Defence

Peter Luff Excerpts

Tuesday 12th July 2011 Ministerial Corrections

[Mr Llwyd]

To ask the Secretary of State for Defence how much money MOD Bicester has paid to (a) Palletways (3PL Contract), (b) Pertemps Employment Agency and (c) City Sprint and other private couriers since the decision to implement the closure of regional distribution centres; and if he will make a statement.

[Official Report, 28 April 2011, Vol. 527, c. 569W.]

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 28 April 2011. I regret that because of an administrative error, some of the figures for payments to private couriers were omitted.

The full answer given was as follows:

[Peter Luff]

[holding answer 26 April 2011]: The total payments made to Palletways, Pertemps Employment Agency and private couriers (including City Sprint) since late 2007 when the regional distribution centres were closed, are provided in the following table:

[Peter Luff]

[holding answer 26 April 2011]: The total payments made to Palletways, Pertemps Employment Agency and private couriers (including City Sprint) since late 2007 when the regional distribution centres were closed, are provided in the following table:

Oral Answers to Questions

Peter Luff Excerpts

Monday 4th July 2011 Commons Chamber

[Jack Dromey (Birmingham, Erdington) (Lab)]

5. What steps the Government have taken to strengthen the defence industrial base; and if he will make a statement.

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

We will publish a White Paper later this year, following up the recent public consultation on last December’s “Equipment, Support and Technology for UK Defence and Security” Green Paper. The Government are already taking effective steps to provide much greater support to UK defence exports and to make it easier for smaller enterprises to do business with the public sector, including with the MOD.

[Jack Dromey]

Britain’s defence industries lie at the heart of our economy. The Government are delaying vital defence orders for our armed forces, and the Secretary of State has said that he will buy off the shelf using open competition in the global marketplace. Does the Minister not recognise the anxiety and uncertainty that this is causing to tens of thousands of defence workers all over Britain who, like our armed forces, give outstanding service to this country?

[Peter Luff]

First, I am happy to say that the shelf is stacked high with British products, and that makes us extremely successful in the international market. Britain is the second greatest exporter of defence equipment—and long may that be the case. On the other comments of the hon. Gentleman, whom I hold in high regard—we have had discussions on British industry before—I would point out that our life would be so much easier had we not inherited a total mess of a defence budget, including a £38 billion black hole. The things he is complaining about were the fault of the previous Government.

[Richard Fuller (Bedford) (Con)]

The previous Labour Government sold the defence contractor QinetiQ to a City firm that, a couple of years later, sold it for eight times the value and closed its plant in Bedfordshire with a consequential loss of employment. Will my hon. Friend ensure that he does a better job of defending our defence industrial base than the previous Labour Government?

[Peter Luff]

Speaking as someone from Worcestershire, where QinetiQ also has a very large presence, I absolutely understand what my hon. Friend is saying. It certainly would not be difficult to do a better job than the last lot did.

[Michael Dugher (Barnsley East) (Lab)]

The Government promised a White Paper on defence procurement in the spring of this year, but it still has not appeared. They are continuing to take major decisions on procurement and the process of procurement in the MOD before they have set out any strategy on the industrial base. Will the Minister tell the House exactly why the White Paper has not yet been published? Is his definition of “spring” the time of year when the clocks go back and the leaves come off the trees?

[Peter Luff]

I am delighted to be able to tell the hon. Gentleman that I can give him an answer to that question. We have delayed publication because of the large number of defence-related reviews that the MOD is conducting at present, including the Levene review, the reserves review and the basing review. These will all lead naturally to the defence equipment and support White Paper, which will be published later this year. The Yellow Book review on non-competitive contracts will be released at the same time, not in July as originally intended, because the two documents will naturally sit together.

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

6. What assessment he has made of the shape and size of the future surface fleet of the Royal Navy; and if he will make a statement.

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[Mr Douglas Carswell (Clacton) (Con)]

18. What assessment he has made of the performance of Eurofighter Typhoon in Operation Ellamy.

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

Typhoon aircraft and Apache attack helicopters have performed very well in Operation Ellamy, proving their military worth and fulfilling all the operational tasks asked of them. Typhoon, in its first multi-role mission in providing both air defence and ground attack, has demonstrated exceptional levels of survivability and, in its ground attack role, a targeting capability with minimal collateral damage, proving that it is a truly formidable aircraft.

[Mr Hollobone]

Given that both platforms are being deployed in theatre in roles beyond their original specification, will my hon. Friend please comment in more detail on the ground attack role of the Typhoon, and on the Apache being deployed for the first time at sea?

[Peter Luff]

The Apache has been on about 20 sorties with no known civilian casualties—an exceptional testimony to that aircraft. Typhoon is performing exceptionally well in Libya. My hon. Friend is right that it was originally conceived as an air defence aircraft; it is now in its first multi-role combat aircraft role, and it is performing superbly. As Wing Commander J Attridge, the operational Typhoon detachment commander said,

“the Typhoon has come of age”

over the skies of Libya and we are seeing the maturation of the RAF’s first multi-role combat fast jet aircraft since world war two. We are all delighted with its performance.

[Mr Carswell]

Given that historically we have invested many billions in cold war era Eurofighters, but perhaps a little less on the unmanned aerial vehicles we need, does the Minister have any plans to switch resources from the former to the latter?

[Peter Luff]

It is not an either/or situation. UAVs have their role to play, but Typhoon is not a cold war legacy; it has proved to be an exceptionally capable modern aircraft, taking on the world and proving its exceptional worth in Libya. I am very confident of success in the large number of ongoing export campaigns around the world. Typhoon is a remarkable modern aircraft with a very bright future ahead of it.

[Mr Jim Cunningham (Coventry South) (Lab)]

9. How much his Department spent on accommodation in London for military officers and staff of his Department in the last 12 months; and if he will make a statement.

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[Stephen Metcalfe (South Basildon and East Thurrock) (Con)]

17. What recent assessment he has made of the export prospects for 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.

I expect an increase in interest in Typhoon following its highly successful air defence and ground attack roles in current operations, in which it has consistently demonstrated exceptional levels of reliability, performance, accuracy, and overall cost-effectiveness.

[Stephen Metcalfe]

SELEX Galileo in Basildon, along with many other businesses throughout the United Kingdom, will benefit hugely from increased exports of the Eurofighter Typhoon, and my constituents will also benefit from improved job opportunities. Will my hon. Friend update me and the House on the progress of the tender process with India?

[Peter Luff]

The Indians are sticking to their timetable, and we are very optimistic about the prospects for Typhoon. My hon. Friend is right to stress the importance of the contribution of companies such as SELEX Galileo. We already have a highly capable radar on Typhoon which matches, or exceeds, many electronically scanned radars operating elsewhere, but SELEX Galileo is on track with Europe’s first and only second-generation scanned radar, which will make Typhoon a truly outstanding, indeed unmatched, multi-role fast jet and a world-beater in the export markets as well. I hope that that includes India.

--- Later in debate ---

[Thomas Docherty (Dunfermline and West Fife) (Lab)]

T8. Given the widespread opposition in west Fife to becoming a nuclear submarine graveyard, will the Secretary of State confirm that the Ministry of Defence will be using the same principles for identifying the long-term waste store as are used by the civil industry? Will he specifically confirm that the store has regulatory support, makes financial sense and has community buy-in?

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

The hon. Gentleman will understand that two sites have been identified as potential candidates for submarine dismantling—Devonport royal dockyard and Rosyth royal dockyard. I can give him the assurance he seeks: we will be following a similar approach to that of the civil nuclear sector and we will take account of a wide range of factors. I do not have time to enumerate those in this answer, but I would be happy to talk to him in detail later, if that would be of help to him. I can particularly reassure him on the subject of consultation, because we recognise the keen local interest in this subject and are keen to ensure that local people have the opportunity to express their views. We will work with all the local authorities and the devolved Administration in Scotland before and during public consultation.

[Neil Carmichael (Stroud) (Con)]

T5. My constituency is home to a large number of reserve armed forces members, who welcome the review of their role. May I ask the Secretary of State whether that review will recognise their capacity, capabilities and willingness to integrate with the regular armed forces?

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[Mr Elfyn Llwyd (Dwyfor Meirionnydd) (PC)]

On 28 April, I received an answer from the Minister to a request for a breakdown of outsourced transport costs from the Bicester logistics centre. The response was that £4 million had been saved and that the amount spent by Bicester on private couriers between 2008 and 2010 was zero. In my office, I have copies of literally thousands of transport documents that show that the answer is millions of pounds. The answer I was given therefore could not be further from the truth. Will the Minister provide urgent clarification on this very important matter?

[Peter Luff]

I share the right hon. Gentleman’s concern, based on what he has told me, and would be delighted to meet him to discuss the matter in more detail. He has brought a very serious matter to the attention of the House and I look forward to meeting him to discuss it further.

[Graham Evans (Weaver Vale) (Con)]

T7. Following recent debates about the restructuring of NATO, will my right hon. Friend confirm that the future of Northwood as a key NATO command headquarters is secure?

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[Jim McGovern (Dundee West) (Lab)]

May I thank the Under-Secretary of State for Defence, the hon. Member for Mid Worcestershire (Peter Luff), for agreeing to meet me yesterday to discuss the potential implications of the SDSR on organisations that depend almost entirely on Ministry of Defence contracts for their survival? I was perhaps a tad parochial at that meeting in stating the case for the Remploy factory in my constituency. Is the Minister in a position to give any assurances and an update to the people employed at Remploy in Dundee West and to me?

[Peter Luff]

I am afraid I cannot go beyond what I said at the meeting with the hon. Gentleman, which I greatly enjoyed. I look to him to carry on making the case for an important facility and factory that does excellent work for the people it serves and who work for it.

[Mark Pawsey (Rugby) (Con)]

T10. Like the hon. Member for Chesterfield (Toby Perkins), I had the honour of joining Armed Forces day celebrations and, in my case, they were at Bulkington in my constituency. Does my right hon. Friend agree that this annual event not only raises public awareness of the contribution made to our country by those who serve and have served in the armed forces but gives the opportunity for the entire country to show its support for all the men who make up that community? [Interruption.] And women.

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[Mr Bob Ainsworth (Coventry North East) (Lab)]

What is the status of the Chinook helicopter order?

[Peter Luff]

Nothing has changed since the strategic defence and security review.

Defence Science and Technology Laboratory (Fort Halstead Site)

Peter Luff Excerpts

Friday 17th June 2011 Written Statements

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

The Defence Science and Technology Laboratory (DSTL) has recently completed a review of the operations at its Fort Halstead site. As a result of this review, DSTL has proposed that these operations should be relocated to its other two sites—Portsdown West and Porton Down—and that the Fort Halstead site should be closed.

I have approved the proposed relocation programme, which will take around five years. DSTL’s current activities at Fort Halstead include support to operations in Afghanistan and to counter-terrorism activity in the UK. By bringing together DSTL’s facilities and capabilities, the programme will result in more robust and resilient scientific support to national defence and security and will offer better value to the taxpayer.

Oral Answers to Questions

Peter Luff Excerpts

Monday 16th May 2011 Commons Chamber

[Miss Anne McIntosh (Thirsk and Malton) (Con)]

1. What assessment he has made of Royal Navy requirements in the context of the military action in Libya.

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

Before answering my hon. Friend’s question, I am sure the whole House will want to join me in paying tribute to Warrant Officer Class 2 Graham Bean of 73 Engineer Regiment (Volunteers) who died on 3 May while serving in Cyprus on Operation Tosca with the United Nations peacekeeping force based in Nicosia. He had a long and successful career in the British Army for over 35 years. Our thoughts and prayers are with his friends and family. Our thoughts are also with the family and friends of the Royal Marine from 42 Commando who was killed by an improvised explosive device in Afghanistan yesterday. More information will be released shortly after the period of grace requested by his family.

Our assessment of the Royal Navy’s requirements was set out in the strategic defence and security review. Events in Libya have confirmed the review’s recognition of the need to retain naval forces at high readiness for operations.

[Miss McIntosh]

I join my hon. Friend in paying tribute to the recently fallen; we will remember them.

Will my hon. Friend join me in paying tribute to the ship’s company of the frigate HMS Cumberland, with whom a number of us were able to stay as part of the armed forces parliamentary scheme? Will he take the opportunity to update us on the question of which frigate has replaced HMS Cumberland for the essential duties she has so far performed in assisting off the coast of Libya?

[Peter Luff]

Speaking as someone who has done two tours of duty with the armed forces parliamentary scheme, I know how deep are the bonds of loyalty that can be formed with ships’ companies after such experiences. HMS Cumberland and her crew performed superbly in the initial stages of the Libya operation, evacuating British and other foreign nationals from Benghazi and undertaking enforcement operations in support of UN Security Council resolution 1973. She has now been withdrawn from service and her role off Libya has been taken up by the destroyer, HMS Liverpool.

[Grahame M. Morris (Easington) (Lab)]

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

--- Later in debate ---

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

4. What his policy is on the use of defence procurement to support and stimulate advanced manufacturing.

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

Advanced manufacturing industry in the UK makes such an important contribution to defence and the armed forces. We have recently concluded public consultation on the Green Paper “Equipment, Support and Technology for UK Defence and Security”, in which we make it clear that the purpose of defence procurement is to deliver the capabilities that the armed forces need, now and in the future. We will set out our future policy on the issue in a White Paper later in the year.

[Chi Onwurah]

Last month BAE Systems announced 100 job losses at its plant in Scotswood, Newcastle. As well as devastating families, those job losses will reduce our advanced engineering skills base. What specific measures is the Minister taking to ensure that procurement supports skills that are essential to our national infrastructure, and how do they sit with the Government’s policy of buying off the shelf without taking industrial needs into account?

[Peter Luff]

The hon. Lady tempts me to pre-judge the outcome of my own consultation, which I must not do, but let me say this: I share her passion for advanced manufacturing and I again pay tribute to its role in defence. We are committed to both a vigorous promotion of exports and boosting UK defence companies in the UK, and to boosting the work of small and medium-sized enterprises, which are innovative and bring new ideas and skills to defence. We are also committed to maintaining the science budget, as called for in response to our consultation by all those advanced manufacturing companies of which she spoke. We are doing a lot to help advanced manufacturing, but the hon. Lady will have to be a little more patient and wait until the White Paper is published.

[Mr James Arbuthnot (North East Hampshire) (Con)]

Does my hon. Friend agree that Government spending on defence research and technology is absolutely essential for maintaining the battle-winning edge for our armed forces in 25 years’ time? Does he also agree that if there is a reduction in defence research because of short-term budget pressures, the long-term effect will be very great indeed?

[Peter Luff]

My right hon. Friend will not be surprised to hear that I could not agree more. I can confirm what I have said to him in the past: the budget for science and technology will increase in cash terms over the comprehensive spending review period. However, I share his enthusiasm about ensuring that we maintain future capabilities as well. It is very important that the science budget is not simply focused on current operations. It must be forward looking, too, to ensure that we have the capabilities that we need.

[Michael Dugher (Barnsley East) (Lab)]

The Minister will be aware that there is considerable concern that the Government might be planning to announce an extremely limited definition of what constitutes sovereign capability in their forthcoming White Paper, meaning that in many important sectors the Government will retreat to their default position and, to quote the Government’s Green Paper,

“to buy off-the-shelf where we can”.

Will the Minister assure the House that the White Paper will be an opportunity to set a clear strategy to use defence procurement to support our manufacturing base, in particular the intellectual property here in the United Kingdom, thus recognising the contribution that defence makes to the wider economy?

[Peter Luff]

I cannot give the hon. Gentleman that specific assurance. Defence money is for defence purposes, but I share his enthusiasm for the defence industrial base. I understand exactly what he says. We will be scrupulously honest with the British people and UK defence companies. I am afraid that although the previous defence industrial strategy was immensely popular, it did not have the money to match its promises. We will deliver what we promise.

[Alun Michael (Cardiff South and Penarth) (Lab/Co-op)]

5. Whether he has discussed with the Secretary of State for Communities and Local Government the merits of a council tax rebate for members of the armed forces who are serving overseas.

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[Jack Lopresti (Filton and Bradley Stoke) (Con)]

9. What assessment he has made of the adequacy of equipment provided to the armed forces to counter improvised explosive devices in Afghanistan; and if he will make a statement.

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

An impressive range of capabilities is in service to counter the threat from IEDs that our armed forces in Afghanistan face; our personnel are trained and equipped to apply a range of tactics, techniques and procedures. Defeating the threat is a vital part of the counter-insurgency campaign, and the equipment we are fielding against these sordid devices is widely recognised as being better than ever. However, as demonstrated by the weekend’s tragic news, which I reported to the House earlier, we are up against a determined enemy and must continue to invest in this area.

[Jack Lopresti]

I thank my hon. Friend for his reply. Is he satisfied that we have sufficient equipment levels in place to train Afghan national forces to counter IEDs and that progress is being made in this area?

[Peter Luff]

My hon. Friend speaks with great authority as a gunner who served in Afghanistan two years ago. He certainly knows what he is talking about. I can reassure him that equipping and training the Afghan national security force is a crucial part of NATO’s common counter-IED strategy. It is of course the job of the international security assistance force, which has the lead for training and equipment. I can assure him that the UK comfortably meets its responsibilities in this respect, but it is a challenging task and one to which we are fully committed because it forms the foundation for our eventual withdrawal from Afghanistan.

[Mr Bob Ainsworth (Coventry North East) (Lab)]

Will the Minister assure the House that the review and the spending difficulties that the Department has will not affect in any way his commitment to the speed of manufacture, and the number of vehicles manufactured, of the light protected patrol vehicles that are so badly needed in Afghanistan?

[Peter Luff]

As the right hon. Gentleman knows, I hold him in very high regard and personal esteem, and with some affection. I gently remind him that it is not a problem we have but a problem we inherited, and we are dealing with it. I can, though, give him the categorical assurance that he is seeking that those matters will have no impact on the operations in Afghanistan.

[James Morris (Halesowen and Rowley Regis) (Con)]

10. What steps he is taking to seek the modernisation of NATO.

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[Paul Uppal (Wolverhampton South West) (Con)]

15. What progress has been made on his Department’s consultation on equipment, support and technology for UK defence and security.

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

My colleagues in the Home Office and I are very pleased with the results of the public consultation, which ended on 31 March, on the recent Green Paper. We used a number of mechanisms, notably conferences, regional visits and a dedicated website, to encourage wide participation, and we received 143 separate written reports from individuals, companies and organisations, as well as more than 200 comments on the website. We are now analysing the information received and will publish a summary of the consultation responses later this year, alongside the planned White Paper.

[Paul Uppal]

Given the value of the defence sector to our economy, what steps are being taken to ensure that prosperity can continue to flourish, and that the whole UK economy can benefit?

[Peter Luff]

I strongly agree with my hon. Friend. Ministers in the Department are committed to the Government’s policy of export-led growth, whereby the Government are making radical steps to ensure that responsible defence exports are actively promoted. This year I have visited India, Japan and Turkey on precisely that mission, and all members of my ministerial team have made similar such visits to ensure that the outcome my hon. Friend rightly seeks is achieved.

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

16. What plans he has for the future of service family accommodation; and if he will make a statement.

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[Mrs Linda Riordan (Halifax) (Lab/Co-op)]

T4. The original White Paper for the Trident replacement programme estimated a figure of £11 billion to £14 billion in 2006 prices, but in a recent letter to my hon. Friend the Member for North Ayrshire and Arran (Katy Clark), the Minister stated that “the combined cost of the Concept Phase, totalling approximately £900 million, and the Assessment Phase, totalling approximately £3 billion at outturn prices is consistent with the departmental guidance that programmes should spend approximately 15% of the total costs before Main Gate.”It appears that this would put the cost of the whole programme at £26 billion. Will he confirm that that is an accurate projection?

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

As I previously explained in an Adjournment debate, all the costs that we are using are entirely consistent with the original projections. I will be delighted to spend some time with the hon. Lady explaining to her in detail exactly why that is the case.

[Nigel Adams (Selby and Ainsty) (Con)]

T6. I am grateful to the Minister for writing to me regarding the restructuring of the provision of elementary flying training at RAF Church Fenton. What plans does the MOD have for the future of Church Fenton?

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[Nick Smith (Blaenau Gwent) (Lab)]

Will the Minister give an assessment of the financial cost of the conflict in Libya so far? Does he recognise reports which state that if the conflict lasts six months, the cost could reach £1 billion?

[Peter Luff]

I do not think it will get to that. This is necessarily a complex subject, and I cannot give a straightforward answer. There are costs that would be incurred anyhow by the armed forces operating in Libya. There are additional costs that are specific to the campaign. We would also have to establish the precise value of the assets deployed or used in the campaign. All I can say to the hon. Gentleman is that the House will be informed in the usual way of the precise costs in the winter supplementary estimates.

[Jane Ellison (Battersea) (Con)]

Will Ministers update the House on the provision of mental health support for our service personnel, in particular those who have returned from theatre? As we know, such problems can take many years to emerge.

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[Mr Peter Bone (Wellingborough) (Con)]

When we were in opposition, we were critical of the former Government for not having enough helicopters. In the SDSR it was confirmed that we needed helicopters and planned to purchase them. Can the Minister confirm that the 14 Chinooks will now be ordered?

[Peter Luff]

I am happy to confirm to my hon. Friend that the position in relation to the Chinooks is exactly as was set out in the SDSR. Indeed, I will be visiting the Boeing production site very shortly to see the production line for myself.

[Mr Iain Wright (Hartlepool) (Lab)]

Given today’s reports in The Times, and following Ministers’ responses earlier this afternoon, it appears that the Secretary of State has some stark choices. He can restrict the capacity for British military capability and influence by cutting personnel and equipment still further, or he can secure a better deal from the Treasury. Which option does he prefer?

--- Later in debate ---

[Joseph Johnson (Orpington) (Con)]

Would the Minister like to take this opportunity to welcome the news that India has just put the European Typhoon, made by BAE Systems, on a shortlist of just two for the hugely valuable multi-role combat aircraft tender, one of the biggest defence orders on the horizon anywhere in the world?

[Peter Luff]

The simple answer is yes. That is an extremely successful outcome, and we are delighted with it. A lot of effort has been expended by the four partner nations. I was at the Bangalore air show myself in February pursuing the cause, and I am delighted by the outcome. We must now pursue the campaign to a successful conclusion.

[Katy Clark (North Ayrshire and Arran) (Lab)]

What discussions has the Secretary of State had about the future servicing and storage of complex weapons systems? In particular, what assurances can he give about the future of Defence Munitions Beith, in Scotland, which stores such systems?

Government Profit Formula

Peter Luff Excerpts

Thursday 31st March 2011 Written Statements

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

I announced to the House on 26 January 2011 that I had asked my noble Friend Lord Currie of Marylebone to undertake a fundamental review of the Government’s single source pricing regulations, which include the Government Profit Formula (GPF) overseen by the review board for Government contracts. In the announcement I said that the review board has been asked to maintain the existing arrangements pending the outcome of Lord Currie’s review (which is due to report in July 2011), and to complete their 2011 annual review of the GPF.

The Government have subsequently considered and accepted the review board’s recommendations in their 2011 annual review, and all changes have been agreed with industry. This will reduce the profit and capital servicing allowances payable by the Ministry of Defence (MOD) on new single source work that is placed after 1 April 2011. An agreed change to the GPF methodology will be of benefit to small and medium-sized enterprises; and agreed changes to Government accounting conventions setting out the treatment of costs in single source pricing will improve the MOD’s negotiating position. The board’s recommendations will be implemented in accordance with arrangements subsequently agreed with the industry side and recorded in an addendum to the published report. I will be placing a copy of the report in the Library of the House. The recommendations will be implemented for new single source work with effect from 1 April 2011.

Oral Answers to Questions

Peter Luff Excerpts

Monday 14th March 2011 Commons Chamber

[Paul Maynard (Blackpool North and Cleveleys) (Con)]

3. What recent progress his Department has made on its consultation on the defence industrial, security and technology policy Green Paper.

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

Our Green Paper, “Equipment, Support, and Technology for UK Defence and Security: A Consultation Paper”, was published on 20 December 2010, and progress on the consultation is encouraging. Ministers have engaged extensively with a wide range of interested parties, including right hon. and hon. Members of this House and of the House of Lords. Last week, a consultation conference took place at which over 200 people from industry, academia, service providers, trade bodies and the public discussed the Green Paper issues with Ministers and senior officials. I encourage anyone interested to send in their views on the issues outlined in the Green Paper before the consultation period ends on 31 March 2011.

[Paul Maynard]

Can the Minister give me an assurance that he will give due weight to the need to have a steady and constant stream of graduates in the complex scientific disciplines that underpin the research and development work on which the future of our defence industry rests?

[Peter Luff]

I am delighted to give my hon. Friend precisely that assurance. I am constantly amazed and delighted by the excellent work done by our scientists. I am in regular discussions with my colleagues in other Departments to ensure precisely that outcome, and he is right to highlight its importance.

[Mr Bob Ainsworth (Coventry North East) (Lab)]

Does the Minister share with his colleagues in industry his plans to cut the science and technology budget by £80 million? Will he tell the House how much impact that will have on our future ability to develop military capability?

[Peter Luff]

It grieves me that the right hon. Gentleman, whom I hold in considerable regard and esteem, should ask such a question after the monstrous slashing of the science budget under the previous Government. Last year alone, £100 million was taken from the science budget by his party and his Government. I am glad to tell him that the science budget has been largely protected—[Interruption.] It has been largely protected from the massive problems that we inherited from him and his colleagues on the Opposition Front Bench. The budget will rise in cash terms over the spending round period. That is a remarkably successful outcome, and I am delighted by and proud of it.

[Mark Menzies (Fylde) (Con)]

Is the Minister in a position to update the House on the Government’s proposals to support the unmanned aerial vehicles programme, because that has a direct link to the skills that my hon. Friend the Member for Blackpool North and Cleveleys (Paul Maynard) spoke about?

[Peter Luff]

My hon. Friend is right to highlight the importance of protecting skills in the fixed-wing sector in general. I cannot give him that update at present, but good work is proceeding in this area and there are some very interesting things that I hope to report to the House in the relatively near future.

[Michael Dugher (Barnsley East) (Lab)]

At last week’s consultation conference on the Government’s Green Paper, which was hosted by the Minister, Mr Neil Stansfield, the head of security and counter-terrorism, science and technology at the Home Office, warned the Government of the dangers of taking equipment “capability holidays”, and argued that it is not possible to dip in and dip out. In light of that, do the Government think that it is wise to take a nine-year capability holiday in carrier strike, a decision that the noble Lord Ashdown described at the weekend as “illogical”?

[Peter Luff]

They just don’t get it, do they? We do not wish to have that capability gap, but were forced to take additional risks in the defence budget because of the mess we inherited from the Labour party. I regret that and do not welcome it, but it is a risk that we have to take.

[Dr Julian Huppert (Cambridge) (LD)]

4. What assessment he has made of the implications for his Department’s policies of proposals for further regulation of the international trade in arms; and if he will make a statement.

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[Julie Hilling (Bolton West) (Lab)]

5. How much of the sum allocated by his Department to the Trident replacement concept phase has been transferred from its budget for the assessment phase.

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

The concept phase for the programme to replace the Vanguard submarine was extended to allow potential designs to be developed more fully, and to allow the value for money of the programme to be reviewed. The previous Government approved a sum of about £255 million for that extension, and this January the coalition Government authorised an additional sum of about £25 million.

[Julie Hilling]

On 19 October last year, the Prime Minister said that

“a proper full replacement of Trident is the right option for the future.”—[Official Report, 19 October 2010; Vol. 516, c. 805.]

However, on 10 March, the Liberal Democrat chairman, the hon. Member for Westmorland and Lonsdale (Tim Farron), said:

“I’m pretty confident there will not be a full replacement.”

Will the Minister please tell us what the formal, agreed coalition Government policy is on Trident replacement?

[Peter Luff]

The coalition Government are committed to the replacement of the Trident submarine, but our Liberal Democrat colleagues have the right to argue another position.

[Mr Matthew Offord (Hendon) (Con)]

Can my hon. Friend assure the House that the decision set out in the strategic defence and security review will not alter the nature or credibility of our nuclear deterrent, and that it will ensure that we maintain Britain’s ultimate insurance policy?

[Peter Luff]

I am delighted to give my hon. Friend that categorical reassurance.

[David Mowat (Warrington South) (Con)]

6. What recent representations he has received on the acceptance by licensed premises of his Department’s form 90 as a means of identification.

--- Later in debate ---

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

My right hon. Friend the Secretary of State for Transport announced the cancellation of the previous procurement process on 8 February. The Department for Transport and the Ministry of Defence are now considering the potential procurement options to meet the future requirements for search and rescue helicopters in the United Kingdom. We will make a further announcement once a way forward has been agreed.

[Mr Ruffley]

I know that the Minister is aware of the great concern in the search and rescue service, particularly at Wattisham in my constituency. Does he agree that a private finance initiative route might not necessarily be the most cost-effective way forward in reforming such services?

[Peter Luff]

I am delighted to pay tribute to the strong and close interest that my hon. Friend has taken in this issue, not least because of his close constituency interest. I can confirm that we are beginning again with a blank sheet of paper. We have learned the lessons from the previous process, which has been so unfortunately terminated, and will look again at what is the correct procurement route. That will include a thorough review of whether PFI is right for this particular procurement.

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

What is the mechanism for making the decision? Would it not make more sense if the Department for Transport acted as the purchaser and the MOD put forward a bid to continue the involvement of the RAF and the Navy in the provision of the service?

[Peter Luff]

I understand the interesting point that my right hon. Friend makes. The present intention is that current procurement arrangements should be stuck to, and I have every confidence that the defence, equipment and support organisation at Abbey Wood can do an excellent job of it this time.

[Mr Alan Reid (Argyll and Bute) (LD)]

11. What plans he has for the future of RAF Machrihanish; and if he will make a statement.

--- Later in debate ---

[Gordon Henderson (Sittingbourne and Sheppey) (Con)]

14. If he will assess the merits of placing currently unrequired defence equipment in reserve.

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

A wide range of options are routinely considered for all defence equipment that is not required for operational use. They include extended readiness, long-term preservation, sale and disposal. In relation to preservation, we take into account factors such as the threats against which regeneration of the capability would be predicated; the cost and practicality of preservation arrangements, which may be significant; and the lead time and costs for ensuring that suitably trained personnel could be made available to operate the equipment.

[Gordon Henderson]

I welcome the Minister’s answer, but I am a bit concerned about cost. The shipping industry often lays up ships at minimal cost for a number of years, using small maintenance teams and dehumidifiers. Given recent events in north Africa, does my hon. Friend agree that keeping Britain’s reserve defences strong enough to meet unexpected challenges ought to be a priority, especially if it can be done at minimal cost to the taxpayer?

[Peter Luff]

Nothing would give me and my ministerial colleagues more pleasure than to be able to keep all decommissioned equipment in storage, but we can do so only when it makes sense financially and strategically. Sadly, it is not as simple as switching off the engine and placing the kit in an air-conditioned environment. We need to be able to maintain the equipment, retain and maintain stores, have personnel trained to use it and—something my hon. Friend may not be aware of—pay the cost of capital needed to hold it in reserve. Sadly, it is more complicated in the MOD than it is in the private sector.

[Toby Perkins (Chesterfield) (Lab)]

15. What assessment he has made of the effectiveness of his Department’s contribution to the operation to evacuate UK nationals from Libya; and if he will make a statement.

--- Later in debate ---

[Thomas Docherty (Dunfermline and West Fife) (Lab)]

18. What assessment he has made of the likely date for HMS Illustrious to return to service; and if he will make a statement.

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

HMS Illustrious is scheduled to return to operational service, to assume her new landing platform helicopter role, in spring 2012. I should add that she has had 180 days’ notice to move, and that that period can be reduced, should the need arise. She will be supplementing the capability provided by HMS Ocean.

[Thomas Docherty]

I am sure the House will agree that the fact that HMS Illustrious is coming back into service ahead of schedule is a testament to the professionalism of the work force and the management, led by Mike Pettigrew. Will the Minister find the time to come to the dockyard to see HMS Illustrious before she sets sail, so that he can see yet again why the best place for the refit and refurbishment of the Queen Elizabeth class carriers is Scotland, rather than France?

[Peter Luff]

Although it is far too early to decide where that work will be conducted, I would be delighted to try to accommodate such a visit in my diary, if that proves possible. The hon. Gentleman’s constituents have certainly done a first-rate job.

[Stuart Andrew (Pudsey) (Con)]

19. What recent assessment he has made of the implications for his Department’s policies of the security situation in the middle east and north Africa.

Trident

Peter Luff Excerpts

Tuesday 1st March 2011 Westminster Hall

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

I genuinely congratulate the hon. Member for North Ayrshire and Arran (Katy Clark) on securing this debate.

In recent weeks, there has been quite a lot of commentary on the replacement submarine programme for Britain's independent nuclear deterrent system, often referred to as the Trident programme. Much of it was incorrect, so I welcome the opportunity to discuss the matter. I doubt whether I shall reassure the hon. Lady on every question, as there is disagreement between us on the principles involved, but I have some good news and some clarification.

Before dealing with the scrutiny of the successor systems to our current nuclear deterrent, and for the avoidance of any doubt—I answer also the points raised by the hon. Member for Islington North (Jeremy Corbyn)—let me be clear about the Government’s policy on the nuclear deterrent. The first duty of any Government is to ensure the security of the people. The nuclear deterrent provides the ultimate guarantee of our national security, and has done so for more than 50 years.

The argument is often made that, because there is no immediate threat to the UK, there is no need to replace the current deterrent system; however, if history has taught us anything it is that predicting future events is difficult. We do not know how the international environment will change over the next 50 years. For example, how many people predicted the current speed and the scale of change in north Africa?

[Dr Huppert]

Will the Minister give way?

[Peter Luff]

I shall not give way. I have some important points to answer, and I do not have time to take interventions—except, of course, from the hon. Lady.

We cannot be certain that no existential threat to the UK will ever emerge. As a result, we cannot unilaterally do away with this ultimate insurance policy. That is not to say that, when the time is right, we will not move away from nuclear weapons. Our long-term goal is to have a world without them, and we will do all that we can to counter proliferation, to make progress on multilateral disarmament, and to build trust and confidence across the globe.

In our strategic defence and security review, we went further than any previous Government in giving assurances to non-nuclear members of the non-proliferation treaty that we would not use or threaten to use nuclear weapons against them. As part of that confidence-building initiative, we announced that our overall nuclear warhead stockpile ceiling will reduce from not more than 225 to fewer than 180 by the mid 2020s. In addition, we announced that over the next few years we will cut the maximum number of nuclear warheads on board each deployed submarine from 48 to 40, that we will reduce our requirement for operationally available warheads from fewer than 160 to no more than 120, and that we will reduce the number of operational missiles carried to no more than eight. None the less, on 9 February, the Prime Minister said:

“I profoundly believe that we should maintain our independent nuclear deterrent. I have looked at all the alternatives over the years, and I am completely convinced that we need a submarine based alternative—a full replacement for Trident—in order to guarantee the ultimate insurance policy for this country. I am in favour of a full replacement for Trident, a continuous at-sea deterrent and making sure that we keep our guard up”—[Official Report, 9 February 2011; Vol. 523, c. 296.]

I take this opportunity on behalf of the House to pay tribute to the professionalism of all those Royal Navy and civilian personnel who answer this country’s call to operate and support this vital national capability on behalf of us all—seven days a week, 365 days a year. Last year, I visited HMS Vanguard and met some of our dedicated service personnel; I was truly impressed by their commitment. It is important that hon. Members should remember that, as we speak, those men are out there somewhere in the oceans at this very moment providing Britain’s and NATO’s ultimate security guarantee. They and their predecessors have so far provided a 42-year unbroken chain of continuous at-sea deterrence, keeping all of us and our allies safe. It is a fact of life that the current class of Vanguard submarines is ageing, yet while the nuclear threat remains we will maintain a nuclear deterrent. That is why we are continuing with a programme to replace the current deterrent.

One theme that has emerged—it emerged in the hon. Lady’s speech today—from those who do not see merit in this policy is that the Government are embarking on a programme of replacing the Trident system by stealth and that Parliament has not had the opportunity to consider the issue. That is simply not true. In 2006, the previous Administration published the White Paper “The Future of the United Kingdom’s Nuclear Deterrent,” which clearly set out why the UK needed to renew its deterrent system, what options were available and how much they were likely to cost. The conclusions of the White Paper remain as valid today as they were when they were first published. That paper was scrutinised by the House of Commons Defence Committee and was debated in full in July 2007. The House voted by a significant majority to

“take the steps necessary to maintain the UK's minimum strategic nuclear deterrent beyond the life of the existing system.”—[Official Report, 14 March 2007; Vol. 458, c. 298.]

That is exactly what we are doing.

Given the serious economic conditions that we inherited, we decided to commit ourselves to reviewing the Trident replacement programme to ensure that we were spending only the minimum necessary. That is why, in addition to the disarmament measures I have already mentioned, following the value for money review conducted last year, we announced a number of changes to the Trident replacement programme. For the submarine, this included deferring the delivery of the first boat to around 2028 and consequently deferring the main investment decision—or main gate—until 2016. I note the hon. Lady’s call for the publication of the value for money study, but I have to disappoint her. It contains a number of highly classified documents that are not suitable for release. However, all the important conclusions were published in full on page 38, paragraph 3.10 of the Strategic Defence and Security Review.

We were also able to announce our intention to work more closely with industry to improve efficiency in the programme. Since that announcement, we have taken huge steps with our three key suppliers—BAE Systems, Babcock and Rolls-Royce—to develop what we now call the submarine enterprise performance programme, which has three key aims: to retain and develop our world-class design, build and support skills, which are essential for delivering the nuclear programme; to realise significant savings by improving our approach to designing, building and supporting these submarines and, by way of example, through the rationalisation of facilities and sharing of resources; and, with industry, to improve our delivery performance. I saw that for myself a few weeks ago when I visited Barrow and Furness with the hon. Member for Barrow and Furness (John Woodcock), whom I am pleased to see in his place. I was hugely impressed with what I saw and with the dedication of the work force.

The Ministry of Defence, industry and the work force have risen to this challenge, and I have seen a step change in the way in which we are working with industry to ensure that our nuclear programme is delivered successfully. All in all, the decisions we took during the SDSR allowed us to save £1.2 billion and defer a further £2 billion of expenditure over the next 10 years. I can confirm to the hon. Lady that the figures for the total cost of the programme are as quoted in paragraph 3.10 in the SDSR.

“The review has concluded that the overall cost of the submarine and warhead replacement programmes and associated infrastructure”—

the three separate parts of the programme—

“ remains within the £20 billion cost estimate foreseen in 2006 at 2006 prices.”

Therefore, the cost estimate remains valid. However, we did not say that we would do nothing until 2016. As for the reference to the delay of the Astute programme, I have to say that we have learned our lesson the hard way—if one stops doing something it costs a lot to start doing it again. That is the root of the problem and a mistake that we must not make again with its successor.

Let me stress again that we did not say that we would do nothing until 2016. We must be clear about the scale and challenge of this project. A submarine designed to carry the nuclear deterrent ranks with the space shuttle as one of the most complex engineering feats in the world. The submarine has a nuclear reactor; nuclear weapons; steam systems; hydraulic systems; electrical and electronic systems; and computing systems, as well as tactical weapons and sensors. It needs to sustain its crew while remaining submerged and undetected for months on end. It is a tremendous challenge to bring those complex components together, and we have an enormous programme of work to complete if we are successfully to see the delivery of the first boat in around 2028. The first significant milestone in this process is the so called “initial gate” investment point.

At initial gate, we will agree the broad outline design of the submarine and some of the component designs, including the propulsion system, and set out the programme of work we need to complete so that we are ready to start building the first submarine in 2016. We will also agree the amount of material and parts—and for which boats—we will need to buy in advance of the main investment decision, and yes, that will include steel. However, we are not planning to procure any such items for the fourth boat at this point.

The precise value of the steel and the other long-lead items will depend on the final initial gate approval, but it is likely to amount to around £500 million, some way short of the £1 billion that the hon. Member for Islington North (Jeremy Corbyn) has cited in the past. There is nothing unusual in that; it is normal practice for most large procurement programmes.

[Jeremy Corbyn]

The figure I cited was the one that the Minister gave himself, which is £330 million. I asked where the parliamentary authority came from for that expenditure.

[Peter Luff]

I am sorry if the hon. Gentleman’s figures have been misunderstood by the Department. I was told that he said a figure around £1 billion. The authority comes from the vote in the House of Commons in the previous Parliament, established custom and practice and all complex programmes. If he wants a historical precedent, I am told that we bought the oak for HMS Victory 15 years in advance of building it. This is par for the course in major procurement programmes; there is nothing unusual about it at all.

It is quite simply not true to say that large parts of the build programme will have been completed by main gate, nor is it true to say that we will be locked into contracts and that we will have spent so much that we will have to build the boats when we get to main gate. There is nothing in the current programme that will prevent us from making choices in 2016 about what deterrent capability we want or how many boats we might order. It is self-evident from the decisions that we took during the SDSR to refine the replacement deterrent programme, which allowed us to save and defer £3.2 billion over the next 10 years, that our intent is to pursue value for money rigorously and only commit to expenditure as and when it is required. As agreed in the coalition programme for Government, the Liberal Democrats will continue to make the case for alternatives to a like-for-like replacement. Yes, it is true that the concept phase was extended in January 2010, which involved some extra cost, but some costs will be transferred from the assessment phase to the concept phase as a result.

What of the calls for scrutiny of the initial gate business case? Parliament does not routinely review internal Ministry of Defence business cases and I have not yet heard a convincing argument that suggests that this programme should be any different. The initial gate business case is not a grand strategic assessment; that happened in 2006 with the White Paper and the vote in the House of Commons in 2007. The initial gate business case is a technical assessment that presents design choices and programme analysis that is reviewed and agreed by technical, financial and procurement experts in MOD, Treasury and Cabinet Office. What we have committed to do once the initial gate business case has been approved is publish a report setting out the key decisions that we have taken, update Parliament on the latest assessment of cost, and explain the steps that we will be taking in the run-up to the main procurement decision in 2016. I hope that that reassures the hon. Lady.

As this is one of the largest programmes in Government, it will be reviewed closely as we move towards main gate, both in the Ministry of Defence and more widely across Whitehall. As my right hon. Friend the Secretary of State for Defence announced last week, the Government are doing more to tighten up the Ministry of Defence’s internal processes. The Secretary of State for Defence will chair the major projects review board, which by definition will include the replacement submarine programme, and will receive a quarterly report on our major projects to ensure that they are on time and within budget. Where projects are falling behind schedule or budget we will take immediate remedial measures. Those responsible will be brought to account in front of the project board. In addition, we will publish a list every quarter of the major project review board’s “projects of concern”. That way, Parliament, the public and the market can judge how well we and industry are doing in supporting our armed forces while offering value for money to the taxpayers.

Progress on the decisions we have taken during the SDSR, including those on the nuclear deterrent, will be reviewed by the National Security Council. The Government have also established a major projects authority within the Cabinet Office with a specific remit to oversee our portfolio of major projects and assess the health of programmes in it through a combination of quarterly reporting and more focused reviews. The major projects authority will produce an annual report through which Parliament and the public will be able to review our performance. On top of that scrutiny, the National Audit Office has published a report on the deterrent programme and, while it is not for me to task the NAO, I would not be surprised if it were to look again at this programme in the run-up to main gate, giving the Public Accounts Committee a chance to do the same thing.

It will be for the next Government to make decisions about scrutinising the main gate decision. For now, I am confident that we are striking the right balance between delivering the programme and ensuring that we are open about how we are performing. As this debate shows, if hon. Members wish to scrutinise the process, there are many avenues open to do that in our parliamentary democracy—many have already been explored by the Select Committee and many other options exist. Our democracy is more secure because of the Trident programme and our commitment to its successor.

Question put and agreed to.

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?

Single Source Pricing Regulations

Peter Luff Excerpts

Wednesday 26th January 2011 Written Statements

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

I am today announcing that Lord Currie of Marylebone is to chair an independent review of the regulations used by the Ministry of Defence (MOD) when pricing work to be procured under single source conditions without reference to competition. The existing framework is described by the Government Profit Formula and Associated Arrangements (GPFAA)—the so-called “Yellow Book”—of which MOD is the sole user.

The GPFAA stems from an agreement between HM Treasury and the Confederation of British Industry in 1968. Operational aspects have been reviewed since that time but successive Governments have left the underlying principles in place. Getting single source pricing right is of great significance to all stakeholders, not least taxpayers: MOD typically places annually around 40% by value of work on this basis.

The formula sets out profit rates allowed as addition to costs, as recommended by the Review Board for Government Contracts; my predecessor announced acceptance of the board’s last report to Parliament on 30 March 2010, Official Report, columns 97-98WS. The GPFAA also includes Government accounting conventions setting out what costs are allowed when pricing single source work.

This review implies no criticism of the Review Board for Government Contracts, which is a valued part of the existing framework and whose remit has been to maintain the profit formula and examine only those issues set before it by MOD and industry.

The defence sector has evolved beyond recognition since the inception of the 1968 agreement. At that time, labour constituted over three quarters of costs in the defence sector. Now it is less than one quarter. The Government owned many more of the assets than we do now. Furthermore, the sector is facing an era of consolidation and restructuring. The Government inherited a fiscal situation that makes it more important than ever that industry is incentivised to reduce costs through the use of modern, fit-for-purpose commercial arrangements (including for small and medium-sized enterprises), additionally making UK industry more competitive on the world market. Therefore, I believe the time is right to carry out this review and have asked that an MOD team, working with the CBI, be established to support Lord Currie’s investigation.

Lord Currie will be consulting widely with other stakeholders and will present his initial recommendations to me by July 2011, after which there will be further consultation with stakeholders to agree an implementation plan, at which time I will report back to the House. In parallel, MOD has requested that the Review Board for Government Contracts continue its work to maintain the existing processes through completion of its 2011 annual review of the profit formula, due to conclude in April 2011, and thereafter until the outcome of this review is known and a way forward agreed.

Integrated Merlin Operational Support Contract

Peter Luff Excerpts

Monday 17th January 2011 Written Statements

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

I am pleased to announce the continuation of the 25-year Integrated Merlin Operational Support (IMOS) contract with the agreement of the second pricing period with Agusta Westland valued at approximately £570 million. The IMOS contract was awarded to Agusta Westland in 2006 to secure the future availability of the Merlin helicopter fleet to the front line while saving the Ministry of Defence and UK taxpayers around £12 million per year compared to previous contractual arrangements. At a time when Merlin helicopters are deployed in Afghanistan and on maritime operations worldwide, agreement to the second pricing period from 2011 to 2016 has ensured that cost-effective operational support will continue, at the level required by the armed forces. I am also pleased to use this opportunity to welcome the first flight of the Merlin Mk 2, being developed by Lockheed Martin. The aircraft is due to enter service in 2013 and achieve full operational capability during 2014.