Armed Forces Readiness and Defence Equipment

Meg Hillier Excerpts

Thursday 21st March 2024 Commons Chamber

[Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

I really welcome this debate, in which five former Defence Ministers are speaking. That is probably a record—certainly in recent years. I very much thank the Chair of the Defence Committee for laying out the global challenges this country faces and some of the capability concerns. Given the expertise in the Chamber, I know that we will hear more about that.

I stand here as Chair of the Public Accounts Committee, which sometimes feels a bit like the second Defence Committee because of the amount of time we spend examining the vast expenditure that this country makes on defence. Taxpayers give this money to the Government trusting that it will be spent well, but sadly all too often we see that it is not spent as well as it should be. We see money going in but we do not see the capability coming out that we require. The PAC examines that defence spending and the delivery; our job is to look at the economy, efficiency and effectiveness of how taxpayers’ money is spent by Government. As I say, the Ministry of Defence too often falls short on that.

The Committee has huge concerns about the MOD’s ability to deliver projects on time and to budget. This report is only one of our latest on the subject. Just because we have war paint on ships or something is very important, interesting and exciting technology to support our men and women on the frontline does not mean that it should not be treated like any other major project in Government and be managed well and properly. There is no point in having something perfect but late if our frontline personnel need it. As our report highlights, recent global events, which I will not go into, as the Chair of the Defence Committee has outlined them, throw into sharp focus why it is so vital that we deliver on time and that we have the capability, including industrial capability, to ramp up when something, such as munitions, for example, are used apace.

The PAC has examined the annual equipment plan from the MOD for more than 12 years. We have done that throughout the time I have been a member of the Committee, for the past nine years of which I have had the privilege of being its Chair. The defence equipment plan is the 10-year programme for the capability that the MOD says it requires and it lays out how that will be funded, and where the challenges and gaps in funding are. All bar last year’s plan were deemed unaffordable, but the PAC took the view that even in the year when the plan from the MOD came out as affordable, it was based on assumptions that were not realistic, and we did not believe it was fully affordable.

In simple terms, affordability is about the gap between the capability the plan lays out and the money available. As the plan covers 10 years, there have been times when Ministers, including some of the former Ministers present and perhaps even the current Minister, might have come up with reasons for that. They say, “Over 10 years, it is fine. We’ll juggle it a bit. We will balance a bit. We’ll get efficiency savings here and there.” We have seen those arguments and excuses far too often, and the efficiencies do not arrive or issues arise and defence programmes are put off and delayed. By delaying them we see a reprofiling of the costs, but no real reduction in them, and we see those chickens coming home to roost.

This year, the gap between the capability required and what is affordable is £16.9 billion—so it is nearly £17 billion over the 10-year period. We can then add in what the Army would deliver. It is perhaps worth my explaining that for some odd reason—the PAC has taken a strong view on this and even the permanent secretary at the MOD has acknowledged that there was an anomaly—when the Commands and the MOD put in their costs for the programmes, most of them put in the full costs of all the capability required, but the Army puts in only the costs of what it could afford. If we add in the capability that the Army actually requires, we are adding a further £12 billion to that nearly £17 billion, thus making the gap even bigger. There has been a clear deterioration in affordability. It is fair to say that £10 billion of that is because of inflationary costs—we partly know the reasons for that, but I am not going to go into them now—and about £2 billion is to do with foreign exchange costs. Again, the PAC examines those regularly with the MOD and the Treasury, but however we hedge it there will be some challenge on foreign exchange because of the nature of some of our defence procurement.

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

Does my hon. Friend agree that that has been made worse by the MOD’s tendency to purchase off-the-shelf solutions from the United States in dollars, which is now accounting for a huge amount of the defence budget? As she says, even with hedging, this is a deadweight around the defence budget.

[Dame Meg Hillier]

My right hon. Friend raises an important point, and we could almost have a whole debate about that. We do not have time to go into the full detail today, but I will touch on our defence industrial strategy. That is what a lot of this comes down to; if we are buying things off the shelf, it can sometimes be more cost-effective, but we need to be careful and cautious, because the longer those projects are for, the greater the risk of foreign exchange challenges. There is also sometimes a risk to our own sovereign capability and the longevity of some of our defence industries.

We recognise that, with our allies, we work in an international world on this. So there is no straightforward answer, but defence industrial strategy is an area that not only the MOD but the whole of Government should be looking at, as it is vital. Both the Chancellor and shadow Chancellor talk about growing the economy, and our defence industries are based in areas where, if we could up the skills and jobs available, it could provide a major boost to the economy. So there are a lot of opportunities there.

The MOD has not credibly demonstrated how it will manage its funding to deliver the military capabilities the Government want. Our latest report says that they need to get “firmer control of defence procurement” because of this very large deficit in respect of the capability requirements needed. The budget has increased, and I am sure the Minister will stand up to tell us how much extra money is going into defence, but this is about not just the money, but how it is managed. The budget has increased by £46.3 billion over the next 10-year period compared with what was set out in last year’s equipment plan. As I said, the PAC has warned that the deficit is even bigger than expected, so that extra budget will be taken up by the deficit if it is not managed down. Part of the reason for that deficit is inflation, but another major impact on it is the costs of the Defence Nuclear Organisation, which is responsible for the vital nuclear deterrent. Those costs have increased by £38.2 billion since last year’s plan.

One of our Committee’s other concerns is that the MOD has been putting off making decisions about cancelling or reprofiling programmes. Reprofiling is not always a good thing, but sometimes we have to trim according to what is necessary. If the MOD cannot afford the plan, it should take a hard decision, but it has optimistically assumed that the plan would be affordable if the Government fulfilled their long-term aspiration to spend 2.5% of GDP on defence each year, despite there being no guarantee that that will happen. Of course, in an election year there is not even a guarantee as to which party will be in government to consider that. We know, and the Defence Committee will know even more than the PAC, how much the MOD is increasingly reliant on the UK’s allies to protect our national interests. That means that we also have to play our part by making sure that we are delivering that.

For all the time that I have served on the PAC— 13 years this year—the MOD has been led by optimism bias, and it is now pressing on based on not optimism but the sniff of optimism, as there is so little left in that approach that will deliver. We must call that out and call a spade a spade, by saying that the MOD can deliver only what is affordable. So either the money goes in or the MOD trims what it is trying to do, because the approach of trying to do everything all at once and not being able to afford it is just not going to work.

[Sir Alec Shelbrooke]

I am listening carefully to what the hon. Lady is saying. I have not cast my eye over the report she is speaking about. She talks about the Government or the MOD trimming projects. The lessons of George Osborne slashing the number of Type 45s in half have had a huge impact on naval capability, and of course we have more than 530 Ajax tanks to come. When we say that we must make savings, are we talking about a false economy? In the long run, it is far better to increase the GDP spend than to slash projects and totally undermine how the defence programme was originally laid out.

[Dame Meg Hillier]

I am tempted by the right hon. Gentleman to go into all sorts of long discussion about how the PAC looks at these issues. Resetting projects and programmes can certainly be problematic, and sometimes stopping something part way through can be expensive. Equally, however, altering the requirements part way through can add on costs. When I talk to the commands or the centre, one problem I find is that people sometimes want to gold-plate what they are procuring, and we sometimes need to look at doing those things in a different way. Brutally, let me say that the current situation is not affordable, which means we must make hard decisions about whether something is stopped or no longer procured, or more money is made available. As I have said, and as the PAC repeats ad infinitum, if more money is made available, we need better project management.

The MOD is also saying very clearly that it will not make any decisions until the next spending review. As everybody in the Chamber knows, that is supposed to be in November, but a general election is looming. A spending review is usually six months after the first Budget of a new Government, so we could be floating on the fumes of the current spending settlement until the summer of next year. In certain cases, we will still be pouring good money after bad; the Ministry of Defence needs to tighten up on that, because it cannot live on hope alone.

I touched on industry in answer to my right hon. Friend the Member for North Durham (Mr Jones). Industry needs a consistent and certain supply of business to keep the supply chain going, both for resilience and to ensure there is proper investment in the necessary infrastructure. We have seen some of our private sector industries leave equipment and buildings to crumble because they have not had continuity of supply. Some blame lies with them, not just with the Ministry of Defence, but consistency of supply is vital and getting that right provides a potential boon to the economy.

The Committee looks at procurement a lot. For the last decade or more, we have been saying that senior responsible owners need to be in place for far longer. They need to be where their expertise is needed for the right period of time, and then be moved on for the next phase of the project. We need to reward people who stay in those jobs, rather than expecting civil servants or military attachés to roll over on a three-year basis, thinking they just need to keep things ticking over. They need proper ownership and proper reward when they get things right. The MOD is beginning to move in the right direction on senior responsible owners’ skills and longevity, but it still has a lot of work to do to catch up to where it needs to be.

I touched on funding timeframes. The Treasury needs to seriously consider properly controlled longer-term budgets, as it is beginning to do in certain areas with the defence equipment plan. That does not mean giving carte blanche to the MOD; those budgets need to be tightly controlled, as the Public Accounts Committee has made clear. However, controlled longer-term budgets are vital.

Finally, the Public Accounts Committee has access to many areas of Government and all areas of spending, if we choose to look at them. I pay tribute to my fellow Committee members who have never leaked a single piece of information, of whatever sensitivity, in the last nine years. However, the Committee looks at certain issues through opaque glass and it is now time to have full transparency. I want as much information as possible to be in the public domain, but the mechanisms of open, public committees are not always appropriate for certain sensitive areas, including defence.

In our latest report, the Committee recommended that there needs to be a new mechanism and approach that allows Parliament to properly examine such issues in the right, secure context. That might be along the lines of the Intelligence and Security Committee, although we would certainly not be looking at information in that area and not in exactly the same way, because the Public Accounts Committee needs to be more fleet of foot on certain day-to-day spending issues. It is time we had transparency so the British taxpayer knows that every tax pound that is spent, whether on defence or on sensitive matters in other Departments, is being seen and scrutinised by senior parliamentarians who know what they are doing. It is an early thought of the Committee, but important to raise. We need full transparency so that officials and Ministers who are spending taxpayer money in this area of vast expense are properly scrutinised on their work.

[Several hon. Members rose—]

--- Later in debate ---

[Mr Mark Francois (Rayleigh and Wickford) (Con)]

May I begin by saying to the Minister for Defence Procurement, for whom I have great regard and who is trying to reform our broken procurement system, that everything I say in the next few minutes is not personally aimed at him? To quote “The Godfather”:

“It’s not personal…It’s strictly business.”

At his speech at Lancaster House on 15 January, the new Defence Secretary now famously said that we are moving

“from a post-war to a pre-war world”.

His words clearly resonated, both nationally and internationally. For example, when I was on a visit to Washington recently, those words were played back to us by Pentagon officials. Shortly after, in an unclassified letter to all Conservative MPs, the Defence Secretary stressed the need for industrial improvements and to rearm, in terms reminiscent of the 1930s.

However, let us consider what that actually means. The head of the MOD, a senior Cabinet Minister, has said, in effect, that we are now likely to go to war. Although he did not specifically state who with—be it Russia, China, Iran or someone else—that one statement, which I fear may turn out to be true if we do not rapidly improve our conventional deterrence, has incredibly serious implications for our entire defence and security posture. The much-vaunted integrated review has now been completely overtaken by events. In a world with increasing Iranian-inspired violence in the middle east, sulphurous threats over Taiwan emanating from Beijing and now the state-sponsored murder of Alexei Navalny, even the most naive liberals surely have to concede that the Defence Secretary might just be right. The integrated review, and its 2023 refresh, are completely lacking in any great sense of urgency in response.

Similarly, the MOD defence Command Paper, which was meant to dovetail into the integrated review, also lacked a sense of urgency, even to the point of retiring a number of key frontline systems, such as radar planes and tactical transport aircraft, in favour of new equipment, arriving much later in this decade. Many analysts expected that to change post Ukraine, but no major equipment decisions were altered, despite Putin’s barbaric invasion in February 2023—something that some members of the Defence Committee effectively predicted in a debate in this House some six weeks before the invasion began.

[Dame Meg Hillier]

The right hon. Gentleman is in the unique position of being a member of both the Public Accounts Committee and the Defence Committee. Does he share my view that it is a bit like groundhog day when hear the words “defence” and “review” in whichever order? I do not know how many such reviews we have had in the last few years, yet we never see the step change necessary to ensure we will deliver the capability our country needs.

--- Later in debate ---

[Dame Meg Hillier]

Given what the hon. Gentleman has just said, does he agree that it would be good to have tighter scrutiny of that spending, which might mean a new system set up so that we can look at sensitive matters?

[Danny Kruger]

I defer to those on the Front Bench on what transparency is appropriate, but I recognise the point made in the hon. Lady’s Committee’s report and I think in the Defence Committee report about the difficulty of getting the information that the Committees need to do their work. I recognise that nuclear is identified as a separate line in the budget and is protected in theory, but I am concerned about what might be a marginal increase in this enormous budget. It is around a quarter of our total defence spending. If that increases even marginally and the shortfall has to be made up from our conventional defence budget, that entails a significant reduction in that conventional spending, which is so important at the present time.

LGBT Veterans Independent Review

Meg Hillier Excerpts

Wednesday 13th December 2023 Commons Chamber

[Dr Murrison]

My hon. Friend will be aware of the disregards and pardons provisions in part 12 of the Police, Crime, Sentencing and Courts Act 2022. They have the effect of expunging those offences, which are no longer offences. That clearly applies to what we are debating today. The answer to his question is that that expunging of material will be complete in relation to offences that are service offences and go outwith the civilian—then criminal—offences listed in part 12.

[Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

My constituent worked for the Secret Intelligence Service between 1975 and 1984. In 1984, he was offered a posting overseas, at which point he declared that he was gay, and he was then dismissed expressly because of his sexual orientation. I thank Lord Etherton for the review and for meeting me to discuss this. Clearly, the review does not cover my constituent, but he and others in his position do not even have the comfort of being able to go public at any point because of the nature of their employment. Has the Minister spoken to colleagues in other parts of Government? If not, will he undertake to do so, because this experience should not be prolonged for those in the secret element of service to this nation?

[Dr Murrison]

I am more than happy to discuss the details of that constituent’s concerns separately. This is a review into the way in which Defence handled the matter between 1967 and 2000, and Lord Etherton’s terms of reference were drawn up accordingly. From what the hon. Lady has just told me, I do not think that her constituent will be covered by the review, but I am more than happy to have a conversation.

Service Family Accommodation

Meg Hillier Excerpts

Tuesday 20th December 2022 Commons Chamber

[Alex Chalk]

Issues of recruitment and retention are, of course, broad-based and multifactorial. All sorts of issues go into determining levels of recruitment and retention, but the hon. Gentleman raises a fair point. I would hope and expect that, at the time of entering into the contract, it was made crystal clear that Pinnacle had to deliver on it, because otherwise the implications for service families—not just the individual serviceman or woman, but their families—would be deeply profound. It has not measured up to that, and I think we need to establish in very short order what it said, when it said it and whether it was being entirely up front about what it could deliver.

[Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

The Public Accounts Committee has issued two reports on this—one in 2016 and one in 2021—and there is also, of course, the excellent report by the right hon. Member for Rayleigh and Wickford (Mr Francois), which highlighted the same issues. Yet another contract was let earlier this year with the same problems. There is a rottenness at the core of the MOD’s ability to contract to deliver on this service, and worryingly, it also delivers on major warships, armoured vehicles and so on. What is the Minister going to do to make sure that there is a real difference? Financial penalties do not deliver better heating systems. Will he undertake a root-and-branch review of how the Ministry of Defence contracts for these services, and will he listen to some of the recommendations made in recent reports?

[Alex Chalk]

There are two issues here. First, there is the issue of the overall quality of the stock. I have spoken about the fact that that does need to improve. In fact, the £350 million to which I referred is principally directed at the 20% of accommodation that requires the most support. As I have indicated, 96% of all service family accommodation meets the decent homes standard, but we need to make sure that that £350 million goes where it is needed and has the maximum impact.

Secondly, the hon. Lady asks a fair question about ensuring that these contracts are properly entered into in the first place, and it is one that I am keen to get to the bottom of. DIO needs to ensure that it does everything possible to do its due diligence on contracts and make sure that, ultimately, we all end up with something that will deliver. That is absolutely what I am focused on.

Defence and Security Industrial Strategy

Meg Hillier Excerpts

Tuesday 23rd March 2021 Commons Chamber

[Mr Speaker]

I call the Chair of the Public Accounts Committee, Meg Hillier.

[Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

I welcome that we are getting more clarity on some of the issues around defence spending, and particularly the Minister’s bold statement that he wants to see us

“achieving real reform in how we procure.”

It would be great if we saw some of that go down to our SMEs. However, as he knows, the National Audit Office concluded in its recent report on the defence equipment plan that the Department

“continues to make over-optimistic and inconsistent judgements when forecasting costs.”

That information comes from the Department’s own cost assurance and analysis service. Can the Minister tell the House and the country what precisely he is going to do differently to ensure that procurement and cost management in the equipment plan is managed better? What precise actions is he going to take?

[Jeremy Quin]

I thank the hon. Lady’s Committee for its report in the summer, which was no holds barred; we have lessons to learn. We are endeavouring to ensure that we answer each of the points made in that report in turn and that we learn from the report and its findings. It is also important that we lay before the Committee an enhanced equipment plan. We are working on that right now. I think it is best that we do that properly, alongside the NAO, so that we work with it and make certain that we have a detailed plan that can be put out for scrutiny. We have that plan, but we need to make certain that the NAO is equally comfortable with it.

The hon. Lady will recognise that, in any organisation with 6,500 contracts, there are going to be ones where we run into problems—that is the experience of the commercial world as well as Government—but we need to do better. So we have enhanced the number of people who are trained to a very senior level in terms of commercial expertise in DE&S; as I say, that is going up to 200 by the end of this year. We are putting more emphasis on where we look at the centre at projects, rather than leaving it entirely with the TLBs. We will bring out up to 65 major projects—not necessarily on a financial basis; there can be some that are low in value but high risk in terms of delivery—starting from the centre, through the defence major projects initiative.

With the help of the Infrastructure and Projects Authority, for which I am grateful, I am reviewing our senior responsible officer structure, to make certain that our SROs, who do a good job but quite a lot of whom are quite stretched, have more individual responsibility and that people are all over the detail of their projects. I hope that in combination, alongside a reform of DSPCR in the single source contract regulations, we may be in a better place to not necessarily please the hon. Lady’s Committee but at least do our best to meet the requirements that it has set.

Oral Answers to Questions

Meg Hillier Excerpts

Monday 3rd February 2020 Commons Chamber

[Mr Wallace]

I welcome my right hon. Friend to his new role as Chairman of the Select Committee on Defence. Perhaps, given his time in the Department, he will enjoy being able to scrutinise some of his own decisions, and I look forward to his questioning me.

We will publish the details of the review in very quick time as we go forward. My right hon. Friend is absolutely right that, if these reviews are to be worth anything, they have to be properly funded. That requires honesty from the Department, wider Government, and the Treasury, and for the ambitions for what we want our country to do and be around the world. If we match our appetites with stomachs, it will have a long-lasting legacy.

[Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

We have had as many defence reviews as you have had hot dinners, Mr Speaker, and I am beginning to think that I have got to the point where I have heard so many Defence Ministers tell us that it is going to be different this time. There have been repeated reviews, and as the Chair of the Select Committee, the right hon. Member for Bournemouth East (Mr Ellwood), said, too often there is a mismatch between the money and the plans. What, realistically, will the Secretary of State do that is different, because every delay in this costs money and every tough decision ducked does no service to our armed services or the security of our country?

[Mr Wallace]

The hon. Lady makes very genuine and good observations about these defence reviews. I was a soldier serving under defence reviews that never translated into either money or the funding. The first thing that we can do is be honest with the men and women of our armed forces about what we can afford and what we will give them, and at the same time be honest with the public about what our ambitions are globally, and make that honesty not hunkered in sentimentality but based on financial reality, making sure that the whole Government buy into that, and that we explain that fully across the House and to all Members, including the hon. Lady’s Committee.

Oral Answers to Questions

Meg Hillier Excerpts

Monday 18th February 2019 Commons Chamber

[Mark Lancaster]

The Army’s new campaign builds on last year’s successful “Belonging” adverts, which, as I said, took recruitment to a five-year high. The early signs are positive. At the moment, 12.4% of recruits are women and 6.5% are from the black, Asian and minority ethnic community. We are yet to see the audited results for the campaign, but we are confident that progress is being made.

[Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

The Public Accounts Committee has been looking closely at what skills we have in our armed forces. We know there are real shortages, particularly in cyber, with people leaving early. Will the Minister explain to the House how he is working with others across Government to ensure that we have the cyber skills we need in our armed forces?

[Mark Lancaster]

That is a very important question. The hon. Lady will be aware of the £1.9 billion investment in cyber across Government. I have taken a particular personal interest in this issue. I want to ensure that the career structure we offer in the armed forces matches these 21st century skills. Historically, it has not done so.

Defence Equipment and Support

Meg Hillier Excerpts

Tuesday 17th July 2012 Commons Chamber

[Nick Harvey]

There have undoubtedly been serious problems with the procurement side of the defence business for a very long time. The deficit in defence from two years ago was in very substantial part caused by the overheating of the procurement budget, but we have taken dramatic steps in the past couple of years to get the defence budget back into balance. The Treasury can see the progress we have made, but the steps we are proposing today will not be taken unless it is satisfied by the work on value for money that is currently taking place.

[Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

As the Minister has acknowledged, there have been long-standing problems in defence procurement. The Public Accounts Committee has taken a keen interest in the matter. Will he outline exactly what steps he is taking to ensure that the establishment of the GOCO model is well worked up, so that we do not have some of the problems that we have had with other procurement bodies in the past?

[Nick Harvey]

The hon. Lady makes a good point—that is why I was at pains to spell out at the outset that the process has some considerable way to go. Only when the work on value for money is completed will a decision be taken on whether we are going ahead in principle. At that stage, we will work the model up in detail and look for a competition with private sector partners. At the end of all of that, there will be a final testing, which must satisfy the Treasury, among others. That will be the point at which a decision to go forward will be taken. There is a long route to go.

Hostage Rescue Operation (Nigeria)

Meg Hillier Excerpts

Tuesday 13th March 2012 Commons Chamber

[Mr Hammond]

The Under-Secretary of State for International Development, my hon. Friend the Member for Eddisbury (Mr O'Brien) tells me that we have taken all necessary steps to protect UK personnel in Nigeria who are working on aid programmes, and the Under-Secretary of State for Foreign and Commonwealth Affairs, my hon. Friend the Member for North West Norfolk (Mr Bellingham) tells me that we have taken the appropriate steps to protect Foreign Office personnel, too.

[Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

The right hon. Gentleman has talked about the security support being provided to President Jonathan and the Government of Nigeria. Does he or the Foreign Secretary have any plans to visit Nigeria to cement that relationship further and offer any further support that the Nigerian Government may require?

[Mr Hammond]

The Under-Secretary of State for Foreign and Commonwealth Affairs, my hon. Friend the Member for North West Norfolk has just informed me that he will be in Nigeria next week. I am not aware of the Foreign Secretary’s forward travel plans, but, as I said to the right hon. Member for East Renfrewshire (Mr Murphy) a few moments ago, when we publish our defence engagement strategy shortly, Members will see that we are placing very great importance on the defence relationship with Nigeria. Defence Ministers will be responding to that document by pursuing the deepening and strengthening of those relationships.