Defence Procurement and Supply Chains

Jeremy Quin Excerpts

Tuesday 1st December 2020 Westminster Hall

[The Minister for Defence Procurement (Jeremy Quin)]

I welcome this important debate, and congratulate the hon. Member for Birkenhead (Mick Whitley) on having secured it. This debate is particularly timely, as several hon. Members have reminded us, as it comes in the wake of an extremely positive bit of news. It is wonderful to see the Chamber united, with the hon. Member for Portsmouth South (Stephen Morgan) welcoming last week’s announcement. Even my friends from the Scottish National party have welcomed this investment in the defence of the United Kingdom, and I welcome the hon. Member for Lanark and Hamilton East (Angela Crawley) having done so. It is a £24 billion increase and, as has been suggested, that is a massive boost to the defence of the United Kingdom. It is the largest investment in 30 years—the largest since the end of the cold war—and I am so pleased that it has generated support in this Chamber this afternoon.

This is a timely debate not only because of that announcement, but because it comes at a point when “team defence” has done so much and performed so brilliantly in confronting the coronavirus pandemic. I begin by thanking the defence industry at every level for its positive and collaborative response to this once-in-a-hundred-years event.

At the heart of defence is a critical task of delivering equipment and support to our armed forces to enable them to continue their vital work. We were reminded of that by my hon. and gallant Friend the Member for Bracknell (James Sunderland) who served himself—it is the kit that our people need to do the job that they are called upon to do. Our partners in industry have risen to that challenge. They have done just that in providing support throughout the pandemic.

To assist them, the Department has actively supported the defence sector through the use of prepayments to maintain business continuity. Some £138 million has been paid on this basis to maintain that flow of cash right through the sector. That has been alongside our drumbeat of orders. I was grateful to hear the hon. Member for Neath (Christina Rees) mention the munitions contract with BAE. I hope that will benefit those employees. It is one of a number of contracts throughout Wales and the rest of the United Kingdom that have continued to be delivered through the course of this pandemic.

Just as we have been monitoring the health of 600 of our suppliers, we make clear to the clients their responsibility to actively engage and support the supply chain. We have engaged directly with ADS, which has been referred to, and with other trade bodies and it has been good to hear of the productive relationships that companies have enjoyed in supporting each other during this period.

As hon. Members have mentioned, the way in which the workforce has been throughout this has been particularly positive. I thank them for how they have adopted and adapted to necessarily different working practices to continue to supply our defence forces, pulling together in a common endeavour to support our forces. How everyone has stepped up to deliver this has been extremely welcome.

[Grahame Morris]

The Minister’s rhetoric is excellent, but in terms of the practicalities for fleet solid support ships, for Rolls-Royce, and the supply chain and the lift-fan blades for the STOL engines for the F-35 Lightning fighter, will the Minister recognise the important role of Government in giving direction to companies such as Rolls-Royce to ensure that that work is carried out here in the United Kingdom? It is part of our sovereign defence plan to ensure that we have security of supply over these vital components.

[Jeremy Quin]

I am grateful to the hon. Gentleman for his intervention. I recognise the passion with which he addresses the issue of the Rolls-Royce concerns at Barnoldswick and the current action there. I hope that can be brought to a conclusion. I know my colleagues have said much the same. I am not aware of any long-term plans to remove the F-35 components from outside the United Kingdom. I am not aware of them and I hope we can continue and maintain a productive relationship with Rolls-Royce.

We all know what a dreadful situation is confronted by the aerospace industry in general. In practice, in defence, we continue to invest and provide that lifeblood of support to our companies that I hope will enable them to remain and prosper inside the UK. I will come on to the FSS point made by the hon. Gentleman later in my remarks.

The proposer of this debate, the hon. Member for Birkenhead (Mick Whitley), mentioned Cammell Laird, which is in his constituency, and I congratulate the company on its work through the pandemic. It has done sterling work on the Type 45 power improvement programme, and it is great to see HMS Dauntless re-floated with key equipment installed and back on to trials. The company has also been working with the Royal Fleet Auxiliary—currently RFA Wave Knight and RFA Tidesurge. With them, and the work of other companies in the marine sector, Birkenhead continues to provide invaluable contributions to the defence and the UK’s wider prosperity.

More broadly, the north-west has one of the highest per capita defence equipment spends of any region in the country. These figures might upset the hon. Member for Strangford (Jim Shannon). The spend is £270 per head per year in the north-west, some way behind Scotland and indeed, Wales, but way ahead of Northern Ireland. The hon. Member for Strangford is absolutely right that we need to lift up and level up the economy.

[Jim Shannon]

We have an excellent MOD contractor in Thales in Belfast, which I know the Minister is aware of. It is very much involved in cyber-security. I encourage the Minister, when looking towards cyber-security contracts and procurement for the future, to note that Thales could perhaps very much feature in that.

[Jeremy Quin]

I have the gift of foresight. Only very recently, I was on a call with the First Minister of Northern Ireland with Northern Ireland defence contractors, talking about the opportunities that may come up. I know that the Chief of the Air Staff will be in the Province to talk about opportunities in aerospace, and we are minded to see how we can support all parts of the United Kingdom, absolutely including Northern Ireland.

To go back to the north-west, the Typhoon programme makes a significant contribution to the UK economy, generating billions of pounds through exports. That is an important issue, which my hon. and gallant Friend the Member for Bracknell raised. That will be enhanced not only by the recent radar development, which has secured in excess of 600 jobs, including 120 jobs at BAE Systems Warton in Lancashire, but also by the recently signed Quadriga contract, which secures further skilled manufacturing work to build parts of 38 new aircraft at BAE Systems Samlesbury, including engineering roles that are central to the UK’s future combat air ambitions.

We can be positive about the future for defence across the UK. The four-year settlement provides the financial certainty needed to pursue a radical modernisation programme to meet today’s threats and prepare for the future.

I urge the hon. Member for Portsmouth South to be a little patient. We have the funding envelope and we are looking forward to producing the integrated review and the defence and security industrial strategy. These are three important parts of the stool that will take us forward for the next few years. It is a platform for the future. I recognise the hon. Member’s eagerness to see those things announced. I would ask him to be patient a little longer. He is obviously happy with the first part of the stool—we have the other two legs to produce, and I hope to bring them forward as soon as practical. As he appreciates, these are cross-Government reports. We will bring them forward when we can.

The four-year settlement ensures that the armed forces will be able to adapt to the threat with cutting-edge technology, compete effectively in the information age and fight decisively when required. It will position the UK as a global leader in the new domains of cyber and space and transform the UK’s capabilities across sea, land and air.

As has been stated, it is underpinned by record investment of at least £6.6 billion on military research and development. I hope to encourage the hon. Member for Liverpool, Riverside (Kim Johnson), who is keen to see us committing to programmes. The announcement that the Prime Minister made confirmed our order of eight Type 26 and five Type 35 frigates.[Official Report, 7 December 2020, Vol. 685, c. 6MC.] It also supports a subject close to the heart of a number of people in this Chamber—the future of the fleet solid support ship programme, which will supply our carrier strike group, and which I know is of direct interest to the right hon. Member for Warley (John Spellar), as it is to the hon. Member for Birkenhead, among many Members. That is an ongoing process, as the right hon. Member for Warley knows; I look forward to his Defence question next week. The competition will be launched next year. I was going to say in the spring, which is but a short step away. We are looking forward to spring dawning.

[John Spellar]

Will the Minister give way?

[Jeremy Quin]

I give way to the right hon. Gentleman, as I thought I might have to.

[John Spellar]

This is absurd. We know what the requirement is. It has already been out to one tender. The only argument was about whether it was a warship. Why are the Government still dithering? Why do they not get the order there, let companies bid in and let their suppliers know and start tooling up and getting supply chains working? Why can they not get a move on?

[Jeremy Quin]

The right hon. Gentleman will be aware that these are warships, which I know he regards as a great step forward in our thinking, as we have learned more about how they will operate in the carrier strike group. He will just have to be a little more patient. We are getting on with the procurement. Come the spring, he will see that competition launched.

[John Spellar]

Why the delay? Quite frankly, they could always have been designated as warships, because they always had guns on them. What is holding it up now?

[Jeremy Quin]

First of all, we have had a delay in this programme for quite some time—I do not know if it goes quite back as far as the previous Administration, but it might well have done. For a long period, people have been thinking about the FSS and how exactly it should be incorporated. All I can say is that I am delighted that, very soon, the right hon. Gentleman’s pain will be over, with the competition being launched. I am pleased that we have reached that point. It is critical, as the right hon. Gentleman will agree, that the next competition is extremely well founded, well based and successful, and we are putting in place the basis to ensure that that is the case.

I must move on. Another major project of direct importance is the future combat air system, which is a truly strategic endeavour. It will build on the success of Typhoon and F-35 to again promote great jobs in engineering in our high engineering base in the north-west of England and throughout the UK. On land, our exciting £2.8 billion commitments to Boxer at Telford is now feeding through supply chain orders throughout the sector. All these programmes, whether at the cutting edge of maritime combat, air or land capabilities support jobs not only at tier 1, but throughout the supply chain, as has been said, with 119,000 directly employed and a further 80,000 or so employed through the defence supply chain. While decisions on the allocation of funding across the breadth of our capabilities will be made and announced in due course, this settlement will support skills and jobs, and apprenticeships, as mentioned by my hon. Friend the Member for Barrow and Furness (Simon Fell), throughout the UK.

In order to ensure a strategic approach, I announced earlier this year that we are leading a cross-Government review of the UK’s defence and security sectors. It will identify how we can ensure that we have competitive, innovative and world-class defence and security industries that drive research and investment. We recently launched the social value in procurement model which, to the hon. Member for Portsmouth South’s point, will provide another tool to ensure our major procurement projects evaluate priority social value themes and outcomes linked to prosperity. As part of the defence prosperity programme, we are working with industry and Government colleagues to develop a joint economic data hub within the UK Defence Solutions Centre to collect and aggregate economic data from across the sector. It will provide a better understanding of the economic contribution of the defence sector at a UK, national and regional level that can inform our decision-making process.

Throughout defence, we are committed to ensuring that we seize the opportunities provided by smaller companies. We are targeting a 25% spend with such companies. We have already hit 19%, up from 13% a couple of years prior to that. We are extremely mindful of the need to maintain a clear vision of our supply chain, and we are working through a Department-wide supply chain resilience and risk programme. Defence has some of the most complex supply chains and challenging procurement programmes across government. However, they contribute to the UK’s proud history of providing the skills, capabilities and equipment that keeps us and our allies safe, and I am convinced that, given the Government’s commitment, the UK will have an equally proud future.

[Sir Charles Walker (in the Chair)]

Mr Whitley, can you sum up this excellent debate, please?