House of Commons
Wednesday 3 December 1997
The House met at half-past Nine o'clock
PRAYERS
[Madam Speaker in the Chair]
Defence Industry
Motion made, and Question proposed, That this House do now adjourn.--[Mr. Robert Ainsworth.]
9.34 am
Mr. Lindsay Hoyle (Chorley): I am grateful for the opportunity to lead this debate.
I welcome the Secretary of State's determination to move to smart procurement. The major review carried out over the past few years made depressing reading and it is vital that the Ministry of Defence moves away from an inevitably confrontational relationship with the industry, which unalloyed competition policy brings. It should form a partnership with the industry, which would be wholly in line with the competitive procurement policies practised in industry.
One of the keys to smart procurement must be the early resolution of industrial policy issues and the adoption of a procurement approach based on partnership between customer and supplier. Three programmes where smart procurement could be applied beneficially are the five-year ammunition purchase programme, the future large aircraft programme and the beyond-visual-range air-to-air missile programme. In each case, the MOD is currently holding a competition, the outcome of which could have potentially fatal consequences for the UK's industrial capabilities. Several key decisions on procurement will be made in the near future, and I call on the Government to support British firms in those major contracts.
Chorley holds an historic position in defence. It is the home of Royal Ordnance, where 40,000 people were once employed. Today, the factory employs only a few hundred. Nearby are other major defence contractors employing many of my constituents. Warton is one of the UK's principal aerospace locations where the Tornado and the Eurofighter are designed and built. As Lord Gilbert, the Minister for Defence Procurement, recently confirmed to me, Leyland Trucks manufactures many of the Army's heavy and light trucks. I urge the Government to give that firm every opportunity to tender for contracts in the future. Those vehicles are quality British products made by a quality British work force with a proven history in Bosnia and the Gulf.
Aerospace and defence account for more than 20 per cent. of Lancashire's manufacturing industry. Many other firms have business in the defence industry. Examples from my constituency include NIS Precision Engineering, Xelflex and the Computer Science Corporation, based in Chorley and Preston.
I shall concentrate today on procurement policy. Procurement principles are simple: the Government must give value for money; nothing must stand in the way of quality and suitability for job requirements; and if there can be spin-offs in terms of jobs, investment and technology transfer, so much the better. Our service people are our most precious resource. If we ask them to risk their lives on our behalf, they must have the best equipment, from aircraft to the tool box. We must give them the protection that they deserve by giving them the best.
I was fortunate to lead a debate in the House on 9 July when I stressed the importance of the Eurofighter project. It is a quality product. It was designed and built by Britain and Europe, and it represents a massive investment by our aerospace sector, both civil and military. It has also given a major boost to the associated industries, such as design, engineering and computing. Without their skills, the project would not have gone ahead and we would not have the success that has put us at the cutting edge of technology.
For example, the Computer Science Corporation might not have been sited in Chorley, if not for the proximity of Warton. Its IT know-how will now be transferred to other areas of the local, regional and national economy.
Other aerospace projects, such as the Airbus,benefit from the technology transfer--for example, in aerodynamics, avionics and navigation systems. That is especially true of the transfer of the FLA, which is a military project with a spin-off for civil aviation. The FLA is a military aircraft which easily becomes a civil aircraft for moving large amounts of cargo around the world. That is a massive market. The FLA has had some problems, but that is natural; it is still at the design stage. The flight control, engines and radar of the Eurofighter are all performing well and could easily be transferred.
The importance of air superiority to any campaign has been proved time and again in the Gulf and in Bosnia. Eurofighter is much cheaper to buy than the American F22, and is only marginally less capable. I congratulate the Prime Minister, the Government and the Opposition on their support on this important subject--the House has united for the benefit of Eurofighter, which would give us the technology to compete with the Americans.
I am delighted that the German Government have finally agreed to the project, ending years of doubt and speculation. At last, we see the green light. I look forward to the signing of the agreement to construct the aircraft, and to seeing it into service. We all look forward to that.
Like the Eurofighter, the FLA represents the future of the aerospace industry and can be developed for the dual use that I mentioned. Like Eurofighter, it has incidental spin-offs such as technological and engineering advances, which benefit the country. Like Eurofighter, it seems to be continually shrouded in doubt and subjected to unwarranted criticism.
For example, I was told that the FLA was deficient, because it cannot carry a tank; nor, however, can the C130J. The C130J cannot carry a Warrior infantry fighting vehicle, which is a crucial element of our infantry support and is being used extensively in the former Yugoslavia. The C130J is an updated 1960s plane.
The only transport aircraft that is capable of carrying the tank is the C17, which has 50 per cent. more capacity than the FLA, but is three times more expensive to buy,
and four times more expensive to run. It cannot meet the European staff requirement in terms of operation from short, soft or rough airstrips.
Other FLA advantages include twice the tonnage per day of the C130J, and 20 per cent. more types of equipment. It is more flexible and can be produced in transport, tanker or maritime patrol variants. It has 100 per cent. greater cargo box volume, 70 per cent. higher average payload per sortie and 20 per cent. higher cruise speed. It could bring up to £5 billion into the United Kingdom economy.
Those are the crucial facts. The global military transport market is estimated to be worth £40 billion. The FLA is a quality European product which has served our services well and would also be a big money spinner for us. The five European partners will now work together to assemble a proposal to define the FLA's performance, capability and production time scale.
Critics of the FLA and the Eurofighter do not seem to understand that, or perhaps they have a financial interest in competitors of British firms. It should be borne in mind that the transfer of technology to the next generation of Airbus will be considerable. The FLA will give us that crucial next generation of civil aircraft for Airbus. I believe that Airbus military will be the way forward for Europe.
Mr. Alan Clark (Kensington and Chelsea):
I hesitate to interrupt the hon. Gentleman's very interesting dissertation. I agree with many of the compliments that he has paid the future large aircraft, but it cannot carry a main battle tank, can it?
Mr. Hoyle:
I shall help the right hon. Gentleman by repeating what I said. We know that the FLA cannot carry a main battle tank, but we are buying the C130J, which also cannot carry a main battle tank. The FLA can carry everything except the main battle tank, but, as we have noticed, the main battle tank is not needed by a fast reaction force. Unfortunately, the C130J cannot carry many tanks either, so we must make a choice. I believe that the decision lies with the FLA, because the C130J cannot carry the infantry Warrior, which is important.
The delivery date for the C130Js that the UK is buying has yet to be confirmed. Is it true that they are suffering from technical problems? Is it true that they are still awaiting a licence from the United States Government? According to press reports, the planes are 17 months late already. Is that correct?
Airbus has proved that it can make a quality product in the civil sector and that it is capable of the same for the military transport sector. As well as BAe, other firms such as Rolls-Royce and Shorts would be given a secure future.
The ASTOR programme will create several thousand jobs in the north-west--for example, at Raytheon Corporate Jets in Chester. More than 50 companies in the north-west would benefit from the ASTOR programme. In discussions with Raytheon, it seems that the Government have three options--Raytheon, Lockheed Martin or JSTARS, which is already in service with the US air force.
The original competition was between Raytheon and Lockheed Martin. JSTARS should be considered too big, too expensive to run and too old to be brought in. Recently, however, JSTARS was brought back into the competition, which I consider a retrograde step.
Defence firms hate such instability. They are spending millions of pounds on projects lasting many years and requiring the highest technological advances. If the Government are to run a competition, it must be a fair one with clear guidelines, which must be adhered to. There is too much at stake, and a quality product cannot be produced unless suppliers have the stability to develop and deliver it.
Will the Government consider changing the parameters, to ensure that they are clearly restated for the participating firms? Will the Government learn that if they change the parameters, there must be open and clear reasons for doing so? They must be up-front about that.
I shall now deal with munitions supplies. Chorley was once the home of Royal Ordnance, which has been making munitions there since the war. The headquarters remains at Chorley and there are a couple of hundred jobs on site. The ability to manufacture and supply armaments and munitions to our services is surely a key part of our defence procurement. To get rid of that, or to place it with another country, would threaten our ability to defend ourselves.
The previous Government have a lot to answer for. They closed plants throughout the country and left us in our present predicament of open tendering for munitions. Surely the provision of ammunition and the associated capabilities of propellant and high explosives are central to our strategic capabilities.
The responsibility lies with the Government and British Aerospace, as owners of Royal Ordnance, to preserve that capability. The Government should try to buy British first and foremost, rather than inviting tenders from other countries, even if they are allies or friendly states, such as the US, Germany, Italy, South Africa and Belgium.
BAe wants to move to a joint venture between Royal Ordnance and SNPE and GIAT Industries of France. That would effectively move production to France, and we would lose the capability to equip our own armed forces. Our armaments production would be based in central France. We would lose the high-explosive works at Bridgwater, on which we are dependent. To give up our own high explosives would be wrong, and would make us dependent on suppliers around the world.
We would depend on France for everything containing explosives--bombs, warheads, missile propellant and even some small arms and gun propellant. If we lose that capability, we shall never be able to regain it. It is easier to maintain a site on this island than on the European mainland, as history has shown, or as Belgium showed by not supplying arms in time of war.
The French always want to take the HQ of any joint venture to France, and especially to Paris. Most mergers with French firms tend to become takeovers, rather than partnerships. Competition in defence procurement that robs this country of key skills and strips us of a key strategic armament capability cannot be allowed to proceed.
The Government should immediately review their policy of competition in this area. British Aerospace must abandon plans to close the Royal Ordnance plant at Bridgwater. BAe is always ready to knock on the doors of Members and ask for support, yet it is threatening to close a BAe company. It cannot have it both ways. If it wants the support of the House, BAe must keep that plant open. Never mind the blackmail tactics; BAe ought to
be up-front, keep the plant open, and work with the Government, not against the Government when that suits it. BAe should learn that quickly.
How many other NATO countries have abandoned their munitions production capability? Not many--in fact, none that I know of. The local unions at Bridgwater have produced alternatives to BAe's current plans, which maintain viability and independence. The unions should be heeded. Will the Minister consider those plans seriously?
I believe that we all recognise the need for an aircraft carrier: 2010 will soon be upon us and we now have the chance to procure a 40,000-tonne aircraft carrier. That is where the future lies. However, it is crucial that we get it right: there is big money involved. We must produce the right class of carrier. There are many hot spots around the world and we will need to maintain a floating land mass from which to exercise our forces. Offshore protection is particularly important, and it can be provided by a huge floating land mass.
We also have an opportunity to develop a naval version of Eurofighter. We have a wonderful aircraft coming on stream and everyone is talking about joint-strike aircraft. What better time to develop for the next century a naval version of Eurofighter that can work from a big aircraft carrier? A 40-tonne carrier would give us the opportunity to begin a joint-strike fighter programme to meet future carrier-borne aircraft need. That is the direction in which we should move. I hope that the Government will consider my views.
I turn now to the beyond-visual-range air-to-air missile. The choice of the Matra BAe Meteor solution for the Royal Air Force's staff requirement Air 2039, the primary armament for Eurofighter, provides a European solution for that key requirement. It gives an opportunity to provide a common weapon across the Eurofighter nations and a further opportunity to drive forward the consolidation of the missile sector of the European aerospace and defence industry. Matra of BAe Dynamics has already formed a further relationship with Dasa's LFK subsidiary, and the adoption of Meteor will bring France, Germany, Sweden, Italy and Spain into the project.
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