Defence Reform Bill

Lord Palmer of Childs Hill Excerpts

Tuesday 10th December 2013 Lords Chamber

[Lord Palmer of Childs Hill (LD)]

My Lords, from these Benches we wish to associate ourselves with the tributes to our Armed Forces. The problem with this debate is that it is rolled up with a Statement from the other House. If we had had the Statement and a debate on it, we would have been able to concentrate on the GOCO arrangements, but we have a Bill with three definite parts, and I am delighted to see that both my noble friend the Minister and the noble Lord, Lord Rosser, have covered the whole Bill, not just the most contentious part of it.

My noble friend said that procurement was not good enough. In fact, I am afraid that procurement in the Ministry of Defence is not fit for purpose. There is a failure in the procurement process. The noble Lord, Lord Rosser, said that it should be brought to a speedy conclusion. Well, the Labour Government ignored it for 13 years, and they ignored it because it was a problem. It still is a problem. It was a problem then and it is a problem now. The coalition Government attempted to tackle it with innovative solutions that have not in fact worked out. Attempts were made to construct a system that worked, and we have concluded that the main thrust of that system will not work.

Mr Bernard Gray told us that, as director, he would solve the problem. I wonder whether the House is assured of the future when the Minister talks about continuity by having Mr Bernard Gray as the chief accounting official and chief executive of the DE&S-plus. Forgive me, but this is the man who told us that he would sort it all out and get it right. I just wonder, with due deference, whether we would not do better to have a completely fresh look at this and let Mr Bernard Gray reorganise something else. I hope that our Government will look at that again, because I certainly do not think that that would instil a feeling of confidence in the DE&S-plus system so ably enumerated by the Minister.

The problem in this area of the MoD is dealing with the major contractors. Our staff in the MoD are being outclassed by the major contractors, and by their lawyers, engineers and the like. My noble friend has indicated the efforts that will be made to bring our team up to a better standard, but the history of this has not been good. The other problem is making the wrong decisions about what is required, which was the problem for the 13 years of the previous Government and, sadly, to some degree the problem for this coalition Government.

The noble Lord, Lord Rosser, rightly spoke about costs to the bidders. Judging by the numerous pages of its bid, Bechtel clearly spent a lot of time on it, as did the other two unsuccessful bidders. I understand from the Minister’s comments that they will be involved in some way in the new DE&S-plus, but there must be some worries about that. The noble Lord talked about Part 1 not remaining in the Bill, but my plea is that it should stay in the Bill, with the proviso that we are not implementing part of the provisions that were made available on the GOCO arrangements in the Bill. When the Minister replies, I hope that he will explain what provisions there are to make sure that this will not go through on the nod at some future date but will be brought back to this House—because, if it happens, it will be a major effort.

I shall concentrate in the rest of my comments on the most unexciting part of the Bill—Part 2, on single-source contracts—but we need to ensure that the Bill does not produce unintended consequences for the UK’s attractiveness as a place to invest. The Bill appears to allow the MoD to challenge the price of a contract at any point up to two years after the end of the contract. It will reduce predictability over contract price, with possible adverse consequences for boardroom confidence to invest, and the international perception of the UK as a good place to do business. Is the unintended end point of the proposed reform to be that suppliers refer their own contracts to the Single Source Regulations Office at the start of the contract to gain greater confidence over the price and the profit? At the moment, the whole contract can be changed at any point up to two years after it has finished.

The Bill states that the SSRO may make provisions that limit the number of times and the period after a contract ends when the MoD may challenge the price. It may also specify the grounds for a challenge. This is a first step, but the industry will need to have greater confidence in a firmer commitment. As we debate the Bill during its passage through the House, we need in this section a provision that the contractor should not be able to increase its price, and that the MoD should not be able to decrease the price: they will make a contract and, provided the product is up to standard, that is what it should be.

On the universal application of the regulations in Part 2, which allows the Secretary of State to exempt any contract from the new regulations, there are times when exemptions will be necessary, but defining the criteria for awarding exemptions would improve certainty for suppliers—and they will need that certainty. The possible exemption of contracts placed with overseas suppliers may place the UK suppliers at a competitive disadvantage globally. The stringent compliance and monitoring regime will place an additional cost burden on UK suppliers and their supply chains. Will the Minister address the issue of the possible creation of complex contracting arrangements, in which contracts are placed offshore in order to avoid the compliance and monitoring regime? The MoD agrees that there will be circumstances in which an exemption will be required, but these will not be defined in the regulations. That seems to be a weakness.

As to independence and impartiality, the Bill appears to allow the customer—the MoD—a significant degree of control over the regulator, the SSRO. The Secretary of State appoints the chairman and board and has a broad power to repeal the regulations and even to abolish the SSRO. Lack of industry confidence in the SSRO as an independent arbiter between the MoD and the industry is a risk. The industry would like to see further steps taken to bolster the independence of the SSRO, as it will fund 50% of the costs of that organisation and yet has no control over the potential cost growth of that body.

The MoD recognises the problem—and that may be part of the solution. The SSRO is independent, as it will be allowed to decide its processes outside those defined in the Bill. An industry representative will sit on the selection panel for the chair of the SSRO. This part of the Bill certainly has more meat on it, and I hope that in Committee we will able develop it further.

I turn briefly to the question of reserves, in the hope that my noble friends Lady Garden and Lady Doocey will take it up in more detail. I will talk about the deployment and appeals processes, and what the Bill will do. Its provisions will place a greater burden on the employers of reservists by extending the circumstances in which reservists may be deployed. This will clearly have a business impact, particularly on SMEs employing reservists with unique skill sets. It is unclear to me—and it is not laid out in the Bill—how SMEs will be helped to replace such specifically talented employees.

The MoD intends to expand its cyber reserve. This may transfer expertise from the private sector to the public sector, as opposed to expanding overall expertise. Greater clarity is required on what steps will be taken to support the employers of reservists in these circumstances. The Ministry of Defence’s position appears to be what is set out in Section 78 of the Reserve Forces Act 1996, which allows the Secretary of State to enable a person liable to be called up to apply for a deferral or exemption. Again, when we deal in detail with the question of the reserves, we will need to make sure that employers feel confident that this is something that they can live with and that will not harm their businesses.

Armed Forces: Territorial Army

Lord Palmer of Childs Hill Excerpts

Monday 18th November 2013 Lords Chamber

[Lord Astor of Hever]

My Lords, we attach a great deal of importance to working constructively with employers and SMEs. I take on board what the noble and gallant Lord said about SMEs.

[Lord Palmer of Childs Hill (LD)]

My Lords, the Ministry of Defence has made redundancies on the basis of increased numbers in the Reserve Forces. If the reservists are not there, the public is bound to ask who is doing the job of defending Britain and Britain’s interests. What is my noble friend the Minister’s comment on that?

[Lord Astor of Hever]

My Lords, our Regular Forces will continue to furnish the highest readiness front-line defence and reaction forces, although these may be supplanted from time to time by individual reservists, but there are many areas in which the reserves can and do provide vital capability, such as medical and intelligence. They will continue their contribution in these fields, but we also expect to see them playing an increasing role in the provision of combat forces. Army Reserve units will be paired with regular units, which provide the same capability, and that will happen across the whole range of capabilities.

Defence: Aircraft Carriers and UK Shipbuilding

Lord Palmer of Childs Hill Excerpts

Wednesday 6th November 2013 Lords Chamber

[Lord Astor of Hever]

My Lords, we must face up to the fact that the coalition Government inherited a much smaller Navy from the noble Lord’s Government. On the operational requirements, the First Sea Lord came to see me this morning and has offered to brief Peers on how he sees these carriers being used. I quite agree with the noble Lord, Lord West, that we need the carriers. They are built to be used.

[Lord Palmer of Childs Hill (LD)]

My Lords, when the cost of building two new aircraft carriers is set to rise by £800 million to £6.2 billion, Harry Truman’s adage, “The buck stops here”, is bound to be inverted. We have heard this in recent exchanges. The coalition Government blame the previous Labour Government; indeed, the contracts in my view and that of many experts, were flawed because the contractor only has to pick up 10% of the overrun. The Ministry of Defence and the Secretary of State must be complimented on negotiating for the overrun costs to be spread at 50/50 between both. However, I note in the repetition of the Secretary of State’s speech that the arrangement is to go on until the contractor’s profit is lost overall. I think we need some more meat regarding how that profit is to be calculated, because there are many ways of calculating what a profit is and not much was said about that in the Statement.

Once we get rid of the blame element we must ask, as the noble Lord, Lord West, asked, whether we need the carriers. We have exchanged views on this before. There are people who say that in an era of conflict marked by counterinsurgency, terrorism and cyberwarfare, carriers are not quite the necessity that they have been in the past. My first question to the Minister is whether the saga of carriers supports the GOCO—government-owned contractor-operated—arrangements we are suggesting should go into procurement. The Chief of the Defence Staff gave an interview on 3 November in which he said he wants the Armed Forces to be available in international crises such as striking firemen, foot and mouth, and intervention in terrorist heartlands. How do the carriers and the F-35Bs fit into that scenario?

Finally, turning to the three offshore patrol vessels, we are told that the marginal costs will be less than £100 million; what guarantees are there?

[Lord Astor of Hever]

My Lords, we do need these carriers, as I said to the noble Lord. On the question about GOCO, as the Statement said, the chair of the Public Accounts Committee has described the carrier programme as one of the most potent examples of what can go wrong with big projects in the public sector. We need to change this and we feel that a change of procurement is necessary. We will all have a chance to discuss this when the Bill comes to this House later this year. As for the operational use of the carriers, they are very flexible ships, they have full strike capability and they can also be used for humanitarian aid and the use of Special Forces. My noble friend asked what guarantee there is on the OPVs. The deal secured today is for a fixed price.

Armed Forces: Redundancies

Lord Palmer of Childs Hill Excerpts

Thursday 31st October 2013 Lords Chamber

[Lord Palmer of Childs Hill (LD)]

My Lords, I thank the noble Lord, Lord Touhig, for putting this important topical item down for debate. This is a subject that he and I have been raising for some time, and I will try not to repeat his words.

The Government’s defence review has been in place now for some three years, having been announced in October 2010. They are three years in which significant redundancies have taken place. Most have been voluntary redundancies. In fact the proportion of voluntary redundancies has been increasing over time. So as we look to the end of 2013, we will have seen more than 10,000 serving forces personnel ending their service careers. We debated back in June of this year the impact on those selected for redundancy who were close to pensionable age. Now the noble Lord, Lord Touhig, broadens and repeats questions that we raised at the time. He asks about the overall impact of the redundancies and in particular, what the Chief of Defence Staff considers the impact to be.

I will thus also return to a question that I have asked on earlier occasions in your Lordships’ House, which is whether the fact that redundancies are in many cases voluntary means a lowering of morale in our Armed Forces? I am also concerned as to whether those leaving the Army, navy and air force are the ones whom we want to leave. Are we losing the skills that are essential for any enterprise? Has the MoD assessed what trades and skills are going by voluntary and compulsory redundancies?

I welcome the words of the Chief of the Defence Staff, General Sir Nick Houghton, when he wrote about his vision for our Armed Forces as recently as August this year. His determination to lead our forces through these times of austerity demonstrates his clear commitment to professional, effective and more efficient forces. His realistic recognition of the challenge he faces in delivering the changes set out in the 2010 defence review should command respect across this House. He was again pressed more recently on the question of withdrawal from Afghanistan, redundancies and reservist recruitment. He seemed resolute in his mission when he said as recently as 21 October:

“In terms of morale, it’s not about individual happiness. It is about the ability to endure in times of real austerity, endure through times of hostility, in times of pressure ... And I think if anything has demonstrated the resilience of the morale of the British armed forces, it is the last couple of years—and the fact they still continue to perform, and are one of our nation’s unique selling points”.

I look forward to hearing from the Minister how he interprets the Chief of the Defence Staff’s words. Does it mean that our forces will have the resilience of their morale being severely tested?

There are additional points on which I hope the Minister might offer your Lordships’ House clarification. So far, there have been three tranches of redundancies and yet the total number of redundancies is only a little over half of that set out in the defence review. There is, I fear, uncertainty as to how the redundancy programme will proceed. What proportion will come from voluntary redundancy? What spread of skills and experience will be lost? Are those taking voluntary redundancy the people we want to lose? These are important questions, not least to enable the Government to demonstrate that our Armed Forces retain the necessary skills, experience and morale, but to clarify the question of recruitment to the Regular and Reserve Forces.

Turning to the Reserve Forces, those who have heard my thoughts on the defence review before will know that I have a real interest in ensuring that our Reserve Forces, newly expanded and updated, will be effective and able to fulfil the role the defence review set out for them. The increase from 19,000 to 30,000 reservists is a vital component of the review and essential in ensuring the overall capacity of the remaining 82,000 Army, RAF and Royal Navy Regular Forces that are planned.

There are continuing questions about this increase in the size of our reserves. How will we recruit the right people? Will there be sufficient numbers with the right skills and experience? How do we ensure that they see deployment that engages their talents and commands their loyalty? We must also give real thought to working with employers so that they both understand the importance of employees giving such service and are able to plan for sometimes lengthy absences of perhaps integral staff.

The issue on which I would press the Minister today is that of the success of recruitment to the reserves, a point touched on by the noble Lord, Lord Touhig. This key issue was put to the Chief of the Defence Staff. He seemed enthusiastic at the prospect of increased numbers of reserves when he said:

“We have produced a good offer. We’ve got to get out the message that people who join now are joining something that is exciting, will give them all sorts of rewards and has a very, very strong future”.

However, the question for me is whether this recruitment is working. We read that reserve recruitment is falling significantly below target—and that is before we begin to ask what vital skills and experiences are missing. If the overall targets are undershot, are we correct to close local TA centres? Is our new outsourced recruitment—again touched on by the noble Lord, Lord Touhig—the best way to fulfil our duty to defend the UK?

I shall not repeat the comments made by the noble Lord about people nearly reaching pensionable age and being made redundant but I have had correspondence with the Minister on the subject. As to the 1.2%, or approximately 130 soldiers, how much would it cost to play the decent Government by that number of people? The answer I got was, “Where do you draw the line?”. That is a problem. However, we know where the line has been drawn, and it affects 100 to 130 soldiers.

In conclusion, I welcome and commend the Chief of the Defence Staff for his determined and judicious language in assessing the progress of the defence review. I have no doubt that our reduced forces will cope in times of peace, but could they cope with another Afghanistan? Could they cope if there were two such conflicts at the same time?

Armed Forces: Human Rights Legislation

Lord Palmer of Childs Hill Excerpts

Wednesday 23rd October 2013 Lords Chamber

[Lord Astor of Hever]

My Lords, we continue to be grateful to Her Majesty’s Official Opposition for their support on Afghanistan. I can assure the noble Lord that my department is exercised about this issue and Ministers are working closely on it with the service chiefs. A number of cases are still before the courts and the legal position is not yet clear. We will continue to monitor developments closely, but I can reassure the House that, even when the ECHR does not apply, UK Armed Forces are at all times required to comply with all applicable domestic and international law. Customary international law and UK criminal law explicitly forbid torture and abuse, and our domestic law applies to members of UK forces at all times, wherever in the world they are serving.

[Lord Palmer of Childs Hill (LD)]

My Lords, I add from these Benches our sincere condolences on the loss so eloquently expressed by my noble friend the Minister. In his and the ministry’s view, will the actions of the Supreme Court lead to further substantial claims on the Government? What evidence is there of commanders in the field being inhibited because of the comments that have been made in these human rights cases?

[Lord Astor of Hever]

My Lords, we are concerned that the Supreme Court judgment creates uncertainties in the law that could well impair the ability of the Armed Forces to make robust and timely decisions which are necessary to our national defence. We intend to defend these combat-related claims rigorously.

Armed Forces: Pension Scheme

Lord Palmer of Childs Hill Excerpts

Monday 22nd July 2013 Lords Chamber

[Lord Astor of Hever]

My Lords, I did say that only 1.2% are affected. The redundancy schemes recognise those who miss out on immediate incomes by paying them significant enhanced tax-free redundancy compensation lump sums. Those who leave before the qualification point will get preserved pensions and further tax-free lump sums at the age of 60 or 65, depending on the pension scheme they are in. Armed Forces pensions remain among the most generous in the public or private sector. We recognise the unique role and sacrifice of the military, which is why the Armed Forces continue to benefit from non-contributory pension schemes.

[Lord Palmer of Childs Hill]

My Lords, what impact does the Minister consider has been made to Army morale since the announcement of the third round of redundancies on 18 June this year? What conclusions about morale does my noble friend the Minister draw from the increased proportion of voluntary redundancies in the recent tranche of Army redundancies, up, reportedly, from 72% to 84%?

[Lord Astor of Hever]

My Lords, there is no evidence that morale in the Armed Forces has been adversely affected by the redundancy programme. The number of applications for redundancy is not an indicator of the state of morale because the Army has deliberately set out to maximise applications. Recruiting for the Armed Forces remains buoyant.

Reserve Forces

Lord Palmer of Childs Hill Excerpts

Wednesday 3rd July 2013 Lords Chamber

[Lord Palmer of Childs Hill]

My Lords, I thank my noble friend for the Statement that he has repeated. From these Benches we associate ourselves with saluting the sacrifice made by our reservists. To meet the challenge of significantly increasing the numbers in our Reserve Forces we need to foster the belief that employers, employees and the nation all benefit from reserve service. Will the Minister say whether medically trained reservists will be able to bring skills to the military and develop additional skills to bring back to their UK employers? Will he also tell the House how employers and employees are to be convinced that there are benefits to the employer and the employee from improved skills and experience while serving, which might outweigh the temporary loss of civilian work time? Finally, will he say whether consultation with employers—which he mentioned previously—have uncovered signs of corporate social responsibility by allowing or even encouraging participation in the reserves?

[Lord Astor of Hever]

My Lords, in answer to the first part of the noble Lord’s question, medical reservists develop additional valuable specialist skills when they are deployed, which they then bring back to the National Health Service. The Defence Medical Services is uniquely placed to share the development of operationally specific medical science and clinical excellence with the NHS. The National Institute for Health Research centre has brought together military and civilian trauma surgeons and scientists to share innovation in medical research, to advance clinical practice on the battlefield and to benefit all trauma patients in the National Health Service at an early stage of injury.

On the benefits to an employer who recruits an employee who is a reservist, I would say that reserve service will benefit different employers in different ways. For some, the improved skills, experience and training of the individual reservist will be beneficial. For others, where the reservist’s military role is close to their civilian one, there will be more benefit from transferable skills. For some companies and sectors, reserve service suits and supports their business models. For many, reserve service may support corporate social responsibility objectives and may be part of their social action plans, alongside wider volunteering policies. We encourage employers to publicise their support for the Reserve Forces to customers, suppliers and their local communities. The second part of my answer was in response to my noble friend’s third question.

Armed Forces: Human Rights

Lord Palmer of Childs Hill Excerpts

Tuesday 25th June 2013 Lords Chamber

[Lord Astor of Hever]

My Lords, as I said in my initial response, urgent discussions are taking place in the Ministry of Defence. We are meeting lawyers and trying to work out the best way forward for members of the Armed Forces. As regards our allies, we know that they are very interested in this issue and we will share the conclusions of our discussions with them as soon as possible.

[Lord Palmer of Childs Hill]

My Lords, lawyers representing relatives said that the ruling meant that the Ministry of Defence owed a duty of care properly to equip service men and women as they went to war. Will the Minister comment on whether this interim judgment creates a risk of making the MoD more cautious with its engagements and less effective in peacekeeping? Will the Minister also confirm that the MoD is aware of its responsibilities towards our service men and women to provide them with vehicles and equipment suitable to the areas of conflict?

[Lord Astor of Hever]

My Lords, with regard to making the MoD more cautious, looking around the House I can see noble Lords and noble and gallant Lords who, in their time, had to take very difficult operational decisions on land, at sea and in the air. I am sure that they would agree that we must ensure that commanders have the confidence to take decisions that often must be made in the heat of combat to obtain their objective with the least possible loss of life.

As for the equipment, the most important priority is the protection of our troops. Since this litigation started, the wide range of protective vehicles, including Mastiff, Ridgeback, Husky, Wolfhound, Jackal and Foxhound, have been available to commanders to match the most appropriate available vehicle to a specific task, based on the assessment of operational risk. Every effort is made to bring troops’ kit up to spec for the job they do and continuously to update it as technology advances.

Armed Forces: Redundancies

Lord Palmer of Childs Hill Excerpts

Thursday 20th June 2013 Lords Chamber

[Lord Astor of Hever]

My Lords, the number of applications for redundancy is not a good indicator of the state of morale because the Army has deliberately set out to maximise applications. Additionally, it should be noted that only 30% of those who were eligible applied for redundancy.

[Lord Palmer of Childs Hill]

My Lords, will the Minister expand on his Answer in relation to reductions in the Army to include reductions in the Royal Air Force and the Royal Navy? The proposals were for 5,000 reductions in the RAF and 5,000 in the Royal Navy. Can he tell the House the timing of those reductions and what progress has been made? Following on from the previous question, what is the state of morale in the Armed Forces if voluntary redundancies are of the extent about which we have been told?

[Lord Astor of Hever]

My Lords, I think I covered the question of morale in my previous answer. As to redundancies in the Royal Navy and the Royal Air Force, in tranche 1, 2,800 personnel—just over 1,000 Royal Navy, 920 Army and 920 RAF—were selected for redundancy, of which 62% were applicants. In tranche 2 of the Armed Forces redundancy programme, 3,760 personnel—165 Royal Navy, 2,880 Army and 750 RAF—were selected for redundancy. Achieving the reductions required to bring the Regular Army to a strength of 82,000 is expected to require a further redundancy tranche, which may also include medical personnel of the Royal Navy and the Royal Air Force. However, at this point, no decision on this has been taken.

Armed Forces: Reserve Forces

Lord Palmer of Childs Hill Excerpts

Wednesday 19th June 2013 Lords Chamber

[Lord Astor of Hever]

My Lords, we are confident that the reinvigorated reserves will deliver the quality and the number of reservists we require in future, both in training and in operations. Over the next 10 years, we are investing £1.8 billion to revitalise the reserves. We have also appointed a three-star general whose job will be to deliver this transformation, including the engagement that will be required with employers. Unfortunately, I cannot give the noble Lord, Lord Rosser, the undertaking that he asked me to give on the numbers.

[Lord Palmer of Childs Hill]

My Lords, the policy on this particular regiment highlights the many questions arising about our Reserve Forces as they grow to meet the demands of the Army 2020. Can the Minister say what thought has been given to the proposals to involve those Gurkhas now quite rightly in Britain in our Reserve Forces?

[Lord Astor of Hever]

My Lords, as my noble friend knows, the Government place great value on the contribution of Gurkhas, both past and present. Gurkhas already serve in the TA and ex-Gurkhas living in the UK can apply to join the reserves. The recent launch of the TA Live campaign encourages ex-regulars, including Gurkhas, to join. While we are not minded to have an exclusive ex-Gurkha reserve unit, the Brigade of Gurkhas is working with recruiters proactively to recruit ex-Gurkhas into the reserves.