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5.25 pm

Ms Dari Taylor (Stockton, South): I warmly welcome my right hon. Friend the Secretary of State's announcement to the House this afternoon. Placing additional orders for strategic kit will support effective operability and defence capability in the theatre of operation. I am more than delighted to hear that two of the four ALSLs, the amphibious landing ships, will be built on the Tyne. It gives me real pleasure.

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I worked on the Tyne when the Conservative Government decided not to award contracts to Swan Hunter. My union, the General, Municipal, Boilermakers and Allied Trades Union, which represented more than 3,500 people, was destroyed by that. It was seen as a deliberately vindictive attempt to close down a Labour community. That Labour community is most certainly still there and it will be joyful tonight. My constituency is the Tees and the sister company to Swan Hunter is Herema on the Tees. I hope that, with clustering and an emphasis on community and on widening capacity, my company on the Tees will also benefit from the order. I know for certain that Corus, which makes the best steel in the world, will ensure that it tenders to supply the steel for those ships.

The House is seeing the reality of the strategic defence review, with billions of pounds being spent on modernising the armed forces to ensure that they are equipped for the post-cold war period, with sufficient flexibility and mobility for rapid deployment. That is something of which to be proud, and I am more than proud to say that it is my Government who are doing it.

I have watched our armed forces with care, and people know that my interest is a keen one. I have watched them with care in the Balkans, I have had the pleasure of meeting our armed forces in Bosnia and I recently watched their actions in Kosovo. More and more, I have come to the conclusion that, because they were so clearly denied the equipment that they needed by the previous Government, we now rely heavily on the capabilities of the people who are the backbone of the armed forces.

Having visited our armed forces far too many times to be under any illusion about what happened under the Conservative Government, I also came to the conclusion that that Government left our armed forces seriously frustrated and demoralised, ill-equipped for combat and unfocused with regard to their role in the world, and they left an MOD less, rather than more, capable of spending public money effectively. Therefore, I am more than pleased to be standing here today, taking part in a procurement debate in which my Government are saying how and in what way they will facilitate an effective armed force for tomorrow.

The reality of my statements is borne out in the report of the Select Committee on Defence on the lessons of Kosovo. My hon. Friend the Member for Walsall, South (Mr. George) and his Committee are to be congratulated on their thorough report.

The Select Committee report concludes that, in the theatre of operations, the British Army was left with incompatible information systems across NATO. That is a telling statement. The Army was using insecure and obsolete United Kingdom tactical communications. Supreme Headquarters Allied Powers Europe told the Committee that

What an indictment of the Conservative party! The report states that there was a lack of all-weather precision-bombing capability, and that there was a continuing deficit in United Kingdom and European strategic lift capabilities.

I contend that the various serious defects in the United Kingdom's capability are down to the previous Government's apparent indifference to the requirements

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of the armed forces. I believe that the Conservative Government used the peace premium as a convenient excuse to neglect and cut the armed forces. To believe that it is possible to put right the ills of years of neglect in the short time that we have been in government is to believe in miracles. From the Opposition's actions and their speeches today, they clearly believe in miracles. Indeed, they believe blindly in miracles.

The serious underfunding of the British armed forces for many years is being remedied at last. Perhaps the process is too slow even for me, and I am confident, challenging and robust about the matter. However, the process is happening. Billions of pounds are being spent appropriately and deservedly on an excellent British Army.

The Government are laying the foundations for a long-term vision of excellence in the field of operation, in the constructs of partnership for peace with NATO, and in the development of an EU defence initiative. My constituents in Stockton, South and on the Tees will benefit from that vision. It does not simply mean work, but a sense of pride and satisfaction in the fact that our armed forces have a tomorrow that they certainly deserve.

5.32 pm

Mr. David Chidgey (Eastleigh): The hon. Member for Stockton, South (Ms Taylor) made an interesting and impassioned contribution as she expressed her joy and delight at the good fortune of her constituency. Many hon. Members who are here today have constituency interests. I wish I could speak with the same joy and passion because the defence industry is vital to the economy of Hampshire. [Interruption.] The Under-Secretary seems to be making an encouraging remark, which is always good to hear. However, perhaps he will not be so enthusiastic when he hears what I have to say.

Hampshire has the most defence-dependent economy of all the shire counties in the country. I have reminded hon. Members on several occasions that more than 300 firms are employed by the defence industry to a significant extent in Hampshire, especially around Eastleigh and Southampton. I am sure that the hon. Member for Southampton, Test (Dr. Whitehead) wishes to make similar points.

I want to concentrate on only two matters this afternoon to give other hon. Members an opportunity to contribute. I shall speak about two major defence procurement projects, both of which other hon. Members have mentioned in passing or in greater detail. They are the Bowman project, which is now deceased, and the type 45 destroyer programme, which has yet to leave the cradle.

The Secretary of State said that we should learn from our mistakes. There is a lot to be learned from what happened to Bowman. I have a specific interest in the Bowman project because the company that was responsible for the procurement was based in my constituency. It no longer exists. Bowman was supposed to create for our armed forces an integrated communications system, which would have been a world beater. It would have equipped anything from a Land Rover to an aircraft carrier with the most highly sophisticated, most advanced communications system in the world. It would have given massive advantages to our armed forces and it had huge export potential. It could have earned many billions of pounds for the UK economy.

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The project was years late in being commissioned by the MOD--for which I do not blame the present Government--leaving our armed forces struggling with out-of-date and archaic equipment known as the Clansman system, which was little more advanced, some say, than the old VALs. In addition, the contractors appointed to undertake the project had suffered delay after delay while the MOD kept changing its mind and specifications.

Hon. Members will know that the National Audit Office was highly critical of the institutional delays built into the MOD project management at the time which caused the delays to the Bowman project. I visited the main contractor, Archer Communications, in my constituency many times to see the problems and difficulties it faced in the three years until the project was cancelled. I will never forget seeing a wall chart in the managing director's office which set out how management and staff had to deal with the MOD in the project. The wall chart gave the project hierarchy of the various departments, sections and specialists within the MOD involved in the project. More than 100 people were involved in different phases of the management process of the project. They were all part of the decision chain; or, should I say, the indecision chain.

It was impossible for the contractor to get timely answers to queries and decisions on developments. There seemed to be a complete ignorance of the basic concept that, for a contractor, time is money. In spite of the efforts of the contractor, the outcome was that the project was further delayed, the cost estimates escalated and--perhaps to cover their embarrassment--the Government cancelled the project; or, should we say, redefined it. The net result was that £200 million of taxpayers' money was lost and will not be recovered in the redevelopment of the project. I agree with the NAO that that money was wasted. Some 650 highly skilled and advanced engineering jobs were lost to my constituency and, as a result, a centre of excellence was destroyed.

In correspondence with me, the Government--through the Minister for Defence Procurement--have said that if smart procurement had been in place, these pitfalls would have been avoided and the problem would not have arisen. Smart procurement is now in place, so presumably it will not arise again on other projects. That is why I wish to refer to the type 45 destroyer procurement programme.

The Government announced in July that, under their procurement strategy, BAE Systems would be the prime contractor. Vosper Thornycroft and BAE Marine would be design and construction contractors for the first three vessels. The Secretary of State said at the time that the Government's approach in the programme would ensure that experience in the type 45 construction was spread between BAE Systems, BAE Marine and Vosper Thornycroft, assisting future competition for follow-on ships.

The key point is that Vosper Thornycroft and BAE Marine were to participate equally. It was a cornerstone of the Government's strategy to maintain competition in warship building in the UK. However, to achieve that, there must be fair and equal allocation of work on the type 45, particularly in the early part of the programme--the first three ships.

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It is important to remember that the prime contractor gave the Secretary of State for Trade and Industry an undertaking as a condition of its merger, or takeover, with Marconi. The undertaking was not to discriminate in favour of its own subsidiaries when tendering as prime contractor. The Government's procurement strategy should be accepted as overriding individual companies' commercial aspirations.

There are real concerns at VT that BAE Systems is seeking to move away from equal work sharing on the type 45. Contract negotiations are being prolonged and agreements on prices are being revisited and queried time and again, all adding to delays that may crucially affect VT's continued participation in the project.

VT has acknowledged that it has a short-term gap in production, and as a result, 650 shipyard workers have been given predictive redundancy notices, which will start to take effect in January. The type 45 project is supposed to be ordered by the end of this year. Those 650 skilled craftsmen are more than half the work force. If the redundancies go ahead, the VT shipbuilding division could become unviable.

If the contract is delayed, VT will be unable to keep that essential work force intact. It will be unable to justify investment that it needs to make to meet the targets in the type 45 production programme, and it could well decide to withdraw from warship construction altogether. If, because of the stumbling blocks, delays and indecision, and because its work force has been stripped, it withdraws to concentrate on its other wide and successful ventures in engineering, production, manufacturing and training, the Government's strategy for retaining competition in the warship building industry will be in shreds.

Government Members may wish to reflect on the wider, long-term effects. There are currently about 4,500 skilled craftsmen in the warship building industry. At the peak of the Government's programme for warship building, we will need 9,000. If VT were to withdraw from shipbuilding, we would lose more than a quarter of our existing skills base and would be going backwards rather than forwards. History shows that when such skilled people leave shipbuilding, they do not come back, as there is great demand for their skills in other industries. We could be taking a highly retrograde step, when we need to build up the skills base in the shipbuilding industry for the over-30 ships programme.

The Government must maintain competition in the UK warship building industry. They must ensure that the type 45 destroyer procurement strategy is adhered to by all the parties. They must ensure that companies such as VT receive fair and equal allocation of work, especially for the first three type 45 destroyers. I would hope that, by doing that, the Government can ensure that the 650 jobs at VT--many of them filled by people from Eastleigh and most of them requiring skilled craftsmen--are not lost to the industry. That is how the Government can demonstrate to me and my constituents that they are committed to smart procurement.

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