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Mr. Hollobone: Will the right hon. Gentleman give way?

Mr. Ingram: No, I must make progress.

The defence industrial strategy also makes clear our commitment to developing research and technology, acknowledging the vital role that that plays in designing emerging concepts and technologies, and also enabling the Department to scan the horizon for new, potentially disruptive, technologies. The MOD invests around £2.5 billion annually in research and development covering the breadth of technical and innovative endeavours, and our immediate priorities are laid out in the DIS.

My right hon. Friend the Secretary of State for Defence announced earlier this month our intention to float Qinetiq on the London Stock Exchange. This is a further step in our plans to develop a public private partnership for defence research. It is also the way forward for Qinetiq to continue to supply battle-winning technology for the armed forces, as well as providing opportunities to exploit leading UK technology abroad.

The step-changes in capability that we are introducing as a result of our continued investment put the armed forces on the footing that they require for the 21st century.

The drive towards network enabled capability, greater interoperability and the use of precision effects means that we can now do more with less following the enhancements to our platforms and weapons. We must continue our efforts so that that remains the case, which means addressing the business and process of defence procurement. We have work to do in this area, but we have made considerable efforts to improve our performance. That has been reflected in the last three NAO major project reports, which noted year-on-year decreasing costs and time delays on the programmes reviewed. However, we need to do more, and must strive for continuous improvement. The DIS has introduced an ambitious package of change, led by my noble Friend Lord Drayson, and builds on our smart acquisition experience.

As I am coming to the end, I will give way to the hon. Member for Kettering (Mr. Hollobone).

Mr. Hollobone: I am most grateful to the Minister for giving way. He was talking about technology transfer and disruptive technologies and the threat that they pose. Does not drone technology offer a terrific opportunity for our armed forces? Will the Minister
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assure the House of the importance that he attaches to drone technology and say whether the necessary technology transfer is taking place, and will the necessary command and control of drones be across our armed forces, or remain with one specific arm of the services?

Mr. Ingram: I wish that I had not given way now; that is another debate in itself. It may be better if I write to the hon. Gentleman on that. The whole concept of DIS is looking forwards to the new technologies—what is coming along, what is important, what we need, how we define the need, whether there is a key capability and core skill base within this country that we want to preserve, and that also matches our need, and how we deliver all that. I will write to the hon. Gentleman on the specific questions that he raises.

Our success will be largely dependent on the changes that industry will also need to make, to plan better for the long-term, growing system engineering capability, stimulating innovation across the supply chain and developing the right behaviours. It is ultimately how industry responds to the challenge, and how we demonstrate the DIS in our future investment decisions, that will demonstrate the strategy's success.

The change programme is a top priority for the Department and the Government. The defence industry will likewise need to move quickly to put both the MOD and industry in the best possible position to achieve the aims of the DIS. We are determined to achieve this and to deliver to the armed forces the equipment that they need for the demands of today and tomorrow. Our people deserve nothing less.

1.52 pm

Mr. Gerald Howarth (Aldershot) (Con): I associate the official Opposition with the remarks made by the Minister and the condolences that he has expressed on the deaths of the two servicemen, Lance Corporal Allan Douglas and Corporal Gordon Pritchard, the most recent casualties in Iraq, and a salutary reminder to all of us and to the nation of the proud part that is played not only by our armed forces but by their families in supporting them. I join him in paying tribute to the families who give this unstinting support, as I know, representing as I do a garrison town. The Minister is entirely right to remind the House and the nation that around the country there are many injured servicemen and women who did not lose their lives, but who every day will bear the scars of the contribution and the sacrifice that they have made on behalf of us all. The House will be grateful to the Minister for that.

The fact that so many right hon. and hon. Members on both sides of the House wish to participate in the debate is an indication of the importance of defence procurement at the present time. Furthermore, the fact that the Minister's contribution lasted for virtually an hour—although, if I may say so, it was a bit wayward at the beginning—was an indication that he too regards this as an important issue, and that there are a number of very specific factors that we need to address. I am conscious that my right hon. and hon. Friends wish to contribute, and if I miss out something, it is not because I do not regard it as important, but I wish to preserve some time for my colleagues, and no doubt my omissions will be taken up by them.
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I almost begin where the Minister left off, because he referred to the various reports that have been published recently, not least the NAO's major project reports. Since we last debated defence procurement 15 months ago in November 2004, there have been a number of those reports, so the backdrop of this debate is a series of Select Committee and NAO reports highly critical of the Government's management of defence procurement. Once again, Ministers have presented a    strategy designed to meet our procurement requirements for the coming decades and to make up for the deficiencies that the previous strategy failed to resolve.

The 2005 NAO major project report was greeted by the MOD as an improvement on the previous two years, which was hardly difficult given that the 2003 report was described as the worst in the history of the report. As is now customary under the Government, the report still highlighted significant cost overruns and delays, and the MOD's latest projects are now £2.7 billion above the originally approved costs. But that specifically excludes—I understand on grounds of commercial sensitivity—the Typhoon project, which in previous years had accounted for over £2.3 billion in cost overruns. The MOD's major procurement projects also continue to fall behind, with delays increasing by 45 months over the past year. But once again, that figure is affected by the exclusion of the joint combat aircraft, which has had its in-service date mysteriously dropped.

In a rather underhand attempt to pre-empt the third disappointing major project report in a row, the noble Lord Drayson held a press briefing days before the embargoed report came out, to spin the positive points in that report. The Minister claimed a £699 million improvement in the cost of the 20 largest defence projects. However, as the NAO concluded, those savings came not from efficiency, but from cuts to future capabilities and cuts in the number of platforms.

Let us not forget that the 2005 report follows hard on the 2004 MPR, which cited cost overruns of £1.9 billion and delays of 144 months. That report followed the disastrous 2003 report that I have just mentioned and its £3.1 billion cost overruns and an average delay of 18 months across the 20 largest projects.

Mr. Ingram: Will the hon. Gentleman give way?

Mr. Howarth: Of course I give way to the Minister. He has had a pretty fair share of time already, but I will of course, out of courtesy, give way to him.

Mr. Ingram: I just want to get the record straight. We recognise the issues on procurement, but perhaps the hon. Gentleman would like to comment on the fact that in 1997, when the Conservative party left office, the NAO found that the Conservative Government's top 25 defence procurement projects were likely to cost over £3 billion more than they originally forecast, and would on average enter service over three years later than originally planned. In 1997, the NAO exposed the fact that only three of their top 25 projects were expected to enter service at the dates originally planned, and six of them were due to enter service at least five years later than they should have. When the hon. Gentleman
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makes these assertions and accusations, he should reflect on the past and tell us where they got it wrong, and why they think that we are now getting it wrong with the defence industrial strategy.

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