Defence Reform Bill — Report (2nd Day)

– in the House of Lords at 3:57 pm on 26th March 2014.

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Amendment 7 had been withdrawn from the Marshalled List.

Amendment 8

Moved by Lord Rosser

8: After Clause 48, insert the following new Clause—

“Annual report to Parliament on Army’s fighting power

(1) The Secretary of State shall lay before Parliament on an annual basis a detailed report on the Army’s fighting power and shall include an assessment of progress made and any setbacks incurred in implementation of the Army 2020 plan.

(2) The first of such reports shall be laid before Parliament in January 2015, no later than 31 January 2015.”

Photo of Lord Rosser Lord Rosser Shadow Spokesperson (Defence), Shadow Spokesperson (Home Affairs), Shadow Spokesperson (Transport) 4:17 pm, 26th March 2014

My Lords, the parents of this amendment are the members of the House of Commons Defence Committee, the majority of whom are government MPs. At the beginning of this month the Defence Committee published a report, Future Army 2020, and its conclusions were hardly a ringing endorsement of either government policy or government competence on this issue. Referring to the Government’s Army 2020 plan, the report pointed out quite fairly that it departed significantly from the announcements made in the 2010 strategic defence and security review. It went on to say that the Defence Committee had,

“considerable doubts about how the plan was developed and tested, and whether it will meet the needs of the UK’s national security”.

It expressed surprise that such a radical change to the Army’s structure, reflecting a reduction of 12,000 personnel from that announced in the 2010 SDSR, had not been discussed at the National Security Council and added:

“Even if the overall strategic vision had not changed, as the Government claims, the military ways and means of that strategy were considerably altered under Army 2020”.

The committee said that its principal concerns were twofold. The first was that the Ministry of Defence,

“has failed to communicate the rationale and strategy behind the plan to the Army, the wider Armed Forces, Parliament or the public”.

The second concern was that,

“the financially driven reduction in the numbers of Regulars has the potential to leave the Army short of personnel particularly in key supporting capabilities until sufficient additional Reserves are recruited and trained”.

The committee pointed out in its report that the Secretary of State for Defence accepted that,

“Army 2020 was designed to fit a financial envelope”, and expressed its concern,

“that this consideration took primacy over the country’s abilities to respond to the threats, risks and uncertainties contained in the National Security Strategy”.

It expressed concern, too, at being told that it was the,

“Ministry of Defence’s Permanent Secretary who told the Chief of the General Staff the future size of the Army under the Army 2020 plan”, and called for an explanation of the,

“apparent lack of consultation and involvement of the Chief of the General Staff in the decision-making process that has affected his Service so fundamentally”.

Such was the committee’s concern, including over lack of,

“evidence of an active experimentation programme in the development and implementation of Army 2020”, that it has called for the Ministry of Defence to provide,

“an assessment of how the Army 2020 plans will affect the ‘Fighting Power’ of the Army providing comparable assessments of both current fighting power and projected fighting power following the completion of the Army 2020 plans”.

On top of that, the committee came out with this conclusion:

“We remain to be convinced that the Army 2020 plan represents a fully thought-through and tested concept which will allow the Army to counter emerging and uncertain threats and develop a contingent capability to deal with unforeseen circumstances. The MoD needs to justify how the conclusion was reached that the Army 2020 plan of 82,000 Regulars and 30,000 Reserves represented the best way of countering these threats”.

The Defence Committee has said other things, also stating in its report that it remains,

“to be convinced by, the Secretary of State’s explanation as to why the reduction in the Regular Army should not be dependent on the recruitment of the necessary number of Reservists. The financially driven reduction in the number of Regulars has the potential to leave the Army short of personnel in key supporting capabilities until sufficient Reserves are recruited and trained”.

That concern is borne out by the trained strength and recruitment targets for the reserves contained in the report.

Continuing, the committee expressed concern,

“that the Army 2020 plan would unravel in the face of any further MoD budget reductions or further reductions in Army personnel”, and concern that,

“the Defence Planning Assumptions are adequate to ensure the UK’s national security”.

It went on to express,

“little confidence in the Government’s capacity to rapidly expand Army numbers should the need arise”.

Since the Government said that Army 2020 had to work and that there was no plan B, the committee continued by saying that the Government,

“owe it to the Army to ensure it does work, but, crucially, if the situation changes, then the Government must be prepared to respond decisively by providing additional resources in order to guarantee the nation’s security”.

The committee was still not finished, but went on to comment on the Government’s amendment taken in Committee in this House:

“While we welcome the Government’s commitment to publish more data on the Reserves and to put into statute a requirement on the Reserves Forces and Cadets Association to produce an annual report on the state of the Reserve Forces, we believe the Government should go further and give a commitment to provide regular updates to Parliament on progress on all aspects of the Army 2020 plan. Oral and written statements while helpful are not sufficient; a detailed annual report on the Army’s Fighting Power should be laid before Parliament setting out progress and setbacks in implementing the Army 2020 plan. The first of these reports should be laid before Parliament in January 2015 … before the 2015 General Election and to inform the 2015 SDSR”.

The purpose of this amendment is to give effect to this conclusion reached by the House of Commons Defence Committee.

There can be no doubt about the magnitude of the changes under the Army 2020 plan. The Army 2020 document itself described the Army 2020 construct as representing,

“a fundamental and imaginative break from the way in which the British Army is currently structured”, and said that the change was,

“as significant as any seen over the last fifty years”.

Neither did General Wall, Chief of the General Staff, dispute that the plans were radical: indeed, he agreed that they were when he appeared before the Defence Committee.

The government amendment which was introduced in Committee is now Clause 47 of this Bill. The Government had no problems agreeing to annual reports by each reserves force and cadets association on the capabilities of the volunteer Reserve Forces in relation to the enhanced duties that are being placed on the members of those forces being prepared and sent to the Secretary of State and for the Secretary of State to be required by law to place a copy of each report before Parliament.

Therefore, there ought to be no reason why the Government, as now called for by the Defence Select Committee following careful scrutiny of the futureArmy 2020 plan, should not also agree to provide Parliament with a similar annual report on progress on all aspects of the Army 2020 plan, with its significant changes in the future role and structure of the British Army. The report, of course, would be about the Regular Army as well as the integration of the Reserves with the Regular Army. It seems rather odd that Parliament should be provided with annual reports about the Reserve Forces and their capabilities but not receive an annual report covering the position and progress of the Regular Army which, under Army 2020, is undergoing significant change, about which the Defence Select Committee has expressed real concerns and doubts in respect both of its implementation and its implications. I beg to move.

Photo of Lord King of Bridgwater Lord King of Bridgwater Conservative

I have some sympathy with the amendment moved by the noble Lord. I think it is very important indeed. We know that the recruitment of reservists did not get off to a magnificent start and we hope that further steps are going to be more effective. We have to watch it extremely carefully. I noticed that one proposal is to encourage those leaving the Armed Forces—the regulars—to become reservists in this case. There are some difficulties for regular serving people moving into civilian street and trying to get jobs if they say, “I am liable to go away for six months at any time”. It is not the best way to encourage a prospective new employer to offer you an opportunity. The Government have in a sense created their own problem. If the economy is improving, as we hope it is, and if employment opportunities are improving, as we hope they are, that might not make it easier to attract more reservists or to recruit people for the Armed Forces on a regular basis. Therefore, whatever one may have thought about this, recent developments in eastern Europe do not encourage one to think that this is the time to slim down on defences any further than we have done. I support the idea that we should keep a close eye on the matter and I think that the points made by the noble Lord were fair. We should pay attention to what may have been a valedictory dispatch from James Arbuthnot as chairman of the Defence Committee. I may be wrong, but I think he is proposing to stand down from that position. He has done excellent work and this may be his last report.

Photo of Lord Palmer of Childs Hill Lord Palmer of Childs Hill Liberal Democrat 4:30 pm, 26th March 2014

My Lords, the amendment moved by the noble Lord, Lord Rosser, raises an important point. Despite a lengthy explanation, the point is whether an annual 2020 plan would help. I have some questions for my noble friend the Minister. What sort of manpower on an annual basis would be needed to prepare such an annual report and would that have any effect on the use of our fighting manpower? Will he also comment on how much information is already in the public domain? That point was mentioned by the noble Lord, Lord Rosser, who said that the information is available but not in a complete format. Perhaps my noble friend can say whether such an annual report, if it showed deficiencies, would aid our enemies rather than the country. I am all for transparency but we are talking about the defence of the realm.

Photo of Lord Craig of Radley Lord Craig of Radley Crossbench

My Lords, I have one very small comment. It would seem to be quite wrong to restrict such an annual report to the Army. It would be necessary, if such an approach were to be adopted, for the report to cover all three services in full.

Photo of Lord Ramsbotham Lord Ramsbotham Crossbench

I absolutely agree with my noble and gallant friend Lord Craig on that point. On reading the Defence Committee report, Future Army 2020, I was concerned to note two statements:

“We are surprised that such a radical change to the Army’s structure … was not discussed at the National Security Council”, and,

“We note that the Secretary of State for Defence accepts that Army 2020 was designed to fit a financial envelope”.

The financial envelope includes not just the Army but the other two services. If we look at history, an annual debate was held in both Houses on the estimates for the Navy and the Army. We are therefore putting back history, as it were, if we have an annual estimate. Particularly in this case, I note the suggestion that the first discussion should be in January 2015 because, of course, when the strategic defence review 2010 was introduced it was clear that its achievement was dependent on the money that would be available in 2015. Looking around, it seems pretty obvious that that amount of money may not be available—in which case, all three services will have to face a review of the current plans.

Photo of Lord Hamilton of Epsom Lord Hamilton of Epsom Conservative

My Lords, I very much echo the sentiments of my noble friend Lord King. I think there is a general feeling that in the latest cutbacks in the forces the Army seems to have taken a rather greater cut than the other two services. Considering that the Army has been deployed almost continuously since the Troubles began in Northern Ireland in 1969, one has slightly to question the wisdom of the Army seemingly taking rather more punishment than the other two services.

However, I do think that the Opposition have a bit of nerve in tabling this amendment, which somewhat echoes the amendment withdrawn by the noble Lord, Lord Dannatt, because, at the end of the day, we are paying now for the legacy that this Government inherited when they took power at the beginning of this Parliament. If you have £40 billion of procurement that has not been funded, you obviously at that stage have a serious problem. Something went badly wrong. When the aircraft carriers were ordered by the previous Government the roof had fallen in on the economy and there was clearly no money to pay for them. It does not matter whether they were a good idea, the money was not there and the Defence Council went ahead and ordered them. For some extraordinary reason, there was no ministerial override from the Permanent Secretary saying that the money was not there. That strikes me as a very serious shortcoming in the way in which our affairs are being run. Let us face it, there is always a temptation for politicians to order things that they cannot afford. On the other hand, we look to our civil servants to preserve the integrity of the finances of the department, and that did not seem to happen. I consider that the Army is suffering from some very bad decisions that were taken in the previous Parliament and the legacy of an overhang of unfunded procurement. Savings had to be found somewhere; and it is the Army. It is extremely regrettable that the Army has to take the punishment in this way.

Photo of Lord Davies of Stamford Lord Davies of Stamford Labour

My Lords, I was not intending to intervene in this debate but feel that I must, in order to correct some of the myths—which is a polite way of putting it—just purveyed by the noble Lord, Lord Hamilton. I was of course the Minister responsible for defence reform in the last three years of the last Government and, indeed, possibly the Minister to whom the noble Lord was referring when he talked about ministerial responsibility. I must tell him that during that time we always stayed within our annual cash limits. So far as the longer-term financing programme was concerned, we were fully and adequately funded on the basis of a 1.5% real terms increase in the defence budget, which was our policy at the time. It was a correct policy and I wish that it had been continued. It was very regrettable that this Government came in and made excessive cuts in public spending, which drove the economy down. The economy was reviving before we left office. The House will recall that in the first half of 2010 the economy grew, at first, by 0.3% and then by 0.7%. When this Government came in with their excessive spending cuts, the growth fell away again. The economy has been in the doldrums, more or less, ever since. That was a mistake made entirely by this Government.

In my view, the decisions of the previous Government on defence procurement were thoroughly responsible. It was very necessary to provide for two carriers; it is an essential arm in our ability to intervene around the world, irrespective of whether we have friendly powers that are willing to provide us with airfields a suitably close distance to where our troops might be deployed or where we need to bring influence or physical power—kinetic power, if necessary—to bear. That was a right decision.

It was a crazy decision to cancel those aircraft carriers—or, at least, to cancel the carrier strike capability of the nation for 10 years. Of course we need two aircraft carriers, because otherwise we cannot be absolutely certain that when we need an aircraft carrier it will be available and will not be in refit. The decisions of the last Government on defence procurement were thoroughly responsible. They were certainly funded. I am sorry to see that, after all the denials that have been made over the last few years by everybody who actually knows the facts, the noble Lord, Lord Hamilton, should still be purveying a completely untrue account of events.

Photo of Lord Stirrup Lord Stirrup Crossbench

My Lords, let me add very briefly my weight to the comments of my noble friend Lord Ramsbotham and my noble and gallant friend Lord Craig, with whom I agree. It may be worth the House reflecting, first, on the fact that the current Chief of the Defence Staff has given his view that his top concern in terms of personnel pressures actually lies with the Navy. Secondly, a few moments ago we were debating the consequences of Russia’s action in Ukraine and the importance of NATO preparedness in the face of that. NATO’s greatest weakness—and, indeed, our own—and Russia’s most likely avenue of attack, should anything go awry, is likely to be in cyberspace. Noble Lords might like to reflect on whether this country is investing enough in that area.

It is clear that this country was previously not investing enough in the defence of the realm and that, in the light of the current situation, it is not investing enough now. As my noble friend Lord Ramsbotham has said, if the Government—whoever forms the Government in 2015 and beyond—do not live up to the requirement to increase defence expenditure in real terms in that year and in each year beyond, our situation will only get worse.

Photo of Lord Astor of Hever Lord Astor of Hever The Parliamentary Under-Secretary of State for Defence

My Lords, Part 3 of the Bill makes important changes that have been broadly welcomed by noble Lords. They will help revitalise our Reserve Forces and, along with the other measures in the White Paper, make them feel valued and valuable and, crucially, more usable.

The changes we are making to our Reserve Forces are part of what is known as Future Force 2020, which will provide military capability in a different way from the past to deliver the range and scale of military forces and skills required. The whole of the Armed Forces, not just the Army, is being transformed to meet the likely future demands on defence. There is often a narrow focus on numbers when concerning changes to the Armed Forces. I am therefore pleased that this amendment focuses more on capability.

The changes we are making to our Armed Forces are guided by the defence planning assumptions, the unclassified version of which is published in the SDSR. Detailed assessments of our force structure’s capabilities are undertaken against a range of scenarios, but they are not put into the public domain for very good reasons of national security. In capability terms, the unclassified defence planning assumptions outline that Future Force 2020 will still enable us to conduct an enduring stabilisation operation of up to 6,500 personnel, one non-enduring complex intervention of up to 2,000 personnel, and one non-enduring simple intervention of up to 1,000 personnel at the same time.

The Army will be structured around the reaction force and the adaptable force. The former are high readiness forces that will provide the Army’s conventional deterrence for defence and will be trained and equipped to undertake the full spectrum of intervention tasks. The latter will be geared more towards defence engagement and homeland resilience, but with the ability to conduct combat operations, particularly enduring stabilisation operations. So we have designed a flexible, adaptable and capable force structure that enables the Army to meet likely future threats.

Noble Lords will recognise that there has been considerable debate about Future Force 2020. To focus narrowly on the Army is, I believe, not helpful and misleading, as the noble and gallant Lord, Lord Craig, said. The other two services are vital to the UK’s defence capability. The Army cannot and does not operate in isolation, even in landlocked countries such as Afghanistan. If we are to consider the capability of our Armed Forces, we must do so in the round, collectively. The noble and gallant Lord, Lord Stirrup, made the point very well about the recent comments of the Chief of the Defence Staff and the Royal Navy. We expect the changes we are making under Future Force 2020 to take effect by 2020. We have acknowledged that between coming out of Afghanistan and fully implementing the Future Force 2020 changes, there is some risk attached, but asking for an annual report on the capability of the Army now would be premature and rather misleading. It is only fair to judge the effectiveness of Future Force 2020 from that year onwards.

Recognising the importance of routinely assessing the capabilities of our Armed Forces against the threats and challenges they may face, this Government instigated the five-yearly strategic defence and security review process. It allows for detailed consideration of changes in the strategic environment and the force structure required to counter the threats and issues identified. If we were to increase the frequency of those reviews to a yearly report on the Army’s fighting power, as this amendment suggests, we could reduce defence to a series of knee-jerk reactions, concentrating on only a small timescale and not allowing any kind of strategic decision-making and long-term planning.

The second reason for rejecting this amendment is that while one crucial role for the Armed Forces will be conventional deterrence, including intervention tasks should they be required, the range of tasks we ask of our Armed Forces is much broader. The armed services make a unique and valuable contribution to the security of the UK, her citizens and those around the world, through activities contributing to conflict prevention, defence engagement, involvement in international defence diplomacy and defence alliances, as well as contributing to peacekeeping, security operations such as counterpiracy off the coast of Somalia, and homeland resilience such as assisting with the recent UK flood relief work. The future force has been designed to be able to respond effectively to these international commitments and align them with national priorities. It therefore seems unhelpful to focus a report on the narrow concept of fighting power. A report focused solely on fighting power would not best reflect the development of the whole range of these capabilities.

Also, as the British Defence Doctrine points out, fighting power will always be considered relative to that of other parties. The notion of effectiveness itself will also change over time, as the strategic context and our national objectives change, making comparisons challenging. An assessment of fighting power would also represent a statement of the relative strengths of defence and could play into the hands of those who wish to reduce the security and relevance of the Armed Forces. We would therefore be unwilling to release a public assessment.

It is important to remember that we already provide considerable information to Parliament about the current changes to the Armed Forces through reports, Questions and debates. The engagement we have had with the House of Commons Defence Committee in producing its report is testament to that, with the Secretary of State, the Chief of the General Staff and a number of others appearing in front of the committee. Furthermore, the MoD releases a variety of unclassified documents that outline the department’s progress or position on a number of areas. For example, the MoD’s annual report and accounts provide an assessment of the activity, concurrency and readiness of the Armed Forces—in sum, an unclassified view of our Armed Forces’ capabilities, which is what this amendment seeks. Also in July 2013 the Army released a comprehensive update on Army 2020, taking stock of what has been achieved so far in the first year since the Army 2020 announcement and the onwards direction of travel.

As I said earlier, while we hold more detailed assessments of our force structure’s capabilities against a range of scenarios, they are not in the public domain for very good reasons of national security, so even if this amendment were accepted we would be limited in what we could report. I believe we are being as open and honest as we can be in terms of the information we release in existing documents or provide during other forms of parliamentary scrutiny.

Photo of Lord Lee of Trafford Lord Lee of Trafford Liberal Democrat 4:45 pm, 26th March 2014

In terms of being open and honest, how is reserve recruitment going at present?

Photo of Lord Astor of Hever Lord Astor of Hever The Parliamentary Under-Secretary of State for Defence

I was coming on to that point in response to the point that my noble friend Lord King made.

The final issue that I need to address is the point that was raised by the noble Lord, Lord Rosser: if we are having an annual report on the reserves, why should we not have such a report on the Regular Army? The reserves are a unique set-up: part-time volunteers who juggle work, family and military commitments. In recognising the importance of the reserves and in seeking to revitalise them through the Future Reserves 2020 programme, it was considered important to have an external independent view of how we were doing because the changes impact on reservists, employers, families and communities.

The reserve associations are community-facing organisations which provide an essential bridge between our Armed Forces and the civilian population. An association exists for each of 13 administrative areas of the United Kingdom. They provide advice and support on behalf of our volunteer reserve forces and cadets, work with the chains of command of the Royal Navy, the Army and the Royal Air Force and establish and maintain links with the community. They therefore have the knowledge, skills and experience to report effectively and independently on the Future Reserves 2020 programme. Clause 47 puts that into statute. The reserve associations would not be able to fulfil that same role for the Regular Army, as that is not where their expertise lies.

My noble friend Lord King mentioned the reserves, and that recruiting got off to a bad start. My noble friend Lord Lee also asked about this. In the Ministry of Defence, we have given a lot of time to this issue. We are working hard on it. We have recently increased the bounty to encourage regulars to join the reserves, which was a point which my noble friend also made. Over the past three or four weekends, I have been out to see reserves training in Scotland and different parts of England. I can report that morale is high. The senior officers to whom I have spoken are optimistic that we shall reach the numbers that we have set out, so I am confident. I had organised for the noble Lord, Lord Rosser, and two or three other Peers to visit the recruiting centre in Upavon. We had to cancel that because we had a Statement in the House, but I think that it is in the grid to have another visit there.

My noble friend Lord Palmer asked what manpower would be needed to prepare the report. The answer is a small number. My noble friend also asked what information is already in the public domain. The answer is plenty—the annual report and accounts and the Army 2020 update both cover progress in detail. He asked whether revealing deficiencies might help our enemies. We would not wish to reveal any weakness that may help our enemies, which will and does limit what we can release.

The noble Lord, Lord Ramsbotham, referred to “radical change” that had not been discussed by the National Security Council. I had better write to the noble Lord as I have quite a lot of information here that I am not going to be able to read out.

The noble and gallant Lord, Lord Stirrup, asked whether we were spending enough on cyber. The Government have recognised the importance of addressing the cyber threat to the UK and we have established a joint cyber unit of regulars and reserves.

I hope that I have answered most of the questions, but if I have not I will certainly write. I have set out why I do not believe the amendment should be accepted and I ask the noble Lord to withdraw it.

Photo of Lord Rosser Lord Rosser Shadow Spokesperson (Defence), Shadow Spokesperson (Home Affairs), Shadow Spokesperson (Transport)

My Lords, first, I thank the Minister for his reply and all noble Lords who have participated in this debate. I am grateful to my noble friend Lord Davies of Stamford for responding to the point made by the noble Lord, Lord Hamilton of Epsom, and do not intend to pursue it any further in the light of the response that my noble friend gave on that point.

A number of concerns have been raised. One is about the potential security implications of producing the report called for in the amendment and, indeed, the report called for by the Defence Select Committee. Since the report would be prepared by the Government and by the Secretary of State for Defence, one would assume that that in itself was a safeguard against anything being revealed that would put at risk our national security.

The issue was also raised that the report refers only to the Army and not to the other services. Obviously, that was in the light of the fact that this has come from a Defence Committee report which was geared to looking at the Army and Army 2020. Of course, if that is felt to be a major stumbling block, there is no reason at all why the Government—if that is their objection—could not come back at Third Reading with an amendment that included the other two forces. The alternative, of seeing this amendment not go through because it does not refer to the other forces, would simply mean that we end up with no report at all.

It is also worth stressing that the key element of the Defence Select Committee’s concerns was actually on the progress being made on the implementation of the Army 2020 plan. I went through the comments that it had to make at some length, because the comments were geared to real concerns about whether the plan would or could be implemented as intended and what the implications would be if it were. It was in that context in particular that the committee called for reports on the progress of all aspects of the Army 2020 plan.

I feel that I have addressed some of the concerns that have been raised. There can be no security implications when the report will be produced by the Government and the Secretary of State for Defence—they are not going to start revealing things that will be of use to those who are hostile to us. The concerns that have been expressed over the implementation of the Army 2020 plan are over how it is going to be implemented, whether it will be implemented as intended and what the implications will be. Primarily what is being sought are reports updating us on the progress that is being made and, as the Defence Select Committee said, detailing any setbacks there have been.

There are reports about what is happening with the reserves. I do not accept the Government’s argument that that is totally different from what is being asked in respect of the Army 2020 plan. They are both reports on progress being made towards implementing objectives set out for our future Army strength. In view of that, I wish to test the opinion of the House.

Division on Amendment 8

Contents 179; Not-Contents 281.

Amendment 8 disagreed.

Division number 1 Defence Reform Bill — Report (2nd Day)

Aye: 177 Members of the House of Lords

No: 279 Members of the House of Lords

Ayes: A-Z by last name

Tellers

Nos: A-Z by last name

Tellers

Clause 50: Commencement

Amendment 9

Moved by Lord Craig of Radley

9: Clause 50, page 33, line 2, at end insert—

“( ) An order under subsection (1) to commence Part 1 may not be made before the Secretary of State has published a White Paper and an impact statement on any proposed Government-owned contractor-operated options compared with DE&S as modified by the Secretary of State commencing in 2014.”

Photo of Lord Craig of Radley Lord Craig of Radley Crossbench 5:09 pm, 26th March 2014

My Lords, the amendment relates to the commencement of Part 1. During earlier consideration of the Bill, both at Second Reading and in Committee, I and other noble Lords questioned why Part 1 should be enacted now. The Government had made it clear just before Second Reading that they did not intend to proceed with the GOCO model; instead, they would seek to strengthen DE&S—described as DE&S-plus—for the next three years, and maybe more, before reconsidering a GOCO solution.

It was explained that getting parliamentary time for a GOCO Bill at a later date might be difficult. The option of using the quinquennial Armed Forces legislation, due not later than November 2016, as a vehicle for Part 1 of the Bill might be adopted, but it could well be too early. Moreover, few would claim that a GOCO part would be a particularly comfortable companion to the Armed Forces Bill. This must be enacted before the five-year life of its 2011 predecessor runs out. Any delays in its progress through Parliament because of differences over the GOCO part would be best avoided. For these reasons, I now accept that the Armed Forces Bill would not be a suitable vehicle and that the inclusion of Part 1 in this Defence Reform Bill should stand.

However, because a GOCO model would be such a major step change in defence procurement arrangements and the timing of its introduction so undetermined, the Government agreed that both Houses should be given a legislative opportunity to reconsider Part 1 prior to its commencement. The Minister therefore added in Grand Committee the amendment that now forms Clause 50(3). This is a step in the right direction, but it does not go far enough.

Part 1 sets out a range of issues covering the arrangements and responsibilities of a GOCO. It contains a considerable amount of important detail; for example, on transfer of employees, financial provisions and protection of intellectual property rights. These and the rest of Part 1 are clearly essential information for any consortia that might wish to formulate a bid for a GOCO contract. In short, Part 1 is about process; it is not about principle. The principle is whether to replace DE&S-plus—not the current DE&S—with a GOCO. An affirmative resolution, the Government’s present position in the Bill, approves only Part 1 commencement and agrees the technical and administrative processes to be followed by a GOCO. This is surely not sufficient.

Ahead of passing the affirmative resolution, Parliament needs to consider as well the relative merits and risks of proceeding with a GOCO compared to those of what will be an up-and-functioning DE&S-plus. This is sometimes strangely characterised as being match fit. Would that equate to how prepared Chelsea were before thrashing Arsenal 6-0 last week, or to a joiner’s well crafted dovetail joint in a carpenter’s shop? It is not clear to me quite how MoD interprets such a vague phrase.

I turn to the amendment. The Government have acknowledged, in particular in a letter dated 19 March 2014 circulated last week among many of your Lordships by Mr Philip Dunne, Minister for Defence Equipment, Support and Technology, the need for a White Paper and an impact assessment prior to the statutory instrument. Mr Dunne says that the Government recognise that comparison between a putative GOCO and the contemporary performance of DE&S-plus is an essential prerequisite before formally approving commencement of Part 1. However, the Secretary of State has the power to set up a GOCO without the formalities of enabling legislation.

An example of this has been trailed only in the past few days. According to the Written Ministerial Statement of 10 March, a new strategic business partner for the defence infrastructure organisation,

“will help the DIO prepare to move to an Incorporated model, currently assumed to occur in 2016, which will entail the creation of a Government Company … to manage Defence infrastructure”.—[ Official Report , 10/3/14; col.

WS 158

.]

No White Paper; no impact assessment; no comparison for Parliament to scrutinise; and, not unusually for such a low-key approach, no great unease has been voiced nor interest aroused in this apparent new GOCO other than, perhaps, incredulity that the Government should be about to grant a 10-year strategic partner contract to Capita, the company that has made such a recent mess of Army recruiting.

Might this example not be a precedent for a future Government to rely on a minimalist approach of just the affirmative resolution for commencement of a procurement GOCO? Procurement and infrastructure are not directly comparable, though both deal in high-value assets. However, the policy and arrangements for procurement are of such overriding importance to equipping and supporting our Armed Forces and to their operational capabilities that it is surely right to strengthen the Bill when it comes to considering the principle of adopting a GOCO.

The amendment is straightforward: it does not seek to do more than introduce into the Bill undertakings given by the Minister, Mr Dunne. It will be some considerable time before the issue of a GOCO commencement might become active. With the passage of years and changes in personalities—even in Governments—assurances in a ministerial letter, or even in today’s Hansard, would seem to be less than definitively robust enough to ensure that the principle of adopting such a novel and radical change in defence procurement is thoroughly considered by Parliament at the time. I urge the Minister not to resist, but to take this away and think again before Third Reading about the importance of including the undertakings proposed by my amendment—already voiced in Mr Dunne’s letter. Parliament and the Armed Forces should have confidence that a procurement GOCO will not be adopted —if ever—without full and detailed consideration at the time. Parliament should first have to hand, by means of a White Paper and impact assessment, the fullest exposition and consideration of any GOCO’s merits and risks, compared with DE&S-plus. The amendment guarantees that security, whatever changes in personalities or Governments may happen.

Photo of Lord Astor of Hever Lord Astor of Hever The Parliamentary Under-Secretary of State for Defence 5:15 pm, 26th March 2014

My Lords, before the noble and gallant Lord sits down, it may assist him and other noble Lords to know that the Government are prepared to support the amendment in principle and that we intend to bring forward a government amendment, achieving these aims, at Third Reading. I will, of course, respond fully to the issues raised at the end of the debate, in the usual way, but I want to make our intentions clear now.

Photo of Lord Craig of Radley Lord Craig of Radley Crossbench

My Lords, that is obviously most welcome news and I thank the Minister and the Government for making it clear at this stage. On that basis, I will be prepared to withdraw my amendment. However, for the purposes of the debate, I beg to move.

Photo of Lord Rosser Lord Rosser Shadow Spokesperson (Defence), Shadow Spokesperson (Home Affairs), Shadow Spokesperson (Transport)

My Lords, I speak to Amendments 10 and 11. In Committee, we argued that Part 1 of the Bill should be withdrawn, following the Government’s decision not to proceed with their proposal for handing over defence procurement to a company under contract to the Secretary of State. That decision was made following a lack of bidders. Instead, the Government announced their intention to go down the road of further developing the DE&S organisation in the Ministry of Defence by setting it up as a bespoke central government trading entity with effect from next month.

Photo of Lord Trefgarne Lord Trefgarne Conservative

I hesitate to interrupt the noble Lord, but I was expecting there to be a separate debate on Amendment 11 in his name. I am a little confused by the procedure that he is now proposing.

Photo of Lord Rosser Lord Rosser Shadow Spokesperson (Defence), Shadow Spokesperson (Home Affairs), Shadow Spokesperson (Transport)

I understand that I am in order in speaking to the amendments in the group. The two amendments in my name are Amendments 10 and 11, but I will refer later to Amendment 9, which has already been moved. I have been advised that I am not out of order in making the contribution I am making, so I intend to continue.

Photo of Lord Trefgarne Lord Trefgarne Conservative

In fact, it is open to any noble Lord to ask to have a particular amendment debated separately. I do not propose to do so on this occasion, but it is open to any noble Lord to do so if he wants.

Photo of Lord Rosser Lord Rosser Shadow Spokesperson (Defence), Shadow Spokesperson (Home Affairs), Shadow Spokesperson (Transport)

I was talking about our view that Part 1 should be withdrawn and about what happened in Committee. The Government declined to withdraw Part 1. We felt, and still feel, that it should be deleted because it provides for an untested and untried major change in defence procurement which the Government do not now intend to introduce and for which they cannot and will not be able to produce any evidence that it will provide a better alternative at some time in the future than either the existing arrangements or, significantly, the further developed DE&S model, which is not even yet up and running. That will now be a matter for a future Government, if that future Government decide to proceed with the GOCO option.

In Committee, we also moved an amendment, which we regarded as very much second-best behind the withdrawal of Part 1, for a super-affirmative order which would be required to be passed by both Houses before Part 1 could be brought into force. We have included a similar amendment in the group that we are discussing. I do not intend to go through in detail the arguments that we put forward in Committee in support of the super-affirmative. They are recorded in the Hansard of the Committee stage. They set out in detail what the super-affirmative would provide for as set out in these amendments.

The super-affirmative order is not something novel. It has been used by this Government. They added the super-affirmative procedure to the recent Crime and Courts Act in respect of any future order made by the relevant Secretary of State to modify the functions of the National Crime Agency. That super-affirmative provision in the Crime and Courts Act requires the Secretary of State to consult the persons who would be affected by an order to modify the functions of the National Crime Agency and lays down minimum periods for consultation and subsequent scrutiny. It also requires the Secretary of State to have regard to any recommendations or representations made by Parliament during the scrutiny period with the subsequent option of laying a revised draft order. I again simply make the point that we are not talking about a minor change that might be made in the future on the basis of affirmative orders but about an untested and untried major change in defence procurement involving more than £10 billion of taxpayer expenditure each year.

The amendment that has been moved by the noble and gallant Lord, Lord Craig of Radley, is an improvement on the current provision in the Bill, and we heard from the Minister—if I understood him correctly—that he will come back with an amendment at Third Reading which will be in line with that moved by the noble and gallant Lord. However, while that amendment provides for a White Paper and an impact assessment, it does not provide for an independent assessment or the involvement of the Defence Select Committee prior to an affirmative order being considered. It thus appears not to provide any minimum timescale between the production of the White Paper and the impact statement for consultation and scrutiny before any vote in Parliament.

It is worth pointing out that government departments do not always produce adequate and appropriate information to support orders they place before Parliament. We had yet another example of this only last night in this Chamber in respect of a Home Office order. Your Lordships’ Secondary Legislation Scrutiny Committee had criticised the poor quality of documentation produced by the Home Office accompanying the order and had written to the Minister of State concerned to voice their detailed concerns. When the committee received the Minister of State’s reply, it found that letter equally disappointing and wrote in its report on the order being considered last night that,

“we found the letter to be no more convincing on the merits of the policy than the Explanatory Memorandum”.

Our super-affirmative would address those potential concerns about the quality of documentation as there is provision for independent assessment and the involvement of the Defence Select Committee.

I take note of the intervention by the Minister to indicate—if I can use the expression—the Government’s acceptance of the amendment in the sense that the Minister intends to come back with a government amendment which, as I understand it, will say either the same thing or much the same thing as the amendment tabled by the noble and gallant Lord, Lord Craig of Radley. Obviously we will want to look at the amendment that the Government table at Third Reading and determine whether to support it or whether to seek to amend it.

Photo of Lord Roper Lord Roper Deputy Speaker (Lords)

My Lords, in view of the remarks made by my noble friend the Minister in his intervention in the speech of the noble and gallant Lord, Lord Craig, saying that he intends to accept the principle of Amendment 9, I can be a good deal briefer than I would otherwise have been. Broadly, I felt after the discussion in Committee and subsequent consideration—particularly after the discussions with Mr Dunne—that it would be very important to get in the Bill the assurances about the material that the Government would produce before a decision was made on the affirmative order. That, of course, was a government amendment that was introduced in Committee after representation from a number of us that a decision should be made by affirmative order and that one could not just use Part 1 of the Bill without any further parliamentary consideration.

I believe that the situation here is the right way for us to proceed. The super-affirmative procedure to which the noble Lord, Lord Rosser, has just referred was discussed in some detail in Committee, and I initially saw some advantage in having a mechanism whereby one could look at this more carefully. On further examination, I took to heart the Minister’s view that this was rather a heavy way of tackling the problem, and that it would be possible for Parliament to be properly informed so that the debate on the affirmative order could be effective and efficient with the sort of procedures that are in Amendment 9. I therefore believe that Amendments 10 and 11 are too elaborate and that the lighter proposal in Amendment 9 is the one that the House, in principle, ought to accept, although of course we will be doing that at Third Reading rather than today.

Photo of Lord Stirrup Lord Stirrup Crossbench

My Lords, I, too, have my name attached to Amendment 9. I do not wish to make the mistake of failing to accept yes for an answer, so I will merely say that I am extremely grateful to the Minister for agreeing to take this away. I look forward to seeing the amendment as drafted by my noble and gallant friend Lord Craig at Third Reading.

Photo of Lord Trefgarne Lord Trefgarne Conservative

My Lords, like other noble Lords I have had some reservations about the GOCO proposal but I am bound to say that my noble friend the Minister has gone a long way to meet those concerns. His observations this afternoon and his acceptance in principle of the amendment proposed by the noble and gallant Lord, Lord Craig, has further assisted me in this matter. That said, Amendment 11—I understand that the noble Lord, Lord Rosser, was anxious that we should discuss it at the same time—goes much too far. The GOCO proposal, which we have already discussed, is adequately protected by the steps which my noble friend has made. Therefore, the call from the noble Lord, Lord Rosser, for a super-affirmative resolution is very much over the top in this particular circumstance and I hope he will not press it. The amendment will achieve nothing, save a further significant delay to a measure which all sides of the House agree has considerable merit and the potential to save the taxpayer a considerable sum in the future. I believe this super-affirmative resolution amendment was tabled only last night and I suggest that it therefore bears all the hallmarks of rather hurried drafting.

Photo of Lord Astor of Hever Lord Astor of Hever The Parliamentary Under-Secretary of State for Defence 5:30 pm, 26th March 2014

My Lords, the amendments in this group deal with the issue of parliamentary oversight and scrutiny of a future decision to proceed with a GOCO. The question of what information should be available to Parliament has been discussed extensively during the passage of the Bill, and that debate has been carried on this afternoon. As I have already indicated, the Government support Amendment 9 in principle and intend to bring forward a government amendment at Third Reading. We think that Amendment 9 strikes the right balance between ensuring Parliament has sufficient information to consider a GOCO proposal and not setting undue constraints on a future Government, the Defence Select Committee or the commercial process.

Amendment 9 requires the Government to publish an impact statement and White Paper before proceeding with a GOCO. The Government have always been clear that Parliament should be able to debate and consider in detail a decision to proceed with a GOCO in future. We agree that that would be a major decision and that it is right that Parliament should have the opportunity to hold the Government of the day to account for such a decision, should they decide to proceed with Part 1 of the Bill. We have also been clear that we expect any future Government to publish an impact assessment on the options before proceeding with a GOCO and to issue a White Paper setting out those options in detail.

We have discussed the issue of parliamentary oversight and scrutiny of a future decision to proceed with a GOCO in great detail, both in Committee and with interested colleagues, and I am grateful to all noble Lords for their contributions to that debate.

The requirements set by Amendment 9 seem reasonable, as they would impose two statutory requirements on the Secretary of State before an affirmative order to commence Part 1 could be laid before both Houses of Parliament. That would ensure that Parliament had sufficient information to properly debate the GOCO proposal under consideration before Part 1 could be brought into force.

We acknowledge that the merit of some form of statutory requirement to provide detailed information on the GOCO proposals in future is needed and that it is reasonable to put such a requirement into the Bill. We did not initially think that a statutory requirement was necessary, but we have been convinced otherwise by noble Lords from all sides of the House. That is an example of what the Members of this House do best—ensuring that legislation is properly scrutinised, and amended where necessary. We will therefore bring forward a government amendment at Third Reading that will make it a legal requirement for a future Government to publish appropriate information on the GOCO options before the order commencing Part 1 is brought forward.

We think that Amendments 10 and 11 go too far. They would do two things. First, they would place in statute the need for a future Government to publish a number of documents before proceeding with a GOCO. Secondly, they would make the affirmative commencement order that brings Part 1 into force subject to the super-affirmative procedure.

I will deal with those two things separately. On the publication of documents, the requirement would be for an impact assessment that covers specific options. This in itself does not present any difficulties; as I said earlier, we are prepared to accept a statutory requirement to produce an impact assessment.

However, proposed subsection (2B)(a)(iii) in Amendment 10 goes too far in that it requires the impact assessment to include any options that may be recommended following consultation with the Defence Select Committee. That is a very unusual provision. It effectively sets a statutory requirement for a future Government to consult the Defence Select Committee on the way forward. Although the Ministry of Defence would, of course, welcome any report that the Select Committee produced on the department’s proposals, we need to be very careful in this House about setting out statutory requirements on a House of Commons

Select Committee. The Defence Select Committee already has the power—if it wishes—to look at any aspect of MoD business and I do not think it would be right for us to tell it what it must do. It is for the committee, not us, to decide what its programme of work should be.

On the other parts of Amendment 10—which would require an independent report on the options and the Defence Select Committee to review and report on that report—again I think this is too much. I really do not see what an independent report would add to the impact assessment set out earlier in the amendment, which would already set out the issues and analysis objectively. I do not think it is right to make it a legal requirement for the Defence Select Committee to review such a report. This raises fundamental questions about fettering the ability of a Select Committee to decide its own programme of work and it would be wrong for this House to direct what a Commons Select Committee must do.

Amendment 11 would also make the commencement order for Part 1 subject to the super-affirmative procedure. This would require the Secretary of State to consult on the order, including with anybody recommended by the Defence Select Committee. This would seem completely unnecessary given the requirement to publish an impact assessment and totally inappropriate in relation to a commencement order. Super-affirmative procedures may be appropriate where secondary legislation covers significant policy matters but not in relation to commencement orders. It is not clear what we would consult on given that the order will simply say when the provisions should come into force. Amendment 11 confuses the issues. I accept that there is a need for Parliament to consider any GOCO proposals but I fail to see what would be achieved by the requirements in Amendment 11. It would not provide the House with any more scrutiny of the proposals in question and introduces an unnecessary and overly complex procedure where none is required. I must therefore strongly resist Amendment 11, which I think is both unprecedented and wholly inappropriate.

The noble Lord, Lord Rosser, said that the super-affirmative procedure would be unprecedented for a commencement order. The other circumstances in which super-affirmative procedures are used are very different. There is no precedent for using a super-affirmative procedure for a commencement order. A super-affirmative procedure is relevant only where an order covers significant changes in policy or has significant legal effect. A commencement order does neither.

I thank my noble friend Lord Roper for his support and wise advice during the passage of the Bill. I also thank my noble friend Lord Trefgarne for his support. Given that the Government have made it clear that they support Amendment 9 in principle and that we intend to bring forward a government amendment at Third Reading, I ask the noble and gallant Lord and other noble Lords not to press their amendments in this group.

Photo of Lord Craig of Radley Lord Craig of Radley Crossbench

My Lords, I thank the Government and the Minister once again for deciding to take away Amendment 9. I also thank very much the noble Lord, Lord Roper, the noble and gallant

Lord, Lord Stirrup, and the noble Lord, Lord Levene—who regrettably was not able to be present—for their support and I beg leave to withdraw my amendment.

Amendment 9 withdrawn.

Amendments 10 and 11 not moved.