Ministry of Defence (Procurement)

Alison Seabeck Excerpts

Wednesday 19th October 2011 Westminster Hall

[Dr Lewis]

There is always the possibility that people will change their mind when they see different circumstances, but I genuinely feel that that has not applied in this case as a result of what I was about to explain and what hon. Members will remember. Out of the blue, even though the procurement of a replacement and successor system for Trident had specifically been excluded from the terms of the security and defence review, on the day when the statement was made, publishing the review and presenting it to Parliament, we were told that the main gate decision, the contracts for Trident would be put off until after the next election. With the greatest respect to the hon. Member for East Londonderry (Mr Campbell), there was no doubt at all that that had nothing to do with hard facts or realities creeping in, and everything to do with politics, as the letter subsequently sent out from the president of the Liberal Democrats, crowing in triumph at the delay of the Trident decision, made clear.

I must not wander too far from the procurement emphasis of this debate. Therefore, I would like to put a specific question to my hon. Friend the Defence Minister with responsibility for procurement issues. It relates to the study that is being done about alternative systems to Trident as a possible nuclear deterrent. That is being done as a gift, a present, a political offering to the Liberal Democrats in the coalition, and I believe that the study is being carried out by the Cabinet Office rather than the Ministry of Defence, although the Ministry of Defence is supplying the material to the Cabinet Office.

I have to say to the Minister that any halfway competent assessment team, facing the problem of examining the existing and the potential systems for carrying a nuclear deterrent in the future, could do a comprehensive study over a period of probably not more than two or three months and arguably over a few weeks, on the basis of the accumulated knowledge of half a century that we have in the business of strategic nuclear deterrence. I would therefore like to know what progress such a study is making or whether it will in fact be spun out until the next general election. The reality is that there is no alternative to Trident for the next generation of the strategic nuclear deterrent, and I suspect that my political opponents in the CND ranks would agree.

[Alison Seabeck (Plymouth, Moor View) (Lab)]

Just as an aside, does the hon. Gentleman have any concerns that the study was one of the documents put in the waste paper bin in the park?

[Dr Lewis]

I do not mind so much when unclassified documents are thrown away, but I do mind when this country’s basic protection is thrown away. I really do not want to see another hung Parliament, with both major parties having gone into an election proclaiming their commitment to the next generation of the nuclear deterrent, only for a small third party that is adamantly opposed to that deterrent, but which does not have the guts to wear its unilateralism openly, to blackmail the leaders of those two parties in turn, saying, “You get rid of this weapons system and we will make you Prime Minister.”

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[Alison Seabeck (Plymouth, Moor View) (Lab)]

It is always a pleasure to serve with you in the Chair, Mr Hood. This is my first opportunity to speak as shadow Minister since the Minister’s warm welcome last week at Defence Question Time. Looking back through Hansard, it is a little surprising that this is the first Westminster Hall debate on procurement since the last election, with the exception of two half-hour debates. I therefore warmly congratulate the hon. Member for Sittingbourne and Sheppey (Gordon Henderson) on securing this debate. He certainly ranged widely, as promised, and highlighted the broad scope and reach of the Ministry of Defence in procurement. There are major challenges in balancing defence equipment needs while ensuring value for money and retaining the essential skills base to support sovereign capability.

I know that I am not the only MP in the Chamber who has a sizeable defence community in their constituency. Before the last election, my constituency was called Plymouth Devonport, which included Her Majesty’s naval base at Devonport. Thanks to the Boundary Commission, it looks like it might be coming back at the next general election, but we shall see. For me and many hon. Members, providing the right equipment to our troops when they need it, so that they can carry out the work for which they have been trained to the best of their ability, is of upmost importance. A number of hon. Members in the Chamber and I have constituencies filled with military personnel and their families, and I often pick up concerns on the doorstep. I should say at this point that I am delighted to have 29 Commando back in Plymouth, safe and sound. It is right and proper to debate the issues here today.

I listened with interest to the speech made by the hon. Member for Sittingbourne and Sheppey and particularly to his reference to the British Army training unit, Suffield, based in Alberta on the Canadian prairies. It is worth noting that the reason why the British Army started to use that training site was due to the loss of El Adem and Tobruk in Libya when a certain Colonel Gaddafi came to power. The hon. Gentleman’s point about the need for bases in secure venues is absolutely right. Suffield was used briefly during world war two, and since 1972 it has been used as a British Army training base, initially on a 10-year lease. The agreement has been repeatedly renewed, which the hon. Gentleman touched on. I believe that a rolling programme of indefinite use is being offered. I note his comments and questions regarding that area. Other hon. Members also quite rightly challenged whether money was being best spent by the MOD on upgrading the premises there. I will listen with interest to the Minister’s answers to those questions.

The hon. Member for Sittingbourne and Sheppey also touched on morale and beer prices, and he raised a genuine concern about how new companies break into the MOD marketplace, to which I will come later in my speech.

My hon. Friend the Member for Barrow and Furness (John Woodcock) flagged up some potential problems, such as the need to secure the skills agenda and the loss of historic capability in Barrow, which is a lesson that we cannot forget. He also spoke about the implications of delays for contracts and cost overruns that follow.

The hon. Member for St Austell and Newquay (Stephen Gilbert), in supporting concerns about the rotation of staff in procurement, raised a challenging issue. That did not used to be the case, because officers used to be retained within certain specialties, and a number of senior and ex-members of the armed forces have spoken to me on exactly that issue in the past. I hope that the Minister will respond to that, because that area deserves consideration.

My hon. Friend the Member for Islington North (Jeremy Corbyn) asked a series of serious questions about Trident replacement and whether it is needed. He has always campaigned on that issue with a great deal of commitment. Again, I want to hear what the Minister has to say about the time scale and transparency regarding Trident.

My hon. Friend the Member for Blaenau Gwent (Nick Smith) raised the issues of contracts and transparency and of the cost of the over-specification of projects.

The hon. Member for New Forest East (Dr Lewis) is on the flip side of the coin from my hon. Friend the Member for Islington North. He described, with benefit of his long-standing interest and knowledge in defence matters, some of the problems regarding procurement and politicians’ role in muddying the waters, if I am to be gentle about what is going on in the coalition regarding Trident.

[Dr Julian Lewis]

Because there has been such candour on Government Benches about muddied waters, for the sake of clarity, will the hon. Lady take the opportunity to reaffirm her party’s firm commitment that Trident should be renewed and replaced by the successor system?

[Alison Seabeck]

The hon. Gentleman and I both stood on manifesto pledges that said exactly that. I also thank him for his kind comments in welcoming me to my new role.

I would like to look more generally to the future of defence procurement. It would be remiss of me not to thank my predecessor in this role, my hon. Friend the Member for Barnsley East (Michael Dugher), for his work alongside that of my right hon. Friend the Member for East Renfrewshire (Mr Murphy) in taking forward Labour’s review on defence procurement—not least in commissioning the report from Admiral Lord West, Bill Thomas from Hewlett Packard and Tony Roulstone from Rolls-Royce Nuclear. I thank them for their incredibly detailed and thought-provoking report, which builds on the work carried out under the previous Government by Bernard Gray, who has been brought in by this Government as the new Chief of Defence Matériel.

In response to questions last week, the Minister told me that he had read the report, although from our exchange last Monday, I think that there might be some differences in interpretation. However, I believe that we need, on the back of the report and Lord Levene’s excellent work, to look at structural reforms and at how, despite repeated attempts by successive Governments, we have failed to tackle overpriced and overrun projects. The Public Accounts Committee and the National Audit Office have clear views and some pretty sharp criticism on that. The Gray report did not mince its words either when talking about overheating in the equipment programme and the inability of the system to flesh out the real cost of equipment at an early stage.

We need to have a defence procurement policy that works with an active industrial policy—one that promotes defence exports, an area in which we in Britain excel and should continue to do so. The hon. Member for Sherwood (Mr Spencer), who is no longer in his seat, pointed that out. While value for money is clearly important, so is the quality of the product supplied to our armed forces, and British products are among the best. More than 21% of the global market in the past five years was met by British production, and we are the largest exporter to the European Union. Also, there is evidence that competition in the export market leads to an enhanced drive for innovation and improvement in those companies, from which the MOD could benefit. The make or buy proposals in the report submitted to the shadow defence team—it is good reading—deserve some further consideration. We all agree that we need a sustainable defence industrial base that can continue to deliver in the long term. Will the Minister let us have his thoughts on the proposal in the Gray report for a 10-year rolling budget, which does not seem to have found full favour with the current Government?

The hon. Member for Gosport (Caroline Dinenage) was absolutely right to say that small and medium-sized enterprises need a degree of long-term certainty when it comes to supporting programmes, particularly bigger programmes. My hon. Friend the Member for Islington North rightly mentioned the need for diversification of industry. It is all to the good if companies can diversify and find other markets, but there are a number of firms, of which I have several in my constituency, that are incredibly specialised in what they do. They provide bespoke products for defence purposes and it is difficult for them to expand, change or move on from what they do.

I welcome the Minister’s thoughts on all those issues. Will he tell us what sort of relationship he has with his colleagues in the Department for Business, Innovation and Skills and what the feelings are about the need to join up procurement policy, which is such an important element in all this?

Finally, is the Minister happy that, for future procurement policy, there is a clear enough delineation between the absolute sovereign capability and the deployment sovereign capability? Is that something that will be made clear in the expected White Paper? Given the ever-changing nature of conflict, the need for greater co-operation between nations, the drive to secure British business opportunities in this field and the economic challenges that we face, we need to ensure that Governments now and in the future have in place the best systems through which to deliver equipment that is designed to enable the front-line soldier to survive, operate and fight. We also need the best technology and back-up for our armed forces, so that they can deliver force wherever and whenever it is required. I look forward to the new White Paper, because there is a real opportunity to make a difference in this particular sphere of MOD procurement.

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[Peter Luff]

It does not feel like that from this side of the fence. I look forward to the conclusions of the PAC on the forthcoming NAO report.

I accept that we need to be clear about how we plan to acquire and support our equipment for the armed forces, which is a point that my hon. Friend the Member for Gosport mentioned. The support costs are typically about two thirds of the total acquisition cost, with one third being the initial acquisition. We also need to be clear about how we invest in technology to sustain the skills of the defence industry, which is something that the hon. Member for Islington North (Jeremy Corbyn) raised. That was about the only thing that I agreed with in his speech.

The scale of what we spend is huge; the total spend for the whole range of procurements in the financial year 2009-10 was £20.6 billion. It is right that hon. Members should be concerned about how we spend that money. It is also right that we should say that much of that is spent very well, very wisely and very effectively by skilled and talented people. It is inevitable that we concentrate on the problems, because that is the nature of Parliament and holding the Government to account is what we do. None the less, I pay tribute to all those who do their jobs remarkably well, whether they are in the armed services, the civil service, the MOD Abbey Wood or the organisation Defence Equipment and Support. They all do a great job serving our nation.

It is true that we face some difficult decisions. I will not score any partisan points by talking about our economic inheritance, and especially the inheritance for Defence Ministers, from the previous Government. In a characteristically thoughtful and articulate speech, my hon. Friend the Member for New Forest East (Dr Lewis) spoke about the need for fixed points in programmes for decisions. As he said, such a measure is important given the long period over which such decisions are felt. As I am frequently reminded, the last captain of the aircraft carriers that we are currently building is probably not even born yet, which puts into context the length of time we have.

I think that I can give the hon. Member for Plymouth, Moor View the assurance that she sought about the 10-year equipment programme. As I understand it, we now have a groundbreaking deal with the Treasury, which enables us to plan with much greater certainty the future of defence equipment and support in general.

I also want to pick up something that my hon. Friend the Member for New Forest East said about the previous Secretary of State, my right hon. Friend the Member for North Somerset (Dr Fox). The MOD is now set on a path of real recovery, real hope and real confidence thanks to his excellent work. It now falls to the ministerial team to continue that work as a tribute to his sterling leadership as Secretary of State.

I will concentrate my remarks on the speech of my hon. Friend the Member for Sittingbourne and Sheppey, because I owe him that courtesy. If I cannot deal with everyone else’s comments, I apologise and will write to them. I will not comment on individual cases, but I reassure my hon. Friend that the support that we give to SMEs has a high priority in my portfolio. I pay tribute to Vector Aerospace, which is one of the few companies that have been named in this debate. It is an outstanding example of a medium-sized company.

We are making a few changes that should help the SMEs considerably. We are reducing the threshold at which the MOD advertises contract opportunities and have created the new defence suppliers forum, which meets regularly under my chairmanship, to discuss how SMEs can make a better contribution to defence and how we can help them achieve that. We are learning a lot from that group’s work. We are launching a new Government-wide contracts finder that offers a free-to-access one-stop shop of public sector opportunities over £10,000. There will be more in the White Paper, the publication of which I too look forward to very much indeed. I cannot say too much about its contents but it will include a definition of value for money—something that many Members have mentioned—and talk more about outsourcing. Although there is already extensive outsourcing in defence—more extensive that many people realise—I agree that there is scope for more. The White Paper will also address the framework agreement on technical services and through-life costing, which is essential.

I am happy to reassure the hon. Member for Plymouth, Moor View that our relationship with BIS is excellent and that there is nothing between us. I know that she would expect me to say that, but it happens to be true as well.

The White Paper will also define sovereignty requirements. I do not foresee any change in the definition that was published in the Green Paper last year.

I will now specifically address the remarks of my hon. Friend the Member for Sittingbourne and Sheppey. I note that he worked for GEC Marconi, where he apparently ran rings around our officials. That issue is why Bernard Gray is working at present on the new matériel strategy. One of the principal purposes of that strategy is to ensure that we have the skills in place in Defence Equipment and Support to make sure that these procurement decisions are taken well and that the contracts are well negotiated. My hon. Friend has made a powerful point, and that work is ongoing. I hope that submissions to Ministers will come before the end of the year. And watch this space, because I agree that it is important that we do procurement and acquisition well, which has not always been the case. In the spirit of consensus, I think that the Opposition’s document on acquisition is not at all bad. In my view, all it lacked was an apology, but that is another matter for another day.

Turning to Canada, I am pleased that my hon. Friend and other hon. Members obviously had such an interesting visit to the British Army training unit Suffield—BATUS—over the summer with the armed forces parliamentary scheme. That is a great scheme, which works very well under Sir Neil Thorne’s excellent leadership. I have benefited from it twice with the Royal Navy— I am a “postgraduate” according to the scheme’s definitions. Today has shown how valuable the scheme is in enabling Members to speak with authority about the armed services and to challenge Ministers on things that they find. It is what the scheme is there for, and we need to make even better use of it than we do already.

I slightly disagree with my hon. Friend’s emphasis and what I think was the spirit of his remarks when it comes to Canada. Led by my right hon. and hon. Friends in the Foreign and Commonwealth Office, Her Majesty’s Government are looking to develop even closer ties with Canada, as well as with other Commonwealth countries. A joint declaration of closer working between the UK and Canada has been drawn up by the FCO for signature by the two Prime Ministers, with a desire to seek

“greater interoperability between our defence forces and deepen co-operation on procurement and capabilities, to be enabled in part by a Memorandum of Understanding - MoU - on Defence Materiel Cooperation”,

and so on and so on and so on. The document was signed on 22 September by the two Prime Ministers, and it symbolises the very close relationship that we enjoy with the Canadians.

I will now talk about BATUS in more detail. As my hon. Friend the Member for Sittingbourne and Sheppey reminded us, it was set up in Canada in 1972. The location was chosen for its ability to provide the large-scale manoeuvre exercises that at the time—the middle of the cold war—were seen as being critical to meeting the UK’s operational and tactical requirements. BATUS provides 2,690 sq km of rolling, semi-arid prairie, delivering training on a scale that is unparalleled by anything available in the UK and enabling more than 11,000 troops to be trained each year. I want to place on record our real gratitude to the Canadians, who have been our utterly reliable allies in providing this world-class training location since 1972, which allows us to train in a way that is just not possible in the UK. The training at BATUS has been essential for the preparation of our troops for operational deployments, and we owe the Canadians a great debt for the part that they have played in enabling the training to happen.

[Alison Seabeck]

I want to ask the Minister a simple question: do BATUS and the recent new agreement give scope for any increased use of BATUS, as the German side starts to scale back?

[Peter Luff]

The hon. Lady not unexpectedly anticipates remarks that I will make in a few moments. I will turn to that issue then, if I may.

I will now address the concerns of my hon. Friend the Member for Sittingbourne and Sheppey about the costs involved with BATUS. The BATIC—British Armed Forces’ Training in Canada—agreement makes clear provision for the cost-sharing of goods and services relating to UK training in Canada, including the provision of all goods, services and facilities supplied in Canada or procured through Canadian sources. The costs are shared in accordance with agreed formulae, which my hon. Friend talked about in his speech, and those arrangements are scrutinised carefully. In addition, the memorandum of understanding is open-ended and may be renegotiated—that will give my hon. Friend some encouragement—at any time with the mutual consent of both parties.

In my view, the UK quite rightly pays the lion’s share of the costs of BATUS, on the basis that we use the facility significantly more than the Canadians. That is absolutely right and proper, and I have no problem with the cost-share involved in these arrangements. I agree that there is always scope to reduce costs, but other locations, as suggested by some hon. Members during this debate, are simply not equivalent and they would incur costs of their own, including significant set-up costs. So I am sure that the scope for savings is always there, but it may be more limited than my hon. Friend imagines.