Defence Reform Bill

Philip Dunne Excerpts

Tuesday 29th April 2014 Commons Chamber

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

I beg to move, That this House agrees with Lords amendment 1.

[Madam Deputy Speaker]

With this it will be convenient to consider the following:

Lords amendments 2 to 6.

Lords amendment 7, and amendment (a) thereto.

[Mr Dunne]

Before we proceed with the debate on the Lords amendments and with your agreement, Madam Deputy Speaker, I am sure that the House will wish to join me in paying tribute to Captain Thomas Clarke, Army Air Corps; Flight Lieutenant Rakesh Chauhan of Joint Helicopter Command, RAF Odiham; Acting Warrant Officer Class 2 Spencer Faulkner, Army Air Corps; Corporal James Walters, Army Air Corps; and Lance Corporal Oliver Thomas, Intelligence Corps, a reservist who worked for one of my hon. Friends in this House. They were killed while on operations in Afghanistan on Saturday 26 April. This appears to be a tragic accident during a routine sortie in Kandahar Province. Our thoughts and deepest sympathies are with the families and colleagues of those who lost their lives. The incident is the subject of a thorough investigation to find out exactly what happened. The House will understand that I am unable to say anything further at this time, pending the outcome of the ongoing investigation into the incident.

[Martin Horwood (Cheltenham) (LD)]

I cannot let the Minister’s comments pass without welcoming them and thanking him for them, and, in particular, expressing the sympathy of the Liberal Democrat parliamentary party and its researchers and staff following the loss of their friend, who displayed great courage and died in the service of his country.

[Mr Dunne]

I appreciate and reciprocate that sentiment.

Let me now deal with the Lords amendments. They deal with all three elements of a Bill that introduces a new and significantly stronger regime for the management of single-source contracts, and makes important legislative changes that will enable us to modernise and make better use of our reserve forces. There is a great deal of support for those measures in all parts of the House, as was evident when we discussed all its previous stages here. The Bill also includes the measures that are needed to help an effective Government-owned contractor-operated organisation to manage defence equipment and support should a future Government decide to proceed with such an option. I shall return to that shortly.

These are all Government amendments, which were made following detailed consideration of the Bill both in this House and in the Lords. Although they deal with different parts of the Bill, they have a common theme: they either provide Parliament with further information relating to the implementation of defence policy, or strengthen parliamentary oversight of future legislation. That, I think, is right, and it reflects the Government’s commitment to ensuring that Parliament has a greater role in the scrutiny of the Executive. The amendments demonstrate that we have listened to the concerns that were raised about issues covered by the Bill, particularly in the other place, and that we have responded accordingly.

Lords amendment 6 fulfils a commitment given on Report in this House, on 20 November, to make it a statutory requirement to report annually on the state of the reserve forces, while Lords amendment 7 reflects the debate in the other place about parliamentary involvement in any future decision to proceed with a GoCo proposal requiring the provisions in part 1 of the Bill. The amendments will strengthen the parliamentary oversight of future defence plans, and I hope that they will be widely welcomed.

Lords amendments 1 to 5 relate to part 2, which concerns single-source procurement. They were made in response to the Delegated Powers and Regulatory Reform Committee’s report on the Bill, which was published on 20 December last year. I am grateful to the Committee for its report, and for the excellent work that it does in ensuring that any proposed delegated powers are appropriate.

The Committee recommended that the first set of single-source contract regulations should be debated and agreed by Parliament. It also recommended that certain of the regulations—namely those relating to the definition of a qualifying defence contract and to the penalty amounts applied under clause 32 of the Bill—should always be subject to the affirmative procedure. Those recommendations are reflected in Lords amendment 5, and Lords amendments 1, 2, 3 and 4 make the necessary consequential changes that arise from that amendment.

Lords amendment 6 would require reserve associations to report annually to the Secretary of State on the condition of the volunteer reserve forces, and for their reports to be laid before Parliament. The reports would include the associations’ assessment both of the capabilities of the reserve forces, and of the provision made in relation to the mental welfare of their members and former members. The amendment delivers on the commitment given by my right hon. Friend the Secretary of State on Report in this House last November. Members will recall that we had a substantial debate at that stage, initiated by my hon. Friend the Member for Canterbury (Mr Brazier)—it is good to see him in the Chamber—about the state of our reserve forces, and the need to report regularly to Parliament on the issue. The amendment enshrines in law the requirement to produce such a report.

Members may be interested to know that on 10 April I had the privilege of attending the West Midlands Reserve Forces and Cadets Association annual dinner. Their knowledge and enthusiasm for the reserves was palpable and I am glad we will have such expertise reporting to the Secretary of State on an annual basis as a result of this amendment.

At the dinner, Defence’s most senior reservist, Major General John Crackett, spoke eloquently and persuasively of the reservists’ contribution to our nation’s defence in the past century and the importance this Government have attached to revitalising and expanding the reserves during this century.

Last weekend’s helicopter crash, which unfortunately I have already had to refer to today, underscores the fact that, tragically, 31 reservists have paid the ultimate price in the service of their country since 2003.

[Roger Williams (Brecon and Radnorshire) (LD)]

I thank the Minister for paying tribute to the five men who were lost in the tragic helicopter accident over the weekend, in particular Lance Corporal Oliver Thomas who used to work for me. He is a fine example of the very talented young people we have in our reserves and the contribution they make to the British armed forces.

[Mr Dunne]

I am pleased that the hon. Gentleman has joined us. Unfortunately, he missed my tribute to Lance Corporal Thomas. I pass my sympathies to him and his colleagues, and his family and friends, on this tragic loss.

Lords amendment 7 will provide Parliament with information on the options for reforming Defence Equipment and Support before any order commencing part 1 of the Bill can be made. As Members will recall, part 1 provides the legislation needed to enable any GoCo solution for reform of DE&S to work effectively. This option is not being pursued at present, and will not be taken forward in the near future, but we think it right that the necessary legislation remains on the statute book in case a future Government, of whatever colour, decide to go down that route.

This amendment follows a substantial debate in the other place about the level of parliamentary oversight required before any future Government could proceed with a GoCo for DE&S that would require the provisions in part 1. As a result of that debate, Lords amendment 7 would require the Secretary of State to publish a report on the options for carrying out the defence procurement activity being undertaken by DE&S before laying the draft affirmative order commencing part 1. The report would need to cover any arrangements for a GoCo and any other options that had been considered, including the option of the new DE&S that is currently being put in place. This information will ensure that Parliament can have an informed debate on the reform of DE&S before agreeing to bring part 1 into force.

The amendment to Lords amendment 7, tabled by the hon. Member for Plymouth, Moor View (Alison Seabeck) —with whom I had the pleasure of serving on the Committee and who conducted herself with considerable distinction—would make it a requirement for a future Government to produce the report on the options for reforming DE&S at least 12 weeks before any order commencing part 1 is laid before Parliament. While on the surface this amendment might seem reasonable, I think it is unnecessary and would unduly constrain a future Government. Amendment 7 already places a statutory requirement on a future Government to produce a report and sets out what that report must contain—and it is most likely to take the form of a White Paper. To place such an obligation on a future Government is itself unusual, and we are aware of no other examples where a commencement order has such requirements attached to it. As such, it represents a major concession by the Government and demonstrates that we have listened carefully to the concerns expressed in the House of Lords.

We have therefore already gone a significant way towards ensuring that Parliament has detailed information to enable it to consider these matters, and there is no need to go further. Although I would expect any such report to be published in good time to enable Parliament to debate whether part 1 should be commenced, it is impossible at this point to predict the exact circumstances in which a decision to proceed with a GoCo might be made. Of course, if Opposition Members were to find themselves in government in the future—that is most unlikely in the immediate future—they could publish the report whenever they wish, but I think it is a step too far to put a legal time limit on the production of such a report; I simply do not think it is the sort of thing we should be setting out in legislation.

No doubt the hon. Member for Plymouth, Moor View will argue that without such a time limit a future Government might try to rush through proceeding with a GoCo—that, of course, will be up to her if she is in this post in a future Government—but that fails to take into account the reality of how these decisions are made or indeed the recent history of the time it took to go through the commercial process in looking for a GoCo solution. The need for a robust commercial process will mean that any such decision will not be taken quickly and that there will be announcements and discussions at each stage along the way.

The last competition, for example, took nearly nine months from the issue of the contract notice in April 2013 until the receipt of detailed bids in November last year. That helps to convince me that Parliament will have ample opportunity to consider and debate any proposals to move to a GoCo well in advance of any order commencing part 1 and we should not be placing arbitrary time limits into statute just for the sake of it. Placing such a time constraint in the Bill may add to uncertainty around the commercial process. The Government will therefore be resisting the amendment to Lords amendment 7.

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

So is the Minister guaranteeing the House some minimum time for discussion in these circumstances? Is he able to say that there will absolutely be a certain minimum time?

[Mr Dunne]

What I am guaranteeing is that a report will be presented to the House before the commencement of part 1 comes before the House in an affirmative resolution. It will be up to the Government of the day to decide at what point to publish that report and therefore what interval to leave between publication and moving an affirmative resolution in this House. What I am not guaranteeing is the duration of that interval.

These Lords amendments will make a good Bill better. They show that the Government have listened to the concerns raised during the Bill’s passage through both Houses. The changes to the Bill covered by the Lords amendments will ensure that Parliament has the information it needs on these important aspects of our defence. I therefore ask hon. Members to agree to Lords amendments 1 to 7 and to reject the Opposition amendment to Lords amendment 7.

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

Labour Members associate themselves with the condolences offered to the family and friends of the five servicemen lost so very tragically while serving their country. Their loss is deeply felt, particularly by their colleagues and close friends here in this place, and we acknowledge that loss.

Let me start by discussing the proposals to part 2 of the Bill. The Minister has talked about Lords amendments 1 to 5 to clauses 33, 39 and 42, which deal with the single-source procurement contracts. Labour Members welcome the amendments in principle, because they take forward the recommendations of the Delegated Powers and Regulatory Reform Committee, and because they make sensible changes to simplify this legislation. It does indeed make sense to use one statutory instrument for all the regulations under part 2, as Lords amendment 1 achieves, along with the accompanying amendments—the technical changes that follow. Baroness Jolly in the other place explained the logic behind these amendments, which allow all the regulations under part 2 to be made in one statutory instrument; there is also provision for the maximum penalties to be made under the single- source contract regulations, rather than in separate regulations.

My colleague Lord Tunnicliffe, who did sterling work in the other place speaking on behalf of the Opposition, said he needed to see the proposal in writing before deciding whether there might be a problem. Having seen it in writing, Labour takes the view that these are largely technical amendments to which we have no objections. However, there are some concerns about the way in which impact assessments are being carried out by Departments on new regulations. The recent Regulatory Policy Committee report, published last month, on the improvement of the evidence base for regulation suggested some serious weaknesses in the way in which Departments were estimating the impact of new regulations. Indeed, only 75% of the first-time impact assessment submissions were fit for purpose, down from 81% in 2012. Will the Minister confirm that the proposed change has been given the green light and whether there are likely to be any problems for that Committee? Lords amendment 5 addresses two more recommendations of the DPRRC. As the Minister stated, it is purely technical and we have no problems with it at all. The Opposition support the work done by the DPRRC and on both sides of the House of Lords and we welcome that group of amendments.

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No Government of whatever complexion should ever be afraid of strong scrutiny—it makes for better and more transparent government, which the public demand. If we ignore that, we further damage the reputation of this place. I am therefore disappointed that the Minister feels unable to include that in the Bill.

[Mr Dunne]

I am intrigued by the selective amnesia from which the hon. Lady appears to be suffering. Does she recall the passage of the Companies Bill under the previous Government, as no fewer than 250 amendments were proposed for consideration by the House in the final two minutes of debate?

[Alison Seabeck]

The Minister is quite right to make that point. It is deeply frustrating for Back Benchers and for the public to see legislation being rushed through Parliament. There are lessons that Members on both sides of the House can learn—

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[Martin Horwood]

It is a pleasure to follow the hon. Member for Canterbury (Mr Brazier), who displays great knowledge of these issues. I am sure that the friends and family of Oli Thomas will very much appreciate the comments that have been made across the House, as I am sure will my hon. Friend the Member for Brecon and Radnorshire (Roger Williams). He would have been here at the beginning of the debate to respond to the Minister’s comments had the expected times for votes not changed rather suddenly. I hope that people will understand that. I am sure that all Members across the House would wish to express their sympathy to the friends and family of all the servicemen who lost their lives in that terrible accident.

I welcome the Lords amendments, which I think strengthen Parliament’s role in scrutinising the implementation of defence policy, which is very important. I know that several of my noble Friends had concerns about the process of building up the new reserve force and about the technicalities of the GoCo idea. It is very welcome that the Government have been open-minded enough to bring forward their own amendments to reflect those concerns and increase parliamentary scrutiny.

On the volunteer forces, we have an ambitious plan to change the whole chemistry and make-up of our armed forces. I think that will leave us with armed forces that are more flexible, more light-footed and more cost-effective, and in a time of genuine austerity that must be borne in mind. On the concerns that have been expressed on both sides of the House about exactly how well that will work, whether it is too ambitious and whether it will at some stage pose unexpected challenges, I think that it is right to have this extra level of parliamentary scrutiny over the process, so Lords amendment 6 is extremely welcome.

Lords amendment 7, which relates to the GoCo, now seems slightly academic, given that we are unlikely to see any proposals for a GoCo in the near future. However, were such a proposal to come forward at some point, I think that it is important to have the safeguards in place to ensure not only that a draft statutory instrument is laid before the House before the actual order is laid, but that we have the report beforehand on alternative options and impact assessments for each one.

In tabling amendment (a), the hon. Member for Plymouth, Moor View (Alison Seabeck) is perhaps trying to gild the lily. I think that she is trying to conjure some mild controversy out of what is now a consensus on the issue. She said that she had remaining concerns about wholesale outsourcing, but of course that is only about the outsourcing of outside supplies, so it does not really change anything in that respect. It is only about whether in future that outsourcing is managed directly by a Government agency or by a more independent and commercially orientated organisation.

Many of us have expressed doubts about that idea. I expressed doubts on Second Reading about whether we should have yet another tier of decision making in between the armed forces and the actual decision-making process and the eventual supplies. However, I think that the formula we have come up with, whereby the different options will be re-examined at the time any such proposal comes forward, is a good one. We would not normally insert another 12-week time scale into legislation of this kind, so I am not sure that that is absolutely necessary, but I appreciate the spirit in which the amendment was moved.

I think that the Lords amendments have made a good Bill even better. I join the consensus on both sides of the House in this good-natured debate by saying that this is the right Bill to bring forward at this time.

[Mr Dunne]

With the leave of the House, I shall make a few closing remarks. I know it is not conventional to do so, but I have been challenged in customary fashion by the hon. Member for Plymouth, Moor View (Alison Seabeck) with a number of questions, and it is right that we put some answers on the record.

The first question that the hon. Lady posed was a technical one about whether the framework of part 2 had been approved by the RPC. We approached the Better Regulation Executive in the Department for Business, Innovation and Skills, which confirmed that in its view part 2 did not constitute regulations of the type that ought to be considered by the RPC or the reducing regulations committee. We therefore did not do so.

The hon. Lady also asked whether in the strategic defence review in 2010 there was some strategic basis for arriving at the force composition of regulars and reservists. As she will know, I was not in post at that time, so I cannot give her my personal recollection of those discussions. It is undoubtedly the case that the fiscal situation that not only the country faced but our Department inherited—the £38 billion black hole in unfunded commitments—played a part in determining dispositions, but the main drivers of the force composition were set out at the time of the SDSR—namely, the unpredictable strategic environment and the need for an agile and adaptable force structure. The force structure that we ended up with, we believe, will enable us to meet the unpredictable strategic environment in future. It also moves UK armed forces closer to the force structures in place among many of our closest allies, so we do not think it is out of line with our main partners and allies.

The hon. Lady touched on reserves and the status of reserve recruiting, which was mentioned by my hon. Friend the Member for Canterbury (Mr Brazier). I thank him for the anecdote he gave us about the growing youthfulness of officers and the growing numbers of recruits that he referred to. I am not in a position to give the House detailed figures at this point, but applications are running significantly higher than average applications in months last year, which is an encouraging sign. We are making good progress in increasing the conversion rate from applicants to trainees. That is also an encouraging sign. I would not like to give the House the impression that we do not recognise that we have a considerable way to move in raising both the number of applicants and that conversion rate.

[Mr Ainsworth]

There is no doubt that there has been an improvement, but what the Minister and the House must do, as the hon. Member for Canterbury (Mr Brazier) said, is keep on top of it. There is institutional resistance to that change and we must recognise that. If we want it to work, we have to be prepared to drive it.

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[Mr Dunne]

I am grateful, Madam Deputy Speaker, for your indulgence not only of me, but of the right hon. Gentleman, the former Defence Secretary, for making that point. It gives me the opportunity to say that there is a clear determination from the Secretary of State downwards to bear down on the issue within the Department. My colleague responsible for personnel, the Under-Secretary of State for Defence, my hon. Friend the Member for Broxtowe (Anna Soubry), is having weekly meetings with the officials who are responsible within the Department and there is a clear determination throughout the ranks, in particular the Army, to ensure from the very senior levels down that there is a major focus on getting the institutional and behavioural change that the right hon. Gentleman talks about.

We are doing some practical things to try to improve recruitment. For example, the bounty for regulars going into the reserves has been doubled relatively recently. We have also introduced a bounty for completion of phase 1 training and a subsequent bounty for completion of phase 2 training to encourage applicants who start the training process to see it through and to have better results at the end of the process.

[Mr Brazier]

I strongly endorse the remarks of the right hon. Member for Coventry North East (Mr Ainsworth), who understands these matters so well.

Of the two measures that the Minister has mentioned, I particularly welcome the second one. On the first, it seems to many in the reserves that the transfer rate is excessively generous. The fact that the other two services have chosen not to adopt it, although they both seem to be doing well in this regard—the Navy has a particularly good record in getting ex-regulars to join, especially as pilots and in other key skill areas—suggests that it should perhaps be a temporary measure.

[Mr Dunne]

It is not for me to determine what may happen in future in an area of the Department for which I am not responsible. My hon. Friend needs to recognise that the cost of training and bringing a new entrant into the Army Reserve is considerably higher than the cost of an already-trained regular transferring, where the cost is, in essence, negligible. The rationale for providing an additional bounty for the regular is that the cost is equivalent to what we are paying to train up a raw recruit into the reserves.

The hon. Member for Plymouth, Moor View asked where the corporate plan and the framework documents stand in relation to DE&S-plus. I am pleased to be able to inform her and the House that we will be placing those in the Library and publishing them shortly.

The hon. Lady asked about the costs of the exercise. I think she was trying to get me to predict the future cost of a subsequent GoCo exercise. I like to think of myself as a clairvoyant in some areas, but I cannot possibly determine what the rates of consultant advice might be at some indeterminate point in the future, so that was a question incapable of an answer. She asked specifically about the costs that we incurred on the previous exercise. I gently point out to her that the answer I gave on the cost of the GoCo element was a subset of the cost of the matériel strategy as a whole. That is why there is a difference between the £7.4 million figure and the £28.9 million figure that we gave to the hon. Member for North Durham (Mr Jones) in response to a question.

We have had a good debate this afternoon. It has been good natured—

[Alison Seabeck]

I thank the Minister, who has been helpful and charming throughout this whole process. I wonder whether he will indulge me in putting on record my thanks to the Officers of the House and to all the Members who have contributed to this debate. I am sure that he is about to do the same.

[Mr Dunne]

Thank you, Madam Deputy Speaker, for indulging so many Members of the House in an opportunity to use time that is rarely available to us to pass such niceties and congratulations across the Chamber. Yes, the hon. Lady’s remarks are absolutely reciprocated. We have had good support from the Officers of the House and from Members of the House throughout the Committee stage and all stages of the Bill. We have also had considerable support in the other place, where there was a great deal of interest not only from the former Chiefs of Staff who sit there but from many other Members on both sides of the House. I thank the hon. Lady for her contribution. I also thank the hon. Member for North Durham, who aided and abetted her throughout the Committee stage. I place on record my thanks to my colleague, Lord Astor of Hever, who took the Bill through the other place in his customary exemplary style.

This is an important Bill that will help transform the way in which we procure equipment for our armed forces and the way in which we use our reserves. I am pleased that it will now proceed to Royal Assent.

Lords amendment agreed to.

Lords amendments 2 to 6 agreed to.

Clause 49

Commencement

Amendment (a) proposed to Lords amendment 7.— (Alison Seabeck.)

Question put, That the amendment be made.