HL Deb 05 March 1984 vol 449 cc3-5

2.44 p.m.

Lord Beswick

My 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 on what evidence they base the view, expressed in their reply to the parliamentary Question of 1st February about the Sea Eagle (H.L. debates, col. 753), that an acceptance of a tender from a United Kingdom firm could adversely affect the exchange rate.

The Parliamentary Under-Secretary of State for the Armed Forces (Lord Trefgarne)

My Lords, I did not actually make the statement which the noble Lord, Lord Beswick, ascribes to me in his Question. The point I was seeking to emphasise during the short debate on 1st February was that accepting United Kingdom tenders which are internationally uncompetitive will give the taxpayer poor value for money.

Lord Beswick

My Lords, I thank the noble Lord for his Answer. But is he aware that I normally go by Hansard when I decide what a noble Lord has said, and according to the Hansard report on 1st February he said that it would be possible, if a tender was uncompetitive, to affect adversely public sector borrowing, interest rates, rate of inflation or the exchange rate". [Official Report: col. 753.] Would the noble Lord agree that a British order, placed in Britain with British currency, would have to be of a gargantuan size and hopelessly uncompetitive to have any effect of that kind?

Lord Trefgarne

My Lords, the words which the noble Lord ascribed to me in the Question omitted the reference to the internationally uncompetitive tender, which the noble Lord, I must confess, did refer to when he read out the quotation just now. That was the important point which I was seeking to make: that an internationally uncompetitive tender would have the adverse effects to which I referred.

Lord Orr-Ewing

My Lords, if my noble friend is going to list the disadvantages of buying from America, would he also list the disadvantage to this country if we do not buy missiles which have been researched and developed and which are nearly ready for production in this country, in terms of jobs in a very high technology field? Does he recall that, as in the case of Trident, an adverse exchange rate between the dollar and the pound can make the purchase of overseas equipment very much more expensive than was originally envisaged?

Lord Trefgarne

My Lords, the other considerations to which my noble friend referred are, of course, equally valid.

Lord Bishopston

My Lords, will the Minister accept that the comments of my noble friend Lord Beswick, regarding the report of his statement in Hansard, are correct? Also, will he have regard to the fact that there are other considerations, some of which he mentioned; notably, first, that British industry is competitive on most grounds with foreign competitors, and, secondly, that the loss of orders in this country could lead to the dispersal of design teams and manufacturing capacity, which means that British industry will not be able to compete for future orders? This would, of course, have effects upon our financial position and would also have social and employment consequences. Will the Minister look at the matter in a comprehensive way, rather than in the monetarist way in which the Government seem to be proceeding?

Lord Trefgarne

My Lords, I must stand by the Answer I gave originally, which was that the noble Lord's quotation from what I said, as contained in his original Question, omitted some very relevant words. But the other considerations to which the noble Lord referred are certainly to be taken into account.

Lord Beswick

My Lords, would it not have been better if, on 1st February, the noble Lord had emphasised the point that, as regards British equipment with a high labour content—in the case of Sea Eagle 60 per cent. goes in wages—20 or 30 per cent. of the cost of the equipment would be immediately returned to the Treasury by way of taxation? In those circumstances, if the British tender is anywhere near the international figure, it would be a better buy.

Lord Trefgarne

My Lords, that is a perfectly respectable point of view, but it is one which the Government will have to examine carefully in this particular case.

Forward to