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Defence Procurement

It is a great pleasure to follow my hon. Friend the Member for Harwich (Mr. Carswell), whose thoughts and forthright contribution to the debate will doubtless have been heard on the Treasury Bench and in the Civil Service Box. Before reaching the main body of my remarks, I want to comment on a theme that my hon. Friend the Member for Reigate (Mr. Blunt) raised in a passionate speech, and put on record my admiration for so many units of our armed forces that have performed so magnificently in Iraq and Afghanistan. I want to pay special tribute to the 4 Rifles Battle Group and Colonel Patrick Sanders, its commanding officer, who gave one of the most moving eulogies on youth when he spoke of the courage and valour that young men and women are showing in theatres today. Many people outside the House do not fully grasp that those people are every bit as brave and courageous as their grandparents and great grandparents were. We should be proud of that, and it is a theme that my hon. Friend the Member for Mid-Sussex (Mr. Soames) developed. I hope that the Minister will take on board the point that my hon. Friend made about the sometimes leaden approach of the Ministry of Defence, particularly by those responsible for the media unit, who sometimes sing a very different tune from, for example, the one that the Minister sang in his welcome words of support for Help for Heroes, a charity of which I shall be honoured to be a trustee. I hope that the Minister will convey his view to those who are sometimes obstructive. I speak from personal experience, as someone who successfully managed to arrange a day out at Newbury races for wounded armed servicemen. I came up against the media unit at the Ministry of Defence and, frankly, I found it pretty obstructive. The unit let the servicemen go, but it was no mean battle. I also pay tribute to the mayor of Newbury, who is an excellent man. He has taken up Sir Richard Dannatt's invitation to pay tribute to our local regiment, the Royal Engineers, by giving a reception. His attitude contrasts with that of the leader of Newbury town council, who said that he wanted nothing to do with the occasion because he did not support the war in Iraq. I cannot condemn enough the failure to make the not-too-intellectual leap of separating whatever one might think about our deployments in Afghanistan and Iraq and paying tribute to our armed forces. I hope that the views of the leader of Newbury town council will be treated with the contempt that they deserve. The main theme of my speech was also touched upon by my hon. Friend—the extraordinary decision to axe the Defence Export Services Organisation. One of the great success stories in the past 40 years has been the joint working between Government and industry to co-ordinate and support our defence exports. DESO is a child of Labour. It was created by Denis Healey in 1966 and is the envy of the world. It has contributed to our being second to the United States in defence exports. We have to ask not only why the decision was taken, but why it was done in such a cack-handed and arbitrary fashion. We know that the decision was taken by the Prime Minister. He produced a statement to Parliament on the day Parliament rose for the summer recess. I have a minute from the DESO team briefing on 29 August, at which the second permanent under-secretary said:"““The Prime Minister's decision had been unexpected””." I should say so, when I can show clearly the level of unpreparedness across government, as they sought to cope with a decision that was kept so close to the Prime Minister's inner circle. What consultation took place across the Government when the decision was taken? Was the Secretary of State informed? Was Lord Drayson informed? Was Lord Jones informed—the former Digby Jones, who as the Minister responsible for UK Trade and Investment will, we are led to believe, take responsibility for whatever emerges from the debacle? He has been quoted in the industry press as saying that the decision was bonkers. He needs to convey that clearly to the Prime Minister. DESO employs—or did—around 250 people. In defence terms, it costs a paltry £16 million a year and supports and co-ordinates exports worth £500 million to our balance of payments. DESO is the envy of the world and is being copied by countries that want to emulate our success in defence exports. It is worth looking briefly at what exactly happened. The night before the statement was presented to Parliament and the staff at DESO were informed, the permanent under-secretary was summoned to No. 10 Downing street, where the Prime Minister informed him that the decision had been made to axe DESO. The permanent under-secretary informed the outgoing director of DESO, who got the staff together the next morning so that the permanent under-secretary could tell them the bad news. The director of DESO then said the memorable words—I might not be quoting him exactly—““Well, ladies and gentlemen, I think it's time that you went and started looking for jobs””. Many of them have: I am told that more than 30—the brightest and the best—have already been employed by companies up and down the country. Interestingly, the Ministry of Defence produced an internal question and answer sheet for employees about what the arrangements will be. The answer to the question,"““Will staff be forced to transfer with their posts to UKTI?””" was:"““How UKTI will manage their responsibility for defence trade promotion remains to be decided.””" The answer to"““Where will the transferred staff be located…?””" was:"““To be decided.””" The answer to"““Where will those who remain in MoD go to, and where will they be located…?””" was that"““this will have to be worked out in the implementation planning phase.””" Finally, the answer to"““Will staff transfer to UKTI on the same terms and conditions as they have now?””" was, again, that that will have to be"““worked out during the implementation planning phase.””" So, nobody knows how many people are going to be transferred to the new arrangement, where they will work, under what terms and conditions they will be working or what they will be doing. Most importantly—I hope that the Minister really grasps this—the answer to the question,"““Will there continue to be a role for the military staff?””" was:"““To be decided.””" The answer to"““What will happen to the (Army) Export Support Team?””" was:"““Again, to be decided.””" The answer to"““What will happen to the DESO First Secretaries overseas…?””" was:"““To be decided.””" The replies to all those questions show a disgraceful unpreparedness across Government for how an important part of our economy and hundreds and thousands of jobs in this country could be affected. Many companies in our constituencies are affected—I am not just talking about the big ones such as BAE Systems, but small companies that might have to go abroad to an area that they do not know. The first port of call for such companies will be the mission, where they will find the DESO representative. He will say to them, ““Right, this is the environment you need to be aware of, these are the people you need to talk to, this is how we do business in this country.”” The customers out there will want to know that those companies have the imprimatur of the Government. In particular, they will want to see uniformed service personnel involved in the negotiations for contracts, yet we do not even know what is going to happen to those uniformed personnel. It is also worth considering what the effect has been in the industry. I have a letter to the Prime Minister from Mike Turner, the chief executive of BAE Systems, in which he expresses his great disappointment about"““the complete lack of consultation with the industry stakeholders.””" In a telling remark, he continues:"““I can think of no benefit that 'synergy' with UK T and I can offer that can begin to outweigh the lost excellence of the DESO operation.””" The chief executive of Thales wrote:"““The link that DESO has provided, both in practical terms and symbolically, with MoD and the Armed Forces has been an important part of the defence side of that export success story.””" It is now gone—finished. The most telling letter to come into my hands was from the high commissioner to Australia—someone well known to this Government—Mrs. Helen Liddell. In her letter to Lord Jones—Digby Jones—she clearly sets out the value of the operation run from the missions and how it works in countries that purchase defence goods from Britain. She says:"““It takes a particular level of experience and knowledge to discuss in detail the kind of kit we sell with men and women who are likely to be commanders in the field. To be blunt, what Australia buys is a relationship””." I believe that this Prime Minister has put that relationship in jeopardy. Mrs. Liddell finishes her letter by saying:"““Incidentally, Australia is currently setting up their own version of DESO, and we hear that France is likely to go the same way!””" We need to see the replies to those letters, from the Prime Minister and from Lord Jones, and the replies need to be public documents because they relate directly to the decision that the Prime Minister took. Why did the Prime Minister take that decision? Was it to appease a group of MPs for whom defence exports are an evil? I would love to have the time to debate that issue with them here and now, but I do not. One of the rumours going round Whitehall is that it was to appease an individual or a group of individuals in his inner circle. I would suggest, however, that this was a typical new Labour cock-up: there are a few negatives out there, BAE Systems and the al-Yamamah project—what shall we do? We should do something dramatic, then we can park it. If anyone raises defence exports, we can say, ““Look, this is what we've done.”” Of course, al-Yamamah and anything else to do with Saudi Arabia is dealt with by the MOD Saudi Arabia project; it has nothing to do with DESO. But that does not matter; it is on the spin grid, and the Government have something that they can say. Then the Government had to row back, and to create a new environment with UK Trade and Investment. We are losing expertise from DESO and losing respect from customers elsewhere in the world. There are questions that need to be answered. Which Ministers were informed of this decision, and when? Why was there no consultation with the industry? Why was there no preparedness across Government on this important issue? The replies to those questions should be put in the public domain. I shall conclude by quoting Jane's Defence Weekly of 15 August. The very cutting article entitled ““UK could pay a high price for cost cutting”” stated that"““it is a bad decision and one that will…severely damage the UK and particularly the one remaining export-led industry where the nation can be considered an international leader and hold its head high. One thing is for certain: the Australian, French, German, Israeli, Russian and US governments that are seeking to emulate DESO's success will be delighted by the Brown announcement.””" I could not have put it better myself.