Oral Answers to Questions

Philip Dunne Excerpts

Monday 4th November 2013 Commons Chamber

[Huw Irranca-Davies (Ogmore) (Lab)]

2. What assessment he has made of the level of contracting by his Department with small and medium-sized enterprises; and if he will make a statement.

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

As I have said in the House before, the Government understand the significance of SMEs to the United Kingdom’s economy. The Ministry of Defence is playing its part in increasing the number of opportunities for SMEs to contribute to defence, both as direct suppliers and as subcontractors on major programmes. We recently published details of the MOD spend for 2012-13. Some £1.1 billion was spent directly with 12,000 SMEs. During that year, 10% of all new contracts by value and 36% by number were placed with more than 1,000 SMEs.

[Huw Irranca-Davies]

Jobs in the supply chain are vital to constituencies such as Ogmore, but I understand that last year the MOD was fined £21,000 for making late payments to suppliers. The new contracts and direct payments that were promised by Ministers have not materialised. Can the Minister explain to SMEs in the supply chain in Ogmore and throughout the United Kingdom why the Government’s actions do not match their rhetoric?

[Mr Dunne]

I am very glad that the hon. Gentleman has chosen to light on the single late payment penalty that the MOD suffered in just one of the 4 million transactions that took place in 2012-13. It involved a company that was not based in Ogmore, not based in Wales, and not based anywhere else in the United Kingdom. It was for late payment for aviation fuel sent by a supplier to our base in Akrotiri in Cyprus, with an invoice from a Greek company in Corinth, over the Christmas holidays. The Ministry of Defence pays 92% of its bills within five days, and has a better record in that regard than any other Department.

[Jeremy Lefroy (Stafford) (Con)]

I greatly welcome the letting of the main contract for the expansion of MOD Stafford to enable it to receive two more Signals regiments. Will the main contractor be encouraged to work with local SMEs which offer value for taxpayers’ money?

[Mr Dunne]

I think that my hon. Friend is referring to facilities management contracts which are being placed on a regional basis. The contractors will of course undertake to use SMEs in their supply chain, but it will be up to them to decide where they place their contracts, so I cannot give my hon. Friend any specific reassurance relating to how many of the subcontracts will go to Staffordshire companies.

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

Although reassuring in many respects and full of detail, the Minister’s response will not give much comfort to SMEs that hold subcontracts with Serco and are awaiting the outcome of the Cabinet Office review, which I assume has been further delayed following this afternoon’s announcement by the Serious Fraud Office. This matter is of serious concern to, for instance, those involved in the consortiums that are bidding for the GoCo. When does the Minister expect a firm decision from his colleagues on whether the MOD can let further contracts to Serco?

[Mr Dunne]

As the hon. Lady said, there has been an announcement following the Serious Fraud Office inquiry into two contractors, which was first highlighted by the Ministry of Justice in its announcement of 26 September. I cannot give her any information about when the SFO will complete its inquiries, and she would not expect me to do so. Until that has happened, we shall not be in a position to make any comment on Serco itself.

[Sheryll Murray (South East Cornwall) (Con)]

A constituent of mine is considering installing on his farm an anaerobic digestion plant that could supply heat to HMS Raleigh. Will my hon. Friend agree to meet my constituent and me to discuss that?

[Mr Dunne]

I am grateful to the hon. Lady for mentioning her interest in encouraging the supply of renewable energy to Ministry of Defence bases throughout the country as well as in her constituency. The matter that she has raised is the responsibility of the Under-Secretary of State for Defence, my hon. Friend the Member for South West Wiltshire (Dr Murrison), but I am sure that one of us will be happy to meet her as soon as possible.

[Mark Menzies (Fylde) (Con)]

3. What discussions he has had with his counterparts in partner nations on improving the prospects of future Typhoon exports.

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

Since the Government took office in 2010, they have reversed a decade of neglect in support for defence exports. Ministers from the Prime Minister down have taken a particularly proactive lead among our partners in encouraging Typhoon exports. Eurofighter Typhoon continues to attract global interest through active participation in a number of campaigns, which are likely to come to a head over the next couple of years. Last week, when I met counterparts from our three partner nations, we agreed to refocus our collaborative programme to improve Typhoon’s export prospects in those campaigns around the world.

[Mark Menzies]

Does the Minister believe that to keep the Typhoon production line running in the future, the Eurofighter consortium must be much more agile in its corporate governance in order to help export potential?

[Mr Dunne]

In our meeting last week I made very clear to both industry and our Eurofighter partners that we need an increased focus on responding to export requirements, which will play an increasingly important part in extending production lines for this aircraft, including in my hon. Friend’s constituency. We agreed that fundamental reforms are needed to speed up decision-making processes within the governance structure, which will make it more responsive both to the requirements of partner nations and to export customers.

[Mr David Heath (Somerton and Frome) (LD)]

4. What his plans are for the future use of RNAS Yeovilton and RNAS Merryfield; and if he will make a statement.

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[Nick Smith (Blaenau Gwent) (Lab)]

12. What account his Department takes of the social and economic effects of its procurement decisions in the UK.

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

Last year, we published the White Paper, “National Security Through Technology”, setting out the purpose of defence procurement—namely, to provide our armed forces with the best capabilities we can afford while obtaining the best possible value for money. The Ministry of Defence makes a significant contribution to the UK economy—approximately £20 billion of annual spend sustaining many highly skilled jobs in communities the length and breadth of Britain—but we also support the defence industry in the UK through active help in export campaigns and in supporting the defence growth partnership, where we share its vision to secure a thriving UK defence sector.

[Nick Smith]

It is good that the NATO summit will be held in Newport in Wales next year. Will the Minister please update me on the procurement of the Scout vehicle, which is important for jobs in the south Wales valleys?

[Mr Dunne]

I add my support to the hon. Gentleman’s efforts to ensure that the NATO summit in Newport is a great success next year. The Scout vehicle is proceeding in its demonstration phase and has passed a number of milestones. As he is aware, it is due to be delivered as part of Future Force 2020. I will not be able to give him an update on the next placing of contracts until such time as the main investment case has been made.

[Peter Luff (Mid Worcestershire) (Con)]

It will not surprise the Minister to learn that I entirely agree with his answer, but may I ask him, on the day when Professor John Perkins’ review of engineering skills has revealed a serious shortage of those skills in this country, what assessment he has made of the impact of that shortage on the defence industries in particular, and on the nation’s operational advantage and freedom of action?

[Mr Dunne]

I thank my hon. Friend for all his work in stimulating interest among our young people in taking up engineering careers, particularly so that they can take up the many hundreds of engineering jobs for which the Ministry of Defence and the armed forces seek to recruit every year. We are doing a lot of work, not least through the Bloodhound initiative—a project with which he was intimately involved—to raise awareness of engineering skills in the armed forces, and to encourage young people to consider maths, science and engineering as future careers.

[Joan Walley (Stoke-on-Trent North) (Lab)]

14. What contracts for recruitment of armed forces personnel have been outsourced to date; and what arrangements are in place to monitor such contracts.

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[Bill Esterson (Sefton Central) (Lab)]

Small businesses in my constituency tell me that late payment threatens their survival and the jobs of their staff. Ministers can quote all the figures they like, but they have to accept that late payment by the MOD is a real problem for some small businesses.

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

If the hon. Gentleman was in the Chamber and listening to my earlier response to the Member for Ogmore (Huw Irranca-Davies), he will have heard that there was a single example of a penalty for late payment out of 4 million transactions last year. Where is the evidence to substantiate the allegation made by the hon. Member for Sefton Central (Bill Esterson)?

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

T8. What discussions has the Secretary of State had with European Ministers on preparations for the European Council on defence?

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[George Hollingbery (Meon Valley) (Con)]

T10. The Meon Valley constituency is home to many who work in the defence sector for companies such as Northrop Grumman, Chemring, Cobham and many smaller defence-related businesses. Will the Secretary of State update the House on what efforts the Government are making to boost employment in this sector, which is so important to the prospects of many of my constituents?

[Mr Dunne]

The three companies to which my hon. Friend refers are important suppliers to the Ministry of Defence through both open competition and single-source capability. I encourage each of those companies to continue bidding for relevant MOD contracts when they are advertised through the portals that are well known to them. I have met representatives of each company at recent defence company exhibitions both in the UK at the Defence Security and Equipment International exhibition in September and overseas. Along with Ministers from other Departments, we actively support responsible defence exports by all quality British companies.

[Nic Dakin (Scunthorpe) (Lab)]

What is the MOD doing to improve its communication with local communities when bases, such as the one in Kirton in Lindsey, are being transferred out of MOD ownership?

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[Huw Irranca-Davies (Ogmore) (Lab)]

The Minister’s earlier response to me was shockingly complacent and refused, notably, to deal with new contracts and the failure to roll out direct payments, as the Government said they would. Will he respond to my constituents who run small and medium-sized enterprises that supply the MOD? They said:

“The MOD remains as inefficient as ever…Their commercial support is lacking and things take for ever to finalise…The MOD is in a mess in some areas we deal with.”

[Mr Dunne]

I am sorry that I disappointed the hon. Gentleman, who had clearly got his facts wrong when he stood up the first time. This Ministry pays 92% of bills within five days, and we make arrangements specifically for small and medium-sized companies to make part payments to assist them with their cash flow. I would be happy for the hon. Gentleman to write to me if he has any other specific evidence to substantiate his claim.

[Bob Stewart (Beckenham) (Con)]

May I ask my right hon. Friend what percentage of the £1.8 billion allocated to bolster reserve forces has been spent already?

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[Mark Pawsey (Rugby) (Con)]

Given previous failures, the Government are rightfully changing the framework for defence procurement, which generates a £22 billion turnover. Will the Minister confirm that under the new arrangements there will be more opportunities for small businesses to get their fair share of that expenditure?

[Mr Dunne]

I pay tribute to my hon. Friend’s contribution in the Defence Reform Bill Committee. He has consistently championed the role of small businesses in defence procurement—something that the Government wish to take forward. Tomorrow, I will chair the SME forum at the Centre for Defence Enterprise in Harwell, and I will be picking up on those points.

[Several hon. Members]

rose—