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Ministry of Defence

I am grateful, Mr. Deputy Speaker. Because of that time limit, I shall do my utmost to keep my own remarks to 10 minutes, as I know that many Members want to speak in both debates. The motion before us seeks the House’s approval for the Ministry of Defence’s spring supplementary estimate—a request for an additional £1,890 million, of which the largest part is to meet the costs of peacekeeping in Iraq and Afghanistan. I know that in making a speech one is meant to begin at the beginning, but I wish to begin at the end, so I shall go straight to the conclusion of the Defence Committee’s report:"““We do not propose that the House should refuse the request for resources set out in the MoD’s Spring Supplementary Estimate. On the contrary, we believe it is essential that peace-keeping operations in Iraq and Afghanistan should be properly funded.””" If anything, we are concerned that too little is being spent, not too much. The Defence Committee, of which I have the great honour to be Chairman, hopes that the House will approve this request for resources. We believe that our service personnel should have the equipment that they need. However, we have several concerns about the way in which the Ministry of Defence presents its estimates to Parliament and thought that the House should have an opportunity to consider them before it approves the spring supplementary estimates. We are therefore grateful to the Liaison Committee for agreeing that our report should be debated. First, we are concerned about the inadequacy of the information that the Ministry of Defence provided to Parliament in support of the request for resources—a request for a very large amount of public money. The initial estimates memorandum, which all Departments provide to their Select Committees with the estimates, is printed in the evidence with our report. It does not add very much—only a breakdown between the operations for Iraq and Afghanistan. That is in table 1 of our report. We thought that that was not good enough and asked the Ministry of Defence for more information. Its more detailed breakdown is set out in tables 2 and 3 of our report. We hope that next time the Ministry of Defence will give that level of information in the estimates memorandum when the estimates are first published. That will give us enough time to report to the House, if necessary, in good time for the estimates day debate. Secondly, we are concerned about the high level of contingency that is contained in the estimate. Tables 2 and 3 of our report show that the estimate contains £69 million contingency in resources and £77 million contingency in capital, so we asked the Ministry of Defence why such a large amount of contingency was necessary, especially at such a late stage in the financial year. The response was that it was"““due to the often rapidly changing operational situation””" and the"““need to be able to respond to the rapidly evolving threat to our forces””." The Defence Committee fully accepts the need for the Ministry of Defence to have financial flexibility to respond to changing threats, buy new equipment and so on when the operational need arises. There may be different views on whether it is a good thing to deploy in Iraq and Afghanistan, but there can be no such difference about the need for our forces to be properly and fully protected. Force protection, especially against increasingly sophisticated improvised explosive devices, is a matter of life and death for our service personnel as they serve this country in Iraq and Afghanistan. Equipment often needs to be developed at short notice. Urgent operational requirements cost a lot of money and we need to ensure that it is properly managed. In January, the Committee visited the Defence Procurement Agency and were briefed by the special projects integrated project team on the acquisition of urgent operational requirements. We were impressed by the speed and efficiency of the acquisition process. The team’s close connection to operations gave its members a strong motivation and they fed back lessons from the field. We were told that, in one project, the contract was let within three days of notification of the requirement and the equipment was in the field in three weeks. That is an extraordinary achievement. We accept the need for flexibility, but that does not absolve the Ministry of Defence of the requirement to make proper financial forecasts. We shall look closely at the out-turn costs in the annual report and accounts to ensure that the Ministry is not routinely overestimating the costs of operations. Our report recommends that the annual report should contain significantly more detail on the cost of operations than it has done in the past. Our third concern is about arrangements whereby the Ministry of Defence waits for the spring supplementary estimates before seeking Parliament’s approval of expenditure on operations. I am afraid that we did not understand why the Ministry does that. It may be a surprise to some hon. Members that the Ministry makes no provisions in its main estimates for operations, even if they are well established. In effect, we are being asked to authorise expenditure in arrears. The Ministry’s explanation for that arrangement is that"““we cannot provide a detailed forecast at the beginning of the financial year that is accurate to the standards which we would normally place before Parliament for figures for that financial year.””" In our view, the fact that the Ministry cannot provide information that is accurate to a high standard is no reason for not providing Parliament with any information at all. We therefore recommend that, in future, provisions for operations that are well under way should be made in the main estimates in the usual way—if necessary, with a large element for contingency. We also recommend that the Ministry provide to our Committee regular updates of the cost of operations, in the same way as it provides information to the Treasury. That would be a welcome demonstration that the Ministry recognises the need for public accountability. It should give us the clear impression that it regards Treasury approval of its expenditure plans as no more important than parliamentary approval. Parliamentary approval should not be a rubber stamp. Perhaps the attitude of the Ministry of Defence is influenced by the fact that funding for operations does not come from its allocated defence budget but is new money from the Treasury. However, it is all public money and it should all be subject to the usual process of parliamentary authorisation. Our report deals briefly with the costs of operations in the Balkans. We recommend that, in future, provision for such operations should be set out in the Ministry’s main estimates rather than transferred in from the Foreign and Commonwealth Office at the spring supplementary estimates. Our report also touches on the future costs of the deployment to Afghanistan. It is not enough for Ministers to tell us that the cost of the deployment will be around £1 billion over five years and we will press the Ministry of Defence for more information on costs in our inquiry into the Afghanistan deployment.