Better Defence Acquisition

Hugh Bayley Excerpts

Monday 10th June 2013 Commons Chamber

[Mr Hammond]

I can assure my hon. Friend that the plan to transfer the Royal Navy dockyards out of DE&S, along with the plan to transfer the logistics and commodities supply service out of DE&S to an outsource contractor, will continue on track. That is why there is a gap between the projected 2015 total numbers of DE&S on a steady state basis, and the 8,000 that we are expecting to transfer under a TUPE transfer if we go down this route.

[Hugh Bayley (York Central) (Lab)]

How much does the Secretary of State think that the new arrangement will save each year? Will those savings be used to buy additional equipment for our armed forces, or simply returned to the Treasury, leaving our servicemen with less?

[Mr Hammond]

The latter part of the hon. Gentleman’s question is clearly one that I cannot answer on a unilateral basis, but I suspect that, in the way that generally happens, there is a potential win-win situation here—a win for the taxpayer in terms of lower public expenditure and a win for the armed forces in terms of greater capabilities being able to be purchased. I think I included these figures in my statement, but the independent estimates are that somewhere between £1.3 billion and £2.2 billion of frictional costs generated by inefficiencies in the procurement system are incurred every year. It would be a very rash man who suggested that we can squeeze out every last pound of those, but I would expect us to be able to achieve net gains after taking account of the cost of the arrangements—the GoCo fee and the cost of the governance function on the MOD side—in the hundreds of millions of pounds.