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Mr. Deputy Speaker (Sir Alan Haselhurst): Order. The hon. Lady has had her time allocation.

4.45 pm

Mr. Douglas Carswell (Harwich) (Con): Others wish to speak, so I shall be as brief as I can.

There is something profoundly wrong with Britain's system of defence procurement. That is not my assertion, but that of Lewis Page, author of the recently published book on defence procurement, "Lions, Donkeys and Dinosaurs". Mr. Page's highly readable account of the monumental incompetence of our defence procurement regime is, I hope, on the Minister's reading list. If not, I would be delighted to lend him my copy for him to read afterwards.

According to Mr. Page, the UK spends about £30 billion each year on defence. His book shows what extraordinarily bad value for money we get—or, should I say, our soldiers get. It is a damning tale that does far more than condemn the actions of any single here today, gone tomorrow politician. Rather, it raises serious questions about the future of our defence industry and the MOD—an institution that Mr. Page compellingly portrays not so much as the Ministry of Defence, but as the Ministry stuffed with dinosaurs.

In reminding the House of one or two instances of particularly gross MOD incompetence, I am not seeking to make partisan political points. The MOD's failings
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have been manifest under Governments of both parties. I am also not especially interested in which side of the House hon. Members happened to be sitting on at the time of the MOD's bungling. Rather, I seek to make the    point that the incompetence of our defence procurement regime is so profound that it is time to contemplate a bold and radical alternative.

Do hon. Members remember the SA80 rifle? They might not, but our soldiers still have to cope with it. It began life in 1985 with several glaring design flaws. The decision was taken after 1997 to spend £92 million to sort out each of the 200,000 flawed rifles. That works out as an additional £460 to make each gun function properly, after its development and production costs. The MOD asserted that that was cost effective. Had it the wherewithal, however, the MOD could have spent that £92 million on, for example, the American M16, at a mere £400 each. Instead, for reasons that are unclear to me, the MOD spent that money upgrading a rifle that no soldier, when asked to select their own weapon, would choose.

Mr. Ingram: I am sorry for interrupting, but I went through that entire process. I put the rifle under intensive test by soldiers and I have a vivid memory of a Royal Marine sergeant saying that it was the best rifle he had ever handled, and a paratrooper sergeant saying the same. One of them had been a sceptic and said that he did not anticipate that when he went into the tests. The hon. Gentleman should speak to members of our armed forces about the quality of the rifle that we now have. I agree about the past. That is why we had to fix it. It was one of those legacies that we had to address.

Mr. Carswell: I note that those parts of our armed forces allowed to choose their own weapons, such as the special forces, do not choose the SA80.

Mr. Ellwood : I was one of those soldiers who had to use the SA80. It is not a great weapon. What makes that weapon great is the SUSSAT sight that is placed on it. Anyone who has been to the Royal Ordnance factory will know that that bullpup design came around in the 1940s, not after the Fabrique Nationale's SLR was made. It is not a great weapon. It is its sight that has made it. The Army or the Marines do their best with the equipment that they get. That is the situation.

Mr. Carswell: To press on, do hon. Members remember all the Apache helicopters that we bought? It was sensible, was it not, to buy all that tried and tested American kit, yet the MOD managed to bungle even that. Israel managed to buy Apaches at £12 million a piece. Somehow the chaps at the MOD managed to spend £40 million on each one of them.

Mr. Vaizey : On that point.

Mr. Carswell: Many wish to speak—

Mr. Deputy Speaker: Order. The hon. Member for Wantage (Mr. Vaizey) has only just walked back into the Chamber. He ought to exercise some restraint because we are running out of time. If he hopes to catch my eye later, it would be a good idea not to extend speeches; otherwise insufficient time will be left.

Mr. Carswell: Apparently, it was something to do with wanting to assemble the Apaches in Britain to
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maintain jobs—a good idea, one might think, until one realises that we could have bought the helicopters directly from the Americans, given each one of the 755 employees working on the assembly line £1 million to retire on, and still have saved ourselves £1 billion in the process. Many of the procurement problems surrounding the Apache, like the SA80, have carried on regardless of which party has held office.

Why is our system of defence procurement quite so hopeless? There are three key reasons. A large part of the reason is that those people in charge of it—I mean really in charge of it; the senior civil servants at the MOD—simply deny that it is hopeless. Those 300-odd senior MOD civil servants who rate themselves of equal rank to admirals, generals and air marshals are not part of the problem—they are the problem. There will be no serious progress in our defence procurement strategy without root and branch reform at the MOD. In any other sphere of life—in business or in the charity sector—a senior director responsible for such bungling would face real consequences, but not at the MOD. This remote and unaccountable elite makes monstrously poor decisions and British soldiers face the rap. No one is accountable. No one is sacked. This is how our defence procurement is run.

Many are the discussions to be had over Britain's strategic priorities. Many are the debates to be had over the best weapon systems, over the SA80, over the Type 45 frigates, over the Chinook HC3s and over UAVs. But what we really need to deploy if we are ever to have value for money in our defence procurement is the P45.

To ward off accusations of gross incompetence, the MOD has now adopted a smart acquisitions policy. I was against the dumb acquisitions policy that it had before, but I note that the projects continue to overrun in terms of time and money. I would venture that, as long as the MOD continues to be a monopoly purchaser and BAE Systems continues to be a virtual monopoly provider, there is something inevitable about that, and the Government's defence industrial strategy does little to change it. Buying British is not always best. It is more important to ensure that our armed forces have the best kit that we can afford than to prop up UK defence plc.

A further reason why I believe our defence procurement is hallmarked by incompetence has been its creeping Europeanisation. Even the most diehard protectionists recognise that the costs and complexities of weapon systems are such that it is unrealistic to buy entirely British, yet many of the so-called defence strategic arguments, once advocated by those committed to defence-industrial autarky, are now regurgitated by those who argue that we must buy European. There are many better alternatives for this country to pursue than further Europeanisation. The MOD has implemented by stealth an EU-facing defence procurement policy. It is yet one more reason why it is time to give serious consideration to the future shape of this Whitehall Department and the many thousands of paper pushers she employs.

To conclude, I hope that the Minister and many others in the House will read Mr. Lewis Page's excellent book. I hope that the Minister will go back to his Department, that he will stop regurgitating the departmental orthodoxies of the defunct MOD, and that he will implement and create an effective defence procurement policy inspired by much of what Mr. Page has to say.
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4.54 pm

David Wright (Telford) (Lab): It is an interesting experience to follow the hon. Member for Harwich (Mr. Carswell). I will pass on his comments about pen pushers to hundreds of my constituents who procure products for the MOD. I am sure that they will be delighted to hear what he had to say.

This afternoon, we have heard about a series of procurement issues, including aircraft, naval products and textiles. It is important to remember that large teams of people work for the MOD procuring those items, because we have not discussed the civil servants who work in supply and purchase. More than 400 people in my constituency work in the Defence Logistics Organisation at Sapphire House. I am concerned about their future, because the MOD has proposed the collocation of a number of staff from Sapphire House to an acquisition hub in the Bath-Bristol area. I know that Ministers have not made a final decision on that matter, but rumours about the collocation proposal and the acquisition hub have been circulating. I hope that the Minister will reassure my constituents about their future in his winding-up speech.

In July 2005, the MOD announced its plans for the acquisition hub. From August to November 2005, a combination of rumour and comments from senior management indicated that the plans were more advanced than staff realised and than the MOD would admit publicly. As has been said, the MOD purchased a building in the Bath-Bristol area to which it might move staff from Telford to work on DLO acquisition activity. On 21 December last year, the Minister wrote to me to confirm the purchase of that property, which was not a nice Christmas present for staff in Telford.

I want to discuss what makes Sapphire House in Telford unique. The procurement and provisioning support for all in-service Army equipment is undertaken at Sapphire House. That work is supported by bespoke IT infrastructure, the PUMAS and PWB systems, and it has been performed in the Telford and Shropshire area for more than 60 years. That business output to the DLO is not replicated anywhere else in the UK.

Additional evidence of the unique role of Sapphire House is found in a key measure of the field Army's ability to deliver its military capability. That measure is called underlying availability, which defines the spares support available in the supply chain and is critical to force sustainability during both peacetime and operational periods.

The DLO procurement reform team, DLO category managers and a small contingent administering the MOD's purchase to payment strategy are also based at Sapphire House. Those teams tap into the bespoke Sapphire House IT systems and, more importantly, utilise the Sapphire House community to interpret and capture commercial and procurement data. Sapphire House is also contributing significantly to the much-heralded—this afternoon—industrial strategy recently launched by the MOD.

Sapphire House is also unique because it houses a number of non-DLO integrated project teams, the Defence Communication Services Agency and the integrated project teams working under the Defence Procurement Agency. That profile demonstrates integrated working and provides a snapshot of what the
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MOD is trying to achieve in the Bath-Bristol area. The MOD wants to collocate activity to the Bath-Bristol area, but it has already done that in Telford, so I hope that it does not move staff again.

The DLO gets a good deal out of Telford, which is evidenced by the excellent recruitment and retention record of staff in that locality. Indeed, 67 per cent. of the work force at Sapphire House is based on administrative grades and is therefore paid a relatively small amount. The MOD gets incredible value for money from those staff. If we move their activities to the Bath-Bristol area, we will not get the same output from the same grading of staff in that locality. That value-for-money aspect cannot be replicated.

One of the issues that local trade unions have raised with me is that although MOD proposals suggest collocation in the Bath-Bristol area, most staff in Telford will not want to move. Surveys carried out by the unions of those 400-plus staff find very few people who want to relocate their activities to that area. People do not want to move their families down there or to break their links with the local community. In many cases, whole families have worked for the MOD in Telford, whether at the old Donnington depot or at the    ESPPA—Equipment, Support, Provision and Procurement Agency—facility at Sapphire House. My concern is that if we collocate activity in the Bath-Bristol area, we will lose essential skills that we have built up through the DLO Telford teams from the ashes of the change that occurred in 1995 when the Chilwell and Donnington sites were amalgamated.

I hope that Ministers will take a step back for a moment in relation to Sapphire House, and think about the skills and quality of the staff there in procurement terms and about what they will lose if people do not move down south in the event that activity is collocated in the Bath-Bristol area. Sapphire House is home to two bespoke IT systems and, uniquely, houses more than 330 highly skilled, fully trained provision and procurement operatives. It has a critical role in running a further 10 IT systems essential to effective inventory management and supply chain operation. This is a quality facility with staff who are very committed to the MOD.

The staff and the trade unions have produced a so-called straw man paper that looks at alternative options. The unions are not particularly opposed in general terms to collocation, but they still see an ongoing role for MOD presence in the Telford area. The paper discusses the retention of skills and staff at Sapphire House. The proposal has been withdrawn, as the Minister confirmed, but I hope that we can breathe some new life into it and that Ministers will be willing to meet trade union representatives again to talk through the future of the paper and to see whether there are any opportunities to retain those skills and staff in Telford.

I want to refer in closing to the comments made by my hon. Friend the Member for Vale of Glamorgan (John Smith), who mentioned the defence training review. It is important that we have a clear, transparent and open competition on defence training. I hope that the Department will pursue that line effectively. Under one option St. Athan would be the prime location; under the other option, which I clearly support as a Shropshire MP, those activities would go to Cosford. It is probably fair to say that both sites have great advantages. Both
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could be seen as high-quality training facilities for defence. I just want us to have a fair competition and a fair decision based on the facts. We can then move forward with quality training environments for all our people working in the MOD.

5.3 pm

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