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Defence Industrial Strategy

I am grateful to the Secretary of State for his statement, and for making copies available to the Opposition in advance. As he will appreciate, however, it was a long statement and the document is extremely complex. The House might benefit from more time in which to consider the implications, and from a longer debate at some stage. The document has been much trailed. It contains a number of points that we welcome, and many that we have called on the Government to adopt in recent years. We welcome the new tone of partnership between Government and industry. More than a year ago we called for"““a mature partnership with industry, with both sides working together from a project’s inception through to the completion of its service life.””—[Official Report, 4 November 2004; Vol. 426, c. 488.]" If Ministers have genuinely embraced the idea, the House should welcome that. We also welcome the identification of key capabilities that Ministers consider it essential to retain in the interests of our national sovereignty, although we shall have to study some of the detail. The Treasury, however, holds the key to much of what is in the document. Has the Treasury agreed to fund the defence industrial strategy fully in the 2007 comprehensive spending review, and what discussions has the Secretary of State had with the Chancellor to that end? If the defence budget is squeezed in the spending round, the document becomes simply a wish list. Implementation is everything. Has the Treasury made an assessment of the effect of spending on defence-related research and development and equipment on Britain’s overall economic competitiveness, and will the Secretary of State make such information available to the House? Where onshore capability is maintained for reasons of strategic assurance, it is vital that value for money is guaranteed, especially when sole sourcing is involved. What measures will be established to ensure that, when the economic forces of competition are absent, taxpayers’ money is best protected? I have a number of specific sectoral questions. The document states:"““In a change to the stated Defence Industrial Policy, there is no absolute sovereign requirement to construct all our warship hulls on shore””." Does the Secretary of State expect to buy hulls from abroad? What assessment have the Government made of the impact on the shipbuilding industry and employment therein? Individual helicopter programmes have been amalgamated in the overarching future rotorcraft capability process, and the overall budgets have been reduced by £1.4 billion on the basis that the Financial Reporting Council will identify synergies and savings. I think we have all heard that from Departments in the past. The most pressing requirements identified by recent reports from the National Audit Office and the Public Accounts Committee are caused by shortfalls in the helicopter lift capability that is essential to our activity in Iraq, Afghanistan and elsewhere. However, more than two thirds of the £3 billion FRC budget is about to be spent on two programmes, the Merlin Mk1 upgrade and Future Lynx programmes, most of which are unrelated to those requirements. Furthermore, £1.2 billion is scheduled to be spent on purchasing, without competition, 80 Future Lynx helicopters for the Army and Navy. An Army purchase is required to spread the non-recurring costs, but it is unlikely that such a route would have been followed if operational requirements had been the main driver. That approach seems to be at odds with the avowed aim of the strategy to put the cost-effective acquisition of capability at centre stage. Perhaps the Secretary of State will deal with the apparent discrepancy. The future aircraft carrier project was unveiled in the strategic defence review in 1998, with the first carrier due to enter service 14 years later in 2012. More than seven years down the line, we still have no firm order placed and no in-service date declared. Yesterday we had what is now described as a two-stage incremental approach to main gate. We will have another long wait before costs and timings are revealed. Will the Secretary of State confirm that both carriers will miss what the Government used to say were the target in-service dates of 2012 and 2015? Is it not true that the industry expects no first carrier before 2014, and no second carrier before 2106 at the earliest? Where does that leave the existing fleet of three small carriers, one of which has been paid off prematurely while the other two are due for disposal well before the likely in-service dates of their successors? Above all, where does it leave the capability of the Royal Navy, which has already sacrificed so many of its other warships for the sake of the promised future carriers? The statement made a passing reference to maintaining onshore the ability to design and build submarines, but no mention was made of the all-important issue of replacing the Trident fleet. Making the decision about embracing Trident is the step that the Government embrace about as much as Dracula would embrace a crucifix. Building a new fleet of missile submarines will have a massive impact on our defence industrial plans, and the time scale cannot be less than 12 to 15 years. That is why the Government pledged in the last Parliament to make the decision in this one. Will the Government now face up to what is a vital issue? Why is the Secretary of State so afraid to do so? Of whom or of which is he more scared, the Chancellor, the Prime Minister in waiting, or the dissent of many of his Back Benchers? When will he begin in earnest the debate about the future of the nuclear deterrent on which people on both sides of the argument are willing, indeed eager, to begin? Let me assure him in one respect. If the Government take the right decision, they will be able to count on the support of the Conservatives to ensure that the country remains protected indefinitely against nuclear blackmail. The generosity of the Opposition to the Government at this time is unbounded. Overall, this may be a rather pessimistic strategy document. The argument seems to be that when the current tranche of orders is completed, surplus capacity will have to be dealt with. I wonder what assumptions are made in this assessment of the outlook for British defence exports and what measures the Government could put in place to ensure that some of the surplus capacity is used to expand our defence exports overseas, especially in the aerospace industry. At first glance, there are a number of positive elements in the strategy document, but there are also a number of anxieties that will be felt across the country. The Secretary of State may be able to address some of them, but the Chancellor remains the key to preventing it from being a strategy of defence industrial decline. Sovereignty comes at a price; will the Chancellor and the Government be willing to pay it?