§ 3.7 p.m.
§ Lord Taylor of Gryfe asked Her Majesty's Government:
§ Whether they will launch a study, in conjunction with companies in the defence sector, of how the defence industry could manage a smooth transition to production for civilian uses, in the light of the anticipated reduction in demand for armaments.
§ The Parliamentary Under-Secretary of State, Ministry of Defence (The Earl of Arran)No, my Lords. Decisions on the way companies conduct their businesses are best left to the commercial judgment of the individual companies concerned.
§ Lord Taylor of GryfeMy Lords, I thank the Minister for that Answer. However, does he recall the statement made by the Department of Trade and Industry in its White Paper that,
open markets do not mean Governments should rely solely on the operation of market forces or stand by as a passive observer of the economy"?1441 In view of the fact that redundancies have been annouced in the industry and that further redundancies are anticipated, does that not indicate that the DTI is standing by, whereas it should begin dialogue as the purchaser of arms with the suppliers of ar[...]s to ensure a smooth transition?
§ The Earl of ArranMy Lords, I can only repeat to the noble Lord that, as regards defence, we prefer to allow our suppliers to follow their own commercial judgment in deciding their markets.
§ Lord Graham of EdmontonMy Lords, is the Minister aware that there are more than 325,000 people employed in the defence industry? That means that there are over 1 million people whose livelihoods are affected by employment in the industry. Surely he cannot simply say that we should leave the future of those individuals, within the context of a national policy and strategy, solely to market forces and the decisions taken in a dozen or 50 boardrooms.
Can the Minister not grasp this nettle and recognise the fact that this is a perfect time, and a perfect case, for the Government to show broad leadership by bringing together the TUC, the CBI and even local authorities involved, where whole towns are affected by the situation, to produce an alternative for the future?
§ Lord DenhamNo, no, no!
§ Lord Graham of EdmontonYes, yes, yes!
§ The Earl of ArranMy Lords, I simply say to the noble Lord, Lord Graham, that, under the Options for Change review, when it is decided as to what and by how much armaments are to be reduced, the defence firms will be fully informed and consulted. At the end of the day their decisions lie in their hands.
§ Lord MolloyMy Lords, can the Minister say what relations the Government have with companies in the defence sector?
§ The Earl of ArranMy Lords, the Government have very good relations with them.
§ Lord GisboroughMy Lords, does my noble friend think that perhaps the "groundnut" scheme might be useful in this respect?
§ The Earl of ArranMy Lords, I would be somewhat dubious of that suggestion.
§ Lord MayhewMy Lords, does the noble Lord agree that there would be less disruption if these companies could be given more notice of changes in procurement policy? Further, is he aware that it is difficult to see why the Tornado decision could not have been taken earlier? Indeed, many of us on this side of the House wonder why the defence review was not started earlier.
§ The Earl of ArranMy Lords, it is not a defence review. It comes under the heading of a policy review under Options for Change, as the noble Lord well knows. In my previous answer, I said that when the time is right the defence industry will be informed and fully consulted about the future of defence armaments.
§ Lord Taylor of GryfeMy Lords, do the Government and the Minister accept that 50 per cent. of government-funded research and development is in the defence industries as against 12 per cent. in Germany and 6 per cent. in Japan? Does not the new defence policy offer the opportunity to return scientists to civilian manufacturing?
§ The Earl of ArranMy Lords, it is some 45 per cent. of total government-funded research. The figure for research and development under the defence budget is just under £2 billion. It is scheduled that that figure will decrease gradually over the next few years.
§ Lord MayhewMy Lords—
§ Lord DenhamMy Lords, of course I shall give way to the noble Lord, Lord Mayhew. However, when he has asked his question and my noble friend has answered, perhaps I may make the business statement.
§ Lord MayhewMy Lords, it is a short question designed only to avoid future misunderstanding. Will the Minister explain the difference between the defence review and the Options for Change?
§ The Earl of ArranMy Lords, in the past defence reviews have normally been resource-led. Under Options for Change, the review is policy-led as a result of the diminishing threat from the East.