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Mr. Blunt: The hon. Gentleman might not be aware that US Secretary Cohen was reported to have criticised the Europeans today for the level and quality of their contribution to the Kosovo business. As I know that the hon. Gentleman is a great believer in the North Atlantic alliance and a member of the North Atlantic Assembly, he must surely believe in burden sharing. Does he not think that the United Kingdom should be doing its bit with cruise missiles, and that we should be reordering cruise missiles so that there are more of them in our inventory and we can take up our fair share of the burden?
Mr. Cohen: Our service men and pilots are putting their lives at risk. They are certainly doing their bit, and I would refute any suggestion to the contrary. For reasons that I have explained, I am not in favour of using up immediately our entire supply of cruise missiles, for which we have paid heavily and which we have only just tested, and having to order more, which would place a large financial burden on our defence budget.
Sometimes, insufficient attention is paid to rectifying faults that appear in defence equipment, an example of which is deficiencies in the safety release mechanisms on the turret cage in the Warrior armoured fighting vehicle. The cage is designed to prevent soldiers in the Warrior from becoming entangled in equipment when the turret turns. Last year, in a tragic accident, a young soldier, Private Craig Mason, drowned while on a night exercise on Salisbury plain. His Warrior overturned into a puddle, trapping him upside-down in the vehicle, and his colleagues were unable to operate the safety mechanisms to release the cage and allow him to escape.
I do not specifically blame those who designed the cage--it is not possible to foresee every eventuality and all conditions. However, it is important that, when such defects are discovered, they should be corrected at the first possible opportunity. I understand that a redesigned cage has been developed, but that no decision has been taken in respect of fitting it throughout the Warrior fleet. The Wiltshire Times of 16 April carried an article about Private Mason's inquest, the final paragraph of which stated:
Another reason for my concern about such problems is the emphasis in smart procurement on getting equipment into service early and updating it while it is in service. That sounds good and I support the principle, but, as the example of the Warrior illustrates, the record in practice is not good. Smart procurement was a change introduced by the Labour Government and it is hoped that it will increase the value for money obtained by the Government when purchasing defence equipment. However, there is a complicating factor that might make it harder to tell whether better value for money has been obtained.
The traditional means of calculating Government expenditure is to be changed. The new resource-based accounting system will be introduced for Government spending over the next few years and, in many respects, it will be an improvement on the existing cash-based estimates system. With the new system will come new rules and, for most Departments, a clear distinction for capital expenditure, which is welcome. However, for the Ministry of Defence, it is not clear exactly where that distinction will lie: a building refurbishment will clearly be capital expenditure, but the purchase of a Eurofighter appears to be counted differently.
There has to be more information from the MOD and the Treasury to make the accounts clearer, not only to Members of Parliament, but to the media and the public. There has to be clarity in defence expenditure, because every pound spent on defence is a pound that cannot be spent on health or education. That makes it extremely important that every pound spent on defence equipment can be justified.
I do not agree with the hon. Member for Salisbury (Mr. Key), who made the case for additional defence spending. My right hon. Friend the Secretary of State for Defence has pointed out that spending by the European members of NATO is 70 per cent. of United States spending on defence equipment, but they do not obtain anywhere near 70 per cent. of the worth--the bang--that the United States obtains from its spending. It is not a matter of increasing spending: our priority must be to ensure better value for money. We should look to doing that before we look to spending more money.
Mr. Gerald Howarth (Aldershot):
I think I bring a unique quality to the debate this evening, in that I am the only hon. Member to declare openly that I once worked for the Russians. I worked for a Russian combat aircraft designer, Sukhoi Design Bureau, in Moscow, and I hope that that experience has helped to inform my understanding of these important issues.
This has been an interesting debate, in that it has provided an opportunity to consider some very serious procurement issues. The Minister will be aware that many claims have been made on behalf of individual companies and contractors. It is entirely right and proper for hon. Members to make such claims. I join those who have praised the hon. Member for Alyn and Deeside(Mr. Jones)--who is not in his place--for the assiduity with which he prosecutes his case on behalf of his constituents every time he has the opportunity. He is probably more assiduous than most other hon. Members in that regard--although I do not wish to detract from their efforts tonight.
The headquarters of British Aerospace is located in my constituency of Aldershot. It will become the third largest defence contractor in the world if the merger with GEC-Marconi goes through. There is also the headquarters of the Defence Evaluation and Research Agency and many other small and medium-sized enterprises that contribute significantly to Britain's defence manufacturing capability, such as St. Bernard Composites--which makes the fan case linings for Rolls-Royce engines--Air Log, Cam-Lok, Weston Aerospace and IBM.
Defence equipment is a fantastic success story in this country. Although I welcome Labour's conversion to the importance of strong defence, I wish that Labour Members would give greater recognition to the contribution of Conservative Governments from 1979 to 1997. Thanks to them, Labour was able to promote its foreign policy objectives when it came to office. The Labour Government had at their disposal a sophisticated, state-of-the-art and capable defence force that they could deploy in time of trouble--as they are doing now.
I shall not advance tonight the case for any particular programme, but I think Ministers should consider carefully the lessons of the past. Their procurement decisions should not be informed only by the need to generate jobs in the United Kingdom; the equipment must be capable of performing the task and it must be available at a competitive price. I also urge Ministers to take into account security of supply so that, when the Government have procured the equipment, there will not stand between them and its deployment a foreign Government or company that is withholding supply, thereby limiting the United Kingdom's ability to deploy its forces.
It is important that Ministers take into account the continuing development of technological capability in this country. I well remember the late 1980s, when we were considering a new anti-radar missile. On offer were
the HARM, high-speed anti-radar missile, from the United States and the ALARM, air-launched anti-radar missile, which was promoted by British Aerospace. I then had no constituency interest in defence, but I was in favour of the ALARM project simply because, if we had bought HARM, we would not have had access to the head technology. By developing our own technology, we made sure that we would later be in a position to keep up with the rest of the world and provide our Government with a British-made option.
The only specific reference that I shall make is to the BVRAAM--beyond-visual-range air-to-air missile--Meteor programme, in which British Aerospace is involved, and to which the same principle applies. If that weapon is procured, the technology will remain in the United Kingdom and we shall not then be subject to a potential veto from the US Congress.
My next point relates to the consolidation of the defence manufacturing base. I mentioned earlier that, if British Aerospace merges with GEC-Marconi, it will be the third largest contractor in the world. I am delighted that British Aerospace has chosen that option, rather than prosecuting the proposal to merge with DASA of Germany, because the arrangements proposed in the latter case would have transferred substantial ownership overseas. It is to the advantage of the United Kingdom that British Aerospace should merge with another British company to create the formidable power that the new, enlarged company will become. I hope that the Minister will comment on the progress in that merger, and state what part the Government are playing in ensuring that the competition authorities on the continent are supportive of it.
I do not support that merger for any chauvinist or jingoistic reason. Collaborative programmes were mentioned earlier in the debate and, although there is clearly an advantage in collaboration--indeed, it is, in many cases, a necessity--it carries costs. In a collaborative project, attempts must continually be made to keep all parties on side and stop the project running into the sand. The Typhoon Eurofighter project is an example of such a project. Ministers, particularly under the previous Government, had to go to Munich several times to stiffen the Germans' resolve, keep participants on board and keep the project alive. It is therefore to our advantage to maintain collaboration within the United Kingdom.
Collaboration between UK companies is advantageous also because our defence industry does not look only across the channel, but looks to neutral Sweden, where British Aerospace has teamed up with Saab, and to the United States. I shall turn later to the United States and the Defence Evaluation and Research Agency. The two-way street is extremely important, and the sharing of technology between us and the US is beneficial to the United Kingdom and our defence industrial base. That collaboration arises because we have a common interest and because the two nations that can be best relied on to defend freedom around the world are the United Kingdom and the United States of America.
I give the Minister a word of warning, which arises from a particular case. When Dowty, which is part of the TI Group, sought to acquire the Messier undercarriage business in France, it found it extremely difficult to do so. In the end, Snecma bid for Dowty in the United Kingdom. I am told that it offered such a ridiculous price that the
TI Group accepted it, and so that capability could be transferred to France. We might therefore find that a specific capability was no longer available in the United Kingdom, and we might become dependent on the whim of the French Government.
I intervened in the matter, and I understand that the assurances that I suggested should be given by the French company and the French Government were secured. That nevertheless illustrates the argument by my right hon. Friend the Member for Bridgwater (Mr. King) that security of supply is important, and that we shall defeat our own purposes unless we are prepared to strive to ensure that security of supply.
My next point is a brief one about exports. When the Labour party came to office, much was said about a new ethical foreign policy and ethics in defence exports. That wrongly presupposed that there were no such ethics before. The previous Conservative Government were very strongly driven by ethical considerations in defence export capability. I emphasise, however, that defence exports are vital to our defence manufacturing base in this country.
If we were not to rely on defence exports, the unit cost of producing sophisticated kit in this country, solely for our own consumption, would be astronomical; we simply could not afford it. The extended production runs that are afforded by export orders enable us to reduce the unit cost of the equipment that is purchased by the British Government. That is beneficial to the British taxpayer and to industry, and the Defence Committee's analysis reveals that it saves about £350 million in amortising the costs of project overheads.
Defence exports have another benefit, which the House should take into account. They enhance the United Kingdom's influence overseas and provide us with that handle on overseas Governments which I wish to prevent their having on us. In the event that a change of Government happens in a country to which we have supplied equipment, we shall be in a position to influence that Government for the better.
We have been extremely lucky in the series of distinguished heads of the Defence Exports Services Organisation. Sir Charles Masefield was absolutely brilliant--an outstanding man--and I am delighted that Tony Edwards has succeeded him. The Defence Committee has investigated the latter and found him to have a totally clean bill of health, and I am sure that he will do a splendid job.
The Defence Evaluation and Research Agency has genuine difficulties. The hon. Member for Dunfermline, West (Ms Squire) mentioned some issues surrounding DERA; slightly unfairly, I challenged her, asking about the problems that it faces. I am sorry that she has not talked to the management of DERA, because I think that she should.
I have spoken to Sir John Chisholm, chief executive of DERA. He told me that, first, the Government are running down the amount of money made available to DERA; secondly, although there is some spin-off from defence research into the commercial world, a great deal of business is spun in from the commercial world and is adapted to the military world; and, thirdly, DERA is obliged to compete with commercial companies for Government defence grants and studies. The agency therefore has real problems.
"Following the incident, a prototype mesh harness system has been developed by Army technicians at Warminster to replace the cage in the Warriors. If it is successful, the Army's entire Warrior fleet could be refitted with them."
However, as I said, it appears that the Ministry of Defence is dragging its feet in making a decision on that matter. I hope that it will stop doing so and fit the redesigned safety feature. British Army Warriors might be in combat soon and, if this country is to send troops into battle, it is vital that they have safe equipment.
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