Further to my statements to the House on 22 and 25 March, Official Report, columns 3WS and 54WS, I am pleased to announce the next steps on a number of projects that will deliver vital equipment and support, particularly to the Royal Air Force (RAF), and will help sustain the aerospace and weapons sectors of the UK’s defence industry. These announcements build on the package of adjustments to the defence programme I announced to the House on 15 December 2009, Official Report, column 801 and the emerging thinking on defence as set out in the Green Paper that leads in to the strategic defence review (SDR).
The Ministry of Defence (MOD) has entered into an interim partnering agreement with MBDA (UK) Ltd to take forward the Government’s strategy for the UK’s complex weapons sector as originally set out in the defence industrial strategy. The agreement builds on the successful team complex weapons assessment phase that commenced in July 2008. As part of the agreement, the MOD has placed a contract valued at some £330 million to demonstrate and manufacture both the fire shadow loitering munition which will be able to be used in operations by the British Army in Afghanistan and, using a development of the current Brimstone anti-armour weapon, the second element of the selective precision effects at range (SPEAR) programme for use by the RAF on Harrier GR9 and Tornado GR4 including on current operations. The contract also includes further work on the future local area air defence system and on future components of the SPEAR programme.
This partnered approach is designed to meet the armed forces’ requirements through a modular family of weapons, with the agreement providing greater overall flexibility to meet evolving requirements, permitting shorter development times, and achieving significant efficiencies through life. It will also ensure the UK has continued access to industrial skills and capabilities that are critical for the ongoing provision of cutting edge complex weapons for our armed forces. The agreement represents a further significant investment in the United Kingdom’s high technology industry and its wider supply chain, and helps to sustain the UK’s key complex weapons skills base.
I am also pleased to announce that this week we will sign a £120 million contract with BAE Systems for the in-service support of the Hawk T Mk2 (the advanced jet trainer), which will provide a modern fast jet training capability for the RAF. This contracted logistic support arrangement will see BAE Systems responsible not only for the number of aircraft made available for training flights but also for ensuring that the aircraft are able to carry out the training mission effectively, and covers all aspects of support including on base maintenance, fleet management, spares management and re-provisioning, repair and all other ancillary activities needed to provide the required aircraft availability out to 31 March 2014. This contract is sufficiently flexible to continue to deliver value for money for defence should the strategic defence review identify changes in the fast jet training requirement. Altogether the contract will sustain over a 100 jobs at BAE Systems and its subcontractors, Babcock Defence Division and Rolls Royce (all at RAF Valley in Anglesey).
We are making excellent progress towards delivery of the 22 new Chinook I announced in December. The decision to buy more Chinooks is a reflection of operational experience over the past 20 years, especially more recently in Afghanistan where the aircraft has proven its value to commanders time and again. I am pleased to inform the House that a contract was signed with Boeing on 23 March, just three months after my announcement, for initial design and long-lead manufacture work, which will protect the critical path to delivery of the first 10 aircraft in 2012 and 2013. This demonstrates our commitment to delivering more capability to the front line as quickly as possible.
It has been well publicised that the A400M transport aircraft, which will provide airlift support to operations, is proving to be a challenging programme, principally due to the technical complexity of this next generation military transport aircraft. Since 2008, MOD officials have worked tirelessly with the other partner nations, the Organisation for Joint Armaments Co-operation, and EADS/Airbus Military to find the best way forward for the UK. This process has involved difficult negotiations but I am pleased to announce today that the partner nations have reached an agreement with EADS/Airbus Military on a non-legally binding heads of terms agreement that will provide the basis for a formal contract amendment in the coming months. The in service date is now expected to be 2015, and it is our intention to see the A400M programme through to completion.
It was very clear from negotiations that the programme would only remain viable with further investment from the partner nations. The UK contribution to this further investment will be achieved by reducing the number of aircraft to be delivered to the RAF so that we remain within our existing cost envelope. We expect that the cost increases, which for the UK represents a maximum reduction of three aircraft from the originally contracted number of 25, may be recovered in the long-term through a levy on foreign export sales of the A400M.
I acknowledge that there have been significant programme delays, reflecting the complex technical challenges of this international project, and we may not receive the number of aircraft for which we originally contracted. Nevertheless, we will deliver the capability required and are greatly encouraged that a prototype A400M aircraft has now flown, with flight trials continuing. This, coupled with recent changes in governance structures that have led to greater transparency, means that the MOD has grounds for greater confidence in the A400M programme. The proposed way forward has been subject to rigorous internal scrutiny, and I am satisfied that the proposed heads of terms agreement is underpinned by a sound evidential base.
As a result, I am confident that the A400M will remain value for money for the taxpayer, and will still deliver an outstanding capability for the RAF. The A400M programme will also sustain up to 8,000 British jobs, including cutting-edge wing design work.
As a result of the measures I announced to the House in December, and despite the delay to the A400M programme, we expect to be able to meet the airlift requirements for current operations after the C130K goes out of service in 2012. We are bolstering our strategic lift capability by the procurement of a seventh C-17, which will enter service with the RAF in March 2011. We are also maximising tactical airlift capability by investing in a package of enhancement measures to maximise the use of the existing fleet of 24 Hercules C-130J. The completion of a second runway at Bastion, Helmand, in 2010 will also allow us to reduce tactical airlift tasking in theatre. Through these investments, the Department believes it can sustain anticipated intra-theatre airlift tasking on current operations until A400M comes into service.
Finally, on 30 November 2009, the Minister responsible for defence equipment and support, announced the beginning of formal trade unions’ consultation on the future of defence support group’s (DSG) Large Aircraft Business Unit (LABU) at St. Athan, south Wales, designed to achieve closure of the facility by June 2013 at the latest.
Once depth maintenance on the VC10 ends in 2013 there will be no requirement to maintain RAF aircraft at St. Athan. The management of the DSG, the Government and the Government of Wales have explored exhaustively the prospects for replacing the contract with other work but no such opportunity has been identified. Therefore, our priority is to ensure that the redundancy and retraining schemes available to the workforce fully reflect our appreciation of the loyal, reliable and very skilled work that employees of St. Athan have delivered for the benefit of the RAF and the country.
We have written to the trade unions concluding the consultation process and setting out the redundancy terms that will give the workforce the opportunity to apply for redundancy on the current conditions available for compulsory redundancy.
MOD will continue to work with other Government Departments and agencies to explore future job opportunities for DSG employees who will be affected by the drawdown and closure of the facility. The option of retraining and transferring LABU personnel to other DSG sites will be maximised where this meets business needs and individuals’ preferences. And DSG will work closely with external training providers and agencies such as Careers Wales, Jobcentre Plus and other advisory organisations to explore alternative training and job opportunities for any employees wanting to retrain for an alternative career.
I pay tribute to the outstanding service of DSG St. Athan personnel, both past and present, in supporting the UK armed forces with the vital equipment needed on critical operations both at home and overseas.
The series of announcements I have made underline this Government’s commitment to provide our armed forces with the equipment and support they need.
The decisions we have taken will introduce new and enhanced capability that is required now and in the coming years, and support, not-prejudge, future decisions in the forthcoming SDR.