Oral Answers to Questions

Peter Luff Excerpts

Monday 10th October 2011 Commons Chamber

[Andrew Stephenson (Pendle) (Con)]

4. What progress he has made on increasing the number of small and medium-sized enterprises bidding for defence contracts.

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

This Government value the flexibility, responsiveness and innovation that SMEs bring to defence, which is why we are taking a number of actions to make it easier for them to participate in defence programmes, both as direct suppliers and as subcontractors. We are simplifying our bidding and contracting processes to make them easier for SMEs. I now chair an SME forum for representatives of small businesses, so that they can better understand and respond to the particular issues they face in doing business with the defence community. We will also set out a number of more specific measures in the White Paper that we will publish later in the year on equipment, security and technology.

[Andrew Stephenson]

I thank the Minister for that answer. I recently met Stephen Shepherd of S Dawes Weaving and Chris Blackadder of Howorths Textiles—both are manufacturers in Nelson, in my constituency. Those SMEs are interested in bidding for more work from the MOD. I would be grateful if the Minister could offer them and other SMEs in my area any advice on bidding for and winning more contracts.

[Peter Luff]

I am happy to reassure my hon. Friend, and Mr Shepherd and Mr Blackadder, that we have a cunning plan to help SMEs, as I hope my original answer suggested. For example, we are revising our internal guidance to ensure that SMEs are not rejected at the pre-qualification stage on the basis of rigid turnover-to-contract value ratios. I would be very happy to arrange for Mr Shepherd and Mr Blackadder to meet departmental officials to ensure that they are fully informed of the opportunities they now have.

[Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)]

In answer to a question I tabled in June, the Minister suggested that only about 50 of some 6,000 new contracts placed directly by the MOD in 2010-11 across the UK are known to have been awarded to Scottish-based SMEs. Given that that is based on an estimate, does he not agree that it is unacceptable that the MOD does not have the actual figures so that we can scrutinise the amount of work going to SMEs and, at the same time, end some of the myths promoted by the separatists?

[Peter Luff]

I sort of agree with that question and I sort of do not. I do not think that it is our job to keep careful records of exactly which SMEs get which business, but it is part of our job to ensure that Scotland shares fully in the benefits of defence expenditure. I get very surprised when the Scottish nationalists frequently represent Scotland as in some sense losing out, which the hon. Gentleman alluded to in his question. That is simply not the case. I have visited Scotland on many occasions over the past few months and seen the massive footprint of defence in Scotland and the massive contribution made to employment and jobs, all of which will be at risk in an independent Scotland.

[Gordon Birtwistle (Burnley) (LD)]

Westland helicopters has a licensing agreement with Boeing to build Chinook helicopters. Why was the order for 14 new Chinooks worth £1 billion given direct to Boeing rather than the licensing agreement being used to give the order to Westland so that it could take on half the work?

[Peter Luff]

I think it is stretching a point a bit to define AgustaWestland as an SME, but nevertheless I am happy to confirm that I happen to have in front of me the previous Government’s defence industrial strategy, which says of AgustaWestland that it is important to understand that AgustaWestland’s role is

“neither predefined nor guaranteed, but dependent on their performance and the value for money of their propositions.”

Our position is very similar and I am happy to be able to confirm to my hon. Friend that the contract we have for the construction of the new Chinook helicopters will lead to some £350 million-worth of work flowing to the British supply chain, which—

[Mr Speaker]

Order. We are extremely grateful to the Minister, but we need to move on.

[Angus Robertson (Moray) (SNP)]

Last week, in a written answer, the Minister confirmed that the MOD’s estimate for the number of contracts issued in the last financial year was 2,370 in England but only 50 in Scotland. Does he believe that that is fair and equitable?

[Peter Luff]

I do not know about you, Mr Speaker, but I am a half-full man, and the Scottish nationalists seem to be talking about half-empty glasses. I think the hon. Gentleman is quoting extremely selectively from the answer I gave him and, for what it is worth, I share his disappointment about the SME performance. I do not believe the figures or trust them, because they are extraordinarily low. I have seen the vibrancy of the Scottish defence sector for myself on a number of visits and I believe that the share of business is much higher. I invite the hon. Gentleman to abandon his ludicrous plans for an independent Scotland and join me in building a still more robust defence industrial base in Scotland rather than talking it down all the time.

[Mark Lancaster (Milton Keynes North) (Con)]

I congratulate the Minister on the steps he is taking to encourage more SMEs to bid. One criticism we often hear from SMEs is that they are lured into bidding for contracts, only to lose out to much larger firms at the last round with little or no feedback from the MOD. May I encourage the Minister to ensure that in such cases SMEs get full feedback on why their bids have failed?

[Peter Luff]

I absolutely agree with my hon. Friend, who makes a very powerful point. If any hon. Member has an example of an SME receiving inadequate feedback from my Department, I want to hear about it. SMEs deserve full feedback. They have an awful lot that they can bring to defence; their innovation and the cost savings they can offer are extremely important and they must be told why they have failed when they do fail.

[Ian Austin (Dudley North) (Lab)]

5. What assessment he has made of the adequacy of his Department’s budget during the comprehensive spending review period; and if he will make a statement.

--- Later in debate ---

[Margot James (Stourbridge) (Con)]

9. What recent assessment he has made of the export prospects for the Eurofighter Typhoon.

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

Typhoon has already been exported to Saudi Arabia and Austria, where it is in operational service. It is also competing in a number of other important markets. Oman has announced its intention to buy Typhoon, and India has selected it for the final phase of its medium multi-role combat aircraft competition. It is also competing in a number of other countries, including Japan, Malaysia and Qatar.

I confidently expect an increase in interest in Typhoon, following its highly successful air defence and ground attack roles over Libya, in which it has consistently demonstrated exceptional levels of reliability, performance, accuracy, and overall cost-effectiveness over and above our very high expectations.

[Margot James]

I thank my hon. Friend for his answer. Does he agree that Typhoon’s success is down to UK leadership in the design and manufacture of world-class aircraft and that Government support is needed, not just to maximise export potential but to defend this vital national interest?

[Peter Luff]

On the question of supporting exports, I know the close interest that my hon. Friend takes in Japan, particularly through her role in the UK-Japan 21st century group. I am happy to reassure her of the close interest that I personally have taken in the export campaign to Japan, which I visited in April, where I discussed Typhoon with many Japanese interlocutors. I am hopeful of a successful outcome. She is absolutely right, too, to emphasise the importance of the underlying design skills and technology—for example, our strong support for Europe’s first second-generation active electronically scanned radar will be key to our success in these export campaigns.

[Alison Seabeck (Plymouth, Moor View) (Lab)]

Ministers talk rather too often about buying off the peg from our international partners, including the USA which, we understand, is struggling at the moment, too. Should Ministers not seek to enhance sales, encourage value for money from British companies and ensure that we retain jobs and skills in the UK? Perhaps the Minister can tell the House whether, given the fall in international demand for top-quality British goods such as the Typhoon and subsequent job losses, he intends to ensure that such phrases are not used in future and that orders go to the UK first.

[Peter Luff]

I welcome the hon. Lady to her new position and, as it is her first outing, I will be relatively kind in my response to her. [Interruption.] I have to say that I have read with considerable interest her party’s defence review procurement document, which advocates a similar policy in relation to off-the-shelf and modified off-the-shelf, so she should read what her own party is suggesting before criticising us. As for her comment that demand for Typhoon is falling, it is true that the four partner nations are stretching out production, but demand is rising fast around the globe, and I am confident that Ministers have a strong commitment to their export diaries, which will lead—

[Mr Speaker]

Order. We need to move on; I am grateful to the Minister. [Interruption.] Order. The Minister’s answers are simply too long—we need to make progress.

[Mr Ben Wallace (Wyre and Preston North) (Con)]

I am grateful for the efforts that the Defence Secretary and his team have made to try to export Typhoon and secure jobs for my constituents in Lancashire at Samlesbury and Warton. However, should the British Government be successful in helping to win those orders abroad, what guarantees can we try to secure from BAE that this is good news for work in Lancashire, and not just good news for BAE shareholders?

[Peter Luff]

I think that it is guaranteed that it will be good news for Lancashire. Of course, the precise composition of the bids is a matter for the company, but I think that it understands the importance of protecting its design skills in my hon. Friend’s constituency, for which he speaks up vigorously and effectively in the House.

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

11. What procedures exist to ensure that British military equipment used in operations abroad does not fall into the hands of others.

--- Later in debate ---

[Andrew Stephenson (Pendle) (Con)]

T2. Many small and medium enterprises in Pendle are keen to know when the yellow book review will be completed. Is the Minister in a position to update the House on progress?

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

I am delighted to be able to do precisely that; it was published a few hours ago. [Hon. Members: “Read it out!”] It runs to more than 100 pages, so I think that I would be in trouble with the Speaker if I did that. Section 4 is specifically about SMEs. I invite the whole House to pay careful attention to this important document and to take part in the consultation on it.

[Mr Jim Murphy (East Renfrewshire) (Lab)]

May I say how much I agree with the Secretary of State when he says that we cannot allow the unpopularity of the Iraq conflict in many quarters to prevent us from standing up for what we believe in in other countries around the world? That is why there remains consensus across parties about the action in Libya and Afghanistan. However, now that there is a timetable for the drawdown of our combat role in Afghanistan, can he update the House on how much longer he anticipates Her Majesty’s forces remaining engaged in Libya?

--- Later in debate ---

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

T5. Is the Secretary of State aware that the future of high science, research, innovation and design in our country very much depends on a fine balance among the defence industries, universities and the private sector? Many of us believe that that is now at risk because of failing demand from the defence sector.

[Peter Luff]

I am very sorry indeed that the previous Government introduced such massive cuts to the defence science budget, which did great harm to the issues that the hon. Gentleman is rightly concerned about. I can reassure him that the defence White Paper on equipment, support and technology, which will be published later this year, will address these issues very seriously, because he is right to draw the House’s attention to this very important question.

[Mary Macleod (Brentford and Isleworth) (Con)]

I recently visited the Brentford air cadets, squadron 342, in my constituency and was really impressed by the training that the young people are given in respect, discipline and community responsibility. What more can we do to encourage more young people to get involved in the cadets?

[Kerry McCarthy (Bristol East) (Lab)]

T6. The Secretary of State and I have a considerable number of constituents who work at the MOD’s Abbey Wood site in Filton. There is real uncertainty there at the moment about how many jobs will be lost, what new work will be sent there and what work will be lost. Could he give some certainty to the people working at the plant about the future of their jobs?

[Peter Luff]

I make regular visits to the Filton Abbey Wood site, as the hon. Lady knows, to discuss those issues with the staff, and I appreciate the concern that they face. The chief of defence matériel, Bernard Gray, is currently conducting a full review of matériel strategy and how the organisation will be structured in future, and I hope that its outcome will give precisely the certainty that she rightly seeks for her constituents.

[Alun Cairns (Vale of Glamorgan) (Con)]

I congratulate the Secretary of State on the leadership that he has shown on Libya. What action is he taking with his Libyan counterparts to help prevent the risk of insurgent activity, in preparation for the national transitional council taking complete control?