HL Deb 17 October 1984 vol 455 cc1056-73

8.19 p.m.

The Earl of Kimberley

rose to ask Her Majesty's Government what national interest criteria they are considering in their evaluation of tender submissions from the candidates for selection as the RAF's new basic trainer.

The noble Earl said: My Lords, for 70 years, with very few exceptions, the Royal Air Force has been trained on British designed and built aircraft. The use of British aircraft has not only given the Royal Air Force an unparalleled reputation for training pilots worldwide, but has also resulted in substantial export orders to countries who look to Great Britain and to the Royal Air Force for their training pattern and for their training aircraft.

For the first time in 70 years the Government have organised a competitive tender for the replacement of a Royal Air Force aircraft. This is the famous but ageing Jet Provost which has been in service with the Royal Air Force for some 25 years. This tender submission is now under evaluation by the Ministry of Defence, and I am led to believe that a decision is expected fairly soon.

On the final short list there were four contenders, but there are now effectively only three which could possibly go for this contract, since the Australian Government decided a few days ago to purchase for its new guided missile frigates the American Sikorsky Seahawk helicopter in preference to Westland's Lynx, thereby puncturing the plans of the Australian Aircraft Corporation and Westland for co-operation of what is still only a paper aeroplane, the Wamira.

That leaves three contenders, which are Brazil's Embraer Tucano, to be built in conjuction with Shorts: the Swiss Pilatus PC9, to be built in conjunction with British Aerospace, and, last but not least, the British-designed and the British-built Hunting Firecracker. Perhaps a point to make here is that of the two foreign contenders from Brazil and Switzerland it is interesting to note that neither of those countries is a member of NATO. All three contenders are very good aeroplanes and all three are in production. All three are equipped with the same engine, Pratt and Whitney's PT6 turbo-prop engine. We do not need to be concerned about the technical capabilities of turbo-prop training aircraft: all three contenders meet the RAF's specification in full. They are all very capable of carrying out the RAF's role as a basic training aircraft. We need not be concerned about cost. All the aircraft are competitively priced, although the British Hunting Firecracker appears to be the best value for money on existing life-cycle costings. Neither do we need to be concerned about industrial production and product support. The two foreign aircraft companies have found British aviation companies who will build or part-build their aircraft.

Our concern over the outcome of this tender is simply, which aircraft will demonstrate the most substantial benefits to Britain and to the British economy? It is my contention that only one of the three contenders can benefit the national interest in terms of jobs, export potential and technological expertise.

The Hunting Firecracker will be built by the Hunting Group of Companies, which is one of the leading defence contractors in this country. This group built the Jet Provost, currently in service, the Piston Provost and the Percival Prentice. Huntings have a record of 40 years of providing training aircraft for the Royal Air Force and for export markets and the product support for these activities. The foreign aircraft, the Tucano and the Pilatus PC9, are surrounded by hypothetical offset and counter-trade deals that are more complicated than an Agatha Christie novel. None of the offset deals is tangible and all are likely to be pie in the sky.

Have your Lordships ever known Switzerland do anything in the international market that did not benefit Switzerland? There are vague possibilities of the sale of Hawk aircraft to Switzerland, but the Swiss are also interested in the Italian Aeromachi MB 339 trainer which is equally as sophisticated as the Hawk and is a pure jet. As all your Lordships know, I am a great supporter of British Aerospace and it is true that it has recently sold the Rapier missile system to Switzerland, but this gives substantial production in Switzerland. It is not all made here. As regards the manufacturing plans for the PC9 which have not yet been declared, the last official statement that I heard was that it would be only a 50-50 work sharing agreement with the Swiss company. If this was so it would once again mean more Swiss jobs than British.

It also seems to me rather dangerous to buy a Swiss aircraft when the Swiss themselves have banned the sale of military aircarft from Switzerland. They get around it in a funny way which I shall not go into in great detail, but I should like to ask your Lordships whether this moral attitude will allow the sale of aircraft to the Royal Air Force and their support from Switzerland for 20 to 25 years, or shall we see once again double standards of morality?

And what a coup for the nearly bankrupt Brazil to supply training aircraft to the Royal Air Force. It would raise that country's prestige enormously in the international market place and it would give them considerable export potential which should, by rights, be British. What counter-trade could Brazil finance? We are one of her biggest creditors and why should we lend Brazil more money for the sole privilege to Britain of buying her trainee aeroplanes? I can only repeat my belief that neither of these foreign aircraft can offer Britain anything more substantial than vague talk about possible counter-trade in the future.

The British Hunting Firecracker will provide about 200 jobs in Bedfordshire, where fabrication will take place. The aircraft will provide some 300 jobs in the East Midlands, where the aircraft will be fitted out. A further 500 jobs will be provided by sub-contract support for the production programme for the Royal Air Force.

Unhampered by any foreign licence, a substantial export market is available to this British aircraft; a market open not only to Britain's traditional outlets but also to developing countries whose insurgency problems necessitate the purchase of a low-cost counter-insurgency and ground support aircraft. Exports for the Hunting Firecracker could bring billions—not just millions—of pounds to the British economy.

The Hunting Firecracker was designed and built with private money at no extra expense to the taxpayer to meet a specific requirement in the defence market. It has no British competitor and the aircraft would have no export market if it were rejected by its own air force. This would indeed be a hard penalty for following the industrial guidelines laid down by the Prime Minister and her Government.

I am not advocating that the choice of a new training aircraft for the Royal Air Force should be influenced by patriotism, but nor do I support the protectionist policies operated by other countries so often to Britain's disadvantage. The British Hunting Firecracker meets the Royal Air Force's specification in full and offers a British solution to a British requirement. I ask my noble friend the Minister for his assurance when he answers this Question that Her Majesty's Government will not lose this opportunity to safeguard our own aerospace design and technology.

8.29 p.m.

Lord Mulley

My Lords, I am sure that the whole House is indebted to the noble Earl for his initiative in raising this important matter and giving us the opportunity to discuss it here in the wider forum of public opinion before the Government come to a decision. This is entirely within the tradition that he has established in the great work he has done and is still doing for the House of Lords defence study group. I believe I speak for members of all parties and, indeed, of none, since I have already learnt the great importance for all of us and the great influence of the noble Lords who sit on the Cross-Benches in stimulating informed discussion on defence matters and in creating a body of considerable influence.

I might also mention the role played in the early days of this group by my noble friend Lord Shinwell, whose achievements we shall be celebrating in this House tomorrow. I recall in particular—and it may be of some passing interest to noble Lords—that I gave a party for him on his eightieth birthday, though with nothing like the splendour there will be tomorrow, since we just had drinks in my office, when I had only recently been appointed as Army Minister. The significant fact was that all the members who had served on the Army Council under Lord Shinwell when he was Secretary of State for War came from all parts of the Kingdom just to have a drink with him on his eightieth birthday, which, I thought, was a great tribute to his work in the defence field.

The question before us is very much wider than which aircraft should be chosen for the next basic trainer. First, I think it puts the spotlight on the method of so open competition that the Ministry of Defence has chosen. To put the matter crudely, it seems to me that they have exposed themselves (in colloquial language) to being on a good hiding to nothing, because whichever aircraft they choose it is liable to cause problems. If they pick any one of the three foreign, overseas aircraft, that will mean that there will be two dissatisfied customers as well as a political row over having let down British industry and British employment. It seems to me that the only sensible conclusion in order to avoid this dilemma is for them to choose the British contender. Then there would be no offence taken in the three other countries, since that is exactly what those countries have done, and will do, and what they would expect us to do. Everyone except us has a proper sense of looking after their own national interest. Those countries would be staggered to think that we would do otherwise. So there would be no offence at all. I submit that that is a consideration that the noble Lord the Minister might like to bear in mind in his deliberations.

But, of course, I would not suggest that that is the only reason for choosing the Hunting Firecracker aircraft. I understand—and the noble Earl has confirmed it—that all the contenders except the Australian one (which is as yet a product of what, when I was Aviation Minister, I used to call "brochure engineering") all those that have flown, are expected to meet the specification. I know that in the Royal Air Force there is a tendency for pilots and the top people in the Air Force to want all that they can get when an aircraft is up for decision—all that they can get by way of performance. It was put to me many years ago by an Air Marshal quite simply when he said, "We are allowed only so many of that particular type. Therefore, if we can persuade the Treasury to put up the money for some fancy features, some extra performance, then we think that that is one up to us". But he said, "If you give us a sum of money and say, 'Go out and spend that on aircraft' then, by golly, we should have more aircraft and it would be tailored down to exactly what the specification required".

I hope therefore that when this decision is made, this bad practice will not be repeated. Indeed, in fairness to the RAF, I think that today they have a rather wider view of the national defence interest than perhaps was the case when I was concerned with these matters 20 years ago. The former Minister responsible for production matters in the department very properly said that it was necessary that, as well as having the right specification, the aircraft should have the proper financial and production backing. Therefore, I should like to mention the organisation which has developed this formidable aircraft for a specific defence requirement and the new consortium which will build and support the Hunting Firecracker for the RAF. Designed by Desmond Norman, the man who designed and built the highly successful Islander aircraft, the Turbo-Firecracker was financed and developed by a private company, Specialist Flying Training Limited, who already use the aircraft to train foreign military students in this country. The pioneers of the venture have, I understand, invested very substantial sums of their own capital in support of their belief in a British aircraft. I find this an extremely welcome contrast to the experience that I had in the ministry from time to time, that no one was willing to produce a design for anything unless they were first given and were paid for a feasibility contract. I think that is exactly the kind of initiative that we should seek to encourage.

But, realising their inability to manufacture the aircraft in sufficient numbers for the Royal Air Force, Specialist Flying Training formed a new company, Hunting Firecracker Aircraft, in conjunction with Hunting Associated Industries and the merchant bankers Guinness Mahon. Of course, Huntings have always been in the aerospace field. The chairman of the group, Mr. Clive Hunting, is expected shortly to succeed the managing director of British Aerospace as the president of the Society of British Aerospace Companies. As the noble Earl, Lord Kimberley, has mentioned, not only did they build the Jet Provost and their predecessors, the Piston Provost and the Percival Prentice, but it is not generally known that they actually designed, as the Hunting 107, the aircraft which finally became the BAC 1-11.

Their associated companies are today, and have been for many years, fully involved in all manner of airfield operations. For example, one of many contracts that they have with the Ministry of Defence and the Government is the care of the RAF VIP flight at Northolt, which many noble Lords will have used, and the Queen's Flight at Heathrow, as well as other naval and Air Force contracts. Although the specification requires, naturally, an unsophisticated aircraft—one that is not going to be very difficult to manufacture—Huntings have available advanced technological capacity of the highest order. Indeed, the contract for the JP 233 is perhaps the most significant defence contract for many years and I had full confidence when Secretary of State in placing it with Huntings. The new company, including Huntings and the merchant bankers Guinness Mahon, must surely satisfy the most exacting criteria for technical and financial backing.

I believe that the aircraft, additionally, will have great export potential. The noble Earl has explained that there is no other contender in the EEC or NATO and that there is likely to be a demand for new training aircraft arising in these countries as well as in the third world countries, with little or no aircraft industries of their own. Believe me, my Lords, I have no doubt that we would not get any benefit, or very little benefit, from any export orders that the Swiss or the Brazilians might attain if we went along by choosing their model. The whole enterprise seems to me to be exactly the kind of development which I understand the present Government and the Secretary of State want to encourage.

I ask in conclusion that noble Lords should contemplate the consequences of our choosing an alternative aircraft. I believe that they would go much wider than this particular contract. What would our rivals in aerospace and advanced technology make of our choice of a Swiss, Australian or Brazilian aircraft for the Royal Air Force? When the noble Earl, Lord Kinnoull, asked a Question before the recess I ventured to pose to the Under-Secretary of State, who I am glad to see here tonight, well after flying the three existing prototypes—though I believe they are not exactly to the specification of the competition—and who I am glad to see as alert as ever, the question: what would be the reception that I should have recieved had I announced that I was going to place an RAF contract with Switzerland or Brazil? I think that the noble Lord knows well enough the kind of response that such an announcement would have received from his right honourable and honourable friends in another place. I hope, indeed, that the Secretary of State, by going for the Hunting Firecracker, will save himself and the nation a great deal of embarrassment.

8.40 p.m.

Lord Winterbottom

My Lords, I am certain that the House is most grateful to the noble Earl, Lord Kimberley, for giving us the opportunity to discuss this issue. He and my noble friend Lord Mulley have put into the picture the basic arguments within the framework that we have to consider. May I add a little point from my past experience when I was Private Secretary to the Minister in the House of Lords in 1949? I apologise for keeping your Lordships at this unconscionably late hour and therefore I shall make only three points in relation to this debate. The first point is this. It is a British design that we are talking about. Anybody can make an aeroplane if they have a design for it; there are no problems there. After all, we are talking about a Brazilian designed aircraft and a Swiss designed aircraft. We know that a great many people throughout the world are designing aircraft.

What is important and what we have in this country is the power to design new high-technology products. That is why I want the design team who produced the Firecracker to be kept in being, because one of them at least has produced one of the most significant light aircraft of the present decade, the Britten Norman Islander. Therefore, one important point is not simply to give away to other countries the power to design new and significant aircraft. It is a significant aircraft, as my noble friend Lord Mulley has said, in that it is high technology in construction, but full of transferable technology in terms of production. So in fact it could be designed here and built abroad. The whole project has this idea in mind. We must keep the design team, alive and financed, in this country.

The second point is that the Pilatus aeroplane is probably a great deal more expensive than the Firecracker. It is 1,000 lb heavier. That may not seem significant to your Lordships but it probably means it is at least 20 or 30 per cent. more expensive than the Firecracker, simply because of the extra weight.

This is a matter which obviously the Minister responsible (who has to decide on the three tenders that he received, I believe, on 1st October) will have to consider. It would be unfair to ask questions of the noble Lord who has to answer the debate tonight; but I should like him to bear in mind that the House would like to know the sorts of factors that would influence the Secretary of State in his decision whether to buy aircraft A, B or C. Certainly, Pilatus is the most expensive. I do not know how the Firecracker compares with the Brazilian offer, but at the end of the day this country will benefit more in terms of jobs and money if a British design is built here than if there is some offset agreement with companies in Brazil or Switzerland. They are going to work very hard to protect their own interests; let us protect our own.

For this reason I am not going to bully the noble Lord, Lord Trefgarne, who has to answer the debate tonight, but I shall tell him that we on this Bench are going to keep a close eye on the way in which the whole approach to this entirely new wave of aircraft develops. There is a new situation, as most noble Lords have said, in that there is open competition for a new aircraft required by the Royal Air Force. Nevertheless, I think that part of the British interest is that the design contract and the production contract should go to a wholly British company.

8.44 p.m.

The Earl of Cork and Orrery

My Lords, my noble friend's most timely Question has to do, according to the way in which it is drafted, with the criteria for choosing the Royal Air Force's new basic trainer. Criteria in the plural there may be, and considerations and takings into account and sub-criteria and wherefores and therefores and "this-having-been-saids" and all the rest of it; but I submit that it all boils down in the end to the single simple question: which of the candidates is best for the Royal Air Force? That, I insist, is the proper formulation of the question: which is best for the RAF? Not for the Brazilians or the Swiss or Short Brothers or British industry or local prosperity of one kind or another. It is simply: what is best for the Royal Air Force and therefore for the nation? If no clear-cut answer to that question immediately emerges, then, and only then, should we move on to other subsidiary considerations.

We have three aircraft to consider, and they all meet the RAF's specifications: I repeat "all". I am dismayed to find misrepresentations being made, and in particular of the Firecracker aeroplane project. I have been told that these misrepresentations emanate from Short Brothers and British Aerospace. I do not know whether that is true, and I do not repeat those accusations, which may well be unjust. But I say that the misrepresentations themselves most certainly are unjust, wherever they come from. Some of them I think I am in a position to rebut, and I do so with the approval of the company. For example, it has been said that Firecracker is not powerful enough. But the Royal Air Force should know what power they want, and Firecracker provides precisely what they have asked for. It has been alleged that the aircraft will not meet the fatigue life requirement. The manufacturer's statement of fatigue life is 12,000 hours. I think that is about 20 years, which is the Royal Air Force's require- ment. Huntings, it has been said, cannot build Firecracker. The noble Lord, Lord Mulley, has emphatically disposed of that, I think. It has been said that the ejection system is not proven and is foreign. It is indeed proven, and it has been proved very thoroughly, including in combat. It has never scored a failure and has saved many lives. It is American, certainly, but it is made by a company which is wholly-owned by Flight Refuelling Limited—a British company—and the system will be made in the United Kingdom. It has been suggested that there is no money behind the project. Indeed there is, and moreover the money is private money, thanks to Guinness Mahon—not taxpayers' money, as in the case of the other two aircraft.

These damaging criticisms, together with others, come perhaps from Short Brothers and British Aerospace but certainly from supporters of these two companies, both of which are largely or entirely publicly owned. Both these companies have worked for Britain and do so work. They have not been backward in raising the "buy British" cry. Are they now, as appears to be the case where their own interests are affected, and their supporters, set to decry the one wholly British competitor in this field? If that is so, I confess that I find it disgraceful.

Firecracker competes on equal terms for the contract. Why should it not succeed? As to offset or counter-trade deals, my noble friend Lord Kimberley has said most eloquently what he thinks of those, and I wholeheartedly agree with him. I shall leave technicalities to others, but I add this. Short Brothers quote 70 per cent. as the British content of the Tucano. What the corresponding figure for the British Aerospace aeroplane is I do not know; but the corresponding figure for the Hunting Firecracker is 80 per cent. and it will be made in Britain by British workmen. I learn from my Latin dictionary that Pilatus, which is a Swiss aeroplane, is a word meaning "made bald" or "stripped of hair". It may occur to some of my more frivolous friends that I therefore might well be a Pilatus man. My Lords, I am not; I am a Firecracker man.

8.50 p.m.

Baroness Airey of Abingdon

My Lords, we have heard this evening some very important arguments from noble Lords who have great experience in this field, but I should like to put it to your Lordships that, as my noble friend said just now, things boil down. I should like to say that this argument really boils down to two matters which I believe are of great importance to our country at the moment, and those are the defence of the country and employment in this country. So when we are are thinking about what should be chosen by the Secretary of State, I should like to remind your Lordships of those two very important matters.

Your Lordships have listened with great attention, as I have done, not only to the pros and cons of the Firecracker, which seems to be leading the field at the moment, but to all the other arguments as well, particularly from my noble friend who has just spoken. But I should like to emphasise the question of the British invented and British produced Hunting Firecracker. That is a very important matter, because we have debated in your Lordships' House the importance of Buy British, and I have myself felt so deeply, as I have said before in your Lordships' House, that we have a genius for invention but, alas!, for leaving the production to others. Therefore, where performance is equal—and this has been put forward with great vehemence this evening—we should surely also consider the question of employment in this country.

Choosing the British aircraft will mean much greater employment in two very important areas in this country; in fact, in Bedfordshire and in the East Midlands, which are two areas where there is very high unemployment at the moment. In addition, if this aircraft is chosen there will be a possibility of exports and of employment in areas of high unemployment where jobs are very much needed at the moment.

Anyone who has tried to sell anything abroad—I have just been to China and Japan and was very much involved in industry while I was there—knows that the first question one is asked when recommending something from this country is: Have you bought it yourself? When the answer is Yes, there is every possibility that you will then have very good sales with that first recommendation for a very good product. That is why I beg your Lordships this evening to put to the Secretary of State this most important matter, and as we have heard such recommendations of this aircraft they should be very strongly borne in mind.

While thinking of the British economy, I should like to quote from a speech which my right honourable friend the Prime Minister made at the flying display dinner in 1980, when she said: The importance of the aerospace industry to the British economy cannot be over-estimated. Indeed, if we had to produce an ideal example of an industry with high value-added export products, we need look no further than aerospace.". I therefore lay before your Lordships the choice that we should set a precedent and support British inventiveness, British industry and British employment. Other countries sometimes support their own products with sacrifice, but let us support the Firecracker with advantage.

8.55 p.m.

Lord Taylor of Blackburn

My Lords, I rise to take part in this debate following the noble Baroness, Lady Airey, on more or less the same question. My interest in the debate is concerned with what effect this contract will have on the unemployment figures of this country, and with which of the manufacturers can give the most effective long-term job guarantees. It has always worried me in a joint venture situation that any effect on jobs is short-term. The technology comes from overseas, the investment is short-lived and the jobs are in support only of a short-term defence requirement. What we need is a downward trend in the unemployment figures and this can happen only with the creation of projects that have long-term benefits.

In this RAF trainer contract, long-term employment will only come to the manufacturer who can command the export market that RAF endorsement will bring. If a foreign aircraft is selected, these jobs will certainly go overseas. All the manufacturers in this contract can demonstrate some United Kingdom jobs in support of the RAF contract, but only Hunting Firecracker, as I see by reading all the information that I have been given and by looking at all the specifications that one is able to look at, can extend those jobs long-term to cover the substantial export market.

I query also the motives of the United Kingdom partners of the foreign aircraft in trying to obtain this contract. I have heard it said many times in this House, and by their representatives, that the Government should buy British, but when it suited their own production lines. The reputation of these companies and their directors has been built on services to the British aviation industry. Do we not now see a reversal of this role and of their attitudes? What hyprocrisy! You back British always or not at all.

To British Aerospace this contract represents about two days' work from their annual turnover. They announced recently an order book of £5 billion. Their factories are full of Airbuses and Hawks. Do they really need what is in effect a very minor contract? Shorts, too, have been announcing big contracts with the USA and for their civil aircraft, but despite the so-called job shortage in Northern Ireland they subcontract major components to the mainland. Is this really an example of unemployment, if the work cannot be completed by their own factory? It seems that they have too much work and that there is insufficient skilled labour in Northern Ireland to undertake another contract.

Following the Labour Whip, which I do, I should not be telling the noble Lord the Minister that the Hunting Firecracker represents the very guidelines for industry that his Government have advocated—private investment, private initiative, cost-effectiveness and job creation with export potential.

I believe that the other aerospace companies have tried to close ranks on private British enterprise by backing foreign aircraft. For the sake of our own country's jobs and the aerospace industry, we should not stand back and let foreigners dictate our defence procurement policies. Once again I say, back Britain—as has been said to us so often from so many places.

9 p.m.

Lord Mottistone

My Lords, I shall be brief; I, too, am a Firecracker man and have little to add to that which has been said by previous speakers, beginning with my noble friend Lord Kimberley and the noble Lord, Lord Mulley, who, in making different points, put the main arguments in favour of this aeroplane. As I see it, all four aircraft meet the basic requirements. One trusts that the RAF procurement executive will resist the temptation to produce unnecessary and unspecified sophistication, which would result in additional expense to the taxpayer. One trusts that the fact that the Swiss aircraft is said to exceed the requirements will not affect my noble friend's judgment—because it must be irrelevant, if it exceeds the requirements.

A side point which makes me particularly interested in this aeroplane is that it is to be used not only as a basic trainer for the Royal Air Force but also for the Royal Navy, whose pilots are all to be trained in the same aeroplane—so I have a particular interest in its being the right aeroplane.

Above all, and as has been said, the aeroplane was designed by Britten-Norman—the same people who designed the Islander—in the Isle of Wight, which is where I come from and which, taking up a point made by the noble Lord, Lord Taylor of Blackburn, has higher unemployment than practically anywhere else; it currently runs at a level of about 15.5 per cent. in the winter. So if other factors are equal, it is important to take account of the point that, although the aeroplane will not be built in the Isle of Wight, because there are not the facilities, the effect of this design being chosen will be of benefit to Britten-Norman in the future in terms of any design that comes along and attracts employment to the island.

Perhaps I may quote a statement made by my honourable friend the Minister of State for Defence Procurement in another place on 2nd February: When it comes to a choice between British and foreign purchase, our policy is to buy British wherever it is good sense, economic and consistent with our international obligations to do so. We go overseas only when the advantages of cost, performance and timescale are judged to outweigh the longer-term benefits of procuring the British option".—[Official Report, Commons, 2/2/84; col. 433.] That seems to me to be pretty fundamental and I hope that may noble friend will be able to endorse that that philosophy will be governing when the Government come to make their decision.

One other point is that, as has already been mentioned, my noble friend the Minister is unique in modern times in being able actually to fly these aircraft himself. I hope that he will be able to tell us that he has flown all the aircraft except the Australian design that is still on the drawing board—that would be rather difficult for him to fly. No doubt he will not be able to tell us what he thought of them, but it is useful to have a Minister who is not going to have the wool pulled over hs eyes by technicians or air staff, or by any others who might try to do so.

In conclusion, I desperately hope, for the sake of Britain in general and for the Isle of Wight in particular, that the Firecracker is chosen as the airplane to train naval pilots of the future.

9.4 p.m.

Lord Morris

My Lords, the conspicuous advantage of speaking last from the Back Benches—an advantage, I suggest, which accrues particularly to your Lordships—is that everything has been eloquently said already. Your Lordships might think that there is little left to say, and you would be quite right in so thinking. However, although my contribution will be short I do not believe that what I have to say is in any way lessened in its importance.

May I at the outset suggest that it must be extremely comforting to Her Majesty's Government to feel that they are in no way taken for granted; that there are no fewer than 10 Members of the Upper House who are firm in their encouragement and support for the decision which the Government must certainly take; namely, to support the classically successful private enterprise endeavour.

The fact that Her Majesty's Government should have offered for open international tender the opportunity to quote for a basic trainer for their own Royal Air Force is one that I welcome with open arms. As the noble Lord, Lord Mulley, so eloquently suggested, the ordinary man in the street—and indeed all our foreign competitors—would understandably feel that the British are mad. But are they? In the long run, nothing so concentrates the minds of designers, engineers and technical innovators as the stimulus of genuine comparison and competition between their like products. In the long term, the operation of this principle will be of immense benefit to our defence industry. Thus are our country's commercial skills enhanced.

However, the keyword is "open" to international tender. The moment any element of an offset deal is brought into consideration of the merits of a product in accordance with a strict specification, then the principle of open tender flies straight out of the window. This is for the simple reason that each tender individually will define its own rules vis-à-vis its competitors, because the balance of power will be totally changed. I suggest that that is axiomatic, but I am not suggesting that an offset deal on a nation-to-nation basis is inherently dishonest. Many people would certainly take that view. I am not suggesting that, because Government, poor things, have to take the overall picture and look to the vitally important issues of employment and the net financial benefit to the country as a whole.

However, I am certain that as a result of this debate and, indeed, I might add, of my own very limited political experience, I am encouraged and emboldened to support the thesis that Her Majesty's Government will gain not one iota of support, from this House at least, if they support the competitor of a wholly British endeavour on the ground of a "nudge-nudge, wink-wink" promise of possible future support of British industry in other sectors. Furthermore, one should never underestimate the export potential of an aircraft which has been selected by the Royal Air Force. Its reputation alone stimulates inquiries immediately —and this is important—from countries which do not have their own procurement and evaluation system; they therefore look to the Royal Air Force for a lead in aircraft selection and pilot training programmes.

In fact, it is worth quoting—and your Lordships must forgive me for so doing—my honourable friend the Minister of State with responsibility for defence procurement in a debate in the other place on the RAF, on 2nd February this year. He said: I want to say a little about the policies that guide our attitude toward procument. Our overriding task in defence procurement is to equip the armed forces by the means which give the best long-term value for the nation's money."—[Official Report,Commons, 2/2/84; col. 443.]

My noble friend Lord Cork and Orrery suggested that the test really ought to be what is best for the Royal Air Force. I think that that is absolutely right and proper. Once one solely considers the money considerations then the offset deals become attractive. However, I am certain that the Ministry of Defence will consider the Royal Air Force requirement in the strict terms of the specification, because if the specification is wrong the Minisitry of Defence, let us face it, has only itself to blame.

I need hardly point out to my noble friends—indeed, my noble friend Lady Airey of Abingdon said this—that the key to successful sales by a government, particularly to the Middle East, is endorsement by that government of the products that they wish to sell. I suggest that the United Kingdom has an opportunity to re-establish its trading position in this field in the Middle East in the face of very strong French and Brazilian competition. The Hunting Firecracker company itself is in an advanced state of negotiations to establish a facility in that region. This is vitally important because there is no doubt, when one bears in mind the Gulf Co-operative Council which is to meet shortly in Kuwait, that the procurement policies of the Gulf countries will ever-increasingly be inward-looking and any company which supports development in that particular area, with its own assembly or sub-manufacturer of defence items, will be considered extremely favourably.

I sincerely believe that it is most strongly to the credit of Hunting Firecracker that it has pushed off the advantage of a major foreign airframe manufacturer which has been trying commercially to get into bed with it, so to speak. It would be ironic if this foreign suitor, who, incidentally, sells the major competitor to the Hawk, should eventually link up with Firecracker because British Aerospace is determined to maintain its link with Pilatus. I have been much longer than I intended, and I ask your Lordships forgiveness at this late hour.

9.12 p.m.

Lord Graham of Edmonton

My Lords, the noble Earl has done us all a great service, and not least a great service to the Government, in taking the steps which have led to the debate that we have all enjoyed over the past hour or so. In doing so, he has demonstrated his grasp of the subject; sufficiently so to impress me and, I suspect, many who have been here tonight. Of course, he would say immediately that his task has not so much been to impress us but to try to bring some influence to bear on the decisions of the Government.

The Minister who is here tonight to reply to the debate has also demonstrated his grasp of what is not an easy subject. He has done so time and again at the Dispatch Box over the past few months when Questions have been asked. I know that he has had an exhausting time in these last few days. I have shared some of it with him. I suspect that that exhausting time has been somewhat out of the normal. I am very grateful indeed to him for being here tonight to reply to the debate.

I believe that an earlier speaker said that there were 10 contributions to the debate. I venture to suggest that the Minister can be in no doubt about the thrust, force and unanimity of the views expressed in the House tonight. Comment has been made that pressure and politicking have reared their ugly heads, but with a potential £1 billion contract with spin-offs at stake, we can expect politicking and pressure. I take no exception to them. Comment has also been made about the uniqueness of the tendering procedure. All who have been invited to tender are perfectly entitled to demonstrate to whomever will listen what they have to sell. What we have had is a display of their wares. I for one have no objection to that.

As has been said by more than one speaker, there are those who take their national duties—to buy within their nation and to support it—very seriously indeed. For instance, one of the countries with a direct interest in the contract is Switzerland. It has a perfectly proper interest. But this is what Swiss readers of an English version of the magazine Interavia were invited to consider recently. Under a headline, Firecracker—Looking for a home market", the article said: It is typically British to set up a competition for a new basic trainer for the Royal Air Force in which manufacturers are invited to compete with an excellently home produced aircraft. Other potential customers must wonder what can be wrong with Firecracker". It concluded: Final impressions:—A real aeroplane, superbly responsive. No ordinary aeroplane can match Firecracker. Firecracker should make tigers, not just aeroplane drivers like those spineless small jets". That was said in a Swiss journal.

I am told that Firecracker is the only British designed and built turbo-prop military training aircraft currently flying and in production. We all know that the Royal Air Force has a reputation for excellence in its training, which has been enhanced by its use of British aircraft. Large export orders have resulted from RAF endorsement. I fear that this enormously beneficial spin-off could be destroyed if a foreign aircraft were selected. I understand that none of the other aircraft on the RAF list comes from a country which is a member of the EEC or of NATO. Reference has been made to the NATO aspect. I think that in the debate in this House we should also introduce the EEC aspect.

Among the complexities which are inevitably bound up in this matter are fears that there are countermoves, or offset arrangements, in the deal open to foreign governments in their purchasing role from Britain if their aircraft, or their nationally related aircraft, fails to secure this contract. For instance, I am told that British Aerospace has signed a fifty-fifty work-sharing agreement with Pilatus of Switzerland. British Aerospace wishes to sell Hawks to Switzerland to replace the Vampire jet, but British Aerospace admits that: there can be no guarantee of Swiss orders against a British order for the Pilatus aircraft, but there is no doubt that British Aerospace would gain considerable good will". If there is no tangible offset for Britain except good will and responsibility for the final assembly for the RAF contract, what are the advantages of a Swiss aeroplane for Britain?

We have heard from my noble friend Lord Mulley—who has vast experience and one can recall his service in holding high office in this field—that the Hunting Firecracker comes from a stable with an impressive record in a wide field of aircraft creation and servicing. I stress that it must be of some importance that the Jet Provost was built by Hunting—and this is the trainer that has given excellent service and value for money, as have earlier trainers built by Hunting. Surely that is not a bad record or recommendation to purchase from the same stable.

Standing at the Dispatch Box, I have the privilege and duty to speak on behalf of the Labour Benches in this debate. At the end of the day the Government will have to come to conclusions based on as objective an assessment as can be made of the facts. Among the criteria they are bound to weigh carefully must be price, jobs and the nationality of the bidders. I accept that in all cases there are qualifications and that, whoever gains the contract, there will be disappointments and even anger and despair in certain quarters.

However, I believe that it is the duty of the British Minister, in a British Government, to discharge his responsibilities in this matter, bearing heavily in mind factors which other governments can afford to ignore. Only the British Government have a prime responsibility to respect British enterprise. Only a British Government have a prime responsibility to encourage British companies. Only a British Government have a responsibility to fight for and find jobs for British workers. Only a British Government have a prime responsibility to get value for money for the British Exchequer. On all of those counts there can be only one acceptable bid: that of the Hunting Firecracker. I trust that the Minister will reach the same conclusions.

9.21 p.m.

Lord Trefgarne

My Lords, your Lordships will be grateful to my noble friend for raising the matter of the Royal Air Force's requirement for a new basic trainer. Before explaining our approach to meeting this requirement I should first like to give some background. After gaining initial flying experience the Royal Air Force students undertake a period of training on the Jet Provost, and then specialise on a type of aircraft relevant to their anticipated future employment. Pilots destined for fast jet combat aircraft progress from the Jet Provost to the Hawk—another very successful aircraft with an increasing number of armed services overseas, the latest of which is the United States Navy.

In September of last year we circulated the Royal Air Force's Air Staff Target Number 412 to industry, together with a questionnaire seeking technical and cost information on available or projected trainer aircraft. We received information on 23 contenders from 17 companies in the United Kingdom and overseas, including the USA, Switzerland, France, Italy, West Germany, Brazil, Spain and Australia. A technical and budgetary analysis was made of this information which showed that the candidates could be divided into three broad groupings: low performance propeller; high performance propeller; and jet.

Taking account of through life as well as acquisition costs, our analysis showed that a high performance turbo prop aircraft, while meeting the requirement, promised the optimum balance between performance and cost. And, my Lords, may I remind you that we are seeking not merely a good training aircraft, but also a replacement that has to fit exactly into a well tried and honed training system. From these we selected a short list of four candidates which were judged to be capable of meeting the needs of the Royal Air Force. These were—the Australian Aircraft Consortium A20, the Firecracker NDN-1T, the Pilatus PC 9 and the Shorts-Embraer EMR 312 Tucano.

Since the announcement of the shortlist in March a detailed technical specification for the Jet Provost replacement has been drafted. This was issued, together with a formal invitation to tender, to the four principal companies and to the manufacturers in the United Kingdom with whom production agreements have been reached. The link-ups are interesting and show great potential for future collaboration between the companies. The Australian Aircraft Consortium have formed a joint company with Westlands—called AAC-Westland—for the manufacture of the A20 in the United Kingdom and NATO countries, and for reciprocal arrangements for the manufacture of Westland Helicopters in Australia. Firecracker Aircraft Limited have formed a company with Huntings—a well established name in the British aerospace industry—which will be known, as we have already heard, as Hunting Firecracker Aircraft Limited. Pilatus have reached agreement with British Aerospace on the manufacture of the PC 9 in the United Kingdom and, I understand, propose to market a complete training package of the PC 9 and the Hawk. Shorts have agreed with Embraer to manufacture the EMB 312 Tucano under licence in Northern Ireland, and are proposing to collaborate with Embraer on other civil aircraft projects.

The procurement of the basic trainer has received a great deal of interest in the aerospace industry both here and abroad. This sector of the market is very competitive—as evidenced by the 23 responses we received—and we have always intended to take full advantage of market forces and obtain maximum value for money. The international flavour of current aircraft is highlighted by the fact that all four aircraft on the short list use variants of an engine manufactured by Pratt and Whitney in Canada.

In parallel with the tendering process, we have undertaken a handling and engineering evaluation at the Aircraft and Armament Experimental Establishment at Boscombe Down of the three aircraft types that currently exist. The Australian A20 could not be included in this exercise since it has not yet flown. I should like to thank the three companies—Firecracker, Pilatus and Shorts—for making the aircraft available for this evaluation. The configuration of each aircraft was of course the one currently available, and there may be some changes in equipment and performance in the aircraft which the companies have offered in the tenders to meet the RAF's requirement.

My noble friend Lord Kinnoull asked a question on this matter in July and at the time I said I hoped to have an opportunity to fly the contenders. I am very pleased to be able to tell your Lordships that this I have now done.

Four tenders have been received from United Kingdom companies and it is with them that we are dealing and not their foreign partners in those cases where they have one. Indeed, it is to one of the four United Kingdom companies that we shall award the contract. We are now evaluating the proposals from the financial point of view and to see that they meet the performance specifications, fatigue requirements, and delivery programme specified by the Royal Air Force. The fatigue aspect is very important since we expect the aircraft will be in service, like the Jet Provosts, for some 20 or 25 years. Our financial analysis includes a comparison with the option to refurbish the Jet Provost, which is a possibility we have not wholly discarded. I hope that the technical and financial analysis of the tenders will be completed speedily to enable a final decision to be made around the turn of the year.

Our main purpose must be to obtain the right aircraft for the Royal Air Force—a sentiment echoed by more than one noble Lord this evening. The prime requirements will be for adequate performance, long fatigue life, low life cycle costs, and to meet the timescale for introduction and phasing into service with minimum disruption to the training programme. In addition to these criteria, there are a number of other aspects involved in determining which option offers MOD and the British taxpayer the best long-term value for money, including the employment opportunities and the industrial capability of the company to produce the aircraft on time and to support it in service. So far as jobs are concerned, we doubt whether there would be much to choose between the four contenders and the volume of work each would generate directly is also likely to be much the same. Overseas sales are another facet. The cachet of RAF approval must be a considerable bonus in the marketing of the successful aircraft overseas.

Perhaps, too, I may refer to one or two of the broader aspects which will also have to be taken into account. Some of your Lordships—in fact I think every single noble Lord tonight has done so—have urged that the Firecracker, as the only British designed aircraft on the short list, should be chosen because it is British and to support the enterprise and initiative shown by the company. I recognise the force of the argument. But Brazil has bought a variety of defence equipment from the United Kingdom and a purchase of Tucano would no doubt help future sales prospects there. It would also provide much needed jobs in Northern Ireland.

The Swiss have been equally good customers of our defence industries and should the PC 9 be selected for the Royal Air Force it would doubtless improve the chances of Hawk being selected as the new advanced trainer for the Swiss Air Force. There is also the prospect for the sale of Westland helicopters to the Royal Australian armed forces, which would include provision for substantial manufacture in Australia.

Clearly in dealing, even at second hand, with the contenders of overseas designs, wider foreign policy issues come into play, but in attempting to address them it must be borne in mind that we are running a fixed price competition with four British firms aimed at getting the right aircraft for the Royal Air Force at the lowest cost. As I have said, the tenders will take some time to evaluate in detail before a final decision is made. However, I can assure your Lordships that all the points of wider national consideration which I have mentioned and the very valuable points which have been raised this evening will be taken into account when we come to make the final decision. As I said before, our prime consideration is to obtain a cost-effective aircraft with good performance and a long fatigue life. I hope that it will be possible to make a decision around the turn of the year, and certainly I will advise your Lordships of the outcome.

House adjourned at half-past nine o'clock.