Defence Reform

Diana Johnson Excerpts

Tuesday 26th June 2012 Commons Chamber

[Diana Johnson (Kingston upon Hull North) (Lab)]

This is the first opportunity I have found in the parliamentary calendar to make any remarks about the Government’s defence procurement White Paper, which came out in February. Unfortunately, it was issued as a written ministerial statement, so there was no opportunity for debate. I do think it is worth looking at what that defence procurement White Paper says. On a number of occasions, I have raised with Ministers my concerns, which arose out of spending the last nine months, along with many trade unionists, employees and family members, fighting for workers at BAE Systems in Brough, who are facing 800 or 900 redundancies.

We have heard a lot this evening about being in economic difficulties and about the deficit that we need to get down, and it seems to me that defence procurement provides potential not only for growth but for defence exports. I think the Government are missing a trick in this area. My understanding of the White Paper is that the Government are moving towards open procurement, buying off the shelf and getting good value for money, that there is no preferential treatment for British industry or British manufacturers and that they will protect the operational advantage and freedom of action of this country only where it is essential to national security. As I said, the economy is flatlining and we are in a double-dip recession, but we know that countries that invest in, and buy from, their own home-grown defence industries do the best at exporting around the world. That makes sense: if a Government are willing to buy from their own industry, it shows a commitment to, and a belief in, providing the very best. That is absolutely what we want for our armed forces.

Brough is the home of the Hawk, and when the Red Arrows go around the country and the world flying the Hawk, people know that it is an excellent, British-manufactured plane. The Red Arrows display amazing acrobatic aeronautical feats, showing again Britain’s excellence in manufacturing. My real concern, then, is about the Ministry of Defence’s approach to future procurement, as it seems to treat itself as if it were a private company, just looking for best value and not recognising that it is part of the Government as a whole. The Government have a commitment—the Opposition support them in this—to growth and rebalancing the economy.

An interesting piece of work has been done on “The Destinations of the Defence Pound”. It is a RUSI—Royal United Services Institute—pamphlet written by Trevor Taylor and John Louth. They point out that buying off the shelf has a negative effect on Government revenues so it does not help the country to deal with the public sector deficit. Buying British, on the other hand, will ensure that British taxes are paid during the course of the procurement process, and there is likely to be a British supply chain, too. The pamphlet shows that spending £1 million will lead to a 36% return to the Exchequer via tax, national insurance and other means. It does not go into the wider benefits, which would obviously include jobs—a key issue for the Government and the Opposition at this time. Then there are all the other multiplier effects of buying from the home defence industry. If the Government buy abroad, that money—those taxes—will go to another Government, and will be lost to us.

It would be helpful if the Minister said something about the European procurement defence directive, and about the need for us to monitor carefully what other countries are doing. Why does the United States of America, when it purchases defence items, demand that they be produced in the United States, and why, in most cases, is any company applying to that market required to have a United States partner even to get a hearing?

I should like the Government to hold a proper debate on procurement, because I think that it might give them an opportunity to get themselves out of the economic difficulties into which they have got themselves since May 2010. Given that we are now in a double-dip recession, such a debate might be of help to them.