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Mr. Robert Walter (North Dorset) (Con): I welcome the opportunity to speak. I shall be unashamedly parochial, because the defence industrial strategy is key to the future employment of many hundreds, if not thousands, of my constituents. The parliamentary guidebooks describe my constituency as rolling hills, market towns, agriculture and so on, but it also contains the headquarters of two large, or medium-sized, defence and aerospace contractors, Meggitt and Cobham. Blandford contains the headquarters of the Royal Corps of Signals, and for many years has been the home of the Royal School of Signals. It has been intimately involved in the development of the Bowman project, and is now the home of the Defence College of Communications and Information Systems, to which I shall return shortly.

Across the western border of my constituency is Thales Underwater Systems in Templecombe. I was very pleased to be there a few months ago when the First Sea Lord opened its new factory extension, which can
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produce in a single operation the 1 km trails that go behind warships for sonar reconnaissance. It is developing a number of unmanned underwater vehicles as well. A few miles down the road, in Yeovil, is AgustaWestland. All those companies employ a number of people who live in my constituency.

I want to discuss two big defence procurement projects, both of which are vital to my constituency. The first—the defence training contract, to which the hon. Member for Vale of Glamorgan (John Smith) just referred—is worth £19 billion, and the second is worth £13 billion. Both bring the private sector into defence provision in a way that we have not previously seen, and both raise key questions, a number of which have yet to be resolved. I hope that the Minister can provide answers to them when he winds up.

The privatisation of the six defence colleges involves a public-private partnership and the spending of £19 billion over 25 years. The Defence College of Communications and Information Systems, at Blandford, is very much a key part of that. Such a partnership is an example of the Government procuring their training needs for the military from private companies. It is very easy to say that it is simply technical training, but much of it is essential military training. The DCCIS provides training in battlefield communications, electronic warfare and a number of other such activities. The Royal School of Signals, which has been at Blandford for many years, is a military establishment, but it has a tradition of employing civilian contractors—individuals and companies—and employees, many of whom are ex-servicemen with the skills needed to train the soldiers of tomorrow. However, they have always been under military control, and there is certainly scepticism among the senior officers involved in the DCCIS about the future under this public-private partnership.

Such scepticism is based on financial grounds, if no other. A training day at the DCCIS costs about a quarter of the equivalent private-sector training in communications or information technology. So one of my questions to the Minister is, will this contract be viable in the long run? As one senior officer put it to me, what will happen if such training fails? If we are in the midst of a battle and we discover that our soldiers have not had the right training, we cannot send them back for re-training. We have a battle to win and we have to get on and make do. Military commanders are part of a chain, and they feel that if they were in charge, they would have greater control over such matters.

I have four questions for the Minister about this contract, the first of which concerns its military integrity. Can this essential military training be provided effectively by a private organisation that is detached from the military commanders in the field? I almost intervened earlier on the hon. Member for Vale of Glamorgan in respect of my second question, which is about the financial transparency of this deal. My constituents are very worried that the Welsh Development Agency will dangle sums of money in front of contractors in an effort to move the defence college from my constituency across the Bristol channel to St. Athan. Reference has been made to giving the successful contractor a sweetener of up to £100 million.
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John Smith: Will the hon. Gentleman give way?

Mr. Walter: I will happily give way to the hon. Gentleman for some reassurance.

John Smith: I can see why the hon. Gentleman did not intervene on me. There is no question whatsoever of the Welsh Development Agency dangling financial carrots to make such deals, because doing so would be unlawful.

Mr. Walter: I am not necessarily reassured by that, and would prefer to hear it from the Minister. I am not sure that it is unlawful for a development agency to be involved in bringing jobs to its area, but I know that the RDA in the south-west does not have the money to be able to match the offer.

My real question to the Minister is: can he guarantee the future of a military presence at Blandford camp, and especially of the defence college? The college is a very important part of the local infrastructure and directly or indirectly employs some 5,000 people in my constituency.

My second key constituency point about defence procurement has to do with the future strategic tanker aircraft. The selection by AirTanker of the new Airbus A330 200 provides the best value for money and will maximise the UK's industrial potential in the project. It is a truly British solution. The Ministry of Defence has estimated the programme to be worth £13 billion, possibly over 27 rather than 25 years. It would involve the manufacture and supply of a fleet of new Airbus aircraft and their conversion to tanker configuration, the fitting and certification of military avionics, the development of Brize Norton with extensive construction work for ground and air support equipment, and the provision of long-term operational support, including crewing, training and maintenance.

The A330 tanker has significant export potential, and its launch will have the added benefit of increasing the opportunity for UK suppliers to meet that demand. There is already talk of the French, who have a similar requirement, buying into the same configuration.

Another question involves what the US will do, given that Boeing was knocked out in the first round of bidding for that country's requirement. I understand that the US could need as many as 300 or 400 tanker aircraft, and there is a real possibility that AirTanker could participate in that. In any event, the project will bring the maximum amount of high-value work to this country, and generate new investment and employment throughout the UK aerospace industry.

I am particularly concerned about the "probe and drogue" aerial refuelling system that was developed and built at Wimborne in my constituency. It has been used by the RAF for a number of years, and is based on an invention by Sir Alan Cobham, who in the 1930s founded a subsidiary company called Flight Refuelling at Tarrant Rushton airfield in the heart of my constituency. He developed a system that allowed the pilot of a receiving aircraft to catch the fuel hose—the drogue—as it trailed from the refuelling aircraft. The receiving pilot could then draw the drogue in, using a type of harpoon.

The apparatus may seem somewhat complicated by today's standards, but it was bought by the Americans after world war two. The US air force converted
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100 B29 bombers to carry the system, and the planes were redesignated as KB29 tankers. Flight Refuelling has continued to develop the technology.

Cobham's other subsidiary, FR Aviation, was formed in 1985. It operates out of Bournemouth airport, in the constituency of my neighbour and colleague, my hon. Friend the Member for Christchurch (Mr. Chope). The company is a world leader in the provision of turnkey special mission flight operations, engineering and aviation services. Between 1991 and 1996, it converted the RAF's VC10 aircraft to incorporate the air-to-air tanker refuelling role.

I want to remind the House of the basics of the matter. Commercial-standard aircraft have been built and tested by Airbus at Toulouse, but the UK will account for half the total value of the basic aircraft. AirTanker will create a centre of excellence for the technology, build new facilities at Brize Norton and run the new systems and support operations. About 75,000 jobs in the United Kingdom are tied up with this. When will the Government finally seal the deal? We have been at this now for six years. AirTanker is the preferred bidder. One of the problems is technology transfer with the United States, but without it there can be no deal because the project is not viable. Unless the United States agrees to the contract specifications that the MOD has laid down, the aircraft is not a viable proposition. Can the Minister please tell me tonight when he will get his pen out and sign the deal with AirTanker?

4.15 pm

Mr. Lindsay Hoyle (Chorley) (Lab): The document on the defence industrial strategy, is important to everybody. The Secretaries of State for Defence and for Trade and Industry are joint signatories because this is not just about defence; it is also about UK jobs. As the only member of the Trade and Industry Select Committee represented here today, I must make sure that that voice is heard. It is important not to neglect trade and industry.

Rightly, much has been said about the joint strike fighter, the ITAR waiver and UK jobs. Those jobs are important to Lancashire and the aerospace technology and defence systems there. Tens of thousands of jobs rely on the contract. It seems odd to me that the Americans are happy for our troops to go shoulder to shoulder in a trench and to fight side by side, but on technology transfer they ain't playing fair, they ain't playing the game. It is unacceptable for the Americans to behave in that way and we must tell them so if they are to expect our support. We are supposed to have a special relationship. We hear a lot of words about that, but we have yet to see the proof of it. We may see the President with his jacket on walking with the Prime Minister and having a good chat at Camp David, but we want to get beyond the words of Camp David and to secure jobs in the United Kingdom.

This is not just about having a manufacturing capability; it is about manufacturing the parts and the final assembly of the joint strike fighter. If we are placing an order for 150 aircraft, the least we can expect of the contract is to be allowed to build them here. If others, with agreement, can sell them on to a European nation, why do we not have the same ability? There are
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questions over maintenance, too. We may be allowed to undertake basic maintenance but there may be a technology bar preventing us from undertaking deep maintenance. We have to put right many issues as soon as possible. It is time that the Americans paid that special dividend.

Some £2 billion of investment has already been made. What are we going to do? Do we look to the Typhoon as a variant of the carriers? That is the second part: we must not make the mistake of the 1960s when the carriers were not the right size. Carriers must provide a platform capable of taking different aircraft. We must ensure that different aircraft can operate from them. Typhoon may be the answer for the future. We cannot say yet, but we must put pressure back on the Americans.

The future of fast jets is important for Lancashire. We must have fast jets continuing beyond the joint strike fighter and Typhoon. We must set out our technology needs for the future. We know that unmanned air vehicles will be part of that future, but I do not believe that we have given up on pilots and aircraft. Therefore, there must be investment now. We want to see the Government working with BAE Systems, ensuring that we build on the technology and skills in Lancashire and secure that advantage for the future—way beyond the 30 years that we are talking about now.

The other procurement issue that we must not forget is NAAFI. I have told my hon. Friend the Under-Secretary before that we must not let NAAFI close. I know that we are pulling back from Germany and there is a question mark over NAAFI there, and in Cyprus and Gibraltar. The profits that NAAFI makes do not end up in shareholders' pockets, but are ploughed back into recreation for the troops. Who else would be working in Afghanistan and Iraq, ensuring that our troops have somewhere for recreation? I make a special appeal on that point.

The other big issue is Royal Ordnance at Chorley and Bridgwater. Bridgwater produces high explosives and Chorley produces initiators and boxer caps. Nothing goes bang without Chorley. Chorley ensures that explosives work. The French, Germans and Americans would not cease production in their own countries of that vital security need, because they recognise that boxer caps and initiators have to be home-grown. BAE Systems tells us that as a favoured friend of the Government, and to ensure security and sustainability, it should retain missile technology, aerospace and shipping. However, somehow, it fails to mention explosives and the need to enter into a partnership. BAE Systems is five years into a 10-year deal—only halfway through the contract—but it wants to close Bridgwater and Chorley. It is unacceptable for us not to have a capability in the UK and it will have to reconsider its position.

When BAE Systems bought Royal Ordnance—an unfortunate deal—it was about asset stripping. We know that the sale of the Enfield site recouped every penny that BAE Systems paid the Government for Royal Ordnance. In Chorley, it was like the wild west—it was a land grab. BAE Systems could not wait to sell off acres and acres of land—it has received the money for 600 acres. It now operates on some 180 acres of the site, producing initiators and boxer caps. It wants to close the facility, but it should not be allowed to do so.
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The Government will say that it is a private company, but it has a contract with the Government, so we should not allow it to close Chorley. In fact, it should be building a new facility for producing boxer caps and initiators. It should sit down and do a deal with the Government and the local authority to release a little more land—the capacity is there—the proceeds from which go to a new production facility to ensure that we have a long-term capability to fight wars.

BAE Systems has tried short-cuts before. It supplied 21 million rounds of ammunition to the Government that has been dumped at sea because it did not work. We do not learn from the mistakes of the past, but we should learn from the Gulf war, when Belgium refused to supply us with artillery shells. This is a wake-up call for the Government: we need Chorley and we need Bridgwater. We cannot have nuclear weapons without high explosive. A charge—made by Chorley—is packed into the missile that supercharges the high explosive that generates the nuclear explosion. The charge has to be repacked regularly, so we would have no independent weapon if Chorley closed. We would be dependent on the French or the Americans and that would be absurd. We have to tell BAE Systems that it cannot close Chorley or Bridgwater and that a contract should be worked out that keeps both facilities open. The proposal to close is about selling the assets and ensuring as much money as possible for the shareholders, but that is not good for the future of the UK's defence.

I know that other hon. Members wish to speak, so I shall conclude in a moment. Before I do, I want to remind the House of the bad mistake we made in giving the contract for army uniforms to China. In Chorley and Blackburn, we were producing superb uniforms, of exceptional quality, for the British Army, and then the contract was given to China.

Let us ask some questions about China. It is important to find out why things went wrong. For some unknown reason, the Chinese made the battledress waterproof, yet everybody knows that uniforms must have breathability. What on earth are we doing? There have been major mistakes. Three garments were tested and there were faults in all of them. Our troops have to operate in the heat and the cold, yet somebody decided to make their uniforms waterproof. What is going on? This is the madhouse of failed economics.

I ask the Minister: please bring the contract back from China, keep UK jobs, make sure that RO survives at Bridgwater and Chorley and let us ensure that aerospace has a long-term future.

4.25 pm

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