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John Reid: Yes indeed. One reason why we must get best value for money is that these projects are immensely expensive. Our goal is to have victorious armed forces, and the technological and cost demands of modern warfare are huge. Part of our job is to make sure that we impose on ourselves the rigours required to do things better and on time. My hon. Friend the Member for
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Glasgow, South-West (Mr. Davidson) said that the document was delivered on time, but it has also been delivered on budget—and that is a claim that I have always wanted to make on behalf of the Ministry of Defence. Being on time and on budget is what we aspire to on our own account, as well as what we demand from industry. That is precisely because we need to get better value for money.

Mr. Brian Jenkins (Tamworth) (Lab): I welcome today's document for its openness, and I congratulate the Ministry on its value-for-money approach. A great deal of time and effort will be spent on the initial stages of the carrier programme, and the adherence to the gateway project is commendable. However, in respect of future provision, will my right hon. Friend say how much of our requirement will be purchased abroad?

John Reid: I thank my hon. Friend for his remarks about the carrier programme, and he is right about our approach. Yesterday, we allocated responsibilities for 60 per cent. of hull build and ensured a degree of continuity in capability by dovetailing the present carrier fleet with incoming vessels. We are prepared to spend £300 million, but we have made sure that all the negotiating levers will not be handed over to the carrier producers. It is very important to get right the demonstration and fine design stages, because it is there that the downstream cost is incurred.

With respect to our openness to competition, I can tell the House that 75 per cent. of our procurement is open to competition. We are not returning to protectionism, but our plans for the remaining 25 per cent. show that we are prepared to maintain a strategic industrial base to supply our armed forces.

Mr. David Laws (Yeovil) (LD): On the helicopter sector, may I, as MP for Yeovil and an economic liberal, say that the Secretary of State has managed to strike the right balance between the need to secure key sectors and the need to achieve value for money for taxpayers? I congratulate him on that. Can we expect an announcement early in 2006 on the key future Lynx order, provided that it meets the value-for-money criteria? Will he assure me that he will not take any advice on the matter from Conservative Front-Bench Members?

John Reid: Well, I suppose that I should begin by saying that I am deeply, deeply grateful for the support that the hon. Gentleman has shown me, given my leading position in the Labour party. I understand that that support is not supplied comprehensively for all leaders, but I thank him for what he has said.

As for the Lynx helicopter, we are keen to ensure that its through-life and update programmes are continued. The very important skills at AgustaWestland are essential to that, and I know that the hon. Member for Yeovil (Mr. Laws) is right to ask about that, from his perspective both as a constituency MP and as someone with an interest in the procurement of very important assets for our armed forces. He will know that the world market in helicopter production is thriving and competitive. We would be silly not to take advantage of
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that, as that is the context in which we find ourselves. I happen to believe that AgustaWestland is able to do very well in the world market, given its success in providing the helicopters used to convey the President of the United States. That is at least one example of Liberals supporting the US President.

Mr. Ben Wallace (Lancaster and Wyre) (Con): My constituents who work for British Aerospace will be most disappointed to hear the Secretary of State in effect announce in his statement the end of the manufacture of manned fast jets after the Typhoon project. Even more disappointing is the fact that he said nothing about a desire to build the joint strike fighter and merely spoke about maintenance and support. Does the right hon. Gentleman agree that an absolute condition of placing the order for the joint strike fighter with the US should be that this country will do all the manufacturing and servicing of future versions of that fighter? Will he extend the buy-British approach to any future plans for unmanned aerial vehicles or drones, and ensure that such machines are built in this country?

John Reid: First, although the hon. Gentleman clearly feels that my statement is terrible for BAE Systems, the problem is that the company does not feel the same way. I believe that it will welcome the Government's defence industrial strategy. Secondly, it would be little over the top for the hon. Gentleman to tell his constituents that a dramatic crisis is looming because one of our planning assumptions is that we may go to unmanned aerial vehicles after 2040. That projection is no more than a warning about something that may happen down the line. Thirdly, we are spending in the order of £50 million on more than 200 Eurofighters, and we are also insisting that maintenance on the joint strike fighter and the updating of its technological capabilities is carried out in this country. All of that is good news. Most important for a company like BAE Systems is the fact that we are sharing with it our long-term vision of how much we shall spend within the limits of what is possible for a Government that must go through three reviews, where we will spend it and how it should invest its money and so on. That is good news for industry and I hope that the hon. Gentleman will reflect on that.

Mr. Michael Jack (Fylde) (Con): May I welcome the Secretary of State's involvement of BAE Systems in my constituency—employing some 6,000 aerospace workers—in the production of this strategy and his recognition of the strategic importance of our military aerospace industry? Can he give more comfort to the House on how he may secure the final assembly and check out unit to be based at Warton to look after and construct the joint strike fighter? Does he agree that in those negotiations it will be important to demonstrate to the United States that if they do not play ball, we have an alternative way of providing a marine aircraft for the new carriers? How will he conduct those negotiations?

John Reid: For blatantly obvious reasons the right hon. Gentleman will not expect me to tell him how I intend to conduct those negotiations. His points are relevant. We have made it plain that we must have the technological capability to upgrade, as well as maintain, the joint strike fighter, which is an essential element of
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our future carrier and other requirements, for its through-life capability. We continue to insist that that is the case.

Mr. Mike Weir (Angus) (SNP): Given the time scale, has the Secretary of State made any assessment of the likely impact of the massive cost of either upgrading or replacing Trident and other defence projects in the long term?

John Reid: No, we have not got to that. I have made several estimates, however, one of which is: what would happen to the British armed forces and industry if we were ever to get a separate Scotland? It would be absolutely disastrous.

Mark Pritchard (The Wrekin) (Con): The Secretary of State mentioned outsourcing aeronautical engineering in pursuit of value for money. Does he agree that value for money can also be found in the public sector? If so, will he give an assurance today that those skills will be retained in the Defence College of Aeronautical Engineering in my constituency and within the public sector, so that there is a public-private partnership, not a drive towards and a doctrine of privatisation, which will see hundreds of jobs lost in my constituency?

John Reid: We live in interesting times. I saw Conservative Front Benchers curl up at those heretical words from behind them. I have no problem in identifying myself with the hon. Gentleman's sentiments. Efficiency, flexibility and productivity are not the monopoly of either the public or private sector. Therefore, we should not approach these matters dogmatically; we should take the best from both and encourage both to have the best. The hon. Gentleman will appreciate, however, that I will resist the temptation to go further and pre-empt the training review that is under way.

Mr. Peter Bone (Wellingborough) (Con): Will the Secretary of State acknowledge the genuine concern in the RAF about the lack of equipment and the late delivery of new equipment? What is his view of the morale of the RAF following his statement?

John Reid: I suspect there has never been a time when members of the armed forces did not properly want more, quicker and better. That is part of what keeps us on our toes. As far as I am aware RAF morale is very good. They are delighted that the C-17s now supplement the Hercules, that we are developing the Eurofighter Typhoon, that we are intending to procure the new tanker aircraft—the A400M is listed as equipment that we will buy—and that the joint strike fighter will operate off the carriers. Those are all good reasons to believe that morale is good and following my statement morale may be even higher than it was a few hours ago.

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