Defence Projects and Exports

HC Deb 12 December 1986 vol 107 cc703-33

Question again proposed.

11.14 am

Mr. Wilkinson

They sometimes say that timing in politics is all. The great advantage of being called at this time is that, occasionally, one gets the opportunity to make two speeches for the price of one. I shall not do that, but I shall continue the plea that I initiated before the ministerial statement at 11 o'clock.

There are certain similarities between the Nimrod AEW controversy and the Westland helicopter controversy a year ago. One linking strand is that defence equipment collaboration is not sufficiently well understood in the House. The Royal Air Force's role in airborne early warning was an ideal candidate for a collaborative solution. It is deeply regrettable that a collaborative solution was not followed. If it had been, there would have been great benefits of inter-operability, standardisation, reduced costs and the entry into service of an effective weapons system. AWACS would have them much earlier.

Dr. M. S. Miller (East Kilbride)

I pay tribute to the hon. Gentleman for his deep knowledge of this subject, for which I have great respect. Will he cast his mind back about 10 years? At that time I was a member of the Select Committee on Defence. The problem was that the Ministry of Defence could not make up its mind about the specifications it wanted for an early warning system. AWACS was developed mainly for use over large land masses. As a maritime nation, we wanted a system that could do the job over large sea areas. The avionics firms said to the Ministry of Defence, "Let us know what you want and we will supply it." What has happened?

Mr. Wilkinson

As so often, the threat has evolved and become more acute, especially the threat of very low-flying, manned penetrating bombers and cruise missiles and, ultimately, there is the possibility of the Soviets acquiring stealth technology. We therefore need an airframe that has a much larger payload and the power generation to offer radar of sufficient size and effectiveness to be a satisfactory system throughout the life of a potential airborne early warning aircraft. This is the case for AWACS—an aeroplane with a 140-tonne maximum all-up weight at takeoff. It is not the case with Nimrod, which is an 85-tonne aeroplane. The size of the radar and power make a tremendous difference. The positioning of the Boeing AWACs Attenna on top of the fuselage rather than split fore and aft in the configuration of the Nirmrod 3 are all very much in favour of AWACS and have enabled Westinghouse to improve the capability of its radar. It has a continuing potential for improvement and enhancement. I am sure that Cabinet will take those factors into account.

Last week I had the honour to present a report to the Assembly of Western European Union on helicopters for the 1990s which was passed unanimously. I want to draw certain lessons from the report. We are all deeply conscious of the need for the Government to make certain key decisions on helicopter strategy. There must be much greater understanding in the Alliance as a whole of the importance of the helicopter in land-air operations. This was referred to by my hon. Friend the Member for Northampton, North (Mr. Marlow). As an aviator, I shall not quarrel with his expert judgments as a former member of the Royal Engineers. Nevertheless, the British Army has been slow to exploit that potential. In part that may be because the operation of helicopters has been divided between the Royal Air Force and the Army, but the adverse effect of that somewhat artificial division has been over-emphasised.

When the study of this matter is reviewed it is important for the optimum choice to be made on overall grounds—command and control, logistics and training—and not merely on administrative convenience and loyalty to a particular service. I am sure that my right hon. Friend the Secretary of State and his team will make that judgment.

Operational requirements and time scales must be much better harmonised. The independent European programme group is working well and has essential work to fulfil for helicopters. Above all, an initial study into the new helicopter for the 1990s, the NH90 programme, has been completed. The helicopter has potentially two variants—a tactical transport or light support helicopter and a helicopter for the new NATO frigate for the 1990s, the NFH.

It is not immediately apparent what the United Kingdom's interest in that aircraft is. Westland, rightly, wants to pursue the studies into it, is interested in it and its technical potential and may well participate. However, it is too early both for Westland and the Ministry of Defence to make an ultimate judgment on the programme.

More important for our country's helicopter industry is the decision that the Ministry takes on whether to procure a new light support helicopter. All hon. Members know that part of the reason for the Westland crisis last year was the failure of the Ministry of Defence to order more helicopters soon enough. In particular, there is a genuine need for new light support helicopters or new medium to light support helicopters.

I urge my hon. Friend the Minister to put to his colleagues in the Department the benefits of buying a Black Hawk with the RTM322 Franco-British engine as a replacement for the Wessex, which is in service with the RAF and the Royal Navy, and a transport version of the EH101 as a replacement for the Puma. The transport version of the Anglo-Italian EH101 would come into service sooner than the anti-submarine variant, which is more complicated.

If the Government could take those two decisions and come up with sufficient funding to order sufficient aeroplanes to make the orders worthwhile, this could transform the prospects of the Westland company, which has done well but which, nevertheless, has an evident gap in its order book until full production work for the anti-submarine warfare EH101 becomes available.

Finally, I ask my hon. Friends in the Government not to forget the importance of the associated industries to helicopter manufacture. They include avionics, electronics and the light turbine aeroengine industry. A great deal of Government money has gone into the RTM322 engine. I hope that the RTM322 will be definitely specified for the Agusta 129 Mark II light attack helicopter, which we all hope will be produced for the British, Italian, Dutch and Spanish armies.

It is a great step forward that our Army now recognises the need for such a dedicated anti-tank helicopter. The agreement on operational requirements which has taken place between the Italian and British general staffs is an example of what can and should be achieved. A negative example of the dangers in collaboration is seen in the so far abortive attempt of the French and Germans jointly to produce a new third generation anti-tank helicopter and, in the case of the French, a new anti-helicopter helicopter. The helicopter Apui Protection is the anti-helicopter helicopter and the helicopter Troisième Generation is the French anti-tank helicopter. The Panzer Abwehr Hubschrauber is the German version. In the anti-tank role all those aircraft will require the new third generation fire-and-forget Trigat missile.

The problem has not been a lack of political will, because during the past 10 years the French and German Governments at the highest level have tried to make the programme succeed, but the operational requirements of the Bundeswehr and the French army are manifestly different and it is impossible to reconcile them.

A great deal of progress is still to be made in arms collaboration. The AEW episode has shown us the dangers of trying to go it alone in expensive, sophisticated programmes which are of the greatest importance to our defence. There is a higher degree of security if a team of industrial partners is available from different nations. I wish that had been available and that we had participated in the AWACs from the start as some of our NATO European friends did.

The Government now have the opportunity for working out an effective helicopter strategy of great benefit to Westland, Rolls-Royce and our armed forces. It is overdue, but that is not to say that it will not be all the sounder for that extra time. I thank my hon. Friend the Member for Kingswood (Mr. Hayward) for the expert and well informed way in which he introduced this most timely debate.

11.26 am

Mr. John Cartwright (Woolwich)

I add my congratulations to the hon. Member for Kingswood (Mr. Hayward) on his timely choice of subject for the debate today. We should be particularly grateful because it looks as if this may be our only opportunity to discuss the airborne early warning system, if, as we understand, the Government are to announce their decision immediately before the Christmas recess.

I agree with the hon. Gentleman's thesis that it is probably unwise for politicians to produce snap judgments on something of this complexity when we do not have access to all the technical assessments, especially the views of the RAF. In 1977 I pressurised the Defence Minister, now Lord Mulley, to choose the AEW Nimrod. I must confess that in the past year or two there were times when I did not feel it appropriate to boast about that part that I played.

In trying to add up the balance sheet on this extremely complex issue, it is fair to say that from a technical point of view the Boeing AWACS would probably be the safe choice simply because the technology is tried and tested, it is generally in NATO use, and it may well be bought by the French, so the issues of standardisation and interoperability do not raise any particular problems.

It is also true that in terms of the jobs calculation Boeing has offered what appears to be extremely generous offset possibilities. That may well compensate for the 2,500 job losses that GEC and its sub-contractors would suffer, if the AEW Nimrod solution is not chosen. Major British firms, such as Plessey, Ferranti and Racal, see considerable opportunities in the Boeing AWACS proposal.

Some of those jobs would be created in areas of high unemployment, which desperately need that sort of support. Other hon. Members, especially my hon. Friend the Member for Yeovil (Mr. Ashdown), have drawn attention to the fears that these replacement job opportunities would be in fairly low-grade trades and skills and that the high technology involved in the GEC avionics operations may well not be replaced as a result of the offset proposals.

As the Boeings would not be swiftly available, we should presumably have to borrow American planes for the early years of the programme. The purchase of nine Boeing planes would also cost about £1 billion. As the hon. Member for Eccles (Mr. Carter-Jones) eloquently pointed out, 11 airframes are already available for the AEW Nimrod project and £1 billion has been sunk into avionics research in the past nine years. There is also at least a possibility of export opportunities. I think that it is generally accepted that if we reject the Nimrod option we shall pay the penalty of breaking up the design and hi-tech teams and losing their expertise. The hon. Member for Kingswood suggested that that expertise could perhaps be replaced in other ways, but initially it would be broken up. That, more than anything else, brings me down on the side of Nimrod as the more attractive proposal, provided—this is a very important proviso—that it can meet the detailed performance requirements of the RAF.

I am not so reassured as others have been by the Secretary of State's protestations that both systems work. As this stage of consideration, I should damned well hope that they do. I should hope that we would not be considering a system that did not work. The question is not whether they work but how well they work and whether one offers a substantial advantage over the other in terms of performance. If there is little to choose between them on technical capabilities and performance, I believe for a variety of reasons that we should stick with the British solution.

A procurement issue that has not been mentioned in the debate so far—the DROPS system of battlefield ammunition transporters—has caused considerable concern on both sides of the House. I understand that my hon. Friend the Member for Yeovil intends to explore this in greater detail if he catches your eye, Mr. Deputy Speaker. I therefore content myself with saying that there is a great deal of concern and suspicion that will not be allayed until there is a full and thorough inquiry into the whole issue.

The motion rightly draws attention to arms sales and exports. The hon. Member for Kingswood was right to stress the economic importance of our ability to export arms, but he will appreciate that the subject arouses controversy. There is always concern about the role of nations selling arms around the world and especially about developed nations selling arms to the Third world. I accept that those arms are sometimes needed for national defence, but all too often one feels that resources that should be used for other purposes are being used for the purchase of arms for not altogether worthwhile reasons. There is also concern about arms sales to nations with bad human rights records, especially if the equipment concerned could be used to suppress internal dissent. There is growing concern, too, about the activities of private arms dealers throughout the world, and especially those based in this country. On all those issues, the Government's position is less clear than some of us would like.

With regard to the Government's position on the supply of arms in the Iran-Iraq conflict, we appreciate that there is a problem in terms of contractual obligations. We understand that the supply of spares for the Chieftain tank and the Scorpion armoured vehicle arises out of contractual obligations entered into in the days of the Shah. Nevertheless, that seems a very long time ago and we cannot ignore the impact of those supplies on the Iranian war effort and the role that they play in that sad conflict.

There is also concern about the role of the International Military Sales Organisation. We read in the press that between 20 and 31 October a team of Iranian officials visited this country and had extensive discussions with that organisation, which is a wholly-owned subsidary of the Ministry of Defence. The talks seem to have covered issues such as infrastructure contracts which had been in existence for some years but which had been in abeyance. It is suggested that those contracts relate to matters such as repair bays and garage facilities for the Chieftain tanks. If there is to be further support for the Iranian effort in terms of that kind of back-up it should be publicly acknowledged by the Government. It is not good enough to argue that although the IMSO is a wholly owned subsidary of the Ministry of Defence it is entirely independent. We cannot accept that type of approach. We need to know exactly what is going on. We have seen from across the Atlatic the dangers that flow from supplying arms to the Iranians and trying to keep it secret. I hope that the British Government will be absolutely clear and open about any arms deals with the Iranians.

As a footnote to that, it would be interesting to hear the Minister's comments on reports that this country has supplied Chieftain spares to the Iraqis to enable them to re-use captured Iranian tanks in the conflict. If that were true, it would be a sad instance of Britain supplying both sides in a conflict which to many of us seems pointless and which has unnecessarily claimed hundreds of thousands of lives.

There is also concern about the role of the Iranian team based in London, which seems to have a vast shopping list of military hardware of all types. The supply may not come directly from the United Kingdom, but it is certainly masterminded in London. Again, there is a feeling that the Government are turning a blind eye because no British laws are actually being infringed. It would be interesting to hear the Government's view on the activities of that group.

A similar issue has arisen in relation to arms supplies to Libya. At the beginning of this week there were reports of the purchase by Libya of submarine lifting gear produced by a Clydeside company. This is apparently intended to equip a Libyan naval base near Tripoli. According to media reports, the company concerned consulted the Department of Trade and Industry and was advised that no export licence was required because the supplier to which the equipment was going was an Italian company. That may be so, but the entire work force at the yard knew that the end customer was Libya. In those circumstances, it seems strange that the need for an export licence was not even considered. In The Guardian on 8 December a spokesman for the Department of Trade and Industry was quoted as saying: We have a normal trading relationship with Libya, though it is doubtful that equipment which could have a military use would get a licence. He went on to say: Sometimes the equipment is not easy to define. I accept that there are problems in defining when and which equipment could be used in a military situation, but as the equipment in question was destined for a naval base near Tripoli and as the firm concerned was supplying similar gear for use in Polaris submarines and, potentially, Trident submarines, it is hard to accept that the potential military use was not obvious. Bearing in mind what the Government have rightly said about Colonel Gaddafi's role as the godfather of a great deal of international terrorism, it is strange that the Department of Trade and Industry does not fall over backwards to be absolutely firm and clear that we should not be supplying military equipment to the Libyan Government. The order was apparently placed in March 1985, well after the embargo on supplying arms to Libya was introduced. The equipment was due to be collected in December 1985 but was not shipped until November 1986. It would be useful to have the Minister's comments on that.

The hon. Member for Kingswood has painted the traditional rosy pictures of the opportunities that SDI offers British firms and academic institutions. In doing so he was echoing some of the early high hopes that SDI meant a lucrative gravy train for a range of companies in Britain. He was echoing the suggestions made by the right hon. Member for Henley (Mr. Heseltine) when he was Secretary of State for Defence, when he said that about $1.5 billion worth of orders were available to Britain through the SDI programme. General James Abrahamson, the head of the SDI office, talked in the summer of 1985 of hundreds of millions of dollars being available to Britain through the programme.

The Memorandum of understanding, which was signed in December 1985, did not involve any formal guarantees of how much money was to be involved. I understand that so far the contracts amount to the princely sum of £25 million for British firms, which is a long way short of the $1.5 billion prospectus that we were offered a year or so ago. Most of the orders that have come to Britain so far are for theoretical studies in areas such as computers, sensors, command control systems and potential counter measures. It may be that these theoretical studies will lead on to orders for hardware, but as the song says, "It ain't necessarily so". A good deal of concern is being expressed among some United Kingdom firms that their commercial research is being exploited by some of their American competitors with no guarantees of contracts coming at the end of the operation.

One independent body, the Strategic Research Initiative, is warning United Kingdom companies that are involved in SDI research that they risk losing copyright and patent rights. It would be useful if the Minister could tell us whether there is concern on the Government's part about the progress of SDI opportunities, whether the position is likely to improve in the foreseeable future and whether the original target figure given by the then Secretary of State, the right hon. Member for Henley, is ever likely to be achieved.

I shall echo what has been said about the need for much tighter European co-operation in defence procurement. It would have been better if the issue had been included in the motion. We talk constantly about the need for co-operation and we agree constantly on the principle and how necessary it is to implement it. Unfortunately, we make only slow progress towards achieving this element of European co-operation.

The hon. Member for Ruislip-Northwood (Mr. Wilkinson) talked about the Western European Union, and I have been a member of the North Atlantic Assembly for the past 10 years. Throughout that period the Assembly has produced reports on the need for greater European co-operation in defence procurement. It has constantly agreed about the principle and it was discussing the issue long before I came on the scene. I suspect that if I disappeared from it tomorrow, it would continue to discuss the issue for years. As I have said, it is unfortunate that we make extremely slow progress. There is pressure on defence budgets throughout NATO and it is essential that we co-operate more. If we want to see a genuine two-way street across the Atlantic and more equal defence procurement opportunities, we must co-operate in Europe. The two-way street currently is, in reality, one great highway from the United States to Europe with 14 individual winding lanes from Europe to the United States. If we want to sell in the American market, we must get together and work together in Europe.

We have had some successes in collaborative ventures, but even when we go down that road there is often an insistence on maintaining national production lines. We must accept that we cannot continue trying to maintain productive capacity and capability at a low level in virtually every type of weapon system. Rationalisation is inevitable. I know that there are problems when national security is involved. I know also that there are difficult issues to be faced involving economic considerations, especially when there is such high unemployment in western Europe and rationalisation means jobs going to one country rather than another. As I have said, however, we cannot continue avoiding the need for greater rationalisation and specialisation in defence given the enormous cost of research and development.

I hope that one of the Government's priorities will be to produce some real progress towards more co-operation within the European pillar of NATO instead of merely talking about it, adopting resolutions and reaching agreements. If we do not make progress we shall not obtain value for money from our defence investment, and that is needed desperately.

11.45 am

Mr. Paddy Ashdown (Yeovil)

I am pleased to be able to contribute to the debate immediately after my hon. Friend the Member for Woolwich (Mr. Cartwright). I endorse wholeheartedly his comments about European co-operation and the sensible approach that he outlined on Nimrod and AWACS. I congratulate the hon. Member for Kingswood (Mr. Hayward) on introducing a timely debate which has already borne a considerable amount of fruit. I thank the hon. Member for Ruislip-Northwood (Mr. Wilkinson), who is not now in his place, and the hon. Member for Eccles (Mr. Carter-Jones) for their mentions of Westland. I hope that the Minister listened to their remarks with great care. The hon. Member for Ruislip-Northwood made some powerful and telling points of which I hope the Minister and the Government will take account. They are points on which I hope to touch briefly.

The hon. Member for Eccles said that the campaign to get the Government to see sense about Westland has not been run, happily, on a party-political basis. Hon. Members on both sides of the House have made a considerable contribution to the campaign and it is appropriate for me, in representing the community which has the largest dependence on Westland, to pay my tribute and express my thanks to both Labour and Conservative Members for fighting a long and strenuous battle on behalf of the company. I hope that their efforts will bear fruit in the near future.

I am sure that the House will not be surprised when I make a few comments on my own about the present position at Westland. I shall take as read some of the more detailed points which were made by the hon. Member for Ruislip-Northwood, who covered the ground with his usual diligence and the background knowledge for which he is widely respected on both sides of the House. The arguments which he advanced were powerful and ones that I wished to adduce myself, but in the interests of brevity I shall not do so. It will be more useful to leave them on the record in the hon. Gentleman's name. As I have said, I hope that the Minister will take account of them.

It is with pride and pleasure that I am able to call the attention of the House to a success story for Westland. Last year the company had a loss of about £95 million, but announced its end-of-year results yesterday and they showed a profit of £25 million. In Britain's present industrial climate it is rare enough for any company of any size to have turned round profit to loss a sum of £120 million in one year. But for a company to have done that against the background of political turbulence and turmoil that Westland suffered in the early and middle portion of the year is testimony to the skill and ability of its management, especially to its leader Sir John Cuckney, to the wisdom of the management's policies, to the strength of the company and most especially to the loyalty and dedication of the work force. The House and the Government should recognise and pay tribute to those qualities in Westland, which have ensured that one of our key defence companies has survived the past year and prospered as well.

I ask the Government to recognise that in all senses and in full measure Westland has played its part in restructuring itself. Westland has been able to fight through a period during which it has been a political football for the most powerful in our land. It has maintained the integrity of the company and prospered. I say again to the Government—I shall do so softly because this is not the time to be too raucous—that it is time that they fulfilled their part of the bargain. It is time that they stopped shilly-shallying over what orders the Government require of Westland.

I say again, as I have said before, that Westland does not ask for charity. It is strong enough to survive in the real world, but it is interested in its primary customer, the Government. The least that the Government can do is to say what they require of the company so that it can begin to address those needs.

We were told that the information on the study on helicopter procurement that we need so desperately to plan for the future would be available towards the end of the year. It is not. I understand that it will now be available early next year. It is now said that it may not even be in the first month of next year. I say sincerely to the Government that every day's delay undermines Westland's capacity to take advantage of its current position in the market place and to fulfil the needs of the British services for helicopters, which are great enough now, and undermines and threatens jobs. I hope that the Government will take account of that, and will move heaven and earth to ensure that the decisions over which they have pondered for so long will be delivered in the near future. For, if they do not do so, jobs will be at risk, and the design teams that Westland has accumulated over the years—its most priceless asset—will be in danger.

Let me be clear, for I do not want to be misunderstood. There is no question of Westland itself being threatened. The company is now strong enough, and, with our new partners, is capable of facing up to the world, whatever the competition may be. I am delighted to say that. I do not want this to be misunderstood. There is no question of Westland not being strong enough to survive. It can. What is at threat is Westland as Britain's majors "stand-alone" helicopter provider. The fact that the Government must now face is that further delay will mean that it cannot deliver the undertaking which we understand was previously concluded, that the Government wish Britain to have a helicopter manufacturing capacity from the design stage to final production. Further delay will threaten, not Westland in total, but that capacity.

We are capable of supplying the helicopters that the United Kingdom forces need so badly, which the hon. Member for Ruislip-Northwood articulated so clearly. We know that those helicopters are required. We are running the oldest helicopter fleet in the world, serving the British Army in the central plain of Germany. It is 100 short of what is needed to fulfil its tasks. The helicopter capacity is desperately needed. Helicopters are a force multiplier, which is doubly important when, by the Government's own concession, we stand at a disadvantage to the conventional forces of the Soviet Union. It makes no defence sense as well as no business sense not to recognise that and bring it to fruition by allowing Westland to know what the Government require of it.

We are discussing export orders abroad. That is important in terms not only of our defence needs in Britain but of the orders that Westland can win abroad. There are orders to be won. There is considerable interest in NATO and in Europe in the aircraft that Westland is producing and has the capacity to produce. There is particular interest in the Black Hawk. However, no nation will buy those aircraft from a British firm such as Westland unless the British Government make the commitment in the first place. That is the seal of approval that such firms look for. We must understand that.

I shall not say that those orders are at risk, but the potential for sales abroad, which could be great, will be enhanced immeasurably as soon as the Government make up their mind. I ask the Government to decide quickly and to recognise that the defence industry implications for Westland are great. About 70 per cent. of the final product, the modern helicopter, is produced not by the aircraft manufacturer in Yeovil or elsewhere, but by other portions of Britain's aerospace industry. That amount is bought in from Smiths Industries and instrument and avionics manufacturers throughout the country. A great swath of our high technology industry depends on the survival of Westland as a helicopter manufacturer and the winning of those orders overseas.

The hon. Member for Kingswood and other hon. Members rightly mentioned the Rolls-Royce RTM322 engine. It is a brilliant engine, with great potential. But it is now an engine waiting for an aircraft. The decisions that the Government now take will therefore have consequences for Rolls-Royce, for the winning of new orders and for large sections of the rest of the aerospace industry.

All that is at stake, and it now hangs on the Government's decisions, which have been delayed too long. Westland is a great firm, and is essential to our aerospace industrial base. It can win export orders, and the prosperity of my community depends upon it. I plead with the Government not to delay further and not to fudge. Let us have those decisions, which have been promised and have been delayed too long.

My second point on the export of British defence equipment is not relevant to Westland. It was mentioned by my hon. Friend the Member for Woolwich (Mr. Cartwright) and I believe that it will be mentioned by the hon. Member for Kingston upon Hull, North (Mr. McNamara), who will deal with it in detail. I wish to look at it in terms of export orders. I wonder whether the Minister realises what is happening with the DROPS contract, which is required by the British Army so that it can fulfil its tasks in the central plain of Europe and in NATO and so that it is supplied with the ammunition that it needs. The Minister may not know that in the present placing of that order we are involved in an unwitting export abroad—in fact, to the Soviet Union, by courtesy of the decision taken by the Procurement Executive of the Ministry of Defence.

Let me give the House the details. We know of the concern about the award of the DROPS contract. Boughton did much of the original work, but was excluded from the contract. Nevertheless, Boughton's bid for the contract was regarded by many independent experts as not only more viable and efficient for fulfilling the task but cheaper in real terms. Instead, the Government awarded the contract to Foden and Scammell. A portion of that contract, fulfilled by Multilift, is at the heart of the system. It is of concern that Multilift's solution to the hydraulics problem bears a startling resemblance to the system proposed by Boughton which was developed with Ampliroll for military application. That concern will, no doubt, be expressed by many other hon. Members in the debate. There may have been some leakage of technical information from Boughton to the people who succeeded in getting the contract, Foden and Scammell, using the Multilift hydraulics system.

What has not been known until now is that Multilift has a parent company in Finland called Pratek. It has been the supplier for a long time of hydraulic systems to Kamaz, the Soviet state truck manufacturers. According to the latest figures that I have, in 1982 Kamaz provided about 400,000 vehicles to the Soviet army, among other people. I am told that in 1982 that same manufacturer used a Pratek multilift hydraulic system to do a similar job to that which is now being done by DROPS.

There have been worries about the similarities between Multilift and Ampliroll. Leaving all other aspects aside, it is now evident that the contractor chosen by the Ministry of Defence supplies similar systems to the Soviet Union, very probably the Soviet army. How can we be assured that the advantages that DROPS will give to the British Army will not quickly become available to the Soviet army as well? It now appears evident that the Ministry of Defence Procurement sees its task not just to supply weapons systems to the British army, but possibly to supply systems to the Soviet Union as well through a firm's parent plant in Finland. Is that not extraordinary?

In the light of all those facts, we must have severe doubts about the competence of the MOD Procurement Executive because of the way it has handled this matter. We must have an inquiry into the full facts, and we must have it soon. I hope that when the Minister replies to the debate he will bear in mind that systems now being supplied to the British Army are also being supplied to the Soviet Union and the Soviet army. I hope he will look into these matters to ensure that the advantages of this equipment to our Army will not in the near future be available to the Soviet Union as well.

11.59 am

Mr. Nicholas Brown (Newcastle upon Tyne, East)

I welcome this timely motion and agree with most of its contents. That keeps me in tune with almost every hon. Member who has spoken in the debate. I hope that the hon. Member for Kingswood (Mr. Hayward) will not mind if I concentrate my remarks on procurement for the Royal Navy—because that has not yet been dealt with in depth — rather than discuss avionics or even helicopters. Before doing that, I should like to speak about our conventional defence industries. Those industries provide jobs and exports. Their export potential is underpinned by the domestic procurement programme of the Ministry of Defence. It is difficult to see how the industries would survive in their present form without that domestic underpinning.

In the next few years, about one third of all available money for conventional defence is committed to the Trident programme. Instead of supplementing NATO's conventional forces to bring the Western Alliance to a closer balance with the Warsaw Pact countries, we are duplicating a nuclear capability that is already provided. That provision is eating into a reasonble conventional defence programme. The effect of this on our conventional forces is substantial and in none of our forces is that more heavily felt than in the Royal Navy.

One third of the Navy's destroyers and frigates are over 25 years old and will be obsolete by 1990. In order just to retain our present position, a further nine frigates would have to be ordered before 1990 and by then about 16 destroyers and frigates of the present fleet would be between 25 and 30 years old. Nothing of the sort will happen.

At Question Time on Tuesday, I asked the Secretary of State for Defence if it was true:

that the order for type 23 02 has been placed with Swan Hunter, that 03 and 05 have been placed with Yarrow, that type 23 04, 06 and 07 have been dropped from the programme altogether and that there will be no frigate orders next year?"—[Official Report, 9 December 1986, Vol. 107, c. 169.] The Secretary of State did not refute what I said and did not even bother to hint at further frigate orders next year. Until there is some ministerial statement, the position will remain as I have described it. The Trident programme may never sink any ships in the Russian navy, but it has already sunk a fair bit of our Navy.

The motion speaks about exports. Although we build excellent warships, we do not sell many abroad. The naval sales task force that the Government have dispatched around the world is a worthwhile initiative. However, the real failure of the nationalised warship building industry to secure export orders is only partially related to a lack of world demand. Although that is an important factor, it does not have much to do with the often alleged complexity of our own warships. It is said that foreign purchasers look for simplicity but, if our builders of warships can build complex vessels, they can certainly build less complex ones.

Foreign Governments do not always make procurement decisions on the same basis as our Government. Nationalised industries find it difficult to respond to some of the criteria of foreign Governments. The Government believe that our newly privatised warship builders will do better, but so far there is no evidence of that.

Hon. Members have spoken about Nimrod. All the speeches assumed that procurement decisions are made on the merits of each case. With what little is left of naval procurement, that is not so. The last of the type 22 frigates—I think it was No.14—was won by Swan Hunter on a competitive tender basis.

However, the then Secretary of State placed the contract with Cammell Laird. As compensation, he promised a type 23 frigate—the 02—later that year. That frigate was eventually placed, some two years later, on terms and conditions that were more onerous than those that pertained to the original type of 22 frigate.

The effect of lead yard services on pricing makes first of class status imperative for warship builders. In previous debates of this kind I have referred to the way that this works in practice. It creates difficulties for follow-on yards and operates against true competition. Also it has the effect of creating monopolies. If the Government are not very careful, they will find that the virtual monopoly that already pertains in submarine supply may spread to the surface fleet, to the detriment of the shipbuilding industry and eventually to the detriment of the defence procurement budget.

Undoubtedly the greatest procurement scandal in recent years has been the procurement of the first of class auxiliary oiler replenishment vessel by Harland and Wolff. The design was undertaken by Swan Hunter which had supplied the Royal Navy with 84 per cent. of all its fleet auxiliaries in the previous 20 years. That should not automatically have meant that Swan Hunter obtained the work, even though the yard that had carried out the design study eventually obtained the order in every other recent, decision.

This important defence contract was placed with Harland and Wolff for political reasons. The Government tell us that the Harland and Wolff bid was lower, yet the detailed designs have not yet been cleared by the Ministry of Defence, despite the fact that on 24 April 1986 the Prime Minister wrote to me and said:

You are correct that an undertaking was given to the Swan Hunter buy-out team before privatisation that the Harland and Wolff bid would be unsubsidised and comprehensively costed. Comprehensive costing has to be based on the designs themselves, yet the bare bones of those designs have only just been released to Swan Hunter to enable it to prepare, in general terms, its bid for the AOR2. The crucial detailed designs, which are supposed to have been comprehensively costed last April, will not be released to Swan Hunter until January 1987. It is legitimate to ask why. Naturally, foul play is suspected on Tyneside.

The nationalised industry, Harland and Wolff, is given massive subsidies and it is using them to take work from yards that have been pushed into the private sector. Harland and Wolff is the most heavily subsidised shipyard in our country, yet the Government assure us that none of this subsidy is underwriting the AOR2 contract. Nobody believes them. The Ministry of Defence must think that it is getting value for money, but the Government are not playing fair with the private sector. The final outrage has been the failure to release the detailed designs to Swan Hunter to enable it to make its bid for the AOR2.

The last reason that the Ministry of Defence gave me was that the delay is due to the fact that the designs are being vetted for commercially confidential information. That is obviously untrue. Only two shipyards are involved. Swan Hunter is the preferred bidder. When it is given the detailed designs it will come forward with a bid, there will be negotiations with the Ministry of Defence, eventually a decision will be made, and Swan Hunter will be either successful or unsuccessful.

If Swan Hunter does not get the work, Harland and Wolff will have the opportunity to obtain it. No third parties are involved. There is no other shipyard from which this commercially confidential information must be kept. It is highly unlikely that Harland and Wolff, and certainly not Swan Hunter, would give this information to a third yard. By doing so, they would be cutting their throats. It is absolutely ludicrous, therefore, for the Ministry of Defence to say that this information is being vetted for commercially confidential information.

Because the explanation that has been given is so plainly ludicrous, those who take an interest in these matters look for another explanation. The suspicion is that the Ministry of Defence is still making adjustments to the designs with Harland and Wolff—designs which I understand have not yet been cleared by the Department of Trade and Industry for seaworthiness or, for that matter, by Lloyds. Harland and Wolff is still taking steps to conceal the extent of the Northern Ireland Office subsidy, which is undoubtedly underpinning the operation. The truth of all that may not emerge until after the event, but the entire episode will remain a public scandal, the more so because it betrays the privatisation that the Government say that they believe in. Undoubtedly the most serious point of all is that the Government are appeasing the terrorism that they say that they are committed to fighting.

12.10 pm

Mr. Kevin McNamara (Kingston upon Hull, North)

I join with other hon. Members in congratulating the hon. Member for Kingswood (Mr. Hayward), who opened the debate. He and I disagree on some matters, but he has timed the debate very well as it has enabled both sides of the House to take part in an important debate on Nimrod, and to have our views aired in the House before the Government reach their final decision.

I join with the hon. Member for Woolwich (Mr. Cartwright) in saying that arms exports are a good thing, but we must be careful to whom we export. We must try to have some criteria by which we can assess the "worthability"—if one may put it that way—of the people to whom we sell our weapons of destruction. We cannot sell them to despotic, tyrannical regimes that threaten their neighbours and, perhaps more tellingly, their own populations. It becomes very difficult, in those circumstances, to understand how and why the scandal of the submarine lifting gear announced earlier this week came about, and how and why international salesmen in London have taken part in discussions on the sale of arms to the contestants in the Gulf war, especially when one of those contestants has been the protector of terrorists in the Lebanon who have taken hostages from many nations.

Out of the £18 billion defence budget, 46 per cent., or nearly £8 billion is spent on procurement. Britain probably spends more on procurement than any of its NATO allies, including the United States. That has an important economic effect on us. Nearly 400,000 people are employed in the United Kingdom defence industry and about 120,000 jobs are tied up directly with exports. It is an important industry for Britain and it needs to be supported, subject to the caveats that I mentioned earlier. Despite the vast sums that have been spent on defence and procurement, jobs are still being lost in our defence industries. Our defence industrial base is crumbling and our Service men do not always receive the standard of equipment that they deserve.

The Ministry of Defence has many plans and projects but those projects are either being stretched or never get beyond the feasibility study stage. The great gift from this Administration in regard to our defence problems and procurement is that they have probably commissioned far more feasibility studies than they have ever commissioned ships for the Navy of major equipment systems for the Armed Forces. The main reason for that is the demands that Trident will make on our defence procurement budget during the next few years.

My hon. Friend the Member for Newcastle upon Tyne, East (Mr. Brown) mentioned the way in which the acquisition of Trident was affecting the Fleet. I do not intend to proceed in that way. The Minister and the Government may argue that, over the period of acquisition Trident will account for only 3 per cent. of the defence budget and 6 per cent. of the procurement budget but within the next few years and stretching on into the next decade, it will take considerably more of the new equipment budget—perhaps as much as 30 per cent. That money, which should be spent on conventional weapons, and on helicopters for the British Army of the Rhine, on frigates, on improvements in our forces, on our Harrier squadrons, and so on, will not be available.

We know from the Defence Estimates earlier this year that the Secretary of State has delayed and cancelled conventional projects. Trident is absorbing so much of our money that the British people will have to decide whether they want to go ahead with it and so see our conventional forces rapidly weakened, or whether they want sensible and strongly organised conventional forces, but without Trident. There is a straight military choice, because the money does not exist for both, and the Government know that.

The Government are already cutting the defence budget. It is one thing to talk about taking new weapons systems through during a period of budget expansion, but is quite another to do that when the budget is declining, as it is now. The folly of it all is that when there is little money available, the Government have apparently decided to spend about £1 billion on AWACS instead of going ahead with our own better aircraft, the Nimrod.

One problem facing all Governments is the inexorable increase in the cost of new weapons systems. A type 22 frigate costs four times as much as a Leander did. The Phantom cost only 50 per cent. more per aircraft that the Lightning did, but he new generation Tornado F2s will be 175 per cent. more expensive. That trend affects us and our allies, and the problem is becoming more acute because we face an increasingly sophisticated threat.

Thus there is a vicious circle within our own arms industry. Equipment costs increase, so obsolete systems are retained in service. Because of the increase in costs, fewer new weapons are ordered. That means shorter production runs, which means that unit costs increase. Because the weapons are coming later, the services want gold plating. We understand that, but that increases the cost again and weapons take longer to develop. Admiral Lamb once made the off-the-cuff remark that One day the Navy will have one absolutely supership, and that's all.

Mr. Nicholas Brown

Probably built at Harland and Wolff.

Mr. McNamara

We have the problem of the gold plating of weapons systems and of systems being duplicated within NATO. I should like to take up the point made by the hon. Member for Woolwich, who has great experience of the North Alantic Assembly and of the military committee there. Many problems are involved in trying to standardise weapons systems and equipment throughout NATO. There are conflicting forces at work. We want to maintain our defence industries, just as the French, Belgians, Dutch and Americans do, but we must recognise the level of duplication. It means that we spend more than the Warsaw Pact countries on defence and are getting less for it. It is a myth that somehow the Warsaw Pact is shovelling roubles, zloty and whatever else into an enormous war machine in order to threaten us, because we spend far more than it does. We are also losing any technological advantages that we may have because of the duplication.

In general, the Warsaw Pact uses one specification when it comes to major capital investments such as tanks and aircraft. As a result, it can produce more, has better standardisation and benefits from long production runs. We have to take that on board when we consider our procurement policies.

Mr. Wilkinson

And why we should buy AWACS.

Mr. McNamara

In 1977, the House agreed unanimously that we should go forward with Nimrod. There was not one dissenting voice.

Mr. Wilkinson

I was not here then.

Mr. McNamara

The hon. Gentleman had been in and out, with obvious results.

We should not now throw good money at an American system and discard what we have already built. We must consider what is the best use of our money. Many people argue that we should buy off-the-shelf from the United States, that that would get us more weapons and that we should have all the benefits of United States production. That would be a policy for disaster in high technology and industry in Britain. It would make us overdependent on the United States. Our remedy, which is accepted on both sides of the House, is that, for the majority of equipment for our Armed Forces, we should depend on British industry.

There will, however, be major capital projects on which we have to collaborate. We often collaborate with the United States, but we should try more effectively and purposefully to secure greater European co-operation. There was very little until the right hon. Member for Henley (Mr. Heseltine) came along, and I pay tribute to him on that score.

So far, there has been only limited co-operation with Europe, but some of the projects have been highly successful—Tornado is the finest example. If we are to work with our European colleagues, we must strike a more positive and aggressive attitude. We must identify projects, as has been done with the EIPG, and be seen to be going about them more purposefully. That is where Trident and the European fighter aircraft come in. The hon. Member for Kingswood has had no clear, categorical undertaking and no contracts have been placed for the EFA.

The hon. Gentleman talked about TSR2. We should get the record straight. More military aviation projects were cancelled by Conservative Governments between 1945 and 1979 than were cancelled by Labour Governments—nine to six. I am not challenging those decisions, but on the basis of that track record one would be more wary of a Conservative Government than of a Labour Government.

As for the figures about Trident, the problems that face the Secretary of State, who has refused to produce a White Paper on defence, arise out of his trying to get a quart into a pint pot. The result is that conventional forces will suffer. The surface fleet is as likely to suffer as the EFA.

When the EFA prototypes are ready, however, we want the aircraft to be powered by a Rolls-Royce engine, as the hon. Member for Kingswood said. It would be nonsense to accept an American General-Electric engine as a fallback, as that would indicate that we lack confidence in Rolls-Royce, which has produced a highly successful and very exportable engine, and would stop the EFA being a European concept and make it a transatlantic one.

There is a real fear about what happens to European technology when it goes across to the United States. I agree with the hon. Member for Kingswood and I hope that when the Minister replies to the debate he will give those categorical undertakings that will delight both the hon. Gentleman and the workers of Rolls-Royce and British Aerospace. I trust that he will say that the Government will go ahead with these contracts and that the aeroplane will fly. If the Minister is prepared to do so and to tell us where the money will come from we will be even more delighted.

If we consider what is happening with regard to the Nimrod system we can see that we would be giving to the United States a complete monopoly in early warning systems. The arguments have been deployed from both sides of the House and I will not go through the great number that I have written down. I wish to make one or two points that are important and that should be borne in mind.

First, the supplier of the Nimrod system is a major electrical company in Britain, the biggest that we have in the multi-national league, but the signal from the Government is that they do not have confidence in it. That is what it amounts to. They do not have the confidence in the British system so they are going to the United States. If they did that the repercussions would cross the whole of our export field and would be profound. Secondly, the hon. Member for Kingswood spoke of the American failures, such as the shuttle, and various others. That is true, but one cannot compare like with like.

Britain has one major company, whereas the United States has half a dozen. Those companies have enormous defence budgets and the United States has an enormous economy. But we have just one company. The blow would be tremendous. We would be signing away £960 million worth of equipment and 2,500 jobs. The Government would be saying to British industry, in the private sector, that it cannot meet the competition from abroad in those areas of the highest technology. I do not think that we can afford to do that.

What has been interesting is that, apart from the contributions of the hon. Members for Ruislip-Northwood (Mr. Wilkinson) and for Northampton, North (Mr. Marlow), the almost unanimous cry in this House has been for Nimrod. Perhaps, we may create a new silly season. Last Christmas it was Westland and this Christmas it could be Nimrod. The Government seem to be willing to go across to the United States continually to find their remedies. They tried to do it with Land-Rover, British Leyland, Westland and now with the airborne early warning system. There are two reasons why it is not good enough that the Government should behave in that way.

First, the Secretary of State said on ITN that Nimrod was up to the job and that the system works. If it works, it works, but if it does not we should not have it. But if it does work we should have it because it is British. Not only has the Minister said it works, but Flight International in its editorial said: The RAF choice must be for quality. It is becoming evident now that the GEC equipment is performing almost impeccably, and is at least the equal to the Westinghouse equivalent in the E-3A, if not some years in advance of it. That is an important comment from an independent source.

If we are to maintain our position we must examine the way in which the Government are pursuing their competition policy. Many criticisms were made when Mr. Peter Levene was appointed and many of us still doubt the wisdom of the contract under which he is serving. However, in fairness to Mr. Levene, one must say that he has attemtped an almost impossible task with tremendous courage and determination, and his work seems to be bearing fruit.

The parts of the Government's competition policy are contradictory. One example is Defcon 19 under which one person develops designs which can be passed on to someone else for production. That does not encourage firms to think that they will get long production runs after they have done the basic work. Companies do not think that they will be given the job of producing systems that they have helped to design. Competition policy needs to be re-examined carefully. The terms, conditions and appointments of contracts should be looked at.

My hon. Friend the Member for Eccles (Mr. Carter-Jones)—we sympathise with him and understand why he has had to leave—pointed out that on Monday the first PC-9 for the Saudi air force will be rolled out and handed over at Brough near my constituency. The PC-9 was the preferred choice of the RAF as a basic trainer and we are still awaiting delivery of the Tucano. It would be helpful if the Minister could tell us when we shall have our first squadron of Tucano trainers, how far behind time they are and whether the problem with the engine has been solved. When will Shorts fulfil its contract?

We are still running the old Jet Provost, at increasing cost. We were promised that that would not happen, because Tucano would be on time, there were no problems and eveything was excellent. It is interesting that Shorts has not received one export order for the Tucano, but the PC-9—our first choice: the one that we said would be part of the family of PC-9, Hawk, Tornado—is being built and developed in Brough, with Swiss partners, and is being exported to the Saudis, well ahead of the Tucano coming into service.

There have been other problems with contracts. Strange procedures were followed in the contracts that were awarded to Shorts. There was the strange case of the telephone call that was or was not made.

The mention of telephone calls bring us neatly to the Boughton saga. Boughtons is a small family firm in Amersham which has spent about £4 million in the past 12 years on designing its own ammunition and equipment carrier for the Army. The system is known as DROPS. Despite its work, the company was not selected to take part in feasibility studies in 1983. That did not seem to be particularly fair and was certainly not consistent with what Lord Trefgarne had been saying about giving small firms an opportunity to take part in important contracts.

We all know that the Amersham firm did not get the contract and much controversy surrounds the case. I am not competent to judge whether the right decision was made in terms of the Army's requirements and whether DROPS came up to it—though DROPS seems to be highly suitable for the American army.

I wish to put a number of questions to the Minister about this case. I trust that he will listen carefully to this matter. I also trust that his hon. Friend will be ready to rush to the Box to get the replies to my questions. They are of the utmost importance.

First, can the Minister confirm or deny that Multilift, the company that was awarded that part of the DROPS contract concerned with lifting equipment and hydraulics, is beneficially owned in Finland and that its Finnish parent company, or another subsidiary of the Finnish parent company has been, or is currently, engaged in a collaborative venture for similar equipment with the Soviet authorities for the Soviet armed forces. Can he confirm that this work has been carried out at the Kama river truck plant? If this Finnish company has this dual relationship, supplying NATO and the Warsaw pact, although I am sure the company is happy, it raises important questions about our technology going to the Soviet Union.

Mr. Ashdown

I am grateful to the hon. Gentleman for raising this matter. I wonder whether it will help if I read a brief extract from a Soviet trade magazine of 1982, which covers this matter, and which he might draw to the Minister's attention. I translate it from the French. It states: We have developed the conception of a system of interchangeable boxes on the back of trucks by Multilift which is sufficiently powerful in order for us to guarantee efficient usage. The article goes on to state: In one year— —this is from Kamaz, the Soviet company that the hon. Gentleman mentioned— In one year we have constructed 150 systems using Multilift on the chassis of Kamaz trucks. These materials made by Partek are extremely in demand by our customer which shows that there are considerable possibilities for development and co-operation. Surely it must be our concern that that development and co-operation does not include the passage of British information to them for further use in the Soviet army.

Mr. McNamara

I am grateful to the hon. Gentleman for his intervention. It has saved me another two and a half paragraphs. He succinctly made the point.

My second question concerns the behaviour of the noble Lord Trefgarne in his relationships with the company. In the press last week, there was an article entitled "How minister 'gagged' MP". The hon. Member for Nottingham, North (Mr. Ottaway) said that he had written to Lord Trefgarne

as, magically, the Chief Whip has got to hear about this matter, I have told him I accept your assurance and you can consider me suitably gagged for public utterings. We must find out why he thought he was being gagged and what those utterings were about. Behind the controversy associated with this matter, did the noble Lord, Lord Trefgarne have a private meeting with the hon. Member for Nottingham, North at which he told him to stop his opposition to the Defence Ministry's handling of the DROPS questions, on the grounds that, as a PPS, he must therefore support and not oppose Government policy and that he must support all Government decisions?

Surely, it is one thing for a Government Minister to ask a PPS to support some plank of Government policy, but it is quite another thing to try to tell an hon. Member that, because he is a PPS, he cannot make inquiries about the placing of highly valuable Government contracts. Can the Minister confirm what we read in the paper—some of us have copies of the correspondence—that the right hon. Member for Chesham and Amersham (Sir I. Gilmour), himself a former senior Defence Minister, has taken the step of writing to the Secretary of State complaining of the way in which the noble Lord seemed to be abusing parliamentary privilege in his conversation with the hon. Member for Nottingham, North. Can he confirm that the actual words used by the right hon. Member for Chesham and Amersham were that the hon. Member for Nottingham, North was warned off and told to keep quiet, and that the former Secretary of State wrote to the present Secretary of State saying: My understanding is that for a Member of the House of Lords to seek to stop a Member of Parliament performing his parliamentary duties is a breach of privilege."? That is a very grave charge. Was the noble Lord breaching parliamentary privilege in his treatment of the hon. Member for Nottingham, North?

There are other matters concerning this contract and the way in which the Government seem to have responded to criticism. A number of questions arise from the BBC Panorama programme on 7 July. In that programme, the BBC strongly implied that there had been serious impropriety in the handling of the DROPS contract in the treatment of the British engineering company, Boughtons, by the Ministry of Defence. However, the one major weakness in the charges made on Panorama was that the chairman of Boughtons did not say that his company had been mistreated. Indeed, a letter from the chairman of Boughtons specifically said that Boughtons had no complaint.

The Ministry of Defence, particularly Lord Trefgarne, made much of this apparent general silence by the chairman of Boughtons on Panorama and of the fact that it had received this letter from him. Now it appears that the reason for this silence was not the Boughtons had no complaint about its treatment by the Ministry of Defence but that the Ministry had made it totally and starkly clear to Boughtons that, if it did complain, it could say goodbye to any further Ministry of Defence business. Boughtons is heavily dependent on Ministry of Defence business and, in particular, is tendering for contracts at the present time.

As for the disgraceful intimidation of Boughtons by the Ministry of Defence, I have specific matters that I should like the Minister to answer. I am told that on 17 June this year, some three weeks before the Panorama programme, Major-General Stopford—then, as now, Director General of Fighting Vehicles and Engineer Equipment at the Ministry of Defence—telephoned the chairman of Boughtons at home in the evening to discuss the forthcoming Panorama programme. Despite having made it clear that Boughtons was not involved and did not intend to become involved in the making of the Panorama programme, the chairman was left with the clear impression that the programme would still result in serious damage to his company's interests.

General Stopford's call left Boughton's chairman noticeably shaken. What is more, he immediately described the call to third parties as being a final warning from the Ministry of Defence". Thus it was clear to Boughtons that the consequences for the company would be disastrous if it was to complain publicly about the Ministry of Defence. In the weeks following, Boughtons also received warnings from other third parties connected with the Ministry of Defence who suggested that the company should write to General Stopford's department formally to dissociate the company from Panorama.

Worse was to follow. I have already mentioned the letter in which Mr. Boughton said that he had no complaint. Lord Trefgarne said in a letter to the hon. Member for Ealing, Acton (Sir G. Young) after the Panorama programme that the chairman had written this letter on his own initiative. In another letter, the right hon. Member for Chesham and Amersham was informed by the Secretary of State that the chairman's letter to the Panorama programme was sent entirely at his own initiative well before the programme was screened". It was not so. The noble Lord and the Secretary of State were guilty—I hope unwittingly—of giving false information. The letter had not been written on the initiative of Boughton's chairman. I now understand that General Stopford again telephoned Boughton's chairman on 30 June, the very day before Lord Trefgarne was to be interviewed by Panorama for the forthcoming programme. General Stopford asked Boughton's chairman on the telephone to fax an urgent letter to him saying that the company had no complaints about the Ministry of Defence. In the words of the chairman's letter to the hon. Member for Nottingham, North, I felt this was a request I could not refuse Nor did he. He wrote the letter under pressure and intimidation and it stated the reverse of the truth.

In those circumstances, I must ask the Minister to tell the House whether either of those telephone calls was made at the instigation of the noble Lord. Were they made on the initiative of General Stopford? If they were made on his initiative, why has he not been disciplined for engaging in such conduct? If they were not made on his initiative, but under the direction, at the suggestion or on the nod and wink of the noble Lord, there is a serious case for Lord Trefgarne to anwer. That is why we want to know why the Minister brandished the letter on Panorama, making exaggerated claims about its importance. The letter had been carefully written and said that, while the company had no complaints, it wanted continuing inquiries to be made.

What was the role of Lord Trefgarne? What was the role of Major-General Stopford? Why were pressures put on the chairman? Who made the telephone calls? Why? Why did the noble Lord and the Secretary of State need those letters when the information they contained was patently untrue? That raises serious matters about the integrity of the noble Lord and the way in which the Ministry of Defence has been conducting its business. The House and the country are entitled to full answers to those questions.

I thank the hon. Member for Kingswood for giving the House the opportunity to consider the importance of the defence industry to our national defence and as an export earner. We have had the opportunity to deploy our various cases about Nimrod, Westland and the Fleet and, in particular, to raise the case about Boughtons on the Floor of the House for the reasons put forward by the hon. Member for Yeovil (Mr. Ashdown) and me. Are we passing our technology on to the Russians? Will the Minister give a full explanation of Lord Trefgarne's conduct in his treatment of that company?

12.47 pm

The Parliamentary Under-Secretary of State for Defence Procurement (Mr. Archie Hamilton)

It gives me great pleasure today in my first debate as a Defence Minister to welcome the motion on behalf of the Government and to congratulate my hon. Friend the Member for Kingswood (Mr. Hayward) on his choice of subject. He said that the debates on Fridays saw the House at its best and I support that and commend most of today's debate as being of an interested rather than a partisan nature. I also congratulate my hon. Friend on his capacity to speak without notes. That is something that I shall have some difficulty in emulating.

Many important issues have been raised, the first of which is the question of engines, which is of particular concern to my hon. Friend because of his constituency interest in it. He mentioned the RTM322 engine, the uprated Pegasus and the XG40. We are assisting Rolls-Royce and Turbomeca by funding one sixth of the development programme of RTM322. That is going well. We cannot say that it will definitely be the engine that goes into the EH101, but we have high hopes that that will be the case.

We have no formal requirement on the uprated Pegasus, but, in conjunction with the United States, we are looking at a Rolls-Royce proposal. I can assure my hon. Friend that we are maintaining progress.

The Government and Rolls-Royce are funding the XG40 as a technology demonstrator programme and we fully expect that its results will contribute substantially to the new engine which the European fighter aircraft nations agreed in Turin last August will be required. Rolls-Royce is the United Kingdom's member of Eurojet—the international consortium formed to co-ordinate the development of the EFA engine.

My hon. Friend the Member for Kingswood and the hon. Member for Woolwich (Mr. Cartwright) referred to the strategic defence initiative. I entirely agree about the need for British industries and universities to be at the table when SDI contracts are handed out. In answer to a question from the hon. Member for Ryedale (Mrs. Shields) on Tuesday, I was able to announce that the overall value of SDI research awards to the United Kingdom had risen to $34 million. That first year total is a solid foundation on which to seek more work in 1987, but it is worth pointing out that these are very much initial contracts and that one would not expect the larger money to come through until later.

My hon. Friend the Member for Kingswood and the hon. Member for Eccles (Mr. Carter-Jones) referred to the British Aerospace Hotol project, a dramatic concept at the very forefront of technology. We are fully aware of what the company is doing and we are watching developments closely.

My hon. Friend the Member for Kingswood stressed the importance of maintaining an adequate level of research and development and of expenditure in support of the defence procurement programme. Government support for that proposition is reflected in our current expenditure on defence research and development amounting to £2.3 billion, of which £1.7 billion will be spent outside the Ministry of Defence, the great bulk being spent on development contracts for weapons and equipment placed with British industry. The Government are examining the relative priorities of civil and defence needs for scarce scientific and technological resources with the aim of increasing the contribution made by those resources to the wider economy.

In this context, we recognise that the MOD research establishments are unique national assets. Although they exist first and foremost for their defence function, they have an important contribution to make to the broader economy. We have assisted in setting up a private company, Defence Technology Enterprise Ltd., with the object of helping to identify potentially marketable ideas and technologies generated in the research establishments and to promote their exploitation by the civil sector. The company now has ferrets in place at four of our major establishments and has more than 160 firms on its books as associate members. More than 450 items on its database are potentially exploitable and it has granted its first licences to entrepreneurs.

The Ministry of Defence and the Department of Trade and Industry are conducting joint military and civil research programmes with industry based on the research establishments, notably in information technology and space technology. The Ministry of Defence has also joined the research councils to sponsor programmes in universities and will contribute to the Link project announced by my right hon. Friend the Prime Minister this week to stimulate co-operation between industry, Government Departments and research institutions of all kinds in the translation of research concepts into marketable products. These are all valuable moves, but I should emphasise that, important though they are, they are complementary to the primary purpose of defence research and development to ensure that our forces are equipped to meet the threat at best value for money.

My hon. Friend the Member for Kingswood mentioned the European fighter aircraft. There is a strong political will in Britain and in Europe for that project to succeed. We are committed to playing our full part in the development of a cost-effective colloborative project, for which my right hon. Friend the Secretary of State for Defence signed the general memorandum of understanding in October. It is self-evident that we cannot order the European fighter now because there is no aircraft to order, so it is entirely misleading for the Opposition to accuse us of wavering on this. Our forward planning takes account of our requirements for the replacement of Jaguar and Phantom aircraft in due course. At the moment we are persuading EFA to meet that requirement.

Mr. McNamara

Will the Minister tell us what sums of money have been set aside for which years for the purpose of those replacements?

Mr. Hamilton

I have already explained that we have large amounts of money available for research and development, and EFA is clearly part of that.

The hon. Member for Yeovil (Mr. Ashdown) mentioned helicopters and the problems that are being faced by Westland. My hon. Friend the Member for Ruislip-Northwood (Mr. Wilkinson) mentioned his concern. I support the hon. Member for Yeovil in congratulating the company on its year-end results, which were announced yesterday. I think that we would all accept that it has done great things to haul itself up from the rather low ebb that it had reached. We are well aware of the industrial position, and the key aspects from our point of view are affordability and military requirements. We cannot forecast our decisions, but we recognise fully the need to review our position on helicopters and to come to a decision next year, which we have said we shall do. That will be done as soon as possible in the new year.

Mr. Ashdown

I am sure that the Minister will understand that that should be done as early as possible next year. Will he give an undertaking that the decision will be made known early next year? If possible, will he say January or February, or later?

Mr. Hamilton

I can say only that I hear what the hon. Gentleman is saying and that a decision will be made as early as possible in the new year.

My hon. Friend the Member for Kingswood mentioned exports, which constitute a key element in Westland's future. He congratulated the company on the enormous efforts that it has been making in pursuing export markets. It is talking to the Ministry of Defence about having the Government's close co-operation in helping it to meet delivery dates, for example. We give serious consideration and every sympathy to these requests from the company if the result is to help to weld in export orders with our own requirements.

My hon. Friend the Member for Northampton, North (Mr. Marlow) raised the "tanks or helicopters" question. It is complicated and of great military difficulty. There seem always to be great dangers in terms of defence procurement in making dramatic and radical decisions to sweep away an armament and move on to another one. A Government many years ago decided that the future of the Royal Air Force was to have pilotless aeroplanes, and much planning was carried out on that basis. That is probably one of the radical decisions that has since been regretted at leisure. I prefer to await the considered advice of our professional military advisers, who are considering the role of helicopters.

The hon. Member for Newcastle upon Tyne, East (Mr. Brown) complained once again about the auxiliary oiler replenishment vessel and said that he feels that Swan Hunter has not been fairly treated. It seems that there is no gratitude in this place. As we all know, the order was switched from the best bidder for the contract. The order has been presented to Swan Hunter, and if it can come up with the right sums it will get it. That should be appreciated at Swan Hunter, and I am sure that it is.

Mr. Nicholas Brown

The Minister is clearly new to these matters. I would stop banging on about Swan Hunter if the Minister, or one of his colleagues, were to answer my questions. Will he explain why the Ministry of Defence is still going through the details of the design about six months after the Prime Minister assured the House that the bid of Harland and Wolff had been properly costed? Will he give us firm assurances in specific terms that public money is not being funnelled through by the Northern Ireland Office to underwrite the contract from Harland and Wolff's point of view?

Mr. Hamilton

We have been informed and assured that the Harland and Wolff bid is not subsidised by the taxpayer. It is a matter of when the details and drawings come through. At that stage it will be possible for Swan Hunter to bid for the AOR. There has never been any question about that.

Mr. Nicholas Brown

Will the Minister tell the House how he can say that the bid of Harland and Wolff was costed comprehensively if the details of the design that form the basis of "comprehensive costing" cannot be released to Swan Hunter? If the bid has been costed comprehensively, the details of the design should have been in existence when the Prime Minister gave her assurance way back in April, and should have been handed over to Swan Hunter last summer rather than next January.

Mr. Hamilton

I am sure that it was possible to produce a comprehensive costing of the ship without the detailed drawings, and we are waiting for them to come through.

The hon. Member for Woolwich raised the issue of International Military Sales and Iran, which arose the other day at Question Time. We are talking about pre-revolution contracts when we refer to IMS. Money is outstanding and that is why negotiations are still taking place. I can assure the hon. Gentleman that none of the existing contracts has led to the export of lethal equipment to Iran. No new orders are being planned for defence equipment because we fall in totally with the terms that have been laid down by my right hon. and learned Friend the Foreign Secretary, which are that there should be no equipment sold that will extend the conflict. That applies to Iran and Iraq. None of the export sales licences being given for equipment going to either of those countries should extend the conflict. The hon. Member for Woolwich also mentioned the Libyan ship lift. Let me put that into perspective. In practice, such ship lifts are used extensively across the Arab world. The ship lift was sold to the Italians. Therefore, the matter of export sales licences did not arise. There should have been no reason why one was needed to sell such equipment to the Italians.

We get into terrible difficulties on equipment which, in certain circumstances, can be used for defence. If we applied the rule that if equipment could have any conceivable use for military purposes we should not sell it to a country we would end up selling no equipment to a country such as Libya. We have substantial financial and commercial negotiations with Libya. It would be a pity to prejudice jobs in this country because we took the view that if we sold someone a pot of paint it could be used to paint defence equipment. Somehow a balance must be struck.

Mr. Cartwright

I accept that we must have a balance. I said that I recognised the difficulty with the potential use of a range of equipment, but there seemed to be a general understanding in the yard that constructed the ship lift that it was going to a naval base near Tripoli.

Surely that shows that a military end use was laid down from the beginning.

Mr. Hamilton

I hear what the hon. Gentleman says. All that I can say is that I do not know the details of where such equipment is going.

The hon. Member for Eccles (Mr. Carter-Jones) referred to Tucano. He says that that is not the right trainer for the RAF. We believe that it is a significant example of value for money from competition. We got Tucano at 35 per cent. less than the price that was originally envisaged, which is good evidence of the advantages of competition. I accept that there has been slight slippage in the programme, but I am sure that there is no major technical problem.

The hon. Member for Kingston upon Hull, North (Mr. McNamara) came up, as usual, with the Labour story of the cost of Trident and the fact that it is making it impossible for us to buy other conventional equipment. It is interesting that that comes up on Trident. Perhaps I was not listening carefully at the time, but I do not remember people endlessly saying that they were absolutely appalled by the Tornado programme, which would have a devastating effect on our capacity to order equipment.

The hon. Gentleman agreed that Trident represents 6 per cent. of our defence budget overall in the peak years and 11 per cent. of our procurement budget, but Tornado was 8 per cent. of our defence budget in the peak year and 18 per cent. of our equipment budget. Therefore, Tornado, at the peak time, must have put infinitely more pressure on other areas of conventional spending. At the end of the day, anything that we buy, we buy to deter our enemies. When it comes to the deterrent effect of Trident, there is no doubt whatsoever that, for every pound that we spend on it, we get a much better deterrent effect than with other forms of equipment.

I do not share the peaceful views about the Soviet Union felt by the hon. Member for Kingston upon Hull, North. If I were a Hungarian, a Czech or an Afghan who had seen Soviet tanks rolling through his city, I am not sure that I would share his views about how peaceful the Soviet Union was then. It is a serious threat to the Western world. We may be seeing changes in the Soviet Union at the moment, hut there is no evidence that those changes will necessarily lead to a more peaceful Soviet Union. Indeed, the reverse could be the case if we start to see the break up of the whole country.

Mr. McNamara

I know that the hon. Gentleman would not wish to mislead the House. At no time did I give the opinion of the Soviet Union that he has just attributed to me. Secondly, if he had listened carefully to what I said earlier he would have heard me and the hon. Member for Yeovil express grave anxiety that some of our technologies might be going to the Soviet Union. The Minister has not yet answered that point. Thirdly, if the Trident defence system is so good, why are we bothering about anything else? Fourthly, should we not have SDI rather than spend money on Trident?

Mr. Hamilton

As the hon. Gentleman knows, SDI has a long way to go before it is perfected. Of course we should not only have Trident; we need to have all forms of defence equipment so that we can deter many different forms of attack. I shall be seriously worried if we ever reach the point where the Soviet Union on the other side of the divide in Europe has an enormous numerical superiority in conventional forces and nuclear weapons.

Mr. McNamara

Will the hon. Gentleman give way?

Mr. Hamilton

I shall give way in a minute.

In those circumstances, there is no way in which Europe could build up its conventional forces to meet that threat.

Mr. McNamara

The hon. Gentleman knows that the superiority of Warsaw pact conventional forces is a complete myth. That assertion was demolished by the American Secretary of State when he said that there is a precise balance. It has been demolished by the Institute for Strategic Studies. It is one of the myths that the Government keep trying to put forward. If the hon. Gentleman reads his own defence statement and looks at the footnotes about the figures on conventional defence, he will see that they are questions 1, 2, 3 and 4, do not compare like with like, and do not add up.

Mr. Hamilton

The Defence Estimates prove conclusively that the Warsaw pact has an enormous superiority in conventional equipment.

Mr. Nigel Forman (Carshalton and Wallington)

I listened to the allegations made by the hon. Member for Kingston upon Hull, North (Mr. McNamara). As my hon. Friend has said, they are quite incorrect. If the hon. Gentleman wants objective evidence which he might more readily accept, he should consult the latest yearbook by the Stockholm International Peace Research Institute from which he will discover that what my hon. Friend the Minister has said is right.

Mr. Hamilton

I appreciate my hon. Friend's intervention.

The hon. Member for Kingston upon Hull, North also spoke about DROPS. That needs a certain amount of clarification, and I am grateful that the subject has been raised. There has been much innuendo and press speculation about DROPS and in the Ministry of Defence many hours have been spent examining the matter in minute detail.

I shall begin by telling the House what DROPS is and about its value to the Army. DROPS is a demountable rack off-loading and pick-up system, and is essentially a sophisticated skip. The container holds up to 15 tonnes of ammunition and the system is designed so that one man can load the container on to his lorry from a storage site or railhead, transport it to the battlefield, unload it and then drive away.

It is worth noting that this broad concept was to be found in a demountable body for water transport developed by Scammell in 1929. The reason for wanting the capacity to transport large quantities of ammunition to the battlefield is that our new weapons fire shells which are twice as big and twice the weight of older shells and need to be replenished five times as quickly as previously planned. If we did not have DROPS we would face substantial increases in manpower and vehicles.

I should like to turn to the difficulty that has arisen over the Ministry of Defence and Boughtons. I am a newcomer to this saga, which has been running since 1982, but I shall try to paint in some of the background and that may help hon. Members to understand why feelings have run so high. In 1969 a Royal Armoured Vehicle Research and Development Establishment study about the future logistic needs advocated the adoption of demountable body techniques combined with the capacity to adapt to rough and muddy terrain.

Transport staff requirements started in 1975, using the Multilift load handling system. On the question of this firm being owned by the Finns and the technology being available to the Soviet Union, the hydraulic system supplied by Multilift was unclassified, in military terms. However, I shall need to check that point, and also the ownership of the company. Nevertheless, we have sound procedures to guard our information and technology. I remind hon. Members that we are referring to a hydraulic lifting system, not to top secret electronics.

Another point that is worth making is that we have the advantage of Finnish technology that may already have been made available to the Soviet Union. The Boughton load handling system was fitted to an in-service vehicle and was trialled in 1976. A further four Boughton land handling systems, not vehicles, were subsequently bought and fitted to Army trucks for operations concept trials. During this period Boughton staff worked closely with Army technicians.

Mr. Ashdown

The Minister has moved away from the question of the ownership of Multilift, but I should like him to confirm what he seems to have said: that the Ministry of Defence Procurement Executive has chosen, as the firm to fulfil this essential task for the British army, a firm that is owned by Finland—which is neither here nor there—and that also supplies the Soviet Union with very similar equipment. Is that what he is saying?

Mr. Hamilton

I am saying that Multilift has provided us with the possibility of this technology. What the firm does with it otherwise is up to it.

Mr. Ashdown

In other words, the Government have no objection to selling the DROPS equipment, which Multilift is providing for the British armed services, to the Red Army? Is that correct?

Mr. Hamilton

I am saying—

Mr. Ashdown

Is that correct?

Mr. Hamilton

Multilift already had the technology. I have no idea what else the firm has been doing with it. However, it offered it to us, and if it is the best technology it seems to us to be sensible to use it.

Mr. Ashdown

This is a very important point. In other words, there is nothing to prevent Multilift from selling this system, which was developed in Britain for sale to the British Army, direct to the Red Army. The Government do not seem to care what is done with it. Is that correct?

Mr. Hamilton

I am saying that Multilift already had the technology and that it has merely been developed further. Therefore, we are taking its technology.

During the trialling of the Boughton equipment, Boughton gained the impression that the production order would be given to it. When it failed to reach the final qualifying round of the tendering process, I suspect that, understandably, it was very disappointed. It used to be commonplace for the Ministry of Defence to select a preferred contractor for certain projects and then to negotiate the contract with that manufacturer without allowing other firms to compete for the order. However, we decided to go for competition. Accordingly, we allowed industry the maximum freedom in its submission of competitive proposals.

From an initial canvass of over 70 firms, eventually we were able to identify 11 main contractorship proposals involving over 20 firms, with Boughton among them. After a most intensive and careful examination, we were able to choose two main contractors, Foden and Scammell, to supply vehicles and two firms, Multilift and Powell Duffryn, to provide three different types of load handling systems for the further competitive trialling and evaluation stages. These trial occupied over a year and were among the most comprehensive ever staged for a logistics system in modern times, covering the full range of operations and soldier use in BAOR, as well as engineering proving in our research and development establishments. They provided firm evidence about the viability both of the concept and of the system choices that we had made earlier.

Thus, we were able to go on to discern the Multilift mark IV as our standard load handling system and to invite the competing main contractors to incorporate it in their final design and production proposals. These have provided the basis for the decisions that I announced last week, namely, the award of production orders for DROPS. These orders, worth about £220 million, will comprise about 2,000 vehicles and a range of ancillary equipment, including flat racks, trailers and rail transfer equipment. The contractors will go to Foden Trucks, Leyland Vehicles Ltd (Scammell Motors) with Multilift supplying the load handling systems and Marshalls of Cambridge and King Tractors of Market Harborough supplying the flat racks and trailers which are also vital elements in the system.

I emphasise that Boughton remains a valued contractor for Ministry of Defence business. We have no doubt that, although unlucky in the tender for jobs, it will surely be more successful in other opportunities on offer. We look forward to continuing to do business with it in the future.

The hon. Member for Woolwich asked about an inquiry. The Comptroller and Auditor General will make an examination of the entire DROPS programme and will report to the Public Accounts Committee in due course. The Ministry of Defence has nothing to hide and so nothing to fear. We welcome that examination.

The hon. Member for Kingston upon Hull, North mentioned my noble Friend the Minister of State for Defence Procurement. He told the hon. Gentleman that a parliamentary private secretary should accept Ministers' assurances. As the hon. Gentleman will know, a parliamentary private secretary is a member of the Government, and it is not unreasonable to ask him to accept Ministers' assurances. The hon. Gentleman also mentioned the telephone call to Trafford Boughton. General Stopford hotly denies that he put any pressure on him.

Mr. McNamara

That is not the interpretation that has been put on those telephone calls by other people. Will the Minister answer the question that I raised? Where the telephone calls made at the instigation of the Minister, or by the general off his own bat? When did the Minister learn about them, and when were those letters—which patently contain misinformation—sent out and why?

Mr. Hamilton

I cannot answer precisely for my noble Friend on all those questions, but I shall certainly write to the hon. Gentleman.

It would be remiss of me if I said nothing about our airborne early warning system. That matter was raised by my hon. Friend the Member for Kingswood. The hon. Member for Eccles showed great technical expertise, no doubt as a result of his time in the RAF. He commented on the price involved. I am sorry that he is not with us, but I can assure him that his comments about the price were wrong. That is my final word on price.

The competition was set to meet the United Kingdom's airborne early warning requirement. My hon. Friend the Member for Northampton, North emphasised what a critical part this early warning system will play in our future defence requirements. The competition is now in its final stages. The company's proposals have been subjected to a thorough evaluation and we aim to reach a decision soon, with an announcement by my right hon. Friend the Secretary of State next week.

Hon. Members will readily understand that I cannot say anything today to anticipate the outcome of the competition, but I can certainly give an assurance to the many hon. Members on both sides of the House who are interested in the outcome that our final decision will be taken only after the fullest consideration of all the relevant factors, including technical, commercial, industrial and operational issues. Nevertheless, the major considerations in the evaluation of the two systems will be the ability of each to meet the Royal Air Force's pressing operational requirements and their comparative value for money.

We are being entirely even-handed in dealing with the two competitors, whatever rumours there may be to the contrary. What must be said about the competition and about the desirability of the recent tendering process is that we are now genuinely able to make a choice between two fixed-price contracts on the best way forward. Before we had no such choice.

I congratulate my hon. Friend the Member for Kingswood on the skill shown in choosing his subject for debate today, which has raised several important issues. I shall emphasise the essential elements of our procurement policy. The Department is the United Kingdom's largest customer. We intend to be a tough and demanding customer, and no less commercial than our suppliers.

Financial resources are, necessarily, limited and must always be used cost effectively. In the interests of the Ministry of Defence, the taxpayer and our suppliers, we are not prepared to underwrite industrial non-competitiveness. Competition in the domestic market should improve the competitiveness in the export market of those companies that rise to the challenge.

Collaboration is now an essential route in a world of international duplication and fragmentation. It has to be an opportunity for companies as well as Governments. It will require tough decisions to be made today, but we must take the long-term view or live to regret in the future.

The new regime in the Procurement Executive is helping us to understand the affairs of our suppliers, to work with them with greatest effect, and generally to raise our standards in the procurement of equipment.

The motion recognises those steps which the Government have taken towards obtaining greater value for money yet reminds us of the effort which we will need to maintain if we are to meet the challenges of the future with success. It recognises the effort that the Government put into supporting British industry to sell its defence equipment overseas. I pledge the Government to maintain that effort, and commend the motion to the House.

1.20 pm

Mr. Hayward

I congratulate my hon. Friend the Minister on the reply that he has given. As he said, it was his first speech from the Dispatch Box, and given his delivery, I look forward to hearing many more such speeches in future, particularly on the subject of defence. He has been surrounded by hon. Members of great expertise. For example, we were all impressed yet again by the knowledge shown by my hon. Friend the Member for Ruislip-Northwood (Mr. Wilkinson) about a whole range of subjects, but particularly about helicopters and aviation weaponry.

I agree with the hon. Member for Kingston upon Hull, North (Mr. McNamara) on many points. However, I still disagree with his analysis of the position of the European figher aircraft. Judging by what he said, it is now under as much threat as any other defence project. Presumably, that gives him carte blanche to visit every constituency, suggesting that the project under development there is also under threat. He has not answered the point that no commitment is every given while a project is in its development stage.

Several hon. Members emphasised the importance of European and international collaboration. We must recognise that we collaborate with many countries on defence projects, and long may that continue. I share the concern expressed by the hon. Member for Kingston upon Hull, North—just as he shared my concern—about the F404. From my conversation with Ministers in this Government I have no doubt about their commitment to ensuring that a European engine is used for EFA when it goes into production. I was worried about other Governments, elsewhere.

Mr. McNamara

I am sure that we shall have a European engine. But it is that much more difficult for the European engine if there is an American engine too, even though a perfectly good European engine could be put in now.

Mr. Hayward

I think that we can both agree about that.

There has been considerable discussion about Nimrod and AWACS. My hon. Friend the Minister has said that there will be an announcement next week. However, concern has been expressed that if Nimrod does not succeed, that will have a dramatic effect on all the technologies being developed in our defence industry. We have a rare capacity to denegrate ourselves unduly. If Nimrod does no succeed, it will be a comment on the technologies involved in that part of GEC. However, it should no be forgotten that the head-up display system was developed within that section of GEC has just been sold for aircraft in the United States. Thus the Americans recognise that company's expertise in that sector, and believe that it is worth purchasing because it is a world leader. That is the context in which different technologies should be judged.

I welcomed all the speeches that were made, but particularly that made by the hon. Member for Newcastle upon Tyne, East (Mr. Brown). Most speeches have revolved around aviation, but the hon. Gentleman reminded us of the importance of naval defence. There are other projects such as the NER90 and the aviation support ship, which he did not mention, to which we shall have to address ourselves as they evolve.

Question put and agreed to.

Resolved, That this House notes the importance for jobs and exports of the British defence industry; and welcomes the Government's continuing support of the industry in its drive for a greater share of the defence export market and the industrial technologies appropriate to the 1990s.