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Mr. Christopher Leslie (Shipley) rose--[Interruption.]

Mr. Deputy Speaker: Order. An hon. Member is trying to address the House and cannot be heard. I cannot tolerate that situation.

Mr. Leslie: I welcome the settlement for war widows. That was an important announcement, as was that of the extra money for defence spending. My right hon. Friend explained that defence spending has received its first boost for more than a decade. Will he comment on the shadow Chancellor's statements on the spending review? Does he believe that the Conservative cuts guarantee would imperil the defence of the realm?

Mr. Hoon: I am grateful to my hon. Friend for his observations, especially those about war widows. Instead of making vague promises, Conservative Members should set out their precise intentions for defence. The Government are committed to spending extra money on defence in each of the next three years. Conservative Members are traipsing round the country telling everyone that they intend to cut public spending. Either they would cut public spending and defence provision or they would cut taxes. Which is it?

Mr. Menzies Campbell (North-East Fife): Does the Secretary of State understand that in spite of his assurances, more than residual discomfort remains in the House about what appears to be a doctrinaire drive towards the privatisation of part of DERA? What is the Secretary of State's response to the report by the Select Committee on Defence, which says:

It continues, more colourfully, to say that the Secretary of State's proposals rely on

It is true that there will be an increase in projected defence spending, but in 2003-04 we will spend only 2.3 per cent. of GDP on defence. Some argue that that is the lowest level of defence spending since the Napoleonic wars. How will the figures assist the Government to persuade European allies to spend more on defence to achieve the European security and defence policy, which both the Secretary of State and I support? Do the figures

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depend on maintaining the so-called efficiency saving of 3 per cent., the continuation of land sales, and the sale of DERA achieving the predicted £250 million?

Will the figures that the Secretary of State announced allow for the maintenance of the Eurofighter programme in numbers, delivery dates and service date? Will they allow for the continuation of the aircraft carrier replacement programme? Will they also allow for the replacement of the light machine gun, which the Director of Infantry seems to regard as a matter of some urgency?

Mr. Hoon: I am sorry that the right hon. and learned Gentleman believes that we have been doctrinaire about DERA. We underwent a completely new consultation process, precisely to demonstrate that we were not doctrinaire. I cannot imagine the reason for the accusation that we are doctrinaire, after we said that the results of one consultation process had not been satisfactory and that we would reconsider the position. The right hon. and learned Gentleman's criticism does not stand up.

Those who have considered the revised proposal have largely welcomed it. I accept that we will not please all of the people all of the time. I realise that that is a trait that Liberal Democrats try to display, but in government it is sometimes necessary to make a decision. We have made a decision that was strongly supported by the United States as recently as this morning. Senior United States officials who are in the United Kingdom said that they were pleased with the proposals.

As for the right hon. and learned Gentleman's suggestion about GDP, we are talking about a substantial amount of extra money--an extra £1,250 million, over and above inflation, to spend on defence. That allows us to say to our European partners and allies that they should increase their defence budgets. We are spending more money, which will allow us to fulfil the programme that we set out under the strategic defence review.

Mr. David Winnick (Walsall, North): In view of--[Interruption.] I shall begin when the interruptions have stopped.

In view of my right hon. Friend's welcome statement today, will he say when a statement will be made about compensation for former prisoners of war of the Japanese? Does my right hon. Friend realise that the Prime Minister's welcome remarks have raised expectations among those very brave people--now far fewer in number--who suffered so terribly from starvation and torture at the hands of the Japanese? We must bear in mind the fact that 25 per cent. of British prisoners of war of the Japanese never returned--and we know why.

Mr. Hoon: My hon. Friend has quite properly pursued that matter with a great deal of commitment and effort, and I entirely share his sympathy. All I can say now is that the matter is still being considered by the Government.

Mr. Julian Brazier (Canterbury): Will the Secretary of State answer just two of the questions that my hon. Friend the Member for Chingford and Woodford Green (Mr. Duncan Smith) asked about DERA? First, which features of the trial involving the shadow DERA organisation will determine whether it is a success and whether the privatisation should proceed? Secondly, what

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will happen to the intellectual property rights that DERA holds, many of which are of such enormous concern to small and medium-sized defence businesses throughout the country?

Mr. Hoon: The answer to both those questions will be established precisely in the process that I have set out. We shall carefully consider which intellectual property rights should remain with which organisation according to the functions that are divided. We shall certainly make a robust assessment during the shadow working of the two separate organisations, and we shall learn from that process how best to achieve our aims. There are no blueprints. That is precisely why we are not being dogmatic about the process.

Mr. Andrew Mackinlay (Thurrock): Full marks to my right hon. Friends the Secretaries of State for Defence and for Social Security for remedying the wrong in relation to war widows, but in his discussions with the Secretary of State for Social Security, did my right hon. Friend tackle the outstanding and irritating anomaly, which involves considerable injustice, whereby some local authorities decide not to exercise their discretion to disregard war disablement pensions in dealing with matters such as housing benefit?

Mr. Brazier: Hear, hear.

Mr. Mackinlay: Indeed, that anomaly is a cause of constant irritation to all hon. Members, and I am astonished that neither the previous Government nor this Government have addressed the issue. That would cost the Exchequer nothing, it would make local authorities face their responsibilities, and it would mean parity of treatment and value throughout the United Kingdom. Can we do it now?

Mr. Hoon: I am grateful to my hon. Friend for making the point about war widows. He says that a wrong is being done, but I should explain that most pension policies had such a provision in the past. We have been able to change an anomaly in the war widows pension scheme, but other pension schemes will need to be altered in future to try to provide consistency. That is relevant to my hon. Friend's second point. Certainly, we should like local authorities to adopt a more sympathetic attitude towards those with whom they deal, but above all, we should like them to adopt a consistent approach.

Sir Teddy Taylor (Rochford and Southend, East): The Secretary of State says that the new DERA company will have the freedom to flourish, but does that mean that it will have the freedom to take its own commercial decisions without direction or guidance from Ministers? If that is the case, is he aware that unlike all the others, those in DERA at Shoeburyness would greatly welcome the fact, because, rightly or wrongly, they think that the guidance that Ministers have given has resulted in work being shifted from Shoeburyness to Eskmeals against the wishes of customers and against all the merits of common sense and economic judgment?

Mr. Hoon: I have heard similar arguments from others who represent areas where there are ranges, but they have

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put them exactly the opposite way round. There is clearly already competition between the ranges, and the commercial freedom that we expect to be extended will be of benefit to them. The fact that the new DERA will have commercial freedom is one of the reasons why we think it important to put the organisation into the private sector.

Mr. Stephen Hepburn (Jarrow): May I remind my right hon. Friend that the average age of skilled workers on the Tyne is now 50, and rising? When will he make a decision on the placement of roll on/roll off ferry orders? If newspaper articles are correct--they are not always-- I urge him to tell the European Parliament to keep its hands off British Government contracts for British workers. He will be aware of the concern that once again, Tyneside might lose out on a Government contract, and he knows about the importance of the decision to the future of shipbuilding on Tyneside, so I ask him to give more information.

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