Defence and Security Industrial Strategy

John Healey Excerpts

Tuesday 23rd March 2021 Commons Chamber

[John Healey (Wentworth and Dearne) (Lab)]

On this day, when we mark a full year since the country first went into lockdown, may I use this statement to pay tribute to the men and women of the armed forces, who have done so much to help the country through this pandemic? I also pay tribute to the men and women who work in our UK defence sector. They, too, responded rapidly, making personal protective equipment and ventilators, and they play a vital part in designing, producing and maintaining the equipment our forces need.

Labour welcomes the publication of this strategy; indeed, the very use of the term “strategy” is something of a victory in itself. We welcome the confirmation that global competition by default, begun by the White Paper in 2012, has gone; it is high time we put an end to a British Government being just as happy buying abroad as building in Britain. We also welcome the change to naval procurement policy, and we welcome the commitment to invest £6.6 billion in defence research and development over the next four years.

However, there is a question at the heart of this strategy: is this the start of a new era, with the aim not just to make in Britain and maintain in Britain, but to develop now the technologies and companies that we will need in 10 years’ time to procure in Britain? Labour’s determination to see British investment directed first to British industry is fundamental. When done well, that strengthens our UK economy and, as covid has exposed the risks of relying on foreign supply chains, it also has the potential to strengthen our UK sovereignty and our security. We therefore want a higher bar set for any decision to procure Britain’s defence equipment from other countries. Will the Minister state today, in the clearest possible terms, the Government’s commitment to build in Britain? How will this strategy strengthen the UK’s defence resilience by growing our sovereign capacity to replace equipment if it is lost in conflict? What is the strategy to boost Britain’s foundation industries linked to defence, such as steel?

This strategy demands a massive change in mindset in the MOD and the military, which only Ministers can lead, so will the Minister commit to publishing an update on progress, with another oral statement to the House one year from now, not least so that we can judge the Prime Minister’s boast in launching the integrated view that we will open up

“new vistas of economic progress, creating 10,000 jobs every year”—[Official Report, 19 November 2020; Vol. 684, c. 488.]

Let me turn to the money. We welcomed the Prime Minister’s extra £16.5 billion in capital funding after the last decade of decline, and we welcome the detail set out by the Minister today, but 30,000 jobs in the defence industry have gone since 2010, and nearly £420 million in real terms has been cut in defence R&D, so in many UK regions the money promised today will still be well short of what has been taken away over the last decade. With the National Audit Office reporting a black hole in the defence budget of up to £17 billion, and with the permanent secretary telling the Public Accounts Committee that not all is

“going to go on new and revolutionary kit”,

exactly how much of this extra money will be swallowed by the black hole in current programmes?

The MOD’s bad habits run deep. Only three of the MOD’s 30 major projects have a clear Government green light on time and on budget. The Prime Minister told the House:

“We are setting up a unit to ensure that we get value out of this massive package.”—[Official Report, 19 November 2020; Vol. 684, c. 499.]

I have tabled the same set of questions to the Minister twice now about the progress, powers and personnel of this unit, and he has given the same evasive non-answers both times, so now is a good time for him to level with the whole House. Will he admit that there is no unit and no plan for a unit? The Prime Minister was making it up, was he not? The important point is this: without a revolution in the way that the MOD controls procurement costs, we are doomed to see it repeat the mistakes of the past.

Yesterday, the Defence Secretary asked our forces to do more with less. Today, the Minister is asking industry to do more with more. This is a big, one-off opportunity. Ministers have got to get this right. It is no good in two years’ time if the NAO still says that the military equipment plan is unaffordable and still says there is a black hole in the defence budget. Does the Minister accept that the single challenge for the MOD now is delivery, delivery, delivery? On behalf of the British people and British forces, we will hold them hard to account for exactly that.

[Jeremy Quin]

I am delighted to confirm that the next years will be all about delivery, delivery, delivery, based on the sound financial footing that this defence settlement has given us. I am very proud of what we have achieved with the plans that we have set out, and I am convinced that we will be able to meet the challenge that has been set for us in order to ensure that we are investing properly for the future.

I thank the right hon. Gentleman for his comments about the armed forces’ contribution during covid. They are sincerely meant, and I know they will be welcomed across the armed forces. I also thank him for his comments about the defence sector. It rose to the challenge as team UK, with unions and management continuing to deliver for the public good.

I welcome the right hon. Gentleman’s commitment to support us on moving away from global competition by default, as well as his comments on naval procurement and his welcoming of the £6.6 billion for R&D. I have good news for him: this policy absolutely gives us the ability to set out right from the outset what we are trying to achieve from a tender. It is not only about making certain we have the best equipment for our armed forces, but about what else we can get for that in the national interest, ensuring that we maximise our social value. That will come through in the awarding of the marks in the tender, which, as I have said, will be compulsory as of 1 June. I believe that we will get a lot out of the strategy. We will see more equipment built in Britain, both by UK companies and by those collaborating with us.

The right hon. Gentleman then strayed into some of the economics of the task. I was in the Treasury under the last Labour Administration, and we could have a discussion about the state of the national finances in 2010 if he chose to have one, and the £36 billion black hole left in the Ministry of Defence. [Interruption.] I hear chuntering. I have an excellent article from The Guardian that will confirm it, but I will share it at a later date. There was a significant black hole left, and I regret that there were jobs lost over that period. I hope we will not be so lackadaisical about exports that can maintain jobs, but there is a long lag time on that. I am proud to see the investment we are now putting into our defence. We make no mistake in what we say about our equipment plan over the past four years—it has clearly been unaffordable, and the permanent secretary has made clear that that is the case. We now have a strong basis on which to deliver.

To reassure the right hon. Gentleman, he mentioned that there are only three green lights, and I think he is referring to the Government major projects portfolio, where the senior responsible owners themselves highlight at-risk projects. There is only one thing more scary than projects that are delayed or do not hit their costings, and that is when SROs are unaware of it. I am pleased we have people who are all over the detail and are focusing on making certain that these projects work. I would rather problems were highlighted so they can be addressed.

To help address that issue, we are doubling the number of projects that are going to be looked at through the defence major projects portfolio. That will go up to 65. That will ensure that at the centre in the Ministry of Defence, we are keeping a close eye on what the top-level budgets are delivering and making certain that we are continuing to deliver those programmes to time and cost. We continue to upgrade Defence Equipment and Support. The number of those trained at senior commercial standard will have risen from 125 to 200 by the end of this year, and we are determined to continue to deliver on the DE&S transformation plan.

I am very optimistic for the future. I am optimistic that, working together with industry, we can continue to deliver a fine UK defence industry of which we can all be proud and that will continue to deliver the protection, equipment and lethality that our troops continue to need to be effective in meeting the challenges in the year ahead.