Ministry of Defence (Procurement)

Jeremy Corbyn Excerpts

Wednesday 19th October 2011 Westminster Hall

[Jeremy Corbyn (Islington North) (Lab)]

I am sorry that I was not present at the start of the debate and I will be brief because other colleagues wish to speak. I want to introduce a wider issue of defence procurement and I hope that the Minister will respond to my contribution. The issue concerns the large amounts of money that are being spent in advance of a parliamentary decision on the replacement of Britain’s nuclear weapon system. The Minister is smiling but I am not sure why—perhaps it is out of desperation at the amount of money flowing out of his Department and into the hands of contractors as we speak.

I would like the Minister to answer a number of questions about the costs of replacing our nuclear weapon system. The main gate decision on the Trident replacement is not due before the House until 2016. Out-turn prices were estimated in the initial gate report to be £25 billion for the replacement of the submarine, and costs for the successor system, including the warhead and infrastructure development, were between £30 billion and £32 billion. So far, £900 million has been spent on planning and replacement, and £3 billion is due to be spent on detailed design before 2016. The rest will be spent after the main gate decision in 2016.

A number of serious questions must be raised. This is not a discussion on foreign policy and we are not debating nuclear negotiations. Nevertheless, when we are faced with a massive deficit, and people in every community in the country are being told to make savings, why is the Ministry of Defence calmly ploughing ahead to get rid of £100 billion of public money on a nuclear missile system that many of us believe to be illegal, unnecessary and dangerous? All the money being spent is going into the pockets of various contractors around the world and not being put to any socially useful purpose.

Whatever choice is reached in 2016, major elements of the vessels will already have been ordered before Parliament has had a chance to debate the issue. That includes £380 million spent on the first submarine, £145 million on the second and £6 million on the third —those are the submarine costs alone. I hope that the MOD will be more open about what that expenditure is for and why it is necessary to make it ahead of any parliamentary decision. I was told by a Minister in another debate that such actions are the normal way of doing things in the Ministry of Defence, and that it does things on a sort of custom and practice basis. If it is custom and practice for the MOD to spend such sums of money without parliamentary approval, I suggest that that custom and practice needs to stop. There should be specific parliamentary approval for each element of expenditure, but that has not happened in this case.

Further spending is taking place at Atomic Weapons Establishment Aldermaston and Burghfield, and the full cost of project Pegasus—the proposed new facility for manufacturing enriched uranium components for nuclear warheads and reactor fuel for nuclear-powered submarines—was priced at £747 million when it received initial approval in 2007. I would be grateful if the Minister confirmed whether that figure is correct. If it is not, will he give the Chamber an accurate figure and state how much more money is expected to be spent on project Pegasus at AWE Aldermaston and Burghfield?

The relationship between the MOD and defence contractors is interesting. Poachers who join the side of the gamekeeper are obviously extraordinarily welcome, and the hon. Member for Sittingbourne and Sheppey (Gordon Henderson) brought a particular expertise to the debate. He seemed, however, to underline an issue that needs questioning concerning the close relationship between the MOD, defence contractors and the defence industry, and the large amounts of money being spent. Parliament exists to control what the Government do. MPs exist to represent their constituents and hold the Executive to account, and there are serious questions about the decision-making process surrounding the replacement of Trident, the purpose of Trident, and the vast expenses that are being undertaken without any parliamentary approval.

[Nick Smith (Blaenau Gwent) (Lab)]

I congratulate the hon. Member for Sittingbourne and Sheppey (Gordon Henderson) on securing this debate and I want to pick up the point about contracts and transparency in Government expenditure. The strategic defence and security review will lead to the renegotiation of many contracts, and that may lead to some savings or perhaps to an increase in costs. So far, the MOD has failed to provide the Public Accounts Committee, the parliamentary body that looks at value for money in defence spending—

[Nick Smith]

Thank you, Mr Hood. Does my hon. Friend agree that transparency is vital in cases such as that under discussion, so that Parliament can scrutinise expensive defence procurement issues?

[Jeremy Corbyn]

Absolutely. Parliament must scrutinise such expenditure. One of the greatest weaknesses of the British parliamentary system relates to its ability to scrutinise expenditure. We do not traditionally do line-by-line budget voting in this country, and although the Public Accounts Committee does a good job, it can look into only one theme or area of expenditure at a time. Perhaps we need tougher scrutiny, particularly where the Ministry of Defence is concerned and given the levels of expenditure being discussed.

I have two final points. Some colleagues present today represent constituencies that have embarked—or are likely to embark—on the manufacture and development of submarines and nuclear warheads, and some represent constituencies that have a big defence interest. I do not have a big defence interest in my constituency but I understand what the position of my colleagues may be. However, there are enormous skills in the defence industry in this country. We make planes, ships and all kinds of things very well, and we have a highly skilled work force. How much better would it be to have a longer-term trajectory for using those skills to make other things such as socially useful products that will develop, sustain and support people, rather than weapons of war or, in the case of nuclear weapons and submarines, weapons of mass destruction that can only kill large numbers of civilians?

Concerns have been raised that the cost of the Trident replacement programme puts significant stresses on the rest of the Ministry of Defence budget. I hear complaints from many people throughout the armed services that they are experiencing various shortages at present. All hon. Members in the Chamber will be able to relate to that. None of those shortages will be met while we continue with the massive expenditure on nuclear weapons and the preparation for replacing the submarines and missiles.

A document entitled “Looking into the Black Hole” by the Royal United Services Institute states:

“The largest, and politically most difficult, procurement programme over the next two decades will be the construction of a successor to the Trident nuclear deterrent submarines. The MoD is due to spend £7 billion over the decade to 2020 on the initial concept, design and development phases of this project, equivalent to around 11 per cent of the new equipment budget over the decade from 2011/12 to 2020/21. But the bulk of spending on the successor submarines, total costs of which are projected at £25 billion, is due to occur during the decade after 2020/21. The Main Gate decision, which gives permission for the Demonstration and Manufacture phase to begin, is due to be made in 2016. If this schedule remains, spending on the successor programme will rise sharply, probably reaching a peak of around 30 per cent of the new equipment budget by 2021/22 or 2022/23, when the first-of-class begins production. It is likely to remain close to this level until after the planned delivery of the first submarine”.

We are on a trajectory to spend a great deal of money before Parliament has even made the decision. I could write now the speech for the Secretary of State, whoever it will be, in 2016—“We’ve spent so much, done so much and made such preparations. Let’s spend another £60 billion on this project.” Why can we not have that debate, discussion and decision now, rather than leaving it for another five years, until 2016, when all this money will have been spent?

[Dr Julian Lewis (New Forest East) (Con)]

I do not know whether you care to cast your mind back to May 1997, Mr Hood, but you drew the short straw of being the hon. Member who had to respond to my maiden speech. That speech was about nuclear weapons—Trident—and I fear that this one will be on the same subject. Indeed, I suspect that it will not be the last one that you or other hon. Members hear from me on the subject. I sometimes think that I should go into a sort of partnership with the hon. Member for Islington North (Jeremy Corbyn). We have debated this subject many times over the years. He never changes his tune, and I never change mine, but the debate remains live. It relates to procurement, in addition to strategy and the ethics or otherwise of nuclear deterrence, because of course the procurement process for Trident has been much disrupted.

The hon. Gentleman made great play of the fact that Parliament has not yet had the debate. Well, excuse me, I think that Parliament did have a debate. If I remember correctly, it was in the spring of 2007, and both the Labour party and the Conservative party were wholly in favour of the next generation of Trident being constructed. I recall the then Leader of the Opposition—now the Prime Minister—to whose speech I had contributed, passing me an Order Paper on which he had inscribed the words “Julian gets his way”. Sadly, of course, there’s many a slip between cup and lip or, indeed, between a vote in Parliament and the deployment of a successor generation. The slip concerned came in the failure of the Conservative party to win an overall majority at the last general election. That ought not to have been a problem for the procurement process for Trident, given that the Labour party had gone into the election pledged to renew the nuclear deterrent and so had the Conservative party. Only the Liberal Democrats were opposed to that.

[Jeremy Corbyn]

I know that the hon. Gentleman loves the fact that the Conservatives are in a coalition Government with the Liberal Democrats—it is what gets him out of bed every morning and into work—but in his discussions with his Liberal Democrat colleagues, has he reached any conclusion about whether they do or do not want a nuclear missile or whether they want a different type of nuclear missile in the review that apparently is being undertaken?

[Dr Lewis]

I have to say to the hon. Gentleman—I am tempted to say “my hon. Friend”—that the Liberal Democrats really differ from both of us, because he knows where he stands on nuclear weapons and I know where I stand, but the Liberal Democrats stand firmly with a foot in both camps. They know that they do not want Trident, but they do not want to put themselves in his camp by telling the truth, which is that the majority of their activists are one-sided nuclear disarmers and do not want a strategic nuclear deterrent at all. Therefore, they come up with this fiction that it is possible to have a viable strategic nuclear deterrent with an alternative system to Trident.

That ought to have made no headway at all when the coalition was formed. The reason for that was that I and all the other Conservative Members of Parliament, who were being addressed by the Prime Minister-to-be at a meeting in Committee Room 14, were told what the terms of the coalition agreement would be, or some of the basic outlines of the terms. We were told that we would have to accept certain things that the Liberal Democrats wanted that we did not want, such as a referendum on the alternative vote, but that the Liberals would have to accept things that we wanted that they did not want, such as the renewal of Trident—that was the very example chosen. I remember my friend and colleague the future Chancellor of the Exchequer looking up at that moment, catching my eye—because at the time I was still the party spokesman on the Royal Navy and the nuclear deterrent—and nodding vigorously in confirmation of what the leader of the party had said. You can imagine, Mr Hood, my surprise and dismay—

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[John Woodcock (Barrow and Furness) (Lab/Co-op)]

It is a pleasure to speak under your chairmanship, Mr Hood. It is also a pleasure to follow the hon. Member for New Forest East (Dr Lewis). My remarks will follow on neatly from his, as his did from those of my hon. Friend the Member for Islington North (Jeremy Corbyn)—those who speak in debates on the deterrent are a kind of a parliamentary tag team. This is not the first time we have seen that, and I am sure that it will not be the last.

[Jeremy Corbyn]

It is an asymmetric triangle.

[John Woodcock]

Yes, that is quite possibly true, and I may say something about the fundamental importance of this debate for Opposition Members later.

I want to talk about the successor deterrent in the context of procurement and the critical issue of sovereign capability. Defence procurement is different from so much Government procurement in other Departments, because of the importance of Britain retaining capability in certain key strategic areas. Submarine capability must remain one of those, and British submarines defending British shores must continue to be built in Britain. It is a happy fact that the only place in Britain that can build them is in my constituency, and what an incredible engineering feat is achieved there.

It is important that procurement is undertaken in the most effective way. Gaps in construction could spell disaster for our capability to build submarines. Hon. Members will think back to the early 1990s, when the previous Conservative Government left a gap between finishing the Vanguard class submarines and starting the Astute class submarines. Ministers say—I welcome this, and we need to hold them to it—that they have learned from those mistakes and from the experience of how difficult it was to restart our capability in Barrow. In fact, the problems and cost overruns experienced with the new Astute class submarines came in large part from the fact that the people building them were learning their craft anew.

Given the constraints of sovereign capability and the fact that only one place in Britain will retain the skills to build submarines, it is critical that the Government do whatever it takes to ensure that the taxpayer gets value for money and that the country’s security is upheld. Conservative Members were hot on that in opposition, when they repeatedly pointed out the cost to taxpayers of delaying important procurement projects and of shifting timetables to the right. It therefore greatly concerned me that when they took office, they delayed the proposed in-service date for the successor deterrent submarines from 2024 to 2028, which necessitated a re-baselining of the Astute class submarines at an increased per boat cost to taxpayers and created the need for a costly refit of the Vanguard class submarines. In an answer to me on 8 November 2010, at column 5, the former Defence Secretary, the right hon. Member for North Somerset (Dr Fox), put the cost between £1.2 billion and £1.4 billion, which is the cost of refuelling alone aside from any other cost incurred in keeping the submarines going.

Apart from the increased cost, the changed in-service date has potentially stretched the safe life of the current Vanguard class submarine to its limit. Experts in the Navy, Barrow shipyard and the Government say that with the increased cost of the refit they think they can keep the Vanguard class submarines in service for the projected time, but their life will be stretched to the limit, and any further delay could compromise safety and radically increase the cost. I hope that the Minister will comment on that. It is important that we keep the project to time, but it has slipped in the past, and if it slips further, given that he has increased the risk to the project, what will happen?

I hope that the Minister will make it clear whether the new Defence Secretary intends to look at the issue afresh, and, if so, what that is likely to entail. Will he ring-fence the budget for Trident from the defence main budget, which has already been mentioned in the debate? Will he make clear the overall extra cost to the taxpayer from the political deal between the coalition factions, which the hon. Member for New Forest East has expanded on at length? That deal subjugated what was in the best interest of British taxpayers on procurement and the defence of the realm to political expediency in this Parliament.

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[Caroline Dinenage (Gosport) (Con)]

I congratulate my hon. Friend the Member for Sittingbourne and Sheppey (Gordon Henderson) on securing the debate, which he promised would be wide-ranging, as it has certainly proved. I want to make passing reference to some of his points about the waste of public money in various previous defence procurement contracts, which is particularly galling given how hard we are now sweating our military assets, working people and equipment to deliver incredible value for money. It is galling, too, because, representing a military constituency, I receive letters from wives in military families saying, for example, that their husband is about to be deployed for a second eight-month term with only a 10-week break, and will be away for a second consecutive Christmas. That puts incredible pressure on families, so it seems very wrong to throw money away thoughtlessly on ill-devised and badly thought-out procurement contracts.

I want, however, to talk about another matter, and that is the vagaries of a defence procurement process which puts obstacles in the way of good, efficiently run British companies—particularly small or medium-sized enterprises—winning contracts, creating jobs and earning the money to help the country grow out of its economic hardship. I know that the Government have always recognised the strategic and economic importance of the defence sector. I have six significant defence companies based in my constituency, so I have become increasingly aware in the past 18 months of the challenges that the industry faces. In the light of the forthcoming White Paper on defence and security equipment, support and technology, I urge the Ministry of Defence to deal with three areas of concern to the companies in my constituency: support for SMEs, greater long-term planning and a strategy for successful outsourcing to industry.

I have spoken before in the Chamber about the great importance of SMEs in all sectors. They are truly the lifeblood of the defence industry. In my constituency, SMEs such as Vector Aerospace represent vital links in the supply chain that allow our headline companies to succeed, and to be world beaters. Britain boasts more SMEs in its defence industry than France, Germany, Spain and Italy combined, and we must recognise and nurture those unique assets.

I welcomed the acknowledgement in the December 2010 Green Paper that SMEs are a vital source of innovation and flexibility. I now urge the Government to address the enduring challenges that SMEs face, as unreliable or slow acquisition processes continue to place unmanageable burdens on their cash flows. Requirements such as the framework agreement for technical support listing have also been highlighted by small contractors in my constituency as prohibitive to SMEs supplying the Ministry of Defence.

The forthcoming White Paper must deliver comprehensive support, through the procurement processes and supply chain management, for our SMEs, so that they can continue to be the pride of the British defence industry. Across all tiers, our defence companies provide jobs for more than 300,000 people and add £12 billion to the UK economy, but, despite the importance of that, the Government are right to prioritise the needs of our armed forces and the taxpayer above industry. We must always be clear that we are not in the business of artificial job creation through public sector procurement. However, the companies whose representatives I have spoken to in my constituency and beyond are not demanding protectionism. They want, for the taxpayer and for industry, an environment that delivers the best value for Government and appropriate support for British companies.

[Jeremy Corbyn]

In the hon. Lady’s dealings with local companies, which undoubtedly have very high skill levels, has there been any discussion or consideration of contracts outside defence, and in other areas, using those transferable skills?

[Caroline Dinenage]

Many do that, and many work in the defence of other countries outside the UK, but Vector Aerospace does repairs and servicing for many of the helicopters—Chinook, Sea King and Lynx—and the mainstay of its work is for the British military.

The White Paper must tackle two procurement challenges that have frequently hampered both industry and cost-cutting efforts. First, we must ensure that through-life capability management is fully considered in the procurement process. In many respects, the MOD is right to prioritise buying off-the-shelf products at the best value, but with acquisition representing only 15% to 20% of the lifetime cost of a programme, there can be significant cost implications to excessively short-term thinking. That has been all too apparent in the case of the Carson rotor blades purchased under an urgent operational requirement for helicopters in Afghanistan, which lacked a repair contract and so had to be ordered as new each time one broke. That is absurd and highly expensive, and we must seek to avoid that in future through greater scope in the procurement process for long-term thinking.

Secondly, the White Paper must ensure that the limited resources of the MOD are put to the best use through successful partnerships with industry. Representatives from Vector Aerospace, which I have already mentioned, have noted that the outsourcing of functions carried out by service personnel or civil servants can deliver significant savings to the taxpayer while continuing to support British industry. They have had incredible results by sending their own personnel to Afghanistan to service and repair Chinook helicopters. Their performance has always been described as exceptional.

We need to ensure that long-term thinking is built into our procurement process. I look with great anticipation to the publication of the forthcoming White Paper, and urge the Government to ensure that it sustains the strategic and economic importance of our defence industry through delivering a supportive and considered procurement environment.