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Mr. Hoyle: Will the hon. Gentleman clarify something that confuses me slightly? I understand that he disagrees with how the Government are going to proceed with the tanker programme and the others that he has referred to, but what would be his way of funding them? He will agree that it is very important that we go ahead with the air tanker programme and the others, and I believe that we have to fund them one way or another, so I would be interested to hear what he would say to that.
Mr. Howarth: I have been a consistent opponent of the structure of the FSTA programme, which I think is the most absurd procurement programme of all, and there are quite a few applicants for consideration for that. It is an absurd programme that is hugely costly and years and years late, meaning that the RAF is having to carry on with clapped-out kit in the form of the VC10 and the TriStar, which is grossly unfair to the RAF and its officers and men. That is all because the Government have come up with this fancy way of doing it. The contract is signed, and we will have to see where we stand when we come into government. Sadly, that is for another day.
As I was saying, there is a fundamental flaw in the Government’s approach. The Prime Minister hailed his economic stimulus as a route to recovery from the shambles that he has created, but for some obscure reason defence has been excluded. Billions of pounds can apparently be magicked up to bail out irresponsible bankers while the service chiefs have to fight for every last penny to ensure that the men and women on the front line have the kit that they need.
Planning round 09 is still unsettled, and further cuts are being demanded. Nowhere is that clearer than in the case of the Typhoon tranche 3. The Financial Times reported this weekend that a deal to approve half of tranche 3—44 aircraft in the case of the UK—has been placed on hold by the Treasury, as my hon. Friend the Member for North Essex (Mr. Jenkin) pointed out. The Minister is clearly not prepared to confirm that report, although I understand that we will get a credit for half the 44 aircraft allocated to the UK in respect of the Saudi order. It would be helpful if the Minister told us something about that, because it is a very serious matter. He needs to tell the House what the consequences will be if the deal fails to go through. I am told that there is every possibility that Chancellor Merkel will be on the phone to the Prime Minister asking, “How on earth can you expect us to follow your example and bend to your wishes on global economics when you have reneged on the long-standing deal on the Typhoon?” The Minister needs to tell the House what implications there will be for the maintenance of key technology skills in this country if the deal fails to go through. Will we have to cede those skills to Germany or Italy, or will we have to pay a financial penalty?
Mr. Wallace: Does my hon. Friend agree that one of the reasons we need an urgent answer is that under its constitution Germany has to get the predominant part of the tranche 3 contract through its Parliament by this May, before the elections start? If we do not get it through by then and the Germans do not get it agreed in Parliament, it is likely that tranche 3 will not happen for a long time.
Mr. Howarth: My hon. Friend is absolutely right—that is my understanding, too. That is why there is serious urgency about this business and why the Minister ought to be as forthcoming as he can be with the House. Perhaps the Under-Secretary, the hon. Member for Grantham and Stamford (Mr. Davies), will mention the matter when he winds up the debate. Of course, there are commercial issues that he may not be able to talk about, but he needs to be honest with the House about what it will cost if the Treasury fails to approve the compromise proposals. If we do not maintain those skills, they will not be available for new programmes such as unmanned aerial vehicle—UAV—programmes, which BAE and others are developing.
Treasury demands for more cuts coincide with reports such as that prepared for the UK National Defence Association by Tony Edwards and endorsed by General Lord Guthrie and Lord Owen, which suggests that the cumulative deficit since the 1998 strategic defence review amounts to some £15 billion and that the planned expenditure for the next five years risks pushing Britain into the second division.
Since we last had a full debate on procurement last June, the Government have cancelled or postponed key programmes and faced a torrent of criticism from all-party Select Committees and others. The Public Accounts Committee’s “Major Projects Report” last July stated:
“The Ministry of Defence has not made sufficient improvements to deliver major military equipment to time, budget and quality.”
Carriers, the cornerstone of the SDR’s expeditionary warfare policy, are delayed again—at a cost of approximately £600 million, I understand from the First Sea Lord. I said in our debate a year ago that the French strawberry, the FRES utility variant—I think that we have to call it the French strawberry now—had gone dead. It has since been binned, in the year by which General Jackson said that the Army had to have the vehicle. The Defence Committee described the handling of the programme as “a fiasco”, on which,
“the MoD has wasted both its and industry’s time and money.”
Mr. Howarth: I give way to that Committee’s Chairman.
Mr. Arbuthnot: I am sorry that I am a little late in rising to my feet—I intended to ask my hon. Friend about the carriers. He mentioned a figure of £600 million. When the Under-Secretary, the hon. Member for Grantham and Stamford (Mr. Davies), appeared before the Defence Committee, he told us that the delay in the carriers meant no defence cost to the country. If the First Sea Lord has given the figure of £600 million—I have heard the same figure from other authoritative sources—to my hon. Friend, does he believe it to be correct?
Mr. Howarth: I think that it is universally accepted that delay in programmes costs money. The idea that one saves money by postponing programmes is not historically proven. Of course, one forgoes the immediate expenditure, but ultimately one drives up the cost. As I understand it, that has happened in the case that we are considering. It is not for me to intervene between senior serving officers and current Ministers, not least because I look forward to a different relationship with them in 2010, but it is for Ministers to explain those matters.
Mr. Arbuthnot: I note in passing that there has been no intervention on my hon. Friend to suggest that the figure of £600 million is incorrect.
Mr. Howarth: My right hon. Friend is extremely perceptive; I had noted the same thing. I will happily give way to either Minister if they wish to intervene.
Mr. Quentin Davies: I am happy to try to clarify the position. When I said that there were no defence costs, I clearly said—the record will prove it—that there was no loss to the nation’s defence capability. I think that I also acknowledged before the Committee that there is always a time value of money. As the hon. Gentleman says, if something is delayed, it tends to cost more in cash terms. However, there is no point in spending the money earlier than required when it could be more usefully spent on other things for national defence capability in the meantime. That is the judgment that I made and to which I stick.
The exact amount of money depends on contractual negotiations, which are currently proceeding. It is simply not in the national interest for me to answer that question or be drawn into precise figures at the moment. [Interruption.]
Mr. Howarth: In case that gem was missed, my hon. Friend the Member for Mid-Sussex (Mr. Soames) said that it is not in the national interest for the Under-Secretary to answer any question. Since we are not likely to make much positive progress with the Under-Secretary, I shall move on.
Mr. Gale: Before we leave naval matters, is there also no defence cost in reducing the Daring-class fleet from 12 to eight and now six ships?
Mr. Howarth: I noted my hon. Friend’s intervention on the Minister.
The House will have noted the Minister’s extremely cagey response to the important point that was made about whether six Type 45s will be sufficient to protect two carrier groups simultaneously, bearing it in mind that at any one time ships will be in refit, maintenance or whatever. I posed that question to the Minister last year, but I did not receive an answer to it, so perhaps his hon. Friend, the other Minister present, will address it when he winds up. The nation needs to know. We are talking about very expensive aircraft carriers, being built at a cost of around £4 billion in total. They will be very vulnerable assets and will need as much protection as they can be given if they are to do their job. The Type 45 is critical to that defence capability, so I hope that the Minister will be able to deal with that point.
Let me turn to other projects. The A400M will be at least four years late. It would be helpful if the Minister said where negotiations on that are and whether the company will pay damages to the Government, or whether it will be in a position to offer an interim solution and, at its own expense, provide the Royal Air Force with aircraft that can give it what it needs immediately.
Let me turn to helicopters. Despite the National Audit Office’s warning in 2004 about the
“considerable deficit in the availability of helicopter lift,”
the Government cut £1.4 billion from the helicopter programme—a decision that has considerably hampered UK operations in Helmand province in Afghanistan.
Even now, future Lynx numbers have been cut from 80 originally to 70, which are now just 62 plus some old Lynxes that will be re-engined. Also, the Minister did not mention the essential maritime support programme MARS—the military afloat reach and sustainability programme—which has been delayed indefinitely.
However, besides the policy issues, the Government stand guilty of utter incompetence in the way that they have mismanaged a number of key projects. The Public Accounts Committee reported that the modification of the eight mark 3 Chinook helicopters was so incompetently managed that
“the Department failed to consult with Boeing, the manufacturer of the helicopters, with regard to the potential costs or timeframes, and the estimated cost of the project subsequently grew by 70 per cent.”
The Committee concluded that the delays arising from the Government’s crass incompetence have
“potentially put the lives of British service personnel at greater risk.”
That is a big charge for an all-party Committee of this House to level at the Government.
Mr. Quentin Davies: Will the hon. Gentleman give way?
Mr. Howarth: If the Minister insists.
Mr. Davies: I imagine that the shadow Minister will not enjoy this particular intervention. His comments are a bit rich, because the Chinook contract to which he refers was placed by the previous Conservative Government, unless I am much mistaken.
Mr. Howarth: Do you know, Mr. Deputy Speaker? I am wholly aware of that fact. I am also aware that the hon. Gentleman’s newly adopted party has been in government for 12 years now, and it is about time that it took responsibility for sorting things out. [ Interruption. ] The Minister says that the Government have sorted them out, but they have not. Where are those helicopters? They are not in Helmand today, where the armed forces need them. Why not? Because the Government did not know what to do—they left those helicopters languishing in a hangar while they decided what to do about them, so I will not take any lessons from him about actions that were taken 12 years ago.
Let me turn to another project for which the Minister would perhaps like to blame somebody else: the defence information infrastructure programme, which is designed to upgrade the network of all computers around the defence estate. The Public Accounts Committee says that it was “badly planned” and is running 18 months behind schedule and £182 million over budget. Then there is the Red Dragon project, in St. Athan in south Wales, which has proved to be another fiasco.
Mr. Hoyle: Where’s John Smith?
Mr. Howarth: It is all right, we will send him a copy of this debate. I think that we know what he would say—we have heard it once or twice.
The Red Dragon project has proved to be another fiasco, with the Defence Committee accusing the Ministry of Defence and Welsh authorities of failing to “work together sufficiently closely,” with the result that £113 million
has been spent on creating just 45 jobs, instead of the target of 4,500. That is £2.5 million spent per job created.
Against that background, it is hardly surprising that the Office of Government Commerce last year issued an appalling verdict on the operation of Defence Equipment and Support. Among its criticisms was the following:
“overall, procurement staff lack broad commercial skills essential for the future”.
“there is an acknowledged shortage of sufficiently capable commercial staff at all levels in the Department”,
“There is no single coherent view of procurement activity”.
That is a pretty damning indictment.
In the defence industrial strategy and the defence technology strategy, the then Minister, the noble Lord Drayson—who at least knew what needed to be done—recognised the importance to national sovereignty of maintaining a healthy defence industrial base, underpinned by an active defence research programme. That science, innovation and technology budget was cut last year by 7 per cent., and it faces further cuts in the coming year. These reductions have been denounced by the Defence Committee, which said in its report, published at the end of February:
“If the UK is to play a meaningful role in the world in the future, sufficient funding for defence research needs to be ring-fenced. The MoD must recognise the very high priority of research and reverse the cut...if not, the role which our Armed Forces can play in the future risks being substantially diminished.”
The impact on Britain’s key defence industry threatens to be disastrous. The Royal Aeronautical Society has stated:
“The UK defence industrial base will decline, UK companies will lose their edge in world markets, global defence companies will not want to invest in the UK and ultimately the UK armed forces will lose access to the high quality domestic assets needed to support equipment in the field and to acquire weapons to meet their specific needs.”
The examples I have set out are the criticisms not of the Conservative party, but of all-party groups in the House, composed of Members with considerable experience.
Why is this litany of failures so important? First, thanks to the financial carnage caused by the Prime Minister, we need to ensure that every penny of investment in defence achieves value for the taxpayer’s money. The commercial skills involved in the procurement process need strengthening, with a greater emphasis on project management, as the Office of Government Commerce has suggested.
Mrs. Claire Curtis-Thomas (Crosby) (Lab): From where does the hon. Gentleman think we are going to obtain significant competence in procurement, if such a capability is not developed as a consequence of the type of projects we have now? Does he think that the absence of procurement competence is unique to the Government sector, or does he believe that it is shared by the private sector?
Mr. Howarth:
The hon. Lady poses an interesting question, to which I fear that I could give a long answer. I shall not do so, however. The private sector has demonstrated its greater ability to run major projects,
which is why we need to beef up the professional element of what used to be called the procurement executive—a better description of it, in my view. She has made an important point, but that is something we need to do. Pulling in a half-colonel straight off the front line and telling him to be an integrated project team leader is not the answer. We need professional project managers, with military personnel sitting alongside them to advise them on the practicalities and on what is needed in the field. However, there is a bigger debate to be had on this point.
Mr. Soames: May I suggest that my hon. Friend consider substantially expanding the courses on business expertise and leadership available to servicemen and women who go into the procurement field? This is such a specialist area, and a corps d’élite of managers with modern, up-to-date capabilities needs to be firmly embedded in the procurement process.
Mr. Howarth: Unsurprisingly, I agree with my hon. Friend that a tremendous amount of work needs to be done in this regard, and I am actively looking at this matter at the moment. Work is being done on this at Shrivenham and it needs to be strengthened—or beefed up, to use a more straightforward term.
Mention has been made of the inconsistency between the Ministry of Defence’s core programme and the urgent operational requirements, which I accept are essential if we are to protect the lives of our servicemen and women. But where is the strategy for Land Systems to replace a fleet of 35 to 40-year-old CVRT armoured fighting vehicles? I haven’t a clue what CVRT stands for. I think that it is—
Mr. Deputy Speaker: Order. If the hon. Gentleman is not sure, I am sure that the House is mystified—and those outside the House even more so. Perhaps he can seek advice.
Hon. Members: Come on, Gerald, what are you going to do?
Mr. Howarth: I think I am going to phone a friend, actually. I am looking around for my hon. Friend the Member for Reigate (Mr. Blunt), who might bail me out. CVRT? I know that the “T” bit is “Tracked”. Forgive me; I am sorry about this failure. Anyway, they are armoured fighting vehicles that are 35 to 40 years old, and I believe that the Department needs a strategy. The Minister mentioned new “dog”-type equipment—further to confuse us all—that is being introduced: Coyotes, Wolfhounds and goodness knows what. I do not believe that this is a substitute for a strategy; it is a strategy that we need.
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