My Lords, I say from the outset that this is a probing amendment to give us the opportunity once again to talk about defence equipment, and I am pleased to see the noble Baroness, Lady Goldie, here. I was minded when I saw her rushing in to do what somebody did to me once. They moved the amendment formally so I had to start responding when I did not have the breath to do it, but I will not do that, partly because I respect her too much.
I am grateful for the support for the amendment from my noble friend Lady Hayman and the noble Baroness, Lady Smith of Newnham. As I say, it is a probing amendment to once again ask about defence procurement. We all have an interest in ensuring that defence equipment is procured efficiently and effectively, because that contributes to the defence of our nation, which is important to each and every one of us.
In particular, I just wanted to ask the noble Baroness a couple of general points and then a couple of specifics. We could have a debate for hours on this, but I do not think that is appropriate at the moment, given that it is a probing amendment. She will know that, in November 2021, the Public Accounts Committee published a report which had significant challenges for the Government. It talked about delays in the Government’s defence equipment procurement programme and a net delay of 21 years across the programme. The committee’s report also said that:
“the Department failed to assure us it is taking these matters sufficiently seriously”.
They are the Public Accounts Committee’s words, not mine. The committee called for more transparency and openness, and said that an urgent rethink was needed and that there was waste running into billions of pounds.
As a starting point, can the noble Baroness update us all on the progress the Government have made in the year since the Public Accounts Committee’s report into defence equipment spending in the other place in November 2021 and where we are now with that? That is particularly opportune because yesterday the Government published the Defence Equipment Plan 2022 to 2032, which I read with interest. While staying
on the generalities, I ask: what did the Ministry of Defence mean when it said in the plan’s executive summary:
“The publication of this report comes at a decisive point for Defence and a period of rising inflation for the country. Although these pressures will have an eventual and significant effect on Defence spending, their full likely impact is not contained in this report”?
The report starts by saying that it does not include the impact of the current inflation level, even while saying that it will have a decisive impact. Frankly, I found that quite bemusing. I would be grateful for clarification from the Minister on what inflation figure was used. If I have read the report right, it was the inflation figure for March 2022. I might be wrong, so I stand to be corrected on that. We know that the current inflation figure is 11.1% and it is not clear whether that is going to go up or down—we hope that it will go down—but how can anyone publish a defence equipment plan, laying out the cost of equipment they hope to purchase, if they do not know what the monetary impact is going to be but they state that it will have a decisive impact? Clarity on that would be extremely helpful for your Lordships’ House.
As I say, those are some of the generalities that I wanted to raise. The whole point of an audit, as we have laid out, is to try to get some clarity and understanding of what is going on. The point of my amendment is that it looks at the next five years. The equipment plan looks at the next 10 years, so the Government’s projected assumptions about inflation are pretty important regarding what they can and cannot afford during that time.
Since we are looking into the future, what is the future of Ajax? The Ajax programme began in March 2010, intended to transform the Army’s surveillance and reconnaissance capability. To say it has gone badly wrong does not really do it justice. The department has a £5.5 billion fixed-price contract with General Dynamics, which was supposed to be for an initial 589 Ajax armoured vehicles. Those Ajaxes were supposed to come into service in 2017. They subsequently missed the revised target of 2021. By December 2021, the department had paid General Dynamics £3.2 billion but had received only 26 out of the 589 vehicles, none of which it can use on the battlefield, so the programme is in absolute turmoil. What is the current situation, and what now is the projection for the numbers of Ajaxes that are finally going to be operational? When will that happen? Given that the Government have put a ceiling on the project of £5.5 billion and have already spent £3.5 billion or so but received only 29 vehicles, what is the future of that programme? What is happening?
Will the Minister take this opportunity to update the Chamber on the important question of the current situation with regard to the “Prince of Wales” aircraft carrier? We are all very proud of our two aircraft carriers and want them to be successful. The “Queen Elizabeth” is performing majestically and fantastically for us and we are very proud of that, but obviously there have been problems with the “Prince of Wales”, which has only recently been completed. What is the projection for when it will be fixed and engineered back? What will the cost of that be, and is it factored into the various budgets?
You can see the difficulty with equipment; just the other day, the Defence Secretary said that the Royal Navy’s new submarine-hunting frigate would be hit by a year’s delay costing £233 million. There are numerous examples that we could look at beyond the couple I have used but, on the general point of my amendment, I want to know from the Minister where the Government are on their response to the Public Accounts Committee report from the other place, published a year ago, and what on earth that sentence in the executive summary of the equipment plan for 2022 to 2032 means, in which the Government say, astonishingly, that inflation is not costed in even though it will have a decisive impact on that plan. We would like some answers to that.
This is said from a position of wanting the defence equipment plan to work and deliver all the requirements of our fantastic, brilliant Armed Forces. To do that, we need certainty. I know the Minister will say, quite rightly, that there are fantastic examples of equipment that has been produced for our Armed Forces. That is true, but budgets continually overrun by billions of pounds and delays happen. Most importantly, have the Government responded—and if not, how will they respond—to the Public Accounts Committee report from a year ago?