Draft Armed Forces (Terms of Service) (Amendments Relating to Flexible Working) Regulations 2018

Tobias Ellwood Excerpts

Wednesday 17th October 2018 General Committees

[The Parliamentary Under-Secretary of State for Defence (Mr Tobias Ellwood)]

I beg to move,

That the Committee has considered the draft Armed Forces (Terms of Service) (Amendments Relating to Flexible Working) Regulations 2018.

It is a pleasure to work under your chairmanship this afternoon, Mr Rosindell. I am impressed by the tier-1 calibre of MPs who have decided to join us to discuss this draft statutory instrument, which we have an hour and a half to debate in full.

I know that colleagues will have read the terms of service regulations, which are core to what we are discussing. The draft statutory instrument will make consequential changes to those regulations for regular personnel in the Royal Navy, the Royal Marines, the Army and the Royal Air Force. The changes are necessary to enable the Ministry of Defence to operate and manage part-time and restricted separation service, described collectively as flexible service, from 1 April 2019.

Hon. Members will recall that in February this year the Armed Forces (Flexible Working) Act 2018 became law, an historic common-sense step that will help to modernise the terms of engagement that we offer our people in the future.

[Michael Fabricant (Lichfield) (Con)]

Will the Minister give way?

[Mr Ellwood]

So early in proceedings—I would be delighted.

[Michael Fabricant]

I am grateful to my right hon. Friend. He might come on to this later, but my only concern with that flexibility is whether it will affect the readiness of the armed forces. I also wonder to what degree other countries have adopted similar practices.

[Mr Ellwood]

My hon. Friend is right. I will come on to that in detail, because it goes to the heart of our continuing to have a fighting capability while meeting the needs of modern society and the expectations of those people who join the armed forces in this day and age.

I am grateful that we had a lively and interesting debate in the lead up to Royal Assent in February. I was particularly pleased to note the overwhelming support for the concept of flexible service.

[Michael Fabricant]

I had a second part to my question about which other countries, if any, have adopted this practice.

[Mr Ellwood]

It is interesting that my hon. Friend mentions that. Australia and New Zealand have different models, and we are sharing our thoughts with other NATO nations. Clearly, this is a recognised step forward in the offering armed forces provide across the world, certainly as regards our allies. I expect a third intervention—but I shall continue.

I also noted during passage of the Act, and certainly during the debate in the House of Lords, that there was an understandable interest in the detail behind the main policy headlines, to examine whether the engine room driving such fundamental changes is fit for purpose. We have worked hard to design a system that will ensure that flexible service operates legally, fairly and efficiently, both for our people and their families who will benefit from the new opportunities and, importantly, for the chain of command who will manage them while continuing to deliver operational capability.

The Government are alive to the desire expressed in this House and the other place to scrutinise the fine detail that will enable flexible service to operate. That is why we have agreed that this important piece of secondary legislation, which we hope to introduce today, should be subject to the affirmative procedure.

Although the changes introduced by the statutory instrument will usher in new, modern opportunities for our people, they are already standard in the wider world of work. We have worked closely with the armed forces to ensure that they are balanced with the need to protect the armed forces’ ability to deliver operational capability—the point made by my hon. Friend. To be clear, that must be a red line for defence. I hope that my statement and our debate will demonstrate how people in the Ministry of Defence have appropriately balanced the overriding need to maintain the operational capability of our armed forces with the need to support those who deliver it, and their families, through opportunities for flexible service.

The regulations enable regular service personnel to serve part time and to restrict the number of days they can be required to serve away from their home base to 35 in any 12-month period. They set out the overall time limits for periods of flexible service and the application process, which is designed to be fair and efficient, enable service personnel to apply voluntarily for flexible service and empower the service to consider applications. However, they do not guarantee that any application will be successful. In addition, they outline the actions required by each party during the application process. Importantly, the process is designed to ensure that service personnel cannot have flexible service terms imposed on them.

There may be occasions when, a flexible service arrangement having been agreed, circumstances require changes to be made to it, either permanently or for a specific period. We have therefore set out the conditions under which a flexible service arrangement may be varied, suspended or terminated. In the interests of national security, we conclude that, in extremis, it is essential for services to be able to recall personnel to their full-time duties immediately, through either permanent termination or temporary suspension of the flexible service arrangement. However, that power will be used only sparingly, and only when a 90-day notice period would have an unacceptable impact. Individuals will also be able to terminate their arrangement with 90 days’ notice, or apply to suspend or vary it.

We want to give service personnel as much certainty as possible about any flexible service arrangement they enter into, because they would not apply if they felt the arrangement was likely to be cancelled without warning or explanation. However, we are clear that that must be balanced with service need above all else. We recognise that service personnel may not always get the outcome they hoped for when applying for flexible service. We therefore judged that it was right and fair to make provision for an appeals process. However, the scope of any appeal will be limited to the serviceperson requesting that the appeals authority reconsiders the decision they are unhappy with. Service personnel will be limited to one appeal against a decision. Outside that process, they will retain normal access to the service complaints system.

Hon. Members will note that the working detail beneath the main headlines I have outlined ensures that we will achieve our main policy aim of being fair and honest with those who work for us. We aim to give people access to new, modern flexible service opportunities, while recognising that we must maintain operational effectiveness, which is paramount.

Approving these changes will send a powerful signal to all our brave, loyal and dedicated armed forces and their families that we are on their side. It will be a major step in the journey towards the introduction of flexible service on 1 April 2019. As well as achieving their primary purpose of making changes to the armed forces terms of service regulations, these regulations will enable the finalisation of important related activities, including: the amendment of subordinate armed forces regulations, such as Queen’s regulations; the publication of a suite of policy guidance material for those who consider applying for flexible service and those who administer it; and the continuation of our comprehensive communications campaign, which will promote and explain flexible service but also manage expectations and not oversell it.

[Leo Docherty (Aldershot) (Con)]

Will the Minister confirm that it is the Department’s expectation that these changes will improve retention? They will, for example, allow a soldier who may have seen operational service to agree a working structure when he is not required for operational soldiering that allows him to do the school run on a Monday, thereby easing pressure on his domestic life.

[Mr Ellwood]

I pay tribute to my hon. Friend for his service. He comes here with experience and he will know from the people that he has worked with that personal circumstances change as people serve in the armed forces. They get married and have kids, and extra pressures arise, which may place additional, personal demands on them. Families federations get the feedback that what would help would be to have this valve to allow a bit of time and give some certainty about what is going to happen over a short period, because something has happened in their life—if they want to study or they have a child, for instance. It will support retention, which is critical for our armed forces.

I can confirm that all the activity I have just outlined, together with the consequential changes to the armed forces pension scheme, the compensation scheme legislation and the changes we need to make to our IT systems to enable flexible service to operate, are all firmly on track for delivery in time for the 1 April 2019 launch.

Hon. Members have already demonstrated their overwhelming support for the concept of flexible service, which I hope will be echoed today. I certainly hope that we can crystallise that support by approving the details that will make flexible service a welcome reality for our armed forces, who are renowned around the world for their professionalism, leadership and discipline. I hope that hon. Members will be satisfied and will be inclined to support this statutory instrument.

--- Later in debate ---

[Mr Ellwood]

I am grateful for the support from right across the Committee. It is important that our armed forces see Parliament, the Government, the Opposition and so forth all supporting what they do.

I thank the hon. Member for Merthyr Tydfil and Rhymney for his support on the Armed Forces (Flexible Working) Act, and in Committee today. He spoke of the debt of gratitude that we owe to those who are in uniform. I would add to that the debt that we owe to those who are related to those in uniform—the armed forces community. It is this place that votes to send these people into harm’s way. It is important that we look after them. Looking after them does not just mean that we do equipment well or train them well. It means that we address the welfare aspects, including housing. It also means understanding that we should give them the flexibility we are discussing here today.

The hon. Gentleman also recognised, quite rightly, that this year is a significant year as we pay tribute to not just those in the armed forces but the generation that stepped forward 100 years ago to defend our values and helped shape our way of life. We are forever grateful for the huge sacrifice that was made.

He talked about the gene pool of talent that we have to recruit from. It is difficult for the armed forces because there is a certain age profile and a level of fitness that has to be expected, and it is competitive in this day and age. We are all aware of the challenges that we face, which is why we must forever compare ourselves with civilian attractions. A flexible service is one example of our being able to illustrate that what someone does in the armed forces is similar to what they might gain on civvy street.

He talked about the appeals process. I touched on the creation of an appeals authority, which would make sure that we carry out proper scrutiny. We do not expect the take-up to be huge. In Australia, which is operating a similar system, there is about a 1% take-up. We expect between 1,000 and 2,000 people, perhaps, at any one time, to take up this opportunity, which means that it would be prohibitive to provide detailed records. I will promise that when we present the armed forces covenant annual report, we will make clear the progress that has been made and give a full report on the impact of flexible service, including the take-up. That is very important.

I am grateful for the Scottish perspective. The hon. Member for West Dunbartonshire talked about his personal experience and those he knows. It reminded me that society is ever distant from those who serve. As we move forward, there is a disconnection from the direct recognition of what our armed forces do. Fewer and fewer of us have a grandfather or father who served and who can remind us of that bravery. That makes it all the more important that we look after our armed forces, and make it an attractive proposition in comparison with the other opportunities open to 18 to 20-year-olds.

The hon. Gentleman also talked about quality of life. I absolutely agree. It should be made very clear that we in this place talk about the professionalism of our armed forces as among the best in the world not because we have fantastic aeroplanes or tanks or ships and so forth or because of their training, but because of the value of individuals—the people—and it is the people we must look after. I would underline, as I like to do, that when someone joins the armed forces community, they never leave. At some point, they may retire and pack their uniform up and slide it over to the quartermaster, but they will remain associated with the armed forces in one form or another, and certainly psychologically, so the more that we can do as they serve and as they move into society as veterans, the better that will be.

The hon. Gentleman touched on housing. I know this has been an issue with Annington Homes and others. We are rationalising the real estate. The armed forces owns 2% to 3% of the land in the UK, and we no longer need that land. We are disposing of that to help with housing. With the reconciliation of bases and hubbing in certain locations, we are spending £4 billion over the next 10 years on that upgrade. The process is slower than I would like it to be, but we have to be patient and try to get the accommodation that is expected for our modern fighting armed forces.

Question put and agreed to.

Closures of RAF Scampton and RAF Linton-on-Ouse

Tobias Ellwood Excerpts

Tuesday 16th October 2018 Westminster Hall

[The Parliamentary Under-Secretary of State for Defence (Mr Tobias Ellwood)]

It is a pleasure to respond to this debate, and I join the others in congratulating the hon. Member for Lincoln (Karen Lee) on securing it.

I begin with a declaration of interest. I am a private pilot and I am pleased to say that the last plane I flew was a Typhoon out of RAF Coningsby, which I took through the sound barrier. That is an example of what the hon. Member for Bridgend (Mrs Moon)—who is no longer in her place—mentioned earlier of dealing with threats, as clearly my presence in the air over the east of England pushed away any Russian threats that day. RAF Coningsby is a fantastic example of what the county of Lincolnshire offers the RAF. We should be very proud of what happens at that base and at all the other bases across the county, and indeed across the country.

Before we discuss the individual basing decisions, it would be remiss of me not to briefly acknowledge, as others have done, the 100th anniversary of the Royal Air Force, a merger of the Royal Flying Corps and the Royal Naval Air Service created the first independent air force in the world. At the time, General Haig commented that he hoped that no one would be so foolish as to think that planes would be usefully employed in the objectives of reconnaissance for the purposes of war. He was a cavalry man who thought that the only way of gaining intelligence on the battlefield was on the back of a horse. We now know that the Air Force would become a significant component in our military capability. Indeed, it was our superior air power during the battle of Britain that led to the cancellation of Operation Sea Lion, the planned Nazi invasion of England.

The size of the RAF has fluctuated. Before the war it was around 31,000; at the height of the war it was 264,000; today it is around 30,000. Such were its requirements that much of the country, especially in the eastern counties, was peppered with bases, landing strips, early warning systems and the factories that made the aircraft, all gearing to support the war effort. Today, thanks to technological advances and changing threats and tactics, our air power footprint is very different indeed. We have a leaner, more versatile and more capable fighting force than we have ever had.

However, we find ourselves responsible for a legacy estate that owns 2% to 3% of UK land, and we realise we cannot afford to keep that going. A significant amount of that land is surplus to requirement. As a result, the MOD undertook a wide-ranging study of the entire estate, culminating in what was known as the better defence announcement in November 2016. That study identified many areas that could be used more efficiently, but stated that overall the estate was too big and expensive, with too many sites in the wrong location. We therefore embarked on a transformation of our estate. We will invest £4 billion over the next 10 years to upgrade key sites—and, yes, we will reduce our footprint elsewhere.

We have a total of 91 sites across the defence estate. Painful though it is, those will have to be reconciled. I hope that that results in a more modern and capability-focused estate. That approach will provide the modern facilities that the RAF needs and give personnel better employment opportunities for their partners and, with fewer movements during an RAF career, the ability to put down roots in their local community, which my hon. Friend the Member for Berwick-upon-Tweed (Mrs Trevelyan) mentioned. Crucially, that work is being done not by a central body—not by the MOD or the Defence Infrastructure Organisation—but by the armed forces and, in this case, the RAF, which is best placed to understand what it requires to support the delivery of defence in the United Kingdom.

That takes us to the sites that are the subject of the debate. First, as was said, RAF Scampton is steeped in history, but it is of course most famous for 617 Squadron and its daring Dambuster raid on 16 May 1943. As I mentioned, Lincolnshire is blessed with a number of other RAF bases, including Waddington and Cranwell, which I visited recently, and Lossiemouth. RAF Scampton is not in good condition. Some buildings have changed little since world war two. The station is in a poor state of repair, as indeed is the runway. I make it very clear, difficult though it is to hear, that it would require significant investment to restore the base to a suitable standard for the aircraft we use today.

I absolutely recognise the passion—that was illustrated in the powerful speech by the hon. Member for Lincoln (Karen Lee)—and the sense of nostalgia about the tough choices concerning the future of RAF Scampton. It simply would not be an efficient use of public money for the Royal Air Force to retain that site purely for heritage reasons. Instead, it will continue to concentrate its resources on active sites that contribute to the defence outputs that will shape the future. Fortunately, as I said, many of those sites are based in Lincolnshire, so we will not remove that county’s important relationship with the RAF.

The Royal Air Force, the MOD and I, as a Minister, are not indifferent to the heroic contributions of those who served at Scampton—not least the Dambusters. I can think of no more fitting tribute than the newly re-formed 617 Squadron, which will be based at RAF Marham with the world’s most advanced jets in the form of the F-35 Lightning.

It is those difficult factors that led me to conclude in my announcement to Parliament on 24 July 2018 that RAF Scampton needed to close. We have ensured that our personnel are fully aware of the plans for the future of the site and we can begin to work with interest to prepare the long-term locations for the units, including the famous Red Arrows as well as No. 1 Air Control Centre and the Mobile Meteorological Unit.

I heard the passion that was expressed about the connectivity between Scampton and the Red Arrows, but I would argue that they are a national asset. I think the hon. Lady knows that they have not only been based in Scampton, although there is a current bond there. They spend a fair bit of time in Bournemouth, dare I say it, when they are doing the air shows down in the south of the country. They move around, doing 60 air shows a year not only in this country but elsewhere, and they have moved in the time since they came into existence in 1965. They have been at Fairford, where another international air show takes place, they have been at Kemble and they were at Scampton before moving to Cranwell and then back to Scampton—and yes, they now need to move again.

Of course it is dramatic when the Red Arrows move, but we must bear in mind the costs of keeping that runway and its facilities open and making the best use of the limited budget that we have. This is a tough decision to make, but we must provide them with a home that is fit for purpose. There are now detailed discussions; I know that the hon. Lady wants to know more information about them, but this is subject to discussions with the Civil Aviation Authority and there are difficulties with sharing absolutely everything. If I can agree to meet her one on one, we can have a further discussion about this, which I hope will be of help to her. We have already identified a number of options to ensure there is a home fit for the Red Arrows.

If I may turn to RAF Linton-on-Ouse, again, we heard a powerful but measured understanding of what needs to be put forward for the future of this base from my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake). As he is well aware, and I think touched on in his contribution, the Tucano aircraft used by No. 1 Flying Training School, the main users of the site, will go out of service in October 2019. The essential Basic Fast Jet training will also move to RAF Valley, as has also been mentioned, using the Texan aircraft type.

With the main occupants due to leave in 2019, the Royal Air Force assessed that there was no requirement to maintain the station in the long term. The remaining units are due to be moved to existing sites, further consolidating the Royal Air Force into core locations up and down the country. Like RAF Scampton, this is an example of how we are driving down our running costs and consolidating our people and our investment into fewer sites but ones that are better maintained.

Understanding the realisation of the defence estate is difficult, and some painful decisions must be made. As it was, it no longer represented the modern-day armed forces it was meant to serve. It was too large, and both our people and our investment were spread too thinly across the entire United Kingdom.

[Kevin Hollinrake]

Will the Minister touch on the issue of capacity? There were concerns raised by people who, I think, had no vested interest here, but were concerned that a single base could not deliver the level of pilot training required for our future needs and some of the contracts we have for other nations. Can we guarantee today that RAF Valley will be able to meet that need?

[Mr Ellwood]

I am happy to give my hon. Friend that assurance. I visited RAF Cranwell only a couple of weeks ago and had a full briefing on the progression of the pilots, depending on which aircraft they will eventually use. He also touched on something else. The expertise that we have in this country is phenomenal. We not only train our pilots to an exemplary standard but train pilots for other nations too. That is important for the soft power relationships that we build with other nations.

[Nic Dakin]

Before the Minister finishes, could he address the points that I raised about the community assets at the Kirton-in-Lindsey site, which will be disposed of as part of the disposal of RAF Scampton? Will he commit to ensuring that the Ministry of Defence engages fully and proactively with the town council and others who have community interests?

[Mr Ellwood]

The hon. Gentleman makes an important point about what happens once a decision is made, and the importance of having a strategy, working with the local authorities and with the devolved Administrations in some cases, to take best advantage of the estate that is being provided. Discussions happen with the Defence Infrastructure Organisation on that very front. The air base that he mentioned was not part of the subject matter for this particular debate, which was focused on these two RAF bases, but I would be more than delighted to meet him to be apprised of what is happening and to discuss that in further detail.

I am sure hon. Members will agree that the men and women of our armed forces, who do so much for our country, deserve to work and train at sites with modern facilities, and that the civil servants and contractors who support them in delivering their outputs need the certainty that the establishment of core sites provides. Let us also not forget the families around the serving personnel, who must be able to benefit from the necessary schooling for their children and be able to buy their homes, put down roots and be part of local communities.

The world is becoming a more complex and dangerous place. We are very fortunate with the history of the RAF, what it has gone through and how it has helped to shape the world and who we are today. I simply make the case, as we head toward the next Budget, that we must keep investing in all our armed forces and in our bases to ensure that we continue to have a place and a voice at the international top table.

Armed Forces Pay Review Body

Tobias Ellwood Excerpts

Tuesday 16th October 2018 Written Statements

[The Parliamentary Under-Secretary of State for Defence (Mr Tobias Ellwood)]

I am pleased to announce that I have invited Lesley Mercer to continue to serve as a member of the Armed Forces Pay Review Body for a further three-year term of office, commencing on 1 March 2019. This appointment has been conducted in accordance with the guidance of the Office of the Commissioner for Public Appointments.

[HCWS1013]

Future Accommodation Model

Tobias Ellwood Excerpts

Wednesday 10th October 2018 Written Statements

[The Parliamentary Under-Secretary of State for Defence (Mr Tobias Ellwood)]

It was previously announced that the future accommodation model (FAM) was being developed with the intention of changing the way in which we provide accommodation to service personnel to ensure that a career in the armed forces can be balanced better with family life. We are committed to making the changes necessary to enable our armed forces to work flexibly, reflecting the realities of modern life and to make a new accommodation offer to help more service personnel live in private accommodation and meet their aspirations for home ownership.

This commitment is being delivered through the FAM which aims to design and deliver a new accommodation model that improves and modernises aspects of the accommodation offer for service personnel and better meets the enduring operational and financial needs of the Department.

We had hoped to run a pilot towards the end of this year and remain committed to this policy principle, but the pilot scheme will now take place in 2019. This will allow the Ministry of Defence additional time to fully evaluate the scope of the pilot and better understand its impact on service personnel, with a view to delivering the most effective model. The pilot, in 2019, will also allow us to continue to work closely with broader departmental and cross-Whitehall initiatives to support service personnel accommodation.

We value the input we have had from service personnel, frontline commands and the families federations, and look forward to continuing to work with them on the implementation of FAM in the future. I will update the House in due course.

[HCWS982]

Opposition Day Defence Industry and Shipbuilding Debate

Tobias Ellwood Excerpts

Tuesday 11th September 2018 Written Statements

[The Parliamentary Under-Secretary of State for Defence (Mr Tobias Ellwood)]

I wish to clarify statements I made during the Opposition day debate on the defence industry and shipbuilding, Official Report, 11 July 2018, Vol. 644. The information should have been:

No UK shipyard provided a final bid for the auxiliary oiler ships recently purchased from South Korea. It cannot therefore be known whether the ships would have cost twice as much had they been purchased from a UK shipyard. However, the prices offered by South Korean yards were substantially lower than those of any alternative and, as a result, taxpayers are paying less than they would have had we adopted a different strategy.

Considering the totality of the programme, including UK customisation work, the programme has a UK work content worth some £180 million, around a third of the total acquisition costs.

[HCWS948]

A Better Defence Estate

Tobias Ellwood Excerpts

Tuesday 24th July 2018 Written Statements

[The Parliamentary Under-Secretary of State for Defence (Mr Tobias Ellwood)]

In November 2016, the Ministry of Defence (MOD) published its estate optimisation strategy “A Better Defence Estate” outlining how MOD will deliver an estate that is optimised to support defence capabilities, outputs and communities both now and in the future. This update provides progress against the strategy.

Delivering the strategy remains a priority for the MOD, and the commitment to invest £4 billion to create a smaller, more modern and capability-focused estate between now and 2040 remains. A major defence-level initiative, the “Defence Estate Optimisation” programme, has been mobilised to deliver this strategy, combining military and infrastructure expertise to transform the places where our armed forces live, work and train. The programme has already delivered nine disposals: Hullavington airfield, Chalgrove airfield, Somerset barracks, MOD facilities at Swansea airport, Moat House, Rylston Road ARC (London), Newtownards airfield, Copthorne barracks and Lodge Hill. The MOD continues to develop integrated plans for sites intended for disposal and redevelopment for those sites that will see an increase in military units. Good progress has been made with a significant amount of work on the myriad studies required to enable a programme of this size and complexity. The first half of 2018 saw the major tranche of capacity studies and reviews of re-provision site constraints being completed. Feasibility and assessment studies have been completed for over 40 sites in which the MOD will be investing.

The MOD can also confirm the intention to cease RAF use of RAF Linton-on-Ouse (North Yorkshire) in 2020. RAF Linton-on-Ouse is the base of the Tucano training aircraft, as the RAF plans to retire this aircraft, the site will no longer be needed. Instead, we will be able to concentrate basic and advanced fast-jet training at RAF Valley from 2019.

The MOD will close RAF Scampton (Lincolnshire) in 2022, relocating the RAF aerobatics team (RAFAT) and others to locations more fit for purpose. The disposal of the site would offer better value for money and, crucially, better military capability by relocating the units based there.

Given the scale of the strategy and the fact that it will be delivered over 25 years, plans continue to be refined to best support operational capability and Parliament will continue to be updated regularly on our plans.

The Department continues to engage with relevant stakeholders, including devolved Administrations and local planning authorities, to ensure sites released under the strategy are redeveloped in a way that benefits both defence and surrounding communities. The MOD remains committed to making the right decisions to provide effective support to defence capabilities and best value for money for the taxpayer.

[HCWS922]

Education Support Fund

Tobias Ellwood Excerpts

Tuesday 24th July 2018 Written Statements

[The Parliamentary Under-Secretary of State for Defence (Mr Tobias Ellwood)]

The education support fund (ESF) was introduced in 2011 as a Ministry of Defence (MOD) fund to supplement the provisions made by the relevant educational authorities across the UK to mitigate the adverse effects of family mobility and parental absence on the children of service personnel. This supplement was considered necessary given the increased operational tempo at the time and the planned drawdown from Germany. The ESF was due to conclude at the end of the 2017-18 financial year.

The armed forces covenant is a promise by the nation that those who serve and have served and their families are not disadvantaged as a result of their service. The provision of educational support for the children of service personnel is primarily the responsibility of the relevant educational authorities and I am grateful to colleagues in the Department for Education for their continued support for the covenant through both the service pupil premium and individual projects, including the £2.8 million recently announced to support the expansion of the Army in the Salisbury plain area. I am also grateful to colleagues in the Welsh Government for creating a £200,000 fund, which I hope can be extended, this year to support service children in Wales.

In the light of the ongoing drawdown from Germany and to provide time for the educational authorities across the UK to bring in longer-term provision for service children as necessary, I am pleased to announce that I have asked the MOD to extend the ESF, on a limited basis, for two years. The fund will consist of £3 million this year and £2 million in 2019-20.

[HCWS908]

Defence

Tobias Ellwood Excerpts

Tuesday 24th July 2018 Ministerial Corrections

The following is an extract from the Opposition day debate on Defence Industry and Shipbuilding on 11 July 2018.

[Mr Ellwood]

Returning to ships and the role of the maritime sector, we should remind ourselves of the significant changes to the Royal Navy fleet. We have two incredible aircraft carriers coming into service, a new generation of Dreadnought-class submarines, the Type 45 destroyers—the most advanced in the world—and the new Type 26 global combat ships. We also have the Type 31e frigates—e for export—which have deliberately been designed with a modular concept. Depending on the export need, which could be interdiction, surface support or humanitarian purposes, its parts can be interchanged simply to adapt to the local requirement. This is an exciting time, and all the ships will be built in the United Kingdom.

[Official Report, 11 July 2018, Vol. 644, c. 1042.]

Letter of correction from Tobias Ellwood:

An error has been identified in my response to the debate on Defence Industry and Shipbuilding.

The correct response should have been:

[Mr Ellwood]

Returning to ships and the role of the maritime sector, we should remind ourselves of the significant changes to the Royal Navy fleet. We have two incredible aircraft carriers coming into service, a new generation of Dreadnought-class submarines, the Type 45 destroyers—the most advanced in the world—and the new Type 26 global combat ships. We also have the Type 31e frigates—e for export—which have deliberately been designed with a modular concept. Depending on the export need, which could be interdiction, surface support or humanitarian purposes, its parts can be interchanged simply to adapt to the local requirement. This is an exciting time, and all the UK ships will be built in the United Kingdom.

The following is an extract from the Opposition day debate on Defence Industry and Shipbuilding on 11 July 2018.

[Mr Ellwood]

Our new shipbuilding strategy sets out exactly how we can achieve such a marine sector. We will continue to build Royal Navy ships only in the UK while encouraging international collaboration in harnessing open competition for other naval ships. Our new framework will ensure that the impact of UK prosperity will be considered as part of our procurement decisions.

[Official Report, 11 July 2018, Vol. 644, c. 1044.]

Letter of correction from Tobias Ellwood:

An error has been identified in my response to the debate on Defence Industry and Shipbuilding.

The correct response should have been:

[Mr Ellwood]

Our new shipbuilding strategy sets out exactly how we can achieve such a marine sector. We will continue to build Royal Navy warships only in the UK while encouraging international collaboration in harnessing open competition for other naval ships. Our new framework will ensure that the impact of UK prosperity will be considered as part of our procurement decisions.

The following is an extract from the Opposition day debate on Defence Industry and Shipbuilding on 11 July 2018.

[Mr Ellwood]

Thirdly, we want to focus on building exports, where there is an opportunity, as the Type 31 will be the first frigate for export since the 1970s. We know that more sales can cut costs in procurement over time and give us the potential to buy even more cutting-edge ships.

[Official Report, 11 July 2018, Vol. 644, c. 1045.]

Letter of correction from Tobias Ellwood:

An error has been identified in my response to the debate on Defence Industry and Shipbuilding.

The correct response should have been:

[Mr Ellwood]

Thirdly, we want to focus on building exports, where there is an opportunity, as the Type 31 will be the first frigate built with exports in mind. We know that more sales can cut costs in procurement over time and give us the potential to buy even more cutting-edge ships.

The following is an extract from the Opposition day debate on Defence Industry and Shipbuilding on 11 July 2018.

[Sir Roger Gale]

I may have misunderstood the Minister, and I know it is not the custom to ask a question to which one does not know the answer, but I think he said that Royal Naval ships were confined to aircraft carriers, frigates and destroyers. Would that not also apply to any replacement amphibious craft that we might need?

[Mr Ellwood]

My hon. Friend is absolutely right—that would be considered royal naval class, so not manned by the Royal Fleet Auxiliary.

It is important that, as we move forward, we look closely at value for taxpayers’ money.

[Official Report, 11 July 2018, Vol. 644, c. 1045-46.]

Letter of correction from Tobias Ellwood:

An error has been identified in my response to my hon. Friend the Member for North Thanet (Sir Roger Gale) during the debate on Defence Industry and Shipbuilding.

The correct response should have been:

[Mr Ellwood]

That would be considered royal naval class, so not manned by the Royal Fleet Auxiliary.

It is important that, as we move forward, we look closely at value for taxpayers’ money.

Draft Single Source Contract (Amendment) Regulations 2018

Tobias Ellwood Excerpts

Tuesday 17th July 2018 General Committees

[The Parliamentary Under-Secretary of State for Defence (Mr Tobias Ellwood)]

I beg to move,

That the Committee has considered the draft Single Source Contract (Amendment) Regulations 2018.

It is an unexpected pleasure, Mr Bailey, to be in the position of moving the motion, but it is nevertheless an honour.

The Ministry of Defence spends some £8 billion a year through contracts that are not competed. Given the lack of competitive pressure, the Government need to find alternative ways of ensuring that the MOD obtains value for money on those contracts while protecting the long-term future of the defence industry by ensuring that suppliers get a fair return on single source work.

Lord Currie produced an independent report on non-competitive defence procurement in 2011. He concluded that the arrangements then in place were simply unfit for purpose. The result was a weak negotiating position for the Department and poor value for money for the taxpayer. As a consequence, the Government introduced a new framework through the Defence Reform Act 2014. Our intention was clear: the new framework set out firm rules on pricing single source defence contracts and shifted the onus on to suppliers to demonstrate that their costs are “appropriate, attributable and reasonable”. Where there is a dispute, either party can refer the matter to an impartial adjudicator—the Single Source Regulations Office—for a binding decision.

Since coming into force in December 2014, the new framework has made significant progress. Contracts worth more than £19 billion have been brought under the framework and the benefits to the MOD have been considerable, including a reduction of the baseline profit rate from more than 10% in 2014 to 6.8% this year. However, any new regime of this complexity needs to be refined in light of experience. The 2014 Act therefore required the Secretary of State to carry out a thorough review of single source legislation within three years of it coming into force. The review was completed in December 2017, and it identified several potential improvements to the framework. We have incorporated the first of those into the regulations, and we plan to introduce further amendments to Parliament later this year.

The Joint Committee on Statutory Instruments has stated that the MOD has failed to comply with proper legislative practice by not offering the regulations under the free issue procedure. The Department had taken the view that the main purpose of the regulations was to introduce enhancements to the existing regulations by changing the definition of exclusions. It believed that the aspects of the regulations that clarify aspects of the original regulations, and hence would cause them to be issued free of charge, would not have been sufficient to justify producing a new statutory instrument. However, in light of the Joint Committee’s views, we are happy to make the regulations free of charge when they are published.

The main amendments under consideration relate to the types of single source contracts, known as “exclusions”, that cannot become qualifying defence contracts. MOD policy remains to maximise the value of single source contracts covered by the framework to secure the highest level of benefits. For that reason, it is important that exclusions are defined as narrowly and precisely as possible to ensure that as many contracts as possible are eligible under the regulations.

However, experience in implementing the framework has shown that there is confusion about how to apply some of the exclusions and that contracts relating to intelligence and international co-operative programmes are being unnecessarily excluded. We are therefore proposing a clearer and more precise definition of the two categories. We estimate that that could result in up to a further 8% to 10% of single source spend coming under the regulations.

We are also adding a further category of exclusion to deal with situations where contracts are transferred from one legal entity to another, such as where an internal restructuring of an industry has taken place. In such cases, although the legal identity of the supplier may have changed, the contract has not otherwise changed in a material sense. We have engaged extensively with stakeholders in drafting these amendments and believe that the proposals will be welcomed by suppliers as offering greater clarity on definitions of exclusions and therefore reducing the degree of confusion. I hope the regulations will gain the Committee’s approval.

--- Later in debate ---

[Mr Ellwood]

Thank you, Mr Bailey—I was waiting for the deluge of other Back Benchers leaping to their feet to participate in this important debate.

I thank the hon. Member for Caerphilly for his comments and his perspective on the resignation of the former Minister, my hon. Friend the Member for Aberconwy (Guto Bebb). We all wish my hon. Friend well and thank him for his service and what he did. The hon. Member for Caerphilly sought perhaps to make fun of the fact that he had resigned, but the Government are yet to match the more than 100 resignations we have seen in the Opposition. There is one Member sitting on the Opposition Back Benches now who resigned. If we want to compare notes on resignations, Labour should perhaps keep quiet.

[Wayne David]

Will the Minister give way?

[Mr Ellwood]

This had better be really good.

[Wayne David]

As the Minister specifically referred to me, I thank him for giving me a chance to reply. Yes, I did threaten to resign, but I actually did resign, unlike the Minister, who has threatened to resign but has not done so. Nothing has changed—he is all talk.

[Mr Ellwood]

The hon. Gentleman says he resigned. As far as I can see, he is still on the Front Bench, so I do not know where his resignation took him. Obviously it did not have the impact he wished. Perhaps his services were desired again because so many others had resigned that the Opposition needed a chance to revisit some of them, saying, “Please come back, because we have got nobody else.” Before we go any further down that cul de sac, shall we return to the business at hand, Mr Bailey?

[The Chair]

I think that would be a good idea.

[Mr Ellwood]

I am pleased to gain your approval.

The hon. Member for Caerphilly wished me well in momentarily taking over this portfolio. Like many of us with a desire to see the best for defence, for our armed forces and for Britain, I take a huge interest in the procurement process. I certainly feel able, competent and enthusiastic to step into the shoes of the former Defence Procurement Minister.

The hon. Gentleman spoke about investment in procurement and touched on the fact that there is to be some £180 billion of investment over the next 10 years. That is an indication of the Government’s commitment. We want to see an advance in equipment for our armed forces to ensure that we remain a tier 1 nation when it comes to our defence posture. That is partly why we undertook a capability review and the defence modernisation programme, which is coming to its conclusion.

The hon. Gentleman asked a number of questions, particularly about why we have single source contracts. There are two principal reasons for that. First, some of the major procurement contracts, such as submarine build, simply go to a single contractor. There is only one that steps forward, perhaps for security reasons or otherwise, so there will be a single source in those cases. In other cases, perhaps at smaller levels, the economic supplies limit who steps forward, such as with our maritime patrol aircraft. Nevertheless, I hope he appreciates that there is not always the competition we want. If there is not the competition, we should have robust rules to ensure that taxpayers’ money is properly spent.

The hon. Gentleman talked about the impact on businesses. There are a number of impacts. First, there is value for money, where we have seen in the percentage drop in the baseline profit rate that I mentioned in my opening comments. We have more efficient procedure, and there is less confusion as to what the process is. There is no negative impact on business—that is what the guidelines were hinting at. The measure will not require any further red tape for business to be concerned about.

The hon. Gentleman talked about the Command Paper. We are preparing that now simply because it is part of the thoroughfare of business that we need to get through. We do not wish to wait until the autumn. I certainly hope that the Command Paper will be published as soon as possible. It is part of the wider timetable that we must honour, which is about joined-up Government and ensuring that we meet our responsibilities. That is why the regulations are being put forward today.

The hon. Gentleman put a couple of other detailed questions to me, on which he invited me to write to him. If I may, I will do exactly that. With that, I seek the Committee’s approval for the regulations.

Question put and agreed to.

Defence Industry and Shipbuilding

Tobias Ellwood Excerpts

Wednesday 11th July 2018 Commons Chamber

[The Parliamentary Under-Secretary of State for Defence (Mr Tobias Ellwood)]

That was an introduction and a half. Thank you very much, Madam Deputy Speaker: it is a real pleasure to take part in this important debate.

Looking at the motion, I see much on which we are in agreement, and looking around the Chamber, I see many of the usual characters who wholly support not only the armed forces and the armed forces industry, but our defence posture. Defence investment is important, and my view—I do not know whether it is related to what may happen later in the day—is that we need to spread that message more widely to our other parliamentary colleagues.

Let me approach the issue from two perspectives. First, why must we invest in our maritime capability? Why, from a British perspective, is it important for us to do that? Secondly, in aiming to meet whatever is our ambition and create whatever architecture we wish to create, how can we most wisely spend the taxpayer’s money on defence? It is interesting that the hon. Member for Llanelli (Nia Griffith) focused on that as well. What is a wise use of taxpayers’ money—or should we automatically give it to shipbuilders in the United Kingdom with no questions asked? That, I think, is at the core of the debate: the issue of where the line should be drawn.

Let me step back from the details for a second, and reflect on the importance of the security and prosperity of our island nation in the context of the seas. For centuries our world-renowned Royal Navy has protected our shores and our people, and has safeguarded our interests. As we mark the end of the first world war, we remember that in that war—and, indeed, in the second world war as well—it was the aircraft carriers, the frigates, the destroyers, and the other warships built by men and women across the country that kept our fortunes afloat.

Today, as the hon. Lady said, our Royal Navy is busier than ever, defending our trade routes, leading the fight against global terror, protecting shipping lanes from piracy, tackling illegal migration in the Mediterranean, and, obviously, playing a leading role in NATO’s maritime capability. Its activities have ranged from war-fighting to nation-building to peacekeeping, and from interdiction to littoral work—and humanitarian work, as we saw in the Caribbean last summer. In a post-Brexit world, however, there is an ever greater need for us to project our influence and lead by example in retaining the most sophisticated and potent Navy in Europe, to help shape the world around us and to keep ourselves and others safe.

I make no apology for raising the wider issue of defence spending—which has already been raised by the Chairman of the Defence Committee, my right hon. Friend the Member for New Forest East (Dr Lewis)—at the very time when the same issue is being discussed more widely at the NATO summit. The Defence Secretary has succeeded in elevating the need for increased defence investment as threats diversify and become ever more complex. As I said in Defence questions on Monday,

“We are entering a phenomenon of constant confrontation by state and non-state actors.”—[Official Report, 9 July 2018; Vol. 644, c. 691.]

We are not in a phase of war, and we are not in a phase of peace.

Let us remind ourselves of the very first line of the national security strategy and strategic defence and security review:

“Our national security depends on our economic security, and vice versa.”

It is important for us to persuade all members of all parties that we must invest, because if we fail to do so, our capabilities will diminish at the very time threats are increasing. We need to convey that message to the Treasury. Let me repeat that as the world becomes more dangerous, our post-Brexit economy is ever more reliant on security for access to our international markets. Some 95% of our trade still goes by sea, and we need to protect our interests there.

[Grahame Morris (Easington) (Lab)]

Will the Minister give way?

[Mr Ellwood]

If the hon. Gentleman will let me finish this peroration, I will of course give way, just to re-energise myself. If we allow that trade to be affected by the changes made in the world around us by nations that choose to breach the rules we helped set up after the second world war, there will not be any money for any Government Departments, let alone the MOD. I hope we can join together to persuade more of our colleagues about that, and not just the stalwarts and defence fans, so to speak, who are here today.

[Grahame Morris]

I apologise for interrupting the Minister’s flow. I do not think any Member on either side of the House would disagree about the importance of the Royal Navy and the incredible job it does, but our point on this side of the House—I suspect shared by some on the Government Benches—is that shipbuilding is a vital strategic industry. There are many benefits apart from producing the very best ships in the world, such as maintaining employment and a skills base that could itself generate more economic activity. I hope the Minister will take that into account, and not least the importance of the supply chain.

[Mr Ellwood]

There is nothing in that that I would disagree with; the hon. Gentleman is absolutely right. I will come on to what we are doing to promote Royal Navy ships; we will come on to the core fact of what is a Royal Navy ship and what is a fleet auxiliary ship, which again goes to the heart of the difference in how these different types of ship are procured.

[Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)]

Notwithstanding what has just been said, surely the Minister will accept that whenever we buy a Royal Navy warship, an auxiliary ship, an aircraft or whatever abroad, we never own all the intellectual property associated with that product. We are buying F-35s, which are splendid aircraft, but we will never know the fine details of the box of tricks that makes them work, and that is a disadvantage to our country.

[Mr Ellwood]

I will move on to our maritime capability and our procurement process, but first please allow me to finish the bigger case of why it is important that we invest here.

I am making the point that although we must persuade Members of Parliament, we also need to persuade the nation. This is the same nation that enjoyed the fly-past yesterday and that expects us to step forward as a global influencer, but I am afraid is perhaps worryingly naive about the need to invest, because that is not a doorstep issue; it does not come up very much on the election circuit compared with health, education or transport. I think all Members would accept that point.

Our defence posture matters; it is part of our national identity. It allows us to sit with authority at the international top table and help shape global events. Other nations and allies look to us; they look to Britain to step forward, and to lead in the air, on land, on the sea and now on the cyber-plane as well. That ambition could be lost in a generation if we do not continue to invest; that capability, and desire to step forward, could be lost.

When we look at the current challenges facing Europe, the middle east and parts of Africa, we see that we are the best in Europe in terms of security, military capability, and intelligence and policing. We have an opportunity to leverage that position of strength as we craft a new post-Brexit relationship with our European allies and take a leading role in NATO, but we can only realistically do that with a sensible increase in our defence spending, which includes investment in ships.

[Gavin Robinson (Belfast East) (DUP)]

The Minister is right to say we need to build support not only across this Chamber among Members who are not present, but from across the nation, about the imperative benefits associated with investment in defence. I hope the Minister agrees that one of the ways to do that is by injecting a sense of national pride in our defence industry: by increasing the connectivity between our yards and our people, and between our people and their representatives. In Harland and Wolff in east Belfast that is exactly what we expect. It wants to be part of this investment and of this country’s defence infrastructure, and it looks forward to playing its part and building its support locally.

[Mr Ellwood]

During my time as a Member of Parliament I have seen a change in the posture of the Royal Navy that we can all be proud of. What is the Type 45? It is the best in its class. What is the Type 26? It will be the best in its class. What is the Type 31? It is a change in approach to modular design, which will be exactly what we need for export. This is what Britain is doing. We invented the aircraft carrier; we were the ones who first put that concept together. That innovation that is inherent in our DNA is what is allowing us to do exactly what the hon. Gentleman says.

[Chris Stephens]

I thank the Minister for promoting modular build in the UK. If modular build is good enough for the Type 31 frigate, surely it is good enough for fleet support ships, which could be built in the UK on the same basis.

[Mr Ellwood]

I have hinted that I will come to that in a second, but there is a distinction between fleet support ships that employ civilians and Royal Navy ships that employ Royal Navy personnel. There is a distinction between the two from a security perspective.

Going back to the point about value for money for the taxpayer, the Defence Secretary, the Procurement Minister and I all want to ensure that we are able to utilise the advanced skill sets in our defence industry across the UK, but the bottom line has to be value for money. Let us take as an example the ships that were recently purchased in Korea. The price was half the British value. Is the hon. Member for Llanelli saying that she would pay double the price for the same auxiliary support ships?

[Nia Griffith]

The Minister needs to take into consideration the fact that something like 36% of that spend would immediately come back to the Treasury in taxation. There would also be a knock-on effect for all the small businesses that would benefit from that money being spent out into the local economy. We would also have to take into account the cost of social security if those people were unemployed, as well as the disastrous cost of losing our shipbuilding industry altogether. Does he recognise that if we do not invest now to create a drum beat of orders, we could see the shipbuilding industry going the same way that the Tories let the coalmining industry go?

[Mr Ellwood]

Now we really are seeing the difference between us, if the hon. Lady is comparing this situation with the coalmining industry. Is that where this debate is going? I certainly hope not.

[Several hon. Members rose—]

[Mr Ellwood]

I am suddenly very popular, but may I just finish answering that point? Then perhaps we can go round houses.

This is a serious point. The hon. Lady did not answer the question on whether she would endorse purchasing a British-built ship that cost twice the amount as one built elsewhere. I hear what she says about the knock-on impacts for small and medium-sized businesses and so on, but a third of the money being spent comes back to Britain anyway. That is part of the contract that has been secured by the Procurement Minister. So in fact, we are already doing as she says, but taxpayers are paying half the price that they would have been paying had we purchased something from Britain. That is the situation that we face, and without wishing to sound too political, that is the difference between us on the Government Benches, who want to be fiscally responsible with taxpayers’ money, and those who simply want to pay for anything. I absolutely want it to be British, but we have to have value for money. Also, it is wrong to suggest that there is no shipbuilding capacity coming through. I have just mentioned the aircraft carrier, the Type 26 and the Type 45, in which there is continuing interest, and we also have the Type 31 and the offshore patrol vessels that are coming through. So there is plenty out there to keep our capability alive and busy.

[Several hon. Members rose—]

[Mr Ellwood]

There is so much choice that I do not know where to start. Let us go with the right hon. Member for Warley (John Spellar).

[John Spellar]

Will the Minister confirm that the Korean shipbuilder that took this contract, DSME, underbid and actually lost significant sums of money on the contract? It was not a fair contract, and because of its general business practices, it came very close to going bankrupt and had to be bailed out.

[Mr Ellwood]

I am glad that the right hon. Gentleman put it like that, because I was worried that he was going to say that state aid had been involved. I am sure that he would not suggest that that was the case, because I know him better than that, even though that was hinted at by those on his Front Bench. That was the commercial decision that the company took, but we are left in a situation where Britain is getting value for the taxpayer’s money.

[Mr Kevan Jones]

The Minister is talking complete and utter nonsense. On the military afloat reach and sustainability contract, there was no UK bid, and the reason for that was that the industry was told that the contract was going abroad. As my right hon. Friend the Member for Warley has just said, the Korean bid was underbid and basically bankrolled by the South Korean Government.

[Mr Ellwood]

The right hon. Gentleman sits down and folds his arms, but there was a UK bid.

[Hon. Members]

There was not.

[Mr Ellwood]

There was a UK bid.

[Mr Dunne]

May I help my right hon. Friend?

[Mr Ellwood]

I would like to move on, so I am going to make some progress and perhaps invite the Minister responsible for procurement, who will be concluding the debate, to go into the detail of the bid. If Labour is taking a position of only taking British offers and not looking abroad, it is not taking taxpayer value for money into consideration.

[Leo Docherty (Aldershot) (Con)]

Does the Minister agree that the picture painted by Labour Members is rather inaccurate? Due to the remarkable scale of investment, not least in our new Type 26 fleet, the picture is one of extraordinary investment activity, so to portray the industry as being on its knees is, frankly, a gross mischaracterisation.

[Mr Ellwood]

I am grateful to my hon. Friend, but I want to move on to the second question that I posed, which is how we can best meet the ambition of optimising our industry’s capabilities while spending taxpayers’ money wisely.

The UK is a world leader in the defence sector. In 2016, the UK defence sector had a turnover of £23 billion, £5.9 billion of which was export orders. The MOD is the sector’s most important customer, spending £18.7 billion with the UK industry and directly supporting 123,000 jobs in every part of the UK. Indeed, my hon. Friend the Member for Ludlow (Mr Dunne), in his report that was published on Monday, shines further light on the important contribution that defence makes UK prosperity, and I pay credit to him for his work. The report shows that there is more that we can do, which should be welcomed by both sides of the House.

[Leo Docherty]

rose—

[Mr Ellwood]

My hon. Friend is very keen.

[Leo Docherty]

I am grateful for that compliment. The Minister is describing an interesting picture. Does he agree that aviation and aerospace are an important part of that picture? Does he also agree that activities in and around Farnborough, including the international airshow, are vital? Will he confirm that he will be attending the airshow next week? If he is not, I will happily arrange that for him.

[Mr Ellwood]

We have wandered away from ships a little, but my hon. Friend is right. I pay tribute to the RAF for its event yesterday, and for what it has done and continues to do. The Royal International Air Tattoo starts at RAF Fairford on Friday, and we have the Farnborough airshow next week, where we will be launching our air strategy, based on the same principles as for shipping, which will be exciting.

Returning to ships and the role of the maritime sector, we should remind ourselves of the significant changes to the Royal Navy fleet. We have two incredible aircraft carriers coming into service, a new generation of Dreadnought-class submarines, the Type 45 destroyers—the most advanced in the world—and the new Type 26 global combat ships. We also have the Type 31e frigates—e for export—which have deliberately been designed with a modular concept. Depending on the export need, which could be interdiction, surface support or humanitarian purposes, its parts can be interchanged simply to adapt to the local requirement. This is an exciting time, and all the ships will be built in the United Kingdom.[Official Report, 24 July 2018, Vol. 645, c. 7MC.]

To achieve our ambitions, we need a strong shipbuilding industry as part of the wider maritime sector. As the Opposition spokeswoman said, more than 100,000 people work in this country’s maritime and marine sectors, including in the shipyards that supply parts and support equipment to keep the great industry alive.

[Mr Sweeney]

Will the Minister give way?

[Mr Ellwood]

I will, but I need to make progress, as other people want to speak and there may be something else that we all want to go to later.

[Mr Sweeney]

The Minister refers to shipyards. He might be aware that a deal was done in 2013 so that, in return for closing down operations in Portsmouth, capital investment would be made on the Clyde to make it a world-class centre of shipbuilding expertise, but that deal was never followed through with. He talks about creating a world-class industry, so why has he failed to follow through on the investment proposals that would make the Clyde world class and restore that capability?

[Mr Ellwood]

We are investing both in the Clyde and in Portsmouth. Looking back over the past few decades, let us be honest that although we have world-class shipbuilding capability, efficiency has not been what it could be. Successive Governments could have done better—we put up our hands up to that—which was why it was all the more important to create a shipbuilding strategy. We commissioned John Parker’s report so that we would be able to understand—

[Chris Stephens]

Will the Minister give way?

[Mr Ellwood]

I will make some progress, if the hon. Gentleman does not mind, because other Members wish to speak. Let me make some progress and I will give way shortly.

[Nia Griffith]

Does the Minister recognise that the Parker report very clearly mentions having a “drumbeat” of orders? That is vital to the industry so that we do not lose skills, so that we do not fall behind on R&D and so that we can remain in the game. Does he agree that that is important and that these ships could contribute to that drumbeat of orders?

[Mr Ellwood]

I do not disagree. I try to be less partisan than others who jump up at the Dispatch Box, and I absolutely agree with the hon. Lady about the importance of that drumbeat of orders, but it should not come at any price. We need to make sure it blends with what is built for the Royal Navy and for the Royal Fleet Auxiliary. We have accepted every single recommendation made by John Parker, and we thank him for his very wise report.

[Chris Stephens]

Will the Minister give way?

[Mr Ellwood]

The hon. Gentleman is sitting on the edge of his seat. Obviously I cannot refuse to give way.

[Chris Stephens]

The Minister is very generous. What did John Parker’s report recommend for how the fleet support ships should be built? I am very curious. Can he tell us what the Parker report says about fleet support ships and the exact page on which it says that?

[Mr Ellwood]

The Parker report is about our approach to shipbuilding, and it has led to our shipbuilding strategy and our defence industrial strategy.

[Mr Dunne]

rose—

[Mr Ellwood]

If I can make some progress, I may actually be able to answer the question.

[Mr Dunne]

Will the Minister give way?

[Mr Ellwood]

I am glad that there is nothing happening later.

[Mr Dunne]

My right hon. Friend has been generous about my report, which was published on Monday, and I am grateful for the other comments about the report by Members on both sides of the House. On page 53 of the report, I refer to the fleet solid support ship and make the point that the fact that we are currently a member of the European Union means that we are precluded from taking advantage of the article 346 exemption to require that ship to be built in the UK. One of my recommendations is that we should take advantage of the opportunity of Brexit to consider the opportunity, after we leave the EU on 29 March 2019, to build UK content into our own procurement rules, which might allow us to change the position, but we cannot do that today.

[John Spellar]

Not true.

[Mr Ellwood]

I suggest that the right hon. Gentleman reads the report by my hon. Friend the Member for Ludlow to understand the full picture. My hon. Friend is correct that EU regulations provide guidance on building those ships. The regulations do not apply to royal naval ships because, from a security perspective, every sovereign nation is allowed to bypass them, but the rules absolutely apply to non-royal naval ships—as in Royal Fleet Auxiliary ships—that employ civilians on board. I encourage hon. Members to read the report before judging what my hon. Friend has just said.

Moving back to what I was saying, we must have an honest debate about what is happening, which is why we need to develop a modern, efficient, productive and competitive marine sector that allows us to build on the work that has been done on the Clyde, in the north, in Belfast, in Barrow, in the north-east, in the north-west and in the south-west of England. We have incredible capability, and I am pleased to see so many hon. Members representing constituencies in those areas in the Chamber today.

Our new shipbuilding strategy sets out exactly how we can achieve such a marine sector. We will continue to build Royal Navy ships only in the UK while encouraging international collaboration in harnessing open competition for other naval ships. Our new framework will ensure that the impact of UK prosperity will be considered as part of our procurement decisions. The 2015 strategic defence and security review created a new security objective: promoting our prosperity. Competition and strategic choice remain at the heart of our approach, but we recognise that there are several different models for working successfully with the industry, and we need to take further steps to bolster that and make the right decisions to enable a strong partnership between the Government and industry.[Official Report, 23 July 2018, Vol. 645, c. 7MC.]

That is part of the whole Government approach, spearheaded by the national industrial strategy, with its mutually reinforcing focus on driving productivity and supporting innovation, which provides a strong and clear policy framework in which industry can invest and grow. Key to that is how defence procurement might build economic value by strengthening UK productivity and industrial capability, including at a local level, and boosting exports sustainably. We recognise that responsible exports are now widely accepted as having a part to play in our wider national defence and prosperity objective. They are considered to be an opportunity, not a burden.

Sir John Parker’s 2016 independent review made a series of recommendations about improvements we can make, and, as I said, I am pleased that we will be accepting all of them. He did place emphasis on the dysfunctional relationships between government and industry. Old ships were retained in service well beyond their service date, with all the attendant high costs, and it is important that that changes. So our new strategy is founded on three pillars. The first is better planning, giving industry greater certainty and predictability. We are providing a 30-year Royal Navy shipbuilding masterplan to guide all future naval shipbuilding decisions, and to document the number and types of ships in which we will invest over the next three decades.

The second pillar is a new approach to design and construction. We want to challenge naval standards and introduce new ones, forcing through advances in design, in new materials such as composites, and in manufacturing methods. Our new carriers are a prime example of that. They are built in blocks, with parts built in different parts of Britain, drawing on the expertise of 10,000 people, and being brought together from centres of excellence from across the country. Thirdly, we want to focus on building exports, where there is an opportunity, as the Type 31 will be the first frigate for export since the 1970s. We know that more sales can cut costs in procurement over time and give us the potential to buy even more cutting-edge ships.[Official Report, 24 July 2018, Vol. 645, c. 8MC.]

For now, for reasons of national security, the shipbuilding strategy sets out that warships will be built and integrated in the UK via competition between UK shipyards. However, for the purposes of shipbuilding only, the national shipbuilding strategy defines warships as destroyers, frigates and aircraft carriers. All other naval ships, including the Royal Fleet Auxiliary ships, as well as other Royal Navy manned ships, such as patrol, mine countermeasures, hydrographic and amphibious ships, will be subject to open competition—that means international competition. That remains where the difference lies between us and the Opposition, but it is the cornerstone of our defence procurement policy. I remind the hon. Member for Llanelli that she talked repeatedly about value for the taxpayer, and it is important we understand that. I hope that there is a compromise whereby where we want to and can, we will utilise British shipbuilding capability, but when it comes in at twice the cost of an overseas opportunity, we will have to be very careful about which decision we make.

[Sir Roger Gale (North Thanet) (Con)]

I may have misunderstood—

[Mr Deputy Speaker (Sir Lindsay Hoyle)]

Order. The Minister will have to sit down.

[Mr Ellwood]

I was just grabbing some water.

[Mr Deputy Speaker]

Order. I don’t care what the Minister thinks he is doing; I am just telling him what he has to do.

--- Later in debate ---

[Mr Ellwood]

My hon. Friend is absolutely right—that would be considered royal naval class, so not manned by the Royal Fleet Auxiliary.

It is important that, as we move forward, we look closely at value for taxpayers’ money.

[Mary Glindon (North Tyneside) (Lab)]

The GMB commissioned a Survation survey that found that 74% of people want these ships to be built in this country. Do not public opinion and the pride that people would feel if the ships were built here matter as much as value for money?

[Mr Ellwood]

I can only say that I hope that 100% of people would like ships to be built in the UK, but I also think that 100% of fiscally responsible people would like value for taxpayers’ money. That is the difference that this debate will illustrate.

Since the strategy was launched in 2017, the Government have worked closely with our partners in industry and made significant progress on our commitments under the shipbuilding strategy, not least through our continued investment in five River class offshore patrol vessels that are being built on the Clyde. Those ships have safeguarded industrial capability through a contract worth around £635 million, which is exactly what the shadow Secretary of State wants to see. We must make sure that there is this drumbeat of work, not only so that none of the shipyards face closure, but because it is essential so that we can continue to act when we require ships to be built for the Royal Navy. The first batch of the cutting-edge Type 26 frigates that are being built under the £3.7 billion contract with BAE Systems are also being built on the Clyde.

[Mr Sweeney]

The Minister mentions the River class batch 2, which was primarily designed to maintain production at Govan shipyard until the Type 26 was of sufficient maturity to begin construction. Does he accept that the only reason why Govan shipyard is open today is because a Royal Fleet Auxiliary order for the Wave Ruler was placed there in 1999 to keep the yard open until the Type 45 build could start? The only reason why that yard exists today is because the Government placed that Royal Fleet Auxiliary order with Govan, and that is exactly what we are arguing for today: to maintain these builds in the UK to maintain industrial capability.

[Mr Ellwood]

The hon. Gentleman sort of makes my point. We need to make sure that we bear in mind not only prosperity and British capability, but value for money for the taxpayer.

The Type 26 will offer a leading anti-submarine warfare capability for its planned 25-year service life, providing critical protection to the continuous at-sea deterrent and maritime task groups. We are currently in dialogue with industry on the strategy’s flagship Type 31 frigate programme, which is worth £1.25 billion for five modern warships. They will be flexible and adaptable in design, as I said earlier, and part of a balanced Royal Navy fleet that will be deployed across operations in support of the UK’s maritime task group.

The shadow Secretary of State mentioned the launch of our fleet solid support ships programme, which is procuring vessels for the Royal Fleet Auxiliary through international competition. They will provide munitions, stores and provisions to support maritime and amphibious-based task groups at sea.

On exports, we are delighted that Australia is considering the Type 26 global combat ship and BAE as the preferred tenderer for its future frigate programme. The consequence of our creating something that other countries want is that further countries have been prompted to look carefully at the Type 26. That is exactly what is happening in our discussions with Canada. This is exactly where we want to go: we want to make sure that we have the capability to build something that we can export, not just something to keep shipyards open. That is critical. The UK’s long-term commitment to the Type 26, which is currently being constructed for the Royal Navy in Glasgow, was an important consideration for Australia in its decision-making process. The fact that we continue to invest in it showed our continued confidence in the Type 26, which we believe is the world’s most advanced, capable and globally deployable anti-submarine warfare frigate.

In conclusion—[Interruption.] I could go on, if Members would like. I hope that the House will join me in recognising the important role that the defence industry plays in helping us to meet our ambitions and commitments, ensuring that we continue to deliver cutting-edge, battle-winning capability for our armed forces for years to come.

[Dr Julian Lewis]

As an immoveable Defence Committee commitment means that I have to leave this debate for a period, though I hope to catch Mr Deputy Speaker’s eye later on, I would not like the Minister to sit down without knowing how much we on both sides of this House appreciate that he has been prepared to speak out as strongly as he has in favour of an increase in the defence budget. I hope that he will continue to press the Opposition to operate on a bipartisan basis in this way, because if we want to invest to keep shipyards open that might otherwise close, surely the logic is that the defence budget must increase.

[Mr Ellwood]

My right hon. Friend is very kind in his words. May I reciprocate by saying that he has done much work to keep this debate alive? The Defence Secretary is absolutely passionate about this. As I said earlier, we need to share this further, beyond defence colleagues and beyond those who naturally find this important and understand it or indeed who have constituencies that are connected with the armed forces. This is something on which we need to engage with the nation. We need to recognise that it is part of our DNA to be strong, to be firm and to be leaders in Europe and on the international stage itself. I hope that that message is being shared in NATO at the summit now.

[Leo Docherty]

rose—

[Mr Ellwood]

I am desperate to finish, but I will give way to my hon. Friend.

[Leo Docherty]

I am grateful to my right hon. Friend for giving way. Given that, at the NATO summit, President Trump has called on all NATO members to invest 4% of GDP on defence, does my right hon. Friend agree that 3% from the United Kingdom is the very least that we should be investing in our national security?

--- Later in debate ---

[Mr Ellwood]

Before wandering too far down that road, let me say that this is just too important for us to play a guessing game and try to thump out numbers of GDP advancement. Other Departments will just turn around and say, “Well, I want a bit more of that for my Department as well.” We must make the case; we must spell out exactly what the money would be spent on, what savings would be made and what efficiencies we can provide inside defence itself. Therefore, whether the figure is 4%, 3% or 2.5%, the purpose of the defence modernisation programme is to give us the detail on what we need to do for our air, land and sea; what we need to do to upgrade in all phases of war; what we need to do in the new areas of complex weapons, cyber-security and protection of space for fear of hollowing out our conventional capability.

In conclusion, this Government have a responsibility to obtain the right capabilities for our armed forces. However, as a customer, we must ensure that this represents value for money for the taxpayer. Competition is at the heart of our approach. Our shipbuilding strategy is a pathfinder and exemplifies many aspects of our approach, set out in the Government’s policy framework, which includes an ambition to transform the procurement of naval ships; the importance of making the UK’s maritime industry more competitive; investment in the Royal Navy fleet; a commitment to exports; and a plan to boost innovation, skills, jobs and productivity across the UK.

We are rightly proud of all those who serve our country. We have a duty to look after them and protect them. That includes procuring the best possible equipment, which allows us to remain a tier 1 nation, leverage our industrial capacity and produce cutting-edge equipment for us and for us to export.

[Wayne David (Caerphilly) (Lab)]

On a point of order, Mr Deputy Speaker. Earlier, the Minister was adamant that there had been a British bid for the MARS tanker contract. That was not the case, and I wonder whether he would like to correct the record.

[Mr Deputy Speaker (Sir Lindsay Hoyle)]

Do you wish to speak, Minister?

[Mr Ellwood]

Because of the mechanics of the Defence Committee, I, rather than the Under-Secretary of State for Defence, my hon. Friend the Member for Aberconwy (Guto Bebb), stepped forward to open this debate. However, defence procurement is his brief, and it would make more sense for him to give a comprehensive reply on this very subject as he is concluding this debate.

[Mr Deputy Speaker]

The matter is now on the record for it to be picked up—[Interruption.] Hot potatoes!

I now have to announce the result of today’s deferred Division, which was subject to a double majority vote under Standing Order No. 83Q, in respect of the Question relating to the draft Renewables Obligation (Amendment) Order. The Ayes were 299 and the Noes were 211. In respect of the same Question among those Members from qualifying constituencies in England and Wales, the Ayes were 282 and the Noes were 201, so the Ayes have it.

[The Division list is published at the end of today’s debates.]

--- Later in debate ---

[Stewart Malcolm McDonald]

Oh, I am going to come to that. The hon. Gentleman leapt up, but sometimes hon. Members’ interventions are best made from their seats; that might have been one of them.

On whether this is a civilian ship or a warship, my party is in agreement with the shadow Secretary of State. We think that the Government have the wrong definition and we do not believe that they are actually fulfilling their responsibilities as far as the Parker report is concerned. These ships are armed and, as has been mentioned, take part in counter-piracy and counter-narcotics missions.

I want to read a quote from the Under-Secretary of State, the hon. Member for Aberconwy (Guto Bebb), who is responsible for procurement. He said in a written answer on 27 April this year:

“The programme to deliver the Royal Fleet Auxiliary (RFA) Fleet Solid Support ships is in the Assessment Phase. We expect that the ships will be provided with a limited range of weapons and sensors for self-protection, most likely to include small arms, and close range guns such as Phalanx. The exact equipment provision has not yet been finalised but will remain consistent with the defensive measures provided to RFA vessels.”

On that definition, the Minister who has just spoken is getting it wrong.

[Mr Ellwood]

May I invite the hon. Gentleman to visit a Royal Fleet Auxiliary ship to see the self-defence assets that are on board? That is allowed by law, given that civilians are working there. They are allowed to have a certain accommodation of capability, as he has just rolled out. That does not make such a vessel a royal naval warship or one that is doing any kinetic operations.

[Stewart Malcolm McDonald]

The Minister is free to invite me. Indeed, I look forward to getting a suggested date and time.

I am not the only one who is picking a fight with the Government over this; I am joined by all the Opposition parties in the Chamber today, the shipbuilders who will be producing these ships when the order finally comes through and the trade union movement that supports them.

[Mr Ellwood]

rose—

[Chris Stephens]

rose—

--- Later in debate ---

[Kevin Foster]

I thank the right hon. Gentleman for his intervention. Sadly for him, if he had waited until I got to a later part of my speech, he would have heard me talk about the Republic of Ireland, which is building naval ships at the Appledore shipyard in North Devon. He asked me to name one country in the world, and he has got one: the Republic of Ireland. I do not think I will take another intervention if knowledge is so limited that even our closest neighbour is not known about.

[Mr Ellwood]

I just want to make a technical point. One reason why we are in this situation is that the Royal Fleet Auxiliary, as I mentioned, is made up of civilians. Most nations that have advanced naval capability have support vessels that are part of their naval fleet; it is for sovereign capability that those ships are built in that way. They do not have even the freedom to offer that elsewhere.

[Kevin Foster]

I thank the Minister for his intervention.

The part of the motion I have sympathy with is about ensuring that when we engage in procurement exercises the criteria take into account the wider benefits of using particular contractors. One of the things I am slightly concerned about is the idea that buying from the UK is something we are only going to do if we have a protectionist policy in place. As is shown by the example I have just been able to give of Babcock building ships for the Irish navy, our industry is perfectly capable of winning contracts in the international market. That is because of the quality of the teams, the quality of the product and the cutting-edge nature of some our technology. The recent Australian navy contract won by BAE, which has already been mentioned, will see the export of our knowledge and expertise—many small and medium-sized enterprises in the UK will get jobs and contracts out of that decision—and it is a sign of the quality we can offer.

It is almost doing down our industry if we stand up in the House and say to its potential international customers that the only reason we would want to buy from it is if we were required to do so, because that is simply not the case. Our industry has moved on hugely, and it is a cutting-edge and competitive one. It is disappointing that more Members have not got up and said that in this debate. I must say that Members on both sides of the House have implied there would be a massive cost to buying here in the UK, whereas we can actually win contracts overseas.

For me, it is clear that our industry can go out and compete properly for work, based on criteria that take into account the wider benefit of delivering a particular contract in a UK yard. I want to see these ships built in the UK and I want a yard to win that contract. I want us to be able to go out and say to our international competitors that that was done because our shipbuilding industry put in a good bid, at a good price, and could deliver exactly the right product and one that they would want as well. Let us be candid: if global Britain is about saying, “We want to sell everything to you, but there is no way we’re going to buy anything in return,” it will not be particularly successful.

In every trade deal we sign, we should rightly look to include protections against subsidy or state aid. In the same way that we would look to stop the dumping of steel via tariffs, we should make sure that a procurement contract deals with any nation wanting to subsidise it with a view to having an unfair competitive advantage. Again, fair criteria would deal with that.