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Defence Acquisition (Independent Review)

I am grateful to the Secretary of State for his statement and for early sight of it. The handling of this report reflects much of the content of the report itself, in that there has been unnecessary delay, incompetence and an attempt to avoid responsibility. We could have had this report months ago. We could have given it time and thought over the summer recess. What did we get instead? Its publication barely an hour before the defence debate last week, with some poor excuses about how it had to be reviewed. Media management was about the only management skill that new Labour ever had, but now even that seems to have deserted it. I, too, wish to thank Bernard Gray and his team for their hard work and for a job well done with this very substantial piece of work. To the credit of the Ministry of Defence, it is widely understood that it wanted to publish the report earlier, but No. 10 blocked that—we can see why it was blocked. It is because when he was Chancellor of the Exchequer, the current Prime Minister took little interest in defence, and we are now paying the price. It is now clear that the Government have increasingly announced, and started, procurement programmes without ever considering whether any money would ever be made available. Children write letters to Santa Claus with comparable understanding between desirability and affordability. The procurement programme under Labour is becoming a wish list. The Secretary of State's statement today was a poor, undetailed and superficial response to this complex report. Perhaps the Government will hold a proper debate in Government time to give the whole House more time to discuss it. Having read the report, I do not think I have ever seen such a damning set of indictments: average time overruns are five years; average cost overruns are 40 per cent. more than the original cost; the total overrun is £35 billion, when we only have a defence budget of £37 billion and an equipment budget of £16 billion. In fact, expected cost overruns in the next 10 years alone amount to £16 billion, which is roughly £4.4 million per day of unfunded liability. Those sums are so large, and the report is so damning, that the shock value has almost diminished. In the words of Bernard Gray, the equipment programme""is unaffordable on any likely projection of future budgets."" We have too many types of equipment being ordered. There is a too large a range of tasks being covered by equipment. Equipment is being procured at too high a specification and with a built-in, sometimes purposeful, underestimation of likely cost. For example, the two-year delay to the future carriers—done on grounds that we can most charitably call utterly spurious by the unpaid Minister for procurement—will add £1 billion to the cost of the project, so to maintain the political fantasy that they are procuring the greatest amount of equipment in recent history, they stick £1 billion on to the taxpayers' bill for the future and cut funding elsewhere, such as through the brutal cuts to the Territorial Army. How perfectly consistent for a Government under whom the interest on our national debt next year will be greater than the defence budget. The fact that we have not had a strategic defence review in almost 12 years is a big part of the problem, but the problem also lies in the fact that the Prime Minister, as Chancellor, was never willing fully to fund Tony Blair's wars. The consequence of both is that defence planning is not conducted in tandem with costings—perhaps the most devastating indictment of all. Again, in the words of Bernard Gray:""In corporate life, no enterprise should persist with a 12 year old strategy without at least re-evaluating it fully on a regular basis. Few who would expect to prosper would even try to do so."" Yet what is the Government's response? First, to play catch-up with the Opposition. After 12 years we will get a Green Paper, perhaps eight weeks before Dissolution. What do they expect—gratitude that after 12 years the penny has finally dropped? We are to have regular defence reviews, too; the Opposition have proposed that for two years. And 10-year capital allocations; we proposed that, too. When will the Secretary of State introduce his 10-year equipment budget plan? Will it be before the election, so that we can see it? He refers to improving the way the MOD costs projects using better and more sophisticated techniques. Can he tell us what he means? What practical measures will he take now to accelerate the improvement of key skills, including in cost forecasting and programme management, in the DE&S and the MOD head office? The procurement process is broken and needs fundamental recasting. Many of its structures are upside down with cost control at the end and not the beginning. What does arm's length mean for DE&S and why are the Government ruling out the Government-owned contractor-operated option? Given the importance attached by Mr. Gray to research and development, why has the Secretary of State cut a further arbitrary £100 million from the defence research budget? Surely that one action stands in complete defiance of the core Gray analysis. The Secretary of State tried the old cop-out that these problems have occurred for many decades. Of course, after the Government have been in office for 12 years, the problems are not really their fault at all. However, the report clearly points out that not only has it been quantitatively worse under this Government but that problems are growing—and at an accelerating rate. The Secretary of State is right about perhaps just one thing—yes, there are skilled and dedicated people working in his Department in procurement. Some of them are my constituents. However, they are stuck in a Department where there have been four Secretaries of State in four years. No one is driving—no one is in control—yet the country is at war. What more damning conclusions could there be in any report to any Government? ...An hour and a half. ...It is not about us—it is about your stewardship.