My Lords, I welcome the noble Baroness, Lady Goldie, to her place and I thank her for carrying on the tradition in this Committee of briefing me on some of the points that I may raise in the way that other Ministers in this Committee have done.
For the benefit of the Committee, I start by saying that nothing I am going to say—which in some respects will be quite critical of the Government’s equipment programme—in any way suggests that any Member of this Committee, or anybody making these decisions, is not absolutely concerned with the proper defence of our country. I just wanted to make that clear. I think it is really important to state that we may have a difference of opinion and we may disagree about some of the equipment programmes and some of the decisions that have been made, but I would never question the commitment of any Member of this Committee or any Minister of this Government to defend our country and do their best for the security of our nation—particularly in the current circumstances. I think it is important to start with that, and I am sure that will be met with agreement by all Members of the Committee.
I wish to move my own Amendment 101—I am grateful for my noble friend Lord Hunt’s support for that—and Amendment 485, where, again, I am grateful for the support of my noble friend but also for that of the noble Baroness, Lady Smith. I will deal quickly with Amendment 101, which I think can be summed up by saying that it is just trying to encourage the Government to look at how we might use more of our defence procurement spending to support British industry and British suppliers. That is the extent of it.
I am sure the Minister will say that the Ministry of Defence does everything it can, that it works according to various international agreements, that it is not always possible to source certain contracts within the UK, et cetera, but many of us looking at contracts wonder why it appears so difficult for us to support British industry, when many countries do not seem to face the same difficulties. Given the freedoms we are now supposed to have, one would perhaps expect that to be easier than it was before.
I will give just one example to make this point. In 2018, the Government announced a £1.5 billion programme for fleet support ships to be built. They said they were going to build them in British yards but, as far as I am aware, not a single screw or bolt has been fastened. It is that sort of thing. When is that
going to happen? When are the fleet support ships going to be built in British yards, as they were supposed to be? The Government said they were looking at a high proportion of this being done in the UK, but what does that mean? Some clarity would be helpful for the Committee and for those who read these deliberations on whether it is the Government’s intention to increase the amount of procurement that takes place in UK industry, so we can use our procurement to support that.
Before I move on to Amendment 485, this goes to the heart of what I am saying. Before us is a procurement Bill. It is an important government Bill that seeks to make a difference and use the hundreds of billions of pounds that are spent to deliver certain objectives for the Government. Why will this Bill, as it is drafted, make a difference to the defence equipment budget and programme? We could sit down now. How will this make a practical difference? What is in here? Some of this needs to be put on the record, so I am going to quote the Public Accounts Committee of the other place. It was not clear from the Government’s letter in response to that committee’s report, which said that the Procurement Bill was going to make a great difference, how it is going to do that. That is what I think is really important.
Noble Lords will recognise that Amendment 485 is a proposed new clause to be inserted after Clause 98, so it does not relate specifically to the defence clauses, as such. It relates to Clauses 96, 97 and 98. In other words, the Bill itself allows for procurement investigations, and the recommendations and guidance that follow them. My Amendment 485, supported by my noble friend Lord Hunt and the noble Baroness, Lady Smith, goes after that clause because it seeks to insert an audit of the equipment plans, and therefore investigate them and make recommendations. That is the whole point of doing the annual audit.
Why is this so important? I am not going to read all sorts of things, but I will use one or two examples, because this is really serious. The Public Accounts Committee of the other place, in October 2021, produced the report Improving the Performance of Major Defence Equipment Contracts. It said:
“There have been numerous reviews of defence procurement”—
this is why I am saying we all have an interest in this—
“over the past 35 years”.
I am making a defence-equipment point, not a party-political point. The reviews have
“provided the Department with opportunities to take stock and learn from experience. We are therefore extremely disappointed and frustrated by the continued poor track record of the Department and its suppliers—including significant net delays of 21 years across the programmes most recently examined by the National Audit Office—and by wastage of taxpayers’ money running into the billions.”
If you go through this report, you see that it logs detail after detail of problems that the committee believes the Government need to urgently address. The Government’s response is that they are dealing with this, but I think the Committee would want to know how. What are they doing on all of those points?
Using the work of the Defence Select Committee again, it talks about problems in aviation and an inquiry it has just launched. We read in the Sunday Telegraph at the weekend about procurement problems with the type of aircraft purchased for aircraft carriers and whether the F-35B will actually be suitable. It will be suitable in terms of being launched off the aircraft carrier, but will all that have to be changed and will there be another procurement difficulty with that?
The report on the Army’s armoured vehicle capability published a few months ago says:
“This report reveals a woeful story of bureaucratic procrastination, military indecision, financial mismanagement and general ineptitude, which have … bedevilled attempts to properly re-equip the British Army”.
I understand that the noble Lord, Lord Alton, was at a committee meeting in your Lordships’ House last week where this was discussed in the context of the Ajax contract. The Public Accounts Committee published a report on 3 June 2022 which pointed to a £5.5 billion contract with General Dynamics, with an initial order for 589 Ajax armoured fighting vehicles that were supposed to be in service in 2017. But by December 2021, at a cost of £3.2 billion, the department had received 26 vehicles, none of which can be used. Maybe now the Government will have to scrap that and move to a Warrior replacement.
So, all these different things are going on, and, again, the Government say that they have sorted these issues. However, I had a quick look and found The Treatment of Contracted Staff for the MoD’s Ancillary Services, another recent report by the Defence Committee from May of this year, which said:
“Outsourcing ancillary services has become commonplace in the Ministry of Defence … If an activity is not a core part of the MoD it is liable to be outsourced. For example, catering, vehicle maintenance and firefighting are liable to be outsourced. However, despite the billions of pounds spent on outsourcing, this is a relatively unscrutinised area. The MoD’s outsourcing practice is not exemplary. Outsourcing appears to be the default position, with little consideration given to providing services in-house. Contractors drop standards and squeeze employees to raise their profit margin, but the MoD is not always willing to step in and enforce the expected standards. It is an absurd state of affairs that the MoD is not allowed to look at a contractor’s previous performance when assessing their bid—a state of affairs that needs to be rectified immediately.”
Yet when we have asked Ministers about excluded contracts, excluded suppliers and what is going to be looked at, we have been reassured that the Procurement Bill will mean that a contractor’s previous performance will be looked at, and that if its bid is not up to scratch or not what you would expect, that supplier can be excluded. However, we read in a May 2022 report from the Defence Select Committee that the MoD is not allowed to look at a contractor’s previous performance when assessing its bid. So, is the Defence Select Committee wrong, or is the Bill wrong? It would be useful for us to hear from the Minister whether the MoD is allowed to look at a contractor’s previous performance, and whether it has or has not.
I have been speaking for a few minutes and I do not want to speak for any longer than that. I have tried to use contracts run by the Ministry of Defence to give some examples of appalling contract management. I have seen the response that the Government sent back
to the committee, which says, “We’re dealing with all of these. We don’t agree with the committee; essentially, it is wrong on some aspects of this, but we agree with it on others. We are doing all sorts to tackle this”.
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The fundamental point is that we all want defence equipment programmes to be successful. We all want our country defended properly. I know that that is what the Government want—this is not a deliberate attempt not to do so—but why is it that continued reviews and resets still reach a position where this is happening? The fundamental point goes back to where I started: why will this Procurement Bill, which includes Clause 6, headed “Defence and security contracts”, and Clause 105, headed “Single source defence contracts” and goes to Schedule 10—it reforms various aspects of this procurement programme—work this time? Why will it be different this time? Why will this Procurement Bill mean that, in five, 10 or 15 years’ time, instead of a report that goes on about improving the performance of major defence equipment contracts, we have a report that asks how the MoD did it and reformed its contracts to ensure not only that there was value for money but that we got the equipment we needed to defend our country?