Oral Answers to Questions

Philip Dunne Excerpts

Monday 26th November 2012 Commons Chamber

[Diana Johnson (Kingston upon Hull North) (Lab)]

4. How many joint strike fighter jets his Department plans to procure.

[The Parliamentary Under-Secretary of State for Defence (Mr Philip Dunne)]

The UK took delivery of its first joint strike fighter aircraft in July and its second in October, both of which are both operating from Eglin air force base in Florida, where they are undergoing operational testing. A third aircraft is due in the second quarter of 2013. Decisions on the overall order for joint strike fighters will not be made until the strategic defence and security review in 2015.

[Diana Johnson]

When will the Minister be able to tell the House precisely how much the Government’s U-turn to procure the F-35B rather than the F-35C, which the SDSR committed to, will cost the taxpayer?

[Mr Dunne]

The hon. Lady should recognise that the decision to change the configuration of the aircraft carriers and the aircraft operating on them will save the taxpayer money.

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

The previous Government entered into the joint strike fighter agreement without securing the source access code to allow British manufacturers to make British products for our planes without having to go via the American prime contractor. Will the Minister update the House on what progress has been made in acquiring the very important source data?

[Mr Dunne]

My hon. Friend is well aware that the arrangements entered into whereby the UK became a tier-1 partner in the JSF programme mean that 15% of the aircraft’s components are manufactured in this country, securing more than 25,000 jobs.

[Julie Hilling (Bolton West) (Lab)]

5. What recent progress he has made on enabling businesses to employ members of the reserves.

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[The Parliamentary Under-Secretary of State for Defence (Mr Philip Dunne)]

As set out in the White Paper published earlier this year, increasing opportunities for SMEs in defence procurement is an important strand in our open procurement policy. We have set up an SME forum, which I chair, precisely to identify barriers to participation. Specific measures include standardising and simplifying procurement systems, promoting opportunities for SMEs through e-procurement mechanisms and marketplace events, and working with our prime contractors to boost opportunities for smaller businesses in the supply chain.

[Gordon Henderson]

I welcome that statement. I was a senior contracts officer with GEC Marconi Avionics, so I would like to think I know something about the complexity of the MOD procurement process. Large companies such as BAE Systems have access to teams of expert contracts officers who can plough through the bid documents. Sadly, SMEs often do not have that luxury, which puts them at a disadvantage. Will my hon. Friend consider how the bid process can be made less complicated and more user-friendly for SMEs?

[Mr Dunne]

I am grateful to my hon. Friend for demonstrating his expertise and bringing it to bear on our complicated procurement processes. We recognise that smaller companies, unlike the larger ones, do not have the resources to focus on putting bid proposals together, which is why we are introducing a number of measures to make that easier for them. They include publishing on web portals all tenders over £10,000, streamlining contract processes and speeding up invoice and bill payment systems, which will make it more convenient for SMEs to receive timely payments. We are also considering requests for interim payments on procurement.

[Angus Robertson (Moray) (SNP)]

According to the MOD’s own statistics, only 2% of SME contracts are given to Scottish companies. Meanwhile, the new Defence Business Services organisation is set to have 1,672 members of staff, only 13 of whom will be in Scotland. Is the Minister not embarrassed by that track record?

[Mr Dunne]

The hon. Gentleman might be interested to know that I will be in Scotland on Wednesday evening to meet defence contractors precisely to encourage them to participate more in the procurement that is on offer.

[Peter Luff (Mid Worcestershire) (Con)]

The Minister has explained to the House how much has been done to make it easier for smaller businesses to do business with the MOD. One outstanding action item is publication of the audited equipment programme. A month ago, the Secretary of State told me that it would be published “shortly”. How shortly is “shortly”?

[Mr Dunne]

I pay tribute to my predecessor for his work in championing the role of SMEs in defence procurement. As far as his direct question is concerned, as he knows the equipment plan is with the National Audit Office, and as soon as it has finished its deliberations the Department will publish it, alongside the NAO’s review.

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

SMEs will be affected by any decision by BAE Systems to shut any of its three yards in Portsmouth, Scotstoun or Govan. Will the Minister update the House on behalf of the businesses and workers in Glasgow who want to know whether, if they were in an independent Scotland, they could compete for work on Royal Navy warships? Will he also update the House to address the concerns of SMEs and workers in Portsmouth who will want to know about any future order of two offshore patrol boats that could fill any production gap?

[Mr Dunne]

The shadow Secretary of State is well aware that under EU procurement rules any nation can direct warlike stores, such as large warships, to be built within its national boundaries. That would mean that in the very unlikely event of a Scottish independence vote leading to an independent Scotland, a new Scottish Government could place orders for Scottish warships to be built in Scottish yards, whereas the residual UK Government could direct warships to be built in their own yards, if they decided to take advantage of the EU exemption. As far as Portsmouth is concerned, the terms of business agreement entered into by the previous Government left the decisions about how the company should rationalise the ship building programme for another day. Having placed large orders that would run beyond the general election, they were not prepared to take tough decisions on what should happen to consolidate the industry.

[John Glen (Salisbury) (Con)]

7. What assessment he has made of the success of Operation Atalanta.

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[Mr Iain Wright (Hartlepool) (Lab)]

14. What plans he has for the future of Defence Equipment and Support; and if he will make a statement.

[The Parliamentary Under-Secretary of State for Defence (Mr Philip Dunne)]

Our evaluation of how best to improve the delivery of procurement and support is progressing well. A soft market testing of the potential for a Government-owned contractor-operated model is due to conclude before Christmas, and the outcome of the value-for-money comparison is expected shortly. Subject to those conclusions, we are on track to make decisions on how we intend to proceed in the new year. In the meantime, we continue to drive efficiency and improvements within Defence Equipment and Support.

[Mr Wright]

Defence procurement is a key part of an active industrial strategy. Defence firms need certainty to plan and invest for the long term. There has been far too much uncertainty over the future shape and direction of Defence Equipment and Support. Notwithstanding what the Minister has said, the position is still vague, with promises made about the new year. Will he provide further clarity and, in so doing, help British businesses to invest for the long term?

[Mr Dunne]

The single most effective answer to the hon. Gentleman’s question is that this Government have removed the overspend in the defence equipment budget that we inherited from Labour. By narrowing the spend for the next 10 years into a £160 billion envelope, it is now clear that some 95% of that money is committed and the contractors know that the programmes will be delivered. That was not the case under the previous Government.

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

The success of the future structure of Defence Equipment and Support lies at the heart of our ability to deliver Future Force 2020. The concerns raised by the industry about exactly how a Government-owned, contractor operated model would work therefore need to be taken seriously. The Minister’s predecessor, the hon. Member for Mid Worcestershire (Peter Luff), also highlighted the delay to the announcement on the equipment programme. My hon. Friend the Member for Hartlepool (Mr Wright) was absolutely right about the Department for Business, Innovation and Skills perspective—it is vital that the defence sector has certainty. Will the Minister undertake to come to the House at the earliest possible opportunity in the new year to set out the detail of the GOCO model and give us a definitive list of the projects that will be overseen by it?

[Mr Dunne]

I thank the hon. Lady for her question. This Government are engaging with industry more proactively than has been the case in recent times. We have just announced the defence growth partnership in conjunction with the Department for Business, Innovation and Skills to drive forward how we support defence contractors in growing the economy in this country. Once we have made the decision, we will make an announcement to Parliament in the usual way.

[Caroline Nokes (Romsey and Southampton North) (Con)]

17. What comparative assessment he has made of the value and terms of armed forces pensions and other public sector pensions.

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[Bill Esterson (Sefton Central) (Lab)]

Warm words alone are not enough when it comes to enabling small businesses to compete in the defence supply chain. Will the Minister confirm that he will take the action needed to create a level playing field, so that small businesses can compete?

[The Parliamentary Under-Secretary of State for Defence (Mr Philip Dunne)]

The Ministry of Defence is determined to increase the participation of small and medium-sized enterprises in the supply chain. To that end, we are holding a marketplace next week, on 3 December, which the hon. Gentleman is welcome to attend, to show off the innovation coming out of our SMEs to the prime contractors.

[Sir Menzies Campbell (North East Fife) (LD)]

May I take the right hon. Gentleman back to the issue of Syria? Will he tell the House in what conceivable circumstances he would think it appropriate for British troops to intervene in a civil war?