Armed Forces and Reserve Forces (Compensation Scheme) (Consequential Provisions: Primary Legislation) (Northern Ireland) Order 2013

Lord Astor of Hever Excerpts

Wednesday 18th December 2013 Lords Chamber

Moved by

[Lord Astor of Hever]

That the draft order laid before the House on 19 November be approved.

Relevant documents: 15th Report from the Joint Committee on Statutory Instruments, considered in Grand Committee on 17 December

Motion agreed.

Armed Forces and Reserve Forces (Compensation Scheme) (Consequential Provisions: Primary Legislation) (Northern Ireland) Order 2013

Lord Astor of Hever Excerpts

Tuesday 17th December 2013 Grand Committee

Moved by

[Lord Astor of Hever]

That the Grand Committee do consider the Armed Forces and Reserve Forces (Compensation Scheme) (Consequential Provisions: Primary Legislation) (Northern Ireland) Order 2013.

Relevant documents: 15th Report from the Joint Committee on Statutory Instruments.

[The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Astor of Hever) (Con)]

Noble Lords may recall that I led a debate on 15 October this year, introducing this legislation specifically for those seriously injured service and ex-service personnel resident in Northern Ireland who are entitled to an Armed Forces independence payment, or AFIP. This legislation provides access to additional benefits, schemes and services, known as passported benefits. The Motion was passed by the Committee but, due to a procedural error in the progress of the statutory instrument in the other place, the legislation must be debated again before it can come into force.

Although the AFIP has been available to seriously injured service and ex-service personnel resident in Northern Ireland, the legislative changes to provide access to passported benefits have not been implemented. A second statutory instrument, amending secondary legislation, will be in place shortly. Today’s debate gives Members a second opportunity to debate this legislation. It provides access to two minor but important legislative changes in respect of carer’s allowance and the Christmas bonus.

This legislative change will ensure that those who provide invaluable support to seriously injured members of the Armed Forces in receipt of AFIP have access to carer’s allowance in Northern Ireland from the Department for Social Development. Carer’s allowance is currently £59.75 per week. This change will make provision specifically for those who devote their lives to supporting our seriously injured people, providing some financial support for doing so. It is only right that a person caring for an AFIP recipient should have access to carer’s allowance. The provisions relating to the Christmas bonus will ensure that all recipients of AFIP automatically qualify for the tax-free, lump sum Christmas bonus of £10.

By putting in place the provisions to give AFIP recipients resident in Northern Ireland access to the additional benefits, schemes and services that are offered by other government departments, devolved Administrations and local authorities, the Government are giving them treatment equal to that offered to service personnel and veterans resident elsewhere in the UK. It is important that we address these issues, meeting the principles at the heart of the covenant across all Administrations for members of the Armed Forces and veterans who are seriously injured. I hope the Committee will therefore once again approve the order today.

[Lord Empey (UUP)]

My Lords, the Minister will know that my interest in these matters goes back to the passage of the Armed Forces Bill in 2011, when a number of amendments were discussed in relation to ensuring that the military covenant was applied universally throughout the United Kingdom, particularly in Northern Ireland. One of the points made at that time was that many of the services that are required to be provided for soldiers, former soldiers and their families are devolved matters in different parts of the United Kingdom. The question then arose: how could the Secretary of State for Defence prepare and deliver a report to Parliament, given that he or she would not be in control of many of the services required in the regions? It was also based on the general principle that these services should be as universally available to eligible personnel throughout the UK as possible.

There are a couple of aspects to this. I understand the technical matters that the Minister has addressed, and the fact that the legislation has had to be reintroduced. However, I seek the Minister’s assurance on a couple of issues. First, the welfare issues are currently before the Northern Ireland Assembly. I have no doubt that amendments will be tabled in that Chamber. Whether they affect any of this is unclear, but sooner or later the Welfare Reform Bill will be passed in Stormont, and then we will see where that takes us. Any amendments may well involve a cost to the Northern Ireland Assembly from the block grant. I think people realise that is the case.

The issue that concerns me more than that is that the Minister is saying that the Government have received the consent of Northern Ireland Ministers from the relevant departments for these proposals. Does that mean that the Government will require a legislative consent Motion to come from the Stormont Government or the Assembly, or is there sufficient administrative flexibility for Ministers in Northern Ireland, on their own, to give the Minister and the department the assurances they seek?

The second point is one I made during the passage of the Armed Forces Bill, and I know the Minister is aware of my concern. Although the fact—if it is the case—that he has the consent of Northern Ireland Ministers is welcome, Ministers in various departments will change from time to time. Therefore, the consent of Ministers cannot be guaranteed in the long term. What does the Ministry of Defence do in the event of a Minister refusing his or her consent? That was a point I made during the passage of the Bill. In the short term there is no problem; however, in the long term there may well be one.

I therefore seek an assurance from the Minister that the Government will take all necessary steps, legislatively if necessary, to ensure that the services provided to injured personnel and their families will be provided throughout the United Kingdom, even if there is opposition from the local Administrations. I fear that a pattern has developed whereby we are hiding behind the Sewel convention, to the extent that it is now regarded as a shibboleth. Is Parliament devolving powers or giving them away permanently to local Administrations? That is a big issue for devolution generally.

The specific issue before us is that currently the consent of Ministers in Belfast is required. I understand that. At the moment, it appears that that consent is being given, and I am glad about that, but in the long term it might not be. I say to the Minister that when the next Armed Forces Bill is introduced, which I gather will be around 2016, I would be willing to bring forward proposals to correct any difficulties that might arise because the ministerial team in Belfast had, by then, changed. The issue that concerns me could arise—we have seen it already with the National Crime Agency, where it is not yet resolved.

I feel very strongly about this issue. The House accepted, during the passage of the Armed Forces Bill, that regardless of where they come from or live in the United Kingdom, the services provided to help former soldiers and service personnel who have served in the UK Armed Forces should be available as equally as possible. Nobody should suffer discrimination because they happen to come from a devolved region. This is Parliament’s responsibility, because the Armed Forces are an excepted matter under devolution. In my opinion, it will never be a devolved issue. Therefore, this Parliament has an overarching responsibility to see that these services are provided on an equitable basis, irrespective of where the recipient comes from. I seek the Minister’s assurances on all these matters.

[Lord Rosser (Lab)]

My Lords, the Minister has reminded us that we debated this matter on 15 October when the order was agreed and we expressed our support for it. The Minister has explained why we have to approve the order again, and that is certainly not an issue on which I wish to dwell.

I have just a couple of brief points, since I do not intend to repeat what I said on 15 October. In responding to points I raised then, however, the Minister said that the number of,

“seriously injured service or ex-service personnel … covered by this order relating to Northern Ireland … is fewer than 20”.—[Official Report, 15/10/13; col. GC 213.]

I simply ask, since the order is not coming into effect on 28 October as was envisaged, whether anyone has lost out as a result, as the order itself indicates that it comes into force on the day after that on which it is made. It would be helpful if the Minister could clarify what date that is likely to be, and whether anyone has lost out as a result of this apparent delay in bringing the order into effect for the reasons the Minister mentioned.

[Lord Astor of Hever]

My Lords, I thank the two noble Lords for their contributions to the debate. I very much agree with the noble Lord, Lord Empey, that all services and benefits should be universally available throughout the United Kingdom.

Five Ministers of State for Northern Ireland provided consent for these amendments to be made. The departments are the Department for Social Development, the Department of Justice, the Department for Employment and Learning, the Department of the Environment and the Department of Health, Social Services and Public Safety. No further Northern Ireland government approval is required for this SI, but the noble Lord asked me about a possible future situation where a Minister refused consent. I am afraid that I do not have an immediate answer with me, but I undertake to write to the noble Lord on this important point.

[The Deputy Chairman of Committees]

My Lords, there is a Division. We will return at 3.52 pm.

--- Later in debate ---

[Lord Astor of Hever]

My Lords, the noble Lord asked me what impact the late implementation date would have on the access to a Christmas bonus of AFIP recipients in Northern Ireland. Although there is no legislative provision to make payment of a Christmas bonus to those individuals who have elected to receive AFIP—as the noble Lord said, there are fewer than 20 in Northern Ireland—payments have been made by the DWP to ensure that eligible seriously injured service personnel resident in Northern Ireland receive the same support as AFIP claimants in the rest of the UK and recipients of both the enhanced rates of personal independence payment, which include the Christmas bonus.

In summary, I restate the point I made when I opened this debate. The changes debated today are closely linked to the Government’s commitment to uphold the Armed Forces covenant. It is only right that we provide access to additional benefits, schemes and services to those most seriously injured, wherever they are resident in the United Kingdom. I believe that these changes will go some way to achieve this.

Motion agreed.

Defence Reform Bill

Lord Astor of Hever Excerpts

Tuesday 10th December 2013 Lords Chamber

Moved by

[Lord Astor of Hever]

That the Bill be read a second time.

[The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Astor of Hever) (Con)]

My Lords, our Armed Forces do an exceptional job and I am sure that all of us in this House will wish to pay tribute to their dedication and the sacrifices they make to keep this country safe. But the Armed Forces can defend the country and protect our national interests only if we provide them with the manpower, equipment and support that they need. In particular, making sure that our Armed Forces have the right equipment, delivered on time and to the right specification, is essential if we are to maintain our capabilities into the future. Making full use of the expertise and skills of our Reserve Forces is also crucial if we are to meet the security challenges that we face over the next decade and beyond.

Let me start this debate by addressing the issue of the reform of the Defence Equipment and Support organisation, which is covered in Part 1 of the Bill. My right honourable friend the Secretary of State for Defence made a Statement earlier today in the other place, and I would like to set out what that said.

The 2010 strategic defence and security review set out the Government’s vision of an agile Armed Forces designed to face the challenges of the 21st century. Central to delivering and sustaining that vision is the ability to procure and support the equipment that the Armed Forces need. There is widespread acceptance that the present defence acquisition process is not good enough. While there have been notable successes, there have also been many examples of poor performance and unsatisfactory outcomes for the Armed Forces and the taxpayer.

The significant reforms that we have already instituted to DE&S are only a start. A more radical reform of DE&S is necessary if it is to sustain the skills that it requires to support our Armed Forces effectively. That is why we developed the matériel strategy programme, which is designed to remove the obstacles to bringing in critical skills by exploring alternative models for DE&S. It was announced in April that the Government had concluded that a Government-owned, contractor-operated model, a GOCO, might well be best placed to deliver the changes required in DE&S, but that we needed, through a competition, to test the market’s appetite for that model and confirm that it would deliver value for money.

In parallel, it was announced that we would work up a public sector comparator, exploring the maximum extent of flexibility that could be achieved within the public sector—a model that we have called “DE&S-plus”. The Government have maintained an open mind as to which option would prove overall to deliver the best balance of risk and potential reward once bids were received.

On 19 November my right honourable friend the Secretary of State informed the other place that we had reached the detailed proposals stage of the competition, with only one bid being received from the two consortia remaining in the process. That bid was from Materiel Acquisition Partners, a Bechtel-led consortium. The Government made clear that we would consider carefully how best to proceed in the light of this development. It has now been confirmed that we have decided not to continue the present competition.

The heart of our approach was to test the market’s appetite for delivering a GOCO along the lines that we had set out, using the competitive process to drive innovation and value. We have always recognised that there are risks inherent in the GOCO approach. With only one bidder remaining in the competition at this intermediate stage, a judgment has had to be made about whether the public sector comparator alone would generate sufficient competitive tension to ensure an effective outcome for the Armed Forces and value for money for the taxpayer. Although the remaining consortia presented us with a credible and detailed bid, we do not have a competitive process. It has therefore been concluded that the risks of proceeding with a single bidder are too high to be acceptable.

We believe that a GOCO remains the best potential future solution to the challenge of transforming DE&S, but that further work is necessary to develop DE&S financial control and management information systems to provide a more robust baseline from which to contract with a risk-taking GOCO partner. We are clear that the only realistic prospect of resolving the delivery challenges facing DE&S in an acceptable timescale is with the injection of a significant element of private sector support. It has therefore been decided to build on the DE&S-plus proposition, transforming DE&S further within the public sector, bringing in that private sector support and ensuring that it becomes “match-fit” as the public sector comparator for a future market-testing of the GOCO proposition.

To do this, we will recognise the unique nature and characteristics of DE&S as a commercially facing organisation by setting it up as a bespoke central government trading entity from April 2014. The new entity will be at arm’s length from the rest of the MoD, with a separate governance and oversight structure—a strong board under an independent chairman, and a chief executive who will be an accounting officer, accountable to Parliament for the performance of the organisation. This will deliver another of the recommendations from the noble Lord, Lord Levene. Crucially, we will permit the new organisation significant freedoms and flexibilities, agreed with the Treasury, around how it recruits, rewards, retains and manages staff along more commercial lines to reflect its role in managing some of the most complex procurement activity in the world.

These changes will reinforce the relationship between the military command customers and DE&S, leading to a more business-like approach, allowing us to move earlier to a hard-charging regime and thus further addressing one of the weaknesses identified in the 2009 Gray report. They will allow DE&S to procure crucial private sector support through a series of contracts to deliver key changes to systems and processes and to support programme management while organic capabilities are built. They will permit the recruitment into DE&S of key commercial and technical staff at market rates and with minimum bureaucracy. Bernard Gray has agreed to become the first chief executive of the new trading entity, thus providing a vital thread of continuity to the continuing DE&S reform agenda from the original Gray report. Alongside the changes to DE&S, we will also continue with the reform of our wider acquisition system, which is focusing on making us a more intelligent customer—a key role for our military, alongside the important role it will continue to play within the DE&S.

These changes will drive significant incremental improvements in DE&S as well as delivering the mechanisms that will give the organisation a robust performance baseline. That will allow the MoD, at a future date, to retest the market’s appetite for continuing the DE&S evolution into a GOCO and its ability to deliver guaranteed value for money against a match-fit public sector comparator. On both counts, this course of action represents the best way forward for our Armed Forces and for the taxpayer.

Part 2 of the Bill sets out a statutory framework for defence contracts awarded in the absence of a competitive process. The White Paper on defence acquisition published in June this year included important changes to our single-source procurement regime. These changes follow the independent report on single-source procurement that was carried out by the noble Lord, Lord Currie of Marylebone, in 2011. Although competition is our preferred approach, the need to maintain critical national industrial capabilities or sovereign control of the intellectual property in equipment programmes sometimes requires us to place contracts without a competitive process. Single-source procurement typically accounts for about 45% of the total the MoD spends on defence equipment and support, or about £6 billion per year, and is likely to remain at those levels for the next decade or so.

Without competition, suppliers can price and perform without being constrained by the disciplines of the marketplace, putting value for money at risk. The absence of an alternative supplier also undermines our contractual negotiations because we have a duty to provide our Armed Forces with the equipment they need, and our suppliers know we cannot go elsewhere. These are serious shortcomings, and we need to address them with an approach to single-source procurement that ensures we get value for money, while still allowing our suppliers a fair and reasonable price, and where the safeguards we need are not regarded as voluntary and a matter for negotiation.

The MoD currently uses a framework for single-source procurement which has remained largely unchanged for the past 45 years. Under this system, which is voluntary, the profit contractors can earn is fixed and there are few incentives for them to reduce costs. The noble Lord, Lord Currie, recommended a new framework: one that is based on transparency, with much stronger supplier efficiency incentives, and which is underpinned by stronger governance arrangements. Based on his recommendations, and following extensive consultations with our major single-source suppliers, we have developed the framework provided for in Part 2.

The Reserve Forces make an essential contribution to delivering the nation’s security at home and overseas. They are an invaluable part of our Armed Forces, working alongside their regular counterparts to deliver military capability. On 3 July this year, we published a White Paper that set out a range of measures for revitalising the Reserve Forces, reversing the decline of the recent past, growing their numbers and investing an additional £1.8 billion over 10 years in their training and support. These measures include improved training and more opportunities for reservists to train overseas, enabling them to undertake the same range of military tasks as regulars, including overseas capacity building and responding to crises at home. The tax-free annual training bounty will be developed to recognise commitment, encourage retention and reward the appropriate level of capability. Reservists will also have improved access to healthcare and better access to welfare support. This will provide reservists with a challenging and rewarding experience. The Bill before us today includes the legislative changes needed to help modernise and make greater use of our reserves and to ensure that both they and their employers are treated fairly.

Part 3 of the Bill makes changes to the Reserve Forces. First, it extends the current powers to call out members of the Reserve Forces. This will allow reservists to be called out for any purpose for which regular forces may be used. Secondly, it allows the Secretary of State, by regulations, to provide for the making of payments to employers to incentivise the recruitment and retention of reservists. Thirdly, it provides improved employment protection for reservists by allowing a right of access, without a qualifying employment period, to the employment tribunal for unfair dismissal where dismissal relates to their reserve service. In addition, the Territorial Army will be renamed the “Army Reserve” and the Army’s ex-regular reserve force will be renamed the “Regular Reserve”.

The support of employers is crucial to delivering the future Reserve Forces and we seek to strengthen the Ministry of Defence’s relationships with employers. The White Paper set out how we will do this by making liability for call-up more predictable, making it easier for employers to claim the financial assistance that is already available and introducing a new employer recognition scheme building on the corporate covenant to ensure that reservist employers receive the recognition that they deserve. We acknowledge that reserve service can have a particular impact on SMEs. We understand these challenges and believe that our measures, particularly those around providing employers with greater predictability, greater transparency and financial support, will be especially important for SMEs, which is why we will increase financial support for small and medium-sized enterprises by introducing a financial award of up to £500 a month per reservist when any of their reservist employees are mobilised.

The House will be aware that on Report in the other place, my right honourable friend the Secretary of State signalled his intention to accept in principle a change to the Bill to provide for some form of annual external scrutiny and reporting on the arrangements for the Reserve Forces. This is an important change that will ensure that Parliament has access to independent advice about the Reserve Forces and the regular opportunity to review these matters. Given this, the Government intend to bring forward a suitable amendment to the Bill in Committee.

I very much look forward to our debate this afternoon. I believe this Bill strikes the right balance between ensuring we deliver the military capabilities that our Armed Forces need and making sure that value for money is provided to the taxpayer. I therefore commend the Bill to the House.

I beg to move that the Bill be committed—

[A noble Lord]

Nice try.

--- Later in debate ---

[Lord Astor of Hever]

My Lords, we have had a constructive and well informed debate on the Bill. I share the generous thoughts of the noble Baroness, Lady Dean, about Lord Gilbert. The debate has shown that there is a large degree of consensus on the need to reform the way in which we manage and deliver our defence capabilities. It is important that we provide our Armed Forces with the equipment and support they need and that we take the appropriate measures to ensure that the Reserve Forces can be used as part of the integrated Future Force structure with individual reserves appropriately protected in their role and their employers better rewarded for the contribution they make in supporting the Reserve Forces.

The measures set out in the Bill represent a real change to how the Ministry of Defence will conduct its business in future. They will allow us to ensure that equipment and capabilities are delivered on time, on budget and to the right specification.

At this point, I am going to cut short my speech as I have been bombarded with questions, and I will try to answer as many as I can tonight. There is no way I will be able to answer all of them, so I will write to all noble Lords who asked questions and copy in other speakers.

The noble Lord, Lord Rosser, and other noble Lords asked why Part 1 should remain if we are no longer proceeding with the GOCO. I am well aware of the mood of the House on this issue. We believe that a GOCO remains a potential future solution for transforming DE&S once we have put in place a more robust baseline from which to contract with a GOCO partner. It would therefore be prudent to have Part 1 in place should a future Administration decide to go the GOCO route. We very much hope that the new DE&S-plus organisation will be robust and successful. We should not be afraid of the competition that potentially testing the market for a GOCO in three to five years’ time would provide. Keeping the possibility of a GOCO would provide an incentive for a new organisation to maximise its performance.

The noble Lord also asked what “at a future date” means in relation to a possible future GOCO. We do not envisage reopening the GOCO option for at least two to three years, certainly not before the next election.

The noble Lord asked how much money has been spent on the GOCO commercial process and whether the Bechtel consortium will now make a claim against the MoD for the money it has spent on the bid. This was also asked by the noble Lord, Lord Davies. We have spent £7.4 million on supporting our work on the GOCO option. The money is not wasted. We have gained valuable insights from this work that have not only helped us understand the commercial landscape but will stand us in good stead for the new organisation. On Bechtel, we have always made it clear that we will not pay bid costs.

The noble Lord asked about the draw-down of regulars prior to build-up of reserves. We have had no choice but to reduce regulars to stay within the budget. The cost of 20,000 regulars is £1 billion a year. In line with the SDSR, there is a drawing down in some areas to build up in others, such as cyber, as the noble Lord knows. This is about doing defence differently.

[Lord Lee of Trafford]

My noble friend has just given an indication of the cost of the GOCO option so far. I draw his attention to a reply to a Written Question I had tabled:

“The Materiel Strategy programme is currently in the Assessment Phase and is considering two options … The Concept Phase of the programme started in May 2011 and analysed a number of different operating models. It concluded with the approval of the Initial Gate Business Case in April 2013 and cost £12 million. The Assessment Phase is currently developing both DE&S+ and GOCO options”.—[Official Report, 18/11/13; col. WA135.]

Perhaps my noble friend might like to look at that.

[Lord Astor of Hever]

My Lords, when I come to answer my noble friend’s questions, I will touch on the assessment phase and come up with some figures which may be helpful to him.

The noble Lord, Lord Rosser, asked for the latest update on recruiting. The quarterly personnel report of 14 November had trained and untrained strength of reserves, inflow and outflow. The Secretary of State will publish recruitment targets before the end of the year. The noble Lord asked about Capita recruitment. We have been very open about the fact that there have been teething problems. The Army and Capita are fixing these. The new website will be up and running in January, and there will be a faster recruitment pipeline. Temporary adjustments have been made to applications to ensure that we continue to progress new recruits. We want to cut out any blockages there.

The noble Lord, Lord Levene, suggested that we stop running down the abilities of civil servants. I agree with the noble Lord and pay tribute to those civil servants in the MoD, who certainly give me excellent advice. The noble Lord asked for a definition of the difference between DE&S and DE&S-plus. This is quite complicated, and I will write to the noble Lord and make sure that all other speakers get a copy of that.

The noble Lord and my noble friend Lord Lee asked why there was no competition for the chief executive post. The simple fact is that the CDM has an extant contract that takes us past 1 April, when the new trading entity will stand up. His post as CDM will morph into the chief executive role. Furthermore, realistically, there would have been no chance of selecting and appointing anyone else in time for them to stand up the new organisation on 1 April. He will also provide a vital thread of continuity from the Gray report into the continuing reform agenda.

Going back to the note that I said that I would write to the noble Lord, I will undertake to do that before the Bill moves into Committee. The note will set out the different models.

The DE&S civilian staff will remain civil servants—a point that the noble Lord raised. Their status will not change. Members of the Armed Forces will continue to make a valuable contribution in DE&S as they do today. We will be able to create a more businesslike organisation which is better able to recruit, reward, retain and manage its staff. In terms of recruiting, we will be using private sector expertise to help DE&S-plus get match-fit, including in terms of its HR transformation.

My noble friend Lord King mentioned the deferral of mobilisation. It is already possible for a reservist or their employer to ask for mobilisation to be deferred. For an employer, one of the criteria for deferral is the impact that mobilisation would have on the business.

I am glad that my noble friend Lady Garden mentioned the cadet debate of a couple of weeks ago. I listened to some of the speeches in this Chamber and was most impressed. I will write to my noble friend about careers advice for cadets. She asked whether there was any skills audit of current DE&S staff. The answer is no, but we undertook a detailed assessment of DE&S business capabilities in the early part of the materiel strategy, which looked at the issue of skills.

The noble and gallant Lord, Lord Stirrup, pointed out that we must focus not just on a single factor as we reform DE&S. We recognise the complexity of defence acquisition, and will continue to do so.

The noble Baroness, Lady Dean, asked about the proportion of regulars recruited to reserves. There are incentives for ex-regulars to join reserves. Those who leave the Army through redundancy are being encouraged to consider a part-time military career in the reserves. For the Army, ex-regulars who enlist into the Army Reserve within three years of leaving regular service can enjoy a number of incentives and benefits, such as reduced Army Reserve commitment and training requirements or, alternatively, a commitment bonus worth £5,000 paid over four years. There is a comprehensive information campaign to ensure that all service leavers, not just redundees, are aware of the opportunities and benefits of joining the reserves.

The noble Baroness asked who is running recruitment; it is Capita, which is working closely with the Army to fix the teething problems. She asked whether tranche 4 redundancies were to be paused. No final decision has been taken on that. Also on the regular to reserve transfer, 459 applications have been made to the commitment bonus scheme, of which 316 were from ex-regular other ranks, 35 from ex-regular junior officers and 108 from direct entry—that is, not ex-regular—junior officers. I understand that this is quite complicated, and I shall write to the noble Baroness and set it all out, copying in other noble Lords.

The noble Baroness asked whether having the legislation in Part 1 would not be a sword of Damocles over the DE&S-plus option. No, we do not see it like that at all. We are constantly striving to improve performance. The innovative structure will move us forward, but the underpinning rationale for a GOCO remains in place and could represent a further evolutionary step. Part 1 being in place will not mean that we have to proceed with a GOCO in future, but it will keep the option open.

My noble friend Lord Lee asked a number of questions. He asked whether a GOCO was the department’s favoured option. When the Secretary of State announced the materiel strategy proposals in June, he was explicit in saying,

“we have not yet accepted the GoCo concept as the chosen outcome; we are conducting an assessment”.—[Official Report, Commons, 10/6/13; col. 54.]

My noble friend asked, as did the noble Lord, Lord West, whether Bernard Gray would resign. No, there is no need for that; what matters is that we drive forward the reform of DE&S. Bernard Gray will do that as chief executive of the new organisation.

My noble friend asked whether the chairman of the new organisation’s board would be executive or non-executive. The answer is non-executive; we will have strong oversight of the new organisation. We were asked how we would recruit the new people. We will use the private sector expertise that we plan to bring in through business partner contracts to help us to deliver a transformed HR. This will include getting the best out of freedoms that we have agreed with Her Majesty’s Treasury and the Cabinet Office, which are necessary for the new DE&S.

My noble friend mentioned Her Majesty’s Treasury. We have agreed with the Treasury and, indeed, the Cabinet Office that we must have freedom to be able to operate effectively. We are confident that we will get these. It is one of the reasons that we are setting this up as a bespoke entity. How much have we spent so far on this? I gave the figure of £7.4 million to the noble Lord, Lord Rosser. We have spent some £17.8 million on the assessment phase of this complex change programme to determine the best way to deliver what we need. This investment, which excludes the cost of MoD staff, has included work on the GOCO, the DE&S-plus option, and on the necessary changes to the customer.

My noble friend asked how much we have spent on consultants. The MoD spent £68 million on consultants in 2012-13. Going back to the freedoms, we do not yet know details of these, but they will be significant. Her Majesty’s Treasury recognises the need for significant freedoms around salary for DE&S-plus. I will write to my noble friend when I have more information. This is obviously a very important issue and I will copy in other noble Lords on it.

My noble friend asked about Bernard Gray’s salary, as did the noble Lord, Lord Davies. I understand that Bernard Gray will continue on his existing terms, but I cannot confirm that today. His current salary is around £220,000 per annum. My noble friend asked whether the potential GOCO competition would make it harder to recruit from the private sector. This is simply not the case. Those we are trying to recruit would see GOCO as an opportunity, not a threat.

The noble and gallant Lord, Lord Craig, asked about ministerial notification and early availability. It is important that Ministers oversee a call-out. We will seek to provide employers with as much notice as possible and arrangements already exist for high-readiness reserves who can be mobilised at short notice. I will write to the noble and gallant Lord on this issue.

My noble friend Lady Doocey asked about mental health and housing. I have very detailed answers but, rather than test the patience of the House tonight, I will write to my noble friend on those matters. I have a very full answer that I think she will be happy with.

The noble Lord, Lord Davies, made a very political speech and asked whether the potential GOCO contract would make it hard to recruit from the private sector, as did my noble friend Lord Lee. We do not believe that is the case. The people we are trying to recruit would see GOCO as an opportunity, not a threat. The noble Lord asked whether there was a special deal for Bernard Gray. His role will continue beyond 1 April on his existing terms and conditions. He provides a vital link between the work done so far and the new organisation.

The noble Lord, Lord Tunnicliffe, gave me sight of his questions. I can confirm that legislation is not required to establish the bespoke entity that we announced today. However, legislation is required to establish an effective GOCO and that remains a possible future option. If we do not have the legislation in place then, that could inhibit a future competition.

We still have to work out the detail of specific freedoms and authorities. However, as I said, the Treasury and the Cabinet Office have been working with us to ensure that this innovative structure will be permitted significant freedoms and flexibilities. I have already undertaken to write to noble Lords on this very important issue.

DE&S civilian staff will remain civil servants—their status will not change—and members of the Armed Forces will continue to make a contribution to DE&S, as they do today. We will be able to create a more businesslike organisation which is better able to recruit, reward, retain and manage its staff.

The Bill provides the legislation we need to make far-reaching changes to the way in which we deliver our defence capabilities. The changes set out will not only improve the support we give to our Armed Forces but make specific improvements for reservists and their employers, who are an integral partner in enabling the Reserve Forces. The measures in the Bill will also help to ensure that the taxpayer gets value for money. We must not miss this opportunity to make essential changes to the way we manage and deliver defence in the future. I therefore commend the Bill to the House.

Bill read a second time and committed to a Grand Committee.

House adjourned at 6.20 pm.

Afghanistan: Interpreters

Lord Astor of Hever Excerpts

Tuesday 10th December 2013 Lords Chamber

[Baroness Coussins]

To ask Her Majesty’s Government, further to the Written Answer by Lord Astor of Hever on 4 November (WA 1), how they will implement the “intimidation policy route” in respect of locally employed interpreters and translators who have worked with British armed forces in Afghanistan but are not eligible for the ex-gratia redundancy scheme; and what is the per capita cost of the intimidation policy compared to the redundancy scheme.

[The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Astor of Hever) (Con)]

My Lords, we take reports of threats and intimidation towards our staff very seriously. There is a robust process in place for the thorough investigation and assessment of intimidation claims. Depending on the threat severity, different mitigating actions can be taken, including relocation within Afghanistan or, in exceptional cases, to the United Kingdom. It is not possible to compare the cost of the schemes at this time, as a redundancy scheme is still being implemented.

[Baroness Coussins (CB)]

My Lords, over 2,000 Afghan interpreters are ineligible for the redundancy scheme. It is insulting to trust them to risk their lives for us but not trust them enough to rely on their own assessment of the dangers they face. Will the Government set aside the redundancy scheme and the intimidation policy and instead offer all the interpreters the same targeted assistance package that was available to the Iraqi interpreters? Will the Minister also agree to arrange a meeting with all relevant departments and a cross-party group of Peers to discuss progress? If ever there were a special case for acting outside the Immigration Rules, surely this is it.

[Lord Astor of Hever]

My Lords, we absolutely recognise our clear commitment to take all reasonable steps to ensure the safety and the security of our locally engaged staff during and beyond the term of their employment with Her Majesty’s Government. The threat environment is different from Iraq. We have a very thorough anti-intimidation policy which applies to all staff employed since 2001 and, in extremis, that includes relocation to the United Kingdom. The noble Baroness asked if I could organise a meeting with a cross-party group of Peers. I am happy to do that. It would be across government, with members from the Foreign Office, the Home Office and DfID.

[Lord Palmer of Childs Hill (LD)]

My Lords, the Times reported an MoD report showing that UK translators had died and evidence that one US translator had been killed. Given this, will the Minister assess the threats? Is he aware of any death threats to UK translators who have served British forces?

[Lord Astor of Hever]

My Lords, since June 2013, 116 cases of intimidation have been reported to the intimidation investigation unit. The IIU investigates claims of intimidation, and an in-theatre decision panel assesses the claim and appropriate response level, depending on the risk to the LEC. The MoD’s labour support unit can confirm that, so far as it is aware, in Afghanistan there have been no deaths of serving LE staff that can be directly linked to intimidation.

[Lord West of Spithead (Lab)]

My Lords, why have the Government been so on the back foot over this issue? The numbers of people involved are minuscule compared with the immigration figures that we have to look at. Other countries are treating people who act as interpreters far better than we do, so I cannot understand why we are so on the back foot. Where is our generosity of spirit? This will affect us in future operations around the world. It is difficult to understand who in government is stopping this happening.

[Lord Astor of Hever]

My Lords, we are not on the back foot. The intimidation policy has been reviewed, and will be kept under review as appropriate, to ensure that it provides a robust and responsive means for addressing concerns appropriately. This will take account of the current security threat and the lessons learnt from handling cases and consultations with local staff. I have a list of what other countries—our allies—do, and it is very much along the same lines as what we do. I am very happy to write to the noble Lord with information on that.

[Lord Stirrup (CB)]

My Lords, the media today are reporting the case of an Afghan interpreter who worked for the UK being given asylum by Germany, having been refused it by the United Kingdom. Is this really the sort of comparison that we wish to draw to ourselves in the international community, and how does that square with the Minister’s assertion that our policies are broadly the same as those of our partner nations?

[Lord Astor of Hever]

My Lords, I have seen the article in the Times today. As I said to the noble Lord earlier, we go about this in a very similar way to other countries. So far only a very small number have been offered relocation in Germany.

[Lord Clark of Windermere (Lab)]

My Lords, many fair-minded people in this House and outside are completely perplexed by the Government’s response in this respect. We do not seem to be treating our interpreters fairly, and many of us feel that the Government have taken a strange decision. Can the Minister explain in words of one syllable why we are not treating our interpreters in Afghanistan in the way that our colleague countries are doing, and as we did in Iraq?

--- Later in debate ---

[Lord Astor of Hever]

My Lords, staff who have trod the ground with us, such as patrol interpreters and their FCO and DfID equivalents, have endured a level of danger over a sustained period, shoulder to shoulder with us in Helmand province. Their contribution to what we have been able to achieve there was made in a uniquely difficult and dangerous environment. We will not abandon them.

[Lord Cormack (Con)]

My Lords, will my noble friend place in the Library a detailed analysis of the comparative treatment by various countries? He says that it is broadly similar; many of us would like to see the details and the facts.

[Lord Astor of Hever]

My Lords, I am very happy to write to the noble Lord, Lord West, and put a copy of my letter in the Library.

[Lord Campbell-Savours (Lab)]

My Lords, the noble Lord referred to a review. What factors will influence that review?

[Lord Astor of Hever]

My Lords, we review the situation every six months. Obviously the level of intimidation, which is relatively low at the moment, is an important factor that would be considered.

[Lord Craig of Radley (CB)]

My Lords, in considering whether to grant asylum to an Afghan interpreter, does the fact that he has a family or is not married come into the equation?

[Lord Astor of Hever]

My Lords, I can assure the noble and gallant Lord that it does not. Eligible staff will be allowed to bring their immediate family: that is their spouse—one only—or partner, their minor dependent children under 18 years-old and that spouse. There is no limit on the size of a single family provided that the criteria are met.

Defence: Type 26 Global Combat Ship

Lord Astor of Hever Excerpts

Monday 2nd December 2013 Lords Chamber

[Lord West of Spithead]

To ask Her Majesty’s Government what is the expected build rate and planned life for the T26 global combat ship.

[The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Astor of Hever) (Con)]

My Lords, the Type 26 global combat ship programme is currently in its assessment phase. As is standard practice with equipment projects, the final design, equipment fit and build programme will not be set until the main investment decision has been taken, when the design is more mature. This decision is expected towards the end of 2014. Our current planning assumption is for the construction of 13 Type 26s with a planned service life of around 25 years.

[Lord West of Spithead (Lab)]

My Lords, I thank the Minister for the reply, and for letting me have sight of it before today. He will be aware of the force-level formula which relates build rates to the planned life of a warship. Although this Answer undoubtedly raises a whole raft of questions, not least those relating to manpower and shipbuilding, I want to focus on just one. Have we really decided that this great maritime nation of ours needs only 13 frigates? Only four years ago, 18 was considered too risky; at the time of the Falklands, we had 40. Has there been a realistic, in-depth study of the requirement for the number of frigates—I am talking about frigates, not destroyers or other things—or is the number 13 based purely on an arbitrary cost figure? In the final analysis, defence of the nation is the top priority for any Government of whatever hue, and I believe that we are standing into danger.

[Lord Astor of Hever]

My Lords, I agree with the noble Lord that defence of the nation is absolutely the top priority of the Government. That is why we are undertaking the Type 26 global combat ship programme. The Type 26 will become the backbone of the Royal Navy from around 2020, and the programme will help sustain surface warship capability in the United Kingdom after the construction of the carriers. This multibillion-pound investment will secure thousands of skilled shipbuilding jobs across the UK for decades to come.

[Lord Geddes (Con)]

Could my noble friend advise what assessment the Ministry of Defence has made of the export potential for these vessels?

[Lord Astor of Hever]

My Lords, the Type 26 is a credible export design and there are likely to be three export variants—general purpose, anti-submarine warfare, and air defence—all sharing a common acoustically quiet hull to realise economies of scale. It is not expected that the UK will build export variants, but international interest in the design is unprecedented. It should be stressed, however, that the Type 26 is neither dependent upon nor funding the export campaign.

[Lord Ribeiro (Con)]

My Lords, having recently been on a Type 45 destroyer and been briefed on its capability, which is enormous, may I ask what the Type 26 will do which the Type 45 will not be able to deliver, mindful of the fact that one is a destroyer and one is a frigate?

[Lord Astor of Hever]

My Lords, although sharing a common acoustically quiet hull, the Type 26 will be delivered in two variants: a force anti-submarine warfare variant and a general purpose variant. All will employ a tailored-mission approach to operations, allowing equipment and crew to be reconfigured to meet changing operational requirements and the future demands of the maritime and joint environment.

[Lord Rosser (Lab)]

My Lords, is it the intention that the Type 26, as well as being used on naval combat operations, should also be capable of being used on humanitarian missions? If so, what kind of such missions?

[Lord Astor of Hever]

My Lords, it is absolutely intended that that is one of the roles that the Type 26s will be used on. We are building a complement of Type 26s that, from the initial ship right through to the end of the class life, will provide us with the flexibility to respond to a wide range of tasks.

[Baroness Garden of Frognal (LD)]

My Lords, I know that the Government hope that Scotland will remain part of the United Kingdom, but if the Scots do vote for separation, where would the Type 26 frigates be built?

[Lord Astor of Hever]

My Lords, the build location will be confirmed after the main investment decision point. The UK Government are not planning for independence. Should Scotland decide to separate from the UK, it would no longer be eligible to bid for those contracts that are subject to exemptions from EU procurement rules to protect essential national security interests and are therefore placed or competed for within the UK. All the UK’s new complex warships are being built in UK shipyards, and we remain committed to using UK industry in this area.

[Lord Soley (Lab)]

The Minister has just described the Type 26 as the backbone of the Royal Navy. The problem is that there are only 13 of them, and there does not seem to be any planning beyond that. I think that most of us are concerned about the long-term view of the Royal Navy for us as a maritime power, as was indicated in the first Question. Thirteen is not the backbone of a major maritime power.

[Lord Astor of Hever]

My Lords, I disagree with the noble Lord. The First Sea Lord has some very exciting plans for the future of the Royal Navy. The Type 26s we are planning, the three OPVs and, of course, the Type 45s which my noble friend mentioned, are all part of those exciting plans.

[Lord Elton (Con)]

My Lords, what are the criteria by which the Government decide which countries are suitable as export purchasers and which are not?

[Lord Astor of Hever]

My Lords, in the context of Scotland, the UK has a number of commercial yards involved in building military warships which have been involved in the building of the carriers. It is recognised that these yards would need additional investment to enable them to participate in the building of the Type 26.

Defence: Procurement

Lord Astor of Hever Excerpts

Thursday 21st November 2013 Lords Chamber

[Lord Lee of Trafford]

To ask Her Majesty’s Government, in the light of the withdrawal of a private-sector bidder from plans to manage defence procurement through a government-owned, contractor-operated organisation, whether they have any plans to close off that option.

[The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Astor of Hever) (Con)]

My Lords, a review is under way to assess two options—a government-owned, contractor-operated entity and a transformed DE&S+, remaining in the public sector. We remain convinced that we absolutely must change our process to deliver the best value for money for the taxpayer and enable the right equipment and support to be delivered on time for our Armed Forces. The status quo is simply not acceptable.

[Lord Lee of Trafford (LD)]

My Lords, is the reality not that the GOCO competition concept is now totally dead in the water? It is quite impossible to run a competition with just one bidder. The very fact that this one bidder, the Bechtel consortium, has a bid in of 1,200 pages surely draws attention to the manifest absurdity and complexity of the bid process.

This concept has been driven through by Bernard Gray with very little support in MoD and the services; should not he now, in the circumstances, given that it has collapsed, consider his own position and consider resigning? But is not the real culprit the Treasury, whose bone-headed attitude over the years has restricted the MoD in employing the quality of people from the private sector, bringing in private sector disciplines, to handle and manage our £14 billion procurement budget properly? So is not DE&S+ the answer, as supported by many noble Lords, including the noble Lords, Lord Levene and Lord West, who sadly cannot be here today?

[Lord Astor of Hever]

My Lords, on my noble friend’s first point, the very fact that one commercial bid team has submitted a bid shows that it believes that there is a potential deal and it can deliver against requirement. We have always known that running a defence acquisition would be challenging, which is one reason for testing through the assessment phase whether it can be done. As for my noble friend’s second point, he is right to recognise the specific needs of defence acquisition and support personnel to match the professionally motivated defence industry. That is why we are very clear that, whatever option we choose, we will need to work with colleagues across relevant departments to put in place the necessary freedoms of operation to provide our Armed Forces with the right kit at the right time and deliver the best value for money for the taxpayer.

[Lord Touhig (Lab)]

The only outside bidder left in this process is a consortium led by Bechtel, a company with a litany of mismanagement of public service contracts, from Iraq to Romania to the United States. In Boston, for instance, it was responsible for the Big Dig, a tunnel construction project that went $1 billion over budget—and two-thirds of the problem was down to its mistakes. Given its mismanagement of the Big Dig, if Bechtel gains control of our defence procurement, will not Britain’s defences end up in a big hole?

[Lord Astor of Hever]

My Lords, the answer is no. The materiel acquisition partner’s team comprises Bechtel, as the noble Lord says, PricewaterhouseCoopers and PA Consulting, a consortium of world-class private sector businesses. The team has extensive experience of complex programme management; between them, they have delivered programmes to the United Kingdom, the United States and to 140 other countries around the world. Bechtel has ranked as the largest programme-managing engineering and construction company in the United States for the past 14 years. Specifically, MAP members have been involved in the Crossrail and High Speed 1 rail projects, as well as the Jubilee line, and in transforming major businesses in both public and private sectors.

[Lord Stirrup (CB)]

My Lords, it has been suggested that the consortium that withdrew did so because it did not trust the MoD’s numbers and there was far too great a risk of it being held to account on meeting targets based on erroneous assumptions. Could the Minister comment on that criticism and its accuracy?

[Lord Astor of Hever]

My Lords, I cannot comment on the Ministry of Defence’s accounting procedures, but I have full confidence in them.

[Lord King of Bridgwater (Con)]

My Lords, my noble friend the Minister said that the status quo is not an option, and certainly there needs to be a massive improvement in the procurement capabilities and efficiency of the Ministry of Defence; it is a long-standing problem. However, when my noble friend Lord Lee says that you cannot have a competition with only one entrant, is it not true that the competition now is between an outside contractor—Bechtel and its consortium—and an in-house resolution? If we do that, will he ensure, because it is essential, that there is more continuity and expertise, as has been referred to, in the procurement section of the MoD?

[Lord Astor of Hever]

My Lords, I can give my noble friend that assurance. Two processes are happening—one as a result of the single GOCO bidder and, as yesterday’s Written Ministerial Statement made clear, that requires a further review across government of the validity of the competition. Secondly, the MoD will be assessing the bid that we have on the table for a GOCO, along with a DE&S-plus proposal, when we have it, to see which will provide the best solution.

[Lord Tunnicliffe (Lab)]

My Lords, on 19 November, a Written Ministerial Statement on the GOCO competition included a vague reference to a review by the Cabinet Office and the Ministry of Defence. This review, which I could not find on the MoD website, expressed grave reservations about a competition with two private sector bidders. A copy of the review is available only from the Library. Given the importance of this issue, and the Prime Minister’s commitment to have the most open and transparent Government ever, will the Minister commit to publishing the review in full on the MoD website? Further, if the Government are minded—it seems that the Minister is implying this—to continue the GOCO competition with only one private sector bidder, will he commit to a further joint review by the MoD and Cabinet Office on how such a competition is viable, and publish that review on the MoD website?

[Lord Astor of Hever]

My Lords, as a Government we want to be open. I am sure that the review will be put on the website. Clearly, the contract is commercially confidential, so we would not put that on the website—certainly until the position is very much clearer. As far as a further review is concerned, we hope to make a decision on the validity of the competition very soon, and a final decision on the whole process by the Summer Recess. I am sure that the whole House will agree that it is important that we take a considered view before making any decision.

Armed Forces: Territorial Army

Lord Astor of Hever Excerpts

Monday 18th November 2013 Lords Chamber

[Lord Trefgarne]

To ask Her Majesty’s Government how many personnel have left the Territorial Army in the last 12 months; and how many recruits have been enlisted over the same period.

[The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Astor of Hever) (Con)]

My Lords, first, I am sure the whole House will wish to join me in offering sincere condolences to the family and friends of Warrant Officer Class 2 Ian Fisher of 3rd Battalion The Mercian Regiment, who was killed on operations in Afghanistan recently. My thoughts are also with the wounded and I pay tribute to the courage and fortitude with which they face their rehabilitation.

Independent figures published last week show that 4,880 personnel left and 3,250 joined the Army Reserves in the 12 months to 30 September. These pre-date the recruitment campaign that started in September to grow the Army Reserve from a trained strength of 19,000 to 30,000 by 2018, with improved training and equipment. There are IT teething problems, which we are addressing as well as undertaking aggressive action continuously to improve the recruiting process.

[Lord Trefgarne (Con)]

My Lords, I endorse the opening words of my noble friend and add my support to them. With regard to the Question, given the future importance of Reserve Forces in the British line of battle, will he ensure that all vigour is applied to the recruiting campaign and that, in particular, the new terms of service for Reserve Forces are not so onerous as to put people off?

[Lord Astor of Hever]

My Lords, I am very grateful to my noble friend for his support. We are making the offer more attractive to both reservists and employers and encouraging ex-regular personnel to join. This is supported by significant additional investment—£1.8 billion over 10 years across training, equipment, paid leave, pensions, and welfare and occupational health support. The Army has already run one Army Reserve recruiting campaign, which resulted in a great many expressions of interest, and is currently running another with up to 900 soldiers conducting outreach activity at local and regional level.

[Lord Tunnicliffe (Lab)]

My Lords, I rise first to associate these Benches with the condolences expressed by the Minister and, particularly, to share his thoughts about the wounded. The Minister has refused on three successive occasions over the past few months to give an undertaking that the decline in the size of the Regular Army will not proceed until the increase in the trained Army Reserve is secured. Now we have figures—incomplete figures—about how this is going, but it does not seem to be going well. The data should be available and open. This should not be a clandestine experiment. Will the Minister commit to publishing all the figures? Does he share my concern that the Government are not meeting their targets and that the untrained strength of the reserves has gone down year on year? This does not bode well for his 2018 target or the future of the British Army.

[Lord Astor of Hever]

My Lords, I do not share the views of the noble Lord. The recruit partnering programme is not failing. We are getting the most capability for the taxpayer from the resources available. At the same time as growing and transforming the reserves, we are changing the way that we recruit for both regulars and reserves, along with our commercial partner Capita. These are two large-scale change programmes, which are yet to reach full maturity. We are working with the relevant contractors, namely Capita and ATLAS, and all MoD stakeholders to identify any problems, iron them out, mature the programmes, and deliver as committed.

[Lord Boyce (CB)]

My Lords, would the Minister like to say what signs there are of the preparedness of business, particularly SMEs, to release people to be reserves since this policy has been in force, given that many of those small businesses in particular have become very lean over the past three or four years?

[Lord Astor of Hever]

My Lords, we attach a great deal of importance to working constructively with employers and SMEs. I take on board what the noble and gallant Lord said about SMEs.

[Lord Palmer of Childs Hill (LD)]

My Lords, the Ministry of Defence has made redundancies on the basis of increased numbers in the Reserve Forces. If the reservists are not there, the public is bound to ask who is doing the job of defending Britain and Britain’s interests. What is my noble friend the Minister’s comment on that?

[Lord Astor of Hever]

My Lords, our Regular Forces will continue to furnish the highest readiness front-line defence and reaction forces, although these may be supplanted from time to time by individual reservists, but there are many areas in which the reserves can and do provide vital capability, such as medical and intelligence. They will continue their contribution in these fields, but we also expect to see them playing an increasing role in the provision of combat forces. Army Reserve units will be paired with regular units, which provide the same capability, and that will happen across the whole range of capabilities.

[Baroness Howells of St Davids (Lab)]

My Lords, is the Minister aware that young men from Grenada have been recruited into the Army, have been accepted and have come over here at their own expense to be trained in the Army? Within weeks of them being here, the Army said that the policy had changed and that those young men had to go back to Grenada, with no recompense. It is a very poor island, and sending recruits back who have spent money coming here, have started their training and have been dismissed in this way is giving a very unkind message to the islands, which supported this country during the two world wars. I hope at least that the Government will see their way to reimbursing those young men.

[Lord Astor of Hever]

My Lords, I reassure the noble Baroness that we welcome Commonwealth reservists. As announced on 11 July, to fulfil their reserves commitments they are required to have indefinite leave to remain in the UK prior to joining. However, I will look into the point that the noble Baroness raised.

[Lord Dannatt (CB)]

My Lords, does the Minister agree with me that the Chief of the General Staff is doing a very good job in trying to manage the process of reducing the Regular Army by 20% while building up the strength of the reserves against a very difficult financial background? We are only three or four months into a five-year programme. On the question asked by the noble and gallant Lord, Lord Boyce, on small and medium-sized enterprises, has consideration been given to waiving national insurance charges for those enterprises as an incentive to employers to take on members of the reserves?

[Lord Astor of Hever]

My Lords, I agree with the noble Lord that the Chief of the General Staff is doing a very good job. I have considerable briefing on the question that the noble and gallant Lord and the noble Lord raised on SMEs and national insurance. It will take me some time to find it—but I will write to the noble Lord. We have always expected there to be a dip in the level of the reserves before they increase as we are changing the fitness requirements and deployability of the force. To reassure the noble Lord, a target of 30,000 trained Army reservists is well within historical norms. We had 72,000 trained reservists as recently as 1990.

[Lord West of Spithead (Lab)]

My Lords, is not the real problem that we are spending far too little on defence? At this moment, we have HMS “Daring” doing a grand job in the Philippines, but it is one of only 19 destroyers and frigates.

Is it possible to put more money into the cadet forces? They do a wonderful job by taking youngsters off the streets, looking after them, encouraging them and growing them; and 30% of them end up as NCOs in our forces.

[Lord Astor of Hever]

My Lords, the noble Lord raises an important point which I will take back to my department. I agree with what he said about the cadets. I was patron of my local sea cadets and I am well aware of the good work that they do.

Armed Forces (Remission of Fines) Order 2013

Lord Astor of Hever Excerpts

Tuesday 12th November 2013 Grand Committee

Moved by

[Lord Astor of Hever]

That the Grand Committee do report to the House that it has considered the Armed Forces (Remission of Fines) Order 2013.

Relevant document: 12th Report from the Joint Committee on Statutory Instruments.

[The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Astor of Hever) (Con)]

My Lords, there is one instrument for the Committee’s consideration today. The Armed Forces (Remission of Fines) Order 2013 is required because, having introduced arrangements to set a term of imprisonment as a means of ensuring that fines are paid, we must also be able to reduce that term in proportion to any reduction of the financial penalty at a later date. This order does that, reflecting the position of the criminal courts.

Fines are meaningless unless there is a mechanism to ensure they are paid. The risk of imprisonment will help to deter those who otherwise might default on their fines, but for those who fail to pay their due, it is only fair and reasonable for them to expect any consequential terms of imprisonment to be proportionate to their fine. To put this into the service context, the alternative period of imprisonment comes into play only when a financial penalty enforcement order is made.

The services have mechanisms in place to recover fines from serving personnel through deductions from their pay. Financial penalty enforcement orders are the mechanism to recover fines from those who have left their service. Financial penalty enforcement orders apply to a person who is neither subject to service law nor a civilian subject to service discipline, but they also apply to certain personnel who are subject to service law as a special member of a reserve force.

Financial penalty enforcement orders may be made by the Service Personnel and Veterans Agency when such persons have failed to pay all or some of a financial penalty that has been awarded against them. The financial penalty enforcement order may be registered with the relevant court—in England and Wales a magistrates’ court—to be enforced, and in due course, if the fine continues to remain unpaid, the person may be imprisoned for a time in proportion to the fine outstanding.

By way of background, the Crown Court in England and Wales must fix a term of imprisonment to be served in default of any fine imposed on a defendant aged 18 or over. This is necessary and right to enable fines to be enforced. Separately, the civilian courts also have the power to reduce or remit entirely a fine following a review of the offender’s financial circumstances. Where the court does so, and a default term of imprisonment has been fixed, the court must proportionately reduce that default term of imprisonment.

I turn to the service courts. The court martial already has a similar power to reduce or remit a fine, but it has not, until now, been required to set a default term of imprisonment when fining a defendant. The Armed Forces Act 2011 inserts new Sections 269A and 269B into the 2006 Act. The first of these new sections requires the court martial, when it imposes a fine on a person aged 18 or over, to specify a term of imprisonment to be served if the fine is not paid and an enforcement order is made. Similarly, the second new section enables the court martial, when making a service compensation order against a person aged 18 or over, to specify the maximum term of imprisonment which may be imposed if the compensation is not paid.

These new provisions, which have come into force, are modelled on those in the equivalent civilian legislation. This order completes the necessary legislative framework for the services in dealing with financial penalties.

[Lord Rosser (Lab)]

I thank the Minister for his explanation of the need for this order and the objective that it is intended to achieve. I take it from the documentation that we have received and from what he has said that it is only a court martial that is now required under the new Section 269A to fix the term of imprisonment if the fine that it is imposing is not paid, that this does not apply if the fine is being imposed after a hearing before a commanding officer and that, consequently, only cases originally heard by a court martial will be covered by the terms of this order in respect of the term of imprisonment being proportionately reduced if the fine is subsequently remitted in whole or part.

I also understand that the reference in paragraph 8.1 of the Explanatory Memorandum to financial penalty enforcement orders being enforced in “prescribed civilian courts” applies in cases where the offender has left the Armed Forces or is no longer a civilian subject to service discipline and, if the fine was not paid by an offender still in the Armed Forces or by a civilian still subject to service discipline, enforcement would be a matter to be dealt with in the service discipline procedures and arrangements.

Finally, was the discrepancy between the requirements on the service courts and civilian courts in respect of a proportionate reduction in the term of imprisonment one that we well spotted, or did it come to light as a result of an actual case?

We have no objections to this order or to its objective of bringing the service provisions in this specific area in line with the equivalent civilian provisions.

--- Later in debate ---

[Lord Astor of Hever]

My Lords, I am grateful for the support that the noble Lord has given to the order, which brings the Armed Forces Act 2006 into line with equivalent civilian provisions.

The noble Lord asked me three questions. The first was whether this measure applies only to the court martial and not to the summary hearing. The answer is yes, only a court martial is required. His third question was on whether the discrepancy was well spotted; the answer is, yes, it was not an actual case. As for his question about paragraph 8.1 and whether it would apply to an offender who had left the Armed Forces, the noble Lord was correct in his assumption on that. I hope that that clarifies those questions. If I may, I shall study what the noble Lord said and write if I have missed anything to add to our exchanges.

Motion agreed.

Armed Forces: Legal Challenge

Lord Astor of Hever Excerpts

Thursday 7th November 2013 Lords Chamber

[The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Astor of Hever) (Con)]

My Lords, I, too, am grateful to my noble friend Lord Faulks for tabling this Motion. It is timely for this House to take stock of recent legal developments which could, in different ways, have important consequences for the ability of our Armed Forces to conduct operations and, therefore, for our national interest.

All military operations carry a degree of risk. As the noble and gallant Lord, Lord Guthrie, said, armed combat is a unique activity. Good commanders are adept at forecasting, assessing, and carefully managing risks in the preparation and execution phases of operations. The Armed Forces of the United Kingdom must at all times seek to operate within the rule of law and to take account of how the law changes. There is nothing new about that. But what does cause the Government concern is the extent to which legal developments are creating uncertainty and imposing costs which may have an impact on how our Armed Forces are able to train and operate.

One direct consequence is that the Ministry of Defence has been grappling with rapidly increasing numbers of legal claims arising from operations, together with escalating costs, largely as a result of these legal developments and the increasing willingness of individuals to litigate. I welcome the fact that these issues are of increasing interest and concern to others. The House of Commons Defence Committee recently announced an inquiry into the legal framework for UK military operations in future, including the protections and obligations for operational and deployed UK Armed Forces personnel. The Ministry of Defence has submitted its observations to the Committee, and we look forward to learning of its conclusions.

The recent report by the Policy Exchange called The Fog of Law, to which a number of noble and noble and gallant Lords have referred, was therefore a timely contribution to the discussion and raised a number of very important questions. It was written by authors with a great deal of hands-on experience of military planning and operations, so its conclusion,

“recent legal developments have undermined the armed forces’ ability to operate effectively on the battlefield”,

deserves respect and careful consideration. None the less, I would not go quite that far, or not yet. I do not believe we have reached the stage where the ability or operational flexibility of our Armed Forces has been significantly impaired or that military decision-making has been hamstrung. I think that that answers the question asked by the noble Lord, Lord Rosser. Crucially, I cannot point to any specific incident in which it appears that concerns about legal liability have been responsible for failure to take operationally necessary measures in the course of combat.

Ministers and the military chain of command have been clear that commanders and other military personnel, at whatever level, who make reasonable decisions in good faith in the course of operations will receive the full backing of the services and the Government. I hope that this reassurance will have put any doubts to rest. I am also reassured that there has been no decision by the courts that would suggest that they would impose liability in such circumstances. Nevertheless, the Government are certainly concerned about the long-term trends which the report analyses. The law remains uncertain on some key matters—unhelpfully so, from the Government’s point of view—and this situation will continue until some of the key cases now before the courts have been ruled upon authoritatively.

The Government are very concerned in particular about the potential effects of the Supreme Court’s majority judgment in the cases of Smith and others, Ellis, and Allbutt and others versus the Ministry of Defence, which were handed down together on 19 June. As the noble and learned Lord, Lord Hope, pointed out, these cases relate to a number of extremely tragic incidents in Iraq arising out of lethal attacks on soldiers patrolling in Snatch Land Rovers and out of a so-called “friendly fire” accident involving Challenger 2 tanks. The noble Lord, Lord Rosser, set that out very clearly. It gives us no satisfaction at all to have to defend cases brought by the families of the brave men who died or were injured in these events, but the principles involved are extremely important, and the Government’s case needs to be put robustly.

Briefly, and at the risk of oversimplification, these cases turn on the extent to which the European Convention on Human Rights applies to military personnel on overseas military operations, and the precise scope of the legal doctrine known as combat immunity. In this litigation, the Ministry of Defence contended that it was not reasonable or appropriate for the courts to take the role of final arbiters of military decisions, including, as in these cases, decisions about the provision of equipment to our forces. Our case failed in a split judgment in the Supreme Court. I think it reasonable to point out the minority speech by the noble and learned Lord, Lord Mance, which offers an admirable and compelling analysis of the dangers of opening up the conduct of military operations to litigation.

The noble and learned Lord, Lord Hope, who delivered the judgment, has spoken with his accustomed clarity about the issues at stake in this case. The Government took comfort from the clear warnings in the majority judgment that the scope for such litigation must inevitably be limited. While the effect of the judgment is that the cases considered by the Supreme Court must now be heard on their individual merits by the High Court, their Lordships were very clear that, to quote the judgment:

“The court must be especially careful, in their case, to have regard to the public interest, to the unpredictable nature of armed conflict and to the inevitable risks that it gives rise to”.

I listened carefully also to the advice of the noble and learned Lord, Lord Brown.

To reassure the noble and gallant Lord, Lord Craig, we will therefore be defending vigorously any legal cases which turn on the issue of combat immunity. For that reason, although we have considered the option of legislating for a statutory definition of combat immunity, and we have not ruled out any legislative possibilities, we have made no decision as yet to bring forward any such proposals. We will study very carefully the judgments in the cases to which I have referred when they appear. It is our hope that the case law will develop in a way which recognises that there must be limits to the extent to which military decisions should be replayed and contested in the courts. I must make it clear that our position is underpinned by the provisions of the Armed Forces Compensation Scheme, which assigns compensation on a no-fault basis for injuries sustained by members of the Armed Forces in the course of their service.

So far, I have been speaking mainly of legal actions brought against the Government by current or former military personnel or their families. There has also been a good deal of concern about the volume of cases against the MoD brought by UK firms of solicitors on behalf of Iraqi and Afghan nationals who were detained by UK Armed Forces. The claims typically allege that individuals were abused on arrest and unlawfully detained, which amounted to a violation of their Article 3 and Article 5 European convention rights. These are the right not to be subjected to torture or inhuman or degrading treatment, and the right to liberty. They seek damages, sometimes for very substantial amounts, as well as declarations that their human rights have been breached, and in some cases they argue that a full investigation is required into their alleged ill-treatment. In a smaller number of cases, unlawful killings and breaches of Article 2—the right to life—are alleged.

A key issue in these judicial review challenges and personal injury claims has been whether people detained or allegedly killed, injured, or mistreated by UK Armed Forces come within the jurisdiction of the convention. On 7 July 2011, the Grand Chamber of the Strasbourg court handed down judgments in the two important cases of Al-Skeini and Al-Jedda. These judgments resulted in a substantial extension of the extraterritorial application of the convention to Iraq. In addition, the Al-Jedda judgment had what I can only regard as the deeply unfortunate consequence that compensation has had to be paid to a large number of people who were detained solely because there was good reason to think that they posed a threat to security in Iraq and to the safety of members of our Armed Forces.

I need hardly say that the Government in no way dispute the need for the legal accountability of our Armed Forces. Nor do they suggest that the Armed Forces are at all times without fault, as we know from the tragic death of Baha Mousa, the Iraqi hotel owner mentioned by my noble friend Lord Thomas. He was beaten to death by soldiers guarding him in 2003. There is no question that his killing was a tragedy and a shameful incident in the history of the Iraq conflict and of the British Army. Those soldiers who knew the truth refused to come clean and no one was convicted of Baha Mousa’s murder, although one soldier was convicted of a lesser offence.

Noble Lords will, I think, be pleased to learn that there remains the possibility that those responsible for the death of Baha Mousa will be brought to justice. As suggested by the previous Defence Secretary, a new investigation of the case is under way, conducted by the Iraq Historic Allegations Team, which was set up as a mark of the Government’s serious commitment to get to the bottom of the allegations of abuse and unlawful killings in Iraq. Despite repeated legal challenges, the competence and integrity of the Iraq Historic Allegations Team has been vindicated by the High Court and it is getting on with its important work, carried out under difficult conditions.

These investigations are important because we need to ensure, as I have said, that the Armed Forces of the United Kingdom will be held to the highest standards of conduct. They are also important because, by establishing how abuses were allowed to happen, remedial action can be taken. The Baha Mousa public inquiry, chaired by Lord Justice Gage, provided a cogent analysis of the conditions which led to the killing and made 72 recommendations to prevent any recurrence, all but one of which were accepted by the Government. We intend to make an announcement shortly on progress on implementation of the Baha Mousa inquiry recommendations. The department will also shortly be publishing the first annual report on systemic issues identified from the investigations of the Iraq Historic Allegations Team.

I mentioned earlier the judgment of the European Court of Human Rights in the case of Al-Skeini and Al Jedda, which had important implications for the application of the human rights convention to our operations in Iraq. It is important to be clear that in our view the situation in Afghanistan is different. This is in part because the UK operates in Afghanistan through ISAF, a multinational force under the ultimate authority and control of the United Nations Security Council. Consequently, we contend that the UK’s acts and omissions are, for convention purposes, attributable to ISAF and hence to the United Nations, not to the United Kingdom. But even where the convention does not apply, there are legal challenges that need to be grappled with. The English courts are all too aware of the serious and difficult outcomes that can arise. Through a combination of recent legal challenges seeking to put a stop to UK detention and transfer operations in Afghanistan, the Defence Secretary came close to being put in a position where he could neither lawfully detain captured persons nor transfer them into Afghan custody. The problem was eventually solved, thanks in part to co-operation between the British and Afghan Governments, but this illustrates the way in which judicial action in the domestic courts can potentially have the most serious effects on operations which the Government consider vital for national security.

Given the centrality of the European Convention on Human Rights to many of these issues, some have suggested that derogation from the convention for military operations should be considered. Article 15 of the convention allows for parties to derogate from the convention’s obligations, but only from certain articles and then only in time of war or other public emergency threatening the life of the nation. There are different views as to the circumstances which would satisfy this condition. The legal and political questions which derogation would raise would be difficult ones, and we would need to be very clear that the benefits outweighed the disadvantages before proceeding with that option. The coalition agreement is also clear that no such changes would be contemplated at present.

I should like to say a word about the costs of litigation arising out of military operations. The Ministry of Defence is required to spend millions of pounds of taxpayers’ money each year to defend claims. These are resources which have been voted by Parliament for defence purposes and which would be much better employed in support of the front line. I wish to place on record my appreciation of the work of the Secretary of State for Justice in seeking to ensure that public resources are allocated as far as possible only to the most meritorious cases.

My noble friend Lord Thomas referred to a paper produced by Army personnel on the problem of risk aversion, which was subsequently leaked to the press. I can confirm that this was what is known as a “think piece” and in no way reflects the policy of the Government. My noble friend Lord Freeman was absolutely right to remind us that these matters are potentially of vital concern to reservists as well as to the Regular Forces. His call for an early resolution of these uncertainties is very pertinent. The noble Lord, Lord Ramsbotham, mentioned Northern Ireland. I was also there in August 1969 and well remember the yellow cards that we were all given and the extreme care that we had to take. There are some misconceptions about derogations from the European Convention on Human Rights by some of our key allies. Their obligations are, in all key respects, the same as ours.

In closing my remarks, I should like to emphasise once again that the Armed Forces are thoroughly committed to the rule of law. We mount a strong defence in litigation wherever justified, but we will also call members of the Armed Forces to account where it is right and proper to do so. The vast majority of our service men and women have served, and continue to serve, the country with integrity and courage, many of them in situations of danger and stress which we civilians can only try to imagine. I pay tribute to them today.

Defence: Aircraft Carriers and UK Shipbuilding

Lord Astor of Hever Excerpts

Wednesday 6th November 2013 Lords Chamber

[The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Astor of Hever) (Con)]

My Lords, with the leave of the House, I shall repeat a Statement made in another place by my right honourable friend the Secretary of State for Defence. The Statement is as follows.

“With permission, Mr Speaker, I would like to make a Statement on the future shipbuilding programme for the Royal Navy, and in particular the aircraft carrier project. As the House will know, the previous Government entered into a contract with the Aircraft Carrier Alliance, an industrial consortium led by BAE Systems, to build two 65,000-tonne aircraft carriers—the largest ships in the Royal Navy’s history.

In SDSR 2010, the incoming Government, faced with the challenge of dealing with a £38 billion black hole in the MoD budget, were advised that under the terms of the contract it would cost more to cancel the carriers than to build them. The Public Accounts Committee subsequently described that contract as “not fit for purpose” and identified in particular the misalignment of interests between the MoD and the contractors, manifested in a sharing arrangement for cost overruns that sees, at best, 90p of every £1 of additional cost paid by the taxpayer and only 10p paid by the contractor as the root cause of the problem.

I agree with the PAC’s analysis. In 2012 I instructed my department to begin negotiations to restructure the contract to better protect the interests of the taxpayer and to ensure the delivery of the carriers to a clear time schedule and at a realistic and deliverable cost. Following 18 months of complex negotiations with industry, I am pleased to inform the House that we have now reached heads of terms with the alliance that will address directly the concerns articulated by the PAC and others.

Under the revised agreement, the total capital cost to the Ministry of Defence of procuring the carriers will be £6.2 billion, a figure arrived at after a detailed analysis of costs already incurred and future costs and risks over the remaining seven years to the end of the project. Crucially, under the new agreement, any variation above or below that price will be shared on a 50:50 basis between government and industry until all the contractor’s profit is lost, meaning that interests are now properly aligned, driving the behaviour change needed to see this contract effectively delivered.

The increase in the cost of this project does not come as a surprise. When I announced in May last year that I had balanced the defence budget, I did so having already made prudent provision in the equipment plan for a cost increase in the carrier programme above the £5.46 billion cost reported in the major projects review 2012, in recognition of the inevitability of cost-drift in a contract that was so lopsided and poorly constructed.

I also made provision for the cost of nugatory design work on the “cats and traps” system for the carrier variant operation and for reinstating the ski-jump needed for STOVL operations. At the time of the reversion announcement, I said that these costs could be as much as £100 million. I am pleased to tell the House that they currently stand at £62 million, with the expectation that the final figure will be lower still.

Given the commercially sensitive nature of the negotiations with the Aircraft Carrier Alliance, I was not able publicly to reveal those additional provisions in our budget, since to do so would have undermined our negotiating position with industry. However, the MoD informed the National Audit Office of the provisions, and it is on that basis that it reviewed and reported on our 10-year equipment plan in January this year. I am therefore able to confirm to the House that the revised cost of the carriers remains within the additional provision made in May 2012 in the equipment plan, and that as a result of this prudent approach the defence budget remains in balance with the full cost of the carriers provided for, and that the centrally held contingency of more than £4 billion in the equipment plan that I announced remains, 18 months after it was announced, unused and intact.

In addition to renegotiating the target price and the terms of the contract, we have agreed with the Aircraft Carrier Alliance to make changes to the governance of the project to better reflect the collaborative approach to project management that the new cost-sharing arrangements will induce, and to improve the delivery of the programme. The project remains on schedule, with sea trials of HMS Queen Elizabeth in 2017 and flying trials with the F35 commencing in 2018.

Overall, this new arrangement with industry will result in savings of hundreds of millions of pounds to taxpayers, and I pay tribute to the team of MoD officials, led by the Chief of Defence Matériel, who have worked hard over a long period of time to deliver this result.

In reviewing the carrier project, we have also reviewed the wider warship-building programme, within the context of the so-called terms of business agreement, or TOBA, between the MoD and BAE Systems, signed in 2009 by the previous Government. As the House will know, we remain committed to the construction of the Type 26 global combat ship to replace our current Type 23 frigates, but the main investment approval for the Type 26 programme will not be made until the design is more mature, towards the end of next year. There is, therefore, a challenge in sustaining a skilled shipbuilding workforce in the United Kingdom between the completion of construction of the blocks for the second carrier and the beginning of construction of the Type 26 in 2016.

Under the terms of the TOBA, without a shipbuilding order to fill that gap, the MoD would be required to pay BAE Systems for shipyards and workers to stand idle, producing nothing, while their skill levels faded. Such a course would add significant risk to the effective delivery of the Type 26 programme, which assumes a skilled workforce and a working shipyard to deliver it. Therefore, to make best use of the labour force and the dockyard assets for which we would anyway be paying, I can announce today that we have signed an agreement in principle with BAE Systems to order three offshore patrol vessels for the Royal Navy, based on a more capable variant of the River Class and including a landing deck able to take a Merlin helicopter.

Subject to main gate approval in the coming months, these vessels will be constructed on the Clyde from late 2014, with the first vessel expected to come into service in 2017. The marginal cost of these ships, over and above the payments the MoD would have to make anyway to keep the yards idle, is less than £100 million, which will be funded from budget held within the equipment plan to support industrial restructuring. The order is good news for the Clyde, sustaining around 1,000 jobs as the carrier construction work reaches completion, securing the skills base there and ensuring the ability to build the Type 26 frigates in due course, while turning the MoD’s liabilities under the TOBA into valuable capability for the Royal Navy.

Turning to the final part of this Statement, the House will be aware that this morning BAE Systems has announced plans to rationalise its shipbuilding business as the surge of work associated with the carriers comes to an end. Regrettably, that will mean 835 job losses across Filton, the Clyde and Rosyth, and the closure of the company’s shipbuilding yard in Portsmouth. The loss of such a significant number of jobs is, of course, regrettable, but was always going to be inevitable as the workload associated with the carrier build comes to an end. I pay tribute to the men and women on the Clyde and in Portsmouth who have contributed so much to the construction of the Royal Navy’s warships, including, of course, the Queen Elizabeth class carriers. BAE Systems has assured me that every effort will be made to redeploy employees and that compulsory redundancies will be kept to a minimum. The company is now engaged in detailed discussions with the unions representing the workforce in Portsmouth and on the Clyde.

I know that the loss of shipbuilding capability will be a harsh blow to Portsmouth, and the Government and the city council, together with Southampton, are in discussion about a package to support the regeneration of employment opportunities in the area. As part of these discussions, I can announce that Admiral Rob Stevens, former chief executive of the British Marine Federation, will chair a new maritime forum to advise the Solent LEP on its maritime vision.

Despite the end of shipbuilding activity, Portsmouth will remain one of two home ports for the Navy’s surface fleet and will continue to undertake the vital support and maintenance work that sustains our most complex warships, including the Type 45 destroyers and, of course, the aircraft carriers. Indeed, with both carriers based in Portsmouth, the tonnage of naval vessels based in the port will be at its highest level since the early 1960s, sustaining some 11,000 jobs in total in the dockyards and related activities. To support this level of activity, I can announce today an investment of more than £100 million over the next three years in new infrastructure in Portsmouth to ensure that the carriers can be properly maintained and supported.

The chair of the Public Accounts Committee has previously described the carrier programme as,

“one of the most potent examples of what can go wrong with big projects in the public sector”.

That is the legacy that this Government inherited: a carrier contract that was “not fit for purpose” and a TOBA that would have required the MoD to pay BAE Systems to do nothing while our shipbuilding skills base faded away. These announcements today put that legacy behind us; secure the future of British warship building; set the aircraft carrier project on a new path, with clear alignment between industry and the MoD; and deliver important new capability in the form of OPVs for the Royal Navy. I commend this Statement to the House”.

My Lords, that concludes the Statement.

--- Later in debate ---

[Lord Astor of Hever]

My Lords, I also pay tribute to the employees of BAE Systems and their families. I congratulate them on the excellent warships that have been built. The job losses are obviously bad news and our thoughts are, as the noble Lord said, with those affected and their families. It comes as we pass the peak of naval shipbuilding on the carriers. We have worked closely with the company to manage the impact of the losses.

Our priority is to do all we can to secure jobs for people in Portsmouth and on the Clyde. We will set out how we intend to do this once the company has set out its plans. We are in very close touch with BIS to discuss the opportunities. As the Statement said, BAE Systems has assured us that it will look first to deploy members of the staff affected to other areas of its business.

The noble Lord touched on the £38 billion black hole, and we can debate this. The Secretary of State, in the Statement in the other place, has offered to write to the shadow Secretary of State. I am very happy to write to the noble Lord, or send a copy of the same letter to the noble Lord, setting out the position on the £38 billion black hole—the difference between the available budget and the commitments that were entered into.

The noble Lord asked about BAE Systems and the trade unions. I can confirm that serious discussions are taking place at the moment. He asked if both carriers will be fully operational. That will be for the SDSR in 2015 to decide. My own personal view is that I would very much like to see both carriers operational, as the Secretary of State said in the other place, so that when one carrier goes in for refit the other is available and can use the crew from the other. However, that is not for this coalition to make a decision on. The noble Lord asked if I could give a guarantee that there will be no further rises. I cannot give that guarantee. As the Statement said, any increase will be shared on a 50:50 basis.

The noble Lord welcomed the OPVs. They will be used for fishery protection, counterpiracy and, among other things, protection of the overseas territories.

The noble Lord asked me about Scotland. I can say, first, that decisions were taken in Britain’s—the United Kingdom’s—best interests. There is no politics in this: it is absolutely in Britain’s best interests. He asked about safeguards if Scotland leaves the United Kingdom. We are not planning on that happening.

Final decisions on the build location have not yet been made on the Type 26 and it would be speculation at this point. Should Scotland decide to separate from the United Kingdom we are sure that companies there would continue to make strong bids for UK defence contracts. However, they would then be competing for business in an international market and would be eligible to bid only for contracts that were open for competition from outside the UK. They would no longer be eligible to bid for these contracts that are subject to exemptions from EU procurement rules to protect essential national security interests and are therefore placed or competed within the United Kingdom. I can also say that, with the exception of the world wars, we have not built a warship outside of the United Kingdom and we do not intend to start now.

The UK has a number of commercial yards involved in the building of military warships which have been involved in the building of these carriers. It is recognised that these yards would need additional investment to enable them to participate in the building of the Type 26.

I hope that I have covered all the noble Lord’s questions but if I have not, I will certainly write to him.

[Lord West of Spithead (Lab)]

My Lords, I am saddened but not surprised by the tone of this announcement. My main reason for that is that there is not a single mention of strategic or operational requirements. My noble friend Lord Rosser mentioned that the Statement said that the Government looked at this and asked whether it would cost more to cancel the carriers than to build them. I would absolutely hope that the reason we build something like a carrier is that we need them for our nation’s security, which we do. There is no reflection of that anywhere in the Statement, or of the sovereign requirement for a shipbuilding capability. We do not build ships for admirals to play with in the bath; there is actually a requirement for them. That is why we do it. Was there any discussion in the National Security Council, of any length—I would like to know how long, if the Minister can tell me—about the strategic requirement for a sovereign shipbuilding capability within this country? It is widely understood that the 19 escorts, which is all we have, are too few in number. Therefore, we will hopefully at some stage start to build more. Is one building stream in Scotland enough to cover that? I do not think that it is. Has this been debated and looked at? It certainly was not touched upon in this paper.

[Lord Astor of Hever]

My Lords, we must face up to the fact that the coalition Government inherited a much smaller Navy from the noble Lord’s Government. On the operational requirements, the First Sea Lord came to see me this morning and has offered to brief Peers on how he sees these carriers being used. I quite agree with the noble Lord, Lord West, that we need the carriers. They are built to be used.

[Lord Palmer of Childs Hill (LD)]

My Lords, when the cost of building two new aircraft carriers is set to rise by £800 million to £6.2 billion, Harry Truman’s adage, “The buck stops here”, is bound to be inverted. We have heard this in recent exchanges. The coalition Government blame the previous Labour Government; indeed, the contracts in my view and that of many experts, were flawed because the contractor only has to pick up 10% of the overrun. The Ministry of Defence and the Secretary of State must be complimented on negotiating for the overrun costs to be spread at 50/50 between both. However, I note in the repetition of the Secretary of State’s speech that the arrangement is to go on until the contractor’s profit is lost overall. I think we need some more meat regarding how that profit is to be calculated, because there are many ways of calculating what a profit is and not much was said about that in the Statement.

Once we get rid of the blame element we must ask, as the noble Lord, Lord West, asked, whether we need the carriers. We have exchanged views on this before. There are people who say that in an era of conflict marked by counterinsurgency, terrorism and cyberwarfare, carriers are not quite the necessity that they have been in the past. My first question to the Minister is whether the saga of carriers supports the GOCO—government-owned contractor-operated—arrangements we are suggesting should go into procurement. The Chief of the Defence Staff gave an interview on 3 November in which he said he wants the Armed Forces to be available in international crises such as striking firemen, foot and mouth, and intervention in terrorist heartlands. How do the carriers and the F-35Bs fit into that scenario?

Finally, turning to the three offshore patrol vessels, we are told that the marginal costs will be less than £100 million; what guarantees are there?

[Lord Astor of Hever]

My Lords, we do need these carriers, as I said to the noble Lord. On the question about GOCO, as the Statement said, the chair of the Public Accounts Committee has described the carrier programme as one of the most potent examples of what can go wrong with big projects in the public sector. We need to change this and we feel that a change of procurement is necessary. We will all have a chance to discuss this when the Bill comes to this House later this year. As for the operational use of the carriers, they are very flexible ships, they have full strike capability and they can also be used for humanitarian aid and the use of Special Forces. My noble friend asked what guarantee there is on the OPVs. The deal secured today is for a fixed price.

[Lord Martin of Springburn (CB)]

My Lords, I have no need to tell the Minister that closures and redundancies are soul-destroying, not only for the workers, but for their families and the communities they live in. On the specific point of redundancies, can I have an assurance that those who have been taken on as apprentices will be entitled to complete their apprenticeships with the company?

[Lord Astor of Hever]

My Lords, I cannot answer the noble Lord’s question about apprentices—it was not in my brief—but we have been assured by the company that it will do everything in its power to find alternative work for those made redundant, both on the Clyde and in Portsmouth. As the Statement said, we are investing a lot of money in Portsmouth and we hope that there will be jobs in the support bases for some of those being made redundant. This is an area that the Government, BAE Systems and the trade unions are all talking about very seriously.

[Lord Reid of Cardowan (Lab)]

My Lords, I welcome the three offshore patrol vessels. This is exactly what was envisaged when the carrier contract was first negotiated, in order to ensure the continuity of a strategic asset for this country. Thereafter, I cannot be so generous. May I correct the misapprehension that has been put about that the carrier cost doubled? The original cost was more than £4 billion when the contract was signed. There was an additional £1.8 billion because, quite correctly, the Government decided, when the recession hit us, that it should be delayed for two years. So when the coalition Government came in, the cost was actually £5.9 billion. That has now risen to £6.2 billion, part of which was due to the Government’s mistaken belief, under the last Secretary of State, that they could somehow fit “cats and traps” over the weekend by some welder doing a “homer” and getting it cheaply. Of course, it cost £60 million.

Secondly, and finally, the Statement is curiously bereft of any strategic sense of what this country needs. The contract was signed to give continuity and retention of skills so that this country would have not only jobs but a major industrial and defence strategic asset. All I have to say is, if the Government believe that they can constitute a future strategic basis purely on the basis of the intrinsic contractual cost of any given contract, I fear for the long term. If the Government continue in that way we may well end up sending our carriers—if they are built—to repair in Korea. You can win the minutes in all of these things and disastrously lose the hours. I hope that the tenor of this Statement is not one that permeates the whole of the Government’s thinking on strategic defence issues.

[Lord Astor of Hever]

My Lords, that is not the case at all. We have secured a great many jobs upon the Clyde, and the future of the British shipbuilding industry is very secure. As regards the costs, we could debate this all afternoon, but the delays added considerably to the cost of the carriers. The decision to have the “cats and traps” was not made over the weekend; we gave a great deal of consideration to it, but then made the decision to revert to the stowable version, which the previous Government had decided on.

[Lord Burnett (LD)]

My Lords, I welcome the fact that the fleet is set to grow, with not just aircraft carriers but Type 26 frigates and offshore patrol vessels, which is good news, but also with the four submarines that are the successors to Trident and which I strongly support. The naval service will need in excess of 1,000 additional trained personnel to man these vessels. Will my noble friend assure the House that the Government understand this and that steps will be taken to increase the strength of the Royal Navy to cope with these demands? Will he write to me about the consequences of this Statement for Appledore Shipbuilders in north Devon, which is in my former constituency?

--- Later in debate ---

[Lord Astor of Hever]

My Lords, I welcome my noble friend’s support for the fleet and for Vanguard’s successor. As regards manpower, the Royal Navy attaches a great deal of importance to this, in particular to get the right people with the right skills. The Navy will need an extra 2,000 people for its expanding fleet over the next five to 10 years. We are very grateful to the United States Navy and the US Marine Corps, which have been especially helpful in training our people preparing for the carriers; whether they are training pilots, deck crew, or on air direction or engineering, they have been very helpful. Finally, my noble friend asked about Appledore, on which I will write to him.

[Lord Dannatt (CB)]

My Lords, the last question was on the increase in the size of the fleet in manpower terms that would be required if both carriers come into service and the three OPVs are fully manned. I welcome that and I do not want to get into that argument at all. However, the previous Government and the present Government took major decisions which affected equipment and manpower in the Armed Forces, and priority in big handful terms has been given to equipment. Therefore where savings have had to be found they have had to be found in manpower. Most of those savings have been found within our land forces—noble Lords will recognise that I would say that, wouldn’t I?

I know that the Minister cannot give a guarantee or even half a guarantee in answering this question, but will he ensure that if there is to be an increase in the fleet in manpower terms, which I welcome, it will not be at the cost of further reductions in our land forces, given that our Army is striving very hard to meet the 20% reduction in its regular size by 2020? Will he also ensure that in future discussions with the Treasury, argument is made most fiercely for an uplift in the defence budget in order to pay for the extra people, and that it is not another opportunity cost of one service against another? We cannot do that and remain credible on the world stage.

[Lord Astor of Hever]

My Lords, the noble Lord makes a very good point; the increase in numbers goes right the way across the Royal Navy—submarines, aircraft carriers and all the other ships—but we will not reduce the size of the Army just to provide extra personnel for the Royal Navy.

[Baroness Liddell of Coatdyke (Lab)]

My Lords, political point-scoring is, I suppose, inevitable in a forum like this, but it is unedifying when hundreds of people are losing their jobs and there are families who will be in real distress this evening. Will the Minister tell us what discussions there have been with the Scottish Government about what assistance will be given to the workforce on the Clyde who will lose jobs despite the new vessels? I welcome the decision to subscribe to these new vessels on the Clyde, but the Minister should take it into account that all of us in Scotland are also heartbroken about the decision to end shipbuilding in Portsmouth. It is a historic dockyard and it is tragic that we are coming to this decision to end shipbuilding there. Does the Minister agree with me that it is absurd that this debate should be taking place at a time when we have the diversion of separating Scotland from the rest of the United Kingdom, which will finish shipbuilding on the Clyde?

[Lord Astor of Hever]

My Lords, personally, I hope that that will not happen. On the noble Baroness’s point about it being very political, I obviously deplore that, but it is inevitable. As far as redundancies are concerned, the Government, BAE Systems, and the trade unions are all, as I said, working as hard as they can to find new jobs for those personnel.

[Lord Lee of Trafford (LD)]

My Lords, when I was a Defence Minister in the 1980s, I remember being told by officials that we could build all the naval requirements in the Vickers yard at Barrow alone. In other words, we have had overcapacity, sadly, in our naval yards for years, and it still applies. I have three specific questions. First, the Statement does not indicate the cost of the three offshore patrol vessels; it is a rather shrouded figure. Will the Minister give the cost of the three OPVs? Secondly, following the point raised by the noble Lord, Lord West, and given that there is a £4 billion retention in the contingency reserve, would it not have made sense to build one more Daring class Type 45 destroyer, as we are desperately short of escort vessels? Thirdly, my noble friend the Minister touched on the humanitarian possibilities of the new carriers. Will he give an indication of the medical facilities aboard the new carriers, in particular the number of new operating theatres that will be available for potential humanitarian and evacuation relief?

[Lord Astor of Hever]

My Lords, we have provisionally agreed a firm price of £348 million with BAE Systems for the supply of three OPVs, inclusive of initial spares and support. The cost of building these vessels and their initial support is entirely contained within provision set aside to meet the Ministry of Defence’s obligation for redundancy and rationalisation costs.

My noble friend Lord Lee of Trafford asked about the humanitarian position; I can confirm that the carriers would be able to assist in evacuation. They each have an operating theatre and a huge flight deck that would take 10 Chinooks while four Chinooks could operate concurrently. I hope that that answers my noble friend’s question.

[Lord Judd (Lab)]

My Lords, in the 1960s and 1970s I had the privilege of representing in the other place part of the community of Portsmouth, including the naval base and dockyard. I remind the House that it is impossible to record adequately what this country owes Portsmouth. It has been in the front line in the defence of the realm for many, many decades. It is, after all, the home of HMS “Victory”, and that in itself says something about it.

I put it to the Minister that it is not just a matter of going through the normal routine of ministerial Statements, assuring everybody that there will be consultations and that the city council has been consulted, and so on. This nation owes a tremendous loyalty and tribute to the people of Portsmouth, and it should be a priority of all the Government and those they are associated with to make sure that a closely knit community such as this does not carry a disproportionate burden as a result of the policies that are being followed.

Referring to what my noble friend Lord West said, surely the first priority in defence is to establish what the threat is and what contribution we want to make towards international security. Having established that, what is necessary to do that? As Libya illustrated very well, every conceivable analysis of the future suggests that we are going to need flexibility and free-standing platforms from which operations can take place, and the carriers are absolutely indispensible to that future. Will the Minister please accept that he will have widespread support in this House if, having made what I believe to be the absolutely right decision to go ahead with the carriers as a priority in defence policy, that is pursued with every possible commitment?

[Lord Astor of Hever]

First, I quite agree with the noble Lord that we owe a long-term debt of loyalty to Portsmouth. Portsmouth will maintain its proud maritime heritage as the home of the Royal Navy surface fleet and the centre of BAE Systems’ ship support and maintenance business. The long-term future of Portsmouth as a naval base for the Royal Navy’s most complex warships will be in undertaking vital support work for the fleet. This will include support and maintenance for the new carriers and the Type 45 destroyers—the most advanced warships ever built for the Royal Navy. I can add that Portsmouth and Southampton are also taking part in the second wave of the City Deals programme and have been working closely with the Government to agree an ambitious deal for the area which will boost growth and jobs in the local economy. We expect to be able to conclude that deal shortly. I am grateful for the noble Lord’s support for the carriers, and I will certainly do everything possible to ensure that that work continues successfully.