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Mr. Iain Duncan Smith (Chingford and Woodford Green): I thank the Secretary of State for his announcement and for giving me an early copy of his statement. Today's announcement has at last begun to clarify the important procurement decisions in, for example, the strategic defence review, on which so much of our armed forces future capability rests. Giving Typhoon a proper air-to-air missile to keep it a potent
weapon system and providing heavy lift to allow our troops to be properly deployed were critical elements of the strategic defence review, as the Secretary of State will recall.Before putting questions to the Secretary of State, I should like to make a general point. Surely, the decisions could, and should, have been made earlier. Is it not a fact that too many Ministries have a finger in the pie, especially the Treasury? As a result, the decisions have been delayed, perhaps unnecessarily. The Government committing themselves to early decisions while insisting that industry produces on time and within budget is a feature of smart procurement. If, as seems to be the case here, the Government fall at the first significant hurdle, what hope is there for future smart procurement programmes?
The Government made two significant announcements today. Their decision to go ahead with the purchase of Meteor as a solution to their BVRAAM requirement will be widely welcomed. I therefore congratulate Matra BAE Dynamics on its successful bid, which, it believes, will secure high-quality technology-related jobs for some time. However, questions need to be asked. Given the doubts that the Secretary of State expressed about Sweden in his statement, has he received cast-iron assurances from all the other partners who are likely--or whom he believes are likely--to order the missile?
The Meteor contract is to produce equipment at the cutting edge of technology. The Secretary of State accepts that and has made it clear that that entails some risks. He outlined his concerns about those risks today, saying that he has set specific dates by which the progress of the programme can be audited. Critically, he has said that the programme will be terminated if those are not met.
Is the Secretary of State prepared to tell us what those dates are so that we can judge whether the programme is proceeding in accordance with the plans? He spoke about how compliance with that programme was going to be audited. Given the changes that he has announced to the Defence Evaluation and Research Agency, who does he expect to carry out the independent audit, which, in the past, DERA might well have carried out?
Bearing in mind the fact that the United Kingdom is bearing the largest share of the costs, what will happen if a British Government wish to terminate a programme which they consider is not being met, but which others do not? How can we make a such a decision without incurring penalties? How will we recoup costs in that eventuality and what plans has the Secretary of State made for that?
The Secretary of State was rather vague about the in-service date. Will he clarify that detail by putting it on record when he returns to the Dispatch Box? He said that much had been said about US embargoes on future export orders. No doubt, that is one reason why we chose Meteor in the circumstances. What consideration has been given to the possibility of partners in the consortium embargoing others wishing to sell the missile on? The Secretary of State said that the USA would welcome the order. However, given that the President has lobbied the Prime Minister over the past few months, to what extent is this another case of the Foreign Office giving the Secretary of State a load of bad advice?
On the heavy lift contract, we welcome the Secretary of State's announcement on leasing four C17s while placing an order for 25 A400M aircraft. Once again,
however, serious questions need to be answered. On the A400M, how confident is the Secretary of State that the other nations will order, either at all or in sufficient numbers to make the project viable? I note, for example, that the Italians have not only dropped the initial number that they were planning to order, but seem recently to have indicated doubts about ordering any at all. The Germans have been blowing colder and colder on the project as the weeks have gone by.Is not the announcement of an order of 25 a significant reduction from the UK's anticipated commitment of 45? Will not that, coupled with the lease of four C17s, send a message to nations that are in doubt about their orders that the UK Government are not as committed as they at first appeared? For example, what has the Secretary of State been told about the critical number that needs to be ordered before the contract is viable? How long is the lease for the C17s?
The Secretary of State seems slightly less than positive in his announcement on the A400M, hedging it with many caveats and conditions. Will not that, together with his announcement that he will purchase C17s if he cannot reach an agreement on the A400M, also send a mixed signal to our European partners? Is not his announcement in some senses likely to pose serious logistical questions to the RAF? Surely the prospect of the RAF having to find spares, relevant infrastructure and training for three different air frames raises questions about costs beyond purchase costs. How will the C17s be supported? Will there be a support facility in the UK, or is he anticipating that that task will be done from the USA?
In congratulating BAE Systems on securing the order, the Secretary of State must agree that such questions will need to be answered if BAE is to feel confident in committing the investment and capital that the project requires without raising serious concerns about future decisions and doubts about its viability.
Although manufacturing production and development skills rest hugely on the success of the two orders, it is most critical that the armed forces, as I am sure the Secretary of State will acknowledge, get the equipment that they need to fulfil their operational requirements. That, we believe, is the most important point.
Mr. Hoon: I am grateful to the hon. Gentleman for his initial observations and, indeed, for his general support for the decisions that the Government have taken. I shall endeavour to deal with as many of the more detailed points that he raised as possible, but in the event of my failing to do so, I shall certainly write to him with more specific detail.
In response to the many observations that the hon. Gentleman made about both projects, let me say that it is clearly necessary to be conditional in our approach to such multinational operations because they depend on decisions by our partners. The alternative, for any Government, is simply to go into the market and purchase equipment off the shelf. We could do that, but we are choosing to try to buy the best, most technologically sophisticated equipment. That depends very much on working with partner nations. That is the way in which we are approaching these decisions.
The hon. Gentleman mentioned doubts about Sweden. There are no doubts about Sweden; we are simply trying to attract it to the project in order that the missile may be
available to its aircraft. The memorandum of understanding still has to be agreed with our partner nations; that is necessarily so, as I have said, in any multinational project.I can certainly publish details of the breakpoints and determination of when those assessments will be made once the memorandum of understanding is established. The breakpoints will be a certain period after that date. We shall retain the elements of DERA that give Government advice about the nature of contracts. That was part of the understanding that we set out.
On the in-service date, we anticipate the missile being available towards the end of the decade. On the US attitude, the package will provide significant job opportunities in the United States as well as in Europe. It is in the nature of modern defence industries that they operate around the globe--certainly across the Atlantic. I do not anticipate any difficulty in announcing orders that will create jobs to supply AMRAAM as well as the C17 heavy lift aircraft.
We are confident about the A400M. We are leading the way: we shall be the first country to have officially announced our order for A400M, and we believe that will provide a strong signal for our partners to do the same. Twenty-five is a realistic estimate of the number of aircraft that we require: 26 Hercules aircraft are to replaced by 25 A400Ms, but the A400M will have a capacity that is one and a half times greater than that of the Hercules; therefore, we are investing in significantly enhanced capability for the RAF. The RAF will not be required to maintain or train crew for three air frames. The idea behind leasing the C17s is that, once the A400M comes into service, it will replace the C17; then, we shall be dependent on a mixed fleet of two aircraft.
Mr. Barry Jones (Alyn and Deeside): My right hon. Friend's excellent statement presages many new manufacturing jobs for Britain, as well as an enhanced defence capability. Will he tell the House when the production of the A400M will begin and the locations at which it will be built? He will not be surprised if I volunteer the services of 4,200 Airbus workers in my constituency to make the wings, because we have a centre of excellence and world-class capability. Will he give further details of the reasons behind the size of the order? We had hoped that 35 would be ordered, and we should like to know why it is to be 25. None the less, the statement is a good one and my right hon. Friend should be thanked.
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