Scottish Affairs Committee - Minutes of EvidenceHC 580

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Oral Evidence

Taken before the Scottish Affairs Committee

on Tuesday 7 June 2011

Members present:

Mr Ian Davidson (Chair)

Fiona Bruce

Mike Freer

Cathy Jamieson

David Mowat

Mr Alan Reid

Lindsay Roy

Dr Eilidh Whiteford

________________

Examination of Witness

Witness: Rt Hon Liam Fox MP, Secretary of State for Defence, gave evidence.

Q135 Chair: Minister, could I welcome you to the Scottish Affairs Select Committee? Thank you for coming along and being prepared to start a little early. We understand you have to be away for a statement at half past three.

Dr Fox: On Libya.

Q136 Chair: So we will make as much pace as we can. We have a number of things we want to raise with you relating to bases and procurement. You will appreciate that we had an agenda arising from the SDSR, but things have obviously changed a bit since the Scottish elections. Therefore, issues relating to independence and the possible impact thereof are going to be on our agenda as well. We also want to raise the question of the Military Covenant. We will leave the last five minutes if we can for the Covenant in particular.

It would be helpful if we could start off by my asking you about the question of the bases that are presently under discussion in Scotland. When do you anticipate a decision being made; the criteria that will be utilised; whether or not there will be any change in that; whether or not you are clearer about impact assessments that will be made after the decision is made; and what sort of support will be provided to those areas that might lose a base? Yes or no?

Dr Fox: Where would you like me to start on those 20 questions? There are a number of changes that obviously flow from SDSR and a number of opportunities that also come as a consequence. We made reductions in the overall size of the armed forces and we also had the potential to bring back the Army from Germany. One of the reasons for doing that is that it costs us about a quarter of a billion a year in allowances alone in keeping the armed forces in Germany. In my view, that is money that would be better spent being put into the UK economy.

There was always a problem with the costs of change and the numbers involved. We may now be able to balance that better. Our aim is to bring half back by 2015 and the other half back by 2020. We have been looking around the country at a number of potential moves. If I tell the Committee that this is like doing a 3D jigsaw, that would be understating the complexity of the problem with the number of moves that we may have to make. We have been working towards being able to make an announcement before the summer recess, before 19 July, and we are trying to stick to that. I want to ensure that, when we do make those decisions, we have made them primarily on the basis of what is best for the defence of the United Kingdom, but we are also naturally acutely aware across Government of the implications.

Once a decision is taken, we will make assessments on sustainability, safety, environmental protection and equality and diversity assessments. Needless to say, I cannot say anything specific about the likelihood of which bases may stay open or close, or indeed to which part of the armed forces they may be related, but we will continue with the work that is ongoing and we will continue to discuss the consequences of any particular decision with interested parties. I really should emphasise that no decisions have been taken finally yet. I have had a number of discussions with the First Minister, with the Secretary of State for Scotland, with BIS and with other interested parties, as well as the Scottish party leaders. We are looking at the issue in the round for the whole of the United Kingdom and of the three services.

Q137 Chair: One of the unknowns or uncertainties is the constitutional future of bases in Scotland. Can I clarify the extent to which that is being taken into account in making assessments about possible substantial sums of expenditure on bases for relocation of troops when there might be a constitutional change which results in those bases having to be vacated?

Dr Fox: No previous work has been undertaken on that basis. Clearly, the result of the Scottish elections and the potential referendum on independence are something which we would want to take account. However, for the moment it is hypothetical. Needless to say, someone who is a confirmed Unionist like myself would be arguing very strongly against it. Of course, on other big strategic issues, as time goes by, we will want to undertake some work to see what we think the implications may be. For example, if you look at some of the programmes that have gone into Scotland-take the Type 45 programme, which has been worth about £6.6 billion overall, of which about £1 billion to £2 billion direct investment went into Scotland-clearly there are big benefits that Scotland has had from being part of the United Kingdom’s economy of scale in the armed forces.

Q138 Chair: As I am sure you will understand, we will be coming to shipbuilding later on in the proceedings. I just want to pick up this question of scenario planning. Surely you must now be taking into account the possibility that bases in Scotland will be in a foreign country, potentially within a few years.

Dr Fox: There would be clear implications for that. I will want to look, as will my colleagues across Government, at what the implications may be and how we might deal with them. As I say, as far as we are concerned, it does remain hypothetical and is something that we would of course want to think about.

Q139 Lindsay Roy: How strategically important is Scotland to the defence and security of the UK?

Dr Fox: If you take just two elements-our air defences from the east of Scotland and our nuclear deterrent from the west-it is a vital part of the coherence of the UK’s defence policy. To lose any of those elements would potentially be detrimental to the country’s security. If I may say, it is not just in those assets. Scotland’s role in the broader defence of the United Kingdom through the armed forces is not something that is just a matter of immense historical pride. It is something that is happening today. If I may say, Chair, when I visit Afghanistan or when I visit Iraq, our armed forces don’t ask one another whether they come from Edinburgh, Cardiff, Belfast or London. They are armed forces under the Crown very proudly fighting alongside one another, as they have done throughout history, with a common purpose.

Q140 Lindsay Roy: And united.

Dr Fox: United armed forces under a United Kingdom.

Chair: Does anyone else want to come in on bases?

Q141 Mr Reid: Should a base be closed, what is the Government’s policy about supporting the communities that have depended on the base for their livelihood?

Dr Fox: To give you an example of how we would go about looking at that problem proactively, if, for example, we are looking at the new employment model and if we are looking at where we may want to outsource, we would naturally look at the economic environment. We would look at the skills base to see where that might be possible into the future. As we look at the basing reviews, we look to see where there might be potential for further support into the local economy which is beneficial to both the local economy and to the cost reductions that we are seeking to see as a Department.

If there are base closures, and if I were to give any indication for the country as a whole, I would simply point out the fact that, with some 17,000 leaving the armed forces and some 20,000 coming back from Germany, that doesn’t leave you with a great deal of room to reduce the capacity for accommodation. It is a question of how we use the bases largely in the review, although some closures may be inevitable in terms of getting economies. We will then want to look across Government, including with the devolved government, to ensure that we provide what we can in terms of wider support for business. My primary responsibility is to look at the defence elements, but I consult with the Scottish Secretary, BIS and also the Scottish Government to see how we can look at things in the round.

Q142 Mr Reid: The bases themselves can often be an asset to the local community. You will be aware, for example, that at Machrihanish there are negotiations about transferring it to a community group. Do you see the Ministry of Defence as having a role in supporting a local community group in that situation by investing in the infrastructure of the base to make it more usable for, say, local businesses?

Dr Fox: The defence budget is for the defence of the country. When it comes to supporting economic infrastructure, there are other parts of Government for that. Across Government, we are obviously keen to minimise any impacts, socially and economically, wherever possible.

Q143 Mr Reid: Are you saying that Scotland supporting the local economy is a matter for the Scottish Government?

Dr Fox: It is an element that is cross-Government. Obviously, the Secretary of State for Scotland has a view on these issues. We want to see the best result that we can get, but it is obviously in conjunction with the Scottish Government itself.

Q144 Chair: Clearly you are saying that the defence budget would not pay any of the costs associated with economically regenerating an area after a defence base is closed, but this would be left to somebody else.

Dr Fox: It is across Government.

Chair: We just wanted to be clear about that.

Q145 Lindsay Roy: Forgive me if I have missed this, Minister. In your response to the Chair when he asked about factors which would decide which bases remain open and which remain closed, what are the critical criteria? Can you just clarify these for us?

Dr Fox: Yes. From my point of view, my recommendations are based on what I believe to be in the best interests of defence overall and in the best deployment of the assets that we have. We are taking a fairly wide-ranging view of that across the whole of the United Kingdom. I have a strong view that we need to maintain a strong footprint of the United Kingdom’s defence assets across the whole of the United Kingdom. That is one of the things that we will take into account when we are looking not just at the defence element in terms of deployability of assets but where the armed forces themselves are situated.

Q146 Lindsay Roy: So it genuinely is still strategic.

Dr Fox: It is indeed and we are looking across the piece. I have had a lot of conversations with the Scottish Secretary, as with the Welsh Secretary, and with the Government of Scotland. I have to say in all fairness that I have been very impressed at the very confidential way in which the discussions that we have had with the Government of Scotland have been conducted.

Q147 Chair: The argument has been advanced that says that Scotland does not get its fair share of defence personnel, in particular uniformed personnel. There have been some statistics advanced which indicate that there are not 9% of uniformed personnel being based in Scotland. How do you respond to that?

Dr Fox: As I said, primarily, I am taking decisions on the forces that are my responsibility since becoming Secretary of State on the basis of what I think is the best laydown of UK forces to give me the best defence outcome. I am aware of the fact that between 2000 and 2010 the total UK reduction was 11.6%, but the reduction in Scotland was 27.9%. Over the decade 2000 to 2010 there were bigger reductions made in total personnel as a proportion than in other parts of the United Kingdom. That is not to say that that becomes the major driving force of what we are doing. For example, when we are looking at where we are relocating those coming back from Germany, and where it is not an absolute defence priority where they go, then getting a Union footprint may well be one of the things we will consider.

Q148 Dr Whiteford: After the SDSR is completed, do you anticipate that the MOD staffing and spending in Scotland will be more or less than our population share?

Dr Fox: We don’t calculate it on population share because we are concerned with a UK-wide outcome for the defence budget.

Q149 Dr Whiteford: Would you accept, though, that the share of Scotland’s staffing and bases in the last 10 years, as you have just pointed out, has been falling on a cumulative basis and that our share of spending is far less than Scottish taxpayers would expect?

Dr Fox: That is in terms of MOD personnel. By the time you add in the value-

Dr Whiteford: Personnel and spending.

Dr Fox: By the time you add in MOD spending that goes on projects such as the Carriers, such as Type 45, such as the £0.25 billion a year that comes into the local economies through Faslane, there is quite substantial spending.

Q150 Dr Whiteford: Will there be more or less after the SDSR?

Dr Fox: There is clearly more because there is more spending coming in through the projects that I mentioned. That is before we get to consider the Global Combat Ship, the Type 26, where that will be built and whether a proportion of that will go to Scotland. There is a considerable benefit in terms of investment in the Scottish economy through that. Of course the decisions that we took in SDSR, with the decision to refit the Carriers, will again mean additional work which will see the shipbuilding industry in Scotland supported right through the decade.

Q151 Dr Whiteford: Why are only 2.1% of senior military personnel based in Scotland if it is of strategic importance?

Dr Fox: You perhaps misunderstood my answer when I said where we base assets is the strategic element: the nuclear deterrent in Faslane and some of our air defences in the east of Scotland. We do not begin our decisions with some sort of ethnic ledger. We decide what we think is the best for the outcome of the MOD budget and how we get a return for the spending across the whole of the United Kingdom. We operate Her Majesty’s forces as United Kingdom forces. We do not begin by subdividing the country into parts and say, "Why does south Wales not get as much as north Wales?", or "Why does the West Country not get as much?"

Dr Whiteford: With respect, I think it is a highly relevant question to ask.

Dr Fox: Sure, but it is not how we view the world.

Q152 Dr Whiteford: But, looking at the footprint, Scotland is about a third of the geographic territory and strategically very important. Looking at the closures of RAF bases in Scotland, if two out of three RAF bases in Scotland close, would you accept that that would be a 25% reduction in established military personnel in Scotland?

Dr Fox: First of all, you have to differentiate between the strategic capabilities that you have and the personnel issues. They are not entirely separate, I accept. For example, maintaining our air defences in the east and maintaining our nuclear deterrent because of its geographic benefits are clearly of enormous strategic interest to the whole of the United Kingdom. As I said, I am acutely aware of the impacts on particular types of local economies of the economics of some of these decisions. Where there are options of equal military utility, I am looking closely to see whether some of those wider considerations might be given greater account.

Q153 Dr Whiteford: The P&J has been reporting that the operations in Libya may be led from RAF Lossiemouth. Should people be reading into that that a decision has already been made to retain Lossiemouth?

Dr Fox: No decisions have been taken. I have to say that during the SDSR, if you read the accumulation of press stories, there were going to be no defence programmes left in the Ministry of Defence. If you read the local press in terms of basing, there will be no bases left either. I do understand, to be serious, the anxieties that people have about the complexities and the time delays. I spoke to personnel in Leuchars and Lossiemouth last week. I understand their anxieties and I explained to them the complexities of what it is we are trying to do. What I want to do is to get a reconfiguration of our armed forces that gives us stability for a long time after that so that people know what to expect and the local economies can adjust.

Q154 Dr Whiteford: Can I ask one final question? Has there been any social and economic impact assessment done in the Lossiemouth or Leuchars communities by the MOD?

Dr Fox: We have not done them through the MOD, but I am very well aware of the vast amount of information that has come in from other sources on that. I don’t think you need to be an economic expert to understand the implications of the local economy in Moray were two bases to disappear. We are aware of that. As I say, it is a very complex set of issues to be juggling with.

Q155 Lindsay Roy: Minister, in your considered judgment, is Scotland any less well protected or less secure than the rest of the UK? If you are saying it is as well protected and secure, will that remain after this review?

Dr Fox: My job by definition is the safety and protection of the whole of the United Kingdom. Scotland is part of the United Kingdom. It falls within that remit and, by definition, it would be unacceptable to have any one part of the country less safe than it was before.

Q156 Lindsay Roy: So you are giving us an assurance that after the Review that position will remain.

Dr Fox: That position in terms of the protection of Scotland as part of the United Kingdom and as part of the integral defence of the UK of course remains. The defence of Scotland is not separate from the defence of the United Kingdom. The defence of Scotland is part of the defence of the United Kingdom. They are indivisible.

Q157 Chair: I would hope that you wouldn’t take from this discussion that we have had so far that we only want Scotland to have, as it were, its population share of defence jobs.

Dr Fox: I am quite sure, Chair, you would like an above average share.

Q158 Chair: Indeed. My understanding is that at the present time Scotland has 50% more defence jobs than its population share would warrant. That is not something that we would want to have reduced simply to meet a quota in any way, shape or form. I am generally in favour of quotas when it is raising us up, but a balance has to be struck.

Dr Fox: If I may say, Chair, that point is very well taken. In a lot of the public debate that I have seen on this, a great deal of emphasis has been given to MOD personnel or armed forces personnel in Scotland where I hear that there is a demand that they are brought up to UK average. But you are quite right to say that, in other areas such as defence-related jobs and industrial jobs, there is a great deal that Scotland derives as a benefit.

Q159 Chair: Could I continue the question of bases, moving forward a little? There has been a great deal of discussion about what might happen after independence in terms of sharing bases and the like. Could you clarify for us what the MOD’s view is on the practicality of having bases jointly operated or worked in some way by an independent Scotland and the UK? Eilidh mentioned the question of planes from Lossiemouth flying off to Libya. How would a decision like that be handled if, say, the Scottish Government didn’t favour an attack on Libya, yet the UK Government wanted to use planes that were based in Lossiemouth to attack Libya? Has there been any discussion with the Scottish Government about how any of that would be handled?

Dr Fox: No; we have not had any discussions on that. As I say, that remains hypothetical largely because, in my view, the Scottish people would be too wise to go down the route of independence. If it does become a potential outcome, we will want to do work on the constitutional implications of that and the wider defence implications. It could potentially be a serious issue.

Q160 Chair: As you are aware, there are two opinions about whether or not there should be one referendum or two. Those who have been advocating one have been saying that all these things will be sorted out by the time the referendum is held, which means that they are going to have to be sorted out fairly quickly. Are you saying that the MOD has not had any approach at all from any section of the Scottish Government to discuss this question of joint bases and what bases of the UK the MOD might retain in Scotland after independence?

Dr Fox: No. I have had a number of discussions with the First Minister and that has not been one of the issues that we have discussed.

Q161 Cathy Jamieson: I want to follow up on that particular point. The Minister well knows my personal view on nuclear weapons, but it is not a personal view I wanted to ask about today. Has the First Minister or has the Scottish Government made any attempt to discuss the issue of potentially having Trident or its successor not based in Scotland while retaining other military bases in Scotland?

Dr Fox: As I say, I have had a number of discussions with the First Minister and that is not one of the subjects that we have discussed to date.

Q162 Chair: What is the MOD’s approach likely to be to an à la carte approach from the Scottish Government towards bases in Scotland? Will they say, "We would like that one but we wouldn’t like that one"? Does the whole thing hang together or can particular elements be picked and chosen from UK bases in Scotland?

Dr Fox: My job as UK Defence Secretary is to set out the organisation and footprint of our armed forces that I believe gives the best defence capability to the whole of the United Kingdom. What I set out when I finally produce the results of the work we have done on the basic review will be what I believe to be in the best interests of the UK as a whole. As I said, Chair, we do not view the United Kingdom as a coalition of states. This is a unitary United Kingdom. We look at defence across the whole of the United Kingdom. It is, after all, a reserved issue.

Q163 David Mowat: Can I ask a follow-up on that? You mention, all other things being equal that, when troops have been brought back from Germany, it might be an option to base some in Scotland because of the decrease that has happened over the last decade. Did I hear that right?

Dr Fox: Not for that reason, but we might think that where there are no unique defence interests we may want to see a footprint of UK forces in the United Kingdom that recognises that.

Q164 David Mowat: Would that thinking apply to the regions of England? You can keep going with that analysis, can’t you? You can say why it has to be more or less equal in Scotland, Wales and the north-west, and so on. It is a difficult path to go down, isn’t it?

Dr Fox: There is a geographical element, for example, access to training, which is not equally available across the whole of the United Kingdom. There is access to things like low flying areas and deconfliction with busy civilian airports. There are a number of elements to take into account but, as I say, we don’t begin this as a social or geographical exercise per se.

Q165 David Mowat: But just to clarify what I heard, you describe the potential fact that the bases could be in a foreign country at some point in the future as a hypothetical thing and it is not part of your thinking at the moment.

Dr Fox: It is not part of my thinking at the moment. I work on the basis that we have a United Kingdom. As far as I am concerned and I shall certainly personally campaign for with every ounce of my being, we shall continue to have one.

Q166 David Mowat: As many in this room will. It is hypothetical but in a sense lots of things are hypothetical. When you do scenario planning that is what you do; you look at hypothetical things. To be clear, you are not saying that would be part of the judgment that you would take as to where the troops in Germany would go.

Dr Fox: It is not the basis on which we take the judgment.

Q167 David Mowat: Indeed, if I heard you right, all other things being equal, you might favour Scotland because of some kind of balancing that is perceived to be necessary.

Dr Fox: There may be factors in any part of the country for particular services to be centred there for reasons of future economic access. For example, looking at contracting out in the future, we want to have basing in places where the skills base would offer us that as an option. Clearly if you base a particular type of military establishment somewhere where you have no access to a broader economy, it limits your contracting-out capability some time in the future. We want to try to marry all these together. Perhaps you are now getting a flavour of the complexity of this.

Q168 David Mowat: I heard that answer. I think the word you used was "outsourcing". You would be interested to put bases where outsourcing was available for certain things for economic reasons.

Q169 Dr Fox: Yes, for certain types of services we might want to do that. It is not simply a matter of: there’s a base; let’s stick people in it. It is a matter of: what is the footprint? What is best for the armed forces? What does it generate in terms of capability? What do we have in terms of future economic capability for changes to sourcing for contracts, for example? We also have the new employment model which tries to ensure that where we put armed forces communities there is sufficient infrastructure for families, remembering that they are not just the members of the armed forces alone.

Q170 David Mowat: If it is outsourcing proximity, does that imply they would tend to be nearer to big conurbations than in the past?

Dr Fox: Some of our elements might be more suitable than others for outsourcing in the future. Again it is a complex mix of where we see employment models, where we see the economics, but, above all else, it is the military utility that I have to take into account. These things come into play where there is no great difference in deploying the assets. Clearly Faslane and our air defences require us to maintain capabilities in certain parts of the United Kingdom.

Q171 Chair: Can I just clarify how long it takes a fast jet to fly from the south of Scotland to the north?

Dr Fox: Now you are asking.

Q172 Chair: I am just wondering how far away it is. I know it is quite far to drive but, if you are flying, how far away from the north of Scotland would a base in the north of England be?

Dr Fox: I would say you would be somewhere between 16 and 20 minutes. It is something of that nature.

Q173 Chair: Thank you. Can I just follow up this point, and I am sure your staff will slip you a note if that timing is wildly out?

Dr Fox: If you are asking me specifically between Moray and the north of England, for example, I would say it is about 20 minutes.

Q174 Chair: You did make some interesting points about the location of bases, which leads me to seek further clarification about how many of the bases in Scotland are absolutely and utterly there for reasons of military utility as distinct from economic footprint and so on and so forth. Coming back to the question of "after independence", how many would you seriously want to negotiate to remain there as distinct from how many you would be willing to transfer elsewhere?

Dr Fox: You are determined, Chair, to get me down this hypothetical of "after independence". As far as I am concerned, as I say, I hope that is not something we ever have to consider. We would have to look at what other options would need to be looked into if Scotland was not part of the United Kingdom, nor available for the defence of the United Kingdom. For reasons that I have given, I don’t believe that the people of Scotland, with their very proud history of contributing to the defence of the United Kingdom, would like to see that reversed.

Q175 Chair: I move on to questions of procurement. I indicated earlier on that, thankfully, Scotland does get far more than its fair share by numbers of defence contracts. The question of independence is causing a certain amount of concern, certainly in my community. John Robertson, Thomas Docherty and I were asked by the shipbuilding unions to meet them yesterday because they are concerned about Type 26. They are also concerned about the maintenance programme for the aircraft carriers, where they recognise that Rosyth is potentially competing with Brest and so on. First of all, could you tell us whether or not there has ever been a Royal Navy ship which has been ordered and built abroad?

Dr Fox: Not in recent years, as far as I am aware.

Q176 Chair: Ever.

Dr Fox: Not being a military historian, I am not sure I am qualified to answer that question.

Q177 Chair: The staff behind you are frantically looking at each other.

Dr Fox: I am sure, Chair, we shall get you the full historical record.

Q178 Chair: That would be helpful. A number of points have been made about whether or not an independent Scotland would have access to Royal Navy orders. I just wanted to clarify whether or not there had been a precedent for that.

Dr Fox: I accept the initial point you made, Chair, that uncertainty is not good for industrial investment. It is clear that the reputation of Scottish shipbuilding in recent years has never been higher than it is today. The Type 45 is a world beater. The Carrier is world class. On the reputation of Type 45, I have been going round the world and there is considerable interest in having Type 26 built in the UK. Naturally, Govan becomes a major player there. Uncertainty is not good for long-term investment and I certainly accept that point.

Q179 Chair: The unions were particularly keen to meet you. I hope you would agree to meet them in the near future to discuss the two questions of uncertainty. The first is the question of orders and whether or not there would be any delay in placing orders for anything related to the Type 26 because of the uncertainty of the constitutional position. Secondly, there is the question of whether or not that uncertainty was more likely to result in discrimination against them so that orders would be given to England because of the uncertainty. You will appreciate there is a worry that apprenticeships might not be started at the present time simply because the future of the yards is not guaranteed for the time when those apprentices would be coming out.

First, are you happy to meet them at some point to explore these issues? Secondly, can you give them any reassurance at the moment about Scotland still being able to compete for the current round of Royal Navy orders?

Dr Fox: I have met the unions on a number of occasions. I have to say, as a Conservative Cabinet Minister in the coalition, I doubt if the Conservatives have ever been as welcome in Govan as they are at the present time. I wouldn’t have naturally thought that Govan would be the place to get applause as a Conservative Minister, but I am very happy that that is how it has turned out to be.

Q180 Chair: Sorry; you are agreeing to go then, are you?

Dr Fox: I have just been and I have met the unions on a number of occasions.

Chair: I was there, indeed.

Dr Fox: I am happy to meet them again in the future. We need now to look at the time frames for these investments. Clearly those making those investments will want to look at what they think the variables are that might make Scotland more or less attractive. Uncertainty is unhelpful in making any investment decision.

Q181 Chair: You will be aware that later on this year is the 40th anniversary of the Upper Clyde Shipbuilders work-in, when the people there fought to stop the Conservatives shutting the shipyards. It is somewhat ironic now that it is the Nationalists who might shut them and they are looking to the Conservatives to support us in keeping them open.

Dr Fox: Indeed, in the programmes we are leading, Chair.

Q182 Chair: Indeed. That is very helpful. In terms of other procurement contracts in Scotland, it would be helpful if you were able to give us the same sort of assurance that the uncertainty over possible constitutional change will not undermine the ability of Scottish factories, employers or anything else to be bidding for UK MOD work in the meantime.

Dr Fox: We will take decisions on where we procure for the Ministry of Defence on value-for-money and the excellence of the product or service being provided to us. As I said, we operate on the basis of being a United Kingdom. The Ministry of Defence operates for the whole of the United Kingdom. We certainly cannot discriminate against Scottish businesses on the basis that there may be some constitutional questions asked later on. That would be quite wrong.

Q183 Chair: That is very helpful. In terms of EU procurement legislation, can you clarify for us how the system would operate in the event of Scotland being independent? My understanding, should that occur, is that they would then have to compete for any crumbs from the MOD, as it were, against everyone else in the EU and that there would be no favoured treatment. Can you clarify for me whether or not you would be able to give an independent Scotland favoured treatment in those circumstances?

Dr Fox: I don’t think I could comment either way, Chair, on an issue quite as hypothetical as that. I am aware, as you are, about defence contracts not being as open to competition as in other areas of the economy.

Q184 Chair: It would be helpful maybe if your staff could let us have a statement of what the present position is, which presumably would be the same after a constitutional change, in order that we can be clear what the rules would be, unless of course the EU changes them.

Dr Fox: What we can certainly set out are the current rules on tendering in relation to what we are able to do in defence inside the United Kingdom compared with what we can do in other areas of the economy in relation to European competition law.

Chair: That would be very helpful. Thank you very much.

Q185 Mr Reid: On procurement, you decided to outsource the management of the ambulance depot at Coulport. That sits in my constituency and has caused some constituents to express reservations on safety grounds. There are concerns that a private company might be tempted to cut corners. What would your response be to those safety concerns?

Dr Fox: It still comes under the remit of the Ministry of Defence and safety is always a priority. We would ensure at all times that safety concerns were absolutely paramount. There will be no change in the safety practices which are well established and will have to be maintained and, where necessary, improved under the current contractual arrangements.

Q186 Mr Reid: Could you explain what work the new private contractors will be doing and what work will still be the responsibility of the MOD?

Dr Fox: The MOD will still have the overall responsibility. The contracting out is simply a different arrangement of working and of the application of the work being done in terms of the safety of our warheads.

Q187 Mr Reid: In terms of the management of Coulport, can you explain exactly what work will be done by the new private contractors?

Dr Fox: Yes. The decision was to outsource elements of SWS-Strategic Weapons Support-to the alliance of AWE, Babcock and Lockheed Martin Strategic Systems. The outsourced work would be processing, handling and storage of components of the Trident weapon system. That has been fairly clearly set out in the contracts that we have put forward.

Q188 Mr Reid: But they will still be supervised by MOD.

Dr Fox: MOD naturally takes overall responsibility for the safety of our weapons. That has to be the case.

Q189 Chair: Can I clarify whether or not, in any of the discussions since the Scottish elections, the First Minister has made it clear that he would wish the nuclear submarine fleet moved south of the border?

Dr Fox: As I said earlier, Chair, I have not had any discussions with the First Minister on that subject either before or after the Scottish elections.

Q190 Chair: Has it been communicated to you by the Prime Minister or any of your Cabinet colleagues that this is an issue that was raised by the First Minister in any of the discussions that he had when he came down on his victory tour after the election?

Dr Fox: I am not aware of that issue being raised with my colleagues, but I can only answer for the conversations that I have had, which have mainly been around the basing issue in Scotland and the options that may be available in Scotland.

Q191 Chair: Just to be clear as well, the only discussions that have been raised by the First Minister relate to the existing bases that are under review as part of the SDSR.

Dr Fox: We have had no discussions in relation to Faslane. That is as clear an answer as I can give you.

Q192 Chair: I am just trying to be clear as well whether or not there was any discussion about any other bases. What would be helpful, if it is possible, is if you could let us have-and I have seen one already but just to make sure it is full-a complete list of all the MOD locations in Scotland by Westminster constituency in order that in some future state we can check with the Scottish Government which of those, in the event of independence, it might wish to retain and which it might wish to give up. I have one at least in my constituency of which I would want to know the future, if that is possible.

Dr Fox: It is possible. We shall be able to do that. We shall make available all the locations of MOD employment in Scotland, but I am rather weary, Chair, if I may say, of leading the witness on this one.

Chair: Indeed; perish the thought. As we have got through most of our business, could we progress to the question of the Military Covenant?

Q193 Cathy Jamieson: Could I take what are reported to be the Minister’s own words in vain that he would not wish any "constitutional crisis" over enshrining a Military Covenant in law? However, it was reported, apparently in The Scotsman, which of course I read regularly, that the Scottish Government had confirmed that it had not been contacted by the MOD to discuss the Covenant or indeed to look at ways of extending rights in law to all parts of the UK. Obviously, the delivery of some parts of the Military Covenant would require the Scottish Government to put in place certain things. Could you update us on exactly what discussions have now taken place in relation to that?

Dr Fox: We will table amendments to the Armed Forces Bill setting out, as I have said already in the House of Commons, the principles on which the Covenant is based. First of all, no one should suffer disadvantage in access to public services or commercial services on the basis of having served in the armed forces. Secondly, it is perfectly legal in the United Kingdom to give specific advantage in certain areas to those who are in the armed forces, members of the families of the armed forces or veterans. These are the two elements.

What I was keen to avoid was a situation where there might be confusion between more specifically defined elements in law, where the responsibility for the delivery lay with the Government at Westminster but the actual provision of services was dependent on perhaps a different pattern of provision in different parts of the country. Naturally, we would seek to minimise that. In any case, where we do get a presumption of a certain type of treatment in a particular area, we would want to see that applied equally across the whole of the United Kingdom. The best way to do that is in conjunction with the devolved Governments in Wales and Scotland to ensure that, where we can, we get equal provision and that there is no disadvantage to the armed forces by being based in one part of the country rather than another.

Q194 Cathy Jamieson: Could I ask very specifically whether that was something that was on the agenda for discussion with the First Minister or indeed any of the Scottish Ministers? Have there been discussions to look at how, in practice, this will actually be implemented?

Dr Fox: We haven’t yet, but I imagine that once we have finally determined how we are going to put it into law, which we will announce to Parliament next week, we will want to have those discussions.

Cathy Jamieson: I will leave it at that for the moment; thank you.

Q195 Chair: Can I be clear then? In any discussions with the Scottish Government, or I suppose also with the Welsh, has there been any indication that this would be a difficulty? I am assuming they would want simply to parallel or indeed improve on what is being done here.

Dr Fox: I have not had any indication at any point that anybody has the wish to disadvantage our armed forces simply because they are in one part of the country or another.

Q196 Chair: I understand that. That is not quite the same thing as saying, though, that they will put into place the same sort of measures. People can often have an objective and it can be done in different ways. To some extent, that might develop into a bit of a postcode lottery. I wondered whether or not there had been any discussion, prior to the Military Covenant having been delivered to Parliament or a statement having been made, with Scotland and Wales to get their agreement that, yes, they were going to follow the same route.

Dr Fox: We have not had specific discussions, but I would have thought that, given that the Covenant is not between Government and the armed forces but between the nation and the armed forces wherever those armed forces are, the citizens of this country would want to see their armed forces given the same benefits as those in another country. I am sure there will be a strong element of public pressure to ensure that that happens in all parts of the UK.

Q197 Cathy Jamieson: Could I phrase things in another way, because I think you are absolutely right that people would want the armed forces to be treated well and they would want people to be treated the same across the UK? One of the issues that has come up in relation to Scotland is that some treatment and rehabilitation facilities which are available in other parts of the UK may not be available in Scotland. People might want to do more, but they may, given that we are living in the real world, expect the MOD or the UK Government to provide some finance for that. Has there been any discussion around the financing of some of this?

Dr Fox: We have had discussions between the Ministry of Defence and the National Health Service to see where the appropriate divisions come. If I can take healthcare in particular, the problem has not traditionally been in the provision of acute healthcare. Our armed forces coming back will come back via Birmingham where the quality of the healthcare they get is second to none. Where there has tended to be criticism is in the tie-up, often in locations of the ongoing and chronic care. There are frequently complaints in England that patients have to travel to too many locations for different types of follow-up. We have been trying to work with the NHS to minimise that. Clearly, the health provision in Scotland is something we would want to deal with to ensure that we can tie that up as best we can. Of course, as it reflects the funding settlement in England overall, we would expect to be able to get those issues sorted out. I wouldn’t like to give the impression, or allow the impression to remain, that there is in any way any obstacle to that. We have had nothing but co-operation in terms of the medical care of our personnel in all parts of the UK. That is not to say it couldn’t be tightened up; it probably can.

Q198 Cathy Jamieson: Just a final question so that I am absolutely clear. Potentially, could there be Barnett consequentials if there were to be different facilities or additions to the healthcare budget to deal specifically with this?

Dr Fox: No, because patients who may reside in Scotland get specialist care in England as well. I would expect there to be a transfer in both directions, potentially.

Q199 Cathy Jamieson: So you wouldn’t expect there at any point to be additional money going to the Scottish Government.

Dr Fox: No more than I would expect money to be coming from the Scottish Government where patients are to be treated in England.

Q200 Chair: Unless there are any further questions, you have been so helpful, Minister, that we will let you go early.

Dr Fox: Thank you, Chairman.

Q201 Chair: The time that you have saved you can use to meet the shipyard unions.

Dr Fox: It flies in any case.

Chair: Thank you very much for coming.

Prepared 6th February 2012