Defence Industries: Market Conditions> (Hansard, 23 May 1991)

§ The Parliamentary Under-Secretary of State, Ministry of Defence (The Earl of Arran)
My Lords, how companies choose to respond to changing conditions in the market for defence equipment is a matter for the companies and not the Government.

§ Baroness Turner of Camden
My Lords, is the Minister aware that about 760,000 civilians earn their living directly from defence work? Many of these people are highly trained but would need retraining to change to work on peaceful projects. Does the noble Earl not believe that the Government should have a role in retraining? Has he seen the document prepared by a group of unions representing their members in industry which sets out a number of recommendations on what should happen so that we do not suffer as a result of the peace dividend?

§ The Earl of Arran
My Lords, the noble Baroness conjectures as to what might happen. The way ahead is certainly not yet clear with regard to what redundancies might occur. As she knows, under Options for Change all these factors have been carefully considered, including how and the right time to inform industry.

§ Lord Mellish
My Lords, the Minister will understand that the defence industry budget cut meant certain unemployment and that can be justified on any side of the House; the less that is spent on defence, the less the need for employees. But does he agree that the Government must surely have known what was to happen and have had some idea on what to do about the staff who were made redundant, bearing, in mind especially that many of them are highly skilled?

§ The Earl of Arran
My Lords, the issue should be kept firmly in perspective. The defence industry is planned to reduce by 6 per cent. in real terms over the next three years. Many industries regularly face fluctuations in the course of normal trading similar to those facing the defence industry.

§ Lord Boyd-Carpenter
My Lords, in view of the present state of the world, will my noble friend also make sure that an adequate defence industry remains effective in this country?

§ The Earl of Arran
My Lords, yes. There is need to keep a careful and thoroughly explored balance.

§ Lord Molloy
My Lords, will the noble Earl's department take into account that many of the workers in the defence industry may now be unemployed? Is he aware that these employees are not merely specialists and skilled craftsmen but they will be extremely difficult to replace if the need should arise? Can he say whether the Government are looking carefully at the situation of those who have now lost their jobs? Does he agree that they are not merely specialists and skilled workmen but they will be extremely difficult to replace if we suddenly have to re-examine our defence industry?

§ The Earl of Arran
My Lords, I hear what the noble Lord says. But the Government have consistently made clear that it is for senior management, directors and shareholders of the defence contractors to decide their future. After information from and consultation with the Ministry of Defence, the matter lies in their hands.

The Lord Bishop of Manchester
My Lords, is the Minister's reply sufficient on such a vital matter for the UK economy? Is it correct to say that between a quarter and one-third of British engineers and scientists are employed in the defence industry and that it absorbs about a quarter of all research and development funds? If the noble Earl agrees that that is true, does he not also agree that it is much too important a matter of policy simply to he left to the market in this way?

§ The Earl of Arran
My Lords, I repeat that it is the Government's opinion that the decisions to be made on the way ahead for defence contractors are for the individual companies. As regards research and development, it is not our policy to achieve a gradual reduction in the real level of spending on defence R&D so that it does not absorb a disproportionate share of available technical resources.

§ Lord Dean of Beswick
My Lords, does the noble Earl agree that it would now be prudent for the Government to re-examine their policy on the purchase of defence equipment from overseas? Does he accept that the Government should pursue an unadulterated policy of buying British, bearing in mind that the future of our supplies will be more secure if we do that rather than shopping throughout the world?

§ The Earl of Arran
My Lords, the first requirement is value for money, as the noble Lord well knows. I do not know whether he is aware that by far the major part of the procurement of British arms comes from United Kingdom manufacturers.

§ Lord Williams of Elvel
My Lords, is the noble Earl aware that there seems to be considerably less flexibility on his part than there was when we last discussed this matter? Does he recall that when the issue was last discussed at Question Time he announced that there was to be a trip by someone from what is called the Department of Trade and Industry—which as far as I know still exists— 325 designed to encourage companies to diversify when Options for Change brought about defence reductions? Can he say what happened to that expedition?

§ The Earl of Arran
My Lords, I am not certain what happened about the expedition except that each side made its views known. I am happy to say that the Department of Trade and Industry still exists and will continue to do so for the foreseeable future.

§ Baroness Turner of Camden
My Lords, has the noble Earl taken into account the submissions from the unions, which have done a great deal of work on this issue and which are gravely concerned about the future of their members?

§ The Earl of Arran
My Lords, I believe that I have made clear that the Government regularly consult and inform defence contractors. It is for them to pass on the message to their unions.

§ Baroness Strange
My Lords, can my noble friend the Minister assure the House that before cuts are made in the defence budget the armouries and the arms which were used in the Gulf war will be replenished to their former state?

§ The Earl of Arran
My Lords, that is slightly off the mark of the Question. Certainly that kind of thing is being taken into consideration in the investigation into the operation in the Gulf.