Contingency Liability for Ajax Lessons Learned Review
Jeremy Quin Excerpts(2 years, 1 month ago)
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The Minister for Defence Procurement (Jeremy Quin)
I wish to inform the House that I am today laying a Departmental Minute to advise of a new contingent liability associated with the Ajax Lessons Learned Review.
Clive Sheldon QC has agreed to lead the review. Negotiations are ongoing and the contingent liability will come into force on the formal appointment of the Chair.
The Departmental Minute describes the contingent liability that the MOD will hold, which will provide an indemnity for conducting and reporting the review. The maximum contingent liability held against the MOD is unquantifiable and will remain following publication of the report.
It is usual to allow a period of 14 sitting days prior to accepting a contingent liability, to provide Members of Parliament an opportunity to raise any objections.
Exposure is limited to the contingent liability of any legal action in the run-up to and following the publication of the Review’s report. It will not cover claims for liabilities:
Arising from any fraud, wilful misconduct, dishonesty, or gross negligence on the part of a member of the Review Team;
Arising from any wilful breach of any contract or agreement with the Ministry of Defence relating to the Review Team.
It is the view of the Department that the likelihood of any claim is remote.
[HCWS741]
Baseline Profit Rate 2022-23: Single Source Defence Contracts
Jeremy Quin Excerpts(2 years, 1 month ago)
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The Minister for Defence Procurement (Jeremy Quin)
I am today announcing that I have set the baseline profit rate (BPR) for single source defence contracts at 8.31%. This differs from the SSRO’s recommendation of 8.07%. Element 2021 Rates 2022 Rates Baseline Profit Rate (BPR) (% on contract cost) 8.31% 8.31% Baseline Profit Rate to apply to contracts between the Secretary of State and a company wholly owned by the UK Government and where both parties agree (% on contract cost) 0.057% 0.046% Fixed Capital Servicing Rate (% on Fixed Capital employed) 3.27% 3.27% Working Capital Servicing Rate (% on positive Working Capital employment) 1.33% 1.33% Working Capital Servicing Rate (% on negative Working Capital employed) 0.65% 0.65% SSRO 0.057% 0.046%
The SSRO calculate the BPR by taking an average of the methodology of profits earned by comparable companies, usually over the preceding three years. This year’s calculation therefore includes profits reported by firms in the comparator group for the year ending March 2021, which was the year when covid-19 had its largest economic impact. The SSRO recommended reducing the immediate effect on the BPR by using a four year average rather than the usual three. While I believe this was a sensible approach, and I support the principles of the SSRO approach, I have decided that it would be fairer to remove the effects of covid-19 completely from the calculation by using the average of the three years prior to 2021.
My reason for this is that while this BPR will be used to calculate the profit payable on single source work contracted in 2022-23, much of the work will be undertaken several years in the future, given the long-term nature of many Defence contracts. I believe it would be unfair to include in this rate the effects of an event that is as extraordinary as covid-19. In reaching this conclusion I have drawn on the analysis produced by the SSRO on the extent to which last year’s rate was unusual, and by my officials on its potential long-term effects.
I have asked the SSRO to engage with industry and my officials in returning—next year—to a market-based benchmark based on their established methodology that reflects my intention to remove the impact of covid-19. For the same reasons, I am also using the figures calculated by the SSRO for the last year before covid for the three capital servicing rates.
Last year I introduced a net zero Baseline Profit Rate for Government-to-Government Contracts. The SSRO has incorporated this into their recommendation this year. I have accepted this recommendation. I am also announcing that I am accepting the SSRO recommendation for their funding adjustment. Neither of these figures are significantly affected by wider economic factors.
These rates will also be published in the London Gazette, as required by the Defence Reform Act 2014.
All of these new rates will come into effect from 1 April 2022.
[HCWS726]
Oral Answers to Questions
Jeremy Quin Excerpts(2 years, 1 month ago)
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Miriam Cates (Penistone and Stocksbridge) (Con)
The Minister for Defence Procurement (Jeremy Quin)
Recent estimates shows MOD investment supporting over 200,000 jobs across the UK. Continued investment in defence, along with the changes we are making as part of the defence and security industrial strategy, will contribute to further economic growth and prosperity, including jobs, across the Union.
Virginia Crosbie
BAE Systems at RAF Valley in my constituency of Ynys Môn is hoping to hear news about a long-term contract, providing security to hundreds of workers. These are high-value jobs that underpin our sovereign UK defence capability. These technical and engineering roles provide maintenance to the RAF Hawk T2 fleet and support our future fighter pilots. Does my hon. Friend agree that this forthcoming contract is great news for Anglesey and great news for our UK security in these challenging times?
Jeremy Quin
I cannot comment on specific contracts, but I can confirm that those are indeed high-value jobs performing an important role for our armed forces. My hon. Friend has been assiduous in pushing the case for defence jobs in her constituency, and I hope to be making an announcement shortly.
Jacob Young
Does the Minister agree that the current dreadful situation in Ukraine means that we need to be very focused on our defence supply chains, buying and using British where possible and further supporting the economies of areas such as Redcar and Cleveland?
Jeremy Quin
My hon. Friend is absolutely right. We were already focused on securing our critical defence supply chains, but DSIS has provided renewed impetus. Specifically on steel, as he mentions his home patch, it is for the prime contractors to place orders but they are all flagged well in advance with UK industry. Unfortunately, there are occasions—we have had this recently—when specific types of steel that we require are not being produced in the UK. I would urge UK manufacturers to really explore these opportunities. We are very keen to see them do so.
David Duguid
The Minister will be familiar with the company Score in my constituency. It is a major supplier of valves across different industries, including for naval vessels. May I invite him to see for himself the fantastic facilities, technology and expertise, including the award-winning apprenticeship schemes, utilised by the single largest employer in my constituency of Banff and Buchan?
Jeremy Quin
Our increase in naval procurement benefits jobs throughout the UK. I am delighted to hear of the Score Group’s apprenticeship scheme to build talent for the future and I am keen to visit. The UK Government’s shipbuilding programme is proving a great success in supporting Scottish jobs unlike, it appears, that of other Governments with which my hon. Friend, as a Scottish Member, may be familiar.
Miriam Cates
Given the MOD’s recently acquired stake in Sheffield Forgemasters, I know that my hon. Friend understands the important role of the UK steel industry in our national security. What consideration has he given to the opportunities for greater integration and collaboration on defence manufacturing between Sheffield Forgemasters and other steel producers, such as Stocksbridge’s Speciality Steel in my constituency, which he is also welcome to visit? That collaboration could benefit jobs and security.
Jeremy Quin
I am aware of the company in my hon. Friend’s constituency. We took the unusual decision—it is unusual—to acquire Sheffield Forgemasters to secure its unique capability to supply specialist large-scale, high-integrity steel components, which are vital to defence programmes. Ultimately, it is for companies to manage commercial decisions for their future, but to improve engagement, the Business Secretary reformed the UK Steel Council in 2021, which offers a forum for the Government, industry and trade unions to work in partnership on what is absolutely a shared objective for UK steel to have a competitive and sustainable future.
Mohammad Yasin (Bedford) (Lab)
The Aircraft Research Association in Bedford is the only UK-based facility capable of testing our future military aircraft and components, but it is at risk of closure due to the change in electricity costs. Ofgem has stated that only the Government can introduce an exemption scheme to save the company and prevent the UK being reliant on foreign states to test our aircraft. Will the Minister urgently meet me and the ARA to discuss a way forward that protects our national security?
Jeremy Quin
I am willing to meet the hon. Gentleman if that is helpful. I warn him that we are aware of the situation and of the capabilities that we need. I am happy to meet him and speak to him and I will take it from there.
Matt Western (Warwick and Leamington) (Lab)
Many hon. Members have been surprised or enlightened by the performance of the Bayraktar TB2 in Ukraine. What sort of message does that send to UK strategy and procurement?
Jeremy Quin
Happily, we were ahead of the game. It is part of the discussion that we had as part of the integrated review. There are active processes in place to test UAVs—unmanned aerial vehicles—and counter-UAV technologies. We are aware of them. This conflict and previous ones have thrown into sharp relief how effective those weapon systems can be.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
I have some important manufacturers that supply the defence sector, such as David Brown Santasalo and Reliance Precision, that would like to know what the future of their business is, given that the Government are going to reduce the size of our armed forces to 72,000 and that last week’s mini-Budget gave no extra funding to defence. If Vladimir Putin is watching the parliamentary channel, what does the Minister think he will be thinking?
Jeremy Quin
I do not know whether Mr Putin is watching us today; I would like to say some robust things if he is. I give some reassurance to the hon. Gentleman: last time I visited David Brown Santasalo, it was hard at work on components for the Type 26, to which programme we are committed, as he knows, and on many export orders. It is hard at work producing really valuable bits of kit for the UK and in due course, I hope, our allies.
Chris Evans (Islwyn) (Lab/Co-op)
UK shipbuilding accounts for 42,600 jobs, yet the Government continue to fail to protect that vital industry and those highly skilled jobs by refusing to build British by default. Can the Minister give me one good reason why we cannot guarantee that all future naval ships procured by this Government will be built in Britain using British steel?
Jeremy Quin
Yes, I can give the hon. Gentleman many more than one good reason for why we have the strategy that we do. To name one, let us look at Type 31, which is a fantastic British export success to Poland and Indonesia; I am convinced that there will be others in due course. It was built with the support of an international consortium and we got the best in the world. It is now based firmly in the UK with a lot of it in the UK supply chain, which is giving the best opportunity for UK jobs and for UK shipbuilders to thrive internationally and competitively.
Wendy Chamberlain (North East Fife) (LD)
Steve Brine (Winchester) (Con)
The Minister for Defence Procurement (Jeremy Quin)
The MOD continues to deliver on its 25-year strategy to modernise its estate. In the last year, the Defence estate optimisation portfolio has completed construction at three Defence sites, with another six in construction, and completed the sale of seven surplus MOD sites, generating £141 million in receipts to re-invest in modem and sustainable facilities for our armed forces.
Steve Brine
The Minister knows that the Sir John Moore barracks in my constituency is marked for disposal under the programme. He also knows that what will be put in its place is causing anxiety. As we reduce the size of the Army in pursuit of the Future Soldier proposals in the integrated review, it is obvious that some consolidation will be needed around the training estate, but does the Minister share my concern about losing what is a good facility in good order at the Army Training Regiment in Winchester, given that the conflict at present—and, I suspect, for some time to come—looks very 20th century, not necessarily in terms of offensive ground operations, but in terms of all the other things, including boots on the ground, that we require of our armed forces?
Jeremy Quin
I know from the meetings we have had that my hon. Friend is very engaged with this MOD site, which is due to close in 2026. The rationale for the closure is to concentrate all phase 1 non-infantry training at Pirbright to provide a bespoke training environment embracing digitalisation. The numbers trained could be flexed, but I will continue to engage with him on what he has impressed on me is an important issue for his constituents.
Selaine Saxby (North Devon) (Con)
The Minister for Defence Procurement (Jeremy Quin)
I emphasise that decisions on equipment are in response to requests from Ukraine, and we consider how best to address Ukraine’s needs. The anti-tank weapons provided to the Ukrainian armed forces thus far have been taken from existing UK stocks, to ensure speed of delivery. The MOD continues to pursue options to meet Ukrainian requirements rapidly, including through UK industry and by actively convening our global partners.
Selaine Saxby
I have been contacted by manufacturers of military hardware in North Devon that work with the MOD and can rapidly move to provide items such as helmets and body armour. Are there any plans for a streamlined emergency procurement process to help speed this up?
Jeremy Quin
I emphasise that these are Ukrainian decisions. I urge UK companies to contact the Ukrainian embassy, as well as using other routes. In parallel, the Department for International Trade is meeting defence-ready trade associations such as ADS and Make UK on a weekly basis to rapidly consider industry offers to Ukraine and how they can be assisted. UK manufacturers of military hardware may also wish to forward offers to their trade association.
Alex Norris (Nottingham North) (Lab/Co-op)
The Minister for Defence Procurement (Jeremy Quin)
You are aware of this, Mr Speaker, but a number of hon. Members have inquired and the Defence Secretary would not want it to be thought that he means any discourtesy to the House: he has had a brief brush with covid, and I can assure the House on behalf of the Department, the armed forces and the Ministers here present that it has neither stopped him nor slowed him down. He has had a second negative test today, and I am assured that by this evening he will be as present physically as he has been virtually over the last few days.
The Ministry of Defence continues to deliver against the objectives of the integrated review and the defence Command Paper, which recognise that Russia remains the most acute threat to our security. We remain on course to deliver a more modernised and threat-focused defence alongside our international allies, just as we have worked with them on Ukraine.
Alex Norris
Recent weeks have only reinforced the need to invest in our defence, which is important for our economy and vital for our security. With that in mind, why will Ministers not give a clear commitment to British-built by default in defence procurement?
Jeremy Quin
The events of the last few weeks show the critical importance of having the right kit in the hands of our armed forces. On many occasions the need can be met by British supply, but I would not write off the kit we can procure from our US and NATO allies, nor would I wish them to write off the prospect of buying kit from us. We are part of an alliance, and I am convinced that our approach of supporting British industry, supporting British investment and supporting capability through the defence and security industrial strategy, while keeping a weather eye on what else is available to ensure our armed forces are well armed, is the right one.
Mr Philip Hollobone (Kettering) (Con)
John Healey (Wentworth and Dearne) (Lab)
The UK’s anti-tank and anti-air weapons are proving vital to the Ukrainians in fighting the Russian invasion. The Prime Minister pledged at NATO last week that we will supply a further 6,000 missiles. Both NLAW and Starstreak are made in Britain by British workers, as the Minister for Defence Procurement said in response to the hon. Member for North Devon (Selaine Saxby) on Question 17, but has production started to replace the British stockpiles of these missiles?
Jeremy Quin
We are working closely with industry. Some lines have continued, but I would rather not get into operational details of as and when stockpiles will be replenished. Suffice it to say that we are in active conversations with industry, as the right hon. Gentleman would expect.
Andrew Rosindell (Romford) (Con)
Jeremy Quin
I hear what my hon. Friend says and I note his concern. As the integrated review made clear, we always look at spending on a threat basis: what is required, we fund. I also remind him that we are the biggest defence spender in Europe and the second biggest in NATO, and we were pleased to receive a £24 billion uplift in the current spending period.
Wendy Chamberlain (North East Fife) (LD)
Jeremy Quin
I thank the hon. Lady for her question. I think I wrote to her last in November of last year on that issue. I am afraid we have not moved on yet and we are still studying exactly what radar configurations will be required, but it is actively being looked at and I certainly commit to updating her when I can give her an assurance one way or the other.
Dr Julian Lewis (New Forest East) (Con)
Ben Everitt (Milton Keynes North) (Con)
Jeremy Quin
I am delighted to join my hon. Friend in welcoming that downselection. There is still a process to go, but if it has finally got over the line, as I hope, that will be great news for Babcock, great news for Scotland and great news for British shipbuilding. I have on multiple occasions been to see my opposite number in Poland and hosted them here in the UK. I think they are making a great choice.
Ellie Reeves (Lewisham West and Penge) (Lab)
In June last year, one of my constituents, a British-Afghan dual national, travelled to Afghanistan to visit his wife and three children aged under 10. During the evacuation, they were advised to proceed to Baron Hotel but were not processed before the suicide attack. Since then they have been trying to get to the UK, but the Foreign, Commonwealth and Development Office says they need a visa and the Home Office says they are ineligible for the resettlement scheme. What urgent action can the Minister take, with colleagues in the Home Office, to ensure that my constituent can return safely to the UK with his young family?
Christian Matheson (City of Chester) (Lab)
Does the Minister share my concern that the agility and mobility hoped for in the Future Soldier programme will be thwarted if those soldiers are stuck in traffic on the M6 near Weeton barracks? Would it not be much better to keep Dale barracks in Chester open and have a wider operational footprint for our future soldiers?
Jeremy Quin
That is an ingenious construction. We always think about this, but I am afraid we do not have any plans to change that element of the defence estate optimisation portfolio at this point.
Dr Matthew Offord (Hendon) (Con)
Rachael Maskell (York Central) (Lab/Co-op)
The national security vetting services have never played such an important role, and the skill there is incredibly high. When will the Minister announce that they will remain in York when the MOD moves forward with its plans for the Imphal barracks site?
Jeremy Quin
I cannot give any form of commitment on that right now, but I will write to the hon. Lady.
Dr James Davies (Vale of Clwyd) (Con)
James Gray (North Wiltshire) (Con)
While it is perfectly true that any sensible person in the west would rather President Putin were not the President of the Russian republic, does the Minister agree that it is vital that we reiterate at every second that we can that NATO is a defensive alliance among 30 members and that we will react if one boot goes over the line on to NATO land, but the presidency of Russia must be a matter for the Russian people, not for us?
Jeremy Quin
My hon. Friend is correct. NATO is a defensive alliance, and we are working closely together. As my hon. Friend the Minister for the Armed Forces said, we are undertaking measures to ensure that NATO retains that deterrence and defensive posture that is appropriate in these times. However, we are focused bilaterally on Ukraine and on supporting Ukraine—that is the focus of our policy.
Andrew Gwynne (Denton and Reddish) (Lab)
At the last Defence questions, I got what I hoped was an encouraging answer on behalf of the nuclear test veterans for what will be the 70th anniversary of the first nuclear tests. Will the Minister update us on where we are in recognising those veterans and their families for their sacrifice?
Mr Richard Holden (North West Durham) (Con)
With the next generation Challenger 3 turrets being built in the north-east, supporting hundreds of jobs, the Defence Science and Technology Laboratory working with Newcastle and other local universities and Cook Defence Systems in my constituency providing armoured vehicle tracks for not just British tanks but those of NATO and European allies, will my hon. Friend ensure that the north-east’s firms and workers remain at the heart of British defence procurement?
Jeremy Quin
They are. Last Thursday, I had a great day opening the AI hub for DSTL in Newcastle and pressing the button to start production of the turrets for our Challenger 3 tanks, to which my hon. Friend referred. There is a great history of defence manufacturing in the north-east, and it will have an even greater future.
Defence
Jeremy Quin Excerpts(2 years, 1 month ago)
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Jeremy Quin
Today, I am delighted to announce that we are going one step further by publishing our refreshed national shipbuilding strategy. Drawing on the multi-talented skills of the Government, industry and academia, and backed up by more than £5 billion of Government investment over the next three years, the plan creates the framework for our future UK maritime success.
[Official Report, 10 March 2022, Vol. 710, c. 505.]
Letter of correction from the Minister for Defence Procurement, the hon. Member for Horsham (Jeremy Quin):
An error has been identified in my statement.
The correct information should have been:
Jeremy Quin
Today, I am delighted to announce that we are going one step further by publishing our refreshed national shipbuilding strategy. Drawing on the multi-talented skills of the Government, industry and academia, and backed up by more than £4 billion of Government investment over the next three years, the plan creates the framework for our future UK maritime success.
National Shipbuilding Strategy
Jeremy Quin Excerpts(2 years, 1 month ago)
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The Minister for Defence Procurement (Jeremy Quin)
With your permission, Madam Deputy Speaker, I would like to make a statement on behalf of my colleague the Secretary of State for Defence and shipbuilding tsar, concerning the Government’s refresh of the national shipbuilding strategy.
The United Kingdom is a great maritime nation and shipbuilding runs in our blood. At the turn of the previous century, Britain built 60% of the world’s ships and, although we are no longer the world’s workshop, our shipbuilding industry remains a global leader in design and technology. It brings in billions to our economy and spreads wealth right across our country. Today, our maritime manufacturers are responsible for the state-of-the-art research vessel the RSS Sir David Attenborough, and for constructing the most powerful surface ships ever built in Britain: the Queen Elizabeth-class carriers.
More than 42,600 people from Appledore to Rosyth owe their livelihoods to our shipbuilding industry, but we still need to strengthen its resilience. It is worth reminding ourselves that even in the digital age, some 95% of UK trade by volume, and 90% by value, is carried by sea. Given this dependence, it is vital that we continue to safeguard our access to global maritime trade, even as we open up our sails and seek out new markets and new sustainable technologies. That is why, in 2019, the Prime Minister appointed the Defence Secretary as the shipbuilding tsar. Since then, he has been working tirelessly across Government to make our shipbuilding sector more productive, competitive, innovative and ambitious.
There has been real progress. Not only do we have much greater cross-Whitehall and industry co-operation, but we are doubling Ministry of Defence shipbuilding investment over the life of this Parliament to more than £1.7 billion a year. We have committed to procuring a formidable future fleet, including up to five Type 32 frigates, alongside the Type 31 and Type 26 programmes. We will grow our fleet of frigates and destroyers over the current number of 19 by the end of the decade. We have launched a competition to build a national flagship—the first ship of its kind to be built and commissioned in Britain—and last September we opened up the National Shipbuilding Office, a pan-governmental organisation that reports directly to the shipbuilding inter-ministerial group, is chaired by the shipbuilding tsar and is driving transformative change across our organisation.
Today, I am delighted to announce that we are going one step further by publishing our refreshed national shipbuilding strategy. Drawing on the multi-talented skills of the Government, industry and academia, and backed up by more than £5 billion of Government investment over the next three years, the plan creates the framework for our future UK maritime success. It contains five essential elements. First, it radically extends the scope of our existing shipbuilding strategy. I may be standing here as a Defence Minister, but rest assured that the plan is as much about commercial shipbuilding as it is about the Royal Navy. We are focused not simply on hulls alone but on internal systems and sub-systems.
Secondly, we are establishing a 30-year shipbuilding pipeline of more than 150 vessels, thereby offering a clear demand signal in respect of our future requirements. We know that a regular drumbeat of design and manufacturing work is vital not just to maintain our critical national security capabilities but to drive the efficiencies that reduce longer-term cost. We are not just giving suppliers confidence in industry order books; we are going to give them greater clarity about our requirements, too. Today, we set out our policy and technology priorities, from net zero commitments to social-value requirements.
We are determined to ensure that our vast shipbuilding programmes leave a lasting legacy that goes beyond the procurement of a new vessel for the Border Force or the latest battle-winning warships, so we have made it a key requirement for shipbuilders to take account of social value, thereby ensuring not only that we deliver the capabilities that each Department needs but that taxpayers’ money is used to maximum effect. We support jobs, skills and investment and will establish a new social value minimum of 20% for competitions for Royal Navy vessels.
Thirdly, our strategy will accelerate innovation, enabling shipwrights and supply chains to unlock new manufacturing, production and clean maritime technologies. In recent times, the automotive industry has blazed a trail in the field of sustainability, investing in everything from electric to hydrogen and ammonia fuel technologies. But domestic shipping accounts for more emissions than the bus and rail sector combined, so when it comes to decarbonisation, it is high time that we made sure shipping does not end up in the slow lane.
In 2019, the Department for Transport published its “Maritime 2050” strategy, amplifying the power of UK maritime business clusters to foster a climate of innovation.
Last year’s clean maritime demonstration competition underlined the sheer depth of the sector’s potential, with 55 projects winning a share of £23 million to develop carbon-free solutions such as hydrogen-fuelled vessels and shipping charge points powered by offshore wind turbines. Building on that success, we will now make the competition a regular event, creating more opportunities for industry to bring cutting-edge technologies to market.
Alongside that news, I can announce today that the Department for Transport—I am delighted to be joined by the Minister of State, Department for Transport, my hon. Friend the Member for Pendle (Andrew Stephenson) —has committed £206 million to develop a UK shipping office for reducing emissions, or SHORE, which will fund research into and development of zero-emission vessels and help to roll out the infrastructure that enables the UK to achieve its goal of becoming a world leader in sustainable maritime technologies.
Fourthly, shipbuilding is a long-term investment, and the more we can do to shelter it from market storms the better, so the fourth aspect of our plan is about providing greater financial support for shipbuilders to win orders. Access to finance for underwriting contracts is an essential element of any shipbuilding enterprise. Alongside banks and working capital loans, the Government also have a role to play in helping to finance vessel contracts.
UK export finance already offers credit facilities to support British companies winning work overseas. To make UK shipbuilders more competitive, we are bidding for orders for new ships from domestic customers. The Department for Business, Energy and Industrial Strategy is now working up plans to underwrite contracts for UK shipbuilders building ships for UK operation. BEIS aims to launch this new home shipbuilding credit guarantee scheme in May.
Switching to exports, opportunity is opening up for suppliers to increase their market share. In 2020, we exported £2.2 billion-worth of ships, boats and floating structures. We believe that we should be able to grow our exports by 45% by 2030. To make that happen, we are opening a new Maritime Capability Campaign Office. Covering all aspects of the shipbuilding enterprise, from platforms to sub-systems, to the supply chain, it will use robust industry analysis of global markets to help suppliers reach untapped markets. Our success in the long term will hinge on the strength of our skills base.
This brings me to the final aspect of our plan. We are determined to develop the next generation of shipbuilding talent, so today we are establishing a UK shipbuilding skills taskforce. Led by the Department for Education and working in tandem with the National Shipbuilding Office and devolved Administrations, it will bridge skills gaps and learn from best practice, particularly in relation to new and emerging technologies. Above all, it will act as a megaphone for the varied and exciting careers that shipbuilding can offer up and down the country, from designing cutting-edge environmentally friendly ferries to developing propulsion systems for complex warships.
The building blocks of our refreshed strategy are settling into place. Our NSO and Maritime Capability Campaign Office are up and running. Our UK shipbuilding skills taskforce is accepting applications from today, and, in the coming months, we will be establishing a new shipbuilding enterprise for growth. Co-chaired by the chief executive officer of the National Shipbuilding Office and a senior industry executive, it will unite the finest minds in shipping to overcome some of the sector’s toughest challenges.
In other words, today, we offer a powerful vision of what shipbuilding will look like in 2030. It is a vision of a supercharged sector with thousands of highly skilled workers; a vision to make this the country of choice for specialist commercial and naval vessels and systems, components and technologies; a vision that generates the increased investment to level up our nation; and a vision that will spark a British shipbuilding renaissance and inspire even more countries to seek out that “made-in-Britain” stamp.
The framework is ready. Now we will be working with our superb shipbuilders, our supply chains and across Government to help transform this great ambition into a prosperous reality. I commend this refreshed strategy and this statement to the House.
Chris Evans (Islwyn) (Lab/Co-op)
After months of delay, I am pleased that the Minister has come before the House with a shipbuilding strategy.
Now, we all know that the Prime Minister loves a photo opportunity or two, so I am sure that he will enjoy his trip to Merseyside today when he can dress up in his favourite fluorescent jacket and his little hard hat and make his historical analogies to Britain’s proud shipbuilding past. Perhaps while he is there, he would like to explain why the Ministry of Defence has given a £10 million contract this week to a Dutch yard for a vessel that could have been built right here in Britain.
Despite the Prime Minister’s jingoism and nostalgia, the reality is this: the Royal Navy has only 13 frigates and six destroyers. Our Royal Navy is being asked to take on increasing responsibilities, but one in five ships has disappeared from our surface fleet since 2010. It is no surprise, therefore, that the Defence Committee has concluded that the Navy cannot fulfil the full ambition of the integrated review with its current fleet. Our Navy needs more ships, but it is also vital that we ensure that they are built right here in Britain. Our shipyards are crying out for an end to the feast-and-famine cycle of procurement, yet, despite the 30-year pipeline, there is no commitment to ensure that ships are built in UK yards.
Our steel industry and shipyards are national assets, which is why Labour has called for a “British built by default” approach to defence procurement. The GMB has said that Ministers are
“again sowing uncertainty with their disastrous policy refusing to guarantee work for UK yards…No other shipbuilding nation would dream of procuring its own vessels in this way.”
I must ask the Minister this: why does the strategy not promise a “British built by default” approach to defence procurement? Why does the strategy not include targets for UK steel in UK ships? Without either, how can the Minister ensure investment in his stated ambition of local jobs invested in our communities?
The strategy also fails to tackle the deep-seated problems of MOD mismanagement and delivery. The National Audit Office currently rates no major shipbuilding programmes as being on time or on budget, and it is only getting worse. The number of MOD projects rated “amber/red” has doubled and fleet solid support ships have moved from amber to “amber/red” in the past year. Why has the strategy been published without a clear timeline for delivery? How will the £5 billion cover the cost of 150 ships, and is this even new money?
At a time of increasing threats, it is not the time for vanity projects, but the Government, and the Prime Minister in particular, continue to push ahead with a new royal yacht. The Defence Committee had stated that it has
“received no evidence of the advantage to the Royal Navy”
in acquiring it. Does the Minister still think that this is the best way to spend MOD money?
Chasing headlines and photo opportunities on shipbuilding is one thing, delivery, value for money and investment in Britain are quite another. Unfortunately, this strategy fails on all those counts.
Jeremy Quin
I make no apologies for taking time to come to the House with this strategy, because we want to make certain that it is a strategy that works, and that is exactly what we are delivering. There is no jingoism or nostalgia about this strategy; it is hard facts that will deliver for our shipbuilding industry. It is a shipbuilding industry that needs to embrace the modern technology of artificial intelligence and environmental sustainability. That is why we are establishing the UK Shipping Office for Reducing Emissions, with £206 million behind it. It is a strategy that will support our ship buyers with a home shipping guarantee system, in the same way that we support our exports with export guarantees. We have a National Shipbuilding Office that is doing great work and is cohering across Government and delivering for the entire industry.
The hon. Gentleman spoke of warships. We can be very proud that we are putting more money into warships —£1.7 billion will be the spend by the end of this Parliament, doubling our current commitment. The Type 31 frigate HMS Venturer had her steel cut in Rosyth, with HMS Glasgow now well under way on the Clyde. Opportunity exists for Type 32, with up to five entering service with the Royal Navy, and a certainty that we will be going beyond our current level of 19 frigates and destroyers by the end of this decade.
The hon. Gentleman referred to FSS ships, which he knows will have a very substantial element of UK build. They are on time to be delivered within a couple of years of the procurement. We are doing our utmost to ensure that we derive value from this strategy and that it will deliver for Britain.
The hon. Gentleman asks why we cannot have a “build in Britain” strategy. As he knows, that is exactly what we do for warships, and it is this Government who have extended that to say that, for every ship being acquired by the MOD, we will make a case-by-case examination to see whether that needs to be a build in Britain. We have broadened that scope.
When we go beyond defence and warships, we cannot, on the one hand, say that we will support the international rules-based order, yet, on the other, ignore rules organisations such as the World Trade Organisation. We need to work within those rules to get the maximum value for our country, which is exactly what the NSO will do. We have a programme of 150 vessels, £4 billion of support going into British shipbuilding over the next three years, and exciting opportunities that our industry can follow.
Mr Mark Francois (Rayleigh and Wickford) (Con)
The British-built Type 45 destroyer is arguably the best of its class in the world, but it has been plagued by persistent problems with its propulsion system. The Ministry has a “put right” programme, but it will not be completed until 2028. Given that we now have to deter a Russia that is prepared to bomb maternity hospitals, we need those ships fully capable and fit to fight now, not in six years’ time. Will the Minister go from this place back to his Department, review the entire programme and issue an urgent operational requirement, so that if they were required, those wonderfully capable ships can fight to keep our country and NATO free?
Jeremy Quin
My right hon. Friend is absolutely right that the Type 45s are excellent bits of kit. They are one of our bits of equipment that I know our adversaries fear, and rightly so. The concern we always have is balancing operational requirements; as he knows, we have two Type 45s out on station at the moment, so we must make certain that we can bring those ships back in for their power improvement project upgrades. I can confirm that we are looking at ways to accelerate the PIP programme, and I recognise that it is important that we do so.
I also apologise to my right hon. Friend, and I dropped him a note this morning. In response to an intervention yesterday, I said that Dauntless was undergoing sea trials, but I had conflated sea trials with the test and commissioning phase. That is where she is now, but the three new diesel engines are working successfully and she will be embarking on sea trials in a few weeks’ time.
Dave Doogan (Angus) (SNP)
I thank the Minister for advance sight of his statement and commend his fleet-of-foot actions in changing the range from Appledore to Glasgow to Appledore to Rosyth. That is an important correction to make.
The fourth from final paragraph in the Minister’s statement cuts to the chase on this issue in the way that the strategy does not when he states that it is a vision to make the UK,
“the country of choice for specialist commercial and naval vessels and systems, components and technologies”.
Among the 80 pages of waffle and padding, the strategy alights briefly on that point, but not in the way it really should. The strategy also highlights the word “international” 31 times. I welcome the realisation that in a global economy with global supply chains the notion that we can procure every single element in the United Kingdom, while a noble ambition that we should sweat as much as we can, is naive.
I welcome the fact that the national strategy sets out a range of opportunities, which excellent yards all around Scotland are ready to lean into and capitalise on. I am a little sceptical about whether the funding announced in the strategy will have a massive impact across all the yards in the United Kingdom, but I hope it will.
Scotland’s skills, as I am sure the Minister will agree, have been highlighted many times in the past decade, not least on the QE2-class ships, which are outstanding in their quality and performance, the Type 26 under construction in Glasgow and the Type 31 under build in Rosyth. He will welcome, as I do, the export success that has been achieved, with 26 going to Canada and Australia, but he will know that those are in-country builds. That is not to downplay the opportunities of intellectual property and engineering that Glasgow will enjoy from them, but does he agree that really what we need is Type 31s sold to countries that will require them to be built in Rosyth?
Jeremy Quin
First, as I am sure the hon. Gentleman will acknowledge, this is a UK-wide endeavour. There are great assets and skills in Scotland, and I am delighted that this week, I think, we have signed a lease to ensure that there is space in Edinburgh for part of the National Shipbuilding Office to be based there. This is a national endeavour, delivering for the whole of the UK. He is right that £4 billion is a lot of money and we want it to go further by winning export orders.
The hon. Gentleman is right that the Type 26 exports to Canada and Australia are a solid bit of progress. It is right to say that they will support thousands of jobs and design is incredibly important, as are many of the subsystems often used by overseas purchasers, even as they do a lot of work on the frigates themselves. We will learn from them as well as their learning from us.
On Type 31 and export, there has been great news: first the work with Indonesia and secondly the down selection last Friday by the Polish navy of Type 31 or Arrowhead. That is an extremely important step forward and I am very proud to have been part of it. I spoke to my Polish opposite number on that and other topics this morning. It would be great if we could also sell Type 31 to countries that do not have the capacity to build themselves, and do that work in Rosyth or elsewhere. That is a grand ambition. However, I am delighted that our design, our subsystems and our skills are being recognised in the export orders we are already winning.
Greg Smith (Buckingham) (Con)
I warmly welcome my hon. Friend’s statement. I am sure he has been glued to the Transport Committee’s current inquiry into fuelling the future, where we have heard evidence about a plethora of new, cleaner fuels being developed for use across the transport sector. With the £206 million he has announced for the UK Shipping Office for Reducing Emissions, may I urge him to give as much regard to the cleaner fuels of the future as to the tech being developed on vessel?
Jeremy Quin
Absolutely; I thank my hon. Friend and look forward to the conclusion of the Select Committee’s work. He is right about fuelling for the future, and I have no doubt that my colleagues in the Department for Transport will place a significant emphasis on exactly those issues. They certainly did in the first round, with the £23 million of the clean maritime demonstration competition, which had 55 awards and was oversubscribed. I know many of the R&D suggestions coming forward were in exactly that space, which offers a great opportunity for the future.
Mr Kevan Jones (North Durham) (Lab)
I draw the House’s attention to my non-pecuniary interests entry in the Register. I welcome the Minister’s statement. In his original report, Sir John Parker emphasised the drumbeat of work and regular orders that is important for yards—but that means orders. The Minister’s own Department, in the past few weeks, has awarded a £10 million contract to a Dutch yard, even though I warned him about that several months ago. He has given no commitments on the FSS, and the Border Force and the Home Office are looking at procuring boats from the Dutch, too. No other country does that. We need a full commitment from Government to ensuring that when those orders are procured, they are procured in UK yards. They used to hide behind the European Union, but they can no longer do that. I understand that Ministers are now hiding behind some international trade issues, but no other country has this problem.
Jeremy Quin
The right hon. Gentleman and I did have a discussion across this Dispatch Box regarding the order, and his intuition proved correct. There was a competition process, and he proved to be correct in his assumption, although I emphasise that that was not a new build of a new vessel, but a requirement for the Royal Navy to have an existing vessel that it could practise some new developments on. It went into the market as a competition and that is how it ended. They fine-tuned the competition to ensure that it was fully fair, and we got that result.
I know the right hon. Gentleman has been a regular advocate of an FSS build in this country. FSS is proceeding and it will be substantially built. I am trying to remember exactly when the two years starts—I believe it is two years from the start of the manufacturing phase but, if it is not, I will write to him and leave a note in the Library.
On the point about the WTO rules, we do not take them lightly and it is right that we work within them, but that does not mean that we do not do everything in our power to maximise the benefits to British shipbuilding. That is what the National Shipbuilding Office has been set up to do, and that is what this refresh is about: whether on shore, on the home shipbuilding guarantee or on skills, we must ensure that we win, that we succeed and that we can compete with and be just as productive as other northern European yards.
James Sunderland (Bracknell) (Con)
I, too, welcome the statement from the Minister, which is excellent—what is not to like? This is about jobs, livelihoods, R&D, technology, self-sufficiency, investment and exports. I welcome the growing imperative towards a “build it in Britain” strategy. That is very important. Given our proud shipbuilding pedigree in Wales, England, Scotland and Northern Ireland, does he agree that this is great for the Union? Moreover, noting that we are a proud seafaring member of the United Nations P5 and of NATO, does he agree that we are better off together?
Jeremy Quin
I absolutely agree that we are better off together. I agree with my hon. Friend that we should build in Britain; that should be the result of this refresh. We should be not only winning in Britain, but winning export orders overseas, due to the quality of our products and ideas and the productivity of our manufacturers. I agree with all that in the context of the United Kingdom build. That is a huge emphasis and, as Scottish yards have found, whether with the British Antarctic Survey or Babcock, having the weight of the Royal Navy—a benchmark Navy—behind them and the UK Government in full support really does help to bring in those export orders. We are committed to jobs, skills and infrastructure the length and breadth of the UK.
Sarah Champion (Rotherham) (Lab)
I welcome the Minister’s statement about the commitment to shipbuilding. May I urge him to do all he can to make sure that the ships are built in Britain, using British steel? In Rotherham, we make world-leading steel and we are the only place making speciality steel. If he could make that commitment, it would give real security to the industry.
Jeremy Quin
In the same way that we have that pipeline of 150 vessels, as the hon. Lady knows, we always set out the pipeline of what is coming up imminently to help steel manufacturers in the UK to know where the opportunities are. With some ships—for example, the carriers—a huge proportion of the steel was from UK sources. It does vary according to the technical specification. However, I am absolutely convinced of one thing: if we can increase the amount of shipbuilding in Britain, the amount of UK steel being used will increase proportionately as well.
Lee Anderson (Ashfield) (Con)
This is welcome news and I thank the Minister for his statement, but does he agree that these warships should be built in Great Britain by great British workers, using great British steel, and—the bit that will upset the Opposition—using great British coal to make that steel?
Jeremy Quin
I feel that today I have trod on the toes of many Departments in bringing forward many policies from the Department for Business, Energy and Industrial Strategy, the Department for Transport and the Department for Education, which are going to do a great job for British shipbuilding. I am not going to plunge into coal—I will leave that to my colleagues—but I agree 100% that warships will be made in this country by British shipyards doing a great job, as they always have done, in supporting the Royal Navy. The more UK content we can have in those ships, of all forms, the more I welcome that.
Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)
In 1941, Winston Churchill embarked on HMS Prince of Wales to meet President Roosevelt and sign the Atlantic charter. That was a battleship—a warship. In 1947, the royal family embarked on HMS Vanguard to start their South African tour. HMS Vanguard was a battleship—a warship. May I suggest to the Minister that it would be better to spend the cost of a Type 31 frigate on another Type 31 frigate than on a national flagship?
Jeremy Quin
I respect the hon. Gentleman’s views. I remind him that the cost of the national flagship, spread over four years, is about 0.1% of the MOD’s overall budget, so this does not break the bank; it is a relatively small proportion of the overall budget. The ship has a job to do. It is not a matter of being a royal yacht, as the hon. Member for Islwyn (Chris Evans) suggested earlier—it is a national flagship with a job to do. A huge proportion of the most successful cities on earth are on the coastline. It has a job in marketing and spreading the word for global Britain. I think it will be a great success. People decry it now, but I have no doubt that in five years’ time they will be saying it is great and in 30 years’ time they will not be able to imagine us not having one.
Brendan Clarke-Smith (Bassetlaw) (Con)
I thank the Minister for his excellent statement. Does he agree, though, that we should not just rely on domestic demand to drive investment in British shipbuilding but look to sell more abroad, as with, for example, the contract Babcock secured with Poland last week?
Jeremy Quin
My hon. Friend is absolutely right. A lot of work went into that. I spoke to my Polish opposite number only this morning. The Poles are delighted by what they are getting. The Arrowhead Type 31 is a fantastic frigate that will do brilliantly for the Polish navy, which works very closely with the Royal Navy in developing these ideas. We have plans around the rest of the world with our allies and our friends to support their capabilities and at the same time to support design and build here in the UK.
John Spellar (Warley) (Lab)
The Minister prays in aid of his case international rules, but surely that requires international agreement, conformity and consensus. The Government used to claim that the issue was EU rules which no other EU country followed. Then they claimed it was WTO rules. Now it is the international order. Now in the statement they have declared the fleet solid support ships to be warships. Frankly, the last veil has been ripped away and his policy is naked to the world. Why will he not declare that they will now buy British first?
Jeremy Quin
We will be buying British in so many ways among those 150 vessels, but we will be doing that not because we have retreated into a narrow protectionist hole but because the design, innovation and skills in this country will be second to none as we work through the benefits of this refresh. The right hon. Gentleman is trying to hide behind the rules. I am trying to say: let us look at the rules to make certain they work and work in the interests of this country. That is why we have the NSO and SHORE. It is why we will have the home shipbuilding credit guarantee. We are finding ways to assist and to ensure—this is the most fundamental point; I know he wants this as much as I do—that our shipyards are as productive as every other shipyard in northern Europe. We are not there yet, we need to get there and we are determined to make that happen.
Brendan O’Hara (Argyll and Bute) (SNP)
My constituency has 23 inhabited islands and therefore ferries are never far from my mind. Babcock is the site of a state-of-the-art advanced manufacturing facility currently manufacturing Type 31 frigates. Does the Minister agree that this expert workforce are ideally placed to design and to manufacture specialist vessels that could serve Scotland’s island communities, and indeed those across the UK, for many years to come?
Jeremy Quin
I certainly agree that there are great skills and great design capacity in Rosyth. I have seen that for myself. I went there to see the new shipbuilding shed, which is a fantastic bit of work. There is a great workforce and a great sense of optimism, quite rightly, in the yard. From memory, the ferries contract has been awarded elsewhere by the Scottish Government, and it has not been a happy situation, so I would not wish to impinge on their personal grief. But are there good skills in Scotland that could be used, and is Babcock a good option? I would say so, but it is not for me to award these contracts.
Kate Osborne (Jarrow) (Lab)
While communities across the north such as those in my own constituency recognise and appreciate industrial investment in places that share a proud industrial heritage built by generations of craft, skill and dedication, does the Minister recognise that his party was responsible for the decimation of our shipbuilding industry over many years? I join hon. Members across the House in asking him to commit to UK shipyards such as A&P Tyne in my constituency to secure these jobs. I also ask him to commit to involving and consulting the trade unions in the new national shipbuilding strategy.
Jeremy Quin
I and the trade unions I have met, particularly on the Clyde, have the same sort of vision for the future of our national shipbuilding endeavour. That is to have those high skills and to have a workforce who are trained, effective and incredibly proud of what they do, which I know is the case today. A huge number of manufacturing jobs were lost under the last Labour Government; I am afraid that the decline of national shipbuilding has not been under the purview of one party or another. But this party and this Government are determined to reverse that, and we do so by ensuring that we can compete effectively on the world stage and that we have the skills, the innovation, the R&D and the productivity. That is what this refresh is about. We will be winning, and winning well, on the international stage. I know the hon. Lady is as keen on that as I am.
Jim Shannon (Strangford) (DUP)
I thank the Minister for his statement and very much welcome it. There is, as he knows, a great tradition and history of shipbuilding at Harland and Wolff in Belfast in Northern Ireland. It is critical that we in Northern Ireland play a central role in the national shipbuilding strategy. Can he confirm that Harland and Wolff in Belfast will have an important, practical, physical role in that strategy, and that financial benefits related to wage packets and so on will come as a boost for the Northern Ireland economy, which will be a central objective for us in getting the benefit of this strategy as well?
Jeremy Quin
It is fair to say that I am very excited by the prospects of Harland and Wolff. It is great to see a great shipyard with a terrific history hopefully sparking back into life as part of our renaissance across the UK. I am not going to be prescriptive about what yards and what procurements will be involved, as that would be wrong on all kinds of levels, but we have 150 vessels coming through over the next 30 years and £1.7 billion of procurement for MOD vessels by the end of this Parliament. There is lots of opportunity, and I wish everyone well in going for it.
Defence Supplementary Estimate 2021-22
Jeremy Quin Excerpts(2 years, 2 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
John Spellar
My right hon. Friend is absolutely right. It is vital to have a well-established industry to be able to respond to a crisis. The Ministry of Defence and the Treasury need to break out of the ideological straitjacket that states that domestic industry does not matter and we can buy from anywhere in the world. That is a hugely important change.
The Minister for Defence Procurement (Jeremy Quin)
In fairness, I must draw the right hon. Gentleman’s attention back to the DSIS—the defence security industrial strategy—in which we fundamentally changed our process of procurement. We have a new partnership with British industry, and in discussions with them over the last few days they have been extremely forward looking, as I know he would wish.
John Spellar
I would welcome a bit more detail from the Minister as to the nature and engagement of those discussions. I was talking to a representative from the industry only yesterday, and they are seeing precious little coming through. It is not happening in any way on the same scale or intensity as in Germany. We could argue that Germany is doing some catch-up, but it is really engaging with its industry. As my right hon. Friend the Member for North Durham (Mr Jones) has said, we give away huge orders and get little or nothing in return. Even now, the Minister’s own Department refuses to commit to building the fleet solid support ships in the UK, and his colleagues in the Home Office are giving an order for new Border Force vessels to a shipyard in Holland.
Peter Grant (Glenrothes) (SNP)
I was not convinced that I should take part in this debate, because I am possibly the least expert on defence matters in this Chamber, but I do have some comments to make.
Let me begin by saying that I do not think that asking very, very hard questions about defence spending on behalf of any of our armed forces is in any way disloyal to those who put their lives on the line. In fact, I would suggest the opposite, because, sometimes, it is our responsibility to ask the questions and to shout about the concerns that serving members of the armed forces, for obvious reasons, are not allowed to express publicly.
I wanted to speak in this debate because we can argue—no doubt we will continue to argue—about how much the defence budget should be each year. We have already seen the beginnings of an argument on the Government Benches about how much of that should be spent on small equipment, how much should be spent on major equipment and how much should be spent on people. The reality is that there will seldom be enough to spend as much as we would like to on all three areas. What concerns me is that, for far too long, the huge amounts of public money that have been spent by the Ministry of Defence have not been well spent or well managed. That means that, for the amount of money that is put into the defence budget, we do not get the number of soldiers, sailors and air personnel that we could get. We do not get the equipment that we should get, and if we do get it, we do not get it on time.
I have been looking at recent reports from the National Audit Office and from the Public Accounts Committee, which I have had the privilege of sitting on for the past two years. In June 2021, the National Audit Office published a report entitled, “Improving the Performance of Major Equipment Contracts”, because it was picking up on a catalogue of failures, of late delivery, of equipment being delivered that was not fit for purpose, and of contracts going hundreds of millions—sometimes billions —of pounds over budget. It found that in eight of the 19 major programmes under way at the time, the senior responsible owner, the military person with direct responsibility for delivering on that project rated their delivery confidence as “amber/red” or “red”. In other words, the people charged with the responsibility for delivering those projects were not convinced they could deliver what was needed where it was needed and when it wasneeded.
The Public Accounts Committee picked up on that report and took further evidence from the MOD, and our report was published in November 2021. We identified, for example, that the contract for four Astute-class attack submarines was more than £1 billion above budget and the Queen Elizabeth-class aircraft carriers were £2.75 billion over budget. It is easy to look at those numbers in the context of the total MOD budget and say that none individually is a huge percentage, but when we think what £3 billion, £4 billion or £5 billion could do to improve the accommodation that service personnel are living in, for example, and what that would do for morale, that waste of public money is simply inexcusable.
The Committee made a comment that really should have rung alarm bells throughout Whitehall—bearing in mind that this is a Committee where, by its nature, the Government have a majority:
“We are deeply concerned about departmental witnesses’ inability or unwillingness to answer basic questions and give a frank assessment of the state of its major programmes.”
In other words, there was a cultural problem at the highest levels of the MOD and they were not convinced that the Public Accounts Committee, on behalf of this House, had the right to ask such questions.
The hon. and gallant Member for Plymouth, Moor View (Johnny Mercer) said that he regarded parts of the integrated review as dishonest; I must say that some of the financial planning documents that the MOD continue to publish could well be given the same descriptor, because they simply do not give an honest and frank view of the challenges it faces in being able to afford some of its plans over the next 10 years. I mentioned improving accommodation for service personnel, and that was not a random example.
Jeremy Quin
I am grateful for the hon. Gentleman’s comments about some of the decisions made by the previous Labour Government, particularly in relation to the aircraft carriers, although I would not describe having those two aircraft carriers as a waste of Government money. They are an extremely valuable addition to our defence and have an extremely good job to do. I take issue with the idea of any document produced by the Department being, as he was implying, dishonest. We have an equipment plan now that has not been deemed unaffordable by the NAO. For the first time in many years, we are balancing our books and delivering on our programmes.
Peter Grant
I am glad the Minister mentioned the affordability of the equipment programme. I think that plan is dishonest if it describes itself as affordable, for reasons that I will come on to later.
Dave Doogan (Angus) (SNP)
I wish to thank the right hon. Member for Warley (John Spellar) for securing this debate. It is an important debate, focusing as it does on the state’s ability to defend the people of these islands, albeit under the current constitutional arrangements. Sovereignty is the precious prize that elevates countries from the ignominy of sub-state status. We see the value of that with the brave actions of Ukrainians, fighting with everything at their disposal to protect their sovereignty, their independence and the freedom of their people, and all power to them in that battle.
Value in defence terms can be for some an abstract concept, especially in times of prolonged peace at home, but in so far as that has generally been the case for the past 75 years, we should wake from that complacency now, as democracy fights for its very survival in the cities of Ukraine. We see in that conflict the criticality of having the right equipment at the right time in the right place. That necessarily turns the spotlight on the institutionally incompetent defence procurement dynamic with which the UK is encumbered. Even the Treasury does not trust the Ministry of Defence to manage its finances effectively, and categorises it in the third quartile of Government Departments for financial management and capability. I can only assume, therefore, that there is nobody in the fourth quartile.
Any one of the MOD’s headline failures would represent a multi-billion pound betrayal of the taxpayer, but the Ministry of Defence has a veritable conveyor belt of these debacles, from Nimrod to Chinook, through Warrior to Ajax. There will be a lot more said about Ajax tomorrow, but it really takes the biscuit in terms of absolute dysfunctional defence procurement. Creative accounting with rose-tinted projections, which plan for undetermined savings to accrue to the MOD’s balance sheet at some unspecified point in the future, is the culture that manifests claims that we will see the plan come in £4.3 billion under budget—no detail, no plan.
The National Audit Office report on the equipment plan states that the MOD has been
“over-optimistic in their assumptions…of targeted savings”
and has identified a number of costs savings that have no plan as to how they will be achieved—£4.2 billion of extra spending that the MOD has not included. The MOD’s own Cost Assurance and Analysis Service produced an independent assessment of the cost of projects making up 58% of the plan’s costs this year and concluded that they are likely to cost £7.6 billion more than projected.
It is expected that the Dreadnought programme—the largest one in the plan—which is already delayed by six years, will cost an additional £2.6 billion. Early business cases for the new medium-lift helicopter and Future Commando Force show that those programmes are currently underfunded. In the case of the new medium-lift helicopter, Industry primes are currently waiting for the MOD to behave like a procurement organisation that has a clue about what it wants, or even when it wants it—but that is in vain. Despite the taxpayers’ large budget increase to the Ministry of Defence, the equipment plan will go over budget in the next few years of the plan. Ministers are fooling nobody when they discuss how they will make savings somewhere, somehow, over the next 10 years.
On personnel, currently the Army’s target strength will be cut from 82,000 to 73,000 by March 2025, and other top-level budgets must make savings by 2030 equivalent to reducing their count by 6,350, while the cost of the MOD’s civilian workforce needs to be lowered by 10% by March 2025. That finger-in-the-air cost cutting is consistent with neither basic resource management principles, nor the new threat environment faced by the west. The Department’s financial plans once again assume further unspecified workforce cuts of £2.5 billion by 2030, but it has not yet announced how it intends to achieve that, and that almost certainly does not take into account inflationary pressures on either pay or costs of remaining staff.
Armed forces housing is in a shocking state, as other right hon. and hon. Members have stated. Of the armed forces members inhabiting single accommodation blocks, just under half are satisfied with their accommodation and 36% live in poorer-grade accommodation. Despite that, the MOD has failed to invest in adequate housing, and the NAO described its planned investments as not sufficient even to prevent further deterioration in the estate, much less to improve conditions for personnel. If the MOD truly wishes to make the Army smaller but more efficient, it needs to invest in making it a more attractive destination for potential recruits, and shabby accommodation is not a particularly good place to start.
Scotland currently has 2,000 fewer soldiers stationed there than we could expect given our population share, which is doubtless a function of the recruitment issues facing the Army. The range of causal factors is not limited to accommodation, but includes remuneration. Scotland’s progressive tax system mitigates that to some extent, with rank and file often paying less tax in Scotland, while those who live off estate in Scotland pay less council tax on average, and of course they all benefit from free prescriptions.
The financial chaos leading to flip-flopping on base closures and disposals, selling off land at RM Condor in my Angus constituency and then back-pedalling on that, is not helpful either. What is the future for Redford barracks, Fort George and HMS Caledonia, and how long will the MOD stick with today’s vague disposal plans? This culture leaves communities reeling from uncertainty and saving plans that are volatile and not credible.
Scotland has 32% of the UK’s landmass and 63% of its maritime area, yet only 7% of the defence personnel, and no surface warships are stationed in Scotland. That means that when Russia comes knocking on Scotland’s door, the Royal Navy is busy at the other end of this island and takes fully a day to engage.
Jeremy Quin
I have been containing myself during the hon. Gentleman’s speech, because I know there are other contributions to get through before I have my own go, but I cannot let him say what he has just said about the Royal Navy. It is there to protect the whole of the United Kingdom and our interests overseas. We have a huge commitment to the High North going on as I speak. We will also have the whole of our submarine fleet based in Scotland in the future, including our continuous at-sea nuclear deterrent, which is so vital to our interests right now.
Dave Doogan
There is a lot of chest-beating about the nuclear deterrent, but much less discussion about the cost of it. We have heard from hon. and gallant Members how much they would like to see numbers in the Army go up, but they do not talk so much about the cost of the Defence Nuclear Organisation, which is 50% higher than that of the next department, the Army. They are not so focused on that cost. Incidentally, I note the Minister in his intervention did not point out which surface warships there are in Scotland, because there are none.
Chris Evans
I think the hon. Gentleman has just written my speech for me. If he will allow me, I will develop that argument further.
Any increase in defence spending would benefit the UK economy. If done well, taxpayers’ money can be spent in a way that enables more apprenticeships, the growth of small and medium-sized enterprises, and for the UK to be a world leader in design, innovation and engineering. However, mismanagement and delays of contracts, or contracts being awarded to foreign companies, will damage the UK defence sector. Unfortunately at present, public money is not being used in a way that brings the most benefit to the UK. Without steady investment and supply of contracts, British shipyards, British aerospace and, ultimately, British jobs will suffer.
When I speak with industry representatives, they tell me they want fairness, not favours; all they ask for is a level playing field. UK bids are competing in a race to the bottom with international companies that enjoy state backing. The feast and famine cycles of defence contracts leave British companies unable to prepare, or to sustain investment in apprenticeships and jobs over a long period of time. If these companies suffer, we lose our domestic defence manufacturing sector.
Labour supports the UK defence industry, which is why we believe in a “British built by default” approach to defence procurement. Our shipyards and our steel industry are national assets, and we need to see a clear plan from the Government on how we enhance these capabilities.
Concerns have been raised by the National Audit Office, the Defence Committee and the Public Accounts Committee about the running of the MOD. Now more than ever, at a time when European security is most under threat, Ministers must ensure that the deep-rooted problems in the MOD are urgently addressed. As the NAO suggests, the Government’s new equipment plan still fails to ensure that our armed forces will get all the equipment they need. Sadly, value for money for the British taxpayer is not being guaranteed. Then, of course, there is the Ajax-shaped hole at the heart of the British Army’s future, which I am sure we will hear more about in the coming days.
In 2020, Labour welcomed the Government’s extra £16.5 billion investment in defence spending, with more scope for high-tech research and development, but the Government’s plan only papers over the cracks in the MOD’s budget. Too much of that new money will be swallowed up by the MOD’s budget black hole. The National Audit Office also states that too little has been done to reform the MOD’s controls in order to deliver this plan on time and on budget. There is also no plan to deal with massive MOD waste, despite at least £13 billion of taxpayers’ money being wasted through MOD mismanagement or misjudgment since 2010, with £4 billion wasted in the past couple of years alone while the present Defence Secretary has been in post. Unfortunately, it all points to the conclusion that the MOD is a uniquely failing Department.
If wasted expenditure had been avoided or reduced, funding would have been available to strengthen the UK’s armed forces. There would have been no need for the cuts to troops, planes, ships and equipment forced by financial pressures. For example, in last year’s integrated review, the Government cut main battle tank numbers by a third. Restoring the Challenger fleet to full strength would cost an estimated £430 million, equivalent to the money wasted by the MOD.
Jeremy Quin
As ever, I am listening closely to the hon. Gentleman’s remarks, and we believe the £4 billion figure is wholly spurious. I seem to recall that, when we cut assets, the document called it waste, and when we invested in assets, that was also waste. It is a very odd document.
Chris Evans
I am very pleased and quite proud that the Minister has looked into that document so well—it shows his due diligence. However, many of the figures in the waste dossier he refers to came from the National Audit Office’s figures. I was a member of the Public Accounts Committee for five years, and sat through many of those uncomfortable hearings with Defence civil servants. It is not just land capabilities that have suffered: last year’s defence Command Paper announced that the entire fleet of Hercules aircraft would be scrapped. At a cost of about £150 million per aircraft, the fleet of 14 would have cost £2.1 billion, comparable to the amount of money that the MOD has wasted on write-offs since 2010.
I am sure Government Members will ask, “What would Labour do differently?” In Government, we would commission the NAO to conduct an across-the-board audit of MOD waste. We would also make the MOD the first Department subject to our proposed office of value for money, with a tough regime on spending decisions. The Public Accounts Committee concluded last year that the MOD’s procurement system is “broken” and “repeatedly wasting taxpayers’ money”—those are the independent Public Accounts Committee’s words, not mine. With any spending announcement on defence, a similar announcement must be made outlining the methods for tackling waste.
As the Minister refers to, Labour’s dossier on waste in the MOD between 2010 and 2021 found 67 officially confirmed cases of waste, the cost of which could have been reduced by better management. All defence projects carry a degree of financial waste, but the level of waste in the MOD goes far beyond this. Some examples that Labour has uncovered are simply embarrassing, such as £64 million wasted on admin errors. When waste on this scale is occurring alongside cuts to our armed forces and cancellations of, or reductions to, armed vehicle projects, Ministers must ensure the chronic mismanagement within the MOD is immediately addressed. Can the Minister guarantee that our troops will get the right kit when and where they need it, and does he accept that defence spending plans are forcing further cuts to our personnel?
Given the threat that Europe now faces from Vladimir Putin’s aggressive regime, it is clear we must do all we can to halt the cuts to our armed forces. Now is the time to reassess our defence spending. We must ensure that our armed forces have the equipment they need, when they need it. We must build a strong defence industry and use public money effectively. We must respond to the new threats in Europe. Labour stands ready to support an increase in defence spending, support our NATO allies, and—above all—support the brave men and women who are serving in our armed forces.
The Minister for Defence Procurement (Jeremy Quin)
It has been a fascinating debate, ably kicked off by the Deputy Chairman of the Defence Committee, the right hon. Member for Warley (John Spellar). He, like so many of the Labour contributors to this debate, is part of the respectable wing of his party. It is, I think, a great relief to the country that we have my right hon. Friend the Member for Uxbridge and South Ruislip (Boris Johnson) as our Prime Minister at this time, rather than the proposition presented to us by the Labour party at the last election. The leadership he is showing in these difficult circumstances is exemplary.
This has been a fabulous debate, and it is a sadness to me that the time allocated is in no way sufficient to reflect the passion of the contributions and their quality, the huge admiration we have for our serving personnel, or the vital importance of what my hon. Friend the Member for Tonbridge and Malling (Tom Tugendhat), the Chair of the Foreign Affairs Committee, referred to as this critical insurance premium for our country.
As my hon. Friend the Member for West Aberdeenshire and Kincardine (Andrew Bowie) said, and as my right hon. Friend the Member for Rayleigh and Wickford (Mr Francois) referred to so poignantly in his point of order, it is so shocking that we are debating these issues while war rages in our own continent—that ghastly barbarity to which my right hon. Friend alluded.
Like so many speakers this afternoon, I pay tribute to the extraordinary defence of their country that has been mounted by the Ukrainian forces and civilians. Last summer, I was privileged to attend the 30th anniversary of Ukraine’s freedom celebrations and saw President Zelensky among his own people. I would never have imagined then the emotional scenes we saw yesterday in this House. As the integrated review recognised almost a year ago, the view that post the Berlin wall coming down we would enjoy a perpetual peace dividend could not and should not be assumed. Old aggressors have been reanimated and new dangers have arisen, requiring a forward-leaning and agile armed forces. We need to be prepared to defend and deter threats emanating from Russia and from states that violate international law in such reprehensible and egregious ways.
Mr Francois
We have seen in Mariupol today what the Russians are truly capable of. We must now deter further adventurism. On that point, will the Minister conduct an urgent review of the operational availability of all our equipment? Where things need to be brought up to scratch quickly, will he issue urgent operational requirements—UORs; he knows what I am talking about—to do whatever we need to do to have all our equipment on top line, should we need it, and can we start with Type 45?
Jeremy Quin
I reassure my right hon. Friend that we are absolutely focused on making certain that we have proper operational availability. On Type 45, as he may be aware, Dauntless has come out of the power improvement project and is now on sea trials. Daring has gone into Cammell Laird. We are looking at ways we can advance that process, but I would say that we have two Type 45s out on station doing their job even as I speak.
As the integrated review and defence Command Paper set out a year ago, Russia poses
“the greatest nuclear, conventional military and sub-threshold threat to European security.”
The IR also emphasised the need to strengthen NATO, which is critical to preserving our security and prosperity in the Euro-Atlantic area.
Bob Stewart
I thank my very good friend the Minister for allowing me to intervene on him. The point is that the IR is broken. We clearly need more people in our armed forces, particularly in the infantry. If there is a message from the House, which seems to be in agreement, it is that we need to spend more on defence—up to 3%—and to reverse the cuts, before it is too late, to the infantry. I declare my interest as an ex-Mercian Regiment officer.
Jeremy Quin
I recognise what my right hon. and gallant Friend says and his particular interest in the 2nd Battalion the Mercians. I will not repeat everything that my right hon. Friend the Defence Secretary said in his statement today, but I ask him to bear in mind what we have done over the past two weeks to show our commitment from the eastern Mediterranean, to the high north, to Estonia. By land, sea and air, we have proved our ability to act fast to maintain deterrence alongside our NATO partners.
To reassure my hon. Friend the Member for Poole (Sir Robert Syms), one aspect of the IR was the importance of continuing to train and look after the forces of other friendly nations outside of NATO. He is absolutely right that 22,000 Ukrainian troops are defending their nation now, having had the benefit of training with the British armed forces. As the House knows, we have continued to provide defensive weapons to their support. In reference to the Chair of the Intelligence and Security Committee, my right hon. Friend the Member for New Forest East (Dr Lewis), having defence assets is one aspect, but as he rightly alluded to, having intelligence to inform our actions and showing leadership are the multipliers that enable us to play an even greater role within our alliances, of which our support to Ukraine is a prime example.
We are aware of that growing threat. This Government provided defence with a four-year settlement and a £24 billion increase in the defence budget. That money, which takes the annual defence budget to more than £47 billion for 2022-23 and our equipment plan to more than £238 billion over 10 years, enables us to modernise and improve the defence enterprise. The International Institute for Strategic Studies independently confirmed that the UK maintained its position as the second largest defence spender in NATO and the largest defence spender in Europe.
Consequently, to reassure the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) and his Carl Gustaf, in the coming years, the Royal Navy will have new ships as our fleet increases beyond the 19 frigates and destroyers that we already have, with the steel cut for our first Type 31 frigate, HMS Venturer; HMS Glasgow in build on the Clyde; and consideration already beginning of the Type 32s. That will be underpinned by the doubling of investment in the shipbuilding sector over the life of this Parliament to more than £1.7 billion a year.
To the point made by my hon. Friend the Member for Henley (John Howell), we are continuing to invest in the RAF and particularly in cutting-edge capabilities such as the European common radar system mark 2, which is a fantastic radar system, to meet the operational threats of the future. We are also investing more than £2 billion over the next four years in the sixth generation future combat air system.
Finally, but perhaps most importantly given hon. Members’ comments, the Army is receiving significant investment. It may be leaner but it is more agile and will have greater lethality. We are modernising the Challenger main battle tank; my hon. Friend the Member for South Dorset (Richard Drax) is absolutely right that there is a role for tanks on the battlefield of the future and we recognise that. There will be 50 new Apache attack helicopters on top of the investment of more than £3 billion over the next decade in the accelerated procurement of Boxer to help to modernise our fleet and ensure that our Army is better integrated with its NATO allies.
We have established the National Cyber Force. We are spending an additional £1.4 billion over the next decade on space. If anyone believes that investing in those new domains is discretionary, it is not: only last November, in an act of dangerous irresponsibility, Russia tested an anti-satellite missile. We all know how much we depend on space and space intelligence, surveillance and reconnaissance.
Critically, thanks to our defence Command Paper, we have reversed a long decline in research and development expenditure, which has been ongoing since 1989, with £6.6 billion ringfenced for R&D over the next four years. On procurement, I know that hon. Members support the Government’s commitment to maintaining the nuclear deterrent, as shown by the overwhelming majority of this House who voted to renew it in July 2016.
We remain the leading European NATO ally, clearly exceeding our 2% of GDP defence spending target. We will ensure that the extra £24 billion that we have to invest in defence is spent wisely and appropriately. We will also ensure that, as we made clear in the IR, with that £24 billion of extra investment in defence, we will have the armed forces that we require to deter and defend. We are equally determined that our defence investment continues to match the threat of the future. I commend these estimates to the House.
UK Shipbuilding
Jeremy Quin Excerpts(2 years, 2 months ago)
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The Minister for Defence Procurement (Jeremy Quin)
I am sure that the hon. Gentleman recognises that the resources and commitment that we have given to Royal Navy procurement are a real step change and exactly the kind of support that he expects to see delivered to UK shipyards.
Mick Whitley
I accept the point about the budget for defence and for shipbuilding, but when the Secretary of State for Levelling Up, Housing and Communities travelled to my constituency recently, he opted not to visit Cammell Laird. Perhaps he knew that the Government are falling far short in providing shipbuilders with the support that they need; perhaps he knew the welcome he was likely to receive from a workforce who have been failed by central Government for far too long. If levelling up is to become more than an empty slogan, we must recognise the enormous potential of British industry, and of shipbuilding in particular, to drive inward investment, create high-skilled work and build a more prosperous future for left-behind towns like Birkenhead.
As a lifelong trade unionist, I have spoken primarily about what investing in the future of UK shipbuilding means for British workers and industry, but national security must not be ignored. The stakes could not be higher. Putin’s appalling attack on the sovereignty and independence of Ukraine has shattered the peace that our continent has enjoyed for so long and has caused human suffering on a scale that none of us thought we would see again. We simply do not know what the future holds, but the appalling scenes that we are witnessing on the streets of Kyiv and Kharkiv are a powerful reminder of just how important it is that we build up our defence capacity at home. That must begin in our nation’s shipyards.
Once again, I urge the Minister to do everything in his power to ensure that fleet solid support ships and all future defence projects in the pipeline are built and designed in their entirety in the UK. That is the very least that our shipyards deserve.
The Minister for Defence Procurement (Jeremy Quin)
May I start by picking up on the remarks that the hon. Member for Birkenhead (Mick Whitley) made about Ukraine? His points were well made. In preparing for this important debate, I could not help thinking about my visits to Ukraine on behalf of the Ministry of Defence, which have included discussions about that proud country’s ambitions for its navy and for its shipbuilding enterprises. We are all deeply concerned; our thoughts are with all Ukrainians. I am glad that the hon. Gentleman made those remarks.
I congratulate the hon. Gentleman on securing the debate. He spoke passionately about what the industry has meant to his family, to him and to his community. I know that he speaks from the heart. I am glad that we have had this opportunity to speak before the launch of the shipbuilding refresh; I hope that we will speak again when it is brought before the House.
Shipbuilding is not only important to the hon. Gentleman, but vital to the United Kingdom. As he mentioned, his constituency has produced many of our finest ships. The first screw steamship to cross the Atlantic and the first guided missile destroyer in the UK were made in Birkenhead. So was the RSS Sir David Attenborough—I will stick with that name, if the hon. Gentleman does not mind—which is rightly a source of huge pride for Birkenhead as it does its important work in the Antarctic, even as we speak. I was pleased to hear about the number of applications—although I would like there to be more work for more of them—for the training scheme to work in the yard. It is one of the many brilliant training schemes around the country, and I am delighted that the work that we are all putting in for a successful future for our shipbuilding industry is being reflected in the enthusiasm of people coming forward to take those opportunities.
As a maritime nation, ships have long been the guarantors of our defence, the deliverers of our trade and the creators of endless opportunities for growth and expansion. However, we are conscious that the sector needs to be more resilient and more sustainable if it is to thrive in the 21st century as it has done historically. That is why the Defence Secretary was appointed shipbuilding tsar in September 2019. He has gathered the Government together to drive the renaissance in British shipbuilding and to enhance our position as a global leader in ship design and technology. Since his appointment, we have opened the National Shipbuilding Office, which is working closely with industry to drive transformative change across the whole of our shipbuilding enterprise.
We have brought forward plans through the integrated review and defence Command Paper to double Royal Navy investment in its new vessels to £1.7 billion per annum by the end of this Parliament, delivering the defence that the hon. Gentleman speaks of. We have confirmed our commitments for Type 26, Type 31 and fleet solid support ships, and set out our ambition, including for multi-role support ships and Type 32, among other future procurements. We have changed our policy to ensure that all new Royal Navy vessels, not just aircraft carriers, destroyers and frigates, are actively considered for build, as the right hon. Member for Orkney and Shetland (Mr Carmichael) said. Having sovereign capacity in our country for delivering our own defence needs is absolutely critical. He was right to allude to that. Through the application of social value to tenders, we are making clear the vital importance of driving wider value for the long-term success of our shipbuilding industry.
On exports, I am the first Minister for Defence Procurement in a generation who can help drive success not just in complex warships such as the Type 26, where we are working so closely with our Australian and Canadian friends, but in highly effective vessels such as Arrowhead, or Type 31, and offshore patrol vessels, with contracts already being awarded and opportunities to pursue them globally.
Learning the lessons of the Parker review, to which the hon. Member for Birkenhead referred, our task is to ensure that the existing success of warship procurement in this country is matched with a renaissance that works across the sector. The right hon. Member for Orkney and Shetland referred to the need for us to have successful commercial entities. He is absolutely right. I do a huge amount of work with the Scottish yards, whose input into the defence industry is absolutely vital. It is a pity that he is the only Member from a Scottish constituency present, because we could have had further discussions, but we are talking about the entire UK shipbuilding industry. It is spread right the way across the United Kingdom, and it is important that all of it thrives. I agree with his sentiments.
We will very soon be setting out our plans to go even further, with the publication of our refreshed national shipbuilding strategy. I have no doubt that this strategy will benefit not just our shipyards but the 1,685 registered businesses in this industry spread right across the UK, 99% of which are small and medium-sized enterprises. Our plans have been developed through extensive collaboration with industry, including businesses in the constituency of the hon. Member for Birkenhead, such as Cammell Laird. I would like to thank them for their insight and support.
As part of the strategy, we will be providing a 30-year, cross-Government shipbuilding pipeline, with a huge range of opportunities for UK shipyards. There are vessels of all types, sizes and complexity, creating a baseline of volume to encourage industry investment in facilities, infrastructure, innovation and skills. That means that they will also be geared up to win commercial and export orders as major new global markets emerge, particularly in green shipping.
Given the vast Government order book, other domestic orders and the export prospects being supported by the Department for International Trade, and with the National Shipbuilding Office seeking to maximise UK work wherever possible, I am convinced that British shipyards are likely to be very busy in the coming years.
While the upcoming strategy extends to all types of Government vessels, at its heart remains an ambition to keep strengthening the Royal Navy, and a critical part of that is our fleet solid support ships, to which the hon. Member for Birkenhead referred. That came as no great surprise; I know that this is a subject close to his heart. These ships will not just be a vital part of our formidable future force alongside our new Type 31 frigates, our two magnificent carriers, our next-generation nuclear submarines, our mine-hunting ships and our multi-role support ships; they are also a great example of how taxpayers’ money is being invested in a way that ensures the long-term future of UK shipbuilding.
Our commitment to the fleet solid support programme was outlined in the defence Command Paper published this time last year, and it is supported by the £24 billion uplift to the defence budget over four years. I can assure the hon. Gentleman that this project will be delivered very much in line with the new strategy. In other words, it will encourage sustainable investment to ensure the long-term future of our domestic shipyards. I know he will appreciate the fact that, as we are in the midst of a competitive process, I am limited in what I can say, but we have designed the competition to emulate the success of the ongoing Type 31 frigate programme in Rosyth. This means that while we welcome the opportunity to learn from international best practice, we have also been very clear that a substantial proportion of the build, including integration, will be carried out in the UK. We have had a very positive response from industry, and each of the four consortia bidding for the programme includes substantial UK involvement. The bidders are also required to set out plans to help improve the capacity and capability of the UK shipbuilding sector, as well as how they will contribute to wider social value.
Mr Carmichael
On the question of the future strategy, we know that shipping is going to have to tackle its carbon emissions, and some of the most exciting and innovative work in that sector is now being done in relation to hydrogen as a source of power for ferries and other seagoing vessels. Will that sort of future-proofing be part of the Government’s strategy?
Jeremy Quin
The right hon. Gentleman will forgive me if I do not reveal the full details of the strategy in this packed Chamber this evening, but I can absolutely assure him that it will cover future-proofing and the future of UK shipbuilding. I have mentioned the greener path ahead for the industry, and for shipping in general, and we absolutely wish to embrace that. I look forward to having an opportunity to say more to him about this.
The fleet solid support strategy will create a further major stepping stone to success for our vital shipbuilding industry so that our shipyards will be ready to win work beyond the life of this project, whether that is for Government vessels of any kind, for foreign exports or for domestic orders.
There is a rich and potent future for the industry, and we will be embracing the trends that will make for a successful industry. I hope that I have been able to reassure the hon. Member for Birkenhead, knowing that he would raise the matter, that the fleet solid support programme is being delivered in line with our wider aims to make the sector more competitive and more sustainable. I hope that I have also been clear that we will take every opportunity we can, not just to increase jobs, bolster skills and secure export contracts in the coming months and years, but to truly ensure that we are bringing shipbuilding home. My colleagues and I look forward to being able to commend to the hon. Gentleman and to this House a refreshed national shipbuilding strategy in what I can assure him will be the very near term.
Question put and agreed to.
Defence Equipment Plan
Jeremy Quin Excerpts(2 years, 2 months ago)
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The Minister for Defence Procurement (Jeremy Quin)
I am pleased to place in the Library of the House a copy of the 2021 Defence Equipment Plan Report, which sets out our plans to deliver the equipment needed by our armed forces to defend the country and protect our national interest.
This year’s equipment plan report is one of the most important in recent years as it implements the strategy and financial reset provided by the integrated review, the defence Command Paper and the spending review. The integrated review outlined the evolving nature of the threats we face. This equipment plan sets out how our military capability will evolve to meet these threats within an affordable financial envelope.
This equipment plan sets out how we are funding the capabilities we need, including more ships for the Royal Navy, a new batch of F-35s, a new medium helicopter and a major upgrade to our land equipment. This represents a significant enhancement on last year’s capability plans while, through additional investment and tough prioritisation, we have reversed the £7.3 billion pressure on the plan outlined last year to a surplus.
This year is the first since 2018 when we have entered a new financial year with a funded contingency for the equipment plan. We have funding set aside to deal with urgent operational requirements and funding set aside for future research and development and its exploitation. We have made good progress in the first year of delivery end for the first time in many years, we expect to live within budget without Ministers having to take decisions on savings measures in year or running central savings exercises.
This has been possible by setting a clear vision for the armed forces through last year’s integrated review and defence Command Paper, which has allowed us to retire less relevant equipment and refocus our programme on the kit we need for the future. We are making progress on delivering this change, including cancelling the Warrior sustainment programme and setting out plans for a more high-tech and agile Army as set cut in our recent Future Soldier publication. This equipment plan relies on fewer low confidence efficiency measures than in previous years and our plans to reduce costs are supported by significant investments in acquisition, support and digital programmes to improve the way the Department operates.
We have, alongside capability investments, reversed the decline in defence R and D spend with a £6.6 billion ringfenced commitment. This will help reduce the risks associated with identifying and bringing into development the game-changing future capabilities we will need to meet the future threat.
However, delivering state of the art defence capabilities carries inherent risk. On a plan of this scale and over this timeline there will always be risks to affordability. We are clear-eyed on those risks and set them out in our report. As the National Audit Office have said, the MOD is responsible for some of the most technically complex, risky and costly procurement programmes in government. New, large and complex programmes like the Future Combat Air System, which will deliver the next generation of combat air capability, and the replacement warhead, which will allow us to renew the UK’s nuclear deterrent, are extraordinarily complex endeavours. We continue to carry out and publish our own independent challenge of costings to help us understand and mitigate financial risk. Excluding Dreadnought, which has its own contingency funding, the risk identified in programmes which were reviewed both last year and this reduced by £0.3 billion, showing an improvement in the Department’s costing and management of risk. However, additional risk inevitably arises from new programmes entering the plan, including the warhead programme.
Planning over 10 years is inherently uncertain and we must be able to respond to changing threats and project-specific circumstances. As challenges emerge on programmes which delay expenditure, we will be flexible in accelerating other programmes to maintain momentum and where possible reduce cost. The HM Treasury £10 billion contingency for Dreadnought shields the rest of the equipment plan from changes in annual spend on our largest and most complex programme. We continue to reduce risk through the forward purchase of foreign currency.
New funding has enabled key decisions to be taken and priorities set but this alone is not enough to deliver on time and to budget. Having the right skills, tools, data and processes are critical. The Department has made real progress, which we set out in our report, but we recognise there is more to do. To deliver value for money for the taxpayer we have invested in our acquisition reform programme which aims to improve the speed and agility of our procurement processes and we are working to improve the capability and availability of senior responsible owners for programmes.
The nature of defence means that the plan is not without risks to which we will be agile in responding, however, new funding, a clear vision and a balanced plan mean that this is a very different programme to those of recent years.
Attachments can be viewed online at:
http://www.parliament.uk/business/publications/written-questions-answers-statements/written-statement/Commons/2022-02-21/HCWS611.
[HCWS611]
Oral Answers to Questions
Jeremy Quin Excerpts(2 years, 2 months ago)
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Christian Matheson (City of Chester) (Lab)
The Minister for Defence Procurement (Jeremy Quin)
We recognise the need to manage risk and ensure resilience in our manufacturing and supply chains, including rotary wing. Through past and current investment in rotary wing capabilities, including Wildcat and Apache, and upgrades to Merlin and Chinook, the UK industrial base remains well placed to support existing and future helicopter platforms, and continues to be a market of great interest to our industrial partners.
Grahame Morris
I thank the Minister for that response and I declare an interest as chair of the Unite group of Labour MPs in Parliament. Further to my Defence question of 15 November, when I asked the Minister what steps his Department was taking to ensure the resilience of the helicopter supply chain in the UK, will he now assure the House that, whoever wins the contract, the new Puma-replacement helicopters will be both manufactured and assembled here in the United Kingdom?
Jeremy Quin
As we and my right hon. Friend the Secretary of State have said, the competition for the new medium helicopter contract, to which I believe the hon. Gentleman refers, will be launched very shortly. Given the skills and capabilities in this country and the nature of that competition, I am confident that a very substantial amount of benefit will flow to the UK as a result of that procurement.
Christian Matheson
I also declare an interest and I echo the words of my hon. Friend the Member for Easington (Grahame Morris). We do not want to get into another situation like the one with the fleet solid support ships. Will the Government ensure that the value to the UK of placing the contracts with UK suppliers and UK manufacturers is included and priced into the deal and the contract?
Jeremy Quin
The hon. Gentleman makes a fair point. It is absolutely critical that we ensure that the social value associated with the contract is fully and fairly reflected in the tendering process. He has my assurance that we will do that and, as I said, it will not be long before he will be able to see more on that subject.
James Gray (North Wiltshire) (Con)
I entirely agree with others who have spoken about the importance of British manufacturers producing these things, but we have a very strong relationship with the United States of America and I welcome the fact that we have ordered 50 new Apache attack helicopters and are upgrading our Chinooks. Does the Minister acknowledge, however, that Boeing UK is now the fourth or fifth largest supplier to the MOD and that, as a British manufacturer, it is hoping to export goods—the new aeroplanes—to America soon?
Jeremy Quin
It is indeed, and my hon. Friend is absolutely right that Boeing is a strategic partner of ours. It also invests heavily, and I pay tribute to its work to enhance apprenticeships and its academic work, including in the far north of Scotland from our base at Lossie. It is an important strategic partner that brings value to the UK.
Chris Evans (Islwyn) (Lab/Co-op)
I am going to do something quite surprising and agree with the Secretary of State when he says, of the helicopter competition, that he does not want a “here today, gone tomorrow” supplier. What are the Minister’s plans to ensure that there is long-term investment in the UK helicopter industry, particularly in high-value engineering design and manufacturing jobs; apprenticeships; and enduring skills development in this vital industry?
Jeremy Quin
On the NMH, to which the hon. Gentleman refers, it is likely, given the timescale—we want to have the helicopters in service in 2025 or as close to that as possible—that we will be seeking to procure an existing platform. However, that absolutely does not gainsay the fact that we will want to see real social value created in terms of engineering skills and capabilities in this country. That will be part of the competition.
Neale Hanvey (Kirkcaldy and Cowdenbeath) (Alba)
The Minister for Defence Procurement (Jeremy Quin)
I am delighted that we are en route to the complete remediation of Dalgety Bay. Environmental sensitivities inevitably have a significant impact on the length of time that it is taking to complete the project. MOD and SEPA officials last met formally on 24 November. SEPA also has representatives on site continually to monitor the work that is being undertaken.
Neale Hanvey
I give the apologies of my hon. Friend the Member for East Lothian (Kenny MacAskill), who has been turfed off a train on his way to the House.
I thank the Minister for that answer. The people of Dalgety Bay in my Kirkcaldy and Cowdenbeath constituency have had to put up with radioactive waste on the shore since the second world war. Thanks to the dogged determination of my predecessor, Roger Mullin, and my persistence, work on that began last May. However, the Ministry promised me and the community that it would keep us updated on progress, but we have had nothing from the MOD since May 2021. Will the Minister say why, and make sure that an update is forthcoming?
Jeremy Quin
I can give the hon. Gentleman an update now. As I think he is aware, we assumed that it would take two seasons to do the complete remediation. I very much hoped that it would therefore have been concluded by the autumn of this year. He is aware of the issues with birdlife that ensure that there is only a set period of time in which we can work. We applied for, and got, extended time to work last summer, and we will apply again for extended time this year. I hope that that will be sufficient, but I have to share with the hon. Gentleman that work may not be concluded until 2023. I hope that that will not be the case, but it is possible; we are keeping it under review. I will write further to the hon. Gentleman.
Jane Stevenson (Wolverhampton North East) (Con)
Stephen Metcalfe (South Basildon and East Thurrock) (Con)
The Minister for Defence Procurement (Jeremy Quin)
Over and above the £5 billion already committed to satellite communications, we are investing an additional £1.5 billion in space capabilities. The defence space strategy sets out our focus on intelligence, surveillance, and reconnaissance, satellite communications, space domain awareness and space commander control. This clear strategic direction has been welcomed by industry and allies alike.
Stephen Metcalfe
Space, in all its guises, presents us with an unparalleled opportunity to drive British science and technical innovation, create well-paid and rewarding jobs, boost our economy, and above all defend ourselves. Can my hon. Friend expand on what he has said, and tell the House what the MOD is doing to ensure that we deliver all those opportunities?
Jeremy Quin
My hon. Friend is correct in every respect. That additional £1.5 billion of investment implies very significant space R&D and the jobs, skills and expertise that go with it. It includes investment in things such as ISTARI, our ISR programme, It also includes innovation spending, as part of the £1.5 billion package, and programmes such as Minerva. Through that investment, we are not only ensuring that we meet the threats of the future, but helping to build capability, expertise, skills and jobs that will serve defence and the wider civil space programme.
Emma Hardy (Kingston upon Hull West and Hessle) (Lab)
Mrs Sheryll Murray (South East Cornwall) (Con)
The Minister for Defence Procurement (Jeremy Quin)
As my hon. Friend’s son will be well aware—
Jeremy Quin
I do apologise. I am even more pleased that my hon. Friend’s daughter graces the Royal Navy. She will know of the increasing importance of space to all the armed forces, and I can assure her that we are actively looking at supporting the wider Government ambition to have private companies launch from the UK this year.
Dan Jarvis (Barnsley Central) (Lab)
Jeremy Quin
We are fighting over the privilege of answering my hon. Friend’s question. As my the Minister for Defence People and Veterans, my hon. Friend the Member for Aldershot (Leo Docherty) said earlier, there are 21,000 apprentices in the armed forces at any one time. Also, we are committed to lifelong learning: for five years after people leave the services, they can apply for and get support to retrain. It is a great opportunity for our service personnel, who have terrific skills.
Dave Doogan (Angus) (SNP)
Does the Secretary of State agree that the same esteem, respect and co-operation that the UK enjoys with Australia will be a feature of UK-Scottish relations on matters related to defence and security after independence? Crucially, though, as an independent state Scotland will, unlike today, have a seat at the table and a role in the decision-making process.
Defence Space Strategy
Jeremy Quin Excerpts(2 years, 3 months ago)
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The Minister for Defence Procurement (Jeremy Quin)
Today I am pleased to publish the defence space strategy. This strategy sets out a vision for the Ministry of Defence as a global actor in the space domain. It articulates how the MOD will deliver the national space strategy’s “protect and defend” goal through capabilities, operations and the growth of a space workforce. It also emphasises the value of alliances and partnerships in pursuit of a safe and secure space domain. I am placing a copy of the DSS in the Library of the House.
The DSS explains how the MOD has apportioned its spending review 2020 allocation for space capabilities and activity: £1.4 billion over 10 years, in addition to the £5 billion over 10 years already allocated to our future Skynet satellite communications capability.
The DSS also reinforces all four of the 2021 integrated review’s objectives to: strengthen security and defence at home and overseas; build resilience; sustain strategic advantage through science and technology; and shape the international order of the future.
Attachments can be viewed online at: http://www.parliament.uk/business/publications/written-questions-answers-statements/written-statement/Commons/2022-02-01/HCWS576/
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