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Mr. Andrew Robathan (Blaby) (Con): I agree with what the hon. Gentleman is saying about ITAR, but the question that must be asked—perhaps he knows the answer—is whether the Prime Minister has asked that favour of the US Government, and if so, what the response from his friend George Bush was.
Mr. Crausby:
The Prime Minister has not confided in me personally, but my understanding is that the White House is very much in favour of the waiver, and support from the President is there. The problem lies with Congress, and people such as Congressman Hunter. My point is that as we move into a second and strong presidential term, the President should redouble his efforts to ensure that Congress delivers. As I have said, the lack of a waiver gives American companies an unfair advantage. Not only are there obvious commercial difficulties in having to license thousands of individual components, but delays could make effective competition virtually impossible.
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Increasingly, UK companies are trying to get around American protectionism by buying up US companies. Therein lies another problem. Many of our major enterprises are forced to employ nearly as many workers in the US as in the UK. If we do not halt that drift, Britain will rapidly become the low-tech end of the business, completely reliant on other countries and their Governments. If that is coupled with the purchase by overseas companies of UK defence manufacturers, we could end up with just the unskilled and outdated end of the business.
The globalisation of high-tech manufacturing is of course inevitable. With a level playing field, the British defence industry can compete with anyone in the world; but defence industrial policy must ensure that the UK has maximum exposure to new technologies. British taxpayers and British politicians will be best persuaded to invest in defence when they can see that the wealth of our nation benefits as a result.
3.39 pm
Mr. Peter Viggers (Gosport) (Con): Thank you, Madam Deputy Speaker, for giving me the opportunity to follow my Defence Committee colleague, the hon. Member for Bolton, North-East (Mr. Crausby). Of course, our thoughts today are with our armed forces, many of whom are being put at risk on our behalf. Our objective is to contribute to the discussion in order to ensure that they have the best possible equipment available to them.
The facts have been rehearsed by several hon. Members. The 20 largest projects in defence procurement cost £51.9 billion—a massive sum—excluding the two most sensitive, which are not recorded. In 2002–03, some £3.7 billion-worth of defence equipment was delivered, but there was a slippage—an increase in cost—of £3.1 billion. Looked at in one way, that means that we are scarcely making any progress at all. There was a 6 per cent. increase in costs and an 18-month slippage in programmes. Nine months of that slippage occurred in the last year, so in that time only three months of real progress was being made. Moreover, although the Defence Procurement Agency said that it expected to spend 15 per cent. of programme costs on investment in de-risking, only 5 per cent. was actually spent. So the smart procurement initiative—now known as smart acquisition—aim of "faster, cheaper, better" is not being met.
With the possible exception of Ministers, we all enjoyed very much the speech of the right hon. Member for Walsall, South (Mr. George), Chairman of the Defence Committee, in which he robustly defended the Committee's report. It was accurate in every case, and every allegation and statement can be fully justified. The Government's description of it as "disappointing and flawed" is completely incorrect. I take part in this debate with relish, and I am happy to associate myself with some of the more critical sections of the report. It is not a habit in this House for a Member to be identified with a particular phrase in a report, but I am proud to be associated with some of this report's more robust language.
We have to ask ourselves what has gone wrong. How can it be that a respected Committee's report can describe the programme as "woeful", which indeed it
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was? Smart procurement was introduced some six years ago, and it is highly charged with management consultant-speak. My background is in business, and I used to have ministerial responsibility for economic development in Northern Ireland—I was responsible for the privatisations of Harland and Wolff and of Short Brothers—so I do not regard myself as completely ingenuous when it comes to business matters. However, even though I listened carefully for about an hour when I attended my first smart procurement presentation many years ago, I did not really understand what those present were talking about. The presentation was completely suffused with management consultant-speak. Ordinary, normal people find it difficult to tune into such language, which was full of "main-gates" and special technical phrases. One needed a dictionary to understand what was being said.
We have reached the stage where the director of defence procurement is offering an amnesty for honest forecasts, and there is a gap in targets. For example, the Ministry of Defence says that there is a 50 per cent. likelihood of a target being met in five years, whereas the DPA is talking about a 90 per cent. certainty of meeting a target in six years—so they are not even talking about the same targets. Every project has to jump through the same hoops, and as so often with this Government, they have created a set of artificial targets and are spending an inordinate amount of money and time trying to meet them. Exactly the same thing is happening in the national health service. The Defence Committee Chairman, whose speech I am trying to develop, said that things have gone wrong; I am trying to work out why.
In the NHS, micro-management has resulted in the Government setting targets in order to decide whether a hospital should get stars. They set targets for waiting times in accident and emergency units, for example. I know that my own local hospital had to work for weeks in advance to build up to its target week when it would be checked for its accident and emergency times. Having reached the target, it wound down from there. Doctors' leave was cancelled in order to meet the target in the particular week, but it was subsequently restored. Having to meet the target distorted the work of the hospital for months.
Exactly the same is happening in defence procurement. The Defence Procurement Agency sets artificial targets and people have to meet them rather than the interests of efficiency. The way ahead must be to develop a team of trained service personnel who have experience within the armed forces. They can move over to the procurement field when they have built up service experience.
The Defence Committee provides a similar sort of analysis in paragraph 14 on page 47 of its report:
"MoD estimates that Smart Acquisition has resulted in savings of £2 billion. However, given that the Chief of Defence Procurement has acknowledged that only one of the seven principles of Smart Acquisition has been implemented, we have no confidence in the reliability of this estimate."
"Indeed, the programme of Smart Acquisition was created and named by government, but does not necessarily define the ultimate standards in defence procurement. Success in defence
- procurement should be measured by objective standards and not just by reference to the seven principles that the MoD has itself adopted."
Smart acquisition has at its kernel the point that a task is de-risked at the beginning, but how can we de-risk a project? Let us take the example of the two huge new aircraft carriers, which we all fervently hope will eventually materialise. How do we decide whether the joint strike fighter, with its short take-off and vertical landing role, will be able to meet its requirements? We all know that there is a significant weight risk with the VSTOL joint strike fighter, but how can we possibly work out whether the technical problems will be overcome, and how can any commercial manufacturing company be prepared to take the risk of the project not working properly? It simply does not work. The Public Accounts Committee made the point that it is unreasonable to expect commercial companies to bear the risk, however much study is put into the project at the beginning.
The only way ahead is to have a trained team of people. Having spoken to a wide range of people in the armed forces over a long period, I would submit that people involved in defence procurement need to have military, hands-on, armed services experience. We need to work in the long term to build up a team of trained and suitably qualified people from the outset and give them hands-on military experience for, shall we say, 10 or 12 years. At the age of, shall we say, 32 to 35 at the rank of, shall we say, major, these people would move over and take over long-term procurement projects. The long term is important: we cannot expect people to pick up a full understanding of major projects in a short period.
The concept of drafting in Army, Navy and Air Force personnel for the standard billet of two and a half to three years and expecting them to be able to pick up and run with the ball is just not realistic. We need a cadre of people, perhaps comparable to the old Royal Corps of Naval Constructors. They usually had services experience before they moved in to become professional experts in their particular fields. I urge the Government to go down that road, to develop a cadre of trained people and then to trust them. We cannot second-guess them all the time; we must put them in position and let them manage. I would maintain that the besetting fault of this Government in particular, and of socialism generally, is that they love micro-management and believe that everything can be controlled from the centre.
I want to make three more brief points. First, we should enhance co-operation with other nations. If the chairman of British Airways said that he wanted aircraft to be designed to his specifications, we would all think that he had gone barking mad and that the company would go out of business. However, the Army, the Royal Navy and the Royal Air Force all have equipment specially designed for them, and the same is true in France, Germany and most other countries.
Governments are protectionist when it comes to defence procurement, and hon. Members, who have the interests of their constituents at heart, are also naturally protectionist in that respect. However, we must steel ourselves to recognise that procurement is not a job creation scheme. Adopting more long-term thinking about defence procurement means that we will work
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more closely with other nations. In that way, the cost to taxpayers will be reduced, and defence forces will receive equipment that is the most cost-effective possible.
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