Oral Answers to Questions

Philip Dunne Excerpts

Monday 17th March 2014 Commons Chamber

[Jesse Norman (Hereford and South Herefordshire) (Con)]

1. What steps he is taking to support small contractors in military procurement.

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

I recognise that small businesses are an important source of innovation and flexibility in meeting defence and security requirements. I am determined to help small and medium-sized enterprises access defence opportunities, including standardising and simplifying our procurement systems, so from this month we are minimising the use of pre-qualification questionnaires and increasing use of standard contract templates for low-risk requirements of under £100,000.

We are regularly making progress on these and other SME initiatives, but we also need to inform the SME community that it is getting easier to do business with the Ministry of Defence, which is why we publish the SME action plan on the gov.uk website and why I am undertaking a series of regional visits to talk to SMEs, such as the excellent event that my hon. Friend hosted in Hereford on 6 December 2013.

[Jesse Norman]

I very much thank my hon. Friend for that reply and for the extremely encouraging news that he has described. There are a large number of specialist defence suppliers in my constituency in Herefordshire. They provide vital new technologies and training for the troops, but they often face huge and apparently unnecessary mark-ups and delays forced on them by the requirement to be part of prime contracts. What can the MOD do to help these companies compete more fairly?

[Mr Dunne]

I agree with my hon. Friend that SMEs have an important role to play across defence procurement, but in particular in new technologies and in training. That is why the Government are committed to increasing the proportion of our annual spend on SMEs. Last year that rose to 15% by value of all spend, with some £1 billion spent directly and £2 billion spent indirectly through larger prime contractors, but the proportion of new contracts is even greater with over a third of all new contracts placed with SMEs in each of the last three years.

[Mrs Madeleine Moon (Bridgend) (Lab)]

Devolved Administrations and their arm’s length agencies often have very close relationships with their SME community. What discussions is the Ministry of Defence having with the devolved Administrations to make sure defence contractors based outside England also have an opportunity to bid?

[Mr Dunne]

Of course defence, and therefore defence procurement, is not a devolved matter and therefore the work the Ministry of Defence does is primarily with industries right across the country. I have undertaken events in Scotland and I am looking forward to an event in Wales in due course later this year.

[Angus Robertson (Moray) (SNP)]

May I wish you a very happy St Patrick’s day, Mr Speaker, and no doubt MOD Ministers will be pleased to put on record their appreciation for the increasing co-operation with the Irish defence forces?

In a parliamentary answer on 3 October 2011 the MOD admitted that out of 6,000 SME contracts with the MOD, only 50 contracts were in Scotland, which is 0.83%, just under 10 times less than Scotland’s population share. When will the MOD answer my question on SME spending across the UK by region, which was tabled in January?

[Mr Dunne]

As I have said to the hon. Gentleman previously, we do not believe it is relevant to look at the location of where we procure equipment. We want to procure the best equipment for our armed forces from the best place. Scotland of course has a significant share of much of our spending, not least through the aircraft carrier contracts, which I saw for myself last week, and much of that defence work would be at risk were Scotland to vote yes in the referendum in September.

[Mrs Emma Lewell-Buck (South Shields) (Lab)]

2. What discussions he has had with the Chancellor of the Exchequer on staff pay and conditions in the new DE&S model.

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

8. What recent assessment he has made of the economic effects on west Fife of the Queen Elizabeth class carrier programme.

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

The carrier programme as a whole is estimated to have sustained about 10,000 jobs across the UK, 4,000 of which are based in Scotland. Although we have made no specific assessment of the impact on the hon. Gentleman’s constituency, to the end of January the Ministry of Defence had spent about £2.3 billion on work billed to the programme by BAE Systems on the Clyde, and by Babcock at Rosyth. I was pleased to visit Rosyth last week to see the progress of the work on the Queen Elizabeth carrier, which is on track to be flooded up in July. The initial bow sections of the Prince of Wales carrier are dockside, ready for assembly to start later this year.

[Thomas Docherty]

I am grateful for that answer. Is the Minister aware that Babcock commented last week that if Scotland votes yes it would be highly unlikely that my constituency dockyard would get further orders for maintenance work from the MOD? Is that why the Scottish National party has admitted that there would be significant job losses at Rosyth in the event of independence?

[Mr Dunne]

The hon. Gentleman will not be surprised to learn that I keep an eye on press cuttings relating to all defence procurement matters. The in-service support solution for the Queen Elizabeth class carriers is still in development and will not be decided until next year, but much support will be delivered at the base port and on deployment at sea. I think, however, that the hon. Gentleman was referring to depth maintenance and refit, and the security implications of that work being undertaken in a non-sovereign dock outside the UK would need to be carefully considered. Several dry docks in the UK are physically capable of accommodating such ships outside Scotland.

[Jason McCartney (Colne Valley) (Con)]

10. What discussions he has had with his counterparts in NATO member states in preparation for the NATO summit in September 2014.

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

We are in negotiations with BAE Systems for the contract to build the three new offshore patrol vessels announced in November. As part of these arrangements, only last Wednesday, during a visit to Scotstoun, I announced that the MOD had committed £20 million to this programme, with the award of a contract for long-lead items, such as engines and gearboxes, which need to be ordered in advance. The main investment decision is due in coming months and construction work of the vessels is due to begin this autumn.

[Oliver Colvile]

Will my hon. Friend also set out the timetable for the building of these frigates and ships, and say a little about when the base porting announcement might be made?

[Mr Dunne]

I thought that my hon. Friend might be interested in the base porting announcement. As is normal practice, we will make the announcement around the time of the main gate investment decision, which, as I have already said, is likely to be this autumn. I am sure that he will advocate strongly his constituency interest, but I have to advise him that other hon. Members will be doing so as well.

[Sir Edward Leigh (Gainsborough) (Con)]

13. What effect the Army 2020 review has had on the operational capability of the armed forces.

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

T7. Last week, the Under-Secretary of State for Defence, the hon. Member for Ludlow (Mr Dunne), admitted that he had wasted £50 million on the Cipher cyber-security project. This weekend, we heard that the NATO website and other websites came under attack following the recent actions in Ukraine. Will the Minister give us a timely assessment of the UK’s and NATO’s cyber readiness, particularly with regard to the situation in Ukraine?

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

The Cipher contract cost the MOD £46 million. Work under the contract ceased in June of last year at the end of a protracted assessment phase, which concluded that the project would not meet the full defence capability requirement at value for money for the taxpayer. I remind the hon. Lady that the contract was placed in November 2008. It is a classic example of the legacy of out-of-control procurement contracts that we were left when we took office in May 2010.

[Mr Crispin Blunt (Reigate) (Con)]

T5. To pick up the theme from the hon. Member for Huddersfield (Mr Sheerman), between 1935 and 1939, defence expenditure doubled in response to the deteriorating security situation in Europe. Does the Department do any contingency planning to determine how our defence capability could be improved rapidly if there was a greater call on our nation’s defence resources?

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

As the Secretary of State says, procurement times are long. Joint Helicopter Command has indicated that it requires a new fleet of Apache AH-64E attack helicopters for operational use by 2020. Has that contract been signed yet?

[Mr Dunne]

If the hon. Gentleman is familiar with the AgustaWestland contracts, he will be aware that last month the Secretary of State announced a contract for the sustainment of the existing Apache fleet for the next five years. Thereafter, we are looking to introduce a contract that will take the effective use of the helicopter up to 2040. Discussions on how we should go about procuring that sustainment upgrade are under way.

[Mr Tobias Ellwood (Bournemouth East) (Con)]

T9. In Budget week, will the Defence Secretary join me in commending Britain’s improved economic outlook, thanks to the Chancellor’s stewardship, which potentially gives rise to finding the annual £65 million required to run the second aircraft carrier? Does my right hon. Friend agree that operating two carriers would strategically extend and involve Britain’s diplomatic military influence in a manner not seen for a generation?