My Lords, Clauses 9 and 10 relate to the transfer of employees, and the transfer of property rights and liabilities in the light of the provisions in Clause 1 in respect of defence procurement arrangements. The decision has now been made by this Government that they will not proceed with the GOCO option but will move to a changed DE&S organisation from April.
Can I ask how the Government envisaged a transfer of staff to a GOCO taking place, had they decided to continue to proceed down that road? When the Bill was being discussed in the other place, the government Minister concerned said that the Government were,
“considering a phased transfer by domain, with the initial domain—maritime—transferring two years before the competition for the remaining domains becomes effective. It is likely that the successful contractor for the initial domain will also be in the competition for the other domains and in a strong position to win them, but it is important that we maintain competitive tension to ensure that the contractor puts in a competitive and compelling bid for the other domains. Therefore, we do not intend to give exclusivity rights over those domains to the successful contractor for the initial domain, which opens up the prospect of having different contractors”.—[Official Report, Commons, 10/10/13; col. 252.]
However, a few minutes after that, in the same debate, the same government Minister said that he had had,
“some advice saying that, as drafted, the contract will be for all four domains”—
including the joint domain—
“and that, in respect of competition for the four domains, including the joint domain, after the initial phase is over the subsequent phases will transfer automatically, in the event that the performance of the contractor has been up to speed”.
Having repeated the advice that he had just been given, the government Minister in the other place said:
“Whether that survives negotiation remains to be seen. Maintaining an element of competition before agreeing the transfer of subsequent domains is quite important. We will be negotiating that as we proceed down the track”.—[Official Report, Commons, 10/10/13; col. 253.]
One is left with the impression that the government Minister in the other place was not wildly enthusiastic about the advice that he had received and had just repeated it.
I appreciate that this is somewhat academic, as this Government are not proceeding now with the GOCO, but whether there might have been more than one contractor, and the timescale for the transfer of domains, is an issue of interest for DE&S staff. It would be helpful if the Minister could indicate which of the two versions of the competition transfer arrangements for the GOCO set out by the government Minister in the other place, to which I have just referred, actually represented the Government’s intentions.
The Government are now moving to a new DE&S organisation from this April and are seeking the agreement of the Treasury and the Cabinet Office to provide the new DE&S organisation with greater freedoms and
flexibilities to recruit, reward, retain and release staff; freedoms and flexibilities that are considered necessary for the effective and efficient conduct of the business. The Government have said that DE&S requires,
“a high proportion of Project Management, Commercial and Financial expertise as well as engineering and other technical specialities”.
They added:
“These specialist skills have a much higher market value than can be recognised within the civil service pay framework, and it is becoming increasingly difficult to recruit, develop, and retain those with the particular skills needed at all levels of the business”.
There are currently hundreds of posts unfilled within the DE&S organisation. Without the achievement of the proposed greater freedoms and flexibilities, the Government’s view is that the loss of skills and capability in DE&S will continue, reducing the ability of the Ministry of Defence to deliver equipment to the front line.
I appreciate that it is extremely unlikely that the Minister will be able to say any more today about the progress of the discussions with the Treasury and the Cabinet Office than he said two days ago. However, as it will affect the employees of the new DE&S organisation in April, can the Minister say something about the hoped-for timescale of the Ministry of Defence getting the new DE&S organisation fully up and running? Roughly how many of the current vacant posts in the DE&S organisation will be filled, assuming agreement is reached on the new freedoms and flexibilities, and over what timescale will they be filled? Are the current discussions with the Treasury and Cabinet Office about the principle of going outside the Civil Service pay scale, or about the extent to which it will be acceptable to go outside the Civil Service pay scale in the revamped DE&S organisation from April—or are the discussions about both issues?
The Government have said that they are looking for an injection of a significant element of private sector support in the changed DE&S organisation from April. What form will that private sector support take, in what areas of activity and at what cost? Is it a case of the private sector taking over and running some functions, of the private sector acting as consultants, or of people from the private sector coming into posts in the DE&S organisation and becoming employees of the organisation on permanent contracts? Or is it intended that it will be a combination of all three? How long is it expected to take to bring in the private sector support envisaged, and how long is it expected to be before the DE&S organisation from this April will be running and operating as fully envisaged by the Government, with its new freedoms and flexibilities, and injection of a significant element of private sector support?
6.15 pm
One of the greater freedoms and flexibilities the Government referred to is in respect of release of staff. Put simply, is, in this context, the word “release” a euphemism for “sack, or otherwise remove from the organisation”? What are the greater freedoms and flexibilities the Government are seeking in respect of release of staff? One of the main concerns expressed in respect of staff about the Bill’s provisions to establish a GOCO related to the potential for a two-tier workforce.
Is the position, however, that that could still be the case with the DE&S organisation as envisaged from this April? Will the flexibilities the Government seek simply be used to reward senior managers brought in from outside, and will the flexibilities be used in relation to appointment and promotion procedures to favour candidates from outside the organisation? Can the Minister give any helpful assurances on these points, not least over concerns expressed about the possibility of a two-tier workforce being created in the DE&S organisation?
We heard in our discussions on Monday that the existing staff were pretty good, with problems not being just about recruitment but also retention, which the Government of course seek to address. However, retention also needs to be addressed by developing personnel management and pay systems which give equal opportunity to access the development and rewards that are put in place in any future changes. Once again, can the Minister give an assurance that this will indeed be the case?
The Government have said that they are in discussion with the Treasury and Cabinet Office over new flexibilities. Are there in fact any concerns within the Ministry of Defence about the impact such freedoms and flexibilities might have? Is the Ministry of Defence concerned about where it might get its project managers, commercial officers and engineers from if the DE&S organisation from April has a market advantage in respect of the overall remuneration package, or is this point not of concern within the Ministry of Defence?
Finally, I have not touched on the issue of pensions for the staff but, as I understand it, the relatively recent changes to public service pensions are now in place for the Principal Civil Service Pension Scheme. That means that staff transferred to the private sector, or non-civil-service public bodies, can retain their membership of the Principal Civil Service Pension Scheme with the new employer, rather than having to move to a scheme providing an equivalent pension. Perhaps the Minister can confirm that that is indeed the case. Of course, such an arrangement does not mean that the new employer has to place new staff into the Principal Civil Service Pension Scheme or, indeed, to employ them on the same terms and conditions at all; hence the concerns that have been expressed, and to which I have already referred, about the prospect of a two-tier workforce. I appreciate that I have raised a number of questions, and I hope that the Minister will be able to respond to the points that I have raised, either now or later on.