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Defence Reform Bill

Volume 579: debated on Tuesday 29 April 2014

Consideration of Lords Amendments

I must draw the House’s attention to the fact that financial privilege is involved in Lords amendment 7. If the House agrees it, I will cause an appropriate entry to be made in the Journal.

Clause 33

Amount of Penalty

With this it will be convenient to consider the following:

Lords amendments 2 to 6.

Lords amendment 7, and amendment (a) thereto.

Before we proceed with the debate on the Lords amendments and with your agreement, Madam Deputy Speaker, I am sure that the House will wish to join me in paying tribute to Captain Thomas Clarke, Army Air Corps; Flight Lieutenant Rakesh Chauhan of Joint Helicopter Command, RAF Odiham; Acting Warrant Officer Class 2 Spencer Faulkner, Army Air Corps; Corporal James Walters, Army Air Corps; and Lance Corporal Oliver Thomas, Intelligence Corps, a reservist who worked for one of my hon. Friends in this House. They were killed while on operations in Afghanistan on Saturday 26 April. This appears to be a tragic accident during a routine sortie in Kandahar Province. Our thoughts and deepest sympathies are with the families and colleagues of those who lost their lives. The incident is the subject of a thorough investigation to find out exactly what happened. The House will understand that I am unable to say anything further at this time, pending the outcome of the ongoing investigation into the incident.

I cannot let the Minister’s comments pass without welcoming them and thanking him for them, and, in particular, expressing the sympathy of the Liberal Democrat parliamentary party and its researchers and staff following the loss of their friend, who displayed great courage and died in the service of his country.

I appreciate and reciprocate that sentiment.

Let me now deal with the Lords amendments. They deal with all three elements of a Bill that introduces a new and significantly stronger regime for the management of single-source contracts, and makes important legislative changes that will enable us to modernise and make better use of our reserve forces. There is a great deal of support for those measures in all parts of the House, as was evident when we discussed all its previous stages here. The Bill also includes the measures that are needed to help an effective Government-owned contractor-operated organisation to manage defence equipment and support should a future Government decide to proceed with such an option. I shall return to that shortly.

These are all Government amendments, which were made following detailed consideration of the Bill both in this House and in the Lords. Although they deal with different parts of the Bill, they have a common theme: they either provide Parliament with further information relating to the implementation of defence policy, or strengthen parliamentary oversight of future legislation. That, I think, is right, and it reflects the Government’s commitment to ensuring that Parliament has a greater role in the scrutiny of the Executive. The amendments demonstrate that we have listened to the concerns that were raised about issues covered by the Bill, particularly in the other place, and that we have responded accordingly.

Lords amendment 6 fulfils a commitment given on Report in this House, on 20 November, to make it a statutory requirement to report annually on the state of the reserve forces, while Lords amendment 7 reflects the debate in the other place about parliamentary involvement in any future decision to proceed with a GoCo proposal requiring the provisions in part 1 of the Bill. The amendments will strengthen the parliamentary oversight of future defence plans, and I hope that they will be widely welcomed.

Lords amendments 1 to 5 relate to part 2, which concerns single-source procurement. They were made in response to the Delegated Powers and Regulatory Reform Committee’s report on the Bill, which was published on 20 December last year. I am grateful to the Committee for its report, and for the excellent work that it does in ensuring that any proposed delegated powers are appropriate.

The Committee recommended that the first set of single-source contract regulations should be debated and agreed by Parliament. It also recommended that certain of the regulations—namely those relating to the definition of a qualifying defence contract and to the penalty amounts applied under clause 32 of the Bill—should always be subject to the affirmative procedure. Those recommendations are reflected in Lords amendment 5, and Lords amendments 1, 2, 3 and 4 make the necessary consequential changes that arise from that amendment.

Lords amendment 6 would require reserve associations to report annually to the Secretary of State on the condition of the volunteer reserve forces, and for their reports to be laid before Parliament. The reports would include the associations’ assessment both of the capabilities of the reserve forces, and of the provision made in relation to the mental welfare of their members and former members. The amendment delivers on the commitment given by my right hon. Friend the Secretary of State on Report in this House last November. Members will recall that we had a substantial debate at that stage, initiated by my hon. Friend the Member for Canterbury (Mr Brazier)—it is good to see him in the Chamber—about the state of our reserve forces, and the need to report regularly to Parliament on the issue. The amendment enshrines in law the requirement to produce such a report.

Members may be interested to know that on 10 April I had the privilege of attending the West Midlands Reserve Forces and Cadets Association annual dinner. Their knowledge and enthusiasm for the reserves was palpable and I am glad we will have such expertise reporting to the Secretary of State on an annual basis as a result of this amendment.

At the dinner, Defence’s most senior reservist, Major General John Crackett, spoke eloquently and persuasively of the reservists’ contribution to our nation’s defence in the past century and the importance this Government have attached to revitalising and expanding the reserves during this century.

Last weekend’s helicopter crash, which unfortunately I have already had to refer to today, underscores the fact that, tragically, 31 reservists have paid the ultimate price in the service of their country since 2003.

I thank the Minister for paying tribute to the five men who were lost in the tragic helicopter accident over the weekend, in particular Lance Corporal Oliver Thomas who used to work for me. He is a fine example of the very talented young people we have in our reserves and the contribution they make to the British armed forces.

I am pleased that the hon. Gentleman has joined us. Unfortunately, he missed my tribute to Lance Corporal Thomas. I pass my sympathies to him and his colleagues, and his family and friends, on this tragic loss.

Lords amendment 7 will provide Parliament with information on the options for reforming Defence Equipment and Support before any order commencing part 1 of the Bill can be made. As Members will recall, part 1 provides the legislation needed to enable any GoCo solution for reform of DE&S to work effectively. This option is not being pursued at present, and will not be taken forward in the near future, but we think it right that the necessary legislation remains on the statute book in case a future Government, of whatever colour, decide to go down that route.

This amendment follows a substantial debate in the other place about the level of parliamentary oversight required before any future Government could proceed with a GoCo for DE&S that would require the provisions in part 1. As a result of that debate, Lords amendment 7 would require the Secretary of State to publish a report on the options for carrying out the defence procurement activity being undertaken by DE&S before laying the draft affirmative order commencing part 1. The report would need to cover any arrangements for a GoCo and any other options that had been considered, including the option of the new DE&S that is currently being put in place. This information will ensure that Parliament can have an informed debate on the reform of DE&S before agreeing to bring part 1 into force.

The amendment to Lords amendment 7, tabled by the hon. Member for Plymouth, Moor View (Alison Seabeck) —with whom I had the pleasure of serving on the Committee and who conducted herself with considerable distinction—would make it a requirement for a future Government to produce the report on the options for reforming DE&S at least 12 weeks before any order commencing part 1 is laid before Parliament. While on the surface this amendment might seem reasonable, I think it is unnecessary and would unduly constrain a future Government. Amendment 7 already places a statutory requirement on a future Government to produce a report and sets out what that report must contain—and it is most likely to take the form of a White Paper. To place such an obligation on a future Government is itself unusual, and we are aware of no other examples where a commencement order has such requirements attached to it. As such, it represents a major concession by the Government and demonstrates that we have listened carefully to the concerns expressed in the House of Lords.

We have therefore already gone a significant way towards ensuring that Parliament has detailed information to enable it to consider these matters, and there is no need to go further. Although I would expect any such report to be published in good time to enable Parliament to debate whether part 1 should be commenced, it is impossible at this point to predict the exact circumstances in which a decision to proceed with a GoCo might be made. Of course, if Opposition Members were to find themselves in government in the future—that is most unlikely in the immediate future—they could publish the report whenever they wish, but I think it is a step too far to put a legal time limit on the production of such a report; I simply do not think it is the sort of thing we should be setting out in legislation.

No doubt the hon. Member for Plymouth, Moor View will argue that without such a time limit a future Government might try to rush through proceeding with a GoCo—that, of course, will be up to her if she is in this post in a future Government—but that fails to take into account the reality of how these decisions are made or indeed the recent history of the time it took to go through the commercial process in looking for a GoCo solution. The need for a robust commercial process will mean that any such decision will not be taken quickly and that there will be announcements and discussions at each stage along the way.

The last competition, for example, took nearly nine months from the issue of the contract notice in April 2013 until the receipt of detailed bids in November last year. That helps to convince me that Parliament will have ample opportunity to consider and debate any proposals to move to a GoCo well in advance of any order commencing part 1 and we should not be placing arbitrary time limits into statute just for the sake of it. Placing such a time constraint in the Bill may add to uncertainty around the commercial process. The Government will therefore be resisting the amendment to Lords amendment 7.

So is the Minister guaranteeing the House some minimum time for discussion in these circumstances? Is he able to say that there will absolutely be a certain minimum time?

What I am guaranteeing is that a report will be presented to the House before the commencement of part 1 comes before the House in an affirmative resolution. It will be up to the Government of the day to decide at what point to publish that report and therefore what interval to leave between publication and moving an affirmative resolution in this House. What I am not guaranteeing is the duration of that interval.

These Lords amendments will make a good Bill better. They show that the Government have listened to the concerns raised during the Bill’s passage through both Houses. The changes to the Bill covered by the Lords amendments will ensure that Parliament has the information it needs on these important aspects of our defence. I therefore ask hon. Members to agree to Lords amendments 1 to 7 and to reject the Opposition amendment to Lords amendment 7.

Labour Members associate themselves with the condolences offered to the family and friends of the five servicemen lost so very tragically while serving their country. Their loss is deeply felt, particularly by their colleagues and close friends here in this place, and we acknowledge that loss.

Let me start by discussing the proposals to part 2 of the Bill. The Minister has talked about Lords amendments 1 to 5 to clauses 33, 39 and 42, which deal with the single-source procurement contracts. Labour Members welcome the amendments in principle, because they take forward the recommendations of the Delegated Powers and Regulatory Reform Committee, and because they make sensible changes to simplify this legislation. It does indeed make sense to use one statutory instrument for all the regulations under part 2, as Lords amendment 1 achieves, along with the accompanying amendments—the technical changes that follow. Baroness Jolly in the other place explained the logic behind these amendments, which allow all the regulations under part 2 to be made in one statutory instrument; there is also provision for the maximum penalties to be made under the single- source contract regulations, rather than in separate regulations.

My colleague Lord Tunnicliffe, who did sterling work in the other place speaking on behalf of the Opposition, said he needed to see the proposal in writing before deciding whether there might be a problem. Having seen it in writing, Labour takes the view that these are largely technical amendments to which we have no objections. However, there are some concerns about the way in which impact assessments are being carried out by Departments on new regulations. The recent Regulatory Policy Committee report, published last month, on the improvement of the evidence base for regulation suggested some serious weaknesses in the way in which Departments were estimating the impact of new regulations. Indeed, only 75% of the first-time impact assessment submissions were fit for purpose, down from 81% in 2012. Will the Minister confirm that the proposed change has been given the green light and whether there are likely to be any problems for that Committee? Lords amendment 5 addresses two more recommendations of the DPRRC. As the Minister stated, it is purely technical and we have no problems with it at all. The Opposition support the work done by the DPRRC and on both sides of the House of Lords and we welcome that group of amendments.

Amendment 6 to part 3 introduces a new clause that will add a section, as we have heard, to the Reserve Forces Act 1996 requiring an annual report to set out an assessment of the capabilities of the volunteer reserve forces. The report will have regard to the duties that may be imposed on members of those forces, including mobilised service under a call-out order. Although the proposed new clause does not go as far as the amendment tabled on Report by the hon. Member for Basildon and Billericay (Mr Baron), who is sadly not in his place today, which was supported by Opposition Members and called for a report on the viability and cost-effectiveness of the reserve reforms, we welcome it as a step forward as well as the principle of increased statutory reporting on the implementation of the reserve reforms.

We must, however, be wise to the fact that there are ongoing concerns. General Sir Peter Wall, Chief of the General Staff, was candid in his description of the driving force behind the Army 2020 plan when he gave evidence to the Select Committee on Defence during its inquiry “Future Army 2020”. He said:

“I remember the genesis very clearly. It was a financially driven plan. We had to design a new structure that included the run-down of the 102,000 Regular Army to 82,000, which is pretty well advanced now, to follow a funding line that was driven by the austerity with which everybody is very familiar...It triggered the complete redesign of the Army.”

Will the Minister say on what strategic basis, if any, the Government arrived at their figure of 82,000 regulars and 30,000 reservists?

The new clause also provides for an assessment of the provision made for the mental welfare of members and former members of the volunteer reserve forces. We have heard a salutary reminder of the risks taken by reservists and by our servicemen and women in general, but reservists also suffer disproportionately from mental health issues as a result of their service. Members of the Territorial Army are twice as likely to suffer from post-traumatic stress disorder as regular soldiers, because they lack the equivalent long-term support structures. I know that things are getting a lot better and that lessons have been learned, but they lack the support that can often be offered by a regiment, a ship or a squadron. We welcome the further provisions better to assess the mental welfare of the reserves and will support the amendment.

We now come to the groundhog day part of today’s business: Lords amendment 7. The amendment is to the part of the Bill that “never was, or is ever likely to be”, which was all about setting up a Government-owned contractor-operated model, which, of course, fell apart when it became impossible to keep two bidders in the process. That pretty much happened the day before we started to discuss the issue in Committee. I should point out that there will not be any consideration of moving to a GoCo at this stage. As the Minister said, that might well happen after a general election. Obviously, we do not know the political complexion of the next or any future Government, so it is a mystery why the Government should resist the Opposition amendment. However, the Minister has made himself very clear.

I suspect that the decision to continue with part 1 of the Bill was more about saving face for the Government after they had ploughed on regardless and maintained this element of the Bill, partly just in case the model being worked through by Defence Equipment and Support, which is up and running, does not work. It is a fall-back position, in which industry and others have little confidence.

It seems appropriate when discussing an amendment that relates to the potential for major changes in DE&S to point out that, despite the launch of the new DE&S model this month, defence procurement is still in a mess. The lack of understanding between the potential bidders and the MOD means that the new system may well not deliver value for money for the taxpayer. That view certainly still pertains in the media. It would be helpful if the Minister put on record exactly why he remains convinced that the model will work, not least because it is loosely based on a model that the Labour party put forward in 2011. Bill Thomas and Tony Roulstone suggested it in a report that they produced for us.

There are issues about wholesale outsourcing. We therefore think that injecting essential expertise into identified key areas is an interesting option alongside some changes to support better the development of existing skills in DE&S. Those skills are undoubtedly present in the civil service, but we need to avoid the constant moves that have been happening and encourage a greater understanding that actions have consequences, and that responsibility has to be taken for the commercial decisions that are made. We support measures and flexibilities that allow the Department to retain and recruit the best delivery leaders.

The Government have listened to some of the concerns that were raised in Committee and in the other place. Lord Rosser welcomed the Government’s move from their previous position, which was for an affirmative order without any of the associated requirements for which a case had been made. We are therefore glad that the Government have tabled the amendment, as it at least ensures that a report—indeed, possibly a White Paper and an impact assessment—will be laid before the House comparing the current model with a proposed future model for defence procurement, aka a GoCo, and allowing parliamentary scrutiny. We know that the financial effects are minimal in terms of the preparation of the report, although there is no mention of any additional cost of any consultation that may follow. I am sure that the Minister has considered that.

Without the amendment, the Government could have introduced a GoCo in future with absolutely no public scrutiny. The Opposition felt that that would be highly inappropriate, considering the catastrophic failure of the tendering process the last time the Government tried to move DE&S to this model and the continuing issues relating to the potential for conflicts of interest and risks to intellectual property, which were the subject of debate in Committee. They are still bubbling.

The Opposition argued in the other place for a super-affirmative procedure involving an independent examination of a future Government’s case for a GoCo and for a report on that independent review by the House of Commons Defence Committee before Parliament made a decision on the affirmative order. That did not find favour with the Government, but the amendment has moved the debate forward, and we appreciate that.

However, the amendment does not set a time scale for scrutinising the report. We would like 12 weeks, as a reasonable period. Lord Astor of Hever was not dismissive of the need for a clear time scale when it was raised and that is partly why we are pursuing this further today. The Opposition feel that the Government have on too many occasions sought to rush through consultations and scrutiny, and run them over a public holiday, and that that practice is not good enough and does not allow full and proper public scrutiny. A recent example involves the Land Registry, whereby a very restricted time scale was allowed.

No Government of whatever complexion should ever be afraid of strong scrutiny—it makes for better and more transparent government, which the public demand. If we ignore that, we further damage the reputation of this place. I am therefore disappointed that the Minister feels unable to include that in the Bill.

I am intrigued by the selective amnesia from which the hon. Lady appears to be suffering. Does she recall the passage of the Companies Bill under the previous Government, as no fewer than 250 amendments were proposed for consideration by the House in the final two minutes of debate?

The Minister is quite right to make that point. It is deeply frustrating for Back Benchers and for the public to see legislation being rushed through Parliament. There are lessons that Members on both sides of the House can learn—

We can learn the lessons without hectoring from colleagues from Scotland. Full and public debate, and full and open scrutiny, are a sign of strong government, and it is something that we should all try to achieve in the House.

My noble Friend Lord Rosser said:

“If a future Government adopt the same approach”

and seek to run Defence Procurement via a GoCo

“the report on the effectiveness of the new DE&S-plus-plus organisation will be crucial, as will be the objectivity of that future Government’s assessment of DE&S-plus-plus”—

as it was referred to in the House of Lords—

“and their case for believing that the GOCO option would be more successful.”—[Official Report, House of Lords, 2 April 2014; Vol. 753, c. 966.]

The report for which this amendment provides will ensure that we can have real oversight as to the effectiveness of the new-look DE&S. However, as I have said, it still falls a bit short of what we would like. We are being asked to allow a measure to proceed that has been fraught with difficulty, at considerable cost to the taxpayer. According to the Minister, in a written answer to me on 18 December 2013, in running the tendering process the Government had

“spent £7.4 million supporting the work on the GoCo option”—[Official Report, 18 December 2013; Vol. 572, c. 636W.]

However, according to a parliamentary answer on 11 February 2014 to a question from my hon. Friend the Member for North Durham (Mr Jones), the total for the concept and assessment phase was almost £29 million. What is the final total, and has the Minister assessed the costs of running a similar exercise if a future Government opted to go down the GoCo route?

The Opposition very much hope that the changes that have been made—sadly, many of them are still not in the public domain—will make a difference, bolstering those areas within DE& S that need additional expertise or which have been hollowed out by changes to the overall size of the civil service. As we are discussing this part of the Bill, will the Minister kindly explain why, as of yesterday evening, the corporate plan and framework document for DE&S were not in the Library or on the Ministry of Defence website? In a written answer to the hon. Member for Mid Worcestershire (Sir Peter Luff), a former Defence Minister, and to me on 7 April, an assurance was given that that would happen. Certainly, in discussing the need for openness and for the full and proper scrutiny of the proposed measures, as well as consideration of the Lords amendments, having sight of this document would be helpful.

It was noted in the other place that a future Government, having made up their mind that they wanted to go down the GoCo route, might be tempted to try to rush through the affirmative order. That was acknowledged by the Minister as a potential problem. Lord Rosser pointed out:

“I cannot help but recall that this Government, in declining to withdraw Part 1, argued that there might in future be a need to bring in the GOCO option with a minimum of delay—an odd argument, bearing in mind that the Government themselves had just had to delay their intentions on the GOCO option by at least two or three years, but nevertheless an indication of a Government’s thinking that they might seek to make the change as quickly as possible at the possible expense of proper scrutiny.”—[Official Report, House of Lords, 2 April 2014; Vol. 753, c. 966-67.]

That was enough to cause Opposition Members concern. Any decision that could have such a major impact on the safety and performance of our heroic servicemen and women must be subject to the necessary scrutiny, and Parliament should be allowed time to undertake that scrutiny. We also have at the back of our mind debates about conflicts of interest, intellectual property protection and so on, which will need, should a new proposal be introduced, to be addressed properly and transparently. A rushed scrutiny period would be unsatisfactory and it would not inspire public confidence.

In conclusion, I am concerned that simply expecting the DE&S-plus proposition to become match-fit as a public sector comparator for future market testing of the GoCo is hardly a vote of confidence in the hard-working staff of that organisation or, indeed, of those businesses that have been encouraged to tender to become strategic partners, which is why stronger scrutiny would help. The Minister mentioned significant concessions, but he also referred to an uncertain future. The measure, as it stands, could do with a little more certainty and scrutiny. Sadly, he has failed to persuade us that our amendment is unnecessary, so we will be pressing it to a vote.

I join my hon. Friend the Minister and the hon. Member for Plymouth, Moor View (Alison Seabeck) in their tribute to the five young men who lost their lives and in expressing thoughts and prayers for their families and loved ones. Our colleague, my hon. Friend the Member for Brecon and Radnorshire (Roger Williams), has lost a researcher, who served with 3 Military Intelligence, with which several House of Commons researchers are also associated.

The House will be relieved to hear that I will be brief. I congratulate the Minister on the quiet and typically modest way in which he has taken the Bill through Parliament, listening at every stage. I will not say much about procurement except that I feel oddly comfortable with the outcome. I expressed several concerns throughout the Bill’s passage about the possibility of going as far as a GoCo, but we would not have obtained concessions from the Treasury and the wider civil service had the MOD not tried it.

The hon. Gentleman mentioned the concessions from the Treasury, but without the detail of the corporate plan, which is yet to be laid in the Library, we do not know exactly what those flexibilities are.

We do not have the detail, but we do know that there is now more flexibility on people and in other crucial areas, such as the annuality of budgets, which are extremely important for running an operation such as procurement.

I want to leave one thought on procurement. Some 25, 26 or 27 years ago, when working as a management consultant, I was privileged to take part in a study comparing the procurement methods of seven different countries. Our procurers in the then procurement executive—it has changed its name several times since—were at least as good as the average and arguably better. The majority of the problems in the system fell into one of two categories. Either the customer within MOD changed its mind or was unclear about its needs, or things were laid down from outside, some of which appear to be being addressed. As a result of the unsuccessful attempt to create a GoCo, we have ended up with a better outcome than we would otherwise have had.

I support all the Government’s amendments and I am pleased that the hon. Member for Plymouth, Moor View is with them, too, although she has indicated one area in which she would like to go further.

I of course knew when my right hon. Friend the Secretary of State made his pledge on the reserves that it would be honoured. However, not only has it been honoured exactly, but the Government’s wording of the clause is better than I originally proposed and has been well thought through. They particularly thought through the complicated federal nature of the reserve forces and cadets associations. The clause deals neatly with a problem, which I hope will never occur again but happened some 15 or 16 years ago, when the centre got out of touch with its regional branches. Leaving the real power with the regional branches, which are elected, covers that issue nicely. Parliament will get a good report whatever happens. I am grateful to the Government for agreeing to the proposal and to the Members on both sides of the House who supported the original measure.

I end by saying—I hope that you will indulge in me in this, Madam Deputy Speaker, because, strictly, it is beyond the amendment—that when we originally debated the matter in the House, there was great concern about recruiting for the reserves. I expressed the view that it had been seriously mishandled under the new assimilated structure controlled by the Regular Army. I also expressed confidence in Major General Chris Tickell, who had taken over.

Since then, things have moved a long way. My local TA infantry battalion got as many soldiers in January and February as it did in the previous 10 months. That is still only two thirds of what it needs if it is to grow, rather than just tread water, but it is a huge step forward. Today it has eight young officers under the age of 30, whereas a couple of years ago it had only two or three.

I firmly believe that things will move in the right direction, but I think that the steady hand on the tiller of this annual report from the RFCAs, which really do get it, will play a profound role, and I am grateful to the Government for giving way on that. I support all the Lords amendments.

It is a pleasure to follow the hon. Member for Canterbury (Mr Brazier), who displays great knowledge of these issues. I am sure that the friends and family of Oli Thomas will very much appreciate the comments that have been made across the House, as I am sure will my hon. Friend the Member for Brecon and Radnorshire (Roger Williams). He would have been here at the beginning of the debate to respond to the Minister’s comments had the expected times for votes not changed rather suddenly. I hope that people will understand that. I am sure that all Members across the House would wish to express their sympathy to the friends and family of all the servicemen who lost their lives in that terrible accident.

I welcome the Lords amendments, which I think strengthen Parliament’s role in scrutinising the implementation of defence policy, which is very important. I know that several of my noble Friends had concerns about the process of building up the new reserve force and about the technicalities of the GoCo idea. It is very welcome that the Government have been open-minded enough to bring forward their own amendments to reflect those concerns and increase parliamentary scrutiny.

On the volunteer forces, we have an ambitious plan to change the whole chemistry and make-up of our armed forces. I think that will leave us with armed forces that are more flexible, more light-footed and more cost-effective, and in a time of genuine austerity that must be borne in mind. On the concerns that have been expressed on both sides of the House about exactly how well that will work, whether it is too ambitious and whether it will at some stage pose unexpected challenges, I think that it is right to have this extra level of parliamentary scrutiny over the process, so Lords amendment 6 is extremely welcome.

Lords amendment 7, which relates to the GoCo, now seems slightly academic, given that we are unlikely to see any proposals for a GoCo in the near future. However, were such a proposal to come forward at some point, I think that it is important to have the safeguards in place to ensure not only that a draft statutory instrument is laid before the House before the actual order is laid, but that we have the report beforehand on alternative options and impact assessments for each one.

In tabling amendment (a), the hon. Member for Plymouth, Moor View (Alison Seabeck) is perhaps trying to gild the lily. I think that she is trying to conjure some mild controversy out of what is now a consensus on the issue. She said that she had remaining concerns about wholesale outsourcing, but of course that is only about the outsourcing of outside supplies, so it does not really change anything in that respect. It is only about whether in future that outsourcing is managed directly by a Government agency or by a more independent and commercially orientated organisation.

Many of us have expressed doubts about that idea. I expressed doubts on Second Reading about whether we should have yet another tier of decision making in between the armed forces and the actual decision-making process and the eventual supplies. However, I think that the formula we have come up with, whereby the different options will be re-examined at the time any such proposal comes forward, is a good one. We would not normally insert another 12-week time scale into legislation of this kind, so I am not sure that that is absolutely necessary, but I appreciate the spirit in which the amendment was moved.

I think that the Lords amendments have made a good Bill even better. I join the consensus on both sides of the House in this good-natured debate by saying that this is the right Bill to bring forward at this time.

With the leave of the House, I shall make a few closing remarks. I know it is not conventional to do so, but I have been challenged in customary fashion by the hon. Member for Plymouth, Moor View (Alison Seabeck) with a number of questions, and it is right that we put some answers on the record.

The first question that the hon. Lady posed was a technical one about whether the framework of part 2 had been approved by the RPC. We approached the Better Regulation Executive in the Department for Business, Innovation and Skills, which confirmed that in its view part 2 did not constitute regulations of the type that ought to be considered by the RPC or the reducing regulations committee. We therefore did not do so.

The hon. Lady also asked whether in the strategic defence review in 2010 there was some strategic basis for arriving at the force composition of regulars and reservists. As she will know, I was not in post at that time, so I cannot give her my personal recollection of those discussions. It is undoubtedly the case that the fiscal situation that not only the country faced but our Department inherited—the £38 billion black hole in unfunded commitments—played a part in determining dispositions, but the main drivers of the force composition were set out at the time of the SDSR—namely, the unpredictable strategic environment and the need for an agile and adaptable force structure. The force structure that we ended up with, we believe, will enable us to meet the unpredictable strategic environment in future. It also moves UK armed forces closer to the force structures in place among many of our closest allies, so we do not think it is out of line with our main partners and allies.

The hon. Lady touched on reserves and the status of reserve recruiting, which was mentioned by my hon. Friend the Member for Canterbury (Mr Brazier). I thank him for the anecdote he gave us about the growing youthfulness of officers and the growing numbers of recruits that he referred to. I am not in a position to give the House detailed figures at this point, but applications are running significantly higher than average applications in months last year, which is an encouraging sign. We are making good progress in increasing the conversion rate from applicants to trainees. That is also an encouraging sign. I would not like to give the House the impression that we do not recognise that we have a considerable way to move in raising both the number of applicants and that conversion rate.

There is no doubt that there has been an improvement, but what the Minister and the House must do, as the hon. Member for Canterbury (Mr Brazier) said, is keep on top of it. There is institutional resistance to that change and we must recognise that. If we want it to work, we have to be prepared to drive it.

I am grateful, Madam Deputy Speaker, for your indulgence not only of me, but of the right hon. Gentleman, the former Defence Secretary, for making that point. It gives me the opportunity to say that there is a clear determination from the Secretary of State downwards to bear down on the issue within the Department. My colleague responsible for personnel, the Under-Secretary of State for Defence, my hon. Friend the Member for Broxtowe (Anna Soubry), is having weekly meetings with the officials who are responsible within the Department and there is a clear determination throughout the ranks, in particular the Army, to ensure from the very senior levels down that there is a major focus on getting the institutional and behavioural change that the right hon. Gentleman talks about.

We are doing some practical things to try to improve recruitment. For example, the bounty for regulars going into the reserves has been doubled relatively recently. We have also introduced a bounty for completion of phase 1 training and a subsequent bounty for completion of phase 2 training to encourage applicants who start the training process to see it through and to have better results at the end of the process.

I strongly endorse the remarks of the right hon. Member for Coventry North East (Mr Ainsworth), who understands these matters so well.

Of the two measures that the Minister has mentioned, I particularly welcome the second one. On the first, it seems to many in the reserves that the transfer rate is excessively generous. The fact that the other two services have chosen not to adopt it, although they both seem to be doing well in this regard—the Navy has a particularly good record in getting ex-regulars to join, especially as pilots and in other key skill areas—suggests that it should perhaps be a temporary measure.

It is not for me to determine what may happen in future in an area of the Department for which I am not responsible. My hon. Friend needs to recognise that the cost of training and bringing a new entrant into the Army Reserve is considerably higher than the cost of an already-trained regular transferring, where the cost is, in essence, negligible. The rationale for providing an additional bounty for the regular is that the cost is equivalent to what we are paying to train up a raw recruit into the reserves.

The hon. Member for Plymouth, Moor View asked where the corporate plan and the framework documents stand in relation to DE&S-plus. I am pleased to be able to inform her and the House that we will be placing those in the Library and publishing them shortly.

The hon. Lady asked about the costs of the exercise. I think she was trying to get me to predict the future cost of a subsequent GoCo exercise. I like to think of myself as a clairvoyant in some areas, but I cannot possibly determine what the rates of consultant advice might be at some indeterminate point in the future, so that was a question incapable of an answer. She asked specifically about the costs that we incurred on the previous exercise. I gently point out to her that the answer I gave on the cost of the GoCo element was a subset of the cost of the matériel strategy as a whole. That is why there is a difference between the £7.4 million figure and the £28.9 million figure that we gave to the hon. Member for North Durham (Mr Jones) in response to a question.

We have had a good debate this afternoon. It has been good natured—

I thank the Minister, who has been helpful and charming throughout this whole process. I wonder whether he will indulge me in putting on record my thanks to the Officers of the House and to all the Members who have contributed to this debate. I am sure that he is about to do the same.

Thank you, Madam Deputy Speaker, for indulging so many Members of the House in an opportunity to use time that is rarely available to us to pass such niceties and congratulations across the Chamber. Yes, the hon. Lady’s remarks are absolutely reciprocated. We have had good support from the Officers of the House and from Members of the House throughout the Committee stage and all stages of the Bill. We have also had considerable support in the other place, where there was a great deal of interest not only from the former Chiefs of Staff who sit there but from many other Members on both sides of the House. I thank the hon. Lady for her contribution. I also thank the hon. Member for North Durham, who aided and abetted her throughout the Committee stage. I place on record my thanks to my colleague, Lord Astor of Hever, who took the Bill through the other place in his customary exemplary style.

This is an important Bill that will help transform the way in which we procure equipment for our armed forces and the way in which we use our reserves. I am pleased that it will now proceed to Royal Assent.

Lords amendment agreed to.

Lords amendments 2 to 6 agreed to.

Clause 49


Amendment (a) proposed to Lords amendment 7.— (Alison Seabeck.)

Question put, That the amendment be made.

Lords amendment 7 agreed to, with Commons financial privileges waived.