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have succeeded in reducing expenditure from £19.57 billion in 1984-85--using 1987 prices--to an estimated £17.7 billion this year. It was surprising that in his lengthy speech the Secretary of State, who tried to poke fun at the Labour party, did not in any way spell out the financial provisions that will be made in forthcoming years to take account of increased demand, if only because of interest rates and exchange rate differentials. It is true that planned defence expenditure will rise by 1.2 per cent. next year and 1.3 per cent. in the following year, but that assumes inflation of 5.5 per cent. this year, 4 per cent. next year and 3 per cent. in 1991-92, with other indicators such as interest rates and exchange rates remaining constant. Defence expenditure in the United Kingdom stood at 5.3 per cent. of GDP in 1984 ; by 1988 it had fallen to 4.3 per cent.

The Government now spend more on health and education than on defence. This is reflected in, for example, the numbers directly employed by the Ministry of Defence civilian labour force. There were reductions of 21,000 in 1987 alone, making a drop of 28 per cent. in five years, with basic industrial grades--the lowest paid--losing some 40 per cent. of their jobs.

The figures for employment in defence-related industries show an even more alarming fall. It has been caused by a decrease in non-Trident, new component spending of 31 per cent. in the past five years and by a fall of 19 per cent. in spending on spares and repairs. The reduction has been most pronounced in air systems, where annual spending has fallen by £1 billion, or 27 per cent. The picture is similar for sea systems, where expenditure is likely to fall by £870 million, or 31 per cent.

Several Hon. Members rose --

Mr. O'Neill : Let me finish the figures, and then I will let hon. Members intervene.

Expenditure on land systems will fall by £300 million, or 15 per cent. It is little wonder that firms such as Westland despair of ever getting an order for a new generation of helicopters, or that warship yards are hanging on by a thread.

Mr. Alfred Morris (Manchester, Wythenshawe) : My hon. Friend has referred to Westland. The Secretary of State talked about happenings during the parliamentary recess. He said not one word about what has happened to Ferranti. I know that my hon. Friend has a considerable interest in the future of that important firm. Thousands of Ferranti employees work in Manchester, not least in my constituency. Decisions are to be taken by the Ministry of Defence that will affect security of employment in that firm. My hon. Friend might have thought it appropriate if the Secretary of State had said at least one reassuring word to those employees. Will my hon. Friend press him on that important point?

Mr. O'Neill : I am grateful to my right hon. Friend for raising that point about Ferranti. This is the best example of the Government's apparent unwillingness, or inability, to defend this country's defence industry base. Firms such as Westland and the warship building yards are hanging on by a thread. We had thought that we might hear--it may happen tomorrow ; we can only hope--about the NFR90 project, which has finally foundered. I hope that the Minister can explain what will be the next round in the process.

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People are very anxious. I speak on behalf of many Labour Members who still have warship building interests in their constituencies. The issue is of such national importance that it should have featured in the speech by the Secretary of State--a matter on which I agree with my right hon. Friend the Member for Manchester, Wythenshawe (Mr. Morris). I know that the Secretary of State wants to divide the ministerial labour, but there are national economic and industrial matters that impinge on defence, and the House is entitled to know about them.

Mr. Robert Hayward (Kingswood) : The hon. Gentleman ducked questions about the Labour party conference and expenditure levels. Will he comment on a statement in The Times of Thursday 14 September which is attributed to him? He said that production lines would disappear if the Labour party came to power. Will the hon. Gentleman identify--possible in answer to the question put by the right hon. Member for Manchester, Wythenshawe (Mr. Morris)--which production lines and research establishments he expects to disappear under Labour party policy?

Mr. O'Neill : Unfortunately, the hon. Gentleman read only that part of the paper which he was given by the Whips Office that was underlined. If he had read the rest, he would have seen that I said more than that and that I qualified my comment. I shall refer to that later and, if the hon. Gentleman wishes to wait, he will hear it. The much-vaunted system of competitive tendering which the Secretary of State mentioned at the end of his speech is causing some disquiet--not just because of the delays and because the longer the system continues, the more limited the savings will become, but because of the widespread feeling among many defence procurement firms that price is the be-all and end-all and that quality is taking second place.

The Secretary of State said that this was not the way in which the system should operate, but ever-increasing numbers of defence manufacturers to whom I have spoken are getting more worried about the problems of providing the quality with which their firms have been associated in the past at the prices that the Ministry of Defence is demanding. Those views are held not by people who have been unsuccessful in winning contracts but by those who have been successful and who are embarrassed by some of the standards that they have to sacrifice to maintain orders and jobs.

We have to recognise that the other anxiety of defence manufacturers is that there is an absence of long-term planning in the Ministry of Defence. The short-term thinking, the simplistic, free market approach to procurement, may seem attractive to ideologues and right-wing think tanks, but it brings no comfort to designers, planners and defence contractors, or to service personnel who see their NATO colleagues getting more and better equipment than they do.

The events of this summer have shown conclusively that, not only are the Government indifferent to the production and planning requirements of our defence procurement industry, but they seem to have completely ignored their responsibility to British firms in the restructuring of the European defence economy. We search in vain for any Government prescription for British defence companies. It is the responsibility of the Government to secure the lines of supply for our forces.

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We cannot meet all our own defence needs. We have to import some goods and produce others under licence. We cannot afford to develop all our own equipment. Some of this work must be undertaken in collaboration with our allies. The West German and French Governments realise that. They take an active part in the development of a procurement strategy.

What was the Government or the MOD position about Plessey in 1987? We were told that it was one of opposition to the GEC bid, but when GEC was joined by one of Plessey's competitors from abroad, the new bid was somehow acceptable. It seems strange that a bid which was unacceptable because it involved the establishment of a British monopoly somehow became attractive when a foreign firm became involved.

When the board, or more particularly the chairman, started looking at International Signal and Control, the Procurement Executive tried to warn it off. Did the MOD have any involvement the following year when a minority on the board had a report commissioned that suggested that this was neither an acceptable nor a desirable merger partner? Even now, when every City page seems to carry a story about another defence contractor taking an interest in buying the company and plundering its assets, the Secretary of State's policy seems to be one of wait and see--leave it all to Sir Derek Alun-Jones, the man who got it so wrong last time, in the hope that he may get it right this time. Getting it right for whom--the shareholders and the institutions who sat idly by when Guerin conned the board? Getting it right for the board itself, many of whom believed that, were it not for the serious plight of the firm, their heads would be rolling in the boardroom as well?

There are more people who are interested in what is happening. We have to get it right for the British armed forces, who are dependent on the products of one of our finest companies. Our third largest defence contractor's design team is worried to death about the uncertainty surrounding it.

The Secretary of State knows of our concern about the future of the firm. We are grateful for the trouble he took when he agreed to meet us. He knows the critical role which the radar system for the European fighter aircraft plays in this sorry business. The contract for the radar was to be signed more than 12 months ago--or, as somebody put it, more than three Defence Procurement Ministers ago. Ferranti won the NATO European Fighter Management Agency assessment on technical merit, with price a secondary consideration. It won the Eurofighter assessment by three to one. In March, the then Secretary of State backed it. In June, the West German Government objected to what they called the perceived risks of ECR90, so a joint study between the Federal Republic and the United Kingdom was set up. It showed that ECR90 was not a higher risk, and probably less risk, than MSD 2000. Then AEG tried to reduce the price by contract manipulation. In the end, that worked against it, and ECR90 was still cheaper.

Now it appears that the goal posts have been widened once again to allow AEG to improve its technical performance. It has been suggested that the Government have agreed that AEG be given an indication of the technical shortcomings so that it can try to correct them and have another chance at getting Ferranti's order. How long will this farce go on? If we do not get an answer today,

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I hope that the Under-Secretary of State for Defence Procurement will be able to tell us more about it tomorrow.

Mr. Dick Douglas (Dunfermline, West) : Is it not remarkable that the Minister has had discussions on this issue but has not seen fit either to intervene in the speech of my hon. Friend the Member for Clackmannan (Mr. O'Neill) or to give us an indication of his view on this crucial matter?

There is not only the question of procurement. I hope that my hon. Friend the Member for Clackmannan agrees that a strategic analysis of a vital defence industry in Britain is involved here. Will we get an assurance? If the Secretary of State cannot give us an assurance today, will the Under- Secretary of State give us a clear indication of the Government's attitude tomorrow, at the end of the debate? Mr. Tom King rose --

Several Hon. Members : Go on.

Madam Deputy Speaker (Miss Betty Boothroyd) : Order. We cannot have one intervention immediately after another. I call Mr. O'Neill.

Mr. O'Neill : I am happy to answer the question that my hon. Friend the Member for Dunfermline, West (Mr. Douglas) asks, but I think that the Secretary of State would make a better job of it.

Mr. King : The hon. Member for Clackmannan (Mr. O'Neill) did me the courtesy of saying that I met him and a number of his hon. Friends who came to see me to express their concern about these serious issues that affect Ferranti. I cannot remember whether the hon. Member for Dunfermline, West (Mr. Douglas) was able to be at that meeting.

Mr. Douglas : No, I was not.

Mr. King : I think that the consensus that came out of that meeting was that there are difficult issues to be faced and that there is a need for responsible action by all concerned. We are all deeply concerned about the employees of that company. Perhaps the hon. Member for Dunfermline, West chooses to make Ferranti a political football. I excuse him, as he was not able to be with the deputation that came to see me. I am sure that he was not able to be there for a good reason. At that meeting, I expressed my concern, and the deputation expressed its appreciation of the message of assurance that I was able to give to Ferranti, that the Ministry of Defence had issued.

Ferranti is a valued supplier and contractor to the MOD. It has some £450 million-worth of contracts. We look for an early resolution to the present problems which have affected the company for extraneous reasons not connected with the Ministry of Defence. We hope for a resolution because we value the company, the people who work for it and the skills they represent. We hope that there will be a successful conclusion. I shall say no more today because it might not be helpful to do so in the difficult situation in which the company finds itself at present, and which it has to resolve.

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Mr. O'Neill : I recognise what the Secretary of State has said. The point that I was endeavouring to make is that there has been another turn of the screw in the procurement procedure--the extension of the survey procedure to allow AEG yet another bite at the cherry. We were not able to discuss that on the occasion to which the Minister referred.

During the early stages of the crisis that faces Ferranti, many of us argued for a speedy conclusion. We now recognise that it will take longer. We do not deny that. What we would like to get from the Minister, if not publicly--I will not push him any further, for the reasons tat he has given --is an assurance that the British Government will give the same support to the ECR90 as the West Germans are giving to the MSD2000. We would like to make sure that the Secretary of State takes a close interest in the merger dealings and proceedings and that he will try to ensure that the merger does not take place before the radar deal is completed, because it is of considerable significance to the future good health of a company which employs a large number of people.

I have to declare a slight interest in the matter. My father is a beneficiary of the Ferranti pension scheme, having been a foreman there for the best part of 25 years. I therefore have a family interest. If one scratches many people in the east of Scotland, there will be very few who do not have a relative who is employed by Ferranti or a subcontractor to it.

Although this is a defence debate, a transfer of technology takes place in Ferranti, and this means that many of the civilian products that it makes derive from the work done originally for defence products. Therefore, it would be foolhardy for anyone to try to break up the group. The whole is greater than the sum of its parts, and to dismantle it, for whatever reasons of the market, would be short-sighted and potentially dangerous for people right across the industrial areas of north Britain.

The change in the demand for defence equipment is creating problems for the defence procurement industry. It has already resulted in a dramatic loss of jobs. In 1979-80, the armaments industry employed 580,000 people. The last time that figures were published in the defence estimates, three years ago, that had fallen to 465,000. It is common knowledge that all firms engaged in defence activity are looking for civilian markets for future work.

We hope that the Secretary of State will consider the establishment of an arms conversion agency, which would help those firms in the defence industry that wanted to--there would be no compulsion--to move into new markets, by way of grants, training, and advice on restructuring and markets. The manufacturing base of the United Kingdom is far too narrow. The decline in demand for defence products offers us a chance to broaden our base and to make use of some of the most highly trained and best equipped sections of our work force. The impact of the decline in defence expenditure is not confined to industry, but extends to the armed forces. While it is true that the Government have kept faith with the pay procedures that Fred Mulley, the last Labour Defence Minister, introduced, they have consistently ignored the need to improve living conditions and accommodation. I am sure that hon. Members will agree, because many have argued for it, that assistance must be given to armed personnel to enable them to improve their living conditions and to purchase accommodation for when they leave the armed services, so that they have a

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place in the housing market. That is a lot more difficult and expensive than it was the last time that such a scheme was discussed, if only because of the interest rate hike.

We owe our armed services personnel a great debt. When they volunteer to serve, they give up a great deal and the financial recompense that we make them should reflect the level of the sacrifice. We know that recruitment will become more difficult as the demographic changes that are already under way become more pronounced. We support much of the tail-to-teeth approach adopted by the Government.

I have spoken to the Secretary of State about the implications of the Deal bombing and the murders in Germany. We deplore them.

Mr. Richard Holt (Langbaurgh) : Will the hon. Gentleman give way?

Mr. O'Neill : No, I will not. I want to get this in in one piece because it is important.

Mr. Holt : Will the hon. Gentleman give way while he is still dealing with terms and conditions?

Mr. O'Neill : No, I will not.

The implications of the Deal bombing and the murders in Germany are such that we will not try to make political capital out of these events. We resent the allegations made, in the heat of a conference speech, by the Prime Minister, reading from a press release.

Mr. Tom King : No.

Mr. O'Neill : Yes. The right hon. Gentleman may wish to check against delivery, but the press release said that some in the Labour party were trying to make political capital out of these deaths. We resent that. We deplore these deaths. They are the work of ruthless fanatics with whom no democrat can have common cause. Those hon. Members who seek to consort with them or their allies deserve our contempt. The Labour Opposition join all who seek to console the grieving and give our full support to those who are pursuing these despicable murderers.

These tragedies have underlined the problems, especially for the British Army of the Rhine, of making every base and military establishment secure. Our troops in West Germany are there for long periods, so it is desirable that their families are able to stay with them in an environment that strikes the right balance between military and civilian life.

Things are different in the United Kingdom. There are no soft targets. The atrocity at Deal might have been avoided if, for example, fencing had been constructed on time. The ifs are endless. The presence of some private security firms at gates and on perimeter duty gives a clear sign to terrorists that part of the security is the responsibility of people who do not have access to arms, and who have only a minimum of training and often only the slimmest of commitments to the job.

The desire to free service personnel for more important and satisfying tasks commensurate with their training is understandable. However, if the work were undertaken by firms that operate proper vetting procedures, pay decent wages, take time to train their staff and can retain them, then their employees could undertake certain duties. However, I am not sure whether it would be as financially attractive for such firms to tender. In the discussions that some of my colleagues in the trade union movement had

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last week with the Under-Secretary--I have a copy of the outline of the minutes taken by the trade union side--it became apparent that a review was going on.

We recognise that on some contracts that are still in the pipeline, the Government have given commercial undertakings. I hope that we can ensure that no more of these cheapjack firms will be hired and that, when people are sacked from one Department of the Civil Service, they do not reappear in the employ of another some time later.

Mr. Keith Mans (Wyre) : Will the hon. Gentleman give way?

Mr. O'Neill : We also recognise the Government's desire to control defence expenditure and reduce it where possible, and that desire is shared by all hon. Members. However, we deplore the piecemeal, penny-pinching manner in which they approach it. Morale in the service suffers, and the Civil Service and the Ministry of Defence are in constant turmoil. The defence industries feel manipulated by competitive tendering a way that was never intended. The Government are trying to do too much with limited resources. That is why we are calling for a full defence review--not one held over the weekend and reported only in the Daily Telegraph , but one that will take as its starting point our commitments.

We need a proper assessment of what is happening with the Trident system. This can incorporate the study by Sir Francis Toombes into the reasons why we can barely construct the facility for the Trident warheads, let alone staff it and produce them. We need to know what the prospects are for the D5 rocket and whether congressional funding for it will be confirmed. What will be the cost consideration for Britain, about which our ambassador in Washington referred in Jane's Defence Weekly last week?

What is the status of the stories about the vulnerability of nuclear boats to satellite radar? Is it true, or is it merely a piece of United States inter-service black propaganda? The House and the country are entitled to clearer and more explicit answers than the ones given, or than I have been given by the Secretary of State in a letter.

Mr. Mans : Will the hon. Gentleman give way?

Mr. O'Neill : The next Labour Government will accept the responsibilities, both financial and strategic, of inheriting the Trident programme. We shall keep and deploy our nuclear weapons in accordance with Alliance decisions. We shall work with the United States and the Soviet Union to secure a further reduction in the world nuclear arsenals. We shall participate in whatever talks are available to secure a complete ban on nuclear testing, to widen and strengthen the case for non-proliferation by showing that the existing nuclear powers will use their best endeavours to reduce and eventually eliminate our nuclear arsenals. We hope that the Government will subscribe to this approach, which we know is favoured by Washington and Moscow.

Our commitment to BAOR will be required to change as a consequence of the conventional forces in Europe talks in Vienna. The review must look at the prospects for force restructuring and for changes in military doctrine, with all the technical and equipment consequences that will follow. The House should be under no illusion. Britain, and only Britain, opposes the kind of disarmament that is on offer in Vienna. We know of the Government's deep-seated opposition to arms control in

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the air, but rather than restrict and obstruct it, we should be exploring ways in which the deployment of the new stand-off missiles can be controlled. We are neither seeking British deployment of these weapons nor prepared to countenance their clandestine deployment in Europe by the United States. Let us talk to the Americans and get a clear and public understanding of what the United States air bases will be used for and what will be deployed there.

One of the great tragedies is that the impetus for arms control which exists on the continent does not drive the search for maritime arms control in the Atlantic. There must be an urgent review to examine some of the Soviet offers in that area. The forward deployment of Polaris with the attendant ships and aircraft contributes to a provocative maritime strategy.

There are a number of confidence and security-building measures that could be explored. For example, there is notification of movements, notification of exercises along the Stockholm lines and the possibility of challenge inspection.

We have also to assess the significance of protecting

Mr. Mans : Will the hon. Gentleman give way?

Mr. O'Neill : Madam Deputy Speaker, this individual has endeavoured over the past quarter of an hour to interrupt my speech on a number of issues which bear no relationship to each other. I do not wish, therefore, to have him intervene in my speech. I ask you, Madam Deputy Speaker, to keep him in his seat.

There are a number of confidence and security-building measures that we could undertake. A degree of interest and commitment from Britain would transform the nature of the NATO debate. Apart from Norway and ourselves, virtually no other country, apart from the United States, takes very much interest in maritime matters in the high northern waters.

We must assess the significance of protecting sea lines of communication. If the CFE agreement goes the way that we all hope it will, the need for back-up support assumes new significance, and the case for a surface fleet will be raised again. I doubt whether, at the present rate of ordering, 35 ships could do the job.

The defence of the United Kingdom and of the home base will continue to be our closest concern. The problems of building up reserve forces were referred to by the Secretary of State. We support him in his endeavours to get as many employers as possible to agree to support the reserve forces. We are talking of an essential part of the defence of the United Kingdom. We want to ensure that all our forces, reserve and regular, are properly trained and equipped and that they are Britain's highest priority. Out-of- area

responsibilities must be continually reassessed. For example, we must determine what the size of the Armilla patrol should be. British forces and ships must be kept out there no longer than is necessary. We have a two-day debate in prospect, but the areas that have been covered by the Secretary of State and myself could justify a far longer one. It is clear that there is confusion and muddle in the Cabinet and in the Ministry of Defence. The British Government are at odds with the rest of NATO on major issues underlying strategy, equipment, deployment and the scope and pace of

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disarmament. That is bad enough, but even worse is that that confusion is reflected in the defence industries, in which some great firms are teetering on the brink of bankruptcy because of the delay, muddle and expense that stems from the process of competitive tendering. There are other firms which do not know when they could fall prey to foreign takeovers. They do not know what, if anything, the Government will do to construct a credible strategy for our defence economy.

Last but not least, what future is there for our armed forces when they see their European counterparts with better equipment, better living conditions and a clearer sense of purpose in their military role? These young men and women are sick and tired of being told that they are the best in the world by a Government whose incompetence, short-sightedness and cheese-paring all too often provide inadequate means to carry out tasks that the rest of the allies no longer think are necessary. Eight years after the Nott report, Reykjavik, Stockholm and the INF, with the prospect of further disarmament to come, we need a review of Britain's role in the world and its future contribution to peace and disarmament. That is why I urge my right hon. and hon. Friends to join me in supporting the amendment. 5.34 pm

Mr. Michael Mates (Hampshire, East) : I am sure that the entire House will wish to congratulate the hon. Member for Clackmannan (Mr. O'Neill) on his remarks about the atrocity at Deal. It must be healthy that there is outright condemnation of the horrors that were experienced there from both sides of the House. The House is the better for both sides being able to agree that such matters should be condemned.

I congratulate the hon. Member for Clackmannan also on the way in which he has danced lightly through the minefield of his party's policy. He did so with his usual good nature and good humour. He made what I reckoned to be an impossible job just a very difficult one. There is a serious aspect of what the hon. Gentleman said, however, which I am sure my right hon. and hon. Friends will want to consider. He criticised the Government's defence policy. He argued that the Government have not gone far enough, have not done enough and have not maintained the real rate of increase on the basis of the inflation that was expected but which has not materialised. If that was not an exercise in cynical opposition, it was an outline of what the hon. Gentleman is committing his party to if and when it should ever form a Government. His words, criticisms and charges need to be closely examined. Questions need to be asked in the greatest possible detail so that the hon. Gentleman can sustain his claim that a Labour Government will do more for Britain's defence than the present Government have done.

I am glad to have the chance of congratulating my right hon. Friend the Member for Bridgwater (Mr. King) on his appointment as Secretary of State for Defence. I look forward to working with him in the years to come. It is appropriate in a defence debate that we should thank him too for his work in Northern Ireland. I do not refer only to the politics of that God- forsaken part of our kingdom. I am mindful of the enormously staunch way in which he supported our forces during his four years as Secretary of State for Northern Ireland. That was of enormous encouragement to all those I know who served in the Army

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in Northern Ireland and to the services generally. The morale of those in the services depends on the staunch support of political leaders. They could have had no stronger ally than my right hon. Friend, and the House should know that.

I am grateful to my right hon. Friend for his kind remarks about the Select Committee on Defence. I am sure that all my colleagues who are members of the Committee will look forward to meeting him, to having him appear before us and to working with him in the years to come. Of course, we have different jobs to do. We have different responsibilities and our aims are not always the same. My right hon. Friend has to defend the Government's policy while members of the Select Committee have to examine impartially, as I hope we do, all the problems of defence in terms of accountability to the House. This means that there will always be a constructive tension between us. If that is handled with good nature, as it has been in the past, I do not see it as other than a thoroughly healthy irritant to the democratic process.

A defence debate is a time when we who have the good fortune to serve on the Select Committee on Defence can have our wares set out and examined. I hope that the House will have noticed the resume of our activities which appears on the Order Paper. It sets out 10 of the reports which the Committee has produced this Session. That list does not include the report on the Brigade of Gurkhas, which was attached to the Army debate. We have produced 11 reports and we expect to produce three more before prorogation. The production of these reports is a tremendous tribute to my Committee colleagues for their hard work and their largely bipartisan approach to the Committee's work. With the membership of the hon. Member for Woolwich (Mr. Cartwright), I should say that the approach is tripartisan. The hon. Gentleman's expert contributions are greatly welcomed. The Committee has worked hard and I am the first to acknowledge to all my colleagues how grateful I am for their help.

I wish to make one other acknowledgement. It is an unusual one, but I hope that it is not out of order. I wish to thank a servant of the House, Mr. Robert Rogers, for his work during the six years that he has been the Clerk of the Select Committee on Defence. His work has been unstinting and his loyalty has been tremendous. He has contributed enormously to such effectiveness as we have been able to show to the House in the depth of detail in the reports that we have submitted. When one of the servants of the House does such sterling work, it is perhaps not out of place to mention him by name. The Select Committee on Defence is engaged on two major inquiries. The first one is on military low flying, a subject in which there is a great deal of interest expressed both inside the House and outside. The second inquiry is into the reliability and maintainability of defence equipment. We hope that we shall have substantially completed these inquiries by the Christmas recess. We shall then continue our item-by-item examination of major procurement programmes. We shall examine next year Rapier, the JP233, Blue Vixen and the multiple-launch rocket system. In the context of what has been said by my right hon. Friend the Secretary of State and the hon. Member for Clackmannan, we decided this morning that we wanted to pursue further our inquiry into the physical security of military installations, a subject which we examined in some detail a few years ago.

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If hon. Members read the list that is set out in the Order Paper, they will note that we have increased the number of subjects in which we are now making annual progress reports. We attach special importance to our annual review of the defence White Paper. but we are also taking an annual look at Trident, the Royal Navy's surface fleet and the availability of merchant shipping for defence purposes. I hope that the House finds these annual updates useful, because they reflect the anxiety felt by hon. Members on both sides of the Committee about those problems, which do not simply go away because they have been considered once. They need to be considered more often so that we can try to identify trends and report them to the House, as well as merely giving the snapshot view at a particular time. I shall allow the Committee's other reports to speak for themselves. I want to pick out one theme from our report on this year's "Statement on the Defence Estimates', and that is the subject of personnel covered in part III. Both retention and recruitment, especially of those with key skills expensively taught out of public funds, are showing worrying trends. There is growing disquiet not only about overstretch because of increasing workloads, but about the turbulence that those shortages cause in domestic life. Postings and separations have always been part of the service career, but in an increasingly competitive labour market they may tip the balance towards personnel seeking a career in civilian life ; yet we have spent thousands, and sometimes millions of pounds training them to serve the armed forces. The demographic trough--or the birth/dearth as I have heard it called--will be a major factor in personnel policy during the coming years. My colleagues and I will be studying closely the plans that my right hon. Friend has to offset those trends. It is vital that we retain the high-quality personnel that we need so much. We rightly focus upon value for money, but that should not blind us to the need to think about money for value. We should not only pay tribute to the services and their civilian support, we should ensure that conditions of service, as well as remuneration, do not disadvantage them in a more competitive labour market. That is of key importance not only to the services, but to the civilian infrastructure, as is shown in our second report of the session on the truly alarming staffing situation in the procurement executive. Although my right hon. Friend said that this was a good time to hold a defence debate, the Committee is disappointed that, once again, it is taking place after the summer recess, so we are debating a document that was published almost six months ago. The Committee finds it difficult to accept such a delay because of the annual rush in the summer to produce its report. The Committee is given four weeks to do so by the Leader of the House, who then tells us that he cannot guarantee a day more. Therefore, at not inconsiderable expense to the Exchequer, the reports are printed urgently.

To have the matter put off until the autumn takes away the urgency of the inquiry and the freshness of the debate--and not only on our report, but on the Government's White Paper. I am also aware that our demand to conduct the inquiry in a short time places extra burdens on the Ministry of Defence. I hope that my right hon. Friend will help me this year and try to achieve a timetable that is comfortable for us all and that enables the debate to have the freshness that it lacks after the long summer recess.

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I wish now to speak for myself as a Back Bencher and to return to a subject upon which I touched during the Army debate. It is the way that the community charge is to be introduced in the armed forces. Before my hon. Friends groan, I assure them that I do not intend to cover old ground. I accept that the poll tax will be introduced, but I beg my right hon. and hon. Friends to think about what will happen in the armed forces. My hon. Friend the Member for Romford (Mr. Neubert), who was the Under-Secretary of State for the Armed Forces at the time of the Army debate, undertook to write to me and clarify matters. He did write, but far from clarifying matters, he increased my alarm. The Government's argument is the standard argument on which they have introduced the charge, and which I accept--that they want to increase the direct accountability of local authorities to a wider range of the population. That would be acceptable if the argument could embrace the armed forces, but I hope to show that, in many cases, it cannot.

In his letter, my hon. Friend the Member for Romford said : "To remove the entire body of the Armed Forces from this regime would directly cut across the important link between what individuals pay and the level of local services they are able to enjoy." My hon. Friend's letter has been placed in the Library, so some hon. Members may have already seen it. He went on to explain how the system would be introduced, and said that there would be a ceiling beyond which service men would not be charged in high-rated areas, although why that should be £50 a year more than the average I do not know.

I telephoned my hon. Friend's office and asked how that would operate and how he would work out the average charge. My hon. Friend's office said that they would add up all the community charges payable in all the districts of the land so that they could work out the average. A return will have to be made of every single and married soldier's community charge, wherever he happens to be and for whatever part of the year he happens to be there. As an exercise in bureaucracy that will be extremely difficult, although such things can be done. But done for what? It is so that the tenet of accountability will still apply.

The Government realise that that will create problems--for example, with the temporary posting of service men. Yet even more extraordinary is the fact that there are different rules for married service men and for single service men, and those rules apply in quite different ways. When a married service man is sent away from his station the community charge in the new place will not be payable if the tour lasts for less than six months, yet single service men posted away from their station will come off their home community charge register after 60 days.

How can it be that, for example, if a regiment is sent to Northern Ireland for four or five months the married members of the regiment will be treated differently from the single members? Some will come off their home community charge registers after 60 days ; others will not be eligible for some months. That does not make sense. They are all in the same boat, having been sent there to do the same job. If there is to be a financial difference in the

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way they are treated for the purposes of the community charge--I am not suggesting that anyone should get out of paying it--that will cause dissent.

Indeed, there is currently cause for dissent in Scotland, where some members of the armed forces are paying the community charge as well as rates. They have left their families in England and gone to serve in Scotland, where the registration officer is registering them as liable for the community charge although they are still paying rates at home. Added to that is the problem of the way in which the system is being perceived by those serving in Scotland because the senior officers are hundreds of pounds better off while the junior ranks are much worse off. Although that is an effect of the community charge which is part of the general debate, it has always been a tenet of the way in which the services conduct themselves that, as far as is possible, everyone is treated the same.

There is a simple solution. We have lived through the complexities of the rating system for 50 and more years, and we can do the same under the community charge. No service man should be exempt from it ; each must pay his due. However, they should each pay an average for all three services, which could be collected in the same way as the rates are collected now. Currently a married service man pays a rates element in his rent, which is collected and passed on for local government expenditure. The same applies to a single service man. Why change a perfectly good system? Everybody thinks it fair. In my constituency there are three major training schools where people come and go. Those responsible within those establishments are bending over backwards to tell the local authority who comes one week and who goes another week in preparation for next April. What an unnecessary complication when there is a perfectly fair and just method of charging service men under the community charge so that they make their contribution to local government in the way that they have been doing.

I beg my right hon. Friend to look at that matter again. The potential muddle greatly outweighs any benefit that may come from a system based on local accountability. It is desirable for all service men to feel part of the local government and the national process, but I am afraid that that will never hapen. They will make their local affiliations where their homes are, the places from which they come, the places that they go home to for their leave and the places to which they retire, rather than the station in which they find themselves serving for six months or one, two or three years. There are so many more complexities that I could have thrown at the Government if I had so wanted, but I want to make one fundamental point in the hope that the matter will be looked at again. If it is, as it nearly always is, the Treasury which is making difficulties, let it be told why a policy which, without fighting old battles, I can say has not been the most popular that the Conservative party has introduced in the 15 years that I have been a Member, would make a bad situation worse by upsetting the soldiers, sailors and airmen. They may always be grumbling, but if the system is fair, it can be ignored ; if it is unfair, their grumble is genuine, and that does untold damage to the armed forces.

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5.50 pm

Mr. John McWilliam (Blaydon) : It is always a pleasure to follow the hon. Member for Hampshire East (Mr. Mates), particularly since it gives me an opportunity to pay my tribute to the work that Robert Rogers has done as Clerk to the Select Committee on Defence. It is extremely useful to have someone who is as knowledgeable, cheerful and hard-working, and as willing to give advice, help and guidance, regardless of who asks for it, on a completely impartial basis. It is always a pleasure to serve under the chairmanship of the hon. Member for Hampshire, East. As hon. Members can see from the number of reports that we have produced in the past few months, we have been extremely busy. However, there are irritants. It is irritating when the Ministry of Defence, for reasons of its own, becomes obstructive on perfectly legitimate questions about its policies and expenditure. It is irritating when witnesses insist on giving in private information which is not secret or classified. We are told that it is commercial, in confidence. When the information is given, one realises why- -it is embarrassing. It is also irritating to be given classified evidence in private only to see on our television screens the next morning a complete exposition of what it was, including close-up photographs of the weapon system, which is usually a Soviet one, a complete analysis of its capabilities and details of what is being done to overcome it. We often get more information that way than we are given. That is extremely irritating and I wish that the MOD would stop it.

Equally, when the MOD sends witnesses to us, I wish that it would send them in a helpful state of mind. It is irritating to have able and intelligent individuals standing before us playing a straight bat and ending up looking positively foolish. It is even more embarrassing when we have to abandon evidence sessions and recall witnesses and a Minister, who has to remain simply because, during the first session, his civil servants would not answer questions. Those are my gripes.

I too welcome the right hon. Member for Bridgwater (Mr. King) to the Dispatch Box, but I am disappointed in what he had to say. I am disappointed because he was complacent. He did not seem to be reflecting the challenges and opportunities which now exist for him--opportunities which have not existed for a long time. It is all very well for him to claim that the tensions within eastern Europe and the Soviet Union increase the threat to Britain. They do not. As far as I am aware, the independent republics of the Soviet Union are not in a state of war, or undeclared war, with the United Kingdom or any of our NATO allies. As far as I am aware, they make no territorial claims upon the territories of any of our NATO allies. As far as I am aware, all that they want, and all that they are trying to get, is a measure of individual freedom and responsibility and to be able to enjoy choice and a range of goods which consumers in western Europe have been able to enjoy for a number of years. It is the combination of those two pressures which has brought about the changes. President Gorbachev has come to the negotiating table with real offers that have to be looked at seriously.

But there are other pressures, which the Secretary of State was careful not to mention, such as those in the United States. Over the next five years, because of decisions taken by Congress and the Senate, the United

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States will have to reduce its military expenditure by 20 per cent. Such pressures will have serious implications for the deployment of United States' resources within Europe, quite apart from the burden-sharing argument which some people have introduced. I do not believe that we have anything to fear from the burden-sharing argument. Any analysis of our commitment to NATO and to the Alliance will show that we play a full and serious part.

However, I am disappointed that, as my hon. Friend the Member for Clackmannan (Mr. O'Neill) has said, we have begun to crack a bit at the seams. We have shown real weaknesses in the one area that is of most importance to ourselves and to Europe, and that is the surface fleet of escorts, frigates and destroyers. We can forget the figures in the "Statement on the Defence Estimates". They are wrong. At the last count in June, of the 47 ships that are supposed to exist, 33 destroyers and frigates were fully operational and eight were available at short notice. That makes 41. Of the 33 that were fully operational, taking into account the commitment to the Armilla patrol, the Falklands, the West Indies and the additional commitment to help preventing drug smuggling and all the other commitments that we cannot discuss, the number of ships which on any day could be committed to NATO is insignificantly fewer than 30.

The number of ships that we are supposed to be able to commit to NATO is classified ; I am not allowed to say. But I can say that the figure that I have quoted is significantly below what we are supposed to be able to declare to NATO on category A--that is, at virtually no notice.

I notice that in the "Statement on the Defence Estimates" the Minister has stopped trying to hide behind the claim of maintaining a surface fleet of about 50 ships. That fiction no longer holds. It is no good the Under- Secretary of State for Defence Procurement shaking his head. That fiction has been presented to us for four years. There can be no argument because the Select Committee report named the ships ; any hon. Member can count them. That is a significant failure on the part of the Government.

My hon. Friend the Member for Clackmannen mentioned manpower, as did the hon. Member for Hampshire, East. The Secretary of State was complacent. The shortfalls are worse than they appear and they will get much worse. When we put it to the Ministry of Defence that we should perhaps maintain the Gurkhas, as constituted, to make up that shortfall, the Ministry of Defence reacted by cutting their numbers in half. It has not yet told us how that is to be done, or about the support units, or about proportions, or about where the Gurkhas will be based. All that we know is that their numbers will be cut in half, and that does not make sense out of the context of a defence review. We should have a review of our commitments to determine what we have in the way of assets and responsibilities and then to allocate them according to the review--but this is a defence review by stealth. Who gets cheese-pared depends on who happens to be flavour of the month. That bears no relation to the commitment required of the large number of men and women who serve in our forces, and it must ultimately lead to some loss of morale.

The Secretary of State was even more complacent about the Procurement Executive. We rely on civil servants to ensure that we are getting value for money and that contracts and specifications are properly drawn up and

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