asked Her Majesty’s Government:

What progress has been made with the signing of the contract for the two new aircraft carriers.

My Lords, first, I am sure that the whole House will wish to join me in offering sincere condolences to the family and friends of Corporal Darryl Gardiner, who was killed in operations in Afghanistan last Sunday.

A number of contracts have been placed with the supply chain for design and engineering data and for materials in support of manufacture of the carriers. The key elements of the manufacturing contract have been worked on by industry and MoD teams over many months and are now substantially in place.

My Lords, I thank the noble Baroness for that Answer. I should also like to join these Benches with the condolences that she expressed to the family of Corporal Darryl Gardiner.

Can the Minister say whether the strong rumours circulating that half a billion pounds have to be found in the procurement budget are correct? If so, from which programme will that come?

My Lords, there is always speculation whenever there is a Comprehensive Spending Review or planning round. When my right honourable friend the Secretary of State for Defence announced the results of the Comprehensive Spending Review last July, he said that the review’s consequences would allow us to proceed with the carriers.

My Lords, on behalf of these Benches I join in the condolences in the earlier tribute. But may I ask the Minister where discussions stand with the French over their interest and involvement in the carrier programme?

My Lords, I have discussed this matter with the French on more than one occasion. They are not yet in a position to make a decision on ordering a carrier themselves, but there are excellent relationships between our team and the French and, indeed, French officials have been embedded in the project team from very early days. The French have contributed towards the design and other early costs and we can possibly benefit from common procurement and shared support. However, the French have not yet committed to making a decision on ordering a carrier.

My Lords, does the Minister accept that it is widely recognised that there are major difficulties in the Ministry of Defence procurement budget? And did not the previous Prime Minister give an undertaking, which I understand has been endorsed by the current Prime Minister, that the cost of the ongoing operations in Afghanistan and Iraq would be a charge against the reserve? And is it not true that up to £500 million has been transferred out of the procurement budget to help meet the cost of the ongoing operations? It appears to be a complete contradiction of the pledges given in this House.

My Lords, it is not true that the costs of operations are cutting into the defence budget. The Treasury reserve has provided some £6.6 billion for operations over and above the core defence budget since 2001. We have had a sustained increase in the defence budget over many years; that is to increase. It is true that every Minister in every department would like more money for their priorities. That is obviously the case with defence, as elsewhere. But it is not true that the cost of operations is biting into that budget.

My Lords, will the noble Baroness answer the question that she has just been asked about the transfer of a large sum from the procurement budget in order to sustain current operations?

My Lords, I think that I did answer it by saying that the operations were met by the very substantial money from the Treasury—the £6.6 billion—that was over and above the amount budgeted for defence.

My Lords, will my noble friend be kind enough to remind the House of the specific budget for the aircraft carriers? Perhaps she would also indicate whether she is confident that the aircraft carriers can be delivered within that budget.

My Lords, the budget is £3.9 billion, which is the targeted cost. There could be differences. However, it is important to realise that we have an incentivised approach and it is very possible that the actual cost on this occasion might be lower, because we have been discussing with industry a different type of approach to this contract.

My Lords, if and when these carriers are built, is it intended that they will be entirely under British control, or is it possible that they will form part of a rapid reaction force?

My Lords, I am sure the noble Lord will be reassured to hear that they will be under British control.

My Lords, can the Minister remind the House of the estimated in-service dates for these two carriers and whether there will be adequate Joint Strike Fighters to embark on them at that time?

My Lords, the in-service dates for the carriers were set out last July; they were and remain 2014 and 2016. The JSF has not yet got to main-gate stage in terms of ordering or setting specific target dates for when they will be available, but we are committed and have signed up to the concept of main gate on JSF and tests are going ahead. My understanding is that those are on target for STOVL test flights this year.