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4.55 pm
Mr. Bruce George (Walsall, South): It is a pleasure to contribute to the debate. As Chairman of the Defence Committee, I have the luxury—if it is a luxury—of having hardly any defence manufacturers in my constituency. That allows me to analyse events and what different companies offer from the perspective of what is in the best interests of the country and the Ministry of Defence, not of one's constituency. If I had a large defence contractor in my constituency, I would espouse
its cause, but it detracts from the debate if we largely hear "Buy me" advertisements. Frankly, such contributions minimise the importance of the Chamber. We should be considering what is available nationally and internationally.My hon. Friend the Member for Crawley (Laura Moffatt), who is a good friend of mine, made an impassioned speech for Thales in her constituency. She does a good job in arguing the case for that "British" company. I hope that when she gets to Crawley, she will jump on an aircraft, head for Charles de Gaulle, get a cab to Thales or, better still, the French Ministry of Defence and its procurement agency, and argue as strenuously there for other people's constituents as she did here. Hopefully, the French Government's procurement policy will be as open as ours. If people support the products of foreign companies in this country, perhaps the French, Germans and, indeed, the Americans will follow us down the route of open competition. Protectionism might be good for their constituents, but it is not good for other people's constituents. If our colleagues represent German, French or American companies, I hope that they will argue the case as strenuously as we have heard it argued here.
The Defence Committee, which I am proud to chair, has taken a deep interest in procurement since 1979 when it was established. We have looked carefully at endless defence equipment programmes and have produced endless critical reports on the way in which the Ministry of Defence procures weapons and other defence systems. Our Committee's interest reflects the concern that British forces have the best equipment available, that the British taxpayer gets value for money, and that the British defence industry remains competitive and world class.
The Committee is fortunate. We have excellent advisers and access to good people who bring their expertise to us. We get information from the Ministry of Defence, the specialist media and defence contractors, who are pleased to talk to us because it allows them to argue the case for their system over anyone else's system. They do not trash their opponents. Instead, they give us a few hints about how their system is infinitely preferable to any other system. We have a good relationship with the people who act on behalf of those companies, be they advisers or specialists in Government relations. They have been hard at work in the House of Commons over the past few days. No doubt if I read Hansard, it will confirm my analysis of that.
One member of that despised profession—I am not talking about journalists or Members of Parliament—
Mr. George: Who would argue with that? Lawyers are uppermost in our minds when we talk of such professions. A very good friend of mine who was an adviser—a person espousing a variety of causes—died last week. I refer to Roger Harding, whom some hon. Members may have known. I deeply lament his death, because he was able and I admired him for the fact that he could give me sound advice, but did not necessarily reflect the interests of those who were paying his salary.
I send my deepest regrets to his family and employees. It is ironic that poor Roger, who was a devotee of Portsmouth FC, died during the season of the club's return to the highest echelons of British football. I deeply miss Roger and his advice.I am pleased that our report, "Defence Procurement", has figured prominently in the debate this afternoon. We have just received a very supportive response from the Ministry of Defence, which causes me some concern. I am not used to the MOD agreeing with almost everything we say. Perhaps we should write a more critical report. I get rather nervous when my views exactly parallel those of the Ministry of Defence. Since the introduction of the annual defence procurement debates, our Committee and its predecessors have undertaken annual inquiries to inform these debates.
I am glad to see that my hon. Friend the Member for Crawley has returned to the Chamber. I shall send her a copy of Hansard, so that she can read how wonderful I said she was, that she was one of my protégés, and that my views on defence are exactly opposite to hers.
The Committee has produced reports to inform these debates. Our latest defence procurement report, the eighth, for the Session 2002–03 was published last July. We examined in depth the Government's defence industrial policy, the opening up of defence markets, the management of risk and the smart acquisition initiative. In our report we consider a series of at-risk projects, which we formally call tracker projects. We ask the Ministry of Defence for a detailed analysis of the status of each of these programmes and we comment on them.
I have heard a little this afternoon about the future aircraft carrier and the debate in the media. Those media comments are slightly alarming to me. When the Government announced in the strategic defence review that they would acquire two real, proper aircraft carriers and have sophisticated state-of-the-art, or rather, state-of-science aircraft on them, I was delighted.
Knowing the MOD from having served on the Defence Committee since 1979, I thought that the Committee would closely monitor the progress of the aircraft carriers. As I know the Ministry of Defence of old, regardless of who the Ministers are, I feared that by 2006 or 2007, some Chancellor might say, "Enough of this. We can't afford it. Let's spin it out even further", so it might be 2015 before the first and 2017 before the second aircraft carrier was delivered. I am a little nervous that we are hardly through 2003, and already people are arguing that we do not need 50,000 tonne aircraft carriers. If we do not want two 50,00 tonne aircraft carriers, we do not want 150 joint strike fighters.
I hope the Secretary of State, if he pops into the Chamber, will tell us whether the aircraft carrier programme is secure, and I hope that he will reassure us that they will be real aircraft carriers, not slightly extended versions of the excellent non-aircraft carriers that we currently have, which have served as aircraft carriers. If there is to be any prevarication, I must express surprise that it has happened so early in the programme. I hope that the two carriers will proceed as they should and that we purchase the aircraft to go on them. We should remember that our whole military strategy is based on expeditionary warfare—in other words, we need the carriers to get our aircraft to where the action is to take place. The last Gulf war showed that
very few countries can be relied upon to provide the necessary territory for the deployment of our troops and aircraft. If one has 150 aircraft, a minimum of two large aircraft carriers is essential. I therefore hope that the anxieties will turn out to be merely media-inspired.Our Committee has produced several reports on procurement. In our forthcoming report on the lessons of Iraq, there is bound to be a strong section on how our weapons systems worked. In Kosovo, the RAF, despite its best endeavours, lacked smart bombs that could land anywhere near the target. It is now in possession of infinitely more proficient and accurate weaponry. My own view, in advance of our report, is that our equipment worked pretty well, and that the failures that occurred were not in war-winning equipment. I am not saying that desert boots are not war-winning—they might be for an infantryman who had been wearing the old-fashioned boots, which were no good anywhere, let alone in the desert.
We are interested in opening up other people's markets to our products in the same way as our markets are open to other countries. As the defence industry continues to rationalise, the number of defence companies continues to decrease. The UK will not be able to rely on open competition if that gives foreign defence companies a level of access to our open defence market that is not reciprocated by other countries. In case our brilliant Hansard writers are not able to see me looking my hon. Friend the Member for Crawley straight in the eye, I hope that she is taking note of my point. I am not opposed to the French defence industry—I just want it to be open to ours. If a British company wants to buy a company in France, it should not be for the French Government to say, "Non." If, say, a French company is going to build another aircraft carrier, but did not do spectacularly well in the building of the last one, perhaps a British company could engage in the kind of competition that French companies—whatever their nomenclature—are able to enjoy in this country. I am not being anti-French, but pro-British. I want British companies to produce quality products that other countries want to buy and to be able to compete on a reasonably level playing field.
Industry witnesses to the Committee told us that the UK is the only major procurer of defence equipment in the world to have opened up its markets. The chairman of BAE Systems, Sir Richard Evans, told the Committee that the Government should not necessarily change their policy, but we should do much more to force other countries to come in line with us.
I detect a subtle change of policy in BAE Systems. If it believes that too many foreign companies are winning contracts in the United Kingdom, it may gain more access to the British market by becoming a foreign company. That leads me to the press speculation, which contains some truth, that BAE Systems has been hawking its wares around the United States and probably Europe, perhaps looking for a suitor to take it over. I shall say more about that later.
Ministers and their officials must maintain the pressure for reciprocal treatment from other defence manufacturing countries. If they do not permit reasonable access to their markets, I would tell them, "We shall look elsewhere. There are other opportunities and if you try to do our manufacturers down, until you change your policies, we will seek partners and
purchases from countries other than yours." Ministers must maintain pressure on European and US partners to conclude existing international agreements aimed at opening up defence markets. It is a question not of getting them to change their policies but of their honestly sticking to legislation under which they supposedly operate.Several colleagues mentioned the United States and the international traffic in arms regulations. I believe—I hope that the Under-Secretary will confirm my view—that our anxieties are more about the role of the US Congress and Congressmen who espouse the causes of their constituents to the exclusion of the national interest and of US allies, which do not include countries that are fervently seeking to penetrate our market. The UK and US authorities had largely secured agreement on the ITAR waiver in 2002, but its progress has been delayed in the US Congress. As other colleagues said, the waiver's importance extends beyond its immediate procedural and legal scope because it is a touchstone of our relations with our closest ally.
I wrote a letter at Defence Committee members' behest to key Senators and Representatives, making our concerns plain. That letter is reproduced in our report on defence procurement. As my hon. Friend the Member for North Durham (Mr. Jones) said, we raised the matter on Capitol Hill with the Administration and the State Department in September.
I shall give hon. Members a preview of my next letter to the Liaison Committee, which comprises a wonderful group of people: "Gentlemen and Ladies, the money you spent on our trip to Washington was 50 per cent. wasted because the meteorological conditions rendered our visit to Norfolk, Virginia hazardous." The entire US navy disappeared into the north Atlantic. I always believed that it was safer to remain in port during a hurricane but I was disabused of that simplistic approach from the Napoleonic warfare era. Perhaps someday we can complete the visit that mother nature rendered almost useless after the second day.
Most people consider the US to be the biggest advocate of free trade in the world. However, the recent "Buy American" policy is no example of that. The proposed defence authorisation Act 2004 would require the US military to procure equipment including specific critical items that are produced entirely in the US. I cannot disagree with the concept of looking after one's strategic assets, but that definition of what is essential is so broad as to include almost everything, and defence manufacturers will hide behind those provisions to make it very difficult—indeed, even more difficult—for European, Australasian and especially British companies to sell into the United States. It is already very difficult to do so.
This policy would have very damaging implications. Only last week, the Netherlands Secretary of State for Defence Procurement warned that international participation in the system and demonstration phase of the joint strike fighter—the F35—could become impossible if the US Congress passed the controversial Buy American Bill. We raised our concerns about the ITAR waiver when we visited Washington in September.
Frankly, I believe that the US Administration will deliver the goods. We said to them, "Who was with you in Iraq? The British and virtually nobody else. Is this the way to treat your allies? If you treat your allies like this, God knows what you would do to those who were not behind you in a conflict." I strongly believe that the arguments put forward by our embassy, by the British Government and, of course, by the Ministry of Defence and many colleagues here, will deliver the goods.
I mentioned earlier the future of BAE Systems. There has been speculation for some time about the future of our largest defence contractor. Press reports in the summer claimed that BAE Systems had rejected an approach from the French-owned Thales—good on it!—and was looking to merge with one of its US rivals, such as Boeing, Lockheed Martin, Raytheon, Northrop Grumman, General Dynamics or probably anyone else large enough. It was reported that discussions with General Dynamics were the most advanced. However, reports in the Financial Times then said that General Dynamics had walked away from this transatlantic merger with BAE Systems.
There would be significant implications if BAE Systems merged with, or was taken over by, a foreign defence contractor. The UK would lose its national defence contractor, there would be serious issues relating to security of supply, and the scope for competition would be further reduced. Jobs in a vital area—particularly high-tech jobs—in the UK would be likely to be lost as a result. A tie-up with a US contractor would also require BAE Systems to dispose of its 20 per cent. stake in Airbus.
I have just received a gesture from a colleague to suggest that the sections of my speech on managing risk and smart acquisition might better be dealt with on another occasion. In conclusion, therefore—this is quite a short speech, for me—I should like to say that the defence industrial policy noted that
- "a manpower-intensive, platform-heavy and predictable doctrine of the Cold War has been replaced by the requirement for sophisticated, rapid and precise military solutions".
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