HC Deb 17 April 2000 vol 348 cc693-4
23. Mr. Julian Brazier. (Canterbury)

If he will make a statement on progress on the purchase or leasing of roll on/roll off ferries for sealift for the forces. [117903]

The Secretary of State for Defence (Mr. Geoffrey Hoon)

On current plans, we intend to place a contract this year, under private finance initiative arrangements, for a long-term managed sealift capability equivalent to six ships to support the joint rapid reaction force. A final decision will not be made until we have fully assessed the bids that we have received.

Mr. Brazier

As a former secretary of the parliamentary maritime group, may I join other Members on both sides of the House in expressing extreme concern that an order of this importance could be placed with a yard abroad, when we have lost so much shipyard capacity? We had a cheap shot earlier about a contract for two ships placed by the previous Government. Did the Secretary of State take legal advice on whether the contract could be framed in such a way as to fall within the EU' s exemption for military projects? If he sought such advice, may we have a copy of it in the Library?

Mr. Hoon

The hon. Gentleman referred to my earlier observation as a "cheap shot". However, the requirement for sea-going lift for the rapid reaction force was the same in January 1997 as that which the present Government identified as part of the strategic defence review. On the strict legal advice that we received, it was concluded that if these vessels were to be available for commercial purposes, that commerciality must by necessity be reflected in the procurement process. The previous Government came to the same conclusion.

As the hon. Gentleman conceded, we are operating under relevant European and World Trade Organisation public procurement rules. Those rules prohibit preferential treatment for the United Kingdom industry because the vessels concerned are clearly non-warlike; they are available for commercial purposes. By that definition, they must be considered under the relevant EU rules. The hon. Gentleman knows that, his colleagues on the Opposition Front Bench know that, and not only did the previous Government know that but they operated under precisely the same rules.

Mrs. Gwyneth Dunwoody. (Crewe and Nantwich)

Would my right hon. Friend like to undertake a short, sharp study of how often our European compatriots have managed to pass on what are basically defence contracts under existing rules to nationalities other than their own and to work forces other than those of their own nationalities?

Mr. Hoon

The British Government are careful to ensure that all relevant EU rules are observed by our partners in the EU. The contracts are published in the Official Journal That is the transparent process that the EU requires. We ensure that other countries participate in those rules as effectively as we do.

Mr. Jonathan Sayeed. (Mid-Bedfordshire)

My hon. Friend the Member for Canterbury (Mr. Brazier) talked about six ships. As I understand it, two of them will be available for trade and four will be used only by the Royal Navy. Is it legally possible for those four ships to be built only in this country?

Mr. Hoon

The hon. Gentleman misunderstands the nature of the contract. The essence of ensuring that the ships are commercially useful is to have them available to the Government at different periods of notice when a crisis requires their availability. Some will be available at very short notice and others will have rather longer notice periods. In the interim, therefore, they will be available for commercial purposes. As they are available for commercial purposes, they cannot be described as "warlike". Therefore, they do not fall within the exception that is set out in the EU procurement rules.

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