§ 3.33 p.m.
§ Lord Sefton of GarstonMy Lords, I beg leave to ask the Question standing in my name on the Order Paper.
§ The Question was as follows:
§ To ask Her Majesty's Government what steps they have taken to ensure that its policy of competitive tendering for defence contracts is implemented equitably between those aerospace organisations which hold design authority for a project and those organisations which have little or no design and development capability and what is the Government's assessment of the impact of its policy in the aerospace industry.
§ Lord TrefgarneMy Lords, our policy is to procure our defence equipment by competitive means, wherever practicable and reasonable, in order to get the right equipment for the armed forces and the best long-term value for money for the taxpayer. The policy is applied pragmatically and equitably case by case, considering carefully all the relevant factors, including any possible consequences for the tenderers involved. Staff are working to clear guidelines on the implementation of this policy.
Competition, through its stimulation of industrial efficiency, is central to the Government's strategy for economic prosperity. We believe that the implementation of our policies for applying competition to defence equipment procurement will strengthen all sectors of our defence industries, including aerospace, and enhance their position in international markets.
§ Lord Sefton of GarstonMy Lords, in thanking the noble Lord for that reply it seems to me that it is a general statement of Conservative philosophy, and I should not like to argue that; not at this stage, anyway. May I ask him whether it is not true that in connection with the major servicing of Nimrod the tender forms should have been ready in June, (the summer of this year), that they are not ready yet, and that if, in fact, work is not steered to British Aerospace before 1985, there is a very great possibility that the number of redundancies occasioned in that particular organisation will be very serious indeed? What do the Government intend to do about that? Is it true that, in view of the fact that some tenderers would not be tendering for the whole of the contract and yet would be expecting to have revealed to them design authority expertise, which may well be a threat to the future research and development in the aerospace industry, the Government are now finding it so very difficult to produce tender forms which are acceptable?
§ Lord TrefgarneMy Lords, I think that there are a number of points stemming from that supplementary question. I was myself at British Aerospace in Manchester on Friday of last week. I am very well aware of the points which the noble Lord puts to me, and we are doing our best to proceed with this very complicated matter as quickly as we can.
§ Lord MulleyMy Lords, will the noble Lord the Minister suggest to his colleagues that they again look at their policy for competitive estimates for future procurement? I ask that because, on the one hand, the actual cost of designing and producing a prototype is extremely difficult and costly on a competitive basis. Secondly, from my own experience, all our major defence contractors were quite unwilling even to put pencil to paper on a design unless they were paid in advance. The consequences, as we have seen in the contract for a trainer for the Royal Air Force, have meant that the major contractors have simply got some British rights for foreign aircraft. This development is one that will clearly be detrimental, in my view, to the British forces as well as to British employment and British industry.
§ Lord TrefgarneMy Lords, I can assure the noble Lord that there is no dogmatic basis to the policy that we are following. It is one of practical, common sense. I must say to him that, of course, if it was the case that in a particular product it was going to be more expensive through some competitive process, then naturally we would not follow that course. But all the evidence we have so far is that it is no such thing. It produces better value for the taxpayer.
§ Lord Boston of FavershamMy Lords, will the Minister accept that while it is important to keep costs down as far as possible, it is also important to maintain standards? Furthermore, is he satisfied that smaller companies in particular have the necessary facilities for maintaining control over standards and avoiding any danger to national security? Also, what on-the-spot checks are made to safeguard those two matters?
§ Lord TrefgarneMy Lords, naturally, we have to have regard to those considerations. Indeed, it is those sort of considerations that have caused us to have to take some time over the matter which the noble Lord, Lord Sefton, raised just a moment ago. But, of course, it depends upon the nature of the task that we are asking the company to perform as to whether or not they are capable of carrying it out, and, naturally, we have to satisfy ourselves that they are capable of doing so before we give the contract to them.
§ Lord Sefton of GarstonThe last part of my Question asked whether the Government had made any examination of the consequences of their policy on the aerospace industry. Perhaps I may frame this in the form of a question: What effect would it have on research and development of the aerospace industry in this country if in fact the Government allow tenders to be split between sub-contractors who have no responsibility for, and have no intention of engaging in, research and development expenses such as in the case of British Aerospace? If it is the Government's intention to allow sub-contractors to take part in these tenders, and to allow the work to be split up, what is the Government's attitude to fragmenting once again the aerospace industry, which has over so many years been urged by successive Governments to merge in order to provide a competitive element in the business?
§ Lord TrefgarneMy Lords, the answer in truth to the noble Lord's question is rather a long one which might go beyond the scope of Question Time. But the Government do see advantages from the policy we are now following, and if the noble Lord would like to have a private discussion with me, I should be very happy to show him the way.
§ Lord Sefton of GarstonBut, my Lords, as the whole matter is so important, and if the noble Lord agrees that it is an important issue which will require some other airing, rather than at Question Time, is he prepared to issue a statement about the consequences that the Government see following their policy on the British aerospace industry?
§ Lord TrefgarneMy Lords, if the noble Lord would like, for example, to table an Unstarred Question on this matter, I should be very happy to give him a full reply.