§ [Relevant documents: First Report from the Defence Committee, Session 1999–2000, on the OCCAR Convention, HC 69, and the Government's response thereto, HC 224; Sixth Report from the Defence Committee, Session 1999–2000, on the Appointment of the New Chief Scientific Adviser, HC 318, and the Government's response thereto, HC 731; Ninth Report from the Defence Committee, Session 1999–2000, on the Future of DERA, HC 462, and the Government's response thereto, HC 901; and Tenth Report from the Defence Committee, Session 1999–2000, on Major Procurement Projects, HC 528, and the Government's Response thereto, HC 902.]
§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Pope.]
§ Mr. Speaker
I should inform the House that there is a 15-minute limit on speeches from Back Benchers.
§ 2.9 pm
§ The Secretary of State for Defence (Mr. Geoffrey Hoon)
I shall outline the Government's achievements in procurement and in modernising our nation's defences, highlight the fundamental choices that Britain faces on defence, and set out the way forward for our equipment programme.
The strategic defence review, in which the Government set out our defence objectives and a clear view of how those would be achieved, identified the need for improvements and for a number of new vessels.
The Government set out new plans, which we are a long way down the path to achieving. We have put in place the development work for our two new aircraft carriers; we have placed contracts for the design work for the first of our new class of type 45 destroyers; and work is under way on building two new survey vessels.
Today, I shall announce the way forward in relation to two further competitions—first, on our strategic lift requirement, and secondly, on the competition to replace our current fleet of amphibious landing ships, known as the new alternative landing ships logistics, or ALSLs.
§ Mr. Hoon
Taken together, these developments represent good news for our Navy and marines, good news for our shipyards, and very good news indeed for Britain. This is Labour in government ensuring that Britain's defences are ranked with the best in the world. I hope that the House will therefore understand why I prefer to announce the way forward on both these competitions, before taking interventions, which I should be delighted to take thereafter.
In identifying the need for improvements to our strategic lift, the strategic defence review recognised that in the post-cold war world, we need to be able to move our forces quickly to trouble spots overseas, and to sustain them properly when they are there.
I was therefore pleased be able to announce earlier this year planned enhancements to our strategic airlift, with the lease from next year of four C-17s and the acquisition towards the end of the decade of 25 of the new airbus 412 A400M transport aircraft, subject to the conditions that I laid out then. Overall, that represents an investment of some £3.5 billion.
The joint rapid reaction forces need sealift to move their heavy equipment, such as main battle tanks and heavy engineering equipment. We have in the past relied on the commercial charter market to provide the majority of the ships that we needed, but the Gulf war showed the potential difficulty of securing sufficient suitable vessels in periods of crisis, particularly when our allies are in precisely the same market. The strategic defence review therefore established that we should secure six roll on/roll off ferries to assure a sufficient level of strategic sealift. The Kosovo crisis reinforced that requirement.
As the House is aware, ro-ros are non-warlike vessels. They will be standard commercial ships, to be used for transporting equipment. They are not expected to enter combat areas. They are not, therefore, by any conceivable definition, warlike.
Most significantly, we will not need six ships at all times—only during major exercises, or in times of crisis when we are deploying the joint rapid reaction force. Under the proposed private finance initiative contract, when the ships are not being used by the Ministry of Defence, they will be used for commercial trade by their owners. As a result, the private sector bears part of the financial risk, the cost to the taxpayer is kept to a minimum, and expensive pieces of equipment are used efficiently. Had we sought to build, own and operate those ships ourselves, we would in effect have had to pay a premium for two ships that we did not always need.
In passing, I remind hon. Members on both sides of the House that we were not alone in opting for the PFI route. The previous Government also opted for a Europe-wide PFI solution based on value for money to meet their sealift requirement. How do we know this? Because they advertised on that basis in February 1997 in the Official Journal of the EC. The only difference was that the previous Government were committed to ordering only two ships, rather than the six that we are ordering.
The competition has therefore necessarily been subject to EU treaty and public procurement rules. The legal opinion on that is quite clear. For this reason we are not able to specify that the ships should be built in the United Kingdom, as we can and do for all warships for the Royal Navy.
§ Mr. Iain Duncan Smith (Chingford and Woodford Green)
I am grateful to the right hon. Gentleman. I understand that he has much to say and wants to get on, but I cannot let his remarks about the previous Government pass. The previous Government advertised and took advice from industry, which was part of the process. All the advice that they received was negative, so a rethink began. There was no commitment by the previous Government to go down the road on which the present Government have embarked.
The right hon. Gentleman said earlier that roll on/roll off vessels were not warlike, as they did not enter the war zone. That is not the sole criterion, as he knows. The question is the extent to which the Ministry of Defence can call on such vessels. The right hon. Gentleman's own tender document specifies one ship at five days' readiness—
§ Mr. Deputy Speaker (Mr. Michael Lord)
Order. That is an extremely long intervention. The debate is 413 important and many hon. Members want to speak. I recognise that the hon. Gentleman is a Front-Bench spokesman, but interventions must be shorter.
§ Mr. Hoon
Let me deal with the advertisement in the Official Journal. If the hon. Member for Chingford and Woodford Green (Mr. Duncan Smith) is saying that the problems experienced by the previous Government were caused by the advertisement that they placed, I can well understand why industry was anxious about their policies. Placing an advertisement in the Official Journal is a clear indication that the Government intend to go ahead with the contract in question. If the hon. Gentleman is saying that the previous Government placed advertisements to invite industry to participate in a competition, but that they did not really mean it, that says much about their attitude towards industry.
§ Mr. Hoon
No. I want to deal with these matters in the round. It was probably a mistake for me to give way a few minutes ago. I intend to make these announcements comprehensively.
We were anxious to encourage competitive UK bids for the ships, and asked all consortiums to explore fully the opportunities for UK build. Indeed, bidders offering overseas build have had to show that UK yards would not have been competitive for those particular ships.
I emphasise that, under EU rules, the Government are not allowed to direct that such ships are built in the UK. The only legal ground on which we are able to award the contract is value for money, defined by reference to price, quality and delivery.
Nevertheless, I am pleased to announce that two of the ships will be built in the UK. Subject to final negotiations, we intend to sign a 25-year contract with the Andrew Weir Shipping Ltd. group based in the UK. This is not a shipbuilding contract, but a contract for the provision of a complete service, including crewing, maintenance, and management of the ships. Andrew Weir has stated that it will provide British crews when the ships are in Ministry of Defence use. The winning bid involves the construction of two ships by Harland and Wolff in Belfast, with the other four to be built in the Flensburger yard in Germany.
§ Mr. Hoon
Moreover, building two of the ships at Harland and Wolff ensures that our armed forces will have the full sealift capability by 2003—the earliest delivery offered by any of the bids—and this option, with ships built against a proven design, was cheaper than any of those offered by any other consortium.
414 It is expected that the order will secure between 400 and 600 jobs in Northern Ireland, and give opportunities for UK suppliers throughout the 25-year period of the contract. Harland and Wolff can also expect to benefit from the partnership with Flensburger. That will further enhance the Northern Ireland yard's prospects of further orders from the international commercial market.
§ Mr. Hoon
Let me complete the statement, and I shall certainly give way in due course. I know that some right hon. and hon. Members will be disappointed that shipyards of particular concern to them have not been selected, but I want to proceed to the second announcement, so that the House has a complete picture of what is intended.
The strategic defence review recognised the need to improve our amphibious shipping. We have organised a competition to build two new amphibious landing ships—or, to use the jargon, alternative landing ships logistic. Unlike the roll on/roll off ferries, these are warships and therefore will be built in British yards.
Such capable and flexible vessels are designed to deploy amphibious forces directly into a hostile environment. They provide a capability to be used in conjunction with the new landing platform dock ships, HMS Albion and HMS Bulwark, to deploy the lead elements in an amphibious force. Landing ships like these can also support small and non-warfighting operations, as did two in the taskforce for operation Palliser to Sierra Leone. Currently, this capability is provided by five ageing landing ships. The bulk of these vessels are now more than 30 years old. The vessels are increasingly expensive to maintain, and are severely limited in their operational utility.
I hope that the House will be pleased to learn that I can announce today that we intend to buy four ALSLs, not two. Subject to negotiation of satisfactory terms and conditions, Swan Hunter (Tyneside) Ltd. has been selected as lead shipyard for the programme. Two ALSLs will be built on the Tyne by Swan Hunter, creating 1,000 new jobs in its Tyneside shipyard. This will bring the work force up to 1,800 at their peak, while sustaining about 200 jobs off site. The other two ALSLs will be built to the same design as the two which we intend to negotiate with Swan Hunter. Given that we need these ships as quickly as possible, capacity constraints at Swan Hunter mean that we have decided that they need to be built elsewhere.
Subject to satisfactory contract negotiations, which will be informed by Swan Hunter's price for the first two vessels, these two further ships will therefore be constructed at BAE Systems' Govan yard on the Clyde. Swan Hunter will be contracted by the Ministry of Defence to provide the necessary lead shipyard design services.
The overall value of the contracts which we hope to place for these new 16,000 tonne ships will be about £300 million. Steelwork could begin by the middle of next year. It is worth noting that the contract value of each ALSL is broadly equivalent to building two ro-ro ferries. It is expected that the order will secure about 800 jobs at the Govan yard, together with about 200 jobs off site.
415 I am offering a real lifeline to the BAE yard at Govan, one that will help to sustain the shipbuilding skills base on the Clyde until the type 45 programme comes on stream. I am confident that the management and the unions there will react enthusiastically.
§ Mr. Tony Worthington (Clydebank and Milngavie)
It is regrettable that a statement was not made earlier so that we might fully examine these matters. When will steelwork begin in the Govan yard? It is crucial that the yard be filled now.
§ Mr. Ian Davidson (Glasgow, Pollok)
I appreciate the work that is coming to Clydeside. It will be welcomed by the work force, whose members have been on tenterhooks for about 18 months. However, there is a difficulty in the immediate short term about the steelwork. Is my right hon. Friend able to clarify when an order for a floating dock might be awarded? Is it possible to have that order immediately to fill the short-term gap? Many in the shipbuilding industry deprecate the fact that the orders for the ro-ros are going to Germany. An order should have been placed within the United Kingdom to maintain maximum employment and to ensure competitive abilities for the future.
§ Mr. Hoon
As for the ro-ro ferries and UK build, I set out in considerable detail the legal difficulties that any Government would have faced in trying to place an order for a commercial ship in a UK yard. It would not have been possible. We have discussed these matters at great length over a long period. The legal advice was absolutely clear. The reality is that we could not direct these ships to be built in the UK, because of European Union rules. In the circumstances, we have considered the capacity that is available in UK yards. We have also had regard to the comprehensive programme of shipbuilding. If my hon. Friend examines my statement at greater length, I think he will find that we have been able to provide work at a number of shipyards, and particularly Govan.
As for the gap between the present availability of orders and the prospect of orders in future, I understand that the work that we hope will go to Govan will be sufficient to allow Govan to continue and to provide work for its employees.
§ Mr. John Burnett (Torridge and West Devon)
This is extremely disappointing news for Appledore, a good commercial yard which has worked extremely hard and thrived in the commercial world. The Secretary of State has talked about value for money. We are talking about public money. and money that should be accounted for. Will the right hon. Gentleman ensure that full details of all successful tenders are placed in the Library for scrutiny?
§ Ms Rachel Squire (Dunfermline, West)
I welcome the good news for Harland and Wolff, Tyneside and Govan. I have yet to meet a shipyard or dockyard worker who wants his success to be paid for at the price of someone else's job. The Government are providing a good balance and a lifeline until the biggest warship order that the UK has seen for years comes into effect. Does my right hon. Friend agree that this makes it even more important that we promote defence diversification to ensure that the excellent engineering skills that we have at Govan and elsewhere find new markets and new opportunities for employment?
§ Mr. Hoon
A great deal of work has been undertaken over a long period to identify the appropriate requirement for this sort of equipment. We have access to various vessels on the charter market, but unfortunately they could not be secured. We could have looked round to ascertain whether there were suitable secondhand but necessarily older and dated vessels available. It was judged that the best way of proceeding was in partnership with the private sector. That is precisely the solution that the previous Government arrived at in judging what was the best for the public purse. Given that we do not require the six vessels all the time, it makes sense that they are used commercially to generate income, rather than being left idle for what could be long periods.
§ Mr. Galloway
As a Member representing one of the yards concerned, I am grateful finally to have caught my right hon. Friend's eye. In reality, his announcement is not good enough. He will have to go the extra mile. The two ALSLs will not be enough to keep the Govan shipyard open and to employ those who depend upon its activities. My right hon. Friend has acknowledged that the steel will not be cut before June next year. However, Govan runs out of steelwork tomorrow. What will happen between tomorrow and June next year?
I underscore the point made by my hon. Friend the Member for Glasgow, Pollok (Mr. Davidson) that we shall have to have something else. The most obvious answer is the floating platform—the submarine repair dock—for which there is now a vital need. It is even more needed than we imagined hitherto. As its technology is essentially that of a large bathtub, it has the advantage of being able to be started upon tomorrow.
I am grateful to my right hon. Friend for the extent to which he has responded to the campaign of the trade unions, the Secretary of State for Scotland and others, but he will have to go an extra mile. If not, what he has 417 announced will not get us out of the hole that we have feared, with members of the work force being thrown on the dole for Christmas.
§ Mr. Hoon
I understand my hon. Friend's concern about his constituents and the yard. Such considerations have been at the forefront of the Government's collective mind for many months, and he and his colleagues have raised questions with me and other Ministers. However, we have been in close consultation and negotiation with BAE Systems, which has assured us that the work will be sufficient to keep the yard open and, specifically, to bridge the gap until the type 45 work becomes available. If my hon. Friend writes to me, I shall examine the issues he raises sympathetically, but I assure him that those are precisely the issues that we have discussed with BAE Systems and I understand their position to be that the work will preserve the future of Govan and its work force.
§ Mr. Duncan Smith
On a point of order, Mr. Deputy Speaker. Our debate has turned into a statement. No prior notice was given that such announcements would be made, so many interested hon. Members are not present. The main point is that, as we have just discovered, the Government made the announcement in a press release in Scotland this morning—which goes against what the Speaker and you, Mr. Deputy Speaker, have said repeatedly. Are not such actions an abuse of the House?
§ Mr. Hoon
Further to that point of order, Mr. Deputy Speaker. I do not want to anticipate anything you might say, but I thought that it would be for the convenience of the House if I made the announcements in the course of a debate on defence procurement that was already scheduled. Clearly, it would have been possible to have made a statement—taking an hour of parliamentary time—and then to have embarked on the debate, but that seemed a somewhat artificial division, given that the subject matter of both statement and debate is defence procurement—[Interruption.] From a sedentary position, the shadow Defence Secretary says that people already knew, but I assure him that, with the exception of those now sitting on the Treasury Bench, no one was aware.
§ Mr. Deputy Speaker
Now that the Secretary of State has responded, let me point out that Mr. Speaker has made it clear that he wants all important decisions that affect the House and that should be heard first by the House to be announced in the House. I know nothing of the press release mentioned, but that is Mr. Speaker's firm position. There is grave danger of an Adjournment debate developing into a statement; it is not a statement, and I have already called for short interventions, so perhaps we can now get on with the business.
§ Mr. Deputy Speaker
I have already dealt adequately with the point of order. I shall not take any more now, because we are losing time for an important debate.
§ Mr. Howarth
It is a separate point of order relating to my travelling to the House and hearing on the radio—
§ Mr. Field
As my hon. Friend the Member for Wirral, South (Mr. Chapman) and I represent two of the nine Merseyside constituencies where there are fewer people in work now than at the time of the general election, may I ask what message the decision to place orders with a firm that will build in Germany and probably subcontract work to Poland sends to our constituents about how today's announcement has affected employment prospects for Merseyside? If we stay to the end of my right hon. Friend's speech, will we hear good news for Cammell Laird?
§ Mr. Hoon
In respect of the ferries, Cammell Laird unfortunately failed to meet the requirements on price and delivery. As for the ALSLs, despite submitting a bid, the company withdrew from the competition, citing, among other reasons, its current commercial commitments. Although I realise that today's announcement will be disappointing to those who work at Cammell Laird and to my right hon. Friend, I have to point out that, compared with other shipyards, it currently has a relatively full order book.
§ Mr. Gerald Howarth
On a point of order, Mr. Deputy Speaker. It has become perfectly clear from the way in which the debate is proceeding that the Secretary of State is taking innumerable interventions from Labour Members and few—in fact, only one—from Opposition Members, even though the matters being discussed should properly have been the subject of a statement that would have given hon. Members on both sides an equal opportunity to be heard.
§ Mr. Deputy Speaker
From whom the Secretary of State takes interventions is not a matter for me. Yet again, we are taking time from an important debate.
§ Mr. Hoon
The two new ship orders I have announced form part of a wider programme of modernisation of the armed forces—a programme worth £6 billion a year. In addition, on 11 July I announced to the House the first three type 45 destroyers which, at about 7,000 tonnes, are the largest and most powerful air defence destroyers ever ordered for the Royal Navy. The two new survey vessels, HMS Echo and HMS Enterprise, will not only enhance the Navy's survey capability but be capable of supporting mine warfare and amphibious operations. The programme also includes the new assault ships Albion and Bulwark, the new Astute class submarines and, of course, the two 419 new aircraft carriers, which enable a quantum leap in our ability to project force around the world. That is the largest programme of warship construction that this country has seen in years—all British warships, all built in British yards.
§ Dr. Julian Lewis
I thank the Secretary of State for giving way—at last. He has mentioned the type 45 destroyers several times. Is he aware that hundreds of my constituents and those of his hon. Friend the Member for Southampton, Test (Dr. Whitehead) have been issued with protective redundancy notices by Vosper Thornycroft's Woolston shipyard in Southampton? Does he realise that whether they are made redundant depends entirely on whether he firms up one of the type 45 orders by the end of the year? Will he give a commitment to do that? So far this afternoon, he has said nothing that will prevent the closure of the Woolston yard and the loss of hundreds of jobs which could be saved if the MOD simply speeded up its ordering programme.
§ Mr. Hoon
The hon. Gentleman should examine the facts more carefully before raising those matters in such a cavalier manner on the Floor of the House. He knows that commercial discussions are taking place between the prime contractor, BAE Systems, and Vosper Thornycroft. How the issue is resolved is a matter for those two companies, and the Government have made clear their expectation that the matter will be settled between them. It is not a matter of firming up an order. The issue is a commercial one, involving two private sector companies.
§ Mr. David Chidgey (Eastleigh)
Is not the Government's strategy on warship shipbuilding in this country to retain and strengthen competition? Is the right hon. Gentleman aware that although when the merger with Marconi took place the prime contractor gave an undertaking to ensure that subcontractors in that company family did not have an advantage over outside companies, Vosper Thorneycroft is extremely concerned that it is getting a bad deal compared with BAE Systems' own contractors? Is not that playing poker with the jobs of my constituents?
§ Mr. Hoon
Those are precisely the commercial negotiations that have to be undertaken, but I assure the hon. Gentleman that, consistent with my announcement about the allocation of type 45 work, we expect a proper division of work between Vosper Thornycroft and BAE Systems.
Let me now address Army issues—
§ Mr. Hoon
I have given way several times already. I shall do so again in due course.
The deployment of Challenger 2 tanks to Kosovo has been a significant success for the Army. The tanks have displayed new standards of performance and reliability. In August, Vickers Defence Systems was selected as the preferred bidder for new armoured engineer vehicles to support Challenger 2. The roll-out of the first Westland Apache attack helicopter took place in spring, 420 representing the achievement of a major milestone in a programme that will provide our forces with a potent new capability.
For the RAF, having learned the lessons of Kosovo, we are investing in new anti-armour missiles, an enhanced all-weather precision bombing capability and improved secure air-to-air communications to ensure that our forces can fully play their part in the most demanding of circumstances.
Those were the most pressing capability shortfalls to emerge from the Kosovo conflict and we have acted on them swiftly. Elsewhere, we have a massive forward equipment programme in place.
We are acquiring a stand-off precision strike capability in Storm Shadow, a new air-launched cruise missile; we are undertaking major programmes to modernise the strike and air defence variants of the Tornado; and we are buying a major new capability in ASTOR, the airborne stand-off radar.
On top of that, more major programmes are either under way or in our plans—Eurofighter and its new METEOR air-to-air missile, the future carrier-borne aircraft, the future strategic tanker aircraft, and, of course, as I have already mentioned, new transport aircraft in the shape of four C-17s and the A400M. All those are world-class systems. All of them will result in major enhancements to the capability and utility of our forces, and all of them are threatened by the £16 billion cuts guarantee of the Opposition.
§ Dr. Norman A. Godman (Greenock and Inverclyde)
I want to shift from aircraft to ships. As a former shipwright, I can well understand the bitterness of those hon. Members whose yards have been excluded from the orders, but I am delighted to hear that Harland and Wolff, that badly pressed yard where constituents of mine work, have the order. I am also pleased that Govan has received the order. However, I emphasise the need to fill the short-term gap in Govan by the construction of the floating platform, which I described earlier today as having all the technology of a gigantic bathtub. The technology is there, and, if that could be brought forward, it would save the highly skilled jobs. The problem in Scotland is that we react traditionally—
§ Mr. Deputy Speaker
Order. The hon. Gentleman is making a long intervention on a point that has been made at least once this afternoon.
§ Mr. Hoon
I think that I am grateful to my hon. Friend. but I must pick him up on his use of the word "excluded". No British shipyard was excluded from bidding for either of the orders. As I have said today, the Government went to a great deal of trouble to ensure that British shipyards were involved and that any of those bidding to provide the service which underlies the ro-ro contract should make it clear why they had not adopted a British solution. Therefore, it is simply not right to suggest that any British yard was excluded. Decisions were wholly consistent with European law and taken on the basis of what was the best value for money.
421 In addition, BAE Systems has said that the order for two ALSLs is most helpful and will help to secure the future of Govan. There is a clear indication that the Government's decision on ALSLs will provide the necessary support to employment in and around the Clyde.
§ Mr. Alasdair Morgan (Galloway and Upper Nithsdale)
Will the Secretary of State concede that, regardless of which yards have been successful, there has been much uncertainty during the past few months, if not years, and that that in itself is damaging in terms of people leaving skilled jobs with resulting skill shortages in yards? In future, will the MOD's procurement policy try to ensure some continuity of ordering so that yards are not faced with the feasts and famines, the peaks and troughs that they have had in the past?
§ Mr. Hoon
The hon. Gentleman is right. If he examines carefully what I said earlier he will see that the Government have gone to a great deal of trouble in trying to provide a number of different opportunities for a number of different shipyards. But the reality is that, using that platform as a basis from which to operate, those shipyards must go out and win for themselves commercial orders in what I accept is a highly competitive world market, but a world market where a considerable number of ship orders are placed each and every day. This provides an opportunity, but no more than that, for those yards to go out and win work for themselves in the market.
§ Mr. Wilkinson
The right hon. Gentleman gave a total figure of £3.5 billion for the procurements. What is the breakdown between the leases for the C-17s and the acquisition of the 25 A400Ms? When will the A400Ms start coming into service? Will the C-17s remain on the RAF's books after the A400Ms come into service? Finally, will the C-17s be a lease purchase deal?
§ Mr. Hoon
I have made it clear, and the hon. Gentleman had the opportunity to ask those questions when I made the statement on the matter, that it would be a lease deal for C-17s. They will be available to the RAF in the short term until there is sufficient heavy lift capacity when the 25 A400Ms, or at least the first of those air transport aircraft, come into service. But clearly we will not take a decision today as to precisely when those aircraft will be available. We are in negotiation with our partners who are equally responsible for the A400M. Those are matters that we will decide as and when necessary in the light of the circumstances at the time. I am sure that the hon. Gentleman would not expect me to give specific answers to such questions at this stage. It would simply not be sensible to do so.
I referred to the defence cuts threatened by the Conservative party. During the past three years the Opposition have suggested that we are not spending enough on defence. But lately there seems to have been a slight change of tack by the shadow Chancellor, who now seems to be telling us that we are spending too much. This is an opportunity for Opposition Members to intervene, and I shall cheerfully give way, so that we may know precisely what their policy is—whether we are spending too much or too little and whether we are spending it on the right things or the wrong things.
422 I have had the benefit of looking carefully at the background briefing note supplied to Conservative Members as part of the Chancellor's spending review. On defence spending, the central office brief states:We will match what we can afford in the light of what the country earns: that is the true prudent policy.I am willing to give way to any Conservative Member who wishes to explain that. It also states:No responsible party can promise particular increases four years down the line, whatever the economic circumstances.Finally—perhaps the real giveaway in their policy—it states:Instead of making pie-in-the-sky promises about more money, Geoff Hoon should start by making we sure we get better value for money already spent.The Opposition have a bit of a nerve. Having spent the past three years telling us that "efficiency" was code for "cuts", they now tell us that we are not efficient enough.
§ Mr. Bercow
Given that my right hon. Friend the Member for Kensington and Chelsea (Mr. Portillo) was a truly outstanding Secretary of State for Defence, would the right hon. Gentleman now care to specify exactly in which speech and on what occasion my right hon. Friend advocated a reduction in defence expenditure? If he is unable to do so, would he just for once have the good grace to apologise and withdraw that remark?
§ Mr. Hoon
I have cited the evidence on which I rely, which is the central office briefing. At this stage, I am in no shape or form casting any doubts on the ability of the present shadow Chancellor in his former occupancy of the position that I am now privileged to hold. What I am doing is questioning how good a shadow Chancellor he is, and making it clear that when it comes to making the choices that the country will face at the next general election, the electorate will have to choose whether they can rely on his economic policies, given the cuts that the right hon. Gentleman is proposing across the range of public expenditure, particularly with regard to defence.
§ Mr. Peter Viggers (Gosport)
To put the issue in context, how many firm warship orders have been placed since May 1997?
§ Mr. Hoon
No, that is simply not true. There are firm orders. We are not here to play guessing games about the Government's expenditure programme. We want to know the Opposition's proposed defence expenditure, and I am giving those on the Opposition Front Bench every opportunity to tell us. Will they match precisely the amounts of money being made available to defence by this Government? That is a question that they have to face up to, a question which they signally refuse to answer. They have been given an opportunity today, but, again, there has been complete silence from those on the Opposition Front Bench.
§ Mr. Julian Brazier (Canterbury)
The Secretary of State asked for examples of items for which better value 423 could be obtained. Today he has announced enormous expenditure on six shiny new ro-ros, the bulk of which will come from a German yard. Given current overcapacity in world shipping markets, I wonder whether better value could have been found, perhaps through a second-hand option. The Secretary of State's knowledge of those markets is revealed by his extraordinary statement that many vessels are placed with yards around the world every day.
§ Mr. Hoon
If the hon. Gentleman cares to check, he will find that approximately 2,500 ships are placed for construction around the world each year. That means a lot every day. [Interruption.] Perhaps the hon. Gentleman's grasp of mathematics is better than mine, but I doubt it given his response. [Interruption.] On better value, we organised a competition, and we got best value from the competition in precisely the way in which the previous Government proposed. We have achieved best value. Unless the hon. Gentleman can do no more than make rather windy assertions, he should come to the House with facts.
§ Mr. Brazier
The Secretary of State has gone for the most expensive option on ro-ros, and is placing the bulk of the order abroad. That has caused some consternation on the Government Benches. He should look across the Atlantic if he wants to see a model of a system that is much cheaper and more cost effective. The American system works at a far lower cost than ours.
§ Mr. Hoon
One of the hon. Gentleman's colleagues keeps saying that he is a mathematics scholar. Unfortunately, he clearly knows nothing about economics. If he had listened with at least half an ear, he would have heard me make it clear that we had gone for the best value-for-money solution. I am sorry that I have to translate that into simple English for him. It means the cheapest. We have gone for the cheapest option, and that means that we have excluded more expensive options. I am sorry to have set that out in such basic English, but the hon. Gentleman clearly experiences difficulty in hearing and understanding.
It is astonishing to receive lectures from the Conservative party on efficiency. The Conservative Government left us with a massive £3.25 billion cost overrun on the Ministry of Defence's 25 most expensive equipment projects. In our first three years in office, we managed to cut that figure by £500 million, thanks largely to our smart procurement initiative. By sustaining and broadening smart procurement under what we will now call smart acquisition, the improvements and efficiencies will continue.
At the outset, we set ourselves a target of reducing acquisition costs by £2 billion over 10 years. Many Opposition Members scoffed at the suggestion, but I am pleased to tell the House that we now expect to improve on that figure. Thanks to the radical reforms that we have put in place to streamline the acquisition process and cut unnecessary bureaucracy, we are already identifying huge savings that can be made in our equipment programme—savings that will be reinvested in defence.
On the Apache programme, for example, we are investing now to save as much as £30 million a year in support costs. On Challenger 2, we have identified 424 savings of nearly £200 million over the life of the project by working closely with industry on innovative new ways of procuring ammunition and improved design for maintenance techniques. On a £200 million contract for new Rapier air defence missiles, we have achieved savings of more than 20 per cent. with the missiles delivered more quickly than through traditional procurement methods, and the contractor able to secure further export orders as a result. "Faster, cheaper, better": once that was an aspiration, now it is a practical reality.
I shall not pretend that there are no problems; there are bound to be some. The constant need to be at the technological cutting edge means that defence equipment projects will always be difficult. They will always carry risk, and a proportion will always run into problems of one sort or another. That point that has been vividly demonstrated by the problems with HMS Tireless and the rest of our nuclear-powered submarine fleet.
As hon. Members will know, HMS Tireless went alongside in Gibraltar in May following a leak of coolant water in her reactor compartment. It was decided that it would be best if Tireless was repaired in Gibraltar. It is understandable that the Government of Gibraltar sought assurances about the safety of the repair. However, it was not until September that the Chief Minister of Gibraltar agreed that the repair could go ahead.
§ Mr. Bercow
On a point of order, Mr. Deputy Speaker. Earlier, you made clear the general position of the Speaker on statements that should be made to the House. I wonder if you will offer us further guidance and thoughts, in the light of confirmatory evidence that the Secretary of State's statement was placed on the BBC website at 12.10 pm, precisely one hour and 59 minutes before the right hon. Gentleman toddled along to the Chamber to address hon. Members. What redress do hon. Members have in those circumstances?
§ Mr. Deputy Speaker
I have already made the position clear, and Mr. Speaker has made his position clear, too. Announcements that should be made first to the House should not be made to the press prior to that. I shall make sure that the matter is brought to Mr. Speaker's attention, although I am not aware of the true position.
§ Mr. Hoon
Further to the point of order, Mr. Deputy Speaker. If the hon. Member for Buckingham (Mr. Bercow) had raised the matter with me, I could have told him that I was still writing the statement minutes before I stood up. I do not know what has appeared on the BBC website or when it appeared. May I make it clear, Mr. Deputy Speaker, that it was not my statement or words for which I am responsible? [Interruption.] I shall have the matter investigated. If I find that someone has released beforehand the text of my statement to the House, I shall take grave exception to that. I have always insisted on making statements on behalf of the Ministry of Defence to the House first. I shall continue to adhere to that practice.
§ Dr. Julian Lewis
Further to the point of order, Mr. Deputy Speaker. Is not the Minister being disingenuous? It is not a question of leaking the text of the statement, but of leaking the Government's proposals and plans. That is what matters, not the form of words in which the right hon. Gentleman chose to dress them up when he got around to writing his speech.
§ Mr. Deputy Speaker
Before the Secretary of State responds, I wish to say that I believe that we have dealt 425 with the matter adequately. I have taken points of order, and said all that the Chair can say at the moment. The Secretary of State has also responded; we should now get on with the debate.
§ Mr. Hoon
Thank you, Mr. Deputy Speaker. I was dealing with the problem of HMS Tireless. Unless and until the Government of Gibraltar said that they were content for the work to go ahead, it would not have been prudent or sensible to continue with the work. We therefore had to await the initial investigation to ascertain the extent of the problem and the investigation of the work that was required.
An initial assessment of the defect on Tireless was that a weld in the reactor cooling system was cracked. Further inspection showed that the cracking was more extensive than originally considered and might be generic. As soon as that possibility was identified, we launched an inspection programme for our other SSN—strategic submarine nuclear—submarines. We therefore could not have started the repair programme any sooner. The shadow Secretary of State's suggestions to the contrary are simply not borne out by the facts. They are unfortunately characteristic of his recent approach to commenting on some matters. I regret that it has been, "Speak first, think later."
Underfunding is not, as the shadow Secretary of State has suggested, to blame. The problem appears to be a design fault on submarines, which were built under successive Administrations of both parties.
I also note that the shadow Secretary of State has criticised the Government for selling our diesel-powered submarines and putting all our eggs in one basket. If the hon. Gentleman had bothered to check his facts before rushing to comment, he would have discovered that the Conservative Government took the decision to dispose of the Upholder class in the first place.
Delaying the sale of the Upholder class submarines to Canada is not a practical means of reducing the temporary shortfall in our operational capability. The first vessel has already been handed over to the Canadians. The remaining three are not ready for sea, and other important factors, including the significant amount of training our crews would require, prevent their use.
We anticipate that the necessary repairs are, in fact, relatively straightforward, but they will take some months to complete because of the protracted procedures that are required to ensure complete nuclear safety during the repair work. In peacetime, safety will always take precedence over operational requirements. The safety of the public and our own personnel is of paramount importance. I am not worried about party political point scoring, and I am sorry that Conservative Members do not seem to share that approach. We will be able to provide protection for the deterrent through the use of other assets—employing additional frigates with towed array and Nimrod maritime patrol aircraft. The safety of the deterrent will not be compromised.
There has also been considerable comment recently on the Kosovo conflict, together with a report on it by the Defence Committee. I welcome the Committee's acknowledgement thatNATO prevailed and that Operation Allied Force can fairly be counted a success.426 It is, of course, right that we should look at how we might do better in the future. Indeed, many of the Committee's findings parallel those in the Ministry of Defence report on "Lessons from the Crisis", published in June last year. It is important to state that the UK's contribution to the air campaign, far from being "disappointing", as some have commented, was a leading one. We were the fourth largest supplier of combat aircraft, which carried out the third largest number of strike sorties. In looking at what lessons might be learned, we should not lose sight of that considerable success.
There has been a great deal of comment on our precision weapons capability, and I hope that the House will recognise that we have already taken steps to address that matter. We have announced the purchase of Maverick missiles, a proven system that is ideally suited for attacking point targets, particularly in situations where there is high risk of collateral damage. We have also announced that we will be procuring enhanced Paveway bombs which make use of global positioning system technology to guide them to targets in all weather conditions.
Comment has also been made on problems with secure air-to-air communications which affected a number of NATO nations during the Kosovo campaign. Following trials earlier this year, I announced in July that we are now undertaking a programme to fit secure communications to aircraft of the types used in the Kosovo campaign.
We are also addressing the need to improve our strategic ability as a result of the lessons learned in Kosovo. As well as today's announcement, I announced in May this year that we will lease four Boeing C-17 Globemaster aircraft. Our longer term requirement will be met by the A400M Airbus aircraft. In sum, we have already taken very seriously the key equipment capability lessons learned from the Kosovo campaign and we have taken quick action to improve our capabilities.
Hon. Members have expressed concern about other items of equipment. Most will have seen the lurid and sensationalist headlines about other examples of so-called "equipment failures", but I wonder how many know the truth behind the headlines and the scale of the problems that we inherited from the last Government?
Take the SA80, for example. Yes, there are problems, but they were first identified during the Gulf war—nearly 10 years ago, under a Conservative Government. It is only now that we have a Labour Government that those problems are being sorted out. The same is true of the Bowman programme. We are acutely aware of the failings of the current Clansman radio system and the crucial importance of introducing a replacement as soon as possible. However, we inherited a replacement programme that was already over time and over budget with little sign of things getting better. That is why we re-opened the competition for the Bowman requirement—because, sometimes, tough decisions have to be taken. Unlike the Conservative party, we will not shy away from taking them when the effectiveness of our armed forces is at stake.
The status quo is no longer an option. We must modernise our defences by planning for the long term now. Nowhere is that more true than with the future of defence research. The strategic defence review made clear that if the Defence Evaluation and Research Agency is not to go into decline, we must take a new approach— 427 one that enables us to exploit fully the knowledge and technology within DERA; to improve access to civil technologies for military applications; to introduce private capital into DERA to meet its investment needs; and to provide DERA with the freedom it requires to allow it to compete for and reward staff, as well as to develop new business.
§ Mr. Brazier
The Secretary of State will be aware of the Select Committee's unanimous views on this matter. Was there one single well-recognised body outside Government that upheld the rather strong statement that he has just made—that failure to do something along the lines proposed would result in DERA going into steep decline?
§ Mr. Hoon
I have cited the justification. There was widespread support for and recognition of the fact that, if DERA is to survive and provide the high-technology research that it currently conducts, it is necessary to have access to private capital and, more importantly, to echo the way in which the private sector now conducts research.
Historically, much leading-edge research was done by Government or Government-sponsored agencies. That is no longer the case today. Much of the work that would have been done through the Government or their agencies is now being done by the private sector. It is necessary to adjust the way in which DERA operates to take account of that fact.
§ Mr. Quentin Davies (Grantham and Stamford)
In light of the Secretary of State's response to my hon. Friend the Member for Canterbury (Mr. Brazier), how come the Americans are perfectly happy that their own military research institutes can continue to thrive and fulfil their role without being privatised or partially privatised?
§ Mr. Hoon
The hon. Gentleman gave away the answer to his question with his use of the word "institutes". The United States has a range of facilities available to it: some in the private sector; some, I accept, in the public sector; some part way between the two. The difference between the United States and any other country in the world, including the United Kingdom, is that the US has a wealth of available research material and institutional structures.
§ Mr. Hoon
The reality is that many are already in the private sector. I wish that we had greater facilities available, but this country has limited means and we have to spend those means in the best way possible. The reality is that we have only one research facility available to us. We judge that it is necessary to attract both private capital and private expertise to give DERA the opportunity of continuing its leading-edge research into the future. Part of DERA will go into the private sector; equally, part will be retained in the public sector. In a sense, that is precisely what is available to the United States Government; research available both from the private sector and the public sector.
428 I recognise that there are those who disagree. I am not pretending that there is widespread or unanimous support for the change. I see my hon. Friend the Member for Walsall, South (Mr. George), the Chairman of the Defence Committee, in the Chamber, and I hope that those who have misgivings will at least accept that we have taken on board some of the criticisms and modified our plans accordingly.
I must make clear that the onus is on those who oppose our plans to say how they would instead provide the commitment and investment needed for the future. Given the remarkable pace with which technology is changing, it is not, in my view, credible to expect the taxpayer alone to foot the bill. It is surely right that we should involve the private sector so that we can take DERA forward into expanding markets in the international arena. I have to say that I find it slightly odd that I should have to make that point to those in the Conservative party who were never this squeamish about public-private partnerships when they were in power.
Of course, the Conservatives are perfectly entitled to say now that they will scrap the DERA public-private partnership. However, they are not then entitled to complain about defence cuts when, on this policy alone, they would effectively be taking hundreds of millions of pounds out of the defence budget at a single stroke.
§ Mr. Duncan Smith
The Secretary of State may be about to say what the Conservatives think about privatisations or private finance initiatives. He will know that the previous Government looked at this proposal in detail and they, of all Governments, said that it was not do-able and rejected it. That is why we are opposed to it.
§ Mr. Hoon
I am grateful for the clear indication—the first we have had—of the Conservatives' spending plans on defence. The reality is that they will have to explain to the electorate how they will find the extra money that DERA would otherwise provide to the defence budget. We have already identified within the Conservative party's general financial expenditure plans a gap of some £16 billion that it will have to fill by cuts in public services.
On defence, a new and deeper black hole is emerging. The Conservatives will have to say how they will fill that hole. Will they cut the equipment programme? We are having a defence procurement debate; this is an opportunity for the hon. Member for Chingford and Woodford Green (Mr. Duncan Smith) to say precisely which equipment programme he proposes to cut: type 45; Meteor; A400M; Eurofighter? Which is it? Which defence activity or operation will they cut? The hon. Gentleman's policy simply is not credible unless he can answer that question.
At the next general election, the people of Britain will face a clear choice on defence: between a Conservative party that would submit our armed forces and their equipment to death by a thousand cuts, and a Labour Government who are investing in the future of Britain's defences; between a Conservative party that just talks tough on defence, and a Labour Government prepared to match words with action; between a Conservative party that is committed to cutting the defence budget to pay for tax cuts for a privileged few, and a Labour Government who are committed to the first real-terms, year-on-year increase in the defence budget since the end of the cold war.
429 After more than a decade of cuts under the Tories, we have a Labour Government who are prepared to invest in the future of our nation's defences. Ours is a record to be proud of, and I commend it to the House.
§ 3.9 pm
§ Mr. Iain Duncan Smith (Chingford and Woodford Green)
I will not start as I had originally planned, because the Secretary of State started with a major announcement. We expected a debate on defence procurement, but he effectively gave us a statement on a particular procurement programme, then a party political broadcast, followed by a quick trot through about 30 or 40 different programme issues, to which we shall come later.
Let me deal first with the roll on/roll off stuff. I deplore the fact that the House is the last to hear about the issue, not because of a pompous view that the House must hear first just for the sake of it, but because we should be able to question how the programme is to work. There is a nicety about giving Opposition parties notice of detailed statements so that we can ask specific questions. The press were briefed in Scotland and there was an article on the BBC website, then one of my colleagues heard something about it on the 2 o'clock news. That strikes me as an abuse not only of Parliament but of the British public, because they have a right to some answers.
There has been a deceitful process from the start in the roll on/roll off ferries programme. The Secretary of State talked about the previous Government's private finance initiative, but that Government said that they did not believe that that was ultimately the right way forward, after receiving clear indications from industry and others that the requirements for the ships were such that they could not be best met in that way.
In the strategic defence review, the Government decided to increase the requirements and to proceed with the PFI, but the tender documents show that the ships are not in essence commercial: they are military ships that can be used by some companies for some commercial activity. The PFI is a clever way of effectively giving ownership to a commercial company and thus being able to turn round and blame European competition rules for forcing us to place the orders overseas. For a Government who go on about their European credentials to use Europe as an excuse in that way is deceitful, especially as the major issues are not dealt with.
§ Mr. Duncan Smith
The reality is that the information and input from industry and others was such that those who left government in 1997 were clear in their minds that the programme would not have worked as they had advertised it. I make no bones about that. I believe that to be the case. If we had been in government now, my belief is that I and others would have recognised that the ships are essentially military. It is not credible to blame the Europeans.
The Secretary of State gave the game away when he talked earlier about best value and referred to getting the cheapest option. If we think for one moment that the 430 French or Germans would place an order in Govan, for example, we are living in cloud cuckoo land. There is a serious need to rethink, not only because of jobs but because there is a strategic reason for building the ships in the United Kingdom.
§ Mr. Davidson
I have already made my position clear on where the orders should have gone. I seek clarification on a matter that I have pursued in some detail for some time. The Conservative Government placed the invitation in the European Official Journal. When did the Conservative party decide that that was not the route to follow? This is the first that I have heard about any change of mind. Had I known about this before, I would of course have been better armed when I went to pursue Ministers. I wonder whether this is a debating trick being produced out of a hat, or whether it is a genuine change of mind. If it is, why did the hon. Gentleman not tell us about it ages ago?
§ Mr. Duncan Smith
I have talked to colleagues of the hon. Gentleman about this matter—one, in particular, who is not present in the Chamber today—and expressed that view to them. It was not possible to raise the matter in the House, because no announcement was made by the Government. My comments are also on record in the Scottish press. In my view, the requirements of the tender have always made the ships military vehicles with a commercial aspect, not the other way round. I am not making a party political point. This is a national issue on which I fundamentally disagree with the Government's interpretation. I am sorry that those who would have built the ships in Govan will not necessarily do so, not only because of jobs but because that would have benefited the United Kingdom.
§ Mr. Hoon
The hon. Gentleman's last remarks will help the House to make a judgment on who exactly lives in cloud cuckoo land. He is entitled to his view, which he has emphasised, but he supported the previous Government, who took quite a different view and placed the invitation in the Official Journal. Had the requirement been for a warlike, military vessel, they would not have had to do that.
I accept that the hon. Gentleman was well known in the previous Parliament for disagreeing with the then Government on Europe, but it is not enough for him to say that we are now blaming the Europeans. We are all Europeans. We are subject to the rules of the European Union, to which, incidentally, and however much he may regret it, that Government signed up. We are simply applying the rules in accordance with our legal advice. It is not enough for him to substitute his own view—
§ Mr. Deputy Speaker
Order. I am reluctant to interrupt the Secretary of State, but he spoke for an hour earlier, and those on both Front Benches must realise that, although they have important contributions to make—indeed, they are the centrepiece of our debate—we also have an awful lot of Back Benchers here who want to say something.
§ Mr. Duncan Smith
We can go round and round the fence debating what was the previous Government's intention, but the key fact remains that the Government have chosen today to announce in essence that orders for four ships that should have been placed with a British 431 yard will go to a foreign yard. The prime candidate would have been Govan, but any British yard would have done. I disapprove of the Government's shameful action and, if we were in government today, I would not be doing as they are.
§ Mr. Bercow
Given the Secretary of State's earlier disingenuousness, does my hon. Friend agree that the very least that the right hon. Gentleman owes the House is that he should urgently initiate a full leak inquiry to establish precisely how his intentions got out earlier than he supposedly intended? Should not that inquiry involve full interrogation of senior members of the Ministry of Defence press office and of—
§ Mr. Duncan Smith
I will not answer my hon. Friend, Mr. Deputy Speaker, but I hope that he can pursue the matter directly with the Secretary of State.
It is probably best to move on now from the roll on/roll off saga. We have not had a good day on that in the House, so let us move on and hope that there will be deeper and further investigations, both up in Scotland and in other shipyards, as well as here in Parliament, where I hope that we can return to the matter, perhaps even next week.
I turn now to the main issue of smart procurement, around which the debate revolves.
§ Mr. Davidson
I am conscious that the hon. Gentleman wants to move away from the question of the ro-ros, and I am happy to do so, but will he clarify the Opposition's position with regard to the other orders for landing ships? Where would the hon. Gentleman place the orders for those four ships?
§ Mr. Duncan Smith
I meant no discourtesy to the yards that have received the orders, and I am glad that the hon. Gentleman has given me the opportunity to congratulate them. Clearly, I congratulate the Govan yard on the order that it has been given, and I sincerely hope that it is enough to get the yard through a difficult time. The other yard to have secured orders is Swan Hunter, and I congratulate it too. The hon. Gentleman is right: I should have said something about the matter, and I apologise to the House for not doing so.
However, I have visited the yard at Appledore, and I am distinctly worried that we could lose the key shipbuilding expertise of what is one of the few remaining yards in the south-west region of the country. I am not about to shed any crocodile tears: I am the first to accept that previous Governments have made many mistakes, but we are at the point where we must decide what we feel about our national shipbuilding capability
. I hope that there will be an opportunity to debate such matters. The Swan Hunter yard is sitting on an order for type 45 vessels, but the Secretary of State today did not mention a matter about which the Govan yard is also waiting for news. If the Secretary of State had said that type 45 orders were to be placed, I should have liked to know exactly when that would happen.
§ Mr. Burnett
The hon. Gentleman mentioned the Appledore yard, which is in my constituency. It is a very 432 competitive yard, with an outstanding work force. Does the hon. Gentleman agree that, if the orders about which he has spoken had gone there, they would have allowed it to enlarge its covered yard? That would have increased Appledore's capacity and competitiveness and allowed it to offer greater value for money—for the Ministry of Defence as for others.
§ Mr. Duncan Smith
I recognise that. As I said, I visited Appledore, and happen to think that, as well as having a brilliant work force, it has a brilliant chief executive. I wish that the Secretary of State would meet him. He would be persuaded that there is a man who knows about shipbuilding. He is quite superb—as I am sure are the chief executives of other yards.
However, taking four ships away from British yards means that there are fewer to spread around. If those four vessels were ordered to be built in this country, shipyards such as Appledore might, if not prosper, at least find life a little easier.
I now move on to the broader subject of smart procurement. First, I want to say that I welcome the Government's measures, arising out of the SDR, to improve the streamlining and efficiency of acquisition procedures. That is the benefit that smart procurement has brought, and it is not a question of party politics. However, before Ministers glow too warmly and get too happy about that compliment, I have to say that that streamlining followed a lot of work by the previous Government, who recognised that change was necessary. Smart procurement may be a new initiative in terms of language, but all its components were gestating in the Ministry of Defence before this Government took over.
In that regard, I wish to give credit to Sir Robert Walmsley, who has played a huge role in driving smart procurement along. Credit is also due to Sir Sam Cowan's work at the Defence Logistics Organisation. I am sure that the Secretary of State and the House will agree that, although civil servants elsewhere in government have been criticised today, those two are shining examples of how best to make departments work.
It has been clear for a long time that procurement procedures had to be reformed. I am the first to admit that. It was encouraging that the Government began with a logical and rational procedure, aligning equipment needs to future military strategy. Smart procurement's reduction of input resources in terms of staff and its transfer of responsibility to industry, alongside the rationalisation of the Defence Procurement Agency, was a good start, as was the creation of the DLO.
However, I want to turn to the budgetary element of the smart procurement strategy. The Secretary of State dealt with that aspect, but it deserves examination. The Government claim that smart procurement will achieve savings of about £2 billion over 10 years. Everyone hopes that smart procurement will live up to that aspiration. If it does not, our armed forces could be left dangerously under-equipped.
However, the National Audit Office review "Major Projects Report 1999" statedIt is too early to tell whether Smart Procurement will fulfil all of its aims433 The Public Accounts Committee has also criticised the way in which Ministers have measured savings from smart procurement. It stated:A proportion of the £2 billion savings…represents deferred expenditure.What assurance can the Secretary of State and his Ministers give that the Government's future equipment programme is affordable, if so many existing projects are over budget? How can that be squared? If that cannot be done now, I hope that the Under-Secretary, when he winds up the debate, will give the House some answers in absolute terms. I hope that he, or the Secretary of State, will say which programmes will have to be cut if smart procurement does not meet the ambitions savings targets that have been set. Much of the Ministry of Defence's budget rests on three elements, one of which is achieving the savings targeted for smart procurement. Some of the equipment programmes may be in difficulty if the savings are not achieved.
Other difficulties associated with smart procurement need to be raised. For example, will the Secretary of State say why the recently appointed smart acquisition team has been given a life of only one year? Does the Ministry have a longer-term commitment to making smart acquisition work? I hope that the Under-Secretary will answer that question when he winds up. Why has the team been given only one year, rather than longer? What is the plan?
Does the Secretary of State have any plans to merge the DPA and the DLO? That merger is beginning to look logical, and I hope that the Under-Secretary will deal with that when he winds up.
The role of smart procurement in collaborative programmes is also important. I shall make some observations on that matter later, but what steps is the Ministry taking to ensure that smart processes are employed in some of the worst ventures with international partners? Later on, we shall examine some individual cases but, although Ministers are always keen to lay blame at the door of the previous Government, they may be stumbling into some of the same errors themselves.
Despite the progress made in procurement procedures under smart procurement, problems with equipment acquisition continue, especially in terms of programme slippage. Over the summer, the National Audit Office found that the average in-service date delay had increased by four months to 47 months since its previous report was issued in 1998.
For the smart procurement initiative to be a success, the Government must resist the temptation to make changes to programmes for purely political purposes. That is the critical element in the debate. Previous Governments have fallen into that fault, and this Government appear about to do the same in a number of cases.
That is especially true in relation to collaborative programmes. Smart procurement should be about letting industry get on with such programmes. The Government are part of the contract, and must adopt a self-denying ordinance in that regard.
For example, there is the Brimstone missile programme, about which I have some concerns that I hope that the Under-Secretary or the Secretary of State will answer. The Government were rightly keen to trumpet the 434 announcement of new, precision-guided weapons. The Secretary of State did so again today. However, he neglected to mention that the Government appear to be cutting back on the Brimstone programme.
Brimstone is a superb, all-weather, precision-guided missile. It would have been ideal for use in poor weather in places such as Kosovo, and was due for service with the Royal Air Force next year. I think that the due date was March, but I stand to be corrected on that.
However, the Select Committee on Defence has reported that it believes that the RAF will order 25 per cent. fewer missiles than originally planned. Why? In addition, I understand that the Government have asked contractors to delay delivery by up to one year.
The Government say that they want smart procurement to achieve improvements in procurement, but are beginning to take decisions—cutting programmes, introducing delays—that will create a problem for industry.
The Government have an opportunity today to put all those rumours—if they are rumours—to bed. Will the Secretary of State tell us what is correct? Are the Government cutting the programme in terms of numbers of missiles, and are they planning to delay the programme? I am happy to give way at this point—however, I see from the Under-Secretary that he will answer that point specifically in the winding-up speech.
§ Mr. Bruce George (Walsall, South)
The initial starting date for Brimstone was 1990. What happened between 1990 and 1997?
§ Mr. Duncan Smith
The hon. Gentleman, who is chairman of the Select Committee on Defence, knows very well that that programme was delayed. I make no bones about it: the previous Government came to it, went away from it and came back to it again. The Committee's reports illustrated that; they were highly critical, and rightly so. However, when the decision was finally made to go ahead, the industry—in this case I think that it was Marconi, which became BAE—stuck to its part of the bargain.
The hon. Gentleman is correct to say that Brimstone should have been in service a long time ago. I make no excuses for that. The industry has said, "Now we have the firm order, and know what is required. There will be no more messing around from the Government. We will meet the March date in 2001, and we will meet it on cost and capability." My worry is that the report may mean that, just as this most smart of procurements could be proved, it could be chopped away at the knees. Let us not see a repeat of what happened before—that is my main concern.
I turn now to the pressures on the defence budget in general and, more particularly, to certain reports about the Royal Air Force. I hope that the Minister will deal with the recent press reports about how the RAF will lose at least— [Interruption.] The Secretary of State is compressing it, but I suspect that he will have more than he anticipates. It has been reported that the RAF will lose at least three of its front-line squadrons under plans drawn up to claw back some £1.5 billion overspent on defence procurement projects
. Those same reports said that the plans presented to the air force board were to be held back until after the next election, disguised, as they said, as a modernisation of 435 the RAF's capabilities to protect the Government—any Government, I suppose, but particularly this one—from charges that they were going back on their commitment not to make further defence cuts.
Intriguingly, on learning of the leak, the Under-Secretary said that the paper was written before the Ministry of Defence's budget was increased in the summer spending review. About a week later, a further leak showed that this paper was not shown to the air force board until its monthly meeting on 2 August—two weeks after the spending review was announced, and when the Government, and the Minister, knew how much money was in the defence budget. So it was not, as he seems to have suggested—I am ready to be corrected—that the Air Force board saw the paper after it knew of the extra money.
Will the Minister also confirm that comments were made at that meeting about reducing a front-line type of aircraft, which would thus reduce cost? That is one way of doing it. Rumours are circulating that it could be the Tornado F3, the Jaguar, or the Nimrod maritime patrol aircraft. [Interruption.] I did not leak those documents because I did not have them. Or is the Minister suggestion that we, too, sit on the air force board?
Those documents were in existence and were presented on 2 August, unless the Minister denies that. Now he must explain why he said that they were presented before the budget announcement, not after. That is of great significance. I hope that he will also confirm that no such plans will be implemented.
The Secretary of State mentioned type 45, but he did not talk much about the carriers. Before the summer recess, the Secretary of State announced that the Government intended to go ahead with the order. I welcomed that announcement at the time. There have been discussions about the collaborative Horizon project mess for much the same reasons. We have been around this fence before. However, we still do not actually have the order. We have heard of difficulties from Vosper Thorneycroft.
I hope that, even if the Government cannot announce the order today—as they seem to have chosen to do in the debate on ro-ros—they can at least alleviate the fear and concern in Vosper Thorneycroft, whose work force has lay-off orders. As they have decided that they will spend the money on this project, will they please make the announcement as soon as possible?
§ Mr. Paul Keetch (Hereford)
When the Government make an announcement about the type 45s, does the hon. Gentleman agree that the ships should be capable of launching not just the principal anti-air-missile system missile but also other missiles, particularly Tomahawk? An ability to do this from a ship at sea on the surface would add greatly to our capability of launching cruise attacks, particularly at the moment, when our submarine fleet, which provides the only existing way of launching cruise attacks, is unfortunately in port.
§ Mr. Duncan Smith
The key point for the Government in the context of the hon. Gentleman's question is: what are we producing these ships for? Obviously they must have the best equipment to deal with possible threats. 436 I agree with the hon. Gentleman that the Government must take into consideration the requirement that the equipment must not be second rate but must deal with the perceived threat. The threat should be explained, and a ship designed around it.
I will not follow the hon. Gentleman in trying to specify exactly what equipment should be used—that is not my role. That should come from the members of the military who advise the Government. I hope that the Government take that advice on board and provide the best equipment available, not cut-price equipment. We do not want a ship that is incapable of dealing with today's threats, let alone threats in the future.
I ask the Government to get on with that. It would help those who work in the shipyards. More particularly, there is a glaring gap in our capability, which was created by the collapse of the Horizon programme. There will be many who have smiles on their faces, saying, "I told you so". We do not want to go over that again, but I hope that we have learned the lessons from it. The decision on type 45 is the right one, but for goodness' sake, let us get on with it as quickly as possible.
In winding up the debate, will the Minister—or the Secretary of State—inform the House of the latest position on the replacement of faulty rotor heads on Lynx helicopters? On a visit that my hon. Friend the Member for Salisbury (Mr. Key) and I made to a base, we were told worrying stories about how far too many Lynx helicopters were grounded and unable to fly. Pilots are literally queueing up, like a local enthusiasts' air club, to fly Lynx helicopters in rotation, because they cannot get their hours on the Lynx helicopters that they would normally fly. What is the position? Can the Government give us any time scale? How long will it take to remedy the problem? When will those Lynx helicopters be back in the air, as they should be?
The Secretary of State mentioned another procurement project, the SA80. The Kosovo report and others have highlighted the problems and failures of the SA80 over the years. The previous Government, in previous iterations, went through get-well programmes that clearly did not work. The Government have taken a decision, in the light of all the concern about the SA80, to upgrade—[Interruption.] If the Secretary of State holds on, I will use my own words; I do not need a prompt from him.
The point is that—despite concerns about the light support weapon as well as the personal weapon, which the Secretary of State knows are widespread—the Government have now decided to go ahead and spend about £80 million on upgrading the SA80. That is about £400 per weapon. The right hon. Gentleman and his colleagues have clearly reached that conclusion in the belief that the get-well programme—for that is what it is—will eradicate all the problems that have made the military so concerned about the weapon and so dismissive of its capabilities, to the extent that special forces and others do not want to use it if they can avoid it.
Presumably, the Government's decision will deal with that problem. Therefore they must state beyond any doubt today that the weapon will be as capable as it should be. One of the tests is whether the Government honestly believe that the weapon will reappear on the NATO 437 approved weapons list after the upgrade. If they do not, they must explain the reason behind the decision to upgrade rather than to go for another weapon.
§ Mr. Duncan Smith
If the Minister concerned has decided that he needs advice from the Opposition about what weapon to buy, he is being paid far too much for the grade that he is in.
§ Mr. Brazier
It is common knowledge in the armed forces that the Army wants the Armalite—it has wanted it from the beginning. If we cannot afford a complete replacement, it would be much better to spend the available money on replacing SA80s with Armalites for front-line troops—a partial replacement with a decent weapon—instead of trying to get a little more life out of that hopeless weapon again.
§ Mr. Duncan Smith
I hear what my hon. Friend says, and my only answer is to question the Government yet again. The answer to my hon. Friend's question lies in the Government's answer to mine. They must say at the Dispatch Box today, beyond any doubt, in the winding-up speech if necessary, that the programme will completely eradicate the problems that have beset the weapon. Let us forget the history. We want to know now whether that is the Government's view. If they cannot say that, it opens up the debate about whether another weapon should be entertained for approximately the same cost. They must know what the figures are.
The other part of the equation concerning whether the Government replace or repair the weapon is what will happen to the Nottingham facility in the process. Having placed the contract with BAE Systems, the Government know that most of the work—the only important part of it—is going to Germany to the Heckler and Koch facility, which BAE owns. Are the Government concerned in any way that the Nottingham facility, which is the last serious small arms manufacturer in the country, will simply close?
The Secretary of State's initial response to such questions was that the Government must deal with best value, but in the summer he seemed to twitch slightly, and to suggest to BAE that it could do more work at the Nottingham facility. He may want to correct me, but those were certainly the press reports. I will give way if he wants to tell us his view of the work at that facility—whether it should do more than simply strip the weapons down, and whether it should do some of the work that is going to Germany. Does he believe that, or is he content with the present arrangement with BAE? Obviously, he does not want to answer that question.
§ Mr. Wilkinson
Before my hon. Friend terminates his catalogue of equipment grief, will he ask the Secretary of State when Tucanos that have been grounded will be airworthy again, and at what additional cost Royal Air Force pupil pilots are being sent to Australia? We were given no clarification of that matter because of the total imbalance in the right hon. Gentleman's speech.
§ Mr. Duncan Smith
I simply relay my hon. Friend's question to Ministers. I hope that it is another question 438 that the Under-Secretary will answer in his reply, as it deserves an answer. Clearly, the Secretary of State is not prepared to answer my question about the Nottingham facility. Will the Under-Secretary confer with his right hon. Friend and decide exactly what their position is on that facility? The people who work there ought to know whether the Government are rethinking. If they are not, those workers will at least know what their future holds. The Government must make that clear.
On Bowman—as the Secretary of State has decided to run that as part of his re-election campaign—again I make no bones about the fact that the project has gone on far too long. Yet again, I spy the brooding presence of the Chairman of the Select Committee on Defence in the corner of the Chamber—as the Secretary of State also found, to his cost.
§ Mr. Duncan Smith
One cannot accuse the Chairman of the Select Committee of smiling—that will ruin his reputation. As he knows, because his reports have stated it many times, and he has long been a member of the Committee, as well as its Chairman for some time, there are huge and inescapable problems with the project. The Government must bear some responsibility for the delays that have taken place. They have been in power nearly four years, and in that time they have stated their belief that the Bowman project, and Archer Communications Systems in particular, were spot on, and that there were no problems.
Even as late as March, the Minister for Defence Procurement said:This Government have now put Bowman on a sound footing to ensure that the Armed Forces can have the new radio system that they deserve as soon as possible.—[Official Report, House of Lords, 8 March 2000; Vol. 610, c. 1082-3.]"Hooray," we all said—but three months later they said, "Enough's enough. Bowman simply has to be scrapped." Now they say that they will reconsider the matter.
It is no good merely blaming the previous Government. We are four years into this Government and we have only just received an unequivocal answer from them. They are going to change the programme. They must take responsibility for the delays of the past four years. If they were so angry about it and thought so little of it, why did they not scrap it when they came to power? They waited all that time, so they must answer that question, too.
§ Mr. Chidgey
I am grateful to the hon. Gentleman for mentioning the Bowman project, which was being run by Archer Communications Systems Ltd., which was in my constituency. Does he agree that one of the tragedies of that failure, which predates smart procurement—goodness knows what would have happened under smart procurement—is that not only have we lost the project, but we have lost £200 million of taxpayers' money and 650 highly skilled engineering jobs in my constituency? Those people have moved elsewhere and they will not be replaced.
§ Mr. Duncan Smith
Clearly, the programme has all the hallmarks of the worst of the excesses that we have come to regret in the annals of the Ministry of Defence. The Select Committee has made that clear time and again.
439 The Government now bear some responsibility for the further delays to the programme. They cannot shake that off. If we are prepared to accept that previous Governments bear some responsibility, this Government should stop playing political games and simply admit that they could have got on with it earlier if they thought that it was such a disaster. They did not. In March they were busy reassuring everyone that they had the solution, and then they suddenly said that they did not have it. They have been in power nearly four years and must start to accept some responsibility. I know that that is difficult and that they do not like doing it.
Previous Conservative Governments found out the hard way about international collaboration. Meteor and the A400M illustrate some of the concerns. Certainly, I would like to think that we found it out; posterity has certainly done so. Such programmes are fraught with nightmare problems, and when I mention the wranglings and the setbacks of the Eurofighter programme—who can forget those? —I think that the Secretary of State will agree. The programme has been put back years. I saw the first prototype fly years ago—perhaps the right hon. Gentleman also saw it. It is absurd that we should now be expecting an in-service date as late as 2005. I am not trying to score a political point, because this has happened over a long period, with many nations making absurd declarations about production figures and the like.
The type 45s come on the back of the Horizon failure and the collapse of the multi-role armoured vehicle programme. Those are just three examples. The Government know that there are others, such as the third generation anti-tank weapon. We have gone round the fence many times and I wonder when we shall learn the lessons. Despite those harsh lessons, such multi-nation collaborative programmes remain a serious problem.
I am worried that the Government may be about to repeat past mistakes by participating in some European procurement strategies that run the risk of creating a fortress Europe and alienating others in the NATO alliance. I should like the Secretary of State to respond to my worry that we may be artificially creating two monopolistic blocs that unnecessarily divide NATO—not what British industry wants. The Minister will be aware that, for all the grand talk generally about European defence initiatives and improved European defence capability, by and large, defence spending across Europe is plummeting, although some countries are worse than others.
§ Mr. Duncan Smith
If the Secretary of State allows me about 20 seconds, I shall answer his question. I want to deal with matters in turn. I shall deal with Meteor first, then A400M, because I have serious concerns and should like some answers.
In the summer, it was reported that the Meteor missile proposed for use on the Luftwaffe's Eurofighter combat aircraft didnot meet the German's Air Force operational requirements,440 according to the Luftwaffe's chief of air staff planning. I should be grateful if the Minister or the Secretary of State could tell us what the status of that report is, and whether that confusion will create difficulties with the memorandum of understanding for Meteor. Will we start to repeat some of the earlier problems with the European fighter aircraft?
If the controls on Meteor are tight, and if BAE is allowed to run the project, we may be able to deliver Meteor properly. I hope that we do, because the Secretary of State is right that Meteor is critical to the RAF's future capability. I make no bones about that, and it is therefore right to go ahead with that decision.
I have some serious concerns about the A400M, about which there are further problems that are of greater concern. Can the Minister or the Secretary of State tell us about the present position of the contract management for A400M? I have heard that the Germans are now demanding project leadership. Is that the case? Are the reports that there is no money in either the French or German defence budgets for that programme correct? Are the numbers of aircraft to be ordered realistic?
One of the great problems with the Eurofighter was that certain countries inflated their requirement. I do not believe that the United Kingdom did so, or that it has done so with this project. I suspect that if anything, we are at the bottom end of what may be the requirement, but one has to question whether some other countries will end up taking delivery of the numbers that they included in the schedules. That is the key point, because there is a critical mass and the item may become very expensive—much more so than on paper—if countries do not take the required numbers.
The Secretary of State asked me whether I supported the project. I had deep concerns when he announced it. I recognised why he had to make that announcement, but I said that the devil lies in the detail of the answers to the questions. If the right hon. Gentleman is unable to answer those questions or is unsure about those points, he needs to revisit the project. To be fair to all those concerned—from BAE onwards—we should tell them whether we are certain that the project can seriously go ahead. To do anything else would be repeating the same mistakes.
If the right hon. Gentleman can answer those questions, and if he is sure that there are no problems and that everything will be sorted out, he may well be right to go ahead with the project—otherwise we shall repeat earlier mistakes. Therefore the answer to his question is yes, I will support the project—so long as he can say that the numbers, and the other points that I made, are not a problem.
In the preamble to the OCCAR convention, signed in September 1998, the four participating Governments—France, Germany, Italy and the United Kingdom—seemed to lay the foundations for a fortress Europe in defence procurement, stating thata strengthening of their co-operation in defence equipment will contribute to the establishment of a European security and defence identity and is a practical step towards the creation of a European armaments agency".Those foundations are built on article 6, which states:When meeting the requirements of its armed forces, each Member State shall give preference to equipment in whose development it has participated within OCCAR".441 That is worrying. The requirement seems to be at odds with the whole point of smart procurement—the procurement of the best equipment at best value and the most competitive price. If such a political requirement is introduced into that process, it will create nightmare problems for smart procurement.
Surely, procurement for the armed forces cannot be devoted to any grand European design; it should be about the best that is available. There should not be a fortress Europe versus a fortress United States. That would be a grave mistake, as the Secretary of State should be aware, and as British industry would tell him. I hope that the Government will agree that projects should be set, as far as possible, according to benchmark standards of interoperability with the best in NATO. Often, but not always, the best happens to be the USA. As we saw in Kosovo, the USA is best in certain aspects.
The key must be that we in NATO can operate in conjunction with those with other equipment. That requires us to look more widely than simply focusing on Europe. The wisdom of the approach has been seen in Kosovo. I hope that the Secretary of State, or the Minister when he responds, will deal with how the Government intend to square such a grand political design with the reality that the armed forces want best value.
The Government have referred to the Defence Evaluation and Research Agency, and I want to raise some points that have been raised many times, mostly by the Select Committee. I thought that the Government's first attempt at the partial privatisation of DERA was almost a fiasco. It was attacked by more or less everyone, not just the Select Committee, and the industry and the United States made their views clear. Despite the outcry following the Government's first consultation paper, instead of producing a genuinely new proposal that might have squared the problem, they simply seemed to go round the fence one more time and make a few corrections.
Questions still remain on many key issues. For example, exactly who will be allowed to buy shares in the privatised companies? There is an issue of national security. What will be the limitations on new company activities? What will be the relationship between the privatised and the retained parts of DERA? Even now, the industry complains about the thorny problem of intellectual property rights.
The Secretary of State will know that DERA is crucial to the process involved in any high-tech project, yet the Government are now putting that at risk. The United States is, of course, an ally with which we have had a long and fruitful history of successful collaborative projects, and the relationship is improving all the time. Technology transfer and exchange are now better than they have been for a considerable time. Harrier, Apache—which the Secretary of State mentioned—Trident and the joint strike fighter are all programmes in which Britain and the United States are collaborating, or have collaborated, with great mutual success.
The JSF is a prime example of how the DERA programme begins to hurt. I remind the Secretary of State of its huge potential not only for BAE, but for industry across the board. Already questions have begun to emerge. [Interruption.]
§ Mr. Deputy Speaker (Sir Alan Haselhurst)
Order. I am sorry to interrupt the hon. Gentleman. Whoever is carrying that bleeper should have turned it off before they brought it into the Chamber.
§ Mr. Duncan Smith
How will the United States transfer the key technologies that are relevant to that programme, as BAE will tell them time and again that stealth technologies are critical? There is no joint programme if BAE does not have access to those critical technologies. Yet I hope and believe that BAE will tell the Secretary of State what it has told me: it is deeply worried after conversations with the Americans, who are saying that they have no idea about what will happen to places such as Boscombe Down, or what the relationship will be, and that they are loth to make commitments on those technology transfer issues, all of which will be damning.
If the Minister thinks that the Americans are absolutely on-side, I must tell him that I do not think so. The new Deputy Secretary of Defence described the relationship a few days ago as constructive and workable, but went beyond those diplomatic words in adding that a number of detailed issues inevitably remained to be resolved. The point is that partial privatisation is immensely complicated and detailed: the devil is not just in the detail, it is the detail. The problems have not been resolved yet, and the Select Committee report goes to the heart of that.
The Secretary of State and the Minister have an opportunity to respond properly to that report—not in the patronising manner of the response I read the other day—by saying how they will deal with the problems. If JSF fails because of the partial privatisation of DERA, neither the industry nor the country will forgive the Government.
The Secretary of State did not refer to some matters, vital in procurement terms, that go way beyond the big money programmes for frigates, aircraft, missiles and so on. I refer to small things that we rather take for granted, but which affect the daily life of service men and women. These might be said to be silly things, but they are important—soap, lavatory paper, vaccines and accommodation. Who could forget the substandard tent accommodation identified by my hon. Friend the Member for Salisbury (Mr. Key) during deployment in Kosovo in winter? We may forget such problems, but they are just as important as failures on big procurement programmes. They affect soldiers, sailors and airmen. How are such problems being resolved, and how deeply have they bitten? When people decide to leave the forces early, those are the straws that break the camel's back.
Defence exports are important to everyone, particularly the 400,000 people who work in the industry and their dependants, and the hon. Members who represent them. We have heard endlessly about legislation on export controls, but can the Minister tell us what that will mean for industry, when it will come forward, what it will contain and how deeply it will bite on industry's ability to deal with future export possibilities?
No one wants programmes to get into difficulties or produce the wrong equipment. Our defence would suffer from that, which is why procurement is hugely important. By its nature, defence procurement is always fraught with difficulties that do not exist in commercial contracts. We are always quick to point out failings at the Ministry of Defence, with people saying that equipment could be 443 bought commercially. But there are plenty of times when that cannot be done, or when commercial products require more work.
It is inevitable that mistakes will sometimes be made because procurement has been overdone, but we are dealing with equipment likely to be used in some of the worst environments that it is possible to imagine, such as slit trenches half-filled with water, in freezing Arctic conditions or at high altitude in aircraft in combat. Whatever it takes, the Ministry of Defence must deal with equipment that will work in those circumstances. No one would forgive the Ministry for choosing an option that, although cheap, did not work when most needed, as has too often happened.
We expected answers from the Government on many of the issues that I have raised. Instead we heard a statement that should have been made separately on a particular procurement project, then a party political broadcast by the Secretary of State. No doubt that was inserted in his programme by Alastair Campbell, who is fed up because the Secretary of State has not yet done enough party politicking. Perhaps every time the right hon. Gentleman stands up in future, we can expect to hear the usual four and a half yards of political nonsense from the Government, rather than their dealing with the issues and problems. I regret that the Secretary of State took that approach today, but we are running towards an election which Labour will lose. Every dog must have his day, and I am happy to give the Secretary of State the opportunity to play silly political games while I look forward to taking over the problems and dealing with them after the election.
§ Mr. Deputy Speaker
Order. There is now an opportunity for Back Benchers to have their day. Rather more wish to speak than would be successful in catching my eye if everyone took the full allocation of time available. I therefore appeal for brevity so that those who have been here throughout the debate may have an opportunity to speak.
§ 4.5 pm
§ Mr. Bruce George (Walsall, South)
I am not sure whether to feel flattered by the reference by the hon. Member for Chingford and Woodford Green (Mr. Duncan Smith) to my brooding presence. I am not so much brooding as sitting here amused and bemused. One great advantage of having sat for ever on the Select Committee on Defence is that one goes round the houses time and again. Whenever the hon. Gentleman or his colleagues scream "foul" or "foul-up", I can say, "Tories—1981 and 1987."
The hon. Gentleman has at least enough humility occasionally to lapse into fairness, though that owes more to his early career at Jane's—incredibly objective—and in the Army than to his present role. The hon. Gentleman must have seen many foul-ups, and must realise—even if not all his colleagues do—that fouling up in procurement is almost par for the course. One can only hope that smart procurement will minimise the foul-ups, which no Government have, as yet, managed to do.
444 I did not bounce to my feet to ask questions about roll on/roll off ferries. I find it amusing that those who did all the screaming have departed the Chamber, leaving those of us who remain less chance to make our speeches. The incandescence of their rage lasted just the length of a statement. They may read what I have said.
I am delighted that we are debating procurement. The Defence Committee did a good job on the four reports relevant to the debate, and much information with which we may evaluate the Government's performance has arisen from the Committee's deliberations. I was pleased to hear the Government say that the debate on defence procurement would not proceed until the Defence Committee had had a chance to evaluate documentation and produce our report.
In addition to the four reports tagged for this debate—on the OCCAR convention, on the future of DOWRY, on major procurement and on the appointment of the chief scientific adviser—I should like to tag personally yesterday's report on the lessons of Kosovo, which contains a substantial section on procurement. I should also mention the report that we published a few months ago on the Government's annual reporting cycle.
The Government spend nearly £10 billion on procurement and spares, which shows how often we should debate those matters. One of the most delicate phrases that I have ever heard used about Ministry of Defence procurement was in our procurement report which said that its annual deeds record over 20 years had been less than glorious. Far worse could have been said, but we must recognise that any Government who try to develop a smart procurement policy will find no panacea. Anyone who claimed that we could save so many billion pounds after two years—or five or 10—would be a born optimist. So much can blow a Government, and their Ministry of Defence, off course.
I can speak with a degree of detachment because I have opposed my own party's policy for at least as long as I have opposed the Opposition's. The Defence Committee is evil to everyone. We have had much more time in which to hone our skills by attacking the Conservatives, but time will tell on that. In fairness, some good starts have been made, and the hon. Member for Chingford and Woodford Green mentioned the establishment of the Defence Procurement Agency, smart procurement, public-private partnerships and private finance initiatives. All that is an attempt to change the culture of decision making at the Ministry of Defence and in its weapons procurement process.
The Government have been courageous—it is difficult to be courageous—where they have been prepared to take dramatic decisions: on the cancellation of Horizon, the common new generation frigate, what is now Skynet 5, the medium-range Trigat anti-tank missile, Bowman and perhaps more to come. That was absolutely right. It took the previous Government a long time, understandably, to change their mind and to say that the time had come to dump a programme. The move to AWACS is an example of where decisions must be made.
I must say something about ro-ro ferries. I should love to have, and perhaps the Defence Committee will have, 445 access to the legal advice that the Department was given. In evidence to us under the section entitled "Military Capability", which states:The RORO service can be used across a full range of missions and military tasks that require deployment of UK forces into theatre through a seaport of disembarkation. It is not the intention to use the service in "battle conditions" but the ships may need to transit warlike zones and maybe under escort as part of a task force.Perhaps the sailors on them will be Royal Naval reserves. I should love to see whether the Government have taken the right legal advice. So much is at stake. I cannot imagine the French falling for an approach such as this. I hope that this will be closely monitored—not by the Mickey Mouse private investigators captured in Cuba but by serious investigators, to ensure that our competitors are playing by the rules. I hope that we shall have an explanation on that in due course.
The report on Kosovo was published yesterday. It was not an easy report for the Committee to write. I am rabidly pro-NATO. The hon. Member for Chingford and Woodford Green will know that I wrote three great tomes in the early 1990s which he as marketing manager did not manage to sell. The books were grossly overpriced and undermarketed, but they were very good. I am a devotee of NATO and it was particularly difficult for me to chair a Committee that was so critical of NATO.
I feel strongly that the only way to get improvements is by criticism. If the Government have any reason to dissent from our analysis or if we have made any factual errors, I look forward to their reply in due course. The Committee was absolutely right to say:Operation Allied Force does, we believe, demand close and careful examination for the lessons it has to teach us about the role of NATO in maintaining security and stability in Europe, and about the types of operation in which it may in the future be involved. NATO's involvement in Kosovo has aroused extensive and sometimes passionate debate, and been the subject of intense scrutiny.The report continued:Despite the imbalance in military potency between the Alliance and Milosevic's forces, Operation Allied Force proved to be a more risky venture than many anticipated.We went on to say why, and that if we embark on such a venture again, we should learn the lessons swiftly and well.
I was a little disappointed with some of the press reports. There was a little too much publicity. We did not criticise the Prime Minister personally. "Grovel, grovel", as Ron Brown said after he was thrown out of the House of Commons. The Prime Minister did not preside over the North Atlantic Council. We pointed out that the need to maintain Alliance unity caused unforced errors. We acknowledged the United Kingdom to be the driving force in maintaining the determination of the Alliance to see the job through to a conclusion. Unfortunately, that enthusiasm was not shared by all our allies.
Wars test not just the resolve and competence of decision makers, and the support of parliamentarians; they test the quality of military personnel and of the equipment that is procured for them. The decisions made today are decisions that our men and women will fight with 20 years from now. One of the problems—here I lapse temporarily into partisanship, but it is necessary to do so—is that many of the procurement decisions that we identify as having been less than successful were inherited from the last Government. If a war is fought 15 years from now, the same criticism can be made by an ageing Member for 446 Chingford and Woodford Green, still awaiting his opportunity and then facing being bypassed as many 65-year-old Opposition Members awaiting their chance are.
To prove my decency I now turn my criticism to an invisible role, next to the very visible Under-Secretary. I am disappointed in the way in which the Royal Air Force performed. I am not talking about the personnel. We revere them, correctly. I take no comfort from the fact that we were the fourth largest supplier of aircraft in the conflict. I would take satisfaction if we had been the second, behind the United States, and not behind France and Italy and just in front of a clutch of other countries. We can do better.
Admittedly, the Tornado and Harrier were good aircraft in their day. They are still useful, but are getting a little venerable. I fear that the poor kit that was procured some time ago did not properly maximise the RAF contribution. We said:The most serious shortcoming in UK capabilities shown-up by the air campaign was the lack of precision-guided weapons capable of being used in all weathers against static and mobile targets.When we go through the lack of security and all the errors it is clear that one of the problems was the TIALD integration on the Tornado GR4 upgrade. That was a disaster. It should have been in years ago. The GR4 version was not ready for use in Kosovo. The initial starting date was 1993. Delays now total 63 months. The Government cannot accept more than a modicum of blame for that. There was a lack of GPS-guided munitions in Kosovo. The spending review promised funds, but much of that was not addressed by the last Government. On anti- armour air-to-air surface munitions, Brimstone was 10 years late, so the RAF had to rely on unguided cluster bombs. Brimstone's initial starting date was 1990.
There was a lack of secure air-to-air communications. The Royal Air Force could not speak securely to its American allies. Nothing has been done and nothing announced. Phoenix has been a great success—that is, it was promised in the 1980s, hoped for in the 1990s and at least in this millennium we have seen this drone operational.
There was insufficient sealift. Throughout the 1980s and 1990s the Defence Committee produced reports complaining about the collapse of the Merchant Marines. There was insufficient airlift. The Government put a lot of faith in the C-130J. It was not their fault; the last Government were still awaiting delivery. The SA80 was not all the Government's fault; it was the fault of the last Government. The Horizon was not this Government's fault. They cancelled it. The Government took a good decision over the BVRAAM and I applaud them for their choice. So when we look at procurement failures, let us be reasonably fair.
In the conclusion of our Kosovo report we said:Overall, despite the heroic efforts of UK aircrew and support staff, we must conclude that the UK contribution to the air campaign, in terms of actual fire power rather than support, was somewhat disappointing.That was hardly a devastating criticism, but the contribution was unsatisfactory and no blame attaches to the personnel.
Our NATO partners have little to be pleased about, except the United States. The defence capability initiative may improve matters. The OCCAR treaty may 447 improve matters. I hope that the treaty was signed on collaboration in the European defence industry. That might help. The Helsinki headline goals may help, but spending by our European partners is pretty miserly and they need to do far more, if the Europeans are to be taken seriously as partners to the United States.
It is important that BAE Systems survives in an increasingly competitive world. Recently, I learned that the entire value of the United States aircraft and aerospace industry is only 17 per cent. of the value of Bill Gates and Microsoft. That is a sign of the problems the US industry is facing.
I want better co-operation in Europe. I am an atlanticist, politically—
§ Mr. Deputy Speaker
Order. I am sorry that there is no additional time for the Chairman of the Select Committee.
§ Mr. Paul Keetch (Hereford)
I shall not detain the House for an hour as the previous Front-Bench speakers have done.
§ The Parliamentary Under-Secretary of State for Defence (Dr. Lewis Moonie)
The hon. Gentleman is only entitled to a quarter of an hour.
§ Mr. Keetch
I must correct the Minister. The Liberal Democrat spokesman is entitled to an hour, but I have given my commitment to the Deputy Speaker and to the Whips that I shall not be using the full hour—not least because I want to ensure that my hon. Friend the Member for Eastleigh (Mr. Chidgey) and Back Benchers from other parties have the opportunity to speak.
In a thorough—if slightly long—speech, the shadow Secretary of State, the hon. Member for Chingford and Woodford Green (Mr. Duncan Smith) paid tribute to Sir Robert Walmsley, as do I. However, the hon. Gentleman rightly criticised the contribution made by the Secretary of State at the start of the debate. The hon. Gentleman pointed out that the right hon. Gentleman's speech was a mixture of a statement and a party political broadcast. Furthermore, I am surprised that the Secretary of State could not find the time to remain in the Chamber—to listen not, perhaps, to me, but to the important contribution made by the Chairman of the Select Committee, the hon. Member for Walsall, South (Mr. George).
§ Mr. Keetch
In relation to the ro-ro order, I hope that the Under-Secretary—who is in the Chamber—will answer the specific points that were raised. First, my hon. Friend the Member for Torridge and West Devon (Mr. Burnett) asked whether details of the successful bids would be placed in the Library. May we have a simple yes or no answer to that question about the landing ships?
§ Mr. Burnett
Does my hon. Friend agree that we are discussing the spending of public money for which the 448 Government must be accountable and that the way to bring them to account is to determine whether, by their own definition, they have achieved value for money?
§ Mr. Keetch
I agree with my hon. Friend. Some of the orders for those ships were placed overseas and I think that the Chairman of the Select Committee shares the concerns expressed by Conservative and Liberal Democrat Members that that is wrong. We should have more information than the Government may be prepared to give.
My second point relates to the Clyde. Can the floating dock order be brought forward to save jobs there?
Thirdly, if it is true, as was suggested by the hon. Member for Buckingham (Mr. Bercow), that the Secretary of State's decisions about these orders—albeit not his actual words—were broadcast on the BBC website before he made his statement to the House, the right hon. Gentleman should return to the House this evening and apologise.
We should never debate defence without stating our belief that the men and women of the British armed forces are among the finest in the world. In all manner of places throughout the world, it has been proved time and again that, when military action must be taken to resolve conflict or to enforce peace, the UK is more than capable of taking the lead and setting the example. This year, that has been proved yet again by Operation Palliser in Sierra Leone.
The quality of our armed forces enables the UK to fulfil our commitments to protect, enforce and promote the rules of the international society to which we subscribe. The best procurements we make for our armed forces are the men and women who serve in them.
We shall be holding another defence debate next week. These defence debates are rather like buses—there are none for months and then two come along at once.
A delicate balance is involved in controlling expenditure on defence procurement. We must ensure that Britain's armed forces are equipped to meet the nation's defence obligations both in peacetime and during conflict. Our armed forces need to be prepared to act alongside our allies in extremely hazardous environments as part of collective defence and security operations. They must have the means successfully to participate in peacekeeping activities anywhere in the world. If they are not sufficiently equipped, the UK's ability to project power—to protect, enforce and promote democracy—will be seriously undermined. As a nation, we will not be living up to the responsibilities brought by a permanent seat on the Security Council of the United Nations.
Defence procurement is about how the Government can best prepare those who serve in our armed forces for the extremely difficult jobs that we sometimes ask them to do. It is also about getting best value for the taxpayer. How can we judge correctly the relationship between quality, speed of delivery and value? Under the previous Government—as we have already heard—projects such as the Bowman system dragged on for a decade, and misjudgments were made time and again. As the shadow Secretary of State rightly pointed out, the Bowman contract should have been dealt with sooner. It is possible to acquire affordable equipment, deliver it quickly and still ensure the highest quality. We should look to our allies, because they have often performed better than us in that regard.
449 Affordable quality equipment does not have to take decades to arrive. Speed, quality and value can coexist; it is the job of Government to ensure that they do so. With that in mind, we welcome the goals underlying the Government's smart procurement initiative. Any initiative that ensures faster, cheaper and better procurement should be welcomed.
However, if smart procurement is to be more than just another soundbite, it needs to be testable. The report of the Select Committee stated that there were early signs of improvement; perhaps they are the "green shoots of recovery"—perhaps not. The Committee also concluded that there is a long way to go. Costs and delays continue to escalate. The average in-service date delay has risen from 43 months in 1998 to 47 months in 1999. As for making procurement cheaper, 13 projects have exceeded their original cost approvals, and cost overruns have increased by £22 million since 1998.
This week, the Minister announced in a written answer that smart procurement will save us £2 billion over the 10 years between 1998 and 2008. How does he know? In the light of the figures and of the worsening performance trends, will the Minister share with us the brand of fiscal mathematics that makes such savings possible, let alone likely?
Surely, if procurement is becoming slower and increasingly expensive, that does not add up to smart procurement. Where are the green shoots? How do the Government measure the success of smart procurement? By which criteria do they claim—as the Secretary of State did this afternoon—that it will save £2 billion? Parliament should be told. Smart procurement needs smart government, and until the Government publish the criteria by which they assess those figures, it is nothing more than a soundbite.
I do not doubt the height of the mountain that the Government have to climb. There have been decades of mismanagement—as Members on both sides of the House must accept. For example, in 1968, the Downey report recommended that 15 per cent. of development spending should be disbursed before full development began. It is obvious that the costs of the whole project, and not just the early costs, should be taken into account when making design decisions. In 1987, a Ministry of Defence working party recommended the implementation of the Downey report. However, the Conservative Government did not fully implement it.
On the Challenger 2 project, Vickers came in 30 months behind schedule and was fined a measly £3 million—only 0.13 per cent. of the contract. As a result, the MOD incurred costs of £39 million, plus the lack of operational capability. Why were those costs not pursued? Why were much larger penalties not imposed?
Furthermore, in 1994, options for a follow-on buy were taken up before the tanks had demonstrated their reliability. In 1995, it was then found that they were not reliable and it required two more years of work to bring them up to standard.
On the contracts that are the responsibility of the Labour Government, the expeditionary strategy, outlined in the strategic defence review, relies on the introduction of two new aircraft carriers to replace the ageing Invincible class. For Britain to have a key role in ensuring international peace and security in the future, it is essential to increase our capacity to deploy. The carriers are vital 450 for that. Each carrier is capable of accommodating up to 50 fixed-wing aircraft, and will give a tremendous boost to the extent to which the UK can operate worldwide either as part of a coalition or independently.
Let us examine those aircraft, as any aircraft carrier is only as good as the aircraft that it carries. There are possibly half a dozen aircraft which we could choose to go on the new carriers, including the joint strike fighter, the F18, a version of Eurofighter and perhaps an advanced version of Harrier. Considering the downward spiral in the Government's performance in meeting procurement deadlines, it is a rather unnerving thought that, if the aircraft chosen is not developed in time, the whole carrier project could be in doubt.
The chief of defence procurement has identified 2005 as the deadline for the decision on the carrier-borne aircraft. However, considering the current state of procurement, if an aircraft is chosen by that time, can we really be confident that it will be delivered to coincide with the carriers? We should not forget that 15 of the 25 on-going projects, or 60 per cent. of all procurement programmes, are at least three years overdue. It is therefore possible that future carriers, perhaps designed with joint strike fighters, will face overruns, which means that the carriers will stand idly by with no aircraft to use. Even worse, we may have to redesign the carriers to operate a different type of aircraft. I hope that we never have to answer those questions in a future debate.
I hope that the type 45 destroyer will succeed. With the principal anti-air-missile system, the type 45 will provide defence at sea against anti-ship missiles, and support for troops on the ground. Most importantly, the proposed capability of the type 45 to accommodate vertical launchers that could carry cruise and Tomahawk missiles would provide the fleet with a weapons capacity that would do a great deal to equip the UK to meet the challenges of the future. As I said when intervening on the hon. Member for Chingford and Woodford Green, given the demise of the submarine-launch Tomahawk fleet, I hope that the type 45s will have the capacity to carry that missile.
Recent evidence suggests that all is not well with the type 45 contracts. Vosper Thornycroft is threatening to make 650 workers redundant and withdraw from large-scale warship building in the UK as a result of confusion over the workshare agreement. Will the Minister assure the House that the workshare agreement set out in the alliance heads of agreement remains the basis of contractual negotiations? Will he also assure the House that there will be fair and equal allocation of work between the prime contractors and other partners and subsidiaries?
What is worse than the uncertain regime of smart procurement is procurement delivered against no regime whatever. The Defence Procurement Agency will shortly place an order for a theatrewide area communications network system, which is a sophisticated and essential development to meet the future needs of our Army. On 10 October, I wrote to the Secretary of State for Defence, asking several questions about that project, but he has not yet seen fit to reply. I shall therefore explain the position to the Minister. The provisions of the system have been subject to competition and tender through the DPA's 451 electronics department. Currently, two major organisations, Racal Avionics and Cogent Defence Systems, are in the frame to supply the system.
§ Mr. Keetch
If I am wrong, as the Minister says, I am happy to give way to him. Perhaps he will explain why the Secretary of State has not had the courtesy to reply to my letter of two weeks ago to explain why I am wrong.
§ Mr. Burnett
My hon. Friend has given a cogent list of delays. Is he going to get on to the matter of delays in the construction of landing platform docks?
§ Mr. Keetch
I am grateful to my hon. Friend, but to ensure that other Members have an opportunity to contribute to our debate, I cannot cover the whole range of delays.
I want to return to the important system that I was discussing which will be carried in the rear of a fleet of military cargo vehicles. It appears that the DPA has released the purchasing authority for the provision of the new vehicles, and that contract is worth some £8 million to the companies supplying the electronic hardware. In other words, we are tendering on the hardware, but not the vehicles that will carry it. It has emerged that both possible contractors want to use the same vehicle, the Duro, which is manufactured in a country that is not in the European Union, not in NATO and not even in the United Nations. I am referring to the Swiss company, Bucher-Guyer.
The development of the vehicle was subsidised by the Swiss Government and it is not in service with any other army. Are we going to buy a piece of equipment that will be carried in Swiss trucks, not UK-manufactured vehicles? Why was no UK, NATO or EU supplier asked to tender for the vehicle and why did the Government choose it? Was there any tender competition at all? The British Army has a system generally described as the green fleet, which means that every vehicle must undergo arduous programmes of development and trial. There is benchmarking for reliability in battlefield situations, and the trials cost millions of pounds and can take several years. All the vehicles are fully supported with logistics and spares, are part of an integrated fleet and can be maintained effectively at a level of operational readiness. Vehicles produced by British companies, such as Land Rover, Leyland Daf, Alvis and others, could fulfil the role for which the Duro vehicle is being purchased.
How can the Government justify a potential requirement to support a new, unknown vehicle that is untested, untried and unproven for service in the British Army green fleet and which will be entrusted to carry one of the Army's most important communications? I am compelled to ask that, if has not already done so, the Secretary of State undertake a full and thorough investigation into why that vehicle will be purchased by the British Army, as we do not regard that as smart procurement.
We must ensure that our procurement strategy provides the very best for our armed forces. As far as implementing procurement strategy that is fit for the 21st century is 452 concerned, we believe that smart procurement is a step in the right direction, but a substantial improvement must be made if it is to mean anything at all. Procurement is not getting faster or cheaper and, regarding the standard of delivery and equipment, it is not getting better.
§ Mr. Robert Key (Salisbury)
The hon. Gentleman has made some important points. One problem is that we look at all those programmes, but not at the philosophy of the procurement or acquisition itself. Does the hon. Gentleman think that there is any reason why contractors who make things that go on platforms, but not the platforms themselves, should not be prime contractors? That is an important matter. What does the hon. Gentleman think about partnering as a means of procurement that can exclude competition?
§ Mr. Keetch
I want to ensure that our armed forces have the best equipment. Indeed, some things that have been suggested today may bring that about, as long as they can be seen to provide what they are meant to do. My concern, especially about Duro, is that we are likely to purchase a vehicle that no one else has apart from the Swiss. It was developed with Swiss Government money and there was no way that Land Rover or anyone else could get involved in tendering. Clearly, that should not be the case.
§ Mr. Burnett
Does my hon. Friend agree that the hon. Member for Salisbury (Mr. Key) made a very good point? Direct contracts save money because main contractors will invariably take something out of a sub-contract. Furthermore, and importantly, the degree of monitoring that the main contractor performs on the subcontractor's work is incredibly inefficient and expensive.
§ Mr. Keetch
As always, my hon. Friend makes an important contribution.
We must make sure that the British armed forces are provided with resources to retain their excellent reputation for serving the interests of the UK and the international community of which we are part. It is now up to the-Government to fulfil their part of the bargain and serve the interests of those who work in the armed forces by ensuring that faster, cheaper and better procurement translates from soundbite into positive action. I have asked specific questions tonight, and I had hoped that the Secretary of State would be here to hear them. As he is not, I look forward to the eventual reply of the Under-Secretary.
§ Mr. Alan Campbell (Tynemouth)
I hoped to catch your eye, Mr. Deputy Speaker, to raise some issues about naval procurement, but I now have the opportunity to respond to what the Secretary of State said earlier. I speak as someone who has a constituency interest in the defence and maritime industries, but also as the chair of the north-east maritime and offshore cluster—a role for which I receive no remuneration.
453 I welcome the decision to place the alternative landing ships logistic order with Swan Hunter on Tyneside. It is excellent news for the north-east and a huge boost not only for the river but for the whole region. It is a tribute to the hard work and investment of the owner of Swan Hunter, the management, and of the work force. It is also just reward for the efforts made across the community in the north-east by employers, employees and trade unions—especially the General, Municipal, Boilermakers and Allied Trades Union and the Amalgamated Engineering and Electrical Union—and political representatives from the region, who have campaigned so hard for the orders. I am delighted with the way in which the Government have responded to those calls.
§ Mr. Burnett
I do not want to be churlish, but when was the last time that Swan Hunter built a warship?
§ Mr. Campbell
In the early 1990s. The failure of the previous Government to put work into Swan Hunter and Tyneside led to the collapse of Swan Hunter. It is only due to the faith of the new owner and his investment that Swan Hunter is the success that it is today.
The decision on landing ships, which I welcome, is about value for money. It is in the interests of taxpayers, as it should be, but it is also an act of faith in the north-east by this Labour Government. I say in response to the hon. Member for Torridge and West Devon (Mr. Burnett) that it is an act of faith in the north-east which stands in direct contrast to the active betrayal of Swan Hunter by the Conservative Government.
I see that the shadow Defence Secretary is no longer in his place. He stumbled today in remembering the name of Swan Hunter. He really should not have done so because he was a member of the House when his Government were responsible for killing off Swan Hunter in the first place. Now it falls to the Labour Government to bring military orders back to that yard. However, even as we do so, there is a question mark over future orders because we do not know the effect of the £16 billion of cuts that would be made by—let us hope that it does not happen—a future Conservative Government. Until the Conservatives start to put some figures into the public domain, there must be question marks against such orders.
We are constantly told that the Government will be judged not by their words but by their actions. That is why the ALSL announcement is important. It begins the process of reinvesting in defence shipbuilding on Tyneside after decades of under-investment by the previous Government. It brings the very real prospect that a warship will be built again on Tyneside. That is not merely an economic boost for the region; it is a psychological boost. I welcome it.
I have said from the outset that the work on the roll on/roll off ferries should be done in British yards, and I stand by that today, so I can welcome only in part the announcement today. But if we are honest we will admit that the route chosen for the procurement of the vessels meant that it was likely that, if the decision had been made earlier this year, which could have happened, all the work would have gone abroad. We should reflect on that and on the jobs that will be created at Harland and Wolff. It was a difficult decision for the Government, and I know for a fact that the Secretary of State and the Minister for Defence Procurement have done a great deal within the rules to keep the work in British yards.
454 I am all in favour of looking at new ways of procuring vessels and equipment. After all, we are defenders not only of the nation but of the interests of the taxpayer. When the procurement process begins, the designation of vessels is crucial. It cannot be too difficult to ensure that Ministry of Defence ships, including ferries, are designated as warships. We know that it happens in other countries. By doing so, we could avoid many of the problems that we have faced.
Ministry of Defence orders are an important part of the future of shipbuilding in the north-east. They are a valuable way of boosting public spending in the region and creating employment both directly and indirectly. They are also a way of ensuring quality and value for money, not only for taxpayers but for service personnel. However, MOD orders cannot be a cushion to protect British yards from facing up to some hard questions about competition with Europe. I accept that there is a case for looking at hidden subsidies for overseas yards and I am sure that the MOD takes it seriously, but surely subsidies cannot account for the differences in competitiveness between some of the yards in Europe and some of our yards.
We shall be competitive only if we are given the opportunity to compete for quality orders. Only with continuity of orders can we move towards economies of scale. The Government are committed to building about 30 warships in the next 15 to 20 years. It is important that, where possible, orders are brought forward to create a firmer and more secure context for investment and continuity of employment, especially for apprentices.
I welcome the award of the contracts to Swan Hunter. We are making progress in the region. Companies and agencies are working together increasingly in the way that I called for in a debate on 4 April. The clusters that are operating on the Tyne are the way forward, as is greater co-operation between yards to maximise for the whole of the United Kingdom the benefits of the orders that we receive. We also need a Government who are committed, as this Government are, to backing our efforts.
I extend to the Secretary of State an invitation to visit Tyneside in the near future to see the excellent work that we are doing. There is a long way to go to secure shipbuilding and ship repair on Tyneside, but the award of the contracts today is a welcome boost for that process, and I am grateful for it.
§ Mr. Peter Viggers (Gosport)
The hon. Member for Tynemouth (Mr. Campbell) spoke up for his constituency and constituency interests—quite right, too, and well spoken, if I may say so. We all speak for our constituency interests. I have on occasions spoken up for my constituency company, Basys Technology, which operates in defence procurement and for another local firm, Vosper Thornycroft. However, on this occasion, I want to look at defence procurement on a top-down rather than bottom-up basis.
Defence procurement is an important issue—an issue of life or death for the soldier, sailor or airman, or even for a nation. It is one of the oldest issues that nations have had to face. It goes back to the creation of gunpowder and right through to the creation of nuclear weapons. It goes right back to the time of the Trojan horse and through to the Enigma code breaker. It is a crucial issue. It is vital 455 that we should give our forces a military edge. After 50 years of tranquillity in Great Britain, it is important that we should not relax. I point out that that is 50 years of tranquillity in Great Britain, not the United Kingdom, because Northern Ireland has been disrupted by violence in that period.
I believe that the Ministry of Defence is working on the basis that there will be no war without three years' warning. That did not apply in the case of Kosovo. We were within a few days of mobilising reserves and going into what might have been an extremely bloody ground campaign. It is crucial that we should lift our eyes above parochial and constituency issues and ensure that we give our troops what it is our duty to give them—the best possible equipment.
There are enormous complications in defence procurement. First, there is the size of the budgets. We are dealing with numbers that have so many noughts on the end that it is difficult for many people to contemplate the size of the budgets.
Then there is the complexity of the issues. To put it most simply, a naval gun costs only a fraction of the through-life cost of the programme. The shells used by that gun will cost much more than the gun itself. We have to concentrate on through-life costs rather than on initial procurement costs.
Another complicating factor is multinationality, and that applies whether we are co-operating with the United States or with our European allies. It is an extra political complication. I welcome the six-nation framework that was signed in July 1998, a letter of intent that was intended to bring six nations together to co-operate more closely and to harmonise their defence procurement.
The final point of complication is the transience of Ministers, decision makers and armed forces personnel. Armed forces personnel are experts in their own field, but they serve in a particular posting in Whitehall to deal with a defence procurement matter for probably two and a half years or so. None of the five Defence Ministers has any defence experience and only one of them has been in post since May 1997. All the rest are transients and have had to try to pick up the threads of enormously complicated issues in a comparatively short time. My message is that we should try to keep defence procurement simple, clear and honest.
Delay is an enemy and the best is the enemy of the good. The people involved in defence procurement try to put extra knobs, whistles and bells on different equipment. They find it difficult to do what the manufacturers of television sets, radios or other mass-produced items have to do, which is to freeze a design and produce a large number. There is a tendency among Ministry of Defence planners to keep evolving the design, which means that it becomes more complicated and expensive. That results in delay after delay.
Why do we need to he concerned about defence procurement? In the NATO Parliamentary Assembly and at other international gatherings where people discuss defence, a series of numbers has become accepted—100, 60 and 15. If the United States puts in 100 per cent. of the effort, all the European NATO countries combined put in 60 per cent. of the effort. However, the European countries receive only 15 per cent. of the benefit from 456 that effort. In other words, all that the European continental NATO allies receive is 15 per cent. of the effect of the United States defence procurement budget—15 per cent. of the bangs for your bucks that the Americans get. That is a deeply serious issue, not only because of the imbalance that is created, but because of the nature of American society. It is disturbing that only about 8 per cent. of United States citizens have passports and have ever travelled abroad. I understand that George W. Bush has travelled abroad only three times, despite the fact that his father was ambassador to China and to the United Nations and later the head of the Central Intelligence Agency. However, that is better than Ronald Reagan who had travelled abroad only once before he was elected President, and that was to Taiwan. The United States is a very insular country. Mentions of foreign policy issues are very rare in the Gore-Bush election debates. It is only after an individual is elected President that he starts to take an interest in foreign affairs.
We in this country are used to the standard schoolroom projection of the world—the Mercator projection with the United Kingdom in the middle and the other countries spread out on both sides. In the United States, north and south America are in the middle of the map, and we must remember that a third of the population of the United States—those in California and on the west coast—look to the west. They do not necessarily look to Europe primarily; they look west to Japan, China, Korea, Indonesia and the Philippines. The United States has been an amazingly staunch ally and I pay it tribute for that. No one could be a finer ally of Europe. However, it would be a mistake to continue to take that fact for granted. We must put more effort into defence procurement and ensure that European defences are stronger, and we must do that without in any way weakening NATO.
A further contributory strand in such thinking about the United States is that it would be a mistake to imagine that the most powerful country in the world will sit by supinely and watch the actions of rogue states—or, to be more accurate, rogue Governments—in countries such as Iran, Iraq, Libya and North Korea without seeking to deploy national missile defence. The planned earliest date for that deployment is 2005, and we will delude ourselves if we think that the Americans will not plan to deploy it. That will inevitably dislocate and disturb the equanimity of NATO. Stresses and strains will occur, and that is another reason to set up a European rapid intervention force and have a European security and defence identity. However, we must create them without disturbing the strong links within NATO.
NATO is expanding. We must ensure that those countries that join NATO have the opportunity to equip themselves consistently with our equipment. We should not forget that, as NATO expands, the sphere of influence of the former Soviet Union will necessarily diminish. Russia and its allies had a huge military-industrial combine and the production of military equipment was an important part of the Russian economy. If Russia sees NATO expanding, it will effectively take markets away from the Russian military-industrial combine. We should be broadminded enough not to rule out the possibility that, one day, we will procure defence equipment from former Soviet Union countries in exactly the same way as we are contemplating the purchase of defence equipment from 457 Israel and South Africa. We should bear such issues in mind when we consider our defence procurement budgets.
On the scrutiny of defence procurement, there is an informed body of opinion among academics. The outstanding Royal United Services Institute is based just down the road from the House, but I want to pay tribute to the work of the Select Committee on Defence, of which I am a member. I admit that, when I began to serve on the Committee, I was a former Minister and thought that it and the other Select Committees were a boil on the backside of the world. I did not understand their relevance. It has taken me a long time to realise how valuable a Select Committee can be.
Select Committees can call witnesses before them and ask for expert papers. They have superb advisers and they can ask informed questions. They can also ask dumb questions, which are sometimes more helpful than the well-informed ones. The reports of the Select Committee on Defence are the most authoritative source of information on a range of defence issues. I pay tribute to the Chairman of the Committee, the hon. Member for Walsall, South (Mr. George)—I almost called him my hon. Friend—and the Committee's other members for the valuable work that they do.
As with other procurement issues on which we have joined the United States or purchased equipment directly from the United States, it is remarkable how trouble free the nuclear deterrent issue has been. We need air superiority in high-intensity fighting capacity and I am a known unenthusiast for the Typhoon Eurofighter, which has a range of only 1,400 km compared with the range of more than 4,000 km of the Boeing 15E and the Sukhoi 35. The aerial dexterity of the Sukhoi and Mig aircraft is notable at air shows and makes the Typhoon look pretty pedestrian and lumbering. However, its electronics are extremely good, so it is a good aircraft.
§ Mr. Viggers
I am sorry, but I cannot. My speech is subject to a strict time limit, so I hope that my right hon. Friend will allow me to continue. I am watching the clock with care.
I am convinced that the decision to scrap the Mauser cannon in the Eurofighter is wrong. I speak as a former Royal Air Force pilot and as the commander of a guided missile squadron in the Territorial Army. I have spoken to many people in the Air Force about the Government's decision to scrap the Mauser cannon after the first 55 batch of Typhoons. It is interesting that every single pilot below the rank of group captain to whom I have spoken—I have spoken to many—said that it was madness to scrap the gun. Every single officer above the rank of group captain to whom I have spoken sucked their lips, thought for a moment, remembered their staff and defence college courses and loyalty to the body public, and said, "There are very powerful arguments for doing so."
We are told that the reasons why the gun was scrapped were nothing to do with money and that it was just not needed. In that case, why do the Rafale and Gripen fighters and all other Eurofighters procured by our allies—even, for goodness' sake, the F22 American 458 stealth fighter—have cannons? Why have we decided that we do not need them? I have asked those who were involved in events in Sierra Leone whether it would have been helpful to have been able to fly a noisy aeroplane over the country and perhaps fire away a few rounds from a cannon. They said that that would have been absolutely invaluable. I am convinced that the decision is a mistake.
Moving to ship orders, I say in passing that when I saw the Secretary of State for Defence preening himself at the Dispatch Box, describing his wonderful plans for maritime purchase, I recalled that this Government have ordered no warships at all since May 1997. The problem is that, as in so many other areas, the Government are all mouth and no performance. We are at risk of encountering the same problem with heavy airlift capacity, as there might be difficulty nailing down the British part of the purchase of 25 A400M aircraft.
I think that I have time to touch on one other point. I see that the Under-Secretary of State for Defence is in his place. He wrote to me this week to say that 9,144 men in the Army are medically downgraded, and have been so for more than four weeks. That is almost 10 per cent. of the Army, and I find it incredible. The hon. Gentleman knows why that is so. It is because he is closing the only military hospital, which is in my constituency. The move to Birmingham will not work and, until he confirms that the Haslar hospital will continue as a defence medical services hospital also serving the civilian population, he will not have the strength of doctors, nurses and other staff that is needed in such services.
The way not to handle defence procurement is that displayed by Baroness Symons. She wrote about the Bowman programme—a programme in complete collapse—on 25 July:I am writing to inform you of a major step forward on the Bowman communications programmeand then she scrapped it. That is exactly the reverse of what I think we should be doing. We need honesty and openness in defence procurement.
§ 5.2 pm
§ Laura Moffatt (Crawley)
I, too, will attempt to be brief. It is a pleasure to follow the hon. Member for Gosport (Mr. Viggers), who had some interesting insights into defence issues.
It is easy to realise from the feelings expressed earlier on the Floor of the House how incredibly important equipment issues have become to us, not only for the sake of our constituents but because we so desperately want to ensure that our very best resource—people in the Armed Forces—is given the very best equipment at the best price. That is why we become so animated when such issues are raised. We as Members of Parliament, and especially the Government, shoulder a huge responsibility to ensure that we get such issues right. It is very important that we secure modern, usable equipment that suits our armed forces.
My first word of warning to everybody in the defence industry and the armed forces who might be listening to the debate is that when they are promised great cuts in taxation at the election, they should think very carefully which Government will truly be interested in ensuring that our armed forces are properly equipped. Defence cuts are such an easy hit when times become hard, which I suspect they would for any future Government.
459 It is important that we think about the procurements of the past and remember that there have been some enormous mistakes. I shall not cite a huge list; that would be a silly waste of time. We have heard hon. Members eloquently pointing out how important some procurement is to their constituents. I should like to relay to the House my experience and why I believe it is so important that we get procurement right.
Getting procurement right is particularly important to those in Kosovo and Macedonia. Being with the men and women on the ground who are doing the job on our behalf made me realise that their having to use a mobile phone during their working hours because we do not provide them with a proper radio station is wrong, and should not be part of our requirement. I hope that we can now see a way forward, especially given the very painful experience of re-tendering for the Bowman programme. Re-tendering was right—and I say that even though one company in my constituency was heavily involved in it. It was right to think about the future of that project.
I suspect that my next point will preclude my receiving an invitation to go to Washington with the Defence Committee. Our men and women serving on the ground with other forces throughout the world say readily and happily that the Americans have all the gear and no idea. That is no excuse for us not to ensure that our forces have proper equipment. It is important in these debates to remember not just the people on the front line but those in everyday jobs.
On a recent Select Committee visit to the Falkland Islands, we were transported in a very out-of-date Tristar aircraft that regularly breaks down and disappoints those in the armed forces who are waiting to get home after six months away from their families. That is an example of an incredibly expensive and daft way in which to procure travel. I sincerely hope that the Government will consider that issue. It may not be the sexy front-line stuff about which everyone has talked today, but it is very important to our armed forces that we move them around the country and the world properly, efficiently and cost-effectively.
I have some major concerns about delivery. To return to the Bowman issue, we must ensure that once we have started, we deliver on time. I understand that we have brought the project back into line, but I want to ensure that the in-service date of 2003–04 is secure and that our armed forces can rely on us to deliver exactly what they need when they need it.
Everybody wants to extol the virtues of parts of the defence industry on their own patch. I shall take a slightly different view and speak about the value of defence jobs in the United Kingdom. I have the great good fortune to live in Crawley, and Gatwick airport is within my constituency. Jobs in the area are largely directed towards the service industries. Without the defence industries in my town, there would be few jobs to entice university graduates back into the town to work on sophisticated communications systems. When we discuss procurement, we should remember how important such jobs are to our constituencies.
The European defence industry is undergoing enormous change. I believe that it is change for the better. We on the Defence Committee are watching matters closely and looking into the way in which we do business. A fine 460 example of that was the quadripartite meetings of Select Committees, which together examined defence exports. That was a huge success and resulted in an excellent report.
The Government have done a superb job of ensuring that we know where exports are going. We could do more and produce more detailed reports. We have made a good start and should move towards greater transparency about the end users of the United Kingdom's defence exports. We are leading by example.
The use of new technologies in defence procurement delivers another agenda that is extremely important to the Government—equal opportunities. I see my hon. Friend the Member for Walsall, South (Mr. George), the Chairman of the Defence Committee, looking at me as if to say, "You managed to get that in again!" New, lighter technologies allow men and women to serve equally in all roles in our armed forces. Women do not want to be given an advantage, but lighter materials and lighter equipment provide a level playing field, and neither men nor women will have to carry heavy packs in future.
The systems are in place for us to move forward, and money is being made available for our armed forces. People should know that the Government are committed to the armed forces and will continue to support them, and the Defence Committee will continue to watch the Government with a keen eye.
§ Mr. Michael Jack (Fylde)
I am grateful for the opportunity to speak in this important debate. I congratulate the hon. Member for Crawley (Laura Moffatt) on her emphasis on people in the defence industry. As a constituency Member of Parliament, I represent the interests of those who work at BAE Systems at Warton—some 6,000 people. They are part of the military aircraft division, which employs almost 13,000 people, who provide a vital backbone to Lancashire's economy.
There are 40,000 people in the north-west of England who rely on the aerospace industry, whose well-being depends largely on military orders, although of course civil orders are important as well. I mention those figures to put into context the number of people who are reliant on our success in that industry.
I have referred to large numbers of people, but I pay tribute to one person whom I used to follow in such debates: our former colleague Michael Colvin, the Member for Romsey. In a way, I feel his presence on the Bench in front of me, from which he used to make extremely knowledgeable contributions to defence debates. I am sorry that he is not present, but I hope that hon. Members will appreciate that, as far as I am concerned, he is here in spirit. The clarity of his contributions will not be forgotten.
The elements of strong defence are, I believe, a clear strategy, excellent people, the best kit and a budget to match. Those are the benchmarks by which one judges the success or otherwise of a procurement exercise. Clear strategy is, perhaps, a subject for debate next week, but if there is one element of the strategic demands on our forces which has become abundantly clear in recent times, it is the need for flexibility.
That has been acknowledged in references to the A400M. I am delighted that the Government have come to a conclusion on that. It was a difficult issue, but the 461 right decision has been made. Similarly, the Government made the right decision on the Meteor missile system. It is right that from the Opposition Benches we say thank you when good decisions have been made. We all recognise the need for quality air power and the importance of flexibility.
Future major procurement projects, whether transatlantic or within Europe, will succeed only through co-operation. That is a challenge, because it entails not just resolving some of the difficult political debates, to which my hon. Friend the Member for Chingford and Woodford Green (Mr. Duncan Smith) alluded in his remarks from the Front Bench, but recognising one of the fundamental changes that is now occurring in the world of defence—the change in the industrial mix.
The United Kingdom is ideally placed for that. BAE Systems, with the takeover of Marconi and the Sanders division of Lockheed Martin, now has a major footprint in the United States and on this side of the Atlantic. The alliances and strategies, and companies working together, are a key ingredient of our future success in defence.
The debate is taking place because both sides of the House expressed concern that once again BAE Systems had had to reduce the number of people whom it employed. Thankfully, the reduction was implemented by natural wastage but, sadly, there are now fewer employees. Rationalisation was taking place in the organisation of the defence industry, and that was recognised. There was a quest for efficiency by that means to re-equip the company with the right skills and the right people for the future. The company recognised the demands that were to be made of it.
One of the issues that the work force find difficult to reconcile is that they know that a company has a £35 billion order book and ask, "Why is the company dispensing with our services?" Against that background, are the Government minded to acknowledge the importance of sustaining work and the importance to the north-west of England of the aerospace industry?
I understand that the Minister has many questions to answer, but perhaps in future the Secretary of State could try in a speech to put into context, for the benefit of the work force, how his Department sees the industrial backbone of the defence industry in the north-west. Does it understand why we become excited about big projects? We all know that they represent a great deal of work for our constituents. That is why we become excited. We should be excited because we are talking about the best kit for our armed forces. That guides our thinking.
If we are honest, we are looking after our constituents' interests and the numbers of jobs that big projects represent. Some words of comfort from the Government on that score would be extremely reassuring to the many hundreds of thousands of people who are somewhat confused because they are personally affected by the changed nature of the way in which large multinational companies operate, both in Europe and across the north Atlantic.
We shall see co-operation in future, perhaps because of the factors that underlie some of the projects that are now in the pipeline. The Eurofighter Typhoon has been mentioned. Co-operation with our partners is important, and so is the second strand in UK defence policy. We need strong UK-based companies for a key strategic reason.
462 In the Gulf conflict, no Tornado or Jaguar would have flown properly equipped if short-term modifications could not have been made to those aircraft. Whether we talk of ships, aircraft or land-based equipment, we must sustain our industrial base. If we do not, and if the chips are down and there is a real conflict, we shall not be able to modify our equipment to cope with strategic demands. That will not be possible if we do not have skilled design teams and skilled manufacturers, down to the humble fitter. Again, I seek some comfort from the Government Front Bench. I hope that the view that I have outlined is in the Government's mind when they make strategic decisions.
Much has been made of so-called smart procurement. I think that it is now called acquisitive procurement. I read an interesting article in a magazine published by the Royal United Services Institute, which was written by Michael Bell. He poses some interesting questions, which are a challenge to us for the future. His first and key point is to draw our attention to the fact that in procurement terms there are few big projects, and there is an incredible amount of competition for them. There is tremendous commercial risk attached to bidding to get them—and to the risk that the company will not get them.
In that scenario, Michael Bell questioned whether a winner-takes-all approach is the best way to run procurement projects. Even within the context of smart procurement, competition still underpins the way in which decisions are made.
Mr. Bell writes:companies are prepared to take more risk than is prudent because the alternative of losing is so dire.In the same article, Sir Robert Walmsley, chief executive of the Defence Procurement Agency, is quoted. His agency was invited to comment on the delays in the maritime patrol aircraft programme, and he says:It has taught me a lesson about competitions that are regarded as "must wins", i.e. the company decides they just have to win and perhaps you get into a position where they almost want it too much because the consequences of the contract getting into trouble several years downstream, ghastly as they are, are far less ghastly than not getting the contract and wondering what you are going to do tomorrow.Now is not the time for a detailed discussion of Nimrod, but we should heed those wise words and think again about our procurement philosophy.
Michael Bell raises another valid point when he says of smart procurement:It wholly failed to address the points about the influence of competition policy on procurement failures presented by industry to the strategic defence review.Industry will embrace smart procurement because working together makes sense, but I have drawn attention to some small cameos that should persuade us to reflect carefully on the results of the policy.
One of the key ingredients in the mixture is a strong budget. The £1.5 billion cuts in the budget for the RAF are not settled, so perhaps the Minister will comment on that issue when he winds up the debate. Can he unequivocally guarantee that the Government currently have no intention either of reducing the number of Eurofighter Typhoons that they procure, or of amending the timetable for that procurement?
The joint strike fighter programme is vital to the development of our aerospace industry, but there is a bill to be met. I understand that if we are to participate in the 463 process over the next four years, the Government have to commit $1.6 billion; if they do not, we shall be unable to sit at the table with other partners and, more important, we will not have the leverage needed to have access to the full range of technologies involved in the programme. I hope that the Minister can offer an assurance that the Government stand four-square behind British participation in the project and that the money to keep us at the top table will be made available.
I should be grateful for clarification of the position on the future offensive air system, which has not yet been mentioned in the debate. I understand that it has the potential to serve as seedcorn for new technologies and as the source of the replacement for the Tornado, whether that is a manned or unmanned aircraft. The project has become enmeshed in some of the thinking about the joint strike fighter and about modifying and upgrading the Eurofighter Typhoon, perhaps for a marine application. How do the Government perceive the future offensive air system in the context of its relationship to the joint strike fighter and modifications to existing equipment?
Will the Minister comment on the Government's efforts to settle with the Government of India the question of their procurement of the successful Hawk aircraft? Finally, will he explain the problem with the adoption of the thermal imaging and laser designation system on the Tornado GR4? In a letter dated 27 April, the Minister for the Armed Forces tried to tell me that the nature of some of the problems was technological, but, in a letter from the MOD dated 8 October, I was told that the problems emerged during trials run by the Defence Evaluation and Research Agency which uncovereda number of unforeseen difficulties with the TIALD system.Considering how long the Tornado mid-life update was in procurement, I find it distressing that I should have received two diametrically opposed opinions from the MOD on a problem that should have been solved before a single GR4 was accepted back into service. However, I am grateful to the Minister for his tribute to BAE Systems for the work that it has done in sorting that out.
Finally, on the theme of personnel, attracting people into an engineering environment is vital to the procurement industry, but attracting people into the RAF is equally important. As president of 2468 squadron of the Air Cadet Force in my constituency I see the poor-quality equipment that those young cadets who are keen on defence have to use on the two nights a week and at the weekends when they come along to learn their skills. Would it not be right to invest a little more in more up-to-date equipment and premises for those young people? They are the seedcorn of our aerospace industry and the RAF and they deserve a better deal.
§ Ms Dari Taylor (Stockton, South)
I warmly welcome my right hon. Friend the Secretary of State's announcement to the House this afternoon. Placing additional orders for strategic kit will support effective operability and defence capability in the theatre of operation. I am more than delighted to hear that two of the four ALSLs, the amphibious landing ships, will be built on the Tyne. It gives me real pleasure.
464 I worked on the Tyne when the Conservative Government decided not to award contracts to Swan Hunter. My union, the General, Municipal, Boilermakers and Allied Trades Union, which represented more than 3,500 people, was destroyed by that. It was seen as a deliberately vindictive attempt to close down a Labour community. That Labour community is most certainly still there and it will be joyful tonight. My constituency is the Tees and the sister company to Swan Hunter is Herema on the Tees. I hope that, with clustering and an emphasis on community and on widening capacity, my company on the Tees will also benefit from the order. I know for certain that Corns, which makes the best steel in the world, will ensure that it tenders to supply the steel for those ships.
The House is seeing the reality of the strategic defence review, with billions of pounds being spent on modernising the armed forces to ensure that they are equipped for the post-cold war period, with sufficient flexibility and mobility for rapid deployment. That is something of which to be proud, and I am more than proud to say that it is my Government who are doing it.
I have watched our armed forces with care, and people know that my interest is a keen one. I have watched them with care in the Balkans, I have had the pleasure of meeting our armed forces in Bosnia and I recently watched their actions in Kosovo. More and more, I have come to the conclusion that, because they were so clearly denied the equipment that they needed by the previous Government, we now rely heavily on the capabilities of the people who are the backbone of the armed forces.
Having visited our armed forces far too many times to be under any illusion about what happened under the Conservative Government, I also came to the conclusion that that Government left our armed forces seriously frustrated and demoralised, ill-equipped for combat and unfocused with regard to their role in the world, and they left an MOD less, rather than more, capable of spending public money effectively. Therefore, I am more than pleased to be standing here today, taking part in a procurement debate in which my Government are saying how and in what way they will facilitate an effective armed force for tomorrow.
The reality of my statements is borne out in the report of the Select Committee on Defence on the lessons of Kosovo. My hon. Friend the Member for Walsall, South (Mr. George) and his Committee are to be congratulated on their thorough report.
The Select Committee report concludes that, in the theatre of operations, the British Army was left with incompatible information systems across NATO. That is a telling statement. The Army was using insecure and obsolete United Kingdom tactical communications. Supreme Headquarters Allied Powers Europe told the Committee thatso far as interception of communications was concerned, the Yugoslays had us cold.What an indictment of the Conservative party! The report states that there was a lack of all-weather precision-bombing capability, and that there was a continuing deficit in United Kingdom and European strategic lift capabilities.
I contend that the various serious defects in the United Kingdom's capability are down to the previous Government's apparent indifference to the requirements 465 of the armed forces. I believe that the Conservative Government used the peace premium as a convenient excuse to neglect and cut the armed forces. To believe that it is possible to put right the ills of years of neglect in the short time that we have been in government is to believe in miracles. From the Opposition's actions and their speeches today, they clearly believe in miracles. Indeed, they believe blindly in miracles.
The serious underfunding of the British armed forces for many years is being remedied at last. Perhaps the process is too slow even for me, and I am confident, challenging and robust about the matter. However, the process is happening. Billions of pounds are being spent appropriately and deservedly on an excellent British Army.
The Government are laying the foundations for a long-term vision of excellence in the field of operation, in the constructs of partnership for peace with NATO, and in the development of an EU defence initiative. My constituents in Stockton, South and on the Tees will benefit from that vision. It does not simply mean work, but a sense of pride and satisfaction in the fact that our armed forces have a tomorrow that they certainly deserve.
§ Mr. David Chidgey (Eastleigh)
The hon. Member for Stockton, South (Ms Taylor) made an interesting and impassioned contribution as she expressed her joy and delight at the good fortune of her constituency. Many hon. Members who are here today have constituency interests. I wish I could speak with the same joy and passion because the defence industry is vital to the economy of Hampshire. [Interruption.] The Under-Secretary seems to be making an encouraging remark, which is always good to hear. However, perhaps he will not be so enthusiastic when he hears what I have to say.
Hampshire has the most defence-dependent economy of all the shire counties in the country. I have reminded hon. Members on several occasions that more than 300 firms are employed by the defence industry to a significant extent in Hampshire, especially around Eastleigh and Southampton. I am sure that the hon. Member for Southampton, Test (Dr. Whitehead) wishes to make similar points.
I want to concentrate on only two matters this afternoon to give other hon. Members an opportunity to contribute. I shall speak about two major defence procurement projects, both of which other hon. Members have mentioned in passing or in greater detail. They are the Bowman project, which is now deceased, and the type 45 destroyer programme, which has yet to leave the cradle.
The Secretary of State said that we should learn from our mistakes. There is a lot to be learned from what happened to Bowman. I have a specific interest in the Bowman project because the company that was responsible for the procurement was based in my constituency. It no longer exists. Bowman was supposed to create for our armed forces an integrated communications system, which would have been a world beater. It would have equipped anything from a Land Rover to an aircraft carrier with the most highly sophisticated, most advanced communications system in the world. It would have given massive advantages to our armed forces and it had huge export potential. It could have earned many billions of pounds for the UK economy. 466 The project was years late in being commissioned by the MOD—for which I do not blame the present Government—leaving our armed forces struggling with out-of-date and archaic equipment known as the Clansman system, which was little more advanced, some say, than the old VALs. In addition, the contractors appointed to undertake the project had suffered delay after delay while the MOD kept changing its mind and specifications.
Hon. Members will know that the National Audit Office was highly critical of the institutional delays built into the MOD project management at the time which caused the delays to the Bowman project. I visited the main contractor, Archer Communications, in my constituency many times to see the problems and difficulties it faced in the three years until the project was cancelled. I will never forget seeing a wall chart in the managing director's office which set out how management and staff had to deal with the MOD in the project. The wall chart gave the project hierarchy of the various departments, sections and specialists within the MOD involved in the project. More than 100 people were involved in different phases of the management process of the project. They were all part of the decision chain; or, should I say. the indecision chain.
It was impossible for the contractor to get timely answers to queries and decisions on developments. There seemed to be a complete ignorance of the basic concept that, for a contractor, time is money. In spite of the efforts of the contractor, the outcome was that the project was further delayed, the cost estimates escalated and—perhaps to cover their embarrassment—the Government cancelled the project; or, should we say, redefined it. The net result was that £200 million of taxpayers' money was lost and will not be recovered in the redevelopment of the project. I agree with the NAO that that money was wasted. Some 650 highly skilled and advanced engineering jobs were lost to my constituency and, as a result, a centre of excellence was destroyed.
In correspondence with me, the Government—through the Minister for Defence Procurement—have said that if smart procurement had been in place, these pitfalls would have been avoided and the problem would not have arisen. Smart procurement is now in place, so presumably it will not arise again on other projects. That is why I wish to refer to the type 45 destroyer procurement programme.
The Government announced in July that, under their procurement strategy, BAE Systems would be the prime contractor. Vosper Thornycroft and BAE Marine would be design and construction contractors for the first three vessels. The Secretary of State said at the time that the Government's approach in the programme would ensure that experience in the type 45 construction was spread between BAE Systems, BAE Marine and Vosper Thornycroft, assisting future competition for follow-on ships.
The key point is that Vosper Thornycroft and BAE Marine were to participate equally. It was a cornerstone of the Government's strategy to maintain competition in warship building in the UK. However, to achieve that, there must be fair and equal allocation of work on the type 45, particularly in the early part of the programme—the first three ships.
467 It is important to remember that the prime contractor gave the Secretary of State for Trade and Industry an undertaking as a condition of its merger, or takeover, with Marconi. The undertaking was not to discriminate in favour of its own subsidiaries when tendering as prime contractor. The Government's procurement strategy should be accepted as overriding individual companies' commercial aspirations.
There are real concerns at VT that BAE Systems is seeking to move away from equal work sharing on the type 45. Contract negotiations are being prolonged and agreements on prices are being revisited and queried time and again, all adding to delays that may crucially affect VT's continued participation in the project.
VT has acknowledged that it has a short-term gap in production, and as a result, 650 shipyard workers have been given predictive redundancy notices, which will start to take effect in January. The type 45 project is supposed to be ordered by the end of this year. Those 650 skilled craftsmen are more than half the work force. If the redundancies go ahead, the VT shipbuilding division could become unviable.
If the contract is delayed, VT will be unable to keep that essential work force intact. It will be unable to justify investment that it needs to make to meet the targets in the type 45 production programme, and it could well decide to withdraw from warship construction altogether. If, because of the stumbling blocks, delays and indecision, and because its work force has been stripped, it withdraws to concentrate on its other wide and successful ventures in engineering, production, manufacturing and training, the Government's strategy for retaining competition in the warship building industry will be in shreds.
Government Members may wish to reflect on the wider, long-term effects. There are currently about 4,500 skilled craftsmen in the warship building industry. At the peak of the Government's programme for warship building, we will need 9,000. If VT were to withdraw from shipbuilding, we would lose more than a quarter of our existing skills base and would be going backwards rather than forwards. History shows that when such skilled people leave shipbuilding, they do not come back, as there is great demand for their skills in other industries. We could be taking a highly retrograde step, when we need to build up the skills base in the shipbuilding industry for the over-30 ships programme.
The Government must maintain competition in the UK warship building industry. They must ensure that the type 45 destroyer procurement strategy is adhered to by all the parties. They must ensure that companies such as VT receive fair and equal allocation of work, especially for the first three type 45 destroyers. I would hope that, by doing that, the Government can ensure that the 650 jobs at VT—many of them filled by people from Eastleigh and most of them requiring skilled craftsmen—are not lost to the industry. That is how the Government can demonstrate to me and my constituents that they are committed to smart procurement.
§ Mr. Stephen Hepburn (Jarrow)
As a member of the Select Committee on Defence, it was my intention all along to speak in this debate, as the Committee has 468 devoted a great deal of effort to procurement issues, and specifically to the lessons learned from recent engagements by our armed forces throughout the world, but the announcements made by my right hon. Friend the Secretary of State give me an ideal opportunity to comment on his procurement decisions and how they affect the area that I represent in the north-east.
I extend the warmest possible welcome to the decision to award the contract to build the alternative landing ships to Swan Hunter on the Tyne. It is good news for the armed forces because, as my right hon. Friend said, the current provision is over 30 years old and in desperate need of replacement, but it is especially good for the workers on Tyneside and those in my constituency who will benefit directly from the work in that yard.
The order will create about 2,000 jobs on Tyneside. Workers who are at present scattered all over the world, not just the United Kingdom, will get the opportunity to come back and work in their home town. Moreover, more than 500 extra jobs will be created in the external economy, thanks to the economic activity in the area. That is great news.
Probably more important than any other factor, however, is the creation at the Swan Hunter yard of 100 apprenticeships. Skilled workers on the Tyne average 50 years of age, and the figure is rising, so those apprenticeships are crucial. The fact that the average age today is 50 does not mean that it will be 51 next year: the cyclical basis of the industry means that the average will be 53 in a year's time.
The decision announced by my right hon. Friend the Secretary of State today is crucial. It will stabilise the shipbuilding and repair industry on the Tyne, and it will pave the way for additional Ministry of Defence contracts—possibly for the manufacture of aircraft carriers—in the future. The order is therefore excellent news for Tyneside.
However, it would be wrong of me not to voice my concern at my right hon. Friend's decision about the ro-ro contracts. I have had meetings with my right hon. Friend about them, and I have also mentioned the issue twice in debates in this House. I have also asked a parliamentary question on the matter. No explanation that I have been given of why the private finance option was taken has convinced me that the decision would be helpful to British industry.
I welcome the fact that part of the order is going to Belfast. The creation of 500 extra jobs there is good news for the area's economic viability and for the peace process. Many of my colleagues who work in the north-east shipyards also work in Belfast, where they have made friends for life with their co-workers in the industry. Yet the decision about the four remaining ro-ros should be questioned. The industry in the UK does not share a level playing field with that on the continent. People who work abroad will confirm that, as will business leaders and trade union leaders.
To place a multi-million pound order, and the years of work involved in it, with a European contractor, at the expense of workers on the Tyne, the Mersey, the Clyde and the south coast is indefensible. I would love to know what other European country would do that—I do not believe that any would.
The order for the four ro-ro vessels is going to Germany, but is my right hon. Friend aware that the bulk of the work will probably be done in Poland, where there 469 is a cheap labour regime? To understand how firms in Poland undercut British industry, one has only to look at the contract that is being proposed.
There should be an investigation across the political spectrum into initiatives that have been funded by means of the PFI. Is it in the taxpayer's interest to export the jobs involved in the order abroad? I know that my right hon. Friend was under intense pressure from civil servants, but recent developments have taught us that they are not always correct.
My hon. Friend the Member for Walsall, South (Mr. George), who is Chairman of the Defence Committee, said earlier that the Committee was told in evidence from the Ministry of Defence that the ro-ro ships would not be classed as warships. Those ships will operate in war zones, and it does not take much imagination to understand that vessels working in areas of conflict should be designated as warships. I believe that the advice given to my right hon. Friend the Secretary of State was wrong.
My right hon. Friend has confirmed that the ro-ro vessels will sail under a foreign flag—except in times of conflict. I am led to believe that the consortiums building the other vessels gave a guarantee that the crews on those ships would be British and would sail under the British flag, and that they would belong to the RMT union. Those are the options for Glasgow, Tyneside and Merseyside.
It is acceptable in peacetime that the vessels should be able to work around the world and under foreign flags, with their foreign crews earning their wages for being involved in fruitful employment. However, in times of war, when it gets dangerous, British lads will have to crew the ships. If it is right for them to work when it is dangerous, it should be right for them in times of peace to make money for themselves and their families.
This policy flies in the face of our maritime policy. Under the leadership of the Deputy Prime Minister, a tonnage tax was introduced that was linked to training and employment, and the employment of British crews under a United Kingdom flag. Flying under a foreign flag goes against that policy.
I appeal to the Minister to scrap the whole thing. The Government should go back to the drawing board and come up with a design that can be classed as a warship. No one is saying that the order should not be awarded to Belfast, the south coast or Tyneside—as long as it is awarded to a British yard so that we can get the benefit.
There are examples: the replacement for the Atlantic Conveyor, which was sunk in the Falklands, was built at Swan Hunter and paid for by public money. It was given to P&O, but was always at the call of the British military for use in times of conflict.
Notwithstanding that, I do not want one daft decision on ro-ros to overshadow today's great announcement for Tyneside as far as jobs are concerned. There is no doubt that the order for Swan Hunter is good for Tyneside. It stabilises the industry, gives the north-east economy a shot in the arm and sends the message that Tyneside has a future in shipbuilding and ship repair. However, I ask the Secretary of State to think again about ro-ros.
§ Dr. Alan Whitehead (Southampton, Test)
I wish to speak about a specific area of current defence procurement—the type 45 destroyer programme. I do so 470 as a Member of Parliament representing a Southampton seat, because the Vosper Thornycroft yard is in Southampton.
First, I wish to say a few words about how I see the current state of defence procurement. It will not exactly hit the headlines, but there is a stark contrast between the Government's overall approach and the previous Government's woeful record. The previous Government appeared to have a blind spot on defence procurement. It was always curious to me that at the same time as they were announcing draconian penalties for local authorities which had marginally stepped out of line on compulsory competitive tendering, they were tolerating huge overruns on contracts, inadequate competition safeguards, sole tender contracts and all sorts of practices in defence procurement. Collectively, that meant that far more was spent on equipment than was necessary and far longer was spent completing contracts than should have been tolerated. The result was that there was far less investment and equipment than could have been the case.
The recent National Audit Office report on the cost overrun on 25 major projects suggested that about £3.2 billion had been spent on those overruns which could have secured more than half of the projected type 45 destroyer programme. That is the extent of the overruns that the previous Government appeared happy to tolerate.
The overall design of the type 45 programme is the result of smart procurement—the idea that we get better value and that contracts are completed more quickly by paying closer attention to procurement, ensuring that competition is sound and procurement is carried out in a best value regime. However, a problem arises when we apply smart procurement to the type 45 programme, because only two companies could build the vessels for the programme. The question is how to ensure good value and effective competition when there are only two tenderers. In this sense we get into game theory—the so-called prisoner's dilemma and chicken. It becomes difficult to envisage real competition when there are only two tenderers; both are likely to know the moves of the other but will not necessarily have the same starting point in their tendering practices.
With a programme of 12 ships to be tendered for over a period of time, there has to be competition over the life of the bidding. It is no good simply having a competition at the beginning of the bidding, after which the rest of the competition goes out of the window because one of the competitors may not subsequently be able to compete.
Again I quote Sir Robert Walmsley, who has been mentioned this afternoon and who said, very appositely, to the Defence Committee last year:Let me come back to the very real point of Vospers and competition. The issue of making sure that Vospers are a credible competitor has very much conditioned our approach to this programme because we know that if we do not compete the follow-on production order there will be very little incentive to shipyards to improve their performance. We know what a success it has been on Type 23s, and there is a sense in which you need one really good competition and it moves everything forward to a new datum from which subsequent incremental improvements can be achieved.He was clear about the need to ensure proper competition throughout the building of the 12 vessels and about the fact that Vosper is, and will be, an important part of that competition.
471 The design that the Government have gone for for this complicated contract and to solve the problem of two tenderers only, is to eschew a straight bid for ship one, which might save some money in the short term but would be disastrous in the longer term, and go instead for a prime contractor for the first three vessels. Vessels one and three are to be built at Yarrow, while vessel two is to be built at Vosper's, but modular work on vessels one and three will be carried out by Vosper and the design and engineering will be shared between the two yards, so that, by the completion of ship three, both yards will have shared the work about 50:50. Most importantly, both yards will have shared the learning curve so that they can compete on an equal playing field for the vessels thereafter.
By the time that the yards have to bid for vessels four to 12, as Sir Robert said, all involved will have a realistic chance of winning. That is the idea of smart procurement as it is applied to that contract. In principle, that seems a sound system and a sound method of ensuring that the 12-vessel contract can be procured at the best value for the British taxpayer.
What if the prime contractor is also the owner of one of the two yards scheduled to build the first three vessels, however? That is the case with the type 45 contract. This is a hypothetical temptation, but I can imagine it being very real. Rationally, as a business, the prime contractor's goal would be to gain a monopoly over the building of the 12 vessels if possible. Indeed, the rational action to take in that case would be to ensure that the competition was not in a position to tender after three vessels, or better still, was not in a position to complete the work on the first three.
Appearances certainly suggest confirmation of that strategy. I am not saying that that is the case, just that it appears that way to me on the south coast and to some people who are involved with Vosper's shipyard. Vosper and Yarrow were asked to put in a price to the prime contractor for the work. They know each other's prices and are collaborating on the work. The prime contractor said, however, that the prices were too high, even though the productivity gain in the prices submitted was, I understand, unprecedented.
That is the equivalent of a poker game between two players when one has a limitless line of credit with the casino owner and the other has only the chips that he brought to the table. The object in those circumstances might therefore not be to win with the best cards but simply to drive the opponent away from the table because one has superior betting power.
That is a real problem for the strategy as far as the Government are concerned. It is certainly a real issue for the 600 workers at Vosper's yard who have had precautionary redundancy notices served on them because the signatures on the dotted line are not there between Vosper and the prime contractors despite the Government's good intentions.
The danger is that if the process drags on too long—whether accidentally or deliberately—Vosper will have to declare those men redundant. As the hon. Member for Eastleigh (Mr. Chidgey) said, after that it would be difficult to get back to the starting line to compete for 472 a contract. Then, we would end up with a monopoly contractor, which is the opposite of what the Government intend.
It may be said that this is not an issue for Government because it is an internal matter between the prime contractor and its subcontractors. Indeed, the Secretary of State suggested that this afternoon. However, given the specialised and very restricted circumstances that I have mentioned, it is an issue for the Government. The outcome of an internal decision to procrastinate on the contract can overthrow the entire admirable and supportable smart procurement structure that the Government have set out for type 45s.
It is important that the Government ensure that the prime contractor lets the contracts on time, and with Sir Richard's words firmly in its ears. I do not know the small print and detail of the prime contract with BAE, nor whether the Government have already taken action, but I suggest that they should do so and ensure that the small print is adhered to. I would welcome hearing the Minister's thoughts on that in his reply. There is a real possibility that smart procurement, with all its manifest advantages will not work in the specialised circumstances of the type 45 programme. That will be desperately sad for the 600 men who would lose their jobs at Vospers but, more important, it could be very costly for the United Kingdom defence procurement programme and might force a return to the inefficiencies and the regime that we have thankfully got away from with our smart procurement programme.
§ 6.1 pm
§ Dr. Rudi Vis (Finchley and Golders Green)
I thank my right hon. Friend the Secretary of State for his informative words, but I should like to probe two aspects of military procurement. They have nothing to do with my constituency. In fact, procurement has little to do with my constituency. First, in what overall international political context are military procurement decisions made? Secondly, once delivery of military hardware and software has been obtained, what can be done if the goods are faulty?
I shall pose some questions for my hon. Friend the Minister to consider. The documents before us and what has been said earlier give little away about the overall international political context. We are considering projects and comments on projects, but I cannot easily discern an overall international political strategy in which those projects can be judged. That may well be my fault and, if so, I am sure that I will be told.
For example, my hon. Friend the Member for Jarrow (Mr. Hepburn) said that the four ships will be built in Germany, probably with cheap Polish labour. If there is no international political context, we cannot judge whether the decisions are good or bad, or made on political or financial grounds. When the European Union is enlarged, we shall have to help out Poland, and that may be one of the means to do so.
My main interest is that military procurement is a highly political issue, with aspects involving finance, resources, efficiency, interested parties, international obligations and institutions, nation states and employment issues. I am particularly interested in the international political context of procurement, and I shall explain why.
I am not a member of the Select Committee on Defence. I am therefore not steeped in its peculiar language or paucity of political perspective. The emphasis 473 is on contracts, on weaponry and on which constituency gets what. I am very surprised by what has been said, given the lack of that context.
I am a member of the Western European Union Assembly. I attended my first meeting of the political committee of the WEU about two and half years ago. Before that meeting, I decided that I would read the papers carefully and that I would keep my mouth firmly shut during my first committee proceeding. The paper's rapporteur was Mr. Martinez, a parliamentarian from Spain, and its title was "WEU Relations with Russia". It was 16 pages long and dated 5 March 1998. I read the paper with care. Overtly, its objective was about the Russian Federation's becoming an associate member of the Western European Union but, covertly, its objective was more sinister. Reading between the lines, it argued for Russia to become an associate member and, for good measure, it also threw in the Ukraine in its conclusion. The inclusion of Russia in the WEU would create a breach between Europe and the United States and weaken the Atlantic alliance. The paper also proposed moving substantial European military procurement to Russia.
One passage from that paper stated:And in an interview with Corriera della Sera on 8 February 1998 the Russian President did go as far as to reveal his country's intention of becoming a full member of all the institutions working for European integration in an effort to counter United States domination and monopoly.The Russians certainly play a long game.
I found the paper arrogant, brash in its twisting of history and full of half-truths. During the meeting, about eight WEU delegates were particularly sycophantic and I broke the golden rule of never speaking in a first meeting. I pointed out my misgivings but Mr. Martinez became displeased with my comments. The final vote was 39 to one, and I felt what the Tories must have felt daily since May 1997.
After the meeting, nine delegates told me that they had misgivings too, but felt that they could not vote against Mr. Martinez. I did not know much about him at the time, but I later found out that he was a former president of the Council of Europe, and had ushered in Russia's membership. Russia has now been more or less slung out of the Council of Europe; at least, its vote has been taken away. Mr. Martinez has done much internationally—in Europe and transatlantically—and he is now a Member of the European Parliament, where he tells the same stories.
In subsequent meetings during the past few years, I have met several members of the Russian delegation and Members of the Duma. In the main, I found them demanding—never giving—and often arrogant. It reminded me, incidentally, of discussions with Americans.
The hon. Member for Gosport (Mr. Viggers) rightly mentioned the percentages of 100, 60 and 15. I sometimes wonder whether we bear that point in mind sufficiently in relation to international military procurement. We should bear the EU in mind in such contexts, and perhaps go beyond OCCAR, and we should have discussions with our colleagues in the EU.
My second point, which is slightly shorter, involves the delivery by firms of military hardware that is found to be faulty when used. Two points from our experience in Kosovo come to mind. First, were military procurement and negotiation and research facilities so weak and ill 474 informed that one could sell them, as the song goes, any old iron? Secondly, do we use price efficiency ratios and other indicators to judge performance?
The public increasingly feel that the taxpayer is being robbed by dodgy entrepreneurs in the military sector. If a house builder sells one a new house and the roof collapses, one has means of redress, but if anti-armour missiles and all-weather, precision-guided bombs do not work, who pays? That matter should be more openly discussed.
In summary, will my hon. Friend explain whether we have an overall political international procurement perspective in the United Kingdom? If so, what are the details, especially with regard to proposed EU developments? My hon. Friend will no doubt answer me in writing. Secondly, who decides about which matters? Are the United Kingdom, the United States, the EU or multinationals involved, or are all of them involved, and in what context? Finally, who pays when we receive dodgy goods, when there are price overruns or time overruns, and when costly mistakes are committed by firms after procurement, even once inefficiencies in MOD processes are taken into account? I look forward to my hon. Friend's reply.
§ 6.9 pm
§ Ms Rachel Squire (Dunfermline, West)
First, I pay tribute to the people who work in our shipyards, dockyards and defence industry who try daily to deliver of their best. Secondly, I pay tribute to Ministers who have difficult procurement decisions to make, as was demonstrated earlier today. Thirdly, I pay tribute to our armed forces who are so highly thought of throughout the world and whose lives depend on the equipment that we procure for them. Unfortunately, over the years, we have not provided the best equipment for them to meet their needs. That has been highlighted in reports from the Ministry of Defence, the National Audit Office and the Defence Committee.
My next point concerns a constituency matter. Unfortunately, Parliamentary Private Secretary commitments kept me from the Chamber during the private notice question on hunter-killer submarines earlier this week. The Secretary of State mentioned it today and I should like to ask the Minister three questions. First, does he agree that Rosyth dockyard has excellent facilities and a highly skilled and professional work force ideally suited to undertake submarine repair and refit work? Secondly, will he make a commitment that Babcock Rosyth will get its fair share of any additional repair work that is being handed out on the Swiftsure and Trafalgar class submarines? Thirdly, does he agree that this unfortunate incident demonstrates the need to have at least two dockyard facilities in the United Kingdom?
On a national issue, I pay tribute to the Government's efforts to smarten up the procurement procedure—this smart acquisition, as it is now called, just to confuse all of us who are daily confused by defence jargon. Both the NAO and Defence Committee reports recognise that, in the past three years, some progress has been made, albeit slowly. Criticisms of the procurement process need to be levelled more at the previous Government than at the present Government, who have made every effort to start to change the system.
I listened with great interest to the comments on the type 45 frigate because recently I visited the Defence Procurement Agency at Abbey Woods. I was given an 475 excellent presentation on the type 45 and the BVRAAM. I was impressed by the whole concept of the integrated project teams and the complex and challenging matters with which they have to deal.
That brings me to two or three brief points on the international front. As has been said, the type 45 frigate was originally supposed to be a collaborative effort with the French and Italian Governments, when it was known as the common new generation frigate or project Horizon. Various difficulties arose, particularly disagreements over the capabilities required. Does that mean, as the hon. Member for Chingford and Woodford Green (Mr. Duncan Smith) seems to suggest, that we should ditch ideas of international collaboration and co-operation on procurement issues? I think not.
We need international collaboration to provide us with all the defence equipment that we need. It may be hard to face up to this, but our country, like many others, can no longer afford to deliver every single item of defence equipment entirely through British industry. We need co-operation and collaboration to do that. It does not make sense to go it alone, strategically, operationally or, frankly, industrially.
We need international collaboration to build on our alliances, particularly NATO, and to promote interoperability between and with our allies. As we all know, the reality is that defence procurement decisions are influenced not only by what is the best equipment, but by foreign policy and trade and industry considerations.
We also need international collaboration and co-operation because of globalisation. During the past 10 years, the world defence industry has been rationalised into four prime defence contractors, of which BAE Systems is one. That raises certain issues as to competitiveness in the UK. It also links us to the whole rationalisation of the European defence industry and to the development of a European market that can compete with the US without taking us into either Fortress Europe or Fortress America. We must take those alliances into consideration in our procurement decisions, while protecting our national interests.
Finally, international collaboration and co-operation are important for technological development, which moves so rapidly. That highlights how important it is for DERA and the Defence Diversification Agency to keep us up to pace with that technology. We must ensure that the skills of our shipyards, dockyards and defence industry are efficiently translated into promoting civilian manufacturing, engineering and technological excellence while maintaining our defence capabilities.
We may be a small country, but we have always thought big. We should continue to do so.
§ Ms Claire Ward (Watford)
This is the first time that I have wanted to speak in a defence debate. Previously, I felt that I did not have enough experience or knowledge to contribute to such debates. However, during the past few months, I have taken part in the armed forces parliamentary scheme, serving with the Royal Marines. That experience and my conversations and discussions with service personnel have shown me that there are a 476 number of problems with some of their equipment, many of which do not seem to have been considered in decisions on future procurement.
The Royal Marines and members of all our armed services are dedicated, professional and highly motivated. No one wants conflict to take place. No one wants to send forces into conflict, but we all want to ensure that, should military conflict be necessary, our air, sea and land forces have the equipment that they need to do the job. I suspect that, in some recent conflicts, it is the dedication and the skills of our personnel rather than their equipment—unfortunately, sometimes, in spite of their equipment—that have achieved our success.
My hon. Friend the Secretary of State referred to the SA80 rifle. Whenever I asked Royal Marines which was their worst piece of equipment, they replied, without hesitation, that it was the SA80. I witnessed trials on their firing ranges and on exercises and on several occasions the weapon did not work. It works neither in desert conditions nor when there is excessive moisture in the air. The jamming is such that only about 30 per cent. of the rifles work at any given time. The design of the weapon is poor; it makes both right and left-hand use impossible. The reliability of the SA80 is extremely questionable and that puts our troops in danger in certain conflicts.
I understand that a programme of alterations has already been agreed by the Ministry of Defence. If possible, will my hon. Friend the Under-Secretary tell us this evening when that programme will be completed to ensure that some upgrading and improvements take place to provide a much better weapon, although certainly not the kind of weapon that our armed forces deserve and would like to have? Will that weapon get to the front line so that our rapidly deployed forces can use it?
I am also concerned about landing craft utilities. Last week, I visited Poole with the Royal Marines and had an opportunity to see the vessels and landing craft that they are using at the moment. The mark 10 landing craft utility is due to come into service in future and is currently in trials. It was originally commissioned in the mid-1980s but, some years down the line, it still has not come into being and several problems make it inappropriate for the kind of work that our Royal Marines would like to undertake with it.
During the testing of much equipment, including weapons, landing craft and radios—several hon. Members have mentioned the Bowman programme—there have been many instances when the views of military personnel were not taken into account. Many issues raised by personnel are simple and straightforward and concern things that would make life a lot easier for them if only those who procured the equipment listened to the views of those who risked their lives for this country. The personnel work with the equipment day to day, and have a much greater knowledge of it than anyone in the Chamber or the Whitehall offices of the Ministry of Defence. I am concerned that there appears to be a lack of interest in listening to those who use the equipment on a daily basis.
I am conscious of time and the need for Front-Bench spokespersons to answer all the points that have been made in a debate, in which many interesting issues were raised. However, may I make a strong case for greater opportunity for service personnel to be involved in procurement issues? They feel that they are constantly left out and that their views are not heard. Much of the news 477 that they get about when equipment is likely to come on stream is filtered through the system and is corrupted one way or another, a little bit like Chinese whispers. They do not get the information that would allow them to feel confident that the procurement of equipment takes into account their concerns and needs. I would be grateful if my hon. Friend in his winding-up speech gives comfort to those who serve on the front line about when the equipment is likely to be completed—and when, in particular, the SA80 will be upgraded—so that they can be assured of the equipment that they deserve and that is necessary for them to carry out their duties.
§ Mr. Quentin Davies (Grantham and Stamford)
In many ways, our debate has been extremely revealing and some important subjects have been raised. As I do not have an enormous amount of time, I hope that I may be forgiven for not following my usual practice of commenting on every Back-Bench contribution.
Let me single out five contributions that were particularly original and well informed, one of which was the contribution of the hon. Member for Watford (Ms Ward). We all welcome her to these defence debates and, given her obvious knowledge of, and sympathy for, the subject, I hope that we shall hear a great deal from her in future—perhaps as early as next week, if she is lucky enough to catch your eye, Mr. Deputy Speaker.
I should like to compliment my right hon. Friend the Member for Fylde (Mr. Jack), who also knows a lot about defence and made a strong case on the need for us to maintain a military and industrial base in this country. Otherwise, as he rightly pointed out, in a crisis we would simply not have the skills available to convert equipment rapidly and support our troops, sailors and airmen in the field.
My hon. Friend the Member for Gosport (Mr. Viggers), who has a long record of taking part in defence debates, made some very good points. He made one point that needs to be made over and over again. Despite all the spin and announcements of announcements that are made or contracts that are to be signed, the Government have not signed a single contract or committed money to build a single warship since they took over the reins of power in 1997. No one should be allowed to get away with that, irrespective of the talents of the spin doctors whom the Labour party employs. My hon. Friend reminded us of the importance of the medical back-up for our military forces and what a tragedy it is that the Government have seen fit to close the last military hospital at Haslar.
The hon. Member for Eastleigh (Mr. Chidgey) is not in the Chamber. I am sorry about that because I want to say some nice things about him, even if he is a Liberal. It does not happen very often. He gave us a fascinating insider's view, which I have not heard from anyone, of the shambles of the Bowman programme during the three and a half years until the Government cancelled it a short while ago.
§ Mr. Davies
The contract with Archer dates from 1997 and has just been terminated by the Government. So for the whole period of the Archer contract, as every week and month went by, we cumulatively lost the £200 million 478 of which the hon. Member for Eastleigh has reminded the House. It was the Minister or his colleagues who were responsible for that, and they cannot get away from it. I shall come back to that later because it is an important issue.
The hon. Member for Eastleigh also gave us a fascinating insight into the position of Vosper Thornycroft, which, in the light of the decisions announced today and the mishandling of the type 45 procurement, may well cease to be an option for the Ministry of Defence when it wishes to procure naval vessels. That is a serious matter.
I do not want to embarrass the hon. Member for Jarrow (Mr. Hepburn) by supporting him, but he made a devastating attack on the Government's procurement policy and today's announcement. Nothing that anyone on the Conservative Benches could say would be more eloquent than the speech made by the hon. Gentleman, who holds a different ideological and political point of view and comes from a different parliamentary tradition.
The great event of today—"great" is perhaps the wrong word; the important event of today—was the announcement of the Government's intentions with regard to procuring the roll on/roll off ferries. We all agree that they are vital, and agree with the need for naval strategic lift. The Government's decision had two particularly unsatisfactory aspects, the significance of which goes much wider than defence procurement or capability, and to the heart of the nature of the Government's relations with Parliament and the way in which the Government take decisions, present them to the public and account to the public for them, as they should do in a democracy. Both aspects are thoroughly unsatisfactory—and that is the mildest word that I can use.
First, we had one more case of an important announcement that was supposed to be made in Parliament being made first in the media. You were in the Chair at the time, Mr. Deputy Speaker, and you expressed your personal concern and undertook to take the matter up from the Chair. You said all the right things, as much as you could. I have no illusions. I believe that Ministers will go home tonight sniggering as they walk away from the House into the darkness, thinking complacently that they have got away with it once again, and that nothing will happen to them. They will try it on a second, third, fourth and 500th time. That is the way of the Government, and it is lamentable.
The second unsatisfactory aspect of the affair is the way in which the decision has been taken and defended to the public. The implicationߞalthough I think it was more like a statement than an implication—of the Secretary of State's remarks was that the Government had no choice but to allow the bid to go to the lowest tenderer in the European Union. The implication was that the public procurement directive and the Treaty of European Union left the Government with no option. However, that is not true. The Government had a choice as to whether to go down the private finance initiative route or the public-private partnership route to procure the vessels.
The decision to take the PFI route meant that the private sector partner would become the nominal owner and the purchaser of the ship. Therefore, the public procurement directive would apply and the purchase would not be protected as a piece of Government procurement for military purposes. The Government took that decision, 479 but we do not know whether they were so incompetent and naive that it never occurred to them, when they decided on the PFI structure, that the inevitable consequence was that the order would have to be offered to competition throughout the European Union. If they did not know that or even think about it, on the basis of competence alone those on the Treasury Bench should not be there.
However—I fear that this might be so—if it was not a matter of competence but one of honesty and they knew perfectly well of the inexorable consequences of the route that they had chosen to go down and were determined to disguise them from Parliament and the public, they obviously behaved in an utterly unforgivable fashion. We may never know the answer, but Parliament is entitled to know which of those alternatives is true. There is no third, fourth or fifth logical possibility. One of the alternatives must be true and both are damning.
The Secretary of State seemed to cover himself against the possibility that we might find out the answer to my question by implying that the vessels did not qualify under the treaty for protection against the public procurement directive. I thought that it was not an accident but a little sinister that he either deliberately or inadvertently continued to use wrong and inappropriate terminology that is not relevant to this legal issue. He said that the roll on/roll off ferries were not "warlike vessels" and implied that they were not warships. Perhaps he hoped that the inference would be drawn that they would not be protected from the public procurement directive even if the Government had been their direct owner and operator.
Article 296 of the treaty appears after the section on single market legislation and it is relevant. It says that the Government must be open about their procurement within the Union on everything except the military equipment that is defined in the article. It says nothing about warlike vessels or warlike equipment, but refers toProducts…intended for specifically military purposes.These roll on/roll off ferries are intended explicitly for a specifically military purpose. Although they do not fire missiles, they will play a military role. Therefore, it is unarguable, according to the treaty, that had the Government procured them in the normal way, they could have protected that order. They could have given it to British shipyards had they wished to do so. I fear that they did not wish to do that, but that is what every other European nation would have done, as the hon. Member for Jarrow rightly said. The Government are in the business of bamboozling their own supporters as well as the employees of the shipyards involved. Those employees must be rightly furious at how they have been betrayed by the Government's announcement this afternoon.
The Government's whole procurement policy can be characterised in exactly the same way as the new Labour Administration can be characterised across the board. There is a facade that is initially and superficially attractive. However, once one looks behind that facade, one soon comes across the dry rot, the hypocrisy, the serious errors and—worse than that—the attempts to cover up those errors. When it comes to the high-profile, headline issues, everything seems fine. The Government are committed to the type 45 destroyers, to two new 480 carriers, to the A400M and to Meteor. We have supported those decisions—I see the Secretary of State nodding—but only so long as they get them right.
My hon. Friend the Member for Chingford and Woodford Green has asked a number of pertinent questions, not merely today but on previous occasions, about whether our continental partners will go ahead with projected orders for the A400M, and so forth—and, indeed, about how the type 45 destroyer procurement is proceeding. In principle, it sounds splendid. However, when one looks behind that, one sees not only great problems with individual items but that the Government have very cleverly so arranged things that they hardly have to spend one penny before the election. So, in fact, all the announcements of new orders and the comments on how they are minded to order this or that are hot air. We have yet to see any of it in reality.
When one goes behind such a facade into the day-to-day necessary procurement of equipment on which the effectiveness and lives of our fighting men and women will depend, one finds a very sad story of serious inadequacies and cover-ups. Let us look at the communications system for our combat aircraft. As we have seen in Kosovo, it is not compatible with the United States system.
§ Mr. Davies
The Secretary of State seems to think that every shortcoming in the services for which this Government have been responsible over the past three and a half years can somehow be laid at the door of the previous Conservative Government. We can all play that game; I could talk about the military inadequacies of the Government of Ramsay MacDonald. The fact is that the Secretary of State has responsibility and if he is to do something on the issue, he had better do it.
§ Mr. Davies
The system clearly is not in place at the moment.
What is more, the Secretary of State has been engaged in the GR1 to GR4 conversion programme. The matter has been in his hands for several years and he still has not got it right. Apparently, the software has still not been successfully integrated in order that GR4s can handle smart weaponry. After three and a half years, that is thoroughly unsatisfactory.
I know perfectly well that the need to replace Clansman has been with us for a long time, and do not doubt that serious errors were made by the previous Conservative Government. Heaven knows, my hon. Friend the Member for Chingford and Woodford Green and I wrote a pamphlet during the previous Parliament criticising the defence policy of the then Administration, so we can hardly be expected now to say that everything that they did was perfect. The important thing is that this Government do not delude themselves, as they are trying to delude the public, that they do not have responsibility for anything because somebody 10 or 15 years ago may or may not have made some mistake. They have responsibility now, and must get things right.
481 The Government have been working with Archer Communications Systems for the past three and a half years and confirmed as recently as March that they believed that it was the right partner to deliver the new Bowman system. Now, they have cancelled the contract and pulled away, losing £200 million. Every penny of that has been lost under this Administration. If the Secretary of State disagrees with that, he should intervene to say so.
I must ask many other questions. What is happening about the Tucanos—the RAF basic trainer? We are told that they are grounded and that our pilots are being sent to Australia for training. The Tucano has been perfectly all right for the first three years of the Labour Government. Are the Government going to say that that situation is the fault of some previous Conservative Administration?
The C130Js have been suffering several problems. They were ordered by the Conservative Government, but who has had problems with them flying in the past few months? The Government have done nothing at all. They have taken delivery of the aircraft, which are clearly not performing properly at low speed and low altitude.
The sonars for the Navy are a serious matter. Everyone agrees that the sonar 2193 is necessary for the Hunt class minesweepers, but when is it due to come on stream? It is at least two years behind, under the Labour Government. The sonar 2087 for the type 23 frigates is an even more important matter. As Ministers ought to know, no 2031s were fitted on the last five of the type 23s, on the grounds that the 2087 was coming along so rapidly that it would not be necessary to fit the 2031. We now have five type 23s that have no stern sonars whatever. As those frigates are supposed to be the essence of our anti-submarine capability, that is thoroughly unsatisfactory.
A further issue is the Eurofighter and the Eurofighter cannon. It was always intended that the Eurofighter would be procured with a cannon, and the Government did not cancel the cannon for the first batch of 55 Eurofighters. However, they decided that the pilots would not be trained and there would be no back-up for the operation of the cannon. A remarkable piece of military hardware was procured by the decision of the previous Conservative Administration and the Government have taken delivery of it. but the cannon will be completely inoperable. Pilots will be put into the aircraft and told that they will never be able to use part of the weapon system that is fitted. This is another case in which Ministers have been a great deal less than frank.
I raised the matter at the last Defence questions with the Minister for the Armed Forces, who said that the Eurofighter was not intended to have a ground attack role. However, in a written answer to me shortly afterwards, he had to confess that the Eurofighter was, among other things, a successor to the Jaguar, which of course has a ground attack role.
I do not believe that Ministers have begun to think through the issue. No one suggests that a cannon is required in a conventional dogfight, but there are many situations in which a cannon is extremely useful—against transport aircraft, for example, or against helicopters. Ministers do not seem to realise that current warfare is somewhat different from warfare 50 or 100 years ago. Often, the state of belligerence is uncertain and the rules of engagement are less than would be expected in a full-scale war.
482 A potentially hostile aircraft may intrude across a particular line into our airspace and refuse to respond when challenged. It may not be practicable or politically desirable to order the aircraft to be brought down by a missile such as the advanced medium-range air-to-air missile—AMRAAM—the advanced short-range air-to-air missile—ASRAAM—or Meteor. A shot from a cannon—the traditional shot across the bows, so to speak—may be exactly the response that is needed.
That aircraft was built with a wide range of flexible options for combat use, but the Government have simply removed one of those. They pretend to the House and the public that no damage is done and it does not matter. It is absurd that the next batches of the Eurofighter Typhoon will have a lead weight to replace the cannon. In no circumstances can the removal of the cannon be justified by the other capabilities or the longer range that the aircraft can achieve as a result.
That is not a zero sum. It is a minus sum conclusion, which is typical of the Government's procurement policy. They thought that it was a small detail that no one would notice. When it came out, they used every trick—
§ Mr. Deputy Speaker
Order. When the Chair takes a point of order, the hon. Gentleman must sit down at once.
§ Mr. Davies
Had the hon. Lady been better informed, she would have known that I was under instructions to speak until 6.45 pm, which I propose to do.
Over and over again, it is the same story. We have the spin, and over and over again the reality is different. The reality is tawdry. The reality is the Government's shortcomings, and the worst reality of all is the systematic way in which they try to cover them up.
§ The Parliamentary Under-Secretary of State for Defence (Dr. Lewis Moonie)
My opportunity to reply to the debate seems to have been a long time coming. The argument of the shadow Secretary of State for Defence, the hon. Member for Chingford and Woodford Green (Mr. Duncan Smith), appears to be that basically, everything is all our fault, for taking so long to clear up the mess that the Conservative Government left us. That appears to be the logic of the arguments advanced by Opposition Members. I apologise; it is taking a long time to clear up the mess that they left us—but that is because the Conservative Government left us with such a mess. 483 Almost every system mentioned by the hon. Member for Grantham and Stamford (Mr. Davies), who replied on behalf of the Opposition, was yet another painful example of the mess in which the previous Government left defence procurement. It is taking us longer than we might have hoped to clear things up. That is a sign of the magnitude of the task facing us.
In opening the debate, my right hon. Friend the Secretary of State covered some very important ground. He spoke about how we are ensuring that our armed forces will continue to have the equipment that they need. He talked about what we are doing to address the problems of time and cost overruns that have bedevilled Ministry of Defence equipment programmes too often in the past.
My right hon. Friend described the scale of our investment in the future of our armed forces and in our economy. He highlighted many of the impressive programmes of new world-beating equipment which will be coming into service over the next few years. It is a matter of concern and regret to me that some hon. Members and parts of the media try to present a different picture—one that says that the equipment on which our armed forces depend is not up to the job. That is untrue. Our service men and women and their families deserve better than to have their confidence in their equipment undermined by inaccurate and misleading remarks.
Yes, we inherited problems with, for example, the Bowman project and the SA80 rifle. However, we are taking decisive action to sort them out. Those are the exceptions. The standard of our forces' equipment in general is overwhelmingly excellent.
§ Dr. Moonie
As well as apportioning blame, I am prepared to apportion credit. The hon. Gentleman is right. On some occasions the Conservative Government ordered things that worked well, and we are fortunate that they did. Many of the other things that they ordered have not worked quite so well.
Shortly, I shall move on to quickly cover as many points as I can. After an hour of questions from the hon. Member for Chingford and Woodford Green, I shall not be able to answer them all in 10 minutes. I shall ditch the rest of what I intended to say that was on the formal side. There is a two-day defence debate next week, and with a bit of luck I shall then have longer to cover various matters. If a Minister makes a habit of doing this, Members will always expect him to do so. In fact, he is summing up for the Government and not necessarily replying to the debate. However, I let that pass.
I shall deal first with the Defence Procurement Agency and the Defence Logistics Organisation. They are both relatively new organisations and it is interesting to speculate how things may emerge over time. There are no plans in progress to consider their position in the immediate future.
I shall now talk about the Brimstone weapon, and I shall occasionally refer to notes because that is much easier than trying to remember everything. We always keep the mix of weapons available to us under review. 484 We have reviewed the number of Brimstones that we require and we plan to buy 25 per cent. fewer. I think that I answered a question on the matter recently. There is still a firm requirement for the weapon. As Brimstone will be one of a number of anti-armour weapons available in a future conflict, including the attack helicopter and the MR anti-tank guided weapon, we have assessed that we shall need fewer Brimstones, hence the adjustment in the procurement. I am happy to say—even though the hon. Member for Chingford and Woodford Green will probably try to claim the credit again—that the Brimstone programme is on target and on cost.
I thought that I had adequately covered the subject of proposed reductions in squadrons of front-line aircraft during the broadcast a few weeks ago, but I shall reiterate. There was a study paper. We produce many such papers and many of them never see the light of day, which is fortunate, because we would be unable to comment properly on all of them, as happened in the case in question. The studies cover the full range of planned equipment capability and establish the scope or lack thereof for significant changes in our forward equipment plans. The paper was not seen by Ministers—at least, not until after it had been leaked.
I can confirm that no recommendations have been made to us, still less any decisions taken, to cut any of our fast jet fleets. It is impossible, and it would be irresponsible of me, to say that nothing will ever change. When Eurofighter is introduced, existing aeroplanes will be replaced. That is only logical—no one would expect us to keep obsolete equipment in service once the new aircraft was in operation. However, that issue will be examined at the proper time. The paper posed hypothetical questions; they will not be answered in the immediate future, but when Eurofighter is in service and it becomes necessary to make decisions on how to plan reductions in the alternative aircraft that we use.
I shall talk about the type 45 later. Several speakers referred to it, and I have some detailed notes further on in my script.
The failure of the Lynx helicopter rotor hub posed considerable problems. However, operational requirements are being met and, although people are having to queue up for training, they are being trained. A tremendous job of work is being done by the people replacing the defective part, and they deserve our congratulations.
We have every confidence that the SA80 upgrade plan will satisfy all the requirements. It is thought that some of the initial work might be done in Nottingham, but most will be carried out in the factory in Germany. After all, it is essential that the work be done as quickly as possible. I can tell my hon. Friend the Member for Watford (Ms Ward) that we expect at least 20,000 weapons to have been fully modified and to be back in service by the end of next year, when I am sure they will make a considerable difference.
A difficult decision had to be made about the future missile, Meteor. There were many factors, especially the fact that smart procurement had identified a route through Meteor for procuring the missile which we thought produced considerable advantages for us, especially in terms of the balance of risk.
To digress for a moment, let me say that one of the major problems affecting large projects of the sort that we are discussing is the allocation of risk. Until the 485 introduction of smart procurement, which we hope is redressing the balance, the Government took all the risk. That cannot be right. I believe that smart procurement—smart acquisition, as I must learn to call it—will redress the balance and lay more of the risk where it belongs, on the contractors carrying out the development work for us. I hope that my hon. Friend the Member for Finchley and Golders Green (Dr. Vis) has noticed that I have answered one of the points that he raised.
Progress is being made on the development of the A400M. I know of no snags, nor of cold feet affecting any of our partners, at the moment. We must expect progress to be slow at first and then to take off after the initial configuration and the initial agreements have been finalised. We are satisfied with the progress that is being made now.
OCCAR will offer considerable benefits to us in the medium to long term, providing a much more rational basis for the selection of projects, and allowing a multinational element and as much co-operation as is needed to ensure that highly complex and often expensive projects are brought to fruition in the minimum time.
We have not yet decided what form the sale of DERA will take. Hon. Members may say—as happened in an Adjournment debate shortly before the summer recess—that someone has told them that things are not very good and that they are not happy, but no one comes to us and says that. Therefore, we must assume that what the Americans are telling us is true and that they are happy with the system that we have proposed.
My hon. Friend the Member for Walsall, South (Mr. George) said that hard decisions have to be made and, ideally, made quickly. However, a balance must be struck between wasting money through too early a cancellation and wasting it through too late a cancellation. Sometimes the balance of opinion, as in Bowman, is to carry on a little longer to try to obtain a satisfactory outcome. In other words, a bit of good money is thrown after what has gone before in the hope of a successful outcome. It is not all dead cost. People are employed using that money. The fact that the work does not ultimately come to fruition does not mean that the money was all thrown away or burned. It was spent on development and it kept people in employment, and we should not forget that. I hope that we shall be able to make an announcement soon on the chosen vehicle for producing the system.
The hon. Member for Hereford (Mr. Keetch) referred to many problems. I have covered his points on smart procurement. I shall have to look into the matter of the floating dock. I did not think that we had any other docks floating around, but I am sure that someone will put me right and I shall be able to reply to the hon. Gentleman.
486 One of the major purchasing decisions of the next decade concerns the future large aircraft, along with the carriers. It is essential that we get that right. A huge sum of money will have to be spent. We are not yet in a position to make such a decision, but I hope that, during the next few years, as our debates on procurement evolve, so will our position on the purchase of such an aircraft.
The vertical communication system is based on the Duro vehicle which was proposed to the competitors because no other vehicle has the configuration to take the system and still be transportable by air.
§ Dr. Moonie
I am sorry, but I do not have sufficient time.
The matter has been extensively investigated within and outside the EC and no equivalent vehicle of sufficient size is available. However, the vehicle will be sourced through a British distributor and spares will be purchased accordingly.
I join the hon. Gentleman in his congratulations to Swan Hunter. The news was excellent and I wish the yard a long and successful future. Its apprentices were mentioned, and that afforded me particular pleasure.
I must mention ro-ro ferries. The Opposition have created a smokescreen to try to conceal what is a good deal. We should not forget that as this is a PFI project, we are talking about a whole life cost. It will cost more than £900 million during its life, and there is no doubt that that offers a staggering saving over any of the other options. I suspect that that is why the previous Government intended to go down exactly the same route.
The ships will be built in Germany, not Poland. However, I do not see why we should object to Poles building them, as many hon. Members hope to welcome Poland into the EC. We should not forget that had we taken any other route, the cost would have been greater, and that would have meant less money to spend on something else.
I have the greatest of sympathy with those who will lose their jobs as a result of the decision on Bowman. We are aware of the problems that have been raised about Vospers, and we are considering them. So far, they are not sufficient to cause us anxiety. I believe that hon. Members are becoming over-anxious, but we will consider the matter closely. The problem with the contracting system is that one has to trust the system. We do not simply rely on people's word: we include checks to ensure that it is implemented properly.
§ It being Seven o'clock, the motion for the Adjournment of the House lapsed, without Question put.