Oral Answers to Questions

John Spellar Excerpts

Monday 26th November 2018 Commons Chamber

[Gavin Williamson]

I cannot imagine what my right hon. Friend is referring to, but I think that when it comes to the issue of Russia’s lack of compliance with its treaty obligations, we need to keep hammering home the message, with all our NATO allies, that it cannot ignore its treaty obligations and must start complying with them.

[John Spellar (Warley) (Lab)]

Will the Secretary of State make clear that there could be dangers here, with threats not only to the INF treaty but to the strategic arms reduction treaty—START—talks on strategic nuclear weapons? Will he also, along with his colleagues in NATO, present a united front on NATO’s assessment, and that of the United States, that Russia is in serious breach of the INF treaty? Will he urge the Americans—who have not, as far as I am aware, announced that they have withdrawn, but have announced an intention to withdraw—not to do so, but also make clear that this is not a reaction from Russia, but a reaction from the west to actions by Russia?

[Gavin Williamson]

The right hon. Gentleman’s assessment is absolutely accurate. This is a US reaction to Russia’s lack of compliance with its treaty obligations. It is important for the whole of NATO to speak with one voice and make clear to Russia that it must start complying with its treaty obligations.

UK Sovereign Capability

John Spellar Excerpts

Tuesday 20th November 2018 Westminster Hall

[Mr Sweeney]

Unit costs ought to come down but the problem is that the way that the shipbuilding strategy is defined makes it more likely that the cost reductions will not be maximised. That is a great shame, because it undermines the aspirations of the strategy.

I am a vice-chair of the all-party parliamentary group on shipbuilding and ship repair, and we hope to bring forward a report on the strategy very soon. It will highlight some of the opportunities to improve it, because we all share the same aspiration. We want to see a world-class industry in the UK that has the certainty to invest. We want a world-class product that is cost-effective enough to grow the size of the Royal Navy.

[John Spellar (Warley) (Lab)]

My hon. Friend rightly focuses on warships, but it is also about the civilian ships for the Ministry of Defence. Unlike every one of our European competitors, the Ministry of Defence stubbornly insists on advertising abroad. There is a point about maintaining a competent workforce and the drumbeat of production, as well as the supply chain and the supply ecosystem, which is so important for sustaining all the yards. Can my hon. Friend find a logical, rational explanation for why the Ministry of Defence refuses to behave like every other European naval country?

[Mr Sweeney]

My right hon. Friend’s point goes back to that made earlier about the Treasury’s behaviour. I feel that this is almost about an economic orthodoxy that drives behaviour and says that we must maximise competitive tendering for the sake of it, because there is some sort of axiom that it works because it does. That approach does not bear scrutiny. Shipbuilding has the highest barriers to entry of any major industry in the world. It is a hugely capital-intensive industry and the only way to make it work, and the only way to get to a world-class, market-dominant position—much like with aerospace, where, as we know, the Americans and Europeans built their own champions in the form of Airbus and Boeing—is by having that synergy between Government, industry and the research and development base that makes it work. That is what we ought to have with shipbuilding in the UK. Fragmenting it in the way proposed in the national shipbuilding strategy serves only to undermine the UK’s long-term sovereign capability in shipbuilding. It is the primary sovereign interest of the UK to have that capability. We are an island nation, a nation of islanders and shipbuilders, and we ought to maintain that capability.

There are critical issues at stake here. We have already heard that Appledore, owned by Babcock, is due to close in March, which will be a devastating blow to the local community and to the UK’s wider defence manufacturing base. It is yet another shipyard to fall. Once it falls, it will not recover and be reopened—that is a simple fact. Once it is gone, it is gone. Despite the recent contract announcement at Cammell Laird, it is also completing an HR1 notification form and making significant redundancies. That is very unfortunate, and speaks to the point about feast and famine. We cannot have these cycles in capacity any more; we need to smooth the cycle as much as possible.

In the context of major shipyard closures and significant downsizing, whether that is at Rosyth or Appledore, it is bizarre that the Government are quite happy to tender contracts overseas in international open competition. Under article 346 of the treaty on the functioning of the European Union, the Government could quite easily designate the industry as UK-protected. It is entirely at their discretion. Any notion that their hands are tied is bogus. They could do that, smooth the production cycles and build a firm and stable footprint for UK shipyards, which would enable them to get match fit and then go out into the world and compete effectively for other orders. That is exactly what they do in Italy with Fincantieri, and what they do in France with DCNS. It is exactly what happens in Germany.

I do not understand why other European Union member states can achieve the same objectives much more effectively than us, but we are so holier than thou that it hurts when it comes to the zealous application of these EU rules and we seem to undermine our own industrial base and our prosperity as a result, meaning that communities are broken and skills lost. Ultimately, we undermine our objective of building a more resilient and effective industrial base to serve our defence industry and, potentially, commercial spin-offs.

Barrow-in-Furness is another example. The gap between the end of the Vanguard programme in the 1990s and the beginning of the Astute programme meant that the shipyard was essentially unable to build a submarine and they had to go to General Dynamics in the United States to be retaught how to build them. That is what we risk losing again if we are not careful.

[John Spellar]

It was surely not just the design capability and the managerial capability, but the actual day-to-day work experience and the work teams that have been created and then broken up. It took 12 to 24 months to rebuild that capability and was hugely expensive. The Ministry of Defence and the Treasury have still not learnt that lesson.

[Mr Sweeney]

My right hon. Friend makes a very prescient point. There is no calculation of the opportunity cost when those skills are lost or of how much it costs to build them back up. The feast and famine cycle is hugely costly and inefficient, and the national shipbuilding strategy risks going back to that pattern. I think that is a critical point that the Minister really ought to address in his remarks about the national shipbuilding strategy.

Let me make it clear that we are all here to try to deliver the best outcome for defence infrastructure in the UK—we are trying to get to the same end goal. We are trying to offer the best of our understanding and experience of these issues to inform this document and improve it as much as we can, and it is fair to say that we want to achieve the same objectives.

We have also seen the development of a combat air strategy—the Tempest programme—which is laudable and looks promising, but there is a lack of an overarching objective on defence. We have already lost the capacity to build large fixed-wing aircraft through the cancellation of the Nimrod programme, which was done hastily by the disastrous 2010 strategic defence and security review and means that we have permanently lost that capability in the UK. Similarly, we have lost the capacity to build main battle tanks.

What else is at risk, and where is the risk profile of the sovereign capabilities that will be lost? What is expendable and what is indispensable? That is not defined in the national shipbuilding strategy, where there is talk of potentially putting the Type 31e combat management system out to international tender. Why do we not define what the key sovereign capability is—not just in the shipbuilding programme, but in aspects of its critical supply chain, including gearboxes, gas turbines, combat management systems, weapons systems and so on? We need to have that granularity of detail in the national shipbuilding strategy, but it is not there. That leaves it open to interpretation and extreme gerrymandering by the Ministry of Defence.

Those are the key issues that we have to highlight, whether they are across land, maritime—I am biased towards maritime, which I have focused on heavily—or aerospace. I am sure that other Members are willing to contribute and add their own thoughts to this debate, but essentially that is an overview of my main concerns about our UK sovereign capability and the risks to sustaining it.

--- Later in debate ---

[Mr Kevan Jones (North Durham) (Lab)]

I congratulate my hon. Friend the Member for Glasgow North East (Mr Sweeney) on securing this debate. He emphasised the lack of strategy on maritime sovereign capability, but we need to ask the broader question of why we are in this mess today.

Since 2010, this Government have had no industrial strategy on defence. Some of the short-term decisions that were taken in 2010, when the Government slashed the defence budget by 16%, have resulted in capability gaps. A revolving door has been put on the office of the Minister for Defence Procurement, which means that they have a life expectancy a bit longer than a mayfly. That is not helpful when we need a champion in that role who can argue against the Treasury.

Why is sovereign capability important? If we want to have certain capabilities for the defence of our nation, we need to invest in them. The right hon. Member for Birkenhead (Frank Field) has raised the issue of defence exports. He is right to say that if we are to nourish that industry, there is a defence export role to it. The Ministry of Defence and the Treasury have adopted Donald Trump’s mantra of “Make America great again”, because the procurements that have taken place are suggestive of an “America first” strategy. In the past few years, they have procured more than $8 billion-worth of contracts from the United States.

As my hon. Friend the Member for Glasgow North East and my right hon. Friend the Member for Warley (John Spellar) both said, those procurements were not put out to contract; they were simply awarded. There were no competitions. We have the Apache contract and the P-8 contract—direct foreign military sales—and we have the scandalous situation of the airborne warning and control system, or AWACS, and I understand the Department is now going down the Wedgetail route. From talking to colleagues in NATO, I know that the Ministry of Defence has had no role, and nor is it interested, in partnering the programme that is replacing the 15 AWACS NATO aircraft. It is going down the Boeing route again. I am not sure whether soon we will have a sign at the Ministry of Defence’s Main Building saying, “Sponsored by Boeing”, but that seems to be the way it is going.

We also have the joint light tactical vehicle contract that was awarded to Oshkosh, with £1 billion of sales to replace armoured vehicles. There was no competition at all. At the same time, the Ministry of Defence and the Treasury are saying that the contract has to go out to competition. This is dangerous for our capability. It is not just about jobs, which are important, but about our supply chain and investment in research and development in our technology. My hon. Friend the Member for Glasgow North East will not remember the Falklands war, where we faced the issue of kit procurement from abroad. It reached a situation where we wanted to use the kit independently but were told that we could not.

I have serious concerns about this off-the-shelf approach to defence strategy, because there is no commitment at all. It would not happen in any other country—it would certainly not happen in the United States. If we were to sell equipment to the United States, there would have to be some offset in terms of jobs or investment there. This Government have not even tried. They trumpet the £100 million going into Lossiemouth, but that would have had to go anywhere. Boeing is going round on a public relations exercise, with glossy adverts that say it is now a British company, but it is not. There is very little evidence of real investment going into jobs and technology. That is not just today; our technology in this important sector is in long-term decline.

The hon. Member for Berwick-upon-Tweed (Anne-Marie Trevelyan), who is no longer in her place, said that there is no indication that the Treasury or the Ministry of Defence recognises that if a contract is awarded in this country, the money will come back straightaway. That is a serious problem for them. Short-term decisions taken now will have long-term implications for our effectiveness not just at maintaining our sovereign capability in a whole host of areas including shipbuilding, which has been outlined by my hon. Friend the Member for Glasgow North East, but at maintaining our capability to use that kit in certain situations. For example, will we be able to get the upgrades on Apaches if a future US Government determine that we should not? That is why we need sovereign capability.

I hate to use the phrase “go back to basics”, but that is what the Treasury and the Ministry of Defence need to do. They need to make it clear that we need to procure and manufacture in the UK under sovereign capability, which should be the starting point for the defence industrial strategy. We have been promised it by the revolving door of Ministers for Defence Procurement, but it has never been put in place. It has to be a joined-up approach across Government that includes the prosperity agenda, which does not seem to matter when it comes to those huge contracts that have been awarded without competition. When there is a situation such as the fleet solid support ship contract, where we could have investment in UK jobs and prosperity, we put it out to foreign competition. My right hon. Friend the Member for Warley is right: no other nation in Europe would do such a thing.

[John Spellar]

Will my hon. Friend give way?

[Mr Kevan Jones]

I am sorry; I am running out of time.

This scandal needs to be highlighted. I hope the Minister, in the time he has got in his new role, stands up to the knee-jerk “America first” reaction.

Oral Answers to Questions

John Spellar Excerpts

Monday 22nd October 2018 Commons Chamber

[Mr Speaker]

The right hon. Member for Warley (John Spellar) deserves some encouragement at this very early stage of his parliamentary career!

[John Spellar (Warley) (Lab)]

Does the Minister not understand that to export defence equipment we have to have a strong home market, and that is why other European countries insist on building vessels such as the fleet solid support ships in their own yards, with their own workers. What blind dogma is stopping these Ministers and their Department doing the same and ensuring that we make them in Britain?

[Stuart Andrew]

As I said a moment ago, we are making sure that we go out to international competition, because that gives value for money to this country, and we can also then invest the savings we make in other capabilities. It means that we attract the best and affordable solutions. It also brings competition at the heart of our shipbuilding strategy, because we want our shipyards to go out there and compete for international orders.

Defence Industry and Shipbuilding

John Spellar Excerpts

Wednesday 11th July 2018 Commons Chamber

[Nia Griffith]

It is incumbent on the Government, though, to look again and strain every muscle to get the very best work-share agreements wherever they exist.

[John Spellar (Warley) (Lab)]

The argument from the hon. Member for Ludlow (Mr Dunne), whom I congratulate on his report, does not hold water. Of course, if we are buying these planes, we will need maintenance facilities, and if that is being done by industry, industry will provide those facilities, but they are service facilities for the RAF, and there might even be work from abroad. Where, though, are these planes being manufactured? They are being manufactured in the United States, with very little return of work coming to the UK. They have been allowed to get away with a very cheap deal.

[Nia Griffith]

On that note, I shall make progress.

--- Later in debate ---

[Mr Ellwood]

There is so much choice that I do not know where to start. Let us go with the right hon. Member for Warley (John Spellar).

[John Spellar]

Will the Minister confirm that the Korean shipbuilder that took this contract, DSME, underbid and actually lost significant sums of money on the contract? It was not a fair contract, and because of its general business practices, it came very close to going bankrupt and had to be bailed out.

[Mr Ellwood]

I am glad that the right hon. Gentleman put it like that, because I was worried that he was going to say that state aid had been involved. I am sure that he would not suggest that that was the case, because I know him better than that, even though that was hinted at by those on his Front Bench. That was the commercial decision that the company took, but we are left in a situation where Britain is getting value for the taxpayer’s money.

--- Later in debate ---

[Mr Dunne]

My right hon. Friend has been generous about my report, which was published on Monday, and I am grateful for the other comments about the report by Members on both sides of the House. On page 53 of the report, I refer to the fleet solid support ship and make the point that the fact that we are currently a member of the European Union means that we are precluded from taking advantage of the article 346 exemption to require that ship to be built in the UK. One of my recommendations is that we should take advantage of the opportunity of Brexit to consider the opportunity, after we leave the EU on 29 March 2019, to build UK content into our own procurement rules, which might allow us to change the position, but we cannot do that today.

[John Spellar]

Not true.

[Mr Ellwood]

I suggest that the right hon. Gentleman reads the report by my hon. Friend the Member for Ludlow to understand the full picture. My hon. Friend is correct that EU regulations provide guidance on building those ships. The regulations do not apply to royal naval ships because, from a security perspective, every sovereign nation is allowed to bypass them, but the rules absolutely apply to non-royal naval ships—as in Royal Fleet Auxiliary ships—that employ civilians on board. I encourage hon. Members to read the report before judging what my hon. Friend has just said.

Moving back to what I was saying, we must have an honest debate about what is happening, which is why we need to develop a modern, efficient, productive and competitive marine sector that allows us to build on the work that has been done on the Clyde, in the north, in Belfast, in Barrow, in the north-east, in the north-west and in the south-west of England. We have incredible capability, and I am pleased to see so many hon. Members representing constituencies in those areas in the Chamber today.

Our new shipbuilding strategy sets out exactly how we can achieve such a marine sector. We will continue to build Royal Navy ships only in the UK while encouraging international collaboration in harnessing open competition for other naval ships. Our new framework will ensure that the impact of UK prosperity will be considered as part of our procurement decisions. The 2015 strategic defence and security review created a new security objective: promoting our prosperity. Competition and strategic choice remain at the heart of our approach, but we recognise that there are several different models for working successfully with the industry, and we need to take further steps to bolster that and make the right decisions to enable a strong partnership between the Government and industry.[Official Report, 23 July 2018, Vol. 645, c. 7MC.]

That is part of the whole Government approach, spearheaded by the national industrial strategy, with its mutually reinforcing focus on driving productivity and supporting innovation, which provides a strong and clear policy framework in which industry can invest and grow. Key to that is how defence procurement might build economic value by strengthening UK productivity and industrial capability, including at a local level, and boosting exports sustainably. We recognise that responsible exports are now widely accepted as having a part to play in our wider national defence and prosperity objective. They are considered to be an opportunity, not a burden.

Sir John Parker’s 2016 independent review made a series of recommendations about improvements we can make, and, as I said, I am pleased that we will be accepting all of them. He did place emphasis on the dysfunctional relationships between government and industry. Old ships were retained in service well beyond their service date, with all the attendant high costs, and it is important that that changes. So our new strategy is founded on three pillars. The first is better planning, giving industry greater certainty and predictability. We are providing a 30-year Royal Navy shipbuilding masterplan to guide all future naval shipbuilding decisions, and to document the number and types of ships in which we will invest over the next three decades.

The second pillar is a new approach to design and construction. We want to challenge naval standards and introduce new ones, forcing through advances in design, in new materials such as composites, and in manufacturing methods. Our new carriers are a prime example of that. They are built in blocks, with parts built in different parts of Britain, drawing on the expertise of 10,000 people, and being brought together from centres of excellence from across the country. Thirdly, we want to focus on building exports, where there is an opportunity, as the Type 31 will be the first frigate for export since the 1970s. We know that more sales can cut costs in procurement over time and give us the potential to buy even more cutting-edge ships.[Official Report, 24 July 2018, Vol. 645, c. 8MC.]

For now, for reasons of national security, the shipbuilding strategy sets out that warships will be built and integrated in the UK via competition between UK shipyards. However, for the purposes of shipbuilding only, the national shipbuilding strategy defines warships as destroyers, frigates and aircraft carriers. All other naval ships, including the Royal Fleet Auxiliary ships, as well as other Royal Navy manned ships, such as patrol, mine countermeasures, hydrographic and amphibious ships, will be subject to open competition—that means international competition. That remains where the difference lies between us and the Opposition, but it is the cornerstone of our defence procurement policy. I remind the hon. Member for Llanelli that she talked repeatedly about value for the taxpayer, and it is important we understand that. I hope that there is a compromise whereby where we want to and can, we will utilise British shipbuilding capability, but when it comes in at twice the cost of an overseas opportunity, we will have to be very careful about which decision we make.

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[John Spellar (Warley) (Lab)]

I will now bring us back to the real world of the defence procurement industry. The Minister wrapped himself in knots over article 346, and it very much reminded me of Madeleine Albright’s response to Robin Cook when he told her during the events in Kosovo, “Our lawyers say I can’t do that.” “Change your lawyers,” she said, “and get better legal advice.” As I will come on to later, that is what every other country does.

We are not saying that we do not want to work in partnership with other countries; we do, and we want to do so effectively, and not just for shipbuilding, which obviously we are focusing on today. We have to look forward. I am pleased that the Minister announced an announcement on the air strategy next week. In particular, we are hoping for an announcement on the future combat aircraft, which we hope will go ahead, and some indications of who we will be partnering with.

Many firms in Europe are concerned by attempts to exclude us from such developments, as we are already seeing with Galileo. It is a bit ironic, in the week of the Brexit crisis, that we are asking Ministers and the Ministry of Defence to be good Europeans—to behave like our European partners. However, the MOD seems to want to act like the three wise monkeys, keeping itself in blissful ignorance. It told the Defence Committee:

“The MoD does not hold information on how other countries apply EU Regulations for defence acquisition.”

Why the hell not? Why has it not asked those questions? Why would it not make those inquiries? It almost reminds me of the sign outside Balliol College during the student demonstrations of 1968: “Do not adjust your mind—reality is at fault.” The MOD does not even want to know the reality, in case it finds it uncomfortable.

France is a very good example. Let me make it clear that I regard France as an excellent defence partner, both militarily and in manufacturing. I congratulate the Minister for Defence Procurement on an excellent performance in front of a joint committee of our Defence Committee and that of the Assemblée Nationale. That is what we are talking about—co-operation and collaboration between our two defence industries.

Let us be very clear: the four auxiliary oilers were awarded with no competition, and furthermore the work was directed to the Saint-Nazaire yard, which was the yard that needed it. From my experience as a Minister, that is not uncommon in Europe, in defence and in many other areas, particularly transport. Not only will European countries decide that work goes to a company of their nationality, they will say which company it goes to.

My respected colleague, the right hon. Member for New Forest East (Dr Lewis), the Chair of the Defence Committee, talked about the percentage of the economy that is spent on defence. I am sorry that he is not here; perhaps he has another commitment. He ought to understand that the economic multiplier effect—the taxes that are paid, and the money that is spent, by the people who work in the yards that will build the vessels—would increase national gross domestic product, and with it the amount that went to defence.

[Bob Stewart (Beckenham) (Con)]

I thank the right hon. Gentleman, who is my friend, for giving way. Will he say quickly why we should not also support things such as Thales UK, Boeing UK and Leonardo in the UK? This is a way of doing it.

[John Spellar]

If they have locations in the UK and there is a fair share of the work, that is absolutely right, but let us look at shipyards. I have mentioned what happens in France. The Berlin-class support ships are built in Germany. The Vulcano-class tanker support ships are built in Italy. The Cantabria-class oilers are built in Spain, and of course the United States has an absolutely rigid “buy American” policy as well. That is the real world, not the fantasy world of neo-liberal economics.

It is poignant that, in the week of the National Audit Office report on the failure of Carillion, in particular through under-pricing contracts and the Government encouraging it to go for “cheapest is best”, we are still being urged to adopt “cheapest is best”. Even within that, we do not drive a hard bargain. We do not insist, in work in the UK, on compensation.

The hon. Member for Moray (Douglas Ross) talked about maintenance work for maritime patrol aircraft. Maritime patrol aircraft will be maintained by the RAF and/or by industry, or in collaboration. That is not the issue. The real issue is what actual work there will be in manufacturing. Of course, maintenance is important, but that has to be done anyway. I refer not just to our shipyards and our aircraft factories, but to the UK’s very successful defence supply chain, particularly in engineering, electronics and, with regard to shipbuilding, our steel industry, which has been so dismissed by Ministers in the past.

This is also about maintaining the necessary flow of work, partly for that supply chain but also for our yards, in particular Rosyth. Rosyth shipyard will have a gap between the completion of HMS Prince of Wales, the second aircraft carrier in 2019, and the expected refit of HMS Queen Elizabeth, the first aircraft carrier, in 2030. Work on ships could keep the shipyard operational in between those dates and would therefore be very important in maintaining flow of work. We know how important that concept is, because of what happened in Barrow. There was a break in the drumbeat in the manufacture and production of nuclear submarines. The workforce drifted away to other industries and it cost a lot of money to recreate it.

As I said at the start, I urge the Minister to look at how other countries operate; to drive out the Treasury dogma, which has been imposed on the health service, transport and defence, that the cheapest and short-term is best; to think long-term; to work with industry, the trade unions and the supply chain. Back British industry. Back British shipyards. Back British steel.

[Several hon. Members rose—]

--- Later in debate ---

[Guto Bebb]

I need to make some progress because I must cover some of the points that were touched on.

From a defence perspective, we are trying to put a coherent plan in place to ensure that we have a competitive UK defence industry that can compete with the best. The way to do that is not to be scared of competition but to embrace competition. We have a shipbuilding strategy that says very clearly that we will understand the need for a national sovereign capability when it comes to building our warships. We need to make sure that we can measure our shipbuilding industry against the best in the world. The way to do that is not to go down the route of a protectionist “Britain first” policy but to invest in the capability that we have in our shipyards. That is why we invested £6.3 billion in Rosyth when we saw the fantastic build quality in the completion of the Queen Elizabeth class. That is why we are investing £3.7 billion in the first three Type 26’s in Glasgow. That is why we are showing a degree of confidence in our shipbuilding sector that Opposition Members need to share.

[John Spellar]

In a throwaway line, the Minister just made a disparaging comment about putting Britain first. What is wrong with putting Britain first?

[Guto Bebb]

The key thing, as my hon. Friend the Member for Torbay said, is that when Opposition Members talk about threats to the south Wales steel industry as a result of the “America first” policy, they are quite happy to attack Donald Trump for his protectionist attitude. The same thing can apply to this debate in spades, I am afraid. Competition and the ability to compete internationally are based not on protectionism but on the ability to be open in the way that we deal with this issue.

Oral Answers to Questions

John Spellar Excerpts

Monday 9th July 2018 Commons Chamber

[Guto Bebb]

My hon. Friend is absolutely right. The weapons element of any ship that is not designated as a warship will be procured from the United Kingdom and fixed on to the platforms in the United Kingdom.[Official Report, 12 July 2018, Vol. 644, c. 7MC.]

[John Spellar (Warley) (Lab)]

Given that every other European country that has shipyards and procures such vessels builds them in their own shipyards, why will the Minister not accept that the problem is not with Brussels or with European regulations but with Whitehall and its refusal to back British industry, British workers and British steel?

NATO

John Spellar Excerpts

Wednesday 20th June 2018 Commons Chamber

[Sir Michael Fallon (Sevenoaks) (Con)]

Like the hon. Member for Glasgow South (Stewart Malcolm McDonald), I am delighted we are having this debate and that it has attracted such strong attendance. NATO summits, unless we host them ourselves, do not always get the attention they should. I have attended three of them. They are always important, but they are each of them important in their own way. Rather than reminisce, however, I would like to focus on what I think will be important next month.

First, this will be the first opportunity for Britain to set out its view of our security post Brexit. We are leaving our partnership with the European Union, which involves far closer military co-operation inside the European Union than many people realise. For example, the European Union headquarters at Northwood has been mentioned. We need to be clearer about our ambition and the continuing role we want to play, both on the European continent and beyond. The security partnership document recently published by my right hon. Friends is a very good start, but I hope the Prime Minister and the Foreign Secretary will use the summit as an opportunity to set out their view of our security after we leave the European Union. I hope they might be able to find a way of doing that in harmony.

Secondly, it is worth reminding ourselves that although the Russian threat is very real and has grown, certainly since the 2010 review and even since the 2015 review, we need to continue to take a 360 degree view of NATO. It is worth reminding ourselves that the only time article 5 has been invoked was to help the United States after 9/11. The last time that NATO troops were sent into live military operations in Europe was to help save Muslims in Bosnia. So it is not just the pressure on the eastern frontier. We need to keep looking at NATO security in the round: pressures on the Black sea, on the eastern Mediterranean and from the south. We need to understand that the survival of those very fragile democracies in the Balkans and in the middle east—even in Afghanistan—is just as important for our security here in the west, because if, in the end, they do collapse, we are vulnerable to the spread of transnational terror groups and the threat of mass migration on a scale that we have not yet seen.

Thirdly, on NATO membership, of course we welcomed the accession of Montenegro last year. It is very important that NATO continues to demonstrate that it is open and that there can be no veto on future applications. It is particularly important to the continuing stability of the western Balkans that we show that, provided they meet the proper criteria, there is a route through for those war-torn countries into the alliance.

Fourthly, on resources, there is nothing new about the American President’s insistence that European countries pay more—that has been said by every American President throughout my political career, and we should, of course, listen. However, at the Wales summit, four years ago now, we did all commit to the 2%. It is bad enough that only four countries meet the 2%, but what I still find really shocking is that 16 countries—over half the alliance—do not even pay 1.5%, including three of the biggest countries in Europe: Germany, Spain and Italy.

Fifthly, I endorse what my right hon. Friend the Member for Mid Sussex (Sir Nicholas Soames) said about the need to continue to reform NATO—to drive forward the plans to modernise the decision-making structures, to enable the troops, planes and ships to be deployed faster across the continent of Europe, and to make sure that the political decision-making machinery is as equally adept and ready to be triggered.

[John Spellar (Warley) (Lab)]

The right hon. Gentleman talks about readiness and the ability to respond. Does he think now that we ought to review the previous decision to re-base from Germany back into the UK, and that we should actually have a forward presence in Germany?

[Sir Michael Fallon]

We continued in my time to keep that particular decision under review. There was not a particular year when all the troops were due to come home, and it was something that we watched particularly carefully as the plans for an enhanced forward presence in Estonia and Poland were developed. It is important, therefore, to be sure about whether the equipment is pre-positioned in the right places and whether it is ready to reinforce in the way that the right hon. Gentleman and I would want.

Finally, I hope that we will find ways beyond this debate of explaining the importance of NATO here at home—of explaining its success since 1949, as well as its obligations—to a new generation who do not, in this country, face conscription, but who are protected day and night by fresh cohorts of marvellous young men and women who step forward to serve in our armed forces. There is a compact there that I believe needs to be better understood. I hope this never happens, but when we next have to send our young men and women into military action wearing the blue beret, I think that we will regret that we did not do more to educate our public about the importance of NATO and the obligations that come with it. That said, I wish my hon. Friends every success at next month’s summit.

Oral Answers to Questions

John Spellar Excerpts

Monday 11th June 2018 Commons Chamber

[Guto Bebb]

My hon. Friend makes a really important point about the importance of SMEs in innovation and capability. Our refreshed defence industrial policy published last December highlights how we are encouraging competition within the defence sector, maximising opportunities for SMEs. For example, we have produced new short-form contracts that make it easier for SMEs to bid into MOD opportunities.

[John Spellar (Warley) (Lab)]

Does the Minister recognise that SMEs depend on main contractors for an enormous amount of their work, and that that is why his previous replies on the fleet support ships have been so disappointing? Can he imagine our European G7 partners, let alone President Trump, buying navy support ships from foreign yards? When is he going to shake off Treasury dogma, wake up to European reality, and buy British ships built in British shipyards by British workers, backing British engineering firms large and small, and backing British steel?

[Guto Bebb]

I listened very carefully to the right hon. Gentleman, but I would not think that we should take any lessons on trade policy from Donald Trump.

Oral Answers to Questions

John Spellar Excerpts

Monday 23rd April 2018 Commons Chamber

[Mark Lancaster]

My hon. Friend is a champion for her constituents. As she knows, I wrote to her on 26 March regarding this matter. I would be delighted to meet her again if she has any further questions she wishes to raise with me.

In general terms, we work closely with Capita. I have mentioned before at the Dispatch Box how we are looking at moving to a more regional recruiting mechanism and ensuring that we have young role models.

[John Spellar (Warley) (Lab)]

I congratulate the right hon. Member for New Forest West (Sir Desmond Swayne) on asking this question on the day Capita has announced a loss of half a billion pounds. That comes as no surprise when we look at the mess it is making of the recruitment project, which is not a channel for recruitment but a logjam. There are huge delays, with many people losing interest in the meantime. Will the Minister admit that the contract has failed and that it is time to bring it back in-house?

[Mark Lancaster]

I do not accept that. I have looked at this incredibly carefully. I have met the chief executive of Capita on several occasions and we continue to work very closely with Capita, which is investing large amounts of money. There have been challenges—there is no doubt about that—with the introduction of the new defence recruiting system. The manual workarounds have not worked, but I have seen at first hand now how most of those issues have been addressed and I am confident that, in future months, we will move forward with this contract.

Ministry of Defence

John Spellar Excerpts

Monday 26th February 2018 Commons Chamber

[Sir Edward Leigh]

That is a very good point. With France, and after America, we are the leading military power in Europe and we have to set an example. If we withdraw from exercises, that creates a bad impression.

I am glad to see that the hon. Member for Gedling (Vernon Coaker) is here. He introduced his Backbench Business debate on defence last month and pointed out that the risks this country faces are only intensifying. If we face a multiplicity and variety of threats, surely our capabilities must reflect that. Russia is indeed a threat again, because it realised that the only way to be taken seriously is to be seen to be a threat. We treated Russia with contempt during the 1990s and it has drawn the lesson. It is a geopolitical gamble that we may not approve of, but in terms of Russian influence it has paid off. What have we been talking about for the past hour except Russia? According to some estimates, its economy’s GDP is equivalent to that of Italy or even that of Australia. Russia’s emphasis on its defence spending has made it an extremely important geopolitical player. Although we are constantly told that times have changed and that defence spending is not as important as it was, perhaps the Russian example shows that defence spending does pay off. I am not for one moment defending or approving of Russia or anything it does, but it has drawn the obvious lessons from the 1990s. There is a threat from Russia and we need to take it seriously.

Surely one lesson we can draw from the past, particularly from the lead-up to the second world war, is that, in terms of commitments, we must have a real presence. There is no point in our having a token commitment to or presence in the Baltic states; we need a real presence if deterrence is to work.

Many other threats are developing from Russia, the Chinese and other potential opponents: cyber-attacks and information warfare are all potential threats.

[John Spellar (Warley) (Lab)]

The hon. Gentleman rightly identifies the potential difficulties on the north European plain. Should not the Ministry of Defence therefore reconsider its decision to withdraw from north Germany and reinstate our capability there?

--- Later in debate ---

[Dr Lewis]

I will not defend what happened in 2010. I was a shadow Defence Minister for slightly longer than the duration of the second world war in the years up to 2010, and I was told retrospectively that the reason I never became a real Defence Minister was that it was known that I would not go along with what they were planning to do. So I am not inclined to lay down my life for the Cameron-Lib Dem coalition of those years. I did not do it then, and I will not do it now.

Having said that, it is all part of a bigger trend, and I come back to my projection of the situation. At the end of the cold war, as we have heard, we took the peace dividend. We had the reductions, which were reasonable under the circumstances. But in 1995-96—the middle of the 1990s and several years after we had taken the peace dividend reductions—we were not spending barely 2% of GDP on defence as we do now, but we were spending fully 3% of GDP on defence. From then on it was downhill all the way—

[John Spellar]

Will the right hon. Gentleman give way?

[Dr Lewis]

I will give way to my good friend the deputy Chairman of the Committee in a moment.

I can remember Tony Blair on HMS Albion in 2007, looking back on his 10 years as Prime Minister and saying, “Well, I think we can say that we have kept defence spending roughly constant at 2.5% of GDP if the cost of operations in Afghanistan and Iraq are included.” But in fact the cost of operations should not have been included, because they are meant to be met from the Treasury reserve. The real figure over the Blair decade came down to 2.1% or 2.2% of GDP.

[John Spellar]

It is clear from the figures provided by the Library that while in most years there was an actual increase in defence expenditure during the years of that Labour Government, since 2010 it has been -1.4%, -1.4%, -4%, -3.3%, -2.4% and -2.9%, and in 2016-17 it did actually go into the positive, +1.4%. My friend should be clear that there was a step-change when the Cameron Government came in that led to year-on-year cuts, and our armed forces are feeling the effect of that.

[Dr Lewis]

What I am looking for today is agreement across the House that we recognise that we should not be having almost theological debates about whether we are just above or just below the 2% minimum guideline that NATO prescribes to its member states for defence expenditure, but that we have to get back to the level—at the very least—of what we considered appropriate for so long, right up until the mid-1990s, when the Labour Government came in, which was 3% of GDP.

--- Later in debate ---

[Mr Ellwood]

I am pleased the Defence Secretary is in his place, because this is very much of concern to him, as it is to all of us in the House, and it gets raised regularly. The last time he was in Brussels he raised it, and our allies in the United States are concerned about it too. The hon. Gentleman raises a very important point. Let us be honest: we know that, for varying reasons, the financial year has been tough. We are grateful to the Treasury for recognising the fiscal pressures the MOD is under and providing an extra £200 million window to allow us to close the books on the financial year 2017-18. I make it clear that this is new money; it is different from the £300 million that has been brought forward to assist with the continuous at-sea deterrence programme.

Looking ahead, there continues to be a lot of debate, as has been expressed today, about the pressures on and size of the armed forces, their annual budget and the 10-year spending plan. I thought it would be helpful to place things into context following the defence and security capability review and the defence modernisation programme, and to flag up some realities that are not for this budget, but which are coming around the corner. The Defence Secretary has spoken of the need to look at outputs, rather than inputs. We must not just set out the number of tanks, ships or personnel that we need; we must first ask ourselves what we actually want to achieve. That leads us to determine the size of our armed forces and the defence posture we wish to show. This should reflect our duties, both domestic and overseas; our ambitions as a force for good; and our international responsibilities as a permanent member of the UN Security Council and lead member of NATO.

We also need to adapt to the changing circumstances, as the threats we face become complex and intertwined. We must recognise that the world has become more dangerous since the publication of the 2015 SDSR. The risks and threats we face are intensifying and diversifying faster than expected, hence the purpose of the defence modernisation programme. It will allow more time to carefully consider how defence works, as well as what defence needs; it will aim to improve how defence operates; and it will focus on achievable efficiency and create different arrangements with suppliers. This modernisation will allow us to take the necessary long-term decisions about our military capability.

For clarity, let me say that the defence modernisation programme consists of four workstreams: the delivery of a robust MOD operating model, creating a leaner and more efficient MOD; a clear plan for efficiencies and business modernisation; a study of how we improve our commercial and industrial strategy, building on, for example, the shipbuilding strategy and the recently announced combat air strategy; and a focus on our defence policy outputs and our military capability—arguably the most important of the four.

[John Spellar]

That is all well and good, and all long term. Given that, why are the Government not sorting out the Capita contract on recruitment, which is clearly, visibly, obviously and lamentably failing the country, our armed forces and the recruits?

[Mr Ellwood]

The right hon. Gentleman touches on something that I am not going to disagree with, but it is pertinent to and included in the workstreams I have just mentioned; we will be seeking more efficiencies and business modernisation. That means looking at our relationship with the contractors we work with, in order to improve the service we need to provide for our service personnel.

The work I have described will be led by the MOD, working closely with the National Security Secretariat and the Treasury, and engaging widely with Parliament, think-tanks, academics, defence experts, international allies, the media, devolved Administrations, the defence industry and, of course, the public.

[John Spellar]

Having all of those other worthy people involved does not get to grips with the problem of the here and now; it is pushing everything off to the right and over the horizon—again. Why will the Department not get a grip of just this programme and sort it out, because it is crippling to our armed forces?

[Mr Ellwood]

We have a programme—it is not fiscally neutral, as the last study was. This will allow us to make the changes and the recommendations that we need to take forward. I hope that the right hon. Gentleman will be able to get behind that, in order to make sure we can provide the service and the changes that we need to make, and which our armed forces deserve.

Modernising Defence Programme

John Spellar Excerpts

Thursday 25th January 2018 Commons Chamber

[Gavin Williamson]

I thank my right hon. Friend for all that he has done for our armed forces. Without his work and campaigning, we would not today have a rising budget, with £4 billion of extra resources committed to our armed forces by the Government. I will take on board his comments. His article in The Daily Telegraph today sets absolutely the right tone and approach for how to take things forward. I hope I have the opportunity to sit down with him to discuss how we get the balance right and ensure that we achieve everything that he has set out and built on for our armed forces over the past four years. We must look at getting additional resources for our armed forces so that they have the capability to protect and truly defend Britain’s global interests, both near and far.

[John Spellar (Warley) (Lab)]

My reaction to this much heralded, hokey-cokey statement is, is that it? Although the voice was Williamson’s, the hands were clearly Hammond’s. Will the Secretary of State confirm whether the programme is still fiscally neutral? Why does it not say that increases in security expenditure will not be at the expense of defence? Why does it rehash the same old tired call for so-called and unspecified “efficiencies”? Why will he not just confirm that the winner is in fact the Treasury and its view that there are no votes in defence? In spite of his warm words, will not the real losers be our superb troops, our excellent defence industry, and the defence and security of our nation?

[Gavin Williamson]

I apologise if the right hon. Gentleman did not hear me. There is not the constraint of the programme being fiscally neutral; we are looking at what we can do and how we can deliver it to the best of our ability. I am very grateful to both the Chancellor and the Prime Minister for all they have done to work towards the position where we can put forward this programme and have the opportunity to look at the needs of our defence industry and establishment.