Defence and Security Procurement

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Mr. Jenkin: Can the Minister answer the point made by the right hon. Member for East Kilbride, Strathaven and Lesmahagow? He said,
“we do not believe that the benefits that might result from introducing a specific defence procurement directive are sufficient to offset the drawbacks.”—[Official Report, European Standing Committee, 8 February 2005; c. 5.]
What has changed?
Mr. Davies: What has changed is that we now have a directive that we did not have in 2005. My right hon. Friend the Member for East Kilbride, Strathaven and Lesmahagow could not have been talking about the directive in any remarks he made in 2005 because it did not exist. The directive was promulgated and drafted by the Commission in 2007. That is the answer, which was contained in the question itself. If the hon. Gentleman had thought it, he would have found the answer buried in his own question.
Mr. Jenkin: May I explain what the right hon. Member for East Kilbride, Strathaven and Lesmahagow said? He said that he did not see the need for any directive—not this one or any other. The Government’s policy seems to be to present us with a directive and to think that even if we are against it, we will support it in the end.
Mr. Davies: The Government’s position would never be to say that we will not consider anything pragmatically and that we have no interest in the ideas that someone might have. We do not conduct our relations in any international grouping on that basis. We do not conduct ourselves in such a way in the World Trade Organisation, NATO, the United Nations or the European Union. The Conservative party, if it ever by some mishap came to power, might well start conducting our international relations on that basis. What disaster would flow from that? If only the wider public had the opportunity to listen to the debate, they would learn a lot about the true nature of the modern Conservative party.
I shall deal with one final point made by the hon. Member for Westbury. I am not sure why I should be particularly charitable to him this evening, but let me be charitable and say that there was a misunderstanding, which I shall try to correct. The Government have never said that the directive is irrelevant for SMEs, let alone that it is damaging. We have said, and I said earlier in these proceedings—before the hon. Gentleman looks through his notes for the reference—that we do not think that increasing the threshold for advertising contracts from €250,000 to €1 million would be helpful for SMEs. Indeed, it would be damaging. The only mentions of SMEs in the directive are in that context. Business supports the Government’s attitude. Business generally realises that the present Government are most likely to understand their needs, both at present and going forward.
Dr. Murrison: The Minister has made a number of assertions. Will he evidence his latest one on business supporting the directive?
Mr. Davies: I am happy to evidence my assertions.
Dr. Murrison: Give us some examples.
Mr. Davies: The two business organisations that articulate the interests of the defence sector are the Defence Industries Council and the Society of British Aerospace Companies, and, I am informed, they both support the Government’s position on the directive.
Dr. Murrison: The Minister supposes that to be the case, but we spoke to those organisations this morning and they have strong reservations about the directive. The Minister has not dealt with any of those reservations this afternoon.
Mr. Davies: I have made it clear that I have not been dealing directly with the matter, as the hon. Gentleman well knows. I am reporting conversations—[Interruption.] I am making it clear that I am not personally testifying to conversations that I have not been party to. I am assured that those conversations have taken place and we have been informed that the industry supports the directive.
I have had many meetings with the defence industry since I started my present role. I can testify that on not one occasion has any industrialist, or any industrialist concerned with the defence industry, expressed reservations, worries or concerns about the directive, which I imagine they could have done because I am, for most purposes, even if not for that purpose, the natural interlocutor of the defence industry. If the hon. Gentleman tells me something, I will not say that it is untrue, but I am interested to know what reservations he is referring to. It does not reflect the position as I understand it, and I am surprised.
The hon. Member for North Devon generously welcomed the Government’s progress with the directive. I am grateful for his considered support. I take on board what he says about SMEs, since he takes a generally positive attitude towards the directive. I am interested to know what more he thinks the directive could do for SMEs. We have already explored the advertising threshold and I have expressed my views on it. I hope that the presidency of the EU will reconsider its views, and that those will perhaps be reflected in the next presidency draft, which neither I nor anyone else here has seen. I am informed that it may be issued at the end of this week.
The hon. Member for North Essex and I have debated European issues before and I see that he has not changed his attitude on those subjects—not to my immense surprise. He makes the mistake of supposing that the directive reflects any kind of EU political agenda. It does no. It is a pragmatic measure designed to clarify a regime that has existed for a long time—[Interruption.]
I shall come directly to the issue of security of information, which the hon. Gentleman raised. I understand entirely where he is coming from. He read out an extract from article 296 about security of information and asked where the directive leaves us now. While enshrining the principles of article 296, the directive makes the position much clearer and, therefore, strengthens the regime. I hope the hon. Gentleman does not wish to turn his eyes away from the facts that are presented to him. I am sure he would not want to conduct a political argument on that basis. I shall read to him the relevant measure in the draft directive, article 9(a), which states:
“This Directive shall not apply to the following cases:
(a) public contracts for which the application of the rules of this Directive would oblige a Member State to supply information the disclosure of which it considers contrary to the essential interests of its security”.
That protection, which is of the kind that he wants, is clear and more copper-bottomed than that in the original regime. I repeat, however, that the original regime is not being changed.
Mr. Jenkin: We have moved to the next classic defence of a new European directive. Having started by opposing it in principle, the Government now support it on the basis that it does not change anything, but makes everything clearer. That always happens. The hon. Gentleman is the victim of the latest throw of the European dice.
Mr. Davies: Making something clearer reduces uncertainty. I hope the hon. Gentleman will think about that. The directive will reduce legal uncertainty and the danger of abuses of the regime—a regime that was already, and is intended to remain, in place. That is very useful.
I shall make a few final, essential points about the essence of the directive.
Mr. Jenkin: Will the Minister give way?
Mr. Davies: Once more, and then I shall wind up.
Mr. Jenkin: The Minister read out an article 9(a) that is not in my version of the directive. Will he read it again so that we can understand exactly what it means?
Mr. Davies: I am afraid that I have no time to do that. We are expecting a vote in the House and I do not wish to impose on the Committee the need to return in order for me to reread something that I have just read to the hon. Gentleman. [Interruption.] Not for the first time, he is not being entirely reasonable.
It is important to ensure maximum liberalisation of trade in the area of defence where EU Defence Ministers are concerned. That is consistent with the true spirit of article 296 and, as I said, will benefit us disproportionately. However, others will also benefit from using price competition in the single market more effectively, because their defence budgets will go further and they will be able to spend more of it on key capability measures. It will also be good for industry, as has been acknowledged by the major trade associations representing the interests of the defence industry. With very considerable conviction, therefore, I commend the directive to the Committee.
Question put:—
The Committee divided: Ayes 8, Noes 4.
Division No. 1]
Crausby, Mr. David
Davies, Mr. Quentin
Donohoe, Mr. Brian H.
Harvey, Nick
Hill, rh Keith
Johnson, Ms Diana R.
Joyce, Mr. Eric
Rennie, Willie
Burns, Mr. Simon
Hands, Mr. Greg
Jenkin, Mr. Bernard
Murrison, Dr. Andrew
Question accordingly agreed to.
That the Committee takes note of European Union Document No. 16488/07 and Addenda 1 and 2, draft Directive on the co-ordination procedures for the award of public contract in the fields of defence and security; and endorses the Government's approach to the negotiations and its view that if, following European Council agreement on a text and negotiations with the European Parliament, the document remains within the UK's negotiating position, the Commission draft Directive could be supported.
Committee rose at ten minutes to Seven o’clock.
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Prepared 25 November 2008