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Mr. Davidson: A critical friend.

Mr. Ingram: Okay, if my hon. Friend wants to put it that way; my colleagues may see things differently. I shall say something later about the important issue that he raises, and he may want to intervene then.

People often focus on specific pieces of equipment—that is understandable, and it has happened already in the debate—but it is important that those pieces of equipment combine to generate the capabilities needed to meet the threats of the future. Last July, my right hon. Friend the Secretary of State for Defence outlined in his statement on future capabilities how the coming years will involve continued movement away from the traditional emphasis on numbers of platforms and people to an emphasis on effects and outcomes.

We no longer face the threat of the cold war, but myriad threats and opportunities. The type of technology and the options for the associated
 
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equipment that we can procure for our armed forces in the future are equally varied and numerous. The capabilities of our armed forces and the military effect that they can deliver are growing year by year. Increasingly, we can combine intelligence with target acquisition, modern communications and precision weaponry. The result is changing the nature of modern warfare. For example, in Iraq, the RAF was able to hit more of its targets with less ordnance and therefore fewer aircraft than ever before: 85 per cent. of our air-dropped munitions were precision-guided bombs. That represents a step change in capabilities over the relatively short period of a decade.

In the future, military operations will involve the rapid, accurate and decisive delivery of critical military effect at the right moment. Again, to use the jargon, that is known as effects-based warfare, the key to achieving which will be the agility and flexibility of our forces and the platforms that they operate from. Procurement is crucial to delivering that transformation. Too often in the past, procurement decisions were made through replacement thinking—automatically replacing ageing platforms with new ones designed to do much the same job. These days, our procurement decisions are increasingly made on the basis of capability, flexibility and inter-operability. We need adaptable and flexible capabilities that we can use alongside our allies.

I want to outline three elements of our vision for delivering those capabilities: network-enabled capability; defence industrial policy; and equipment acquisition reform. Let me deal with network-enabled capability first because it is central to effects-based warfare. It is not a weapon, but a concept of war, and it cannot just be bought off the shelf. Put simply, it is a linked network of systems, platforms and headquarters that can all communicate with one another in real time. It allows up-to-date intelligence and information to be delivered exactly where it is needed most, so our commanders achieve the rapid, pinpoint response that we require. That is not just a future aspiration.

In Iraq, we have seen the difference that networked capability can make. The Mamba artillery detection radar, which is a procurement success story, was recently used in concert with our communications network to pinpoint enemy firing positions. Fire was then brought to bear from coalition aircraft at the precise time and location that it was needed. That is a graphic demonstration that our NEC approach is already paying dividends.

At the strategic level, our investment in the Skynet 5 satellite system—the largest private finance initiative contract ever awarded by the MOD—will provide secure communications between strategic decision makers and front-line forces. That secure network will extend to the operational and tactical levels, using systems such as Cormorant and Bowman, both of which are at an advanced stage. Bowman entered service in March this year, with Cormorant due in service in 2005.

Of course, the network will be only as good as what is connected to it. That is why we are investing in state-of-the-art technologies from surveillance assets, such as the Watchkeeper unmanned aerial vehicle, to other world-
 
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beating air, land and maritime capabilities for the delivery of effect in theatre, such as Typhoon, Apache and the aircraft carriers.

Mr. Michael Jack (Fylde) (Con): The Minister has alluded to the fact that BAE Systems is one of the key suppliers of the type of weapons system to which he has referred. Will he confirm that the MOD has no doubts about the integrity and probity of the company in the way that it has conducted its business for his Department and for contracts abroad?

Mr. Ingram: We have very good relations with BAE Systems and all our major suppliers throughout the supply chain. I know about the criticisms that have been made. I have heard people say that there could be corruption at the highest level between the industry and the MOD. If they say that, they must make it stack up. This goes back to the importance and vitality of what we do in procurement and the way in which it delivers not just for individual companies and their employees but for the good of the British economy. Crucially, what the suppliers deliver is vital to our war-fighting and peacekeeping capabilities. I endorse the point of view expressed by the right hon. Gentleman.

Mr. Gerald Howarth: Will the Minister give way?

Mr. Ingram: No, I want to make progress now.

I have already mentioned the new aircraft carriers and Type 45 destroyers. Our amphibious capability has been enhanced most recently by the introduction of the assault ship, HMS Albion, in July last year. HMS Albion will be joined by her sister ship, HMS Bulwark, this December. Our future maritime expeditionary force will therefore be better placed to support the land component—a vital element of any military intervention, which is known in the jargon as the boots on the ground. Our future procurement plans will also ensure that the Army is ready for whatever it will face.

I have mentioned FRES, but better-balanced land forces also need flexible, highly capable support. Helicopters provide a flexible attack and lift capability. Over the next decade, a significant part of our helicopter fleet will be retired from service. We therefore intend to invest about £3 billion over the next 10 years to replace and enhance that capability. The Apache attack helicopter is the most recent addition to our fleet. Apache gained initial operating capability on 28 September, and any hon. Member who has seen it will know that it is an awesome aircraft. It will provide the Army with an unprecedented long-range precision attack capability.

Our commitment to more flexible and deployable forces is also borne out elsewhere in the air environment. Our planned purchase of an extra C-17 and 25 A400M military airlifters will boost the tactical and strategic airlift for all three services in times of peace, crisis and war.

Delivering all that capability is done through a partnership between the Ministry of Defence and industry, so safeguarding our forward equipment programme and equipping and sustaining our front-line
 
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forces are central to safeguarding that partnership. That brings me on to the defence industrial policy, which is the second element of our vision that I want to touch on.

The Government are committed to a strong and healthy UK defence industry. The defence industry brings significant economic benefits to the UK. It creates employment, technology and intellectual property.

Mr. John Smith (Vale of Glamorgan) (Lab): Will my right hon. Friend give way?

Mr. Ingram: If I am going to give way to my hon. Friend, I trust that he will not be asking about the Defence Aviation Repair Agency—I live in hope.

Mr. Smith: Not on this occasion. My right hon. Friend mentioned the defence industrial policy and the need to retain capability. He rightly said that the Apache will come into operation, but there is a large capability requirement for new helicopters and our helicopter industry depends on that. Does he anticipate that there will be an early announcement on that? Does he think that it will benefit the British-based helicopter industry?

Mr. Ingram: I do not know what my hon. Friend means by "early". I was grateful that he did not raise DARA, although he often raises the important matter of DARA St. Athan on behalf of his constituents.

I said that some £3 billion would go into the rotary fleet, and that vital investment will have a major impact on British industry. The work on, and consideration of, that process are currently going on and major suppliers will form part of those discussions. The general answer to my hon. Friend is yes, but I cannot give him a time line. I know how assiduous he is, so I have no doubt that he will be on the case and pursue the matter vigorously in the months ahead.

We have made great advances in our relationships with our suppliers. It is now more than two years since we published our defence industrial policy, which was a watershed. For the first time, we brought together all the issues that affect our relationship with industry into a single, coherent policy. It was developed against a backdrop of huge industrial consolidation.

In the area of market access, we are addressing the barriers to UK industry in our allies' markets. The defence exports and market access forum has been set up jointly with industry to address issues that affect our ability to participate in overseas markets. While we are on the subject of participation, it is worth noting that we have just appointed John Wall, the national officer for the Amicus trade union, to the National Defence Industries Council. Partnership with industry means just that: there is partnership with not only the companies but those who deliver the product—the work force.

We have taken a leading role in Europe on shaping the new defence agency. The agency's principal purpose is to improve member states' military capabilities. It will do that by easing access to member states' markets, improving the flow of information and technology across borders and creating an environment that allows companies to co-operate more closely. Our closer relationship with European partners does not jeopardise
 
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our relationship with the US in any way. We have always been clear that maintaining both relationships is crucial. Nearly 18 months ago, the Prime Minister signed an agreement with President Bush to increase co-operation on military and defence matters even further. Progress has been much slower than we would like, and has not been helped by some in Congress who continue to stand in the way of an international traffic in arms regulations waiver for the UK.

Although we are encouraged by the positive language in the recent US Defence Authorisations Bill about the processing of export licences, it does not address the root cause of barriers to co-operation. We need a US system that recognises not only that the UK is wholly trustworthy but that it has the necessary legislation to safeguard sensitive information and control arms exports. It is high time for the intent of our agreements to be translated into concrete actions that meet the needs of both our Governments. We will continue to press the new Administration on that point.

Our defence industrial policy also sets out the factors that we take into account when assessing acquisition options. In addition to factors such as security of supply, we also take account of impact on the industrial base, such as the level of investment in intellectual property, facilities and employment in the UK. The globalisation of the defence business means that the UK defence industry embraces suppliers that bring benefit to, and create value in, the UK, regardless of the nationality of their shareholders.

We are now working on the next step: developing the policy into an industrial strategy. That will explain more clearly which technologies and industrial skills are most important for maintaining existing capabilities and which we expect to require in the long term. That is a major undertaking, but the output will inform better the investment decisions of industry and the Government alike.

We have also been working hard to develop our industrial strategy in the shipbuilding sector, which my hon. Friend the Member for Glasgow, Pollok mentioned. The current programme has the potential to create or secure several thousand jobs in UK shipyards and their suppliers. However, I appreciate that without a reasonable amount of programme stability, core skills might be lost and we may thus be unable to build on experience or achieve longer-term investment in modern facilities. Ministry of Defence and Department of Trade and Industry officials and representatives from the shipbuilding industry have been meeting on a regular basis.

We have been examining the industry for some time. In summer 2003, the supplier relations group began a study on the UK naval shipbuilding industry. That study was complementary to the RAND study on UK shipbuilding capacity. The output from the studies has underscored the need to develop an industrial strategy for UK shipbuilding that supports the delivery of the forward programme and promotes a healthy and economically viable industry in the long term.

We do not wish to impose change on shipbuilding or any other part of industry. We aim to work together to establish changes to the way in which we conduct our business that both sides need. For example, we are
 
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involved in close dialogue with the aerospace industry about how we both need to change so that we can deliver our future programme.

Both aerospace and shipbuilding are key industries. We are working in greater partnership with industry and we need a more open-book examination of the situation. We must deal with the peaks and troughs and ensure that we have capacity when we need it. We must ensure that we have core capability when we need it. The important thing is to establish a way in which we can smooth the process while achieving that. There will be difficulties, because individual companies that are at different phases of their future plans have competing demands, but there is determination to find a solution.

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