It is a pleasure to follow the hon. Member for Canterbury (Mr Brazier), who is respected in all parts of the House for his vast knowledge of defence matters. I associate myself with the thoughtful and heartfelt tribute that he paid to the two men who tragically died in the past couple of days in the Brecon Beacons.
I will concentrate on part 1 and, to some extent, part 2 of the Bill. The provisions in part 1 are fraught with risk. I agree with the Chair of the Defence Committee that the devil is in the detail and that no other country in the world has attempted to outsource the means by which it equips its armed forces. The notion that a GoCo—the Government’s preferred option—will act as
the agent of the Ministry of Defence and negotiate and sign new contracts on behalf of the Secretary of State is an inherently risky one that needs to be explored during the passage of the Bill.
A defence procurement strategy should have three objectives. First and foremost, it should provide the equipment that is necessary to ensure that this country has the protection and security that it needs. Secondly, it should provide value for money for the taxpayer in the pursuit of the first objective. I also believe that it should have the third objective of supporting and enhancing our manufacturing and innovation capability. I am concerned that the Bill, particularly part 1, does not provide for all three objectives.
I heartily agree with the Defence Committee report on defence acquisition that was published earlier this year, which stated:
“We believe that the absence of a defence industrial strategy which supports appropriate national sovereignty puts the UK at a disadvantage against competitor countries.”
In evidence to the Select Committee’s inquiry, the European Aeronautic Defence and Space Company stated that the Government’s
“feeble support to British Industry is in striking contrast to the model in continental Europe, where for major projects a cross-Departmental approach focuses on cost and value to the nation as a whole. There appears to be no mechanism in the UK to measure the cross-government impact of a contract going overseas, where short-term redundancies and long-term loss of skills shift the problem from MOD to the DHSS and other Departments: good value for money for MOD perhaps, but poor value for the nation.”
I agree with that analysis.
Why do the Government not add defence to their sectoral industrial strategies for aerospace, automotives and the life sciences? The defence industry is economically vital as well as strategically critical to this country. It has annual revenues of more than £22 billion and directly employs more than 100,000 highly skilled workers. The defence growth partnership, which is chaired jointly by the Minister of State, Department for Business, Innovation and Skills, the right hon. Member for Sevenoaks (Michael Fallon) and the managing director of MBDA, which was an excellent appointment, is a good, tentative start, but it needs to be translated into an active strategy that maintains for the long term our operational capability and our economic and industrial competitive advantage.
The Bill, if anything, takes us further away from that objective by creating additional pressure to focus on the narrow definitions of cost, value for money and off-the-shelf solutions. It fails to take account of the long-term impact that procurement decisions have on manufacturing, industry and innovation in this country. In the long run, overemphasising price and purchasing defence equipment off the shelf at the expense of value and national capability may cost us more in terms of our defence flexibility and our defence manufacturing base, and may cause a reduction in the levels of research, investment, intellectual property and design capability in the UK.