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Mr. Iain Duncan Smith (Chingford and Woodford Green): I start by thanking the Secretary of State for his courtesy in passing the statement to me reasonably early, so that I would be able to respond.

I unequivocally welcome the announcement of the order for the two ships and I congratulate the yards that have been successful in obtaining the orders. Although I welcome the statement, it is worth pointing out--only in passing, of course--that this is the first warship order to be placed by this Government in the past three years. It is good news, but the Secretary of State needs to assure the House that older ships in need of refit will not be paid off early over the next few years as a result of the order. I would like him to make that point unequivocally at the Dispatch Box.

The Secretary of State also referred to the nature of the contract, and said that the design had been produced by two companies that subsequently bid for the contract. Will

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he tell us how he will balance that fact with the competition element, if yards such as Swan cannot bid because they do not have access to commercially sensitive information? How will he deal with that matter, and maintain a competitive environment?

Today's announcement of the type 45 is in many senses tied up with the roll on/roll off ferry order, which is not, it appears, going to Govan. Will the Secretary of State remove any doubt and tell us whether that order will go to British yards, or is he preparing to let it go overseas? Is he using this announcement as a smokescreen to try to make that sound like good news at this moment?

The Secretary of State referred to the air defence system, but then moved quickly on to other matters. Why was he so coy about all the other systems? An order has been placed for the ships' hulls, but the key question relates to the fact that their capability will depend wholly on the systems used. Therefore, I have a few questions about the systems, which I hope that he will answer.

On Merlin, will the Secretary of State dispel the doubts that have appeared in the press? Will he confirm that the type 45 will be able to carry, and will carry, Merlin helicopters, and that the landing systems on the ships will be designed to carry them? Otherwise, the capabilities of the ships will be much reduced.

Will the Secretary of State assure the House that the ships will receive the very best and latest design of command and control, and that they will not be hamstrung by costs so that they have to accept a lesser system, as has been reported and leaked by the Navy?

Will the ships have surface-to-surface guided weapons capability, and if so, will he tell us which one that will be? Will they have a good close-in weapons system--or is it, as reported, unlikely that they will get one at all?

The launchers will be critical and the Secretary of State referred briefly to them in connection to PAAMS. However, is it the case that the ships will not be able to fire tactical Tomahawks using the launchers because the launchers are not capable of accommodating tactical Tomahawk or Tomahawk as it exists today? Will that not limit their capacity to operate in the environment that the Secretary of State described?

The Secretary of State's strategic defence review rightly said that our troops are likely to be at risk in future from ballistic missiles in theatre. Will these ships have any anti-ballistic missile capability to deal with that, or is the Secretary of State planning to design in any capacity, as referred to in his own SDR? Will he assure the House that the Sylver launcher will be adapted to make such flexibility available, and tell us what the cost of that will be? What is his response to the recommendation of the Select Committee on Defence that such flexibility should be incorporated?

We have heard reports that either the sonar capability will be very limited or there will be none at all, certainly in coastal waters. Is it not a reality that more and more potential aggressors whom we might face are investing money in the coastal capability of submarines? Will the Secretary of State clarify the position, as without either a Merlin or such coastal capability, does this ship not become vulnerable to attack?

The Secretary of State said that the ship would be designed on commercial lines. Will he explain the Navy's attitude to that in relation to the protection of the ship?

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What lessons have been learned on damage control, especially from the Falklands, and can those be implemented? Will sacrifices on damage control issues be made for commercial reasons?

In conclusion, we welcome today's statement about the order for ships, which we have been urging the Government to make for some time. However, serious questions remain about the systems. The ships alone are not good enough, as they rely on the systems to operate properly. This weekend, the comments of a naval officer were leaked in the press. He said that if the ships do not get the best systems, it will be a case of

In short, is this going to be a first-rate Royal Navy ship--or a Treasury ship?

Mr. Hoon: I am grateful to the hon. Gentleman, at least for his opening remarks and his conclusion. I am not quite sure about what he said in between, and I shall try to deal with that in due course.

I am not sure that the hon. Gentleman, or any Conservative Back Bencher, is in a position to criticise too much the fact that we have made this announcement today. I mentioned the date that the Horizon programme started, and I would have thought that the hon. Gentleman might just have noticed that that was during the Conservative Administration. The programme failed--and frankly, one reason for the delay in making the announcement is the fact that we had to deal with the failure of the previous Government. We have managed to turn that failure around with the outstanding success that we are announcing today. The hon. Gentleman does not have much ground for complaint. If there were delays, they were the creation of the Government whom he supported.

As for competition with other yards, the idea underlying the use of modules is partly that we can extend the opportunity for constructing parts of these ships to yards other than the two that I mentioned. Equally, clearly we can involve those who are not necessarily shipbuilders, either historically or traditionally, which will be good for competition and for British industry, as it will diversify the necessary skills and ensure that others are involved in the process. There will be real opportunities for the shipyard that the hon. Gentleman mentioned, as well as other shipyards--and, indeed, those who, perhaps, have not previously seen themselves as in the business of making ships.

I see no connection whatever between that and the order for ro-ro ferries. The total of this order already amounts to some £1 billion. I assure the hon. Gentleman, as I do the House, that the Government are not in the business of spending £1 billion of taxpayers' money as a smokescreen. This is a vital capability required for the Royal Navy, and is long overdue as a result of the failure of the previous Government to organise procurement effectively.

The hon. Gentleman asked detailed questions about systems. I shall simply back his concluding point, as he is right to say that it is vital that we rely on the systems to make sure that these ships operate effectively. In the past the Royal Navy, like navies throughout the world, has had the problem that the technology moves on much more quickly than does the ability, for example, to build a ship.

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That also applies more generally to procurement of high-technology equipment. Central to the way in which the ships are to be designed is the fact that they will be capable of adjustment as the technology changes and develops. In response to the hon. Gentleman's points about Merlin, command and control, surface-to-surface guided weapons, close-control weapon systems and tactical Tomahawk, there will be an ability to deploy each of those weapons, should they be appropriate when the ships enter service in 2007. We shall be able to consider the strategic situation in the years leading up to 2007.

Let me make it clear that the ship's design and development is firmly in the hands of the Royal Navy, which is advising Ministers about the decisions that are made. The Navy is happy not only with the particular decisions made about these ships, but with the sophisticated range of warship building on which the Government have embarked, so I see no cause for concern. [Hon. Members: "What about Merlin?"]

This will be a very different approach from that taken in the past, when technology has overtaken the vehicle carrying the various systems. Instead, we will be able to adjust. [Hon. Members: "What about Merlin?"] Opposition Members keep repeating the word "Merlin". I have made it clear that it will be possible to use Merlin from the ship, if necessary. Those judgments will have to be made in light of the circumstances closer to the in-service date of 2007.

Mr. Syd Rapson (Portsmouth, North): I welcome the statement, especially as it places contracts with British shipyards. Of particular interest to me is the possibility--and it is only a possibility--of shipbuilding returning to Portsmouth, whether in my constituency at Vosper Thornycroft or in the dockyard in the constituency of the hon. Member for Portsmouth, South (Mr. Hancock). We would both support that. I hope that the statement does not undermine Vosper in the competition process, or with regard to the company's capacity for ship repair. We will look into that later, but I thank my right hon. Friend for the statement and the welcome possibility of shipbuilding returning to Portsmouth.

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