Airborne Early Warning System

§ Mr. Denzil Davies (Llanelli)

I beg to move, That this House do now adjourn.

Leave having been given this day under Standing Order No. 20 to discuss: the need for an independent and urgent inquiry into the purchase of a new airborne early warning system for the Royal Air Force. Several questions arise out of the statement of the Secretary of State for Defence. It was a long and detailed statement and I may come to it in my speech. However, I have no doubt that the Secretary of State for Defence or the Under-Secretary of State for Defence Procurement will attempt to deal with it in their respective speeches.

Most hon. Members including the Secretary of State would agree on at least one thing—that decisions on defence procurement are seldom easy. They are seldom easy, obviously, because there are so many considerations that must be taken into account. Those considerations often appear to be in conflict with each other. First, there are the military considerations, then the industrial considerations and then the financial consequences for public finance and public expenditure.

The industrial considerations cannot and should not be separated from the defence considerations. A country's ability to defend itself and, indeed, to wage war if necessary in its own defence, is invariably and obviously bound up with its defence industries and industrial base. A country that does not have a strong industrial and technological base cannot, in the modern world, wage war for very long. Recently there have been many examples of countries with strong industrial bases being able to wage war against seemingly larger and more powerful countries. We won the last war partly because of the strength at that time of our industry and, of course, of our technical expertise and innovation.

I agree with the Prime Minister that defence interests are paramount, but defence interests include military and industrial interests. It is no coincidence that President Eisenhower spoke of the military-industrial complex, because without an industry and without that base it would not be possible to provide the wherewithal to wage war and to defend one's country.

No other major nation in the West would have taken the decision that this Government have taken today. I do not believe that the French, the Germans, and certainly not the Americans, would have given the sort of kick in the teeth to their own industry which this Government have done. It is no good the Secretary of State or Conservative Members saying, "Well, it is all right, you know. There is a sub-contract here for Plessey and a bit there for Racal, and Ferranti comes in with another sub-contract." That does not show an understanding of modern defence procurement. Sub-contracts are all right but the main objective should be to secure the prime system and to ensure that one's industry can compete and carry out the prime system. If we merely produce components under sub-contracts, we shall lose the expertise to carry out the prime system which we need to maintain our base and to remain a viable industrial nation.

I said that these decisions are never easy. Perhaps I should have qualified that remark by saying that they are never easy if they are considered and looked at rationally 1410 and objectively. They are, of course, much easier if the person who is taking them is driven by some sort of simple absolutism that is nurtured by half-baked economic theories, personal spleen and a besotted adoration, sometimes, of all things American.

The Government have not considered this problem objectively and rationally. The Secretary of State said in his statement that the decision was a matter of judgment. I am sorry to tell him that we do not have confidence in the Government's judgment on this matter or in their judgment on matters of defence procurement. That is why we say that there should be a second opinion on, and an independent inquiry into, the technical matters involved.

§ Mr. Robert Atkins (South Ribble)

I am exceedingly grateful to the right hon. Gentleman for giving way. Will he comment on remarks attributed to the chief Royal Air Force officer responsible for this project, who was reported in The Times on Monday as saying, with the blessing of the Chief of the Air Staff: I simply cannot accept these allegations that there had been some sort of bias in the evaluation. There has been the most thorough, far-reaching evaluation of the competing proposals … over the last six months. The suggestion that the assessment is a biased RAF exercise impugns the integrity not only of the RAF but also of all those individuals involved in this difficult task. Does the right hon. Gentleman accept that?

§ Mr. Davies

The gentleman concerned is perfectly entitled to express his view. During the past two or three weeks many things have been said in the newpapers on this matter. However, we do not trust the Government's judgment on defence procurement, or on the question of protecting British industry and British technology in general, because their record is not good. It is unnecessary to have a long memory—

§ Mr. Gerald Howarth (Cannock and Burntwood)

The right hon. Gentleman suggests that the judgment of the Labour party might be better than the judgment of the Conservative party. If the Labour Government's judgment was so wonderful why was the TSR2 cancelled in favour of the F111, which was then also cancelled? Perhaps he will tell the House about their surfeit of judgment in that regard.

§ Mr. Davies

We did not order a foreign aircraft.

Let us look briefly at the Government's record on procurement during the past three or four years. It is not necessary to have a long memory to remember what happened the last time the Government became involved in defence procurement. About a year ago there was lie question of the purchase of Westland or of a share in it. Perhaps I should remind Conservative Members what happened—[Interruption.] We are discussing an important matter of procurement. I am trying to show that the Government's judgment is not particularly good on these matters. What happened? Two Secretaries of State resigned. The Prime Minister was so determined that shareholder power should overrule the national interest and that the Americans should control Westland that she was prepared to subvert many of the conventions of the constitution to get her way. She got herself into such a pickle that she had to call upon Sir Robert Armstrong—that well known linguistic gymnast—to rescue her from her difficulties.

§ Mr. Robert Atkins

That has nothing to do with it.

§ Mr. Davies

The Secretary of State said that it was a matter of judgment, and I am trying to show that the Government's judgment in these matters has not been very good. Let us see how good the Government's judgment has been in respect of defence procurement and the royal ordnance factories. We all know what has happened to them during the past year. Let us see what has happened to the royal dockyards following the hare-brained scheme proposed by the former Secretary of State for Defence, the right hon. Member for Henley (Mr. Heseltine). They are being decimated and destroyed by the Government's procurement policy.

Let us look at the general policy of competition within the Department. If the Government continue with some of their competition policies, our defence industrial base will soon go the same way as our civilian manufacturing base has gone. If Conservative Members do not realise that, they should start to think about it. To some extent, our defence industries have always been protected. They have been protected by Governments of both parties in two ways. First, they have been protected by a virtual block on imports, with certain exceptions. That was one form of protection, although it was not an exact import control. Secondly, our defence industries have been protected to some extent over price in order to enable them to carry on. However, the Government are taking that protection away, and opening the industry up to competition from other countries that would never allow us to compete in the way that they compete here. That is what is happening, and if it continues there will be a substantial diminution in our defence industrial base.

§ Sir Antony Buck (Colchester, North)

If what the right hon. Gentleman has just said is true, is it not remarkable that we have managed to export 113 Harriers to the United States?

§ Mr. Davies

There is obviously a two-way trade, but the danger is that our defence industrial base will be destroyed as a result of the Government's policies.

Let us briefly look at the record on the civilian manufacturing side. Not long ago, the Prime Minister wanted to sell off our last remaining motor manufacturer to the Americans as well as Land-Rover, but she was stopped by opposition from Labour Members and by many other hon. Members. Again, that shows that the Government do not have a very good record on judgment in these matters.

§ Mr. Michael Heseltine (Henley)

How does the right hon. Gentleman square his suggestion that we do not support Britain's defence industrial base with the fact that 95 per cent. of procurement is bought through British industry or collaborative projects?

§ Mr. Davies

That used to be the case, but there is a great danger that that percentage will reduce rapidly as a result of the Secretary of State's policies. Given the mess that the right hon. Member for Henley made of the royal dockyards and the royal ordnance factories, he should be the last person to stand up and say anything.

As the Secretary of State said in his statement, the latest instalment in the long Nimrod saga commenced in March 1986, when the Ministry of Defence announced an open competition for an early warning system for the RAF. As the House well knows, three American companies — Boeing, Lockheed and Grumman — entered the 1412 competition, as did GEC. After the preliminary examinations, Lockheed and Grumman dropped out because I understand that their systems were not considered suitable. Thus, the two companies left, GEC and Boeing, were presumably thought to be suitable to go into the final round of the competition.

I think it is fair to say that the competition at least spurred GEC into action. I understand that during the next few months several improvements were made to its system. The transmitter was improved, as was the range and the overland capability. The receiver capacity was enhanced to prevent overloading, the tracking programme was improved, and the central computer was made to work three times as fast. No doubt there were other improvements as well, which were carried out in the fairly short period between March and the competition's final stages.

Indeed, the position had improved sufficiently for the editor of Flight International—a respectable publication that is well thought of—to write towards the end of the year: The Royal Air Force choice must be for quality. It is becoming evident that the GEC equipment is performing almost impeccably, and is at least equal to the Westinghouse equivalent in the E-3A, if not some years in advance of it. Confidence in the system was enhanced when Lockheed decided that it would insert the system into its aircraft in order to try to sell the system worldwide. Again, I should have thought that Lockheed would not have done that unless it was satisfied that the system worked. We are talking about an American company that is a very close competitor of Boeing. Hon. Members may say that that is not enough for them, and that they are not prepared to take Lockheed's view, the view expressed by the editor of Flight International, and so on. In that case, perhaps they will take it from the horse's mouth, from the Secretary of State for Defence.

§ Mr. Robert Atkins

What about Jane's "All the World's Aircraft"?

§ Mr. Doug Hoyle (Warrington, North)

Shut up and listen. You might learn something.

§ Mr. Speaker

Order. This debate is of great interest and I ask the House to listen quietly to what the Opposition spokesman has to say.

§ Mr. Davies

On 5 December, two weeks ago, the Secretary of State made a clear statement. He has been challenged about it in the House and he has not denied it, and so I shall repeat it tonight. Quite gratuitously, when asked, he said that "both systems work." He need not have said anything. He did not even qualify that. He went on to qualify the position in terms of cost, but there was no qualification of technical matters. He did not say that in one of those fireside chats that he gives on Radio Ayr, such as the one that he gave before the bombing of Libya. This was prime time stuff, on "News At Ten". He clearly said that the two systems work. I am not sure what the Secretary of State said this afternoon. I think that he said that they did not work. By implication, his statement shows that the two systems—[HON. MEMBERS: "No!"] The Secretary of State is perfectly capable of answering for himself. I can only repeat what he said.

§ Mr. Jonathan Sayeed (Bristol, East)

Does not my right hon. Friend's earlier statement show that he was bending over backwards to be fair to GEC? Surely the purpose of 1413 airborne early warning is to give a better warning than ground radar pictures can do. As the GEC Nimrod gave a worse picture, would it not be better to buy an aircraft that gives a better picture?

§ Mr. Davies

All I know is that on 5 December, the Secretary of State bent one way, and today he has bent another. Perhaps he will tell us how he squares that statement with what has been said today. Within 48 hours of the Secretary of State's statement on television, there was a barrage of propaganda in the press rubbishing GEC and Nimrod. The two stories from the Sunday newspapers that I shall quote were probably written within 24 hours. I shall quote stories from The Observer and The Sunday Times of 7 December, stories written on Saturday afternoon. The story in The Observer was written by Adam Raphael and Victor Smart. It said, under the headline: Cabinet gets set to ditch Nimrod. The Cabinet's defence committee is expected to decide this week between the rival bids … But with Mrs. Thatcher firmly in the Boeing camp the Government are likely to go for the AWACS system. James Adams, the defence correspondence of The Sunday Times said: The project is three years late, more than £600 million has been spent … George Younger, the defence secretary, received the report from the equipment policy committee on Friday and is studying it over the weekend. He had not studied it on the Friday, when he went on television.

We need to be told how the Secretary of State squares his statement that both systems work with the leaks that came from his Department. They could not have come from anywhere else, and there is a quotation from somebody in his Department who is not named. Was the Department trying to get at the right hon. Gentleman? Was it trying to change his mind? Was it a coincidence or a consequence? It is no good the Secretary of State smiling about it—he owes the House an explanation of what went on, especially when the conclusions of committees that are supposed to be secret are found in all the newspapers on the following Sunday. Has he lost control of his Department or is he still in control?

AWACS is not perfect either, and the Secretary of State knows that. It took 16 years to develop and its technology is quite old. As Boeing confirmed, it has had to be substantially updated over the years and those updatings are not done by Boeing for nothing—it charges the United States military. Many would say that AWACS was not designed to work in Europe.

There is then the question of jobs. The Government, and in particular the Secretary of State in his statement today, have tried to say that more jobs would be created. We know that jobs will be lost. We do not know how many—perhaps 2,000 or 2,500. In his statement, the Secretary of State said that Boeing had entered into a contractual obligation to provide £130 worth of work for every £100 of work on the AWACS. When I asked the Secretary of State whether any penalties would be applied if Boeing failed to carry out this obligation, he said that they would not. It is a strange contractual obligation where if one person breaks the contract there are no sanctions.

We know what it is in the contract. Boeing says that it will use its best endeavours to find the jobs and do the offset. The Secretary of State cannot tell me that, if Boeing fails to provide that £130 worth of jobs, there is a procedure for suing the company or getting damages. We 1414 have seen this arrangement time and again, as in the case of Trident when few jobs and orders came. We also saw it in the case of star wars. The right hon. Member for Henley rushed off to the Pentagon and signed an agreement to provide £1 billion, but look what has happened. Time and again, when we enter offset agreements with the United States, a mere trickle of jobs results, for the simple reason that the Americans are not as daft and soft as we are and they keep their defence contracting, in the main, to themselves. Perhaps the Secretary of State will confirm that there is no way that he can make Boeing live up to its promise of £130 worth of jobs for every £100 of work.

The Secretary of State said that the money that would be lost as a result of this exercise was about £600 million, and that the cost of AWACS would be £860 million for six. He went on to say that there was an option within six months to acquire another two. Would he explain that option a little more? Do we need six or eight aircraft? Presumably the Secretary of State knows how many we need—or does he need another six months? We should be told how many we need because no doubt the threat has been assessed, and I would have thought that the military conclusion would tell the Secretary of State how many he needs. If he orders another two within six months, how much more will that cost?

The Secretary of State then said that the £860 million was at 1986–87 prices. Perhaps I am being obtuse, but is that the fixed price? I take it that it is the fixed price, irrespective of what happens to inflation, but we should be told whether that is the actual sum in sterling that the British Government will have to pay. We were then told that the money would be found within public expenditure totals. By when does the money have to be found? The public expenditure totals do not go for more than three years, as there is now a three-year public expenditure review. Will the money be found within those three years or will it be paid in 1991, when the Boeing aircraft are delivered? We should be told what the implications for expenditure are, and we should be told whether the Government intend to lease three aircraft between now and 1991. The Secretary of State said that no offer had been made, and he was choosing his words carefully. Perhaps no formal offer has come, but have negotiations been started? Would the aircraft come from Boeing or the US Air Force, and how much would they cost the British taxpayer?

The Government's judgment on this matter is suspect, and the Secretary of State has said that he cannot prove anything and that it is a matter of judgment. In view of that, of the considerable consequences of the Government's decision for Britain's defence interests, British industry, for jobs and the economy, the history of the matter and the statements that have been made, the prudent course is to seek a second opinion by setting up an independent technical inquiry. It need not take too long. It should not take very long. There is no great rush as the contract does not have to be signed immediately.

§ Mr. Robert Key (Salisbury)

Will the right hon. Gentleman give way?

§ Mr. Davies

No, I have taken enough time.

The aircraft will not be with us until 1991, so it will be possible for the Government to satisfy everybody, 1415 including industry, by setting up an independent inquiry to look at the technical matters once and for all. We would all accept the results of such an inquiry.

If the Government do not do this, we must conclude that it is not just scientific and engineering matters that have been decided in this case, but that there is an element of malice towards GEC and perhaps towards some of its leading personnel. If the Government fail to set up an inquiry, we must also conclude that what they have done and what they will do by deciding in this way shows their contempt for British industry, defence interests and technology.

§ The Secretary of State for Defence (Mr. George Younger)

I am very grateful to the right hon. Member for Llanelli (Mr. Davies) for providing us with the opportunity to have a debate so soon after the difficult decision that I had to announce this afternoon. However, with best of goodwill towards the right hon. Gentleman, the kindest description I can give of his speech is that it was a bit of a struggle. I thought that we were going to hear a clear and specific definition of the Opposition's views on the Nimrod decision, what they would have done themselves, and why. Instead, we were given a long tour d'horizon of the right hon. Gentleman's ideas on defence policy generally.

I have to offer my apologies to the right hon. Gentleman. It was somewhat tactless of me to have answered in my statement this afternoon all the questions that he was going to ask. I appreciate that it was difficult for him to recast his speech, so I was interested in some of the thinking on his feet in which the right hon. Gentleman indulged. It showed that he has a flexible attitude towards dealing with policies, if they can be made up as he talks.

He announced that in the past there was a virtual blockage of imports of defence products. If the right hon. Member for Leeds, East (Mr. Healey) had been here to hear his vast purchases of equipment from other countries, particularly from the United States during his time as a Defence Minister, described as a virtual blockage of imports, I think that he would have derived some wry amusement from it.

§ Mr. Neil Kinnock (Islwyn)

It is plain that the Secretary of State is not very good on percentages. Is 5 per cent. a large amount or a small amount? Will he also give us the answer that he did not give this afternoon? What is the enforceable power in respect of the alleged 130 per cent. contract that he is supposed to be setting up with Boeing?

§ Mr. Younger

I understand why the Leader of the Opposition feels the need to try to make the speech of his right hon. Friend the Member for Llanelli again. On the 90 or 95 per cent. figure, or whatever it is, the correct figure is over 90 per cent. But that was not my point. It was the point of the right hon. Member for Llanelli. The right hon. Gentleman cannot get away from the fact that he said that there was a virtual blockage of imports, but he moved his stance when he saw he was getting nowhere. A few bars later, if that is the right way to describe it, he said, "No, no, there is a two-way trade between the two sides of the Atlantic. We are buying and selling both ways." He was moving his stance as he went along.

1416 Then he came to his great panacea for our defence industries and exports. [Interruption.] I am trying to inform the House of the views on the Labour side, which I am sure the right hon. Member for Llanelli will be most entertained to hear. This great leader on the other side, who is so keen on defence exports and defence industries, has committed himself in a paper, which I read with great interest, which was produced by the national executive committee of the Labour party. It says: There are strong arguments for a policy against the arms trade. Far too many jobs are dependent on other people's wars. There are also strong, less widely publicised economic arguments. We"— that is a Labour Government, if ever there should be another one— will disband the defence export services organisation. It is very nice to know that the Labour party has such a high regard for this organisation. I should point out that it is not the sales organisation that it intends to disband, but the defence export services organisation. Those who buy defence equipment, and, by doing so, create jobs in this country, will find that a Labour Government, should there ever again be one, will disband that organisation.

The right hon. Gentleman asked a number of questions which I shall do my best to answer, although I think that I have answered all of them already. First, he asked whether we need six or eight E3A aircraft. To fulfil the full and necessary policy that we want and that NATO wants us to provide, we need eight. In my statement I committed this country to buying six now and I have taken an option, with Boeing, to buy two more within six months at the same price. I wish to keep those two in reserve until I know the outcome of the annual review of our long-term costings. It is most important to see everything in the round so that we can make sensible decisions.

I said this afternoon that the price that had been offered by Boeing had been quoted in sterling. It is a fixed price that contains an allowance for inflation. There will only be an addition for excess costs and inflation if a point above a certain threshold is reached. The rest of the information is confidential, but that is the general line and it is a very full answer to the right hon. Gentleman's question.

§ Mr. Denzil Davies

The right hon. Gentleman did not say this afternoon that there would be an allowance for inflation. Is that British inflation or American inflation? How is it to be calculated in the contract?

§ Mr. Younger

The details are part of the contract. The right hon. Gentleman knows that we do not make details of that sort public, for obvious reasons. [HON. MEMBERS: "Why not?"] Nor did any of my predecessors in this job.

The right hon. Gentleman also asked where the money would come from. I made it clear this afternoon that the money will come from within the Ministry of Defence's expenditure patterns which have already been published—[Interruption.] The right hon. Gentleman would hear a great deal better if he did not talk so much himself. The money has to be found from within the Ministry of Defence's expenditure patterns which have been published by my right hon. Friend the Chancellor of the Exchequer. There is no mystery about that.

Lastly, the right hon. Gentleman asked whether any offer on leasing had been made. I made it clear this afternoon that there has been no offer, but that if there 1417 were such an offer I should consider it, if it were necessary to do so. I repeat that I have not had an offer, but if I receive one I shall consider it carefully.

§ Mr. Denzil Davies

I asked the right hon. Gentleman when the expenditure would start and when the payments would be made. Will there be payments within the next three years? The public expenditure assessment is for the next three years.

§ Mr. Younger

That is a perfectly good point. There will be some expenditure in the next three years, but there will be savings in the earlier years, because of the expenditure profile. I have given the totals, but the right hon. Gentleman will have to wait until he sees the breakdown and what, exactly, the cost works out at.

§ Mr. John Wilkinson (Ruislip-Northwood)

Will my right hon. Friend clarify the options? Is the issue of whether the option is to be taken up at a later date in any sense contingent upon a potential order by the French air force? Will Royal Air Force aeroplanes have the CFM56 engine—the Franco-American engine—which is certificated for the Saudi Arabian air force?

§ Mr. Younger

The option is not dependent upon the French taking up an order for AWACS, but I have made it clear that if the French decide to take AWACS, which is not at all unlikely, we shall be willing to co-operate with them over the procurement of AWACS and the support facilities for it. That has been very much welcomed by the French Government.

§ Mr. Frank Cook (Stockton. North)

Will the right hon. Gentleman give way?

§ Mr. Younger

No, not for the moment.

As for the rest of the option—[Interruption.] I am trying to answer the first part of the question, but the right hon. Member for Llanelli is much more interested in asking the questions than in hearing the answers. However, that is understandable. [Interruption.] The right hon. Gentleman is more interested in asking questions than in getting answers. My hon. Friend the Member for Ruislip-Northwood (Mr. Wilkinson) asked a valid question about the option. It will be exercised entirely at our discretion. If the French buy some AWACS aircraft, it will be a matter for negotiation between us and Boeing about whether that makes a difference. The engine laid on by Boeing is exactly the same as the engine in the existing AWACS aircraft.

§ Mr. Frank Cook

The French are interested in an airborne early warning system and have already expressed an intense interest in Nimrod. If they pursue that interest and intend to purchase the whole system lock, stock and barrel from GEC Avionics, what will be the Government's attitude? Would they permit such a purchase or would they try to block it?

§ Mr. Younger

I am always keen to encourage defence exports and should be very pleased if the French want to buy Nimrod. That is an excellent idea. The right hon. Member for Llanelli was somewhat unwise to pour cold water on the value of the offset deals. Whatever else one says about Boeing, it has an extremely good record in delivering what it promises on offset. When we bought Chinook helicopters from Boeing, the company more than fulfilled its undertaking on the offset. What is more, as has been made clear not only by me but by some of the 1418 contractors concerned, the offset being offered in this deal is good and of a high quality. If the right hon. Gentleman does not believe that, he should speak to the firms concerned and they will tell him that that is the case.

§ Mr. Denzil Davies

In his statement the right hon. Gentleman said that there was a contractual obligation. I asked if there were any penalties and he said no, but if Boeing fails to exercise its best efforts the Government have no sanction in law against Boeing. Is that the case?

§ Mr. Younger

I have already answered that question but I shall answer it again. In the case of the contract to supply the aircraft there are penalty clauses on Boeing if it fails to deliver on time and so on. There are no penalty clauses about the offset but Boeing has an exceptionally good record—[Interruption.] Apart from the fertile imagination of the right hon. Gentleman, there is no reason to think that Boeing will not fulfil its obligations. It will probably exceed them.

§ Mr. Churchill (Davyhulme)

Does my right hon. Friend agree that it comes ill from the Leader of the Opposition to impugn the good faith of our American allies on whom he intends to rely for the ultimate nuclear defence of our nation? Is it not rather cheap for the right hon. Member for Llanelli (Mr. Davies), who has no great technical knowledge and expertise, to impugn the integrity and judgment of the scientific and service expert advice tendered to my right hon. Friend?

§ Mr. Younger

My hon. Friend is correct. However, he is expecting a great deal too much if he expects logic from the Opposition. I urge him to be a little more realistic in what he expects from the Opposition. One cannot expect the right hon. Member for Llanelli to be logical because he made a long speech about how good our defence industry and exports are and yet proposes to abolish the whole organisation if the Labour party come to power.

My statement was rather long and I shall not weary the House by repeating all the points that I have already made, although I seem to have had to do so for the right hon. Member for Llanelli. In the short time available to me I should like to concentrate on the most difficult and controversial issue arising from my decision—my assessment of GEC's prospects of achieving the required performance with the Nimrod system. That is probably what the House will find most useful to hear.

Airborne early warning is a fundamental requirement of modern warfare and our lack of this capability, for instance during the Falklands conflict, had consequences which we all clearly saw. In layman's language, the purpose of AEW is to put radar into the sky so that it can look far beyond the horizon of any radar system on the ground. This should give a clear picture of all flying objects over a long range, including those at low altitudes at which a hostile aircraft could conceal itself beyond the earth's curvature.

The AEW first detects hostile aircraft and then tracks their movement and, if possible, identifies their type. Friendly forces can then be alerted and fighters scrambled to intercept the intruder. The AEW aircraft will then guide them to the target. The AEW ensures that our fighters and aircrew do not wear themselves out on speculative patrols, but are called up when needed and directed straight to their targets. In this way the effectiveness of our fighter force is greatly enhanced. In other words, AEW is a force multipler in the truest sense.

§ Mr. Tam Dalyell (Linlithgow)

The Secretary of State for Defence stressed the importance of a vital secure data link. Does he agree with the chairman of GEC who said in a broadcast at 5 pm that in three years' time Nimrod will be much better? In the view of the right hon. Gentleman's ministerial experts would GEC have solved the problem of the secure data link within three years? That is a purely factual question but it is important in terms of judgment.

§ Mr. Younger

The unanimous view of the experts was that with the best will in the world—it is only their judgment—GEC would not have been able to solve all the problems in that time.

§ Mr. Dalyell

The data link problem?

§ Mr. Younger

Yes, especially the data link problem, and that problem is also experienced in the AWACS. It is not a matter of dispute between the two companies.

§ Mr. Dalyell

So Boeing is not better than GEC. On the data link problem, are we being told that Boeing has no great advantage over GEC? These are difficult systems. Is Boeing not much better than GEC?

§ Mr. Younger

I have made it clear that there is nothing between the two on that point. All hon. Members should know that, but if they do not I make it clear now that those items are still—

§ Mr. Dalyell

That alters it.

§ Mr. Younger

This is nothing new and it is perfectly well known by everybody concerned that the data link is still in the development phase. It is not a problem—

§ Mr. Dalyell

It is the reason given in the right hon. Gentleman's statement. Look at paragraph 5.

§ Mr. Younger

I know exactly what is in the statement. With respect, the hon. Gentleman has a great talent for making something out of nothing. I was quite open about it and I still say that on that aspect there is no difference between the two. I looked carefully at my statement and if the hon. Gentleman reads the text he will find that that is borne out word for word. This is a short debate and I do not want to take up time by going into a non issue.

§ Mr. Dalyell

On a Point of order, Mr. Speaker. I am told that I have a talent for making something out of nothing. For 20 years I have been the weekly columnist of the New Scientist and I know something about the subject.

§ Mr. Younger

I hope that the hon. Gentleman will not be too sensitive. I am not trying to be disrespectful to him but, as I have said, this is a short debate and many hon. Members wish to speak.

§ Mr. Dalyell

The right hon. Gentleman has been technically caught out.

§ Mr. Younger

This early warning system is the essential and demanding role for which Nimrod has been planned for nearly a decade. The recent flight trials were carried out with great care. I flew in one of the sorties, as did my hon. Friend the Minister of State for Defence Procurement. As a result of the trials we have been able to form a clear picture of Nimrod's performance against the air staff requirement.

It must be emphasised that we did not conduct a sudden death play-off between Nimrod and the E3A, as has been 1420 represented. Nimrod was tested against the air staff requirement. Neither did we move the goal posts, although perhaps we would have been justified in doing so in view of the increase in the air threat since 1977. We did not specify, as has been suggested, that the AEW system must track aircraft targets over densely populated land. We said that this would be a valuable bonus in the competition, but it was never part of the baseline specifications against which Nimrod and AWACS were measured. I make that clear again.

§ Mr. George Park (Coventry, North-East)

Is the Minister asserting that the specifications were never altered during the life of this contract and that GEC never got altered specifications or amendments during the whole life of the contract? Is that what the Minister is saying, because if so it runs entirely contrary to the evidence that was given to the Public Accounts Committee?

§ Mr. Younger

The hon. Gentleman must understand that they are two different things. I have never heard of a contract that has gone through without the specifications being altered many times and on many points. Air staff requirement 400, against which this project is measured, has not been altered except in one respect, in that in-flight refuelling was added to it with the agreement of everybody. There is no problem about that because both of the contenders have in-flight refuelling capabilities.

This is a very short debate and I should conclude my speech as soon as possible because many people wish to speak.

§ Dr. Keith Hampson (Leeds, North-West)

rose—

§ Mr. Tony Favell (Stockport)

rose—

§ Mr. Younger

It is most unfair on other people.

§ Mr. Favell

I am grateful to my right hon. Friend. As he is aware, many of my constituents are employed at British Aerospace at Woodford. Will he please assure them and the whole of the north-west that there is no criticism of the way in which they have carried out their work on the 11 airframes? What will happen to the 11 aircraft which have been constructed by British Aerospace?

§ Mr. Younger

My hon. Friend has made a valid point. I should like to take the opportunity of saying again, as I said in my statement, that British Aerospace carried out its part in the contract excellently and completely to the stage that it had reached. It has done a good job in providing the aircraft and I should like to make that clear.

We shall have to give urgent consideration to the future use of those aircraft. I have begun to identify a number of possible uses for them. Nothing definite has yet been put forward, but, naturally, this is an important matter. The future of that airfield will, of course, also have to be considered. I accept my hon. Friend's great concern about that matter and I assure him that it will be addressed as soon as possible.

The air staff requirement specifies a number of performance characteristics that must be achieved, of which two are of fundamental importance. The first is the detection range which must be long enough to give the fighters time to scramble and intercept. The second is continuity of tracking. That is to say, the signature of the target aircraft must remain in and be displayed by the AEW computer system for as long as the aircraft remains within range. If the life of the track is too short, the signal 1421 may disappear and then reappear apparently as a new signal, thus giving the false impression that there are two aircraft instead of one and confusing not only the operators in the AEW aircraft, but users of the information in the air, on the ground or at sea.

We had hoped that our experts' appraisal of Nimrod and the programme of flight trials would ideally demonstrate that the system was within sight of achieving the required standard, or failing that, that there was at least a good prospect that it would achieve it within an acceptable time scale. Regrettably, my experts were unable to reach that conclusion. The flight trials yielded no consistent or reliable pattern or results. Those results, which GEC was content for us to use, generally showed a detection range significantly below what we had specified. The mean track life of the system was less than half of what we specified.

That is the performance of the system today, which the company would accept falls well below our standards now. However, the company has proposed technical solutions to overcome those various shortcomings. Taking each shortcoming and each proposed solution in isolation, it is possible that the system might approach the required standard, but even so, its performance would be marginal and on GEC's own showing the system would have only 70 per cent. of the reliability that we have specified.

My experts had to judge the system as a whole and not each of its component parts separately. All the individual improvements would have to be integrated into a system which would perform well in all respects. Sadly, our experience in recent months has been that as the firm has made an improvement in one area, that has resulted in the degradation of some other aspect of performance. The experts judged that that pattern was likely to continue and that the required performance was unlikely to be achieved before the mid-1990s at the earliest, if then.

§ Mr. Cranley Onslow (Woking)

Is the ceiling of the aircraft relevant to the detection range? In that context, is it important that the Nimrod can attain a ceiling of about 25,000 feet and that the AWACS can attain a ceiling about 10,000 feet higher?

§ Mr. Younger

My hon. Friend has made a good technical point. The range at which each aircraft is effective is affected by its height because it can see that much further, the higher it can get. However, I stress that all the testing that we have done of the ability of Nimrod to operate is against ASR 400 and not against the AWACS aircraft.

§ Mr. Kinnock

On the basis of the appraisal that the Secretary of State has rightly offered us as a matter of public record tonight, if Lockheed were to approach him what advice would he offer it about the installation of the GEC system for its aircraft? If the French were to approach him on the subject, what advice would he tender to them about that British product?

§ Mr. Younger

I am not quite sure what the right hon. Gentleman means by the word "advice".

§ Mr. Dalyell

That is a very good question and the Secretary of State should answer it.

§ Mr. Younger

I am endeavouring to do just that. I and not quite sure what the right hon. Gentleman means by the word "advice".

§ Mr. Kinnock

The right hon. Gentleman is rubbishing British products.

§ Mr. Younger

I am trying to be open with the House about the sort of considerations that led me to take a very difficult decision. If the right hon. Gentleman is asking me to say nothing about that, I am very surprised. I have made it clear all along, and particularly this afternoon, that I regard GEC as a good company doing much very good work for the Ministry of Defence. I expect it to continue to do that for a long time in the future.

It is a great mistake and a damaging error to make out that because this contract ran into difficulties, anything else that GEC does is also inefficient. That is not the case. The company is a valued contractor and I wish it to remain so.

It is easy for hon. Members to criticise the judgment that we have made, but it is much more difficult to be the person who makes it. The one thing which, sadly, was missing from the speech of the right hon. Member for Llanelli was a balance between the considerations that he would have had to take if he had been in my position. He rightly emphasised the effect of a decision of this sort on the industry concerned, the company concerned and the reputation of British industry. That has been very much in my mind when making this difficult decision.

However, the right hon. Gentleman made no mention of the other criteria—the equipment and the standard of the equipment that the RAF requires to do its job. With respect to the right hon. Gentleman it is no good taking one of the criteria and letting it drive the whole thing because the whole is a balance between the various criteria that have to be taken into account. If I take the right hon. Gentleman's argument at its most literal, he is saying that the overwhelming importance of British industry having the work must take complete precedence over whether, at the end of the day, the equipment has worked.

§ Mr. Hugh Dykes (Harrow, East)

The difficulty of my right hon. Friend's decision is appreciated by everybody and there is great sympathy for it. The great tragedy of the post-war period is that again and again we surrender to American technology. That weakens the country and the whole of Europe because we do not develop our own high technology.

§ Mr. Younger

I thank my hon. Friend for his absolutely valid point with which I totally agree. However, one cannot understand from that that we are in a position to do everything ourselves. It is better to collaborate on some things. To be fair to the Americans, they have taken the same view in reverse and have not attempted, because they could not beat it, to make a competitor to the Harrier. They have bought our Harriers and they are now, under licence and in agreement with us, co-operating and building them for themselves.

This is a very short debate and it is high time that I brought my remarks to a conclusion. I should simply like to say that if this is an effort by the Opposition to paint a picture that shows our decision to have been a wrong one, they have so far not addressed themselves to the principal issues. I cannot take seriously a case which rests on a series of assertions about other matters and which does not get down to the real nub of the issue, which is that the RAF requires aircraft up to a certain standard to do the job. Could GEC's equipment have got up to that standard in three years? I have faced up to the truth, have 1423 faced the fact that I do not believe that it could, and I have taken the necessary decision. I hope that the House will back me in that decision.

Several Hon. Members

rose—

§ Mr. Speaker

Order. The House knows that this is a three-hour debate. A great many right hon. and hon. Members wish to take part, so I plead for short contributions, please.

§ Mr. James Wallace (Orkney and Shetland)

Many hon. Members recognise that decision that the Secretary of State has announced today was a difficult one. We have made it clear that, if it had been possible, we should have liked to see a decision in favour of the GEC option. There are obvious reasons in terms of British jobs, technology and export opportunities why that should have been the case. However, at the end of the day it is the defence considerations that matter. We have said that if only one option met the air staff requirements, that would be the proper decision for the Secretary of State to take.

§ Mr. Robert C. Brown (Newcastle upon Tyne, North)

When the hon. Gentleman says "we", does he mean the Liberals, or the Liberals and the Social Democrats?

§ Mr. Wallace

I am speaking on behalf of my Liberal and Social Democratic colleagues in this matter.

At the end of the day we are dealing with a matter of judgment, and the House is being asked to accept the Secretary of State's judgment on which of the two options before him met the air staff requirement. He has told the House that on the advice available to him only the Boeing option met those requirements.

Because of the important consequences that that decision has for one of Britain's home-based companies, it is important that as much information as possible is made public. The decision must be seen to be right as well as be right.

In his statement this afternoon the Secretary of State described some of the considerations which led him to that decision. He has expanded on them in a letter which he sent to all right hon. and hon. Members and he has given more this evening. I urge the Secretary of State to place in the Library or to put on public record as much declassified information on this matter as possible because it is important that such information should be before the public. That is particularly important because, in statements made earlier this week, GEC has said that it felt that in some way it had been cheated. The more information that is available the more will GEC be able to challenge the various considerations that led the Secretary of State to his decision, if it feels it necessary to do so.

When the Leader of the Opposition intervened and said that the Secretary of State was rubbishing GEC by explaining to the House what had led him to his decision, he was being disingenuous. If the Secretary of State had tried to withhold from the House his reasons for coming to his decision, the Leader of the Opposition would have been on his feet crying foul again and saying that we were being kept in the dark. It is important that as much information as possible is made available.

§ Mr. Key

Does the hon. Gentleman agree that it is time to give the lie to the idea that no proper assessment has been made and that there should be some so-called independent assessment? As most of the assessment was done at the arms and armaments experimental establishment at Boscombe Down in my constituency, does the hon. Gentleman share with me an understanding of the deep offence caused to the scientific Civil Service by such allegations?

§ Mr. Wallace

I accept the hon. Gentleman's point. I have no reason to believe that anything other than the best military and technical advice was given to the Secretary of State.

Key points of concern were jobs and the quality of jobs. Boeing has made various promises and claims which it says will accompany the selection of its option. It has talked of a 130 per cent. offset and in one letter it has said that the high-tech involvement will lead to new products with guaranteed new markets and export sales. I think that the House would like to know precisely what those new markets and export sales that have been guaranteed are.

We have been told that British companies will be involved in further development of the AEW system and that there will be E3A sales to other countries in which British industry will have an opportunity to participate. If those guarantees come to pass they will be welcome. My hon. Friend the Member for Isle of Wight (Mr. Ross), who has aviation industries within his constituency in which Boeing has had some involvement, has found that Boeing has been good in keeping its word.

On this occasion, however, there has been serious competition, and in those circumstances I should have thought that the Ministry of Defence was in a strong bargaining position. Therefore, I do not understand why the Secretary of State was not able to get a better belt-and-braces clause in the contract to hold Boeing to the 130 per cent. offset. It is all very well to go on good faith and previous performance, but the history of the project has been so marred by what could be called weak contractual arrangements that, as we are taking it forward, one would hope that the Ministry of Defence could be much stricter in the conditions that it sought to impose.

Indeed, the Comptroller and Auditor General, in his report published in July this year with particular reference to this project, said that one of the main lessons to be learnt for project management was to establish contractual terms to put the contractor under effective discipline". There is considerable justifiable anxiety on the Opposition Benches that such an opportunity has not been taken.

A further point on the contract which I raised with the Secretary of State earlier this afternoon relates to extraterritoriality laws. As I understand his reply, it was open to contracting parties to choose which law they wanted and it has been the practice of the Ministry of Defence to seek United Kingdom law. Fears on this matter arise from previous experience with several contracts involving IBM when the United States Government have sought to assert their law over matters which are very much within the United Kingdom regarding whether certain equipment could be moved within the United Kingdom and having a clear say in which countries goods may be exported to from the United Kingdom. Again, we should like some assurance that it is perfectly clear in the contract that the United States will not be able at any subsequent date to claim that its law could apply to this contract.

§ Mr. Wilkinson

Will the hon. Gentleman clarify one simple point? Is his party, or the alliance that he is representing, in favour of the Royal Air Force having the best aircraft in defence of Britain as regards airborne early warning? That is not clear.

§ Mr. Wallace

I am working on the basis that the Government have made their decision, and I am trying to make it clear that, having entered into a contract, it is important that we get the best deal. One of my points concerned extra-territoriality. That is an important point that should be covered in the contract.

The Secretary of State said in a statement this afternoon that costs would be contained within the defence budget as outlined by the Chancellor in his autumn statement. However, it has already been confirmed in news reports that the Ministry of Defence states that the defence estimates do not include any additional spending for AWACs. As the Secretary of State said, the greater costs will come in the later stages in the early 1990s. That is the very time when the bulk of expenditure on Trident is expected. Therefore, the House should be told how the Secretary of State sees the defence budget panning out in the late 1980s and early 1990s when those two major projects will have to be funded. What will give? The Secretary of State has said in the past that some hard decisions will have to be made. Can he give the House any idea of the way in which his mind is working on those hard decisions?

§ Mr. Cyril D. Townsend (Bexleyheath)

Will the hon. Gentleman give way?

§ Mr. Wallace

I have given way a lot and I know that other hon. Members want to speak.

The project is a sorry tale which shows up some serious deficiencies in the Ministry of Defence's procurement policy. With his usual disarming frankness this afternoon the Secretary of State said that he did not seek to evade his Department's share of responsibility. We look forward to a clearer explanation of where he sees his Department having gone wrong. The Comptroller and Auditor General in his report to which I have referred identifies many areas in which it has gone wrong.

§ Mr. Townsend

Will the hon. Gentleman put the House out of its misery? Is the hon. Gentleman recommending that his hon. Friends should support the bold decision to give the RAF the best possible system or not?

§ Mr. Wallace

We have supported the Secretary of State's brave decision. I cannot make it any clearer than that. However, many other questions have to be asked, such as how we ever got to this position in the first place. There are serious matters, such as £660 million of taxpayers' money having gone down the drain, that we wish to examine. The Public Accounts Committee is already examining it and I am sure that the Select Committee on Defence will wish to examine it. If local authorities had mismanaged that amount of money, Conservative Members would have been down their throats calling for surcharges.

The Government have a responsibility to the taxpayer for the way in which they manage the public purse and there have been serious shortcomings in that. We will be looking for those shortcomings to be examined and to ensure that lessons are learned and that proper procedures are implemented in the future. However, as I have said, it 1426 is a brave decision and we hope that the Secretary of State can give more information to the public to show the full basis and jusfication for his decision.

§ Mr. Stuart Bell (Middlesbrough)

On a point of order, Mr. Deputy Speaker. Is it not appropriate to write into Hansard the fact that the hon. Member for Orkney and Shetland (Mr. Wallace), representing the alliance, spoke entirely on his own without a single member—

§ Mr. Deputy Speaker (Mr. Ernest Armstrong)

Order. This is a short debate and we should not waste time. The hon. Gentleman knows that that is not a matter for me.

§ Mr. Julian Amery (Brighton, Pavilion)

All my instincts incline me towards supporting the Nimrod project. It is a British project, we have sunk a lot of money into it, there are many jobs at stake and it is a pillar of our defence industries. It would be a popular decision for the Government to take and every consideration would seem to favour it—except one. My right hon. Friend the Secretary of State says that it does not do the job that is required. That is a strange and saddening reversal of fortunes.

Long ago, almost before the flood, I was responsible for recommending to the RAF and the Government what sort of aircraft they should have. I produced a programme that included the TSR2, the P1154, and the HS681. Nobody questioned the fact that they were technologically better than anything that could be obtained in the United States, France or anywhere else. The only criticism was based on cost. The Tory Cabinet accepted them. Then Mr. Wilson came into office with the right hon. Member for Glasgow, Hillhead (Mr. Jenkins) as the Minister responsible for aviation. They cancelled all of those on the grounds of cost, not technology. They cancelled them roughly, but I do not want to go into that story now.

It is sad that we appear to be cancelling a project now, not on grounds of cost but because it is technologically not as sound as it should be. If it was technologically good and cost more, I would be in favour of supporting it. However, my right hon. Friend the Secretary of State has told us that it is not up to the job, technologically.

It is a difficult assessment for us to make. There are always people in the House who can make technical assessments, but there are not so many of us, I suspect, who can form a judgment on what is the margin between the two projects. I shall give only my own rough and ready measuring rod. When a Tory Government, in an election year on a defence issue, take an unpopular line they must have a damned good reason for doing so. Therefore, while I cannot say what the exact assessment may be, even with my own aviation background, it seems that the gap is pretty big.

If the world was peaceful and there was a general staff assessment that there would be no major conflict in the next 10 years, we could say that we could take second best for the RAF in the hope that it would help the defence industry to produce first best later on. I am afraid that the world is not like that. It is a dangerous world. The rearmament of the West is almost closing the window of opportunity that the Soviets have enjoyed since President Carter's time. That may make them more amenable to a return to detente, but it could precipitate adventures and risks. In that situation it seems to me that the interests of 1427 the Royal Air Force must be paramount. We cannot take risks with the men who may—I hope that they will not—have to defend our shores, convoys and other interests at home and perhaps beyond the NATO area. They must have the best equipment available.

It is rather striking that the chiefs of staff, as I understand it—those who represent the Navy and the Army—have gone along with the decision made by my right hon. Friend although it is not necessarily the cheapest and may deprive them of some things to which they attach importance. The interests of the fighting services must be paramount in a dangerous time such as this and it is for that reason that, in spite of all my inclinations to buy British whenever we can, I support the Government wholeheartedly.

§ Mr. Doug Hoyle (Warrington, North)

When my right hon. Friend the Member for Llanelli (Mr. Davies) began his speech he said something that is true and that cannot be denied. He said that the sort of debate we are having tonight would not happen anywhere else. It certainly would not occur in the United States, France, Germany or Italy, because they would not surrender their technology in the way that ours is being thrown away tonight. We are trying to examine whether the British system, Nimrod, works. Indeed, we have it on the record from the Secretary of State that it does work. However, I should like the Secretary of State to answer the question that was put to him by my right hon. Friend the Member for Llanelli.

There was great play made in the statement by the Secretary of State, of the point that the failing of the British system was that when it comes to the final stage it would require the installation of a secure data link. I want to know whether AWACS has a secure data link. It is not clear from the statement. One would think that only Nimrod does not have a secure data link. If AWACS does not have a secure data link, what is the time scale for it to have one? Many technical questions have been asked but that is a technical question that we do not have an answer to.

§ Mr. Younger

There is a genuine misunderstanding here. I ask the hon. Gentleman to read the words of the statement very carefully. The reference in paragraph five is specifically to make it clear that GEC was offering to produce six aircraft between mid-1989 and mid-1990 which would approach the final standard"— That is fine so far— subject to certain exclusions, of which the most important is a vital secure data link". That is an exclusion from what it was expecting or expected to provide at that stage. That is because it is still under development. The same is true of the secure data link for AWACS. There is no difference between Nimrod and AWACS on that issue. There are plenty of differences in other ways but the systems are exactly on a par on that issue. I hope that that has clarified the matter.

§ Mr. Hoyle

I thank the right hon. Gentleman for his explanation. It does clarify the matter to some extent. However, it would not be clear from the statement that AWACS does not have a secure data link.

1428 It is history and the role that the Ministry of Defence has had to play that I want to talk about. No one could ever accuse me of being a great friend of GEC. When it came to the Plessey takeover, I was on the side of Plessey. In this instance, however, I think that GEC is more sinned against than sinning. Many of the problems that have arisen are not its fault, and much of the responsibility for the time that has been taken rests with the Ministry of Defence. Many of us spent a great deal of time in 1977 persuading the then Secretary of State for Defence that it would be right to order Nimrod. The order was placed and at the very beginning GEC made it clear—this was done at one of the first meetings to be held—that one of the problems would lie with the computer. The civil servant concerned was a Mr. Geoffrey Stone, who was in charge of the project. Despite GEC stating that there would be problems with the computer—attention was drawn to the inadequacy of the performance of the 480 computer—nothing was done.

In 1978, GEC said that for £10 million—that must be set against the overall cost of the scheme now—it could filter out the misleading signals that were being picked up from cars and other man-made objects. Unfortunately, nothing was done from that time onwards. The Secretary of State has said that the goal posts have not been moved and the specification has not been altered, but it is my understanding that when the Nimrod contract was first arranged the purpose of Nimrod was largely to fly over the seas and the sparsely populated northern region. As recently as 1985 the specification was altered and it was—

§