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View from Westminster - November 11
8:40am Wednesday 10th November 2010 in MP's View - Mark Garnier
THE Treasury Select Committee has now finished its marathon of evidence sessions surrounding the comprehensive spending review and we are in the process of writing and editing the report.
During the course of last week, we held over 15 hours of sessions, all of which have to be written up and compiled into the final report, with our recommendation of whether the CSR is fair and necessary.
There were large numbers of issues coming up, but one became a recurring theme – that of aircraft carriers.
Readers who have followed this will be aware that two aircraft carriers were ordered, by the previous government, from BAE in Scotland.
The bill for this was to be £4.8 billion and so the contract was scrutinised to see if it could be cancelled. But during the process of looking into this, it emerged that the previous government had signed up to cancellation penalties that meant that in order to cancel, the cost to the tax payer would not be a small penalty but a whopping £5.2 billion – and no aircraft carriers.
We, on the Treasury Committee, were absolutely flabbergasted at this, hence our enthusiasm to get to the bottom of it.
The Chancellor very obligingly let us have a copy of a confidential letter (now in the public domain), from BAE to the Prime Minister explaining why the penalty was so high.
Some of the arguments are fine and I would certainly agree that we should keep our naval shipbuilding capabilities in this country and not go overseas.
But BAE were arguing that in order to be able to guarantee the capability, they would need to keep the yards open, but later went on to say that they would sack all the workers and mothball the yards in the event of cancellation.
So what our predecessors have agreed to is a £4.8 billion contract to build two carriers that will employ many Scottish workers for a decade; or a cancellation penalty of £5.2 billion that will result in the vast majority of the money going to BAE shareholders and the workers losing their jobs.
The lesser of two evils is to build the carriers, but this lunacy, to my mind, just goes to show why we need to keep reviewing all this stuff.
It is absolutely unacceptable that taxpayers are signed up to these insane contracts and I was certainly keen to see that the civil servants had learnt proper lessons from this sorry story.
We are now going back to our other previous investigations which look at financial regulation and the efficiency of the successor to the soon-to-be-defunct FSA, and into competition and practices of banks.
I’m certainly looking forward to questioning them about why they are not lending.
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