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Mr. Spellar: I should point out that that assurance is also mutual and many of those countries will also be dependent on us. That is a further part of the equation. I think that the right hon. Gentleman understands that the changing nature of the industry is forcing all countries to look at a greater degree of international rationalisation and interdependence.
I have spoken in some detail about our smart procurement initiative. However, delivering effective equipment to the front line is not just about buying new kit; it also means ensuring that equipment is well- maintained and reliable. It means ensuring that equipment is in the right place at the right time, together with the ammunition, spares and technical back-up needed to support it. We need a taut, efficient and responsive supply chain that stretches, as they say, from factory to foxhole.
That means adopting a truly "whole-life" approach to managing our equipment. Those responsible for procurement must work closely with those responsible for supporting it. We must ensure that the whole-life costs of equipment are properly considered when procurement decisions are taken. We also need to be able to make better-informed decisions about technology insertion to keep systems current, and about spares and maintenance to keep them fit to fight.
We have seen a revolution in the way that industry manages its own supply chains and in the capability of logistics businesses in the private sector. In the automotive industry, for example, the improved organisation of the supply chain has been the engine of tremendous gains in productivity. The logistics industry has seen a similar transformation. Many of those businesses need to have a global reach, just as our armed forces do. We have looked long and hard at world-class best practice and we are bringing the lessons learned to bear on our own organisation.
What I am talking about is no less than a revolution in defence logistics. The reforms lie at the heart of our modernising programme and their success is fundamental to the success of the strategic defence review overall.
The process will be greatly facilitated by the appointment, at the start of this month, of GeneralSir Sam Cowan as chief of defence logistics to head the new Defence Logistics Organisation. However, the CDL's job is not simply about ensuring that whole-life costs inform our procurement decisions, important though that is. It is also about delivering support to the front line in the most cost-effective manner.
Much has been achieved in recent years, with better rationalisation and co-operation between the services' logistics areas. I pay tribute to the logistics staffs for what has been achieved. However, the creation of a CDL represents a step change. The Defence Logistics Organisation that he heads brings together the organisations of the Chief of Fleet Support, the
Quartermaster General and the Air Member for Logistics into a single entity. It will be the largest joint organisation in defence, with some 41,000 staff and a budget of nearly £5 billion a year.
The task of reorganisation is enormous and will not be completed overnight. It is being tackled in two phases. Phase 1, completed on 1 April, was to create the essential elements of the core headquarters. That has enabled the CDL to assume budgetary and management control of the current logistics areas, and to plan the change management task necessary to achieve phase 2.
The time scale has also seen the creation of three new defence-wide support organisations: the Defence Aviation Repair Agency, the launch of which I had the pleasure of attending on 7 April; the Defence Transport and Movement Agency; and the Defence Storage and Distribution Agency.
The DLO will look to harmonise systems and achieve greater efficiency by adoption of best practice across the whole area. A key strand will be the integration of similar systems. That, in turn, will provide the opportunity for strategic management of all logistics support. In short, it will achieve better, more effective support through the application of sensible processes and common practices. That will be a change of the greatest magnitude.
We shall, however, retain the single service logistics units at the front line. That decision recognises the particular nature and characteristics of single service operations at sea, on land or in the air. The challenge is to blend logistics support seamlessly into the front line.
We also need to improve the procurement of logistics support to the front line. That is a major task, and smart procurement is again very relevant. We recognise the wealth of expertise and experience in industry in procuring and managing logistics. We shall harness those skills in our project teams. We shall look to partnering approaches, where appropriate, to ensure the most cost-effective delivery of logistics support. We also need to ensure that much better use is made of advanced information technology.
Mr. Andrew Lansley (South Cambridgeshire):
I am sorry to interrupt the Minister in the middle of his explanation of logistics matters. Before he concludes, will he help me on the issue of future procurement? Have he and his colleagues had the opportunity to reflect on the potential value to our armed services of the airborne stand-off radar? Does he have any information on the prospects for that procurement? Can he assure the House that he will take fully into account the value of the UK-developed Racal radar system in circumstances such as Kosovo, as it is able to identify potential targets with greater precision?
Mr. Spellar:
I thank the hon. Gentleman for that intervention. I shall come on to individual equipment programmes, but it is right that hon. Members should intervene in support of the companies and work forces in their constituencies, and the excellent work that many of those companies are undertaking.
Before I deal with equipment, I shall return to the logistics side. Our stockholdings will need to be reviewed further. The aim will be to move towards a demand-led
system, based on the assumption that stocks should be held only when they cannot be regenerated within the readiness time of the forces that they support. Accordingly, our target is to reduce the book value of non-munitions holdings by £2.2 billion by April 200l; and we further intend to rationalise our stock procurement to achieve savings of £130 million a year from 2001-02 onwards. For that, we need to develop better forecasting techniques, and if we are to reduce stocks safely, we require improved lead times from industry that match our readiness needs.
The hon. Member for South Cambridgeshire (Mr. Lansley) will be pleased to know that I shall now turn to some of the individual programmes that I spoke about earlier. Each of the services can look forward to vastly improved equipment capabilities as the plans we laid out in the SDR are brought to fruition. For the Royal Navy, the valuable flexibility offered by aircraft carriers has recently been demonstrated by the deployment of HMS Invincible from the Gulf to the Adriatic. Carriers allow us to project military force rapidly and over long distances. The strategic defence review concluded that we should replace the current generation of carriers and their aircraft in about 2012. It also concluded that the future carrier force should comprise two larger carriers. Modern ship upkeep practice means that there will not be lengthy refit periods for these vessels, as is the current practice, and we should therefore be able to achieve the same availability from these two vessels as we do from the current three.
We have already issued invitations to tender for the assessment phase of the future carrier programme in January to six potential prime contractors. We expect to place a contract with up to three companies in the autumn, and the ships will be built and outfitted in the United Kingdom. Contrary to the suggestions we have heard previously from Opposition Members, the programme is running to schedule and with the full commitment of the Government.
The new carriers are a key element of our future defence plans. We are encouraging the sensible use of the latest technologies and innovative ideas to ensure that carriers are acquired on time and to cost. Future carriers will be capable of deploying air power in the form of the joint Royal Navy-Royal Air Force future carrier-borne aircraft. This new aircraft will fulfil a wide range of military tasks. A variant of the US joint strike fighter remains a strong contender, but other options are also being considered, such as a naval variant of Eurofighter, Rafale, the F18E/F and an upgraded Harrier.
We are pressing ahead with plans to triple our sealift capability through the acquisition of additional roll on/roll off vessels for the joint rapid reaction forces. In the meantime, our strategic sealift requirements will continue to be met by the chartering of Royal Fleet Auxiliary Sea Crusader and RFA Sea Centurion, which are proving to be tremendous assets. Centurion continues to transport heavy equipment in support of operations in the Balkans. The provision of a six-ship ro-ro capability will significantly improve Britain's ability to move its forces rapidly to deal with crises anywhere in the world.
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