Procurement (Hansard, 20 March 2000)

§ 5. Mr. Desmond Swayne (New Forest, West)
When he last met the Chancellor of the Exchequer to discuss defence procurement. [113692]

§ The Parliamentary Under-Secretary of State for Defence (Dr. Lewis Moonie)
My right hon. Friend the Secretary of State for Defence has regular meetings with the Chancellor of the Exchequer and other Cabinet colleagues to discuss a range of defence issues, including procurement.

§ Mr. Swayne
Which procurement exercises have been cancelled, deferred or withdrawn during the current Parliament?

§ Dr. Moonie
None.

§ Mr. Ernie Ross (Dundee, West)
Will my hon. Friend confirm that we inherited many of the procurement problems that have been reported by the press from the previous Government? Will he also confirm that we inherited a total overrun cost of £3 billion and an average delay of three years on the top 25 projects? What action is he taking to correct that?

§ Dr. Moonie
I can indeed confirm that. Because of smart procurement, we are on track to achieve the £2 billion of reductions in spending on equipment procurement by 2007–08. We aim to achieve that as a result of the defence review. The programme to introduce the new structures and procedures is right on course, with integrated project teams, a new customer organisation in 705 my headquarters and a range of new processes. Smart procurement really is a complete overhaul of all aspects of the business of buying and managing equipment.

§ Mr. Dafydd Wigley (Caernarfon)
Does the Minister accept that the immense purchasing power of the armed forces can have a direct effect on the economy of these islands and that, other things being equal, that effect should be borne in mind, not least in the purchase of meat for the armed forces? There is an inability, apparently, to secure home-grown lamb from any competitive source. Surely that can be reversed, and it is possible to purchase lamb from within these islands.

§ Madam Speaker
Order. Questions should be about defence procurement.

§ Dr. Moonie
With regard to the procurement of beef and lamb, I am doing everything that I can to facilitate the purchase of those materials from British sources.

§ Mr. Lindsay Hoyle (Chorley)
In his discussions with the Chancellor, will my hon. Friend ensure that the case is put forward for the Meteor and A400M programmes, on which tens of thousands of jobs in the north-west depend? I realise that finance is always important, and savings of £300 million could come with the Antonov 124–100.

§ Dr. Moonie
I cannot comment now on the purchase of the BVRAAM—beyond visual range air-to-air missile—because we are evaluating the bids that we have received from two groups of companies: Matra BAe Dynamics and Raytheon Systems Ltd. However, our assessment will take into account a wide range of factors, including missile performance, cost, technical risk, industrial issues and overall value for money.

§ Mr. Quentin Davies (Grantham and Stamford)
I think that the Minister may need to think again about his rather hasty answer to my hon. Friend the Member for New Forest, West (Mr. Swayne). Surely, last summer, the original C17 leasing contract was shelved indefinitely and the current heavy-lift contracts and projects are all being considerably delayed. Those are just two examples.
Is it not time that Defence Ministers or perhaps the Chancellor himself—who no doubt imposed the savings—came clean about those efficiency savings? Is it not a fact that the Select Committee, which has a Labour majority, now regards those so-called efficiency savings as thoroughly suspect? When, for example, 65 per cent.—

§ Madam Speaker
Order. We want a question to the Minister. We do not want examples.

§ Mr. Davies
But if 65 per cent. of the current cost of running a warship goes on salaries, which cannot be arbitrarily reduced, and if, as the Minister himself has acknowledged, all the forces are under strength, those savings will have to come—

§ Madam Speaker
Order. I expect Front Benchers in particular to put questions to Ministers and not to hold the House up, as the hon. Gentleman is doing with examples. He should put a question to the Minister.

§ Mr. Davies
Is it not a fact that those efficiency savings are thoroughly bogus? To get 3 per cent. savings out of the remaining 35 per cent. the Government will have to cut spares, fuel and so forth by 10 per cent. each and every year—

§ Madam Speaker
Order. The hon. Gentleman will resume his seat.

§ Dr. Moonie
I shall reply briefly, Madam Speaker.
The decision on heavy-lift capability is a difficult one to make, as we are evaluating several excellent prospects. To get value for money, it is essential that we make a rational decision and make absolutely certain that we are satisfying our armed forces' need for a heavy-lift capability. It takes time to do that.
On spending, the hon. Gentleman should address himself to the cuts that the previous Administration made prior to the general election.