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Defence in the UK

In the north-east, as the hon. Member for North Durham (Mr. Jones) is no doubt about tell me, there is also a keen interest in those issues and their likely effects on employment. I believe that nowadays not even the most unreconstructed trade union leader believes that the role of the MOD should be to create jobs in the defence industry. There is a keen awareness that the best way to maintain jobs is to develop quality products that fulfil the needs of our armed forces and that exportability is key to work force stability and preferable to public money being used for labour market reasons rather than defence capability alone. The Government are to be commended for the defence industrial strategy and the work done by Lord Drayson, which has made an important contribution to the debate about future procurement—[Interruption.] No, there is no but. There will always be a tension between the need to maintain sovereign capability and the need to provide value for money for taxpayers. There is a balance to be struck between those who say that we must make everything in the UK to guarantee our total sovereignty and those who say that we should buy everything off the shelf in order to lower the cost to taxpayers. The answer to the problem was to some extent laid out in the defence industrial strategy. Clearly, we need to maintain sovereign capability in areas that are vital to our long-term defence. I believe that areas such as submarines and avionics clearly fall into that territory, although, as was mentioned earlier, the joint strike fighter is a case where we are looking to a partnership with the US for the shared technology for what will probably be the last manned fighter that we build. That may provide a useful model for the UK’s future procurement strategy. On the other hand, it would be nonsense to say that body armour or trucks fall into the category of sovereign capability. In those and other areas, it makes sense to buy equipment off the shelf and ensure that it is made speedily available to our forces, rather than to invest in programmes in what would effectively be reinventing the wheel. Looking ahead to the necessary procurement processes and the strategic threats that we are likely to face, the priorities for a future Conservative Government would be capability, interoperability, adaptability and exportability. We actually wish to see an expansion of Britain’s defence exports because that is the best guarantee of long-term sustainable jobs, but for my Treasury colleagues, there are also potential benefits to the taxpayer in a well thought out procurement programme. Let me provide two examples. The Hawk, developed under MOD funding in the 1970s, cost a total of £1.2 billion for development and production. Subsequently, more than 800 were sold around the world to customers including the US Navy, Australia, Switzerland and South Africa. The value to the UK economy amounted to more than six times the initial cost and the estimate of the return to the Treasury for those exports was about twice the initial outlay. That meant benefits to our defence base, benefits to our armed forces and benefits to our taxpayers.