Oral Answers to Questions

Peter Luff Excerpts

Monday 31st January 2011 Commons Chamber

[Jesse Norman (Hereford and South Herefordshire) (Con)]

4. What assessment he has made of the value for money of the AirTanker private finance initiative project.

[The Parliamentary Under-Secretary of State for Defence (Peter Luff)]

The price for the future strategic tanker aircraft service was set in competition and also assessed against a public sector comparator before the contract was let in March 2008. Nevertheless, because I understand the concerns about the use of PFI for military procurement, I commissioned a thorough, independent review of the contract, which concluded that there was now no persuasive value-for-money case for pursuing an alternative mechanism to secure this urgently needed capability.

[Jesse Norman]

I thank the Minister for that reply. This is but one of many apparently wasteful and expensive private finance initiative projects within the Ministry of Defence—including, most recently, dog kennels at the Defence Animal Centre that are reported to cost more than rooms at the Park Lane Hilton hotel. Does the Minister think there is a case for taking a very detailed look at the MOD’s PFI contracts to lower their cost and improve value for money to the taxpayer?

[Peter Luff]

I agree with my hon. Friend and I am glad to say that a lot of work is being done within the work strands on renegotiation of PFI contracts. Three operational PFI projects have been selected and the pilot phase has commenced with the aim of making savings as part of the renegotiation process. The three projects are the Corsham development, Main Building redevelopment and the defence sixth form college. We expect to have the potential savings identified by the end of March.

[Mark Tami (Alyn and Deeside) (Lab)]

Does the Minister accept that the AirTanker project secures tens of thousands of jobs in the UK and was the best option in comparison with the more expensive and sub-standard option put forward by Boeing?

[Peter Luff]

I am quite clear that the AirTanker will be an outstanding aircraft and do its job very well. It is urgently needed to repair a fragile air bridge and perform its main function of in-air refuelling as well. I understand, however, the hon. Gentleman’s point of view.

[Nic Dakin (Scunthorpe) (Lab)]

5. What his policy is on the provision of benefits to veterans; and if he will make a statement.

--- Later in debate ---

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

7. What his policy is on the use of individual and direct offset agreements in defence contracts.

[The Parliamentary Under-Secretary of State for Defence (Peter Luff)]

The Ministry of Defence does not have offset agreements in defence contracts. We do invite prospective offshore suppliers to propose, on a voluntary and non-contractual basis, how they would work with UK companies in support of a contract placed overseas. Following the publication of a Green Paper in December, all policy issues relating to the acquisition of defence equipment are the subject of a consultation that closes on 31 March.

[Mr Sheerman]

Will the hon. Gentleman consider looking at this offset very seriously? Other countries use offset to great benefit, some using it to stimulate investment in environmental technologies. I know that the Government are consulting, as he says, so will he meet a group who have been discussing the issue and some of the industry leaders to discuss it further?

[Peter Luff]

I would be delighted to do so, as part of the Green Paper consultation process.

[Eric Ollerenshaw (Lancaster and Fleetwood) (Con)]

8. What steps he is taking to increase the level of UK defence exports.

--- Later in debate ---

[Mr Dominic Raab (Esher and Walton) (Con)]

9. What steps he is taking to ensure value for money in his Department’s procurement.

[The Parliamentary Under-Secretary of State for Defence (Peter Luff)]

The Government are determined to drive out the mismanagement of the equipment programme experienced under the last Administration. Developing a balanced, affordable programme must be our first priority. The strategic defence and security review and the current planning round process are major steps on the road to achieving that, but ongoing acquisition reforms, the work of the defence reform unit, and the appointment of Bernard Gray as Chief of Defence Matériel are also signals of our determination to address the issue successfully.

[Mr Raab]

I thank the Minister for his answer. I also welcome Lord Currie’s review of single-source pricing regulations. The major projects reports produced by the National Audit Office in 2009 and 2010 issued scathing assessments of the last Government’s record of purchasing defence equipment. How will the Currie review ensure better value for money for taxpayers?

[Peter Luff]

My hon. Friend is right to highlight the importance of the review, which I announced to the House last week. Given that some 40% of work by value is secured through this route, it is crucial to the taxpayer that we secure value for money from procurements. It is important for industry to be given incentives to reduce costs, and this will be good news for small and medium-sized enterprises, many of which find the present procedures for procuring work exceptionally onerous. Moreover, by making industry more competitive on world markets we will increase our export potential. It is a win-win situation.

[Jim McGovern (Dundee West) (Lab)]

Can the Minister tell the House what the implications of the strategic defence and security review are for organisations and companies that depend almost entirely on Ministry of Defence contracts—for example, Remploy? The Remploy factory in my constituency depends entirely on MOD contracts and its workers are frightened for their jobs. Can he give me assurances that I can offer to those workers that their jobs are secure for the future, based on MOD contracts?

[Peter Luff]

I cannot offer that specific assurance—I am not aware of the specific situation—but I would be delighted to meet the hon. Gentleman to discuss the situation in detail, if that would help.

[Sir Alan Beith (Berwick-upon-Tweed) (LD)]

What is the nature of the inquiries taking place into the procurement of the search and rescue helicopter contract? Do they involve the police or potential disciplinary action? When will we know whether the contract has been completely invalidated by what has been discovered?

[Peter Luff]

The investigation into the issue notified by the preferred bidder is ongoing. Until the issue has been properly considered it is not possible to progress to procurement. I hope that it will be possible to make a further statement to the House on the way forward. No decision has yet been taken on this matter and, in view of the issues involved, there is nothing more I can say at this stage to the House.

[Elizabeth Truss (South West Norfolk) (Con)]

10. What estimate he has made of the cost to the public purse of relocating Tornado maintenance facilities away from RAF Marham.

--- Later in debate ---

[Stephen Barclay (North East Cambridgeshire) (Con)]

11. What steps his Department is taking to increase the effectiveness of project management for its major projects.

[The Parliamentary Under-Secretary of State for Defence (Peter Luff)]

The National Audit Office’s recent major projects report shows that the well-documented problems with some of the largest procurement projects have generally been caused by poor and deliberate policy decisions, and that project management itself is improving. But we are doing more to improve project management, including: running a programme to increase skills; forming a major projects performance board to review our most significant projects regularly; and appointing Bernard Gray as Chief of Defence Matériel, where he will build on the improvements made by his predecessor.

[Stephen Barclay]

Following numerous Select Committee recommendations, the Department’s own guidelines run to eight pages in setting out what should be included in project histories, yet the £4 billion Nimrod project history runs to just two pages; makes no mention of senior responsible owners or senior staff changes; and took the Department seven weeks to produce, even though it already has this document, which is marked unclassified and had no redactions. Will the Minister write to me within the next month listing all the major defence projects that do not comply with the Department’s own guidelines on documentation and what the gaps in documentation are?

[Peter Luff]

I am reluctant to turn this into a diary session for my diary secretary, but I think it would be very helpful to discuss this important issue with my hon. Friend. Departmental good practice guidance on maintaining project histories allows scope for project team leaders to interpret it and decide what best meets the needs of their project depending on its size, complexity and nature. The format and content are not mandated and, frankly, the problems with the Nimrod MRA4 project are about the most well-documented of any major procurement programme we have.

[John Glen (Salisbury) (Con)]

12. What recent assessment he has made of the security situation in Afghanistan; and if he will make a statement.

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Defence (Peter Luff)]

My hon. Friend is absolutely right to highlight that very important plank of our policy towards the defence industries. At present, we are consulting through the Green Paper and I urge him to respond to that consultation. There are 18 separate questions on what we can do to improve the relationship between small and medium-sized enterprises and the MOD.

I draw my hon. Friend’s attention to the outstanding work of the Centre for Defence Enterprise, which is bringing innovative SMEs into the defence market for the very first time, and is very much welcomed by those SMEs.

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

T5. The Big Lottery Fund has recently extended the deadline for the excellent Heroes Return 2 scheme, administered from Newcastle, that provides funding to help veterans and their families take part in commemorative visits, either in the UK or abroad. Like many right hon. and hon. Members, I have been encouraging my constituents to take advantage of the scheme. Will the Minister outline what support he and his colleagues are providing to encourage uptake of that funding?

--- Later in debate ---

[Mr Speaker]

I counted about four questions there, but the Minister is a specialist in pithy responses, and we will hear him.

[Peter Luff]

I can confirm the answer to that question when the current planning round is settled, but I assure the hon. Lady that we understand the importance of these helicopters for the mission in Afghanistan.

[Bob Russell (Colchester) (LD)]

A key player in the security situation in Afghanistan is Pakistan, which, in the war on terror, has seen more of its civilians and security and military personnel killed than any other country. Last week, I was part of a Commonwealth Parliamentary Association delegation to Pakistan. Will the Secretary of State join me in thanking the Government and people of Pakistan for their efforts to date and encourage them to maintain that level so that our forces in Afghanistan are supported?