| Previous Section | Index | Home Page |
Mr. Menzies Campbell (Fife, North-East): A moment ago, the Minister mentioned the transatlantic connection and the need for open and competitive markets, both points with which I agreed. Does he agree, though, that the transatlantic link could be further strengthened if British defence manufacturers believed that there was an open and competitive market in the United States?
Mr. Arbuthnot: I totally agree. I have argued in the United States and in this country for a two-way street. I recently wrote an article in which I said that, to some extent, there is a two-way street between the United States and Europe, but that, unfortunately, more traffic flows in one direction than in the other. That is not sustainable in the long term, because all the traffic will end up at the wrong end.
Mr. John Home Robertson (East Lothian): It is not good enough to write articles. How does the Minister intend to deal with the problem of American protectionism? Does he not understand that American companies can make loss-leading bids for procurement contracts with the MOD in ways that can destroy key parts of our defence industrial base; while British and other European companies are not allowed to compete for similar procurements in the United States? The hon. Gentleman cannot just shrug that off as a matter for article writing. It is a point that will have to be dealt with.
Mr. Arbuthnot: I do not shrug it off--that is absurd. I talk to industry in the United States; I talk to senators and congressmen, as do my ministerial colleagues. We try to persuade people in the United States. The same applies to European industries: protectionism is not in the interests of United States industry or of European industry. It is a question, rather, of continually persuading those who in the past have argued in favour of protectionism that it will not help them--
Mr. Home Robertson: But it is happening.
Mr. Arbuthnot: Well, we are arguing strongly against it, and we believe that we are beginning to make some
headway. The world is a mutually dependent place; it is a shrinking and a changing world too. A Fortress America would be just as damaging as a Fortress Europe.
The United States is a major market for UK and other European defence goods. To stop American products competing to meet our requirements would ultimately be self-defeating for us, but, as I told the hon. and learned Member for Fife, North-East (Mr. Campbell), there must be reciprocity--the two-way street should be just that. Governments must commit themselves to keeping defence markets open and avoiding the damaging but tempting voices of protectionism. It helps no one.
We have proved our credentials in the results of recent competitions, in which we have, in turn, been accused of a lack of concern for the United Kingdom's and Europe's industrial base and of an anti-American Anglo-European preference. Neither is correct.
Mr. Michael Colvin (Romsey and Waterside):
I accept everything that the Minister and Opposition Members have just been saying, but will he use this opportunity to give credit where it is due?
In the world market for defence products British industry does extremely well, because it is competitive and has a technological edge. Can my hon. Friend confirm that more than half the American orders for defence hardware placed with overseas countries come to this country because of the competitiveness of British industry and the quality of our products? What is more, they come here because of the important north Atlantic alliance, which is underpinned by co-operation between British and American companies.
Mr. Arbuthnot:
To someone with the expertise of my hon. Friend, I can only say yes.
The recent Farnborough air show epitomised the healthy competition through excellence that exists in the global defence and aerospace sector; it also showed the United Kingdom's leading role in that sector. I pay tribute to the success of our defence industries in today's highly competitive overseas markets. Exports of defence equipment benefit both the country and the Ministry of Defence. They support about 90,000 UK jobs, and in 1995 they brought home about £5 billion-worth of business--almost 20 per cent. of the world export market.
It is our overall defence export objective to maintain and build on this performance over the next five years. We are well on the way to achieving that in 1996. The MOD benefits directly from the sale of equipment overseas through the payment of commercial exploitation levies, where we have helped to fund development. It also benefits indirectly from the lower unit costs which result from the spreading of overheads.
For these reasons, it is appropriate that we continue to give full and vigorous support to British industry in pursuit of overseas sales prospects. That is a vital ingredient of success. Industry's assessment is that, in recent years, some 70 per cent. of the total value of export sales would not have been achieved without assistance from the Defence Export Services Organisation. We will continue to help British industry to compete for success in this important marketplace.
As well as developing our procurement policies, we have also made enormous strides in improving the organisation for procurement. Our service men and
women need to know that, in the Procurement Executive, they have an organisation no less professional and expert than themselves. It is an organisation which, at its new headquarters in Bristol, can realise its full potential. The new Procurement Executive will save about £100 million a year in running costs alone. The organisation has 35 per cent. fewer staff than in 1990, and has halved the number of people in the very top management levels. That very much reflects the reality of "Front Line First", under which savings such as those can be ploughed back into defence expenditure elsewhere--including, for example, back into the front line. It is our aim to ensure that the Procurement Executive remains nothing less than the best defence procurement agency in the world.
Over the past year, as my right hon. Friend the Secretary of State outlined yesterday, we have seen a commitment to providing equipment as efficiently as possible. In February, we announced an order for a further three type 23 frigates from Yarrow, valued at £400 million. In July, we announced the decision to order replacements for HMS Fearless and HMS Intrepid from GEC Marine, worth about £450 million. In March, the contract was let for the Apache attack helicopter from GKN Westland, representing the most important element of the Army's forward equipment programme and an investment of £2.5 billion. In February, new support vehicles--both utility and battlefield ambulances--were ordered from Land Rover, worth some £200 million.
Recent decisions for the RAF represent one of the largest packages of equipment procurement with the purchase of the Nimrod 2000 from British Aerospace, Storm Shadow from British Aerospace and Matra Marconi, and GEC Marconi's Brimstone, with a total value approaching £4 billion and sustaining around 5000 jobs in the UK. Those decisions will bring jobs and support industry throughout the United Kingdom.
For the future, we look to continuing work on the new batch 2 Trafalgar nuclear-powered submarines and the collaborative common new generation frigate for the Navy; the multi-role armoured utility vehicle for the Army; and the assessment of bids for the future medium-range air-to-air missile--one of the key armaments for the Eurofighter and for the RAF.
The House will recall that my right hon. Friend made an important announcement in respect of the Eurofighter at last month's Farnborough Air Show. I wish to repeat that the Government are committed to the production investment, production and support phases of the programme, subject to the satisfactory conclusion of the relevant memoranda of understanding and contractual negotiations. I hope that our German, Italian and Spanish partners will be able to make the same commitment soon. We will be working to avoid any further costly delay in this vital programme.
My right hon. Friend the Secretary of State said yesterday that the equipment we were providing to our armed services was world class. That is because our armed services deserve no less. They are widely respected, and I would go so far as to say they may be the most professional armed services in the world.
Mr. Jeremy Corbyn (Islington, North):
Will the Minister give way?
Mr. Arbuthnot:
No, I am winding up.
Look at the job our armed services do. They save lives worldwide with sensitivity and courage, they protect the nation at home and our interests abroad. In that job they represent the people of this country, and they are identified with every man, woman and child. That is why we are so proud of what they do, that is why our armed services have the full commitment and support of this country, and that is why, under a Conservative Government, we will continue to give them the support and commitment they need and deserve.
Mr. Deputy Speaker (Sir Geoffrey Lofthouse):
Order. Before I call the next speaker, I must remind the House that Madam Speaker has placed a limit of 10 minutes on all Back-Bench speeches between 7.30 and 9 pm.
| Next Section
| Index | Home Page |