---

Mr. Burnett: I hope that the hon. Gentleman agrees that if the ordering process were more orderly, it would retain competition, because having one supplier and one customer is unlikely to be in the best interests of the taxpayer.
 
4 Nov 2004 : Column 489
 

Mr. Howarth: Yes, of course. We were the architects of the introduction of extensive competition into defence procurement, which resulted in a considerable saving for the British taxpayer and a sharpening-up of British industry. We must also face the fact that the defence industrial base is contracting not only in this country but around Europe and in the United States. We must also address security of supply.

Ms Dari Taylor (Stockton, South) (Lab): The hon. Gentleman discussed how the Conservative Government increased competition, but does he remember that he closed Swans, an excellent naval yard, which reduced competition?

Mr. Howarth: My hon. Friend the Member for Mid-Sussex (Mr. Soames) has confirmed that the hon. Lady is a magnificent woman and we all welcome her contribution. Of course, we closed various things when we were in government, and this Government have closed things. The point is that we must have an adult debate. The world has moved on.

The Minister told the Select Committee that he seeks the answer to the question: which essential capabilities does this country require? We understand that point and are doing our own work to see whether common ground exists or whether we disagree on the capabilities that it is necessary to retain in the United Kingdom. Given the contracting defence industrial base, we must address the essential issues. I hope that I have made our policy clear: we believe that it is essential to work with industry and to even out the peaks and troughs so that we can retain the skills base in the United Kingdom to ensure that essential capability is maintained.

I do not want to take too long on individual projects, but the Minister inevitably raised Typhoon. He mentioned that the Royal Air Force is pleased with the product, and I endorse that view. The last Conservative Government started the Typhoon project, and it is a fantastic bit of kit. I look forward to seeing it at close quarters, when I introduce its delights to my hon. Friend the Member for Mid-Sussex. I hope that we shall manage a flight in it—my hon. Friend did not know that.

This time last year, we were told that a decision was expected on tranche 2 of Typhoon by Christmas. We still expect a decision on tranche 2 by Christmas—unfortunately it will be Christmas 2004 rather than Christmas 2003. Will the Minister give the House an assurance that the Government expect to sign off tranche 2 by the end of the year? If the contract is not signed by the end of the year, what plans does he have to introduce some form of bridge funding to ensure the maintenance of the skills base, particularly among the sub-contractors, an issue to which I have just referred?

We have consistently called for the second tranche of Typhoon to be adapted to a ground attack role and hope that that project will now proceed. I understand that design work is at an advanced stage, but we must know when it will be finalised and how confident the Minister is that the new systems integration work has been satisfactorily concluded and de-risked.
 
4 Nov 2004 : Column 490
 

When will the new variant enter service? The Defence Committee concluded:

"We are concerned that there appears to be a wide disagreement between the MoD and industry on how much the necessary enhancements will cost. We find it surprising that MoD considers that there will be little impact on the total cost of the programme, unless there are plans to reduce the size of the third Tranche."

I am not inviting the Minister to comment on the third tranche, but I ask him to comment on that particular point. The Government response to the report suggested that the Committee was confused. Will he tell us what the planned enhancement programme is all about and how it differs from the ground attack variant?

Hon. Members will remember that the MOD originally expected to award FRES—the unfortunately named future rapid effects system, which is medium-weight battlefield equipment—to Alvis Vickers, Britain's major land system manufacturer. Ministers later backtracked from their initial position and dismissed out of hand a joint proposal last year by BAE, Alvis and Thales to work with the MOD to develop that project. So much for the partnership with industry. Months passed while the MOD was reviewing its procurement strategy.

Later, the Government announced their intention to establish a systems house to reassess the entire project, adding at least another year to the process. The Minister appointed W S Atkins to undertake the assessment phase. When does he expect it to be completed? In a recent interview in Jane's Defence Weekly, the chief of defence procurement, when discussing the FRES project, stated:

"we are not going to sign up to any in-service-date, any capability or cost until we understand what the customer wants".

I agree with the de-risking, but the assessment has gone on for such a long time that the gestation period is approaching A400M proportions.

The CDP's statement would be fair, were it not for the fact that Ministers had already set an in-service date of 2009, which subsequently slipped to 2010. The Minister cast doubt on the achievability of that in-service date in a written answer last month to my hon. Friend the Member for Congleton (Ann Winterton), who inquired about the introduction of an assessment phase:

"Part of this Assessment Phase work will be to identify and reduce risk in the programme to enable us to define an appropriate In-Service-Date."—[Official Report, 4 October 2004; Vol. 424, c. 1874W.]

Will the Minister stick by 2010?

Can the Minister tell us how much he has set aside for the FRES project, which the Chief of the General Staff, General Sir Mike Jackson, regards as absolutely essential? There has been some speculation that the programme's lifetime cost could be as much as £50 billion on top of the initial £6 billion figure. Again, we would welcome clarification from the Minister on that point. It is little wonder that a senior infantry officer was quoted in The Daily Telegraph on 2 October as saying that the FRES programme had turned into "a debacle".

On the question whether the programme will be collaborative, the Minister confirmed in a written answer to me on 19 October that a collaborative solution is a possibility. What work is going on? Will we collaborate with our European partners or the United
 
4 Nov 2004 : Column 491
 
States, which has a similar programme under way? We must be told the parameters within which the Government are operating.

The record is not happy on collaboration with our European partners. The Minister abandoned Tracer and the multi-role armoured vehicle, both of which were collaborative programmes. Having abandoned those programmes, is there any sense in going down another collaborative route? The answer is in the Minister's hands, and I would be grateful if he explained it.

Serious questions remain over the future of the project to design and build the carriers. First, the Government announced that they wanted the MOD to take a risk-sharing part in the programme, leading BAE's former chairman, Sir Richard Evans, to express the concern that the three-way alliance was developing into:

"some sort of a procurement committee, chaired by a procurement officer from the Ministry of Defence who will have a balancing vote on the committee".

He was rightly concerned about where and with whom the responsibility for risks resides and whether a committee is the right decision-making body. Have those concerns, which were raised by one of the prime contractors in the carrier project, yet been attended to?

The decision to introduce a physical integrator for the carrier project represents little more than an added layer of bureaucracy on an already cumbersome project. As I said at Defence questions last Monday, the contract is not, as has been reported, for the management of the project, but rather it is the contract for the management of the contract for the management of the carrier project, which is extremely convoluted.

The Parliamentary Under-Secretary of State for Defence (Mr. Ivor Caplin): Say that again.

Mr. Howarth: No, the Minister must do that.

On the joint combat aircraft, which was formerly known as the joint strike fighter, reports persist about continuing problems with the short take-off and vertical landing variant. Can the Minister confirm that the weight problems with the STOVL variant have been resolved? I understand that those problems have not been resolved, giving rise to concerns that the aircraft will carry only two 1,000 lb bombs instead of the planned 2,000 lb bombs. As Jane's Defence Weekly put it:

"the requirement has now been made to fit the aircraft, instead of the other way around".

Are the Government prepared to accept that reduced payload?

Doubts have also been cast on the viability of the STOVL variant. Tom Fillingham of BAE told Jane's Defence Weekly:

"STOVL is not set in stone. Right now our current planning is for STOVL but we don't have a contract."

A decision to abandon the STOVL variant would mean the new carriers being fitted with catapults to launch conventional aircraft. When does the Minister expect to make that decision, and what effect would the need to change the JCA requirement have on the cost of the carrier programme and on that aircraft project itself?
 
4 Nov 2004 : Column 492
 

I do not want to speak for too much longer, because I know that many hon. Members want to contribute to the debate. The Minister mentioned the international traffic in arms regulations waiver. I agree with him that progress has been slow, although I attach no blame to Ministers, because Lord Bach has batted as hard as anybody. We are all indebted to Senator John Warner of the Senate armed services committee for his work on behalf of Anglo-American relations in trying to drive through a solution in Congress, where the real problem lies, to benefit the United Kingdom and the United States.

We are indebted to the Senator for at least having got into the Appropriations Bill a specific undertaking that the United States Government will ensure that the United Kingdom's applications for the export of technology are expedited—whatever that means. I fear, though, that it is not enough. The Secretary of State said in a letter to the US Defence Secretary on 16 June:

"The mutual operational, technological and industrial benefits we have enjoyed over the years of co-operation could quickly evaporate, with both of us being losers and with obvious political ramifications."

I think that he is right.

My own view is that progress will remain slow unless the Prime Minister seeks to extract some dividend for the phenomenal support that he has given President Bush over the past few years. It is the very least that the United States can do. This is not an intemperate criticism of the US Administration. However, the fact is that we are partners, and the Prime Minister deserves some dividend for his support. The Minister is more aware than I of the damage that the Prime Minister has incurred from his own side. One dividend should be to get the ITAR waiver—which, I remind the House, concerns unclassified information. We are not asking for classified stuff—well, we are, but we are not getting it—yet we cannot even get an agreement enforced on unclassified material. The Prime Minister deserves that.

I turn to Galileo, the EU's proposed competitor to the US's free-to-users global positioning system, which provides aeronautical and motor car navigation systems—although more advanced Members no doubt have SatNav in their BMWs.

---