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Lord McIntosh of Haringey: My Lords, I am in some difficulty because, in referring back to Amendment No. 2, the noble Lord, Lord Lucas, neglected to speak to his Amendment No. 5. For that reason, I shall need to return to briefing notes on Amendment No. 2 which I had already discarded when it was not moved. I am, however, happy to do that. But before I do so, perhaps I may say a few words about the question of whether Clause 7 is too restrictive, which was debated at some length in Grand Committee. I should like to make some general remarks about how the Bill deals with electronic signatures.

Various organisations have asked the Government to consider whether Clause 7 is drafted too restrictively and could have the effect of excluding certain certificates and certain kinds of signature from admissibility. The first point to make--this is relevant to both Amendments Nos. 2 and 5--is that Clause 7 is not intended to prevent anything being admissible in evidence. In the Government's view, it does not have that effect.

The Government's intention is that the clause should apply to a wide category of electronic things so that the courts are able to receive evidence of them and give that evidence the weight it should properly bear. The clause states what is meant by an electronic signature and its certification. Each of these terms is given a pretty wide meaning. The meaning given to the term "electronic signature" is along the same lines as that given in the European Community's Electronic Signatures Directive; it is not identical, but the Bill's definition is, if anything, wider.

The meaning given for "certify" and, by implication, "certification" is wider than is the definition of "certificate" in the directive. Noble Lords will be aware that Clause 7(3) has already been amended in another place to widen the concept of certification in the Bill. In particular, a certificate does not have to be seen in isolation. In considering whether the subject matter of a certificate is a valid means of establishing authenticity or integrity--for example, when a witness is required to confirm an electronic signature--other factors may be considered as well.

The Government have been asked whether the only certificates which are admissible are those which say, for example, "I confirm that this signature belongs to Andrew McIntosh", or "I confirm that this means of producing signatures is a valid means of establishing the authenticity of the communication". The answer is "No". Subsection (3) of Clause 7 is so drafted that it makes admissible a statement which needs to be added to other evidence to establish authenticity or integrity. For example, the signature service provider might

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make a general statement in his literature that certificates bearing his logo were a valid means of establishing authenticity.

In drafting Clause 7, the Government have aimed at being as inclusive as possible. We have not invented the terms "electronic signature" or "certification"; these terms were already in use within the industry. The Government's approach has been to avoid focusing too much on the labels "signature" or "certificate". It is immaterial what the parties call the thing; what is important is to look at the function it performs. The functions described in Clause 7 are very wide indeed.

Perhaps I may now return to the issues raised by the noble Lord, Lord Lucas, and the noble Baroness, Lady Buscombe, in relation to Amendment No. 2, which states:

    "The Secretary of State may make provision for the recognition of approvals granted under compatible registration procedures in other jurisdictions where he has agreed to recognise such procedures".

The point that we seek to make here is that we do not think that, at this stage, bilateral recognition is the right way to move forward. Clearly, advances in electronic signatures and certification are taking place all over the world. The noble Lord, Lord Lucas, mentioned the United States, but we must also consider the European Union and many other regions which are advancing in this area--although we rather think that we are ahead of the game.

Article 7 of the EU directive contemplates three ways in which the certificates from outside the Union may be recognised. Perhaps I may take certificates from outside the Union as exemplars of the international trade consequences of what we are discussing. The first is by a provider in a third country being accredited by a scheme in a member state. The second is by an EU provider guaranteeing the quality of the certificate from a third country provider. The third is through bilateral or EU-level arrangements with third countries. It is the third, the bilateral proposal that was made in Amendment No. 2.

We do not believe that the bilateral approach will be the most common route. We believe that the first and second routes will be the most common, and that this is a market where industry and international standards bodies are increasingly driving the process. There was a debate about UNCITRAL in Grand Committee.

Overseas providers can choose whether or not to seek UK approval. There is nothing to stop them doing so if they believe that UK approval will give them higher status in the market-place. Equally, if they believe that overseas approval gives them the status that they need, there is nothing to stop them trading in the UK on that basis. Since overseas providers will have a choice, we are not imposing a burden on them or on us. We are not requiring anyone to go in for approval procedures which are in advance of their particular needs. What we are doing is providing the basic requirement of all of these provisions; namely, that in law there is a possibility of the recognition, if the courts agree it, of an electronic signature and certification.

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This is an occasion where I believe that we are giving the lead in encouraging the market for electronic communications to grow without being over-prescriptive. I fear that the amendments would indeed be over-prescriptive.

Lord Lucas: My Lords, I am grateful to the noble Lord for his explanation, which I shall read with interest. For the present, I beg leave to withdraw the amendment.

Amendment, by leave withdrawn.

Defence Procurement

3.41 p.m.

The Minister of State, Ministry of Defence (Baroness Symons of Vernham Dean): My Lords, with the leave of the House, I should like to repeat a Statement on defence procurement that has been made in another place by my right honourable friend the Secretary of State for Defence. The Statement is as follows:

    "With permission, Madam Speaker, I would like to make a Statement on two significant defence procurement decisions. I would like to announce our decision on a new beyond visual range air-to-air missile to arm the Eurofighter, and on delivering the major enhancements to our strategic airlift capability promised in the Strategic Defence Review

    "This Government are committed to the modernisation of our Armed Forces. We are determined to deliver improvements in defence capability, to underpin long-term security and to ensure that Britain can act as a real force for good in the world. Our Armed Forces deserve the best equipment. We are committed to ensuring that they have the best equipment. But we are also committed to doing this in a way which is cost-effective and the best value for taxpayers' money. Smart procurement means making every pound count.

    "We are also aware of the wider context. The procurement package we have selected is clear evidence for our partners on both sides of the Atlantic of our strong commitment to enhance European defence capabilities. NATO's effectiveness depends on continuing technological improvement and on equitable burden sharing. The European Defence Initiative lies at the heart of this, for the good of Europe, the transatlantic alliance and the international community as a whole.

    "The beyond visual range air-to-air missile is a vital component of the Eurofighter's ability to dominate the skies. It promises to be a highly accurate, highly manoeuvrable missile that will significantly improve Eurofighter's 'no-escape' zone, and hence will ensure that this world-class aircraft can combat all projected air threats. It will make a major contribution to the air superiority requirements of the United Kingdom and coalition partners, including NATO operations. Our priority is to sustain Eurofighter's superior capability as far as possible into its service life, which will extend well

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    towards the middle of the century. We have to secure the highest performance, at best overall value for the taxpayer

    "We have had the advantage of a strong competition with high-quality bids from Matra BAe Dynamics and Raytheon Systems Limited. The competition has been keenly fought, and many honourable Members have written to me and to other Ministers.

    "After a thorough, indeed exhaustive, process we have concluded that the Meteor missile offered by Matra BAe Dynamics and its consortium is likely to best meet our needs over the life of the Eurofighter aircraft. The overall performance promised by Meteor will ensure that Eurofighter is equipped with the best weapon possible and will deliver the air superiority that is central to success in military operations.

    "Meteor is a collaborative venture with Germany, Italy, Spain--our Eurofighter partners--France and, we hope, Sweden. We now plan to conclude a memorandum of understanding with those European partners by the end of the year, formally committing us all to this programme. Subject also to agreement of satisfactory terms and conditions with Matra BAE Dynamics, we will award a contract as soon as possible.

    "This will be a Smart contract. Tightly defined breakpoints in the contract will be linked to flight tests and other demonstrable achievements. These will focus on, first, the ram-jet motor, then guidance systems, and finally data-links and electronic counter-measures. Specific dates will be attached to each.

    "These breakpoints will be auditable and capable of external independent evaluation. If these are not delivered, the contract will be terminated by the partner nations which will recover all development costs from the contractor.

    "Meteor is expected to enter service with the RAF in the latter half of this decade. Meanwhile, we intend to buy more of the currently highly capable advanced medium-range air-to-air missile, produced by Raytheon, to equip Eurofighter when it first comes into service.

    "Our decision will give the RAF the most advanced air-to-air missile in the world. It will be welcome to our European partners. It will also be welcomed by our US allies as a clear indication of our commitment to a strong defence capability, available for all operations in which the United Kingdom might be involved.

    "Industry in the United Kingdom will also welcome this decision. Matra BAe estimates that it will create or sustain some 1,200 jobs in the UK, including at Stevenage, Bristol and Stanmore. Many of these will be high-quality jobs in new technology, and in system and software design. The United Kingdom will lead this major project.

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    "I turn now to our strategic airlift requirements. Improving the mobility and deployability of our forces was a key theme of the Strategic Defence Review. Events in the Balkans and, more recently, Mozambique and Sierra Leone, have underlined the high priority of increasing our strategic airlift capability. Both NATO's Defence Capabilities Initiative, and the Headline Goal adopted at the Helsinki European Council, identify this capability as one in which Europeans need to make particular improvements.

    "We have explored a number of possible avenues to meet our immediate needs as well as the longer-term requirement. After careful consideration, we have determined that the best short to medium-term solution is a lease of four C-17 Globemaster aircraft from the Boeing company. They will begin the first of several years of service with the RAF from the middle of next year. These flexible, capable aircraft will deliver vital, early support to our new Joint Rapid Reaction Forces. They will also make a crucial contribution to improving the aircraft capabilities available for NATO and European operations and to inter-operability with the United States.

    "Beyond this short-term lease, we have now decided that our heavy lift needs from the latter part of this decade onwards would be best met by the A400M aircraft from Airbus Military Company.

    "This promises to be a superb aircraft--a new design that is specifically tailored to meet our military requirement. Moreover, the A400M should offer an extremely flexible capability, covering both the tactical and strategic roles. It offers scope for a multi-national support package and substantial through-life cost savings.

    "At this point, our commitment to A400M is necessarily conditional, in that it is based on assumptions that are dependent both on our potential partners and on Airbus--on their commitments to sufficient numbers of aircraft at launch and the establishment of a viable programme.

    "We hope that we can sign a contract for the A400M urgently but this must be based on realistic figures for purchase. All countries must balance the size of firm commitments against other priorities for defence equipment. The United Kingdom will order 25 aircraft in the A400M initial launch. This is sufficient to build a viable programme, while safeguarding our industrial interests. We look forward to other partners following our lead so together we may confirm the launch order as soon as possible.

    "But affordability will also rest on confirmation of unit prices at the level offered by Airbus, commitment to the in-service date we require and satisfactory negotiation of commercial terms and conditions. Programme launch and contract placement must also be achieved within a reasonable timeframe.

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    "This is a Smart process too. We shall hold European industry to its promises.

    "If Airbus cannot offer us and our partners an affordable and manageable programme on this basis, we shall be able to meet our military requirement and protect the taxpayers' interests by purchasing a fleet of Boeing C-17 aircraft as an alternative.

    "But we do look forward to success in this exciting and innovative programme.

    "A400M will offer great benefits to the United Kingdom. BAe Systems expects the programme to create directly 3,400 long-term, high-skill, high-wage jobs--in particular at its sites at Filton, Broughton and Prestwick--with indirect employment taking this figure to over 10,000.

    "Our industry will be at the forefront of developments in the aircraft's new technology, including a carbon composite and metallic hybrid wing and a new propulsion system. The project will strengthen the European aerospace industry and will complement the world-leading wing capabilities of British industry that we support through the major investment we have recently announced for the development of the A3XX.

    "A vital and technologically innovative element of the A400M will be its engines. Airbus Military as prime contractor will be responsible for selecting the best power plant so that the aircraft will meet its commitments to the partner nations on performance and price. However, we shall make sure that in its decision Airbus Military takes full account of the merits of the likely proposal from Rolls-Royce and the undeniable quality of its products.

    "These procurement decisions are of great importance to our Armed Forces and our defence capability for several decades to come. They deliver on our promises in the Strategic Defence Review; they make a significant contribution to Europe's defence capabilities; and they are good news for British industry and jobs.

    "I commend them to the House".

My Lords, that concludes the Statement.

3.53 p.m.

Lord Burnham: My Lords, I thank the noble Baroness most warmly for repeating the Statement by her right honourable friend, which will be very much welcomed by your Lordships. I only hope that by now her right honourable friend has released the journalists who have been locked in an office unable, without their telephones, to ring their bookmakers since 2.45.

We must give our warmest congratulations to British Aerospace on the decision that has been made. It is, however, necessary to ask the Government what took them so long. This suggests a degree of in-fighting among various departments. The decision will be welcomed universally by those parts of the Armed Forces which will operate the equipment. But I hope that today's decision does not turn into tomorrow's

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problem. Meteor is in the design stage and is still a concept that has not been tested or proved. That is recognised by the short-term approval of the Raytheon BVRAAM. Is the Secretary of State buying an unproven missile at twice the cost for good European reasons? Unlike the American missile, this is untried technology.

I should be grateful if the Minister could put on record the cost and in-service date of the Meteor missile. What considerations other than cost were taken into consideration in the decision? What guarantees are there that other European countries will commit themselves? If they do not back it, or the project is unsustainable for any reason, will the United Kingdom be left without a beyond visual range missile for the Eurofighter? What is the fallback situation? If the in-service date is unsatisfactory what will the Government do? Having said that, we welcome the decision.

With regard to heavy lift capability, will the Government put on record the number of C-17s that they intend eventually to lease, and the cost? Is there an option to buy these aircraft? Most important of all, what is the effect of the decision to lease the C-17s on the production of the A400M? Surely, when crews become used to C-17s they will be reluctant to change even to a more advanced aircraft. It may be a wrong decision to have three different heavy lift aircraft in commission, or will the C-130Js be retired early? With three systems, one needs back-up, spares and everything else, which inevitably lead to an increase in the cost and complication of the whole exercise. What is the future of the A400M? It cannot be good; it looks like another Rover, ro-ro ferry or Ford.

How committed are other countries to heavy lift aircraft, and what is the critical mass in terms of numbers? The possible plan that has been quoted involves 195. However, that puts the United Kingdom's requirement at 45. The Secretary of State has announced today the figure of 25. Is 195 an accurate figure? What is the breakeven point for the A400M? Even on the basis of 195, there appears to be a reduction in the number of orders from Germany and Italy in particular. Do we have assurances from those countries and others that they wish to proceed with the A400M? The United States is to replace the C-130Js at the end of this decade. Should not European and American strategic transport requirements be harmonised to allow large production runs, which appear to have a major advantage?

Finally, I should like to raise one matter which is separate from the subject that we are considering. What are the implications of this decision for future tanker aircraft which must have an involvement? Having said that, we very much welcome the Statement and the decision.

3.58 p.m.

Lord Redesdale: My Lords, we on these Benches support the Meteor programme and the development of the A400M with the short-term use of the C-17. However, I should like to ask a number of questions.

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First, as the Meteor system is at the moment only at the development stage it may experience the problems that other weapons system commissioned by the armed services have suffered in the past. I hope that the Minister will report to the House, not necessarily in the form of a Statement, on how those tests are developing over the coming few years.

Although we support the use of the C-17 as a short-term interim measure, our concern is that those aircraft will be on lease. How will that affect their operating capabilities in war zones? Shall we be able to use the C-17 in areas of conflict? Will the Government also make the C-17 and the A400M, when it comes online, available to the United Nations? During debate on the Statement yesterday, we on these Benches raised the issue that some UN forces were unable to reach Sierra Leone with their equipment because they lacked the heavy-lift capability and that it was not being supplied by other members of the United Nations. I hope that the Government will indicate that the aircraft will be available for UN operations.

Finally, according to the Statement, the development of the A400M is seen to be complementary to the development of the A3XX and the dependent large number of jobs. If, due to the cost constraints which may arise from the full price of the development of the aircraft, the A400M is cancelled, what effect will that have on the development of the A3XX?

4 p.m.

Baroness Symons of Vernham Dean: My Lords, I thank both noble Lords for what I believe on this occasion has been a genuinely warm welcome of my right honourable friend's Statement. I agree with the noble Lord, Lord Burnham, that your Lordships' House in general will welcome the Statement, in particular as regards heavy airlift. Seven noble colleagues raised that issue in the debate on defence last Friday. I hope that they, too, will be happy with the outcome.

There was no infighting between government departments on these decisions. They were closely fought competitions. They are complex projects. We are talking about three projects. Whereas the Meteor project--the beyond visual range missile project--stands on its own, the strategic airlift project was divided into a short-term need and a longer-term need. Identifying the C-17 as covering the short-term need and the A400M as the longer-term need was always a possibility.

Yes, the noble Lords, Lord Burnham and Lord Redesdale, are right: Meteor is at the design stage. But Her Majesty's Government believe that Meteor is the best of the tenders put forward in terms of the overall lifetime of the Eurofighter. It will arm the RAF with a missile which will make a major contribution to the air superiority requirements of the United Kingdom and our coalition partners.

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I was asked about the cost. I cannot give detailed costings because of the commercial in-confidence rules. But I can tell your Lordships that the overall costs of the Meteor project are approximately £1 billion. Some noble Lords have expressed recently some worries in your Lordships' House about the MoD always going for the cheapest option. It is worth saying that we have looked carefully at capability, not cost. Value for money is not synonymous with accepting the cheapest tender. I think that your Lordships will see this decision as very strong evidence of that aim at work. As I said when making the Statement, there will be break points in this contract. I stress to your Lordships that the break points will be capable of audit and external independent evaluation. That is an important point. We focused in particular on the ram-jet motor on the guidance systems and on the datalinks electronic counter measures. So we have a checking mechanism in place which I hope meets the natural concerns that there are bound to be about the project still being at a developmental stage.

I stress to your Lordships that if the missiles are not developed, the partner nations will cover all development costs from the contractor. I hope that noble Lords will see that as a significant advance in the Smart contracts we are now seeking to develop on these issues.

The noble Lord, Lord Burnham, asked what would happen if there were a failure in the project. We would go back to the market to secure the missile system that we need.

The noble Lord then turned his attention to the C-17. There will be four of those aircraft leased over a seven-year period. The total cost over that period will be in the region of £0.5 billion for that element. I do not believe that the RAF will be reluctant to make the change to this aircraft. I believe that the RAF is full of extraordinarily skilled pilots who will relish the opportunity to fly what we believe will be an extraordinarily capable aircraft. I stress to the noble Lord that we shall not have three aircraft in operation together for very long because we shall be finishing the seven-year lease on the C-17s as we bring in the A400Ms. We shall have the C-130Js which, as the noble Lord knows, have been brought into service as part of our longer-term strategic airlift requirement. At present, noble Lords will know that we have 51 C-130s. Twenty-five or 26 C-130Js are coming in. There will then be 25 A400Ms which have one and a half times the capacity of the C-130 Hercules aircraft.

As regards the A400Ms, the partner countries are Germany, France, Italy, Spain, Turkey and Belgium. We have identified 25 aircraft as our need. We believe that it is time for complete straightforwardness over this and that partner nations should not be willing to deal in the realms of speculation about what they might do. Without being too conceited, I hope I can say that the United Kingdom has given a lead on this. We hope that the partner nations will now also take the plunge and say what number of these aircraft they require.

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The noble Lord asked what number we need. I have heard various figures quoted. I have heard various figures quoted by Airbus Military itself. They vary from 150 to 270 or 280. I suspect that there is a good deal of flexibility in that number as we shall see when our partners start to declare.

The noble Lord also asked about harmonisation. There will be considerable harmonisation if all partner nations take up the challenge and go for the A400M. On the tanker aircraft, it is a somewhat different decision. It is a PFI project and we are still trying to formulate the way in which we shall run that competition.

In answering the questions addressed to me by the noble Lord, Lord Burnham, I hope that I have covered the points made by the noble Lord, Lord Redesdale. The C-17s are on lease. The test was real value for money. It was a leasing decision. It may sound an unusual decision, but noble Lords should recognise that leasing is what occurs in the civil world. There are considerable advantages to leasing aircraft. We are not in the position of having to go to a spot market to try to hire the capability we need because we shall be able to take these aircraft where we want them. They will be ours for the using. We shall not have to try to extract them from wherever they may be with the painful business of explaining why we want them and so on. They will be ours to use. They will be available to the United Nations if appropriate. Indeed, as I believe the Statement implied, had we had them, we would have used them in Mozambique and Sierra Leone. However, we shall have them soon.

4.10 p.m.

Lord Monro of Langholm: My Lords, with regard to the Royal Air Force I believe that the noble Baroness has made the right decision in moving from the Hercules to the Boeing A400. As she said, I am sure that from an operational point of view there will be no problems for the Royal Air Force. First, in relation to heavy-lift, can she give even an approximate figure of how many additional jobs there might be at Prestwick? Secondly, every pilot to whom I have spoken who has had the privilege of flying the Eurofighter says that it is an exceptional aircraft. Does the Minister really mean that it will not be in service until approximately 2008 or 2009, and is that with or without Meteor? Virtually 10 years is a long time to wait until it is put into squadron service, and I am sure that the Royal Air Force would like to have it quicker than that.

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