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6.1 pm

Dr. Rudi Vis (Finchley and Golders Green): I thank my right hon. Friend the Secretary of State for his informative words, but I should like to probe two aspects of military procurement. They have nothing to do with my constituency. In fact, procurement has little to do with my constituency. First, in what overall international political context are military procurement decisions made? Secondly, once delivery of military hardware and software has been obtained, what can be done if the goods are faulty?

I shall pose some questions for my hon. Friend the Minister to consider. The documents before us and what has been said earlier give little away about the overall international political context. We are considering projects and comments on projects, but I cannot easily discern an overall international political strategy in which those projects can be judged. That may well be my fault and, if so, I am sure that I will be told.

For example, my hon. Friend the Member for Jarrow (Mr. Hepburn) said that the four ships will be built in Germany, probably with cheap Polish labour. If there is no international political context, we cannot judge whether the decisions are good or bad, or made on political or financial grounds. When the European Union is enlarged, we shall have to help out Poland, and that may be one of the means to do so.

My main interest is that military procurement is a highly political issue, with aspects involving finance, resources, efficiency, interested parties, international obligations and institutions, nation states and employment issues. I am particularly interested in the international political context of procurement, and I shall explain why.

I am not a member of the Select Committee on Defence. I am therefore not steeped in its peculiar language or paucity of political perspective. The emphasis

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is on contracts, on weaponry and on which constituency gets what. I am very surprised by what has been said, given the lack of that context.

I am a member of the Western European Union Assembly. I attended my first meeting of the political committee of the WEU about two and half years ago. Before that meeting, I decided that I would read the papers carefully and that I would keep my mouth firmly shut during my first committee proceeding. The paper's rapporteur was Mr. Martinez, a parliamentarian from Spain, and its title was "WEU Relations with Russia". It was 16 pages long and dated 5 March 1998. I read the paper with care. Overtly, its objective was about the Russian Federation's becoming an associate member of the Western European Union but, covertly, its objective was more sinister. Reading between the lines, it argued for Russia to become an associate member and, for good measure, it also threw in the Ukraine in its conclusion. The inclusion of Russia in the WEU would create a breach between Europe and the United States and weaken the Atlantic alliance. The paper also proposed moving substantial European military procurement to Russia.

One passage from that paper stated:

The Russians certainly play a long game.

I found the paper arrogant, brash in its twisting of history and full of half-truths. During the meeting, about eight WEU delegates were particularly sycophantic and I broke the golden rule of never speaking in a first meeting. I pointed out my misgivings but Mr. Martinez became displeased with my comments. The final vote was 39 to one, and I felt what the Tories must have felt daily since May 1997.

After the meeting, nine delegates told me that they had misgivings too, but felt that they could not vote against Mr. Martinez. I did not know much about him at the time, but I later found out that he was a former president of the Council of Europe, and had ushered in Russia's membership. Russia has now been more or less slung out of the Council of Europe; at least, its vote has been taken away. Mr. Martinez has done much internationally--in Europe and transatlantically--and he is now a Member of the European Parliament, where he tells the same stories.

In subsequent meetings during the past few years, I have met several members of the Russian delegation and Members of the Duma. In the main, I found them demanding--never giving--and often arrogant. It reminded me, incidentally, of discussions with Americans.

The hon. Member for Gosport (Mr. Viggers) rightly mentioned the percentages of 100, 60 and 15. I sometimes wonder whether we bear that point in mind sufficiently in relation to international military procurement. We should bear the EU in mind in such contexts, and perhaps go beyond OCCAR, and we should have discussions with our colleagues in the EU.

My second point, which is slightly shorter, involves the delivery by firms of military hardware that is found to be faulty when used. Two points from our experience in Kosovo come to mind. First, were military procurement and negotiation and research facilities so weak and ill

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informed that one could sell them, as the song goes, any old iron? Secondly, do we use price efficiency ratios and other indicators to judge performance?

The public increasingly feel that the taxpayer is being robbed by dodgy entrepreneurs in the military sector. If a house builder sells one a new house and the roof collapses, one has means of redress, but if anti-armour missiles and all-weather, precision-guided bombs do not work, who pays? That matter should be more openly discussed.

In summary, will my hon. Friend explain whether we have an overall political international procurement perspective in the United Kingdom? If so, what are the details, especially with regard to proposed EU developments? My hon. Friend will no doubt answer me in writing. Secondly, who decides about which matters? Are the United Kingdom, the United States, the EU or multinationals involved, or are all of them involved, and in what context? Finally, who pays when we receive dodgy goods, when there are price overruns or time overruns, and when costly mistakes are committed by firms after procurement, even once inefficiencies in MOD processes are taken into account? I look forward to my hon. Friend's reply.

6.9 pm

Ms Rachel Squire (Dunfermline, West): First, I pay tribute to the people who work in our shipyards, dockyards and defence industry who try daily to deliver of their best. Secondly, I pay tribute to Ministers who have difficult procurement decisions to make, as was demonstrated earlier today. Thirdly, I pay tribute to our armed forces who are so highly thought of throughout the world and whose lives depend on the equipment that we procure for them. Unfortunately, over the years, we have not provided the best equipment for them to meet their needs. That has been highlighted in reports from the Ministry of Defence, the National Audit Office and the Defence Committee.

My next point concerns a constituency matter. Unfortunately, Parliamentary Private Secretary commitments kept me from the Chamber during the private notice question on hunter-killer submarines earlier this week. The Secretary of State mentioned it today and I should like to ask the Minister three questions. First, does he agree that Rosyth dockyard has excellent facilities and a highly skilled and professional work force ideally suited to undertake submarine repair and refit work? Secondly, will he make a commitment that Babcock Rosyth will get its fair share of any additional repair work that is being handed out on the Swiftsure and Trafalgar class submarines? Thirdly, does he agree that this unfortunate incident demonstrates the need to have at least two dockyard facilities in the United Kingdom?

On a national issue, I pay tribute to the Government's efforts to smarten up the procurement procedure--this smart acquisition, as it is now called, just to confuse all of us who are daily confused by defence jargon. Both the NAO and Defence Committee reports recognise that, in the past three years, some progress has been made, albeit slowly. Criticisms of the procurement process need to be levelled more at the previous Government than at the present Government, who have made every effort to start to change the system.

I listened with great interest to the comments on the type 45 frigate because recently I visited the Defence Procurement Agency at Abbey Woods. I was given an

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excellent presentation on the type 45 and the BVRAAM. I was impressed by the whole concept of the integrated project teams and the complex and challenging matters with which they have to deal.

That brings me to two or three brief points on the international front. As has been said, the type 45 frigate was originally supposed to be a collaborative effort with the French and Italian Governments, when it was known as the common new generation frigate or project Horizon. Various difficulties arose, particularly disagreements over the capabilities required. Does that mean, as the hon. Member for Chingford and Woodford Green (Mr. Duncan Smith) seems to suggest, that we should ditch ideas of international collaboration and co-operation on procurement issues? I think not.

We need international collaboration to provide us with all the defence equipment that we need. It may be hard to face up to this, but our country, like many others, can no longer afford to deliver every single item of defence equipment entirely through British industry. We need co-operation and collaboration to do that. It does not make sense to go it alone, strategically, operationally or, frankly, industrially.

We need international collaboration to build on our alliances, particularly NATO, and to promote interoperability between and with our allies. As we all know, the reality is that defence procurement decisions are influenced not only by what is the best equipment, but by foreign policy and trade and industry considerations.

We also need international collaboration and co-operation because of globalisation. During the past 10 years, the world defence industry has been rationalised into four prime defence contractors, of which BAE Systems is one. That raises certain issues as to competitiveness in the UK. It also links us to the whole rationalisation of the European defence industry and to the development of a European market that can compete with the US without taking us into either Fortress Europe or Fortress America. We must take those alliances into consideration in our procurement decisions, while protecting our national interests.

Finally, international collaboration and co-operation are important for technological development, which moves so rapidly. That highlights how important it is for DERA and the Defence Diversification Agency to keep us up to pace with that technology. We must ensure that the skills of our shipyards, dockyards and defence industry are efficiently translated into promoting civilian manufacturing, engineering and technological excellence while maintaining our defence capabilities.

We may be a small country, but we have always thought big. We should continue to do so.

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