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6 Jun 2006 : Column 68WH—continued

When loading big munitions, we need propellant, which we used to make here. However, now we buy it from Switzerland—a little nation more famous for its
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cuckoo clocks and chocolate. Swiss propellant still gives problems. We still import erratic naval shells from Australia. TNT from eastern Europe is of “very dubious quality indeed”. Those words are not mine, but from the report of someone who deals with TNT and works inside this close-knit and very loyal British industry. Why are we forced to import TNT, of all things, from eastern Europe? The British company that makes it over here reckons that it can make far more money by not making it here at all.

The parliamentary advisers to BAE Systems should start taking note at this point. British Aerospace was proud enough to use the national name when it bought Royal Ordnance plc in 1986, not under this Government. However, then came the rebrand—everything in this country has to be rebranded. Out went the words “British Aerospace”; in came the abbreviation “BAE”. The company is now so busy getting rid of other essential British assets that I rather wonder why its title still includes the B for British at all. I do not believe that it is a British company any more. We should say goodbye to Airbus and to the Bridgwater bomb factory, too—it is all becoming a bit of a tragedy.

Some 130 BAE Systems workers agree with me, as do, I like to think, many Members of this House. My illustrious predecessor, the former Secretary of State, Lord King, agrees with me. Shutting the BAE plant would be much more than a local blow; it would be a national disgrace. It could put at risk the very defence of the realm, about which every Member, regardless of who they are, should care.

We started making armaments in Bridgwater during the last war; it was a question of necessity. Germany was stretching our military capabilities to the limits. It was in my local Royal Ordnance factory that the famous bouncing bombs designed to destroy the Ruhr dams were loaded. Their inventor, Sir Barnes Wallis, is probably rotating in his grave at the news that we now know.

The bombs aimed at Saddam Hussein’s bunkers were also made at Bridgwater; the final charges for our ultimate weapons are still made in the area. Next year, however, the essential ingredients will be shipped in from France, provided that the French are not on strike. Relying on foreign suppliers for anything as essential as military munitions is mad. No Government should treat defence as they do commerce, and no Government should ever be held hostage by any company, British or otherwise. Who will pack our bombs in future? Who will load our bullets? It will not be done at Glascoed.

I hope that my questions are sensible, but so far I have not been given a real answer from any Minister in this place or the Lords. I have corresponded with Ministers and taken part in rather too many detailed face-to-face sessions. I am always told, not only by Ministers, but by BAE, “There is nothing to worry about; BAE Systems is confident that there is no risk to supply.” I am sorry, but I do not believe that. I can understand why BAE Systems cannot be bothered with a little bomb-making factory that ticks over nicely but will never make a real bomb in the financial sense.

I am told that a consignment of explosives was recently shipped from France to Somerset so that the experts at Puriton could have a look at it. The product was passable—just about. However, security at the
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French depot at which it was collected was lamentable. The gates were wide open; the staff had gone to lunch. The lorry driver went in, picked the stuff up himself and delivered it back here. That cannot be right in any country. It certainly would not happen here—I know that it would not—and it should not be allowed to happen in places on which we depend in other countries. Making weapons is far too important to leave to the sloppy or cut-throat practices of the marketplace. I am convinced that the risks of buying abroad outweigh the advantages. To adapt the words used by a recent Defence Secretary when giving evidence to a Select Committee, buying abroad is not “fit for purpose.”

Of course closing our arms factory would be a bitter blow to Bridgwater, but it would also be a dangerous step for national security. I ask the Minister to use his muscle and to intervene before it is too late.

1.39 pm

The Parliamentary Under-Secretary of State for Defence (Mr. Tom Watson): I congratulate the hon. Member for Bridgwater (Mr. Liddell-Grainger) on securing a further debate on the procurement of munitions and for providing me with the opportunity to speak in my first ever Adjournment debate as a Minister.

The hon. Gentleman brings his considerable defence experience to the debate, and he is a powerful advocate for his constituents. I suspect that I shall be able to reassure him on the points he raised about security of supply, although I shall not be as reassuring on the independent commercial decisions made by BAE Systems.

The hon. Gentleman has raised vital strategic issues, and I recognise the disappointment being felt by the loyal, committed and experienced work force in Bridgwater. Although general munitions are important for the future of defence, this is a commercial decision for the company. However, I understand what the work force must be feeling. As a former trade union representative, I hope that I can be sensitive to that.

Turning more specifically to weapons and ammunition, the hon. Gentleman will be aware that the UK defence market is the most open in the world. We procure a range of weapon systems from overseas that provides us with an effective military capability and value for money to the British taxpayer. It includes munitions—I shall refer to some of his specific points on munitions later—but also complex weapons and other equipment. It would be wrong to deny ourselves the opportunity to draw from a wider market if it made sense to do so.

The focus of the debate is the use of foreign-procured munitions, which is an emotive issue on both sides of the House, but one which I assure the hon. Gentleman has been thoroughly investigated and tested by Members of the House in Adjournment debates in this Chamber and on the Floor of the House. Such investigation helped to underpin much of the munitions chapter of the defence industrial strategy, which provided clarity in the thinking of the Ministry of Defence on the supply of general munitions.

The strategy explicitly recognised the military importance of munitions and the critical capabilities that we want to retain and develop in the UK industrial
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base, such as the ability to design munitions, support them through life and test them safely. In that regard, we have a stated policy to convert our explosives to insensitive munitions.

On the hon. Gentleman’s point about TNT, of course it was important to our general munitions policy in the past, but demand for it will decrease as we start switching to insensitive munitions with a polymer-bonded explosive that do not rely on TNT as the explosive fill.

Mr. Liddell-Grainger: Is the Minister aware that the Americans tried to make that explosive and blew up the plant? He may not be aware of that, as he is filling in. BAE Systems people have gone out to Holston to help sort out the mess.

Mr. Watson: I am not aware of that situation. Obviously, my officials will find out about it, and I will write to the hon. Gentleman if I cannot get an answer in the next 20 minutes.

The re-engineering of the explosives manufacturing process was always going to be necessary, regardless of any company rationalisation plans. In simple terms, it was already undergoing considerable change as new technologies were adopted and new forms of chemical bonding developed.

As the hon. Gentleman is aware, BAE Systems provides the armed forces with the majority of their general munitions matériel. In October, we reaffirmed our long-term commitment to BAE Systems and its supply of munitions in the form of signed partnering principles, which ensure security of supply of munitions and build on the framework partnering agreement that we signed with the company in 1999. Those principles encourage improved performance, value for money and modernisation of the company’s systems. Without that, there is unlikely to be a substantial future for munitions production in the UK.

Any site rationalisation activity is a commercial decision for the company. I strongly understand the hon. Gentleman’s point about security of supply, but we have been given assurances that the required capability will be delivered at value for money. It may be that today we will have to disagree on our interpretation of those assurances.

BAE Systems has announced the closure of two of its munitions sites: Chorley and, as the hon. Gentleman knows, Bridgwater. I understand his continuing concern about the Bridgwater site. If it were in my constituency, I would also be advocating my constituents’ case. However, the decision remains a commercial matter for the company. I am aware that it is providing a comprehensive redundancy package that is well above the statutory minimum. In addition, there will be opportunities for relocation within the company. Nevertheless, as I said earlier, I recognise that this is a difficult time and that an older work force might choose not to take that option.

BAES Land Systems intends to outsource the supply of several explosive products, but some elements of the explosives manufacturing process at Bridgwater will be transferred to Glascoed. As such, a programme of
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significant investment has commenced to underpin a secure and affordable source of supply and to ensure that essential munitions capabilities continue to be supplied from a UK base. To secure greater value for money, BAE Systems may source base materials for those munitions overseas.

The company has assured us that, in assessing potential overseas sources of supply, security of supply considerations are a key factor in deciding which companies can provide such matériel. I have asked my officials at the MOD to keep me informed about this, and of course I will write to the hon. Gentleman if there are any changes.

For a variety of other munitions, the MOD and BAE Systems have a significant stockpile of matériel to ensure access to munitions when the armed forces need them. The hon. Gentleman will be reassured by the fact that we have undertaken rigorous assessments of our future arrangements with BAES Land Systems in respect of the supply of munitions and are confident that the right decisions are being made on security of supply and value for money.

Mr. Liddell-Grainger: The Minister is making a powerful point, but I beg to disagree with him. May I give him one example? During the first Gulf war, my predecessor, Lord King, asked the Belgians for 7.62 mm ammunition for general purpose machine guns. The Belgians refused to give it to us because they did not agree with our involvement in that war. I hope the Minister agrees that we cannot ignore the point that we have no say at all if a country disagrees.

Mr. Watson: The countries that are hoping to supply us will have given guarantees that they will retain a security of supply. Perhaps the hon. Gentleman will be comforted on that point when I discuss Eurenco and future reassurances that we hope to make in that area.

The company has indicated that it is likely to source raw materials from the Holston plant in the United States, which the hon. Gentleman mentioned. It is one of two potential international suppliers, the other being Eurenco in France. The hon. Gentleman raised the point about security in a previous debate. I have been assured that BAE Systems has talked to the company about security, and perhaps some of his concerns could be allayed by its security arrangements.

My officials have visited Holston and are wholly assured that it can easily produce ample quantities of the materials we require while meeting the stringent quality standards that the hon. Gentleman says are vital. However, the final decision on sourcing will be for the company, based on the parameters that we offer in the contract.

The hon. Gentleman tried to test my French on quality control. I shall not even attempt to come up with a phrase, but I assure him that quality control underpins everything that our officials are trying to achieve in the contracts. It is important that we include a system of monitoring and testing so that quality never decreases. He raised an important point, and I hope that the systems that we put in place will reassure him in that regard.

It should also be noted that the Holston plant can manufacture crude RDX to the same standard as that
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previously produced at Bridgwater. BAES Land Systems, overseen by the Defence Ordnance Safety Group, validated initial samples, and I am assured that they are of excellent quality. From the frown on the hon. Gentleman’s face, we might have to disagree on that point as well. Each batch of raw material will be tested in the same manner to ensure continued quality.

The hon. Gentleman should be reassured that the decision to support the company’s plans was not taken lightly. The company could not allow a situation to continue in which BAE Systems was starting to underwrite inefficient production. We applaud the company’s efforts to achieve a better balance of cost and capability. Its decisions are in line with the defence industrial strategy and are in the best interests of producing a modern and sustainable munitions business in the UK for which we can tell the British taxpayer we are getting value for money. I hope he understands that that is the balance we must strike.

The hon. Gentleman should be reassured that a project team is closely monitoring and challenging BAE Systems as it undertakes that transition. I congratulate him, because these debates are profoundly challenging to BAE Systems as well, and perhaps a bit of parliamentary scrutiny will keep its technicians—although he mentioned its parliamentary officer—on their mettle.

In addition, the company has contingency plans, particularly as there are at least two overseas suppliers for each of the main raw energetic materials that we require. Should the unforeseen happen and supply be interrupted from one source, BAE Systems will retain the technical ability to switch to the alternative or draw on existing stockpiles.

Another benefit of the company’s transition is the considerable investment—up to £10 million—in its facility at Glascoed. That will become a centre of excellence in the development and production of insensitive munitions, which are what we will need to operate all our future munitions requirements safely.

Mr. Liddell-Grainger: The Minister has been generous in giving way and I hardly dare ask him another question, but can he give an assurance on whether we have any long-term commitments as a nation to ensuring that the Glascoed plant is retained? Are there any long-term guarantees from BAE Systems on that?

Mr. Watson: I cannot give the hon. Gentleman a long-term guarantee, but I can certainly write to him and sketch out the future arrangements for munitions manufacture.

The company has already invested about £12 million in the new insensitive munitions plant at Glascoed, and we continue to examine new ways to provide capability and value for money. That is not an exclusive process, and if the hon. Gentleman can bring his experience to bear on it, I will welcome his input and that of his colleagues.

In munitions, that aim is being exercised through project MASS—munitions acquisition, the supply solution. With the hon. Gentleman’s defence background, he will know that the MOD is fuelled by acronyms, and project MASS is one that does what it
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says on the tin. The project is in its assessment phase and is examining our requirements beyond 2010 with regard to the entire munitions supply chain, as well as analysing the potential benefits of further involving industry in the end-to-end supply chain for munitions.

The hon. Gentleman should also be reassured that even though BAES Land Systems is doing its utmost to guarantee security of supply, we have gone one step further. The Department is taking active steps to help the company to create an even more robust supply chain. A good example of that can be seen in the potential Holston arrangements. The supply arrangement from Holston will be a commercial one between two separate arms of BAE Systems—BAES Land Systems in the UK and BAE Systems Inc. in the US, which runs Holston—but we are already in negotiation with the US Department of Defence for a stand-alone munitions memorandum of understanding to underpin that. That will ensure clear understanding on both sides of the importance of reliable supply.

A similar memorandum of understanding with France is being considered for the products supplied by Eurenco, so on the hon. Gentleman’s point about Belgium, I hope I can reassure him that we are trying to offer that extra confidence to the system.

More widely, there are also a number of international agreements with our allies, such as the implementing agreement on security of supply with France, Italy, Germany, Spain and Sweden, and the US-UK defence co-operation memorandum of understanding, which provide support and assurance in the security of supply of defence equipment, including munitions.

Although the supply of explosives to our armed forces is an emotive matter, it must be remembered that we already rely on overseas suppliers for a great deal of our equipment. The UK is successfully procuring a range of munitions components from overseas already, not to mention a range of complex weapons. Therefore, even if BAES Land Systems were to reinvest at Bridgwater and accept the resultant cuts in other capability areas, we would still have to source many of the remaining components of each ammunition round from overseas.

In general, even if a UK company is the prime contractor for a particular equipment, it is likely that it will source many of the components from overseas. We would not wish to hamper UK companies in their efforts to produce top-line equipment for our troops by insisting that they source components in the UK. Obviously, a balance must be struck between security of supply and value for money, and I hope that the hon. Gentleman will, if not be happy with my contribution, understand that we keep the issue at the forefront of our minds in every decision that is taken.

Conversely, many of our allies rely on us for many of their defence equipments where we are the leaders in a particular area. Only through that global marketplace can we ensure that we can afford to give our troops the best equipment they deserve.

As a new defence Minister, I say to the hon. Gentleman that I want the best equipped and the best trained forces, so that they can live up to their name as the best armed forces in the world. Although I do not do defence procurement—that is done by another Minister—and I
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am not the Minister with responsibility for the armed forces, that is a shared goal that all four Ministers at the Department are keen to achieve. Our new Secretary of State is particularly keen that we give the reassurances that the hon. Gentleman and other Members are looking for on security of supply.

To sum up, I am confident that the changes that I have described will provide better capability at better value for money in such an important sector, ensuring that our armed forces are provided with the general munitions necessary for success on operations. The
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hon. Gentleman might not walk away with the assurances that he requires on the future of Bridgwater, but I hope that I have been able to allay some of his fears on the strategic level of security of supply.

I understand how the hon. Gentleman is standing up for his constituents and the work force, and he has also talked to the trade unions about the issue. If there are any other ways in which the Department can soften the blow in our commercial relationship with BAE Systems, we will do everything we can to help him and his constituents.

Question put and agreed to.

Adjourned accordingly at two minutes to Two o’clock.

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