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Procurement of Army Uniforms
3.28 pm
Mr. Lindsay Hoyle (Chorley) (Lab): I am sure not only that there is much interest in the House of Commons in this matter, but that the good people of Lancashire and the rest of the country share that interest.
A very important contract, better known as the cut and sew tender—DC4 BESL/1002—was let. Quite rightly, Lancashire companies—in the constituency of my right hon. Friend the Foreign Secretary and in my own—have been the backbone of the cut and sew contract in the past. Many will say, "Oh, that is not the case, because this went off to Romania." That cannot be denied, because a smaller part of the contract was carried out there, but the majority of it was done in Lancashire. We must ensure that that is on the record. A company called Cooneen Watts and Stone has got the new contract, after many years of it being held by the people of Lancashire. It is crucial to remember that in the Government's hour of need those people worked round the clock to ensure that the Ministry of Defence and our soldiers had the right kit to go to war.
We must address the key issue: if there were a contract for Army rifles in order that soldiers could defend themselves, do we really believe that we would put it out to tender and that people would look at the tender list and say, "This company has said that it can supply rifles cheaper"? One would ask for a sample and expect the company, whose sample rifle or uniform was being provided, to be the future supplier of that item. A soldier needs a weapon with which he can defend himself—a weapon that can be used. Exactly the same is true of a camouflage uniform: if a soldier is going to war, his uniform is to defend him against death.
The right garment of the right quality will last, whether it is washed or weathered. More importantly, when it turns to night and infrared sensors are put on, the soldier no longer looks like a soldier: his image is deflected because the company that supplied the uniform has ensured that the right camouflage has been printed on it. If that camouflage is not right, the soldier becomes a target.
We know that Cooneen, Watts and Stone has absolutely failed to deliver. More importantly, it has hoodwinked the Ministry of Defence. As my right hon. Friend the Minister of State rightly said in response to parliamentary questions, it bid for the contract when it was not the company that would carry it out. Not once did it tell the Minister that the contract would be taken over by army factory 3533. In fact, the Minister did not understand the meaning of 3533. I understand why: he was never told.
There is something tragically wrong when the Minister and other Members of Parliament have been hoodwinked. More importantly, the good people of Lancashire may well lose their jobs as a result. If we cannot supply the People's Liberation Army, as we should not, because of human rights, we must ask why on earth a subsidised People's Liberation Army factory should be supplying the British Army. It is totally unacceptable morally. Where does that leave us with respect to our agreements on trade union recognition, because we know that no trade unions are allowed
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in China? Morally, it stinks to high heaven. More importantly, what rates of pay operate in the factory, which was described as the factory of £1 a week? This is totally unacceptable. The living and working conditions of the employees are unacceptable. Let us say for the record that this is unfair competition.
I believe that we have an opportunity. I ask the Secretary of State to investigate fully how someone can pretend that the sample that they have given is of what will be supplied in the future. Someone in competition with British Aerospace could supply us jets, and we would say, "Not to worry. They are now being built in Chile." They could be built anywhere in the world. That is the danger of what is happening in this case. We must get this right and ensure that the Government address the key issues.
Mr. David Watts (St. Helens, North) (Lab): Does my hon. Friend agree that the pledge made by the MOD that it will if possible support British industry will be a hollow one if every contractor is allowed to subcontract outside the UK?
Mr. Hoyle : Absolutely; that is key. The contract should not be sent off to somewhere such as China. I can hear the Secretary of State saying, "Part was made in Romania." Of course it was; it always has been. Most crucial to the defence of our soldiers—this should be the most important point—is that the camouflage print and material is made in Lancashire. What we can say about the contract is that the cut and sew camouflage uniform will be made in China. My hon. Friend is right: it should not be. This is totally unacceptable.
At the debriefing for the unsuccessful bid for the cut and sew camouflage uniform contract, company representatives were categorically told by the selection panel that it was unable to take account of past experience, because that was unfair and would create an uneven playing field for tendees who had not previously dealt with the MOD. However, the response to a parliamentary question tabled by my hon. Friend the Member for Burnley (Mr. Pike) states that the contractors' past performance was included in every pre-contract award evolution process. One is contradicting the other. There is something seriously wrong.
I believe that the Minister is being told one thing, while there has all along been a different arrangement, and a different agreement seems to have been made. I am worried about what is happening in the MOD. In fact, one has to wonder about Warwick. Warwick is crucial; it is the backbone of future procurement. On one hand, the trade unions meet the Prime Minister, have a dialogue and come out with an agreement that Warwick is about protecting jobs in the UK and the future of technology. If such arrangements continue, textiles in the United Kingdom will become a museum piece. That is not acceptable to the people of the UK; it is totally against the interests of Warwick and the discussions on it. The MOD has to respect the Prime Minister and the Government. It is important that its officials learn who is in charge. This is about the protection of British
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soldiers—their interests should be paramount, and we should expect the best. The best is the uniforms that have been supplied for many years.
Judy Mallaber (Amber Valley) (Lab): Is my hon. Friend aware that when I raised the issue the Minister said that we had acted according to European Union procurement rules, and that every EU country apart from the UK classifies military uniforms as "warlike", which means that—even if they follow those rules, about which there is some doubt—they are subject to the exemption from EU procurement rules for military materials?
Mr. Hoyle : That is absolutely correct. We went through this before, when we discussed the roll-on, roll-off ferries that were built in Germany. They were built there because they were not "warlike". We are playing cricket and everybody else is playing rugby. It is time that we woke up to the fact that the uniforms should be classed as "warlike", and the contract should be placed not only to create UK jobs but to protect them. Otherwise, we shall see the closure of a factory and the loss of many UK jobs.
Janet Anderson (Rossendale and Darwen) (Lab): Does my hon. Friend share my concern about the allegation that, to qualify for the tender, the winning company used fabric that was printed in the UK, but failed to inform the MOD that it was not from its intended source in China?
Mr. Hoyle : That is absolutely right—it is a crucial point and I echo my hon. Friend's concern. I understand that, at this late stage, some camouflage uniform has suddenly been supplied. The joke is that the MOD may test it, say that it is wonderful, and run with it. It was produced in Adlington in my constituency, which has supplied Cooneen Watts and Stone because it is not able to get any of the material out of China. Therefore, the uniforms made in future will not be of the same quality as those provided. That should tell us something. The alarm bells have been ringing for a long time for the rest of us; now they should be ringing in the MOD. We should stop messing about and pull in the contract as soon as possible.
Mr. Neil Turner (Wigan) (Lab): My hon. Friend has not yet raised the fact—if he is coming to it, I apologise—that if the contract goes to China, and it is confirmed, the factory in Lancashire will shut, people will lose their jobs, taxes will be unpaid and benefits will have to be paid out. That all represents additional cost to the taxpayer in this country, which has not been taken into account, and which is more than the difference between the prices of the contract in this country and in China. When we considered competitive contracts under the Conservative Administration, we were allowed to take such costs into account. Should not the MOD have taken those costs into account when awarding the contract?
Mr. Hoyle : I absolutely agree. We know that other countries rightly take into account redundancy costs, benefit payments and the loss to the exchequer, and it is foolish that we do not do that. That is a good point. If
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we broke down the cut and sew contract, we would see that it cannot have been lost by more than £500,000. We know from the number of workers who will be made redundant and the benefits that will be paid that the loss to the taxpayer is much greater than the windfall that the MOD feels that it has made on the contract so far.
It is crucial that we ask questions. Cooneen Watts and Stone was not on the original tender list, but somehow it was placed on it. We know that it does not have a track record. My hon. Friend the Member for Pendle (Mr. Prentice) suggested that it was the place to go for a wedding dress, but we are not talking about a wedding dress—we are talking about battledress, and we expect the best. We expect the UK to be supplied, but do we really believe that we would have security of supply from China in our hour of need? The answer is no. Are we really willing to run the risk of our soldiers not having the best? I recognise that price is important, but we are not talking about major savings; we are talking about pennies, compared with the MOD's budget. Indeed, there will be a great cost to the taxpayer.
Mr. Watts : Does my hon. Friend agree that if the contract is not changed, there is unlikely to be a UK competitor to bid for a similar contract in the future?
Mr. Hoyle : That is absolutely right. We will lose the crucial know-how and the advantage that we have had. Armies around the world have looked at the contract and said, "If the British Army is using these uniforms, they must be the best", and contracts have been won on the back of that. However, all that will be put at risk because armies will say, "If they're not good enough for you, why should they be good enough for us?" The knock-on effect, quite rightly, will be that they pull out. We will also begin to lose the research and development that has taken place in textiles. Who on earth will design the textiles to meet the MOD's future needs? It will not be some People's Liberation Army factory in China. The long-term costs of what is at stake are therefore very great.
I genuinely believe that Ministers at the MOD have not been told the facts or been given the full story. I want them to consider how on earth we get ourselves out of this mess. I also want them to recognise that we believe in the trade union movement and in UK manufacturing and, more importantly, that when the Prime Minister himself makes an agreement at Warwick, everybody should respect it. All of that is now being put at risk.
The Chamber is very busy, and I know that other hon. Members want to speak, so I will not take up much more time. I simply want to make it clear to everyone once and for all that this contract must be brought back to the UK and jobs in Lancashire must be protected. It is of the utmost importance that our soldiers have the best kit possible so that their lives are not put at risk for the sake of a few pounds and to save the face of the MOD.
Mr. Nigel Evans (Ribble Valley) (Con) rose—
Mr. Deputy Speaker : Order. Does the hon. Gentleman have permission to speak from the Member for Chorley (Mr. Hoyle) and the Minister?
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The Minister of State, Ministry of Defence (Mr. Adam Ingram) : He does not have it from me.
Mr. Evans : I have it from the hon. Member for Chorley, not the Minister.
Mr. Deputy Speaker : The hon. Gentleman needs permission from the Minister, too. I call Judy Mallaber.
3.43 pm
Judy Mallaber (Amber Valley) (Lab): As the Chair of the all-party group on clothing, textiles and footwear, let me say that the industry is hugely important.
Mr. Evans : On a point of order, Mr. Deputy Speaker. Do hon. Members have to seek permission from the Minister from now on to be able to contribute? Does that prevent them from intervening on other hon. Members?
Mr. Deputy Speaker : It has always been the case that an hon. Member needs the permission of the hon. Member who sought the debate and the Minister to make a speech, but they may intervene.
Judy Mallaber : This is a very important industry; indeed, more people work in it than in the automobile industry. However, it has been under huge pressure and strain, and the development of the new area of technical textiles and a high level of research and development are key to its future. Army uniforms are a prime example of that, because the UK is very much in the forefront of developing smart fabrics. My right hon. Friend the Secretary of State for Trade and Industry sees that as hugely important for the industry. The decision on the contract not only seems to have been carried out in a strange way, but demeans and undermines our ability to develop the new styles and techniques that will take the industry forward. That is to be deplored.
Mr. Evans : Does the hon. Lady accept that the security of supply and the quality of the product is important, just as the hon. Member for Chorley said? It is not just about protecting UK jobs; it is about protecting UK soldiers. Do we really think that there would be a debate in the French Assemblée Nationale about procuring clothes from abroad for the French armed forces? It does not sound important, but it is. It is strategically important. If the rest of Europe treat the matter differently, we should do likewise.
Judy Mallaber : I agree. Anybody who has talked to families or people who have been abroad with the Army about the nature of its equipment and the range of different places, climates and environments in which it has to operate knows just how important it is to have the right equipment and uniform and how essential it is that we keep the ability to provide that within this country. That is vital, not just for the future of the industry, but, as the hon. Gentleman says, for the safety of our soldiers.
Those were the only points that I wanted to raise, because I wanted to leave time for the Minister to respond.
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3.46 pm
The Minister of State, Ministry of Defence (Mr. Adam Ingram) : I am grateful to my hon. Friend the hon. Member for Chorley (Mr. Hoyle) for securing the debate and for providing me with opportunity to speak on this important issue.
It is clear from the number of hon. Members who have turned up that this is an important matter and there is no doubt about the heat that it has generated. As a result of that both, the Secretary of State and I have met various interested people, including trade unions, hon. Members and representatives of some of the industries involved to hear their concerns at first hand.
Let me say from the outset that we have carried out a careful examination of the issues that have been raised and I refute the allegation that Ministers have been hoodwinked. Hon. Members have the right to say what they think about Ministers, but we have the right to say—not because we are fragile—that that charge is unwarranted and not borne out, as the intensity of effort and examination that has gone into the matter shows. Everything is second checked, looked over again and trawled over and officials are brought in and questioned intensely when such parliamentary interest is raised.
I cannot accept that we are being conned by the professional civil service. People say, "What is the motivation?" Is some other issue being raised, or is some allegation underlying all this? We are talking about professional civil servants who carry out their job to a high standard and know that all their decisions are subject to scrutiny and, when a parliamentary issue or a concern is raised, those are trawled over and examined again.
Mr. Neil Turner : We are not suggesting that there is some underhand method. It is simply that the people in the Ministry of Defence are looking for the cheapest price and our argument is that doing so, in this instance, may harm the interests of the British nation and the British Army in particular.
Mr. Ingram : I will deal with that as I go on. The word used was "hoodwinked", as if there were something else happening. I want to refute and rebut that.
The Secretary of State and I have gone through the issue and examined it in detail and we have come to the firm conclusion that there are no grounds to change the original decision to award the contract to Cooneen Watts and Stone Ltd.—CWS—which is a consortium comprising Cooneen Textiles Ltd. and Watts and Stone. I strongly reject any suggestions that that contract award will provide the armed forces with substandard uniforms and clothing. All clothing items for the armed forces are designed and procured to strict specifications, and contracts are closely monitored.
Mr. Hoyle : The issue is that if there is a tender, the sample that is provided will be the one that is used for the future. The sample used was not provided by the factory in China. The fact that that factory cannot produce what is being requested of it must put a question mark over its meeting the future needs of the British Army. There will be worries if the product cannot be developed to the same standard. We need an answer.
Mr. Ingram : I shall come to the issue of the testing regime.
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Let me deal with the view that combat clothing is warlike in nature and should be similar to a rifle or any other piece of military equipment. Article 296 of the European Union treaty provides exemption for some defence procurement, usually on the basis of national security considerations. For many years, the custom and practice have been to undertake military uniform procurement on a competitive basis, without exemption, to secure the best value for money—not the cheapest price, but the best value for money. It would be inconsistent, even perverse, to change that approach when the Ministry of Defence is active in the EU consultation—the Green Paper on opening up the defence procurement market to provide more opportunities for UK small and medium-sized enterprises in Europe.
We are trying to create a better and more open climate in Europe for British industry. What is being argued is that we should close the door because of one part of the British industrial sector. One can imagine the potential impact that that could have elsewhere as we try to open up Europe so that other parts of British industry—the manufacturing base and SMEs—get the opportunity to trade in a more open market.
Mr. Watts : Although many of us believe that fair competition in Europe is good, we do not believe in the option in this case. British industry cannot compete with that subsidised company, because of the pay and conditions of the staff in China. Will the Minister address that issue and tell us how many European countries are giving their combat clothing contracts to companies outside their borders?
Mr. Ingram : I do not have that information to hand, although it can be made available. However, I make the point again: we are trying to open up the European market, not to close it down. The logic of what has been argued is that, from a British perspective, we should close that market down.
Mr. Ingram : Hon. Members can shake their heads, but I am trying to explain that we are negotiating to try to create a more open market so that there are more opportunities for British industry and business in Europe. If we go for the type of approach suggested, that would be used against us. People would say, "You are now adopting opposite practices to those you have applied over the years." The approach that I have described is not new.
A number of issues have been raised, and I deal now with the procurement structure and the way in which contracts are put together. I shall come to the issue of China if time permits, but countries that appeared on the list of all the bidding companies included, in different shapes and forms, Ukraine, Bulgaria, Romania, Sri Lanka, Dubai and China. The idea that there was a sole British manufacturer seeking to place all its output in the UK sector is simply wrong. My hon. Friend the Member for Chorley accepted that, although almost as if it were a side issue. The company that he was talking about does some of its work in Romania.
All the other companies that bid were also looking at placing the work for the contract elsewhere, outside the United Kingdom. That is the reality that we face, and
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there is nothing new about it. That is standard practice, not only in that procurement stream, but in high-street procurement.
Mr. Hoyle : I thank my right hon. Friend for giving way, as we have to clear up the difference. All of this cut and sew contract goes to China. We said that the majority of the cut and sew contract was done in Lancashire—that is the difference. The problem of claiming that we are going to open up the European market is that all that says is that that market should follow Britain's example and go to China.
Mr. Ingram : No, it does not. That would depend on how the countries in question decided to construct their procurement processes. I am saying that other areas of excellence in the UK find it difficult to get into that market at the moment. We are trying to negotiate an open approach. I should have thought that if this is about British industry rather than one sector of British industry, that was a high prize to pursue. It is an important element for us to take into consideration. However, that is not the motivation. The current approach is not new. It has for years been custom and practice for us to do things that way. We would have to change our approach to redefine our clothing industry.
As for the Chinese aspect, because of the way we monitor contracts the defence clothing project team recently visited the subcontractors in China as part of the contract management plan. That was at the request of the prime contractor and is part of the confidence building and communications required in a new partnership. The visit report validated the key aspects of the CWS tender. That was an intensive examination of one part of the supply chain. The team saw no cause for concern about the standards employed, and the report submitted to me stated:
"The team is convinced that the quality of garments that will be manufactured in China for this contract will fully conform to our specification and that there is no reason to doubt the Prime Contractor's ability to meet its contractual obligations."
"The team confirms that CWS understand their responsibility to manage sub-contractors. Furthermore, they are obliged to monitor ethical standards, minimum ages of employees and environmental obligations."
All that was examined for the plant in question.
However, we are in a slight difficulty because the company itself is exercising its contractual rights not to disclose its supply chain. Other companies do that—for very good reasons. They do not want to open it up to their competitors. If they build a good relationship they will want to preserve it, and they have the right, within the contractual arrangements, not to disclose it and to ask us not to disclose it.
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My hon. Friend the Member for Chorley and other hon. Members will be aware that there are court cases pending in this context. Some of the matters could verge on being sub judice, so I am constrained in my approach. Two hearings are to take place in January. Some of the issues will be judged in court; let us see what happens. There has been one attempt to use the judicial process, and the original application failed, but the company, exercising its legal right, decided to find other legal arguments. All that is healthy, although it certainly ties up a lot of Ministry of Defence time, but the matter will be exposed in open court, and it will be decided, in the eyes of the law of the land, whether there has been any breach of obligations.
Janet Anderson : Were Ministry of Defence staff shown any samples during the visit that the Minister mentioned?
Mr. Ingram : I am sorry; I missed that.
Janet Anderson : I was asking whether whether any samples were shown to Ministry of Defence staff during the visit.
Mr. Ingram : Two independent assessments were carried out by independent test facilities in China. Both found that the quality was matched, and that result was replicated at two test facilities in the UK. There have been four tests of the garment, which found that it was satisfactory. That is why we are satisfied about compliance in this contract.
We have two minutes left and I have been generous in giving way, so I have not covered all the issues. Some of those that have been raised are only months away from being ventilated.
Mr. Gordon Prentice (Pendle) (Lab): Will the Minister give way briefly, on that very point?
Mr. Ingram : No; I want to make a point about technology. The way the issue has been argued, it is as if we are dealing with leading-edge British technology, but we are not. The technology is 1970s technology and is widely available in the international marketplace. There is nothing new about what we are dealing with and what we are trying to do.
There are many red herrings in this debate. People make allegations and assertions. I urge my hon. Friends to return to and interrogate their sources and ask why they are raising the issues in the way they do. They should do what they ask the Minister to do: put to the test the contract and the companies that are raising the arguments.
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