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This is the first defence procurement debate that we have had since the man who was probably our last ever Minister for Defence Procurement resigned in order to
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take up other challenges. We do hope that he wins the race. [Interruption.] We are talking about Le Mans in this instance.

I think it right to pay tribute to the work of Lord Drayson. He brought great industrial knowledge and skill to his job, and I believe that industry recognised that he proved to be of great benefit to defence in general and to the country. His replacement, Lady Taylor—she is a great friend of mine, having been Chief Whip at the same time as me—brings great political skill to her job. It will be very beneficial to bring together those two skills. We hope that a degree of progress will be made by the Ministry of Defence once some steps have been taken in the work of procurement.

Mr. Kevan Jones: When the permanent secretary gave evidence to the Defence Committee, I predicted that the defence industrial strategy and the tempo of change in the procurement process would not survive the departure of Lord Drayson. Does the hon. Gentleman agree that that prediction has come true?

Mr. Arbuthnot: Yes. In fact, I was about to say something about the defence industrial strategy. The original strategy provided the vision that, for the first time ever, the Ministry of Defence would set out what the United Kingdom defence industry was going to do, what it was not going to do, where it should be developing its investments and what it should be planning for the future. The budget was to be clear, which is why the Chief Secretary to the Treasury was signed up to the strategy. Then Lord Drayson left and the premiership changed—although not in that order—and seemed to break down. In November last year, we were told that “Defence Industrial Strategy 2”, which we had expected to be published before the end of last year, had to be delayed for a few months until the 2008 planning round.

It seemed sensible—and industry seemed generally to support it—for the planning round to inform precisely where the defence industrial strategy was going. Unfortunately, the planning round itself seemed to run into the sand. I was delighted to hear today, for the first time, that it has actually finished, although I am not entirely sure what has come out of it. It seems that we are now looking forward to some sort of review that will go into the 2009 planning round. We are told that it will be published some time in the next few months, but we were told that about “Defence Industrial Strategy 2” last year.

Where is industry in all of this? It seems to have had the dialogue it had with Lord Drayson under the defence industrial strategy completely cut off. There seems to have been virtually no dialogue, so how can the industry decide where it is to invest and where things are going? There seems to be a sense that industry does not know what is happening because no one else does either. It is worrying that a sense of paralysis is coming from the MOD, and it is caused, frankly, by a budget that is so tight, given the level of operations we are facing, that things are beginning to break.

My hon. Friend the Member for Aldershot (Mr. Howarth) spoke about the Defence Export Services Organisation. When I was the Minister for Defence Procurement, making all these mistakes that have been referred to from the other side of the House, I found that DESO was an absolutely outstanding organisation.
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It did really good work for this country and provided a link between the uniformed personnel, the industry and the MOD that was really valuable overseas. If the transfer of DESO to the Department for Business, Enterprise and Regulatory Reform breaks that beneficial link, it will be a tragedy. I believe it probably will, frankly. I was delighted that my hon. Friend said that a future Conservative Government would reverse that policy.

After all this muddle over the planning rounds, we have had a succession of different announcements. They do not seem to have been informed by any particular strategy on procurement, but we have had a welcome announcement on the future strategic tanker aircraft. The manufacturers seemed a bit surprised that we were buying that capability in the way we were, implying to the Defence Committee that it was probably a rather expensive and time-consuming way of achieving something that the Australians seemed to have achieved in a far shorter time scale. Nevertheless, the FSTA is a welcome renewal of a capability that we definitely need.

I am delighted that we are closer to having some clarity on the carriers. Industry in this country will be pretty pleased that it has been announced that a contract will be signed. I understand that the contract for the carriers will be signed once the new ship company has had all the shareholder consultation that is necessary. I hope we have some clarity by the end of July.

The trouble with the carrier decision is that it initially came out of the strategic defence review at the end of the 1990s, which was based on a surface fleet that was going to be much larger than our current surface fleet. It will now take such a high proportion of the defence budget that many people—Sir Michael Quinlan wrote an article in the Financial Times in February—will wonder whether this capability should be provided in a different way. These are questions that need to be considered and answered. The point about the Type 45s being reduced to six is a worrying one. It does not look as though Britain, as a maritime power, will have the footprint—if that is an appropriate thing to talk of in maritime terms—around the world with the number of ships we need. There is a definite quality in quantity.

The hon. Member for North Devon (Nick Harvey) said that perhaps the Government had made the right decision, and that we need more ships but they may not need to be Type 45s. However, it seems to me that the decisions we are taking reduce the number of ships that we have, and therefore the influence and reach of the Royal Navy, in a way that is potentially devastating to the influence of this country.

I would like to know how many joint strike fighters—the things to go on the aircraft carriers—we are going to get. The initial announcement was that we were going to get up to 150 joint strike fighters. All in this House know what “up to” means; it means “fewer than”. Thus we will get fewer than 150 joint strike fighters, and I understand that each aircraft carrier will be able to take 36 of them. The Ministry of Defence has just told the Defence Committee that there was never any intention to deploy two aircraft carriers with a full complement of joint strike fighters at the same time, and I do not know what consequences that statement will have.

Nevertheless, this will be a very capable aircraft. When I originally saw the proposals for the aircraft, I was very enthusiastic about it, partly because it would
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give us access to new technology, particularly on stealth matters, and partly because each aircraft was going to cost only $33 million. The price seems to have gone up a bit since then, and there seems to have been a bit of difficulty with the international traffic in arms regulations—ITAR—as to whether we get access to the new technology.

Mr. Michael Jack (Fylde) (Con): My right hon. Friend expresses a doubt about the number of the aircraft. From his standpoint on the Defence Committee, is he convinced on two grounds—the question of the exchange of classified information and the maturity of the test-flight programme for the short take-off and vertical landing version of this aircraft—that a decision on a commitment on numbers could yet be made?

Mr. Arbuthnot: No, I am not convinced that a decision on a number of aircraft could yet be made. Nevertheless, it would be helpful to have a rather better indication than the current one of somewhere between 36 and 150. Essentially, the defence of this country has to be based on what we need to defend ourselves. We have been told by the Ministry of Defence that this decision will be taken on the basis of what we can afford. That obviously must be a very serious consideration in this decision, but the first duty of Government is to be able to defend the country, and that will require a suitable number of joint strike fighters.

The future rapid effect system—FRES—used to be more than just a vehicle acquisition programme, but that is what it seems to have become. As a vehicle acquisition programme, I believe it to be this country’s most important procurement, because the armed forces are in constant contact with the enemy on the ground and they need proper protection. When our forces are dying because of roadside bombs when we have the capability to protect them better, we ought not to hold that procurement up by bureaucratic delay.

I believe we were told last summer, at the trials of truth, that a decision would be made in November that there would be a downselect. In November, there was a downselect from three vehicles to three vehicles. That struck me as slightly strange, but we were also told at the same time that the downselect of the utility vehicle would be combined with the selector of the utility vehicle integrator. That has not happened. Therefore, the design of the vehicle is ploughing ahead somewhat strangely as no one knows who the integrator might be.

Mr. Kevan Jones: Does the right hon. Gentleman agree that the delay is convenient for the Ministry of Defence? Irrespective of what it tells me in parliamentary answers, the Mastiff and other vehicles that have been purchased are part of the FRES family. They are being pushed further back to manage the commitment programme.

Mr. Arbuthnot: I agree, but I do not know whether that is convenient for the MOD or whether it is confused on the issue. Baroness Taylor has told the Defence Committee that the Mastiffs are not part of the FRES programme, but surely they have to tie into that programme, in some definable and predictable way, so that we know how they react with each other.

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Mr. Jones: The right hon. Gentleman and I attended the trials of truth when Lord Drayson said, in response to a question I asked him, where Mastiff and the other vehicles fitted in. We were told then that they were part of the FRES family, so something has clearly changed since the departure of Lord Drayson.

Mr. Arbuthnot: Yes, indeed, and we need to have some answers to those questions. No doubt Baroness Taylor will give us some answers to those questions, but we need to ask them. The programme is important and I wish we could have more clarity about when we will get those vehicles.

Mark Pritchard: Obviously the decision on Piranha V from General Dynamics has been made, but my right hon. Friend is right to make the point about the vehicle integrator programme. Is he aware that BAE Land Systems in my constituency, which employs several hundred people, is keen to hear as early as possible who will be picked for that integrator programme, as it could well be that company?

Mr. Arbuthnot: I am aware of that. BAE Land Systems is not alone in being very keen to discover who will be picked, because I am, and I am sure that the rest of the House is, too—

Mike Penning: So are the soldiers.

Mr. Arbuthnot: Let us never forget that. It is the soldiers who need to be protected. What they are doing in Afghanistan and Iraq, they are doing for us—not for politicians but for this country and the stability of the world. We should pay them a great tribute for that.

I echo what the Minister said at the beginning about the success of urgent operational requirements. These have been very successful. There is always the question of how, when some equipment comes into the MOD’s inventory as the result of a UOR, the subsequent maintenance costs will be paid for. Will they continue to be paid from the contingency reserve?

I also echo the words of the hon. Member for North Devon who said that the Future Lynx was an urgent matter. We are generally short of helicopters. I hope that Ministers will be able to provide more details once they have read the report of this debate, but it looks as though the number of helicopters owned by this country will be dramatically reduced over the next 10 to 15 years. However, this is the time when the number should be dramatically increased. Because of the roadside bombs and other threats in Afghanistan, it will be necessary for more work to be done by helicopter as opposed to by vehicle, so we need more helicopters.

In that connection, I want to comment on the partnering arrangements, which seem to have worked very well, between the Ministry of Defence and Finmeccanica. They are a mechanism whereby the MOD can save a lot of money and can introduce the integrated operational systems that will really help it as well as bring in some of the industrial skills that it desperately needs. I hope that we can hear more about where partnering is going. It seems to have worked in the helicopter division and it ought to work in other divisions, too.

On individual programmes, when a coroner makes strong remarks such as those that the coroner made recently on the tragic Nimrod crash, the whole country
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wants answers to the questions about whether those aircraft are airworthy. I am sure that there are answers to those questions, and we want them to be given so that the public can have confidence in what our men and women who are still flying those aircraft are doing.

I turn now to the method of procurement. The threats that we face change constantly. There is no point in our trying to decide 15 years beforehand what needs to be the answer to a question that we do not yet fully understand. We need a series of platforms that are flexible and have the connections to allow us to evolve them. We need a procurement system that allows for precisely that change in procurement. In order to achieve that procurement system, we need personnel in the MOD who are well trained and have the commercial and industrial skills and the commitment to different programmes to deliver those procurements.

We know that there will be a vast reduction in the number of people at Abbey Wood. We also know, because we have been told, that because of the operational tempo many of the people at Abbey Wood cannot be sent out for the training that they desperately need on current procurements. That strikes the Defence Committee as seriously short-sighted. The operational tempo should not mean that people are not trained to do properly the jobs that they need to do. That training should be absolutely essential in getting that important work done.

Finally, we need skills not merely in the MOD but in the industry and the country as a whole. Unless we improve our science base in this country, and unless we can commit some of that science base to the sort of research that QinetiQ has been telling us leads to battle-winning capability, we will not have that capability. If we do not have that, we will be in real trouble.

4.33 pm

Mr. David Crausby (Bolton, North-East) (Lab): Of course our forces are entitled to the best equipment. That could not be more graphically demonstrated than by the loss of so many of our brave young people this week. That equipment should be purchased, and at the right price. It should deliver security of supply and, above all, be dependable. The safety of our forces is paramount and value for money is vital, but I am obliged to say that in the main and in the long-term the most secure and dependable supply is a local supply manufactured and delivered by the UK for the UK and in the UK. I completely accept that urgent operational requirements and international co-operation are separate matters, but in the long term, in the main, we should buy British.

The Government Front-Bench team may be a little tired of hearing from my hon. Friend the Member for Chorley (Mr. Hoyle) about the cut-and-sew contract to supply our soldiers’ uniforms. He is absolutely right to complain about the way in which British jobs were sold out when we allowed our uniforms to be manufactured abroad. The contract was placed with a company in Northern Ireland that immediately transferred production to China. That five-year contract is coming up for renewal, and I sincerely hope that we will soon see an end to the scandal of British soldiers wearing uniforms made by one of our commercial and military rivals.

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Ridiculously, British soldiers wearing uniforms made in China are working alongside Afghan army soldiers, who enjoy the luxury of having their uniforms tailored in Lancashire. Does anyone really believe that the Chinese or the Russians would dress their soldiers in Lancashire cotton? I do not. It would be funny if it was not so sad. All that we ask is that when the Ministry of Defence lets the contract again, we ensure that the product is produced in Britain, or at the very least in Europe, and that we are not in the appalling situation of supplying our troops with inferior kit that then has to be repaired in Britain.

The aerospace industry also profits greatly from Lancashire. The British aircraft and aerospace industry is second in size only to America’s, and it is a significant driver of economic growth and productivity. We should be enormously proud of it, and we must make certain that we look after it, not just because of the jobs involved, but in the interests of our military sovereignty. We have been able to maintain our position as the world’s second largest defence supplier, and so we should. After all, we are the world’s second largest defence importer. The British defence industrial base has a proud, successful history, but the smart trick will be to ensure that we have a long, successful future.

We choose to spend more of our taxpayers’ money on defence than many of our European partners, and we are right to do so. I hear all the talk about co-operation with our allies, but the first step towards that co-operation is for our allies in NATO to start spending the same amount of gross domestic product on defence as we do, and to be as prepared to put their soldiers and service people in harm’s way as we are. Britain has the most open market in the world, and that, no doubt, drives down costs and improves the quality of our defence-related products. We must ensure that our willingness to allow access to our markets does not result in the decimation of British jobs or loss of essential skills and British intellectual property.

Mr. Kevan Jones: Does my hon. Friend agree that the policy of an open defence market has also led to significant investment in the UK from Thales, Finmeccanica and others? That has helped to support and perhaps grow our defence industry.

Mr. Crausby: Absolutely; valuable contributions have been made. My concern is not so much about international ownership as about British production. From a defence point of view, as long as manufacturers are prepared to produce products using British workers, and to keep that under British control, I am happy. We must ensure, however, that such openness is not a door that opens only one way. Too often that is the case, certainly as far as the Americans and many of our European partners are concerned. We are, as my hon. Friend described, privileged to be involved with some first-class international aerospace co-operation programmes: the joint strike fighter, the Eurofighter Typhoon and the A400M, for example. They are first-class products and we must take full advantage of them.

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