Procurement Bill [ Lords ] (Ninth sitting)

Chris Evans Excerpts

Committee stage
Tuesday 21st February 2023 Public Bill Committees

Brought up, and read the First time.

[Chris Evans (Islwyn) (Lab/Co-op)]

I beg to move, That the clause be read a Second time.

It is a pleasure to serve under your chairmanship, Mr Mundell. We have only been here half an hour and it is like we have never been away.

New clause 7 would require the Secretary of State for Defence to conduct a review of procurement of fleet solid support ships by the end of 2023. In November 2022, the £1.6 billion contract for fleet solid support ships was awarded to a Spanish-led consortium, Navantia UK, over the rival bidder, Team UK, which included major British defence companies such as Babcock, BAE Systems, Cammell Laird and A&P. At least 40% of the value of the work—about £640 million—will go abroad. My colleagues and I have questioned the Government on numerous occasions about whether there is a limit on how many jobs will be created in Spain and why there are no targets for UK steel in the contract. The Government are yet to give concrete answers. That is exactly why we need the new clause. It is vital that we review the contract to ensure that the promise of work and jobs in Britain is kept.

The new clause outlines key points that we believe must be reviewed. The first is about UK build work. Subsection (2) states that the review must consider

“the total amount of expected UK build work for each Fleet Solid Support ship”

and

“the number of UK jobs and Spanish jobs that have been created so far as a result of awarding the contract for Fleet Solid Support ships to ‘Team Resolute’”.

It is reported that Team UK’s bid would have generated more than 6,000 jobs and supported a full onshore build of the ships. The bid also promised an investment of £90 million in shipyards and a further £54 million in training, apprenticeships and improving the skills base.

--- Later in debate ---

Brought up, and read the First time.

[Chris Evans]

I beg to move, That the clause be read a Second time.

I must say this, given the shared interest that my friend the Minister and I have in boxing—I was going to stay away from the boxing metaphors, but I think this will be the last time I speak in this Bill Committee. We recently marked St Valentine’s Day, and he will remember the “St Valentine’s Day massacre”, when Jake LaMotta faced Ray Robinson, and after Ray Robinson trapped Jake LaMotta on the ropes and the fight was stopped, LaMotta ran after Robinson, shouting, “You didn’t knock me down, Ray! You didn’t knock me down!” Considering that the Government have won on all the new clauses, I feel like shouting at the Minister, “You didn’t knock me down! You didn’t knock me down!”

New clause 8 would require the NAO to conduct an audit of waste in Ministry of Defence procurement and to provide recommendations on how better contract management might minimise the loss of taxpayers’ money, and then require the Secretary of State to report to Parliament on whether the NAO’s recommendations had been accepted. I touched on the issue of waste in my previous speech, but I want to take this opportunity to re-examine the severe levels of waste in the Ministry of Defence. I speak not just as the shadow Minister but as one who was a member of the Public Accounts Committee for five years. I could give this Committee numerous examples of the permanent secretary sitting quite uncomfortably in his seat, answering questions mainly around the defence equipment plan and other such documents that came before the PAC. To be honest, it was embarrassing and uncomfortable, but that is where the Ministry of Defence has been for the last couple of years.

Labour’s “Dossier of waste in the Ministry of Defence 2010-2021”, published last year, confirmed that the MOD has wasted at least £15 billion of taxpayers’ money since 2010, with £5 billion since 2019, while the current Defence Secretary has been in post. Waste in the procurement system has become engrained. This needs to change urgently. I have alluded to the defence equipment plan; when mistakes were pointed out by the NAO, very often the Ministry of Defence response was a shrug of the shoulders and, “So what?” Very often the defence equipment plan was sent back because it was inaccurate and had been drawn up very sloppily, but again, the MOD just shrugged its shoulders. This is why we would commission the National Audit Office to conduct an audit of waste, setting out any instances of waste in Ministry of Defence procurement.

We have set out five definitions of “waste in procurement”, which can all be evidenced in the current procurement system. They are: overspend on initially planned budgets; assets being withdrawn or scrapped, or prepaid services terminated; a contract being cancelled; a contract being extended beyond the initially agreed timescale; and administrative errors that have had a negative financial impact. Everyone might be aware of the key examples of waste, but I feel that they should be mentioned again in order to truly depict the problem in defence procurement. They include £595 million written off with the cancellation of the Warrior armoured vehicle sustainment programme, £231 million wasted by writing off armoured vehicles such as Mastiffs, Ridgebacks and Wolfhounds earlier than planned, and £530 million on overspends relating to the Protector drone programme. The Labour party’s dossier of waste also found that £64 million was wasted on administrative errors.

A shiver goes up my spine and that of my hon. Friend the Member for Merthyr Tydfil and Rhymney when I mention the delayed Ajax project, which is based in our constituencies. I have been following this project. General Dynamics, which runs the Ajax programme, has its headquarters in my constituency, and it has a facility in Merthyr Tydfil and Rhymney. Ajax is a perfect example of waste in procurement. The initial planned budget was set at £5.5 billion, with 589 armoured vehicles ordered and expected to be delivered and in service by 2017. Now, in 2023—six years later—the MOD has spent £3.2 billion and only 26 vehicles have been delivered. There are also reports that Ajax will now cost an extra £1 billion or more if all 580 vehicles are still bought.The Ajax programme has been set back by delays, mismanagement and various design and development problems, all adding costs that are being paid for by the taxpayer.

An NAO audit of waste would evaluate programmes like Ajax, analyse at which points in the programme issues start to arise, and identify whether they are trends in procurement programmes across the MOD. The recommendations from the NAO audit would be vital to minimise wasted public money. Ajax is the perfect example of how the costs of delays become built into the procurement process. I have been told by members of the Business Services Association that delays in the system cause the biggest cost, and that their potential impact on the length of procurement contracts actually puts off many from bidding on defence contracts. It is wrong that our system has become a deterrent for British businesses instead of an incentive.