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Defence Industrial Strategy

Volume 702: debated on Monday 16 June 2008

asked Her Majesty’s Government:

Whether it is still their intention to publish a revised version of the defence industrial strategy; and, if so, when.

My Lords, I am sure that the whole House will wish to join me in offering sincere condolences to the families and friends of Lance-Corporal James Bateman and Private Jeff Doherty of 2 Battalion the Parachute Regiment, who were killed on operations on Thursday 12 June in Afghanistan.

We remain committed to the defence industrial strategy and are working closely with industry to develop it further. We continue to review with industry the timetable for the publication of the planned update. A date has yet to be determined and I will keep the House informed.

My Lords, we on these Benches join the noble Baroness in sending our condolences to the families and friends of Lance-Corporal James Bateman and Private Jeff Doherty of 2 Battalion the Parachute Regiment. She says that the Government remain committed but since the departure of the noble Lord, Lord Drayson, it appears that work in the MoD on a revised DIS has been derailed and that, as we feared, the civil servants are triumphing. Is she aware—I am sure she is—that this is causing great uncertainty for industry, particularly for SMEs? Can she assure the House that she will now give a clear sense of direction to the Government’s defence industrial strategy, particularly where it relates to the further implications of partnering with industry and retaining our sovereign capabilities?

My Lords, I can certainly tell the House that the whole of the MoD, including civil servants, is very committed to the defence industrial strategy and that a great deal of review work is being undertaken sector by sector in close conjunction with industry. The most recent workshop, in which we discussed operational sovereignty, occurred just two weeks ago. Very senior people—key players in the defence industry—were present and fully involved, which proves the commitment on the part of industry and of the MoD.

My Lords, we on these Benches wish to be associated with the tribute. Given the tremendous pressure on the defence budget, does the noble Baroness not find it somewhat ironic that most defence contractors, whether they be involved in manufacture or outsourcing, are making record profits and that that sector is very highly rated by the stock market? Given that the Government’s policy is one of partnership with the industry, and while we want a prosperous defence industry, does she consider that the present risk/reward ratio between government and industry, both in terms of profits and penalties, is fair?

My Lords, the noble Lord refers to a problem that has existed for all Governments for many years; that is, how to ensure that we have a thriving defence industry while also ensuring that the taxpayer gets good value for money from contracts. By working in new ways with the defence industry and having different types of contracts, be they PFI deals, partnering or leasing arrangements, the MoD is able to work out what is appropriate for each capability. All the time we are looking at new ways of ensuring that we get best value for money so that we can provide our Armed Forces with the capabilities which they need.

My Lords, is my noble friend aware that many of us on this side are grateful for the fact that for the past 11 years we have had a Government who have a defence industrial strategy? Will she confirm that the potential award of the contract for the two aircraft carriers will provide jobs throughout the whole of the United Kingdom, including Scotland, but that the jobs in Scotland could be put in jeopardy if the SNP were to have its way and get a separate Scotland? Will she also confirm that these jobs represent an important part of the union dividend?

My Lords, I confirm that I know of no plans by the SNP to build any aircraft carriers in Scotland, or indeed anywhere else. We have made significant progress with the maritime industrial strategy, which will be underpinned by the decision to go ahead with the carriers, and we are now waiting for the joint venture company to fulfil its further legal agreements before the next stage. A lot of jobs will be created in all parts of the United Kingdom.

My Lords, as the defence industrial strategy is related to procurement, on which there is a Question tabled for Answer on 7 July, will some information as to the revised version be available by then? I have forgotten the previous Minister—

Yes, my Lords. He devised this defence industrial strategy so the revision in outline would be greatly appreciated before 7 July.

My Lords, I said earlier that I could not give a specific date. All I will say is that the discussions with industry are taken very seriously by both sides, and I hope that we will make very good progress and have a document that is well worth all the effort that both industry and the MoD have put into it.

My Lords, is it correct that the Strategic Defence Review announced the carriers and that it has taken over 10 years to place a production contract for the vessels?

My Lords, the decision to go ahead with the carriers was first made in July last year, so I do not think that there has been undue delay since then.