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30 Jan 2003 : Column 1028—continued

Mr. Bernard Jenkin (North Essex): I thank the Secretary of State for his statement and for giving me a copy in advance, but I have to say to him that this is not so much a decision as a fudge. The addition of two full-sized aircraft carriers to the Royal Navy's fleet, along with the introduction of the new joint strike fighter, will represent a huge increase in Britain's ability to project, sustain and protect military force anywhere in the world. So we welcome any progress towards the launch of the new ships, but we fear that this programme is now beset by uncertainty.

First and not least, there is the vexed issue of money. Can the Secretary of State guarantee that the money for those ships will be available without the need to cut other programmes? The armed forces and the equipment budget are already overstretched. It is clear from the forward defence equipment plans that there is

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far more on the Government's shopping list than current defence spending levels will support, alongside all of the UK's other defence commitments.

Secondly, the Secretary of State describes his announcement as "innovative", but he is being a little modest. He has not so much announced a decision as the start of a whole new process: the formation of an as yet ill-defined alliance that is entirely unformed and agreed only "in principle". He remains committed to the in-service dates of 2012 and 2015—dates that are long after he is likely to have departed—but if in a year's time his proposed alliance is judged not to be operating successfully, as he put it, where will that leave the Government's programme? The so-called smart procurement policy was meant to avoid the vexed issue of work sharing. This project started out as a clear competition, but has not the Secretary of State bottled out in the past few weeks by unexpectedly deciding to split the work between the two main competitors? Is he not now effectively saying that Thales won the competition, but that British Aerospace is the prime contractor and has to adopt the Thales design?

What is the basis for deciding the split of work, and is it subject to ministerial direction? Will the contract be arbitrated under English or French law, and who will ultimately be responsible for achieving project milestones and holding to budget? Does not this decision artificially to split the contract have very serious implications for the way in which future defence competitions should be conducted? Is it not the truth that the Secretary of State could never have justified awarding the whole project to a French company, given that there is no possibility of the French Government's ever allowing British companies to compete on the same terms in France? Should he not have realised that at the outset, rather than discovering it only now?

We recognise that Thales UK is a major UK investor and employer, and that work placed with it will create British jobs in British factories, but some work will certainly go to France. I merely ask whether the Secretary of State shares the anxiety of many in our defence industries that UK companies simply do not have the same opportunities to buy companies, and to compete in French markets on the same terms. In return for nominating Thales as a "key supplier"—the company is still effectively owned and controlled by the French Government—what is President Chirac giving Britain, except a regular kick in the teeth for the Prime Minister on issues such as agricultural reform, his outrageous invitation to President Mugabe and his determination to split NATO over the issue of Iraq?

Will the Secretary of State now agree that the company to which he periodically refers as "British" Aerospace is in fact a British company? Will there now be an end to the unseemly public criticism of what is Europe's largest defence contractor and one of our biggest industrial employers and export earners, from which he has carelessly wiped millions in stock market value?

This decision raises many questions about the future of defence procurement policy, which the Government will have to address. The final order for those ships is important for British industry and vital for the future of UK defence, but today's announcement by the Government has introduced more risk and more

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uncertainty—not just for this project but, by implication, for the entire defence equipment programme.

Mr. Hoon: I am sorry that the hon. Member for North Essex (Mr. Jenkin), who speaks on defence matters on the Opposition's behalf, has yet again come to the House with a litany of anti-European—in this case, anti-French—rhetoric. He has a problem, because if he examines the NATO alliance, he will discover that a significant number of European allies are members of NATO, and we work with them regularly. I know that there are many in the Conservative party who would probably like it to revert to its state before the debate on the corn laws, but unfortunately, when the hon. Gentleman talks about projects for the 21st century, his arguments sound distinctly outdated.

The key question that the hon. Gentleman must answer is what would the Conservative party have done differently from the announcement that has just been made. [Interruption.] In all the hon. Gentleman's rhetorical, anti-European flourishes from the Opposition Front Bench, I heard not a shred of a suggestion as to what exactly he would have done differently. [Interruption.] If he says—

Mr. Deputy Speaker (Sir Alan Haselhurst): Order. There is far too much chatter from Front Benchers on both sides of the House. We are trying to hear a reply from the Secretary of State.

Mr. Hoon: I am grateful, Mr. Deputy Speaker.

What the hon. Gentleman must say at some stage today—perhaps he will have opportunities other than the one he has just wasted—is whether he would have been prepared to jeopardise this vital programme for our armed forces and the benefits that flow across a range of British industrial expertise, by refusing to take advantage of the strengths of BAE Systems and Thales UK and the various bids that they made. If he is saying that he would choose one bid or the other, he is actually saying that he would rule out of consideration, and exclude from benefit to the UK's armed forces, the considerable expertise that each of those companies would make available. [Interruption.] I can hear mumblings on the Opposition Benches, so obviously in the course of his rambling response, the hon. Gentleman did not make all the points that he wanted to make. I invite him to think carefully about the ways in which such project negotiations are conducted, because if he did so he would see that the proposal set out is very clear, tight and well defined, and is clearly of considerable benefit to United Kingdom manufacturing industry.

Let me comment for the House on just one aspect of the hon. Gentleman's obsessions: the reference to French law. Had he listened carefully, and had he thought for a moment about the benefits to the United Kingdom, he would have recognised, as do many of his hon. Friends, that that was a smear, perpetrated deliberately to arouse the anti-European, anti-French rhetoric that has come to characterise the modern Conservative party. If he does not recognise that that is a disgrace, there are plenty of people on the Benches behind him who do.

Mr. Paul Keetch (Hereford): I, too, thank the Secretary of State for giving me an advance copy of his

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statement. The Liberal Democrats believe that the new carriers that the right hon. Gentleman has announced today are essential to the United Kingdom's future expeditionary strategy. I congratulate him, and the Government, on procuring them.

We firmly believe that it is right for the carriers to be built, but we must be careful about the spin on this. It reminds me of Lewis Carroll, whose Dodo said:

We must be sure that the Government can demonstrate that the process has been competitive, not political. In other words, has the alliance turned over the nature of smart procurement?

Will the Secretary of State outline what discussions he has had with his French counterpart about the new French carrier? Does the decision announced today open the possibility of any advantages for the Ministry of Defence in future co-operation and possible future contracts for British companies on that carrier? What discussions has his Department had with the two contractors about the building of a hybrid carrier that could land both conventional carrier aircraft and the STOL—short take-off and landing—aircraft now being suggested? After all, that would ensure that there was proper co-operation with French and American aircraft carriers. Does the decision exclude such a possibility?

Can the Secretary of State confirm—yes or no—that the recommendation from the Defence Procurement Agency was for a single prime contractor? Does not a single contractor represent a single point of control? Who will really run the project? Will it really be BAE Systems? Who will own the rights to the design of the future carrier: BAE or Thales? Can the right hon. Gentleman give a single example of an alliance producing a contract on time and on budget? In short, after a three-year contest, why have the Government decided on such an alliance? If it is such a good idea, why was it not decided on at the start of the contract?

The Liberal Democrats believe that the future carrier programme is essential to our British military future, and we congratulate the Government on fulfilling their obligations under the strategic defence review. I hope that the alliance will work, but it will be for the Secretary of State to demonstrate that that design does not become one of our major overruns.

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