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Mr. Miller: In challenging the Minister to make a statement to the Committee the day after the Budget, does the hon. Gentleman believe that the batch 2 Trafalgar class submarines will not go ahead? Is he satisfied that the project will go ahead?
Mr. Colvin: I am as satisfied as I can be. However, I am concerned about its timing. Many orders have been placed which, thanks to Treasury constraints, have been edged to the right. If a wife wants a new kitchen, her husband might say, "Yes, darling, of course you can have it." However, if there is not enough money, he could delay, perhaps by saying, "I couldn't get the one you wanted," or, "The colour scheme is wrong." It could be pushed into next year's household budget: we all know that it can be done.
Mrs. Dunwoody: There would be trouble in the marriage.
Mr. Colvin: I take the point. Such delays deprive our armed forces of much-needed equipment and add to industry costs. Although it may help the Treasury to balance the books this year, it will add to the long-term costs.
While on the subject of defence industries, I draw the attention of the House to the equipment section in the Committee's report. During our visit to Washington last June, we studied the state of the so-called "two-way street" regarding reciprocal sales and purchases of defence equipment between the United Kingdom and the United States, particularly the extent to which United Kingdom companies get offset defence business from US companies when our Government buy American. The two-way street when the Government came to power was about 15:1 in favour of the United States. During 17 years of Conservative Government, that ratio has improved, but it is still 2:1 in favour of the United States and that is too much.
Since the end of the cold war, there has been an enormous restructuring of defence industries on both sides of the Atlantic. That restructuring has hit the United States defence industrial base much harder than it has hit ours, because we were restructuring anyway. There has been a dramatic loss of jobs in the United States.
My right hon. Friend the Member for Northavon (Sir J. Cope) earlier referred to the question of diversification and conversion in the defence industries and he picked up a point made in the Opposition amendment. The United States of America has thrown $300 million at the conversion of its defence industries with not a single dollar in return. It has been a complete waste of money and is not the way to use public funds.
Another factor is the collapse of the Soviet Union and the Russians' desperate need for foreign currency. They are flooding world markets with defence hardware, including Kilo class submarines and even Scud missiles. That is dangerous and it is also bad for our overseas sales prospects.
While in Washington, we met Dr Paul Keminski, who is the Department of Defense Under-Secretary for Acquisition and Technology. We had an interesting
discussion and Dr Keminski gave every indication that the United States is beginning to have a change of heart about what is known as the "buy American" policy. He saw the advantages of an open market for defence products. He told us of 20 equipment programmes that offered opportunities for co-operation with the United Kingdom and he held out exciting prospects for research and development programmes.
Dr Keminski also told us that because of the shrinkage of the US defence industrial base, it was difficult to obtain competitive quotations within the United States and his Department had to look to Europe, and in particular the United Kingdom, for competition. He wanted the business to start further upstream--in other words, research and development programmes would be open to United Kingdom bids as well as to American companies. The Americans intend to spend $45 million in 1997 on 34 such projects, and Britain is already involved in a third of them. It is therefore doubly important that the Ministry of Defence should react positively to the call from the Society of British Aerospace Companies for Government help with demonstration programmes, because otherwise we run the risk of losing our technological lead.
One big question is whether the United States and the United Kingdom are becoming more protectionist. Both countries are in an election mode and there is a tendency for orders to be placed at home. We see that in the United States at the moment. We have heard calls from Congressmen on the hustings for an expansion of the "buy American" policy. In the UK, we want to see a better balance of transatlantic trade in defence hardware and the Government's decisions on the Nimrod replacement and the stand-off missile and anti-armour weapon for the RAF are welcome examples of that.
The key to the Nimrod replacement is the opening up of world markets, because there is a market of some £9 billion waiting for a replacement maritime patrol aircraft. Japan, for example, wants a jet maritime patrol aircraft that can fly higher, is pressurised and has a longer range, and the co-operation between British Aerospace, Boeing and McDonnell Douglas may assist our access to that market. This product has tremendous prospects.
If I may wear for a moment my constituency hat rather than my Select Committee hat, I wish to seek support for the United Kingdom's two leading military communications companies, Siemens Plessey Systems and Racal Radio--both of which have facilities in my constituency--in their bid for the MOD's Bowman contract to succeed the Clansman communication system. Their bid meets all the MOD's requirements and the companies have already spent enormous sums of their own money on the development of the project. The companies are British and they would create some 6,500 new jobs if they won the contract. The tremendous export potential would mean still more jobs.
Earlier, the subject of Gulf war syndrome was mentioned. We have heard much about organophosphate pesticides in recent years, but not usually in defence debates. They are now on the agenda. Ten days ago, my hon. Friend the Minister of State for the Armed Forces revealed that those pesticides were used more widely in the Gulf than was previously thought and he corrected evidence that had previously been given--not by him, but by an official--to the Defence Committee. That is an example of open government, because there was no pressure on my hon. Friend and he voluntarily came
forward with the information. The Select Committee was pleased to have it although we want to know why it has taken so long for the Ministry of Defence to review the records of all the environmental and operational conditions to which British forces were exposed in the Gulf. We will consider any new evidence and I welcome the offer from my hon. Friend the Minister to meet the Select Committee with his officials to review the welcome and major research programme that will be undertaken into Gulf war syndrome. In particular, we wish to know more details about the epidemiological survey and the Medical Research Council's intentions.
Since the House last sat, the Ministry of Defence has also announced the successful bidder for the married quarters estate--the consortium led by Annington, which has some distinguished military figures on the board. Annington's expertise as a property management company will be more important than the nationality of the various financial institutions that have put up the money. The Select Committee produced an interim report in July and we will consider the details of the sale. Service families will welcome the deletion from the scheme, for the first 25 years at least, of the site exchange option, because it had caused considerable uncertainty.
The sale has not been a tremendous public relations achievement for the Ministry of Defence and, combined with the rise in rents, it has made service families very unhappy. The onus is now on the Ministry of Defence, the Defence Housing Executive and Annington to demonstrate the benefits of the new arrangements, not least the upgrading of the existing service accommodation and the preservation of the integrity of the "patch".
Before I conclude, I will say something about the future of NATO and may take up what the hon. Member for South Shields said, but first I wish to mention one other procurement matter. The Warrior has given stalwart service in Bosnia and it has been the envy of all our allies, which demonstrates the enormous export potential for that vehicle. GKN needs an interim order to maintain the skill base at Telford, where the Warrior is manufactured. The company has made an imaginative proposal for the supply of Warriors in the mortar vehicle role to replace the old, slow F-432s. The mortar proposal is based on the private finance initiative and no payments would need to be made until 2000. That should please the Treasury. It is vital that the production line of the much respected Warrior is maintained. It is the flagship product of GKN Defence and I hope that the proposal wins favourable consideration from the MOD.
When my hon. Friend the Minister of State for Defence Procurement winds up, I hope that he can tell me whether he has had any further thoughts about the decommissioning of our nuclear submarines. At the moment, the plan is to leave them alongside at Rosyth for the half-life to take effect and to remove the radioactivity in due course, but other nuclear reactors exist. For example, questions have been raised about a small reactor used for training purposes at Greenwich and I would like to know my hon. Friend's thoughts on the decommissioning of that facility.
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