hearing me repeat them.

My constituency of Harborough has a squadron of the Leicestershire and Derbyshire Yeomanry. It is suffering from poor recruitment and I have one practical solution to offer those on the Ministry of Defence Front Bench and the Secretary of State in particular. In order to avoid the attrition rate—the wastage rate—of those who express an initial interest in serving in the reserves, the Territorial Army as was, we should bring them into the units and give them weapons training much more quickly, rather than wait for them to go through medical tests and so forth. Once we have grabbed them, got their interest and introduced them to the practical, military side of the reservists and their camaraderie, we can then decide whether they are fit for the role they wish to play or whether we should deploy them in a less front-end activity. That is a simple, practical proposition and I trust it would enable the Secretary of State and his Ministers to produce the 30,000 reservists and not to lose so many on the way to achieving that number.

[Mr Philip Hammond]

I think this is the first time that I have had the pleasure of addressing the House while you are in the Chair, Madam Deputy Speaker, so I offer you my congratulations.

I congratulate all right hon. and hon. Members who have spoken this afternoon. This has been a good debate, during which many passionately held views have been expressed and much deep knowledge displayed. I thank those who served on the Public Bill Committee and scrutinised the Bill very effectively.

Most of all, I congratulate my hon. Friend the Member for Canterbury (Mr Brazier), who led the debate so ably on this group of new clauses and amendments. He speaks with an authority on this subject that is unquestioned throughout the House, and when he speaks on this subject, we listen. By “we”, I mean not only Members of the House, but the Government.

What my hon. Friend has said to me and the House today about the crucial importance of protecting the distinctive ethos of the reserve movement, even as we move to an integrated armed forces, is compelling. He is absolutely right that we must get right the balance between integration and protecting that distinct ethos if we are to achieve our goals.

I am happy to have made a commitment to my hon. Friend to introduce in the other place an amendment that reflects his new clause 1, which I have to say is technically imperfect, to ensure that this House has an annual opportunity to consider an independent report, produced under statute by the RFCA, not only once, as is proposed in new clause 3, but every year—not just as we roll out the programme, but thereafter—so that we can monitor not just the expansion of our reserves, but the maintenance of them in future.

[Mr Havard]

How will that consideration be undertaken? Will there be a proper, full debate on the report in the House in Government time, as several hon. Members have mentioned, or will there be some other mechanism?

[Mr Hammond]

That will be for the House to determine, and the hon. Gentleman knows the mechanisms available. However, I expect to be held to account for our delivery of this agenda. I am confident that the Chairman of the Defence Committee will give me no quarter in holding me to account for the delivery of this immensely complex agenda.

[Mr Cash]

Will the Secretary of State give way?

--- Later in debate ---

[Mr Hammond]

I will make some progress, because I have very little time, and I want to respond to some of the points made during the debate.

My hon. Friend the Member for Penrith and The Border (Rory Stewart) made an extremely important point that I fear was nearly missed. One could be forgiven for thinking that the recruitment of reserves as part of Army 2020 is simply a question of backfilling or substituting for regulars, but he pointed out that as the nature of warfare changes and we need more specialist skills, we will find increasingly that specialists have to be recruited through the reserves from the civilian sector. With the creation of our cyber-reserve force, we are already seeing the truth of that statement, as people in highly skilled technical jobs in the private sector queue to join the cyber-reserve and offer their skills and expertise to the defence of our nation.

I am the first to acknowledge—I have done so before, and I want to do so again today—that increasing the size of our Army Reserve to 30,000 and sustaining them at that level is a challenging agenda. We are doing it in the face of ending combat operations in Afghanistan, and however strange some people may find this, the prospect of going into a combat zone is a huge recruiting sergeant for the armed forces, regular and reserve alike. We are also doing it against the backdrop, about which I have been completely frank, of challenges with the existing IT system.

We have to get the balance right between our central recruiting system and the vital role played by reserve units in mentoring new recruits. My hon. and learned Friend the Member for Harborough (Sir Edward Garnier) was absolutely right that the key to converting applicants into recruits and getting them through the training process is to get hold of them early at unit level and mentor them through that process. That is what we are doing.

--- Later in debate ---

[Mr Cash]

Does my right hon. Friend accept that what he says will happen in the House of Lords is way off in February? Will he not take the advice of my hon. Friends the Members for Beckenham (Bob Stewart) and for South Dorset (Richard Drax) and initiate the pause that is needed to get this matter right and then submit it to a binding decision of the House at this stage, rather than waiting until the Bill has been passed? Why can he not do that?

[Mr Hammond]

I will not do that because this is a long programme—a five-year programme—that will need continued scrutiny throughout its life. I am asking the House to give the Bill a Third Reading this afternoon so that we send a clear message to the Army, which needs the space to deliver this agenda and is confident that it can do so; to the many thousands of reservists up and down the country who commit their time and effort to the defence of this country; and to the many thousands more waiting in the wings, whom we are seeking to attract to join the reserve forces.

[Several hon. Members]

rose—

[Mr Hammond]

I must make some progress, because I have very little time and I want to leave a couple of minutes for my hon. Friend the Member for Canterbury to wind up the debate.

I hope that my hon. Friend the Member for Canterbury will not press new clause 2. It is essential that we manage the defence estate as a whole. We are on the brink of completing the appointment of a strategic business partner for the Defence Infrastructure Organisation, which will mean that we have the very best private sector estate management capability to deliver the defence estates programme. That will be to the benefit of the regulars and the reserves.

[Mr Baron]

Will my right hon. Friend give way?

[Mr Hammond]

I will say something about new clause 3 and will then take an intervention from my hon. Friend.

First, I recognise that my hon. Friend is a passionate supporter of the armed forces. It is ironic that today, that passion has manifested itself in an attempt to block or inhibit the growth and reinvigoration of the reserves. I know that that is not what he wants. Indeed, I know that he would like to see more capability across our armed forces, not less. As I have made clear, we have no problem with submitting information to the House for scrutiny. By accepting new clause 1, we will deliver the intention behind subsection (1) of new clause 3. I believe that making it an annual report for annual scrutiny will provide for better scrutiny than what he is proposing.

I cannot accept the halt that is proposed in new clause 3. That would send out a signal now to the thousands of people who are in the reserve forces or are thinking of joining them. The Government have set out their plan and are legislating to deliver it. The Army has embraced the plan wholeheartedly. For Parliament to introduce additional tripwires at this stage would create uncertainty, undermine the message about the roll-out of improved terms and conditions, and cast doubt on our intention to spend the sizeable sum of £1.8 billion that is available to support this agenda. In short, it would make the whole agenda into a political football.

As my hon. Friend the Member for North Wiltshire (Mr Gray) said in his contribution, the proper way to scrutinise the implementation of this programme is through the established mechanisms of the House—the annual report, Select Committee hearings and the reporting of data—and not by halting the roll-out of the programme. We do not do that elsewhere and we should not do that for our reserve forces.

What I am attempting to do is to ascribe the most transparent of motives to my hon. Friend the Member for Basildon and Billericay (Mr Baron), but listening to him I could not help detecting just a hint of an undertone of a hidden agenda. Maybe what he wants is not to help us to fix the challenges we face in the reserves agenda, but to find a reason to abandon the project. In his own words, he told the House:

“we could very easily reverse the cuts to the regulars”.

--- Later in debate ---

[Madam Deputy Speaker (Mrs Eleanor Laing)]

Order.

[Mr Hammond]

I have heard these arguments from my hon. Friend before. I have always been clear that we have no choice but to reduce the size of the Regular Army to operate within our budgets. The difference between an Army of 102,000 and an Army of 82,000 is £1 billion a year. He does not have that funding available, and neither do the Opposition. If we are to operate within our budgets, we have no choice but to draw down the Regular Army as we withdraw from Afghanistan and to build up the reserve strength that will primarily be needed if we again become embroiled in an enduring operation with six-month troop rotations.

[Mr Jeffrey M. Donaldson (Lagan Valley) (DUP)]

Recruitment is critical to the success of this project. In Northern Ireland, almost all our reserve units are at 100% recruitment capacity. Why not extend and raise the ceiling for recruitment in successful areas?

[Mr Hammond]

I can tell the right hon. Gentleman that, although we have not publicised it, we have increased the recruiting cap on units in Northern Ireland to 115% of liability, and the Army will continue to consider increases in liability caps in other parts of the country where recruiting performance is strong. I can go further and tell him that a review is currently under way to look at trade skills available in Northern Ireland. Most of the reserves recruiting is trade skills-specific. If we find that pools of additional trade skills are recruitable, we will consider locating additional units in Northern Ireland to tap into them. We have to be agile and go where the potential recruits are and where the skills we need are.

I want to go briefly through some of the other points that have been raised. I want to nail the point my hon. Friend the Member for Basildon and Billericay has made several times in debate and in the media. He says that a 40% or an 80% mobilisation rate is not achievable. We are looking at a maximum mobilisation of between 3,000 and 4,000 reservists at any given time, out of an Army Reserve of 30,000. By my maths, that is significantly below 40% or 80%. During Operation Telic in Iraq, 85% of reservists responded to call out—an 85% mobilisation rate—and Operation Herrick had a 79% mobilisation rate, so I do not quite understand his point.

[Mr Baron]

Will the Secretary of State give way?

[Mr Hammond]

I am sorry, but I have to press on. I also want to deal with—

[Mr Baron]

rose—

--- Later in debate ---

[Mr Hammond]

I also want to deal with the cost of the Reserves. The ratio is 1:5—the cost of training and maintaining a reservist is one fifth of the cost for a Regular Army soldier.

I will not dwell on the Opposition’s position; I think I have made my views known in interventions. However, I want to make a comment about new clause 4, tabled by the hon. Member for North Durham (Mr Jones), which deals with mental health. He has a long and honourable record of raising this issue. While I hope he will not press new clause 4 to a vote, I would be prepared to ask the RFCAs, as part of their obligations under new clause 1, to include reservists’ mental health in the issues that they report on. I hope he will consider that helpful.

Finally, let me turn to new clause 6, which was tabled by the hon. Member for Dunfermline and West Fife (Thomas Docherty). His intentions are absolutely honourable and good: he wants to impose an obligation on employers to grant unpaid leave for training. We have not absolutely ruled out looking at that possibility in the future, but we have made a conscious decision that we want to do this working with employers, not against them. That has meant a couple of tough decisions on unpaid leave availability and discrimination rules. For now, we have decided to try to work with the grain, with employers, but if that does not work and we find there is a problem in the future, we will have an opportunity to return to this issue in the Armed Forces Act in 2016.

We have had a good debate. I urge the House to reject new clause 3 and embrace the concession we have made on new clause 1, so that we have an annual debate on the progress of the project in the House. I hope we can send from the House tonight a clear, cross-party message that we are behind the men and women of our reserve forces, who give so much for the defence of our nation.

[Mr Brazier]

May I say what a pleasure it is to speak for the first time under your chairmanship, Madam Deputy Speaker? I failed to declare my interest at the beginning of this debate: I am proud to have one son in the Regular Army and one in the Territorial Army.

This has been an excellent debate. I would like to mention two speeches in particular: the forensic analysis of my right hon. Friend the Member for North East Hampshire (Mr Arbuthnot) and the piercing vision of my hon. Friend the Member for Penrith and The Border (Rory Stewart). They both gave the House a great deal to think about, as did many others, in excellent speeches.

I thank my right hon. Friend the Secretary of State for accepting the substance of new clause 1. I look forward to it being introduced in another place. I will indeed withdraw my new clause—I made it clear that what I wanted was for it to be properly discussed. He has been very patient with me pressing him on reserve matters, of which property is just one. The decision to adopt the substance of new clause 1, reinforced by many speeches from all parts of the House, sends out a message to the reserves that the House of Commons is behind the reserve forces, just as it is behind the regular forces. We are proud of both. Finally, I must ask colleagues not to vote for new clause 3, tabled by my hon. Friend the Member for Basildon and Billericay (Mr Baron). Much as I respect him, it would send out a disastrous message to the reserve forces at this sensitive time. I beg to ask leave to withdraw the clause.

Clause, by leave, withdrawn.

New Clause 3

Report on Future Reserves 2020

‘(1) Within one month of the passage of this Act, the Secretary of State shall make and lay before Parliament a report on the viability and cost effectiveness of the plans set out in Reserves in the Future Force 2020: Valuable and Valued, Cmd 8655, together with his recommendation on its further implementation.

(2) Further implementation of the plans shall be halted 40 days after the laying of the report unless both Houses shall have resolved to approve the recommendation from the Secretary of State contained in the report.’.—(Mr Baron.)

Provides for a Government report detailing the viability and cost-effectiveness of the plans set out in the White Paper on Reserves (Cmd 8655). Both Houses must approve the report and the Secretary of State’s subsequent recommendation in order for the implementation of the reforms to reserve forces to continue.

Brought up, and read the First time.

Question put, That the clause be read a Second time.

--- Later in debate ---

[Mr Kevan Jones]

I thank the Under-Secretary of State for Defence, the hon. Member for Ludlow (Mr Dunne) for the constructive way in which he has engaged with the Opposition. We are not used to that—certainly not from the Secretary of State—on Bills or things to do with defence. The Committee as a whole gave a good and detailed examination of all aspects of the Bill. I accept that parts of it are still developing as we speak. Events this week have shown that with the withdrawal of one of the contractors for the proposed GoCo.

I thank my hon. Friend the Member for Plymouth, Moor View (Alison Seabeck) for her work on the Bill. I also add my best wishes as she should hopefully become a grandmother for the second time in the next few hours. May I also thank the members of the Committee, the Clerks and the witnesses who came before us? I thank, too, the Minister’s hard-working civil servants who, at times, had to think on their feet when replying to some of the points that were made. I thank them on behalf of the Committee for their work.

I do not think that there is any disagreement in the House that we want to ensure that we procure the best equipment and support for members of our armed forces. In the debate this afternoon, it has been recognised that we should thank the men and women of our armed forces for the contribution they make to our safety. We often take that for granted, but we should never do so because they put their lives at risk to ensure that we can sleep safely in our beds at night.

The first part of the Bill concerns defence procurement. The Government have put forward two options: a GoCo or DE&S-plus. It was clear in Committee and is still quite clear that there is a determination within the MOD that a GoCo should be the way forward—

[Mr Philip Hammond]

indicated dissent.

[Mr Jones]

I am sorry that the Secretary of State says that, but that was not the tenor of what we heard in Committee. Clearly, the withdrawal of one of the potential bidders has left serious questions about the future of the GoCo. We will certainly look closely at how the process goes forward.

[Mr Hammond]

For the sake of the record, I have said many times before in this House and say again today that we are open-minded about the choice between the GoCo and the DE&S-plus solution. We understand that the GoCo will bring certain advantages, but DE&S-plus might bring different advantages. We will weigh the two in the balance and select the solution that is in the best interests of the taxpayer and the armed forces.

[Mr Jones]

I am pleased to hear that, but I am also rather sceptical about what the Secretary of State says. Clearly, the emphasis in Committee and the mood music have been that the GoCo seems to be the main show in town, and there has been scant examination of what DE&S-plus will do. We must ensure that as the process goes ahead and the Bill goes to the other place proper scrutiny is maintained. Not only is this a major change to how we procure defence equipment in this country but it will have an impact on our relationships with international allies.

--- Later in debate ---

[Mr Jones]

I thank my hon. Friend for that question and for his work in Committee. He raises an interesting point, as one of the concerns raised in Committee was what would happen after the nine-year process as regards renegotiating the contract. We will now have only one contractor who, if successful, will certainly be in pole position come the renegotiation at the end of the contract, whether or not any others are able to bid. We must consider those issues very carefully in the coming months as the process develops.

The other issues on which we spent a lot of time and about which there are still concerns are those on intellectual property and single-source procurement, about which we had numerous discussions in Committee. I think that industry still has concerns on those points. Part of the process is about not only reassuring the work force but ensuring confidence about working with the defence sector, because it is a major employer in this country. It is also important to ensure that we are at the leading edge of not only defence technology but security technology. Full involvement of the sector throughout the process will be very important. I think that the Bill will have an interesting passage through the other place.

We spent most of the afternoon on the reserves part of the Bill. I reiterate the point made by my hon. Friend the Member for Gedling (Vernon Coaker), the shadow Secretary of State: Labour Members—and Members generally—look with pride on the contribution that reservists make to our armed forces. I have seen them at first hand, in both Iraq and Afghanistan; they are very brave men and women, doing a fantastic job on our behalf.

On the process ahead, I welcome the Government’s slight change of heart on producing an annual report. May I say thank you to the Secretary of State for including mental health in that report? If he wishes for any assistance with the organisation involved, in terms of how it approaches that, I am quite willing to engage, or point him in the direction of other organisations that will be interested in knowing how mental health can be seen as a priority, because there is an issue, whether we like it or not, with reservists and mental health. I know that the Government have followed through on work that we did in government and have added to that, in terms of making sure that veterans’ mental health is seen as a priority.

On the overall position of reservists, after this afternoon’s debate, I would say that the jury was still out, but we did get some clarification from the Secretary of State on the reduction in the Regular Army. Remember, when the strategic defence and security review was first announced by the Prime Minister, there was to have been a reduction of 7,000; then the figure went down from 95,000 to 80,000. I think the Secretary of State was very candid this afternoon: that was about money, not about what was best for our armed forces.

[Mr Philip Hammond]

Or about spending it in different ways.

[Mr Jones]

Well, we can have a debate about that; the Secretary of State still bandies around the £38 billion figure. What he and many others seem to forget is that there was also the impact on the defence budget of the 9% decrease that this Government brought in as part of the SDSR.

On monitoring how the changes go forward, the hon. Member for Canterbury (Mr Brazier) has done a fantastic job. He has been an assiduous champion of reservists for many years. When we were in government, he worked closely with the then Secretary of State to try to improve the lot of reservists. He raises an interesting point about the issues between the regulars and the reserve forces. There has been, in some quarters of the Army, a view that somehow the reserves are second-best. It will be important to ensure that that is not the case going forward.

It was interesting to hear General Sir Peter Wall say that the proposals were the way forward. When we were in government, he was part of the senior command of the Army that recommended the £20 million cut for the reserve forces. It is important that senior officers in the Regular Army fully buy into the process, because that is how we will make sure that we have the joined-up approach that we require.

The Secretary of State has moved a lot this afternoon; he has gone from holding the position that we should not have annual reports to giving a commitment to them. However, we need parliamentary time, so that the report does not just sit on a shelf in the Library, but is debated on the Floor of the House. I tell him gently that the more engagement he has, not only with the Opposition, but with his party’s Back Benchers, the better, when it comes to making sure that the best intentions that we all have for our armed forces are realised.

The nonsense that we are still going through—we are being barred from speaking to senior officers, and barred from military bases—is not helpful. When I had a role in the Ministry of Defence, I took the view that the more engagement that parliamentarians, irrespective of political party, have with members of the armed forces, the better—and not only for MPs’ understanding; members of the armed forces also get a lot out of coming to understand how this place and politicians operate.

[Mr Hammond]

For the record, we have, as far as I am aware, arranged for the Opposition Front-Bench team and individual members of it to visit military bases.

[Mr Jones]

indicated dissent.

[Mr Hammond]

I am sure we have. If the hon. Gentleman wants to contact me—I have said this to the shadow Secretary of State—and let me know where they would like to go and when they would like to go, we will facilitate it.

[Mr Jones]

That is a very good change of heart. [Interruption.] It is a change of heart; that is not what has been going on over the past few years since the right hon. Gentleman has been Secretary of State. I know it is an issue that the Chairman of the Select Committee has raised as well. I take that at face value and we will test the system, as the Secretary of State has made the offer on the Floor of the House.

We will not press the motion to a vote—[Interruption.] The Minister is chuntering away. The shadow Secretary of State wrote to the chiefs of the armed forces, wanting to meet them, and I have here a note from this afternoon which says that the MOD just rang the shadow Secretary of State’s office to say that the pre-arranged meetings with several chiefs have been cancelled because there is a change in protocol and he must now arrange the meetings through the Secretary of State’s office. Under the old process, the request would be made and the Minister would sign it off at the end. I know that he is paranoid about leaks, and the process is not helping.

I conclude by wishing the Bill well when it goes to the other place.

Matériel Strategy (Upgrade)

Lord Hammond of Runnymede Excerpts

Tuesday 19th November 2013 Written Statements

[The Secretary of State for Defence (Mr Philip Hammond)]

On 10 June 2013, I published a White Paper on the strategy for reform of the acquisition and support of our armed forces’ equipment. The strategy plans to explore the potential for involvement of the private sector under a Government owned and contractor operated (GoCo) model by means of a commercial competition which is under way, and to compare this option with an internal approach which would deliver an improved solution within the public sector (DE&S+). I want to update the House on progress of the commercial competition.

When the invitation to negotiate (ITN) was released on 25 July there were three prospective bidding consortia but this reduced to two shortly thereafter. While we believed that two bidders were sufficient for an effective competition, alongside the internal DE&S+ option, I asked that a review of the process be undertaken jointly between the Cabinet Office and the Ministry of Defence (MOD). This has recently been completed, and a copy of the report has been laid in the Library of the House today.

The review concluded that a viable competition remained, albeit with some risk attached, but that any further reduction in the number of bidders should stimulate a formal reconsideration and decision on whether to proceed further with the GoCo option. Bids were required from the two commercial consortia in three phases and the second of those was due to be received on Friday 15 November. The MOD has received a bid from one of the consortia but the second (Portfield, comprising CH2MHill, Serco and Atkins) has decided to withdraw from the competition. This is regrettable and the reduction in competitive tension will make it more challenging for the Department to conclude an acceptable deal with the remaining bidder, notwithstanding the competition from the DE&S+ bid, which will be received shortly.

The Department, with the Cabinet Office and HM Treasury, will now study the detailed proposal received from Matériel Acquisition Partners (led by Bechtel with PA and PwC in support), which is substantial at over 1,200 pages. In parallel, the DE&S+ team will continue to refine and enhance their proposition. This analysis will inform a decision on whether it is in the public interest to proceed with only a single commercial bidder and an internal option, or whether alternative approaches should be considered and a further statement will be made once this process is complete.