I hope noble Lords will forgive me if I give a Second Reading introduction to this part of the Bill to make clear the Opposition’s general position. First, I declare an interest, although not a pecuniary one or any interest that I would be required to declare, to show the position I am coming from in terms of experience. I was a non-executive director of the Defence Logistics Organisation, the Defence Procurement Executive and a founder director of DE&S, so I tend to see these matters from the rather more sympathetic viewpoint of those poor professionals who are caught in the middle of the many debates about the efficiency of this process.
I shall speak briefly on Part 2 in general. The view of the Opposition is that this is an admirable attempt at an intractable problem. I commend the creation of Part 2 and congratulate the noble Lord, Lord Currie of Marylebone, on his excellent report and the MoD staff who have turned that report into legislation and regulations. I particularly thank the noble Baroness, Lady Jolly, Philip Dunne, the Permanent Under-Secretary of State for Defence, and their adviser, Jason Petch, for their time in taking me through the Bill line by line. The Opposition’s duty in this sort of legislation, which is largely apolitical—quite honestly, I am scratching around for any political points this afternoon—is to scrutinise the legislation line by line. I assure the Committee that we have done this but mostly off the Floor of the House. Therefore, we have before us a relatively modest number of groups and we hope to finish the Committee stage this afternoon.
My general thrust this afternoon will be to look at the independence and quality of the SSRO, the whole issue of transparency in its operation and its accountability to Parliament. I will also pick up on one or two concerns that have been put to us by industry. Where industry wants assurances, we should like to be able to read them into the record to meet its concerns. It is important to note that, although this debate takes
place in the Moses Room with a modest number of us present, words spoken by the Minister will be extremely important to industry.
I should also make a point about procedure. Rather lazily, we have not crafted wickedly clever amendments with which to do our probing but are using the device of a clause stand part debate. I hope to brief the Minister in more detail than I have been able to about the questions that will arise from that. I have given her some briefing but I entirely understand that on some of the questions, which came up just as I made the final run-through, line by line, she may have to write to me. In this important area, it really is better to have accurate and considered responses, rather than hastily cobbled together ones, not that I suggest that the Ministry of Defence would have hastily cobbled together answers anyway. That is quite a useful procedure but if we are not satisfied with the responses and feel that they need to be read into the record, we will use Report to achieve that objective.
I turn now to the Clause 13 stand part debate and Amendments 18G and 18H. I wish to probe the key concept of the SSRO: its independence—not in its role, with which I am comfortable, but in its working. I start with the appointment of the chairman, the rules about which are in paragraph 1(1)(a) of Schedule 4, which states simply that the chair of the SSRO shall be,
“appointed by the Secretary of State”,
and gives no further guidance as to how that chair may be appointed. I first ask the Minister to expand on how the chair will be appointed. I caution her about too much reliance on reference to the Commissioner for Public Appointments, because the commissioner very recently put out a useful press release about appointments in which he clearly stated:
“Ministerial appointments to public bodies regulated by the commissioner must be made in line with the commissioners code of practice which sets out that appointments must follow an open, fair and merit-based process, overseen by a panel. In the case of chair appointments, the panel must be chaired by an independent public appointments assessor appointed by the commissioner”.
That is so far, so good. It goes on:
“The panel’s job is to judge the suitability of candidates and to provide a list of candidates who are ‘above the line’ i.e. they have the ability to do the job. It is then for the relevant Minister to choose which of these candidates to appoint”.
I read that to stress the point that the appointment of the chair is in the discretion of the Secretary of State. It is, in that sense, a political appointment. It is entirely within his discretion.
The complementary area that I shall now explore is the relationship that the chair and the board have with the Secretary of State. I go back to paragraph 2(2) of Schedule 4, which states:
“A person may not be appointed as an executive member without the consent of the Secretary of State”.
The first point is that the executive members will need the consent of the Secretary of State. It is clear from paragraph 1 of Schedule 4 that the Secretary of State appoints not only the chair but the non-executive chair of the SSRO. Moving on, paragraph 3(2) states:
“Appointment as a member of the SSRO is for a term of … not less than three years, and … not more than six”.
Sub-paragraph (6) of the same paragraph states:
“A person who ceases to be a non-executive member is eligible for reappointment”.
Returning to the commissioner’s press release, it states clearly:
“The Public Appointments Commissioner plays no part in a decision not to re-appoint someone at the end of their term of office. That is a matter for Government”.
That makes it very clear that reappointment is a matter for the Government. Looking further at the schedule, paragraph 6 sets out:
“The SSRO may, with the approval of the Secretary of State … pay remuneration and allowances to the non-executive members, and … pay or provide for the payment of pensions, allowances and gratuities to or in respect of a person who is or has been a non-executive member of the SSRO”.
Finally, in pursuance of that point, I move to paragraph 16, on “Finance”, which says:
“The Secretary of State may make to the SSRO such payments out of money provided by Parliament as the Secretary of State considers appropriate”.
Taking all these together, let us suppose, to make it simple, that I was to be appointed—it does not pay enough but we can put that to one side. Let us look at this relationship. The Secretary of State appoints me, reappoints me, determines my remuneration, controls my budget, appoints my non-executives and then approves the appointment of my executives. It is for the Minister to convince me that this is an independent organisation. I have been there; I have been the chairman of a nationalised industry and the chief executive. I have lived under these rules and I have to tell noble Lords that independence was not one of the things I felt. I felt from time to time that I had conversations with the Secretary of State where there was a degree of influence.
I repeat my request to the noble Baroness and invite her to convince the Committee that the SSRO is truly independent. What mechanisms will be put in place to assure us, the world, industry and so on that this independence is real? Can she give us some practical indication: for instance, will the Secretary of State or MoD staff be allowed to communicate with the chairman or SSRO staff?
SSRO staff are covered in paragraph 7 of the same schedule, which says, quite bluntly:
“The SSRO may appoint employees”,
and,
“may pay its employees remuneration and allowances. Employees of the SSRO are to be appointed on such other terms and conditions as the SSRO may determine … The SSRO may pay or provide for the payment of pensions, allowances and gratuities to or in respect of any person who is or has been an employee of the SSRO”.
Finally, paragraph 17(3) says, very clearly:
“Service as a member or employee of the SSRO is not service in the civil service of the State”.
I ask the noble Baroness whether, as it appears from the schedule, the appointment is at the sole discretion of the SSRO. Will there be no interference from the state in any way, from the MoD or the Cabinet Office? Will pay be unfettered and will the SSRO be able to pay what is necessary to achieve the quality of employee necessary? In other words, will it have the sort of freedom—as far as one can see from simply reading
this, the complete freedom—to appoint people on terms and conditions that are competitive with industry and, indeed, as good as, if not better than, those that will be allowed to DE&S-plus?
I move on to a straightforward question about procedure. Paragraph 10 of Schedule 4 states:
“The SSRO may determine its own procedure”.
I do not know why draftsmen do that, because it then goes on to say,
“but this is subject to sub-paragraphs (2) to (6)”,
which pretty well say that everything of importance has to be done by a committee. That is what I think it says. Can the Minister confirm that those provisions in sub-paragraph (3) cannot in fact be made by the board of the SSRO itself but will be made through a procedure of the committee as defined in, I think, sub-paragraph (2) and with the particular caveats that are in the subsequent sub-paragraphs?
Finally, I wish to raise an issue that I know we all worry about in public office: revolving door syndrome. I invite the noble Baroness to comment on the extent to which there will be limitations on where the members of the board, the executives of the SSRO, come from or go to. In particular, I am concerned about the extent to which they may be leading lights in the industry and carry their industry heart with them into the SSRO or, conversely, come out of the SSRO into plum jobs in industry; will there be some limitations?
We have a couple of amendments in this group, which are just to enliven the debate. In the first, I wish to bring some independence to these appointments and suggest that they should be ratified by the House of Commons Defence Select Committee. In the second amendment, I suggest that the committee to which I referred earlier should have a majority of members who are not employees of the SSRO. I beg to move.
3.45 pm