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Mr. Arbuthnot: Today's announcement about Land Rover vehicles does not replace the RB44. They are steadily coming back into service as they are repaired.
Mr. Spellar: I thank the Minister for that clarification.
The argument over the Army field ambulance is a symbol of what is wrong with the Government's unbalanced general procurement policy. I am pleased that the Minister of State for Defence Procurement will reply for the Government. We thought that there would be some movement when the previous Minister, the right hon. Member for Kettering (Mr. Freeman), gave evidence to the joint Select Committees on Defence and Trade and Industry in May, as was mentioned by the hon. Member for Romsey and Waterside. The right hon. Member for Kettering said:
We also hoped that there would be a positive response to the joint report of the Defence and Trade Industry Committees, which drew attention to many of those points. I am afraid that our hopes were misplaced. In a parliamentary answer on 9 January, the Minister of State for Defence Procurement, in talking about the white vehicles contract, stated:
Such an attitude is widespread throughout Whitehall because on 11 January the Under-Secretary of State for Trade and Industry, the hon. Member for Amber Valley (Mr. Oppenheim), said of the field ambulance order:
Those are, of course, important considerations, but they are incomplete. The Government are trying to construct a two-legged stool. There is an important third leg, the maintenance of Britain's defence industrial base. It is recognised by the Labour party, in our document,
"Strategy for a Secure Future" and by the joint report of the Select Committees on Defence and on Trade Industry,
"Aspects of Defence Procurement and Industrial Policy", which states:
It is the practice, formally or informally, of our major industrial competitors and the minor players to operate in that way. It is this Administration, with its time-warped, dogmatic approach, that is out of step. The Government are dominated by far-right dogma, conducting their theological debates to the exclusion of the country's real problems. It is very reminiscent of the Labour party in the early 1980s.
We must ask: when will the Government learn from the successful countries and companies in the real world, where partnership between supply and customers is the increasing pattern? The Government seem to take an almost Orwellian stance on the issue: two legs good, three legs bad. We do not expect them to change completely; we will offer them a way out. The Government may say, "Two legs good, three legs better." They will then have a balanced procurement policy.
The Land-Rover example provides another major lesson. The Rover group, its employees and their unions have worked together increasingly as a partnership to compete in the global market. That partnership is replicated in many other defence firms across the country. Their message to Government is the same as the message from the Select Committee: partnership at industry level must be matched by long-term partnership between industry and the MOD. That is how we shall ensure that our forces get the equipment that they need and deserve, that taxpayers get value for money and that Britain's defence industry can punch its weight in the international marketplace.
The ideological approach that is adopted in so many areas is leading to some interesting, if extremely perverse, conclusions. In pursuit of the holy grail of the free market, the MOD is putting at a disadvantage the now private sector Royal Ordnance compared with some of its overseas competitors. In the words of the Select Committee, those competitors are
That is without the activities of Mr. Gordon Foxley and his corrupt cohorts, who made the situation worse. That led to the purchase of duff ammunition and to disaster for the Blackburn ordnance factory. The Minister will also be aware of the considerable disquiet about the below-cost order for target ammunition from Portugal for Bisley. That has again had an effect on one of our ordnance factories.
We understand that the 81 mm mortar order, worth £100 million, is just around the corner. The product was sold previously to 40 countries, including the United States in the face of a "buy American" policy. Yet our firms must face a "sell Britain short" policy. Its prime architect is the Secretary of State's pal, David Hart, whose philosophy was summed up in a line of his article which appeared in The Spectator on 6 February 1993. In the article, he talked about purchasing F15s and fitting new avionics in Britain, so that
What a dismissive attitude to adopt to Britain's top exporter, and what a revealing comment about Mr. Hart's attitude to Britain's industrial base.
The Government's policy is also adrift of reality in relation to the sale of the married quarters estate. The current indications from mortgage companies point towards some level of upturn in house prices, which will continue into next year. We know that they do not have the best prediction record, but it would be a bold Minister who would go on the record tonight as forecasting a further decline in house prices--especially in light of the Prime Minister's assurances on Tuesday.
If we are to believe the Evening Standard, the Minister of State for the Armed Forces has not been too successful in his efforts to sell his flat, so he knows the problems
that abound in the property market. However, at the possible bottom of the price cycle, the MOD is rushing at breakneck speed into a sale of its housing. If a company did that, the pundits would view it as a sign of impending bankruptcy.
The situation is worse than that. The MOD is also committed to an open-ended contract, whereby it will pay either a fixed sum or an aggregate of total market rents-- whichever is the higher--while the rent assessment officers and the tribunals are pushing up rents well above the rate of inflation and the increase in the cost of housing. We do not even know whether NAPNOC--no acceptable price, no contract--will apply. It is the give-away sale of the century.
Who will benefit? The forces will not benefit. They are known to be very concerned about the disruptive effect of the scheme, especially for relocation of troops in future. The service men would probably do far better under the discounted sales scheme. It appears from a parliamentary answer to me today that the scheme is at risk. The answer reads:
As the answer makes clear, the scheme has been popular with service personnel.
People who are looking for rented homes in the area will not benefit. Even local builders may be undermined if faced with possible release of property in the area. We are faced with a dogma-driven exercise, probably pushed by the right-wing guru, David Hart. The prospectus of the MOD for purchases makes that clear. It reads:
Mr. Arbuthnot:
Will the hon. Gentleman give way?
Mr. Arbuthnot:
Is the Labour party committed to the married quarters estates sale? Would it reverse it? What would it do about it?
Mr. Spellar:
I thought that I had made it clear that the last thing anyone would do now would be to sell property at the bottom of the market and then put it out on the basis of market rents, as they increased--[Interruption.]
The Minister is trying to shout me down. It seems that he is desperate to sell now and pay later. He is not even--
[Interruption.]
Mr. Deputy Speaker:
Order. I am trying to listen to the hon. Member but the Minister is not.
"the Ministry of Defence needs to continue to give due consideration to the possible consequences of procurement decisions for the defence industrial base and I am happy to affirm this once again."
"the criteria for the selection of the winning bid is based on best value for money, which includes technical and commercial competence"--[Official Report, 9 January 1996; Vol. 269, c. 104.]
"contracts . . . will quite rightly be based primarily on value for money and operational considerations."--[Official Report, 11 January 1996; Vol. 269, c. 295.]
"We recommend that MOD endorse the view that National Security depends on a strong economy as well as strong armed forces and that it has an important role in contributing to that economic strength. We further recommend that MOD make the maintenance of the technology base of the UK defence industries a priority, and that consideration of this factor be built into the procurement process from the initial stages right through to the decision to order the equipment".
That is recognised by defence industry firms and their employees. In its evidence, the Defence Manufacturers Association said:
"MOD's procurement policies are seen as verging on the hostile to the indigenous industrial base and there is no clear defence industrial policy against which British industry can negotiate R&D co-operation from a position of strength."
"nationalised or otherwise subsidised with protected home markets and thus frequently able to quote for UK orders at or below marginal cost".
"British Aerospace can stay in business, if it must".
"The future of the scheme is being evaluated in the context of the proposals to transfer the married quarters estate to the private sector."
"The Government is determined to sustain"--
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