Armoured Cavalry Programme: Sheldon Review

James Cartlidge Excerpts

Thursday 15th June 2023 Commons Chamber

[The Minister for Defence Procurement (James Cartlidge)]

With permission, Madam Deputy Speaker, I would like to make a statement to update the House on the review conducted by Clive Sheldon KC on the lessons to be learned from the armoured cavalry programme, which is the Army programme centred on the Ajax vehicles. The Defence Secretary has previously acknowledged that the programme was a troubled programme. Albeit that he has more recently announced that it has turned a corner, it is against the backdrop of concerns he had about the programme, and those of this House about what was known at the time of publishing the integrated review, that he commissioned an independent review by a senior legal figure to investigate the circumstances.

In May last year, Clive Sheldon KC was appointed to lead a lessons learned review into the armoured cavalry programme. The review’s terms of reference were to

“identify lessons and make recommendations to help Ministry of Defence (MOD) deliver major programmes more effectively in future, with a particular focus on how MOD shares and elevates issues across the Department.”

An earlier Ministry of Defence report, by David King, specifically relating to the health and safety concerns about noise and vibration, was published in December 2021. We continue to make good progress on implementing the recommendations from that report, some of which are echoed in Mr Sheldon’s review.

Mr Sheldon submitted his report to Ministers on 19 May, and I am today publishing that report, unredacted, on gov.uk, and placing a copy in the Library of the House. I wish to formally thank Mr Sheldon and his team for the painstaking work that they have undertaken to enable us to better understand how the MOD can improve the governance, culture and leadership of our major programmes. They interviewed some 70 people and considered tens of thousands of pages of evidence.

The resulting report makes for difficult reading, highlighting a number of systemic, cultural and institutional problems across several areas of the Department. These problems include: fragmented relationships and the conflicting priorities of the senior responsible owner role. It also points to a reticence to raise, and occasionally by seniors to listen to, genuine problems in a timely, evidenced manner.

We accept these findings and most of Mr Sheldon’s 24 formal recommendations, with 15 accepted and nine accepted in principle. Crucially, the review did not find that either Ministers or Parliament were misled. Equally, the review team did not see any evidence of misconduct by any individual, let alone gross misconduct, and nothing that would justify disciplinary action. It is, though, true that many of the behaviours highlighted in the report are far from ideal, but in many cases they have already been recognised and acted on, both specifically on the armoured cavalry programme as well as across the Department.

Where work is not already under way to implement a recommendation, we commit to making the necessary changes at pace. In the interest of time, Madam Deputy Speaker, I will address the recommendations in the themes set out by Mr Sheldon in his executive summary, rather than going through each of the recommendations.

A number of recommendations relate to MOD’s internal relationships, including with the Defence Science and Technology Laboratory. Considerable effort has already been made to address these issues within and beyond the Ajax programme. This has resulted in much improved working and reporting arrangements, in particular with the Defence Equipment & Support organisation and also the newly established acquisition safety cell that advises the Investment Approvals Committee on equipment safety matters. Escalation routes also exist for DSTL through the chief science officer where concerns are not acted on.

Another area of focus is SROs. I know that many colleagues are interested in this point. We fully agree with the need to improve how senior responsible owners are supported and much work has gone into upskilling and supporting SROs, ensuring that they have the time and space to focus on delivering their programmes and can build skills through the Major Projects Leadership Academy.

Today, four in every five of our major project SROs are committing at least half their time to leading their programmes—half the Army’s 19 SROs dedicate 100% of their time. We also agree in principle with Mr Sheldon’s presumption for a minimum tenure, subject to compatibility with employment law.

Finally, the report comments extensively on a culture that led to issues not being escalated and makes recommendations to improve that and the flow of information. Transparency has improved since the period of this report. For Ajax, there are detailed updates through the SRO to Ministers that ensure the potential issues are exposed early should they arise in the future. Processes will be further strengthened through the defence acquisition operating model and guidance. Work is also under way to implement a project delivery data strategy to strengthen the use of data to both support performance reporting and assist in early identification of issues. Of course, the main aim of commissioning this review was to learn lessons to improve procurement—not just on Ajax, but across the MOD’s programmes.

Ultimately, the core of our intent is to ensure that the equipment we procure for the British armed forces is of the highest possible standard and, furthermore, that our service personnel have faith in the system and the taxpayer has faith in our spending of money from the public purse. Quite simply, we need to deliver change across the Department, turning widespread desire for acquisition reform into tangible reality, in particular driving increased pace and agility into acquisition, so that we can keep pace with technology and maintain our competitive edge.

Although I recognise the many challenges in this programme to date and the need to learn lessons, I would stress that there is already intense work under way in the Department—especially at DE&S—to improve performance, with encouraging signs. For example, between December 2020 to December 2022 we saw a reduction from 6.1 years to 5.1 years in the time that it takes to go from outline business case to delivering equipment into the hands of our armed forces.

In further positive news, I hope the House will welcome the significant progress made to recover the Ajax programme. I can confirm that, as of Tuesday afternoon, the Household Cavalry has been undergoing standard Army field training on Salisbury plain in a range of Ajax vehicles. Focused on individual and crew training, this step marks the restarting of British Army training on these sophisticated vehicles, and I hope underlines that this project really has turned the corner. Indeed, last Friday I had the great privilege of visiting Bovington to experience the Ajax vehicle at first hand.

I am pleased to report that the soldiers I met described the vehicle and its capabilities as “night and day”—a phrase used repeatedly—compared with their current equipment. In describing Ajax’s strengths, the soldiers I spoke to emphasised the platform’s high mobility, increased firepower from the new cannon and a highly sophisticated sensor suite that really helps them do their job, representing in totality a very real and positive step change in capability—all packaged in a vehicle with high levels of crew protection and survivability. As training increases across other field Army units on the 44 vehicles already delivered, in parallel General Dynamics’s personnel in Wales continue to run their production lines to build the operationally deployable vehicles, with the end goal of 589 fully operational vehicles by 2029.

To conclude, I reiterate my gratitude to Mr Sheldon and his team for their considerable efforts and for distilling his findings into clear lessons and recommendations for the future. Our focus now is on understanding and applying those lessons, ensuring that they are implemented in the armoured cavalry and other major defence programmes, as well as ensuring that we deliver the game-changing capability that Ajax will provide to the British Army as quickly as possible. I commend this statement to the House.

[Madam Deputy Speaker (Dame Rosie Winterton)]

I call the shadow Minister.

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

Before I start, if you will allow me, Madam Deputy Speaker, I want to pay tribute to Glenda Jackson, our former colleague, given the sad news that she recently passed away. She was a doughty champion for social justice and was the greatest actor of this or any other generation. I am sure further tributes will be paid in the coming days.

What the Sheldon review has shown without a shadow of a doubt is that Ajax is the biggest procurement failure for a decade. The review is beyond damning. For a report to state,

“Reporting was at times lacking, or unclear, or overly optimistic. That led to senior personnel and Ministers being surprised to discover in late 2020 and early 2021 that the programme was at much greater risk than they had appreciated”,

is frankly embarrassing.

There is no place to hide any longer. The failure to manage this contract was on this Conservative Government’s watch. It was they who allowed the relationship with General Dynamics to break down to such an extent that every time Ajax was mentioned, here or in the press, there was fevered speculation that the contract was about to be cancelled. That has caused anxiety for the Army and above all for the workers in General Dynamics in both Merthyr Tydfil and Oakdale in my own Islwyn constituency. Even the threat of losing 400 jobs would be devastating for the south Wales economy.

This programme has cost £5.5 billion and has been running for 13 years, but has yet to deliver one deployable vehicle. If this was the private sector, heads would roll, so I ask the Minister this: has any action been taken against anyone responsible for this mess? What new procedures have already been put in place on other major programmes to stop similar mistakes happening? Ministers must ensure that our NATO obligations are met in full, but, whether it is Ajax, delays to Wedgetail or a modern war-fighting division, NATO must have concerns. Have any been raised with the Government about Ajax?

I well remember the sense of excitement from workers at Oakdale when this contract was signed in 2010, just after I was elected. The Ajax contract was then labelled a game changer, not only for south Wales, but for the Army. It is truly sad that we have arrived at a point where Ajax has become a byword for waste and incompetence.

Workers at General Dynamics should have been listened to, but they were not. There was a

“lack of appreciation of diverse and contrary voices, especially from those working on the ‘shopfloor’. These voices were not fully included, and were too easily dismissed.”

Those are not my words, but the words of the report. Perhaps if workers had been listened to, we would not be standing here now.

As the Minister knows, Ajax is not an isolated case: 37 out of 39 defence equipment contracts being run by the Ministry of Defence are marked red or amber by the National Audit Office. That includes Morpheus, which is extremely important to our armed forces. Have the problems with that programme’s communications system been fixed, or are they unfixable? What contingency plans are being made for Morpheus?

For a contract as important as Ajax, with so much speculation around it, it is amazing that we have not had an oral statement on Ajax since December 2021. For too long, the Government have avoided scrutiny on this issue. On this and other future contracts, will the Minister commit to giving regular updates to the House? We are, after all, ensuring soldiers’ safety—the most important thing about the contract—and spending taxpayers’ money. I find myself in agreement with the Minister when he says that change has to come. It is not a moment too soon.

[James Cartlidge]

I begin by agreeing with the hon. Gentleman on Glenda Jackson; I do not think she was in the House when I was here, but she was an amazing actress and I join in his sentiments and echo them entirely.

I recognise that the hon. Gentleman is not just the shadow spokesman but has a clear constituency interest, and I respect that. He talks about fevered speculation and the impact on the workforce, and I totally understand that. We do not want to see that. He talks about coming to the House: I am here today to be absolutely clear with everyone about the latest position. In fact, my colleague the Paymaster General regularly updated the House on the position around Ajax when he was the Minister. My predecessor, now the Lord Chancellor, also issued a written statement earlier this year that was very detailed about the programme, so I think we have been consistent in updating the House.

On some of the hon. Gentleman’s specific questions, he asked about action on individuals. What we said when commissioning this review was that disciplinary action would be taken only if there was evidence of gross misconduct, and Mr Sheldon found no evidence of misconduct, let alone gross misconduct. That is the clear reason why individual action has not been taken.

In terms of action across programmes, I point the hon. Gentleman to the very significant investment by the Army of £70 million over the next 10 years in Army procurement programmes, including in the past two years a doubling in the number of SROs and a doubling of the amount of time that SROs spend on their responsible major projects. Those are significant investments.

I also point out to the hon. Gentleman some of the improvements we have seen. I accept that we need to go further but, if I may draw a contrast, this is not the first review of acquisition. Bernard Gray issued an independent “Review of Acquisition for the Secretary of State for Defence” in 2009, which described a poorly performing procurement system. That review found that

“the average programme overruns by 80% or c.5 years from the time specified at initial approval through to in service dates”,

and that was under a previous Government.

These problems have been around for some time and it is disappointing. I have pointed to the improvements we have seen, but let me be absolutely clear: the ultimate reason we have this report is to learn lessons and the way we respond to it is to deliver a fundamentally better acquisition system. I totally agree with the hon. Gentleman on that and I hope we can all work together to that end.

[Madam Deputy Speaker (Dame Rosie Winterton)]

I would like to just take this opportunity to add my thoughts about Glenda Jackson, as I can see there are colleagues in the Chamber who were here in the House at the same time as her. She was a wonderful colleague and a great Minister, and I think we all want to send our condolences to her family. I call the Chair of the Defence Committee.

[Mr Tobias Ellwood (Bournemouth East) (Con)]

May I immediately associate myself with your kind words about Glenda Jackson, Madam Deputy Speaker?

We now have in the Chamber not one, but three current or former procurement Ministers who bear the scars of this project. I am pleased that we are able to discuss the matter so openly and I commend the recent work that the MOD has done to get on top of the issue.

Ajax is now a case study that the MOD and DNS should use on how not to do procurement. This is all about the British Army’s recce vehicle. The current one being used, the Scimitar, was introduced in 1971. It is good to hear that the soldiers the Minister met said that the replacement is better than the last—that is brilliant, because it was built in 1971. Ajax’s journey has been miserable. It started in 2010 and the delivery date was 2017, yet it is not expected to enter service until 2030. Something very serious has gone wrong.

I absolutely welcome Clive Sheldon’s report. The Committee will look into that in more detail and, rather fortuitously, a Sub-Committee study on procurement, by my right hon. Friend the Member for Rayleigh and Wickford (Mr Francois), is currently under way. I am sure that he will have more words on how we will digest the report in more detail.

The Minister covered some of the issues. Concerns include the relationships between different entities within, or associated with, the MOD. The senior responsible officer has been criticised for not being a single point of contact or owning the actual project itself but having to have a number of projects going concurrently. Concerns got stuck because of people taking a rigid view of their remits. It is not just with Ajax that there is a problem; there is also with the land warfare capability. We have similar problems with the main battle tank and the armoured fighting vehicle. I hope that those problems will be addressed when the defence Command Paper comes out.

[James Cartlidge]

I am grateful to my right hon. Friend the Chairman of the Select Committee. Of course, we are absolutely committed to engaging with his Committee and, indeed, with the Sub-Committee, before which I will appear next week. I was born in 1974. He makes a striking point about the existing vehicle being from 1971—it is the same age as my elder brother. I take his point that one might therefore expect servicemen to say that it is night and day.

I put great store by meeting those on the frontline, and I will always continue to do that. It was a great privilege to go to Bovington. One of the soldiers I sat next to in the Ares version had been in a Challenger 2 when it was hit by an IED—I think it was in Iraq or Afghanistan; he did not say. He felt confidence in the protection. It is so important that we interact with the soldiers on the frontline. Ultimately, that is the point: we want to deliver a better acquisitions system for them and I look forward to working with my right hon. Friend’s Committee to that end.

[Madam Deputy Speaker (Dame Rosie Winterton)]

I call the SNP spokesperson.

--- Later in debate ---

[James Cartlidge]

I did not have the pleasure of appearing before the hon. Gentleman in the Select Committee. Obviously, we bring forward this capability to ensure that it can add huge capability on the frontline when it really matters—that is what it is being tested for. That is why it is really good news that the Army is now training on that vehicle at Salisbury Plain. Of course, that has happened much later than we wanted. That is why we are here and have the Sheldon report. Ultimately, we want to improve our acquisitions system, but procurement can be complex, even for simple things such as ferries, as the Scottish Government have themselves discovered.

[Mr Mark Francois (Rayleigh and Wickford) (Con)]

The Ajax programme has been an absolute debacle, first initiated in 2010. Thirteen years and some £4 billion later, we still do not have a new armoured vehicle in frontline service. We will not have it until late 2025, and it will not be fully in service until 2030. This report starkly reveals in exquisite, agonising detail just how massively bureaucratic and broken the MOD’s procurement really is. With war under way in Ukraine, will the Minister assure the House that he is now genuinely personally committed to root-and-branch reform of how we buy military equipment in this country? The taxpayer and our armed forces deserve no less.

[James Cartlidge]

It is no exaggeration to say that no one in this Chamber has greater passion on the subject of procurement and acquisition reform than my right hon. Friend. I look forward to appearing before his Sub-Committee next week to discuss the important role of Defence Equipment and Support, on which, of course, so much of the report is focused. He is absolutely right: we need fundamentally to improve acquisition. A key reason for that is technology. We have to have a system that is faster, leaner and more agile so that we can respond more quickly to evolving technology. It must be self-evident to us all from the theatre in Ukraine—the way that uncrewed systems, one-way attack drones and all the rest of it are being used—that war is changing rapidly and we need to respond to that. Our acquisitions system needs to be able to do so, too.

[John Spellar (Warley) (Lab)]

May I first express concern that there was in the Minister’s statement no estimate of the extra cost that will be incurred or of the capability gap? To echo the comments of others, the excellent workforce in Merthyr Tydfil are certainly not to blame in this debacle. Indeed, one of the issues highlighted in the report is that they were not listened to when they expressed concerns about the progress of the project. What I am unclear about is why, yet again, no one is to blame. It is probably because Ministers change so quickly that they can evade responsibility. Certainly, the system, and individuals’ roles in it, are to blame.

Why did we need a KC and a year of examination to deal with the blindingly obvious failures in the procurement system, of which this programme is merely an extreme example? Why did Ministers not do a rapid assessment and get on with the job? Will the Minister actually get on with changing the system and not let the natural inertia within the civil service get back to business as usual, as we have seen so often before and as we are seeing again in health with the vaccines programme—this system is failing the British people and, in this case, the British armed forces—or will a successor stand up there and make the same lame excuses in a few months’ time?

--- Later in debate ---

[James Cartlidge]

I have the greatest of respect for the right hon. Gentleman’s experience as a former Defence Minister. There are three points to address. In relation to the cost, it was a fixed-price contract. The point about the workforce is extremely important. As I said in responding to the shadow spokesperson, the hon. Member for Islwyn (Chris Evans), I am seized of that point. The defence sector is incredibly important to every single part of the United Kingdom, but particularly to Wales and in terms of General Dynamics UK.

Finally, the right hon. Gentleman asks why there was the need for all this time and a KC. If only there were such a simple answer. This is incredibly complex territory: 10,000 pages of evidence and 70 people interviewed on complex matters. It has taken time, but we now have the report in front of us and the key thing, as I have said, is to learn the lessons from it.

[James Gray (North Wiltshire) (Con)]

I welcome the sharp and cleansing light that the report will shine into the shambolic Ajax programme and, by extension, into the whole of the defence procurement programme, which has been a problem—we have been saying so for years. The report shines a light into it. I very much welcome the Minister’s commitment to listening to the lessons learned from the report and to change things fundamentally in wider procurement. In that context, will he let us know when the defence Command Paper is due out—it will presumably reflect some of those lessons—and, in particular, whether a defence industrial strategy will be published separately or alongside the Command Paper, and whether it will genuinely reflect the changes that he intends to make?

[James Cartlidge]

I am grateful to my hon. Friend. We are hoping to publish the Command Paper imminently, and it is certainly my hope that it will contain important statements on the issue of acquisition reform. For me, it is an absolute priority; obviously, I would say that as the Minister for Defence Procurement.

My hon. Friend referred to the defence and security industrial strategy. The key point about that is that we see the defence industry as part of our military capability. That has never been more the case, because of the urgent strategy that we need to get replenishment under way due to the stocks we have gifted—for entirely the right reasons—to Ukraine. He makes a very good point.

[Richard Foord (Tiverton and Honiton) (LD)]

I would like to build on the searching question from the right hon. Member for Warley (John Spellar). The Government announced in March that they would resume payments for Ajax towards the £5.5 billion cost. We had been expecting the CVR(T)––combat vehicle reconnaissance (tracked)—to be retired this year and for Warrior to be retired in 2025, but if Ajax is not to reach full operating capability until 2029 at the earliest, how will the capability gap be closed? If that is by extending Warrior, how much additional taxpayer’s money will be spent on extending the life of Warrior?

[James Cartlidge]

The hon. Gentleman asks a very good question. Obviously, it is important that the Army is satisfied with the capability it has, so that it can fulfil its key operational requirements. I am assured that that is the case. Inevitably, if there is delay in one capability coming forward, there will be some impact. We estimate that there is a cost of roughly £200 million to extend the life of Warrior and Challenger 2 in response to delay in this programme and the timescale in relation to Boxer coming forward.

[Sarah Atherton (Wrexham) (Con)]

At its height, the Ajax project supported 850 jobs across Oakdale and Merthyr and a further 22 Welsh small and medium-sized enterprises. That is considerable investment in Wales and a void we cannot easily fill. Paragraph 7.8 of the Sheldon review details a number of examples of personnel feeling that there was not a “psychologically safe” environment in the MOD to raise concerns, as it would be “career limiting”, despite Joint Service Publication 492. This meant that “optimism bias” towards the project succeeding ran riot. How is the Minister going to change the culture, because that is not procedural?

[James Cartlidge]

My hon. Friend, who speaks with the expertise of a former Army officer and someone who serves on the Defence Committee, has hit the nail on the head in terms of the issue of optimism bias. [Interruption.] Did I say “former Minister”? I correct the record if I said that, but she is certainly on the Defence Committee.

[Mr Ellwood]

No, she was a Minister!

[James Cartlidge]

I apologise; she is a former Minister. She knows what she is talking about—that is for certain. She made an extremely important point about optimism bias. It may be that I was a bit pessimistic in my answer.

This is a serious point, because Mr Sheldon talks about optimism bias at length. Obviously, the new initial operating capability and full operating capability are much later than we wanted them to be, but I think what happened is that DE&S sat down with General Dynamics and said, “This time we’ve got to be realistic. Let’s have a programme we can actually deliver to.” I know it is disappointing, but that is the key thing; we want to actually get this equipment delivered.

My hon. Friend’s point about having psychological confidence to speak up is incredibly important, and she is a champion on that. We conduct the pan-Defence people survey, and the last iteration of the survey asked questions in relation to psychological confidence—are people confident in coming forward and challenging the system? In the last survey, the Army was eight percentage points above the civil service benchmark, so there is improvement happening in this space.

[Jim Shannon (Strangford) (DUP)]

I thank the Minister for his statement. This report makes for hard reading, and yet the humility with which he has accepted the critique is to be admired in these days of blame-shift. Mistakes were made; that is clear. It is also clear that transparency and efficiency go hand in hand. Will he confirm that the application of these lessons and new procedures will be armed forces-wide and that every officer stationed in Northern Ireland and Wales, and from the top of Scotland to the tip of England, will be made fully aware of the dangers of doing what has been done before and will embrace these changes for the better?

[James Cartlidge]

It is always a pleasure to receive questions from the hon. Gentleman; we always keep the best until last on the Opposition Benches, in my view. It is a matter of pride for me that I will be going to Northern Ireland to mark Armed Forces Week starting next Saturday, and I am looking forward to that immensely. I can confirm to him that I will not blame-shift; I will take responsibly. I am the Minister for Defence Procurement: I have the responsibility of delivering a better procurement system, and that must apply across the forces, as he rightly says.

[James Sunderland (Bracknell) (Con)]

Notwithstanding the technical and procurement difficulties that have been reported, and the Sheldon review, which I welcome, Ajax has probably had more TLC than any British-made platform in history. Members may feel free to accuse me of optimism bias, but does the Minister agree that when it is finally rolled off the production line, it will be an excellent platform and fit for export?

[James Cartlidge]

My hon. Friend speaks with huge experience as a former senior Army officer, and he is absolutely right. I referred to visiting Bovington last Friday. For the soldiers there, Ajax is a step change from the vehicle from 1971, but there is another very serious point. They talked about the extra lethality of the cannon, the manoeuvrability and the amazing sensors in that machine, which gives them such huge oversight of the battlefield. It has great capability.

On my hon. Friend’s final point, as someone who is passionate about exportability and our defence sector exporting around the world, I would like to see it get to that phase, but the good news is that we have got it out there, and the Army is now training on it.

[Richard Drax (South Dorset) (Con)]

I commend the Minister—a conscientious Minister, if ever there was one—and his predecessor, my right hon. and learned Friend the Member for Cheltenham (Alex Chalk), to whom we have spoken on many occasions in the Defence Committee, on which I sit. I know that they are just as alarmed by this as we all are.

We have to learn the lesson about attention to detail. On our visit to General Dynamics, there were two sets of headphones on the table. One set was used by the civilian operators, and one was used by the military, for which the vehicle was being built. The civilian one had double protection, but the military one did not, so when the military used their headphones, it affected their hearing. That was 10 years after the vehicle had been built. As it took another while to drive this vehicle, as we can no longer afford to do so, it took another year before the fault was eventually found. It is attention to detail, quite apart from everything else, that we need, to ensure that this never happens again.

[James Cartlidge]

My hon. Friend makes an excellent point and reminds us about the background of the noise and vibration issues. It is my understanding that part of that was because this vehicle came forward in the wake of Iraq and Afghanistan, and had what is called a rigid body design, which has its own characteristics of noise and vibration. He is right to highlight the issue of the headphones. We do not believe that the first headset that was used was responsible for those noise and vibration issues, but the good thing is that we worked with General Dynamics and brought in the second headset. That is the one I wore one on Friday. To put it crudely, there is a smaller black one that goes right into your ears—a bit like the sort of thing we are given when we go on a factory visit—and then there are the bigger external ones that sit on top of the helmet. It was very effective.

This has been a very difficult programme, and I have been completely open in acknowledging that to the House, but I believe that we can use this moment as an opportunity genuinely to improve our acquisition system.

[Mr Deputy Speaker (Mr Nigel Evans)]

I thank the Minister for his statement and for responding to questions for over half an hour.