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Volume 210: debated on Tuesday 30 June 1992

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To ask the Secretary of State for Defence what initiatives he proposes to take to assist conversion and diversification in the defence sector; and if he will make a statement.

We have no plans to take any such initiatives. Decisions affecting the future of a company, including its product lines, are best left to the commercial judgment of the firm's management.

About 1 million jobs in this country depend, directly or indirectly, on defence expenditure. If we are to have a peace dividend and to prevent the non-proliferation of weapons among those who should not have them, diversification and conversion are required. Why do we not adopt the approach that we take towards eastern Europe, and provide conversion know-how in this country also?

I sympathise with the hon. Gentleman's argument, even though he exaggerated the number of jobs that are directly or indirectly connected with defence. His idea of spending taxpayers' money on a new quasi-autonomous non-governmental organisation is misguided. The best way forward for defence diversification is for ideas to come from the companies themselves.

Does my hon. Friend agree that history is littered with unrealistic socialist dreams of agencies to beat swords into ploughshares? Are not the managers of the companies concerned best placed to make long-term strategic decisions? If the Government were to intervene, would not the long-term result be unhelpful?

My hon. Friend is perfectly right. Right hon. and hon. Members with long memories will recall the disastrous experiments with taxpayers' money by the National Enterprise Board. We cannot have Government second-guessing of industry, financed by the taxpayer.

That was a very disappointing answer. Is the Minister aware that conversion and diversification policy is needed in the Cowal area in my constituency following the departure of the United States navy? Is he aware also that last week the Ministry of Defence advertised the former United States buildings for sale on the open market? Will the Minister and the Secretary of State for Defence undertake to reconsider that decision, with a view to the MOD's reaching a financial agreement with the United States navy and handing over the buildings to the local enterprise company, which is at the very heart of the recovery strategy for the area?

The hon. Lady is living in a time warp—in a bygone age. It is not for the Government to spend taxpayers' money on such diversifications. We have an interest in making sure that taxpayers' money is wisely spent. The decision to place that land on the market at a fair price is much the best solution.

Even though concern about defence employment comes ill from the Labour party in view of recent considerations, does my hon. Friend acknowledge that many jobs in the south-west are dependent on the aircraft industry and docks and, in my constituency, effective firms such as Avimo and the MOD's hydrographic division? Will my hon. Friend give whatever consideration he can to preserving those jobs where possible and to future activities where such jobs have to be run down?

My hon. Friend is right to draw attention to the fact that Labour has consistently advocated massive defence cuts—of 27 per cent. at its last party conference. I agree with my hon. Friend that we must consider carefully the significant number of jobs involved, but, with a procurement budget alone of £9 billion a year, there is scope for creating a strong and thriving defence industry that provides many jobs, despite the current difficulties created by the undoubtedly necessary defence spending rundown.

I am sure that all hon. Members—with the exception of a few Conservative Members—will be disappointed by the Minister's answer. I know that his predecessor washed his hands of the defence industry, but I thought that the present Minister might he a little more sympathetic. Does he not understand that workers in the industry, like service men and women, have given a lifetime of service to this country? Surely, at a time of necessary cuts, the Government can make at least the minimum contribution. May I also point out that the only mention of an agency was made by the Minister himself?

It seems from the hon. Gentleman's final point that he has forgotten that the first mention of a defence diversification agency appeared in his party's election manifesto. It is also mentioned in the question.

The basic difference between the parties is this: the Government believe that it does not place the taxpayer and civil servants in the best position to try to second-guess industry's own wish to diversify. Many defence companies are doing that very successfully already and they should be encouraged to continue.

I appreciate what my hon. Friend has said in answer to Opposition Members. Will he reassure us, however, that he fully accepts that the Ministry of Defence has a prime responsibility in delineating the key technologies that the defence industry is likely to be asked to supply in the immediate future?

Yes, I can give my hon. Friend that reassurance. We continue to take the Defence Research Agency's work in new technologies very seriously, and we are communicating more and more openly with industry about the technologies of the future, on which we expect to spend more of the defence budget.