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Mr. Hoon: The position on technology is as I set out, and it would not be appropriate for me to go into the detail of the technology that will be available to the Ministry of Defence, which can then be passed on to other companies. Clearly, whichever company had been successful, there would have had to be precisely the same kinds of intellectual property arrangements between the company involved and the MOD on behalf of the Government. We are entirely satisfied that the arrangements in the CDC bid will allow this country the opportunity to exploit and develop the work that we have required for Bowman, both overseas, where appropriate, and in further enhancing the system.

That is why we welcome the creation of a research centre, which is likely to be located in south Wales. It will allow us to do further work in training and development towards the full digitisation of the system in the future. That is an important development; it will further enhance the communications equipment available to our armed forces, and that is why we judge overall that CDC provides the appropriate value for money solution, as well as a platform that can be effectively developed in future. I anticipate that that will involve a wide range of suppliers of such equipment.

Mr. Wayne David (Caerphilly): I thank my right hon. Friend for today's enormously positive statement, which is good news for the United Kingdom and, of course, the armed forces. It is particularly good news for the Caerphilly county borough in south Wales—an area with objective 1 status because of its very low gross domestic product, which has suffered a large number of job losses in recent months. The 400 new jobs that will come to the borough will be high-quality and well paid—precisely the kind of jobs that we need. Can my right hon. Friend say how the contract might help the greater south Wales economy?

Mr. Hoon: I am grateful to my hon. Friend for his observations. Certainly, the announcement will be good news for south Wales. I have already mentioned CDC, which will develop a number of jobs in south Wales. Cogent Cryptographics at Newport will also be an important supplier of cryptographic equipment under the contract. Several other companies are likely to benefit—

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this is only the first tier of the contract. We anticipate that there may be a further 300 jobs in second-tier contracts, which have yet to be identified. As I said, it is not entirely appropriate to give the precise details, but I can give my hon. Friend details relevant to his constituency, and I will do so for other hon. Members' constituencies.

Mr. David Laws (Yeovil): I greatly welcome today's announcement, which is not only long overdue, as the Secretary of State said, but will be extremely important in my constituency, not least at Westland Helicopters. Can the Secretary of State confirm that about 120 jobs at Westland will be secured over the next five years and that such work will provide the foundation for future orders? Will he make a commitment to continue to work alongside Westland to help to secure future orders, not just in the domestic market, but in the export markets?

Mr. Hoon: I am grateful to the hon. Gentleman for his observations. As I said in my statement, Westland will be an important subcontractor and its work on converting helicopters to incorporate the Bowman system will secure at least the number of jobs that he mentioned.

Jane Griffiths (Reading, East): Although it is obviously welcome that the contract has been awarded and that the future of armed forces communications looks in better shape, what can I say to my constituents who are employed by Thales, some of whom will lose their jobs immediately according to the company, which expects 400 jobs to go straight away, initially at Harrow and Bracknell—both places where my constituents are employed? It is clear that south Wales has greater need of new jobs than the Thames valley, but none the less my constituents are real people with real homes and real families. What can I say to them?

Mr. Hoon: I entirely understand the disappointment felt by those who work for Thales. I had the opportunity in recent weeks of visiting a Thales facility that provides some of the most advanced optical equipment available anywhere in the world for the United Kingdom. Thales is a very high-quality, successful company, employing highly skilled people. Although I cannot in any way substitute the decision that we have made—on the grounds of best value for money and the most effective in-service date for the armed forces—I understand the concerns that my hon. Friend has raised. All I can say to her—perhaps this message can be passed on to her constituents—is that a large number of jobs will be created across the country as contractors and subcontractors secure work under the overall Bowman programme. I anticipate that some of that work may well go to her part of the world.

Dr. Julian Lewis (New Forest, East): The hon. Members for Reading, East (Jane Griffiths) and for Slough (Fiona Mactaggart) have emphasised the fact that Thales already employs 14,500 people in many constituencies all over the United Kingdom. The Secretary of State understandably stresses the new jobs to be created, but what about those to be lost, such as at the former Racal factory, now Thales, in my constituency? How many people does CDC currently employ in the United Kingdom?

Mr. Hoon: In a sense, I have dealt with that point. All three companies, had they been successful, would have

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been developing solutions that would have required an increase of up to 90 per cent. in the UK work force. I would not want the hon. Gentleman to leave the House with the impression that somehow the 14,500 people employed by Thales in the UK are all engaged in such communications work. That is far from the case. Indeed, Thales would have created a significant number of jobs had it been successful. As I said in reply to my hon. Friend the Member for Reading, East (Jane Griffiths), Thales is a diverse company. It makes available a range of high technology in defence work to the UK and other countries. I see absolutely no reason why that successful high-technology work will not continue.

Mr. John Lyons (Strathkelvin and Bearsden): Are the unsuccessful companies excluded from bidding for subcontract work under the Bowman programme?

Mr. Hoon: No. Indeed, I anticipate that, as the effect of the contract spreads across the country, there will be a great number of contracts and subcontracts for which Thales and other unsuccessful companies may bid successfully.

Mr. Mike Hancock (Portsmouth, South): I would be grateful if the Secretary of State informed the House whether there have been any job losses in the senior management of the MOD over the bungled and incompetent handling of the contract—or, as normal, have they been rewarded with promotions and decorations? Will he substantiate his response to the hon. Member for Grantham and Stamford (Mr. Davies) that there would be only minor downgrading of the specification? In evidence to the Select Committee on Defence last year, those from his Department said that the original spec would be downgraded significantly to the one now on order. Could he also give a figure for the compensation that will have to be paid? He alluded earlier to the existing contractors involved in the contract. How much money has the Ministry spent to date on the project?

Mr. Hoon: Let me make it clear that, as I said when I talked about specification changes, there were adjustments. There are constant adjustments in the specification of complex pieces of equipment; I gave the House an idea of the nature of that equipment in my statement. Adjustments in a contract that takes this length of time are inevitable and are part of the process.

As for compensation, in a sense the hon. Gentleman is asking the same questions that were asked earlier. The amount that is likely to be written off has yet to be determined precisely, but I am confident that a great majority of the work done under the previous contract will be relevant to the work that has been awarded to CDC, so the money that has been spent will not be wasted.

Mr. Michael Jabez Foster (Hastings and Rye): May I congratulate my right hon. Friend on the wisdom of his decision, not least because it is a true British decision and a true British solution which employs the greatest number of British workers? In particular, it provides some 75 jobs in my constituency of Hastings and Rye. Following the rather sad news last week about the bypass, it is good news that jobs are to be created in an area where there is

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a weak economy. Is the announcement likely to result in export opportunities and therefore on-going jobs after the period of the contract has ended?

Mr. Hoon: My hon. Friend tempts me, but it is fair to say that none of the three bids were entirely British. It is in the nature of modern high technology for defence purposes that that is increasingly unlikely. Much as I would like to agree with my hon. Friend, it is important to tell the House that these are multinational bids by companies based in several different locations.

As for the potential for export, the prospects for the future are very good. Such equipment will put Britain's armed forces at the head of countries that invest in secure battlefield communications. I am confident that the research and development investment that is likely to be located in south Wales will mean that our lead can be extended. Clearly, that experience will mean that other countries will look to our expertise and the manufacturing capability established in the United Kingdom with a view to securing export orders. I am confident that the decision gives us an appropriate platform for export.

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