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6.27 pm

Sir John Cope (Northavon): I agree that the Royal Air Force serves this country exceptionally well, and my hon. Friend the Minister of State made that point effectively at the start of the debate. That was also apparent at the excellent recent presentation to Members of both Houses by the Royal Air Force presentation team and some senior officers.

The hon. and learned Member for Fife, North-East(Mr. Campbell) began by calling for stability for the Royal Air Force, and the Government have committed themselves to stability in defence organisation and spending. From the point of view of the Royal Air Force, the hon. and learned Gentleman must hope for continuity of Conservative government in the next few years. That is the only result that could guarantee the continuity of defence spending, as set out in the White Paper and elsewhere.

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My concern arises from my constituency interest and involves the defence industrial base. I shall follow on from and, to a certain extent, agree with some of the remarks made by the hon. Member for Warley, West(Mr. Spellar). Towards the end of a somewhat thin speech, the hon. Gentleman complimented the report of the Select Committee, and my right hon. Friend the Member for Kettering (Mr. Freeman) when he was at the Ministry of Defence, on the emphasis that they placed on the importance to this country of the defence industrial base.

The view has occasionally been expressed in some quarters of the Ministry of Defence that the health of the companies involved is a matter for the Department of Trade and Industry, not the MOD, which should look for the best equipment for the forces at the best prices and allow companies' health to be the responsibility of others in government. But that is a narrow view. It is certainly in the national interest that the great defence companies of this country, both large and small--many small businesses are involved in defence--should continue to contribute a great deal to this nation.

It is said that 395,000 jobs in the United Kingdom are supported by defence goods and services, of which about 80,000 are dependent on exports. There are more people in the defence industries than there are in the armed forces--there are about 215,000 people in the armed forces in total. That should not surprise us, as 39 per cent. of the defence budget is spent on equipment and 29 per cent. on service personnel. Those percentages back up the relative importance of the defence industrial base.

For those companies to flourish, it is essential for the Ministry of Defence to take account of the direct and indirect effects of its massive purchasing decisions on British companies. I would not express it quite as crudely as the hon. Member for Warley, West did by saying that we should always buy British or always try to. It is more complicated than that, as the speech of the hon. and learned Member for Fife, North-East made clear.

The maintenance of the industrial base is not only in the interests of the companies and industries involved, but in the interests of our defence. We are not asking the RAF or anyone else in the armed forces to accept lower standards of equipment or safety. The equipment produced by British companies is of as high a standard as any in the world, but we also know that we can rely on our companies.

During the Gulf war, it was interesting to note how many civilian personnel went out to help back up the armed forces in the field. We have not always been able to rely on defence equipment bought from other countries--a serious incident involving ammunition occurred in the middle of the Falklands war. The more general point is that, unless British industry--both the defence sectors and other sectors--prospers, we shall be unable to afford the defence that we should have and that we wish to have. The health of industry in general provides important underpinning for this country's defence.

I know that some people, particularly some Opposition Members, are embarrassed that our export effort and employment depend to such a large degree on the building of defence equipment. That has led people to think up the ridiculous idea of a defence industry diversification

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agency. The idea that a Government agency should help defence companies turn over to civilian production does not bear examination, and I am glad that the idea has not been repeated this afternoon. I have lost track of where the idea has got to within the hierarchy of defence thinking among Labour Members--perhaps I am about to find out.

Mr. Frank Cook: I am grateful to the right hon. Gentleman for giving me the opportunity to comment on his last assertion. The assumption that Labour Members are opposed to export sales of arms per se is misleading. Labour Members oppose the export of arms to regimes that will use them for suppression and repression--that is the point.

Sir John Cope: There are two separate arguments--I accept what the hon. Gentleman said. Of course, we can disagree about the particular regimes in question and the particular sales that are made, or are likely to be made, to them. However, some Opposition Members--I acquit the hon. Gentleman of this charge--seem less keen for us to be in the defence production business at all. That must be true; otherwise, what would be the point of a defence industry diversification agency?

The idea that some such agency could tell British Aerospace in my constituency or Rolls-Royce, which also affects my constituency, how the defence sections of their business could be switched over to peaceful activity is ridiculous. British Aerospace is already among the world's leading suppliers of airliners--particularly through its European connections and the airbus. Rolls-Royce is one of the world's leading aero-engine suppliers to both civilian and military aircraft. The idea that an agency could tell those businesses how to sell more civilian aircraft or aero-engines is ridiculous.

Mr. Paul Murphy (Torfaen): I shall have the pleasure and honour of visiting Rolls-Royce in Bristol next Monday. The last thing I shall be telling it is to diversify in the way that the right hon. Gentleman suggested. I am sure that he would agree that defence diversification in this country and others does not involve telling industry what to do. Because of the way in which the world has changed in the past few years, industry is looking for other ways to develop its skills and potential--there is nothing wrong with that.

Sir John Cope: I am all for that. I am happy that the two companies that I mentioned, and many others, are extremely active in civilian as well as military markets. The idea on which I was pouring cold water was that a Government agency could push them from the one to the other.

I shall return to the main points that I wish to make in support of the defence industrial base. My hon. Friend the Minister of State for the Armed Forces will have to give close attention to the three forthcoming purchases for which bids have been submitted. It is important to consider the British content of those bids not only in terms of quantity, but in terms of quality.

The bids are made to look as British as possible: all the literature that has poured in to us recently has been covered in Union Jacks and has contained great lists of subcontractors in every possible constituency. All those

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bidding do their best to demonstrate that they are the most British. But what matters is the quality of the contribution, not merely the quantity or percentage of the contribution.

Therefore, although I entirely accept the difficulty that Back Benchers face when judging competing bids objectively, I think that British Aerospace makes an exceedingly good point when it draws attention to its prime contractorship in the three bids in which it is principally involved--the maritime patrol aircraft, the stand-off missile and the air-launched anti-armour missile. In all cases, it is necessary to look extremely carefully at the quality of the contributions in the bids of all the companies when deciding between them--I appreciate that it is always an extremely difficult choice.

The decision by my hon. Friend the Minister of State and my right hon. Friend the Secretary of State will have great significance for the future of those sections of British industry and for potential exports. They should give the closest possible attention to that aspect of the purchasing decision.

I agree with some of what the hon. and learned Member for Fife, North-East, who sits on the Liberal Benches, seemed to say at the end of his remarks about Europe. In looking at the three purchasing decisions, I believe that there is sometimes a danger in becoming too involved with the American, as opposed to the European, contractors. The base from which the American contractors operate is massive. It is backed by massive Government research--the National Aeronautics and Space Administration, and in other ways--and, of course, it has the benefit of a huge home market.

Mr. Wilkinson: Could not the converse equally be true? Participation in American programmes, for the benefit of our armed forces, to meet a British need, gives British industry an incomparable opportunity to maximise its participation over large production runs, especially in the export markets, to meet American requirements. Dowty in Cheltenham is building the propellers for the C130J, and there is a huge benefit. The same could apply if that propeller was chosen for the Orion 2000.

Sir John Cope: I do not argue that it is wrong in every case or that there are no advantages in co-operating with the Americans, but the fact is that the United States is extremely reluctant to export any of its technology. One is not dealing with an equal partner when one takes on a partnership with the United States; whereas one tends to deal more with equal partners in the deals that are put together in Europe.

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