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Dr. Gavin Strang (Edinburgh, East and Musselburgh): Does my right hon. Friend agree that, following the report of the National Audit Office on the training of pilots, the low number of junior fast-jet pilots in April 2000 is an especially important issue and that the problem will increase in each of the next three years? Will he assure the House that every effort is being made to put that right?

Mr. Hoon: I am grateful to my right hon. Friend for raising that matter; it is of great concern to us. There is a particular retention problem with pilots, which we continue to address. I am confident that my hon. Friend the Minister for the Armed Forces will cover that matter when he speaks later.

Mr. Nicholas Winterton (Macclesfield): The Secretary of State is aware that, this year, I am taking part in the armed forces parliamentary scheme. I am delighted to have visited both Canada and Bosnia. My point relates to Bosnia-Herzogovina.

With all the money that the Government have at their disposal, when will they provide troops in Bosnia with living accommodation that meets the standards adopted by all other countries represented in Bosnia? The right hon. Gentleman knows that the Corimex buildings have no air conditioning, and that in summer they are intolerable. After six years of those living conditions, when will they be improved?

Mr. Hoon: I am grateful to the hon. Gentleman for raising the question of accommodation. My hon. Friend the Minister for the Armed Forces will refer to it. We are concerned about the fact that we do not provide the standard of accommodation for our armed forces that we should do. The Government are urgently and seriously examining the matter to try to make an improvement.

Mr. Gerald Howarth (Aldershot) rose--

Mr. Hancock rose--

Mr. Hoon: I have given way several times and I want to make progress.

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The armed forces need and deserve the best equipment, so that they can perform to their full potential. We inherited an equipment programme with strengths, but also some serious weaknesses. The shortfalls identified in the strategic defence review--strategic lift, for example--have been apparent in recent operations. We are now putting them right.

Back in May, I announced a £4 billion package to lease four C17s and to acquire 25 A400M transport planes. That will give us a capability that few others can match. Last Thursday, I announced the provision of six new roll on/roll off ferries to provide strategic sealift for our forces, and the procurement of four new logistics ships to support our amphibious and expeditionary capability. Those orders are worth about £1.25 billion, of which more than £1 billion will be spent in the UK. They are a huge boost to our military capability. That is yet another step towards putting in place the flexible, mobile forces proposed by the SDR. It also means jobs for Scotland, for Northern Ireland and for the north-east--jobs for Britain.

I can tell the House that an important decision has been taken with regard to the main engines for the type 45 destroyer. BAE Systems, the prime contractor, ran a competition to select the pair of gas turbines that will power each warship. Excellent bids were received from Rolls-Royce plc, offering the WR21, and from General Electric Company, offering the LM2500. The prime contractor advised us that both engines met the programme requirements, and that either would be acceptable to the Royal Navy. Therefore, it has been a difficult task to decide between the two bids. On balance, we have decided to select the Rolls-Royce WR21.

The LM2500 is a mature product--it is in volume production and available at an attractive price. We accept that the WR21 presents a greater degree of risk to the programme, but we had to look at a range of other factors. Those factors, many of which fall outside the type 45 programme, include the commonality of support arrangements with existing Rolls-Royce engines in the Royal Navy, and particular aspects of Royal Navy fleetwide operations for which the Rolls-Royce engine is well suited.

Because those wider issues have played such a significant part in our decision process, and because our future plans are not sufficiently certain to allow them to be an element of such a competition, we have decided to set aside the competition and negotiate the contract on a sole-source basis with Rolls-Royce.

Hon. Members should welcome the decision as good news for employment in the United Kingdom, particularly in the main Rolls-Royce facilities in Coventry, Bristol and Derby. Overall, some 1,000 jobs will be sustained as a result of our decision. That is clear evidence that this Government are investing in defence and investing in Britain.

The type 45 itself will, of course, be a large, versatile and highly capable ship, and it will provide a huge increase in capability from the outset. It will provide outstanding air defence in support of operations from war fighting to crisis intervention. We still expect to place a contract in excess of £1 billion, for the first three type 45

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destroyers, before the end of the year, although the precise timing will depend on continuing negotiations involving the prime contractor.

Mr. Paul Keetch (Hereford): Will the Secretary of State give way?

Mr. Hoon: In a second.

It remains our intention that the first and third ships will be assembled by BAE Systems Marine and the second ship by Vosper Thornycroft. Involving two shipbuilders in the design of the ship will make for effective competition for follow-on ships and reinforces the importance that this Government attach to a strong and competitive warship-building industry in this country. The detailed level of work share between the two yards remains to be decided, but must enable effective downstream competition and provide value for money to the British taxpayer.

Mr. Keetch: I am grateful to the Secretary of State for giving way and for remembering Hereford. On the type 45, the Sylver launcher has been selected as the launcher for the principal anti-air-missile system for the lead ship of the class, but we understand that it can launch the PAAMS missile only. Given the problems that we have had with submarines, would it not be advisable for type 45s to be able to launch, for example, cruise missiles? Will the Secretary of State therefore give the House an assurance that the launcher for the subsequent ships will be capable of launching a type of missile other than PAAMS?

Mr. Hoon: Those are matters that we can review as the programme is developed, but I am absolutely confident that the armaments capability of these very impressive ships will be perfectly sufficient as and when they come into service.

Mr. Chidgey rose--

Mr. Hancock rose--

Mr. Hoon: I need to make more progress.

The warship is being designed for the future, so it will be capable of incorporating up-to-date technology. While land attack missiles are not currently planned for the type 45, the ship is designed from the outset to allow the fitting of a vertical launcher suitable for a variety of weapons, including Tomahawk. The ship will have sufficient space and facilities to allow its capability to grow through its life. The type 45 will be a world-class ship for a world-class Navy and its success will depend on the world-class design and manufacturing skills of British industry.

Mr. Hancock: Will the Secretary of State give way? It is important for jobs.

Hon. Members: His job.

Mr. Hoon: I am all in favour of preserving jobs. I will certainly give way.

Mr. Hancock: I am delighted that the Secretary of State gave way. On the question of the second type 45,

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he is no doubt aware that it is vital to Vospers and to the work force currently at Woolston and the work force to be transferred to Portsmouth. There is a significant problem as the prime contractor is yet to sign and to make a reasonable arrangement with Vospers about the way in which that contract will operate. Will the Secretary of State do all that he can to bring about a decision and to get that contract signed as quickly as possible, so that we can secure those 650 jobs that are currently at risk at Vospers in Woolston and secure the move to Portsmouth as quickly as possible?

Mr. Hoon: Obviously, it is in the Government's interest to have this matter resolved as quickly as possible--that will get the ships in service as quickly as possible. I assure the hon. Gentleman that we are making every effort to ensure that the negotiations do not go on for too much longer and that we achieve the result that he and I want to secure for the Royal Navy.

Mr. Chidgey: Will the Secretary of State ensure that, as originally intended, the share of the work between Vosper Thornycroft and BAE Systems Marine will be fair and equal?

Mr. Hoon: That is what we announced and that is what we are seeking to achieve.

This world-beating new equipment is part of the success story that is Britain's defence. We must make sure that our forces, which are the very best, remain so. That involves the modernisation of our forces, which we are achieving in every aspect of what we do, from the organisation of Europe's defence to the command and control of our helicopter and Harrier forces. It all has one aim--to maximise and improve military capability.

I am, therefore, also pleased to announce that the invitation to tender for the new competition for the Bowman communications system will be issued today, which is four weeks earlier than planned. After a rigorous examination of industrial proposals, we will invite bids for the supply and initial support of Bowman from three companies: Computing Devices Canada, TRW and Thomson Racal Defence Ltd. All bidders are expected to offer proposals with significant manufacturing work and vehicle conversion in the United Kingdom. That represents a major turnaround for Bowman. The fact that we have been able quickly to issue the invitation to tender to major companies with good track records in this sector is a clear vindication of our early decision to reopen that competition.

Our programme of equipment improvements has its roots in the strategic defence review. That demonstrates that the SDR is on track. Two years on from the completion of the review, we continue to make excellent progress. Let me mention a few highlights. Elements from the joint rapid reaction forces have already seen action in East Timor and Sierra Leone. Those JRRF provide a pool of forces typically comprising around 20 major warships, 22 other vessels, four brigades, 110 combat aircraft and 160 other aircraft, any of which can be drawn on as situations and circumstances require. They can be deployed quickly around the world and they can deliver a real punch when they arrive.

Joint force Harrier brings together all our Harrier aircraft into a single potent capability. It has already proved its worth in Sierra Leone. We have created a single

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logistics organisation under a chief of defence logistics who is charged with streamlining and improving support to the front line. We are sustaining and broadening the success of the smart procurement initiative under what we now call smart acquisition. With smart acquisition, we are reducing the acquisition cost of defence equipment by £2 billion over the next 10-year period from 1998 to 2008, just as we said we should do in the SDR.

I give just one of the many examples of the success of smart acquisition. On the Seawolf surface-to-air missile programme, we aim to produce a common basic missile to re-arm the different systems on type 22 and type 23 frigates. By tightly writing the contract to include incentive payments for early delivery plus profit and risk sharing arrangements, we expect to reduce projected costs by up to 50 per cent.

The SDR is a long-term programme. The last SDR decision will not take effect until the Tornado GR4 is phased out as planned in 2020. Already, however, almost half of the key SDR measures have been implemented, although we have at the same time been engaged in crises in the Gulf, Kosovo, East Timor and Sierra Leone. That is a considerable achievement.

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