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I welcome the encouragement of improved supply chain management of the primes. BAE Systems is one example of improvement in that regard. Adopting a more paternalistic relationship than simply squeezing out every last penny is often a much more constructive and long-term approach. Given the passing of the
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Defence Diversification Agency, which had evolved into a body that supported small businesses, I would welcome an update on how the Government plan to support the engagement of small businesses in the defence sector. The national health service and the higher education sectors have specialist bodies that engage with small businesses and businesses in general, but what will happen in the defence sector?

Chris Ruane: Will the hon. Gentleman give way?

Willie Rennie: I am sorry, but I will not take any more interventions.

I understand that the UK may not have the capabilities to meet all our defence needs, but the defence industrial strategy adopts a tone of pessimism and defeatism. Sourcing on an international basis is healthy and will help to deliver value of money to the taxpayer, but the DIS appears to limit itself to exploring the existing capabilities rather than outlining what support and mechanisms can be provided to develop new ones. Our country’s economic strategy should be built firmly on skills, science, research and development, and innovation, yet the DIS includes little innovation and more conservatism.

I have visited the United States twice this year. On both occasions, we lobbied on the hill for the advancing of technology transfer. We had a difficult job in convincing some Congressmen that this did not mean the transfer of jobs to the UK but a partnership that would benefit the armed forces of both countries. I welcome the new treaty that has been signed and the scrutiny in the House. We must ensure that the US understands the importance of this matter to us as well as the benefit to it.

I hope that Rosyth will be a significant beneficiary of the announcement on aircraft carriers made just before the recess, which was well received in Fife. Rosyth will play an important role in the final commissioning of these massive structures, which will be the biggest and most complex construction projects ever on the Forth, even compared with the iconic Forth bridge. We are looking forward to the massive increase in employment in Fife. Babcock is expected to increase its employee numbers from about 1,200 to 1,800 and other companies will also seek to increase their numbers locally.

Many issues remain unresolved, some of which I wish to raise today. First, how do we ensure that local people—this point was made earlier by the hon. Member for Glasgow, South-West (Mr. Davidson)—are given the skills fully to exploit the opportunities ahead, so that the effects of this massive project are felt long after the carriers sail down the Forth? I fear that instead of training local people to take these jobs now, companies will simply rely on transitory employees from elsewhere who will move to the next job when this one is complete.

I am in favour of the free movement of people—I am a liberal—and regard it as healthy rather than as a threat, but I am interested in ensuring that Fife retains a skill base that could be developed and in Fifers being able to take advantage of the opportunities. We are talking not just about a couple of big ships that need to be built, but about a long-term development opportunity for Fife. What are the Government doing to ensure that
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companies are fully engaged with local colleges and enterprise companies so that longer-term skills development is planned?

Secondly, I have heard the Minister responsible for defence procurement talk about the possibility of other countries awarding more contracts to UK yards if we get the carriers built on time and within budget. What engagement has there been? After the construction of the carriers, the Type 45 destroyers, the military afloat reach and sustainability project—the feast—there will be a famine. If we simply rely on the MOD orders to fill the books, we will struggle. What plans are there to fill the order books for the yards so that it is not just a boom-and-bust situation for Scottish yards and others? What is the longer-term strategy?

Thirdly, has the relationship with France been developed in respect of the carriers? We have not heard much about this since the announcement made in July. If so, what will the nature of that relationship be? The hon. Member for Plymouth, Sutton (Linda Gilroy) mentioned the Babcock takeover of Devonport Management Ltd. Having been opponents over the Trident contract, it is good that Rosyth and Devonport are coming together in a constructive partnership. I am sure that they will work better together and will also be a counterbalance to BAE Systems in the shipbuilding and refit industry.

I wish to return to a point made earlier about the Public Accounts Committee. It found that the MOD’s 20 biggest weapons projects are £2.6 billion over budget and a total of 36 years behind schedule—that is six times longer than the second world war. Its report voices concerns about the massive scale of the cost overruns and delays and the MOD’s failure to hold staff to account when things go wrong. The report is obviously damning and gives little confidence in the MOD’s ability to manage these large projects. How has the Minister responded to this report, and what measures have he and the Department put in place to get things right?

7.58 pm

Robert Key (Salisbury) (Con): I apologise to the House, to the Minister for the Armed Forces and to my hon. Friend the Member for Woodspring (Dr. Fox) for missing most of the opening speeches. As the hon. Member for Plymouth, Sutton (Linda Gilroy) mentioned, she, the hon. Member for North Durham (Mr. Jones) and I were at a meeting to discuss coroners inquests and that is why we were delayed.

I decided to change the habit of a lifetime today by not concentrating on specific defence procurement issues that might affect my constituency and instead taking a broader view of defence procurement and why we need to do it at all. I should like to explain why, if I were Prime Minister, I would wish to double the defence budget over 10 years. Of course, that will not happen under any Government, but I should like to explain why we sometimes need to take a step back and think about why we have defence procurement at all. Is it a question of boys’ toys or something rather more serious?

During the summer, I attended the funeral of a distinguished former war correspondent from the second world war, latterly a great expert on Nelson, who was the author of more than 20 books. One of those books was drawn to my attention, and I read it during the
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recess. This remarkable book, which is called “East and West of Suez: the Retreat from Empire”, was written by Tom Pocock in 1986. It talks of the great days of the British Navy and the 1953 Spithead review. He talks about the celebrations that took place:

He then points out that there was a lot of fighting between the defence chiefs:

Some might say those were the days, but the only reason why those things happened was that the British public—the electors—knew that they needed such a scale of armament and those procurement programmes. We seem to have forgotten all that in the intervening years. We tend to think of high-intensity conflict as a very important subject, but we do not actually think of what is needed. After all, the traditional reasons for going to war have changed dramatically. We are not looking after territorial advantage now, or aiming for territorial expansion. We are not setting up new empires around the world. We are far more interested in acquiring armoured vehicles, guns or aircraft—platforms, as we must now call them—and systems to go with them because we are more interested in homeland defence and security. We are no longer concerned with the threat of invading armies; we are more interested in cyber warfare. Peace enforcement is a crucial part of the operation of the forces, as is guarding against terrorism, and deterring and defeating it.

However, there is also the matter of our country’s need for global trade and travel. That is what we have done for hundreds of years, it is a legacy of empire and Commonwealth, and it is very important today. Owing to the fact that 90 per cent. of our trade is carried out by ship, we need a long reach to protect that trade.

Chris Ruane: Will the hon. Gentleman give way?

Robert Key: No, I shall not give way at this stage.

We may no longer be quite so concerned with the Spratleys in the South China sea, and perhaps we should turn our attention more to the north-west passage and the implications for trade routes between China, Japan and Europe via the north of Canada resulting from climate change, and the international tensions that are building over that situation. However, we are talking about things that touch the lives of every citizen every day, but they do not realise it.

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There are 16 or 17 Members of Parliament present for this debate, because the Whips have decided that there is not much legislative business and, as usual, have popped in a defence debate. I am very grateful to them for allowing us to have such a debate—it does not happen very often—but the House should be packed on such an occasion and it is not. Whether we are talking about importing Fairtrade bananas from the Windward islands, fridges from China, television sets from Taiwan or cars from Japan, we are talking about the need for a global reach to defend our trade, our standing of living, our quality of life, our influence in the world and the British national interest. That is what is at stake, which is why we still need to procure such very expensive systems. It is why we shall continue for a long time—indeed, for ever—to need an Army, a Navy and an Air Force. There is much loose talk around to the effect that we will not need an Air Force when we have unmanned aerial vehicles. We will. We shall need expertise to operate those platforms whether they are manned or not, and we shall need the Navy because we must have global reach to protect our British interests and our alliances around the world.

We will need an Army, of course, to help in the defence of the homeland, but also to ensure that we can project our standards of life, our morality and our ethical stance in the world, and so that we can look after humanitarian aid and carry out peace enforcement and peacekeeping as well as high-intensity warfare when the need arises. If we can explain that to the taxpayer—indeed, if we could explain it to the Chancellor of the Exchequer, the shadow Chancellor and the 620 Members of Parliament who are not here—the defence budget might rise up the political agenda, and more people might share my view that, over a 10-year period, we should in the national interest double the defence budget.

The usual suspects from all parties are debating, with great expertise, the need to hold the Government to account on the issue of particular procurement programmes, but that misses the main point: in a democracy such as ours—an international country—that is at the cutting edge of military capability, we still need to persuade the taxpayer that procurement matters. For people to go to Tesco, the Navy, Army and the Air Force must ensure that all the products can get there and be safe once they do so. It is as simple as that. However, we do not make that effort.

The Defence Committee has spent six months going to all the major NATO countries—it is off to Georgia and Turkey next week—and they all say that the public are not prepared to pay. The American public are prepared. The British public pay for more than anyone else in Europe, but other nations apparently do not think that that is important. It is important, and we need to convince the taxpayer of that, not by obscure arguments about whether one version of FRES is better than another or about who will win the contract for the next big order, but in relation to where the national, personal and family interests lie in having the best equipment and the best conditions for armed services personnel. If we can argue the case in such a way, the British taxpayer will realise its relevance, and then the Chancellor of the Exchequer and the shadow Chancellor might agree that we should double the defence budget over a 10-year period.

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8.7 pm

Mr. Douglas Carswell (Harwich) (Con): It is a great privilege to follow the hon. Member for Salisbury (Robert Key), who spoke so eloquently. He dwelt on slightly bigger themes, and I shall try to make various points in a similar vein.

The UK spends £32 billion a year on defence— 2.5 per cent. of our GDP. That might be half the proportion of the mid-1980s, but in gross terms it is the fifth highest such spend in the world. It should be enough to maintain a substantial force, but we struggle. Our defence procurement system is not good at turning tax pounds into the equipment our armed forces need. Bluntly, the UK’s defence procurement budget is spent more in the interests of a few privileged defence contractors than it is in the interests of our armed forces. An ineffective Ministry of Defence pays wildly high prices for kit that it suits the contractor to provide. The MOD pays double, or even triple the price, for what are often inferior products. I could talk at length about the catalogue of incompetence, but I shall confine my comments to helicopter procurement.

Sensibly, a decision was made to buy Apache helicopters, which are a good piece of American kit. However, in order to preserve jobs, or perhaps award large contracts to privileged suppliers, it was decided to assemble them in the UK. The cost of that protectionism has been vast, and is still being paid in Afghanistan today. Our UK-assembled Apaches cost approximately £40 million each—three times what the Israelis paid for theirs. Worse, by not buying directly off the shelf, we have ensured that only a handful of Apaches can serve in Helmand. Parts from the unused fleet in the west country are being cannibalised to keep our few Apaches in Helmand airborne. If we had bought directly from Boeing, we would have more Apaches—more of those decisive, battle-winning weapons—in Afghanistan.

I say to those who perceive defence procurement as an exercise in job creation rather than war winning that, if we had bought directly from Boeing, we could have given the 755 employees of Agusta £1 million each and still saved £1 billion. As a job preservation scheme, such protectionism was ludicrous.

Protectionism also explains why our armed forces do not have enough transport helicopters. The Ministry of Defence placed a £1 billion order for the new Lynx at £14 million each. The problem is that they will not be ready for several years. When I was at the air base in Kandahar, I saw an ancient, grounded Lynx, which the new Lynx is supposed to replace. It was designed for the cold war and is simply not operating in Afghanistan as it should. Next to it, I saw row after row of unused United States Black Hawks. They would cost only £6 million each and could be available in months if only we were not so protectionist. Thanks to the Ministry of Defence, we spend twice as much on buying an inferior helicopter, which will not be available for years, from an Italian company. Similar points could be made about Merlin and the Chinook.

Not only the taxpayer pays the price for that decision. In Iraq and Afghanistan, helicopters save lives. Every helicopter means fewer road journeys, fewer targets for improvised explosive devices, fewer bombed and broken troop carriers and fewer casualties. We pay a high price for the protectionist defence procurement policy.

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Thanks to our relationship with Finmeccanica, we do not have enough helicopters. When Brigadier Ed Butler arrived back from Afghanistan, he was asked what piece of equipment he most needed. “Helicopters”, he said. I do not recall his specifying that they had to be built by Finmeccanica.

The defence industrial strategy claims to be about providing the armed forces with the equipment that they require on time, and at best value for money for the taxpayer, but saying it does not make it so. The defence industrial strategy is based on the flawed premise that we need sovereignty of supply. That is lobbyist speak for, “The defence procurement budget must go to a privileged few.” Sovereignty of supply is a superficially attractive argument, but it is idiotic, not patriotic.

The premise is flawed because one simply cannot buy an exclusively British jet fighter, helicopter or missile; such equipment is too sophisticated. Sovereignty of supply is an argument for protectionism. One might as well argue that the UK needs self-sufficiency in food production. Doubtless it could be done with a massive protectionist effort. Doubtless a case could be made that, if we did not become self-sufficient, we could be starved out. However, most people recognise that that does not wash. For centuries, we have imported food—and provisions for our armed forces.

In what sense are the privileged few companies from which we are obliged to buy our defence kit British? Is Finmeccanica, maker of the new Lynx, British? Now that BAE has sold off Airbus, in what sense does awarding Airbus the £2.5 billion contract to deliver the A400M transport planes preserve British jobs? With so many contracts outside the UK, why continue to treat BAE as a British company?

The sovereignty of supply argument is about preserving the privileged status of a tiny handful of defence contractors. The defence industrial strategy is about maintaining a guarantee that some contractors will have a permanent income stream from British taxpayers. It is no surprise that the biggest supporter of the defence industrial strategy is BAE.

Protectionism and the defence industrial strategy are wrong not because other companies cannot get a fair crack at supplying business but because our armed forces do not get the equipment that they need when they need it. It is not patriotic, but idiotic.

The farce continues because there is no effective accountability for defence procurement. As an aspect of public policy, it is no longer settled by those whom we can elect at the ballot box. Regardless of which Member of Parliament is the departmental mouthpiece, the defence contractors get the contracts that they want and our armed forces do not get the kit that they need. Civil servants escape censure for monumental inefficiencies; the Member of Parliament who happens to serve as the departmental mouthpiece loyally and faithfully recites the line that Sir Humphrey gives him. Remote officials make the decisions and our armed forces take the rap. No one is accountable and no one is sacked. That is how our defence procurement works today.

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