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AoH MT 11 First Defence Speech
Address by the Lord Astor of Hever D.L.,
Shadow Defence Minister in the House of Lords
to the First Defence Seminar held on 7th March 2006 entitled
“The Drayson Review:
Industry’s last hope – or best chance?”
When Lord Drayson, the Minister for Defence Procurement, made his Statement to the House of Lords presenting the White Paper I responded for the Opposition by saying, after complimenting him on getting this important White Paper out on time, that I did not want
“to snap back at it immediately with detailed questions, careless endorsements or knee-jerk reactions; but rather to take it away, go go through it carefully, compare it with our own ideas, discuss it with representatives of industry—who are, I know, standing by to examine the implications for them of these proposals in detail—and then come back for a prepared debate”
We have now had the opportunity to embark on giving the White Paper that sort of detailed examination. I am therefore very grateful to First Defence for organising this occasion this evening. This gives me the opportunity to share with you some of our initial reflections – from the point of view of the Conservative Party as the Official Opposition - and to hear what Francis Tusa has to say about it. I know that this will be well informed, interesting and sharply expressed.
I look forward also to our broader discussion which I am sure will generate a number of valuable and insightful points.
Let me begin therefore by giving you some initial, fairly cautious, general observations on the Strategy.
I will then go on to give you my own response to the several specific and highly pertinent questions formulated by First Defence in their invitation to this seminar.
So, first: How should we in the Conservative Party see this strategy? How do we see it?
Our starting point has to be the fact that
how best to provide the Armed Forces with
the right equipment
at the right price
at the right time,
is a seemingly intractable combination of objectives.
It is an intractable combination because there is no easy scope for trade offs between these three different objectives.
The result has all too often been that in the search for the best the equipment has been late in coming into service and there have been cost over-runs.
To work towards a satisfactory solution is of the greatest importance to the management of the defence budget and defence finances generally—issues to which we in the Opposition, in our role as a prospective government, are bound to give considerable thought of our own.
As in the case of earlier major statements about Defence put out in recent years by the present Government there is much which we can readily endorse in their general analysis of the problems.
It is entirely in accordance with the principles enunciated by David Cameron that we should welcome this – and that we should say so.
The trouble is that the Government’s response to its own analysis has been – and is - seriously inadequate.
That is clear from the facts.
Numbers of trained soldiers are well below target.
Numbers of reserves are falling.
Numbers of ships at sea, available to enforce international law and order are going down and down.
More arguably the planned numbers of fast jet fighters – the sharp end of air-power - are reducing.
Demonstrably we have not got
that are needed to give ourselves the undoubted global reach that is the essential element in the Government’s expeditionary strategy.
When I questioned the Government yesterday as to whether the RAF had sufficient appropriately equipped aircraft to deliver, support and eventually repatriate the forces we are now committing to Afghanistan the answers showed that we have not.
“RAF aircraft will be supported by land and sea transportation” I was told – sea transportation to Afghanistan, just fancy that – and that “charter aircraft will be used to provide additional airlift capacity, primarily for freight”.
Are we to assume that these chartered aircraft will be provided with the defensive aids and suites which, we have been told in other earlier answers, are now regarded as essential for all aircraft flying in and out of Afghanistan?
In considering the general thrust of the White Paper I suggest that we need to reflect on three main themes about which it is built namely
(1) The Guiding principles as set out at the start of the Paper
(2) Partnership and
(3) Operational sovereignty
There is of course much further important material in the sixty or so pages of Part B of the White Paper which look in turn at twelve distinct, but in some cases overlapping, “Industrial Sectors” and “Cross-cutting capabilities”.
Of these I will say simply that the assumptions and proposals which they contain are in some cases acceptable, in others questionable and indeed in some cases – such as fixed wing aircraft capabilities -highly questionable.
In all cases they have large elements of unfinished business – a point Lord Drayson himself has made in expounding and debating the strategy and calling it a Framework for Action.
Guiding principles
The principles by which the present Government claims to be guided are stated in Paragraphs A 1.21 to A 1.27 inclusive of the White Paper.
We should look with particular caution at the last and most questionable of these - the intended move away from competition as the best route for securing value for money.
It is not, I fear, a matter for fine-tuning these guiding principles. It is rather a matter for defining our own. The first of these – our own guiding principles - must be that defence industrial strategy has as its over-riding purpose how best to harness the resources of industry to the needs of defence rather than how to apply the defence budget for the benefit of industry.
Partnership
In my initial response to the Strategy I said that
- “we welcome the creation of a partnership between Her Majesty's Government and industry. We hope that they really can work as a team. The Minister must be congratulated on this change of heart and particularly on ending the trench warfare between Her Majesty's Government and BAE, Britain's biggest defence contractor.
It will be [relatively] easy to change attitudes in industry.
- The challenge for the Minister will be to drive these improved relations past his civil servants and the DPA.”
Operational sovereignty
While it is still far from clear exactly what the Government means in practical terms by this express aspiration, we welcome it, as an admirable intention in a general sense, and as a form of words.
It is essential that we retain within the United Kingdom the skills and capabilities to fulfil Urgent Operational Requirements (UORs) when we commit our armed forces to urgent action and that never again do we find ourselves dependent, for instance, on a reluctant and non-compliant Belgium for necessary ammunition as we did at the time of the first Gulf War.
But true operational sovereignty goes wider than that. It must mean that – if push comes to shove - we can undoubtedly fulfil all our planning assumptions.
It is sadly clear that, again for instance, in the matter of heavy air lift to which I have just referred we cannot do so.
On page 141 the White Paper records the importance – and I quote - of “making the Defence Industrial Strategy more than simply words”.
But words are, it has to be said, all that the Strategy is at the moment. I have an anxious concern that so far as the concept of operational sovereignty is concerned things are more than likely to remain that way – a comfortable phrase rather than a commitment to necessary action.
Let me move on then to the questions posed. The first of these was Does the White Paper represent a coherent strategy on which industry can plan and develop, or is it just a tactical wish list?
To that I would say that the White Paper is considerably more than just a tactical wish list. In this respect it compares very favourably with its predecessor MoD Policy Paper No 5 entitled Defence Industrial Policy and published in October 2002.
I would however remind you that Alan Johnson MP was the co-author of that Paper, in his then capacity as Minister of State for Employment Relations, Industry and the Regions, and that he re-appears in the more elevated position of Secretary of State for Trade and Industry as a main contributor to the current White Paper.
Alan Johnson is a Trades Unionist and a Socialist. It is unsurprising therefore that, as a response to any identified problem, he should favour – as this White Paper does - more centrally directed and managed action by the state.
In contrast David Cameron has made it clear that Conservatives look to devolve responsibility for the more efficient delivery of public services downwards to those doing the job. This must apply in the case of Defence procurement as much as in any other public service.
On the strategy disclosed by this White Paper I will therefore willingly accept that it is internally coherent and consistent in the line that it takes.
The trouble is that this line is also consistently flawed by its adherence to the fundamental fallacy that Socialist ‘big government’ works best.
We can, if you wish, return later to this particular argument.
What I will say now is that we – and industry – should therefore be extremely cautious in allowing ourselves to be carried away by the internal logic of a case built on false premises.The second question posed was How will UK defence contractors respond to the Strategy now propounded?
It is clear that there is a range of propositions within the White Paper to which UK Defence Contractors – and particularly some of them – will respond favourably. Indeed they are doing so.
But it is clear too that there are also propositions – particularly those related to exclusive partnerships - with which others, perhaps the majority, will find quite serious difficulties. That is apparent from the reservations which the Defence Manufacturers Association has expressed in its evidence to the House of Commons Defence Committee.
The difficulty lies, it seems to me, in the way in which an intention to help all emerges as what may be a bonanza for some, but exclusion for others.
The White Paper and its exponents have the usual kind words, of course, for Small and Medium Sized Enterprises – the SMEs.
But in practical terms the regime which the White Paper propounds will push the SMEs - and the entreprenurial vigour which they can contribute – back into a rather remote distance, from which their contribution can only be filtered in via friendly prime contractors.
It is a pity that the SMEs cannot be assured of fair direct access to MoD work. This is another example of how expressed good intentions, in general terms, can be frustrated in practical application in detail.
Third then How will foreign defence contractors view the UK defence market in the light of the government’s latest pronouncements?
They are bound to welcome it, I believe. They should be encouraged by the inclusive definition of “the UK Defence Industry” cited in a footnote on Page 16 of the White Paper as including “both UK and foreign owned companies”, albeit that definition is hedged with some important caveats including the residence of intellectual property.
This leads us into the fourth question – very much a two-parter. Part I, also further divisible
Is this strategy an encouragement to British defence contractors to invest in the leading edge technology our armed forces need if they are to win the battles of tomorrow?
And the second part
Or, will it encourage our Defence Contractors to put up the “for sale” sign and sell themselves to the highest bidder?
Looking at Part I first: It is too early to see what the answer will be to the first subdivision of that question – the encouragement to invest - and I am inclined to put a question mark against the assumptions underlying the second sub-division – relating to the pre-emptive benefits of “leading edge technology”.
To me it is more important that the equipment of our armed forces should be
well suited to purpose
entirely reliable in all combat circumstances
and that our people should be able
to learn all necessary skills in using it
than that it should always be
on the axiomatically unproven leading edge of technology.
What I do know is that the technology development cycle moves forward considerably faster than do the cycles of design, development and installation which are required to incorporate those technological advances into working operating systems in the hands of the Armed Forces.
Thus we can, all too easily, find ourselves in a position where a system specified to what is, at that stage, state of the art is in fact obsolescent by the time it comes into service.
Many would argue that the Eurofighter Typhoon is a classic example of that. We may well be confronted with similar problems in the case of Watchkeeper.
The Government would argue I believe that an answer to this lies in ‘incremental’ or ‘spiral’ acquisition – adding new capabilities to platforms as you go along rather than fitting them all as precondition of acceptance into service.
To this I would note that there is a counter-argument that continuously adding new capabilities can well result in demands for the continuous re-training of those who are to use the platforms and systems.
As to the second main part of this question:
Or, will it encourage our Defence Contractors to put up the “for sale” sign and sell themselves to the highest bidder?
Put in those terms I fear that the answer will be “yes” and that the Strategy will have the effect of reducing UK Sovereignty in our defence industrial base.
Defence contracting will become like the proverbial tins of sardines – an asset to buy and sell rather than a supply of goods for use.
This brings me to the last – and, to me, by far the most important - of the questions First Defence has posed: What will this latest policy pronouncement really mean for our armed forces?
I have to say that I am filled with deep anxieties. I believe that in its emphasis on providing platforms and their kit it will contribute dangerously towards investment decisions – resource allocations within the Defence Budget - which value the technology and the ‘toys’ above that of people – whereas on a realistic view it is actually the opposite that should be the case.
You will have gathered, I believe, from what I have said that I view the Defence Industrial Strategy with some hope, but also with considerable caution as to whether or not – and how far – it will work out in practice.
The Strategy is indeed a Framework for Action and if it is to succeed there has to be a lot more action to come.
The Opposition will follow closely, supportively but not uncritically the necessary further steps as they emerge
and we shall also – I hope – develop our own distinctive thinking.
That thinking must be along the lines of:
► thinning out the layers of oversight – rather than adding to them as the White Paper does,
and of putting real weight behind two concepts which the White Paper only mentions in passing
► Single Points of Accountability to ensure that all costs throughout the life of a particular project are robustly estimated and correctly monitored
► giving a reality to the role of the Single Responsible Owner.
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