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6 Jun 2006 : Column 62WH—continued

1.10 pm

The Parliamentary Under-Secretary of State for Transport (Gillian Merron): I congratulate the hon. Member for Cheadle (Mark Hunter) on securing the debate. I have carefully listened to the points that he has made so clearly.

I feel that it would be helpful if I structured my response. First, I will set out the background as I see it; secondly, I will review the progress so far; thirdly, I will review the current state of play; and last but by no means least I will outline the issues before us, many of which I realise the hon. Gentleman appreciates.

To set out the background, the south-east Manchester multi-modal study—SEMMMS—was one of 22 multi-modal studies set up following the 1998 review of the roads programme to consider the case for major schemes on key sections of the road network. An important feature of the studies was that they looked in detail at the contribution that public transport improvements could make to resolving the identified problems on the road network, reflecting the principles set out in the 1998 integrated transport White Paper.

Three linked road schemes were originally planned as trunk road improvements—the A6 Stockport north-south bypass, the A555 Manchester airport link road west and the A555-A523 Poynton bypass—and were all remitted to the SEMMMS. After examining a range of options, the study concluded that those road schemes should be taken forward on a smaller scale than the original trunk road proposals to cater more for the needs of local traffic than for longer distance strategic traffic.

The study recommended that the road improvements should be implemented alongside a package of other improvements including quality bus corridors, light and heavy rail improvements, measures to encourage cycling and walking, and initiatives to encourage more sustainable patterns of travel, all of which I am sure would be welcomed by the hon. Gentleman’s constituents. The study also recognised that although some of those measures could be implemented quite quickly, the larger investment proposals would require further detailed development and appraisal before they could be considered for entry into the Government’s approved programme of transport improvements. In particular, that applied to the major road scheme proposals.

March 2002 brought our response to the study’s recommendations, which invited the three local authorities to continue the development of the road schemes and to bring forward detailed proposals for further consideration under the local transport plan funding arrangements. An issue raised generally by multi-modal studies was that many of them proposed ambitious programmes of investment that, in aggregate, would not have been realistically affordable.

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It is worth pointing out that partly because of that experience we have now introduced a much more transparent system for seeking regional views on the transport investment priorities within indicative regional funding allocations. Regional and local bodies have a much clearer picture of the resources that are likely to be available to their region over the next 10 years. We have given them the opportunity to advise the Government on how they think those resources should be allocated to best serve the region’s needs and objectives. The advice was received from the regions earlier in the year and we plan to respond to it shortly.

Andrew Stunell: Can the Minister confirm that the region offered strong support for the scheme and that the funding package is there?

Gillian Merron: I will be addressing that point, so the hon. Gentleman will have to be a little patient.

I want to move on to reviewing the progress that we have made so far in implementing the SEMMMS recommendations. Good progress has undoubtedly been made and many of the shorter-term measures are in place. Up to 2006-07 we have allocated £55 million for small-scale integrated transport works and £23 million to the SEMMMS quality bus corridor scheme, which is now well advanced. I am glad to say that that funding is bringing real benefits to south-east Manchester through improved bus reliability and patronage, the regeneration of local and district centres, improved pedestrianisation and cycling facilities, road safety improvements and initiatives to reduce the number of cars on the road. I want to put on record my congratulations to the authorities concerned on the progress that they have made with the measures. I look forward to seeing that continue.

I turn now to reviewing the current state of play. Alongside all the work that I have described, the three local authorities, led by Stockport, have made significant progress in developing and appraising the major road improvements recommended by SEMMMS: the north-south bypass of Stockport, the completion of the link road into Manchester airport and the Poynton bypass. The authorities’ detailed appraisal of the proposals and bid for funding was submitted to the Department in July 2004. A number of issues on the transport modelling, scheme appraisal and funding arrangements were followed up over the following year.

In the light of that further work, the Department is satisfied that the transport modelling and appraisal of the scheme is now sufficiently well developed for the purposes of a decision on the entry of the scheme into our approved programme of transport investments. We also recognise that the scheme appraisal produced by the authorities demonstrates that the SEMMMS road proposals would bring significant benefits to the south-east Manchester area, including bringing traffic relief to a number of local centres and the improvement of access to Manchester airport and other employment centres. They would provide a high-quality route for freight traffic from south-east Manchester to access the trunk road network and help to facilitate complementary measures to encourage walking, cycling and bus usage.

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However, we have to remember that alongside those benefits there would also be some negative impacts, particularly on the environment. In particular, the north-south bypass of Stockport would run through the Goyt valley, adversely impacting on the landscape and biodiversity of the area.

I recognise that it is now some time since the Department concluded its work on the appraisal of the scheme, and the hon. Member for Cheadle asks why that is so. It would be helpful to outline the challenges that need to be addressed before a decision can be reached. First, I would like to consider the cost of the SEMMMS road scheme. A key factor that has to be very carefully considered is that the SEMMMS road proposals are extremely expensive. Although it is true that the proposed scheme is on a smaller scale than the previous trunk road proposals, the authorities’ latest estimate of the cost of delivering the complete SEMMMS road scheme is around £550 million. That assumes that construction will start before the end of the decade and that construction inflation will run at 2.5 per cent. over the period. That cost estimate is significantly higher than that produced for the multi-modal study.

Moreover, evidence has emerged across both the trunk road and the local roads programmes in recent months that suggests that construction inflation has risen significantly more quickly than 2.5 per cent. per annum, partly due to increasing oil and commodity prices. In view of that evidence, departmental officials recently asked Stockport to review the current cost estimate, looking in particular at the potential pressure on construction costs. We are awaiting Stockport’s response on that. I am sure that the hon. Gentleman will recognise that no Government could enter into such a large investment decision without considering carefully the scheme’s affordability and deliverability, and the implications for other priorities.

Mark Hunter: I am grateful for the generally positive and supportive things that the Minister has said about the relief road scheme, but does she not accept that it is somewhat frustrating for those who have long campaigned for the relief road to be completed to hear the Government talking about cost escalation, especially given that the delay caused by successive Governments has led to much of the increase in costs over that period? I acknowledged earlier that a substantial price tag was attached, but none the less local residents feel strongly that the Government ought to be prepared to meet their part of the bargain.

Gillian Merron: I appreciate the frustration expressed by the hon. Gentleman on behalf of his constituents. He rightly acknowledged, however, that previous Governments have failed to respond as he would have liked. I stress the need to take all factors properly into account before taking a decision.

That leads me to the second point: funding and procurement. As is normal with all large transport schemes, we invited the three authorities to explore the possibility of private finance as a means of delivering and funding the SEMMMS road scheme. One of the principal advantages of private finance is that, for such large schemes, it can offer valuable efficiencies in the procurement and subsequent management of the assets over the life of the concession, which is normally
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25 years. However, PFI is approved only when it represents better value for money than the alternative of conventional funding.

The hon. Gentleman will be aware that the Government provide financial support for local authority PFI schemes through the system of PFI credits. The amount of the PFI credit broadly represents the amount of capital investment that the Government are supporting financially. The authorities’ latest estimate of the PFI credit funding requirement for the SEMMMS road scheme is about £860 million, which covers both construction and future capital maintenance. As I have already noted, we have asked the authorities to update their cost estimate, which makes it possible that the estimated PFI credit requirement will increase further.

Even at £860 million, that is a very large amount of funding. For example, it is more than the Department’s total PFI budget for the current year for local authority transport PFI schemes in the whole of England. We must therefore consider the affordability of SEMMMS alongside our other priorities for PFI funding—including, for example, our programmes for street lighting and road maintenance, as well as other major investment schemes. We are still considering the provision of PFI funding for the scheme, which raises some complex issues, but it has to be recognised that delivering SEMMMS as a conventionally funded scheme would raise even more difficult questions on affordability.

As I mentioned earlier, we provided each region last year with indicative funding allocations for major transport schemes over the next decade. In the north-west, the funding allocation starts at £115 million in 2006-07, rising to £135 million in 2014-15. The north-west has an ambitious programme of transport improvements and, even without SEMMMS, it has faced some difficult choices in deciding which schemes to prioritise. It is clear that SEMMMS, at its current estimated cost of some £550 million, would take up several years of the region’s allocation if the scheme were to be funded
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conventionally. It seems doubtful that the region would be prepared to prioritise funding for the SEMMMS scheme by sacrificing a major part of its other scheme priorities.

Andrew Stunell: I am sure that the Minister will have papers showing that the public sector contribution to the scheme is £32 million. We are talking about a PFI scheme, which is outside those limits—and that was the point of the refinancing package supplied by the three authorities.

Gillian Merron: I thank the hon. Gentleman, but that is all that we are considering in reaching a decision. I must tell both hon. Gentlemen that we need to consider how such an ambitious scheme can be funded other than conventionally. It is only right and proper to put those issues before the House.

All of that raises significant issues about the provision of funding for the SEMMMS road proposals. We recognise the good work that Stockport and the other authorities have carried out to develop and appraise the SEMMMS road proposals, and we understand their desire, as well as that of the hon. Gentlemen, for a decision to be made as soon as possible.

We also recognise the importance of the scheme and the benefits that it would bring to the south-east area of Manchester. However, it would represent an enormous investment by Government. We need to consider the risks associated with the scheme as well as our other funding priorities. I cannot today give a definitive date for reaching a decision. I can say only that we aim to work through the issues and to reach a decision as speedily as possible. I anticipate that that will be before the end of the year.

Once again, I congratulate the hon. Member for Cheadle on securing this debate, which has given me the opportunity to set out the position and associated issues in respect of such an important matter.

6 Jun 2006 : Column 67WH

Foreign Procured Munitions

1.26 pm

Mr. Ian Liddell-Grainger (Bridgwater) (Con): I am grateful to have the chance, yet again, to raise in this place what I believe is a vital matter. I am pleased to see the Minister in his place. He has returned from visiting our oldest veteran, who I believe is 110 years old. It was a great ministerial duty—and, I am sure, one of importance to the nation—to visit one of our oldest and most important citizens.

Defence is a genuine interest of mine. I used to be an adviser at the Army Land Command headquarters. I maintain the rank of Major, and I am still on the reserve list of the Territorial Army. Most important of all, I represent a constituency with a proud history of providing our Army, Navy and Air Force with the real means to do the job—in other words, to put forward the Government’s will anywhere in the world. In Bridgwater, we make bombs. We have done so efficiently, economically and successfully for more than 50 years—since 1939 in fact. Some of my constituents are the best legal bomb-makers in the business. They are true specialists and dedicated to their work. Unfortunately, next year there may be no work for them to do. Next year, the people who now own what we call the Royal Ordnance just outside Puriton intend to close it. Why? They reckon that they can buy what we need elsewhere in the world but a whole lot cheaper—and unfortunately they have convinced the Government—but they are absolutely wrong, and history proves them to be wrong.

It is rather pithy that the debate should be on the anniversary of D-day. It was today, 62 years ago—unfortunately, the Minister and I were not there. Thank God for the Americans; we launched a joint operation from these islands to bring a final end to the bloodshed that we know as the second world war. Brave allied soldiers—British, American, Canadian, Australian and other allied forces—landed on the beaches of Normandy. It was the severest test of manpower and equipment. The symbolism of a successful invasion disguised the carnage; we have only to ask those soldiers who survived. Putting it in today’s crude terms, there were far too many Private Ryans, far too many weapon systems that did not share the same ammunition, far too many home-grown disasters on that day. D-day was a victory, but it was also something of a miracle.

Military success relies on courage, training and scrupulous attention to detail. That detail includes knowing exactly what your weapons are capable of doing—what they will do when the trigger is pulled. We can be completely sure only if we know exactly where the kit was made and by whom. When Hannibal set off across the Alps, he had not bought his elephants on eBay; he knew exactly where they came from and what they were capable of. Those elephants were tried, tested and reliable. In Queen Victoria’s time, the dear old British Admiralty, which we all love, would insist that every issue and item of munitions on board all our fighting ships was made here, at home—hence the Royal Ordnance factories, which have existed since the days of Henry VIII.

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Even the glasses for the telescopes had to come from a specific British manufacturer with a reputation for excellence—no ifs or buts. That was not blind patriotism or protectionism, but simple common sense. I wish our neighbours and allies no disrespect whatever; I have trained and worked with most of them. However, British standards in military matters have rightly always been of the very highest; every other nation works hard to match them. There is a huge risk in buying bits and pieces—especially those deliberately designed to go bang—on the open arms market.

I am afraid that under many Governments, Britain has acted stupidly in the past. Not long ago, the British Army took delivery from India of an enormous consignment of 9 mm ammunition. I have a horrible suspicion that it was bought as a special offer—probably two for the price of one. The ammunition jammed and misfired with such frightening regularity that it was taken out to sea and quietly dumped. Meanwhile, British officers and soldiers who attempted to fire certain 7.62 mm shells made in Portugal still refer to them as “Lisbon crackers”. Unfortunately, once again, the Ministry of Defence had to cut its losses; it fed the useless Portuguese munitions to the fish. Buying those munitions was neither sensible nor economic.

We still have problems with shells. These days we get them from France, where “quality control” is a phrase for which there does not seem to be a direct translation. Even suppliers in Germany are suspect on quality. I hope that the Minister is taking note of what I say; I am delighted that he is here, although I accept that responsibility for defence procurement lies with another Minister. As the Minister can well imagine, much of the information comes from the experts who make the bombs in Bridgwater. Those people, who make up an old work force, have spent their lifetimes in the industry. They believe strongly in their country and in what they do, and still see themselves as employees of the Royal Ordnance factories.

I shall provide an example of some slightly heavier artillery. The old Royal Ordnance factories won a contract to manufacture the RO18, a weapon still in service today. However, the MOD first insisted on buying a Belgian version, which went on test in Canada and proved so inaccurate that the safe area for our troops had to be increased tenfold. The Secretary of State at the time—not the present one—said that he knew all about it. He explained that the fault was common, but refused to stop the MOD buying cheap Belgian products. That was not acceptable. The only line of defence against the shoddy workmanship was the expertise of Royal Ordnance staff, who were then responsible for checking every item of stock that came in. One report eerily catalogued the landing of a consignment from a European arms factory:

That ought to be the scary stuff of history. Unfortunately, however, I know that it still happens. The more we buy abroad in the mistaken belief that cheapest is best, the more we risk embarrassment, accident and, ultimately, military disaster.

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