Defence Procurement

Gerald Howarth Excerpts

Tuesday 10th December 2013 Commons Chamber

[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.

[Sir Gerald Howarth (Aldershot) (Con)]

I congratulate my right hon. Friend on having grasped this particularly difficult nettle. Does he agree that in addressing the skills issue so ably highlighted by Bernard Gray, these proposals raise the prospect of having an intelligent customer in the Ministry of Defence and therefore of avoiding some of the ghastly procurement mess-ups created by Labour? Would he be good enough to indicate how he sees ministerial accountability being applied to the new agency? Will it report direct to Parliament, as he mentioned, or will it report to Ministers, who would then report to the House?

[Mr Hammond]

There were two questions there. First, my hon. Friend is absolutely right to point out that for a customer-supplier interface to work, we need skills on both sides. This is not just about upskilling DE&S; simultaneously, we are also carrying out a project within the MOD that will continue to upskill the customer side to ensure that we can be an intelligent customer. On accountability, of course Ministers will be accountable to Parliament for DE&S’s activity, but as I have announced, the chief executive will be an accounting officer with a direct line of accountability, via the Public Accounts Committee, to Parliament.