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17 Oct 2007 : Column 260WH—continued

As my hon. Friend pointed out so well, the DESO decision was not a well thought out strategic change to the machinery of government. It was, as he said, a ham-fisted and poorly thought out decimation of four decades of outstanding success and service to UK Ltd.
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It was not only a bad decision, it was a rotten decision. It was taken to appease a number of factions. I understand it was done to appease a communist who works in the Treasury, and it was done in a thoroughly underhand and low way.

I understand that only nine days after the appearance of an advertisement in The Sunday Times for a new head of DESO, the permanent under-secretary at the Ministry of Defence was summoned to No. 10 to be told that DESO was to be closed. The permanent under-secretary then informed Sir Alan Garwood, the head of DESO, who informed his staff the next day. There was no consultation. Not even Sir John Rose, the chief executive of Rolls-Royce, or Mike Turner, the admirable chief executive of British Aerospace, were informed that the change was about to take place, let alone consulted about it. That is in keeping with the present Prime Minister. Indeed, it is my strong belief that the Secretary of State for Defence was not told. As you may know, Sir Nicholas, the Secretary of State was not even told that the Prime Minister was to make an announcement in Iraq about the return of 1,000 men, most of whom were already here.

As I said, the change was dressed up as an improvement to the machinery of government. If one can believe it, that change included a Government proposal to undergo a major reorganisation of the head office of the Ministry of Defence—which is to proceed at exactly the same time as they are prosecuting a war on two fronts. It is hardly surprising that parts of the Government should be held up to ridicule and contempt if they take their eye off the ball in order to reorganise head office at the same time as their men are fighting on two separate fronts. It is, indeed, an astonishing decision. It is living proof that this Government are not competent, open or accountable.

I ask the Minister to answer these questions today. Was the Secretary of State told before the decision was taken? Was he consulted in any way? Was Lord Drayson, Minister for Defence Equipment and Support, consulted? I want answers to those questions before the Minister finishes replying to the debate.

The point of DESO is this: it is an extremely efficient, effective and vigorous promoter of its operations, quite unlike the dud organisation into which it is to be broken up and shunted. I had the privilege, as did the right hon. Member for Warley (Mr. Spellar), who was a doughty defender of defence interests, to be Minister of State for the Armed Forces and to work alongside one of the great heads of DESO, Sir Charles Masefield. He was a truly remarkable man. His energy, commitment and effort, together with that of DESO, secured major international successes and commercial contracts for British companies of all sizes.

I strongly commend the words of my hon. Friend on the vital importance of the holistic approach that DESO took to the defence industry; it dealt not only with the great companies but with the small businesses struggling to make their way in overseas defence markets. I have the greatest admiration for DESO, especially for its success overseas in the interests of our country. It is one of the most effective organisations for the expansion of British commercial interests overseas.

DESO linked extremely well and very effectively with our embassies and attachés, and it had unrivalled knowledge of its markets—something that UKTI
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could not even begin to achieve. It took a seamless approach; everyone knew what DESO was doing. The staff of DESO attached to our embassies and high commissions were extremely good at developing those vital markets. The Government are quite unclear about whether the staff will be retained.

As I said, the decision was taken in order to appease a number of factions in the Labour party. One has to assume that those who initiated the decision are working for another power. They cannot be working in the interests of the United Kingdom. They appear to be determined, for that is what they will do, to undermine the commercial efforts of Britain in some of the most competitive and important markets for our commercial endeavour overseas.

I believe that the Select Committee on Defence should examine that grotesque decision, taking evidence from all the parties involved on how it came about, who was responsible, who initiated it and what were the thoughts behind it. Clearly, no strategic thought was given to the change. It is a terrible, dud decision, and my hon. Friends and I will continue, through parliamentary questions, debate and with freedom of information, to get to the bottom of the matter. We have little hope of hearing anything useful from the Minister. However, if he intends to remain an honourable member of the Government—I am sure that he is—he must answer openly and make the Government accountable for that decision, and tell us today how it came about, who took it, and what he believes the consequences to be.

I cannot believe that the Government can do such a stupid thing. DESO has been a great success for this country. As I said in the House last week, wilfully to undermine it, break it up and take it out of the Ministry of Defence, which has the back-up and the people to know what it is doing, and where it is linked into our defence diplomacy and export efforts, is a decision of bovine stupidity.

10.20 am

Dr. Julian Lewis (New Forest, East) (Con): When you introduced the debate, Sir Nicholas, you said, quite understandably, that this is one of a series of debates on defence that have rightly been occupying the House’s attention in recent days. If only that were true. It would have been true had the debate been held a few months ago, but as we can see from the Government’s representation here today, the Government do not regard the debate as one about defence at all. The Minister answering for them is not a Minister for defence, but for the Department whose title, I believe, is the Department for Business, Enterprise and Regulatory Reform, or DBERR for short. As I would understand it from any lexicon, the word “deburr” would mean something like “to take the rough edges off something”, which I am sure is what the Government have been trying to do by making this meretricious and indefensible move.

The significant aspect of the debate is not so much the difference between the opinion of every Opposition speaker, on the one hand, and on the other hand that of the Government and of the one speaker from the Labour Back Benches who so far has defended their move. What is significant is the debate that took place
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in a series of interventions on that one speaker, the hon. Member for Wolverhampton, South-East, by his right hon. Friend the Member for Warley (Mr. Spellar), who was a distinguished junior Defence Minister at the time when the Government were producing sensible documents such as the strategic defence review.

The Minister for Employment Relations and Postal Affairs (Mr. Pat McFadden): The hon. Gentleman might wish to correct his references to hon. Members. I am happy to defend all my own comments, but I am the Member for Wolverhampton, South-East. I believe that the hon. Gentleman was actually referring to my hon. Friend the Member for North-West Leicestershire (David Taylor).

Dr. Lewis: I am happy to acknowledge that error, and I only hope that that will not be the sum total of misapprehensions on which the Minister is able to correct this side of the House. His hon. Friend the Member for North-West Leicestershire (David Taylor) and his right hon. Friend the Member for Warley have between them absolutely encapsulated the reason for the change. Had DESO remained with the Ministry of Defence, we would not have seen the sort of concern and outrage that has resulted from what is purely a political gesture. As my hon. Friend the Member for Newbury (Mr. Benyon) said in his excellent opening speech, and as numbers of hon. Members have said since, that gesture is clearly meant to appease those people who object to the Serious Fraud Office having dropped the BAE Systems inquiry.

Mr. Soames: My hon. Friend really knows his stuff in this area and was a very distinguished shadow Minister. Is he aware that the head of DESO once told me that the former Prime Minister, the former Member for Sedgefield, was absolutely assiduous in helping the cause of British defence exports throughout his time in office, and was always prepared to help DESO in its overseas work in the greater interests of the United Kingdom’s commercial success?

Dr. Lewis: I can well believe that. Indeed, given that very commitment by the Prime Minister’s predecessor, the whole strategy of the present incumbent in seeking to distance himself from what he no doubt regards as the tainted legacy of his predecessor adds to an understanding of the reasoning behind the decision. One might think that the Government would be rather discomforted by the fact that, so far, only a single Member of the Labour Back Benches has spoken up for their decision, whereas every other speaker—not least my hon. Friend and former boss as shadow Secretary of State for Defence, the hon. Member for Mid-Sussex (Mr. Soames)—has excoriated it. It would be a mistake to think so, however. I am quite sure that every speech that points out the unjustifiable, indefensible and outrageous nature of this decision—both in its own right and in its execution—will enable the Government spin doctors to point to the Government’s critics and say, “You see, we have delivered. We have upset and outraged all those people whom you oppose because they believe in a strong defence industry and in strong defence exports.”

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David Taylor: I am most grateful to the hon. Gentleman for spelling out in his own terms the importance of the arms industry. Does he believe that the shock departure of the chief executive of BAE Systems yesterday was linked to the al-Yamamah deal, to which he referred earlier, or might it have been linked to other corruption inquiries in relation to the arms trade that involve BAE in South Africa, Tanzania, Chile and the Czech Republic?

Dr. Lewis: I would be astonished if there were such a link, and there is something that I have not quite understood, either from the tenor of the hon. Gentleman’s speech or from his interventions. Either he accepts that there is a role for a legitimate arms industry for export from this country, or he does not. He indicates that he does. We must therefore question the entire relevance of his speech—one that sought to minimise the importance of the industry—to the Government’s decision to move an efficient Government agency from the Ministry where it is most appropriately sited to a different one, where there is no experience and where effectively the Government will be starting from scratch in the representation of such an important industry.

I am not being party political when I say that it is emblematic of what has occurred that the Liberal Democrat party has not seen fit to send a Back Bencher, let alone a Front-Bench spokesman, to take part in the debate. No party would have been more in the vanguard of opposing the arms trade and calling for changes of this sort than the Liberal Democrats. However, they have got what they want, and they are now involved in their favourite spectator sport—from our point of view—of engaging in another round of leadership elections. Those elections are not due until some time near the end of the year. Are we therefore to expect a merciful release from Liberal Democrat contributions to all our debates between now and the end of the year, or is it simply that they are leaving this debate alone because they know that their objectives have been achieved in relation to arms exports and defence representation?

The point has been made repeatedly about the advertising of the post to head DESO only days before the announcement of DESO’s abolition. Yet this is the Government who entered office talking about joined-up Government. What we must remember is that, if the Government are dissatisfied with the uses to which exported arms may be put, it lies in their hands to lay down rules and regulations on countries to which arms are exported. As it is, we are seeing a sort of reversion to old style unilateralism. By emasculating the organisation, the Government are now saying, effectively, “Let’s leave it to other countries—countries that have more ethical foreign policies than us, such as France, the USA, China and, of course, such as our old friends the Russians.” Vladimir Putin has been pictured shaking hands with President Ahmadinejad of Iran on the front pages of today’s newspapers.

I believe that what has happened today is a gesture to certain parts of the old Labour constituency, and our reaction is enabling the Government to say, “You see, our gesture means something because you have upset the forces of darkness.” But they are not the forces of darkness, they are the forces that enable £5 billion a
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year of revenue to flow into this country’s economy and that are rightly regulated by the Government, who decide where arms exports can go. It is a sign that the habits, practices and indulgences of manipulation, spin and devious techniques did not die with the passing of Tony Blair as Prime Minister.

10.31 am

Mr. Ben Wallace (Lancaster and Wyre) (Con): I think that it is in order for me to declare that in my previous employment I worked for QinetiQ, which at that stage was the Government defence research authority. Indeed, I therefore have some shareholdings in defence companies, although they are too small to warrant an entry in the register.

Mr. Gerald Howarth: Shame.

Mr. Wallace: It is a shame, but there we are.

David Taylor: Would the hon. Gentleman confirm that QinetiQ was the company that was privatised and sold off in the most dubious fashion, which resulted in substantial profits for some of the key people in the know at the head of the organisation?

Mr. Wallace: I totally agree. I opposed the sell-off of QinetiQ, and I do not have any shares now—nor did I have any then—in the company. I do not believe that those massive pay-offs were worth it—no one warrants that. I agree with the hon. Gentleman on that point.

We all call it “arms” today, because it suits the Campaign Against Arms Trade to do so, but the British defence and aerospace industry goes much wider than arms. We do not make Kalashnikovs and all those things that we mainly see on the television. As a north-west MP, I am incredibly conscious of the weight and contribution that the defence industry gives to the UK economy. We make a whole range of things that, in today’s environment, mainly have dual uses. That is important.

My hon. Friend the Member for Newbury (Mr. Benyon) correctly pointed out that one of the reasons that we have an arms industry in this country is to spread the cost and to allow our armed forces to afford the best kit available. If we did not share the cost of those procurement cycles, we might not be able to afford them. That means sharing and selling to our allies. No one here says that we should sell weapons systems, or even defence systems, to our enemies or to people with whom we disagree.

The hon. Member for North-West Leicestershire (David Taylor) pointed out that BAE Systems sells more to America than to Britain. Well, that is not a surprise, as America is our biggest ally and also the biggest defence market in the world—shock, horror! People may have views about the Bush regime, but let us remember that it is not a regime—he is an elected President, and one with whom the hon. Gentleman’s Government went to war in Iraq. America is a perfectly acceptable ally for us today, in the past and in the future. I am very happy if British companies share their technology with American companies and American armed forces benefit from the protection that our defence industry can give them and vice versa. The Government have just placed an order for Mastiff
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vehicles to protect British armed forces in Iraq and Afghanistan from mines. That is an American company selling to Britain. I hope that no one objects to that, and nor should they.

The industry also allows us to keep a skills base. When I worked at QinetiQ, it employed 10,000 people across the United Kingdom. It was the biggest grouping of PhDs in Europe, and the biggest research technology organisation in Europe. In this day and age, when we are threatened by Chinese and Indian competition in the realm of technology development, to have an organisation such as QinetiQ, founded in the defence and aerospace industry, is a real asset to the UK. Before we push away what it does because it is founded on defence, we should think what such companies have contributed for our daily use. As I stand in this Chamber, I can see plasma screens, a QinetiQ invention that people daily queue up to buy from Currys or wherever else. The timing clock is a military LED invention. When I get e-mails from all those people in the Campaign Against Arms Trade, I like to remind them that the internet was invented by the Department of Defence in the United States—how nice that they can send e-mails, based on a military system. Perhaps that is why the Minister responsible for postal services is here—so that he can offer an ethical alternative for sending communications.

We should remember that the arms industry—the defence industry—gave us the jet engine and facilitates everything that we do today. People cannot merely say, “If we get rid of our arms trade, that will be fine.” Spin-off from the aerospace industry benefits United Kingdom citizens, the taxpayer and the Treasury. I find it totally ironic that the new Prime Minister is at the heart of the decision to abolish the Defence Export Services Organisation—the man who has always played to the chorus of Rosyth. I am an ex-MSP who represents a north-western English constituency, and my father is from Fife—in fact, he grew up in the Prime Minister’s town when the Prime Minister was the son of the manse, which anyone from Scotland knows is a far higher class than most people in Scottish society. This is the man who makes capital out of backing Rosyth and lives next to Raytheon in Glenrothes. In he comes, and to give some sop or make some easy decision, he abolishes DESO. I hope that the voters in Fife remember that that is what their Prime Minister has done. They did in the other seat in Dunfermline, which became, rather ironically, a Liberal Democrat gain. The Scots know a good thing when they see it, and I hope that they remember what the Prime Minister has done with DESO.

We should also remember about dual use technology. Yes, we have invented things, but today’s threat is not the Soviet Union—it could well be Russia or China in a few decades, but it is not now—but the terrorists on our street. When I was in QinetiQ, I personally worked on projects that are right now keeping us safe from suicide bombers. Most of what we do in defence today is about scanners, sensors and communications. It is not about firing the gun but about trying to anticipate the actions of our threats. As we speak, in this building, some—probably 99.9 per cent.—of the sensors that are being used were developed by the arms industry. Let us call it the arms industry, because we can take these people head on. Those sensors, developed in that industry, keep us safe in aeroplanes and on the streets.

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Smiths Group is an excellent company that is now equipping every single New York tube station with chemical and biological detectors to ensure that the population of New York is protected from weapons of mass destruction used by terrorists. If only our Mayor of London were clever enough to invest in such a system. That is a British invention, and I am proud that we supported it. We did so through DESO, which got those sales for us—something it is extremely good at. In my experience, I would go to an embassy, and DESO would know what it wanted. It would know the market and the customer. Let us remember that DESO was on the side of small business. It was not BAE Systems. Yes, it helped BAE Systems and everything else, but it also helped small companies in my constituency and in that of my hon. Friend the Member for Newbury by giving them the marketing infrastructure and international presence that they would not otherwise have had. Frankly, without that they would have been crushed by the likes of the American, German and French giants. If people are on the side of British defence, they should be on the side of DESO.

My hon. Friend the Member for Mid-Sussex (Mr. Soames) is absolutely right when he talks about the Department of Trade and Industry being a dud—we call it “deter trade international”. We used to go to the embassy, but we were lucky if the staff knew anything from their elbows, and when they did sort of know what was going on, their only response was, “Ring up your Business Link in your regional development agency.” That is the real game—keeping each other going: the RDAs keep the DTI going, and the DTI keeps the RDAs going. I spoke to a woman on the desk at Southampton—I wonder if she was the same communist who now has got a job in the Treasury—who did not even know where the Czech Republic was when I asked if she could help with a tender in that country.

We should be reversing this decision. It is an horrendous decision for a small, £16 million project. Not much in the Government works extremely well for £16 million, but DESO does. We should all recognise that not a single MOD Minister, nor probably a single DTI Minister—for its short remaining life span—supports this decision. However, the Prime Minister is at the heart of this. He can reverse the decision, and he must.

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