HL Deb 21 June 1991 vol 530 cc343-6

11.27 a.m.

The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Reay)

My Lords, with the leave of the House, I should like to repeat a Statement made by my honourable friend the Minister of State for Defence Procurement in another place about replacement of the Chieftain tank.

"In his Statement to this House on 20th December 1988, the former Secretary of State, my right honourable friend the Member for Ayr, announced the Government's intention to replace the Chieftain with a new tank. The Challenger 2 tank being developed by Vickers was to be given the opportunity over the next two years to demonstrate that it could meet three demanding milestones. At the same time, my department has conducted an extremely thorough assessment of three other contenders—an improved version of the US Abrams tank, manufactured by General Dynamics; an improved version of the German Leopard 2, manufactured by Krauss Maffei; and the French Leclerc tank manufactured by GIAT.

"This work has been greatly helped by the full assistance which we have had from the companies concerned and from their governments.

"In reaching our decision, we have had to take into account a wide range of factors, many of which did not apply two-and-a-half years ago. Chief among these is the major political and military transformation within Europe which will mean that, by the mid-1990s, over 30,000 fewer tanks will be ranged against NATO in Europe. This has led to our study of Options for Change and allows us to make significant reductions in the size of our tank fleet.

"But the main battle tank remains at the cutting edge of a modern army and without it high intensity conflict would be impossible. Indeed, the Gulf war has demonstrated the continuing importance of the tank in the land battle.

"A decision of this magnitude requires a wide range of factors to be carefully weighed and taken into account.

"Our appraisal has now been completed. We have reviewed the progress of the Challenger 2 programme, in which Vickers Defence Systems have achieved all the performance criteria known as milestones. We have also assessed the competing claims of the Leopard, Abrams and Leclerc tanks. I can inform the House that, subject to the negotiation of satisfactory contract terms, we have decided to go ahead with the Chieftain replacement programme and to place the order for the new main battle tank with Vickers for Challenger 2.

"In making the choice of the new tank, an important consideration has been the advantage of maintaining a single ammunition type within the smaller fleet. In addition to this order for Challenger 2, and taking into account the lessons of the Gulf war, we intend to proceed with a substantial upgrade programme for the Challenger 1 fleet. In particular, this programme will significantly increase the firepower of the Challenger 1 fleet by the fitting of a new and more powerful gun.

"As a result of the acquisition of Challenger 2 and the enhancement of Challenger 1, the British Army's tank fleet will be well placed to meet its new commitments, both within NATO's rapid reaction corps and elsewhere.

"The choice of Challenger 2 testifies to the skills and capabilities of British industry and will deservedly ensure jobs at VDS and its sub-contractors. It is an excellent tank and likely to command close attention among our friends and allies. I am confident that Challenger 2 is exceptionally well placed to compete in these important overseas markets where there are genuine defence needs.

"This announcement carries forward the process announced by my right honourable friend in July last year. As he then made clear, our aim is to achieve smaller but better forces. The Government are determined to ensure that our armed services receive the equipment that they need to do the job. This decision is an important step in that direction. I commend it to the House."

My Lords, that concludes the Statement.

11.30 a.m.

Lord Williams of Elvel

My Lords, I thank the Minister for repeating the Statement made in another place. We generally welcome the Statement. We congratulate Vickers on its success in being the Government's choice. As the Minister will be aware, there has been a long period of uncertainty, and we must be glad that that period of uncertainty is now over. Nevertheless, the Statement gives rise to a number of questions which I should like to put to the Minister.

The Statement claims that the British Army's tank fleet will be well placed to meet its new commitments both within NATO's rapid reaction corps and elsewhere. That must mean that the Government have a clear idea of the number of Challenger 2s that they will order. I should be grateful if the Minister would let us I, now that so that we can judge whether the tank fleet will be well placed to meet all its new commitments.

Secondly, while I welcome the upgrade of Challenger 1, especially with the new and more powerful gun, I should like to ask whether there will be any upgrade of the Chieftain fleet, for instance, with a new turret or a retrofit? Is that on the agenda or has it now left it?

Thirdly, in considering the size of our future battle tank fleet, have the Government been persuaded by our commitments under the CFE arrangements or have they been dominated by the Treasury? That is an important point which has been raised many times in defence debates in your Lordships' House. We should like firm government assurances on that matter.

Lord Mayhew

My Lords, we on these Benches are also grateful to the Minister and welcome the Government's decision, which is a tribute to the skill of the workforce and to the Chieftain's performance in the Gulf. As the noble Lord, Lord Williams, said, it ends a long period of expensive uncertainty to which Vickers was committed. On those grounds, we welcome the decision.

The Statement refers to a smaller number of tanks. We await with great interest the figure which we are entitled to know. Does this not once again show the importance of trying to standardise some of the weapons in operation in NATO? How many different main battle tanks will there now be in NATO? Why have we failed to reach agreement on a European main battle tank which might have had just as favourable repercussions, if not better, for the British arms industry? What attempts did we make to reach agreement and why did they fail? The smaller each national fleet of tanks becomes, the greater becomes the argument for a standardisation of weapons, and the greater the necessity for European countries to get their arms procurement act together. However, that does not detract from our welcome. We believe that the decision is the right one in all the circumstances.

Lord Reay

My Lords, I am grateful to both noble Lords for the broad welcome that they gave the Statement. They asked how many tanks were to be ordered. We expect to order enough to replace two regiments of Chieftain tanks. There is to be no refit for the Chieftain, about which the noble Lord, Lord Williams, asked. He asked about numbers and the justification for them. As I said, we plan to replace two regiments within a planned smaller tank fleet. That is the number we consider necessary for our functions.

The noble Lord, Lord Mayhew, asked about the allies' main battle tanks and how many different tanks there are. There are now four main battle tanks within NATO, those of the United States, Germany, France and Britain. Interoperability was clearly an important consideration. We gave careful consideration to the achievement of interoperability with our allies in the rapid reaction corps. But, given the size of the intended order, there was no opportunity materially to enhance interoperability within the allied tank fleet; so we concluded that our contribution would be stronger if we had interoperability within our own fleet which will include a capable tank.

11.35 a.m.

Lord Ironside

My Lords, my noble friend has made an announcement which we accept as being the right one. My congratulations go to Vickers on complying with all the points that the Government put to it so as to win the contract. My noble friend pointed to the opportunities that will be available to Vickers to export that main battle tank to our allies and other friendly nations. In doing that, will Vickers be subjected to the commercial exploitation levy on the product? Vickers has invested much of its own money in this product, and there is a good case for it to be zero-rated—if that is the correct word—on the commercial exploitation levy, if it arises in the future.

Lord Reay

My Lords, I am glad that my noble friend welcomes the decision. He raised an important point about sales. The prime consideration is to provide the Army with first class equipment. Potential sales are always a factor taken into account in equipment procurement decisions. Potential foreign customers will have seen Challenger 1 in action during the Gulf campaign. That operation demonstrated its battlefield range and its superb night fighting capability. On the question of the levy, I understand that normal practice is to have the levy.