Diversification Strategies (Hansard, 19 July 1994)

§ 1. Ms Eagle
To ask the Secretary of State for Defence what plans he has to study attempts at defence diversification strategies in other NATO states.

§ The Minister of State for Defence Procurement (Mr. Jonathan Aitken)
My Department has no plans for such a study.

§ Ms Eagle
I thank the Minister for that surprising response. Given the money and effort that the Clinton Administration are putting into defence diversification in America, and given that last week's announcement meant the loss of 18,500 more jobs in defence-related industries in this country, why on earth will the Government not consider setting up a proper defence diversification agency to deal with some of the issues?

§ Mr. Aitken
I know that the idea of a defence diversification agency is the one and only policy that unites the entire Labour party. Labour puts the diversification agency first; we put the front line first.
However, the hon. Lady's bright idea is not very workable or sensible. For a start, such a study would really be a non-examination of non-strategies. No European NATO state has a defence diversification policy, for the simple reason that our partners believe—as we do—that such a policy is best decided on by industry, rather than Government trying to make decisions that are really the province of business.
As for the American experience, it has been much criticised. It covers a number of areas that are already covered by Government Departments in this country, such as resettlement for all service men. The Wall Street Journal recently described the American diversification policy as "unblemished by success".

§ Mr. Wilkinson
Does my hon. Friend recall that the Minister for Industry obtained European Commission approval for intervention funding for the naval shipbuilders Swan Hunter for the construction of merchant vessels? In that context, will my hon. Friend take heart from the willingness of the owner of Constructions Mecaniques de Normandie in another NATO country— France—to invest in Swan Hunter if Her Majesty's Government will place the order for the refitting of the landing-ship logistics potential of the Sir Bedivere with Swan Hunter? Is not this a case of another NATO country's investment making unnecessary diversification funding?

§ Mr. Aitken
We have made it clear that foreign ownership is no bar to the future ownership of Swan Hunter. As for my hon. Friend's question about funding in general, that is properly the province of my right hon. Friend the Minister for Industry, who has been extremely effective and sympathetic in trying to work out a policy for this difficult subject.

§ Dr. David Clark
Does the Minister feel no conscience at all about the tens of thousands of defence workers whom he sacked last week? Why does he refuse to contemplate establishing a defence diversification agency as part of a diversification strategy that would provide packages of assistance for the downsized defence communities, and also help the defence industry to diversify its technology and skill in the civil market? The United States has done it; the European Community has done it; why will not the British Government do it?

§ Mr. Aitken
The British Government have done something rather better. The hon. Gentleman must have been asleep lately. The question relates to defence diversification for industry, and if the hon. Gentleman had been awake he would have noticed that "Front Line First" announced either orders or invitations to tender that are worth more than £5 billion to British industry and that will underpin or create some 10,000 jobs in our defence industries. It is absurd for the hon. Gentleman to adopt a whingeing, carping tone when he should be welcoming the statement.

§ Mr. John Marshall
Does my hon. Friend agree that those who call for a defence diversification agency have learnt nothing from the 1970s when Governments were unsuccessful at picking winners but adept at spending hundreds of millions of pound in trying to do so?

§ Mr. Aitken
My hon. Friend is quite right. The Labour party has learnt nothing and forgotten nothing. It wants to take us back to the old days of clause 4 ideology, of looking after the means of production, distribution and exchange and back to the National Enterprise Board and quangos, all of them doing jobs much better done by industry itself.