Defence Supplementary Estimate 2021-22

Rachael Maskell Excerpts

Wednesday 9th March 2022 Commons Chamber

[John Spellar]

I thank the right hon. Gentleman for his interventions not just in the Chamber but in the Defence Committee on these important issues. This is pertinent to a debate on the estimates, because resources and finances are obviously crucial, but it is the doctrine, the mindset and the organisation that decide the outcome. It is the same in Ukraine, where the morale of the Ukrainian forces, who are fighting for their homeland, is crucial when facing a conscript army who are not sure where they are or why they are there. That is why we have to get this right. We need an increase in the Budget in a couple of weeks’ time, but we also need a reset in our thinking.

[Rachael Maskell (York Central) (Lab/Co-op)]

When I tabled a written question asking whether there needed to be such a review, I received a complacent answer from the Minister for Defence People and Veterans, the hon. Member for Aldershot (Leo Docherty), saying that everything is all right and that we are meeting the current requirements. That answer came on 4 March, after this conflict had begun. There needs to be a review of our mindset to build up the security of our country, rather than just defending the Government’s position.

[John Spellar]

I thank my hon. Friend for that. This very much shows that a week in politics can be a very long time, but it also reveals, as she rightly says, a complacency about our situation and about the international situation, which was not justified by events.

In conclusion, what we have to question today is: is there the necessary understanding in the Government of the tasks and indeed the opportunities confronting them? Are they willing to rethink and provide the funds to implement urgent and necessary charge? Bevin understood this and seized the moment, and Prime Minister Attlee backed him to the hilt. So the fundamental question today is: are this Prime Minister, the current crop of Ministers and our dysfunctional civil service up for the challenge or even up to the job?

--- Later in debate ---

[Peter Grant]

I am sorry, but I really do need to make progress. I could talk until 7 o’clock, if the right hon. Gentleman wants me to, but I think other Members wish to speak.

The Public Accounts Committee reported that the Commands—the Army, Navy and Royal Air Force—planned to use some of the £16.5 billion of additional funding to address the backlog in maintenance and repairs of that accommodation, which at the time was estimated to be about £1.5 billion. The Committee reported at the same time:

“However, this extra funding seems to have already been spent more than once before it had even arrived with the Department”.

As I am sure many hon. Members are aware, if we listed the number of times that Ministers or civil servants told us that an MOD funding problem would be fixed by that additional money, welcome though it is, it would certainly add up to many times. Perhaps that is why they are a wee bit coy about giving us a detailed breakdown of exactly what the money will be spent on, because once they do that we will find out that it will not go nearly far enough.

[Rachael Maskell]

Will the hon. Member give way?

[Peter Grant]

The right hon. Member for Warley (John Spellar) is not looking, so I give way to the hon. Member.

--- Later in debate ---

[Rachael Maskell]

I have been carrying out a bit of an inquiry into Annington Homes, which owns a lot of the MOD estate. The MOD is currently leasing 7,230 vacant homes from Annington Homes. Given the refugee crisis and the fact that we have 11,000 to 12,000 people in bridging hotels, would it not be worth investing in those homes and bringing them up to standard, so that they could be used to rehouse people who have now been languishing in hotels for more than six months, not least because many of them served with our armed forces?

[Peter Grant]

The hon. Member makes an important point, and she reminds us that if accommodation is lying empty, it should not matter which Department or public body has its name on the title deeds; houses are there for people to live in, so whether they are evacuees and refugees from Afghanistan or anyone else, it should be possible to give them the kind of accommodation they want.

I will go through some of the findings of the NAO report, “The Equipment Plan 2021 to 2031”. I think it is dishonest to state as a matter of fact that the equipment plan is affordable, because in order for it to be affordable, as the NAO report states in paragraph 2.7, £3 billion of financial risk was not included. For example, a future combat air system had an estimated cost in its business case up to 2031 of between £10 billion and £17 billion. The equipment plan allocates £8.65 billion, so that one project alone is, at best, underfunded by £1.35 billion, and at worst it has possibly been allocated barely half the money it will cost.

Paragraph 2.17 refers to £7 billion of what the MOD terms “Planned Cost Reductions”—I think this is what the right hon. Member for Warley was referring to. At the time, according to that report, the top-level budget holders had plans to deliver less than half of the £3.1 billion. Some £2.6 billion of it needed to be achieved by 2025, within the first four years, and the first of those first four years is up in three weeks’ time. As the right hon. Member mentioned, the MOD has a dismal track record, assuming it will make massive savings all over the place and delivering very little of it. It cannot afford to get it wrong this time, but I think we all know that the chances of it getting it right and delivering that £7 billion, if its past record is anything to go by, are very slight. It is yet another hole in the affordability of the equipment plan.

Paragraph 20 of the NAO report picked up on an issue that the MOD does not like us to talk about but that I think is very important. It states that the top-level budget holders were

“deliberately spending more slowly on projects to keep within their budgets”.

In other words, they were given a budget to have something delivered and ready to use in 10 years’ time, but they spend the budget in 10 years and then the equipment is not ready until after 12, 13 or 14 years. There can be unforeseeable delays in the procurement of defence equipment, but if the MOD has assessed that the military will need that equipment in 2031, and then someone in the MOD deliberately delays procuring it for any amount of time, simply to make it look as if they are sticking to the budget, I do not see how that can possibly be acceptable.

Elsewhere, the NAO estimated that about £12 billion of savings built into the equipment plan were not savings at all, but were based on spending the money after the period of the equipment plan. They were based on delaying getting this vital equipment to our service personnel. An independent assessment carried out by the MOD’s cost assurance and analysis service, looking at projects that make up about 58% of the current year’s plan—although clearly there will be bigger expenditure on some of them later—reckoned that those projects alone were likely to cost £7.6 billion more than was assumed in the make-up of the defence equipment plan. It goes on and on. The NAO’s conclusion in paragraph 23 is that

“There is a real risk that, despite the additional funding it has received, the Department’s ambition outstrips the resources available to it.”

In layperson’s language, despite the MOD saying it has an affordable equipment plan, there is a very real risk that it does not.

Finally, the affordability of the equipment plan depends on getting an inflation plus 0.5% budget increase every year up to 2031. The Treasury has said it is comfortable with that, but given what has happened recently to public finances, the cost of living and inflation, I question whether it is still realistic to assume that is guaranteed. It is possible that it will be delivered; if it is not, that is yet another hole in the affordability of that plan. I make no apology for saying that where the equipment plan says that it is affordable and does not put all those caveats against it, it is a dishonest document for anyone to have published. It makes statements that are patently not justified, even by the information that was made available to Members of Parliament and, indeed, members of the public.

We can argue about whatever amount of money is allocated to the Ministry of Defence in this year’s budget or next year’s, or in any year coming, but we are failing our service personnel. The Government, this Parliament and the MOD are failing our service personnel, first because they are not being open and honest with them about the financial challenges they continue to face, but most importantly because surely, when somebody signs up and is willing to put their life on the line—let us not forget that two young men from Glenrothes lost their life fighting an illegal war in Iraq, and would probably be here today if they had had the best possible equipment available—the very least they are entitled to is living accommodation that is fit for human habitation, and to be given the best possible equipment available to defend themselves from enemy attack. I do not have confidence that this Government, or any future Government in this place, will genuinely honour those commitments.

That is why, whatever budget is set for the MOD through the due process, there needs to be a complete root-and-branch review of financial management—far too often, financial mismanagement—within the Ministry of Defence. It is costing billions and billions of pounds that the MOD simply cannot afford to waste, and there will be times when it risks costing the lives of our service personnel.