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Mr. Kevan Jones (North Durham) (Lab): I echo the tributes that my hon. Friend the Member for Vale of Glamorgan (John Smith) paid to our men and women in the armed forces. We often take them for granted. They make difficult decisions and find themselves in difficult situations, so it is right to start a speech in such a debate by paying tribute to them.

I welcomed the speech made by the right hon. Member for North-East Hampshire (Mr. Arbuthnot). He is the new Chair of the Defence Committee, to which I have been reappointed for this Parliament. I echo his views about the previous Chair, my right hon. Friend the Member for Walsall, South (Mr. George). I did not get on with my right hon. Friend on all occasions, but I was thinking the other day that his absence is a little bit like toothache—one misses it when it is gone. He made a great contribution on defence in the House over the years, which has clearly been recognised by many right hon. and hon. Members.

I want to talk about the importance of the UK defence industry to defence in the UK and the deployments that we ask our men and women to undertake around the world. I shall do that by concentrating on two issues: first, the future rapid effect system; and, secondly, the future shipbuilding strategy for UK yards.

The international situation these days is setting new challenges for the armed forces. The need for lighter and more manoeuvrable forces is clearly evident. The tasks that we will ask our armed forces to undertake in the future are likely to be smaller in scale than in the past, conducted at short notice, and carried out some distance from the UK. That explains why it is important to develop a medium-weight land capability that could be deployable by air and effective in acute and dangerous situations.

Few would dispute the fact that it is important that FRES is delivered on time, on budget and up to specification. As General Sir Mike Jackson told the Royal United Services Institute last year:

No one should doubt the scale of the task that faces the Ministry of Defence in delivering on time and to specification. The new medium-weight armoured vehicle will be totally network enabled and full of computers and new technology. It represents the largest single project that the MOD has undertaken in peacetime. It will be an important piece of kit for the
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next 20 to 30 years for the British Army. It is thus vital that we have a defined in-service date, but this is where I find that answers given by the MOD, with its usual culture of denial, are a little unclear.

The generally quoted in-service date for FRES was 2009. In late 2004, the then Minister for Defence Procurement, Lord Bach, said that the date would definitely be 2009. He said that

In fairness, I realise that that does not mean that the entire fleet of vehicles would be fully operational, because there will be a family of vehicles with different capabilities. In October 2004, in reply to the Defence Committee's procurement report, the MOD said that

However, when I questioned General Sir Mike Jackson in the Defence Committee in January 2005, he said that he doubted that FRES would be available by 2010.

To try to obtain some answers, I tabled a written question to the Secretary of State. I was grateful but intrigued by the answer from the Minister of State, who said:

We have gone from Ministers openly talking about an in-service date of 2009 to a position where the Minister will not be pinned down on what the date will be. That makes me wonder what, if anything in FRES, will be delivered on time.

The Government's response to the Select Committee report referred to

Yet when General Fulton appeared before the Select Committee he said that there was an option. He said that

That is the challenge that faces the British Army. I am increasingly sceptical about whether FRES will be introduced anywhere near the end of the decade. People ask why that matters. It matters because our existing kit is getting older and there will be a capability gap if FRES or some variant of it does not come on board.

British industry faces another problem—planning to ensure that we have the capability to produce in the UK the variants of FRES and other armoured vehicles in the future. The current programme of Alvis Vickers, or BAE Systems Land Systems as it is now, shows that there is a real problem. There are gaps in the company's work over the next two or three years. Again, people ask why that matters. It matters because we cannot keep a skilled work force together and assume that we can turn
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on the tap two or three years later when we want to procure an armoured vehicle. Planning is needed to ensure that industry is taken into consideration.

I welcomed the appointment of Lord Drayson as the Minister with responsibility for defence procurement. This month, when he appeared before the Select Committee he showed his understanding of industrial processes, and I await his defence industrial strategy with eager anticipation. We need to do two things: first, we must deliver equipment on time and on budget to our armed forces; and, secondly, we need to realise that if we are to maintain a viable and vibrant defence manufacturing industry we must plan our procurement. Clearly the Defence Procurement Agency had an atrocious record on that in the past.

I want to deal with the shipbuilding strategy. I welcome the commitment given by my right hon. Friend the Minister of State in his opening address that £14 billion will be spent on procuring new ships for the Royal Navy over the next 10 years. However, I am sceptical about whether they will actually be built in the UK. There will be a glut of work, with the CVF, the future carrier, and the military afloat reach and sustainability—MARS—programme, but there are worrying signs that unless a clear strategy underpins development in the yards we shall not have the capacity to build those ships in the UK. The idea of building our warships abroad, possibly in eastern Europe, would be a complete tragedy.

There is a notion—there certainly was when the Conservatives were in power—that shipbuilding is an old smokestack industry. I would challenge anyone who thought that to visit a modern shipyard. Not only do they use cutting-edge technology in fabrication, but electronics and so on. It is far from a smokestack industry. We need a clear strategy to ensure that the industry in this country has the necessary capacity and we should encourage apprenticeships and expertise in those areas. If we fail to do that, I fear that, when we finally come round to procuring ships in the future, we will not have the necessary capacity or skills base, which is vital.In the next 12 months the Government need to lay out that strategy, not just for shipbuilding but for other parts of defence manufacturing. I hope that we do not go down the road of thinking that purchasing our equipment from abroad would be cheaper somehow. Clearly, if work is not forthcoming there will be knock-on social effects on many of those communities throughout country.

I want to refer to the ongoing saga of the alternative landing ship logistics, which has a lot of credence locally in the north-east, given the involvement of Swan Hunter. I am concerned about that programme. Clearly, extra money is rightly being spent to finish it. I visited Scotstoun yard in Glasgow a couple of weeks ago to see the two BAE Systems vessels being procured. There are serious problems with that programme. We now need a clear audit of what is going wrong and what needs to be put right to get those ships delivered on time.

I am not here to apportion blame, but some grave questions must be asked about the way in which the winning bid used an off-the-shelf Dutch design. Clearly, unrealistic estimates for the cost of those ships were included. I am also concerned that, as the ships are being delivered, possibly up to 40 variations are being made each week. I understand that Lloyd's Register will not
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even certificate some of the ships until some of those modifications are put right. Unless that is done, the saga will carry on. Will it cost more for the taxpayer? No doubt, it will, and I wonder why some of those things were not questioned when an off-the-shelf Dutch design was proposed as a cheap alternative by someone at Swan Hunter who may have expertise in the oil industry, but none at all in designing and building a modern warship, even logistics ships such as those in that programme.

Shipyards must work together, but if we have no commitment to sharing work around the industry yards such as Swan Hunter will face a number of years without work. The way to ensure that that does not happen is to plan the work over the next 10 years. However, I would certainly question whether any work should go to the yard under the current management. I have nothing against the work force—I have the highest regard for the good work that they do—but there are clearly serious problems not just with the way the work is managed, but with whether they can find the investment that is needed for a modern shipyard.

We should not underestimate the importance of the defence industry in this country, not just in procuring the best equipment that our armed forces need, but in ensuring that we protect this country's skills base. If that is not done, we could become a country of assembly workers for other international arms manufacturers. That would be a tragedy, not just for parts of the north-east, but for many communities throughout the country.

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