The Blog

Mending Defence Procurement; Can We Keep Up the Momentum?

One of the greatest unsung achievements of the coalition government is the balancing of the defence budget. A great gaping financial wound has been staunched - but will the dressings hold?

On the eve of a meeting at RUSI to discuss the government's approach to defence acquisition, led by Peter Luff MP, Minister for Defence Equipment, Support and Technology 2010-2012, Peter Luff writes about the challenges and what needs to be done to sustain the progress.

One of the greatest unsung achievements of the coalition government is the balancing of the defence budget. A great gaping financial wound has been staunched - but will the dressings hold?

In a sense, balancing the budget as a one-off exercise was the easy bit - but heaven knows it didn't seem it. Keeping it balanced is going to be even more challenging and requires real change in competences, procedures and behaviours.

Two essential but overdue changes are the long-delayed publication of the audited equipment programme (now said to be imminent, as it has been for three months or more) and the reform of the acquisition organisation DE&S.

Time is passing and the window of opportunity is beginning to close. Will the government have the courage to do the right thing and be bold with DE&S? I sincerely hope so because it's the only way to change those competences, procedures and behaviours.

Everyone thinks buying equipment for the armed forces is easy - at least they seem to as torrents of abuse rain down on the poor souls charged with the responsibility from the Daily Mail, the Times and the Public Accounts Committee, among others. Wiser souls know better. They know that defence acquisition is a perfect illustration of my first rule of politics, "Everything when properly understood is really rather complicated."

But making deference acquisition better is a vital contribution to our national security.

So I was pretty pleased to read these words in the most recent analysis of MoD's major projects from the National Audit Office,

"In recent years we have reported several times that the Department has had to slip projects or cut equipment numbers to bridge the gap between estimated funding and the forecast cost of the defence budget. These decisions were not value for money and meant that new capabilities were not available on time. There are no such instances recorded this year...."

If that's the report card on my two and a half years as Defence equipment minister, I'll live with it.

But there was an important continuation of what the NAO said,

"There are no such instances recorded this year, though difficult decisions may still be necessary as part of the Department's drive to keep the equipment plan in balance."

I agree with that judgement and that's why I am going to the Royal United Services Institute on Wednesday of this week to discuss these decisions with academics and industry representatives.

In May 2010, when I became minister for defence equipment, support and technology, I inherited a defence equipment programme characterised by serious cost over-runs and significant delay, as it had been for many years, and a deteriorating outlook. The much quoted £38 billion 'black hole' in the MoD's budget was, if anything, an underestimate of the scale of the challenge the new government faced.

By the time my decision to leave Parliament at the next election prompted me to stand down as a minister, the situation was dramatically better. The budget was balanced. Structural reform of the Ministry of Defence, the armed forces and of DE&S, the defence acquisition organisation, was under way, holding out the real possibility that decision making and project management could be improved. A new system of prioritising expenditure offered the prospect of never again allowing the budget to get out of control. And the department was regaining the respect of the defence community and, crucially, of the rest of government.

This had not been an easy journey and many painful decisions were necessary to make this progress - but progress it was.

It is certainly good that the Defence equipment budget is now balanced and that our armed forces are better equipped than they have ever been. These achievements were hard won by many people. It is, though, by no means inevitable that they will endure unless structural, policy and attitudinal changes are made permanent at the Ministry of Defence. The forces that could yet undermine this progress were well described in Bernard Gray's report for the previous government on defence acquisition. I am far from convinced that they have yet been tamed permanently - evil may yet live after us.

An important part of securing these gains is changing the relationship between the MoD and its suppliers. I was determined to improve that relationship, the shortcomings of which had been responsible for so many of our problems. This must involve a firm resolve to pursue the transformation of DE&S and to implement in full the policies of the White Paper, 'National Security Through Technology' published in February 2012.

The White Paper set out how defence and security acquisition policies would be conducted in the future, but the approach it adopted was resisted by some. The concerns they expressed were largely based on misunderstandings about what the document actually said. That was why I spent a lot of time over the months that followed explaining that the commitment to science, to smaller businesses, to exports, to national security and to competition added up to a policy that would bring real benefits to the British companies that supplied MoD.

Because I am passionate about the future of British engineering and about the need to provide the best possible equipment for our armed forces, if I have one key message it is this: safeguard - and increase as soon as possible - the science and technology budget. It is this budget that will secure the future effectiveness of our armed forces and the vitality of British defence companies.

Finally, there is one subject on which I fear the White Paper might have been too complacent - skills. The single greatest constraint on the future success of defence companies in the UK is the availability of engineering skills. Far too many of those companies are now being forced to recruit engineers from overseas because of a significant shortage of British young people coming forward for engineering courses, both at degree and apprentice level.

The industries supplying Defence share with so many British engineering businesses outstanding creativity and remarkable innovation. They offer rewarding and exciting careers. It would be a tragedy for our security and for our more general economic success if those qualities were to be frustrated by a failure to inspire young people to become the engineers and scientists of tomorrow.

Peter Luff writes in advance of the 30 January meeting at RUSI to discuss the government's approach to defence acquisition.