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Mr. Nigel Evans (Ribble Valley): Does the hon. Gentleman agree that it is strategically important to ensure that work on the Al Yamahma contract, EFA, the Tornado, Hawk and other aircraft production continues in and around my constituency? It is also important to retain research and development skills in that area in order to ensure that we secure alliances with other European countries in the future to produce aircraft such as the
European fighter aircraft. We must be able to look forward to whatever will replace EFA in 10, 15 or 20 years' time--we must remember that the EFA was 17 years in the making.
Does the hon. Gentleman agree that the Government must look now to maintaining Lancashire's existing defence manufacturing capability by ensuring that good orders are given to British companies with interest in the EFA and other defence aircraft, ships and munitions in the next 10 or 15 years? That will enable long-term planning by companies such as British Aerospace, and will secure the future of smaller companies that depend on the existence of those larger firms.
Mr. Hoyle:
I welcome the hon. Member's remarks--and I welcome his conversion to Labour's procurement policy. I take on board his comments. We have the research facilities, the skills, and the development in the north-west: it would be madness to move it elsewhere. The Government are planning for the future. I am pleased that the hon. Gentleman supports that, and I look forward to his continuing support of the Government's policy. I cannot disagree with a word that the hon. Gentleman said.
9.54 am
Mr. Alan Clark (Kensington and Chelsea): I commend the hon. Member for Chorley (Mr. Hoyle) for seeking an Adjournment debate on this important topic, and for the lucid and comprehensive way in which he set out his case. This topic must be approached from several different angles, and I caution the House against treating the defence industries in isolation as an engine of employment. The real importance of the defence industries is their high-technology and research qualities and that aspect of their function that keeps this country at the leading edge of the various technologies associated closely with the defence field. Maintaining those industries as consistent laboratories of research is just as important as retaining them simply as engines of employment, often making products that are either obsolete or obsolescent.
Before I go on, I must congratulate the hon. Gentleman on drawing the attention of the House to the fact that we are divesting ourselves of the capacity to make high explosives in this country. We must put that issue in an historic context and consider the events of the whole century--particularly some of the tremendous debates at the time of Lloyd George's Government, and, to a lesser extent, during the second world war, about the shell shortage and the need to produce bomb, missile and shell warheads. The very idea that, at the end of the century, the House of Commons should submit meekly to the fact that Britain is totally divesting itself of the capacity to make high explosives and delegating it to the French--of all people--is utterly incredible; it literally passes credibility. It is a commentary on the fact that fashion in opinion is everything; no one seems even to have noticed what is happening.
The defence industries are part of the whole defence policy structure which, if it is to be credible, must have input from the Foreign Office, which determines our long-term strategic objectives; from the Department of Trade and Industry, which is concerned about industrial capability and determines what capacities we must retain
at all costs in this country; and from the Ministry of Defence, which determines security requirements. The hon. Gentleman talked about buying British, and I endorse his remarks completely. However, one problem with competition and with foreign bids is that they never calculate the real costs--such as the costs of paying unemployment benefit in this country, the benefits of direct taxation levied on industrial activity in this country and so on. The costs are too net and they do not take on board the gross accounting. A responsible Government should consider those factors.
But it is no good buying British if the British are not producing what we need. Defence procurement projects develop their own momentum. Hon. Members on both sides of the House, such as the hon. Member for Chorley and my hon. Friend the Member for Ribble Valley (Mr. Evans), become greatly attached to such projects largely because of the employment implications for their constituencies. That is perfectly proper; it is how constituency Members of Parliament should respond to pressures. However, those pressures often become separated from the real consideration: the merit of the weapons involved.
As the hon. Gentleman and the Minister well know, MOD input in defence projects is driven by the Operational Requirements Committee, whose output has a very long gestation period. It comprises largely serving officers--who are often nearing the end of their careers and who are on secondment--and there is a perfunctory, and all too cursory, input from the chief scientific adviser. Broadly speaking, the Operational Requirements Committee conceives of weapons--it is a classic example of commitment to fight the next war with the weapons of the last war. The last war was the cold war, which we won--it was an almost bloodless victory. However, there is a huge time lag in which we become saddled with weapons that were conceived in a totally different context. At some point--I hope that this will be part of the review that the Secretary of State and his team are undertaking--there has to be a major strategic reappraisal of what our military function is meant to be.
As I understand it, the objective of the Foreign and Commonwealth Office is that our military capability should carry sufficient weight to merit our place on the Security Council of the United Nations, and, deriving from that, our place on the various other bodies that determine world policy, such as the Group of Seven, and so on. If we are to maintain this, our defence industries and our strategic posture will need a totally different configuration from that still being carried through, which is part of the old cold war configuration. I am in total agreement with the hon. Member for Chorley that, essentially, it has to be naval in its bias. If we are to justify our seat on the Security Council of the UN, we have to be able to take part as primary partners in any intervention or peacekeeping in distant waters, and for that it is essential that we have, for example, a fixed-wing carrier. We have to reconfigure the whole procurement strategy.
I have a series of tables that are absolutely terrifying. They show the amount that has been spent in the past eight years or so on major weapons products. Leaving out the unit costs of purchasing, more than £11 billion has been spent so far simply on aircraft and associated systems. The amount spent on the Navy and on naval
procurement is barely 15 per cent. of that. These are simply development costs and the very early stages of conception. The whole naval field has been completely neglected.
The House should remember that, at the time of our naval supremacy, when we really knew how to do it, and when there were a whole range of competing yards around the country, the building of the Dreadnought, which was the very first of its line--a completely revolutionary ship with turbine propulsion and heavy main armament--took exactly a year and a day from laying the keel to completion and commissioning. The tonnage was the same, and in many ways the throw power was the same, as a CVS carrier, whose replacement is a matter that the defence team now have to consider.
Mr. John Hutton (Barrow and Furness):
I congratulate my hon. Friend the Member for Chorley (Mr. Hoyle) on initiating the debate. It is also a great pleasure to follow the right hon. Member for Kensington and Chelsea (Mr. Clark). Both my hon. Friend and the right hon. Gentleman spoke with a great deal of common sense.
I take much pleasure from the fact that there is an emerging consensus in the House about Britain's future defence requirements in terms of procurement and our longer-term strategic defence posture. I should point out to the right hon. Gentleman, who spoke very eloquently and with a great deal of knowledge, that, since the election of the Government on 1 May, we in this country are not suddenly divesting ourselves of our ability to procure ammunition. I am sad to say that it is a process for which the previous Government, in which he was a Minister, took a very significant responsibility. That leads me to make a wider point about procurement generally.
In shipbuilding, with which my constituency has a direct interest, the Government have inherited a pattern of defence procurement that worships dogma above common sense. Time after time, artificial competition exercises are manufactured between commercial entities to pursue what we believe to be value for money for the taxpayer. We all understand that value for the taxpayer is very important, but there are other ways of ensuring it than following a doctrine of artificial competition. The Ministry of Defence has evolved a sensible procedure to ensure value for money and state-of-the-art technology from the defence industry without the need to resort to artificial competition exercises.
I hope that the Minister will be able to say that the Government will explore seriously the benefit of widening the scope of the "no acceptable price, no contract"--NAPNOC--procedures. As the right hon. Member for Kensington and Chelsea rightly pointed out, in many areas
of the defence industry there is no effective competition, because of the restructuring of the industry. Hundreds of thousands of defence jobs have been lost in the industry since the early 1980s. If we constantly look to manufacture these competition exercises, we not only increase expenditure for the taxpayer but can delay important procurement decisions unnecessarily and end up with not very good value for money.
I am not saying that in some cases competition and a competitive tendering exercise are not important. I believe that they are. However, we should approach all the issues in defence procurement from the standpoint of common sense. I hope that, in some cases, common sense will lead us to conclude that, by developing the NAPNOC procedures--this particularly applies to shipbuilding--we can get better value for money and develop a more coherent relationship with the defence industry, which needs firm guidance from the Government about their long-term procurement requirements.
That is why I endorse the right hon. Gentleman's implicit welcome of the Government's strategic defence review, which will be important not only for putting our defence forces on to a proper basis to meet some of the very difficult threats and challenges that we will face in the next century, but will help the defence industry to wake up to the challenges. The review will require the defence industry to negotiate with the Government over a longer term, and with more certainty and confidence, about their future procurement requirements.
One lesson that we all learned in the 1980s and 1990s is that, with the best will in the world, it is impossible for the defence industry to survive on a diet of hot air and promises. People have to make things. As the right hon. Gentleman made clear, we cannot use the defence procurement budget simply to manufacture jobs. We all understand that. It has to be for a purpose.
Often, the attitude and stance of the previous Government made it very difficult for companies to plan over the long term, which is the basis on which all successful companies have to operate. The constantly changing agenda, delays in procurement and ineffective management of the budget all contributed to a very serious state of affairs for Britain's defence industries.
I also welcome my hon. Friend's surprising support for aircraft carriers. Although I had not expected him to mention them, I am delighted that he did. When we talk about Britain's future defence requirements, it is important that we recognise the central role of the Royal Navy. I also welcome what the right hon. Gentleman said about that. The figures that he quoted were significant. I used them in debates in the previous Parliament. Defence spending over the past 15 to 20 years has largely been at the expense of the Royal Navy, notwithstanding the rundown of the Trident programme. It is clear that the Royal Navy has borne the brunt of many of the reductions in defence spending in the past 15 to 20 years. That is a serious mistake.
I do not have any illusions of imperial grandeur, but I want Britain to pull its weight in the international community. We should support the United Nations properly and effectively when required. If we are to do that, we must have the ability to project force around the world, not threateningly--I am not arguing for that--but to support our international allies and to protect our allies around the world.
Amphibiosity is important. In my constituency, the first deal is now being cut for the new assault landing ships for the Royal Marines. That is a very welcome procurement. For amphibious forces to be effectively and safely deplored around the world, they will undeniably require aircraft protection. We will not always be able to rely on protection from land-based allies: we may be able to do so in some operations, but not in others. We would jeopardise the safety of any deployment if we proceeded without the effective provision of air cover. Some people may argue that our allies could provide that, and of course the United States navy has a significant carrier force. However, with the benefit of hindsight and prudence, it would be a mistake to assume that that cover will always be available.
That leads me to conclude that we should consider a replacement for Invincible class aircraft carriers. That is what my hon. Friend has concluded, and I hope that it is what other hon. Members will conclude. My hon. Friend referred to a carrier capable of carrying 40 aircraft. That is probably what we should be considering. The Invincible class, which carries a maximum of nine Harriers, is not really designed to perform a full air cover operation to protect amphibious landings. That is probably the most expensive decision that the Government will have to make as part of the strategic defence review: it is one of the key strategic challenges.
We can argue the toss about whether it should be a vertical, short take-off or more conventional, assisted take-off and landing aircraft carrier. Those operational considerations are largely secondary to the important strategic issue of whether we want British forces to be able to deploy safely and effectively around the world. I hope that my hon. Friend the Minister will explain the Government's view on those important issues.
I broadly welcome the Government's commitment to the establishment of a proper policy for defence diversification. We argued in the previous Parliament that the then Government had a special responsibility to the defence industry, given that they were essentially its only customer, and that they should give the industry practical help to cope with the significant downturn in defence spending.
That was not an appeal for an interventionist industrial policy based on some ancient dogma: far from it. It was a matter of common sense, because the defence industry was one of the few areas in which British companies had a leading edge, a technological advantage, a proven record of innovation, markets abroad and a reputation abroad that was second to none. I am afraid that there are few such sectors left in British industry. We felt that the defence industry was not properly supported and was not being allowed to make the necessary adjustments in an era of significant reductions in defence spending, which fell by a third under the previous Administration.
This Government's commitment to consult industries and others about the establishment of a defence diversification agency is welcome. I do not believe that it is a panacea, or that an agency on its own will be able fully to compensate for the job losses, because hundreds of thousands of jobs have been lost already due to the previous Administration's neglect. In my constituency, 10,000 jobs have been lost in the VSEL shipyard in Barrow-in-Furness since 1990.
However, evidence from successful practice in other countries shows that a defence diversification agency can help defence companies and others in a community affected by defence job losses to explore the best practical use of technology transfer initiatives. Some of the leading edge innovation in research and development that defence companies have undertaken can be transferred. We should explore the potential for commercial exploitation of those designs in the civil markets.
That will not be easy: I am not making false claims about what a defence diversification agency can do. However, it is completely unacceptable for a Government, who are the industry's only significant customer, to say to defence companies after years of an exclusive commercial relationship, "We're sorry, you're on your own now. We've decided to go elsewhere, and we're no longer interested in what happens to you." That is an unacceptable abdication of responsibility. I am delighted that this Government have broken with that neglect, and have taken a practical approach to diversification issues.
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