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Finally, I note that today the Government are also announcing that it is their intention to sell DARA’s rotary wing and components facility at Fleetlands, in Gosport, Hampshire. Is the Minister aware that, to my personal knowledge, the workforce provides highly specialised engineering skills associated with naval helicopters that are not feasibly transferable to other locations, nor readily replaceable, and that it would not be in the UK’s interests to dissipate?

6.12 pm

Lord Drayson: My Lords, I am grateful to noble Lords for their welcome of the Statement. I will do my utmost to answer their questions.

The noble Lord, Lord Astor, asked about the contract. I am pleased to inform the House that, following the announcement, BAE and VT have confirmed the creation of the joint venture to the London Stock Exchange. The heads of terms have been signed and people can have confidence that the project has been brought together. I accept the points that noble Lords have made about the time it has taken to get here. I accept that the project has been worked on for a number of years, but the benefit will be the way in which we have reduced the risk in the project. We now have an excellently configured project. There has been tough negotiation to get it to this point, but it has required the whole UK maritime industry to work in a way in which it has never done. I pay tribute to the management and the workforces of the yards involved for how they have been prepared to work together with the Ministry of Defence to enable the announcement today.

The clarity on the outcome of the naval base review, with the joint venture and the aircraft carrier orders, gives us what we need to build a globally competitive maritime industry in this country to support what the Navy will require.

Both noble Lords asked me about the aircraft to go on to the carrier. I accept that the Harriers are extremely busy in Afghanistan and are doing an excellent job. Our intention is to replace the Harriers next year with Typhoons. We have a project to configure

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the Typhoons to have ground-attack, close-to-port capability. That is how we will address the Harrier issue next year.

I accept the importance of ensuring that the Joint Strike Fighter project proceeds in a way satisfactory to the United Kingdom. We reached a very important agreement last year with the United States on technology transfer. We built on that with the new treaty between the UK and the United States on technology transfer and co-operation across IP in defence. Both those things are positive, but we retain the so-called contingency plans, or plans B. I will be going to Washington later in the year to see the progress being made on technology transfer, and we will absolutely ensure that we receive the necessary operational sovereignty on these aircraft to operate them in the way we need. We will not place orders for these aircraft until they have completed those test flights and we are satisfied at the progress of the project.

I am very pleased to confirm that the two new aircraft carriers will be base-ported at Portsmouth naval base. The confirmation of the joint venture to the stock exchange gives the workforce in Portsmouth absolute clarity on its future. The fundamentally important and perfect marriage of the support ethos from VT with the experience in ship design and building from BAE gives the right basis for going forward.

FRES is on track. We have the trials next week, and I hope to see noble Lords at those trials. I will make sure that that project stays on track because it is clearly the most important project for the British Army. It needs to stay on track.

These announcements today enable us to move forward more rapidly on other projects, such as MARS. The industry needs such clarity on base loading, enabling businesses to value themselves and put the joint venture together.

We are in negotiations about further Type 45s, so I am sure that noble Lords would not expect me to make additional commitments about that while negotiations continue.

Today’s announcement reflects the Government’s commitment to defence, but we should recognise the challenges that we face in defence. As my right honourable friend emphasised, we recognise the need to focus further on operations and the need for flexibility to put the emphasis on the equipment programme to operations. Of course, we will also focus on minimising and dealing with any unit cost growth that we see. I hope that I have answered all the questions. If I have not, I will write to noble Lords

6.17 pm

Lord Bach: My Lords, as someone involved in the aircraft carrier project for a few years, I congratulate my noble friend on the announcement he has made today. It will be widely welcomed, not just in the Navy, which deserves such a declaration, but around the country too. Does he agree that the orders for the two new aircraft carriers—I believe that they are the largest ships ever to be built for the Royal Navy—are

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not only great news for UK defence, and for the Navy, but are a huge boost to the towns and cities where they will be built; namely, Glasgow, Rosyth, Portsmouth and Barrow? It will also be a huge boost to British industry and the British defence industry in particular, which has a very proud record that is not always recognised.

Lord Drayson: My Lords, I thank my noble friend for those comments and I pay tribute to his contribution as my predecessor in the role of Defence Procurement Minister. A sustained effort has been required over a number of years to bring us to this point today and I agree with him that it is a happy day for our Navy and for our Armed Forces generally.

Lord Bramall: My Lords, I do not want to sound churlish at all, because there is clearly a lot that is very good in the Statement and will naturally be welcomed by those who admire our Armed Forces, appreciate the wonderful job that they do and know that they deserve absolutely the best. I am certain that Her Majesty’s Government come in that category. However, now that the future defence funding is clear, with a nuclear deterrent to be paid for out of the defence vote, and a singled-out decision taken to go ahead with two fleet carriers—presumably with the aircraft to go on them, although that was not actually mentioned, otherwise their value would be reduced—can the Minister give some indication what other badly needed items of equipment, vital training exercises or overdue improvements in manning will not now be able to remain in the programme because of funding restraints, if not in the very short term then at least in the crunch period of 2012-13? At that time, for instance, an important future rapid effects system for the Army is due to come into service.

Can the Minister at least enlighten us on which areas hard and painful choices—I am sure that he would want to use that phrase—will have to be taken in because of what he has got into the programme and what we still badly need? Were he to say that no hard choices need be taken—that there was plenty of funding for all the things that we need—I would be mindful of the great Duke of Wellington and his famous comment.

Lord Drayson: My Lords, the noble and gallant Lord will permit me a smile relating to his final sentence. I am sure that it is clear to the whole House that decisions will need to be taken on our equipment programme in the light both of the changing circumstances that we encounter on operations and of how we need to rebalance the programme to make sure that we properly prioritise those needs on operations. By that, I am not confusing the funding for operations that comes from the reserve and our UOR programme; I mean those matters that directly relate to what we regard as the nearer-term needs. Within that, let me be absolutely clear about FRES—the future rapid effects programme. As I have said, I recognise that the FRES vehicle—the future armoured fighting vehicle—is the single most important project to the British Army. It has seen delays but is now on track and I am determined to keep it on track to meet the Army’s requirements.

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Today’s announcements in terms of the CSR will not allow that to delay FRES, under my management of the project.

I shall not get into a list of what specific projects need to be looked at, because there need to be negotiations with industry in terms of the contractual basis. From industry, we need recognition of the flexibility required to ensure that our equipment programme stays relevant to the challenges that we face now. They are often different from the priorities that may have been set a few years ago. It is that kind of flexibility that we now see from industry and that today’s announcements reflect.

Lord Burnett: My Lords, the Government initiated a naval base review because they felt that there was considerable overcapacity. The Minister will know that the review is of profound importance to the Royal Navy and the economies of Plymouth, north Devon and, in fact, the entire south-west region. If the review is now complete, what impact will it have on DML Plymouth Appledore? If it is not complete, is there more to come and when will it be published? Finally, if the two carriers are to be base-ported at Portsmouth, what about the other service ships?

Lord Drayson: My Lords, the noble Lord is absolutely right that we have overcapacity in terms of the naval bases—he knows it from his experience—and the naval base review addressed that issue directly. My right honourable friend the Secretary of State directed that the review should end up with a level of capacity and support for the Royal Navy appropriate to a modern fleet, supported using the more innovative practices that we are introducing and some of the changes taking place within the Royal Navy. The conclusion from that was—following the decision relating to the aircraft carriers, which allowed the joint venture to be put in place—that we could have clarity that the most cost-effective method was not to close one of the naval bases, but to remain with a three-base solution and to expect the companies running the bases to work with the Royal Navy to develop innovative support programmes that allow greater efficiency and flexibility.

An example of that is the way in which the Royal Navy is using crew swaps—one ship having more than one crew, reflecting the fact that, with increase in maintainability of ships, ships do not have to come back for maintenance as frequently. Those swaps can take place at sea. We must make sure that the companies on the bases—DML in Plymouth, or the JV in Portsmouth—are incentivised to improve that efficiency over time. I cannot give the noble Lord a direct answer today, because these things need to be negotiated now that we have given clarity on the three-base solution. However, I am confident that the facts that the communities and businesses at each base now know what they will be focusing on, and that they have a long-term future, enable them to work with us to deliver the outcome that I believe we both want.

Earl Attlee: My Lords, I am grateful to the Minister for repeating the Statement. I remind the House of my interest as a serving TA officer. I am

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disappointed with the content but, unfortunately, my party will not offer more or cut the commitments.

This is a disaster. The Statement refers to a 1.5 per cent average annual real-terms increase. Does the Minister agree that gross domestic product has been increasing at a much faster rate? Why has defence expenditure not at least kept pace with the growth in GDP? Will the Trident project attract extra funding to the current budget?

The Statement refers to the carrier. Noble Lords should not hold their breath waiting for the Minister to place the order. What progress has been made in placing the order for that shipwreck of a project, the future strategic tanker aircraft? Where are we with that?

Defence planning assumptions provide for one medium-scale and one small-scale operation, with medium-scale a brigade and small-scale a battalion. We are actually doing two medium-scale plus, and they are both difficult. How long will it be before the wheels come off because of doing too much? We cannot continue doing double medium-scale plus when we planned and are provided for one medium-scale.

The Statement refers to a 25 per cent reduction in head office. Does that mean that head office has been 25 per cent too big since the SDR? What did the 3 per cent year-on-year efficiency savings of the SDR do if there is still room for such a cut?

Lord Drayson: My Lords, I do not agree with the characterisation of the Statement given by the noble Earl. I agree that GDP is growing at a faster rate, but that is not a reasonable basis for spending decisions. This is a real-terms increase in the defence budget. As we said when we announced the replacement for the nuclear deterrent, funding for it has been allocated and does not come at a cost for the conventional forces, so is clearly separate.

To describe the FSTA in those terms is unfair. That project has passed into the fundraising stage for what is one of the largest PFIs ever in the City. Therefore, it has passed the stage of approval in the Ministry of Defence to allow that fundraising to take place. We hope and expect that fundraising to be completed this year. We will then be able to pursue that project, which is complex and innovative. It is on track, as I have described.

Noble Lords will have noted from the Statement that funding for operations from the reserve will be maintained. That is a separate issue to the issues relating to the defence budget. I accept that the Armed Forces are under pressure. The sustained operations in both Iraq and Afghanistan test our ability to maintain this level of operations over a period and I accept that that is beyond the planning assumptions. However, through the success that we are having in both those operational theatres, I believe that we are showing our ability to do that. Of course, we take into account the fact that sustaining those over a long period is a significant challenge. I do not agree with the way in which the noble Earl characterised those points. We have the resources to make the decisions that we have to make in the circumstances with which

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we are faced in the world today. The announcements that we have made on the aircraft carrier and the naval base review show our ability to make those decisions.

Lord Ramsbotham: My Lords, like my noble and gallant friend Lord Bramall, I welcome much in the Statement, and I am sure that it will give particular pleasure to the Royal Navy. Like my noble and gallant friend, I am minded of the descriptions of “affordability” used in the Ministry of Defence. Can you afford it, or can you afford to give up what you have to give up in order to afford it? The decisions to buy this expensive equipment, like the decisions to buy the expensive Eurofighter, the Astute submarine and the Trident replacement, were taken before current operations in Iraq and Afghanistan began.

Frequently in this House, questions are asked about equipment related to that operation. I always remember talking to the divisional commander who went into Basra in the second Gulf War. I asked him, “What was the battle-winning equipment as far as you were concerned?”. He replied, “The American Marine air wing that was put under my command, because it had precisely the equipment that we needed for this type of operation, which was not available in our inventory”. Therefore, since the Minister mentioned the need to rebalance the programme, will that include taking into account the lessons from the current operations in Iraq and Afghanistan and the implications of those for our future equipment programme and its affordability?

Lord Drayson: My Lords, not only will we take them into account, but they will be our number one priority. That is the clear challenge that we have to manage in our equipment programme. We accept that we will have to make decisions about things that we will not do, but the priority will be those things that are most relevant to the operational theatres in which we are engaged at present and in which we are likely to be engaged in the near future.

Lord Dixon: My Lords, having served my time as a shipwright and having worked in the shipbuilding industry for 36 years, I assure my noble friend that the much delayed decision about the aircraft carriers will be welcomed in the shipbuilding industry as a whole. Can he confirm that shipyards in the Tyne and Tees area will be able to tender for some of the fabricated work for those two boats?

Lord Drayson: Yes, my Lords, substantial parts of the construction of the two aircraft carriers are open to competition and will be open to companies to tender for.

Baroness Fookes: My Lords, like other noble Lords, I warmly welcome the decision about the aircraft carriers and the three-base solution. I hope that the Minister will realise what misery people have been through, at least in the Plymouth base, about which I know much more, and probably the others as well, with the uncertainty that has been hanging over them for many months. I assume that, for the aircraft carriers, there will be what I call the birth-to-death

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approach—through-life care—by those who are responsible for their building, so that there is continuity and they cannot just walk away if there are any design defects over the lifetime of the aircraft carriers. Secondly, have the current users of aircraft carriers been fully consulted about the design and about the way in which the arrangements have been made? I am delighted to see the noble Lord, Lord West, in his place, but many of those decisions must already have been made.

Lord Drayson: My Lords, I recognise, as the noble Baroness said, the uncertainty that there has been over these decisions in those communities, and I am grateful for the forbearance of those communities and for the way in which they have engaged in the review process, which has enabled us to come to the decisions that we have announced today. However, that clarity that we are now able to give gives those communities the ability to plan for the future with confidence.

With regard to through-life care, that is absolutely the case. The creation of the joint venture brings together those two organisations, which will enable us to contract with an entity from now on—not only for this project but for future shipbuilding projects—in a way that is completely through-life, from the design of a ship through to its manufacture, upgrade and eventual disposal. This will enable us to get best value for money for the taxpayer and maximum capability for the Royal Navy.

We absolutely consulted. It has taken time to get to this point. We have been able fully to consult with the current carrier strike force and to recognise that we have a very potent force that has tremendous experience in using these types of ships—albeit that the current carriers are much smaller ships—and we recognise the incredible flexibility that this type of capability provides us. They have been fully involved in the design process, which is now done. Let us be absolutely clear about this. We are now moving into the phase of manufacturing these ships.

Lord Lyell: My Lords, I thank the Minister for the Statement and for all the help that he has given. I also thank him for the 24 hours a day, seven days a week help that his department gives to your Lordships’ defence committee. Can he confirm now, or put it in writing if he runs out of time in the last minute, that the GR9 will be the aircraft on board the two carriers? Can he further confirm that the arrangements for training the pilots from the old Sea Harriers in 800 and 801 Squadrons are proceeding satisfactorily? Can he give me some indication of the programme for one, two or even three versions of the new Joint Strike Fighter? One is to be air and the second is to be short take-off and vertical landing. Am I right that a third version is planned of the F-35 that is due to be carrier-borne? Can he give me some indication of that? If not tonight, can he write to me?

Lord Drayson: My Lords, briefly, I will do so, and I will also answer a question from the noble Lord, Lord Astor, which I did not answer earlier. The plan is for the Harriers to run on until they are replaced, so to

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speak, by the Joint Strike Fighter. We have designed the aircraft carriers to have flexibility, through the so-called Delta design, and to have a contingency plan B if there is any issue relating to the Joint Strike Fighter STOVL version. We hope that there is not; we will be watching it very carefully. The carriers have been designed to give us the necessary flexibility to cope with any need to move to a contingency. I will write to the noble Lord with any further information that I can give him on that.

Local Government and Public Involvement in Health Bill

6.38 pm

The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Andrews): My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.

Moved accordingly, and, on Question, Motion agreed to.

House in Committee accordingly.

[The DEPUTY CHAIRMAN OF COMMITTEES (Lord Tordoff) in the Chair.]

Clause 235 [Exercise of functions by local councillors in England]:

Baroness Andrews moved Amendment No. 242K:

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