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Jim Knight: Will the hon. Gentleman give way?

Mr. Howarth: I will not, if the hon. Gentleman will forgive me. I have spoken for a long time, although not for as long as his right hon. Friend the Minister.

There are some good programmes in the Government's procurement plans. It is very important that we do not analyse projects to death. We must try to get equipment that is more readily available, and not necessarily equipment that meets requirements down to the last and finest detail. We need equipment to be robust and cost-effective. That is the better way to go. A company in Hampshire has told me that it would like the Government to introduce more technology demonstrators rather than trying to get everything right on paper, as technology demonstrators would allow us to see the technology in action.

Finally, the real question will be the extent to which this substantial bow-wave of procurement programmes is financed. The carriers, the joint strike fighter, the future strategic tanker aircraft and the various other projects that the Minister and I have mentioned will all have a substantial price tag attached. I hope that the Government are confident that they will be able to persuade the Chancellor to part with the money when the going gets tough—as it inevitably will—so that many of these worthwhile projects are not axed because of insufficient financial provision.

6.45 pm

Mr. Bruce George (Walsall, South): Thank you, Mr. Deputy Speaker. I will continue the remarks that I began to make earlier. I usually approach these debates wearing a Defence Committee hat and by being consensual. However, an Opposition Member will always deliberately provoke me into taking that hat off and being partisan. I will try hard to put that consensual hat back on.

It is a great pleasure to follow the hon. Member for Aldershot (Mr. Howarth). I do not know how he manages to combine the two onerous tasks of being a senior member of the Defence Committee and a member of the Conservative defence team. If he finds the tasks too difficult to bear, we will reluctantly wave him goodbye. I promise him a champagne reception, which the Minister will pay for—[Interruption.] Not out of the defence budget, but out of his own pocket.

The hon. Member for Aldershot's speech contained a few lapses about the SA80, for which his party must accept a degree of responsibility, and the famous Phoenix, which began its life in about 1977. Two decades later, it came into operation and is now effective. I shall not give my A to Z of Tory procurement failures.

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This Government have not had time to rack up the failures of the Conservative party. After 17 years, we will be able to evaluate exactly how effective their procurement policies have been. I hope to be around long enough to say that the Government have done substantially better.

Unless provoked, I will not refer to the defence budget, but I can promise the hon. Member for Aldershot that the decline began in 1985. The Tories' great success was to achieve the Frank Allaun goal of bringing defence expenditure down almost to the average of our European partners. If Mr. Allaun knew that, he might have rushed out to vote Conservative because—here I go again, being partisan—the Tories delivered one of the principal policies of the left wing of the Labour party. Having got that out of the way, I will now get back to serious consensual politics.

Anyone listening tonight might have imagined that the debate would be fierce and the difference between the parties unbridgeable. In reality, it is not; the difference between the parties now is narrower than it has been in my many years here. Everyone hopes that it will remain that way.

Procurement is critically important. I have served on the Defence Committee since 1979, and those who have served on that Committee over the years have monitored the MOD's performance in procuring equipment and weapons systems. We have produced dozens and dozens of reports that, over the years, have been fairly consistent in indicating frequent delays, cost escalation and, in many cases, gross under-performance.

All Governments have tried to introduce a system in which the procurement of weapons systems is efficient and the equipment is produced to time and at a cost relatively close to the original estimate, so that our military personnel achieve most of their objectives when they fire the weapons or drive the vehicles. Smart procurement, or smart acquisition, is the latest in a long saga of attempts to do that, and I shall discuss later whether it has been successful so far or, indeed, whether there are signs of success.

When annual defence procurement debates were introduced in 1998, our predecessor members of the Defence Committee monitored equipment issues more systematically. The Committee instituted annual inquiries based on a survey of major procurement projects. The goal was to monitor and report progress on a selection of the operationally more significant procurement programmes. Those programmes were on what I call the at-risk register because they were most at risk from predators in the Treasury, trying to play silly games by elongating the procurement process.

We wanted to report regularly to the House on whether there were any signs of Treasury interference in programmes that were proceeding reasonably successfully. We also wanted to find out whether there were signs of cost escalation. I am grateful to the MOD for responding annually to our requests for all sorts of information. We have 14 separate procurement items on the list, from the future aircraft carrier to the Swiftsure and Trafalgar submarine updates and the private finance initiative projects. The MOD provides us with a great deal of information.

However, unlike previous Defence Committee reports on procurement, we have a rather different focus. In our first report in 1999, we evaluated the then recent, thankful

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withdrawal from the Horizon frigate programme and its replacement by the Type 45 destroyer programme. We considered PAAMS—the principal anti-air missile system—which is an integral part of the common new generation frigate, as the Type 45 destroyer was then called. In our second inquiry, we considered BVRAAM—the beyond visual range air-to-air missile—for the Eurofighter and the strategic lift programmes. In our third report, we considered the future aircraft carrier and the future joint combat aircraft programmes and all sorts of other things.

As I have said, our approach has been slightly different in this Parliament, and I am sure that many hon. Members will have read our report, so it would be superfluous to go into any detail. We did not duck the contentious subjects, such as the warship-building strategies, the warship support modernisation initiative, PFI schemes, the decommissioning of the Sea Harrier and information superiority capability. We followed up several of our earlier inquiries on ammunition supply, ASRAAM—the advanced short-range air-to-air missile—BVRAAM and the A400M. We made a list of other recommendations, and it is a very good report.

We have considered some quite contentious issues in the report, and I shall begin with warship procurement. The MOD has had to use the division of work on the Type 45 programme as the basis for steering the future of warship procurement in the United Kingdom more generally, because decisions on the Type 45 programme will have implications for future shipbuilding capacity and the extent of competition for other programmes.

I sympathise with the MOD; it had to find a solution in very difficult circumstances. We are all aware of those circumstances: too much capacity chasing too little naval work. The MOD commissioned a study by RAND Europe, which showed that there is an uncertain balance between the benefits of maintaining competition in the market and placing all the work with one shipyard to produce economies of scale. A compromise on the Type 45 programme is probably the best that can be achieved in what is a difficult balancing act.

BAE Systems's yards will assemble the vessels from blocks built by its yards at Barrow and on the Clyde and by Vosper Thornycroft. That will help to keep those yards in business, while allowing economies of scale because of the larger production runs of the same block for each vessel. However, I wish to highlight the risks in that approach. As RAND said, that approach might not stop BAE Systems becoming the only United Kingdom yard able to project manage and assemble warships, reducing the scope for future competition.

Another possible risk is that the MOD will have to play its part in ensuring that sufficient capacity remains to gear up for an unexpected increase in warship procurement activity, possibly at the end of the decade, as the future carrier and future surface combatants come on stream.

The MOD rejected the unsolicited bid from BAE Systems to build all the Type 45s because of concerns about, inter alia, the Astute submarine and Type 45 blocks tripping over each other in Barrow's Devonshire dock hall. However, RAND noted that there were similar dangers with the current plan in which it is envisaged that the second and subsequent Type 45s will be assembled at Barrow. Since our report was published, the MOD has announced that the construction of the Astute submarine

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has been delayed by a year, and I would welcome the Minister's assurance that that will not threaten the Type 45 construction programme.

I shall refer to a further risk. Having decided on long production runs for the Type 45, there are sound financial reasons why the MOD should order all 12 vessels. I repeat that the Government should commit themselves to ordering all 12 vessels. Until they do so, they will not be able to suppress suspicion that the Treasury will sink some of them. None of that detracts from the fact that, at last, the MOD has begun to tackle a long-running problem in that sector. I should like such work and RAND's analysis to form the basis of a fundamental review of warship procurement strategies.

We also considered the warship support modernisation initiative—a highly contentious issue even on our Committee. As with warship construction, warship support and maintenance has long been beset with fundamental imbalances and ever-falling naval work loads as a result of new maintenance technologies and a shrinking fleet. I recall that, in the mid-1980s, there was a wonderful philosophical debate in the Defence Committee about whether 44 frigates and destroyers was "about 50", as the then Government said, or "about 40", as the Committee said. I can even remember back to the time when we had 75 frigates and destroyers. I am not quite certain exactly how many frigates and destroyers we now have available because of some directional difficulties that were encountered in the antipodes.

The warship support modernisation initiative is at least a positive step towards tackling the structural problems. I hope that it will produce the estimated savings of £327 million over five years and £48 million a year thereafter. Some of those savings will come from greater competition for refits negotiated as part of the initiative, and some from rationalising activities across dockyards and neighbouring naval bases.

Although much of that can and deserves to be applauded, regrettably, as the Minister knows, it comes at a cost. The MOD will have to be very prudent to minimise the adverse aspects of this policy and its impact. Some 1,000 jobs—some would say 750—will go. We have welcomed assurances during our inquiry that all three naval bases have a secure future. It remains a concern, however, that all of the current naval dockyards may not have a secure future as a result of the warship support modernisation initiative. It seems that Rosyth may have a difficult time without the existence of a co-located dockyard and naval base. What I—and, I suspect, most members of the Committee—want is a sensitive handling of job losses with minimum compulsory redundancies, the protection of essential facilities in the dockyards and naval bases, and care taken to avoid, as far as possible, disruption to sailors and sailors' families as refits are placed according to competition.

We are told that Sea Harrier is to be withdrawn between 2004 and 2006, six to eight years earlier than planned. First, that has not been an example of good forward planning because some aircraft will be less than 10 years old when phased out. Although part of the decision to withdraw them was based on a new post-cold war security environment, we should note that the latest aircraft were ordered in 1993. It seems fairly clear to me and the Committee that the upgrading of the Sea Harrier to make

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it effective flying off carriers in hot conditions has presented and will present real technical challenges. In a similar vein, its air defence system—its Blue Vixen radar and ASRAAM missiles—could not sensibly be shoehorned into the offensive support RAF Harriers.

The real question is whether the MOD should keep the Sea Harriers as they are with their imperfections. That, in turn, raises two other questions that our report examined: what other systems could cover Sea Harriers' air defence capability, and do we still need that capability anyway? We highlighted the things that would have to be done—or the assumptions that would have to be made—if a rationale for withdrawing the Sea Harrier were put forward. The Type 45 destroyer and its PAAMS would have to be delivered without delays to its 2007 in-service date. I have already spoken of my concerns in that regard. In the meantime, the improvements planned for the existing Type 42s and their Sea Dart missiles must be similarly pursued with the utmost vigour. The eight years of delays in putting an infrared fuse on Sea Dart must be a thing of the past.

More fundamentally, the rationale for withdrawing Sea Harrier depends on two all-important foundations. Future naval operations will be for the most part in the littoral environment, supporting land forces, for example, where hostile aircraft will not have to undertake the long run-in towards our ships, which makes them vulnerable to our air defence aircraft—missiles could be fired at us from ground-based launchers with little warning. In those littoral environments, effective air missile defences will be essential, and the Sea Harrier does not provide that. We will have to rely on allies for airborne air defence cover for our ships—that means the United States. If and when we do fight in the open ocean, for some as yet unforeseen reason, we will have to have the United States alongside us.

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