Defence and Security Public Contracts (Amendment) (EU Exit) Regulations 2020

Lord Touhig Excerpts

Tuesday 3rd November 2020 Lords Chamber

[Lord Touhig (Lab) [V]]

My Lords, I congratulate and welcome the noble Lord, Lord Dodds. He follows in a rich tradition of sons and daughters of Derry/Londonderry making very important contributions to the quality of public life in our country. I look forward to his contributions in the future.

Defence procurement drives the UK’s important defence industry, and with that protects hundreds of thousands of skilled jobs. The industry needs certainty to flourish, including on how contracts will operate towards the end of the transition period. As we have heard, these regulations relate to public procurement procedures which are governed by the Defence and Security Public Contracts Regulations 2011. Under the UK’s obligations in the withdrawal agreement and the EEA EFTA separation agreement, the same rules will continue to apply to procurements launched but not finalised prior to the end of the transition period. With the internal market Bill currently going through your Lordships’ House, I am glad that the Government have not fully abandoned their obligations in the withdrawal agreement.

I have a number of questions for the Minister. Can she confirm how many contracts she expects to continue operating under these rules, and for how long? This SI updates two of the financial thresholds over which the full requirements of the 2011 regulations apply. Can she explain why the higher threshold has been increased from £820,700 to £884,720, and how this was calculated? The regulations also say that procurements launched after the implementation period completion day will follow the Defence and Security Public Contracts Regulations 2011, as amended by the 2019 regulations. For those procurements, notices will be sent to the UK e-notification service, and rights and remedies under the 2011 regulations will be limited to the UK and Gibraltarian economic operators only. Will this be affected if procurement is included in an EU-UK FTA?

While clarity for procurement contracts that have begun but are not yet completed is welcome, there remains much uncertainty around the future of defence procurement, especially relating to the integrated review, the comprehensive spending review, and Covid-19. I am sure that I am not alone in worrying about delays to the review and the changing timeframes for the CSR, as well as the impact that this will have on procurement and the whole defence industry. It has been reported that the CSR will now be based on a one-year settlement rather than a three-year one, which could be very damaging to defence. Equipment procurement is a long-term business, and it is already facing a hole in the budget of £16 billion. Can the Minister confirm that the Ministry of Defence will now receive only a one-year settlement? What impact will this have on procurement projects, and on the UK’s military programmes and capabilities?

I hope that the Government realise that, as Ministers argue over budgets, our adversaries are moving ahead with new threat capabilities. We cannot afford a delay or a spending downgrade. I would be most grateful if the Minister explained what steps the department is taking to mitigate the impact of rising cases of Covid-19 and the tightening of restrictions on procurement. How are the Government protecting small businesses along the defence supply chain?

All my professional experience prior to entering the House of Commons tells me one key thing: businesses need certainty. While these are challenging times, the Government must do their utmost to provide that certainty through the procurement procedures.