Defence Procurement

Bob Ainsworth Excerpts

Tuesday 10th December 2013 Commons Chamber

[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.