HC Deb 03 July 1969 vol 786 cc812-22

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Ernest G. Perry.]

11.38 p.m.

Mr. Frank Allaun (Salford, East)

The title of this debate is, "The multi-rôle combat aircraft and its cost", but it might equally well have been, "That's where the money goes". I shall dwell on the money side of it tonight.

We recently witnessed in Parliament a scene which aroused little comment yet which struck me as highly incongruous. On 14th May, the Chancellor had spoken of the country's serious financial position. Minutes later, he was followed by the Secretary of State for Defence, who announced the signing of an agreement with West Germany and Italy to cooperate in proceeding with the building of 1,000 multi-rôle combat aircraft. Of these, he said, about one-third would be bought by the British Government. No mention was made in the Chamber of the cost, but, apparently, at a briefing outside—I shall say something about that—the Minister said that we would purchase 350 of these aircraft, at an estimated cost of £1½ million each, and in addition we would pay £150 million as the British share of the cost of developing the aircraft before it went into production. That brings the bill to the little sum of £675 million.

That figure has been described by one expert observer as "incredibly low". Since most recent estimates in this field have been exceeded several times over, the suggestion in the Economist that the eventual cost will be about £1,500 million for Britain alone for this one aircraft may not be wildly out. Indeed, the escalation of cost for certain 'planes and missiles has been so alarming that several of them have quite rightly had to be cancelled, involving heavy cancellation charges, as my hon. Friend the Member for Barrow-in-Furness (Mr. Booth) has reminded me.

This suggests that there should be extreme caution before the Government take on this new commitment.

Two of the six Governments originally intending to collaborate have already dropped out, and a third may do so shortly. I suggest that our own Government should follow suit, and, as production will not start for six years, they can still take such a decision before it is too late.

There were cheers in the Commons when the announcement was made—though certainly not from all quarters as one hon. Gentleman opposite maintained. I think that it is lunacy. Even odder is the fact that it was those who have been demanding cuts in Government spending who were most enthusiastic for this huge new financial commitment. The extra cost of teeth and spectacles would be more than covered by going without a couple of these new 'planes. If we made the great so-called "sacrifice" of forgoing all of them, most of our housing, pensions, education, and health service difficulties would be greatly eased. Gallup polls, the Labour Party conference decision, and, not least, common sense, all indicate which sphere of Government spending should be given priority.

I wish to keep my remarks to 10 minutes at the most in the hope that my hon. Friend the Member for Bebington (Mr. Brooks) a member of the Public Accounts Committee, who has applied his mind closely to this matter, will catch your eye, Mr. Speaker. He would show that Britain will have to pay an unfairly high proportion of the research and development cost.

But there is one serious aspect of the matter to which I wish to draw attention. When my right hon. Friend the Secretary of State made his statement on the M.R.C.A. on 14th May in the Chamber he made no mention of the cost. Yet on 15th May there were detailed reports, certainly in The Times, the Guardian and the Daily Telegraph, and perhaps other papers, quoting the Minister as follows. Under the headline, Britain in a new £150m. swing wing project Arthur Reed wrote in The Times, Britain is to spend £150m. to produce a new military aircraft in conjunction with West Germany, Italy and possibly the Netherlands, Mr. Healey, Secretary of State for Defence, announced yesterday. The cost of each machine is put at £1.5m. In the Daily Telegraph, Air Commodore E. M. Donaldson, Air Correspondent, wrote: By sharing the cost with other nations and jointly producing the 'plane, Mr. Healey said, it guaranteed Britain a 'home' market of more than 1,000 'planes as a start at less than £1,500,000 each because of the numbers involved.…Research and development will amount to about £400 million, of which Britain will pay about £150 million. The Guardian stated: …at a price of perhaps £1.5 million each. Now these reputable defence correspondents did not think up a figure out of the air. They were clearly given it in a briefing by the Secretary of State himself. They said so. They quoted him. So, on 25th June, I put down a Question to my right hon. Friend asking him to estimate the approximate cost. My hon. Friend the Minister of Defence for Equipment replied: …It is not the normal practice to give cost estimates of this nature."—[OFFICIAL REPORT, 25th June, 1969; Vol. 785, c. 1479.] The same answer has been given to similar Questions from my hon. Friend the Member for Bebington and my hon. Friend the Member for West Lothian (Mr. Dalyell).

In other words, we have the Secretary of State deliberately concealing from the House, where it would have been questioned, the vast cost of the project. Then he gives it in a briefing session outside the Chamber to the defence correspondents. Lastly, when asked in Parliament to give an estimate, he refuses to do so I suggest that this is a very serious abuse of Parliamentary practice and democracy. My right hon. Friend is going behind the backs of Members of Parliament when he refuses to tell them the estimate but tells it to others. The House has been deceived. He is guilty of constitutional impropriety which deserves heavy censure.

11.46 p.m.

Mr. Edwin Brooks (Bebington)

My hon. Friend the Member for Salford, East (Mr. Frank Allaun) is to be congratulated on having raised this most important and highly expensive matter. Although the hour is late, I should like to add some of my own concern and reservations about the project. I do not normally wish to rely heavily on quotations but if my case is to be made effectively I should consecutively read a few short extracts from journals and newspapers which have appeared recently in connection with the project.

In Interavia at the end of 1968 it was stated: The unofficial estimate of the number of aircraft required by each country, as agreed at the Bonn meeting on July 17, is as follows: Federal Germany 500, U.K. about 250, Italy 175 to 200 and Holland up to 100. On 15th May, the well informed air correspondent of the Daily Telegraph wrote, on the basis of what clearly seems to have been a briefing from those in authority in the Ministry: More than 1,000 planes will be built—about 400 for the R.A.F., 800 for the German Air Force and about 150 for Italy and Holland, if she joins. Many more will be built for export. It was on the basis of these interesting figures that I asked my right hon. Friend on 14th May: As the Germans will require roughly twice as many of these planes as we will, how will this affect the allocation of research and developments costs? He replied: The German requirement is about 50 per cent. greater than ours, not twice as great."—[OFFICIAL REPORT, 14th May, 1969: Vol 783, c. 1416.] Presumably, therefore, the figures in the Daily Telegraph of 800 and 400 respectively were wildly inaccurate.

I wrote to my right hon. Friend and received a reply on 29th May in which he sought to allay my anxieties, but he went on in the letter: …of course, no country is committing itself at this stage to the precise number of aircraft which it will eventually take from the programme. There is no point therefore in trying to reconcile the figures I gave the House and the speculations of aviation journalists, however well informed. That is a fair point but, on the following day, a number of well-informed aviation correspondents came back from the Paris Air Show with figures wildly different not only from those I have quoted but from each other, and these appeared in the Press on 31st May. There is, therefore, some cause for alarm, because the public clearly are not being given anything like a precise picture of what is entailed. For example, in the Daily Mail of 31st May it was reported: Germany is said to be prepared to take 400 of the 'planes, the R.A.F. 385, Italy 200, and Holland, if it joins in, 100. The Daily Sketch on the same day, quoting Mr. Alan Greenwood of B.A.C., who is Panavia's chairman, said that he revealed at the Paris Air Show: …that Britain will buy 380 two-seater M.R.C.A.s, Germany 600 single-seaters, Italy 200 and Holland 100. It is alarming that aviation correspondents who have been to a responsible, reputable air show, the Paris Air Show, should supply figures like this. If the figures are out of thin air, the correspondent is acting irresponsibly. If the figures came from a briefing, the correspondent was either deaf or different figures were given.

The Guardian of 31st May said this: The total development bill is expected to be something like £380 million, of which Britain will contribute £150 million and Germany a little less than £200 million. That is not much more than the total British figure on research and development. The Guardian article continues: The financial shares are in keeping with the numbers of aircraft needed by the respective air forces: Germany about 500. Britain perhaps 300, Italy 200, and Holland 100. I think that the "perhaps" is well advised. Wildly different figures have been given, certainly of the ratio of 'planes needed by Britain to those needed by Germany.

My purpose is not just to quote a series of newspaper figures, but to show that a real problem faces the House in deciding what is the fair proportion of research and development costs which this country should incur in this project in relation to our European partners. If it is true, as the Guardian says, that Germany is allocating little more than we are intending to allocate, there is something wildly wrong about this deal.

We have little or no knowledge of what levy on sales is to be imposed for exports to third parties, from which there might be recoupment of some of the expense of the initial investment. We have no idea how the levy is to be broken down among the countries.

Although this project is in the early stages of development, it has already reached a stage of reasonable technological specification. We have not had anything like adequate financial clarification, and, if the House is asked to support a project in which Germany will have less incentive to financial economy because of her interest in building up an aviation industry than would normally be the case, it is extremely important that my hon. Friend, tonight if possible, should give us figures far more precise and authoritative than those which have been circulating in recent months.

11.54 p.m.

The Minister of Defence for Equipment (Mr. John Morris)

My hon. Friend the Member for Salford, East (Mr. Frank Allaun) has used very strong words about my right hon. Friend the Secretary of State. If the note I took is correct, he accused him of deliberately concealing from the House information which the House should have. I am sure that my hon. Friend knows my right hon. Friend well enough—my hon. Friend has been in the House longer than I have—to know that if anyone has opened up the question of defence and provided as much information for the House as is possible and practicable on every occasion for many a long year, it is my right hon. Friend.

I am familiar with the opposition of my hon. Friend to defence expenditure. His is the pacifist case; he is opposed to all defence expenditure, and in that sense I can see why he is objecting to this most important aircraft which we are planning. If this is the object of putting down this subject for debate—and I take no exception, I welcome it—I can assure him that I too am much concerned to see that we get value for money from this project in our defence equipment programme.

First, I think it would be helpful if I were to give a short resume of the background to the development of this project up to the present time. As was explained to the House by my right hon. Friend the Secretary of State for Defence, on 14th May, feasibility studies carried out by four European countries—West Germany, Italy, Holland and the United Kingdom—over the past year showed that their national requirements for a military aircraft for service in the later 1970's could be harmonised and met in a multi-rôle aircraft built to a substantially common design. It was as a result of those feasibility studies that representatives of West Germany, Italy and the United Kingdom signed, on 14th May, the Memoranda of Understanding, under which they have embarked on the project definition phase of the project.

I regret that the Dutch Government, who participated in the feasibility studies, have confirmed that they do not wish to sign the Memoranda. They have, however, put forward alternative proposals on the basis of which they hope to remain in the consortium. These proposals are now being considered by ourselves and the other participating countries.

The essence of the M.R.C.A. project is that it is a collaborative venture which meets the N.A.T.O. requirements of all the participating countries. So far as the Royal Air Force is concerned, the British variant of the aircraft emerging from the feasibility studies should be suitable to equip R.A.F. squadrons at first in the strike-reconnaissance rôle, and later in the fighter rôle. As the House will know, we already have the Jaguar and the Harrier as close support aircraft for the 'seventies, and we also have the Phantom as a fighter. What we are now looking for is an aircraft capable of reaching targets beyond the immediate battle area in all weathers—the job now done by the Canberra and over the next few years by the Buccaneer. This is the task for which we are looking to the M.R.C.A.

So far as numbers are concerned, which was a matter referred to by my hon. Friend the Member for Bebington (Mr. Brooks), the present requirements of the participating countries are likely to amount to something over 1,000 aircraft, of which the R.A.F. plans to take about one-third. No country is, of course, ordering aircraft at this stage. All that has been done is that, for the purposes of deciding how work is to be shared, the countries concerned have made an estimate of the number of aircraft they expect to need when the M.R.C.A. goes into service in seven or eight years' time. I cannot be responsible for all the conflicting reports referred to by my hon. Friend, but I assure him that it is on this basis, at this very early stage, that we have approached the problem.

I should now like to say a little about the way in which this project is to be controlled and the phases it is planned to go through. This relates to the anxieties about costs which concerned my hon. Friend.

As my hon. Friend knows, the Panavia Company has been formed by the aircraft industries of the participating countries to develop and produce the aircraft. An international management organisation has also been set up to manage, direct and keep under review all aspects of the project, with special emphasis on financial matters. This organisation consists of a small policy group, a board of directors and an international management office. The policy group, comprised of one senior official from each participating country, is responsible for major decisions of policy and advising on the commitment at the end of each phase of the programme. The board of directors, again comprised of representatives from each country, is responsible for the management of the programme and direction of the international management office permanently established for the executive management of the project.

This programme itself has been split into four main phases. The conceptual phase has been concluded; the project definition phase is now in progress; then will come the main development phase, which will be divided in turn into three sub-phases; and finally a production phase, which will, to a certain extent, overlap development.

The importance of this organisation and phasing is that the project will be approached and evaluated stage by stage; progress will be carefully reviewed at each stage before further financial commitment is made to the next stage.

This now leads me to the point about which my hon. Friend has expressed particular concern—that of the costs of this project. My hon. Friend is quite right when he says that a project of this size will cost a substantial sum. But this is hardly surprising when what is involved is the re-equipment of some two-thirds of the R.A.F.'s combat front line; and we need to remember that all the expenditure, including that on research and development, will be spread over a period of about 14 years. However, as I explained in answering a Question from my hon. Friend on 25th June, it is not normal practice to give cost estimates of this nature. In any case, it would be wholly misleading to quote detailed figures at this stage of the project when we are only at the beginning of the project definition phase. One of the purposes of this phase is, of course, to produce firmer cost data as a result of which the financial and budgetary implications of the whole project can be fully assessed. We have, of course, made our own provisional estimates of the total costs of the project. These lead us to believe that the M.R.C.A. should provide much better value for money than any possible alternative.

I think that I can help my hon. Friend to this extent by assuring him that there is no basis for the suggestion that, after my right hon. Friend the Secretary of State made his statement in the House on 14th May, an estimate was given by the Ministry of Defence on the following day of £675 million as the British share of the cost of the project.

I would deal finally with the anxieties which my hon. Friend has expressed about the dangers of the costs of this project getting out of control. I can assure my hon. Friend that I am as concerned as anyone to ensure that strict control is exercised; but I would be the last person to attempt to minimise the difficulties in achieving that control. It is because we are fully seized of these difficulties that, as I have already explained this evening, the project is divided into a number of phases, with a searching review of the whole programme at the end of each phase. Our present financial commitment is only to the current phase, that of project definition, in which our share is some £4 million. We have learned a great deal from past experience in the control of elaborate military projects and, in the kind of project with which we are dealing this evening, a vast amount of expertise and judgment has been built up both at B.A.C. and in the Ministry of Technology. It is true to say that no other aircraft project has been so carefully appraised at such an early stage.

I conclude by assuring my hon. Friend that we and our consortium partners are very conscious that this venture presents a unique opportunity for Europe to collaborate on a project of major military and technological significance. This will be of great value to N.A.T.O. and can also help to establish a European aircraft industry on a truly competitive scale. We are all determined to ensure that this project will be a success, and I am confident that all concerned will be getting extremely good value for money.

Mr. Frank Allaun

rose—

Mr. Speaker

Order. The hon Gentleman has exhausted his right to speak, but he can intervene before the Minister sits down.

Mr. Allaun

Thank you, Mr. Speaker. Before my hon. Friend sits down—he has denied that the Minister gave these figures to the Press next day. But three reputable papers quoted the right hon. Gentleman as saying so. I cannot understand his explanation.

Mr. Morris

In the course of his comments on this matter, my hon. Friend has given a number of figures. The figure that he gave when he asked me a Question on the last occasion on which I was replying was £675 million. That is the figure of which he had given me notice.

I can find no basis for it in the Ministry of Defence. As I said earlier, from my inquiries it appears that this figure of £675 million was not given by us.

Mr. F. V. Corfield (Gloucestershire, South)

Is the Minister yet in a position to give the House any information about the choice of engine? I understand that negotiations have reached a fairly critical stage in the last few days, and the House would be interested if he could give us any fresh information.

Mr. Morris

rose—

Mr. Speaker

Order. The hon. Gentleman can speak again only with the leave of the House, which I suspect may be granted.

Mr. Morris

With the leave of the House, I anticipated that this Question would be asked. I regret that I am not in a position to answer it. It may take a little time. It may be two or three months before we can give an answer to this very important question.

Question put and agreed to.

Adjourned accordingly at five minutes past Twelve o'clock.