HL Deb 12 April 1984 vol 450 cc1314-6
Lord Denham

My Lords, a Statement is to be made in another place this afternoon on guided weapons for the Royal Navy. With the leave of the House, I shall arrange for the text of this Statement to be printed in the Official Report.

Perhaps, with the leave of the House, I may also take this opportunity of wishing noble Lords in all parts of the House a peaceful rest during this coming Recess and a happy Easter. I think your Lordships would all wish to extend those remarks to the staff in all parts of the House.

Lord Ponsonby of Shulbrede

My Lords, I should like to join with the noble Lord, Lord Denham, in wishing your Lordships, and particularly the staff of the House, best wishes for the Easter Recess.

It has been an exceedingly long Session since Christmas, and, I think, as Easter has fallen very late this year, it was perhaps one of the longest on record. Therefore, the Recess is even more welcome than usual. I can assure your Lordships that we shall return with renewed vigour and renewed attempts to inflict further defeats on the Government after the Recess.

Lord Kilmarnock

My Lords, we on these Benches should also like to associate ourselves with the remarks of the Government's Chief Whip, particularly in relation to the sterling service of the staff during the long and, as the noble Lord, Lord Ponsonby, said, testing Session behind us. I fully agree with him that it is a very welcome break but we can flex our muscles for an even more testing Session to come.

Following is the statement referred to above:


With permission, Mr. Speaker, I wish to make a Statement about the procurement of the next generation of surface-to-surface and surface-to-air guided weapons for the Royal Navy.

For some months we have been conducting a competition for a second generation surface-to-surface guided weapon for the four Batch III Type 22 frigates and the first eight Type 23 frigates. The contenders were British Aerospace's ship-launched Sea Eagle, McDonnell Douglas' ship-launched Harpoon. Aerospatiale's Exocet MM40, and versions of Otomat from Oto Melara and Matra. The thoroughgoing evaluation of these contenders has taken into account performance, cost and timescale considerations as well as industrial and employment factors.

The competition has been keen and of considerable benefit in assuring value for money. Following the submission of 'best and final' offers from the competing contractors, the outcome is clear. Having taken all relevant factors into account, the Government have concluded that the best choice on both operational and cost grounds is the McDonnell Douglas Harpoon: a proven system, which has had 100 per cent. success rate in firings since 1978, and variants of which are already in service with the RN and RAF.

Subject to agreement with the company on contractual terms and conditions, we will place a fixed price contract worth of the order of £200 million for Harpoon missiles and associated ship systems for the Batch III Type 22 and Type 23 frigates.

I recognise that there will be disappointment that we have decided not to buy British for this item of Royal Navy equipment. However, the United Kingdom's position with regard to the high technology involved in advanced missiles has been preserved by our earlier decisions to purchase ALARM and air-launched Sea Eagle from British Aerospace. I take this opportunity of reaffirming the Ministry of Defence's commitment to air-launched Sea Eagle and also of reminding the House that 95 pence in the MOD's procurement £ is spent in this country.

The employment implications of the various options have been an important consideration in our decision. I am pleased to be able to tell the House that McDonnell Douglas have undertaken to provide offset work for British Industry to the value of 130 per cent. of the cost of the Harpoon order, of which half will be in areas of high technology and 30 per cent. on the Harpoon programme itself. McDonnell Douglas' track record on offset is excellent and their undertaking will be incorporated in the contract. Over the past seven years they have placed well over £300 million-worth of contracts in the United Kingdom at all levels of industry and, on sub-Harpoon, their offset eventually totalled one and a half times the purchase price. Another important consideration was the need to reduce as far as possible uncertainties caused by future exchange rate fluctuations. In this respect we have achieved an agreement with McDonnell Douglas that 30 per cent. of the value of the contract will be payable in sterling.

The Government are convinced that this decision is right for the Royal Navy and right for the taxpayer, and is also entirely satisfactory in employment terms for British industry.

In addition, I am also glad to be able to inform the House that today we have authorised the placing of a firm contract with British Aerospace for the full development and initial production of the vertically-launched version of the Sea wolf surface-to-air missile for the Royal Navy's Type 23 frigates. This important programme will ensure that Sea wolf keeps its substantial lead over all its international competitors, and will guarantee that the Type 23 frigates have the most modern versatile and devastating point defence missile system available. This is a programme of major importance for the Royal Navy and British industry. The initial order alone is worth some £250 million. Taken alongside the substantial order which we placed some weeks ago for the third main production order for conventionally-launched Sea wolf, this order will sustain the momentum of the programme and—not least—will sustain job opportunities at British Aerospace and their sub-contractors.

The Royal Navy has today acquired two highly effective modern systems which will greatly enhance operational effectiveness.