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Mr. Ian Davidson (Glasgow, Pollok): Why were these serious matters not resolved by the previous Government?
Mr. Key: They did not arise under the previous Government. These matters were first put to me last year.
I dare say that these problems existed under the previous Government, but that is not a good reason for the present Government to ignore them.
The adjutant-general's standards and discipline paper has now been under revision for some two years. The last expected date for publication was March. Some high profile and unpleasant cases of courts martial have done nothing to enhance the reputation of the forces, and some of those cases are still outstanding. Meanwhile, paragraph 133 of chapter 6 of the strategic defence review promises the development of a common personnel strategy, led by the centre but implemented by the individual services. Enigmatically, the SDR says that the Government will examine the need for a single, tri-service discipline Act.
The previous Select Committee on Defence and the previous Special Select Committee on the Armed Forces Bill were highly critical of the Ministry of Defence under the previous Government for its failure to consolidate the existing three service Acts. The Ministry of Defence has always--until now--implied that, given the different ethos and functions of the three separate services, it would be impossible to encapsulate service discipline in a single Act. What has happened to change that?
We are all aware of the pressures, particularly sexual pressures, implicit in more and more joint activity--perhaps appropriately termed "purple activity"--but Ministers must explain to the House and to the Navy, the Army and the Air Force just what is going on. The beginning of chapter 6 of the SDR makes much of the need to retain highly motivated people and to maintain that motivation. Just so.
The Secretary of State has said often enough that he believes that service men and women should reflect or be representative of British society at large. I am not sure that the three services would accept that. Traditionally, our services have demanded more of their personnel and have demanded higher standards than prevail in the rest of society. Do the Government intend to drop those traditional standards? Is that why they are able to promise a single discipline Act?
Paragraph 132 of chapter 6 of the SDR announces the establishment of a cell to provide a focal point for veterans seeking guidance, and that has been welcomed by many ex-service organisations. The British Limbless Ex-Servicemen's Association, in its summer 1998 magazine, expressed the scepticism about the cell. It hopes that the MOD appreciates the likely implications for the equipment and staff that will be needed. It said that, at one point, the war pensions helpline dealt with 22,000 calls in a week. Like us, the association is watching with interest to see what happens.
On Monday 5 October, the Minister for the Armed Forces launched the veterans advice unit. Is that the much-heralded cell? If so, the staff of just five warrant officers--however well trained and highly motivated--will be hard put to it to cope. My hon. Friend the Member for Mid-Norfolk (Mr. Simpson) will return to policies for people when he winds up the debate.
Faster, cheaper and better procurement has become the MOD motto.
I was told that many of the ideas within the Ministry of Defence are seen in the commercial world as naive or underdeveloped. British industry, competing in world markets, is at the cutting edge of technologies and financial systems for modelling and costing. Why should companies spread their international competitiveness? The leaching of ideas would be inevitable.
There is much concern, too, about rainbow teams, whereby the MOD puts together all the potential partners in a project, including foreign prime companies. Some major British companies have declined to take part in that process, and who can blame them?
Even if there is a funding inducement for prime contractors to collaborate, the length of the various processes--even under the smart procurement regime--means that in four or five years, and by the time one of the primes becomes a winner, the capability of each company will have been exposed and shared. That is not very smart. Chinese walls are not good enough, and raise massive problems of intellectual property rights.
We warmly welcome the commitment in the SDR to the formation of a broad acquisition stream encompassing military and civilian staff. Integrated project teams and through-life accountability are concepts warmly welcomed by the private sector. There is still a fear that the acquisition cycle is too long, and some scepticism that there will be single-team accountability on the MOD and private sector sides.
Mr. John Wilkinson (Ruislip-Northwood):
Will my hon. Friend comment on the significant delays in collaborative programmes that have been induced by the defence review, in typical socialist style, being initiated by Gerhard Schroder's red-green coalition in Germany? What does my hon. Friend think about the delay in the multi-role armoured vehicle programme? That is a joint programme, but we could perfectly well have achieved it ourselves using the overcapacity in our armoured fighting vehicle industry. What does he think about the delay in the proposed collaborative, beyond visual range, air-to-air weapon? Are such delays tolerable for our armed forces?
Mr. Key:
That is the finest possible example of why we should not go in for proportional representation and coalition Governments. The instability that is being caused by the lack of a German Government week after week hits hard when it comes to the procurement industry and our military defence alike. The MRAV contract was
My hon. Friend is right to put his finger on that contract but, although significant, it is not the only one. A stack of such contracts is building up. It is astonishing to see the way in which the new German Administration--who may one day eventually form a Government--are wheeling and dealing with the Greens, whose agenda is absolutely anti-NATO and all that it stands for, in order to cobble together some sort of Government. It is very worrying--even more worrying, I suppose, than the former German Chancellor's proposal for a future large Antonov.
Mr. Menzies Campbell:
Am I to understand from what he has said before that the hon. Gentleman would have opposed British participation in the Eurofighter project, that he would now withdraw from the Horizon frigate project and that the United Kingdom would build its own successor to the type 42?
Mr. Key:
There are, of course, plenty of people who say that it would be a very good thing if we built our own successor to the type 42; but the answer to the hon. and learned Gentleman's question is no.
I must make progress. No doubt we shall return ad nauseam to debates on proportional representation in the future.
The defence procurement industry's supporting essay 6 was at the heart of the strategic defence review. The scientific and technological superiority available to the fighting forces of a handful of western nations gives us a hugely important asymmetrical advantage over enemies, but we cannot rest on our laurels because the catching-up process is speeding up as well. That is why, when I visited the north-west of England, I was so pleased to see the progress being made by British industry on, for example, the future offensive aircraft, about which my right hon. Friend the Member for Fylde (Mr. Jack) spoke so well last night.
Product data modelling now allows the most senior technicians to talk through design concepts with the fastest pilots and the most senior military officers, in terms of real time but virtual reality, on the premises of our procurement companies, without even making the journey to Abbey Wood. One of the many reasons why product data modelling is so important is that it reduces abortive expenditure that results from late design changes and the reworking of manufacture, which add to costs and time overruns. Concurrent engineering processes and systems being developed by private-sector defence procurement companies can reach their full potential only if they are matched by a determination in the Ministry of Defence to break down some of the old barriers and restrictive practices.
May I ask a specific procurement question? Has the MOD a clear vision of the total lift capability required for the SDR concept of operations? I wrote to the Minister about that in July, but I have still not received an answer. The SDR equipment acquisition appears to envisage a maximum of four C17s, the 25 C130Js already on order and some amount of additional tactical support. How will the MOD calculate the final balance of lift assets to be acquired through the short and long-term airlift competitions?
MOD witnesses told the Defence Committee that the MOD's operational analysts had suggested that four was the required number of C17s. Why, then, is Boeing under the impression that eight, 10 or even 12 C17s will be considered? Can Ministers explain the contradiction, or is this just something else for the contracts journal? If the real intention is to procure more than four C17s, how will the MOD pay for the additional aircraft, given that they cost £125 million each? What is the intellectual basis for a number greater than four?
We know that RAF pilots are already training on C17s. On what basis would the MOD lease them? What work is in hand to investigate the leasing mechanisms? How will the MOD ensure value for money? C17s cannot be refuelled in flight by British tanker aircraft; will the MOD overcome that problem through technical changes to the C17, or through cover by United States planes for extended missions?
The Government are schizophrenic about our relationships with Europe and the United States as allies. That is reflected in their attitude to procurement. Most important military research is being undertaken in the United States. The Pentagon's research and development budget is $37 billion; the combined research and development budgets of France, Germany and ourselves is $10 billion. If we are to have access to the latest technology on anything other than American terms, we must own some of it ourselves, and must be able to use that as an entry ticket to joint projects with the Americans.
There is a huge and welcome variety of joint venture projects within Europe, and between European and American companies, and that should be encouraged; but if all our defence manufacturers were subsumed into one European corporation, would the option remain open? A very serious question is whether the United States would be prepared to enter into joint projects involving the latest technologies with a monolithic European competitor embracing countries in Europe which, it must be said, the Americans mistrust.
Finally, let me ask about the Defence Evaluation and Research Agency. What is the state of the public-private partnership option? I was grateful to the Minister for Defence Procurement, who wrote to me in August ruling out the privatisation of DERA in its entirety. We note that he has decided that highly sensitive parts of the agency, and those that ensure that the United Kingdom can continue to operate effectively with our allies, will need to be retained wholly within the Ministry of Defence. Of course, I have a constituency interest, as my constituency contains the two Porton Down establishments and Boscombe Down; but more than 12,000 staff work for DERA across the country, and the Government owe it to them to end the uncertainty that surrounds their future as quickly as possible.
After last year's general election, DERA put proposals to Ministers on defence diversification. Well, that was a damp squib. In autumn 1997, DERA provided a corporate plan with options for its future. Silence! Last November, 11 months ago, the MOD announced that the SDR would examine future options for DERA. In spring this year, the Chancellor of the Exchequer advanced proposals for privatisations and partnerships. Mysteriously, DERA unexpectedly slipped from the list.
"We must capitalise on the lessons we have learned from successful commercial restructuring to adopt modern business practices; consolidate and streamline; embrace competitive market strategies; and eliminate or reduce support strategies . . . all this in order to do the job better, faster and cheaper."
20 Oct 1998 : Column 1114
Those are the words of Jacques Gansler, Under Secretary of Defence Acquisition and Technology in the United States. That is what our allies are doing, and it seems that we are to follow suit. Will the smart procurement initiative fulfil that mission?
In this country we had the Downey cycle in the 1960s, the Levine reforms of the 1980s and the defence cost studies in 1994. We welcome smart procurement, following as it does the US models of defence acquisition reform and the revolution in business affairs. The reaction of the British defence procurement industry to the smart procurement initiative has been very positive, at least on the surface. Indeed, it would be surprising if the response of the providers to the major customer were anything else. Privately, the truth is less flattering. I was recently told that if smart procurement is all about selecting a partner early, what is going on is driving in the opposite direction.
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