HL Deb 01 February 2005 vol 669 cc100-2

3.1 p.m.

Lord Astor of Hever

asked Her Majesty's Government:

Whether they have delayed funding of the next stage in the projects to acquire Watchkeeper, new air-to-air refuelling capabilities, the carriers and the future rapid effects system; and if so, for what reasons.

The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Bach)

My Lords, all these programmes are progressing well towards their respective main investment decision points, or main gates, as they are known. Under Smart acquisition, we are determined to spend the right amount of time and money ahead of main gate to gain a better understanding of the risks involved. As part of our normal annual planning process, we review all equipment projects. The current planning round is still under way. Final decisions on the 2005 equipment plan have not yet been taken.

Lord Astor of Hever

My Lords, why has a major contract not been signed for any of these vital projects? Why has there been further delay? Has the MOD run out of money to pay for them, and when will a decision be made on the physical integrator for the carriers?

Lord Bach

My Lords, I reassure the noble Lord that we have not run out of money. But we refuse to take decisions too early—something that has happened often in the past under governments of all parties. We rush to production for some of these major projects and find that we have not even begun to take out the risks. Then we meet them in the production phase, find that we are spending far too much money on them and the delays are intense. Therefore, in spite of the pressures to move to major investment decisions, we are determined to wait until we are ready.

Lord Garden

My Lords, will the Minister consider delaying one aspect of funding associated with the carrier project? Do the Government have the ability to hold back some of the £2 billion promised towards the Joint Strike Fighter development until we receive assurances from the American Government over technology transfer, which we talked about in the previous Question?

Lord Bach

My Lords, of course we are not spending all that money at this particular moment; we are spending it during the project phase of the Joint Strike Fighter. It is important to remind the noble Lord that, although there are great difficulties in getting technology transfer of any kind from the Americans—indeed, that was mentioned during the previous Question—the fact is that, so far, we have the technology transfer that we need for the Joint Strike Fighter. The real test will come in the next 18 months or so when we see whether we get the technology transfer that we need to support our own Joint Strike Fighter.

Before we are too critical about the Americans, I hope that the House noticed the outstanding contract that Augusta Westland won over the weekend to supply, along with American partners, the VXS—the presidential helicopter for the future. It was a great win for Britain.

Lord Craig of Radley

My Lords, can the Minister tell the House whether major reports that British Aerospace may withdraw from the carrier programme should be taken seriously?

Lord Bach

My Lords, there is always speculation on major projects of this kind, such as the CVF—the aircraft carrier—and I am not going to comment on speculation, whether it has appeared in the press or elsewhere. We are in discussions with BAe Systems, as we are with other companies involved in this major project.

Lord Truscott

My Lords, will my noble friend indicate whether the Ministry of Defence is spending more time and money on the assessment phase of procurement programmes, so attenuating the risk of project management?

Lord Bach

My Lords, as I said to the noble Lord, Lord Astor, a minute ago, one of the justified criticisms in this whole field over many years is that we sign up to production too soon. I cannot repeat often enough that the result is that, at a later stage, problems arise. If those problems were dealt with earlier, we would not have the delay and cost increases to which defence procurement has been prey for 40 or 50 years. The principles of Smart acquisition call for spending more money and more time earlier, if necessary, to drive out risk before production begins. That is easier to say than to do because there are all kinds of pressures on us to get the contract signed, whether they be from industry, the media or others. We must resist those pressures.

Lord King of Bridgwater

My Lords, following the Minister's congratulations to Augusta Westland on its great achievement, does he recognise that it bears out that early authorisation must be given for projects of this kind? Perhaps I may say—not in false modesty, I hope—that I placed the order for the Merlin helicopter in 1991. It has now become the plane that has received the supreme accolade of being chosen as the executive aircraft for the President of the United States. But it warns of the tremendous time lag involved in the construction projects for these sophisticated weapons systems.

Lord Bach

My Lords, I congratulate the noble Lord on the decision that he took. The helicopter that has arisen from that decision is a world-beater, as the recent result shows. However, I still maintain that, when looking at large procurements, it is important not to rush to production too soon.

Lord Luke

My Lords, in view of the slightly unrevealing nature of his answers to my noble friends' questions, can the Minister give us an assurance that the in-service or commission date for the first of the two carriers is still 2012?

Lord Bach

My Lords, the in-service date for any project is not decided upon until the main investment decision—main gate—is reached, for very good reason. It is then that you look at the whole project, see where you are with it and what the trade-offs have been and then decide on a date. The year 2012 is still the date that we have in mind for the first aircraft carrier.