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Mr. Davidson: Does my hon. Friend agree that the hon. Gentleman made it even worse by suggesting that he might have to follow the hon. Member for Henley (Mr. Johnson) up north, not realising that the hon. Member for Henley went to Liverpool, which is in the north-west, while Swan Hunter is in the north-east. Does not that explain why the Tories have only a small band of support on the south coast?

Ms Taylor: My hon. Friend knows that I could not agree more.

When Swan Hunter won the contract for the two auxiliary landing ships logistics, I was delighted. I was thrilled to watch the construction process, with its expert shipbuilding and engineering competence. When the first ship was launched, everyone, including the Royal Navy, said, "Look, Dari,"—they did not call me "the hon. Member"—"this is not high-tech kit," but to my eyes it was an excellent piece of engineering. It was expertly made and totally dependable; it was launched on time, and it was made to price. To my way of thinking, all those are qualities.

I want now to bring a problem to the attention of my Front-Bench colleagues. I hope that they will be sympathetic to what I am saying. Swan Hunter is now building the second logistics ship. Construction should have started three months before it did. I believe that production is catching up and that the ship will be launched in 2005, but I want my Front-Bench colleagues to acknowledge the following problem. During the building of the first logistics ship, the Royal Navy decided that it wanted greater electronic competence and better technology, so the design had to be rethought for the second ship. The designers had to go back to the drawing board, and that took time. Inevitably, time is money. If the Royal Navy wants better, more and different, that is exactly what we should be producing and delivering, but the straight fact is that it will cost. I
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do not know which one of the hon. Members present is prepared to stand up and say, "We should have the lesser design because it was cheaper and it was done on time." I most certainly will not be making that statement.

The new landing ship dock logistics, or LSD—an unfortunate acronym—will be launched in spring 2005. I have no illusions about my competence to understand the changes that the Royal Navy required, but I do know that I support its determination to achieve the best. We in this House should determine likewise and spend accordingly. I do not want anyone to be under the illusion that I expect there to be an open chequebook, but when the Royal Navy can explain why and how the costs have increased, we are honour bound to accept that.

My next point has to do with the maintenance of a competent manufacturing industry, which is a difficult and expensive achievement. We must understand that investment in equipment is astoundingly expensive. I want to put a problem to my Front-Bench colleagues. The second logistics ship is, as I said, to be launched next spring. We know that, justly, Swan Hunter has won the contract to build 25 per cent. of the aircraft carrier, but all the suggestions are that the date for that project has slipped. It could be 2006; it might be later. That is seriously problematic for a shipbuilding industry that is costly in terms of its skilled work force and the equipment that it uses.

I cannot complain about that: the design of the carriers has to be right, and if the project takes longer, we have to cope with that. However, we also have to be sympathetic to the manufacturer, who cannot have kit lying idle or watch the people whom he has trained disappear into the ether. How would he get that trained work force back again quickly and effectively—a work force whom we trust to build the carrier? I have a suggestion for Ministers. It is not that I want the Department always to build on time—that is not always possible—but I want it to acknowledge that there are alternatives when that is not possible. I want to suggest such an alternative.

The Royal Fleet Auxiliary Service needs new oil tankers. I do not believe that that is a secret—the whole House probably knows that. New oil tankers are necessary because the single-hull tanker is being decommissioned for appropriate reasons. We can rebuild or put in a second, additional hull lining. Both options mean good work. I want to persuade my Front-Bench colleagues that the contract should go to a British yard. Of course, I want it. The hon. Member for West Chelmsford (Mr. Burns) is smiling because he knows jolly well what I am about to say: I want the contract to come to the north-east and I shall lobby and exert pressure for it. However, I especially want Ministers to understand that we have a responsibility to support a competent defence manufacturing base. It also has a responsibility to look for new products, diversify and ensure that it is looking for commercial opportunities.

I hope that Ministers would not consider giving the tankers to Holland or the Ukraine to build. Again, I make it clear that I understand that those places could
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build cheaper—the industry's estimate is £2 million cheaper—but the cost to us would be clear in many other ways.

Mr. Jack: Does the hon. Lady agree that the north-east has the potential to offer another service to the Ministry of Defence? If any existing Royal Navy vessels need to be scrapped, a proper and environmentally friendly facility for dismantling them could be built, possibly in Hartlepool or other north-east sites, using the expertise to which she adverts.

Ms Taylor: I agree with the right hon. Gentleman. The northern defence industry is keen to press its competence to decommission in an environmentally friendly way. Not only Hartlepool but the Tyne faces much opposition. Both rivers have the competence and I hope that Ministers are listening because it is crucial to keep that manufacturing base.

I have spoken about the right of the Royal Navy to change the specifications if it believes that to be appropriate. We should support that. I have asked the Department to consider the way in which we can bring product forward to support the defence manufacturing industry when that is feasible. I know that hon. Members want building to be done to cost and on time, but I want us to build the best so that our armed forces have the best.

The debate has been good and robust. We have challenged each other and we are clearly thinking about a complex part of defence. I started by complimenting my Front Benchers and I shall end by doing that because it is valuable and important. They made it clear that they believed that they could cut waste. They believed that they could make savings. We all watched and wondered how and if. I am delighted to read a report that states that the pledge to make £2 billion of savings over 10 years has already been met. The Department is hitting its targets. It is spending good money and minimising waste. I simply ask my hon. Friends for one more thing—to ensure that any slippage is acknowledged and stopped and, when possible, to support our defence manufacturing industry. It is precious to us all and the last thing we want to see damaged.

4.44 pm

Mr. Simon Burns (West Chelmsford) (Con): It is a great pleasure to follow the hon. Member for Stockton, South (Ms Taylor), who made a passionate and interesting speech. She conveyed to the House her love of men in uniform—the armed forces—and her stalwart support for constituency interests. Although I will not follow her comments, except in one respect, I was impressed by her interest in and love of the armed forces and defence. I mused, as I listened to and watched her, on how interesting it would have been to hear a speech on defence from her 20 years ago. It might have been a case of then and now with regard to her views, but given her background before she came to the House, perhaps she had not had the same experience that she has had since of meeting our armed forces in the field, which may have influenced her.

The part of the hon. Lady's speech that I would like to follow is that which she devoted correctly to her constituency interest. That is what I would like to do
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briefly today. My constituency has for many years been associated with defence procurement. In 1987, there were five Marconi companies in the constituency. It still has a Marconi company—Marconi Selenia—but because of changes in defence procurement, a global economy and rising costs, there have been changes in the ownership and composition of some other companies that remain in my constituency such as e2v and BAE Systems, which, having taken over some of the Marconi empire, has a manufacturing presence there. Chelmsford has expertise and experience dating back many years because it is the home of Marconi. We have a close interest in defence procurement, and rely on it for jobs and the sustainability of the local economy. We are proud of the town's contribution over many years to supplying our armed forces with highly skilled, highly technical equipment, and to supplying armed forces and commercial, non-military companies and establishments around the world with first-class equipment.

I want to ask the Minister four questions, to which I hope he will respond, if not in his wind-up, because of pressure of time, then in writing as soon as conveniently possible. The nature of defence companies has changed rapidly because of the massive costs of research and development for new equipment. Much more international co-operation has developed between companies seeking to produce the finest equipment that armed forces need. As a result, there is concern in my constituency, which my hon. Friend the Member for Aldershot (Mr. Howarth) shares, about the need for clarification of the Government's view on giving defence contracts to companies that may be part of an amalgamation or conglomeration that is not exclusively British-based. As the Minister will know, the Government's defence industrial policy states:

First, on that basis, are the Government more concerned about investment in and growth of UK defence industries than the ultimate ownership of a defence supplier?

Secondly, inward investment is clearly extremely important for the future of the UK's defence industry. We need to move away from the issue of company ownership and focus instead on where jobs are created and how best the UK can attract more foreign investment. For instance, Finmeccanica is an Italian business, but its subsidiary, Marconi Selenia in my constituency, is a UK company that sustains high-quality jobs both at its sites in Chelmsford and Liverpool and through third-party relationships in the UK that support delivery of its contracts. So my second question to the Minister is: do the Government agree that creating and sustaining such jobs is essential in order to avoid a technology drain, in which such expertise is forced to leave the UK in search of jobs overseas?

Thirdly, the UK defence industry does not exist in isolation. Rather, it collaborates with European partners to identify procurement and third-party opportunities. Such an approach is naturally two-way, and by encouraging inward investment UK workers and
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businesses can continue to identify new opportunities for growth. So my third question to the Minister is: does the Government's policy on defence procurement take into account the need for ever greater collaboration so as to ensure the continued successful growth of the defence industry?

Fourthly, the UK's industrial capability and export ability are key to this debate. Companies such as Finmeccanica are well placed to exploit networks on behalf of the UK industry. For example, the global defence communications market sector is estimated to be worth about £500 million over the next 10 years, and it is essential that UK companies compete vigorously and successfully in this market. So my fourth and last question to the Minister is: what is the Government's stance on the need to increase the UK's export capability? It is crucial that British companies, either working alone or in collaboration with overseas companies, should have the ability to be at the sharp end of research and development, developing new technologies and products that will ensure that our armed forces have the finest, best and most appropriate equipment to enable them to continue to defend this country and protect our interests overseas.

These companies have gone through an extremely difficult time economically as world markets and the industry contracted very painfully, with far too many job losses and all the misery that that entails. It is important that they should now be given the opportunity to put the difficult times behind them and to move forward, so that they can thrive and look forward to a bright, successful future in which they have the ability to be innovative and entrepreneurial, both in our own national interest and for the purposes of inward investment, job creation and exports.

4.52 pm

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