Oral Answers to Questions

Philip Dunne Excerpts

Monday 14th July 2014 Commons Chamber

[Mark Pritchard (The Wrekin) (Con)]

12. What recent representations he has received on future employment at MOD Donnington; and if he will make a statement.

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

rose—

[Mr Speaker]

The Secretary of State has an uncharacteristically ashen face, but I am sure that the sensation will pass.

[Mr Dunne]

As my hon. Friend the Member for The Wrekin (Mark Pritchard) knows, I have visited MOD Donnington a couple of times. My most recent visit was on 15 May, when I had the opportunity to meet representatives of both staff and the trade unions. I have received representations from both hon. and right hon. Members of the House, including from my hon. Friend and parliamentary neighbour.

[Mark Pritchard]

I am grateful for that reply. While I may not be right honourable, I nevertheless hope that MOD Donnington will feature in the Minister’s thinking over coming weeks as he decides on the successful bidder for the future logistics of Her Majesty’s armed forces.

[Mr Dunne]

As my hon. Friend knows, we are currently engaged in introducing private sector management skills into the logistics and defence support group activities carried out at Donnington. Both are at advanced stages of negotiation, so I am unable to give him any more information at this point about the competition. However, as soon as a decision is reached, he will be one of the first to know.

[Henry Smith (Crawley) (Con)]

13. What assessment he has made of the recommendations of the concluding report of the Trident commission set up by the British American Security Information Council.

--- Later in debate ---

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

My hon. Friend is right to draw attention to the great success of the air show at RAF Waddington, which I believe he attended the other day. He is also right to point out that the runway is in need of routine maintenance—essentially, a new runway needs to be laid, which will take 59 weeks starting in September—and therefore it will not be available next year. The RAF is undertaking a review of all air show commitments for next year, so we will be in a better position to respond on 2016 when that review has been completed.

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

The Government made a clear decision in the 2010 SDSR to withdraw the important Sentinel capability from service. There is now speculation that it is to be retained, although it is not named in the news release that has gone out—it sort of slipped under the media radar. Does the Secretary of State accept that, like the F-35 U-turn costing millions, this is another example of poor strategic decision making and more back peddling?

[Martin Horwood (Cheltenham) (LD)]

T2. The F-35 Lightning II should be one of the world’s most advanced combat aircraft, not least thanks to British expertise at companies such as GE Aviation and Ultra Electronics, but it was sadly missed at Gloucestershire’s royal international air tattoo—a very exciting event this weekend. Can Ministers reassure the House that that has no implications for its service for the United Kingdom from 2018?

[Mr Dunne]

My hon. Friend is right to draw attention to the importance of the F-35 programme to businesses up and down this country, including in Gloucestershire. Last year, the F-35 suffered an engine incident, which is being investigated. It is absolutely right that the safety of aircrew and aircraft are of paramount importance, rather than seeking to attend air shows around the world. Obviously, we would welcome the F-35 once it has been declared safe, and we are still hopeful that it will arrive at Farnborough before the air show finishes.

[Julie Hilling (Bolton West) (Lab)]

T7. Although today’s announcement is welcome for companies in my constituency such as MBDA, which is of course at Farnborough this week, does the Secretary of State think that announcing a re-spend on things that he cut in the first place will make up for the hundreds of millions of pounds wasted on botched decision making, bad equipment decisions, IT failure, a recruitment crisis and collapsed procurement reforms on his watch?

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[Robert Jenrick (Newark) (Con)]

T3. British defence exporters, such as GDT in Newark, can take their stands at Farnborough today with renewed confidence as a growing part of our economy. GDT grew by 10% last year and the sector by 11%. What steps are the Government taking proactively with companies like GDT to ensure that this success continues?

[Mr Dunne]

I am very grateful to my hon. Friend for referring to the Farnborough air show, which I attended this morning for the Prime Minister’s opening. He was highlighting at Farnborough, not just to the British defence supply chain, but to representatives of the international supply chain who were present and to the international delegations visiting from abroad, just what a high-quality defence industry we have in this country, and as he pointed out, we cannot have a secure economic growth plan without a secure national security plan.

[Angus Robertson (Moray) (SNP)]

As we know from the recent services inquiry of the Military Aviation Authority, three of my constituents died aboard colliding Tornado jets above the Moray firth in 2012. Among the contributory factors may have been the absence of a collision warning system. When will we see a collision warning system installed in Typhoon aircraft?

[Mr Dunne]

As the hon. Gentleman knows, because he called an Adjournment debate on this subject last week, at which he asked that very question and I gave him the answer, at present we are investigating the introduction of a system on Typhoon, and at this point it is not appropriate to give him a timetable or a cost for that introduction.

[Mr Nigel Evans (Ribble Valley) (Con)]

T4. If Pericles were alive today, I am sure he would have been at the Farnborough air show, looking at all the amazing equipment that is available to defend our freedoms. One piece of equipment is BAE Systems’ Taranis unmanned air vehicle. Will my right hon. Friend assure the House that this Government will continue to support that technology to ensure that we have manufacturing and research and development capability for the future, both militarily and commercially?

--- Later in debate ---

[John Glen (Salisbury) (Con)]

T8. In view of the uncertainty about the future of Public Health England at Porton Down and the imminent submission of the outline business case to the Treasury, will the Minister confirm that the Defence Science and Technology Laboratory is ready and willing to work collaboratively on a Porton-based solution for the future of the PHE facility there?

[Mr Dunne]

My hon. Friend is a valiant champion of all that goes on in and around Porton Down, and he is to be congratulated on the work he did in securing the science park funding last week. With regard to the CL4 facility at Porton Down, which is co-shared with Public Health England, the Ministry of Defence will be working with the Department of Health to ensure that the best solution is found for the country as a whole for the future of CL4 facilities.

[Nic Dakin (Scunthorpe) (Lab)]

What discussions has the Ministry of Defence had with North Lincolnshire council in recent weeks to ensure that the disposal of the Kirton in Lindsey base benefits the local community rather than damages it?

RAF Fast Jets

Philip Dunne Excerpts

Tuesday 8th July 2014 Commons Chamber

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

I congratulate the hon. Member for Moray (Angus Robertson) on securing a debate on what all hon. Members accept is an important matter. I am pleased to have the opportunity to respond, if not to all the hon. Gentleman’s questions—he acknowledged that he asked a great many. I will attempt to answer as many as I can and, where I am unable to do that, we will write to him in due course.

Air safety is of paramount concern not only to me, but clearly to everyone in the RAF and in the Ministry of Defence. I am well aware of the hon. Gentleman’s interest in the matter. He is a consistent questioner of the Department on the subject. I am therefore pleased that we have an opportunity to have a debate about it and to talk specifically about the RAF’s fast jet operations.

I pay tribute to the men and women of the RAF who operate fast jets and dedicate their service to the defence of our country. The hon. Gentleman rightly raised concerns about the tragic loss of Squadron Leader Sam Bailey, Flight Lieutenant Hywel Poole and Flight Lieutenant Adam Sanders, when two Tornadoes collided above the Moray firth near his constituency two years ago last week. My thoughts and sympathies are also with the families and friends of those who died so tragically.

I wish to make it clear from the outset that the RAF is satisfied that all risks to life associated with the operation of its fast jets are both tolerable and as low as reasonably practicable—ALARP. If that were not the case, the RAF would not fly these aircraft. I can assure the House that air safety is at the core of all the RAF’s aviation activity. I am sure the hon. Gentleman will accept that no flying can ever be without risk, yet prior to that tragic loss and despite the proximity events to which he has referred, there has not been a mid-air collision involving RAF Tornado for 13 years.

The service inquiry into the tragic loss two years ago has been painstakingly thorough, taking more than 100 witness statements, including 60 interviews within three weeks of the incident. It concluded in November 2013 that the cause of the accident was lack of recognition of converging flight paths. Seventeen contributory factors were identified, of which only one was lack of a collision warning system. The purpose of the service inquiry was not to attribute blame, but to ensure that we learn lessons from that tragic incident and do whatever we can to prevent it from happening again. The MOD has accepted liability for the incident, and will continue to liaise closely with the families affected. As the matter is subject to further legal proceedings, it would not be appropriate for me to comment further.

In recent years, and in particular following the publication of the Nimrod review, which was undertaken by Charles Haddon-Cave, QC in 2009, significant work has been undertaken to improve flight safety. Not least, we have now established an independent military aviation authority, the role of which is to regulate all military aviation activity and to assure my right hon. Friend the Secretary of State for Defence that risks are being managed to an acceptable level. Since 2010, all aviation risks are owned and managed by named duty holders. They are very senior, suitably qualified and experienced officers who are personally and legally accountable for the safe operation of their aircraft.

The risk of mid-air collision is well known to the MOD and a great deal of work has been undertaken to reduce it, both in the UK and overseas. At the time of the incident, the MOD was in the process of introducing the centralised aviation data service, a pre-sortie planning tool that allows aircrew to plan a sortie and identify what other aircraft have planned routes in the vicinity. That planning tool is but one of a range of measures in place to minimise the risk of mid-air collision. Others include extensive aircrew training designed to ensure that pilots are fully aware of their surroundings; use of transponder equipment in military aircraft; aircraft and ground-based radar; and air traffic control.

It is clear from the hon. Gentleman’s remarks that he believes that a collision warning system would have prevented that tragic accident, but it is simply not possible to be that definitive. The service inquiry did not conclude that the lack of a collision warning system caused the accident. The inquiry specifically stated that

“it is not possible to completely remove the risk of colliding with another aircraft regardless of the controls and mitigations put in place”.

Therefore, a collision warning system is not a panacea. It cannot guarantee that a mid-air collision would never happen again. A CWS provides an additional level of security and another tool for the aircrew to use. The majority of RAF fleets have a collision warning system or a plan to fit such a system. Airborne collision avoidance systems are installed on all RAF multi-engine transport aircraft. The Hawk T2, which the hon. Gentleman mentioned, has a traffic collision avoidance system—TCAS II—fitted, and we are currently in the assessment phase to fit a system to Hawk T1.

However, such capability on front-line fast jets remains developmental. It is not simply a matter of fitting existing equipment that is available for civil-registered aircraft. The Ministry of Defence is in fact a lead within Europe for the development and embodiment of CWS on existing fast military jets. That is despite the technological and operational challenges of retrofitting such a system to fleets whose performance far exceeds that of normal aircraft profiles and performance.

In answer to the hon. Gentleman’s question, we have initiated a programme to fit Tornado aircraft with a similar system. This is currently being trialled on two aircraft, and a third has been fitted for further development. On current planning, we intend to introduce this capability in stages from later this year.

Analysis is currently under way into the potential to fit a collision warning system on to Typhoon aircraft, but it is too early to provide a timetable for development of this capability. The hon. Gentleman asked some specific questions in response to a previous written parliamentary answer I provided to one of his questions. I am not in a position to be able to give him any further comfort on why this is the case, other than that it is a very complex process, and that at this stage we are not far enough along in that process to be able to give clarity on either timetable or cost.

Looking forward, the F-35 Lightning II will have a limited collision warning system in its early capability block, which is supplemented by advanced sensors and software to provide pilots with a much higher level of situational awareness than our existing platforms.

On the hon. Gentleman’s concerns about the procurement for the Tornado collision warning system, it is a matter of record that the commitment to fit a collision warning system to Tornado aircraft was made in the 1998 strategic defence review. Developing such a system proved difficult and attempts to develop a bespoke solution were unsuccessful during the early part of the past decade. It was only in 2008 that a commercial off-the-shelf collision avoidance system was identified as a potential solution for the Tornado GR4 fleet, and detailed design work began in December 2012 following the award of a contract to BAE Systems. It is true that the programme had been cancelled in April 2011—I think the hon. Gentleman said it was in 2010—as part of measures to bring the Department’s equipment budget back into balance, but that decision was revised within three months, clearly demonstrating the success of the post-Nimrod review duty holder construct. The duty holder elevated the risk to the then Secretary of State, my right hon. Friend the Member for North Somerset (Dr Fox), on 14 June 2011, who within a week directed that the collision warning system should be reinstated.

Of course, fitment of a collision warning system to the Tornado fleet was not the only recommendation in the service inquiry. The other procurement recommendation was for new automatic personal locator beacons, which were contracted last month and are due to enter service in autumn 2015. I would like to reassure the hon. Gentleman that the service inquiry findings were reviewed as a matter of urgency throughout the MOD and substantial progress has already been made in implementing the 42 recommendations.

I can answer one specific question posed by the hon. Gentleman in relation to the Tornado airworthiness review team report of 1994, which has been released by Defence Equipment and Support under a freedom of information request.

In conclusion, we recognise that air safety is not just about equipment. Risk management and training form an integral part of safety management. The RAF seeks to improve all aspects of its safety management system, which holds, at its core, the principle of continuous improvement. I would like to make it clear that the safety of our aircrew, other aviators and the general public, and protecting our aircraft to maintain a defence capability, are of utmost importance to the RAF.

Question put and agreed to.

Review Board for Government Contracts

Philip Dunne Excerpts

Monday 9th June 2014 Written Statements

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

I announced updated Government profit formula (GPF) allowances to the House on 15 April 2013, in line with recommendations made by the independent Review Board for Government Contracts. The review board is an independent non-departmental public body established in 1968 following an agreement between the Government and industry and its role is to recommend a fair and reasonable return for industry based on the principle of comparability in those situations where there is only one supplier of a particular good or service and, therefore, where there is no recourse to competition to establish prices.

Following the recommendations set out by Lord Currie of Marylebone in his 2011 report into the existing single source procurement system, the Government undertook a major reform programme aimed at delivering a more suitable and modern means of delivering on this key part of our procurement activities. This programme is making good progress and forms part 2 of the Defence Reform Act 2014 which received Royal Assent on 14 May 2014. This legislation will replace the review board with a more empowered public body, the Single Source Regulations Office (SSRO). In the meantime, we expect the review board to continue to produce recommendations for the current profit rate.

The review board has recently completed its 2014 General Review and has made its recommendations for the profit rate for the year beginning April 2014. The Government have accepted the board’s recommendations and the updated allowances will be implemented on new single source work undertaken in the financial year beginning 1 April 2014.

A copy of the review board’s 2014 general review report will be placed in the Library of the House.

Closure of MOD Storage and Distribution Depot (Dülmen)

Philip Dunne Excerpts

Thursday 5th June 2014 Written Statements

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

As part of the strategic defence and security review in 2010 we announced that we would withdraw half of the UK armed forces currently based in Germany by 2015 and the remainder by 2020.

Consistent with that announcement, we are now in a position to clarify when we will close the Ministry of Defence (MOD) main storage and distribution depot in Dülmen, Germany. The depot will cease non-core activities by October 2015 with a view to closing the site by September 2016 and releasing it to the German federal authorities.

Regrettably, this will result in redundancies of 242 locally employed civilians, in two tranches in autumn 2015 and 2016. MOD officials will work closely with the German employment agency to support the transition of the employees into new jobs, including paid time off to attend training and resettlement courses. The small number of UK civil servants will be given access to normal departmental procedures to secure alternative employment and the UK military staff will be redeployed to other posts as their roles cease.

Detailed plans for the drawdown from the Wulfen depot are still to be formulated, and are not specifically linked to the decision regarding Dülmen. I can also provide assurance that all relevant German authorities will continue to be involved by us as we work to finalise plans for our withdrawal from Germany.

Defence Equipment and Support

Philip Dunne Excerpts

Wednesday 14th May 2014 Written Statements

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

On 10 December 2013, Official Report, column 146, the Secretary of State for Defence announced his intention to establish the Defence Equipment and Support (DE&S) organisation as a bespoke trading entity, from April this year.

Since that announcement, having agreed the principle that DE&S should be provided with the necessary freedoms to allow it to operate along more commercial lines, within an agreed operating cost budget, we have worked with HM Treasury and the Cabinet Office, to agree the governance and accountability structure within which the new DE&S will operate.

I can confirm that, on 1 April 2014, DE&S was launched in its new form and is now an arm’s length body to the rest of the Ministry of Defence. The DE&S has been provided with the unparalleled freedom to manage its own business, outputs and work force within an operating cost envelope set to drive significant efficiencies.

Ministerial oversight of the new DE&S is being provided through an owner’s council chaired by me. As the first chief executive of the organisation, Bernard Gray, as Chief of Defence Matériel, has become an additional accounting officer, directly responsible to Parliament for the resources and performance of DE&S. The permanent secretary, as principal accounting officer, remains accountable to Parliament for the Department as a whole.

To assist the programme of delivery and transformation, the DE&S will introduce private sector skills through a number of contracts for managed service providers (MSPs). DE&S will remain responsible for its outputs, with the MSPs providing high-quality support and expertise in the key areas of project delivery, human resources and management information, finance and information technology. The contract notice for the first MSP, project delivery, was issued on 14 April and invitations to negotiate were issued to eight companies on 12 May. The contract notice for the second MSP, human resources, was also issued on 12 May. We expect to have the contracts in place later this year.

The launch of the new DE&S provides an unprecedented opportunity to transform the process of defence acquisition and support for our armed forces, while improving value for money. The changes we are introducing will result in a higher performing delivery organisation, which is better able to deliver vital equipment and support to the front line, on time and at the agreed price. In doing so, we remain consistent with the report on defence acquisition from 2009 and the Levene recommendations from 2011. We are also thinking further ahead, to ensure that by the middle of the next Parliament, DE&S is a genuinely customer-facing, match-fit organisation, providing a robust public sector comparator should a future Government decide to re-examine the potential for a GoCo model. This is the beginning of the transformation process. We are empowering the DE&S to meet head on the challenges of delivering a most complex and demanding portfolio of work to meet its customers’ needs.

Full details of the DE&S governance structure, function, policies, and strategic objectives are contained in a new framework document and corporate plan. I have placed copies of both documents in the Library of the House.

Oral Answers to Questions

Philip Dunne Excerpts

Monday 12th May 2014 Commons Chamber

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

7. What progress has been made on the design and development of the Type 26 global combat ship.

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

The Type 26 global combat ship programme is in its assessment phase; its basic capabilities and design were announced in August 2012. My hon. Friend is a keen student of this planned state-of-the-art frigate, so he knows that it is being designed for flexibility in mission and capability for the Royal Navy. The final design, equipment fit and build programme will not be set until the main investment decision has been taken when the design has been fully matured. That decision is now expected towards the end of this year.

[Mr Ellwood]

It has been said that a ship can be in only one place at a time, and the same applies to the helicopter on board. Given the increased reliance on rotor systems at sea, which significantly widen the footprint of influence on operations, ranging from humanitarian to kinetic, will the Minister look seriously at increasing the deck space to accommodate not one but two Merlins, or indeed four Wildcat helicopters, to give Britain’s next ship greater flexibility?

[Mr Dunne]

I can assure my hon. Friend that the Type 26’s flexible mission bay is just that: it will accommodate a broad range of manned and unmanned surface, air and underwater vehicles, and be adapted on a tailored mission basis to the changing needs of its deployment. The use of both the hangar and the large flight deck will enable the platform to operate the Wildcat, Merlin or Chinook helicopter, in addition to the ship’s permanently embarked helicopter.

[Jason McCartney (Colne Valley) (Con)]

9. What steps he is taking to ensure effective incentives are in place to support recruitment to the reserves.

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[David Mowat (Warrington South) (Con)]

13. What progress he has made on improving the efficacy of his Department’s procurement since May 2010.

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

When we came into office, the major projects report for 2009 identified procurement overruns of £1.2 billion and delays of 93 months in the top 15 defence equipment programmes, after 13 years’ of inaction by Labour. By contrast, we have taken decisive action and made considerable progress in improving the efficacy of defence procurement. The latest major projects report from the National Audit Office for 2013 showed that the cost of 10 of our 11 largest equipment programmes had been reduced by almost £50 million in the last year, and some 98% of our key performance measures are set to be achieved.

[David Mowat]

In December, as the Government abandoned the process to find an external contractor to manage Defence Equipment and Support procurement—the so-called GoCo approach—the Secretary of State said that the Bechtel bid in particular had contained knowledge capital which would be useful going forward. Can the Minister confirm that this has happened and that best practice is being assimilated?

[Mr Dunne]

On 1 April we established DE&S as the first bespoke Government trading entity with wide ranging freedoms from central Government controls, details of which I look forward to publishing before the House prorogues. We are introducing global best practice to the new DE&S through three work package contracts for managed service providers. We are today issuing the invitation to negotiate for the first work package for project delivery to eight world-class companies which have passed the pre-qualification questionnaire process, and we plan to award contracts for the four domains this autumn.

[Sir Peter Luff (Mid Worcestershire) (Con)]

25. I congratulate the Minister unreservedly on winning these freedoms for DE&S. In the absence of a proper contract with a contractor, how can he maintain his opposition to the Treasury’s natural instincts to abhor freedom and seize back power to itself and the centre?

[Mr Dunne]

I applaud my hon. Friend for the pioneering work he did in helping us take this reform of DE&S through. We are convinced that the work that we are doing in the new bespoke trading entity will bring significant benefits to defence procurement for the long term, but as he knows, we have retained in the Defence Reform Bill, which should shortly receive Royal Assent, the power for a future Government to introduce a GoCo, with suitable parliamentary scrutiny, should this be necessary to transform DE&S further in the years to come.

[Henry Smith (Crawley) (Con)]

14. What assistance his Department plans to provide to ensure that veterans are able to take part in the commemorations of the 70th anniversary of D-day.

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

I am familiar with the dispositions of that well-respected regiment, because B Squadron is recruited from its base in Telford, which is adjacent to my constituency. I am delighted to hear the good recruiting result that the hon. Gentleman refers to. I have further good news for Dudley residents: as my right hon. Friend the Minister for the Armed Forces indicated, reserve units can recruit beyond their structured liability in the event that they have success in recruitment, and we intend for the Dudley and Telford squadrons to be able to continue to recruit to up to 125% of their strength.

[Mr Speaker]

Order. Answers are hopelessly long. Ministers really have to get the message.

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[Sir Bob Russell (Colchester) (LD)]

On placing orders for Royal Navy ships, including fitting replacement engines, does the relevant Minister agree that the national security importance of guaranteed ongoing servicing in the UK must be the determining factor, instead of a foreign deal that weakens Britain’s long-term defence interests?

[Mr Dunne]

As the hon. Gentleman, who is a distinguished member of the Defence Committee, knows, this Government believe in open procurement to get the best value for the taxpayer, not only in procuring equipment initially, but in sustaining and supporting it, including diesel turbine engines for Her Majesty’s royal naval ships.

[Richard Graham (Gloucester) (Con)]

The Minister has referred to the important project of the Type 26 frigates. He will know that the first HMS Gloucester was launched in the Commonwealth in the 1650s and that the 10th HMS Gloucester was decommissioned only a couple of years ago. Does he agree that nothing would be more appropriate than for the 11th HMS Gloucester to be a Type 26 frigate?

[Mr Dunne]

My hon. Friend makes a very powerful case. I have to inform him, however, that the decision of whether the next class of frigate will be named after locations, people or whatever has yet to be taken, but his points have been well made.

[Martin Horwood (Cheltenham) (LD)]

Do Ministers know whether the Chilcot inquiry into the invasion of Iraq will be published by the time of the general election? If so, which one and what is causing the delay?

Defence Scientific Advisory Council (Triennial Review)

Philip Dunne Excerpts

Monday 12th May 2014 Written Statements

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

I am today announcing the publication by the Ministry of Defence of the findings of the triennial review of the Defence Scientific Advisory Council (DSAC). Triennial reviews of non-departmental public bodies (NDPBs) are part of the Government’s commitment to ensuring, and improving, the accountability and effectiveness of public bodies.

The DSAC is an advisory NDPB that provides the Secretary of State for Defence with independent expert advice on matters relating to non-nuclear science, technology, engineering, analysis and mathematics.

The review concluded that DSAC provides a valuable source of independent advice across defence and the functions performed are still required. The review recommended that DSAC should be retained as an advisory NDPB and noted that it continues to meet the high standards of governance required.

The review was carried out with the participation of a wide range of internal and external stakeholders and I am grateful to all those who contributed to this triennial review.

The Defence Scientific Advisory Council, triennial review report has been placed in the Library of the House. Copies are available to hon. Members from the Vote Office and to noble Lords from the Printed Paper Office. It is also available at the following link: https://www.gov.uk/government/organisations/defence-scientific-advisory-council.

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.

--- Later in debate ---

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—

--- Later in debate ---

[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.

--- Later in debate ---

[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.

Defence

Philip Dunne Excerpts

Monday 28th April 2014 Ministerial Corrections

[Mr Hoban]

To ask the Secretary of State for Defence how many smartphone apps his Department has launched.

[Official Report, 22 October 2013, Vol. 569, c. 102W.]

Letter of correction from Philip Dunne:

An error has been identified in the written answer given to the hon. Member for Fareham (Mr Hoban) on 22 October 2013.

The full answer given was as follows:

[Mr Dunne]

Since 2007, available records show that the armed forces have launched 31 smartphone applications.

The correct answer should have been:

[Mr Dunne]

Since 2007, available records show that the armed forces have launched 39 smartphone applications.

Military Credit Union

The following is an extract from the response given by the Minister for Defence Equipment, Support and Technology, the hon. Member for Ludlow (Mr Dunne) to the hon. Member for Strangford (Jim Shannon) during the Westminster Hall debate on Military Credit Union on 8 April 2014.

[Jim Shannon]

I also asked the Minister about giving advice to soldiers and serving personnel on how best to manage their money. I said that, often, those who did not have the level of income they currently have found managing their money overawing. Has offering that advice been considered?

[Mr Dunne]

Indeed. The hon. Gentleman raised the role of the Money Advice Service, which we established two years ago, and I am grateful that he gave it a positive endorsement. The advice is proving effective and, as the hon. Member for West Dunbartonshire said, the number of people taking advantage of the service in its first two years demonstrates that there was a need for it. We think that it is being delivered in the right way. I also thank the hon. Member for Strangford for the advert he gave to Armed Forces day this summer and the celebrations that will take place in his constituency. I wish them well.

[Official Report, 8 April 2014, Vol. 579, c. 44WH.]

Letter of correction from Philip Dunne:

An error has been identified in the response given on 8 April 2014.

The correct response should have been:

[Mr Dunne]

Indeed. The hon. Gentleman raised the role of the MoneyForce, which we established last year, and I am grateful that he gave it a positive endorsement. The advice is proving effective and, as the hon. Member for West Dunbartonshire said, the number of people taking advantage of the service in its first year demonstrates that there was a need for it. We think that it is being delivered in the right way.

Military Credit Union

Philip Dunne Excerpts

Tuesday 8th April 2014 Westminster Hall

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

It is a great pleasure to serve under your chairmanship today, Mrs Riordan. For me, as for the hon. Member for Harrow West (Mr Thomas), this is the first opportunity to do so. I congratulate him on securing the debate. He has been a persistent advocate of an armed forces credit union—I think he presented a ten-minute rule Bill earlier in the year—and I am pleased that he has managed to secure a full 90-minute debate today. It is good to see colleagues from Northern Ireland supporting it.

There is no fundamental disagreement between us on the proposal. The Government have actively supported credit unions since we came to office and we have been working energetically to increase access to affordable credit by modernising and expanding the sector. That is why we are investing up to £38 million in the credit union expansion project, providing an increased range of financial services for up to 1 million more customers, which we anticipate will save them up to £1 billion in loan interest repayments over the period to March 2019. We also believe that credit unions have a role to play in supporting our armed services.

Financial pressures exist within service households just as they do in the wider community, as all those hon. Members who spoke explained. Indeed, many hon. Members may have received letters from members of the armed forces or their families who have been denied credit, have struggled with obtaining a mortgage or have been refused the opportunity to purchase a financial product as simple as a product warranty. Often that has nothing to do with their creditworthiness per se, but is due to the nature of a peripatetic career that can prevent some in the armed forces community from developing a consistent credit history in the area where they live; that is often used by credit referencing companies to determine credit credentials. We recognise that that is a problem within the structure of employment in the armed forces, and have been actively taking steps to ease the problems for service personnel, as an important component of the armed forces covenant, which the hon. Member for West Dunbartonshire (Gemma Doyle) mentioned.

Two years ago, in April 2012, working with credit reference agencies and the Royal Mail, we introduced “shadow” postcodes against British forces postal addresses, to try to establish consistency of address. That helps armed forces personnel serving overseas to maintain a UK credit history that is recognised by financial service providers and allows improved access to financial products. The MOD has also secured an important pledge from, among others, the UK Cards Association, the British Bankers Association, and the Council of Mortgage Lenders to treat

“applications for credit and mortgages...fairly and consistently with civilian counterparts”.

Last year, as other hon. Members have mentioned, we launched MoneyForce in partnership with the Royal British Legion and the Standard Life Charitable Trust. That has been providing training, briefings, resources and online support, helping the armed forces community to manage its money and financial affairs better.

Despite that support, there are still those in the forces, as there are among the public at large, who end up requiring a loan just to make ends meet. I am sure that the hon. Member for West Dunbartonshire was not suggesting, in her remarks, that armed forces personnel have increasingly become users of food banks, because I am aware of no evidence of that. If she has any I should be interested.

[Gemma Doyle]

indicated dissent.

[Mr Dunne]

I think she is indicating that she did not mean that, and I am pleased to hear that, because there is no reason for it.

Citizens Advice has said that it is dealing with a significant number of cases of service personnel and their families who get into difficulty with debts at high interest rates owed to payday lenders. Those lenders appear to be specifically targeting the armed forces because some personnel have problems with credit ratings. The hon. Members for Harrow West and for West Dunbartonshire both mentioned some of those payday lender adverts, and the extortionate rates of interest that they charge. I searched the internet to see what claims those companies make. Entering “armed forces loans” into the search engine generates a list of companies promising no credit checks, rapid payment and 100% satisfaction. One website even depicts a smiling soldier in uniform giving a thumbs-up in front of the Union flag, with the claim that it is the

“Number One lender to the military”.

[Mr Thomas]

The Minister accused me of persistence, so as he is five minutes into what is, to be fair, a very interesting speech, will he tell me whether he will support a feasibility study on payroll deduction, and meet me to discuss how we might get quicker access to credit union products for armed forces personnel?

[Mr Dunne]

I am sorry that the hon. Gentleman seems to want to bring the debate to a premature conclusion. We have plenty of time left, and I am sure, given that he called the debate, he would like to use as much of it as possible. He already asked that question in his remarks, and I hope to deal comprehensively with all his questions before the debate finishes.

I referred to the website because of the impression that may advertently or inadvertently be given that websites directed at the armed forces carry some endorsement from the armed forces. That could not be further from the truth, but it highlights the risks for the Ministry and the service branches in any involvement in the provision of financial products, should personnel or their families get the impression that the military was endorsing a particular product. Such a financial product would carry the same kinds of risk as any other regulated entity, and we take that seriously.

[Jim Shannon]

The hon. Member for Harrow West and I cited the Navy Federal credit union in the United States as an example of something that is clearly personnel-oriented but is acceptable and does what it should: it does what it says on the tin, as we say. That is an example of what could be done.

[Mr Dunne]

I completely accept that there are examples elsewhere, as the hon. Member for Harrow West said—not just in the United States but also in Australia—of credit unions receiving support from the armed forces. I shall come on to that but I was just highlighting the level of associated risk.

--- Later in debate ---

On resuming—

[Mr Dunne]

Before the Division, I was explaining how credit unions must be properly regulated, and the fact that we need to be confident that any credit union established with military branding has some financial security. Credit unions offer access to good-value savings and loan products for a customer base that has historically found it hard to access such services. They are registered as industrial and provident societies and are regulated by both the Financial Conduct Authority and the Prudential Regulation Authority.

Unlike payday loan companies, credit unions are, in my view, a positive force for the community around them, benefiting members and local economies alike. Their role in developing alternative financial services for member groups has been well championed in this House, not only by the hon. Member for Harrow West but particularly by the all-party group on credit unions, which my hon. Friend the Member for East Hampshire (Damian Hinds) has chaired so admirably since he was elected, among his many other duties, including his support for me today, for which I am extremely grateful.

Of course, provided that they meet the common bond for membership, members of the armed forces and their families can already apply to join an existing credit union local to them in order to access the range of financial services on offer. However, coverage is not national and the services vary. As the hon. Member for Harrow West pointed out, the Navy Federal credit union in the US is a model of what can be achieved. It has around 5 million members and some £50 billion in assets. I agree with the hon. Gentleman that a well-managed credit union for our soldiers, sailors, airmen and women, as well as their families and veterans, could be of considerable benefit if established for United Kingdom armed forces.

However, there is a “but”. What makes credit unions unique and makes them work is their independent spirit. They are created by the people for the people, offering products that their customers want because their customers are also their members. Typically, credit unions grow steadily and organically from small beginnings, normally taking many years to cultivate their membership. To give one example, the Glasgow Credit Union was founded by two members in 1989 as the Glasgow District Employees Credit Union. In the following 25 years, it grew to a membership of 32,000 and now has some £100 million in assets. Although this is an excellent example of localism in action, it demonstrates the time that it can take a credit union to develop proper traction and critical mass. Also, it would not be in the interests of anyone—the taxpayer, UK financial services or credit union members themselves—to try to shoehorn an institution of this kind into a Whitehall Department. The organisation of credit unions has always been, and must continue to be, the remit of the private and voluntary sector. It is no small undertaking to establish one.

[Gemma Doyle]

Could the Minister explain, therefore, why the Department for Work and Pensions has put aside £38 million to support credit unions, because that does not seem to sit with the point he has just made, namely that supporting credit unions is not the business of Government?

[Mr Dunne]

The Government are keen to support the development of credit unions but we are not keen to be the operator. The funding is available to provide support. I am not familiar with all the detail about what the DWP funding has provided, but I can certainly look into that matter and write to the hon. Lady if she would like clarification. Nevertheless, as far as I am aware, it is not the business of the DWP to establish credit unions. I think that it is providing support for existing or start-up unions being established around the country on an initial basis, effectively like providing start-up funding for a business.

[Mr Thomas]

Of course the Minister is right that one would not want a military credit union to be run by the Secretary of State for Defence, or even by a talented junior Minister such as himself; one would want it to be run by its members. However, what the Ministry of Defence could do is help to facilitate the establishment of such a credit union and a feasibility study that was specifically focused on what role the MOD might play to help to achieve that objective.

[Mr Dunne]

Indeed, and not for the first time the hon. Gentleman is pre-empting just what I am coming to in my remarks; he is very prescient.

It is important that any organisation that undertakes the establishment of a credit union does so with its eyes wide open and is aware of the risks that might be involved. From our perspective, in the event that we were to provide support for an organisation, we have some responsibility for the savings of service personnel, to ensure that those savings are in an environment where they will be properly stewarded, managed and regulated. That said, we are minded to support any suitable organisation with the wherewithal to put in place a credit union to support the men and women who serve in our armed forces.

To that end, I will update the House on where the Department has got to in the discussions that were identified by the hon. Gentleman in his remarks. The Department has already brought together relevant parties to form a working group to look at precisely this issue. It includes the DWP, the Treasury and the Association of British Credit Unions Limited, as well as service charities such as the Royal British Legion and the three service benevolent funds. A number of those stakeholders were present at meetings hosted in January and February by the MOD. There was broad support for the credit union concept and a number of parties expressed their willingness to become involved, but unfortunately at that time none of the individual charities stepped forward to take the lead. Subsequent to those meetings, however, we have had further approaches from some of those organisations that attended them. ABCUL, which was referred to earlier, has been in touch and it has indicated that it is keen to take these discussions forward. We, too, stand absolutely ready to do so.

The hon. Gentleman has asked repeatedly about the prospect of the MOD funding a feasibility study into a military credit union. We are of a mind to support one or more organisations that wish to take the lead in investigating the feasibility of a credit union, but we do not think that it would be appropriate for us to take the lead. As and when an organisation steps forward, we are willing to work with it on how we can best support the establishment of a credit union, but we think that actually establishing a credit union would be best done by an organisation that is already one of those we have been talking to and that is already embedded with relationships with service personnel and their families.

[Mr Thomas]

I want to understand exactly the Minister’s point. If a charity or a credit union were to come forward saying that it believes it has the capacity or interest to provide such a dedicated military credit union and to get it up and running, would there potentially be the prospect of support in financial terms as well as in the crucial area of payroll deduction for a military credit union?

[Mr Dunne]

I am not in a position to commit the Ministry’s budget here and now. What I am willing to do, as I think I have already indicated, is to offer further support to explore the possibility of establishing a military credit union. If an existing credit union felt that it had the resources and the experience to bring to bear, that would be a very positive development; equally, if an existing service charity felt that this was an area that it wished to explore, that would also be very welcome. I am not closing the door to providing assistance for a feasibility study, but I will not commit at this point to conduct one without knowing to whom I might be making such a commitment.

[Jim Shannon]

Further to the point made by the hon. Member for Harrow West, I have a question. My hon. Friend the Member for North Antrim and I suggested that, by making payroll deductions during a five or 10-year period, we could build in the moneys that would be needed, while being ever mindful that it is a credit union that is being established. Would such a scheme be part of the feasibility study?

[Mr Dunne]

The subject of payroll deduction has been raised by a number of hon. Members. We make payroll deductions in certain areas. Insurance services were specifically mentioned as possible services for a credit union to provide and it was said that a payroll deduction might be a way of helping to fund insurance premiums. We already make such deductions for armed forces personnel. We have a payroll deduction scheme that is financially supported by the Government, over and above our merely facilitating contribution payments. That is to ensure that life insurance is available to armed forces personnel who are on operations, irrespective of their role. That is a specific product that is funded through payroll deduction.

[Mr Thomas]

I am grateful to the Minister for what he just said on that subject. However, may I specifically ask him whether the MOD now accepts that if there were a credit union that it had confidence in regarding the ability to provide financial services to armed forces personnel, it would be willing to facilitate payroll deduction for members of the armed forces to join, contribute to and pay into such a specific military credit union?

[Mr Dunne]

Again, we are talking about quite a number of hypothetical steps here. I am certainly willing to say that if we get into discussions with a serious, credible entity that is willing to establish a credit union, we can consider the possibility of payroll deductions as one means of providing either interest payments or investment through the union’s savings products. However, in the absence of knowing which party we would be dealing with and the suitable structures that would be placed around it, I cannot commit to do that.

The hon. Gentleman will appreciate that military payrolls are not a uniform or simple thing. The issue strays rather beyond my departmental responsibilities, so for me to commit other Ministers and other elements of the Department to things about which I am not expert would be career-inhibiting. I will not do that, but I certainly undertake that, if we pursue discussions with the credit union, the issue can be on the agenda.

[Mr Thomas]

I would not want to limit the Minister’s career in any way, given how helpful he has been in this debate. On payroll deduction, I gently suggest to him that the NHS has some equally complex systems, and many parts of the NHS are able to do it. My last specific question is whether he is willing to commit to asking the relevant Minister—I appreciate that he is filling in today—to meet ABCUL, Plane Saver and me. Those organisations think they might be in a position to offer a credit union service now, before a dedicated military credit union is established.

[Mr Dunne]

The hon. Gentleman referred to Plane Saver before, and I am not aware that it has directly approached us. We have clearly had an approach from ABCUL. It participated in meetings earlier this year and wrote again last week, perhaps prompted by sight of this debate. I am confident that the Under-Secretary of State for Defence, my hon. Friend the Member for Broxtowe (Anna Soubry), who has responsibility for defence personnel, welfare and veterans, would be willing to meet the hon. Gentleman and ABCUL. If he wanted to bring Plane Saver along, it would be welcome, too.

The hon. Gentleman asked some specific questions about the promotion of credit unions within military publications. Were the credit union to be established with support from the military, it would be more than welcome to take space in the military publications. I cannot, however, commit to the charging basis on which that space would be available; that would be a matter for the normal procedures for each publication. He asked whether we could institute a ban on payday lenders advertising in military publications. This Government are not in the business of prohibiting freedom of speech. Payday lenders might be unethical, but they are not unlawful, so we should not ban their adverts. We should, however, look to support the credit union going forward.

The hon. Member for Strangford (Jim Shannon) asked whether we could underwrite a scheme, but I have to disappoint him. The Ministry of Defence budget might appear to be large, but it appears from the inside to be somewhat constrained. We have to devote our budget to our front-line duty, which is protecting the nation. We are willing to provide opportunities to access military publications and that kind of thing, but we are not in a position to underwrite a financial offering to our personnel.

[Jim Shannon]

I also asked the Minister about giving advice to soldiers and serving personnel on how best to manage their money. I said that, often, those who did not have the level of income they currently have found managing their money overawing. Has offering that advice been considered?

[Mr Dunne]

Indeed. The hon. Gentleman raised the role of the Money Advice Service, which we established two years ago, and I am grateful that he gave it a positive endorsement. The advice is proving effective and, as the hon. Member for West Dunbartonshire said, the number of people taking advantage of the service in its first two years demonstrates that there was a need for it. We think that it is being delivered in the right way. I also thank the hon. Member for Strangford for the advert he gave to Armed Forces day this summer and the celebrations that will take place in his constituency. I wish them well.[Official Report, 28 April 2014, Vol. 579, c. 7MC.]

I conclude by confirming that the Government support the notion of establishing a military credit union. We are in active discussions with the credit union trade body and the service charities. I have indicated that we are willing to commit the Minister to meet them again, with the hon. Member for Harrow West, who takes such an interest in this matter. In closing, I encourage all parties with an interest in developing this kind of financial service for our armed forces personnel to get together, to pool resources and to try to find a way of making it happen.