Logistic Commodities and Services (Transformation)

Peter Luff Excerpts

Monday 16th July 2012 Written Statements

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

I can today announce the launch of an initial phase of a planned transformation project within Logistic Commodities and Services (LCS), part of defence equipment and support.

The primary role for LCS is to provide support to military operations and force generation by undertaking procurement and inventory management of all non-explosive commodity items, including food, clothing, fuel, and medical supplies. This also involves the storage and distribution of these commodity items, together with all other non-explosive stock across defence.

The transformation project aims to consider how we can improve inventory management and stock control, rationalise current stock holdings, improve and rationalise storage infrastructure (releasing surplus for disposal), improve commodity procurement and logistic processes, and optimise the size of the LCS organisation. Under the current model, each commodity area operates in isolation. The storage infrastructure itself requires investment to improve its condition and to rationalise the numerous dispersed locations.

This initial phase of the project, the assessment phase, has now commenced and will explore the alternative delivery models available and whether these would represent value for money. This work will explore two options for delivering support in the future; industry integration and an in-house developed value for money benchmark. No decisions on the final operating model or locations will be made until the assessment phase is complete. This phase will take a minimum of 12 months to complete. The formal process of TU consultation will be followed throughout the project.

Marchwood Sea Mounting Centre

Peter Luff Excerpts

Thursday 12th July 2012 Written Statements

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

The 2010 strategic defence and security review identified a number of Ministry of Defence (MOD) assets that would be considered for disposal. I would like to update the House on progress we have made on our commitment to sell the Marchwood sea mounting centre in Hampshire.

Sea mounting activities are vital to meeting the UK’s military requirements and will remain so in future. Our personnel at Marchwood, including 17 Port and Maritime Regiment, deliver a key capability to our armed forces overseas and the centre provides a valuable training facility for them at home.

Options for the sale of Marchwood have therefore been assessed with the continued availability of these capabilities in mind, including consideration of alternative UK locations from which sea mounting activities could be undertaken.

Based on this work I can reaffirm the intention to sell Marchwood. However, our analysis has led us to conclude that the preferred option is to continue to meet the sea mounting requirement from the same site. This will ensure that the military outputs can still be met while allowing greater economic and commercial benefit to be realised from the site. In doing so we envisage a much closer relationship between the MOD and industry in delivering these capabilities from a privately owned sea mounting centre.

MOD will now focus on developing the commercial proposal by the end of this year. Any sale will be dependent on the prevailing market conditions at the time, and the transaction will need to demonstrate that the required, assured defence capability can be delivered in a way which represents value for money.

Oral Answers to Questions

Peter Luff Excerpts

Monday 11th June 2012 Commons Chamber

[Guy Opperman (Hexham) (Con)]

3. What plans he has for maintaining aircraft carrier cover in co-operation with key allies.

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

The strategic defence and security review confirmed the Government’s intention to re-introduce a carrier strike capability from around 2020. This capability will be delivered by the Queen Elizabeth-class aircraft carrier, operating the STOVL— short take-off and vertical landing—variant of the joint strike fighter. Until then, the Government have accepted that expeditionary air power will need to be deployed by other means, which may include agreements with allies regarding overflight and basing rights. In addition, the Government are considering the scope for us to co-ordinate carrier strike operations with those NATO allies that currently operate aircraft carriers, including the United States, France and Italy, both prior to and following the re-introduction of the United Kingdom’s own capability.

[Guy Opperman]

Our future aircraft carriers are being built by our Scottish allies. What happens to the construction of those carriers if Scotland declares independence and does not contribute to the cost?

[Peter Luff]

As a good Unionist, I must emphasise that the carriers are being built by the United Kingdom, and that many English yards, as well as Scottish yards, are making a fine contribution to these outstanding ships. The best thing that I can say to my hon. Friend is that it is two thirds of a century since the United Kingdom built a warship outside the UK—that happened during the second world war—so the facts speak for themselves.

[Nick Smith (Blaenau Gwent) (Lab)]

The Telegraph conservatively says that it is £250 million, but can the Minister say how much the bad decision to proceed with the F-35C cost? Surely this should include the costs of carrier conversion, too.

[Peter Luff]

I can confirm what my right hon. Friend the Secretary of State has said on many occasions: as of the end of April, we had committed £39 million on conversion studies and a further £1 million on an air-to-air refuelling study. We do not think that the money has been wasted. Changing the variant was considered the best course of action under the SDSR, and these costs were necessarily incurred.

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

Can my hon. Friend confirm that it is our intention to build the two carriers so that both are able to operate fixed-wing aircraft and that we will purchase enough fixed-wing aircraft to operate from both of those carriers?

[Peter Luff]

I can confirm that both carriers will be built; it will be a decision in the next SDSR as to whether or not both are operated. Similarly, we are following an incremental acquisition policy on the joint strike fighter itself. Therefore, I cannot give my hon. Friend the comfort he is seeking at this stage, as this relates to a commercial negotiation and a strategic decision for the next SDSR.

[Richard Graham (Gloucester) (Con)]

4. What his policy is on pensions for war widows.

--- Later in debate ---

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

Innovation ensures that we are able to access and deliver technology into our systems and equipment to provide continuing operational advantage to our armed forces. That is why our recent White Paper, “National Security Through Technology”, highlighted the importance of investment in science and technology. It also recognised the contribution of commercial investment in developing new technologies. Using open competition in defence acquisition ensures that we are able to deliver the best and most innovative capabilities at an affordable price. In addition, the success of the Centre for Defence Enterprise in bringing through suppliers new to defence, particularly small and medium-sized businesses, which are important sources of innovation, led to our decision to broaden the centre’s remit, including the mentoring of smaller companies.

[Chi Onwurah]

During the recess, BAE Systems announced the closure of the historic Scotswood road site in Newcastle, with the loss of more than 300 jobs. This brings to an end a 165-year history of skilled engineering, the longest continuous site of tank manufacture anywhere in the world, as well as bringing great distress and uncertainty to my constituents. Does the Minister agree that refusing to take into account the wider economic implications of defence procurement undermines not only innovation, but jobs and communities across the country? Will he agree to meet me and a delegation from BAE to see what can be done to save the site?

[Peter Luff]

I have enormous respect for the hon. Lady’s expression of concern for her constituents, and I pay tribute to the work that those people have done over many years to support the armed forces. However, it is not true to say that the policy that she describes is the cause of the problem. The problem is that BAE Systems has not won contracts at this site. Meanwhile, the Warrior sustainment programme, the Scout SV programme, the Foxhound programme and the integration of the urgent operational requirements continue around the United Kingdom, generating thousands of highly skilled and important jobs. I very much regret that BAE Systems has been uncompetitive, but it is not the fault of the Government. The company must answer why it could not compete successfully for contracts.

[Chris Ruane (Vale of Clwyd) (Lab)]

12. What budget his Department will require after 2015; and if he will make a statement.

--- Later in debate ---

[Priti Patel (Witham) (Con)]

15. How much his Department plans to spend on renewing the nuclear deterrent in the remainder of the spending period.

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

The Ministry of Defence plans to invest around £1.4 billion between now and 2014-15 on the assessment phase of the successor submarine programme, as announced to Parliament in May last year. The total cost of the assessment phase, including long-lead items, will be around £3 billion by the time it is complete in 2016-17. Without that investment, it could not be guaranteed that a successor submarine would be available in time to ensure a continuous at-sea deterrent.

[Priti Patel]

With unfriendly regimes advancing their development of nuclear weaponry, will the Minister give an assurance that the United Kingdom will be defended by the most advanced and effective nuclear deterrent?

[Peter Luff]

I can assure my hon. Friend that we understand the vital importance of keeping the minimum effective nuclear deterrent for precisely the reasons she sets out so eloquently.

[John Woodcock (Barrow and Furness) (Lab/Co-op)]

The decision finally to go ahead is welcomed on the Opposition side of the House, and indeed in my constituency, but the previous Secretary of State put the cost of delaying at between £1.2 billion and £1.4 billion, so is the new Secretary of State’s estimate of the extra cost of delay higher, lower or about the same?

[Peter Luff]

I must be honest and say that I am not sure what delay the hon. Gentleman refers to, so I suggest that we have a conversation about it later.

[Mr Speaker]

That is a refreshing outbreak of splendid candour, on which we congratulate the Minister.

--- Later in debate ---

[Mr Marcus Jones (Nuneaton) (Con)]

T2. I welcome the MOD’s recent award of a £350 million contract to maintain the Royal Air Force’s Hercules aircraft, which will sustain 500 UK jobs. Can the Minister say what other steps are being taken to support the UK defence industry?

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

Absolutely I can. I too welcome the award of the Hercules integrated operational support contract, which will save the MOD £170 million by replacing several short-term contracts with one overarching contract. It is another example of the policy that we set out in our recent White Paper, with a list of measures to improve the lot of the British defence industry, including a £160 billion equipment programme, strong support for responsible exports, support for small and medium-sized enterprises in the defence sector and strong support for the previously declining science and technology budget.

[Mrs Mary Glindon (North Tyneside) (Lab)]

T8. When Sir John Holmes reports on his review of the medals system, is the Prime Minister likely to keep his pre-election promise so that after 67 years the surviving Arctic convoy veterans at last receive a British medal in acknowledgement of their brave service?

--- Later in debate ---

[Chi Onwurah (Newcastle upon Tyne Central) (Lab)]

In response to my earlier question about the closure of BAE Systems on Scotswood road, the Minister seemed to prefer to criticise BAE Systems, and therefore some of my constituents, than to answer my request for a meeting to see whether we could find a way to save these jobs.

[Peter Luff]

It is always a pleasure to meet the hon. Lady. I extended an invitation to her to discuss another subject, but she did not respond. I am always happy to meet her—[Interruption.] On the strictly professional matter of innovation. I intended no criticism of her constituents whatever. They have done a first-rate job. However, the other companies put in lower, better value bids and so won the contracts. That is the problem, and there is no answer to that.

[Jo Swinson (East Dunbartonshire) (LD)]

An effective and trusted Afghan national army is key to a smooth transition. When I visited Afghanistan last year, I heard that although recruitment is going well, attrition remains a challenge. Will the Secretary of State look into the fact that attrition rates are not monitored for the different ethnic groups, so we do not know whether there is more of a problem with the Tajiks, Pashtuns, Hazaras or Uzbeks? That information would surely be useful in addressing the problem.

Successor Submarine Programme

Peter Luff Excerpts

Tuesday 22nd May 2012 Written Statements

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

I wish to inform the House that the Ministry of Defence (MOD) has signed contracts, worth approximately £350 million (excluding VAT), for the first 18 months of work on the assessment phase of the Successor submarine programme.

The Successor submarine programme will deliver the replacement for the Vanguard class submarines that carry the UK’s strategic nuclear deterrent. Hon. Members will recall that, my right hon. Friend the Member for North Somerset (Dr Fox), the then Defence Secretary, announced to the House on 18 May 2011, Official Report, columns 351-53 that the programme had obtained its initial gate approval and was commencing its assessment phase leading up to main gate consideration in 2016.

The assessment phase is expected to cost some £3 billion in total, and focuses on design and engineering activities, the purchase of long lead items, preparation for production, technology development, information and knowledge management, and project management. These latest contracts are part of that investment.

To deliver the assessment phase effectively, the MOD has signed a collaborative agreement with the three key suppliers in the UK submarine industry: BAE Systems Maritime—Submarines, Rolls-Royce and Babcock. We have also signed contracts with these companies, which include the first 18 months of assessment phase activities, as the start of a rolling programme of work.

The highest value contract is with BAE Systems Maritime—Submarines: it is worth around £328 million and covers submarine design. The contract with Babcock is worth around £15 million and covers the design aspects of in-service support. In addition a contract amendment with Rolls-Royce has been placed and is worth around £4 million for Successor design work.

These contracts, along with our continued commitment to the Astute submarine programme, will sustain thousands of jobs across the UK submarine industry, and will allow us to maintain this vital capability that underpins the nation’s long-term security.

Government Pipeline and Storage System

Peter Luff Excerpts

Tuesday 22nd May 2012 Written Statements

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

A draft Energy Bill has been published today, including provisions to enable the sale of the Government Pipeline and Storage System (GPSS).

The GPSS was established at the beginning of the second world war to supply aviation fuel to military airfields across the country. Since then it has grown to become an important commercial asset, serving a number of major civil airports such as Heathrow and Gatwick. Military use now only equates to around 10% of the GPSS throughput, with the system distributing around 40% of aviation fuel in the UK.

Following a review of the GPSS it has been concluded that it does not need to remain under MOD ownership and could benefit from the investment that a private sector operator can be expected to bring, although a final decision on sale will be subject to market conditions at the time. Such investment has the potential to increase the resilience of the system and allow even greater commercial development by removing current restrictions unless there is an underpinning defence requirement. Sale will not impact on defence outputs and military requirements can be met through contractual arrangements with the purchaser of the system. Consultation is being undertaken across Government to ensure other outputs are similarly accounted for.

The primary purpose of the legislation is to create a set of transferrable rights to maintain, use, remove, replace or renew the GPSS, to restore land if any part of it is removed or abandoned, to inspect or survey the GPSS or the land on or under which the GPSS runs and to access the land on or under which the GPSS runs for these purposes.

The legislation will also provide that where an interest in land is depreciated as a result of the creation of these rights, the owner will be entitled to compensation and impose an obligation on the owner of the GPSS to pay compensation in respect of loss caused by the exercise of these rights.

An exercise is being launched today to notify those landowners on or under whose land the GPSS runs and interested bodies of the impact the legislation will have on them and provide them with the opportunity to comment on the draft provisions, which have been published as part of the draft Energy Bill. As part of this exercise I am also writing today to all those MPs within whose constituency it is situated.

More detailed information can be found on the MOD’s website at: http://www.mod.uk/gpss.

Comments on the draft provisions should be submitted by 31 July and the Government’s response will be published on the MOD website shortly thereafter.

Atomic Weapons Establishment

Peter Luff Excerpts

Monday 14th May 2012 Written Statements

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

I should like to provide an update to the House regarding the continuing programme of investment at the Atomic Weapons Establishment (AWE).

On 3 April 2012 an agreement was reached between the Ministry of Defence and AWE Management Limited (AWEML) to continue the priced period of work, within the existing overarching 25-year contract with the company, to 31 March 2018. This agreement, providing important investment in skills and facilities at AWE, is valued at an average of around £1 billion per annum with approximately 40% to be invested in capital projects.

This arrangement, and the continuing need for investment in skills and facilities at AWE, is in accordance with the December 2006 White Paper “The Future of the United Kingdom’s Nuclear Deterrent” (Cm 6994) and the “Defence Plan 2008-2012” (Cm 7385). The programme of investment is continuing both to ensure we can maintain our existing nuclear warhead in service for as long as necessary, and to ensure we retain the capability to design and manufacture a replacement warhead should that be necessary.

Defence

Peter Luff Excerpts

Thursday 10th May 2012 Ministerial Corrections

[Mr Llwyd]

To ask the Secretary of State for Defence what the total cost to the public purse was of spending by MOD Bicester on third party logistics organisations in (a) 2008, (b) 2009, (c) 2010 and (d) 2011; and what proportion of such spending in each such year was allocated to (i) Palletings, (ii) Hacklings, (iii) Metcalfe Farms Haulage, (iv) Kenyons, (v) Reason Transport, (vi) Andover Transport, (vii) Pertemps agency drivers, (viii) City Sprint, (ix) other private hauliers and (x) other couriers.

[Official Report, 30 April 2012, Vol. 543, c. 1143-1144W.]

Letter of correction from Peter Luff:

An error has been identified in the written answer given to the right hon. Member for Dwyfor Meirionnydd (Mr Llwyd) on 30 April 2012.

The answer given was as follows:

[Peter Luff]

[holding answer 26 April 2012]: The freight and courier contracts used by Logistic Commodities and Services Bicester to transport defence equipment are managed by Defence Equipment and Support (DE&S) and are available for use by all Ministry of Defence (MOD) units. The cost of these contracts cannot be attributed to individual sites.

The total expenditure incurred in financial years (FY) 2010-11 and 2011-12 against each enabling contract is shown in the following table:

[Peter Luff]

[holding answer 26 April 2012]: The freight and courier contracts used by Logistic Commodities and Services Bicester to transport defence equipment are managed by Defence Equipment and Support (DE&S) and are available for use by all Ministry of Defence (MOD) units. The cost of these contracts cannot be attributed to individual sites.

The total expenditure incurred in financial years (FY) 2010-11 and 2011-12 against each enabling contract is shown in the following table:

Non-Competitive Government Contracts (Profit Formula)

Peter Luff Excerpts

Wednesday 25th April 2012 Written Statements

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

I announced to the House on 26 January 2011, Official Report, columns 10-11WS, that I had asked Lord Currie of Marylebone to undertake a review of the Government’s single source pricing regulations, which include the Government Profit Formula (GPF) overseen by the Review Board for Government Contracts. Lord Currie published his recommendations in October 2011 and they are currently the subject of consultation with industry and across Government. Pending the outcome of those discussions, the review board has been asked to maintain the existing arrangements.

The review board recently completed their 2012 annual review of the Government Profit Formula and has recommended revised allowances. The Government have accepted the board’s recommendations and the updated allowances have been agreed with industry.

The recommendations will be implemented for new single source work in accordance with the arrangements agreed with industry and published in an addendum to the review board’s report, a copy of which will be placed in the Library of the House.

Defence

Peter Luff Excerpts

Tuesday 24th April 2012 Ministerial Corrections

[Fiona Mactaggart]

To ask the Secretary of State for Defence what contracts his Department has with A4e; and what the (a) purpose and (b) monetary value is of each such contract.

[Official Report, 1 March 2012, Vol. 541, c. 436W.]

Letter of correction from Peter Luff:

An error has been identified in the written answer given to the hon. Member for Slough (Fiona Mactaggart) on 1 March 2012.

The full answer given was as follows:

[Peter Luff]

The Ministry of Defence does not have any contracts with A4e.

The correct answer should have been:

[Peter Luff]

The Ministry of Defence has one contract with A4e. This is for the provision of a trial of early leaver services, to assist service personnel leaving the armed forces with their transition back into civilian life. The contract is for a period of 12 months, commencing February 2012, and has a nil value contract management fee.

MOD Logistics (Bicester)

Peter Luff Excerpts

Wednesday 18th April 2012 Westminster Hall

[Mr Llwyd]

First, I am making attacks not on the hon. Gentleman’s constituency, but on some people who might not be completely open in the way in which they deal with matters at MOD logistics at Bicester. Secondly, those who advise me are included in the “we”—I do not pretend to be of any royal stock. I hope that I have made my position clear. The hon. Gentleman knows that my argument is not with him or his constituents, but with the MOD logistics department, which is the whole purpose of this debate.

I believe that the officials responsible for this are perhaps positioning themselves to make a fortune out of it in due course; and that, to make that operation less apparent, misled the Minister, who has in turn, unintentionally, perhaps misled the Commons. I have evidence and a confession from the head of logistics, who said on Monday night that all the information that I had been asking for over the last six or eight months was available, but had been declared to the Minister to be unavailable. There was a repetition of the word “unfortunate” when he said that the Minister had been misled.

The same official told me that there are plans to restructure the department, which may be announced in the coming weeks, so the debate is timely. I did not ask for this debate to make any particular political point, nor do I want to embarrass the Minister, who I know is a man of integrity and who may well have been placed in the unhappy position of unintentionally misleading Parliament on one occasion at least. He did indeed correct himself in due course, which is what I would expect of him.

This is a debate about administrative propriety upon which all parties in this Chamber agree, about a specific exercise in holding the Government to account and about the spending of public money. It is also a debate that asks, “Does Parliament have any power to hold the Government to account? Does the Government have the necessary control over their civil service in this area, or are we all to be treated as nothing more than a nuisance by officials who spend £27 million a year of the public’s money?”

I suspect that what we have here may be a fraudulent operation. It needs urgent and perhaps unusual treatment by the Minister’s office. My suggestion is that the Minister appoints a small team of two or three who will be given access for 48 hours to the TMS—transport management system—computer system that records the logistics operation and who will then report to him in due course. They should be the Minister’s own team, because there are some in senior management positions who are perhaps not worthy of complete trust. Information has been concealed, withheld and manipulated. Those people now have no incentive to do anything else. Most important, there is a proposal for further restructuring

“to bring together the component parts of the logistics organisation into site-based groups.”

That sounds like a return to the structure before the last restructuring. There is also a rumour of a management buy-out. The idea that the same management who created this mare’s nest can then profit from it will cause revulsion in anyone not directly benefiting from it.

Before I lay out a summary of the case, I ask the Minister for assurances that the people, however senior, who have supplied me with information will not suffer from proceedings by their managers or from other parts of the MOD hierarchy. I have no doubt that the Minister will respond to that in due course.

Military logistics planning is usually conducted in acronyms and the language of consultants. For the convenience of the House, I will present the case in layman’s terms. Ministry of Defence logistics is the term used for transporting equipment for the Army, Navy and Air Force round Britain and overseas. The main southern distribution hubs from which supplies originate are Bicester and, secondarily, Donnington. Bicester stores and sends equipment to our forces nationwide and worldwide, via RAF Brize Norton or Heathrow. It was from Bicester that the equipment for Iraq was delivered, for example. The main day-to-day task in peace time is resupply: Bicester transports everything from ship engines and heavy machinery to documents, toilet paper, body armour and ration packs and, yes, the famous boots going to Northern Ireland. There are flight steps from the Falklands, equipment, kit, documents, jiffy bags and pallets—all are ferried round the UK and round the world largely from the two centres.

Let me describe succinctly the operational structure before and after the restructuring—how it was done then and how it is done now. Before restructuring, supplies were transported out from Bicester in one of three classes of vehicle: a Luton van size; a removal truck size and a standard articulated lorry—a 44-tonne truck. Those vehicles carried supplies from Bicester to one of the regional centres around the country, from where supplies were sent on in smaller vehicles to their final destination. It is the hub system by which all major transport companies, such as FedEx, United Parcel Service and the Royal Mail, work. There is a universal logic to the system: the large trucks carry larger quantities of goods longer distances more cheaply, and the smaller vehicles conclude the delivery with a short local journey.

That conventional model was abandoned in 2008 and a new system was put in place. The managing director of Bicester was at that time, and is now, Steve Brannigan. He decided to close these regional distribution centres, to reduce the fleet and number of drivers, and to make up the shortfall in in-house capacity by greater use of private hauliers, contractors and couriers—generically called third party logistics, or 3PL for short. As a result of that new structure, it was said, the cost of the regional distribution centres—nearly £4 million a year—was saved. In a letter dated 28 July 2011, the Minister describes those as “net savings”, but my understanding is that that is very far from the truth. Again, I stress that I do not impugn the hon. Gentleman’s veracity over any action that he has taken. The crucial figure has been concealed and withheld.

What is the total sum paid to private transport? That figure is not yet forthcoming. We are told the total budget for transport, but not the total budget for private transport, and I believe that it is much higher than has been reported by senior people. The restructuring of the system reduced the number of in-house trucks and drivers and contracted their replacements from outside the Department. The idea behind the restructuring was to outsource much of the driving work and make efficiencies by competitive tendering. Palletways, the trucking firm, now does much of the work that the MOD used to do itself. Thus Bicester sends four or five articulated trucks carrying the supplies that it needs to have delivered to the Palletways centre in Staffordshire. Palletways then does the job that Bicester used to do in precisely the same way that Bicester used to do it, by sending the supplies out to its own regional distribution centres.

It is said that contracting out has a good reputation in management circles. The use of private contractors promises greater flexibility, lower overheads and more competitive tendering. Paid staff are not idle when there is no work. Contractors are assumed to have a commercial incentive to work harder than employees as their position is less secure. That is the theory. Often it works, but it does not translate into good practice automatically.

Has the restructuring of Bicester MOD logistics been a success? Has the evaluation process worked? The results should be apparent in the accounts, including the total operating sum spent on logistics before restructuring and the total operating sum afterwards. Those figures have been held very close by the Bicester MOD logistics management. In fact, they refuse to reveal them. Why is that? I believe that it is because the total cost of private transport makes a nonsense of the outsourcing, that total third party logistics costs show that no savings have been made, and that the restructuring has actually resulted in net losses.

It is easy to see how private contractors would struggle to match in-house costs: private sector drivers have a higher cost per hour than public sector drivers; there is the cost of operating licences and there is VAT on agency driver fees. Compare that with the defence infrastructure of bases and personnel, which can be used intelligently at low, or even no, marginal cost. There is also the need to transport MOD supplies to the main contractor’s depot 75 miles away from Bicester.

Those factors prompt questions that need to be answered. Did the restructuring work? Have the new arrangements saved money? Were the highly paid consultants who devised the new system worth their fee? The fact is we do not know whether the business operation has been analysed to show whether it works better or not. The figures have been arranged to show a financial benefit from the new structure. Real-time reports from the computer system, as well as common sense, present a very different picture.

The Minister will remember the question that started this process off last year; it was about the famous pair of boots that were transported from Bicester to Northern Ireland at a cost of almost £800. At that point, we were trying to establish the ongoing costs of the restructuring and we asked what those costs were. However, the costs of couriers were left out of the answer, when they are about a third of the total. The Minister said:

“I have been categorically assured about the omission of the courier costs.”

He also said that the error was

“a result of human error rather than any intent to mislead”.

That is what the Minister said.

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

If I had let an inaccurate answer lie on the record, I would have been criticised. It was a genuine clerical error—a mistake. There is no conspiracy behind those figures at all. It was an error that we corrected as soon as we became aware of it. In my experience, it has happened two or three times. It was an error—no conspiracy.

[Mr Llwyd]

As I have already said, I do not have any real argument with the Minister about this matter, and I accept what he says. However, we are told that there was “a formatting error.” I must remind the House that the MOD is responsible for transporting nuclear missiles around the country and that “a formatting error” could have incalculable consequences.

The Minister has been assured that there was an “error” and I accept what he says. In addition to the “formatting error”, however, the bill for private contractors is not merely the bill for Palletways, private couriers and agency drivers from Pertemps. I know that there are as many as 25 private trucks a day coming in and out of Bicester MOD that are not Palletways trucks or trucks used by private couriers—25 trucks a day that have not appeared in any explanations or admissions.

As I have already said, the Minister has been told that there were £4 million of net savings from the closure of regional distribution centres. The figures given by Logistic Commodities and Services Bicester show that £7,535,000 was spent on private contractors, private drivers and private couriers in 2008-09, and in 2009-10 £6,305,000 was spent on private transporters. That is a palpable reduction, but those figures do not include the cost of private hauliers—those 25 trucks a day. Where do the costs incurred by those private hauliers appear? They include Hacklings, Metcalfe Farms Haulage, Kenyons, Newsomes, Reason Transport, Andover Transport—the list goes on. Who is paying for those trucks? Out of what budget are they paid? There is some “find the lady” trick going on here, or some accounting sleight of hand to hide the costs of between 6,000 and 10,000 trips a year. Where are those hidden journeys accounted for? Who has paid for them, and how much? What does it do to the net saving figure claimed by officials? These questions must be answered.

I tabled a series of parliamentary questions asking for basic management information. I was trying to determine whether the restructuring has been a success. I asked the pertinent questions about how many miles were driven, the number of trips that were made, the hours that were taken, the class of vehicle driven and the cost per mile. I was told that the information was not held centrally and was not available, except at disproportionate cost. That is not true. The Minister was also told that the information was not available, but he was misled. The information is available within half a dozen keystrokes on the TMS computer system, assuming it has not been deleted—I have evidence of deletions from the central computer, so I do not dismiss that possibility. The TMS system records every journey, every driver and every distance. All the information is there within half a dozen keystrokes and we would hope that it is there. Otherwise how could the Department know what it was actually spending and what it was doing?

I had believed that the information was readily available, centrally held and available at almost no cost—and so it was admitted to me by Neil Firth, the head of logistics, on Monday. He repeated that it was “unfortunate” that the information was not provided. First, it was a “formatting error”; then it was “unfortunate”; and next it will be “the dog ate it”. The Minister and Parliament are being taken for a ride. That is not “unfortunate”; it has put a Government Minister in the position of misleading Parliament. In my experience, that is a very serious matter. Again, I stress that I am not impugning the Minister.

I have other examples of that type of activity. People can see courier vans lined up on the A34 outside MOD Bicester in the dead of night waiting for a job to be called. They pick up, they drive to their destination before 6 am, the unit is shut and the courier drives back to Bicester with the parcel, saying that it was undeliverable. Then the courier gets to deliver it again in daylight hours. That means one job, two charges. It happens all the time. Couriers pick up at night and deliver before the depot is open. There are days, weeks and years of it. Every Christmas and every Easter, deliveries are sent out and returned on the first day of the holiday. They come back marked, “Unable to deliver”, as the unit is “closed for the holiday”, so the courier tries to deliver it the next day, and the next day, and the day after that. “Closed for the holiday”, “Closed for the holiday”—one job, three charges, every year.

There are many other examples of couriers being contracted at £100, £125 or £150 to take small parcels here and there, even though MOD trucks are going to the exact same destination at the exact same time—that, too, was admitted to me on Monday. It is suggested that half a trailer of failed deliveries comes back every night from Palletways to Bicester, to be redispatched and recharged again and again. We have seen examples of MOD trucks and drivers standing idle while commercial trucks and drivers are paid to do the work that could be done in-house.

I understand that the MOD units can pitch for MOD jobs, but they have to quote using a kerbside price for fuel, which is around £1.45 a litre. For the same job, Eddie Stobart can quote using his bulk price in Belgium of 80p a litre. Who made that decision? Why is the MOD systematically instructed to price itself out of competition with the private sector? I believe that the costs are being increased superficially and drastically, and that the goose is being fattened.

The Minister is categorically assured, and so assures the House, that there have been net savings of £4 million, but the evidence is not available, apparently, except at a disproportionate cost. I believe that there have not been net savings, but that the same people who carried out the disastrous restructuring are quietly trying to conceal their errors in another one. I repeat: it is also possible that the costs are being allowed to escalate through daily inefficiencies, to make a management buy-out seem like a good idea and demonstrate palpable savings. This might be straying into other forms of liability, but it is possible that the management are tolerating, and in some cases promoting, such inefficiency and cost inflation in order to buy out the business and make a fortune from it.

It is in the interests of good government, in the interests of the public and in the interests of accountability and transparency that a fast, urgent investigation is undertaken, perhaps with two or three investigators, with a report prepared for the Minister. If there is to be another restructuring, it is essential that it is done properly and openly, and in a way that permits challenge and scrutiny, especially in these days when cuts are being made in every service and the armed forces are at full stretch. I hope that this debate will put things right. I feel sure that the Minister will investigate the matter thoroughly and urgently, because nothing else will do.

--- Later in debate ---

[Alison Seabeck]

The hon. Gentleman has a fair point: if such people were trade union members, they might well have come to members of the Labour party. However, I do not know who has spoken to the right hon. Gentleman, and I assume the hon. Gentleman does not know either. I am talking generally about people who feel they have seen something in their workplace that is inappropriate or that constitutes extreme waste. Clearly, the right hon. Gentleman, from his perspective, has not had adequate answers to the written questions he tabled. This process started more than a year ago, and these issues were highlighted a year ago, so why do some of these things appear to have been pushed under the carpet?

[Peter Luff]

indicated dissent.

[Alison Seabeck]

The Minister shakes his head.

[Peter Luff]

Obviously, I will check what the right hon. Gentleman said, but I think he did not get the statistics he asked for because they went back to 2005, and we did not have them. I think that will be the reason, but I will check. However, I reject the claim that there was any lack of transparency.

[Alison Seabeck]

The Minister is a decent man, and I take his response absolutely at face value. However, it would be helpful if he could check. No one takes becoming a whistleblower lightly, so if somebody felt strongly enough to become one, it is important that their allegations are fully investigated.

In written answers to the right hon. Gentleman over the past year, the Minister has indicated that savings had been achieved or were expected to be achieved at MOD Bicester. However, as we have heard, the right hon. Gentleman feels that those figures are inaccurate, and they are being seriously questioned. Indeed, inefficiencies such as Government trucks turning up at the same time as outsourced vehicles cannot be right, and I ask the Minister what monitoring is, or could be, undertaken to check on such things so that we can take action if there are, in fact, discrepancies.

How much duplication has there been? Have costs been inflated? Those are perfectly reasonable questions, and they deserve an answer. I assume the Minister is confident of the veracity of the information he has received. We need to have confidence in the data we are given. When Ministers make decisions—this reinforces the point made by my hon. Friend the Member for Telford—the data they base them on should be factually correct.

My next question is slightly tangential. Has there been any Cabinet Office involvement in this matter, given that it concerns civil servants and data? There is a Cabinet Office responsibility in there somewhere, particularly if a civil servant is involved in whistleblowing. As I say, that is a small point, but I would be interested to know the answer.

There is an issue here that transcends Governments; it was a problem for the Labour Government, and it is clearly an ongoing problem for the current Government. Waste and cost overruns happen, but Ministers—of whatever party—have a duty to the public, as well as to those they work with, to ensure that we understand how they happen.

The Government’s role as a client is also important, and there is the issue of how goods and services are procured. The Minister knows better than most that he is working towards a procurement strategy. I hope—I am sure the Chief of Defence Matériel wants this, too—that there will be a degree of openness and transparency to ensure that value-for-money benchmarks, which look attractive at first sight, actually deliver the savings the Government want further down the line.

I could go on about worries about loss of experienced civil servants and skills in the Department, but that would be extremely tangential to the points made by the right hon. Gentleman. We want to avoid a reoccurrence of the concerns that he raised. Therefore, in closing, apart from reiterating the importance of transparency, I want to ask the Minister what processes the Department will now follow to ensure that the evidence is gleaned from the right hon. Gentleman, if he has it, and that it is properly investigated. We need to find out why and how information appears to have been distorted through the process in question, and whether that was by accident or intent. It is important to understand it, and I hope that the Minister can offer us not only an explanation but some reassurance.

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

I congratulate the right hon. Member for Dwyfor Meirionnydd (Mr Llwyd) on securing the debate. He was kind enough to say some generous things about me, and I say them back to him. He is a gentleman whom I respect very much, and we have worked together for many years in the House—for more than 20 years, to be precise. All that I would say to him is that I think there is a scandal in logistics, but it is not the one that he thinks. I shall come on to that.

I reject the right hon. Gentleman’s underlying assumption. He sees a conspiracy where there is none. The suggestion of fattening up for some kind of killing is just wrong. We had an opportunity to discuss these matters yesterday, but he pulled that meeting, having had a meeting with Neil Firth and colleagues. I think that he has misrepresented what he was told at that meeting, although I was not there, so I cannot be sure. From what I heard, he got a very different story from the one he has reported to the House today.

[Mr Llwyd]

I do not accept that. I had a note-taker with me, and I referred to the notes taken.

[Peter Luff]

In that case, I will make the specific rebuttal now. It is true that the right hon. Gentleman was told that mistakes are likely to be made. There are 8,000 deliveries a day across the logistics operation. If 99% of them go right and 1% go wrong, that is 80 a day that go wrong. That is a lot of anecdotal attacks to make on an organisation that is basically being well run. He was told that mistakes are inevitably made, but against a background of 8,000 daily deliveries, it is unfair to assert some kind of systematic error, inefficiency or corruption. That is the problem that we have.

I will study the detailed assertions made by the right hon. Gentleman. I will not be able to respond to them all during the debate. I shall write to him and to the other hon. Members who have participated in the debate, as best I can, as I look at the matters individually, though I think that I shall be able to satisfy him on all questions—at least if he is prepared to be open-minded about the answers. I assure him that if any company or Ministry of Defence official has acted inappropriately, it will not be tolerated, and action will be taken. We have a zero-tolerance policy on those matters, as I know from several occasions during my two years in my post.

I would say to the hon. Member for Plymouth, Moor View (Alison Seabeck) that there is an inefficiency and fraud hotline at the Ministry of Defence, so that anyone with a concern about inefficiency or fraud can ring up, completely securely—whistleblowing is entirely encouraged in the Ministry of Defence—and make the allegation. I am aware of no such allegation of impropriety in the logistics organisation being made on the hotline. If someone has gone to the right hon. Gentleman with specific allegations that is their democratic right—I do not want to stop them doing that—but I wish that they had come to me through the fraud hotline and enabled me to address such concerns sooner, if they exist.

[Alison Seabeck]

Did the Minister, before today’s debate, ask specifically whether any calls had been put into the fraud hotline on this matter?

[Peter Luff]

To be fair to the hon. Lady, I did not ask. I will check that, but I am sure that they would have been drawn to my attention had they been made. It is a fair question to ask, and I cannot give her a guarantee. There has been no Cabinet Office involvement, though; I assure her of that.

I will not arbitrate on Donnington and Bicester today. I have been to Bicester. I shall go to Donnington in July. I shall be even-handed, entirely, I promise both the hon. Member for Telford (David Wright) and my hon. Friend the Member for Banbury (Tony Baldry). I shall not be arbitrating there. I think that I shall be able to give the hon. Member for Plymouth, Moor View the reassurance that she wanted on all the fundamental points she made in her speech, because this is a bipartisan issue.

Successive Governments over decades have dealt with problems with logistics, which is often the Cinderella of defence, and to which insufficient political attention is often given. That is one reason why I welcome the debate. It is good that the subject should be exposed in the House, and good to have the opportunity to record some of the remarkable achievements of people who work in logistics, often in adverse circumstances.

I think that I detected in the speech of the right hon. Member for Dwyfor Meirionnydd—if I am wrong I apologise to him straight away—an underlying hostility to the role that the private sector can play in delivering defence outputs more effectively. We, like the previous Government—it is a bipartisan policy—have found that using the private sector appropriately enables significantly better outcomes to be achieved for defence. Many of the things that we are doing in the logistics operation build on decisions made by the previous Government. We understand the role that the private sector can play.

I assure the right hon. Gentleman that no information that it is proper to put in the public domain, within the limits of commercial confidentiality, has been concealed. Detailed information is available, for example, on each and every contractor involved—I think that 17 are on the list—including exactly how much money they are paid and exactly what they do. I have written to members of the Public Accounts Committee with that information. I have the schedule here, and if we have time before the Division in the House is called, I may even read out all 17 names, what the contractors do and how much they were paid in 2010-11. I shall make sure that the information is available to the right hon. Gentleman after the debate.

No information is concealed. Indeed, the National Audit Office rightly goes over logistics regularly, and another NAO report is due out in the fairly near future. If the NAO has not spotted such things as the right hon. Gentleman is concerned about, and all the information is genuinely available, I am frankly suspicious about whether the allegations have any foundation. However, I will double check. Question after question has been answered, and nothing that it would be improper to conceal will be concealed. Some information, as the hon. Member for Plymouth, Moor View was kind enough to note, sometimes must be kept private for reasons of commercial confidentiality. That is frustrating for politicians and democrats, but sometimes it is important. However, we shall be as open as we possibly can.

I listened carefully to the right hon. Member for Dwyfor Meirionnydd and will address some of his points in my speech—I have already done so in part; but I want to explain a little more about logistics commodities and services at Bicester, and the wider operation, to put his remarks in context. The organisation provides remarkable support to the UK armed forces, particularly to those serving on deployed operations, not just in Afghanistan but particularly there. LCS Bicester is one of three main storage and distribution depots for non-explosive stores, operated by Defence Equipment and Support. The other two are LCS Donnington, in Shropshire, in the constituency of the hon. Member for Telford, where I am going in July, and LCS Dulmen, in Germany. The role of those sites is to receive, store, maintain, issue and distribute non-explosive matériel on behalf of the UK armed forces and other Departments.

Last year, the National Audit Office published a report called “The use of information to manage the logistics supply chain”. In that report, the NAO—it is not I, a Minister, saying this, but the NAO—acknowledged the improved performance of the MOD’s supply chain and its effectiveness in supporting our forces in Afghanistan. In particular, the NAO’s report noted that the operational supply chain is more complex than the standard industry supply chain, which is not something that people often acknowledge.

To pick up on the comments made by my hon. Friend the Member for Banbury, the UK’s delivery performance is comparable with that of commercial operators. We are doing as well as the commercial sector, which is a great tribute to all those involved, and a significant achievement. That is why I am suspicious about the allegations made by the right hon. Member for Dwyfor Meirionnydd.

The defence equipment and support logistics commodities and services operating centre, of which MOD Bicester is a part, is key to the successful delivery of those services. The defence inventory is huge, complex and comprehensive. As at 31 December 2011, the gross book value of the inventory, excluding explosive stores, was about £29 billion. That represents 500,000 different line items, covering everything from clothing to medical supplies and engine parts. Those items are distributed to approximately 3,500 sites across the UK and around the world. Up to 8,000 issues are sent every day—some 1.2 million every year—ranging from small washers to aircraft wings. That is indeed a huge and complex operation. Given the sheer volume of items moved by the organisation—I am in no way complacent, because we do not tolerate error, either—it is inevitable that some mistakes will be made.

Turning to one mistake in particular that the right hon. Gentleman has made much of in the past, there is an appropriate saying: a lie is around the world while the truth is getting its boots on. Let us look at those boots once more. An item that should be routinely requested is sometimes marked as urgent by the unit itself; or items may be sent individually when they could be packaged together. That is normally the fault of the requesting unit.

In the specific case of the boots couriered to a unit in Northern Ireland, which the right hon. Gentleman raised at Prime Minister’s questions, that is exactly what happened. The unit used the wrong process to order the boots. It realised the mistake too late. I am not going to allow civil servants to override front-line decisions and say, “We do not think that is urgent. The officers in charge might think it is urgent, but we disagree.” That would not be right. The responsibility lies with the unit to use the appropriate requesting process.

What happened in this instance was a regrettable mistake, which the unit tried to correct too late. It was not corruption; it was not fraud; and it was not improper. It was a straightforward human error. I hope that the right hon. Gentleman will not repeat his assertion. I am entirely satisfied that there was no fraud involved at all. The mistake was made by the Army, which it regretted and tried to correct.

I cannot guarantee that such mistakes will not happen again—we are all human beings who have feet of clay and who make mistakes—but I am absolutely confident that this is not a systematic problem. The right hon. Gentleman made that assertion in his speech, but I dissent from that view firmly and absolutely.

LCS Bicester is a well-run operation, which I am sure is also true of Donnington. The restructuring of the former Defence Storage and Distribution Agency—DSDA, of which LCS Bicester was a part—has produced significant savings. The FDSCi—future defence supply chain initiative—report, which followed the DSDA restructuring, was published in November 2009 by the previous Government and presented to the House, and I would be happy to send the right hon. Gentleman a copy. It forms the basis of my remarks today and represents more information in the public domain, which I hope will reassure him.

Between 31 March 2008 and 31 March 2012, the operating costs of DSDA and its defence equipment and support units fell from £285 million to £231 million a year. That represents a reduction of nearly 20% over four years. When calculated on a like-for-like basis, taking into account inflation, the cost of improved service and other exceptional one-off costs, the saving is 26%. That is an impressive achievement for which the hon. Member for Plymouth, Moor View should take her fair share of credit, on behalf of the previous Government, who initiated some of the changes.

Similarly, the cost of transporting MOD equipment has fallen by 21% over the same five-period period. I repeat that I have the detailed information on the use of companies and couriers that I would be happy to share with the right hon. Member for Dwyfor Meirionnydd. I will resist the temptation to read them all into the record, because it is a long list. I am surprised that he highlighted Palletways in particular. I assure him that there are people on the distribution list who get paid more than Palletways. Again, on a like-for-like basis, allowing for the impact of inflation and so on, the saving on the transport costs is 29%. It is 29% cheaper in real terms, which is a big achievement. A key performance is the average cost per transaction—the processing of an issue of receipt. The equivalent cost has fallen from £103 per transaction for the financial year ending 31 March 2008 to £79 per transaction in the year ending 31 March 2012. That is an increase in efficiency of 23%. Those are good and impressive figures.

Over the same period—I appreciate that this is a good news, bad news story—manpower numbers have reduced by more than 2,100 posts and the service to the customer has significantly improved. The average customer wait time—this is a really impressive statistic—has fallen from about 49 days to four days. That is an important figure, considering that our armed forces are heavily committed in operations in, for example, Afghanistan. I pay an even-handed tribute to both Bicester and Donnington in that respect. The operation of LCS Bicester and the two other main storage and distribution depots is a genuine success story. If there were an hon. Member for a German constituency and if they were present, I would congratulate him or her as well, although storage and distribution represent only one element of the management of our equipment.

We are proud of the spares and equipment availability in operational theatres such as Afghanistan, as it ensures that commanders are not constrained in conducting their missions. The same could be said for the manner in which we supported Operation Ellamy in Libya, which was another success for a logistics operation. Support for such operations must be our first priority.

Nevertheless—this is the scandal to which I alluded in my opening remarks—there is no disputing the fact that the defence inventory is, and has been for many years, too large in both value and volume and that any avoidable delay in reducing it will create many future challenges. We have to deal with the issue. There are a number of reasons for this situation. Many items are bespoke and have been purchased in bulk, based on an estimate of need stretching across several years, even decades in some cases. Other items are purchased with a view to ensuring that sufficient stocks are available to deal with a sudden surge for a short-notice or large-scale military deployment. However, that is far from the whole story.

There is a legacy—I am not making a point about the previous Government—of under-investment in the information systems to track and manage stores. The truth, as I said during my opening remarks, is that logistics is the Cinderella of defence, and that is manifest in this case. It does not seem to be a priority for investment, but it should be. Too often, the Department is unable to locate with confidence what it holds. It thinks and is reasonably sure that it has something, but it just cannot prove it to accounting standards quality when it should be able to. Moreover, it has often held too much just in case something happens.

I visited some of the warehouses in Bicester recently—I met my hon. Friend the Member for Banbury immediately before I saw them—and they are jaw-dropping. Stuff is being held that simply should not be held and it should be disposed of. The £29 billion stock holding is far too high. Too much inventory is stored for too long and at too great a cost to the taxpayer.

This is not just a British problem. Army surplus stores exist around the world. The situation seems endemic to defence, but we must cope with it. The inventory is large and it is growing, and we are determined to tackle it head-on. We have not been idle. The Department is making progress in improving inventory disposal through the stock transition programme, which was set up to meet Treasury targets to reduce inventory holdings in our main storage and distribution depots. We have arrested the rate of growth—it is still growing—in the defence inventory as a result of those disposal measures, and we are committed to bringing purchasing activity under much stricter control.

In December 2010, I announced to the House the introduction of the future logistics information services project, which represents a step-change improvement to the quality of logistics information available to the armed forces. It will ensure the long-term delivery of operationally essential logistics information to both the MOD and industry, and the significant financial efficiencies will contribute to the Government’s strategic deficit reduction programme, without reducing operational capability.

One of the logistics information systems that will be managed under FLIS is the management of the joint deployed inventory, or MJDI—I love these acronyms—which is now up and running and has reached its initial operating capability. MJDI will bring huge improvements, enabling the entire deployed inventory—the inventory that is overseas on service—to be seen on one system. It will encourage better use of stock, which in turn will lead to reduced repeat demands, lower stock levels and saved costs in storage and transport, all generating improved operational performance. Importantly, it will enable operational commanders to make informed decisions based on accurate and timely information.

To give a specific and important example, a four-year Bowman radio equipment asset management improvement programme was introduced in 2010. Since then, we have made good progress and a coherent and auditable inventory baseline has been established. It is not rocket science, but it is hugely important and we are doing it. Process improvement in the way in which the data are captured and managed will in future enable the Department to identify and track assets more effectively. This is really important stuff.

We recognise the importance of having a comprehensive corporate strategy to tackle the myriad complex issues, and have commissioned the development of a strategic plan for the management of the defence inventory. It is intended to deliver the correct conditions to incentivise and mandate improved inventory purchasing and disposal behaviours. We have a lot of attics at the MOD, and they are too full of stuff. We need to get rid of stuff, as well as acquire stuff more thoughtfully. The strategic plan is a significant piece of work and it has just completed phase 1 of its milestone.

The financial savings and efficiencies secured by LCS Bicester and all the storage and distribution sites over the past five years are impressive, but, as I have already said, there is a long way to go if we are to provide the best possible support to military operations and maintain the agreed quality and service to our armed forces.

In response to the hon. Member for Plymouth, Moor View, in August 2010, I announced that DSDA would renounce its agency status and that a new organisation, the logistics commodities and services operating centre, which brings together the key commodities purchasing, storage and distribution elements of the Department into one organisation, had been created. LCS Bicester is part of the LCS operating centre. The primary role for LCS is to provide support to military operation and force generation by undertaking procurement and inventory management of all non-explosive commodity items, including food, clothing, fuel and medical supplies; the storage and distribution of those commodity items, together with all other non-explosive stock across defence; the disposal of surplus MOD equipment and the operation of the British Forces Post Office.

LCS is currently developing a transformation project, which aims to consider how we can improve further our inventory management and stock control, rationalise current stock holdings—we are trying to thin them down, rather than fatten them up—and improve and rationalise storage infrastructure. That will include releasing surplus for disposal, which will be of interest to the hon. Member for Telford and my hon. Friend the Member for Banbury. The project will also seek to improve commodity procurement and logistic processes, and optimise the size of the LCS organisation itself. The storage infrastructure requires investment to improve its condition and to rationalise the numerous dispersed locations.

Should the programme be taken forward—frankly, I expect that it will be—the first step will be to initiate an assessment phase, to explore the alternative delivery models available and whether they represent value for money, which I think addresses one of the questions asked by the hon. Member for Plymouth, Moor View. The work would explore two options for delivering support in the future: industry integration and an in-house developed value for money benchmark. That review will consider all existing facilities. I emphasise that it is far too early to say what the implications will be for individual sites and that no decisions have been made.

In advance of the work at Bicester, however, a planning application for the retained footprint and for the sale and development of surplus land has been submitted to Cherwell district council, to prepare the way to the approach to defence logistics and to secure the value of the surplus land.

We must not forget that it is the people who work at LCS Bicester, Donnington and the other sites associated with it who make logistics operations succeed. The efficiencies and improvements that have been implemented at those sites are testimony to the quality of the people whom we employ, and I am grateful to them for what they do. I have met many of them and know that they are focused on providing the best support to our service personnel deployed on operations. I fully understand the vital role that they play. They are rightly proud of what they have achieved, and they continue to achieve a great deal.

I am enormously grateful for the commitment and dedication of all those who work to ensure that our armed forces receive the best logistics support possible. It is our job to ensure that the right framework is in place to make it work. That challenge has been ducked for too long—for decades, not just in recent years. Indeed, arguably we are addressing decades of neglect in these issues, and it will take time to deal with them. The change will come, but it will come slowly and incrementally. I am determined that we should improve the way that we do things.

If the criticisms made by the right hon. Member for Dwyfor Meirionnydd contain any significant truth, I will, of course, want to address them very honestly and frankly. We need to do the best we possibly can to ensure that our armed forces can fight and defend our freedom as effectively as they have done in the past.

[Mr Dai Havard (in the Chair)]

I suspend the sitting until 4 o’clock or until such time as we can reconvene if Divisions take place in the House.