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Mr. Howarth: The Minister has got a bit of a nerve referring to events of eight years ago. The Government have been in office for eight years, and first they introduced smart procurement, then smart acquisition. There has been new idea after new idea to try to deal with the problem, but the Government have failed, and the NAO reports indicate that. I am sorry to say to the Minister that I will not give way again if he simply tries to blame the last Conservative Government eight years ago. The public are fed up with that. The Government are in charge. They are responsible and accountable, and what is more, we will hold them to account until the day comes, very shortly, when we take over.
It is not just a matter of the NAO reports. The Defence Committee, chaired so ably by my right hon. Friend and neighbour the Member for North-East Hampshire (Mr. Arbuthnot), Labour members of which are present, has been equally critical, charging in its 2004 report that
That is hardly a tribute to the Minister. More recently, the Committee in its report on two of the MOD's largest and most important projects, the carriers and the joint combat aircraft, concluded that it may be "falling seriously behind schedule" and thereby creating a potentially dangerous capability gap for the Royal Navy. The Committee has also warned that if costs are not brought under control, the project may become "unaffordable". The members of the cross-party Committee are knowledgeable, and they have criticised the Government's performance. After more than eight years in power, the Government have failed to deliver promised improvements on the delivery of equipment to our armed forces. The cost of major projects has continued to rise, and in-service dates have continued to slip—there is no money left in the budget, so allowing programmes to slip is the only way to manage the position. Over the past year, the MOD's unfunded commitments rose by £5 billion to almost £19.5 billion.
Sarah McCarthy-Fry (Portsmouth, North) (Lab): Does the hon. Gentleman agree with yesterday's comments by Sir Peter Spencer to the Public Accounts Committee on the MOD major projects report? He said that procurement difficulties are due in large part to the "toxic legacy" of previous Governments and that he expects such difficulties to continue for some years to come.
Mr. Howarth: I have not seen Sir Peter's remarks, and I shall read them with great care. Sir Peter is in charge now; the delays are occurring now; and the in-service dates are slipping now. It is no good blaming the Government of eight years ago for something for which this Government have taken responsibility for the past eight years. Sir Peter has been in office for the past two or three years, so he should be careful when it comes to casting beams out of others' eyes.
Since the Government came to power, spending on defence has fallen both in real terms and as a share of GDP. Defence spending in 2004–05 was almost
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£1 billion less in real terms than in 1995–96. In 1995–96, defence expenditure was 3 per cent. of GDP, but this year it is set to fall to 2.3 per cent. of GDP. However, our military commitments are far greater today than was envisaged even in the strategic defence review, and they are expected to remain at the current high tempo.
The Minister has mentioned the defence industrial strategy, which is an attempt to identify the key military-industrial capabilities that we need to retain in the United Kingdom. The document is a move in the right direction, not least because the Government have taken on board what we have been saying for the past three years. In the procurement debate 15 months ago, I called for
"a mature partnership with industry, with both sides working together from a project's inception through to the completion of its service life."—[Official Report, 4 November 2004; Vol. 426, c. 488.]
We welcome the Government's conversion to our view.
If we are to retain certain key capabilities in the UK, it will involve placing some non-competitive contracts. However, we must be wary, because the cost-plus approach has failed to deliver value for the taxpayer in the past. When the MOD seeks a particular solution through a non-competitive contract, we propose that the MOD and its industrial partners should run an open-book accounting system policed by the National Audit Office to ensure value for money for taxpayers. I have discussed the matter with the Comptroller and Auditor General, Sir John Bourn, who confirmed that the NAO could assist in such a scheme. I have mentioned that idea in the past and offer it as a genuine and constructive suggestion to the Minister as a means by which we can retain key industrial capabilities in the UK, where we have only one supplier. I am offering the Minister a mechanism by which we could try to protect the taxpayer interest and retain that defence industrial capability.
The defence industrial strategy will be judged on how it works in practice. The hon. Member for Tamworth (Mr. Jenkins), who is not in his place, described it as a "MOD wish list" in the Defence Committee on Tuesday, and he was largely right. Furthermore, some serious unanswered questions have been left hanging, and I shall raise a couple of them. On fixed-wing aircraft, the Government appear to accept our strategy of maintaining Britain's aerospace industry by involving it throughout an aircraft's service life. I have always believed that we should provide an income stream to industry to ensure the certainty of which the Minister has spoken. However, the bald statement that current plans do not envisage the UK needing to design and build a future generation of manned fast jet aircraft beyond Typhoon and the joint strike fighter effectively heralds the end of a century of capability in which the United Kingdom has been a world leader.
Given the uncertainty surrounding the joint combat aircraft programme, I question whether abandoning the ability to make combat aircraft would be foolhardy in the short term and echo the infamous Duncan Sandys 1955 White Paper, which confidently predicted the end of manned flight. I accept that the era of the unmanned air vehicle and the unmanned combat air vehicle has dawned. The United Kingdom must be fully involved in the development of that technology, and I understand
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that it is. However, it is not in our national interest so lightly to abandon the capability of building manned fast-jet combat aircraft.
The Minister has referred to "complex weapons"—missiles. The strategy states:
In other words, missiles are critical to modern military operations—the soft speak is for the benefit of groups such as the Campaign Against Arms Trade, which does not like some of our manufacturing industry's products. A few lines later, however, the document states:
"There is, apart from the Meteor programme, little significant design and development work beyond the next two years. This will present a substantial challenge to the industry."
The Minister has discussed that point, but what about the challenge to Government? If missile technology is vital, we must establish the means to ensure that we have access to secure supplies. I note that the Minister has said that negotiations are under way, and I hope that he will keep the House informed, because if the DIS statement is right that those weapons are critical to modern warfare, we must retain that capability in the United Kingdom.
That brings me to the fundamental issue that underpins the DIS. As the Minister has said, the Government accept that
"to maintain our national security and keep the sovereign ability to use our armed forces in the way we choose we need to retain those key capabilities in the UK."
The force of that argument cannot be understated. Let us not forget that during the first Gulf war the Belgians refused even to sell us ammunition.
On ammunition, the DIS states:
"it is essential we retain onshore the design authority role and its underpinning capability for munitions manufacture",
but the Government accepted the closure of the BAE facility at Bridgwater, which means that the source of supply will be overseas. In answer to my questions, Ministers tell the House that they are content to rely on BAE for security of supply, knowing that that supply comes from overseas. BAE cannot give that guarantee, because it will be subject to the whim of the overseas manufacturer's Government. The Minister is not entitled to accept a guarantee from BAE.
Mr. Hoyle : The hon. Gentleman has mentioned Bridgwater. Is he aware that that strategic review also covers Chorley? Without Chorley, nothing goes bang, because initiator and boxer caps are produced nowhere else in the UK.
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