Ministry of Defence — House of Commons, 2018-02-26
Topic: Defense
Nia Rhiannon Griffith (Labour, Centre-left): My hon. Friend makes a valid point It is clear that the work strands of the review will look in detail at the way in which industry does business with the MOD, which is an area where progress can and should be made. It is apparent from responses to the consultation on the defence industrial policy refresh that there is a desire for the MOD to be more flexible and collaborative in setting requirements, as well as in engaging with industry at an earlier stage in the procurement process Opposition Members would also like the definition of "good value" to be expanded to include wider employment, industrial or economic factors when making procurement decisions and awarding contracts. There have been a few nods in that direction from Ministers, and we welcome the reference to it in the national shipbuilding strategy, but the defence industrial policy refresh is extremely disappointing, in that it fails to make any such changes The Select Committee also called for a broader definition of "value for money". This call has received the support of the trade body ADS, as well as defence trade unions such as Unite and Prospect, so I would be grateful if the Minister could explain why the MOD has decided not to pursue such changes There is also strong support within industry for fair and open competition, wherever possible, when making procurement decisions. The Secretary of State reflected that in general terms before the Select Committee recently, but there has been no firm commitment that the contract for the new mechanised infantry vehicles will be subject to open competition. I would be grateful if the Minister could confirm this evening that this really will be the case The MOD budget has also taken a substantial hit due to the sharp fall in the value of sterling following the EU referendum. The Department faces a real challenge given that so much of the equipment plan is denominated in foreign currencies. That is made worse by the fact that the MOD has, for some reason, used exchange rates that do not reflect current market rates—something that the NAO identifies as a risk to the plan. Of course, one reason for the collapse in the value of the pound is a clear lack of investor confidence because of how this Government are handling the Brexit negotiations. The Opposition firmly believe that a clear commitment to negotiating a customs union with the European Union would provide the certainty that industry and investors need that they will not be hit by burdensome and unnecessary tariff barriers when Britain leaves the EU That is particularly important for defence companies, which depend on pan-European supply chains and simply cannot afford to see barriers to trade imposed between Britain and our European partners. But the Government have recklessly decided, point blank, to rule out a customs union, in a move that seems clearly designed to appease the hard right of the Conservative party rather than reflect the interests of our economy and workers in the defence industry Finally, as well as the severe challenges to the MOD budget in the here and now, there is also the spectre of massive potential costs coming down the line for forces accommodation. As the NAO’s recent report highlights, the Conservatives’ decision to privatise the housing of service personnel and their families in 1996 has been a disaster from start to finish The Conservatives ignored repeated warnings at the time, including from my right hon. Friend the Member for Warley (John Spellar), that this sell-off of public assets would not deliver value for money, and now we learn that the deal may have cost the taxpayer up to £4.2 billion. That has left us in a ridiculous position whereby the Government now rent back the same accommodation at increased cost. The MOD will be held over a barrel if the company demands costly rent rises when the lease is up for renewal in 2021. I would be grateful if the Minister could set out exactly how the Government plan to manage the lease renewal process in a way that does not simply result in further unnecessary costs to the taxpayer There is support on both sides of the House for real investment in our national security and for an end to the short-sighted and painful cuts that have marred the last seven years. We cannot do security on the cheap. It is time for this Government to deliver the proper investment in defence that the British public expect.