HC Deb 11 July 1988 vol 137 cc30-41 3.53 pm
The Parliamentary Under-Secretary of State for Defence Procurement (Mr. Tim Sainsbury)

With permission, Mr. Speaker, I should like to make a statement about the Government's plans to place orders for further Duke class type 23 frigates

The type 23 frigate will form the backbone of the Royal Navy's anti-submarine warfare surface force in the future. Principal features of this ship include a towed array sonar to detect low-noise submarines, a 4.5 in gun, a helicopter capable of carrying Sting Ray torpedoes and sonobuoys, Harpoon anti-ship sea-skimming missiles and vertical launch Sea Wolf missiles to counter the air threat. The type 23 will be more capable than the types of ships it is replacing.

Tenders were sought for orders for one to four ships from the four main warship building yards in the United Kingdom. We are very pleased with the outcome of the competition. The precise value of the order is commercially confidential but the prices submitted were very keen. Following evaluation of the tenders, I am pleased to be able to tell the House that an order for three ships is to be placed with Yarrow Shipbuilders Ltd. The ordering of all three ships from Yarrow provides best value for money in terms of prices and contract conditions. The average unit cost of the three new ships is some £10 million below the average of the last three ordered in 1986. That reflects, among other things, the keenness of the competition; the benefits of batch ordering; Unproved efficiency in the shipyards, due in part to improved fabrication methods; and greater experience of building those types of vessel.

I take this opportunity to thank all the yards which participated in this excellent competition and which submitted such competitive bids. Although tenders were sought for up to four vessels in order to explore the benefits of batch ordering, an order now for four—even if all from one yard—would not be significantly more attractive in terms of unit price than an order for three. Therefore, we have decided that it is best to include the fourth ship in the next batch competition. That will enable all the yards that participated in this competition to have an opportunity to bid again for that ship, together with further possible orders.

This decision brings to 10 the number of new frigates now on order, excluding the three type 22 frigates accepted by the Royal Navy from tire shipbuilders this year. In recent days, there has been much comment in the press and from the Opposition about the size, age and availability of our surface fleet. I regret that much of it has been ill informed. My announcement today demonstrates in the best possible way the Government's commitment to maintaining a highly capable escort force of about 50 destroyers and frigates.

Mr. Allan Rogers (Rhondda)

We welcome the Minister's statement, but we also have grave misgivings about it. We welcome it because it will mean an enhancement of our surface fleet, which has been much reduced in capability and in relative effectiveness because of the Government's gross inability properly to manage the defence economy over the past few years. We also welcome it because it will provide much-needed job opportunities and safeguards in Glasgow, where the vessels will be built. My hon. Friends the Members for Glasgow, Hillhead (Mr. Galloway) and for Glasgow, Garscadden (Mr. Dewar) are very pleased that Yarrow Shipbuilders has won the order, which will mean maintaining jobs in an area that is currently ravaged by unemployment as a result of the Government's policies.

However, my hon. Friends the Members for Tyneside constituencies are completely dismayed by the Minister's announcement. The recent completion of a type 23 frigate on time and within budget gave them the hope that Swan Hunter would be given one frigate out of this order, or out of the four—a point to which I shall return. Instead, Swan Hunter has been given nothing, which will mean an almost immediate loss of 700 jobs and a potential loss of 2,000 jobs in the near future, with the possible complete closure of the yard.

We note that the original announcement concerning the frigates was made at last year's Tory party conference. We are grateful that the Minister, unlike so many of his colleagues, has on this occasion used the House to make such an important announcement. In making the observation that this is the second announcement of the same order, I note that at last year's Tory party conference the Secretary of State for Defence received 32 seconds of applause for his announcement there. Are we to understand that that is now to be the Government's technique for ordering three frigates a year—once at the Tory party conference, and once in the House?

It should be remembered that the requirement for three frigates a year is a basic requirement laid down in the Select Committee's report. Are the Government returning to ordering one frigate a year, as they have done since 1981—a policy, incidentally, that has reduced the Navy even further than was envisaged by Sir John Nott in 1981? That led to the resignation of one of the hon. Gentleman's colleagues, but he is not particularly concerned.

Can the Minister give an assurance on the orders? When will the ships be delivered—or are we to have another announcement about that? If tenders were sought for four frigates and if, as the statement said, there are significant advantages in batch ordering, why are the Government ordering only three out of four? Why is the fourth frigate to become number one for next year, and how many are to be ordered next year? What is the Government's continuing policy—or are they dealing with the matter on an ad hoc basis?

As the Select Committee said in its recent report, the Navy desperately needs surface ships if it is to service our commitments in the Gulf and the south Atlantic and to NATO. Although the announcement is welcome news for some of our yards and is undoubtedly a welcome enhancement of our surface fleet, it will lead to dismay on Tyneside and is certainly not enough for our Navy.

Mr. Sainsbury

The hon. Gentleman is very hard to please. His reaction to the announcement, which he is grudgingly prepared to admit is good news, reminds me rather of the remark attributed to Oscar Wilde when he first saw the Niagara falls—that they would be more impressive if they flowed the other way.

The hon. Gentleman asked a number of questions, and it may not be possible for me to answer them all. He asked particularly when the ships would be delivered. As he knows, for operational reasons we do not give acceptance dates in advance, but we expect fabrication of the first of the three ships to start in about six months' time, and for work on the others to follow at roughly six-month intervals. He also asked why there should be three rather than four ships. I thought that I had explained that clearly in my statement. It is perfectly acceptable for the fourth ship to be included in the next order, for which we expect to invite tenders next year.

The hon. Gentleman referred, rather to my surprise, to much reduced capability in the Royal Navy. I entirely reject that allegation. The new ships, like others in the Royal Navy, are highly capable—much more capable than the ships that they are replacing.

Several Hon. Members


Mr. Speaker

Order. May I ask for brief questions? We have a heavy day ahead of us.

Sir Antony Buck (Colchester, North)

Does my hon. Friend agree that it is not a very happy precedent for a Minister responsible for the Navy to start quoting Oscar Wilde? However, apart from his last few remarks, my hon. Friend's announcement will be warmly welcomed.

Does my hon. Friend agree that it is important to emphasise that the new types of frigate being ordered have a vast capability compared with those that they will replace? Will he be able to tell us soon when the other orders will be made, so that we can keep our commitment to a surface fleet of around 50 major ships?

Mr. Sainsbury

I am grateful to my hon. and learned Friend for his reaction. I can confirm that the ships are a great deal more capable, particularly in their antisubmarine warfare capability: they have much enhanced sonar capability, and are also much quieter. In addition, they carry a smaller crew—170 as opposed to 220, which was the complement of the previous type of antisubmarine warfare ship.

The next competition will be next year. We have not yet decided how many ships will be involved, but the number will be consistent with an ordering pattern to retain a modern and highly capable fleet of about 50 destroyers and frigates.

Mr. John Cartwright (Woolwich)

Does the Minister include the Select Committee on Defence in his sweeping dismissal of the Government's critics as being ill informed? In particular, does he challenge the Committee's assessment that no fewer than 25 of the existing escort vessels will reach the end of their planned lives over the next 10 years, and that that means 14 orders over and above what he has announced today if the surface fleet is not to become smaller and less capable than it is now? Why do the Government not attempt a planned approach to ordering, instead of the drip-feed approach that they have demonstrated again today?

Mr. Sainsbury

I am glad to say that I did not describe the Select Committee as ill informed. I referred to the reaction to its report, much of which has been ill informed, particularly the reaction on the Opposition Benches. I am sure that the hon. Gentleman, who is I believe a member of the Committee, will know that paragraph 72 of its report refers to the 25 ships that he has just mentioned, and also suggests that two orders are required this year to retain the escort fleet at about 50. I have just announced an order for three.

Mr. Michael Mates (Hampshire, East)

Does my hon. Friend accept that this is excellent news for the Royal Navy, for Yarrow Shipbuilders and for the hundreds of subcontractors who will benefit from the orders? Excellent as it is, however, the news does not mean that my hon. Friend is out of the wood in his determination to keep a destroyer frigate force of about 50. Does he accept that he must order a further two next year, two in 1990, three in 1991 and two in 1992 just to keep pace with the aging quality of the present fleet?

While I have no doubt that my hon. Friend can do that, would it not make sense for him to be able to tell the House as soon as possible that it is his intention, and that it is in the long-term costings? That is the best way to achieve confidence in the Navy, and among other yards that failed this time but stand to succeed in subsequent orders.

Mr. Sainsbury

I am grateful to my hon. Friend for his welcome for the announcement, and for what he said about Yarrow's and particularly about subcontractors. A large number of companies throughout the country will benefit from the subcontracting work associated with this major defence contract, which is not always the case.

I take my hon. Friend's point about the need to order new ships to keep the capability and numbers of the escort fleet up to the required level. My hon. Friend will have heard what I have said about another order next year. I think that he will understand why I do not give precise numbers or timings, looking several years ahead. I am, however, happy to repeat our commitment to retaining an escort fleet of about 50 ships, and to assure him that they will be very capable. The new ships are much more efficient and effective that those that they are replacing.

Mr. George Galloway (Glasgow, Hillhead)

Notwithstanding the fully justified reservations of my hon. Friend the Member for Rhondda (Mr. Rogers), the Minister will be aware that the news will be greeted with delight and satisfaction on the Clyde, particularly in my constituency. It is certainly good news for the Clyde shipbuilding industry and the Royal Navy. It follows not from ill-informed criticism, but from extremely well-informed criticism relating to the need to keep our service fleet up to strength at about 50.

The Government's good-sense decision reflects—for once, perhaps—a recognition of Britain's real defence needs in the real world and on the real seas, rather than the nuclear preoccupation of the fantasy world in which some military strategists persist in living. This is good news for Glasgow and very good news for the constituency and Yarrow's, which is a centre of excellence. I offer the Minister thanks from my constituents.

Mr. Sainsbury

I am grateful to the hon. Gentleman for his reaction, which, as he said himself, was perhaps a little more genuine and honest than that of his hon. Friend the Member for Rhondda (Mr. Rogers), who seemed to be looking for reasons to complain about good news. I can do no better than to say that a total of 27 major naval vessels with a value of nearly £4.6 million are now on order for the Royal Navy, or under construction. Some 64 major ships and submarines have been ordered by the Government since they came to power in 1979.

Mr. David Martin (Portsmouth, South)

Will my hon. Friend confirm that the money saved by the very efficient procurement of these ships will be kept within the defence budget for further procurement?

Mr. Sainsbury

I am glad to be able to confirm that. One of the principal reasons for our drive for more competitiveness and value for money in our procurement expenditure is to provide for the opportunity to buy more equipment with the money saved.

Mr. Frank Field (Birkenhead)

Does the Minister need to be reminded of the bitter disappointment that will be experienced in Cammell Laird this afternoon as a result of his announcement? May I remind him of Cammell Laird's substantial order book for conventional submarines? Will he open negotiations with the yard in the near future on the timing of the placing of those orders, so that any employment effects of today's announcement can be minimised? Will he assure the House that all these orders were decided on price? Having spoken to the shop stewards before coming here, may I extend an invitation to the Minister, now that the tenders have been decided, to visit the yard in the near future?

Mr. Sainsbury

I appreciate what the hon. Gentleman says about the disappointment that will be felt by Camrnell Laird. As I said in my statement, I appreciate the contributions of all the yards that took part in the competition, and the keen bids that they put in. I can assure the hon. Gentleman that the award of the three ships to Yarrow Shipbuilders Ltd. was on the basis of price. I may add that Yarrow's bid was fully compliant in terms of contract conditions.

A number of other ships will be coming forward for invitation to tender. We recently had a presentation on the aviation support ship. I have already mentioned inviting tenders for a further batch of type 23s next year. There will be further orders for auxiliary oiler replenishment vessels, single-role minehunters and type 2400s in due course. I shall be happy in due course to pay a visit to Cammell Laird to see the shipyard.

Mr. Neville Trotter (Tynemouth)

Does my hon. Friend accept that, although there will be general welcome for this addition to the strength of the Royal Navy and the work for the contracting part of the marine industry—the subcontractors—there will be great disappointment on Tyneside that Swan Hunter, the major frigate builder, did not share in the order? Does he accept that there is a strong case for having a long-term ordering programme to avoid uncertainty, with all the problems that that rise gives to for employment?

Will my hon. Friend say a little more about the next batch of type 23s? When he refers to next year, does he mean that the process will start then or that the order will be placed then?

Mr. Sainsbury

As I said in answer to the hon. Member for Birkenhead (Mr. Field) about Cammell Laird, so I appreciate the disappointment in my hon. Friend's constituency at Swan Hunter. I am equally grateful to it for its participation and contribution to this effective competition. As I said, there will be another order next year. I shall not commit myself now to saying how many ships will be involved, but it will be a batch order and the process will start next year. It might even come to order next year—it is as yet too early to say. As with Cammell Laird, there are Royal Navy ships under construction at Swan Hunter, which I hope will submit competitive tenders for the future opportunities with which it will be provided.

Mr. Bruce Millan (Glasgow, Govan)

Is the Minister aware that what he has just said about a further batch order next year will be welcomed by every hon. Member with a naval shipbuilding interest in his constituency? In the meantime, his announcement today will be warmly welcomed on Clydeside, especially as it is clear that the order went to Yarrow strictly on merit—and as, without the order, Yarrow would have been faced with a substantial rundown in the labour force in the next few months.

Mr. Sainsbury

Of course, when I announced the intention to go out for another batch order next year it is clear that not all the yards can win if we place the orders in batches. That is the inevitable consequence of seeking the best value for money for the Navy. I hope that we please the whole House by getting effective competition and being able to order three ships at an average cost of about £10 million less than the previous group. The clear consequence is that not all yards can be successful on each occasion.

Sir Geoffrey Johnson Smith (Wealden)

I welcome my hon. Friend's statement this afternoon, but may I ask what reliance is he placing on the use of advanced weapons systems on surface vessels as a way of maintaining and, if possible, increasing their numbers and prolonging their lives?

Mr. Sainsbury

I am grateful for my hon. Friend's welcome for the announcement. The weapons systems and sonars and radars on the type 23s are, as, he would put it, modern and very capable. There are some advantages in some of the latest systems because they are easier to enhance and modernise than some of the older ones. That should enable us to keep some aspects of the sensors and weapons of the modern ships in the most up-to-date condition without the difficulty of refitting, which we have run into on previous occasions when we virtually had to rebuild some of the earlier Leanders.

Sir Russell Jonhston (Inverness, Nairn and Lochaber)

In associating myself with the general welcome for this announcement—particularly as a Scottish Member—may I associate myself with hon. Members on both sides who have argued that there is a case for a long-term ordering programme? Does the Minister agree that, as well as getting value for money, it is of great importance to maintain our warship building capacity? Without a long-term building programme there is a risk that some of it could be lost.

Mr. Sainsbury

I am grateful to the hon. Gentleman for his welcome for the order. Of course, there are always requests for long-term programmes for this and that. He will be as aware as I am that long-term programmes tend to change, and the longer-term and more highly defined the programme, the less flexible it inevitably is. The last thing that we want to do is to commit ourselves too far in advance to ordering precise numbers of particular types of ship with particular categories of arms, sonars and radars, when we are faced with an evolving threat and must continually judge what is required against it.

Sir David Price (Eastleigh)

Is my hon. Friend aware that, although his statement will give encouragement to the Royal Navy and Yarrow, it will give nothing but disappointment to my constituents in Vosper Thornycroft? May I take it that as a result of that disappointment, of which I am sure my hon. Friend is aware, his Department is bending every effort to assist Vosper Thornycroft in getting orders for both mine hunters and mine sweepers, particularly in the Gulf and for Arab states? Will he add anything in that respect?

Mr. Sainsbury

I appreciate what my hon. Friend said on behalf of Vosper Thornycroft, which is the third unsuccessful yard in this competition. I repeat to him what I said to our hon. Member the Member for Tynemouth (Mr. Trotter) and to the hon. Member for Birkenhead (Mr. Field) about the yards' participation in this competition. Like Swan Hunter and Cammell Laird, Vosper Thornycroft has an opportunity to tender for further orders that come along. Like the other yards, it has ships for the Royal Navy under construction, and it can bid for other work from overseas and from the civil sector as well as from the Ministry of Defence.

Mr. Chris Mullin (Sunderland, South)

Will the Minister accept that, while no one begrudges the work going to Yarrow, there is considerable disappointment about the announcement? In fact, it is a bit of a kick in the teeth for many in the north-east that not one of the orders has gone to Swan Hunter. What hope can the hon. Gentleman hold out for the thousands of workers whose livelihoods depend on Swan Hunter? Does the Minister agree that the merciless application of market forces should not be the only criterion he takes into account when deciding where to place such orders?

Mr. Sainsbury

I am glad to note the hon. Gentleman's enthusiastic welcome for defence orders of considerable size. I appreciate that not every yard can win if a batch order is placed, but I am somewhat surprised that he should suggest that we should incur extra expense by splitting the order. Depending on how the order was divided, the extra expense to the Royal Navy would have between £11 million and £20 million if we had not taken advantage of the best offer. We have a responsibility to ensure that that money is saved to be used for other equipment to ensure that we have the best possible Navy.

Sir Ian Lloyd (Havant)

My hon. Friend will be aware that, apart from recent events in the Gulf, the evidence given before a Congressional defence committee last week—that modern weapons systems depend completely on their electronic capability—reinforces the point made by my hon. Friend the Member for Wealden (Sir G. Johnson Smith). When was the specification for the electronic equipment frozen; how old will it be when it is installed; how frequently will it be updated?

Mr. Sainsbury

My hon. Friend will know better than most that it is difficult to answer that question because there are about 62 or 63 different systems in the type 23, and almost all of them have electronic components. The answer to his question would be different for each one, but I take on board his point about the need, when ordering complex electronic equipment. to bring to bear the sort of approach that he recommends.

Mr. Bruce George (Walsall, South)

Many—probably most—Opposition Members welcome the Minister's announcement as a step towards achieving his own target of 50 frigates. However, to achieve that goal would require ordering about two or three a year. Over the past five or six years the Government have averaged about one a year. To achieve the target would require far more than simply the ordering process that we have heard about. Does the Minister agree that perhaps his citing of Wilde was quite apt because many ships have been lost in the ordering process? To lose one was surely unfortunate, to lose two was careless, but to lose an extended family of ships amounts to neglect.

Mr. Sainsbury

In the relevant Oscar Wilde play the parents were found again. Perhaps the Select Committee's comments on the ordering rate overlooked the inevitable implications of a reduction in the overall size of the escort fleet from the figure in the 1970s down to about 50, which remains our target size. As the hon. Gentleman will be aware, paragraph 72 of the Select Committee report suggests a required ordering rate of 2.6 ships a year, which is the equivalent of two more orders this year. I have just announced three and that seems a good start towards achieving what the Committee asks for.

Mr. Jonathan Sayeed (Bristol, East)

My hon. Friend's announcement will be warmly welcomed with a great sigh of relief by the Royal Navy. That is because it is aware that it is not able to fulfil its peacetime commitments without withdrawing from some NATO exercises. It is extremely perturbed about the lack of type 23s, in particular the towed array sonar frigates required for the northern area. It is also worried about the impossibility of defending the sea lanes of communication in wartime. Will the Minister reassure the Navy by introducing into the long-term costings a clear programme of continuous ordering of surface units?

Mr. Sainsbury

While I welcome my hon. Friend's reaction to this order, may I say that I do not accept the "impossibility" as he puts it, of defending the sea lanes. The Royal Navy would feel that to say that was selling it short, given the ships that it has, let alone the new ships that we are talking about ordering. I agree that the towed array sonars, which will be one of the main weapons systems of the type 23s, give a greatly enhanced anti-submarine warfare capability, which will be of great value to the Royal Navy.

Mrs. Margaret Ewing (Moray)

May I also welcome today's announcement which will be greeted with enthusiasm throughout Scotland where we justifiably regard the words "Clyde-built" as demonstrating the pride that we feel? Can the Minister say whether emphasis is being placed by the Ministry on decentralisation of defence procurement expenditure? Is he aware that recent estimates show that 68 per cent. of this massive budget was concentrated in the south-east and south-west? Surely some of the pleas that we have heard from the northern regions of England show the need for decentralisation. Will the subcontracted steel come from Ravenscraig?

Mr. Sainsbury

It is apparent that the welcome for this order is not just from Scotland but from all those who have the interests of the Royal Navy at heart. Subcontract work is a matter for the prime contractor, and where he obtains his supplies is a matter for him. I am sure that he will find, as the hon. Lady would expect, some very competitive suppliers in Scotland.

Mr. Allan Stewart (Eastwood)

Further to the points made by the right hon. Member for Glasgow, Govan (Mr. Millan) and the hon. Member for Glasgow, Hillhead (Mr. Galloway), may I ask my hon. Friend whether he agrees that this is magnificent news for the west of Scotland and a tribute to the professionalism and dedication of the management and work force in Yarrow who have won this contract on merit? Is my hon. Friend able to say anything more about the consequences of the contract for the preservation and creation of jobs? Does he agree that the lesson for the whole of Scottish industry is that the way to preserve and create jobs is to be competitive?

Mr. Sainsbury

Indeed. I am grateful to my hon. Friend for his welcome. We estimate that about 10,000 jobs will be sustained in the defence industry by these orders. He is absolutely right that in defence equipment supply, as in other industrial and commercial activities, competitive effectiveness in meeting the customers' requirements most efficiently is the best way to ensure the preservation of jobs and to create more jobs in Scotland and throughout the country.

Mr. Frank Cook (Stockton, North)

While the Minister's announcement of the batch order will be welcomed by the Royal Navy, it will be bitter news for the community surrounding Swan Hunter, where it will immediately mean 700 redundancies in the short term and probably 2,000 in the not-so-long term. Many of those people will be constituents of mine who travel to and fro each day.

Has the Minister taken into account the fact that the three orders announced today may yet fall short of the "about 50" that the Royal Navy considers adequate, especially taking into account the increased down time in modern operations and the need to update and relit these vessels more regularly? Will the Minister also take into account the fact that we need not only to renew our vessels but to retain our capacity to renew them? If we close the yards, as is happening at present, we need never look for another conflict like that in the Falklands because we shall be unable to furnish the equipment to send to such a conflict.

Mr. Sainsbury

I appreciate that the hon. Gentleman's constituents, like other people in the area of Swan Hunter, will be disappointed that Swan Hunter has not won this order. Of course the size and shape of the work force at Swan Hunter are matters for the company, but I hope that its continuing programme to improve productivity and efficiency, of which I am aware, will enable the company to win extra orders from the Ministry of Defence, from the private sector or, indeed, from overseas.

Mr. John Wilkinson (Ruislip-Northwood)

While warmly welcoming this order, which will be a valuable addition to the fleet, may I suggest to my hon. Friend that his financial problems next year may be even greater than they were this year, in that defence expenditure is projected to continue to decline in real terms as a proportion of Government expenditure and as a proportion of GDP? In those circumstances, how will he fulfil his worthwhile and laudable objective of a surface fleet of about 50?

Mr. Sainsbury

I am grateful to my hon. Friend for his welcome for this order. Expenditure on defence is projected to remain at about a constant level for the next two years. This order is a demonstration of one of the best ways in which we can meet the objective that my hon. Friend and I share—getting better value for money. As I said, the average cost of the three ships for which I have just announced the order is about £10 million less than the last three which were ordered in 1986. That is getting better value for money through more effective procurement, and is one of the best ways to ensure that we can meet the requirements of the Ministry of Defence and the Navy.

Mr. Tony Worthington (Clydebank and Milngavie)

The Minister's statement will be greeted with great relief on Clydeside and especially by my constituents. It is not often realised that Yarrow is the largest single employer in manufacturing industry in Strathclyde. There are about 5,500 jobs in Yarrow, and subcontractors will depend on this order. It is difficult to overestimate the importance of the order, and enormous credit is due to the management and work force who have won this order on merit.

I should like the Minister to try to be a little less reticent about the batch system and about what it means to defer one of the ships into the next batch. When does he expect to be more explicit about the number of ships and the timing of the next batch? So far he has been a little reticent about that.

Mr. Sainsbury

I appreciate the hon. Gentleman's welcome for the order. Like some other hon. Members, he is seeking more information, but I am afraid that at this stage I am unable to give that to the House. Obviously, the batch system means that we order ships not singly but in groups. I have already announced that next year there will be another invitation to tender for a further batch. By normal standards that is quite precise. For the reasons that I have already advanced, I do not wish to commit myself further. I repeat our commitment to maintaining an escort fleet of about 50 ships. Those ships will be highly capable.

Several Hon. Members


Mr. Speaker

Order. I appreciate the interest in this statement and I hope that I have called all those hon. Members who have a direct interest. I shall call hon. Members who are still rising but I ask them to be brief because other hon. Members wish to take part in the subsequent debate.

Mr. Robert Banks (Harrogate)

Does not the chorus of delight from the Opposition Benches contrast with the performance of previous Labour Governments? Does my hon. Friend agree that the viability of a shipbuilding industry in this country is a major factor in securing competitiveness for the building of warships? Has he given careful consideration to the effect on Swan Hunter, in particular, as a result of his decision?

Mr. Sainsbury

My hon. Friend is right in his observation. If I recall correctly, when the Labour party was in power from 1974 to 1979, it cut the defence budget on no fewer than five occasions, which does not give us great confidence about what it would do in the future. I assure my hon. Friend that we are conscious of his point and that we keep under review the overall capacity of the shipbuilding industry, as we do the ship repair industry, to meet the requirements of the Royal Navy.

Mr. Anthony Nelson (Chichester)

Is my hon. Friend aware that his welcome statement this afternoon will mark a major enhancement of our commitment to the defence of the east Atlantic and of NATO's northern flank, as well as to the pre-eminent reputation of our Royal Navy in anti-submarine warfare? However, will he be somewhat cautious about accepting the rather superficial arguments in favour of a longer-term batch ordering policy, not only because there are other priorities in defence procurement, but because it implies a sort of Buggins's turn, which cannot be in the long-term interests of our defence procurement policy?

Mr. Sainsbury

I am grateful to my hon. Friend for those remarks, with which I very much agree. The Royal Navy contributes about 70 per cent. of the NATO surface fleet in the east Atlantic and the Channel. That is a reflection of the important contribution of the Royal Navy to the NATO Alliance.

Mr. James Couchman (Gillingham)

This is very good news for the Royal Navy, for Scotland and for Yarrow, but may I join my hon. Friend the Member for Tynemouth (Mr. Trotter) in articulating the fact that it is bad news for Swan Hunter, which is having considerable troubles with its present orders, particularly the AOR? When will my hon. Friend order more ships of the types that he mentioned, including ships for the amphibious forces, and will he lay down a more specific timetable for the next batch of type 23 frigates?

Mr. Sainsbury

One of the reasons why I cannot fully satisfy my hon. Friend's curiosity about the precise timing of the next order is that it takes quite a long time to analyse the tenders when they come in. As he will be aware, it is not at all unusual nowadays for there to be perhaps two or even three rounds of tendering to ensure that the Royal Navy obtains the best price and that the tenders are fully compliant with the contract conditions. That can take quite a long time and it is difficult to predict in advance exactly how long it will take. Therefore, I must leave my hon. Friend with no more information than I have already given to the House.

Mr. Julian Brazier (Canterbury)

Following the point of my hon. Friend the Member for Harrogate (Mr. Banks), may I congratulate my hon. Friend on the excellent deal that he has struck? However, may I put it to him that we must keep at least two effective frigate builders in being, if we want to be competitive in future? That will almost certainly mean that, at some time in future, we shall have to pay a little more for our frigates than the price at which Yarrow would be able to produce them because, inevitably, Yarrow now has a strong competitive advantage. I put it to my hon. Friend that Swan Hunter should be that other yard.

Mr. Sainsbury

I aware that, to retain competition, we need more than on supplier. As my hon. Friend will recognise, we went out to four yards—not just two—all of which put in bids for that batch. I hope that a number of yards will continue to compete for future orders to ensure that we have competitive prices. I do not accept that that will necessarily mean that we shall have to pay more than we would otherwise do to ensure that we retain at least two yards with the capability of building new frigates.

Mr. Barry Field (Isle of Wight)

I appreciate that the order is an early stage, but is my hon. Friend able to confirm that the radar contract will be awarded to Plessey, which will be good news for its employees on the Isle of Wight, and can he say whether the helicopter requirement of those new warships will be met from existing resources, or whether additional helicopters will be required, which will be even more good news for Westland employees on the Isle of Wight?

Mr. Sainsbury

As I said earlier, there are a number of subcontractors and suppliers throughout the country, including the Isle of Wight, which are likely to benefit from the announcement of the order. In due course, those new frigates will carry the EH 101 helicopter, which is currently being developed and is supplied by Westland. I hope that my hon. Friend's constituents, like constituents in many other parts of the country, will benefit from that order.