| Previous Section | Index | Home Page |
Mr. Brazier: I am grateful to the Minister for giving way, as this is a subject on which, before coming to the House, I was privileged to be co-author of a study covering eight countries. Is the Minister aware that the list that he just mentioned does not include the armed forces? The early involvement of the armed forces, not just in formulating requirements but in project teams, makes the most proficient procurement system while the surest way to achieve the most devastating cost overruns is to have to change things after they have come into service.
Mr. Spellar: I look forward to receiving a copy of that study as the hon. Gentleman's contribution to the strategic defence review. He obviously did not listen to what I said previously because I said that streamlined procurement allows us to keep pace with technology, industry and the requirements of our armed forces. Obviously, that will involve the armed forces at an early stage. We are fully intent on that and look forward to receiving the hon. Gentleman's contribution.
We are looking to the various elements of smart procurement, taken together to deliver measurable improvements in our performance. We are determined to drive out the factors that are the main contributors to cost and time scale overruns, of which we have seen far too many.
Much still needs to be done to develop the full package of smart procurement measures, but the Procurement Executive has already begun to implement some elements. We also recognise the need to engage industry in the process and are already involved in extensive consultations with industry through the National Defence Industries Council. Its working parties are taking account of the views of companies, both large and small. That is very important because there has been a tendency to regard the prime contractors as the industry and to forget the huge numbers of firms and employees in an enormously capable and interdependent supply chain. Many hon. Members on both sides of the House have such firms in their constituencies and recognise their value to the local and national economies.
The response that we have received from industry has been positive. That comes as no surprise as there are considerable benefits in this for industry as well as for us. It will help to sustain the British defence industry's place in an increasingly competitive global market through a
continued reputation for quality, effectiveness and value. We shall back its competitive role in that international marketplace. After all, it was a Labour Government who first set up the defence sales organisation.
On the future of the UK defence industry in the global market place, one of the policy principles underpinning the strategic defence review is the Government's commitment--previously made in opposition--to a strong, capable and competitive UK defence industry. The aerospace and defence industry in Europe has been a tremendous contributor to economic prosperity. One has only to mention the success of the Airbus consortium in the civil sector. In 25 years, it has come from nothing to capture a third of the world market for airliners.
In Britain, the export achievements of British Aerospace, GEC and Rolls-Royce, and the thousands of smaller firms that support them, have made a major contribution to the balance of payments. The fall in defence spending, however, since the end of the cold war and the rapid rationalisation of US defence industries that has followed represent a huge challenge to Europe's defence and aerospace sector. The industrial giants of Boeing, Lockheed Martin and Raytheon Hughes, with their vast industrial strengths, will make it increasingly difficult for fragmented European industries to compete in the years ahead. Europe must respond to that challenge.
My right hon. Friend the Secretary of State said at the recent industry conference:
While recognising this challenge, European industry has up to now been slow to respond, operating as it does in different political environments, with different forms of ownership and commercial systems. We in Government are not in the business of arranging transnational commercial marriages. That is for industry to do, based on its judgment of where its best interests lie. That is the best means of securing a healthy, competitive private sector industry designed by industry itself, not by Government diktat. However, unlike the last Conservative Administration, who dogmatically believed that such issues should be left solely to the market, the present Government recognise that we have a key role to play in the restructuring process.
The facts speak for themselves--except to the profoundly deaf. We are the principal customers of the UK defence industry. The decisions that we take in this area will have a profound effect in shaping the market environment in which the defence and aerospace industries operate. We have a role to play in facilitating the necessary international agreements that would allow mergers or joint ventures to proceed, and we can help by establishing a clear policy framework in which industry can make sensible decisions on how to restructure.
The need for defence industrial restructuring in Europe is urgent. The call for Europe to get its act together should not imply any hostility to our US allies, as was rightly
mentioned by the right hon. Member for Wealden. Many industries have substantial business in the US and cannot ignore a procurement budget that is twice that of Europe combined. Indeed, some of the solutions to consolidation may involve US companies. We must recognise that a healthy mix of competition and co-operation between US and European industries is in the interests of countries on both sides of the Atlantic.
We must also recognise the need to widen the technology in the defence industries. My right hon. Friend the Secretary of State announced yesterday that the Government intend to make the best use of the skills and technologies developed for defence purposes, by encouraging their wider exploitation in civil markets. Such defence diversification will strengthen the country's industrial base. In that context, I welcome the comments of the hon. Member for Aldershot (Mr. Howarth).
Mr. Gerald Howarth:
I am grateful to the Minister for his kind remarks. Will he respond to my request for the Government to state that they will support Foresight action with Government money for research and development in the aerospace industry, along with the private sector money that is on offer?
Mr. Spellar:
I intended to write to the hon. Gentleman about that, as I am mindful of the time available.
The hon. Member for Bournemouth, East (Mr. Atkinson) referred to ballistic missile defence. The SDR makes it clear that we now face fundamentally different security risks, and he drew attention to some of them.
Our prime concern in assessing the need for ballistic missile defence for the UK concerns the ballistic missile threat as a means of delivering chemical or biological weapons. Potential responses are not of course limited to active ballistic missile defence.
The pre-feasibility study considered the options for active defence only. Its conclusions and those of other, related work have informed our work on ballistic missile defence, and continue to do so in the context of the strategic defence review. We attach great importance to work in NATO on this subject.
I shall deal with the questions raised by my hon. Friend the Member for Barrow and Furness (Mr. Hutton) and the hon. Member for Torridge and West Devon (Mr. Burnett)
regarding the replacement for Fearless and Intrepid. I can confirm that the contract was placed for two amphibious ships with VSEL on 31 July 1996. Along with my hon. Friend the Member for Thurrock, my hon. Friend the Member for Barrow and Furness raised the possibility of a replacement for Invincible. Studies to establish a procurement strategy for any new class of aircraft carrier are at an early stage, with further work subject to the outcome of the SDR.
Let me finish by recapping on the major themes of the British defence policy under a Labour Government. At the election, we pledged to be--and always will be--strong on defence. Our strategic defence review, therefore, has at its roots firm principles, including commitment to NATO, strong armed forces, retention of Trident coupled with progress on arms control, and support for a strong defence industry. That should be a welcome message not only in this country but with our allies. I am delighted to say that such messages were reaffirmed at this year's Labour party conference.
"Europe's defence and aerospace industry must rationalise or die".
That must have been a favourable message as British Aerospace shares shot up at the announcement. To lose out to US competition in emerging markets when domestic orders can no longer provide the critical mass required for continued viability is to risk everything. Sooner or later, marginalised European industries would founder as their Governments could no longer afford to pay the spiralling costs of keeping them alive.
| Next Section
| Index | Home Page |