HL Deb 29 June 1982 vol 432 cc203-12

5.46 p.m.

The Earl of Kinnoull rose to ask Her Majesty's Government whether they will now review the P.110 project as a replacement for the Jaguar in the light of the current interest in European co-operation and the future requirements of the Royal Air Force.

The noble Earl said: My Lords, I must first apologise to the House for the short notice of this Unstarred Question. The business of the House is so crammed daily with major Bills at this time of the Session that it is increasingly difficult to fit in an Unstarred Question at a reasonable hour. This is an unusually reasonable hour. I am grateful for this opportunity to draw attention to the P110 project which has been, of course, on the Order Paper under "No named day" for some weeks. I am grateful to the noble Lord, Lord Beswick, for indicating that he will take part. As a distinguished late chairman of British Aerospace, T look forward very much to what he has to say and I hope that he supports the project.

The P.110 project I think can accurately be described as the next generation of supersonic fighter aircraft to replace the Jaguar in the 1990s. It is a British industry concept from the derivative of other projects which have been considered and studied over the years. Informed opinion tells me that the P.110 design performance could out-match any of its likely competitors in the 1990s—that is the F16E, the F18L and the Mirage 4,000. Coupled with that is the industrial significance of the project if it gets the go-ahead. It is something that industry considers with a very high priority.

The history of the P.110—and my noble friend will correct me if I am wrong—arose from a common desire to find a replacement of Jaguar through a European collaborative venture. The Government suspended support last year on the grounds that no commonality could be found among the respective air forces and so there was no foreseeable collaborative agreement. British industry at that stage set up a group of seven companies under the leadership of the British Aerospace Company to continue to fund the P.110 project by private funds. It committed £25 million so that this project could be continued until the end of the year.

Since mid-1981 a number of important issues have progressed. First, as I understand it, an understanding has been reached between the European industrial partners—that is the MBB and the A1T from Italy, to participate with private funding if the project is supported by Her Majesty's Government. Secondly, there has been a comprehensive market analysis of the sales potential of this project which has shown, even on a cautious basis, a very encouraging possible return on investment.

Thirdly—and I think that this is very important—at least 40 per cent. of the development costs will be saved by using the same engine and avionics as that used in the Tornado. This obviously gives an advantage on time-scale and, indeed, a more accurate estimate of the eventual sale costs.

Fourthly—and, again, I hope that my noble friend will confirm this—there has been a continuous and helpful discussion with the Royal Air Force as to their requirements. All this has been achieved in the last 12 months by private funding. But clearly this funding cannot be sustained much further without vital Government support being reactivated. As my noble friend will know, the crunch time is rapidly approaching.

I recognise that the funding problem is complex, particularly for the Royal Air Force to commit themselves with their limited resources. Nevertheless, it is difficult to see how much further industry can go without a Government commitment. A sales order of a paper project without Government blessing is next to an impossibility.

To get agreement among potential home air forces on commonality of specification is, by the experience of Tornado, a marathon of tortuous negotiations, unless someone bangs their heads together. Equally, any proposal for Government to fund a new military aircraft by themselves I believe is accepted as being distinctly unlikely by all but the most optimistic.

So what is the answer? I believe that the answer is a new concept that is emerging from this project of a partnership between Government and some European industries, each carrying a share of the funding and, by doing so, each showing a faith in the project. The funding of this project, where £600 million in development costs have already been borne by another development and over a time-scale of, say, seven years, allows an annual commitment of not very sizeable sums in comparison to a defence budget of £4.1 billion. I think that we are talking in the range of a Government contribution of about £15 million a year and going up to not more than £60 million in any one year.

The industrial benefits of a successful PI10 project is something that I need hardly stress to my noble friend, with his long and distinguished experience in industry. By the 1990s the production line of the Tornado will be tailing off. At present 55,000 jobs are directly concerned with this aircraft. This is perhaps an argument more appropriately addressed to the Department of Trade than to my noble friend's department, but it is an argument fortified by the aerospace industry's proud record of achievement. One must not forget that it is an industry of high technology, which still supplies 12 per cent. to 15 per cent. annually of the world's market needs; an industry where over 60 per cent. goes to export. But it is an industry of high technology and, as my noble friend will know, it does not stand still; it needs timely Government support.

My noble friend's right honourable friend the Prime Minister gave such verbal support for the industry way back in 1980 when she spoke at the Farnborough 80th Dinner. She said: The importance of the aerospace industry to the British economy cannot be over-estimated. Indeed, if we had to produce the ideal example of an industry with high added value export products, we need look no further than aerospace. I think that those were encouraging words.

Besides, of course, the very strong industrial argument supporting this project, there is I believe the good military argument that we should produce our own aircraft where possible or at least on a collaborative venture basis. Memories will not have dimmed of the purchase of the F1-11 aircraft and its subsequent cancellation. It was a mistake that cost us £400 million based on prices 12 years ago. The development of the Harrier and the Sea Harrier has proved a wonderful success and perhaps I could pay tribute to the brilliant design and performance of these aircraft as well as, of course, the outstanding bravery and skill of the pilots who carried out such effective operations over the Falkland Islands.

The purpose of this short debate, and hopefully the value of it, is to seek an updating of the Government's thinking on the P110 project. I hope that my noble friend can confirm tonight that industry regard the P110 as a top priority project; that the Royal Air Force are close to agreeing that the P110 will meet requirements; that the reaction of European industry's is an encouraging sign of collaboration. This project, I believe, offers a great opportunity for our aerospace industry. On the face of it, it offers a sensible and digestible investment from Government and a new concept of partnership. I am sure that my noble friend's heart is in the right place. I earnestly hope that his undoubted wisdom will grasp and support this opportunity nd that his reply tonight will encourage us all.

5.56 p.m.

Lord Beswick

My Lords, I think that we should all agree that the noble Earl is mistaken if he thinks that he has to apologise for asking this Question at short notice. It is more a matter of congratulations on his initiative. In my view, we are indebted to the noble Earl for raising this Question this evening. If I may say so, he has a sustained and informed interest in all aerospace affairs, and his opinions and judgment deserve to be considered with care.

We are also fortunate in having the noble Viscount to answer from that Box. He may well be one rung down the aristocratic ladder from the noble Earl, but he is several rungs nearer the point where decision-making in these matters takes place. What he has to say this evening will be studied with great care and with some anxiety, not least by those people outside this House who are engaged in the industry.

I think it is true to say that the shape of Britain's aerospace industry in the future will be influenced—probably decisively—by the eventual decision on the P.110 fighter. It is not for me to say what a wonderful aircraft it will be. There will be more professional views than mine as to that. But I do know its pedigree and I do know those responsible for it, and I am confident that there need not be doubts about its performance for the role intended.

But what I want to stress is the importance of the project for the British industry. I should like to put down the reasons for stressing that importance. First, I emphasise that I say "British industry" and not simply or narrowly "British Aerospace". The aeroengine industry and the equipment industry as a whole, including the electronics, are also importantly concerned. It has never been my view that a British aircraft designer should be exclusively limited to United Kingdom engines or to United Kingdom equipment and, of course, the market outside the United Kingdom is important to the suppliers as well. Nevertheless, it is vital for the long-term future of the wider industry that there should be major aircraft projects originating in Britain, or at any rate with Britain as a prime partner.

I understand, as the noble Earl himself has indicated, that both Rolls-Royce and Marconi recognise this fact to the extent that they have been prepared to fund a part of the money needed to get the P.110 to the present study stage. The fact of this joint venture by the three companies seems to me something which this Government should encourage, and is another important reason why the Government should now take a more positive decision about the future of the project.

The third reason that I offer for consideration is that a soundly based British industry in the aerospace business must have an on-going partnership with our friends in Europe. I took the view when I had something to do with these matters, that on the civil aircraft side Rolls-Royce and British Airways both looked too fixedly—I shall not say gullibly—at the attractions of the United States aircraft industry. This is not an occasion for going into details, but I would say that the attitudes they struck two or three years ago underrated the possibilities of European co-operation. The experience of the last two years or so only strengthens the opinion that I then held.

That was the civil side. On the military side I trust that the partnership with McDonnell Douglas on the marvellous Harrier aircraft will prove beneficial to all concerned, but it still remains true that the British aerospace industry will be more soundly based and the national capability will be strengthened if we can forge a successor to the European Panavia partnership. As I mentioned capability and the Harrier, may I say that it is thought by those who understand these matters that the P110 could well be an important factor in the development of the supersonic V/Stol capability of the future.

These are the three reasons which I hope will be taken into account when the Government take a decision on the P. 110 project, but I suppose they would be considered longer-term or strategic reasons. There is the importance to the aerospace industry as a whole. There is the significance of this need to foster the joint venture exercise between British Aerospace, Rolls-Royce and the electronics industry. And, thirdly, there is the fact that the project could strengthen our essential ties with Europe. But there are other more immediate reasons. One is the present productive position, and the need to get a proper balance in the industry, and the need for new business if the resources are to be economically utilised and run-down avoided,

I, and many others—and I am sure the noble Earl—would be delighted if the noble Viscount was to say this evening that the Government propose to bring forward the new orders for the Sea Harrier. There are places on the production line, I understand, for that aircraft which the Services undoubtedly need. But it is also essential to keep the designers employed on this 110 project. I have said that the private venture money has been put into the work so far, and the noble Earl has described what this has amounted to, but the noble Viscount will be the first to agree that it just is not possible to continue to spend millions of pounds unless there is an agreed requirement at the end of it.

Everyone will know of the Treasury problems facing the present Government, but the industry has made it possible so far to help along this project, and I believe it is true to say that no large sums of money would be required this year or next. But an understanding, a commitment, there clearly must be if British industry is going to maintain its potential in this field. I hope that the noble Viscount will be able to give some encouragement.

I add just one more thought, and I hope that if I say this it will not dissipate any goodwill I may have with the noble Viscount. The thought is this: there will be enormous numbers of people of different backgrounds, of all parties, and of none, who will say that it would be an absolute tragedy if the British Government decide that they cannot afford to equip our forces in the 1990s with an aircraft capable of fighting beyond visual range, and yet they also say that they must go on to spend billions on the Trident nuclear illusion. As I say, I ask the noble Viscount not to be diverted by this comment, but to concentrate on the other points which the noble Earl has made so well, and to give us an encouraging statement about the future of this quite remarkable possibility in new fighter aircraft.

6.4 p.m.

Lord Kilbracken

My Lords, the noble Earl and my noble friend have both referred to the Harrier and the Sea Harrier aircraft. I cannot resist seizing this opportunity, when I see the noble Viscount on the Front Bench, of referring to remarks I made two weeks ago that are not at all irrelevant to what we are talking about now. I spoke then as a former pilot of the folly of sending so few aircraft with the task force to the Falklands. I gave certain figures, which the noble Viscount said were wrong. He said that I had misled the House but he did not wish to correct me.

The figures that I gave were that there were 20 Sea Harriers with the task force, and that figure is not disputed. That figure is in the public domain. I estimated the number of pilots who would have been there to fly them based on my knowledge of Fleet Air Arm squadron procedure, and I gave the figure of two dozen. I have since ascertained the correct figure confidentially and I cannot reveal it. I can only say that it was extremely close to the figure I then gave, and that cannot be disputed.

It is disgraceful that the Fleet Air Arm and the Air Force should have been so weak that when these circumstances arose it was necessary to send such a nugatory force with a tiny number of pilots and aircraft to fly under conditions of enormous hardship—over 1,000 missions were flown—in the Antarctic in winter. I therefore hope that, whatever the Government do on the question of this fighter aircraft, or any other fighter aircraft, they never again embark on an operation which demands so much, and too much, of a gallant body of men, of which I am proud to have once been a part.

6.7 p.m.

The Minister of State for Defence Procurement (Viscount Trenchard)

My Lords, I am grateful to my noble friend for raising this important matter and for the constructive way in which he has done it. I am also grateful for theconstructive way in which the noble Lord, Lord Beswick, who knows so much about this industry, has joined him in this Question. I will, if I may, leave for one moment, while I just check one remaining figure, a quick answer, which has little to do with the Unstarred Question, in relation to the noble Lord, Lord Kilbracken.

Let me start by saying that the Government really do understand not only the important defence questions about future combat aircraft, but the very great importance of the P.110 programme to the British aircraft industry and to the many firms that depend upon that industry. I listened, and will draw the attention of all concerned, to the remarks of the noble Lord, Lord Beswick, in this connection. Indeed, recently the chairman of BAe has made clear to me that of all the aircraft projects which his firm is considering, that is, all the projects, civil and military, his board attach the highest priority to the P.110 project.

However, the House will also know that there are very severe problems facing the Defence Ministers of every country and these are caused by the ever increasing cost of much more sophisticated and much more powerful platforms and weapon systems. The White Paper, written before the Falklands, which we have recently released, spells all this out in Chapter 4, which has to a degree escaped attention because of the priority of other matters so far. That chapter shows clearly that the increase in costs of weaponry has been running at a considerably faster rate than the 3 per cent. per annum increase in defence expenditure which this Administration have announced through until the year 1985–86. For most main weapon systems the increase in real terms has been between 6 per cent. and 10 per cent. per annum.

That is the main reason for pressures on budgets and there are masses of individual good cases for extra expenditure. At the risk of becoming a gramophone record, I must tell the noble Lord, Lord Beswick, that the pressures are not caused to any major extent by the need to modernise our independent strategic deterrent and to adopt the Trident system. The expenditure on Trident has barely started and the pressures are already with us and have been with us for years. Over the years Trident expenditure will amount to approximately 3 per cent. of the defence budget.

Of course, there are pressures on us not only for a new combat aircraft from British industry but to increase our requirements of many other things, and the Falklands campaign has provided the background for many legitimate cases to be made. So it is against that background that the House should consider that the development costs of a new combat aircraft are bound to be of the order of £1,000 million. I say to my noble friend that that figure is after taking account of the development already performed for Tornado and of the engine developments planned for the Tornado aircraft. It was against that background that Cmnd. 8288 stated that we were unable to afford any direct or early replacement for the Jaguar aircraft, and that was restated in March of this year by my honourable friend the Parliamentary Under-Secretary for Defence Procurement, Mr. Geoffrey Pattie.

It is also true, the Government believe, that no other individual European country is likely to be able to afford the full development cost of a new combat aircraft and all its equipment and weapon fit. Against that situation, British industry have, I know, been working constructively, and I shall return to that shortly. I should, however, remind the House that we are in the process of replacing a substantial proportion of the RAF's fleet of aircraft; 385 Tornadoes will he in service by the end of the decade and the GR 5, which is the RAF version of the V/STOLAV8B, should also come into RAF service in this decade. We shall study in detail the magnificient record of the present Harriers in the South Atlantic, but this too may well lead to pressures to spend more money to build on the great success of this design. I shall leave until another day and a more appropriate one I am sure one will arise before long—to discuss the general question of replacements arising out of the Falklands operation.

I shall at this point, as the noble Lord, Lord Kilbracken, has taken the opportunity to re-raise a question he asked me when I was answering questions after one of the statements on the Falklands operation, tell him that I am now enabled, without risk to security, to give him the figures which led to my saying at the time he raised it previously that he had not got his facts right. I also drew his attention to the fact that air battles today were with missiles as well as aircraft: 28 Sea Harriers were deployed to the South Atlantic and 14 RAF Harriers, making—if I my arithmetic is correct-42 Harriers deployed. Fifty-three pilots were deployed. The casualties were in fact covered when he previously raised the question, and therefore I believe the statement I made to him on that occasion—I apologise if it was rather brief—was an accurate statement.

Lord Kilbracken

I was referring, my Lords, and said quite clearly I was referring, to the number of aircraft and the number of pilots who sailed with the task force. I specified that. What the noble Viscount has given are the figures for the total number of aircraft and total number of pilots who either sailed with it or joined it subsequently. That is a completely different matter. My figures are right. They are no longer confidential and I can tell him that there were 27 pilots to fly the 20 Harriers which sailed with the task force.

Viscount Trenchard

My Lords, I shall look up the noble Lord's words and write to him yet again. In my reply on that day I drew his attention to the fact that reinforcements were sent there at various stages and that the number of aircraft deployed was very much greater.

The House will remember that the Air Staff Target 403 for future combat aircraft was originally set out in order that there should be a replacement of the Jaguar in the early 90s. France and the Federal Republic of Germany also had comparable future combat aircraft requirements. Budgetary difficulties in all the countries have led to these discussions being pursued in what must be described as a low key. But discussions with our potential partners have gone on and the possibility of advanced V/STOL beyond the AV8B has also been discussed with the United States. The decision in Cmnd. 8288 that we could not afford to proceed with the development of an early Jaguar replacement, was, of course, unwelcome to the aerospace industry, and particular importance lies, as the noble Lord, Lord Beswick, pointed out, in the need for new design work to occupy the very skilled teams of development and design engineers in BAe and in the other companies. The problem will, of course, become a production one too when the programmes for Tornado and AV8B begin to decline.

The industry's response to this situation has, as noble Lords have made clear, been to put forward the P.110 as a private venture to meet what they perceive to be the future requirements of the United Kingdom and other countries. The House will not need to be reminded of the importance of volume of production and of numbers of aircraft which are required to turn development costs of this size into sensible propositions. Noble Lords have referred to the companies which have worked with BAe on this project, and I commend their effort. They include Rolls- Royce, Marconi, Dowty, Lucas Aerospace, Ferranti and Smiths Industries.

The P.110 is based to a great degree, as has been said, on Tornado technology, but I understand it will embody many technological advances. It is designed primarily as a fighter aircraft, although it would have a capability for ground attack and other roles. It is conceived as a twin-engined single seat fighter powered by an improved version of the Rolls-Royce RB 199 engine. I further understand that the idea is that some 40 per cent. of the airframe is planned to be made out of carbon fibre composite, saving very considerable weight by the use of this new and immensely strong material. It would involve a further development of what is termed the "fly by wire" technique, which is in fact a sophisticated electronic means of ensuring very fast and absolutely reliable performance control. The advances that have been made by BAe Warton in this area are very striking, even to the lay visitor—and I have been lucky enough to have been there—and the company is continuing to advance its technology in this area.

As has been mentioned, the industry has, I understand, had talks with the industries of other countries. The industries of other countries face the same problem of keeping their highly skilled teams employed in the future. These initiatives are to be commended because the size of the development costs in total requires that the British industry must seek partners, and the more industry-to-industry discussions that go on, the more likely, in my view, it will be that collaboration in the future will be more economic than it has sometimes been in the past.

Of course, the industry is pressing the Government to commit themselves to an order for the P.110, and at this point I should tell the House what stage has been reached. The industry has made a presentation to the Royal Air Force and to the experts in the Ministry of Defence, literally this week. The first task has to be for the RAF and the experts to examine all the highly complicated facets of the proposal now put forward by the industry, with a view, first, to examining whether they are satisfied that the aircraft, if developed, will meet the requirements of AST 403. That will take some time.

The second question will be to review the stage that the industry has reached in discussions with other European industries, to examine the progress made in discussions with other Governments, which Ministers and officials in the MOD have been fully supporting, in order to judge what the market prospects for the aircraft might be; and then there will be the need for Government-to-Government discussions. In fact, my honourable friend the Under-Secretary of State for Defence Procurement has recently had some discussions with the German industry and with the Federal Government.

I understand that the industry plans to deliver to my right honourable friend the Secretary of State in the very near future—we have not yet got it—a confirmation of the presentation that it has made to officials verbally, and the industry will include in it certain propositions which I also understand will involve a suggested plan for phase by phase progress. I have no doubt that the proposition will ask for the support of the British Government.

It was obvious from my noble friend's introduction of the Question that he has been given more details of the proposition than I have yet heard, and as yet neither I, nor my right honourable friend the Secretary of State, has actually received it. I have noted what both noble Lords have said about the possibility of the request for the commitment from the Government at this stage being relatively small. However, commitments will have to be examined in both directions. There is perhaps a request for a commitment by the Government to a certain phase. But the commitments which the Government must make will also have to be examined against the degree of commitment and certainty that we have that the industry can produce within the specifications, and against the degree of—I shall not say certainty—reasonable assurance about the further stages of the programme, which I am sure will to a large degree be dependent on the first stage.

I have to say that it will not be possible for the Government to give an instantaneous reply to a project of this magnitude, which they have not yet received, and which requires a very considerable degree of consultation. In the meantime, our position has not altered from that stated in Cmnd. 8288—that we were unable to afford as then estimated and put forward any direct or early replacement for the Jaguar. But we hope very much that the industry's efforts, up to this stage on a private basis, to develop a commercially sound proposition will enable the industries of this country, of the Federal Republic, and possibly also of France and Italy, to see a way forward which would be attractive to the Governments and the air forces of the countries concerned. The air forces, including our own Air Force, continue to believe, and to advise their Governments, that at a stage in the 'nineties there will be a need for a future combat aircraft.

We shall have to look in detail at the question of the performance specifications of the P.110 and at the total commitments, both immediate and inherent in any immediate agreements to the first phase, before we can see whether we can help in what must be a combined project involving many parties. The Government will therefore examine with the greatest care the proposition that they are about to receive. It will take a little time, even though we will go as fast as is possible with a project of this size.