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There is widespread agreement that the procurement and support of defence equipment can and must be improved. It is clear from our debate in Committee that there is a consensus on the need for reform. In the past, under Governments of both parties, too often defence procurement has not delivered the equipment needed by our armed forces on time or within budget. By producing for the first time a balanced and affordable equipment programme, we have already made significant progress in improving the framework in which defence equipment is procured. Now is the time to make further structural changes to ensure that the ground we have already gained is not lost in the future.

The outline of our approach on procurement reform was set out in the White Paper “Better Defence Acquisition”, which we published on 10 June. Our preference, as we expressed around the time of the White Paper, is to transform the existing Defence Equipment and Support organisation into a Government-owned, contractor-operated organisation—a GoCo. But as we have explained, it not a foregone conclusion that a GoCo will be chosen instead of a public sector comparator, which we are calling DE&S-plus.

In addition, as was made clear in the written ministerial statement by my right hon. Friend the Secretary of State for Defence, the Cabinet Office and the Ministry of Defence have recently completed a review into the viability of the matériel strategy commercial competition. After a rigorous examination, it concluded that a viable commercial competition for a GoCo provider exists, albeit with risks. We welcomed this conclusion; indeed, we have already made considerable progress in addressing the recommendations and managing the risks the report highlights, including strengthening the DE&S-plus team.

The report also recommended that any further reduction in the number of bidders should stimulate a formal reconsideration and decision on whether to proceed further with the GoCo option. Last week, we received through this competition, which we have been running in parallel with the Bill, one bid for a GoCo from Materiel Acquisition Partners, a consortium led by Bechtel, with PA Consulting and PricewaterhouseCoopers. This is a complex, detailed proposal, running to more than 1,200 pages, which is currently being evaluated to understand what benefits it offers, at what cost and with what conditions. We intend to subject the bid to run a GoCo to a rigorous comparison with the public sector comparator, DE&S-plus. We expect a proposal from the team developing the DE&S-plus option shortly.

Colleagues have asked me, rightly, about what DE&S-plus means. As we have said, we believe that the GoCo option is most likely to embed and sustain the significant behavioural change required to transform defence acquisition, but we need to test this, and we are testing the GoCo proposition against the best that we could do wholly within the public sector. The DE&S-plus proposition is being worked up now. I cannot give much detail at this stage, as I would not want to compromise its proposal. What I can say is that we are focusing on ensuring an optimum balance between the need for an organisation that has the freedom to run its affairs in a way that best meets Ministry of Defence needs, and retaining and building on the values of the public sector. Should the GoCo option be the chosen way

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forward, the legislation that we have set out in part 1 of the Bill is essential to ensure that it can operate effectively without delay.

The Secretary of State’s written ministerial statement yesterday also announced the withdrawal of the other consortium competing to run a potential GoCo—clearly, that is regrettable. The Ministry of Defence, with the Cabinet Office and the Treasury, will now study the detailed proposal received from Materiel Acquisition Partners. In parallel, the DE&S-plus team will continue to refine and enhance their proposition. This analysis will inform a decision on whether it is in the public interest to proceed with only a single commercial bidder and a public sector comparator, and a further statement will be made once this process is complete. All I can say at this stage is that the bid we have on the table is substantial and from a consortium of world-class private sector businesses.

While analysing these proposals, we are going to continue to work with our allies and with industry, who have expressed a desire to understand how the potential changes to the matériel strategy for DE&S would work. We are confident that through this engagement we will work to determine how a GoCo would manage our international business and relations with industry as effectively as possible.

One of the most valuable aspects of the Committee was the opportunity it provided me to set out the GoCo proposal in greater detail than was possible in the White Paper. We have been able to describe the mechanisms, in addition to the legislation through which the Government will exercise strategic control over a GoCo. For example, through both this Bill and the contract, the GoCo will be required to protect information that is sensitive for national security or commercial reasons. Much of our debate in Committee centred on protecting confidential information and on intellectual property.

Open competition will usually be the best way of ensuring value for taxpayers’ money. However, sometimes there is only a single provider of a capability we require, and sometimes the need to maintain critical national industrial capabilities or sovereign control of the intellectual property in equipment programmes requires us to place contracts with UK companies without a competitive process. This so-called single-source procurement typically accounts for about 45%—some £6 billion a year—of the total that the Ministry of Defence spends on defence equipment and support, and it is likely to remain at that level for the foreseeable future.

The MOD currently uses a framework for single-source procurement that has remained largely unchanged for the past 45 years. It is a system that is failing the taxpayer—neither does it help industry to remain competitive in an increasingly globalised world. It is therefore in the interests of both the MOD and its suppliers to create a framework with incentives to deliver efficient and competitive behaviour. Part 2, based on the 2011 report by Lord Currie of Marylebone, addresses this need. It sets out a new framework based on transparency, with more and better information on costs, stronger supplier efficiency incentives and stronger governance arrangements. At its core is the principle that industry gets a fair profit in exchange for providing the Ministry of Defence with transparency on cost and better value for money. To oversee that new framework, the Bill will create a small, non-departmental public

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body to be known as the single source regulations office with approximately 30 staff. That will replace the existing pricing review board. The SSRO’s role will be to keep the statutory framework under review and to monitor adherence to it. The new arrangements will operate routinely through agreement between the Ministry of Defence and industry, but where agreement cannot be reached, the SSRO will have the power to make binding determinations on both parties.

Finally, the third part of the Bill relates to our reserve forces. We have already had a long debate on many aspects of that this afternoon and, as has been made clear by everyone who spoke, the reserves already make an important contribution to military effectiveness. The White Paper of July makes it clear that we expect them to make an even greater contribution in the future. We need to update the legislation that supports the revitalised reserve forces and their contribution to defence. Part 3 remedies that situation.

The title of the White Paper published by my right hon. Friend the Secretary of State last July encapsulates the Government’s attitude towards the reserve forces, as they are both “valuable and valued”. The Bill reflects that and replaces the outdated title of the Territorial Army with the Army Reserve, which not only far more accurately describes the reserves’ current role, but is a change that reservists themselves have resoundingly called for.

The Bill also allows reservists to be mobilised for the breadth of tasks carried out by regular forces, which is not currently the case. It recognises the contribution that employers make in supporting our reserve forces, by providing an additional monthly payment, per reservist, to small and medium-sized enterprises when their reservist employees are mobilised.

Finally, the Bill contains a measure to ensure that reservists are not disadvantaged by their reserve service. Reserve service does not count towards the two-year qualifying period for claims of unfair dismissal. For claims where the reason for dismissal is, or is primarily because, the individual is a reservist, we will remove that two-year qualifying period.

In conclusion, the thread that runs throughout the Bill is the need to deliver the equipment and support that our armed forces need, while ensuring a fair deal for reservists, their employers, industry and the public. The Bill makes important changes to the way in which we might deliver defence capabilities in future and I commend it to the House.

6.42 pm

Mr Kevan Jones: I thank the Under-Secretary of State for Defence, the hon. Member for Ludlow (Mr Dunne) for the constructive way in which he has engaged with the Opposition. We are not used to that—certainly not from the Secretary of State—on Bills or things to do with defence. The Committee as a whole gave a good and detailed examination of all aspects of the Bill. I accept that parts of it are still developing as we speak. Events this week have shown that with the withdrawal of one of the contractors for the proposed GoCo.

I thank my hon. Friend the Member for Plymouth, Moor View (Alison Seabeck) for her work on the Bill. I also add my best wishes as she should hopefully become a grandmother for the second time in the next few

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hours. May I also thank the members of the Committee, the Clerks and the witnesses who came before us? I thank, too, the Minister’s hard-working civil servants who, at times, had to think on their feet when replying to some of the points that were made. I thank them on behalf of the Committee for their work.

I do not think that there is any disagreement in the House that we want to ensure that we procure the best equipment and support for members of our armed forces. In the debate this afternoon, it has been recognised that we should thank the men and women of our armed forces for the contribution they make to our safety. We often take that for granted, but we should never do so because they put their lives at risk to ensure that we can sleep safely in our beds at night.

The first part of the Bill concerns defence procurement. The Government have put forward two options: a GoCo or DE&S-plus. It was clear in Committee and is still quite clear that there is a determination within the MOD that a GoCo should be the way forward—

Mr Philip Hammond indicated dissent.

Mr Jones: I am sorry that the Secretary of State says that, but that was not the tenor of what we heard in Committee. Clearly, the withdrawal of one of the potential bidders has left serious questions about the future of the GoCo. We will certainly look closely at how the process goes forward.

Mr Hammond: For the sake of the record, I have said many times before in this House and say again today that we are open-minded about the choice between the GoCo and the DE&S-plus solution. We understand that the GoCo will bring certain advantages, but DE&S-plus might bring different advantages. We will weigh the two in the balance and select the solution that is in the best interests of the taxpayer and the armed forces.

Mr Jones: I am pleased to hear that, but I am also rather sceptical about what the Secretary of State says. Clearly, the emphasis in Committee and the mood music have been that the GoCo seems to be the main show in town, and there has been scant examination of what DE&S-plus will do. We must ensure that as the process goes ahead and the Bill goes to the other place proper scrutiny is maintained. Not only is this a major change to how we procure defence equipment in this country but it will have an impact on our relationships with international allies.

Mr Dunne: I agree with the hon. Gentleman’s final point: this clearly needs to be scrutinised properly. However, let me gently make the point to him that part 1 of the Bill inevitably focused on a GoCo rather than DE&S-plus because DE&S-plus does not need legislation whereas a GoCo does.

Mr Jones: I accept that point, but the mood music coming out of the MOD seems to be that there is a concentration on the GoCo. We will certainly wait and see how things develop.

John McDonnell (Hayes and Harlington) (Lab): We have been here before with such privatisations, but surely the concept of competition is stretched to absurdity when there is only one bidder. We risk demoralising the staff we employ at the moment; today, we did not even

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reach the part of the Bill that would have given them the assurances that are needed about their long-term employment prospects.

Mr Jones: My hon. Friend makes a very good point. As the process goes forward, there is obviously a lot of concern among people who work in defence procurement. It is important that things are brought to a conclusion so that they can have some reassurance. It will be interesting to see how the process goes ahead with just one bidder. We need to ensure that that is scrutinised in the other place, as I am sure it will be. I hope that the Minister will keep us informed in the House about that ongoing process.

John Woodcock (Barrow and Furness) (Lab/Co-op): One of the key concerns was that if a new provider was created to run the GoCo it would effectively be difficult for another provider ever to come in and take it on. Are not those concerns aggravated by the fact that we have only one bidder going through the process to start with?

Mr Jones: I thank my hon. Friend for that question and for his work in Committee. He raises an interesting point, as one of the concerns raised in Committee was what would happen after the nine-year process as regards renegotiating the contract. We will now have only one contractor who, if successful, will certainly be in pole position come the renegotiation at the end of the contract, whether or not any others are able to bid. We must consider those issues very carefully in the coming months as the process develops.

The other issues on which we spent a lot of time and about which there are still concerns are those on intellectual property and single-source procurement, about which we had numerous discussions in Committee. I think that industry still has concerns on those points. Part of the process is about not only reassuring the work force but ensuring confidence about working with the defence sector, because it is a major employer in this country. It is also important to ensure that we are at the leading edge of not only defence technology but security technology. Full involvement of the sector throughout the process will be very important. I think that the Bill will have an interesting passage through the other place.

We spent most of the afternoon on the reserves part of the Bill. I reiterate the point made by my hon. Friend the Member for Gedling (Vernon Coaker), the shadow Secretary of State: Labour Members—and Members generally—look with pride on the contribution that reservists make to our armed forces. I have seen them at first hand, in both Iraq and Afghanistan; they are very brave men and women, doing a fantastic job on our behalf.

On the process ahead, I welcome the Government’s slight change of heart on producing an annual report. May I say thank you to the Secretary of State for including mental health in that report? If he wishes for any assistance with the organisation involved, in terms of how it approaches that, I am quite willing to engage, or point him in the direction of other organisations that will be interested in knowing how mental health can be seen as a priority, because there is an issue, whether we like it or not, with reservists and mental health. I know that the Government have followed through on work

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that we did in government and have added to that, in terms of making sure that veterans’ mental health is seen as a priority.

On the overall position of reservists, after this afternoon’s debate, I would say that the jury was still out, but we did get some clarification from the Secretary of State on the reduction in the Regular Army. Remember, when the strategic defence and security review was first announced by the Prime Minister, there was to have been a reduction of 7,000; then the figure went down from 95,000 to 80,000. I think the Secretary of State was very candid this afternoon: that was about money, not about what was best for our armed forces.

Mr Philip Hammond: Or about spending it in different ways.

Mr Jones: Well, we can have a debate about that; the Secretary of State still bandies around the £38 billion figure. What he and many others seem to forget is that there was also the impact on the defence budget of the 9% decrease that this Government brought in as part of the SDSR.

On monitoring how the changes go forward, the hon. Member for Canterbury (Mr Brazier) has done a fantastic job. He has been an assiduous champion of reservists for many years. When we were in government, he worked closely with the then Secretary of State to try to improve the lot of reservists. He raises an interesting point about the issues between the regulars and the reserve forces. There has been, in some quarters of the Army, a view that somehow the reserves are second-best. It will be important to ensure that that is not the case going forward.

It was interesting to hear General Sir Peter Wall say that the proposals were the way forward. When we were in government, he was part of the senior command of the Army that recommended the £20 million cut for the reserve forces. It is important that senior officers in the Regular Army fully buy into the process, because that is how we will make sure that we have the joined-up approach that we require.

The Secretary of State has moved a lot this afternoon; he has gone from holding the position that we should not have annual reports to giving a commitment to them. However, we need parliamentary time, so that the report does not just sit on a shelf in the Library, but is debated on the Floor of the House. I tell him gently that the more engagement he has, not only with the Opposition, but with his party’s Back Benchers, the better, when it comes to making sure that the best intentions that we all have for our armed forces are realised.

The nonsense that we are still going through—we are being barred from speaking to senior officers, and barred from military bases—is not helpful. When I had a role in the Ministry of Defence, I took the view that the more engagement that parliamentarians, irrespective of political party, have with members of the armed forces, the better—and not only for MPs’ understanding; members of the armed forces also get a lot out of coming to understand how this place and politicians operate.

Mr Hammond: For the record, we have, as far as I am aware, arranged for the Opposition Front-Bench team and individual members of it to visit military bases.

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Mr Jones indicated dissent.

Mr Hammond: I am sure we have. If the hon. Gentleman wants to contact me—I have said this to the shadow Secretary of State—and let me know where they would like to go and when they would like to go, we will facilitate it.

Mr Jones: That is a very good change of heart. [Interruption.] It is a change of heart; that is not what has been going on over the past few years since the right hon. Gentleman has been Secretary of State. I know it is an issue that the Chairman of the Select Committee has raised as well. I take that at face value and we will test the system, as the Secretary of State has made the offer on the Floor of the House.

We will not press the motion to a vote—[Interruption.] The Minister is chuntering away. The shadow Secretary of State wrote to the chiefs of the armed forces, wanting to meet them, and I have here a note from this afternoon which says that the MOD just rang the shadow Secretary of State’s office to say that the pre-arranged meetings with several chiefs have been cancelled because there is a change in protocol and he must now arrange the meetings through the Secretary of State’s office. Under the old process, the request would be made and the Minister would sign it off at the end. I know that he is paranoid about leaks, and the process is not helping.

I conclude by wishing the Bill well when it goes to the other place.

6.56 pm

Mr Arbuthnot: The focus of debate today has been on the reserves, but the issue of the withdrawal of one of the only two remaining bidding consortia from the competition to run the equipment procurement for the Minister of Defence is central to the defence procurement of this country, and I would like to ask the Under-Secretary of State for Defence, my hon. Friend the Member for Ludlow (Mr Dunne) to explain.

My right hon. Friend the Secretary of State intervened on the hon. Member for North Durham (Mr Jones) to say that the private sector bid will be weighed against the DE&S-plus bid, but I thought the review that my right hon. Friend announced yesterday was precisely into the question of whether that weighing-up would take place. I am not entirely sure that my right hon. Friend has got the Treasury and the Cabinet Office on his side on that point.

Mr Dunne: I will happily try to clarify the position to my right hon. Friend the Chairman of the Select Committee. There are two processes happening, one as a result of the single GoCo bidder. As was made very clear in the statement that my right hon. Friend laid before the House yesterday, that would require a further review across Government as to the validity of the competition. Secondly, we at the Ministry of Defence will be assessing the bid that we have on the table for a GoCo with the DE&S-plus proposal, when we have it, to see which provides the best solution for defence.

Mr Arbuthnot: I am grateful for that clarification. So when will my hon. Friend receive the DE&S-plus bid? It would be good if he knew exactly what that DE&S-plus bid was. Will it be days, weeks or months? It is an

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initiative forming within his own Department and it might be better that we all discover what it is sooner rather than later.

The Defence Committee has to take evidence on this fundamental shift in the circumstances surrounding the central plank of our country’s defence procurement. We need a clear time scale to know when we should take evidence, as Ministers need to realise. Scrutiny of what they do will be determined by the Select Committee and not by them.

Finally, to what do my right hon. Friend and my hon. Friend attribute the fact that they started with three private sector bidders and they are now down to one? What caused that?

6.59 pm

Martin Horwood: In the time available, I would like to say that I think that the background to the Bill is both the challenge of deficit reduction and the greater challenge of a new military and security landscape, to which the Bill forms part of an imaginative and strategic Government response. Those challenges also bring opportunities, such as the opportunity for more efficient and cost-effective defence procurement. We on these Benches and our noble Friends in the House of Lords have raised some questions about the GoCo model, but I think that whichever model is eventually chosen will offer the opportunity to improve on the past history of defence procurement. The other opportunities are obviously those offered for reservists by the Bill, including a new name and status, new employment protections, the new possibility of paid leave—

7 pm

Debate interrupted (Programme Order, 16 July).

The Deputy Speaker put forthwith the Question already proposed from the Chair (Standing Order No. 83E), That the Bill be now read the Third time.

Question agreed to.

Bill accordingly read the Third time and passed.

Jim Shannon (Strangford) (DUP): On a point of order, Mr Deputy Speaker. In yesterday’s debate on women and the cost of living, I asked the Economic Secretary to the Treasury a question about the bonuses paid to men being double the size of those paid to women. I spoke to her in the Lobby tonight. Her reply yesterday was about pay, but my question was about bonuses. Is it right and proper for that to be clarified in Hansard tonight, and perhaps by the hon. Lady in person?

Mr Deputy Speaker (Mr Lindsay Hoyle): It is not a point of order, but it is certainly a point of clarification, which the hon. Gentleman has achieved.

Business without Debate

Delegated Legislation

Motion made, and Question put forthwith (Standing Order No. 118(6)),

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National Health Service

That the draft National Health Service (Approval of Licensing Criteria) Order 2013, which was laid before this House on 16 October, be approved.—(Anne Milton.)

Question agreed to.


St Raphael’s Hospice (Cheam)

7.1 pm

Paul Burstow (Sutton and Cheam) (LD): The petition relates to the future of St Raphael’s hospice in my constituency, which is being put at risk by the actions of the trustees of the charity that owns it, the Daughters of the Cross. The threat to the hospice, which is much loved and respected, has led staff, volunteers and the families of people who have used it to collect more than 5,900 signatures on a petition calling on the Vatican to intervene. Next week the chair of the hospice’s advisory committee, Dr Ron McKeran, and I will meet the Pope’s representative in this country, the Papal Nuncio, Archbishop Mennini, to tell him about the petition and the more than 5,900 signatures collected from the public and urge him to use his good offices to secure a resolution to the dispute between the staff and volunteers and the charity.

The petition states:

The Petition of residents of the UK,

Declares that the future of St Raphael’s hospice has been put in doubt by plans drawn up by Daughters of the Cross, a charity that funds the hospice, and by plans to sell off St Anthony’s hospital, which shares the site with the hospice and provides administrative and other support services worth up to a million pounds a year; further, that the sale of the hospital will break the funding link with the hospice and undermine the Christian character of the institution; further, that the Petitioners regret that rather than engaging with the staff and supporters of the hospice and hospital to find a mutually agreed solution to the future of both institutions, the charity has pursued a course of action that is not widely supported; and further, that the Trustees have failed to grasp that the success and respect in which both institutions are held is the result of a shared endeavour between themselves, the staff and volunteers and the local community who raise and donate the funds to pay for them.

The Petitioners therefore request that the House of Commons thanks Her Majesty’s Government for raising the matter with the relevant authorities in the Vatican; further, that the House urges the Papal authorities to intervene to protect the ethos of St Anthony’s hospital and its special relationship with St Raphael’s hospice; and further, that the House holds a debate on the future of St Raphael’s hospice and possible ways forward.

And your Petitioners, as in duty bound, will ever pray.


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DEFRA Office (Alnwick)

Motion made, and Question proposed, That this House do now adjourn.—(Anne Milton.)

7.4 pm

Sir Alan Beith (Berwick-upon-Tweed) (LD): I am glad to have the opportunity to raise a matter that is of great concern in Alnwick in my constituency, particularly as the Minister responding is the Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend the Member for North Cornwall (Dan Rogerson), who knows a thing or two about the problems of rural areas, as he represents one himself. We have already met to discuss the problem, and he of course has come to it after all the key decisions have been taken, but I still hope that he will use his good offices to try to improve the situation for the staff at Alnwick.

Lion House, which has been rebuilt in recent years, has been in Alnwick since long before the first of my many years in this House. The reason we are considering this issue, which involves 40 jobs, is the Cabinet Office’s shared service centre initiative, which began in 2004 under the then Labour Government and was refashioned in 2011 by the present Government, and which has been subjected to severe criticism by the National Audit Office throughout for not delivering the savings it promised.

The office has a long history. About 30 years ago it ceased to be the regional office of the Department for Environment, Food and Rural Affairs, because the Department gave up its network of regional offices. I went to see the then Agriculture Minister, Peter Walker, who was the kind of Tory we do not see many of these days. He was extremely helpful. I suggested to him that he find other work for the office from the central work of the Department, and he did: library functions were transferred to Alnwick and in subsequent years the staff moved on to other work, in particular the handling of civil servants’ expenses. They could have given a lesson or two to the House authorities and the Independent Parliamentary Standards Authority on the efficiency with which they managed their operations. Indeed, I am going to suggest to IPSA that it might move its work from central London to DEFRA’s Alnwick office. I will come back to that. The staff earned a very good reputation, and not just in DEFRA—they provided a service to several Departments.

What is to happen? A company has been formed, 75% of which is owned by a French company called Steria and 25% by the Government. That immediately prompts the question: what do the Government intend to do with their ownership and board membership of the company? Will they use them to good effect?

My hon. Friend the Minister has indicated to me that the work is likely to remain at Alnwick for 20 months while the company considers how it will be handled in the future. That raises the question how likely it is that the work will be offshored, perhaps to India or who knows where. There are different views on the matter. The unions are fairly convinced that the work will be offshored and Steria seems to have a commitment to offshoring as a major part of its operation. Of course, there are other sites involved, not just Alnwick. The Cabinet Office’s position is that non-customer-facing jobs will be offshored. I am not sure what that means when we are talking about civil servants and their

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personal expense claims. I think that they are customers of the service, so in that respect it is a customer-facing service.

What does the period of 20 months really mean? I was concerned to receive a letter from my hon. Friend in which he wrote that the company would

“continue to occupy accommodation at Alnwick (Lion House)”.

Does that mean that the work will continue for 20 months or that the company will just pay the rent of an increasingly empty building—which is already a matter of concern—for 20 months? Some rather unhelpful phraseology has crept in.

The situation is very worrying for staff. Let us consider their position under TUPE and the transfer arrangements. The unions have negotiated an agreement that is referred to as TUPE-plus. There seems to be some acceptance that, as these things go, it is not a bad agreement, but I would be interested to hear my hon. Friend the Minister explain what will be available to staff. During or after the 20-month period, will some of them be offered other civil service posts? It has been suggested that they will, but the trouble is that many of the posts may be down in Tyneside or even much further away, perhaps over in Carlisle, where the Rural Payments Agency is situated. What did the Department’s equality impact assessment have to say about the situation and about people with caring responsibilities who cannot easily move? They do very good work in the Alnwick office, but they would not be able to continue to provide a good service to the Government if they were told that they had to move a long distance away. That raises a question about what the Department will do, if outsourcing goes ahead, to seek other work for its staff. It seems to me that if there is a period in which the new company reviews what it does, that period should be used to look for other work that could be done at the Alnwick office, as Peter Walker did 30 years ago.

After all, this is the Department for Environment, Food and Rural Affairs, and it exists to promote the health of rural communities, so it must not be in the business of relocating jobs from rural to urban areas. When change has to happen in particular functions, the natural response of the Department ought to be to see how far it can relocate work from urban to rural areas. Of the urban centres, I am thinking particularly about central London, where the Department still carries out activities that need to be considered for out-posting to its rural centres, of which Alnwick is one.

Other questions have been asked about the changes. The Public and Commercial Services union has asked about the tax status of the new company. The Minister for the Cabinet Office and Paymaster General said in a letter to me that the joint venture

“will promote UK growth as a UK based taxpayer”.

What assessment has been made of the overall tax impact, which obviously includes VAT, and the impact of any offshoring, as well as of the domicile in France of the majority owner of the new company, Steria, which is a French company? The union has also asked about the handling of civil servants’ personal data if there is outsourcing to a country that does not have the rigorous data protection regime of this country. Ministers must address that question.

I will sum up the questions that the Minister must answer, and if there are any that he cannot answer tonight, I hope that he will do so by letter. What use will

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the Government make of their 25% ownership? Will they use it to encourage keeping jobs local, where that is an efficient outcome? I do not expect the Department to do so if there will not be a good outcome and value for money for the taxpayer, but there is pretty good evidence that Alnwick provides good value for money. I want the Government to use their participation in the company structure to encourage sourcing jobs locally wherever possible.

How committed is the new company to outsourcing? I am meeting people from it shortly, and I will put the same question to them, but the Government must have formed a view. What will happen in the 20 months? Will the work stay at Alnwick during that period, or will the office be virtually emptied with the work leaving earlier? Will the office be viable for the small number of remaining staff if most jobs go? What will the company and the Department do to seek other work if the Alnwick office loses its current work to outsourcing, and will alternative public service jobs be offered? What is the equality impact assessment in respect of carers, especially women? What is the tax impact, and what is the situation in relation to personal data?

Above all, does DEFRA recognise that it is the Department for rural affairs and is supposed to be committed to that role? How is it going to demonstrate that commitment to the people of the Alnwick area? Forty jobs may not seem many in the London context, but they have a big impact in a small rural community such as Alnwick, where there are not many such professional jobs and where the quality of locally available staff has been clearly demonstrated.

7.13 pm

The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Dan Rogerson): I pay tribute to my right hon. Friend the Member for Berwick-upon-Tweed (Sir Alan Beith) not just for how he is currently representing his constituents as regards the Alnwick office, but for how he has done so, as we have heard, over many years—going back to the era when Peter Walker was the Secretary of State. I am sure that they are very grateful for and well aware of all that he has done to support them.

My right hon. Friend has set out the issues from his perspective. I will set out the Government’s point of view on the office in Alnwick and its history. The building is owned by the Department on a freehold basis. There are three occupants: DEFRA, Northumberland county council and the newly created joint venture organisation that we have heard about, Shared Services Connected Ltd. I will take each of those in turn.

The DEFRA network has a large estate spanning England and Wales that supports the delivery of its business. That includes officers, operational depots and scientific sites. The cost of the estate has come down significantly since 2011. By 2015, the savings from exiting properties and reducing the amount of space that we use will reach about £53 million per annum. However, the annual cost will still be about £113 million. We will look for ways to reduce that further. In Alnwick, DEFRA occupies office space for about 24 full-time equivalent staff who are focused on the management of information and providing warehouse facilities for archiving. There are also two full-time equivalent members of staff from the Rural Payments Agency.

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Northumberland county council occupies 2,000 square feet of the Alnwick site. That lease expires on 2 February 2017, although a mutual break is available with 12 months’ notice from February 2015. However, there is no indication that Northumberland county council is looking to vacate the site.

Stimulating economic growth is a top priority for the Government. We want rural areas to contribute to and benefit from that growth. As my right hon. Friend kindly pointed out, I represent a rural area, although it is perhaps not as far flung and widely set as his area. None the less, it is a rural area and it faces many similar challenges. The Government have introduced a wide range of policies and initiatives to promote business and deliver growth in urban and rural areas, including new infrastructure, raising skill levels and supporting business, particularly small and medium-sized enterprises, which make up a significant element of the rural economy, as my right hon. Friend knows.

The roll-out of superfast broadband infrastructure is vital to sustainable economic growth and the creation of jobs in rural areas. Online small businesses, whether rural or urban, grow four to eight times faster than their offline counterparts. The Government are investing £530 million in rural broadband up to 2015, which, through match funding, will result in up to £1.2 billion of public funds. The pace of progress is accelerating, with 42 of the 44 local projects contracted, including all of those in the south-west. Across the UK, 10,000 rural properties are being connected each week. As was announced in the spending review, a further £250 million will be available from 2015 to extend superfast broadband to 95% of UK premises by 2017.

I am setting out these policies to establish that the Government are very much committed to seeing rural areas share in the economic growth that we are delivering, in contrast to the position that we inherited.

Sir Alan Beith: I am pleased that my hon. Friend has responsibility for this area, not least because Northumberland is way ahead of the field in its work on rural broadband. However, if small businesses can operate from rural locations, so can the Department for Environment, Food and Rural Affairs.

Dan Rogerson: Absolutely, we can. I have set out the history of the office. As my right hon. Friend has pointed out, it has shown that it can be a very efficient place from which to operate. We want to get to the position where the new company recognises that. What is being delivered there must be so competitive that it is attractive on a continuing basis. We would welcome that, but it must be a matter for the new shared venture company.

We are taking other action to support the rural economy, including improving competitiveness and skills, investing in rural tourism, and supporting new micro-enterprises and those that have aspirations to grow. We have established five pilot rural growth networks, which aim to tackle the barriers to economic growth in rural areas, such as the shortage of work premises, slow internet connectivity, which I have mentioned, and fragmented business networks.

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DEFRA’s rural development programme for England has, to date, invested more than £400 million in projects to grow the rural economy. Completed projects have created more than 8,500 new jobs and safeguarded a further 9,700. The next seven-year rural development programme is a major opportunity to continue to invest in rural growth and the environment. We are working together with interested groups to design a programme that makes a measurable contribution to improving the environment and economic growth, while providing real value for money. The civil service is moving to being faster, smaller and more unified, and sharing services is a central part of that. The next generation shared services strategy sets out a new model to share human resources, procurement, finance and payroll functions with five centres, instead of the current eight, to deliver more efficient and cost-effective services.

As my right hon. Friend pointed out, the Government signed an agreement on 1 November 2013 with Steria Ltd to create a joint venture partnership with Government. The new company, Shared Services Connected Ltd, has been formed initially from a consolidation of some existing shared service centres: the Department for Work and Pensions, DEFRA and the Environment Agency, with in-scope services from UK Shared Business Services Ltd expected to become part of SSCL by 2015. All DEFRA staff previously engaged in the delivery of shared services transferred to the new organisation from 1 November 2013. Services to existing customers are being maintained and delivered out of DEFRA offices in Alnwick and York.

The creation of SSCL is a key part of the civil service reform plan, which will harness industry best practice to deliver Government back-office functions more efficiently. Transforming back-office operations across Government could help to deliver between £400 million and £600 million in savings for the taxpayer, freeing up scarce resources to be better spent on front-line services. Economies of scale will enable Steria to drive down costs and improve service levels by sharing expertise across customers, adopting common processes and systems and investing in new tools. To be a competitive and viable business, SSCL needs to be in line with other companies of this kind, which see some non-customer-facing transactional roles being sourced offshore. As longer term transformation plans are agreed, SSCL will consult staff and representatives. Assistance will be provided to any affected staff, including reinstatement and redeployment opportunities.

Over time, the objective is to establish SSCL as the pre-eminent provider of shared services to UK central Government and the wider public sector. By migrating clients to a low-cost shared service model, it is estimated that total benefits delivered by SSCL will be in excess of £l billion. It is expected that in the course of the next couple of years there will be some site consolidation from the nine existing delivery sites, and we expect some staff reductions. Steria has made a number of commitments on behalf of SSCL, including: no compulsory redundancies in the first six months, an intent to minimise the need for compulsory redundancies through work force planning, and a series of redundancy avoidance measures during the transformation period. Steria has also agreed that any final decisions on location will not be made for six months. That will be a business-based decision. My right hon. Friend will be well aware that this is a key point. There will be a chance to demonstrate office

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efficiency, given the low cost of locating in the base, the ownership of the premises and so on, so there is a good case to be made to Steria for the Alnwick office. However, the decision will ultimately be based on what it aims to deliver to Government and the taxpayer.

With regard to shared services staff currently based in DEFRA’s Alnwick office, we have an agreement that SSCL will continue to occupy accommodation at Alnwick Lion House for a period of 20 months. That is an update on the minimum 12-month commitment that was previously communicated. That represents progress in the right direction, and my right hon. Friend’s efforts to focus attention on what has been achieved at Alnwick have played a part in that. The Department is well aware of what it has delivered over many years.

Sir Alan Beith: May I press my hon. Friend on the 20-month period? The phrase “occupy accommodation” is unpersuasive. I had understood him to anticipate that in the 20-month period the work would be likely to remain there, although that would not involve an absolute guarantee on the number of jobs that would remain during that period. Will he clarify that for me?

Dan Rogerson: I understand my right hon. Friend’s concern about that. He is right that, in a period of transition, members of staff might look to the future and decide whether to look for other opportunities, while others will stay on. The agreement is as described, which is to say that the accommodation will continue to be occupied. The company’s plans for carrying out the activity there is essentially a matter that he will have to take up with the company itself, but he has certainly put his concerns on the record tonight. I am happy to take those concerns back, so that we can get a little more clarity for him and his constituents about what that might mean.

My right hon. Friend asked what staff could expect. There is an expectation that other opportunities for staff will be put forward first, so that options for redeployment can be explored. I have a great deal of sympathy generally for his view about Government jobs in rural areas. The tax office in my constituency went during the last Government drive to narrow the HMRC estate, which was a matter of great sadness. As a Government, we need to ensure that we explore all the options for keeping jobs in rural areas. He was generous

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enough to point out that I am relatively new to my responsibilities, but I know that previous Ministers will have made the case for keeping as many jobs as possible in rural areas, and I am keen to do so too, alongside ensuring the private sector investment that we are stimulating in the ways that I have set out.

The company’s tax position is clearly not a matter for DEFRA, but my right hon. Friend asked that I seek further information for him, and I am happy to do so. He also made a fair point about how the Government will use their stake in the new organisation. Clearly we will want to ensure that lessons are learned and that the objectives of the original project to make efficiencies are met, but there might also be opportunities to ensure that the company takes into consideration some of the points he has raised this evening. Again, I can feed his concerns about that through to ministerial colleagues in the Cabinet Office.

The shape of what will happen at the office has not been decided—that is a matter for the new organisation to take forward. I welcome the fact that my right hon. Friend is in discussions with the company, which is a sensible way for him to proceed. I thank him for the diligent way in which he has pursued this matter. Having been in this role for about a month, I have heard from him on several occasions—through parliamentary questions, in discussions with officials and, now, on the Floor of the House. I know that he will continue to ensure that his constituents get the very best service as the transformation project moves forward.

I hope I have given my right hon. Friend a little reassurance that we recognise the huge achievements of people at the Alnwick office, who will be well placed to make the case for how efficient they have been in the duties they have discharged. The commitment to continue to occupy the accommodation in Alnwick for 20 months goes much further than the original 12 months. Some of the questions he has raised tonight will be considered during that period and the answers will come forward. I am happy to remain in contact with him about this matter, and in particular about the questions he has posed that I have been unable to answer without reference to ministerial colleagues.

Question put and agreed to.

7.28 pm

House adjourned.