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Mr. Wilkinson: I am sure that hon. Members on both sides of the House are interested in what the Minister has said about Kvaerner Govan. The Govan yard built the hull for HMS Ocean, and is one of the few shipyards in the United Kingdom capable of building the hull for a big aircraft carrier.
Can the Minister tell us whether Swan Hunter on the Tyne is back in the business of receiving naval requests for tender? Is it to be considered, or are we down to Barrow and Harland and Wolff if Kvaerner is not bought by a company that wants to proceed in naval shipbuilding?
Mr. Spellar:
The hon. Gentleman should not forget Cammell Laird in Birkenhead. Those are the yards that are the main contenders; then there are the companies that have been invited to tender for the role as prime contractor--systems-integrating, weapons-integrating companies. There is, in fact, quite robust competition, as a considerable number of yards are potential builders of the carriers.
Mr. Wilkinson:
What about Swan Hunter?
Mr. Spellar:
As far as I am aware, Swan Hunter is a potential bidder, but the companies concerned will have to decide whether they wish to upgrade their yards and take part in the competition, given that they have the basic capability.
Let me now deal with the Army side. The SDR placed great emphasis on our information, surveillance, target acquisition and reconnaissance capability, known as ISTAR. That capability is needed to provide the fast, detailed, accurate intelligence that is essential for rapid decision making in complex circumstances.
The competition for the airborne stand-off radar contract--mentioned by the hon. Member for South Cambridgeshire--is now in its closing stages. As I think we all know, the fight for that contract has been conducted intensively by three determined bidders. United States prime contractors have been prominent, but scores of capable British companies have been involved with the three consortiums. The decision is receiving close ministerial attention and, as some hon. Members may know, my right hon. Friend the Secretary of State for Defence gave each consortium an opportunity to present its proposals to him personally last week.
Mr. Michael Jack (Fylde):
I am grateful to the Minister. I hope that he has not drowned in his glass of water.
About four weeks ago, during the business slot on the "Today" programme, a representative of the Raytheon corporation clearly intimated that the corporation thought that it had won the ASTOR contract. In that context, it was discussing the potential creation of additional defence jobs in Belfast. Did the Minister receive any reports of
that broadcast, and Raytheon's assertion of its position? If so, did he investigate the source of the stories, and can he assure me that Raytheon was speculating?
Mr. Spellar:
I did not receive a report about the programme. If such a report had been submitted, it would probably have been lost in the welter of reports on the various companies involved in that and other competitions which, understandably, drew attention to the industrial benefits that would result from their particular projects. Given the right hon. Gentleman's constituency, he will know that companies rightly focus on that.
As I said earlier, the Government are anxious to maintain the country's defence industry capability, but, although it is inevitable that companies will highlight that aspect, we are still evaluating all the programmes. Having received a number of representations from companies, my right hon. Friend the Secretary of State invited each consortium to make a final presentation. Decisions are being considered, but, as the right hon. Gentleman would imagine, there are currently other pressing matters on Ministers' minds.
Mr. Barry Jones (Alyn and Deeside):
My hon. Friend will know that my constituents who are employed by Raytheon have a crucial interest in the decision that the Department might make shortly. He will also know that we had hoped to hear of a decision in March--understandably, that date slipped--and that, clearly, no decision will be made this month. Will he tell my constituents when a decision might be made? He will know that there is great interest in the matter in my constituency.
Mr. Spellar:
The answer is "shortly". I pay tributeto my hon. Friend's regular--incessant, repetitive--campaigning on behalf of his constituents, and to the way in which he constantly presents their case to the Government. He was equally active in that campaign in previous Parliaments, and in making his constituents' case to the previous Government. He certainly ensures that the very strong case for the excellent plant in his constituency never ceases to be in the public eye, and I congratulate him on that.
Mr. Lindsay Hoyle (Chorley):
There is concern across the country about who will be chosen for the airborne stand-off radar programme. In considering the matter overall, however, will my hon. Friend take into account not only the United Kingdom's technological base and abilities, but United Kingdom jobs?
Mr. Spellar:
My hon. Friend rightly says that we have to consider the entire range of the UK defence industry's capabilities, including its future health and ability to compete for future contracts. We should be clear about the fact, however, that our defence manufacturing industry is thriving and is internationally competitive. As I said only last month, our industry has 26 per cent. of the world market for defence equipment. Moreover, hon. Members who have been demonstrating their support for various programmes represent many of the companies that have achieved precisely that success.
On the Air Force side, hon. Members will know that, last September, we signed a contract for the first tranche of production aircraft for Eurofighter, which will start to
enter service in 2002, under a contract tautly linking payments to achievement of a demanding set of milestones. Eurofighter is a world-class aircraft--which is further demonstrated by the considerable potential that it is showing already in the export market.
I am sure, looking around the House, that many hon. Members will also be interested in our plans to deal with the shortfall in our strategic airlift capability that was identified in the SDR. We already have 25 Hercules C130J aircraft on order from Lockheed Martin to replace the first part of our current Hercules fleet. There have been difficulties with the programme, as many hon. Members will know, and the in-service date has slipped to next spring. However, the programme is now on track, and we are being paid liquidated damages by the prime contractor to offset the additional costs of running on our current fleet.
The remainder of our future requirement for large transport aircraft is the subject of a competition that we are running in conjunction with some of our European partners. Bids were received in January for the Airbus consortium's A400M, as the future large aircraft is now known; for the Boeing Cl7; and for a further tranche of C130Js. We aim to be in a position to make a decision--in consultation with potential European partners--by early next year.
Such a procurement will take time, however, and our need for enhanced strategic airlift is urgent. We are, therefore, running a parallel competition for short-term strategic airlift to bridge the gap. We have asked for proposals for lift capability equivalent to four C17 aircraft, and received a number of bids in January, in parallel with bids for the longer-term procurement. Evaluating the long and short-term proposals together will enable us to identify the most cost-effective overall package to meet our needs.
Today, as ever, there is a range of other programmes about which I have not been able to speak. Nevertheless, I hope that I have mapped out our strategy, and our plans for ensuring that we supply our front-line forces with the equipment that they need, in a timely and cost-effective way.
The strategic defence review has provided the blueprint for our armed forces for the future. As I have made clear, however, the planning phase is over, and we are steadily rolling out the programme. We recognise and appreciate that that entails a tremendous amount of hard work for service men and for civilians in the Ministry of Defence, and for our partners and suppliers in industry. It involves fundamental change in the way in which we buy our equipment--in our processes and organisation. Changing the organisational arrangements is the relatively easy part. Changing the culture, which is a much more challenging enterprise, is the key to success.
Mr. Robert Key (Salisbury):
The Opposition always welcome the opportunity to debate defence issues on the Floor of the House, although I dare say that the timing of
We also welcome the first defence debate in the new format under which we shall consider, in three separate debates, people, policy and procurement. The House will recall that I first suggested this in the debate on the Royal Air Force on 23 April 1998, at column 997 of Hansard. At the time, in an optimistic surge of enthusiasm, Labour Ministers were working on their strategic defence review. The Labour party had abandoned its objections to nuclear defence and taunted us with the force and budget reductions that we had made in government, in step with all our NATO allies.
Labour Members mocked us for those defence cuts, but they want the British people to forget the facts. The first fact is that the Labour party not only supported those cuts, but begged us to go further in pursuit of the elusive post-cold-war peace dividend. The Labour Government then cut defence deeper than we had ever dreamed of doing.
Even before the strategic defence review, the Secretary of State for Defence had capitulated to the Treasury's demand for a £500 million cut in the defence budget to fund national health service winter spending in 1997.
The Government started the strategic defence review with the proposition that their great, no-holds-barred, welcome all-comers, thinking the unthinkable, foreign- policy-led review would, in practice, result only in defence cuts. The Secretary of State made that very clear at the strategic defence review seminar in Coventry on11 July 1997. It was quite clear at that seminar that the Secretary of State knew that the pressure was on him to cut the defence budget. It then went into free-fall in the comprehensive spending review. He lost the argument with the Chancellor of the Exchequer and the Prime Minister did not ride out on his white charger to save the defence budget. This year, Labour slashed defence by £800 million or 3.6 per cent. and will do so again over the next two years by a further £400 million--an additional 2 per cent. That was not enough, however. In addition to those savage cuts, and as the only possible way of meeting his commitment to the Chancellor of the Exchequer, the Secretary of State for Defence then imposed efficiency savings of a further 3 per cent. a year across the board for all three services.
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