HC Deb 29 November 1988 vol 142 cc563-4
6. Mr. Graham

To ask the Secretary of State for Defence what assessment he has made of the implications for the supply of defence materials of (a) the current and (b) planned regional distribution of production of defence materials by former Royal Ordnance plants; and if he will make a statement.

Mr. Younger

We have assured the supply of appropriate defence materials by the five year agreement for the supply of ammunition that we concluded with Royal Ordnance in July of this year and by a number of other extant contracts. Royal Ordnance acknowledges that it remains committed to supply us in accordance with those arrangements. With that commitment, it would not be appropriate for the Government to seek to restrict the company in its search for greater efficiency and competitiveness, which are matters for the commercial judgment of the company.

Mr. Graham

As the Secretary of State is aware, British Aerospace intends to phase out and close Bishopton Royal Ordnance factory, with the loss of 1,100 jobs. We understand that it intends to transfer the work to Chile, Kentucky and other parts of America. Does the Secretary of State accept that the Bishopton Royal Ordnance factory is a major propellant producing factory in Britain? If we allow that firm to transfer its work abroad, in the event of a crisis Britain would not properly be able to defend itself because of the time scale in bringing back arms to this country.

Mr. Younger

I appreciate the hon. Gentleman's concern. That it appears that this particular facility is to be closed by Royal Ordnance is a serious and difficult matter. I disagree with the hon. Gentleman about transferring production to other countries. As I understand it, no such decision has been taken. I urge the hon. Gentleman and his constituents to wait and see what plans British Aerospace produces. It has underlined that it will be as helpful as it can to existing employees.

Mr. Churchill

What obligations are there on Royal Ordnance to maintain a surge capability in the production of key categories of weaponry and munitions in the event of future hostilities?

Mr. Younger

I appreciate the point that my hon. Friend has made. As I have already said, the five-year agreement that we have concluded with Royal Ordnance obliges it to be able to supply us with what it has been contracted to supply in the next five years. That will give us plenty of time to decide what future contracts should be made, and with whom. An adequate supply of the necessary materials is available from a number of different sources.

Mr. Rogers

Will the Secretary of State make an urgent assessment of the implications of the possible non-production of defence equipment at former Royal Ordnance factories, especially in Leeds? If, as rumoured, the Government are to purchase the American-built main battle tank, does the right hon. Gentleman not realise that that will mean the loss of more than 20,000 jobs at Vickers and supplying companies, besides removing a main battle tank building capacity from this country? Why has the Cabinet delayed a decision on this important issue? Does it not know all the facts, or is the Secretary of State waiting to make an announcement on the day before the recess so that he will avoid political flack from Conservative Members who want his head?

Mr. Younger

The hon. Gentleman seems to assume one particular outcome. There have been rumours in all directions and I can confirm only that we are holding a competition—it is a good one—between the different types of tank. We have difficult choices to make. It is still my hope that we shall be able to make a decision before the end of the year. My colleagues and I will do our best to stick to that.

Mr. John Marshall

Does my right hon. Friend agree that this reorganisation of production should lead to lower unit costs, better value for the taxpayer and greater job and export opportunities?

Mr. Younger

I agree with my hon. Friend. It is in everyone's interest that our defence industry, whether Royal Ordnance or any other part of it, should be as competitive as possible. All the signs are that moves in recent years to make it more competitive have resulted in record overseas sales of defence equipment and have secured a large number of jobs.