Defence and Security Public Contracts (Amendment) (EU Exit) Regulations 2020 — House of Lords, 2020-11-03
Topic: Defense
Annabel Goldie (Conservative, Centre-right): My Lords, I thank your Lordships very much indeed for their contributions, which have all been helpful and informative. I will deal with them as specifically as I can The noble Lord, Lord Thomas of Gresford, and the noble Baronesses, Lady Wheatcroft and Lady Smith of Newnham, raised the issue of complexity, and why we have retained the regulations. There is no denying that they are complex but, at the same time, within industry they are understood, and to that extent they are predictable. That is why it was thought imperative that we maintain that clarity and continuity for the sake of businesses, so that they could understand the background against which they were operating and the solid basis on which they were being asked to proceed In common with these points was a further question: what about a more comprehensive review? As I indicated, that is in mind and under way, specifically to improve the pace and agility of acquisitions, but it is a very significant piece of work and cannot be done quickly. What matters is that it is being done; Parliament will receive further information about that in due course The noble Lord, Lord Thomas, and the noble Baronesses, Lady Wheatcroft and Lady Smith of Newnham, asked whether I had any idea of how many procedures had been launched but not concluded. I am afraid that I do not have a specific answer to that question. This is to some extent a changing and continuing scene but I shall make inquiries and, if I find something out, I shall certainly bring that to their attention The noble Lord, Lord Thomas of Gresford, also raised the issue of companies having access to defence procurement in the EU after the transition period. As a matter of EU law, EU member states will no longer be legally obliged to open their defence and security procurements to UK suppliers as the appropriate directive will no longer apply. However, our UK suppliers are world class; they enjoy interest and demand for their products across the globe and offer incredible experience and expertise in defence. It may well be that EU member states will choose to give UK suppliers access to their competitions to maximise the effectiveness of their procurements, just as the UK might choose to do I think it was also the noble Lord, and the noble Baronesses, Lady Wheatcroft and Lady Smith of Newnham, who raised the question of state aid. I imagine that their question was predicated on whether an assessment of state aid influences a potential supplier’s bid. There is no change in the ability of contracting authorities to request that tenderers explain their price or costs where tenders appear to be abnormally low. There will, of course, no longer be an obligation to report to the European Commission where state aid is the reason that a tender was rejected It is a great pleasure for me to be able to extend to my noble friend Lord Lancaster a warm and personal welcome to these Benches. He raised the interesting issue of the Dunne report. He is quite right that it has been pivotal, because a stronger, more competitive and sustainable defence industry brings both better value to defence for the customer and greater economic benefit to the UK. That, of course, was recognised in the defence prosperity programme launched in Parliament in March 2019. The programme was informed by Philip Dunne’s excellent report on the subject as well as by the refresh defence industrial policy My noble friend also raised the interesting question of sponsored reserves; they are indeed another enabler of military capability. The assurance of contracted services, which was indeed one of their characteristics provided for under the Reserve Forces Act 1996, enables them to continue to use their skills in an operational environment to support the MoD and to deliver the service that their employers have been contracted to provide I congratulate the noble Lord, Lord Dodds, on his thoughtful and constructive maiden speech, which had the resonance of authority from his personal experiences. I identified three principal chords in what he had to say: he seeks delivery of Brexit, he wishes the union protected, and he sees the value of upholding defence. I cannot disagree with him on any of those things. I hope that the evidence is before us that the Government are determined to deliver on all those important fronts The noble Lord, Lord Browne of Belmont, pointed out, I think helpfully, just how important these regulations are, because they do provide consistency and continuity. Of course, that is at the heart of why we are dealing with this business today, and it is very much in the interests of our defence industry partners that we do that The noble Baroness, Lady Wheatcroft, raised the issue of our relationship with the EU. I wish to reassure her that, certainly in relation to defence, that relationship is important. We remain committed to European security, which is synonymous with United Kingdom security, and we will continue to co-operate with our friends and allies on shared threats and challenges. I reassure her that we already enjoy a strong bilateral relationship in relation to defence with a number of European countries, and that these are cordial and constructive. Of course, NATO will be at the heart of our approach to defence. The UK has consistently been and will continue to be a strong proponent of closer NATO-EU co-operation, stressing the need for coherence between the two on a range of challenges where the strengths of both organisations need to be combined My noble friend Lord Trenchard raised the issue in general of procurement, and specifically he mentioned the fleet solid support ships. As he will understand, I cannot comment too specifically on that process, other than to say that there was a healthy response to the market intelligence-gathering exercise. I wish to reassure him that we are clear that these ships will be made by British-led teams building on the success of Type 31, and we intend to allow international partners to work with UK firms to bid for this British-led shipbuilding project The noble Lord, Lord Bhatia, quite rightly raised the issue of proper tendering processes, and also being very careful to be sure of who we are doing business with. I think that would be met with an echo of agreement throughout the Chamber. Part of this process today is to ensure that there is a clarity and a robustness to the procedures, and the wider review, which I have already referred to, will have very much at heart what the United Kingdom wants to have at the forefront as the singular issues of importance when it is looking at these important procedures The noble Baroness, Lady Smith of Newnham, raised issues about equipment and her concerns about the reports from the National Audit Office and the Public Accounts Committee. I acknowledge the existing financial difficulties with the 10-year equipment plan, but I wish to point out to her that we have stayed within budget last year, as we have in the previous two, and we are striving to reduce the future gap. I think all your Lordships will understand that managing these ambitious, complex programmes is challenging, but we have already achieved £7.5 billion of equipment efficiency savings for the next 10 years, and, of course, last year we secured an extra £2.2 billion funding for defence. The noble Lord, Lord Touhig, raised a number of issues. I think he was concerned that legislative matters in future might cause problems with our approach to these issues today. I say to him that whatever may be negotiated in the future, we always endeavour to ensure consistency and that we align legislation appropriately. He also mentioned the spending review, and I reassure him that the Ministry of Defence is in discussion with the Treasury. He rightly identified important issues, and I would agree with him about these important issues. These discussions are obviously of significance, but I cannot comment further on that just now. He also raised the issue of Covid and the effect of Covid both on the MoD and on our industrial partners. I want to reassure the noble Lord that the MoD has very robust procedures to deal with the incidence of Covid within our Armed Forces, and we also have been engaging closely with our industrial partners to ensure we are doing everything we can to support them I am very grateful for the contributions offered this afternoon. I hope I have answered noble Lords’ questions and clarified the implications of the amended legislation, and I trust that your Lordships will feel able to support the statutory instrument which I have already moved.