Draft Single Source Contract (Amendment) Regulations 2018

Debate between Catherine West and Wayne David

Tuesday 17th July 2018 General Committees

[Wayne David (Caerphilly) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Bailey. May I say that I was surprised to hear the Minister say that it was a pleasure to be here? We all know he is here because the fellow who should have been—the Defence Procurement Minister—resigned last night. I am glad to see a very able stand-in, but I am a bit surprised, because this Minister had threatened to resign and instead it was a Minister who had not threatened to resign who did so. It is all a moveable feast; nevertheless, I welcome the Minister to the Committee.

[Catherine West (Hornsey and Wood Green) (Lab)]

Does my hon. Friend agree that it is a little confusing who is a Minister these days?

[The Chair]

Order. The nature of the debate is straying some way from the regulations. I have indulged Mr David so far, but he must please confine his remarks to the business before us.

[Wayne David]

Indeed. I was simply taking my lead from what the Minister had said. I hope you will indulge me slightly more, Mr Bailey, as I pay tribute to the Minister who should have been here, because he did his homework meticulously well. He was a very good Defence Procurement Minister who put his constituents first. As he explained to me last night, he resigned because he was concerned about the situation of Airbus, which employs many people in his constituency, and could not bring himself to support the Government on this occasion. I simply say that for information, but it is relevant because Airbus is referred to in the regulations. It would have been slightly embarrassing, to say the least, if the former Minister had been speaking now in this Committee knowing full well that his constituents would be adversely affected by legislation that the Government were pressing hard.

I have some sympathy with the Minister before us, but this is an important subject and I want to ask him some questions. If he cannot respond effectively, we will understand why, and I would be more than happy to have his replies in writing—in copious detail, I might add.

The Ministry of Defence has a 10-year equipment budget of £178 billion. For 2016-17, the budget for equipment and infrastructure is more than £8 billion. Members might be surprised to hear that some 40% of MOD contracts are single source—allocated without any competition—of which only 15% to 20% are subject to the Single Source Regulations Office.

I understand that the regulations make three changes, two of which expand the scope of the SSRO with regard to aspects of international co-operation and some intelligence activities—those that do not impinge upon the national security of this country. The third is about extending the exclusions to the regulations where there is a change of contract, which is perfectly understandable. What percentage of contracts that are currently not subject to the SSRO will now be brought under that office’s responsibility? I ask that because when a Minister in the other place, where the regulations have already been dealt with, was asked the same question he was somewhat confused and thought that his notes were unclear. Might the Minister now, or in writing, clarify that, so that we have firmly on the record exactly what percentage we are talking about?

The second question about the two exclusions that are coming to an end. The regulations state that there should be a voluntary agreement between the MOD and the supplier. I find that strange, because as I understand it, a regulation is either in place or not in place; it either applies to people or does not apply. It seems strange that there is a process whereby there is a voluntary agreement on whether the regulations are to apply. I will quote exactly what the explanatory memorandum says, at paragraph 7.5:

“The proposed change is that contracts made within an international defence framework will be subject to the legislation if the MOD and the supplier agree.”

That is surely very uncommon. Legislation either applies or does not apply.

[Catherine West]

My hon. Friend is making a very important second point. Is he aware of whether the Department, in its public procurement principles, has a commitment to pay the living wage both outside and within London? I know that the Minister is aware of my questions in that regard. Also, is there any provision in defence contracts, given that this is public procurement, for the suppliers to employ apprentices? Could the Minister outline the situation in that regard in his response?

[Wayne David]

It will be interesting to hear the Minister’s answer to those two points. I think I know what the reply will be. The fact is that the Government’s so-called defence industrial strategy is strong on rhetoric but very weak on substance. That is a leitmotif through all our criticisms of what the Government are doing on defence procurement.

Let me return to the point that I was making about the apparently voluntary nature of the legislation. Of course, that has implications, because, as the explanatory memorandum goes on to say:

“The need for agreement from both parties may limit increased take-up to an extent.”

How much is “to an extent”? It is so imprecise that it is almost vacuous. If all suppliers say, “Well, that’s very interesting, but we’ve decided not to apply it,” will the Government’s response be, “Well, fair enough. That’s okay. It’s voluntary anyhow”? That is my second question—will the Minister explain the logic, if there is some, behind that?

My third question is about the impact that the modified regulations will have on business. Common sense tells me that there is bound to be an impact on how businesses operate, how much they charge and how they relate to the Ministry of Defence, so I am surprised to see that the explanatory memorandum, under the heading “Impact”, says:

“There is no impact on business”.

Again, is that because this is voluntary and the anticipation is that everyone will ignore it, as it is not worth the paper it is written on? I will be interested to hear the Minister’s explanation of that.

My fourth point is that, as the Minister said, the Government have conducted a review of the legislation, as they are obliged to do under the 2014 Act, but this explanatory memorandum says that they will bring forward a number of changes to be set out in some detail in the Command Paper in the autumn. If that is the case, why are we seeing these modest changes now? Would it not have been better to wait for the Command Paper to be published in the autumn? Then we could have dealt with all the changes that stem from that. It seems very much that this is a partial case of cart before horse. I ask the Minister for his response to that. If there are pressing reasons to bring these modest changes forward, what are those reasons? They are hinted at in the regulations, but the explanatory memorandum does not explain them.

My fifth and final question is on a contextual point. It is interesting that the papers that were circulated for this Committee are a little different from the papers that are at the bottom of the room today. One change that I have quickly noticed is to how the document, the explanatory memorandum and the amended legislation will be distributed, and how much the charge will be for the documents. The document circulated to Members—I ask them to listen carefully to this—states that

“the overriding purpose of this instrument is to give effect to the policy on exclusions, not to remedy the deficiencies, which were not identified in the consultation as matters which cause concern or confusion to users, and would not in themselves have warranted a separate instrument. Therefore it has been decided not to make the instrument free of charge to known recipients of the SSCRs.”

I challenge anyone to explain to me what on earth that means. I have heard of double Dutch, but that is convolution in the extreme.

I am sure the ministerial team have read through all the documentation that the civil servants have sent out, but how on earth could something so convoluted have been passed? I respectfully suggest that all those involved in writing legislation and explanatory memorandums be sent on a plain English course not only so that parliamentarians understand what is being said, but, more importantly, so that the people outside who have to adhere to the regulations understand what is being said. I am sure the Minister cannot hope to explain the quote I gave, because I do not think any reasonable person can, but may I ask for a reply in writing on the last point in particular? With that, I will be able to explain to constituents how much will be charged and how the document will be distributed in plain, intelligible English.