Defence Supplementary Estimate 2021-22

Peter Grant Excerpts

Wednesday 9th March 2022 Commons Chamber

[Peter Grant (Glenrothes) (SNP)]

I was not convinced that I should take part in this debate, because I am possibly the least expert on defence matters in this Chamber, but I do have some comments to make.

Let me begin by saying that I do not think that asking very, very hard questions about defence spending on behalf of any of our armed forces is in any way disloyal to those who put their lives on the line. In fact, I would suggest the opposite, because, sometimes, it is our responsibility to ask the questions and to shout about the concerns that serving members of the armed forces, for obvious reasons, are not allowed to express publicly.

I wanted to speak in this debate because we can argue—no doubt we will continue to argue—about how much the defence budget should be each year. We have already seen the beginnings of an argument on the Government Benches about how much of that should be spent on small equipment, how much should be spent on major equipment and how much should be spent on people. The reality is that there will seldom be enough to spend as much as we would like to on all three areas. What concerns me is that, for far too long, the huge amounts of public money that have been spent by the Ministry of Defence have not been well spent or well managed. That means that, for the amount of money that is put into the defence budget, we do not get the number of soldiers, sailors and air personnel that we could get. We do not get the equipment that we should get, and if we do get it, we do not get it on time.

I have been looking at recent reports from the National Audit Office and from the Public Accounts Committee, which I have had the privilege of sitting on for the past two years. In June 2021, the National Audit Office published a report entitled, “Improving the Performance of Major Equipment Contracts”, because it was picking up on a catalogue of failures, of late delivery, of equipment being delivered that was not fit for purpose, and of contracts going hundreds of millions—sometimes billions —of pounds over budget. It found that in eight of the 19 major programmes under way at the time, the senior responsible owner, the military person with direct responsibility for delivering on that project rated their delivery confidence as “amber/red” or “red”. In other words, the people charged with the responsibility for delivering those projects were not convinced they could deliver what was needed where it was needed and when it wasneeded.



The Public Accounts Committee picked up on that report and took further evidence from the MOD, and our report was published in November 2021. We identified, for example, that the contract for four Astute-class attack submarines was more than £1 billion above budget and the Queen Elizabeth-class aircraft carriers were £2.75 billion over budget. It is easy to look at those numbers in the context of the total MOD budget and say that none individually is a huge percentage, but when we think what £3 billion, £4 billion or £5 billion could do to improve the accommodation that service personnel are living in, for example, and what that would do for morale, that waste of public money is simply inexcusable.

The Committee made a comment that really should have rung alarm bells throughout Whitehall—bearing in mind that this is a Committee where, by its nature, the Government have a majority:

“We are deeply concerned about departmental witnesses’ inability or unwillingness to answer basic questions and give a frank assessment of the state of its major programmes.”

In other words, there was a cultural problem at the highest levels of the MOD and they were not convinced that the Public Accounts Committee, on behalf of this House, had the right to ask such questions.

The hon. and gallant Member for Plymouth, Moor View (Johnny Mercer) said that he regarded parts of the integrated review as dishonest; I must say that some of the financial planning documents that the MOD continue to publish could well be given the same descriptor, because they simply do not give an honest and frank view of the challenges it faces in being able to afford some of its plans over the next 10 years. I mentioned improving accommodation for service personnel, and that was not a random example.

[Jeremy Quin]

I am grateful for the hon. Gentleman’s comments about some of the decisions made by the previous Labour Government, particularly in relation to the aircraft carriers, although I would not describe having those two aircraft carriers as a waste of Government money. They are an extremely valuable addition to our defence and have an extremely good job to do. I take issue with the idea of any document produced by the Department being, as he was implying, dishonest. We have an equipment plan now that has not been deemed unaffordable by the NAO. For the first time in many years, we are balancing our books and delivering on our programmes.

[Peter Grant]

I am glad the Minister mentioned the affordability of the equipment programme. I think that plan is dishonest if it describes itself as affordable, for reasons that I will come on to later.

[Mr Francois]

Will the hon. Gentleman give way?

[Peter Grant]

Given that the right hon. Gentleman is a best pal of mine sometimes on the Public Accounts Committee, I will give way.

[Mr Francois]

The hon. Gentleman missed the best bit of the November report, which was that the cross-party Committee concluded that the UK’s defence procurement system was “broken”. Does he agree that we are not going to deter further Russian adventurism with a £4 billion light tank that not only does not work, but deafens its own crew?

[Peter Grant]

I think the right hon. Gentleman will understand that there are far too many examples for me to quote them all. I want to leave some for him. I have no doubt he will bring his much greater knowledge to bear on the example he quoted.

[Mr Kevan Jones]

The Minister said the plan is in balance, but that is not what the NAO report says. It is only in balance if the Department meets the so-called efficiencies, which, on previous form, it has never met.

[Peter Grant]

I wish I had not let the right hon. Gentleman intervene, because he has just stolen my thunder, but never mind—“It’s nae loss whit a freen gets”, I think is the phrase we would use in Fife.

The single living accommodation, at the time the NAO started looking at it on 31 October 2010, was being used by almost exactly 80,000 armed forces personnel, or more than half the entire number of people working in our armed forces. Some 36% of those 80,000 people were living in accommodation rated grade 4 or below. The accommodation was so poor that the MOD did not even have the cheek to charge rent on it—that is how bad it was. I do not know what accommodation standards legislation is like in England, but certainly in Scotland it would be illegal to rent out some of that accommodation as a private landlord, a social landlord or a local authority.

[John Spellar]

Will the hon. Gentleman give way?

[Peter Grant]

I am sorry, but I really do need to make progress. I could talk until 7 o’clock, if the right hon. Gentleman wants me to, but I think other Members wish to speak.

The Public Accounts Committee reported that the Commands—the Army, Navy and Royal Air Force—planned to use some of the £16.5 billion of additional funding to address the backlog in maintenance and repairs of that accommodation, which at the time was estimated to be about £1.5 billion. The Committee reported at the same time:

“However, this extra funding seems to have already been spent more than once before it had even arrived with the Department”.

As I am sure many hon. Members are aware, if we listed the number of times that Ministers or civil servants told us that an MOD funding problem would be fixed by that additional money, welcome though it is, it would certainly add up to many times. Perhaps that is why they are a wee bit coy about giving us a detailed breakdown of exactly what the money will be spent on, because once they do that we will find out that it will not go nearly far enough.

[Rachael Maskell]

Will the hon. Member give way?

[Peter Grant]

The right hon. Member for Warley (John Spellar) is not looking, so I give way to the hon. Member.

[Rachael Maskell]

I have been carrying out a bit of an inquiry into Annington Homes, which owns a lot of the MOD estate. The MOD is currently leasing 7,230 vacant homes from Annington Homes. Given the refugee crisis and the fact that we have 11,000 to 12,000 people in bridging hotels, would it not be worth investing in those homes and bringing them up to standard, so that they could be used to rehouse people who have now been languishing in hotels for more than six months, not least because many of them served with our armed forces?

[Peter Grant]

The hon. Member makes an important point, and she reminds us that if accommodation is lying empty, it should not matter which Department or public body has its name on the title deeds; houses are there for people to live in, so whether they are evacuees and refugees from Afghanistan or anyone else, it should be possible to give them the kind of accommodation they want.

I will go through some of the findings of the NAO report, “The Equipment Plan 2021 to 2031”. I think it is dishonest to state as a matter of fact that the equipment plan is affordable, because in order for it to be affordable, as the NAO report states in paragraph 2.7, £3 billion of financial risk was not included. For example, a future combat air system had an estimated cost in its business case up to 2031 of between £10 billion and £17 billion. The equipment plan allocates £8.65 billion, so that one project alone is, at best, underfunded by £1.35 billion, and at worst it has possibly been allocated barely half the money it will cost.

Paragraph 2.17 refers to £7 billion of what the MOD terms “Planned Cost Reductions”—I think this is what the right hon. Member for Warley was referring to. At the time, according to that report, the top-level budget holders had plans to deliver less than half of the £3.1 billion. Some £2.6 billion of it needed to be achieved by 2025, within the first four years, and the first of those first four years is up in three weeks’ time. As the right hon. Member mentioned, the MOD has a dismal track record, assuming it will make massive savings all over the place and delivering very little of it. It cannot afford to get it wrong this time, but I think we all know that the chances of it getting it right and delivering that £7 billion, if its past record is anything to go by, are very slight. It is yet another hole in the affordability of the equipment plan.

Paragraph 20 of the NAO report picked up on an issue that the MOD does not like us to talk about but that I think is very important. It states that the top-level budget holders were

“deliberately spending more slowly on projects to keep within their budgets”.

In other words, they were given a budget to have something delivered and ready to use in 10 years’ time, but they spend the budget in 10 years and then the equipment is not ready until after 12, 13 or 14 years. There can be unforeseeable delays in the procurement of defence equipment, but if the MOD has assessed that the military will need that equipment in 2031, and then someone in the MOD deliberately delays procuring it for any amount of time, simply to make it look as if they are sticking to the budget, I do not see how that can possibly be acceptable.

Elsewhere, the NAO estimated that about £12 billion of savings built into the equipment plan were not savings at all, but were based on spending the money after the period of the equipment plan. They were based on delaying getting this vital equipment to our service personnel. An independent assessment carried out by the MOD’s cost assurance and analysis service, looking at projects that make up about 58% of the current year’s plan—although clearly there will be bigger expenditure on some of them later—reckoned that those projects alone were likely to cost £7.6 billion more than was assumed in the make-up of the defence equipment plan. It goes on and on. The NAO’s conclusion in paragraph 23 is that

“There is a real risk that, despite the additional funding it has received, the Department’s ambition outstrips the resources available to it.”

In layperson’s language, despite the MOD saying it has an affordable equipment plan, there is a very real risk that it does not.

Finally, the affordability of the equipment plan depends on getting an inflation plus 0.5% budget increase every year up to 2031. The Treasury has said it is comfortable with that, but given what has happened recently to public finances, the cost of living and inflation, I question whether it is still realistic to assume that is guaranteed. It is possible that it will be delivered; if it is not, that is yet another hole in the affordability of that plan. I make no apology for saying that where the equipment plan says that it is affordable and does not put all those caveats against it, it is a dishonest document for anyone to have published. It makes statements that are patently not justified, even by the information that was made available to Members of Parliament and, indeed, members of the public.

We can argue about whatever amount of money is allocated to the Ministry of Defence in this year’s budget or next year’s, or in any year coming, but we are failing our service personnel. The Government, this Parliament and the MOD are failing our service personnel, first because they are not being open and honest with them about the financial challenges they continue to face, but most importantly because surely, when somebody signs up and is willing to put their life on the line—let us not forget that two young men from Glenrothes lost their life fighting an illegal war in Iraq, and would probably be here today if they had had the best possible equipment available—the very least they are entitled to is living accommodation that is fit for human habitation, and to be given the best possible equipment available to defend themselves from enemy attack. I do not have confidence that this Government, or any future Government in this place, will genuinely honour those commitments.

That is why, whatever budget is set for the MOD through the due process, there needs to be a complete root-and-branch review of financial management—far too often, financial mismanagement—within the Ministry of Defence. It is costing billions and billions of pounds that the MOD simply cannot afford to waste, and there will be times when it risks costing the lives of our service personnel.

[Dr Julian Lewis (New Forest East) (Con)]

Not for the first time and, I am sure, not for the last time, the House has cause to be grateful to the right hon. Member for Warley (John Spellar) for reaching across the party divide in support of the strongest possible defence of this country and the strongest possible support for NATO. It is in that spirit, as a former Chairman of the Defence Committee, that I acknowledge the stalwart support he has given to successive holders of that post. This is an opportunity for defence-minded parliamentarians to give some initial reaction to the colossal and extraordinary events of the past fortnight in the context of what Britain was going to spend on defence, and what it should spend on defence in future.

In June 1950, five years after the end of world war two and following a time of mass demobilisation, the Korean war broke out. The effect of that conflict, quite apart from the terrible consequences for the people living in Korea, was to cause a huge reassessment of the amount of national effort that must be invested in defence in the United Kingdom. That led to a reconsideration of the level of defence expenditure, and I suggest that the seismic events of the past two weeks should lead to a similar reassessment of what we are prepared to invest in defence in the United Kingdom in the 21st century. We cannot conduct this debate as if nothing serious has happened to transform the situation in the past two weeks.

Although it is very early and the outcome of the conflict is still very much in doubt, I suggest it is possible to come tentatively to about half a dozen conclusions, and I will run through them very quickly. First, I think we can say that the advanced public messaging by the United States, NATO, the United Kingdom and other allies has been outstanding. It has prevented President Putin from seizing the narrative. By predicting accurately in advance what he was going to do, it has completely undermined his potential disinformation campaign. Every pronouncement that we hear from the Kremlin is so ludicrously at odds with reality that it cuts no ice at all, except with those totally indoctrinated.

Secondly, the events of the past fortnight dispel any illusions we might have had about the nature of our Russian adversary. As has been said rightly many times by those on the Front Bench, that is not the Russian people, but the people in control of that great, but benighted country. We must remember that people such as President Putin are the direct descendants of the regime whose ideology led them to kill millions of their own people in the decades in which Leninism and bolshevism held sway. Although the communist doctrine has collapsed, the mindset, the imperialism and the brutality have not. I have previously described President Putin in uncomplimentary terms, and I think it is worth repeating them. This man is a cynical, sneering psychopath. He does not care how many people he kills, as long as he gets his own way. Anyone thinking that there is a way to reason with these people, rather than deter, contain or, if necessary, defeat them, is living in a world of fantasy.

Thirdly, in light of Ukraine’s decision to give up—admittedly it was not a system it could operate at the time, but given time it could have done so—the third largest nuclear arsenal in the world, which it inherited from the former Soviet Union, any lingering doubts about the wisdom of the United Kingdom continuing to possess a strategic nuclear deterrent as long as Russia does so have finally been put to bed.

[Peter Grant]

rose—

[Dr Lewis]

I will allow the hon. Gentleman to intervene, because I know his party has a problem with this issue, but I do not intend to let it dominate my speech.

[Peter Grant]

I can assure the right hon. Gentleman that we do not have a problem with the issue; we have a problem with nuclear weapons. Is he not aware that as a matter of international law, as a successor state to the Soviet Union, Russia was the legal owner of those nuclear weapons? It was entitled to take them away. Ukraine would have been in breach of the law to try to hold on to them.

[Dr Lewis]

Yes, and I am also aware that as a result of Ukraine’s decision to give up those nuclear weapons, Russia guaranteed the security and the borders of Ukraine. If the hon. Gentleman is going to throw international law at me, all I can say to him is that, if he thinks that those sorts of manoeuvres and unilateral renunciations are the way to stop someone being attacked and destroyed by a ruthless adversary, it should be a long time indeed before he and people who think like him have any influence on the way in which we choose to keep the peace—by deterrence—so that we do not end up in a situation like Ukraine.

Fourthly, this horrible situation should establish whether and to what extent economic sanctions can force an aggressor to desist. It is often said that the world has become more interdependent. We will never see a more extreme example of democratic countries seeking to use economic pressures to force an aggressor to desist. If that fails to work in this instance, it will be a further argument for increased investment in hard defence capability, because that particular aspect of hoping to be able to turn war into an outmoded concept will, sadly, have been disproved. I hope that it does play a part in stopping Russia from proceeding, but I am not holding my breath.

Fifthly, the conflict has exposed the folly of fuel dependence on hostile countries and raised questions about the wisdom of a policy of unilateral net zero targets by democracies regardless of what much larger countries, that are not democracies, do. I am not seeking to pick an argument with the environmentalists; I am merely saying that there is a parallel with the question of unilateral or one-sided nuclear disarmament, because if we achieve net zero at tremendous cost to ourselves while much larger hostile countries simply flout the commitments that they have given, we will have taken that pain for no benefit to anyone. Targets must be multilateral if they are going to do anything other than weaken our ability to protect ourselves.

The last of the six lessons is that the conflict has killed the idea that conventional aggression by one state against another is an outmoded 20th-century concept. Time and again, people such as the right hon. Member for Warley on the Opposition Benches and my right hon. and hon. Friends present on the Conservative Benches have raised the question of what an appropriate level of defence investment should be, only to be told from on high, “You’ve got to realise that there are new forms of warfare. The next war will not be fought much with conventional armed forces. It will be fought in cyber-space or even in space itself.” Of course, there are new and serious threats—potentially fatal threats—in those two newer areas of conflict, but they are additional threats. They are not substitutes for the threats that we have always faced and continue to face from conventional armed forces.