HC Deb 25 June 1981 vol 7 cc385-400
The Secretary of State for Defence (Mr. John Nott)

With permission, Mr. Speaker, I should like to make a statement.

The Government have reviewed the defence programme, and a full account of our conclusions is contained in a White Paper, which will be available shortly in the Vote Office.

The Government intend to honour the NATO aim of 3 per cent. real growth in defence expenditure, and have, exceptionally, taken a firm decision now to plan to implement the increase until 1985–86, a full four years forward and two years beyond the published plans for public spending generally. This may mean that defence absorbs an even greater share of our gross domestic product, and, while it will be necessary to curb several of our forward plans and aspirations, the additional funding should enable us to enhance our front-line capability above its present level in very many areas.

The House knows of our basic problems, which are not unique to Britain. We have a defence programme which is unbalanced and over-extended. Last year, we suffered from severe cash problems, and similar difficulties are already emerging in the current year.

We cannot go on like this. We have no choice in the longer term but to move towards a better balance between the various components of our effort—front-line numbers, quantity and quality in equipment, and military and civilian support. We must determine this balance in terms of real defence capability rather than as the outcome of a debilitating argument over each Service's budgetary share.

We have looked first at the defence of the United Kingdom itself, especially in its role as a crucial reinforcement base for NATO. For some time we have felt the need to give greater emphasis to our reserve forces. For the Territorial Army, whose readiness and efficiency were vividly shown in Exercise Crusader, my intention is that there will be a progressive increase in numbers of some 16,000 men and women, and there will also be an increase in training days from 38 to 42 a year. We will order new minesweepers for the Royal Naval Reserve as soon as resources permit, and we will expand the use of Royal Air Force Regiment reserves in airfield protection.

In United Kingdom air defence—a priority requirement—we will sustain all the programmes already in hand, including the Nimrod early warning system and the doubling of modern air-to-air missile stocks. As a new enhancement, we will provide Sidewinder air-to-air missiles for a further 36 of our Hawk aircraft, making 72 Hawks in all available to supplement our fighter force; we will run on two Phantom squadrons, instead of phasing them out as had been earlier planned, when the air defence version of Tornado comes in; we will examine the possibility of switching 20 Tornados to the air defence rather than the strike version; and we will substantially increase the VC10 tanker fleet, which multiplies our fighter force by prolonging patrol time and range. Around our coasts, we will increase our capability to counter enemy mining, and we have set aside funds for enhancing our defensive mining capacity to help secure our ports and maritime routes.

I turn next to the major land/air contribution on the Continent of Europe. BAOR's manpower, which is above our Brussels Treaty commitment of 55,000 men, will return to that level, but we will retain in Germany our full present combat fighting strength of eight brigades and our responsibility for the forward defence of a vital 65 km of the central front.

We intend, however, to withdraw from Germany one divisional headquarters and other supporting staff, with a consequent reduction in the number of locally employed civilians, and this, together with other necessary economies, will enable us to move over the next five years towards a slightly smaller Regular Army of 135,000 trained men—7,000 fewer than at present, but partly balanced by the increase in the Territorial Army.

Suggestions have been made, I know, that we should go for a much greater reduction in our troops in Germany, but, quite apart from the fact that there is no one else to perform our task of defending 65 km of the central front, it would be much more expensive to bring the troops home, because we simply could not house or train them here without a massive new infrastructure programme. Only disbandment would relieve our budgetary pressures, and we cannot prudently cut our Army below a certain minimum level.

However, the small reduction in Regular Army manpower that I propose will help us to afford, as is our intention, the very wide range of re-equipment projects now envisaged for BAOR. The scale or timing of some of the projects will be modified, partly to restrain costs but mainly to provide for a further increase in war stocks and ammunition, to improve the combat endurance—the staying power—of 1st British Corps, which will be substantially enhanced. We plan, for instance, to increase further the buy of Milan anti-tank missiles.

The Challenger tank will equip four armoured regiments, new night sights for missile systems and tanks will be introduced, and improvements will be made both to the present Chieftains and, in due course, to Challenger. We will bring into service the 2nd Chinook helicopter squadron to enhance Army logistic support and mobility. We shall introduce the tracked version of the Rapier missile system and the TOW anti-tank missile launched from Lynx helicopters.

I am glad to announce that, subject to final negotiations, we should shortly be signing in Washington an agreement with the United States Government for the joint manufacture with the United States of the AV8II, the advanced Harrier. This has turned out to be an agile and effective aircraft, with a substantial weapon-carrying ability, and we plan to order 60 aircraft for close all. support. Within the total Anglo-American programme of some 400 aircraft, we are looking for a 40 per cent. share for British Aerospace and a 75 per cent. share for Rolls-Royce on the engine. There should be something like £1 billion work for British industry, the bulk of it for export to the United States.

I have decided that we cannot afford early replacement of the Jaguar, although possibilities remain open for new combat aircraft in the longer term, perhaps through international collaboration. On the other hand, we must exploit our investment in Tornado—some £10,000 million at current prices. We will continue with the JP233 system for neutralising enemy airfields, and we shall seek also to acquire new weapons to equip Tornado in an anti-armour role and for suppressing enemy air defences.

At sea, the Royal Navy will continue with the key task of providing a strategic nuclear force by the modernisation of the Polaris force with the Trident system. We have maintained one Polaris boat on station continuously for the past 12 years. One Trident submarine, invulnerable to any pre-emptive strike, will carry up to 128 independently-targeted warheads, which can hold at risk targets over a vast area of the Soviet Union. No enhancement of our conventional forces could possibly prove of equal deterrent value. In a world where nuclear weapons cannot be disinvented, it is the United Kingdom's surest way of preserving peace.

However, we must also keep strong the three conventional elements of power at sea. In maritime air, in addition to present plans, we will fit a further three Nimrods, making 34 in all, to the full mark II equipment standard, which is as great a leap in technology over the mark I Nimrod as the mark I was over the Shackleton. Armed with the Sting Ray torpedo, the mark II will have great striking power against submarines. We will proceed with a new stand-off anti-ship missile to be delivered by Buccaneers—which we will keep on for this task—or by Tornado. Subject to the satisfactory completion of contract negotiations, we intend to acquire British Aerospace's Sea Eagle anti-ship missile.

We shall increase our fleet of nuclear-powered attack submarines, newly equipped with Sub-Harpoon, from the present 12 to 17. I have today confirmed the order with Vickers at Barrow of another submarine at a cost of £177 million. We shall also proceed as fast as possible with a new and more effective class to replace our present ageing diesel-powered submarines. These should also have a market overseas. We shall acquire a new heavyweight torpedo for all our boats, and are considering alternative British and American designs for this. Overall our maritime air and submarine capability will be much enhanced.

As regards surface ships, we shall go ahead with all the very large orders—20 new warships to a value, with their weapons, of about £2,000 million—already in hand in British shipyards, and shall be placing an order for a further type 22 anti-submarine frigate, at a cost of £125 million, which will sustain work at Yarrows on the Clyde. We are placing the order for five patrol craft with Hall Russell of Aberdeen for service in Hong Kong.

But I believe we must make changes here in a number of ways. First, if we want to build a reasonable number of new ships in the future, we must devise much cheaper and simpler designs than the type 22 frigate. We must accelerate urgently—and I have provided funds in the programme for this—a new type of anti-submarine frigate, the type 23, built with an eye to export as well as Royal Navy needs, for we have not sold a major British warship of Royal Navy design for over a decade. I intend to pursue as well the possibility of still more cost-effective, smaller ships than the type 23.

Secondly, we can maintain our surface fleet at its present full strength only through a continuous programme of refits and major mid-life modernisations of older ships, requiring a huge and costly dockyard infrastructure. Typically, it can now cost up to £70 million to modernise an old Leander frigate, which is actually more than our target cost for the new type 23 frigate.

If we are to be able to build new ships in our shipyards and fulfil other priority defence tasks, we simply cannot afford to sustain such a policy of refit and modernisation—or, for that matter, maritime air defence at the present level, where the planned forward investment in major equipment for the air defence of warships at sea has been about double that for the air defence of the United Kingdom itself.

It is for this reason that, while we shall complete the new carrier "Ark Royal", we intend to keep in service in the longer term only two of the ships of this class, with their heavy demands on supporting anti-submarine and air defence escorts. The older carrier "Hermes" will be phased out as soon as the second of the new carriers is in operation.

Overall, we shall try to hold the destroyer and frigate force declared to NATO at around 50 ships compared with 59 ships at present. This will be achieved by disposing early of older and more manpower-intensive ships—for example, from the County, Rothesay and Leander classes—and timing their withdrawal so far as possible to avoid major refit or modernisation. We shall place some of these ships, without further modernisation, in the standby squadron, where they will still be available, though at longer notice, as part of our force declaration to NATO. There will be a consequential reduction of Royal Fleet auxiliaries.

On present estimates, the reduction in target numbers of the Royal Navy will be between 8,000 and 10,000 men by the end of 1986, rather more than the reductions of 7,000 in the Army. We shall maintain the three Royal Marine commandos, since we place great value on their unique capability, but we shall dispose of the two specialist amphibious ships rather earlier than planned.

In consultation with the United States Secretary for Defence about these changes, I have indicated our wish to play an enhanced role, alongside our allies, outside the boundaries of the NATO area. We envisage resuming the deployment of naval task groups—centred sometimes around a carrier, sometimes around destroyers or frigates—for substantial periods on visits and exercises out of area. We have made specific provision in our programme for the extra costs of such deployment. We are continuing with our plans designating an Army field command to plan out-of-area contingency tasks; for providing an extra stockpile of equipment and giving our Hercules aircraft the equipment needed for a co-ordinated assault by parachute troops.

As regards support, the change in policy on refits which I have described earlier will mean that we cannot justify keeping a dockyard organisation of its present size. I regret to inform the House that the base and dockyard in Chatham will have to close in 1984. Work at Portsmouth dockyard will contract very severely, though the naval base will be retained, and consideration will be given to alternative ways of fulfilling the Government's obligation to support the economy of Gibraltar if it is decided that the dockyard work there cannot be kept up indefinitely. We shall consult closely the Gibraltar Government about how best to deal with the situation.

Much more naval training will take place at sea, and there will be a reduction in shore-based naval establishments, stores and fuel depots. Overall civilian numbers in the Ministry of Defence will fall by between 15,000 and 20,000 as a result of our measures. Our total work force will in due course be significantly below 200,000. Redundancies will, I am afraid, be inescapable.

I have described to the House the main thrust of what we propose and the substantial enhancement of our front-line capability in very many areas, but with a major reduction in the supporting infrastructure of defence.

I am asking my right hon. Friend the Leader of the House to find time, as soon as possible, for a debate on all these issues. At that time I shall be able to explain more fully the background to my proposals.

In conclusion, the Government have, in accordance with their undertakings to the country, decided to provide the increased resources our defence demands by increasing spending by 3 per cent. in real terms for the next four years, and we have decided also to apply the extra funding in a revised programme which will enhance the combat endurance and the hitting power of our front-line Forces in the decade to come.

Mr. Brynmor John (Pontypridd)

The Secretary of State made a statement which obviously has grave implications for the future defence of this country, and it is one that we shall want to study closely and to debate. His role has been that of a conjurer concealing by illusion what is really happening to the defence effort. His statement today has been altered from the worst case that was trailed in the Conservative newspapers over the last few weeks and he has tried to induce sighs of relief on the Conservative Benches. But I remind them that this is an illusion.

The right hon. Gentleman has told the truth to the House, but not the whole truth. For example, let me put to him the question of money, which enters crucially into the argument. The question of the funds available and what can we afford has been the subject of debate, yet the Secretary of State did not mention even one figure in his statement. How much will this exercise save compared with the Government's published programme? How much will be saved next year and up to 1985? How much will be saved up to the end of the decade, when the Trident costs will start to bulge?

What percentage of GDP does the Secretary of State envisage for defence in all the programme years? He said that it might take a larger percentage of GDP, but, given that under the dead hand of the Tory Government GDP is not likely to rise in the immediate future, how much of it that is available will be taken up by defence?

My second point concerns the size of the Navy. The Secretary of State has announced what appears to be a reduction of nine ships, from 59 to 50, but he will know, as we all do, that the gross number of ships in the Navy is irrelevant. What is relevant is how many there will be in the front line and how many will be in reserve. Will he confirm or deny that all the 50 ships that he mentioned will be in the front line, or will some be put in mothballs, to be called up when necessary, and left to rot away quietly in some river, thus reducing our total front-line fleet to 30 surface ships, as has been mentioned in the press? Will the third through-deck cruiser be sold or scrapped?

How is it proposed to deal with the 8,000 to 10,000 naval redundancies and the 7,000 redundancies in the Army? Where are they coming from? Are they being made across the board? Does the right hon. Gentleman have any plans to get rid of the extraordinary number of senior naval officers who are still in the Admiralty, although the size of the fleet has shrunk by so much?

I turn to the job implications of the closure of Chatham dockyard. The area already has an unemployment rate of 14.3 per cent. If Chatham is closed, the rate will rise to 25 per cent., and with the indirect consequences it may go up to 33 per cent. At the same time we shall lose the greatest source of expertise in SSN—nuclear-powered submarine—refitting in the Navy. What does the right hon. Gentleman propose to do about that and about Portsmouth? Does he propose to launch any special schemes for redeployment? Will any alternative industry come in, or will Chatham and Portsmouth be cast aside as monuments to the Government's monetarist folly?

What are the implications for British Shipbuilders? How many of the 20 ships that the right hon. Gentleman mentions on page 7 of his statement are already ordered and how many are new orders? If, as I suspect, there are no new orders for British Shipbuilders, what effect will that have on British Shipbuilders? Will it mean that its corporate plan has to be scrapped?

Is it not clear to even the most loyal, unthinking and compliant Government supporter that what we are hearing today is the first instalment that conventional defence has to pay because of the Trident missile system fitting into the defence review? This defence review has been shamelessly rigged, in that Trident's efficacy has never been called into question. By lowering our conventional warfare capability, we are lowering the nuclear threshold. We are abandoning the NATO priority, which is for a strengthening of non-nuclear forces as opposed to nuclear. If the right hon. Gentleman will not cancel this nuclear folly, the next Labour Government will.

Mr. Nott

Perhaps the hon. Gentleman did not hear what I said. We are not trying to save anything; we are spending more on defence. That was the central part of my statement. The percentage of gross domestic product that we shall be spending depends on how fast GDP grows.

Secondly, all of the 50 ships will be available to NATO. They will all be in the NATO operational category, although it is true that eight will be in the stand-by squadron.

We do not need to take any decisions on the carrier at present. HMS "Ark Royal" will not be completed until 1985–86. We shall have to take a decision at about that time about the third ASW carrier.

The reduction in numbers will take place as far as possible by natural wastage. I cannot exclude some redundancies, because it is essential that we keep the balance of the Forces correct and that we have a good balance of recruitment and professional skills within them.

I very much regret the closure of Chatham. It is a matter of great regret. The refits of the nuclear submarines and the other nuclear refits will in future be done in Devonport and Rosyth.

Although the hon. Gentleman clearly did not hear me, I announced today some new ship orders, which I think will be welcome to British Shipbuilders.

I come to the question of Trident. There is a big difference between our achievement already, in this Government's whole period in office, and our forward plans for defence spending, on the one hand, and the implications of the Labour Party's policy of reducing the share of our GDP spent on defence to the European NATO average, on the other hand. We debated the matter recently, and that was the official Labour Party amendment. The difference between the amount of money in our proposals and Labour's proposals is £20 billion. That is enough to pay for Trident four times over.

Therefore, how the hon. Gentleman has the temerity to talk to me about jobs in the defence industry, and our inability to sustain the cost of Trident, I do not understand.

Mr. John

It is clear that the Secretary of State is hard of hearing. I asked what alternative plans his Government had—apart from his Uriah Heep-like expressions of regret—for bringing alternative work to the people who are being displaced in the dockyards. They have served him and his Government, and all Governments, loyally. They demand more than the cheap, intellectual priggishness that they have been treated to recently.

Will the right hon. Gentleman now answer the question about Trident? Are we not hearing today about paying the first instalment in conventional defence for fitting in the Trident programme?

Mr. Dennis Skinner (Bolsover)

Jobs for the Yankees.

Mr. Nott

I have already seen the trade unions—about an hour ago. I shall be seeing them again within the next few weeks to discuss the further details of the Chatham and Portsmouth redundancies. We shall see how we can achieve this very difficult reduction in numbers in the easiest possible way. But I repeat that the hon. Gentleman cannot lecture me about the cost-effectiveness of any of our weapons systems.

Several Hon. Members


Mr. Speaker

Order. It is clear that many hon. Members are seeking to catch my eye, but it has been announced that there will be a debate on this question in the near future. Therefore, I propose to allow—exceptionally—a full half-hour for questions and then we shall move on.

Mrs. Peggy Fenner (Rochester and Chatham)

Does my right hon. Friend believe that the people of Rochester and Chatham elected me to support a Government that would do what has just been done to their dockyard? My right hon. Friend need not reply. I shall tell him the answer: they did not, and I will not.

What are my right hon. Friend's plans on timing? How long have we to fight this diabolical decision? What are my right hon. Friend's plans for the 7,000 work force and their great expertise? Forty-five per cent. of them are dedicated to submarine refitting. How does it happen that in a realignment of the surface fleet this refitting is removed from Chatham, when they have worked up such an expertise?

Mr. Nott

Our plans are for the dockyard and naval base at Chatham to close in 1984. I quite understand that my hon. Friend feels strongly on the matter, and I naturally regret that I have had to make this announcement.

As for the manner of the rundown, over the next few months we shall of course have discussions with the employees and their representatives to see how we can do it in the fairest and most effective way.

Mr. T. W. Urwin (Houghton-le-Spring)

In view of the highly controversial nature of the right hon. Gentleman's statement, may I ask whether there is any special significance about the fact that there does not appear to be on the Government Front Bench any representative of the upper echelons of the Foreign and Commonwealth Office to listen to what the right hon.

Gentleman says? Is he aware that only last week, in the forum of Western European Union, the Minister of State, Foreign and Commonwealth Office, gave a categorical assurance to the parliamentarians assembled there that there would be no reduction in the conventional forces established in Europe in accordance with the Brussels Treaty? In view of what the right hon. Gentleman has said about the abrogation of an establishment in Germany, is he in a position to give the same categorical assurance, that there will be no diminution in the number of our Forces remaining in Germany in accordance with our obligations?

Mr. Nott

I said in my statement that we shall maintain our Brussels Treaty commitment of 55,000 men. That is what my hon. Friend said at the Western European Union. There will be a reduction in numbers in BAOR of up to 2,000 soldiers, but we shall certainly maintain our Brussels Treaty commitment, which is what my hon. Friend said at the WEU.

Mr. Edward du Cann (Taunton)

I strongly support my right hon. Friend's determination continuously to obtain value for money in defence expenditure, which is very much needed and has often been reported upon by Select Committees, notably the Public Accounts Committee in the last Parliament. Will he give the House two clear assurances?

First, is it his belief that our maritime capacity, actual and potential, including the capacity for refitting, is adequte to safeguard Britain's maritime trade routes upon which the economic health of this country will always depend, in peace and in war?

Secondly, with regard to the hydrographic department of the Royal Navy, which he did not mention today but which is important for both strategic and commercial reasons and which pays its way, will he give an assurance that if he has not already made the decision he will make a decision in future not only to maintain it but to expand it in that strategic and commercial interest?

Mr. Nott

I certainly assure my right hon. Friend that we shall retain an adequate capacity for refitting the fleet that I have described for the next decade.

With regard to the hydrographic fleet, perhaps I may deal with that in greater detail when I speak in the debate that my right hon. Friend the Leader of the House has suggested. I cannot undertake that the fleet will be expanded, but I should like to deal with the subject in more detail in the debate.

Mr. A. E. P. Duffy (Sheffield, Attercliffe)

With regard to anti-submarine warfare, is the Minister sure that he is not relying too much on nuclear-powered submarines and maritime patrol aircraft, and the barrier operations and search-and-destroy techniques in which they undoubtedly excel? How will he provide, for example, for the pre-positioned hostile submarine or a breakdown in barrier operations if he cannot muster a balanced mix of forces, including certainly more escort vessels than the absurdly low figure of 50 that he now proposes?

Mr. Nott

I am not making any judgments about operational questions of that kind, but the surface fleet will still be substantial. There will be a very substantial increase in maritime air capability, particularly with the new weapons. There will also be an increase in the submarine fleet. However, I think that the techniques of anti-submarine warfare are better dealt with in a debate rather than in supplementary questions and answers.

Mr. R. Bonner Pink (Portsmouth, South)

Does the Minister accept that the reduction in the Navy of both escorts and men will be a very severe blow to it which, in my opinion, will mean that it will not have the capacity adequately to safeguard the convoys which must come to and go from this country in wartime? Does he also accept that the reduction at Portsmouth and the closing of Chatham will have severe repercussions in the neighbourhoods of both ports and indeed the whole of South Hampshire in the case of Portsmouth?

Will the Minister also answer two specific questions? Will he ensure that Ministry of Defence contracts are placed in the Portsmouth area, in particular with Vosper Thornycroft and Marconi? Will he further undertake to continue the close collaboration with local representatives to ensure that the least possible hardship is suffered in these most regrettable reductions?

Mr. Nott

I believe that the only way that we can afford to go on building new ships for the Royal Navy is by cutting down on the support costs of the existing arrangements. We cannot simply go on modernising Leander frigates at a cost of £70 million each when we can build the new type 23 for about £60 million. It is looking to the future of the Navy that leads one to that conclusion. The main reductions have therefore been in the infrastructure and not in the front-line capability.

With regard to the defence industries in my hon. Friend's area, Portsmouth will remain a major naval base. There is a tremendous concentration of defence industries in that area. I have attempted to avoid substantial cutbacks in procurement so that the defence industries are not affected, but I can do that only if I look to savings in the support infrastructure, which is what I have done.

Mr. Frederick Mulley (Sheffield, Park)

Will the Secretary of State explain why he thinks it wise to reduce the Army by 7,000, having regard to the enormous burden of Northern Ireland and the very frequent rotation of units there which often requires the taking of troops from West Germany, considerations which caused me to increase the number when I was in office?

Secondly, how many of the M23 frigates have been ordered? Does the Minister appreciate that we shall not sell any unless they are already down the line with a much shorter delivery time than we can normally quote? Has he made up his mind whether he intends to try to sell them for export or for the Royal Navy? Are they to be financed by the defence Vote, or by the Department of Industry Vote, as they should be if they are to be part of the export programme?

Finally, as it seems that we intend to spend so much more than our European allies, what is the Minister doing to encourage NATO to increase its expenditure? Can he give us some idea of NATO's preferences as between our conventional forces and the very expensive Trident programme which, in my view, is not justified against our general economic background or the programme that he has now announced?

Mr. Nott

On the last point, that may be the right hon. Gentleman's view, but it is not the view of our NATO allies who welcomed the Government's decision to modernise the strategic nuclear deterrent. Moreover, when the right hon. Gentleman was Secretary of State for Defence he, too, was modernising the strategic deterrent with Chevaline. I am surprised that he has changed his mind in the past 18 months.

I should, of course, prefer to increase the size of the Army rather than to diminish it, but I regret to say that, with cost escalation of equipment at its present level, it is not possible both to maintain the enhancement of our weapons systems in Germany and also to retain the full present size of the regular Army.

The type 23 is still in the design stage. We are trying to get the plans ready as soon as possible, but it will be between a year and 18 months before we can place tae first order for a type 23. It is all being financed on the defence procurement Vote.

Finally, of course, I believe that our NATO allies should increase defence spending. That is the purpose of the 3 per cent. But it does not help very much to lecture one's allies. One must just encourage them along.

Mr. Peter Griffiths (Portsmouth, North)

Will my right hon. Friend accept that the use of the term "contraction" with regard to Portsmouth dockyard is no comfort whatever to the thousands of people who will lose their jobs with no prospect of finding alternative employment in that area?

Does the Minister also accept that the deterioration in morale in the dockyard which will follow today's statement will make an orderly contraction difficult to obtain? Will he also explain how, if his strategic decision with regard to the surface fleet proves to be wrong, the necessary back-up capacity could be provided for the hastily assembled surface fleet which might well be needed in an emergency?

Finally, I wish to put two specific questions. First, will the Minister give a clear assurance that the Portsmouth naval base will still be regularly visited by warships of all classes and from all nations and that it will have the proper facilities to receive and to service them? Secondly, with regard to the base and the dockyard, will he give an assurance that the giving up of Ministry of Defence land to the civic authorities and to private development will take place as soon as possible, but that before that happens sensitive industries will be offered places within the secure perimeter, for example, for the production—

Mr. Speaker

Order. I know that the House wants to be fair to the hon. Gentleman, whose constituency is affected, but I have given a time limit. Perhaps he will now come to his concluding question.

Mr. Nott

I agree with my hon. Friend that the contraction of Portsmouth will be very severe. I can only say that we shall try to make it as orderly as we possibly can. As my hon. Friend knows, whenever the economy is buoyant there is anyway a considerable problem with Portsmouth. I believe that when the economy picks up there will be additional jobs available in the Portsmouth area. Portsmouth naval base will continue as at present. I shall certainly look into my hon. Friend's questions about land, and I shall be happy to discuss with him any problems concerning the Portsmouth dockyard contraction if he would like to come and see me.

Dr. David Owen (Plymouth, Devonport)

Is the Secretary of State aware that, despite the very painful consequences of some of these decisions, he is to be congratulated on the fact that at long last, after two years of total unreality in the defence budget, he is grappling with the central need to start to control the defence budget? He will be supported in that, and in particular he will be supported in his decision to slim BAOR and to concentrate the dockyards. But how does he justify a decision to reduce the surface ships and yet not to increase the hunter-killer submarine build rate? The build rate of 17 is that which has been planned for the last 12 years. Does the right hon. Gentleman recognise that if the economy continues to decline it will be very hard to justify even the present expenditure, and that it is on that basis that we still feel that it is wrong to pursue the Trident modernisation programme?

Mr. Nott

I am grateful to the right hon. Gentleman for his earlier remarks. I do not think that I need comment further on Trident at the moment. We shall no doubt be debating that again. With regard to the SSN programme—the hunter-killer nuclear submarines—I was referring to the numbers of them that will be in the fleet in 1990. I was not saying how many orders we would place between now and then. I was saying that we now have 12 in the fleet, and that we shall have 17 in the fleet by 1990. The number of orders that we can place in the next few years is a different question.

There is a contraction in the overall size of the surface fleet. That was not a strategic decision, as I think was earlier suggested. It was a consequence of feeling that we could no longer afford a dockyard infrastructure of the size that we have, and, therefore, the continual modernisation of the old Leander frigates. It was a consequence of that rather than a plan to reduce the size of the surface fleet. But in considering defence capability as opposed to separate Service Votes, I have calculated very carefully that over the next decade, as a result of these proposals, we could expect a shift in planned allocations of only about 3 per cent. from maritime to land-air capabilities. So the shift is not nearly as great when we consider capability as opposed to actual Service boxes, if I may put it in that way, as has been suggested in the last few weeks.

Mr. Kenneth Warren (Hastings)

While congratulating my right hon. Friend on the common sense which he has deployed in the defence review, may I ask what he is doing within the Ministry of Defence to improve its efficiency? In particular, is he examining the terms and conditions and the specifications which are imposed on suppliers, and which add to the Government's own costs and deny those suppliers export opportunities which they could achieve through commonality?

Mr. Nott

I agree with my right hon. Friend that a great deal of change and improvement is needed in the whole contract area and in the manner in which we procure new equipment. There is also a need to bring industry in earlier, with its own funds, and to build simpler equipment—and perhaps, if the Public Accounts Committee would allow it, even to enhance the profit margins, having got industry into these projects earlier. All these matters are of very great importance.

Mr. Robert C. Brown (Newcastle upon Tyne, West)

Could the Secretary of State tell me how much consideration the Cabinet gave to the effects on British Shipbuilders before reaching this decision? Is he aware that the corporate plan presented by British Shipbuilders to the trade unions was conditional on approximately 18,000 employees being transferred from merchant shipbuilding to naval work? How can the corporate plan, in those terms, proceed?

What future can the Secretary of State offer to the workers at Swan Hunter on the Tyne? Does he realise that he could scrap the Navy completely and rebuild it with modern purpose-built ships for the cost of Trident?

Mr. Nott

I have kept very closely in touch with the chairman of British Shipbuilders, and HMS "Ark Royal" is being completed now in Swan Hunter. If we were to continue the existing refit structure, with the modernisa-tion of older ships, obviously we should have fewer new ships than will now be the case. I accept that there is a problem in the warship building yards and that there is bound to be, in the next few years, a shift to the new defence technologies, which are less labour-intensive, and away from the labour-intensive warship building capacity. But I am in very close touch with the chairman of British Shipbuilders and helping as best I can.

Mr. Stephen Ross (Isle of Wight)

Is the Secretary of State aware that we shall at least welcome the realisation in his statement of the need to build cheaper ships, so that we can sell some of them abroad? We also welcome the suggested reduction in bureaucracy. Is the Secretary of State aware that on the Liberal Benches we believe that he is sacrificing our Eastern Atlantic defences on the altar of Trident, and that many jobs in shipyards—including Vosper Thornycroft, in which some of my constituents work, and in Portsmouth—are at stake? Is he satisfied that sonar protection is adequate protection in the Eastern Atlantic, with the 137 submarines of the Russian fleet? Finally, what is to happen in Cammell Laird?

Mr. Nott

I realise that if the political parties in this country have taken up a position that is antagonistic to Trident, there is not a lot more I can do to persuade them. But the amount of money that Trident will cost us in the next few years is not more than a couple of hundred million pounds on average, against a total budget of £12½ billion. It is absolute nonsense to suggest that, if we did not have Trident in our programme, the kinds of changes that I have announced today would not have been essential. That is even on a rapidly rising budget, and Trident is a very small proportion of the additional 3 per cent. that I have announced.

I must deal with Cammell Laird separately in the debate.

Mr. Anthony Buck (Colchester)

Will my right hon. Friend acknowledge that on the Conservative Benches we are all very glad that he has made the statement, as there is no more debilitating phenomenon than uncertainty? His statement will dispel some of that uncertainty. Does he agree that the most important part of his statement is the announcement that there will be an extension of our defence capacity right through to 1985–86? Are other NATO countries following our admirable example?

One understands the feelings of hon. Members concerning the dockyards. Will my right hon. Friend confirm that there will be ample dockyard facility remaining for the proper refurbishment of the fleet and, in due course, our Trident boats as well?

Mr. Nott

I agree with my hon. and learned Friend that it has been necessary to remove the uncertainty, which has been rife while the review has been undertaken.

We are spending more on our defence than any of our European NATO allies are spending. It would be a great encouragement to us if they were to emulate our example. There will be sufficient dockyard capacity to look after the fleet and to refit the nuclear submarines. There will, of course, be a smaller dockyard capacity, because we shall reduce the refining of the older surface ships and build new ships instead. I give my hon. and learned Friend that assurance, and I am grateful to him for what he has said.

Dr. John Gilbert (Dudley, East)

Now that the right hon. Gentleman has succeeded in sinking more ships in one afternoon than any foreign admiral ever did, can he say whether his calculations are based on the £5,000 million Trident system, or can we expect more cuts later if he decides to opt for Trident 2? Secondly, will he list all the equipment projects for the Army and the Royal Air Force which have been slowed down, reduced in number or reduced in quality as a result of his clinging to this Trident nuclear virility symbol?

Mr. Nott

As I said in my statement, throughout the programme, possibly with the exception of a smaller dockyard structure, I believe that there is an enhancement in our front-line capability. Moreover, I have put additional considerable sums of money into the combat stocks of our Forces so that their staying power in a conflict will be enhanced. Nothing is more important than that in raising the nuclear threshold. In the Trident expenditure costings, I have taken account of the figure of £5 billion that I have announced on many occasions to the House.

Mr. Keith Speed (Ashford)

In addition to the two amphibious warfare ships and the two carriers that we will be losing over the next few years, what number of destroyers and frigates will be disposed of or placed into reserve over the next five years? This is an important matter. It is not just a question of 59 to 50, because, clearly, many more ships than that will no longer be in the active operational fleet.

Mr. Nott

By the mid-1980s we shall have got rid of most of the County and all of the Rothesay class as well as some old Leanders. That is about 20 old ships in all. The 20 ships that will go out of the fleet in the next five years—as my hon. Friend knows, they have reached the end of their life—will be replaced by the 20 new ships that are now in the shipyards.

My hon. Friend also referred to the reduction from 59 surface ships to 50. Eight of the more modern Leanders will be in the standby squadron. Therefore—I do not seek to hide it—there will be some reduction in the overall readiness of the fleet in view of the fact that the standby squadron is at 30-days-plus readiness. However, that is nothing like the kind of catastrophic change in the surface fleet which many newspapers have suggested.

Mr. Dick Douglas (Dunfermline)

What has happened to the dockyard study? Is it now in mothballs? We require some indication of overall employment in the dockyards and naval bases. In addition, can the right hon. Gentleman give some indication about the phasing of the refit programme. Our suspicion is that the timing of the refit programme will be extended, as a result of which the capability of our fleet in service terms will be reduced.

Mr. Nott

The refits will now be finished in the yards. We will no longer go in for mid-life modernisations of any of the older ships. The rephasing of the present fleet into the new structure will require a great deal of working out, and that is taking place at present. There will be much less dockyard capacity than the dockyard study suggested, but many of the admirable suggestions in the study will be implemented, and I have referred to some of them in the White Paper which is now available in the Vote Office.

Mr. Cranley Onslow (Woking)

I congratulate my right hon. Friend on the sensible and responsible method of his overall approach to this difficult problem. Is he aware that, unlike the Opposition, the Conservative Party is determined to maintain Britain's effective defences against the real threats that face us, and welcomes the support that he has given to our long-term defence capability through the significant orders that he has today placed with British Industry?

Mr. Nott

I am grateful to my hon. Friend for his support.

Several Hon. Members


Mr. Speaker

Order. I propose to call two more hon. Members from either side in view of the circumstances.

Mr. R. C. Mitchell (Southampton, Itchen)

What is the effect of the right hon. Gentleman's statement on employment at Vosper Thornycroft, Southampton and the Royal naval dockyard in Portsmouth? Will the right hon. Gentleman's Department help the hon. Member for Portsmouth, South (Mr. Pink) redraft the leaflet which appeared at a recent election which stated "Save Portsmouth, Save the dockyard—Vote Conservative"?

Mr. Nott

I shall communicate with the hon. Gentleman and give him as much information as I can. The amount of work going to Vosper Thornycroft will very much depend on its success in obtaining orders. Generally speaking, there will be an increase year by year in the amount spent by my Department on procurement with British industry. The sums are increasing. Therefore, I am sure that the defence industries will welcome the Government's increase in expenditure to buy defence equipment in the future.

Mr. Michael Brotherton (Louth)

Does my right hon. Friend recall that in the recent debate, as reported in column 165 of Hansard for 19 May, he assured the House that the through-deck cruisers would be completed and would remain part of our defence programme? Does he also recall that I have written to him on this subject and that I have yet to receive a reply? What discussions has my right hon. Friend had with our American allies about our pledge to maintain 70 per cent. of the ASW commitment in the Eastern Atlantic? Does my right hon. Friend really believe that 25 or 30 Nimrod aircraft will replace a similar number of frigates, because I think that most unlikely?

Mr. Nott

I do not believe that, and I have never said it. I have never suggested that Nimrods, submarines or anything else can take the place of surface ships. I visited Washington last weekend and met my counterpart, Mr. Weinberger. We had excellent discussions. He welcomed the Government's decisions to increase our defence expenditure, and he understands the thrust of our proposals. While he must speak for himself, I believe that he supports our determination to reduce support infrastructure rather than the front-line capability of our forces, which in nearly every area is enhanced.

Mr. Kevin McNamara (Kingston upon Hull, Central)

What was the reaction of the trade unions to the statement that the right hon. Gentleman made to them an hour earlier, and how many job losses did he indicate would take effect as a result of these proposals? What will be the effect of his proposals on Gibraltar? What level of unemployment does he expect there among members of the trade union to which I belong as a result of these proposals? What additional economic help does he intend to give that area to try to overcome the effects of his decisions?

Mr. Nott

The hon. Gentleman must ask the trade unions for their reactions. I saw their representatives very briefly. In so far as there will be substantial job losses in the Ministry of Defence, I would not expect the MOD trade unions to be very happy. It would be surprising if they were.

I have given a broad outline of our desire to discuss the question of the dockyard with the Gibraltar Government, and that we shall undoubtedly do in due course.

Sir Frederick Burden (Gillingham)

I am grateful to my hon. Friend the Member for Rochester and Chatham (Mrs. Fenner) for support, but Chatham dockyard is situated in Gillingham. I must therefore admit that this is the most distressing day that I have experienced in the 30 years that I have been a Member of this House. My right hon. Friend's decision means that Chatham dockyard is to close, despite the fact that over the years a sense of service to the nation, especially to the fleet, has developed there. About 9,000 men and women employed in the dockyard will now cease work two or three years hence. However, is my right hon. Friend aware that the level of unemployment in the area is now more than 13 per cent. and that it has risen by 5 per cent. in the last year?

I believe that there is a gut reaction among many people against the cuts which my right hon. Friend is making in the Royal Navy. Unless he can give an assurance that there will be no war within the next 20 years, these cuts in the surface fleet will be very dangerous. The replacement and restructuring that my right hon. Friend proposes will take some considerable time to come into operation. I understand that the surface ship replacement that he has in mind has not yet been designed and considered for construction. I believe that these proposals are utterly dangerous, and I cannot support this defence policy.

Mr. Nott

I understand that my hon. Friend finds this a very distressing day. It is a very distressing matter for Chatham; that I perfectly well understand, and I genuinely regret it. The job losses in Chatham will be about 7,000. I think my hon. Friend talked about 9,000 job losses.

Sir Frederick Burden

With the ancillaries.

Mr. Nott

We shall do our best to hold the surface fleet—our force declarations to NATO—above 50. It will vary year by year, depending on the speed with which we phase out the older ships and also on the speed with which we are able to bring in the new type 23. We shall do our best to hold it over 50 as against the present 59.

Mr. Robert C. Brown

On a point of order, Mr. Speaker. The statement that has just been made by the Secretary of State for Defence will have extreme repercussions on the shipbuilding industry. I saw the Secretary of State for Industry in his place a moment ago and I assumed that he would make a statement on the effect of the defence statement on the British shipbuilding industry. I see that he has now left the Chamber. I wonder whether you, Mr. Speaker, have received a request from him to make a statement. If not may we have a statement by the Leader of the House?

Mr. Speaker

I am afraid that I have not. I have allowed extra time for the statement made by the Secretary of State for Defence.

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