House of Commons
Monday 15 January 2018
The House met at half-past Two o’clock
[Mr Speaker in the Chair]
Oral Answers to Questions
The Secretary of State was asked—
Armed Forces Covenant
The Ministry of Defence published the armed forces covenant annual report in December 2017, which outlined the progress made to strengthen the covenant. Notable achievements include the establishment of a new ministerial covenant and veterans board, which had its first meeting in October 2017. The next ministerial covenant and veterans board meeting is due in the spring.
I thank the Secretary of State for that reply. Before Christmas, I visited the Community Awareness Project in Wakefield, and many of its homeless clients are former armed services personnel. The Veterans Association UK estimates that there are 13,000 homeless veterans. They are guaranteed priority access to social housing under the armed forces covenant, but it is impossible to know that unless they are counted in the census. Will he commit—here, today—to count armed forces personnel and veterans in the census, as recommended by the Office for National Statistics?
I thank the hon. Lady for highlighting that, and I assure her that, yes, we will do so.
Will my right hon. Friend tell the House what his Department is doing to support wonderful local charities, such as the Leigh-on-Sea branch of the Royal British Legion and Help for Heroes, in helping veterans to tackle isolation and loneliness?
The point my hon. Friend raises is very valuable. We have to be reaching out to so many veterans, who have given so much to our country over so many years, and the work of Help for Heroes and the Leigh-on-Sea branch of the Royal British Legion is absolutely pivotal to that. We have recently seen investment of £2 million to create the veterans’ gateway, which is there to make sure that veterans are signposted to the charities, support organisations and of course Government organisations that can best support them if they are suffering from loneliness or need other additional help. May I take this opportunity to thank the Royal British Legion—at Leigh-on-Sea and at so many other branches across the country—which continues to do so much for our veterans, day in and day out?
The armed forces covenant is currently more of a statement of intent than a statement of action, and it does not guarantee the support that serving personnel and veterans require. Does the Secretary of State agree that putting an armed forces representative body on a statutory footing would be a bold commitment to ensure proper representation of personnel and veterans?
What we have done is to create the veterans board. It was previously co-chaired by my right hon. Friend the Member for Ashford (Damian Green) and me, and it will now be co-chaired by me and the Minister for the Cabinet Office. We have found that the feedback about what we have been doing and trying to achieve in creating the board has been very positive. This is about not just the Ministry of Defence, but every Department, every local authority in the country and businesses helping and supporting our veterans and our service personnel.
Housing regularly tops the list of concerns expressed by the Army Families Federation, as my right hon. Friend will know. Since 2014, CarillionAmey has been responsible for 50,000 service homes, and its website boasts that 1,500 calls are taken from concerned service families every day. What will he do, given that Carillion is about to collapse, to ensure that those calls are responded to appropriately in the immediate term and that service housing is dealt with in the longer term?
I thank my hon. Friend for his question. There were some problems, and the Under-Secretary of State for Defence, my right hon. Friend the Member for Bournemouth East (Mr Ellwood), has done an awful lot of work with CarillionAmey to tackle these issues. We will be making every effort to ensure that the accommodation provided by the partners with which we work and from which our service personnel benefit is of the highest standards.
Housing for our armed forces families is indeed an important part of the covenant. I recognise that CarillionAmey is a separate entity from the parent company, Carillion, but, given the concerns about its capacity and performance and today’s worrying news, what contingency plans does the Minister have in the event of unforeseen knock-on effects on armed forces housing?
I assure the House that we have been monitoring the situation closely and working with our industrial partners. There will be a Cobra meeting later today to discuss addressing some of the most immediate issues, and the Under-Secretary of State for Defence, my right hon. Friend the Member for Bournemouth East, will do what he can, working with Amey and the separate business, to make sure that standards are driven up and no one notices a fall in service.
The strategic defence and security review created a national security objective to promote our prosperity, supporting a thriving and competitive defence sector. We have now published our national shipbuilding strategy and refreshed defence industrial policy; industry has welcomed both. Exports are now also a defence core task, and I was delighted last month to sign the biggest Typhoon order in a decade, worth £6 billion.
Our NATO allies should be living up to their commitment to spend 2% of gross domestic product on defence, including 20% of defence expenditure being on major equipment, as agreed at the 2014 NATO Wales summit. Does my right hon. Friend agree that, if all members of NATO lived up to their commitments, there would be a boost to the British defence manufacturing sector and therefore to high-skilled British jobs?
My hon. Friend makes a valuable point. He is right that, if everyone lived up their commitments on NATO spending and capital equipment, Britain could be a major beneficiary. I have made that point repeatedly to NATO Defence Ministers. It is about making sure that we have the right product on offer, so that we can sell it around the globe. That is something we in this country can be proud of as we continue to make significant and important deals across the globe.
Will the Secretary of State confirm that, by 2020, 20% of our defence budget is set to be spent in the United States, not supporting UK jobs in design, engineering and manufacturing? Will he look again at defence procurement policy, which currently excludes social, economic and employment policies?
We are proud that we continue to sell more and more to the United States that is British designed, manufactured and built, and we will continue to do that. We have some world-leading companies that continue to lead the way in this field.
The defence industrial policy refresh was extremely disappointing, particularly in its failure to include a change to how the Ministry of Defence calculates value for money to include employment and economic impacts in cities such as Portsmouth, despite many defence companies urging the Ministry to make that change. Can the Secretary of State explain why?
The refresh has broadly been welcomed by industry. I am sure that it will be followed by further refreshes, and we will be happy to look at different options.
One way to support defence exports is to make more of the “Five Eyes” relationship and the sharing of platforms. A great way to do that would be to have three, or perhaps four of the “Five Eyes” powers operating the same platforms, potentially on the same frigates. Will my right hon. Friend assure me that every effort will be made at the top of Government to support Type 26 exports?
My hon. Friend makes an important point about exploiting the “Five Eyes” relationship in terms of defence exports. I have raised that with my Australian and Canadian counterparts. We need to create a platform that uses not just British products, but Canadian and Australian products, to encourage them to purchase the platform.
In any defence contract, what conditions do the Government put in to ensure the use of British labour, new apprenticeships and British components?
The Ministry of Defence has created 20,000 apprenticeship places in the past few years. Everything we do in our negotiations with firms, both UK based and international, aims to bring as much work content as possible into the United Kingdom.
Will my right hon. Friend welcome the often innovative work done in this field by smaller UK companies? Does he agree that they have a valuable role to play in procurement?
We need to work out how to bring more small and medium-sized businesses into the MOD supply chain. Sterling work has been done in the past few years, but we have to double down on that and make sure that more small and mid-sized businesses benefit from MOD contracts.
As the Defence Secretary will know, the Government recently signed a letter of intent with the Qatari Government for six new Hawk aircraft, but workers at the BAE Brough plant say that, even if that deal goes through, there will still have to be a headcount reduction in line with future aircraft production rates. What can the Government say to reassure these workers about their jobs?
Later this afternoon, I will be meeting the Qatari Defence Minister to try to push the issue of making sure that we deliver on the statement of intent and the deal in terms of the purchase of the six Hawk aircraft. I have also taken the opportunity to meet the Emir of Kuwait, as well as the Prime Minister and the Defence Secretary, to push the 12 Hawk aircraft that we are desperately hoping the Kuwaitis will look at purchasing. This will have an important impact on the hon. Lady’s constituency and so many others.
I congratulate the Minister with responsibility for defence procurement, the Under-Secretary of State for Defence, the hon. Member for Aberconwy (Guto Bebb), on his new job. I am sure he will do his best to ensure fairness in defence procurement. I very much hope that the Defence Secretary will dispel the rumours regarding the £3 billion contract for the new mechanised infantry vehicle. Will he take this opportunity to give a commitment that there will not be a cosy deal with the Germans, but a fair and open competition for the prime contract?
What we have been doing is working to get a clear idea of what the Army needs going forward. The Under-Secretary of State for Defence, my hon. Friend the Member for Aberconwy, is new to the job. He will be looking at the options as to how we take this forward and making sure that we get the best deal and the best value, as well as the right equipment for the British Army. He will be looking at the details as he gets his feet under the desk.
Strategic Equality Objectives
The MOD increasingly strives to become a more diverse and inclusive organisation. The defence diversity and inclusion strategy is currently being reviewed to ensure it is continuing to have the desired impact on the organisation. I look forward to publishing a paper later this year.
Having more diverse armed forces clearly adds to their effectiveness, but, unfortunately, the latest figures show that the number of black, Asian and minority ethnic regular personnel has risen only 0.5% since 2015. What specific initiatives does the MOD have to improve on this?
The hon. Lady will be aware of the latest advertising campaign that is going through. She is absolutely right that, if we are to reflect society, we must be able to recruit from right across society, and that includes BAME people and women as well. We have this target of 10% for BAME and 15% for women by 2020, and I hope we will achieve that.
I strongly support the Minister’s ambition to encourage more BAME people and women to join the armed forces, but what has led him to the conclusion that the new advertising campaign to which he alluded a moment ago, which is rather less than robust in my view, will be any more successful in doing that than the good old-fashioned “Be the Best”?
I am grateful for my hon. Friend’s question. He will be aware that the “Be the Best” campaign continues, but he will also be aware that we must recruit from a diverse footprint. That means that we have to dispel some of the messages that are out there, and that is exactly what this new campaign is seeking to do.
What assurances can the Minister give workers in Rosyth, in my constituency, about the future work programme for the dockyard there, following the carrier completion contracts? Would he be able to meet me in the constituency to discuss that future work programme with unions and the management?
Order. I struggle to identify the relationship between the question posed and that of which the House was treating, but I will charitably attribute this to my inability fully to hear the hon. Gentleman. If the Minister wishes to blurt out an extremely brief reply, I think we should indulge the fella.
I hope I never blurt out anything in this Chamber, Mr Speaker, but I will say with courtesy to the hon. Gentleman that, if he would like to meet my hon. Friend the new procurement Minister, I am sure they can come to some arrangement.
That all sounds very encouraging. Now, on the matter of equality and diversity, let us hear from a Lincolnshire knight.
Of course the armed forces should be welcoming and open to all, irrespective of their gender, race or sexuality, but is it not better to state this in general terms? After all, we are all part of a minority—as you have alluded to, Mr Speaker, I am part of many minorities in my views—and the armed forces should be representative of the whole nation.
They should be, and that is why, even within the time of this Government, we have seen the number of women in one-star postings or above increase from 10 to 20, for example, and why we have opened up every role in the armed forces to women as well.
Daesh (Syria and Iraq)
The Government’s policy on the use of remotely piloted air systems to target Daesh fighters in Syria and Iraq is no different from targeting conducted by a manned aircraft. All UK targeting is conducted in accordance with UK and international law.
Our drones are piloted in the same way as fixed-wing strike aircraft, but the pilots do not have the same service life as pilots in frontline squadrons. Some drone pilots find it difficult to switch between being on live operations and being at home with their families. Will the Secretary of State confirm what support we give to drone pilots, and does it recognise the peculiar circumstances of their role?
We recognise that this is a new form of warfare, and we have been working very closely with those engaged in it, making sure they have that support and that it is put in place before they go on operations, during and after. We are also working very closely with the United States air force to make sure we learn the lessons they have learned over the past few years so that our service personnel might benefit.
The one thing above all else that gives us legitimacy in using force under these circumstances is the rule of law. Further to what he just said, will the Secretary of State confirm that UK operations will always comply with both the rule of law—the law of armed conflict—and the Geneva convention?
Yes, they do.
Armed Forces Compensation Scheme
The Ministry of Defence is carefully considering the recommendations of the armed forces compensation scheme review. It has always been the intention to publish a response a year after the publication of the review, which came out in February 2017.
As part of the Government’s response to the consultation, will the Minister consider the fact that, since the establishment of the compensation scheme 11 years ago, only 56% of claimants have been given awards, that 96% of those have been in the lowest four levels of support and that 60% of those low-level awards that are then appealed receive an increase in award? That significant percentage demonstrates flaws in the original decision-making process. Will he commit to urgently improving that first-stage decision making to ensure that veterans are given the support they deserve?
I am happy to look at the concerns the hon. Lady raises. The quinquennial review took place in 2016, and overall we were found to have remained on track and fit for purpose. We are making some changes, but they will be announced later in the year.
The Opposition strongly welcome reforms to the compensation scheme to make it fairer and easier to access, but we are concerned at Government proposals to prevent armed forces personnel and their families from seeking legal redress where there are failings that need to be highlighted. Not only would this remove an important legal right for injured service members, but it could prevent the MOD from learning lessons from past decisions. Will the Minister agree to think again and preserve the right of redress for personnel and their families?
As I alluded to in my previous answer, no firm decisions have been made, but I will be presenting the results in due course, and I will bear in mind what the hon. Gentleman has said.
Royal Navy: Capability and Strength
The Government are committed to increasing our maritime power to project our influence across the world and promote national prosperity. Growing for the first time in a generation, we will spend £63 billion on new ships and submarines over the next decade. We are also committed to increasing the number of personnel in the Royal Navy.
As the Minister will know, the strongest arm of the Royal Navy is the Royal Marines. Will he update the House on the work that is ongoing to transform the Royal Marines home base in south Devon into a world-leading facility and how it will enhance our national amphibious capability plans to ensure that we continue to meet our NATO and national priorities?
In my previous role, I was responsible for the better defence estate strategy. I can confirm that it remains the intention to dispose of the Royal Citadel and Stonehouse in 2024 and Chivenor in 2027, and to provide units for the Royal Marines in either Plymouth or Torpoint. I cannot confirm exactly what form that will take at this stage, as further work is required, but I will update the House in due course.
The lack of clarity and the leaks and confusion surrounding the national security review are really hitting morale, and morale affects capability in the Royal Navy. Given the uncertainty over Plymouth’s HMS Albion and HMS Bulwark and, now, the leaked proposal to merge the Royal Marines with the Parachute Regiment, will the Minister clear up the confusion and rule out those Navy cuts and the merger?
I am sorry to have to disappoint the hon. Gentleman, but I can only repeat what has already been said: the Government take the security of our nation incredibly seriously. I think it is far more important to ensure that the review is robust, comprehensive and detailed than to rush to make announcements simply to appease the hon. Gentleman.
May we take a moment to acknowledge the courageous service of Surgeon-Captain Rick Jolly, whose death has just been announced? He was the only person to be awarded a gallantry medal by both sides in the Falklands war.
Will the Minister please take back to those conducting the review the united opinion on both sides of the House that any loss of frigates and amphibious vessels before their due out-of-service dates would be totally unacceptable?
I am grateful to my right hon. Friend for highlighting the very sad passing of Commander Rick Jolly. He was indeed an absolute legend, and the service that he provided in the Falklands is worth reading about. It is unique to have been given awards for gallantry by both the United Kingdom and the Argentine forces. I also note my right hon. Friend’s other point.
Does not the passage of the Russian frigate Admiral Gorshkov through the English channel over Christmas prove that the Russians are intent on constantly observing our capability on the high seas, and is it not vital for us to maintain that capability at as high a level as possible?
Absolutely. The Russian activity in the north Atlantic is as high as it has been since the end of the cold war, which is why we constantly assess it and respond appropriately. I was delighted that, as ever, HMS St Albans accompanied that Russian vessel during its passage through the channel.
I call Richard Grosvenor Plunkett-Ernle-Erle-Drax.
Thank you very much, Mr Speaker.
May I reiterate what Members on both sides of the House have said so far, and add my concerns to those that have already been expressed about the future of the Royal Marines and the Royal Navy? I believe that any cutting of the Royal Marines or any further part of our amphibious fleet—HMS Ocean having already gone to the Brazilians—is absolutely out of order and totally unacceptable.
My hon. Friend is a champion of the armed forces, and I am of course aware of his own service. I can only repeat what has already been said, but I entirely recognise the contribution made by both the Royal Marines and the Royal Navy. I was deeply honoured to be able to award green berets to our Royal Marines back in 2016, having accompanied them for a short run across the moor. I am only too well aware of what they are capable of, and I note my hon. Friend’s concerns.
What assessments have been undertaken of naval capability in response to the inevitable arms race in weapons of mass destruction which would follow the implementation of the United States’ nuclear posture review?
I am sorry, but I did not catch the question. If I may, I will review it and write to the hon. Gentleman.
I think it would be fair to say that it was tangential to the subject of the strength of the Royal Navy.
We have heard from the Government ad nauseam that the Royal Navy is growing when that is demonstrably untrue. There continues to be a sharp divide between rhetoric and reality. It is utterly unacceptable that the House should hear about significant potential cuts from the newspapers, as we did yet again this weekend. Can the Minister refute those reports, and confirm that we will not see a repetition of the 2010 scale of cuts in our armed forces?
It is deeply disappointing that the hon. Lady once again comes to the Dispatch Box almost trying to talk down our Royal Navy. As is clear from the opening comments, we are absolutely committed to some £63 billion-worth of investment in our Royal Navy. Only shortly before Christmas we saw the Queen Elizabeth arriving in Portsmouth, after £120 million worth of investment in Portsmouth. We have now laid the first contracts for the first three Type 26s, and we are looking at Type 31s, and there are also nine new P-8 aircraft. The investment in our Royal Navy is significant, so for the hon. Lady to come to the Dispatch Box and simply try to talk it down is deeply disappointing.
Once again we do not seem to have very clear answers on that front. We also know that a lack of personnel is a driving factor for decisions in the Royal Navy. Capita is failing miserably on recruitment targets, failing to deliver savings, and is still bungling its IT systems, so what specific steps will the Minister be taking to get to grips with this situation?
We seem to be switching seamlessly from the Navy to the Army. [Interruption.] If it is in order, that is fine, but there is continuing work on recruitment in the Army. I am pleased to say that compared with this period last year, applications are up about 20%. There have been some minor glitches in the new computer system, but they are being ironed out and I am confident that we will see recruitment into the Army increasing.
Future Accommodation Model
The MOD is committed to giving personnel flexibility and choice in where, how and with whom they live. The future accommodation model programme is advancing a new way to offer choice to our armed forces, whether they wish to live on the garrison or rent or buy a house.
The families federations have made clear their concerns about the family accommodation model and a distinct lack of communication from the Department with forces families. When will this Government introduce some concrete proposals so that forces families have some clarity about their future?
I agree that it is very important that we work closely with the families federations to make sure that we look after their interests, and we have explained the proposals to them. I meet them regularly and my right hon. Friend the Secretary of State has also met them recently to explain the roll-out of this pilot scheme, which will begin at the end of this year.
It has been suggested that this model has saved £500 million, but also that it will not reduce the total pot of money used to subsidise housing. Given that we are told that no decisions have been made, is it not true that this £500 million figure has just been plucked from the air and we do not actually know the financial implications of this?
Let us turn this around: this is not about saving money; it is about offering choice to those whom we want to keep in our armed forces. One of the reasons why individuals choose to leave is that there is no choice; they look over their shoulders and see people in civilian streets able to invest in a house, or to rent or to buy and so forth, and that is exactly what we want to offer those in the armed forces.
The Army Families Federation found that if service family accommodation was replaced with the rental model, only 22% of personnel surveyed would definitely remain in the Army. Does the Minister not agree that the future accommodation model risks having a devastating impact on already shaky retention rates?
I do not quite recognise those figures. We have worked with the families federations to establish exactly what the armed forces want, and they want choice, particularly the youngsters who come in. Some will want to continue living on the garrison, but others will want to get on the housing ladder, and we need to help them; that is what we need to do for our armed forces.
The most pressing worry of service personnel tonight in terms of the future of their accommodation will be that the parent company of the company that provides the maintenance of their quarters has just gone bust. Given the great importance of its service to service personnel, particularly in the middle of winter, may I press the Minister further and ask what plan B has the Defence Infrastructure Organisation come up with to make sure that maintenance will continue for service personnel throughout the winter?
My right hon. Friend is right to raise this important question. There will be questions about the future of Carillion, and I understand that a statement on the matter will follow Defence questions. From the Defence perspective, we should recognise that a plan B was inherent in all the contracts. These are joint ventures, and if one of the companies steps back, there is an obligation on the other company to move forward and fill the space. We have been working on this for some time, and we have been prepared for this moment.
I am fortunate enough to have visited several airbases recently as part of the armed forces parliamentary scheme, and many airmen and women have expressed their concern about the significant differences in off-base accommodation across the country. How can we address this concern if there is no differential in pay in the future accommodation model?
First, I pay tribute to the armed forces parliamentary scheme. Looking round the Chamber, I hope that there is not a single person who has not either done the course or signed up for it, because it gives a fantastic and valuable insight into what our brave armed forces personnel are doing. In relation to the future accommodation model, it is important that people should not be disfranchised because of funding, and we need to ensure that, no matter where someone might rent, it will be about the same up and down the country. That will be the plan.
On behalf of the Scottish National party, I welcome the new Minister, the Under-Secretary of State for Defence, the hon. Member for Aberconwy (Guto Bebb), to his place. In response to an earlier question on CarillionAmey, it was stated that military families should not see a difference in the service they receive. Is it not the case, however, that they should see a difference? The 1,500 calls per day that the hon. Member for South West Wiltshire (Dr Murrison) mentioned earlier should tell us that something is deeply wrong with this private contract.
First, I extend my welcome to the Under-Secretary of State for Defence, my hon. Friend the Member for Aberconwy, the new procurement Minister. He is very welcome indeed. In relation to the hon. Gentleman’s question, we need to understand what those calls are. If someone is phoning up to get a lightbulb replaced, does that mean that they are dissatisfied with the service, or do they simply need a new lightbulb? Let us be honest about what those calls actually are. A process also exists so that when someone is prevented from, say, getting a new lightbulb, they are compensated for the inconvenience caused.
Let us be serious here. We know that this is not about lightbulbs. It is about people’s hot water going off and their having to wait weeks to get it fixed. Is it any wonder that fewer than half our service families are happy with the current accommodation model? When does the Minister plan to get a grip of this and end the dreadful service that companies such as CarillionAmey are giving to military families?
The hon. Gentleman is absolutely right; it should not be flippant about something that is so important. I should explain, however, that an awful lot of calls come through that relate to the everyday management of these locations. Yes, there are occasions when someone’s boiler has gone and we need to ensure that the individual family is compensated. Under a former Defence Secretary a couple of years ago, we called the company in to say that standards were slipping and needed to be improved. The satisfaction surveys that have come back since then show that there has been a dramatic increase, but yes, we still need to keep working at this.
We know that the Conservatives have a poor record when it comes to making decisions on armed forces housing. The 1996 sell-off is the prime example of that. The Ministry of Defence is planning to sell a number of sites as part of its changes to the defence estate, but it is unclear what will happen to the housing stock on those sites. Will the Minister tell us what plans are in place for that housing when the sites are sold?
Stepping back from Defence questions, I am sure that the hon. Gentleman will be aware of the need for more housing in this country. The Ministry of Defence owns 2% of UK land, and it is important that we do our job in freeing up land that we no longer need and that is surplus to requirements in order to make way for new housing. That is exactly what we are doing, and we have started off with an announcement on 91 sites.
European Defence Agency/Fund
I thank Members on both sides of the House for their warm welcome. I should also like to take this opportunity to pay tribute to my predecessor for the work that she has done in this role for the past two years. Ministerial colleagues and I regularly discuss defence co-operation with our European partners. The Government are clear that they are seeking a deep and special partnership with the EU, including on security matters. It is important that UK and European industry can continue to work together to deliver the capabilities we need to keep us safe, and we look forward to discussing options for future co-operation during the next phase of the negotiations.
I thank the Minister for that response, although he does not make it clear whether we will still be part of the European defence fund or whether that is our ambition. He will be aware that negotiations on the next stage of the European defence industrial development programme, which is part of the EDF, are taking place, so what assessment has he made of the impact on jobs in our aerospace, defence and security industries if we do leave?
The impact would be significant, and everybody would recognise that. However, going back to my previous point, the Government’s intention is to ensure that, despite leaving the European Union, our relationship with our European partners on security and defence is enhanced and strengthened.
The Minister surely knows of the deep concern among our friends and allies across Europe, not just about the European defence fund, but about the fact that this country is running down its defence capacity. Our support for NATO is under threat from our leaving the European Union, and people believe that we will soon lose our seat on the UN Security Council. What does he say to our friends in Europe?
The hon. Gentleman is making a statement that I do not recognise. This country is still one of the largest defence spenders in the world and still meets its obligations within NATO, and our European partners are well aware that the United Kingdom has a huge amount to offer them moving forward. The picture painted by the hon. Gentleman does not reflect the reality.
Munitions Workers (First and Second World Wars)
I am sure that the whole House will join me in paying tribute to the thousands who worked in munitions factories during both world wars. They produced vital equipment that helped us to final victory. For practical reasons, it is not possible to pursue individual awards, but the Department for Business, Energy and Industrial Strategy would be happy to work with colleagues across the House to look at further ways of recognising the collective effort of former munitions workers.
My constituent Sue Wickstead wrote to me about her aunt, who worked in a munitions factory during the second world war, and I urge my hon. Friend to work with BEIS to ensure that munitions workers are properly commemorated for their bravery on behalf of our country’s freedom.
I am delighted to say that we are already in negotiations with the Department and will happily pursue that work.
Last year, I had the privilege and pleasure of meeting Ethel Parker, a 99-year-old former munitions worker from Swynnerton. She is incredibly proud of her service and will be 100 in May—I am sure she will forgive me for mentioning her age. For her and many others, time may well be running out, and they would very much want to be at the opening of a memorial, which would ideally not be in London so that they could visit it. Can we progress this issue as a matter of urgency, just as we have with other memorials, so that those involved can actually see the testament to their work to deliver victory in world war one and world war two?
Once again, I can only pay tribute to those constituents who played such an important part in the second world war—those who took part in world war one are no longer around—and I absolutely recognise the urgency. We had a similar issue when it came to the French Légion d’Honneur, so mechanisms are in place, but I will pursue this as a matter of urgency.
May I group this question with Question 21?
The answer is that it was not grouped, but I think we ought to indulge the fella.
I think I might go out and buy a lottery ticket, Mr Speaker, as I seem to be doing well here—
I think the right hon. Gentleman is getting a little confused. I know that his responsibility is for defence rather than arithmetic, but the grouping was between Questions 14 and 21, so it is rather difficult to put Question 12 with Question 21. The right hon. Gentleman should satisfy himself with what I am sure will be a high-quality answer to the hon. Member for Canterbury (Rosie Duffield).
Mr Speaker, that is why you are the Speaker and I am just a Minister.
While much attention in defence debates focuses on those in uniform, we must recognise the unique commitment that families make to our country in supporting those who actually serve. I have met the War Widows’ Association of Great Britain on several occasions and have listened carefully to its case for the reinstatement of war widows’ pensions for those widows who remarried or cohabited before 1 April 2015. The Secretary of State is already apprised of the issue, and we are now considering a way forward.
I should just say that the right hon. Gentleman is a respected Minister. On a very serious note, and in recognition of the fact that I will have the whole House with me, we discovered not that long ago that the right hon. Gentleman is also a very brave man.
As the Minister will know, arbitrary and unjust transitions in pension status can have dire consequences for those who depend on them, and it is particularly shameful when those affected are the families of those who were prepared to make the ultimate sacrifice for our country. Members of my own family have been affected, so will the Minister please meet me directly to discuss this issue?
I would be delighted to meet the hon. Lady, particularly given her experience of this matter. It is a very difficult issue, and we must recognise that war widows’ pensions are not compensation for the loss of a spouse but are paid to assist with maintenance. We must pay tribute to any family who have undertaken the burden of losing somebody in uniform to the service of this country.
We now come to Question 14. I hope someone will now volunteer to group it with Question 21.
No one else is stepping forward, so I will jump in.
Armed Forces: Pay and Retention
As the House is aware, pay rates are recommended by the independent Armed Forces Pay Review Body, and by the Senior Salaries Review Body for the most senior officers. The next set of recommendations are expected in the spring.
Does the Minister share my concern that all three services are running below strength and that the delay in lifting the armed forces pay cap and in prioritising recruitment will only exacerbate the problem?
I hope the whole House would agree that pay is not the reason why people join the armed forces. Nor is it the reason why people choose to leave the armed forces, but we do not want it to become one. That is why I am pleased that the Armed Forces Pay Review Body has been liberated from the 1% pay freeze that has existed for a number of years.
The 2017 armed forces continuous attitude survey found that satisfaction with the basic rate of pay and pension is at the lowest level ever recorded, with nearly half of service personnel stating that their pay and benefits are not fair for the hard work they do. How bad do things have to get before the Government take this seriously?
I repeat: the important situational change is that the 1% pay freeze has been lifted. It is up to the pay review body to make its recommendations. We should also recognise that it is not simple basic pay. There is a complex process involved in armed forces pay, including progression pay, the X factor and a variety of allowances that must also be incorporated and considered.
Armed Forces: Mental Health Support
There has been a comprehensive change in how we deal with mental health issues in the armed forces, as outlined in the mental health and wellbeing strategy, which I was privileged to launch last year. We are already seeing the start of a cultural change in removing the stigma that for so long has been associated with those wanting to raise mental health concerns during their service time.
I thank the Minister for that reply. A recent report found that just 31% of our armed forces personnel and veterans with recent mental health problems had accessed a mental health specialist. Does he agree that the high rates of medical discharge among UK personnel might prevent people from seeking help for fear it might end their career? What will the Government do to encourage service personnel with mental health issues to seek help?
The hon. Lady is absolutely right, and it is why we had to introduce such a fundamental change in our strategy. People were not coming forward. If someone has a knee injury, they declare it, they show it, they get it sorted out and they get back into the line. If they had something wrong with their mind, soldiers, sailors and air personnel were reticent to step forward. That is now changing. We are changing the stigma, and we are grateful to the support of the Royal Foundation for providing funding for extra studies on this important matter.
Does my right hon. Friend agree that we need to be very careful with this narrative on veterans? If we go too far down the road of promoting the idea that we are all broken and contribute nothing, it will not help us to beat the challenge and to present mental health treatments on a fair and acceptable footing for our armed forces.
I shall take this opportunity to explain that the absolute majority of the 14,000 who leave the armed forces every single year make the transition into civilian life without a problem. In fact, 90% or so are either in education or in a job within six months. However, some require support, and often that they do not know where to find that support. My right hon. Friend the Secretary of State mentioned the armed forces veterans’ gateway, which is an important portal that opens up more than 400 military-facing charities that can provide that support for our deserving veterans.
Royal Air Force: Pilots
A total of 145 pilots formally applied to leave the Royal Air Force in the last three financial years.
Does the Minister agree that the RAF needs to do everything possible to retain its experienced pilots, particularly in the light of competition from the civil sector? Will he look at the case of 100 experienced pilots who have been disadvantaged in relation to their peers by the latest change to pay and conditions?
I absolutely recognise that we need to retain our experienced pilots, and of course a number of financial retention schemes are in place to do that. Equally, pilots have the choice as to whether or not they remain flying, by going into a specialist flying scheme, or stop flying, by going into the general scheme. Since the announcement that we would be buying nine P-8s, I have been deeply encouraged by the number of commercial pilots who have left the RAF and now want to re-join.
RAF pilots from Lossiemouth and other military personnel in my constituency have contacted me about the Scottish National party’s “nat tax”, which makes Scotland the highest taxed part of the United Kingdom and potentially a less desirable posting. Does the Minister agree that the SNP should drop these dangerous plans? If it will not, what support could the Government give RAF personnel in Scotland, who will face paying more tax than their counterparts south of the border?
Don’t bang on about SNP policy—we don’t need to do that. The esteemed Minister should focus on the latter part of the question, which was orderly and did relate to the policy of the Government, for which he is responsible.
I would not dream of banging on about the SNP, but it is of course for it to justify to our armed forces personnel its higher rate of income tax. I have yet to be contacted by any RAF pilots wishing to leave, and I will continue to do my best to ensure that they will want to stay in the RAF.
Fleet Solid Support Ships
The national shipbuilding strategy made it clear that, as non-warships, the fleet solid support ships will be subject to international competition. There are clear cost and value-for-money advantages from maximising competition, which remains the cornerstone of defence procurement. UK companies are welcome to participate in the competition.
Daewoo, of South Korea, which is currently building the Tide class tankers for the Royal Fleet Auxiliary, has benefited from unfair state aid assistance from the South Korean Government. Will the Minister give assurances that for the next batch of fleet solid support ships, any shipyard worldwide that is benefiting from unfair state aid will be excluded from the competition? Even better, will he make a commitment that UK shipbuilders will be able to bid for that on that basis?
I thank the hon. Gentleman for his question. The point I made in my initial answer is very clear: we believe that competition is a good thing. That means fair competition, so we will be more than happy to look into the details of his comments. However, we do believe that competition on this issue is the best way forward.
Since becoming Defence Secretary, I have asked the Department to develop robust options for ensuring that defence can match the future threats and challenges facing the nation. Shortly, when the national security capability review finishes, the Prime Minister, with National Security Council colleagues, will decide how to take forward its conclusions, and I would not wish to pre-empt them. However, as the Prime Minister made clear in the speech at the Lord Mayor’s banquet late last year, we face increasing and diversifying threats to this nation. Although the detail must wait until the NSCR concludes, I can assure this House that as long as I am Defence Secretary we will develop and sustain the capabilities necessary to maintain a continuous at-sea deterrence; a carrier force capable of striking globally; and the armed forces necessary to protect the north Atlantic, to properly support our NATO allies and to protect the United Kingdom and its global interests. That is why I continue to work with the Prime Minister and the Chancellor to secure a sustainable budget for defence to deliver the right capabilities, now and into the future.
Finally, I wish to thank all those service personnel who gave and did so much over Christmas and new year to make sure this country remained safe.
I thank the Secretary of State for his belated acceptance speech.
The Army recruitment centre in Oldham closed before the recruitment contract was handed over to Capita. Last year, only 7,000 of the 10,000 new entrants needed for the Army were recruited. Will the Department review the closure of those local offices to see whether it has affected the number of new entrants coming through?
Yes, we will certainly always review anything that has an impact on local recruitment. We are always looking into this issue. We have seen a 15% increase in the number of people applying to join the Army. We want to build on that and make sure that more people join our armed forces.
I thank my hon. Friend for the passion with which he asked his question. The Ministry of Defence supports and attracts engineers across the services. That work includes focusing on undergraduate apprenticeships in the Royal Navy to target submarine engineers; the Army’s running science, technology, engineering and maths events to inspire young people; and enhanced digital marketing of the RAF to promote graduate engineering opportunities.
As I said earlier, plans are in place to make sure that, with respect to what is happening with Carillion, obligations are met and we continue to provide the important accommodation for service families, as well as single accommodation.
My hon. Friend is a champion for the cadets. With more than 800 cadets and 125 adult volunteers in 20 detachments, the Hereford and Worcester Army Cadet Force demonstrates how the cadet experience provides opportunities for young people to develop self-discipline and resilience. I started my military career in the cadets, I am a great fan of the cadets, and we certainly continue to support the cadet expansion programme.
Once again, the hon. Gentleman’s comments are disparaging of our ability as a nation. This country aims to deal with past failures by ensuring that we have a platform that will appeal to nations around the world. The MOD is confident that the platform that we are developing for the Type 31e will appeal around the world. It would be good if some Members who claim to represent British industry were willing to support rather than attack it.
The Crowsnest project will deliver instructor and initial crew training in 2019, and it will be operational from mid-2020 to support the initial operating capability for HMS Queen Elizabeth. We are on track for Crowsnest to enter service, and I thank Thales—a key subcontractor —for its positive engagement and its collaborative approach to supporting this vital Royal Navy project.
Just the other week I was learning about all the things that we do in terms of supporting the United States through the F-35 project. United Technologies Corporation, which employs more than 2,000 people near my constituency, is applying the actuators, as is Moog, another American company that employs a British workforce. We are making sure that we are an absolutely pivotal part of the supply chain for this important project that will generate many thousands of jobs.
As I mentioned earlier in answer to the hon. Member for Rhondda (Chris Bryant), the level of naval activity that we see from Russia is at its highest since the cold war, but I am sure that the House will appreciate that I cannot go into too much detail. I can assure the House that our independent nuclear deterrent is continuously on patrol, as it has been every day now for nearly 50 years.
A constituent of mine and a veteran of two tours of Afghanistan, former Rifleman Lee Bagley, lost a leg after a non-theatre related injury incurred in February 2010. His subsequent complaint about delays to his treatment was dismissed in part because he was out of time. Will the Minister, under proposals to improve the armed forces covenant, ensure that, in any such circumstances again, the victim will have available a full explanation of what they may expect from treatment, and their rights?
Of course, the hon. Gentleman’s constituent was the subject of an Adjournment debate that the hon. Gentleman and I discussed some 18 months ago. The advice at the time was that he should put in a complaint to the service complaints ombudsman. I am not sure whether that has been done. However, if I may, I will take this opportunity to review the case and come back to the hon. Gentleman.
This is a very delicate issue. However, I can absolutely reassure my hon. Friend that we do have the capability to protect these assets. It would probably be inappropriate to say any more in this House.
As the Secretary of State assesses the effects of the delays to the 2018-19 pay negotiations on retention to the armed forces, do they not agree that the Ministry of Defence is actually giving squaddies a real-terms wage cut, while the Scottish Government are in fact putting money in their pockets through the new progressive tax system?
I will be giving evidence to the independent pay review body next month, and we will be doing everything we can to ensure that members of the armed forces get paid as and when they expect to be paid. Let us not forget that the Scottish Government are taking money out of service personnel wages.
I very much welcome the establishment of the veterans board. Will my right hon. Friend task it with ensuring that there is greater awareness among local government and public bodies of their duties and obligations under the covenant?
My hon. Friend is absolutely right to highlight that. So often, local authorities do not understand the duties and obligations that rest on their shoulders. We are not only creating intentions to improve the lives of people who are serving in our armed forces, but putting money behind them, such as with the premium to ensure that service personnel get the right type of education for their children. However, we do need local authorities to work with the Department to ensure that service personnel benefit.
In 2013, the regulatory reserve scheme was introduced. Since then, we have paid out more than £29 million and benefited by only 480 deployable reservists. Would it not have been better to use that money to improve the conditions, the pay and the benefits of those in our regular forces and to retain them?
I am not quite sure whether I agree with the hon. Lady’s figures, but I will go away and look at them, because I do not have them to hand. I absolutely defend what we have done quite successfully in increasing the size of the reserve. Compared with where we were three or four years ago, we now have a usable reserve, which is a very positive thing.
Will the Secretary of State join me in congratulating the Army on its new recruitment campaign, which shows the changing face and culture of our armed forces? Does he share my confidence that the corporals and colour sergeants who await those recruits in our training establishments, and the esprit de corps in our regiments that awaits thereafter, will ensure that our Army is no less professional, no less robust and no less lethal?
I could not agree more with my hon. Friend. The British Army is the best in the world. What we want to do is recruit from every walk of life and every background; it does not matter where someone comes from, their sexuality or anything else. We want the best in our armed forces, and that is what we will achieve.
I welcome what the Secretary of State has said about his efforts to secure further Hawk orders. May I remind him that if we do not get those Hawk orders for BAE Systems and the jobs at Brough, his Department will not be able to renew the Red Arrows fleet, which flies Hawks, when the time comes?
I thank the hon. Lady for reminding me of that. We have, I believe, 75 Hawk aircraft, which the Red Arrows pull from and which are due to go until 2030. This is why we are working so hard to secure future orders for the Hawk aircraft and we will continue to do so going forward.
I welcome my hon. Friend the Member for Aberconwy (Guto Bebb) to his ministerial role. Will he begin by considering boosting exports by pairing the national shipbuilding strategy with the national aerospace strategy?
I thank my hon. Friend for welcoming me to my role. He makes a really important point; I will be more than happy to take his representations on board as we move forward.
How often does the Veterans Board meet and what powers has it got?
It meets twice a year and has the ability to direct and ensure that Ministers right across the Government are doing what is needed. It will evolve and change, and that is what we want to see. I cannot remember such a body existing prior to 2010. I am very proud of what our party has done for veterans and we will continue to deliver for them, unlike other parties.
National Security Capability Review
(Urgent Question): I rise to request urgent clarification of the radical reductions in conventional military forces provisionally proposed by the national security capability review, together with an explanation of the reasons for undertaking the review and the financial constraints under which it is being conducted.
In the 2015 strategic defence and security review, the Government identified four principal threats facing the UK and our allies in the coming decade: terrorism, extremism and instability; state-based threats and intensifying wider state competition; technology, especially cyber-threats; and the erosion of the rules-based international order.
As the Prime Minister made clear in her speech to the Lord Mayor’s banquet late last year, these threats have diversified and grown in intensity. Russian hostility to the west is increasing—whether in weaponising information, attempting to undermine the democratic process or increased submarine activity in the north Atlantic. Regional instability in the middle east exacerbates the threat from Daesh and Islamic—Islamist terrorism, which has diversified and dispersed. Iran’s well known proxy military presence in Iraq, Syria and elsewhere poses a clear threat to UK interests in the region and to our allies.
Like other Members, I have seen much of the work that our armed forces continue to do in dealing with these threats. It is because of these intensifying global security contexts that the Government initiated the national security capability review in July. Its purpose is to ensure that our investment in national security capabilities is joined up, effective and efficient. As I said in oral questions, since I became Defence Secretary I have asked the Department to develop robust options to ensure that defence can match the future threats and challenges facing the nation. Shortly, when the national security capability review finishes, the Prime Minister, with National Security Council colleagues, will decide how to take forward its conclusions. I would not wish to pre-empt that decision.
Although the detail must wait until after the NSCR concludes, I can assure the House that as long as I am Defence Secretary we will develop and sustain the capabilities necessary to maintain continuous at-sea nuclear deterrence, a carrier force that can strike anywhere around the globe and the armed forces necessary to protect the north Atlantic and Europe; and we will continue to work with our NATO allies. The Prime Minister, the Chancellor and I will be doing all we can to ensure that we have a sustainable budget, so that we can deliver the right capabilities for our armed forces.
I thank the current Defence Secretary—[Laughter.] That is not meant to be funny. I thank him for confirming what the previous Defence Secretary told the Defence Committee, namely that the capability review resulted from intensified threats to the United Kingdom. If the threats are intensifying, why has the review provisionally proposed radical reductions in our conventional armed forces, and why is it required to be fiscally neutral, as the National Security Adviser recently told the Joint Committee on the National Security Strategy? Who has imposed that financial restriction? The Ministry of Defence? Unlikely. The Treasury? Almost certainly.
If new threats have intensified, is not more money needed, unless of course previous conventional threats have seriously diminished? If previous conventional threats have diminished, why did the National Security Adviser claim to the Defence Committee in a letter:
“Because the main decisions on Defence were taken during the 2015 SDSR, this review is not defence-focused”?
If this review is not defence-focused, and if the 2015 plan therefore still applies, why should thousands of soldiers, sailors and airmen be lost, elite units merged or aircraft frigates and vital amphibious vessels scrapped, long before their out-of-service dates?
Finally, is it not obvious that we are bound to face such unacceptable choices as long as we continue to spend barely 2% of GDP on defence? Even after the end of the cold war and the taking of the peace dividend cuts, we were spending fully 3% in the mid-1990s. Defence is our national insurance policy, and it is time for the Treasury to pay the premiums.
I thank the current Chairman of the Defence Committee—I think we are only ever current—for raising those points. In the NSCR, we are looking at the threats that the country faces, and everything that was done in 2015 is relevant today. As I pointed out, the Prime Minister herself has highlighted the fact that the threats are increasing, and we are having very active discussions right across Government about how best we can deal with those threats. There is an awful lot of speculation and rumour in the press, but that is what we expect of the press.
As I mentioned earlier, we need to ensure that we have the right capability, whether that is a continuous at-sea nuclear deterrent, our special forces, or an Army, Navy and Air Force that have the right equipment and capability to strike in any part of the globe. That is what we have to deliver. I am afraid that I cannot be drawn on the details at the moment, but I will be sure to update the House regularly, as the national security capability review develops, on the conclusions of the review and how we can best deal with them.
I am grateful to you, Mr Speaker, for allowing this urgent question, because Members on both sides of the Chamber have had enough of constantly reading about proposed defence cuts in the newspapers while Government Ministers stonewall questions in the House.
May I press the Secretary of State actually to answer the questions posed by the Chair of the Defence Committee about the national security capability review? Is it the case that the defence element of the review is to be hived off? If so, when can we expect that part to be published? We live in a time of deep global uncertainty, and the risks that we face continue to grow and evolve. Can the Secretary of State confirm that the review will carry out a thorough strategic analysis of those risks, and make a full assessment of the capabilities required to deal with them effectively? It is complete nonsense to have a review without also reviewing the funding, yet that is precisely what this Government propose to do.
Although we must develop and adapt our capabilities as the threats that we face continue to evolve, this review must not become a contest between cyber-security and more conventional elements. Will the Secretary of State recognise that Britain will always need strong conventional forces, and that money must be made available for both? He must not rob Peter to pay for Paul.
There is significant concern about cuts to personnel, with numbers already running behind the stated targets across all three services. The Government still maintain that they aim to be able to field a “warfighting division”, but will the Secretary of State admit that this simply will not be possible if the Army is reduced to the levels speculated? What is the Government’s target for the size of the Army? They broke their 2015 manifesto pledge to have an Army of over 82,000, and they have now broken their 2017 pledge to maintain the overall size of the armed forces because, in reality, numbers have fallen.
Finally, will the Secretary of State tell us what specific steps he is taking to stop defence cuts, beyond posing with dogs outside the MOD and briefing the papers about his stand-up rows with the Chancellor? The fact is that we cannot do security on the cheap, and the British public expect the Government to ensure that defence and the armed forces are properly resourced.
I think that all Government Members recognise the importance of making sure that we maintain conventional forces, and the fact that we have to have a continuous at-sea nuclear deterrent; but we cannot have one and not the other. We have to ensure that we have that ability so that, if we are in a point of conflict, there is deterrence at so very many levels. That is why having robust armed forces—the Army, Navy and Air Force—is so incredibly vital.
The Government and the Conservative party made a clear commitment in our manifesto to maintaining numbers. We are working to ensure that we get the recruitment methods right, so that we can give many people right across the country the opportunity to be able to join the Army, Navy and Air Force. I have to say that if we are choosing between parties when it comes to who will prioritise defence, and who will ensure that our armed forces and this country’s national interests are protected, I know which party I would choose, and it sits on this side of the House.
I will continue to work with the Army, Navy and Air Force to ensure that we get the very best deal for our armed forces. We have a vision as to what we wish to deliver for this country: a robust, global Britain that can project its power right across the globe. We recognise that that is done not just through cyber-offensive capabilities, but the conventional armed forces. As I said earlier, as the national security capability review starts to conclude, I will update the House on the conclusions and how it will be developed.
There has been speculation over the weekend that the defence element of the NSCR is going to be effectively broken out, and dealt with separately slightly later. Given the immense amount of speculation, will the Secretary of State confirm whether this is true? Is he also aware that if he continues stoutly to fend off the pin-striped warriors of the Treasury, he will have very strong support on the Government Benches and, I suspect, even among the Opposition.
I assure my right hon. Friend that we are working hard across Government and all Departments to make sure that we have the right resources for our armed forces not just this year and next year but going forward. On whether I can update the House, I am afraid that I do not have the ability to pre-empt the national security and capability review, but as soon as its conclusions have been brought forward and it has gone to the National Security Council, I will be sure to update this House as soon as I am able to do so.
Who would have thought that a national security review would become a proxy Conservative leadership contest between the Secretary of State and the Chancellor?
Will the Secretary of State answer the question that he has been asked by the Opposition and by Government Members? Is the review being split up into defence and security, is defence expected to come later in the year, and if so, when will that happen? What size will the Marines be by the time this concludes? Does he not agree that given all the speculation, and given that the SDSR is now effectively out of date because we are leaving the EU and because of major currency fluctuations, what is needed is a proper SDSR that he, at least, would be able to get a grip of?
I apologise, Mr Speaker, but the hon. Gentleman seems not to have been listening to my previous answers. I am not in a position to comment on his question, but I have promised the Committee that I will update the House as soon as I am able to do so. Quite simply, I am not in a place where I can pre-empt the decisions of the National Security Council, and the national security and capability review is ongoing. As soon as I am in a position to be able to update him, I will certainly do so.
When I joined a conventional infantry battalion in 1969, there were 780 officers and soldiers. Now, in the same conventional infantry battalion, there are just over 500. That is a loss of a third in number. Does my right hon. Friend agree that doing that and still calling something a battalion is a great loss of capability?
My hon. Friend makes a very valuable point, and I will certainly look into it. We want to make sure that battalions are properly and fully manned so that they are able to deliver the right capability with the right equipment and the right resources, but I take on board the points that he makes.
In 2015, the Conservative party was very clear that the size of the Army should be 82,000. Will the Secretary of State give a commitment today that on his watch the size of the Army will not drop below 82,000, and if it does, will he resign?
We are meeting all of our operational commitments. We have also made it clear that we want to deliver on the numbers that we outlined in the manifesto in keeping the forces at the levels that they are, and we will be doing everything we can to deliver on that.
Does my right hon. Friend agree that in some ways this is an unfair question for him, because given everything that he has said, he does not decide defence and security policy, as that has now been upped to the National Security Council and the National Security Adviser? At what point does the influence of the chiefs of staff come in? Is he able to veto any proposals being put forward by the Treasury or other Government Departments?
The Chief of the Defence Staff acts as the Prime Minister’s principal adviser on all defence issues. We will be putting forward our thoughts as to how best to make sure that our armed forces are best equipped to go forward. This national security capability review touches on 12 strands of work. I am keen to make sure that defence gets the very best deal. I will be very vocal in making sure that the interests of our armed forces are properly represented going forward.
Does the Defence Secretary not realise that he has a real opportunity here? Both in the debate on Thursday and today, Parliament is saying that he should go to the Treasury and tell it we will not accept merging the Paras with the Marines, cuts to amphibious warfare capability or cuts to the Army of some 11,000. We are trying to support and help him, so instead of retreating into partisanship, will he embrace what Parliament is telling him, and go and tell the Chancellor and the Prime Minister that we want more money?
I am always incredibly grateful for such cross-party support. In the arguments and the debates about our armed forces having the right resources, the fact that there is a real passion to make sure that they have the resources they need is apparent to everyone, not least me. As I have already said, I have made and will continue to make the arguments that need to be made to ensure we have the right resources to enable our armed forces to fulfil the asks that politicians in this House so often place on them.
First, I commend the Government’s commitment to defence: we spend the largest amount of money on defence in Europe. However, the money must be well spent if we are to deal with the security threat. Does the Secretary of State agree that for the Marines, such as 40 Commando in Taunton Deane, to function at the top of their game, they must have the correct amphibious capability, which includes retaining HMS Albion and HMS Bulwark? I know that he will give this due consideration, because it is very important not just for Taunton, but for the nation.
I will most certainly give that proper consideration, and I would be very happy to meet my hon. Friend. I have just visited the commando training centre, and it is quite clear that exceptionally high levels of training go into preparing every marine, as they do into preparing every member of our services. It is absolutely vital to understand the capability we have—not just the Marines, but 16 Air Assault Brigade and so much more—and the benefits they can bring to and their immediate effect on the field of conflict. We will feed all these comments and thoughts into the national security capability review.
The Secretary of State says that he will not be drawn on the detail, and to an extent that is understandable. Is not the fundamental problem, however, that the review is already constrained in that we know it is fiscally neutral? Would not the best way to proceed be to look very carefully at the extensive range of threats we face as a country and to allocate resource and capability accordingly?
The hon. Gentleman makes a very important point. I know that the first thing at the forefront of the minds of the Chancellor and the Prime Minister is making sure we get the right outcome. Everyone is very keen to listen and to look at how to get the right solutions for this country’s needs. I thank the hon. Gentleman very much for his contribution.
The Liaison Committee was unanimous in supporting the request of the Chair of the Defence Committee, my right hon. Friend the Member for New Forest East (Dr Lewis), to have the National Security Adviser appear in front of the Committee. My right hon. Friend the Secretary of State will know that there are precedents for the National Security Adviser appearing in front of the Defence Committee, the Foreign Affairs Committee and elsewhere, and Parliament has never accepted the Osmotherly rules, so will he give permission for the National Security Adviser to appear?
I am afraid that my hon. Friend is asking me something I cannot deliver. I can offer the Chief of the Defence Staff if she would like him, but I cannot offer the National Security Adviser. However, I will certainly pass on her request to Mr Sedwill.
There is danger, is there not, of an ever-diminishing spiral? Governments and political parties say they will have 82,000 or 80,000 in the Army, but fail to recruit that many and end up saying, “All right, there’ll be 75,000”, and then the figure will be 70,000, and so it will go on and on. If we fail to recruit enough and the Government fail to fulfil their promises, this country will in the end be left without sufficient defence.
Let us make it absolutely clear: the reason we are looking so clearly at how we go about our recruitment is to make sure we meet the target and fully recruit, and that is why we are changing our approach. As is often said, “If you always do what you always did, you will always get what you always got.” We are trying to look at how to do this differently, so that we hit our numbers and get the right people who want to serve our country, and that is why we are going to do things differently. We have already seen a 15% increase in applications, and I hope that that will continue to rise.
It is perfectly reasonable that the Secretary of State cannot say much until the national security capability review has been completed, so when will that be?
I hope very soon, so that I do not have to sound quite so evasive. I hope it will happen in the very near future, but I am not yet at liberty to name a date.
Pursuant to a point made earlier, I would say to the Secretary of State that the appearance in the newspapers of briefings, which I am certainly not suggesting hail from him, is something that greatly irritates Members of the House. It is therefore very much to be hoped that before the conclusion of the review, there are no further such briefings. If there are, I rather imagine that I will be confronted with further requests for urgent questions, and I will feel unable, and in any case disinclined, to resist those requests.
On that point, I stand here as chair of the all-party parliamentary group on the armed forces covenant. The reality is that the leaks to papers are undermining morale and the confidence of families, and sending completely the wrong message to our allies. We need answers and we need them now, if only for the people who are serving. They need to know whether they will be serving in Plymouth, or be moved to Colchester.
The hon. Lady makes a powerful point on morale in the armed forces. To read speculation in the newspapers is not good for anyone. That is why I hope we can conclude the national security capability review at the earliest possible moment; then, we can make clear some of the options and what we want to do to take our armed forces forward and to make sure that they have the right investment, so that they continue to be the successful, vibrant organisations in which so many people take great pleasure and pride in serving.
Does the Defence Secretary agree that the British Army headcount now is at an irreducible minimum? Does he also agree that the Sedwill review must deal principally with the threats that face this country—cyber and terrorism, and asymmetry—and will he reconcile the two?
We will continue to do everything we can to fulfil our commitment. I confess that, probably like all Defence Secretaries, I am a little greedy: I would always prefer to have larger numbers in our armed forces. In the coming months, we will do all we can to drive up the numbers through the new recruitment campaign. We hope that will attract significant uptake and an increase in the number of people joining our forces.
Had the Secretary of State been able to join us last Thursday, he would have heard across the House a cry for reassurance. Many of us here are also members of the NATO Parliamentary Assembly and represent this House and this country across the NATO alliance. I have to tell the Secretary of State that that cry for reassurance, that demand to know that we are able and capable and have the people, the personnel and the equipment to defend the NATO alliance, is shared by our allies. They are also desperate to hear the results of the national security capability review. Are the Secretary of State and the Government aware of that and of the need to reassure our allies?
Yes. We need to reassure our allies that Britain will continue to play a pivotal role not only in the defence of Europe, but in actions in every part of the world, where we bring unique capabilities—the ability to make a difference, as we have done throughout our history. I am as keen as the hon. Lady to bring the national security capability review to a conclusion, so that we can set out our clear vision for our armed forces. They are the best in the world. We have to continue to invest in them. We are increasing the amount of money we spend on our armed forces, and we need to make sure that the whole world understands our commitment to delivering a global Britain.
The Secretary of State took over in a difficult situation, because there were a lot of vacancies in the armed forces. I was pleased to hear him say that he wishes to bring the totals back up and that that is mainly a recruitment problem, which he thinks he may be able to resolve. Does he have the money in the budget if all those people come forward?
Yes, we do.
With Russia on the rise, our allies under threat and our northern flank vulnerable from Russian naval power, the threat from the Russian great bear is clear. Does the Defence Secretary understand that there is no support from any part of this House for any further cuts to our Royal Navy and our Royal Marines or for mergers that reduce the capabilities of our armed forces?
The threat that the hon. Gentleman talks about is what prompted the security capability review, and that is why we are looking at how best we deal with that threat going forward.
I am proud that we are one of the few members of NATO to actually maintain the 2% of GDP and exceed it. What can we do to ensure that other NATO members actually pay their fair share?
That point has been echoed by not just myself but the US Administration. We need to make sure that everyone understands that every country in NATO has to contribute towards the collective security of Europe and that that is not something that can be outsourced to another nation.
Our Prime Minister is meeting President Macron later this week in Sandhurst. The French are our major defence partners. Will they be consulted as part of the review, particularly in terms of the implications post Brexit for our ability to co-operate with them and other EU partners?
It is a sovereign decision as to how we spend our money on our armed forces, and that decision should be made purely in this country. However, we have worked, and we continue to work, with the French, as we do with the United States, and they are important partners in ensuring we have the stability and security in Europe that benefits every European nation.
I am pleased the Secretary of State is focusing on recruitment. May I put a plea in for the cadets? Many of our cadets go on to serve in the forces they support. However, many cadet units have disappeared from our schools, which is a tragedy. May I put in a plea that the cadets are not left out when we are considering recruiting people into our armed forces?
My hon. Friend is absolutely right in her analysis of the important role that cadets play. Some 20% of our armed forces served in the cadets. That is why the Government are committed to opening 500 new cadet forces in schools right around this country. Cadets are so incredibly vital for our armed forces, but they also make sure, in communities right across the country, that our armed forces play such an important role in the life of those local communities.
The Secretary of State has referred at least twice to the manifesto commitments on numbers that he and all his colleagues were elected on. He has been slightly vague about this, so will he be absolutely specific that it is the Government’s policy, under the manifesto he stood on in 2017, that the British Army will not go below 82,000?
Our commitment was to maintain the size of the armed forces, and we absolutely stick by that commitment.
On Saturday, together with my hon. Friend the Member for Lichfield (Michael Fabricant), the hon. Member for Stoke-on-Trent North (Ruth Smeeth) and several other colleagues, I had the honour to be at the laying-up of the colours of 3 Mercian, the Staffords, in Lichfield cathedral. It was a great privilege to be there and to recognise their service, but at the same time it was a reminder of the difficult decisions that had to be made. I agree with colleagues that 82,000 is an absolute minimum for the Army, and we must go higher—possibly to see the return of 3 Mercian—and certainly not lower.
I would very much like to reintroduce the Staffordshire Regiment as part of any changes, and that is something I would like to look at going forward—I may have some more battles to win before I get to that stage. However, I take on board my hon. Friend’s comments, and I am very conscious of the important role that the armed forces—especially the Royal Signals—play in Stafford, of how they are so involved in the local community and of how important the money we spend on our armed forces is to the economic prosperity of Stafford and Staffordshire.
The Secretary of State listed areas that would be protected, including aircraft carriers. Could the red line be extended to the amphibious assault ships—the Albion-class ships—and may I respectfully point out that a reduction in our amphibious capability would fundamentally diminish our ability to carry out humanitarian missions?
We need a broad range of capabilities, and I will certainly take on board the hon. Gentleman’s comments. We must maximise our capability, make sure it is affordable and give our armed forces the right training and equipment for them to do their job right around the globe.
Many of us are sympathetic with the Secretary of State in his battle royal with the Treasury—after all, we are down to our last 13 frigates and six destroyers—and think that we should be spending 3% of gross national product, not 2%, but how many of us will support the Treasury when, having achieved our aims and we do spend 3% of GNP on defence, we cut the budgets of other Departments?
I think that I will refer that question to Treasury questions as something the Chancellor might like to take up.
While we are talking about the Chancellor, will the Defence Secretary say what he thinks about the fact that early last month the Chancellor is understood to have told defence chiefs that an army only needs 50,000 full-time professional soldiers?
As already touched on, there is an awful lot of speculation, and I am sure that much of it is not based on fact. The Chancellor was a great defender of the armed forces when he was Defence Secretary and is passionate about what they do. I am sure that that passion still burns in his heart today.
The importance of amphibious capability is summed up by the famous quote: the British Army is a projectile to be fired by the British Navy. Will the Secretary of State reassure me that he will do everything in his power to make sure that at the end of the review that statement is still the case?
We have seen how British forces have been consistently able to deploy effectively around the world using land, sea and air. That requires a broad range of capabilities. We have to look at new ideas: how do we fight differently; how do we get different equipment; how do we get more efficient and capable equipment? That is why we are doing a national security and capability review—to see whether we can get answers to some of those questions—but I am afraid that I cannot be drawn on specifics.
What assessments are being undertaken as part of the review on the savings that could be made by home basing Welsh regiments in Wales, which would help with recruitment and post-service medical care?
The Principality of Wales plays an important role in all we do in defence—it would be great to see national Armed Forces Day taking place in Wales. We are always looking at how to ensure an even distribution of resources in terms of the Army, Navy and Air Force—RAF Valley is an important part of our training capability for the Royal Air Force based in Wales—but we will always look at how we can do more in Wales. It contributes so much to everything we do in our armed forces—the Royal Welsh Fusiliers are currently serving in Estonia—and I am sure that that important role will only increase going forward.
We all understand why the Secretary of State cannot comment publicly, but there is a human element to all this: good men and women up and down this country and their families want somebody to come out and publicly refuse the proposals that have come forward. Will the Secretary of State agree that now is a good opportunity to get a grip on this process and lay out a broad vision for UK defence post Brexit?
My hon. Friend makes a powerful point. We need to draw these matters to a conclusion as swiftly as possible and make sure that people have a clear idea of our intent—how we are going to develop our armed forces and make sure they have the right resources to deliver everything we ask of them. That is what we aim to do. We have the best armed forces in the world; and we have to maintain that. If we want to ensure that Britain remains a global nation that can project power in every part of the globe, we need an armed forces with the resources and manpower to do that. That is what I aim to deliver.
The House learned from the defence debate on Thursday that one of the cruxes of the issue of defence budget pressures is the fact that the defence rate of inflation is considerably higher than the national rate. Year on year, it erodes the purchasing power of defence. However, the Ministry of Defence and the Treasury stopped measuring the defence inflation rate last year. As part of the review, will the Secretary of State commit himself to reinstating measurement of defence inflation, and, in order to be truly fiscally neutral, will he ensure that the annual defence budget increases are pegged to the defence rate of inflation?
That is a very important comment. Foreign exchange rates have had an adverse effect on our ability to buy equipment such as the F-35 fighter. We will always be happy to look at suggestions such as the one made by the hon. Gentleman, and I will certainly raise it with the Treasury, but I cannot guarantee the response.
Richard Grosvenor Plunkett-Ernle-Erle-Drax.
History, sadly, has shown us that politicians are all too easily tempted to cut our armed forces in order to spend money in other areas. May I urge my right hon. Friend not to do so? We are leaving the European Union, and I believe that our commitments and responsibilities will grow, not least because by the time 27 other countries have decided to do something, it will be too late.
That is why the Government are committed to growing our efficiency budget from £36 billion to £40 billion, increasing the amount of money that we spend on equipment by 0.5% above inflation every single year. These are important points. The first duty of every Government is the defence of the nation, and that is why this Government take it so incredibly seriously.
Much has been made of the Secretary of State’s relative youth in comparison with that of their predecessors. With that in mind, I was reminded of a quotation from Dante at the weekend, when I was reading about their predicament. “In the middle of the journey of our life, I came to myself in a dark wood where the direct way was lost.” Can the Secretary of State enlighten the House about the instructions on the map showing the way out of the “selva oscura” in which he and his Prime Minister now find themselves?
Probably not. I have not read much Dante. I am more of a Burns fan. I have felt a great deal older over the last two months, since starting this job: I think that it ages people an awful lot.
I believe that we are all simply committed to ensuring that we get the very best for our armed forces, and I am sure that the hon. Gentleman will be four-square behind our delivering it.
The hon. Member for West Dunbartonshire (Martin Docherty-Hughes) is of a notably literary turn, as is becoming increasingly apparent in the House. I expect that we will hear further expositions in due course.
On Friday I visited Nos. 10 and 101 squadrons at Brize Norton in my constituency, and I could see how hard they were working. This morning my constituents were out providing tanking support for the Typhoons that were investigating the latest Russian reconnaissance. Does my right hon. Friend agree that now is the time when we need to match spending with the size of the threat, rather than scaling down our response to that threat in order to fall into line with spending?
The review is very much about examining the threats and ensuring that we have the right resources, and that we deliver for the security of our country. Wherever we go, all around the globe, we so often see my hon. Friend’s constituents playing a vital role in ensuring that our armed forces are able to function in every part of the world.
Thank you, Mr Speaker. This must be like opening a box of chocolates and realising that all your favourites have gone and there is just a strawberry cream left. However, I am glad that my patience has won out.
Earlier, the Secretary of State mentioned the changing nature of our security challenges. Does he agree with the Minister for Security and Economic Crime that the big tech companies must do more, and that they may face a special tax levy if they do not do more to help with combating terrorism?
The hon. Gentleman really should not do himself down. I have every expectation that the people of his constituency have been listening to the entirety of these exchanges principally for the purpose of waiting to hear him.
My hon. Friend comes up with an innovative idea for hypothecation of tax in terms of the MOD, and I would be keen for him to expand that idea and push it with the Chancellor going forward.
On a point of order, Mr Speaker. I am grateful to you for taking this point of order now, but the Secretary of State has a couple of times used the words “Islamic terrorists.” I think he meant “Islamist terrorists”; I am certain he did, and it is important that we make that distinction in this House, as I am sure he would want to, and I just want to give him the opportunity to correct the record on that.
I thank the hon. Gentleman for bringing that to the House’s attention, and he is absolutely correct.
The hon. Member for Rhondda (Chris Bryant) has performed a notable public service; it will be recorded in the Official Report, and I am very grateful to the Secretary of State.
On a point of order, Mr Speaker. The Secretary of State, who is a very nice man, referred to Wales as a Principality during the exchanges. He knows, of course, that Wales is a proud nation; will he please correct the record?
I know of course that it is a very proud nation that contributes so much to our armed forces. I am not that great on my Welsh history, and I am sure the hon. Gentleman knows a lot more about it than me, but I think it has been referred to as a Principality for hundreds of years, but I could well be wrong.
With permission, Mr Speaker, I wish to make a statement to update the House on the situation relating to Carillion Plc.
Today the directors of Carillion concluded that the company is insolvent and that it is going into liquidation. The court has appointed the official receiver as the liquidator. It is regrettable that Carillion has not been able to find suitable financing options with its lenders, and I am disappointed that the company has become insolvent as a result. It is, however, the failure of a private sector company and it is the company’s shareholders and lenders who will bear the brunt of the losses; taxpayers should not, and will not, bail out a private sector company for private sector losses or allow rewards for failure.
I fully understand that both members of the public and particularly employees of companies in the Carillion group will have concerns at this time, and the Government are doing everything possible to minimise any impact on employees. Let me be clear that all employees should continue to turn up to work confident in the knowledge that they will be paid for the public services they are providing. Additionally, in order to support staff—and in this instance this will apply to staff working for the private sector as well as for the public sector contracts of the Carillion group—we have established a helpline using Jobcentre Plus through its rapid response service.
The Government are also doing everything they can to minimise the impact on subcontractors and suppliers who, like employees, will continue to be paid through the official receiver. The action we have taken is designed to keep vital public services running, rather than to provide a bail-out on the failure of a commercial company. The role of the Government is to plan and prepare for the continuing delivery of public services that are dependent on these contracts, and that is what we have done.
The cause of Carillion’s financial difficulties is, for the most part, connected not with its Government contracts, but with other parts of its business. Private sector contracts account for more than 60% of the company’s revenue, and the vast majority of the problems the company has encountered come from these contracts rather than the public sector.
Our top priority is to safeguard the continuity of public services, and we have emphasised that to the official receiver. We are also laying a departmental minute today notifying the House of a contingent liability incurred by my Department in indemnifying the official receiver for his administrative and legal costs. The official receiver will now take over the running of services for a period following the insolvency of the company. The Government will support the official receiver to provide these public services until a suitable alternative is found, either through another contractor or through in-house provision. The court appointment of the official receiver will allow us to protect the uninterrupted delivery of public services—something that would not have been possible under a normal liquidation process.
The official receiver is also under a statutory duty to investigate the cause of failure of any company. He is under a duty to report any potential misconduct of the directors to my right hon. Friend the Secretary of State for Business, Energy and Industrial Strategy. My right hon. Friend has asked that the investigation look not only at the conduct of the directors at the point of the company’s insolvency but also at that of any previous directors, to determine whether their actions might have caused detriment to the company’s creditors. That includes detriment to any employees who are owed money. The investigation will also consider whether any action by directors has caused detriment to the pension schemes.
Carillion delivered a range of public services across a number of sectors, including health, education, justice, defence and transport, and in most cases the contracts have been running successfully. We have been monitoring Carillion closely since its first profit warning in July 2017, and since then we have planned extensively in case the current situation should arise. We have robust and deliverable contingency plans in place. These are being implemented immediately to minimise any disruption and to protect the integrity of public service delivery. Other public bodies have been preparing contingency plans for the contracts for which they are responsible. The majority of the small number of contracts awarded after the company’s July profit warning were joint ventures, in which the other companies are now contractually bound to take on Carillion’s share of the work. For example, the Kier group, one of the joint venture partners for HS2, confirmed this morning in a release to the stock exchange that it had now put in place its contingency plans for such an eventuality.
I recognise that this is also a difficult time for pension holders. The Pensions Advisory Service has set up a dedicated helpline number for staff and pensioners who have concerns about their pensions. Those who are already receiving their pensions will continue to receive payment from the various pension funds, including the Pension Protection Fund. For those people who have started an apprenticeship programme with Carillion, the Construction Industry Training Board has set up a taskforce to assist apprentices to seek new employment, while also working with the Education and Skills Funding Agency to find new training placements. The official receiver will be in contact with all apprentices. Companies and individuals in the supply chain working on public sector contracts have been asked to operate as usual. Normally, in the event of a company going into liquidation, the smaller firms working for it move across to the new contractor when it takes on the work.
The private sector plays an important and necessary role in delivering Government services—something recognised by this and previous Governments of all political parties. Currently, 700 private finance initiative and private finance 2 contracts reflecting capital investment of up to approximately £60 billion are being delivered successfully, and we also have a number of service provision contracts being delivered successfully by a range of companies. Such contracts allow us to leverage the expertise of specialist providers and to deliver value for money for taxpayers. I would like to reassure the House that we are doing all we can to ensure the continuity of the public services provided by Carillion and to support an orderly liquidation of the company.
I shall write to all right hon. and hon. Members today to summarise the situation and to inform colleagues of a helpline for the use of Members and their staff to provide answers in the fastest possible time to any constituency problems that may arise. Along with other ministerial colleagues, I shall keep the House updated on developments as the official receiver starts to go about his work. I commend this statement to the House.
I thank the Minister for an advance copy of the statement. The House will conclude that it was recklessly complacent for the Government to seek to avoid responsibility and to place it on to the company. After all, Carillion provides 450 separate taxpayer-funded contracts to the public, with 20,000 people working directly for it and many thousands more in the supply chain. All those thousands of people will have heard his reference to Jobcentre Plus with a shudder of fear for their futures at the beginning of a new year.
Will the Minister confirm that Carillion provides services to this Conservative Government in 50 prisons, 9,000 schools, 200 operating theatres and 11,000 hospital beds, as well as across a whole series of infrastructure works? Two fifths of Carillion’s income is paid by the taxpayer, so when did the Government first realise that Carillion was in trouble? After all, it had three chief executive officers in a short space of time, made three separate profit warnings and its stock was already subject to short selling on the stock exchange back in 2015. The Minister says that the Government were monitoring the company, so why did they leave the position of the Crown representative observing Carillion vacant for more than three months? How can they explain that £2 billion-worth of Government contracts—taxpayers’ money—was awarded despite all the information that has clearly been in the public domain? I have been asking questions about Carillion in this House for over three months. Why was it apparent to everyone except the Government that Carillion was in trouble? The Secretary of State for Transport in particular has questions to answer. Can the House be told what the Government knew about Carillion’s financial health when they awarded a £1.4 billion contract for HS2 quite recently?
The Minister has failed to satisfy the House that the jobs of Carillion’s employees and all those in the supply chain will be safeguarded. Will he confirm that the pay, conditions and jobs of those staff are the Government’s priority? Why has he apparently not had a single conversation with representatives of the workforce about their jobs and pensions? Those people should be a higher priority than the executives’ bonuses, which appear to have been safeguarded. Will he assure the House that Carillion is not the first in a series of suppliers that will fall one after the other like dominoes?
The Government have announced that public money will be given, presumably to the liquidator, to carry out vital public service contracts, but does that not mean that decisions about those contracts have now slipped out of the Government’s control and into the hands of an unaccountable administrator? Would not the simplest, most effective and most democratic way to handle all the contracts have been to bring them back into the public sector, where the ethos of serving the public prevails, rather than that of private profit? Is it not the case that the Government themselves and the Conservative party have too cosy a relationship with the chair of Carillion’s board who—believe it or not—is the Government’s chosen corporate responsibility tsar? He also urged people to vote Tory during the 2015 election. It is a chumocracy.
Is it not time that we reversed the presumption in favour of outsourcing once and for all? After all, this is not about the failure of a single company, but of a whole ideological system of contracting out public services. The Government are incompetent in office, reckless with taxpayers’ money and helpless with public services. Is it not time that they made way for an Administration that care, and will exercise due diligence?
First, may I correct the hon. Gentleman on one specific point about schools? He said that 9,000 schools have contracts with Carillion, but the figure I have is about 230—219 plus a small number of building contracts—which is much smaller than the exaggerated figure that he gave the House.
As I said in my statement, 60%—roughly three fifths—of Carillion’s revenues are actually from contracts that have nothing to do with the United Kingdom Government. Indeed, the problems that Carillion faced arose in the most part from those contracts, not from Government contracts.
The position of private sector employees is that they will not be getting the same protection that we are offering to public sector employees beyond a 48-hour period of grace, during which the Government will sustain the official receiver to give time for the private sector counter-parties to Carillion to decide whether they want to accept termination of those contracts or to pay for the ongoing costs. That is a reasonable gesture towards private sector employees.
As for those who have been employed by the Carillion group to deliver public service contracts, the Government are continuing to pay their wages for the services delivered —those payments are being made through the official receiver, instead of through Carillion. That money, of course, is budgeted for by various Departments, local authorities and NHS trusts. The best help that one can give to employees delivering vital public services is to give them the assurance that we are continuing to pay their wages and salaries, and not to indulge in the sort of scaremongering to which I am afraid the hon. Gentleman is prone.
The private sector employees are entitled to know that assistance will be there from Jobcentre Plus after the 48-hour period of grace runs out, when a number of them may face termination of the Carillion contracts through which they have been employed.
The hon. Gentleman asked about the contracts that were awarded after the first profits warning in 2017. As I said earlier, there was a small number of those contracts. The defence contracts were actually agreed and signed before the profits warning, although they were announced afterwards. The Government, quite rightly, have to operate a fair and transparent procurement process, guided by the Public Contracts Regulations 2015. There are a number of tests of financial capability for potential contractors. At the time when all those post-July 2017 contracts were bid for and awarded, Carillion met all the mandated tests, so it would have been, to put it mildly, a legal risk to have treated Carillion any differently from other bidders that were able to meet the tests.
In the light of what was in the public domain about Carillion’s profits warning, the Government Departments responsible for the contracts ensured that there were arrangements, such as the joint venture provision, to give protection in the event of Carillion being unsuccessful in its attempts, about which it was confident, to secure an agreement with its bankers. I emphasise that no money is paid to Carillion, or to any other contractor, other than for services that are actually delivered, so there is no question of money being spent twice for the same service.
I am disappointed that the hon. Gentleman resorted to party politics in his response. It is worth reminding ourselves of who awarded Carillion its contracts. Of the Carillion contracts that, until this morning, were still active, roughly a third were awarded by the Conservative Government, roughly a third were awarded by the coalition Government when the right hon. Member for Twickenham (Sir Vince Cable) was Secretary of State for Business, Innovation and Skills, and the other third were awarded by the Labour Government, during which time the hon. Member for Hemsworth (Jon Trickett), as he knows, worked in the office of the then Prime Minister.
When the hon. Gentleman returns to this subject, I suggest he treats it with the seriousness it deserves and does not preach sermons without taking a long, hard look in the mirror.
First, let me pay tribute to my right hon. Friend’s calm and workmanlike approach in working through all the contracts and liabilities, which is absolutely the responsible thing to do. I note what he says about the financial capabilities, awarding and the public procurement rules, and I am sure there are many questions to be asked about that and about future arrangements. However, may I just ask him about the small and medium-sized enterprises in the supply chain? Many companies supply Carillion contractors and are in contracts, and they will be concerned about meeting liabilities, perhaps to Her Majesty’s Revenue and Customs or to others. Has he or his Department had discussions with HMRC about things such as time to pay arrangements, so that SMEs are given time, rather than being under pressure to keep paying the taxman?
I am grateful to my right hon. Friend for that. Let me make two points in response to her. First, the Government, through the official receiver, are continuing to make provision for payments both to suppliers and subcontractors. If any subcontractor experiences any difficulties, I encourage them to talk in the first place to the Insolvency Service. This is exactly the sort of risk that led us to decide to set up a hotline for Members of Parliament and their staff, so that if anything does seem to be going wrong, Ministers can be alerted to it rapidly. May I also say to her that HMRC and the Treasury have been fully in the loop at all stages of these discussions, but I will make sure the point she has just made to the House is reinforced when I chair a meeting of interested Ministers later today?
I thank the Minister for advance sight of his statement. Obviously, our immediate thoughts are with the workers involved and their families—those affected by this announcement directly and the many thousands more who are indirectly affected. I am aware that the Scottish Government are working with the liquidator to try to work on contingency plans, and I seek an assurance from him that he will assist the Scottish Government in those endeavours. I also want to know what assurances he will give that UK-funded projects in Scotland will continue in light of Carillion’s collapse. What assurances can he give to the workers involved that their jobs will be safe?
Since July last year, the Scottish Government have been setting about trying to manage the risk involved in these contracts, and we have to ask: given that since last July the UK Government have awarded more than £2 billion-worth of contracts to this company, despite it having had three profit warnings, what due diligence has been undertaken by UK Ministers? Is it incompetence or ideology that has led Ministers to sign off multi-million contracts to a company that was on the verge of going bust? It was not the employees or the communities that depend on these contracts that awarded the contracts, so it is for the Government to intervene and pick up the pieces when something like this happens. In recent years, we have had similar things happen in Scotland—we had Tata steel in Motherwell, BiFab engineering in Fife and others—and the Scottish Government worked night and day to save those jobs, and they succeeded. I would welcome a similar commitment from the UK Government to make that effort to try to protect these jobs.
In conclusion, many thousands of people are today worried about whether they will have a job next week and, if they do, who will be paying their wages and will their pension will be protected, so it is important that assurances are given that safeguards will be in place. There will be some joint venture projects, where other companies can take over the contract, and there may be some projects that can be easily transferred to another company. But there will also be some projects where the only solution will be to take the jobs and the project in-house and for them to be directly managed by the Government or their agencies. I seek an assurance from the Minister that where those circumstances pertain, that is what the Government will do in order to safeguard jobs and their services, which these contracts provide.
The hon. Gentleman spoke to this issue with the seriousness it deserved and in a constructive fashion. I can give him two assurances. The first is that the Government are certainly going to continue to pay the wages—salaries, as well as those of suppliers and subcontractors—in respect of UK Government contracts in Scotland, in the same fashion as occurs anywhere else in the UK. Secondly, as I think I said in my statement, the Government will be in discussions with the official receiver about the future provision of those services. I believe we will end up with a situation in which some are transferred to an alternative external contractor but others are taken in house by a Department or other agency of government.
On contact with the Scottish Government, we have had regular and constructive communications with them throughout the period in which the UK Government have been monitoring Carillion. Our priority has been to maintain public and essential services in every part of the UK, whether those are the responsibility of UK Government Departments or of devolved bodies. This morning, my right hon. Friend the Secretary of State for Scotland spoke to Keith Brown MSP, the Scottish Government Cabinet Secretary for the Economy, and assured him of the UK Government’s determination to support the Scottish Government in responding to the concerns of pension stakeholders, employees and contractors in Scotland, as well as those everywhere else in the UK.
I commend my right hon. Friend for his swift and urgent action on this issue. I urge him to pay no attention whatsoever to the politicking coming from the Opposition Benches, because it was of course Labour Members who, when in government, drove the process of private sector involvement hard. They did so for a very good reason: they said that it brought expertise that does not exist in the public sector to the running of these kinds of contracts.
Nevertheless, as we look into these matters—I am sure there will be a review—we should bear in mind two elements that when I was a Minister it always struck me were missing in the public sector. The first is direct contract management on a very regular basis, the lack of which was often the reason why some of these contracts drifted. That needs to be looked at very specifically. Secondly, the Government—probably the Cabinet Office—might want to think about having some kind of capability to review regularly the situation for companies that are engaged in large public contracts, to see what their status is on a wider basis.
I am grateful to my right hon. Friend for his suggestions. I note that the Chair of the Public Administration and Constitutional Affairs Committee, my hon. Friend the Member for Harwich and North Essex (Mr Jenkin), said today that his Committee is going to launch an inquiry into Government procurement. My right hon. Friend the Member for Chingford and Woodford Green (Mr Duncan Smith) makes some important points about the need to have a look at how successive Governments have conducted the procurement process. I hope he will understand if I say that today, and in the immediate future, my wish is for Ministers and officials to focus above everything else on the continuity of the provision of public services and on doing all that we can to give help and reassurance to employees, subcontractors, suppliers and pension holders. There will be an occasion to return to some of the broader questions posed by my right hon. Friend.
This morning, the 400 employees who work in the Carillion headquarters in my constituency in Wolverhampton, along with many others, woke up to the news that Carillion had gone into liquidation. It probably felt like a bomb had hit them. The Minister says that the Government are going to give them support, but what type of support will that be? It is absolutely not enough to say that people can ring the jobcentre. What other futures are there for those employees? I seek an urgent meeting with the Minister to discuss this issue, because the headquarters are in my constituency. Will the Government commit to investigating why contracts continued to be handed to Carillion despite the company’s known difficulties?
On the hon. Lady’s last point, I responded at quite some length to similar points made by her Front-Bench colleague, the hon. Member for Hemsworth (Jon Trickett). The Government are, as I have said more than once in these exchanges, not only offering advice but paying the wages and salaries of people who are involved in the delivery of public services, until such time as the official receiver has found an alternative provider, whether in the public or private sector. I am happy for either I or another Minister in my Department to meet the hon. Lady to talk about her particular constituency concerns.
On the HS2 aspect of this—my hon. Friend the Member for Stafford (Jeremy Lefroy) joins me in this question because HS2 carves straight through our constituencies—will my right hon. Friend make publicly available the assessment of the Government and HS2 Ltd of the impact of Carillion’s collapse and the viability of the HS2 project itself and the substituted contracts and subcontracts, and also the effect that he believes it will have on my constituents and the constituents of my hon. Friend?
I can certainly well understand the importance of this issue to my hon. Friend’s constituents and those of many other hon. and right hon. Members. The answer in respect of the particular contract that was awarded last year is that the two other private sector parties are now bound contractually to take over the responsibilities previously allotted to Carillion and to do so for exactly the same price as was set for the three-party consortium in the first place. I will refer his broader points about HS2 to my right hon. Friend the Secretary of State for Transport who I am sure will be in touch with him.
While 20,000 people across the UK, including 400 employees in Wolverhampton at Carillion’s headquarters, are now at risk of losing their jobs, it seems that the senior management of Carillion have changed the rules so that they can keep hold of their exorbitant bonuses. Does the right hon. Gentleman think that that is fair, and if he does not, what will the Government do about it?
I can certainly well understand and appreciate that sense of unfairness on the part of the hon. Lady’s constituents. It would be wrong for me from the Dispatch Box to pre-empt the inquiry that the official receiver will carry out into the conduct of both present and previous members of the board of directors, but I can say that the official receiver has the power not only to investigate, but to impose severe penalties if he finds that misconduct has taken place.
The whole House will be concerned for the employees who are facing an uncertain future, and I preface my remarks by showing my concern as well. On 17 July, I brought the Secretary of State for Transport to this House at 10 o’clock at night to answer the questions that I raised about HS2 contractors and the unacceptable risks to the taxpayer, and that included Carillion. Unfortunately, those words seem to have come true. While my right hon. Friend is looking at the assessment of the effect on the constituency of my hon. Friend the Member for Stone (Sir William Cash), will he also look at the other failures of HS2, management and Government? Would not he and his constituents, as well as my constituents and, perhaps, Mr Speaker, some of yours, feel that now is the time to cancel this ill-fated, poorly run project?
My right hon. Friend speaks, as always, both eloquently and forcefully on behalf not only of her constituents, but of very large numbers of people in the constituencies along the HS2 route. As I said in my response to my hon. Friend the Member for Stone (Sir William Cash), the particular HS2 contract that is at issue today will be covered by the joint venture arrangement. In that sense, Carillion’s liquidation today will not make a difference to the cost of delivering those particular services to the HS2 project.
When Carillion collapsed at the weekend, it had debts of £900 million and a pension deficit of £600 million and yet, year after year after year, Carillion paid out dividends to its shareholders. Although the chief executive was jettisoned after the profits warning last July, he is still being paid a salary in excess of £600,000 a year until this coming October. Will the Government confirm that those payments to the former chief executive will stop as of today, and will the right hon. Gentleman agree that it is about time that we reformed our corporate governance laws so that companies cannot siphon off money to the detriment of suppliers, workers and, ultimately, the British taxpayer?
As I also said in response to the hon. Member for Wolverhampton North East (Emma Reynolds), I completely understand the concerns that pension contributors and existing pensioners will have. As I said earlier, the official receiver will consider potential detriment to the interests of pension contributors and pensioners as well as to employees of the company, and may seek to impose penalties. In addition, the Pensions Regulator has the powers to recover payments made to executives or others in the company if there is evidence that they have abused their responsibilities.
Is my right hon. Friend confident that we are capable of recognising when companies are bidding too aggressively?
As I said in response to my right hon. Friend the Member for Chingford and Wood Green, when the initial situation has stabilised there will be a need to take a fresh look at how the Government go about the contracting process. We will certainly wish to take into account the point that my right hon. Friend the Member for New Forest West (Sir Desmond Swayne) makes.
Order. I am sure that the people of Woodford Green would prefer to be known as the residents of Woodford Green rather than of Wood Green, and it may be that the residents of Wood Green would rather be known to reside in Wood Green than in Woodford Green.
Will the Secretary of State confirm that all annual fee payments made thus far by public authorities to Carillion in respect of private finance initiative contracts will now cease and that the liquidator will not be allowed to sell any of those contracts on to anyone else, so that there will not be a reward in the hands of others for the failures of this company?
I will look in more detail into that particular case and write to the right hon. Gentleman. The principle will be that one will need to find willing suppliers to take over the role of Carillion in a PFI, but on the basis of the information that I have been given today, no PFI faces an immediate crisis as a result of the liquidation.
Southend constituents and those in broader Essex will be worrying about how the situation affects their public services. Will my right hon. Friend consider publishing a list—a spreadsheet—of all the contracts and all the affected constituencies and use that as a basis for updating the House on progress on individual projects as mitigation takes place?
We are seeking to analyse the spread of Carillion contracts so that we know which Members of Parliament are particularly affected. Some contracts, of course, are specific to a particular location while others provide a service across a much greater swathe of the country. What I can say is that so far today the reports from different Government Departments and agencies, whether one looks at schools, hospitals or other public sector providers, are that workers seem to be responding and services are being delivered as usual. I hope very much that that situation continues.
The accounts show that in the last four years, on the PFI contracts alone, Carillion was part of deals that have made nearly £1 billion in profit directly from the public purse.
It is now clear that the notion, which all Governments have dealt with, that PFI is a good way to transfer risk to the private sector is a myth. Will the Government finally bring in a windfall tax to claw back the money so desperately needed for our public services from these companies? Or is it simply that they broke it but we will always end up fixing it?
The hon. Lady risks ignoring the £60 billion of capital investment that it has been possible to use to modernise and improve public services, and that would not have been available had this Government and their predecessors not used the PFI and PF2 approaches. The events of the past 24 hours have demonstrated that for private contractors this is not an easy ticket to riches; there are very real risks associated with taking on a contract. In this case it is—and rightly so—Carillion’s shareholders and creditors who are suffering very substantial losses as a consequence of the financial difficulties into which the company has fallen.
Does my right hon. Friend agree that sad occasions such as this demonstrate the importance of the strength and resilience of our model of pension protection? They also serve to underline the real importance of not allowing individual directors who might have put at risk employees’ pensions to walk away from their responsibilities. Will he assure the House that the investigation by the Pensions Regulator will be full and thorough?
My right hon. Friend makes a very good point. Obviously, the Pensions Regulator acts independently, but I am sure that both the Pensions Regulator and the trustees of the individual pension schemes will respond appropriately to what has happened. In addition, as I said earlier, the official receiver can take account of detriment to pensioners and pension contributors as part of his analysis.
The Secretary of State has said that staff should continue to turn up to work and that they will continue to be paid, but he has also said that he is setting up a helpline at Jobcentre Plus. What assurance can he give the staff—I am thinking particularly of the 400 staff in the Wolverhampton headquarters, as well as staff around the country—that they should continue to turn up, when they face the prospect of that Jobcentre helpline? Also, can he say anything more about investigations into the company’s changes in corporate governance in 2016, which appear to make the clawback of future bonuses more difficult?
On the second point that the right hon. Gentleman makes, the issue is covered by the scope of the advice that my right hon. Friend the Secretary of State for Business, Energy and Industrial Strategy has given to the official receiver about how his inquiry into the conduct of existing and previous directors might develop.
On the right hon. Gentleman’s first point, the situation for all employees of Carillion group companies is that for the next 48 hours—even for private sector employees, rather than those who are providing public services—there is that certainty that they can continue to turn up to work. After 48 hours, either the private sector counterparty must agree to fund future provision, including the fees of the official receiver, or those private sector contracts of Carillion’s will be terminated. It is those people whom the helpline from Jobcentre Plus is particularly intended to help.
The Government will, as I said in my statement, continue for the time being to fund wages, salaries and payments to contractors and suppliers where that is necessary for the provision of key public services. That is to give the official receiver the time to arrange, in an orderly fashion, the transfer of service provision, either to a new contractor or to an in-house provider within Government.
The Minister has offered reassurance in respect of joint venture partnerships with giants such as KBR and Kier Group, but what assessment has he made of arrangements such as CarillionAmey, which provides services to 50,000 MOD households—the homes of our brave men and women who serve in the armed forces?
The Ministry of Defence has been very closely involved in all the cross-Whitehall discussions about our contingency plans. The assessment by the Ministry of Defence is that that contingency planning means that the collapse of Carillion will have minimal impact on service personnel and their families. The facilities management contracts, which provide services to service personnel and their families, and which involved Carillion, are all through joint ventures. The other parties to those joint ventures are now contractually required to deliver all the requirements.
Will the Chancellor of the Duchy of Lancaster confirm that by Government contracts he also means those within local government and the NHS? Contracts and running public services are not just about central Government.
I am very pleased that the Minister has mentioned apprentices, but the nature of apprentices is that they are young and they are training as well as working. I am concerned that many young people cannot bear the burden of not receiving any money, despite the low remuneration they get as part of the training process, and that it will not be easy midway between training schemes to find another appropriate training scheme for those young people to dovetail into. May I ask that special consideration is given to that particularly unique set of circumstances of being partly trained and having to find somewhere else to go?
My hon. Friend makes an important point. I can well understand why apprentices would be worried at the moment. Carillion has 11 training centres across England, with about 1,200 apprentices who are also Carillion employees and who are mostly 16 to 18-year-olds. The Construction Industry Training Board has now agreed to become the training provider for those apprentices, and it will assist apprentices accordingly in finding new employment as rapidly as possible.
There are 1,200 16 to 18-year-old apprentices. May I suggest that the statement that the CITB is going to call together a taskforce does not match the urgency with which Members across the House have raised the issue of these young people, and the crucial question of their future in construction, which we desperately need to fix in advance of the Brexit debate?
The 1,200 apprentices obviously needed to be found both a training provider and an employer, and Carillion had been performing both those roles. The CITB has now stepped in and taken up the role of the training provider for all those young men and women. I assure the hon. Lady that the CITB is going to be extremely active—and will be pressed by Ministers to be very active—in ensuring that it reaches out to employers and finds spaces for those young men and women as rapidly as possible.
This is a very serious day, with a most significant and unfortunate corporate collapse. I urge my right hon. Friend to give as much reassurance as he can to constituents such as mine, working in the Carillion headquarters in Wolverhampton, that there will be a continuing role for them under the administrator while a more permanent solution is put in place. I thank him, his colleagues and officials in the Department for their work in putting this statement together in order to reassure public sector providers of service within Carillion and its subcontractors that they will continue to provide service to the NHS hospitals in particular. Will he ensure that those construction projects where Carillion remains a prime contractor—I am particularly thinking about the NHS hospitals in Birmingham and Liverpool—will not suffer significant delays and that arrangements are put in place rapidly to maintain those contracts?
I am grateful to my hon. Friend for his comments. The Department of Health is looking at each of the different hospital construction contracts. Obviously, the way forward depends very much on the exact legal structure of those different contracts and on the stage that they have reached. For example, the chief executive of the Royal Liverpool and Broadgreen University Hospitals NHS Trust said earlier today that he saw no problem with moving forward to the completion of the new hospital construction work in Liverpool. The west midlands projects to which my hon. Friend refers are at a much earlier stage of development. However, I assure him that Health Ministers have this matter very much in their sights and I am sure that they will be in touch with him.
Despite the Minister’s comments, I remain deeply concerned about the future of the new Royal Liverpool University Hospital. When will the new arrangements be made and when will the hospital be completed? The people of Liverpool must not pay the price for Carillion’s failure.
I agree with the hon. Lady’s final sentence. I refer her to the very strong words of reassurance from the chief executive of her hospital trust that things are in train to deliver the new hospital within the time that he was forecasting.
Last week, under the ten-minute rule, I introduced, together with 11 colleagues, a Bill to tackle abuse of retentions in the construction industry. In preparing for that Bill, it very quickly became clear that Carillion was one of the worst offenders. Will the Minister give me an assurance that he will take this point into account in addressing the concerns of subcontractors? Will he also consider bringing forward my Bill during Government time?
On my hon. Friend’s last point, I promise, on a “without prejudice” basis, to examine the case for doing so and to discuss it with ministerial colleagues. On his broader point, as I have said in response to a number of hon. Members across the House, there is a case for the Government to take a fresh look at the procurement process. However, I do not want that, in the next few days and weeks, to get in the way of our immediate responsibility to make life as easy as it can be made for employees, pensioners and others who are very worried about their futures.
I echo the concerns of my hon. Friend the Member for Liverpool, Riverside (Mrs Ellman). The new Midland Metropolitan Hospital now towers over the terraced housing in the Smethwick part of my constituency. Despite a delay due to a design failure, work is now proceeding apace and it is two thirds completed. What will the Government be doing about ensuring the flow of funding and work so that the contract can be completed and we can look forward to the opening of this new, much-needed hospital?
Discussions are taking place with the trusts, with Carillion managers and contractors, with PwC—as a special manager in the liquidation on behalf of the official receiver—and with the lenders to the project companies so that in coming days construction activities can continue without material disruption on crucial projects that the Government strongly support.
Can my right hon. Friend specifically help us on what arrangements are being made to ensure continuity of the prison facilities management contracts, which, as he knows, already cause great problems, have only some two years to run, and are not joint ventures? Particular issues for staff and for prisoner security and welfare arise around those contracts.
I had better not trespass on the responsibilities of the new Secretary of State for Justice, but I can say that contingency plans at the Ministry of Justice included the creation of a Government company that is available to take on the provision of these services at any time.
Carillion is responsible for 11,800 in-patient beds, so what action will the Government take immediately to avoid exacerbating the current NHS winter crisis?
The word from hospital trusts today so far has been that the work of hospitals has not been materially affected by the collapse of Carillion. The Department of Health has not been looking at this in isolation. In preparing contingency plans, it has been talking for some time to the NHS trusts that use Carillion as a contractor. The contingency plans address these issues with the aim of minimising disruption and making sure that services to patients continue both safely and to a high standard.
I highlighted the point I want to raise in a Westminster Hall debate on small businesses in November 2016. I am concerned about the consequences for subcontractors and suppliers down the supply chain that are now likely to be left unpaid by Carillion. This is what we would call a domino effect. Is it not time to change the insolvency rules to introduce an assumed Romalpa clause or similar, so that in the instance of the failure of a primary contractor such as Carillion, payments or the snatching back of recognisable goods and services are directed to the relevant companies down the supply chain by the receiver or the insolvency practitioner, rather than the primary client making post-insolvency payments into a likely black hole?
In the case of Carillion, the Government have made provision for payments to subcontractors to continue where those subcontractors are involved in the delivery of key public services. As far as my hon. Friend’s broader points about insolvency law are concerned, he will have seen that my right hon. Friend the Secretary of State for Business, Energy and Industrial Strategy is in his place on the Bench beside me, and I am sure that he, given his responsibilities for the Insolvency Service, will have taken careful note of my hon. Friend’s request.
This morning, I spoke to my local council, which is already acting fast to do all it can to ensure continuity of services and of staffing contracts. I am sure that the Minister will agree that the uncertainty ahead is hugely unsettling for employees and their families, but there is the further concern that valued employees with great expertise will start to look for new jobs, further compounding the risk to service delivery. Will he again reassure the employees affected by local authority contracts, such as those in Hounslow, that the Government will not leave them in the lurch and that the commitment to protect public services and supplies will extend to local authority contracts and, indeed, to services such as prisons, including Feltham young offenders institution in my constituency?