Oral Answers to Questions

Peter Luff Excerpts

Monday 13th December 2010 Commons Chamber

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

6. What estimate he has made of the likely effect on the economy of his decision to build two aircraft carriers.

[The Parliamentary Under-Secretary of State for Defence (Peter Luff)]

The construction of the two Queen Elizabeth class aircraft carriers is expected to create or sustain around 7,000 to 8,000 jobs in the tier 1 shipyards of Appledore, Govan, Portsmouth and Rosyth, with a further 2,000 to 3,000 jobs in the wider supply chain. Equipment subcontracts to the value of some £1.3 billion have been placed to date, boosting local economies across the UK. The strategic defence and security review confirmed that both carriers will be built, and we expect that construction work on the programme will continue until late in this decade.

[Catherine McKinnell]

I thank the Minister for that encouraging answer. He may be aware that I have introduced the Apprenticeships and Skills (Public Procurement Contracts) Bill to encourage better use of the public procurement system to increase the number of apprenticeships available. What steps is the Minister taking to ensure that defence procurement increases the number of apprenticeships available, helping to build on skills bases in areas like the north-east, which has a proud history of manufacturing in this sector?

[Peter Luff]

I congratulate the hon. Lady on her initiative, and I can say that defence contractors up and down the country are committed to apprenticeships—and I pay tribute to them for that. It is very important that we maintain the skills base of our defence manufacturing industries, and they will be invited to contribute to the consultation that we are launching shortly on our new defence equipment policy.

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[David Mowat (Warrington South) (Con)]

8. What assessment he has made of the value-for-money of the contract to build two new aircraft carriers for the Royal Navy.

[The Parliamentary Under-Secretary of State for Defence (Peter Luff)]

The strategic defence and security review concluded that a carrier strike capability was needed for the future. The most cost-effective way of delivering that capability from around 2020 is to continue building both the Queen Elizabeth class aircraft carriers, fitting the operational carrier with catapults and arrestor gear to enable the use of the more capable carrier variant of the joint strike fighter.

[David Mowat]

I thank the Minister for that reply. Does he agree that it cannot have been right on the eve of a general election, weeks before we reached the certainty of the strategic defence review, for a large UK supplier to enter into a contract with the Government? It was very difficult to break, so it effectively prejudged the result of the defence review. Is the Minister happy that BAE Systems acted in good faith in this matter?

[Peter Luff]

Cancellation costs are a very complex area. The contract for the aircraft carriers was related to the programme of work, agreed by the previous Government under the so-called terms of business agreement, to sustain the ability to design and integrate complex warships in the UK. Over the next few years, the QE class is providing that work load, with a Type 26 global combat ship taking over later in the decade. If we were to cancel the contracts for the QE class under TOBA we would need to provide replacement work, which would come at a cost, compounding the inevitable costs of cancelling the QE class ships, one of which is already well under construction. This brings us to the position so clearly outlined by the Prime Minister in the SDSR announcement. I would not point the finger of blame so much at BAE Systems as at my predecessor, who acquiesced in the delay of the carrier contract, which led to £767 million of increased costs in the last financial year alone, and a total of £1.56 billion over the life of the programme, making his peerage just about the most expensive in British political history.

[Mr Speaker]

May we have shorter answers from now on, please, and not long statements?

[Thomas Docherty (Dunfermline and West Fife) (Lab)]

As the Minister knows, the best way of obtaining value for money for the “cats and traps” is to fit them during the construction of both Queen Elizabeth and Prince of Wales. Can he update us on the progress made by his civil servants in discussing the issue with Babcock, and will he also tell us when he will report to the House on the final decision?

[Peter Luff]

The hon. Gentleman has a habit of asking me questions that I cannot answer. No decisions have been made yet, although they are currently being made. However, I can reassure him that we are considering carefully which system of “cats and traps” should be fitted to the carriers. Once again, he has made a point very well on behalf of his constituents.

[Mr David Crausby (Bolton North East) (Lab)]

Two new aircraft carriers fitted with joint strike fighters will put Britain’s naval strike force in the premier league, but how can the Minister justify the absolute necessity in the longer term if he is prepared to accept no aircraft cover in the shorter term?

[Peter Luff]

I am amazed that the hon. Gentleman has even asked that question. It is clear that we can accept the capability gap now to ensure that we have a truly capable carrier in the future—and it will be a truly capable carrier thanks to the decision to change the carrier variant, which will significantly enhance the power and projection of the vessel.

[Andrea Leadsom (South Northamptonshire) (Con)]

9. What recent steps he has taken to increase the level of defence exports.

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[Mark Lancaster (Milton Keynes North) (Con)]

14. What arrangements are in place to monitor the progress of his Department’s major equipment procurement programmes.

[The Parliamentary Under-Secretary of State for Defence (Peter Luff)]

I receive monthly reports and quarterly detailed project health checks on the Ministry of Defence’s largest projects. Last year, discounting deliberate policy decisions made by the previous Government, the MOD met all its targets to deliver its major projects to cost, time and performance. This year looks equally encouraging. The top 30 major projects are also reviewed annually by the National Audit Office and in this year’s report the Comptroller and Auditor General said:

“In-year performance on the majority of large defence projects which we examined has been encouraging".

But we should not wait for the NAO to tell us how we are doing at the end of the year. That is why I can announce to the House today that the Secretary of State and I are forming a major projects performance board that will review our most significant projects regularly.

[Claire Perry]

I thank the Minister for that reply. Does he agree that in a long line of procurement failures from the previous Government, the £38 billion overspend in the defence budget takes the biscuit? Will he reassure the House on what steps will be taken so that that level of commercial failure will be, like the idea of a Labour Government, a thing of the past? [Interruption.]

[Peter Luff]

I hear howls of protest from those on the Opposition Front Bench, but over the weekend I heard the shadow Secretary of State fessing up to major failures in procurement. I strongly agree with my hon. Friend.

I am happy to tell you, Mr Speaker, that I cannot comply with your request for short answers and do justice to my hon. Friend’s question because we have a range of measures in place to achieve precisely that outcome, including stronger controls over the entry for new projects in the equipment programme; a formal project start-up process that considers requirement risk, technical viability risk, affordability and deliverability; improving key skills; working closely with the NAO; and reaffirming our commitment to regular defence reviews. All that will achieve exactly the outcome that she so rightly desires.

[Mr Speaker]

We are most grateful.

[Mark Lancaster]

Historically, one of the fundamental problems with procurement has been a disconnect between Ministers, civil servants, uniformed personnel and the defence industry. How do we intend to address that problem in the future?

[Peter Luff]

My hon. Friend is absolutely right. We talk of a conspiracy of optimism in these major projects that has so often characterised procurement decisions in the past. The list I rattled through in answer to my hon. Friend the Member for Devizes (Claire Perry) partly addresses the concerns of my hon. Friend the Member for Milton Keynes North (Mark Lancaster). I am sorry that I said it so fast, but it was important to get it on the record. If I do not deliver on that, I think my job will be on the line.

[Robert Halfon (Harlow) (Con)]

12. What recent steps his Department has taken to reduce the risk of cyber-attacks on the defence estate; and if he will make a statement.

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[Tony Cunningham (Workington) (Lab)]

16. What studies his Department has undertaken on the feasibility of operating the existing fleet of Sea King search and rescue helicopters beyond 2016; and if he will make a statement.

[The Parliamentary Under-Secretary of State for Defence (Peter Luff)]

As part of the review of the search and rescue helicopter project a number of options have been considered, including extending the current search and rescue Sea King helicopters beyond 2016. An announcement will be made shortly.

[Tony Cunningham]

I thank the Minister for that answer, but will he explain why he plans to spend about £7 billion on American search and rescue helicopters rather than upgrade the Sea Kings at a fraction of the cost? Sea Kings did an incredible job during the flooding in my constituency.

[Peter Luff]

Apart from anything else, that is the plan we inherited. However, I assure the hon. Gentleman that all options are being considered extremely carefully. I repeat that an announcement will be made shortly.

[Ian Lavery (Wansbeck) (Lab)]

17. What steps his Department is taking to raise the standard of service accommodation.

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[Graham Jones (Hyndburn) (Lab)]

22. What recent discussions his Department has had with representatives of the defence industry on the effects of the reductions in expenditure proposed in the strategic defence and security review.

[The Parliamentary Under-Secretary of State for Defence (Peter Luff)]

Ministers and officials have had many discussions with industry representatives both during and since the outcome of the strategic defence and security review was announced in October, including a full meeting of the National Defence Industries Council, which I chaired last month.

[Graham Jones]

In October 1,000 people were put out of work by BAE Systems in Lancashire, and last week a further 1,300 job losses were announced, owing to SDSR cuts. Does the Minister think that these job losses are a price worth paying, and does he agree that they will have an adverse impact on the economy of east Lancashire?

[Peter Luff]

I emphatically do not think that is a price worth paying, but sadly it is a price that we have to pay, thanks to the economic incompetence of the previous Government.

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[John Woodcock (Barrow and Furness) (Lab/Co-op)]

May I take the Minister back to RAF search and rescue? Does he not understand the concerns of my constituents and the many thousands of people who walk and climb in the Lake district that we might be about to pay substantially more for an inferior service? If it remains the cheapest and best-value option to re-fit the existing helicopters, will he consider doing so?

[The Parliamentary Under-Secretary of State for Defence (Peter Luff)]

I can reassure the House that the Government are absolutely committed to best-value options, unlike the Labour party. I repeat that the announcement will be made very shortly and the hon. Gentleman will be able to judge the decision on its merits. I am afraid I can say nothing further until then.

[Andrew Selous (South West Bedfordshire) (Con)]

T6. Will the Secretary of State give the House an as full as possible update on the ability of the Afghan Government to prevent terrorist organisations from organising within their own borders?