I beg to move

That this House notes the importance for jobs and exports of the British defence industry; and welcomes the Government's continuing support for the industry in its drive for a greater share of the defence export market and the industrial technologies appropriate to the 1990s.

I intend to cover some general matters and some specific projects that relate to the British defence industry, especially those that affect Filton, within Bristol. Before doing so, I make the observation that in ordinary circumstances our debates on Fridays possibly see the House at its best. That is not the position in terms of attendance, but they give us the opportunity to cover a range of topics in a more considered manner than may generally be the position Monday to Thursday. In the light of the statements made by the hon. Member for Kingston upon Hull, North (Mr. McNamara) in Bristol yesterday, in which he attempted to produce a scare story about the long-term future of the European fighter aircraft and the job implications for many of my constituents and those of my hon. Friends in the area, I shall in a later part of my speech deal with somewhat more contentious issues than those that I anticipated raising. The terms of the motion were framed specifically to enable the House to move away from the more emotive issues of unilateral and multilateral defence and to consider instead some of the great benefits to the nation's economy that many of the major companies within the defence industry provide for the United Kingdom.

I think that the hon. Member for Eccles (Mr. Carter-Jones) will confirm that previous debates on aerospace have been considerably all-party in character. I recall a motion that I moved three years ago—it was the first motion that I had the pleasure of moving in the House—concerning the A320. It was notable for every Back Bencher from both sides of the House speaking with a common line of thought. I think that my hon. Friend the Member for Ruislip-Northwood (Mr. Wilkinson), whom I am pleased to see in his place, took part in that debate.

The defence industry employs about 200,000 in the United Kingdom directly and there are many others who benefit indirectly through sub-contracting and off-shoot employment. The annual turnover of the industry has risen dramatically in recent years. In 1983 it was about £5·75 billion. In 1986 it increased to £6·6 billion, and the projection for 1987 is about £7 billion.

In an answer to my hon. Friend the Member for Stockport (Mr. Favell) a few days ago, my hon. Friend the Under-Secretary of State stressed that exports of British defence equipment have risen strongly in recent years at a rate of about 12 per cent. per annum in real terms. That is a substantial achievement. Export orders reached £2·9 billion in 1985 and represented over 5 per cent. of British manufactured exports, accounting for about 120,000 jobs. A large proportion of the defence industry contributes to exports. The prospects are extremely good for the long term for both employment in this country and exports.

We should ask ourselves why the prospects are so good and how they can be maintained. They can be maintained primarily by the joint operation of a strong industry and active support from the Government, in their ordering policy in the United Kingdom and in assistance for exports overseas. The strength of the industry starts with the big high-profile companies such as British Aerospace and Rolls-Royce, and moves down to many small companies through companies such as Ferranti, GEC, Plessey, Racal and Lucas Industries.

We tend to presume that British Aerospace is a long-established company with great strength. It is worth remembering that it came into existence only nine years ago as a result of legislation passed by the Labour Government, who rightly brought together the airframe manufacturing industries. Over the past few years British Aerospace has rationalised its bases and products and is now beginning to show its strength. It is important to remember that for most companies in the industry—British Aerospace is no exception; indeed, it is probably the prime example—collaboration is an absolutely crucial factor. It is not just collaboration in the United Kingdom but collaboration in Europe as well as with the United States and other countries.

Without the strength of that collaboration, the British industry would be absolutely nothing. As a country, we cannot afford to produce major defence projects and expect them to succeed on our own. The cost of producing them is excessive. The length of the orders available is minimal. Therefore, we have to look for international collaboration outside our shores to achieve the maximum benefit. The routes that we are following in several projects show that. This must be recognised by anyone who is involved in the industry.

With regard to progress in selling abroad, there also has to be a direct inter-relationship between the Government and the industry. There is no point in any of the defence companies going abroad trying to sell projects when they have not received orders or substantial support from their home base. We must also ensure that they receive active support from British Government representatives in the countries involved.

I am pleased to say that, in general, the support that apparently is given to all industries—not just defence—has improved around the world from our embassies and trade missions. However, we have not as yet reached the level of support given so visibly by the French and Americans, for example, to their industries in other parts of the world. There has been an improvement, but we must not sit back and say, "We have made the changes. That is enough." It is not.

We are now receiving support from the Government and leading personalities. The royal family has been seen to give support on several occasions when dealing with other royal families who are in charge of major deals. That is to our long-term benefit, and it is the way that we have to go if we are to compete with those countries.

One of the major projects that is currently under consideration by the Ministry of Defence is Nimrod. I do not want to deal with it at great length; I know that a decision is close. I am also aware that one or two hon. Members wish to refer it. However, I should like to make two observations. First, I am concerned that there is a supposition that if the order does not go to GEC it will be a mortal blow to British technology as a whole. That is not so. There will be an impact on GEC and other defence technologies, but in recent years, for example, the United States has had failures with defence projects, such as the T46, the failure of some satellites that have had to be brought back from outer space, and the Divads project Sergeant York. All those failures have resulted in expensive cancellations. There will be implications; I do not deny that. However, I hope that they will not be overstated too dramatically:

The difference between ourselves and the Americans is that the Americans say that they do not give official support, which we know they do. In some of the projects to which the hon. Gentleman referred the loss was borne by the Government of the United States, not by the companies concerned.

I agree with the hon. Gentleman, who has substantial experience in defence matters. There is no doubt that the American Government give immense support to some of the companies, visibly and invisibly. They are supposed to be free-standing defence contractors, yet when one looks at the way in which projects have developed one sees that several major companies are asked to produce alternatives, and they are funded by the Department of Defence. Probably the best example is the benefit that went to Boeing as a result of the 747, which was a failure for the contract for which it was orginally designed, but the Department of Defence had funded the pre-production models of the 747, which ultimately has turned out to be a great benefit not only to the company but to world aerospace. One cannot but recognise the assistance that has been given indirectly through such systems of funding.

My second observation about Nimrod is that, since the original commitment was made in 1977, there have been nine years of delay. We are told that there has been substantial improvement in the technological capacity of Nimrod. It is not for me as a politician to judge whether the options are now comparable. I say to the Minister and the Ministry of Defence that if the projects are technologically close we would all wish the order to go through GEC and British Aerospace. However, if the technical assessment is that there is a massive difference, I am afraid that, on balance, we would have to consider the Boeing option to be preferable. I am concerned about the technical gap. If the two are on a par, there is no problem, but defence technology is moving so rapidly that in two or three years time the requirements imposed on all defence capacity will be far greater than today. There are developing expertises in silencing equipment, new paints and new defence systems, all of which make it necessary to keep up with the advance of technology as much as possible, because other nations are changing extremely rapidly.

The other defence project that has caused problems within and without the Chamber over the past few months is helicopters. Earlier in the year there was a substantial argument about Westland and where its long-term industrial commitment should go. There is also, however, the problem of orders at the moment. I am not convinced that as a country we have identified the role of helicopters in the defence and civil fields. Until we address ourselves to that problem, it will be difficult for a Government or a civil company to decide what orders are to be placed and where. There is no doubt that there is a substantial gap in orders in the factory at Yeovil at the back end of next year, 1988 into 1989. I believe that that is causing considerable concern at Yeovil and in the aerospace industry as a whole. I know that efforts are being made by the company with the support of the Government to find orders around the world for aircraft currently being constructed at Yeovil, and to find work in association with the consortium which includes Sikorsky and to determine the other options available. It is important for us to retain helicopter technology because there are substantial prospects beyond 1989. The EH101 has been discussed on many occasions and work on the A129 and on Black Hawk may provide employment.

The hon. Gentleman's comments about Westland are entirely accurate and I agree with them. It is not just this Government who have failed to produce a helicopter policy; successive Governments over 17 years have failed to do so. The gap is not just at Westland, because the British Army on the central front is regarded as flying the oldest helicopter fleet in the world and, according to an American study, it is 100 aircraft short of its need to fulfil the NATO task.

The point made by the hon. Gentleman relates to the problem that I spoke about at the start of my speech. We are not sure where we are going in terms of the use of helicopters, not only for defence but in general. The problem identified by the hon. Gentleman is to some extent a reflection of the overall problem. The development of the RTM322 is a joint project between Rolls-Royce and Torbo Mecca. The engine has undergone test trials at Filton and has proved a success. I saw the tests when I visited Rolls-Royce at Filton, and everybody was pleased with the performance of that engine. It looks like a serious contender to the T700 for use in the Black Hawk and its variants. It is an example of the way in which Government and the defence industry can work together. In the long term, that engine could substantially benefit the helicopter industry.

We are not proud enough of the Pegasus engine. It is unique and we have been able to sell it to the United States, although we have not been able to sell it to as many other countries as we would like. The development of that engine did not stop once it was installed in the Harrier. It has been uprated and, in answer to a question that I asked in July, I was told that negotiations with the United States were going well. The Under-Secretary of State for Defence Procurement said:

"There is a Rolls-Royce initiative to uprate the GR5 Pegasus engine. Although there is a formal requirement for this at the present time, we are attracted by its lower life-cycle costs and better performance. We are looking at it in conjunction with the United States marine corps."—[Official Report, 15 July 1986; Vol. 101, c. 836.]

As far as I am aware, that was the first public declaration that such developments were taking place. I hope that progress has been maintained in negotiations and that before long we shall see a commitment to the L1161 so that British and American forces and other people to whom we may be able to sell the aircraft will benefit from the further improvement in what has been up to now a uniquely British and successful project.

The other major aero engine being developed at Filton is the RB199. It has been in production for some years for use in the Tornado project. Work is being carried out in Germany, Italy and Spain and I hope that the XG40 will be one of the bases for the engines for the European fighter aircraft. A number of new technologies are being developed to improve substantially the performance of the RB199. It is a good engine, but the evidence suggests that the XG40 will be substantially better.

While dealing with those two engines and their development, I should say something about the Tornado and the European fighter aircraft. My hon. Friend the Member for South Ribble (Mr. Atkins) is unable to be here this morning, but he, along with members of the aviation Committee and other interested parties, worked hard to encourage the Ministry of Defence to get the four countries together. That was a major achievement and the four countries agreed to develop the European fighter aircraft. We now have a commitment to that aircraft and I hope to see the XG40 development together with developments in the other countries being used in that aircraft.

I understand from information that I received yesterday from a number of people in Bristol that they are worried about comments by the hon. Member for Kingston upon Hull, North. I understand that he claimed that there was no money in the Ministry of Defence budget for the European fighter aircraft. When challenged that this was merely a scare story, the hon. Gentleman said that it was not, and that there was no money and no prospect for the long-term development of the European fighter aircraft. Quite rightly, that worried many people.

I am amazed that the hon. Gentleman could have made such a statement. Some of us have longer memories than he may think and we know that the last fighter aircraft Britain attempted to develop was the TSR2 on which my father had the pleasure of working. That aircraft was scrapped by a Labour Government. [Interruption.] My hon. Friend the Member for Northampton, North (Mr. Marlow) makes the very point that I was about to discuss. After the scrapping of that aircraft, there was an act of industrial vandalism unparalleled since the war—the instruction to destroy every jig and tool associated with the TSR2. At a stroke, all the associated technology was destroyed.

As far as I can ascertain from research in the Library, the hon. Member for Kingston upon Hull, North has not asked one question over the last six months about the funding of the European fighter aircraft. The only question about it from the Labour Benches was asked in June by the hon. Member for Eccles. Since then, the only questions about the European fighter aircraft have been from Conservative Members. If one looks at the way funding is provided and commitments are taken about production of all defence projects—with the exception of Trident — one sees that they are not specifically identified until they are due for production.

Funding provided for research and development is clearly shown in column 32, page 17 of the second volume of the Defence Estimates published earlier this year. They do no identify any specific project. It is appalling that the hon. Member for Kingston upon Hull, North can go to a major city, Bristol, which depends heavily on defence industries, and raise such a scare story which is so incredibly ill-founded. If the hon. Gentleman has put down questions and has not received answers, I am willing to give way to him so that he can tell us about it. I shall also give way to him if he can identify the funding not only for the XG40 but the L1161, the RTM322 and all the other Army and Navy projects. I note that he sits in his seat in silence. I presume therefore that he concedes that his scare story yesterday in Bristol has no solid foundation.

I concede nothing. I will make my own speech in my own time.

I hope that all hon. Members will note that I have provided the opportunity but that the hon. Gentleman will wait and presumably avoid the examples that I have quoted and will not counter my argument and identify his information that the project is under threat.

Apart from the European fighter aircraft, another major long-term technological effort is under way—Hotol. It is primarily for defence but it has substantial implications for civilian use. That project is being developed by a number of companies, including British Aerospace and Rolls-Royce. It is at the forefront of technology. We should be extremely proud of it. Recently I visited Japan and was amazed by the interest that the Japanese show in the project. If the Japanese are interested in it, that leads me to believe that the project is a potential world leader for the 1990s and into the next century. It has great potential for the transportation of people; it would also deal with defence threats; it could also launch satellites in a different way from Ariane and from the programmes that are pursued in the United States. After the recent tragic failures in the United States, involving the loss of life, it is important that a more reliable alternative should be found. The fact that the most attractive option is available from United Kingdom industry is a great compliment to us.

As for collaboration on projects, I said earlier that the United States has suffered from certain technological failures. I identified Sergeant York as an example. It provided British Aerospace and the Government with the opportunity to demonstrate to the United States that there is an alternative to track Rapier. The Rapier project has been successful. It has been sold to many countries. However, the long-term evolution of any defence project is important. We cannot regard it as a one-off project and then assume that that is it. Track Rapier is an example of the development of the Rapier project which is well worth identifying and supporting, because the United States Government need a system like that. We have successfully sold a variant of the harrier, the AV8B, to the United States. They are very pleased with it and variants are being developed. The Hawk is another primarily British project which is now being sold to the United States. It has a British airframe and British engines and it shows great potential. However, apart from the United States, other countries could be persuaded to purchase such projects.

On a more tendentious note, there is the strategic defence initiative. Many people are absolutely opposed to it, while others support it. It is important that the British defence industry should be allowed to sit at the table when projects at the forefront of long-term technology are discussed. We cannot sit back and allow other people to participate in a project and say that we shall not try to obtain any orders. It is absolutely crucial that companies and universities should be able to work on state of the art technology. I should welcome the participation of British companies and universities in that project. It would keep us abreast of the United States and also of the Europeans and the Japanese who intend actively to participate in the project.

The Labour party has recently published a consultation document headed "Labour party science and technology policy." It was written by the hon. Member for Motherwell, South (Dr. Bray) and published on 19 November 1986. It will have aroused concern in the defence industry. The hon. Member for Motherwell, South calls for a direct swap from defence research and development expenditure to civil research and development expenditure. We need increased research and development in civil engineering and in civil industry in general, but the document does not give credit for the large amount of feedback from defence research and development to civil projects. For example, nobody would identify the V2500 as a civil engine, but much of the research work on that engine was carried out in defence establishments. On page 5 of his consultative document the hon. Gentleman calls for

"a cut of £100 million in defence research and £1,000 million in defence development."

I have looked through the document, but I cannot find the time scale upon which the hon. Gentleman is working. However, I am willing to presume that it would be over the period of one Parliament. If so, that involves a cut, on the basis of last year's expenditure on defence research and development—which I understand to have been £2·1 billion—of £200 million a year in defence research and development. If the Labour party confirms that that is its policy, it is important that it should identify which 10 per cent. of defence research and development is to be removed. Such a cut would affect projects not only in my constituency but in other parts of the country. One of those projects, the XG40, could be the basis of an engine for the European fighter aircraft.

Various countries have declared that they are committed to the European fighter aircraft and that the engine for it should not be the F404. The F404 is already in certain foreign air force aeroplanes. The attraction for foreign air forces is that the F404 could be used as the initial engine for the European fighter aircraft. The logic of that is somewhat dangerous, for there would then be an argument over cost. Because the F404 engine was in place, it would be argued that all associated development should be cancelled.

The Ministry of Defence actively supports a European engine for the European fighter aircraft, and I understand that Germany and Spain are still committed to a European engine for the EFA. I ask the Government to continue to support the commitment to a European engine and, with their European colleagues, to ensure that it is in place in the project from the start. My conversations with Defence Ministers in the last few months lead me to believe that they recognise that the European fighter aircraft is crucial to a number of air forces in Europe for the 1990s.

I have covered fairly broadly a number of specific projects and the general problems that face the British defence industry. With the support of the Government we must develop United Kingdom projects that can then be exported in order to provide a continuing and assured base of British defence manufacture not only for another decade but for many decades to come.

I am very grateful to you, Mr. Deputy Speaker, for calling me to speak so early in the debate. For reasons that I have already explained to you, I shall have to leave the Chamber fairly soon, for which I beg the forgiveness of the House.

The motion is very interesting and I agree with much of it. I have been the chairman of the parliamentary Labour party's aviation group for some time and I have had the pleasure of working closely with the Conservative aviation group. We work harmoniously together, never acrimoniously, and always in the national interest. The hon. Member for Yeovil (Mr. Ashdown) is a relatively new boy in this House. However long he may be a Member of Parliament, he will never experience so much co-operation from both sides of the House, particularly from Back Benchers, as he has received over Westland. The Ministry of Defence has behaved badly over helicopters, not the Back Benchers.

I may now be attacked—nicely I hope—because I shall defend Nimrod in the strongest possible terms. My opening remarks are aimed at preventing unemployment and preserving technology but that argument is not meant to disguise the fact that I think highly of Nimrod. Technically, I am the only hon. Member in the Chamber who has flown Nimrod and used the equipment. I used it in a professional capacity. Hon. Members will probably laugh, because the last time I used air interceptor equipment was in 1945—possibly before some hon. Members were born.

At the end of the war we used the British mark 10 air interceptor. It was probably the best in the world and we lost it. That is the point that I wish to make to the hon. Member for Kingswood (Mr. Hayward). I do not take any comfort from his remarks about preserving technology. If the Nimrod equipment provided by GEC is not utilised, it is, in my book, another act of vandalism. I cannot do much about Nimrod in the sense of operating it, because I am old hat now, but it has been said that Nimrod produced too many returns, that the screens became cluttered, and that one could not pick up individual targets. That was basically the main complaint about Nimrod. I looked for that during the exercise. I must set the scene for this. Hon. Members may say "Ah, well, they have fed you a load of bull." But I am old enough in the tooth to recognise bull when I see it.

I operated the equipment with a squadron leader from the Ministry of Defence. We used the same circuit, so he knew exactly what I was doing and what he was showing me and there was no argument. I say clearly to hon. Members that the major objection to Nimrod was that there was a mass of clutter. That complaint was true, but is now no longer true. That problem has been resolved. In a crowded part of Britain, which shall remain nameless, we identified individual targets. That seemingly is Boeing's strongest argument against Nimrod.

I am grateful to the hon. Gentleman for his courtesy in giving way, and I apologise if I am raising a point which he may be about to come to, but can he be secure in his belief that the clutter has not been cleared up to such an extent that some of the targets that should have been within range are not now shown on the screens?

The hon. Gentleman makes an interesting point, but if danger comes at all, it will come from the south, east and north while the clutter occurs in the west. However, the clutter in the west satisfies my requirements.

The Secretary of State for Defence said:

"They both work. There's no question about that".

I did not say that; the Secretary of State did. He went on a different mission in Nimrod. He flew successful interceptions. As a former member of the Royal Air Force, I do not wish to foist upon the RAF any equipment which does not meet its staff requirements. This aircraft does. The only hazard is that the horizon that can be reached is not quite as great on Nimrod as on Boeing, but that difference is not of any great significance.

The hon. Gentleman has already given way once, and I thank him for doing so again. He knows that we are both joint signatories to the early-day motion which now, with the Labour motion, has more than 100 signatures on behalf of Nimrod.

Does the hon. Gentleman agree that the detection range for Nimrod is slightly shorter by, say 8 to 10 per cent. because the AWACS system was originally developed on the west coast of the United States for very fast arriving Soviet aircraft coming from the east. The protection configuration for Nimrod is of a different physical requirement for the whole of the greater European theatre, and is therefore perfectly satisfactory.

Does the hon. Gentleman also agree that the disturbing thing about what the Secretary of State for Defence said about Nimrod working as well as Boeing is that Britain would have no chance of getting such a system adopted by the Pentagon and Department of Defence, because the Americans buy and support 100 per cent. American systems? They have done that overwhelmingly, as history shows. Above all, there is such a major difference in cost that the decision must be made in favour of Nimrod.

I congratulate the hon. Member for Harrow, East (Mr. Dykes) on getting his speech in quickly. I do not agree with everthing that he said, but I must confess that he reminds me very much of a wing forward coming round the blind side when I played scrum half. I should have learnt the trick of not giving way. Basically, yes the environments of, say, the North sea and the west coast are different and Nimrod has been built with that in mind.

I shall refer to unemployment later for good reasons, but I do not wish people to think that I am advancing this argument for the sake of saving money for other projects and I do not want to condemn Boeing. In all fairness, I must say that I have quarrelled with Boeing more than most people, basically, as the hon. Member for Kingswood knows, over the airbus industry. I deplore the fact that Boeing tends to say that it is subsidising the airbus industry. It can say that if it wishes, but it should not pretend that it is not very heavily subsidised by the Government. It is Boeing's pretence that annoys me, not its aircraft. AWACS is now rather old hat. It is getting rather long in the tooth. One can modify and upgrade equipment to a certain extent, but there comes a point when one has to start from scratch. The aircraft that I flew in the war were modified. The poor old Mosquito was modified until it was hardly recognisable. One can modify and upgrade too far. The advantage of the GEC system is that it is a new system which possesses tremendous potential for development and improvement. I have a funny feeling that the hon. Member for Ruislip-Northwood (Mr. Wilkinson) is about to rise.

To put matters in perspective, does the hon. Gentleman not recognise that the Nimrod mark III AEW was launched in 1977, a year before the NATO AWACS programme was launched by our European friends in NATO, and yet the NATO AWACS came into service in 1982, which was the year in which the Nimrod mark III should have become operational? That is the difference in what has been achieved.

That is the one point that I will concede to the hon. Gentleman. The time factor has been scandalous. Two groups of people must accept responsibility for that. GEC must accept its part of the responsibility and the Ministry of Defence must also accept responsibility for moving the goal posts. Responsibility is not one-sided. I share the hon. Gentleman's anxiety about the delay, but we are talking about the present. The Nimrod aircraft will perform efficiently, will do what is required, and will meet the requirements. I have praised the aircraft and its system. Above all the aircraft has been paid for.

Recently, the Chancellor of the Exchequer has been belabouring us about the need to support exports. But there is no export potential for us in the Boeing AWACS. We could export our electronic capability for use in American aircraft, and in that respect the export potential is good. For that reason, Nimrod should be supported. However, I would not support an aircraft that did not provide the necessary protection for the boys flying it.

Contrary to what the hon. Member for Kingswood said, I believe that if we do not order Nimrod we shall lose that technology. Moreover, it costs an awful lot of money to keep people unemployed; a substantial amount of public expenditure is involved in it. But if we did not pay unemployment benefit, to those made unemployed they would probably be attracted overseas, and I believe that those skills must be retained in Britain.

Perhaps I can clarify what I meant to say. I did not want to suggest that that specific technology would not be lost. But I believe that some people have exaggerated the situation, saying that if we did not get the order it would be a comment on British defence technology as a whole. I concede that there would be a problem for this specific technology.

That just goes to show what a reasonable bunch of people we are in the all-party aviation group. I accept the hon. Gentleman's point.

We have some massive gaps in our defences. We may now start arguing about the figure. How much more will the AWACS system cost compared with Nimrod? A reasonable figure would seem to be about £500 million. However, as soon as I say that, someone will probably disagree. No fluttering of light has come into the Minister's eyes, but perhaps we should settle for £450 million.

That amount of money would provide a lot of conventional weaponry in this country, and that is what we desperately need. I do not like the sort of headline that states, "Decision on assault ship awaits a £250,000 report". The Government commission reports when they should be commissioning ships. The problem is that there has been delay after delay, and our shipbuilding industry has suffered. Our ability to land assault ships has been substantially reduced.

Will the hon. Gentleman give way?

An intervention will take up my time, but I certainly give way.

The hon. Gentleman will realise, I am sure, that Conservative Members and no doubt the Government as well are deeply committed to the Royal Marines and that particular capacity, but the assault ships that we have at the moment have a life until the mid-1990s. Surely it is far more sensible for the Government to commission a proper report and to come up with the best, most cost-effective, proper and effective solution than for them to go ahead and build ships at this stage, when they are not now wanted.

I suppose it shows that the Ministry of Defence is flexible in that it cancelled those ships at one time, and preserved them just in time for the Falklands war. It had a deathbed conversion. The Navy still needs more ships, but instead it gets feasibility studies. Feasibility studies are all right if time is on one's side. In 1939 or 1940, we had Spitfires, which were first-class aircraft, and Hurricanes. They were not feasibility studies but real aircraft. Our problem was that we did not have enough of them. That is the problem now with our conventional defences. Feasibility studies are still being carried out.

I think that I have made the case for Nimrod, and at least the House knows where I stand on that issue. I am not talking about a mock-up; I actually flew in the aircraft. During both exercises the equipment worked to the air staff, not target, requirement. When we come to air staff targets, we enter a whole new sphere. I was confused, because I thought that Westland made the W30 to meet air staff target 404. Then somebody said that the target was not what was really wanted, and that it was the requirement that was needed.

Let us leave out the political battles. After all, the Conservative aviation group went to see the Minister of State for Defence Procurement about two years ago, just as the Labour party aviation group did. He was warned about what would happen. Suddenly everything happened, and we had one hell of a row about helicopters. However, Back Benchers on both sides of the House had given warnings, so the Ministry could not say that it did not know.

The Ministry then put two problems before the country. First, Westland, a high technology helicopter industry, found itself in difficulty. Secondly, the armed forces were denied the helicopter support that they required. In response to the point made earlier by the hon. Member for Northampton, North (Mr. Marlow), I should point out that paper helicopters do not defend people in battle. If troops have to be moved up quickly, a working and up-to-date helicopter is needed, not one that is years out of date.

Westland has recovered quite well, but not thanks to politicians. Our track record on defence is not good, but Westland has pulled itself up by its bootstraps and now deserves support and orders. The hon. Member for Kingswood said that if we ordered in advance we could order helicopters now that would be of great value to the Army, in support, using substantial amounts of Westland technology and the RTM322 engine, which would seem to be a superb winner. Consequently, the Ministry may have an obligation to bring forward some orders for Westland. The company is owed that.

I strongly support what has been said about HOTOL. We have too often taken the lead and produced designs that we have then thrown away. If, at the end of the day, money is required to push the concept ahead faster, it is well worth it. Some of that money could come from the savings that will follow fitting GEC avionics into existing Nimrod aircraft that have already been paid for.

Back Benchers on both sides of the House were right about the new fighter trainer and the Government were wrong. What we said about the PC9 and the delay in the provision of Tucano was absolutely right, and the latest figures prove that. British Aerospace is delivering. My hon. Friend the Member for Kingston upon Hull, North (Mr. McNamara) is going there on Monday when the first PC9 will be delivered and the Saudi airforce will get it.

The aircraft that we chose, I think because of a cunning aerial manoeuvre which won the hearts of many people, is a long way behind. The Minister should sometimes listen to his Back Benchers. If Back Benchers on both sides of the House are united, they are probably right and have probably received well informed advice.

The Minister should go for Nimrod. Some of the money that is saved by buying Nimrod should be put into HOTOL. The Government cannot rethink their decision with regard to the fighter trainer, but it was the wrong one. Having helped to cause some of the problems at Westland and as they have now been put right, the Government should ensure Westland's high technology, especially in view of its high technology blade and the possibility of a new Rolls-Royce engine going into the helicopter. If they buy British, the Government will find that the exports flow.

I congratulate my hon. Friend the Member for Kingswood (Mr. Hayward) on introducing this important debate. It is vital that our Armed Forces are supplied with the best and most technologically up-to-date equipment. It is equally important that we have an effective, efficient and successful, especially in terms of exports, defence industry.

Opposition Members might say that it is immoral to export weapons of war. Maybe they say that in their constituencies as well, where we enjoy such a successful defence industry. Sadly, the world is not a safe place and there will be armies and defence forces which require equipment. As long as that is the case, I for one believe that it is more than proper—it is right and beneficial—that they should enjoy the opportunity of buying British equipment, and the better that equipment is, the more satisfactory it will be.

We have addressed the important subject of airborne early warning. I do not know what the solution to the requirement is. I do not know whether it should be AWACS or Nimrod. With respect, I believe that the hon. Member for Eccles (Mr. Carter-Jones), despite his great eloquence, does not know what the solution should be either. I also put it to my hon. Friend the Member for Harrow, East (Mr. Dykes) with the greatest respect, because I have the greatest respect for my hon. Friend, that he and the 100 hon. Members who have signed the various early-day motions, do not and cannot know, either. What I do know is that this is a very important requirement and that it is of the essence that we get it right. Airborne early warning is the system by which we would know whether a surprise attack on the United Kingdom was likely to take place. It is vital that we have in position in the sky a system in which we can have the utmost faith. If we get something which is not the very best—which is adequate—bearing in mind the circumstances in which it could be required, it could be the death of the United Kingdom. It is therefore vital that we get the right solution.

When looking for the right solution, we have to ask of both systems, "Does it work?" I do not know. I do not have the skills, knowledge or ability to assess whether they work. Do they work?

I shall be brief this time. I am sure that my hon. Friend agrees that our right hon. Friend the Secretary of State for Defence confirmed on "News at Ten" last Friday that Nimrod works as well. With that confirmation, we know that we are making a rational decision between the expensive AWACS system, which had teething troubles for the first six years, and a much better system which has enormous export potential and is British.

I am sure that, when the decision is made, the effectiveness of Nimrod will be taken into account. I am sure that Nimrod will do an effective job, or my right hon. Friend the Secretary of State would not have said so. I am sure, however, that my hon. Friend agrees that it is of the essence that we have the very best.

As the hon. Member for Eccles said, the Nimrod system used to have a great problem with clutter. One could see targets, and objects that were not targets as well. The hon. Gentleman talked about looking to the east and looking to the west, but if one clears up the screen to the extent to that one clears up the clutter, it is possible that the target, whether coming from the east or the west, will not appear on the screen. I do not know, and I put it to the hon. Gentleman that he does not know either—perhaps he has some miraculous way of knowing—whether that problem has been solved. If so, perhaps he will tell the House.

I most certainly will. The one thing that the hon. Gentleman must realise is that part of the clutter is caused by slow-moving equipment. If one is trying to intercept a cruise or stealth-type machine, it develops a tail. One looks for something which moves quickly and develops a tail. I am sorry to have to give the hon. Gentleman a lesson, but that is the difference between a fixed and a moving target—a moving target shows a tail and can be clearly identified.

I thank the hon. Gentleman for the lecture. I spent three years at university being taught engineering. I am not saying that I learnt anything, but I was taught. What the hon. Gentleman says is probably correct, but there are other aspects of the technology and of definition. I am not saying that the baby has been thrown out with the bathwater, but the hon. Gentleman does not know whether it has or has not, either.

The hon. Gentleman said that Nimrod has a lesser horizon than AWACS. There is a difference in the geometry. The radar antenna is central with AWACS and there are antenna at both ends of the aircraft with Nimrod. I do not know, and the hon. Gentleman does not know, whether that difference in geometry has different characteristics with regard to the effectiveness of the two systems, but that factor must be taken into account.

The hon. Member for Eccles said that AWACS is out of date and that it is not the sort of system that can be modernised and brought up to date. Perhaps he is right. Maybe he is wrong. I am quite sure that the Government, the Cabinet and all of the people who are scrutinising these two options will consider that aspect carefully. I am not trying to run Nimrod down. The hon. Gentleman spoke of on the one hand, but we should consider the other. Nimrod is based on the Comet aircraft, which I think was built after I was born, but I was born before the hon. Gentleman was flying an aircraft. It was not that recent.

The hon. Member for Eccles also said, as others would put it, that a lot of money has been spent on Nimrod. If money has been spent, that water has flown under the bridge.

No.

If the hon. Gentleman were in business or commerce and he bought a bit of machinery for his factory last year and it was doing a good job and a new piece of machinery came along with he could finance and afford to employ the labour for and, after employment and interest costs he would still save some money, the best thing that he could do is dispose of the old machine for the most money that he could get for it. The same applies here, if one has spent money that money has gone and it is not retrievable. What one is looking at—

rose—

If I may just finish my point. What one is looking at are the future costs. The future costs, taking into account the disposal costs of what one has got and the disposal potential of what one has got. It is the future costs that one has got to look at.

I must make it very simple for the hon. Gentleman. We have got 11 arcraft that have been paid for. We do not have to write them off, we have got them.

of course the hon. Gentleman is right. If one is looking at building Nimrod from today it will obviously make it less expensive than it would be if we did not have those aeroplanes. The point I am making is that it is the money that one has got to spend from today—to get to the solution—that is the financial cost that one should look at. That money has gone—one cannot retrieve it. It is the on-cost from today—we start from today. I will not make a racialist remark about Irishmen.

We come to the question of the British or United States solution. I think we all know in the House that these multibillion projects are not as simple as that. If we have what is essentially a British solution it also has a large foreign component and if we have what people think to be a United States solution that also would have a massive British content. If one speaks to Racal or Plessey about AWACS they start watering at the mouth. They see a very great opportunity for them to be involved in this project. It is not as simple or as straightforward as that. I think that the hon. Member for Eccles would know that. The hon. Gentleman talked about employment.

I feel absolutely certain that on the question of offset-arrangements there is a great deal to be gained for British companies out of AWACS. The difference is that if we take AWACS we shall be building technology invented elsewhere but if we take the Nimrod option we shall be using British technology. On the one hand, we would be basically bolters and pinners of other people's technology but on the other hand we would be developing our own. Can the hon. Gentleman not see which is to be preferred between those two options?

I agree with the hon. Gentleman as far as Nimrod is concerned and that part of avionics that is particular to airborne early warning systems. Of course, that is British technology and of course, it is preferable if we can use British technology, particularly if there are great export opportunities. But one cannot yet say that. I am sure, all things being equal—I am sure the Government would believe, all things being equal—that if Nimrod does the job, it is Nimrod that we must have.

It does the job, the Secretary of State said so.

Well, we will see, we will see. That may be the case and the hon. Gentleman may hope that it is the case, but I start from the simple position that I hope that we get the best possible solution. I would move on from there. For obvious reasons one would hope, possibly, that Nimrod is able to produce the best possible solution. We do not know yet and I put it to the hon. Member for Yeovil (Mr. Ashdown) with great respect, that he does not know either.

In terms of technology, the early warning system is not the only technology on the aircraft. Racal and Plessey, in their own ways, are on the frontiers of technology with regard to other parts of avionics within the system. If the AWACS system were to be developed there would be great opportunities. I am not necessarily talking about the offset employment opportunities but the technological opportunities for British companies, together with Boeing, to develop further along the frontiers of technology and to gain technological expertise and further export markets. That would benefit Britain later on.

Let us consider the offset arrangements. Yes, of course, Boeing has offered very generous offset arrangements but I think that, to a certain extent, one is sceptical about that offer. These offers may be made, but given the position of Congress and given the difficulties of the United States system in putting orders overseas, whatever the company says, can we really be assured that it could deliver what it is promising? Again, this is something I am sure the Government will be scrutinising as effectively as it possibly can.

Right. If both work and if Nimrod is as effective as AWACS—as hopefully it will be, as I said to the hon. Member for Yeovil—and as that is the most British solution and if it is an effective solution, so be it. Hurrah! Let us have Nimrod. But I put it to the House that we do not yet know. A British Secretary of State for Defence would have all the evidence before him and would put that evidence to the Cabinet. It is impossible that he would go for a United States version, or basically the United States version, if he thought that the British version was better and would do the job. That will not happen. If the Government come up with AWACS there must be a very good reason for coming up with AWACS, for to do so will obviously be politically difficult. The Government will only do that if it is the best solution. They will not do it for any other reason.

I would like to address myself briefly to one other point and that concerns the British Army of the Rhine and the equipment for the British Army of the Rhine. This might be music to the ears of the hon. Member for Eccles, I am not sure. I take the view, without a great deal of knowledge, perhaps instinctively, that we have reached the stage—a watershed—as we reached a watershed between the horse and the tank. We reached that watershed rather too late as we had horses for too long. We are now reaching a watershed between the tank and the helicopter.

I have been told by people who I believe are objective and who have the knowledge to put the point, that given modern methods of battlefield surveillance, one would be able to see where all the tanks are from a very long distance. One can get helicopters a long way quickly and concentrate them. Traditionally, the tank, in attack, has been used in a concentrated format, to puncture holes through our defences or the enemy defences. One has got to get the tanks together—concentrate them together, to use them to the most effect. The concentration of tanks, slowly lumbering into position, would be seen "for a long time from a long distance". The build-up would be known in advance.

Helicopters, with a much greater range than the tanks, with highly effective missiles, developing every day, could be in a position well out of range of the tanks. They would be safely—as far as anywhere on the battlefield is safe—and securely over their own troops, ready to take out each and every tank without any intervention from the tanks, though of course there might be other forms of aerial intervention. That technical problem could be dealt with, to a large extent, also by the helicopters through stealth and other means.

We have just bought a regiment of Challenger tanks and I believe that that probably should be the last regiment of tanks that we buy, particularly for an offensive role. I do not say that tanks do not have some defensive role. If we look to the future and the modern cavalry I believe that the modern cavalry will not be based in tanks but in helicopters. After all, a helicopter is much more like a horse than a tank. If one is after a bit of esprit de corps and élan in the cavalry, perhaps the helicopter is more appropriate than tank. Farewell the tank, welcome the helicopter.

Let me make a few comments, which one would expect from the Labour Benches, but may be of more interest coming from this side. I wonder whether we really ought to look at the way we form some of our regiments. There is the idea that some of our cavalry regiments should be outposts for some of the less intelligent sons of families that own large slices of counties and have double-barrelled names. I think that we ought to move on from there and we ought to be more professional in our approach as to how we officer some of those regiments.

I believe that our Army is now a very professional Army and I believe that some of the social aspects that have been carried forward from the past are things that we should, perhaps, look at a little more carefully in the future.

I wanted to take part in the debate because I suspected that there would be almost unanimous agreement on the motion and I wanted to put some arguments against it.

Because of what I have to say, I should make it clear that I am not a pacifist. I served for five years in the Royal Navy during the war and I have never looked back on that service with anything but satisfaction. I agree that every country has the right, indeed the duty, to arm and defend itself, but I oppose the expansion of the arms exports trade.

In saying that a country must defend itself, I do not say that it must necessarily use nuclear weapons. There is a glib cliché that nuclear weapons have preserved the peace for 40 years, but I do not believe that that is the case. One can believe that only if one postulates the theory that for the past 40 years the Russians have been poised to walk into this country. I have never had any illusions about the Soviet system of government, but I do not believe that that is true.

Does the right hon. Gentleman accept that peace has been maintained for 40 years?

There is no argument about that, in the sense that no major war has broken out. However, some people who defend the Common Market argue that it has been responsible for ensuring that there has been no European war. Those who defend the nuclear deterrent make the same claim. I do not look at the Russians through rose-tinted spectacles, but I do not believe that for the past 40 years they have been poised to invade the United Kingdom.

At least Conservatives are frank about wanting to expand arms sales. Unlike the Labour Prime Minister who appointed a Minister for disarmament and within a month appointed a salesman to go round the world flogging arms, the Conservatives are open in their wish to increase arms sales.

I find the mention of developing British technology rather odd because we in Scotland have suffered from what the hon. Member for Northampton, North (Mr. Marlow) says would be the result of ordering the American aircraft. Although Scotland has had many military installations dumped on her soil, with effects on the environment, the economy and our way of life, we have had little share of defence contracts, even those for the defence of the United Kingdom. We do not have the percent.age share that our population would justify.

I do not have the knowledge to make a judgment between the Nimrod and the AWACS, but Boeing says that it will produce far more jobs in Scotland if its aircraft is chosen. If it is a question of jobs, I look for an advantage for Scotland and I will do no public relations work today on behalf of the Nimrod.

The hon. Member for Eccles (Mr. Carter-Jones) said that the Government should be commissioning ships and not reports. The Government have shown little concern over the disappearance of the Merchant Navy, but the Royal Navy cannot be maintained without a sufficient merchant fleet. The trade aspect might be disregarded, the employment aspect might be disregarded, but surely this Government, of all Governments, with their dedication to defence—they make a great thing of it and there is substance in their claim—should not be indifferent to the disappearance of the Merchant Navy, because we are still a maritime nation and without a Merchant Navy the Royal Navy will not have the people to man its ships in a war. In the meantime, the maintenance of the Merchant Navy will provide work for our hard-hit shipbuilding industry.

The hon. Member for Kingswood (Mr. Hayward) mentioned the Chinook helicopter. There has been a loss of confidence in that machine following the recent tragic accident in the Orkneys. I have written to the Department of Transport following representations made to me by my constituents who use that service to the oilfields. They say that the helicopter should be phased out and I understand that it is not used for civil purposes in the United States. I hope that the Minister will note their representations.

It is not true to say that arms exports result in more jobs. The opposite is happening. The value of arms exports has risen substantially recently, but the number of jobs has fallen. Britain is the fourth largest exporter of arms after the United States, the USSR and France and it is immoral that some arms are diverted to countries such as Chilek, Iran and Turkey that have appalling records. It is an immoral trade which raises tensions and increases danger. It puts an arms burden on Third world countries with meagre resources. I decline to support a motion which

"welcomes the Government's continuing support for the industry".

I do not know what it is about this season of the year and its effect on colleagues, but a year ago an outbreak of mass hysteria seemed to affect the collected ranks of hon. Members and, particularly, right hon. Members and this year a similar thing has happened over Nimrod and AWACS.

In both cases, the debates have been characterised by a plethora of hyperbole and wild exaggeration. Arguments in favour of patriotic solutions have been advanced, with few or no technical facts to back them up. Such behaviour does us discredit.

In both cases the relevant experts have clearly come up with appropriate policies and we saw yesterday that the judgment of the board of Westland was vindicated in the return of £26 million profit by Westland plc over the past year. This is hardly surprising in view of the excellent quality of management there and the commitment and dedication of the work force.

We are now considering the future airborne early warning requirement of the Royal Air Force. The defence equipment committee of the Ministry of Defence has had all the facts, there has been an extremely thourough evaluation over the past six months and the technical conclusions are patently clear. Only the Boeing E3A AWACS meets in full the necessarily demanding specifications of the RAF for an airborne early warning system.

Furthermore, Boeing has secured three leading British electronic companies as partners. Plessey, Racal and Ferranti all stand to gain substantially from that arrangement and, according to the offset agreement, the Americans will purchase in the United Kingdom £1·30 of goods and services for every £1 that we spend on procurement of the AWACS in the United States. We shall also be able to share in the future enhancement of the AWACS system over its whole life in service not merely with the RAF, but with other air forces, such as those of the United States, Saudi Arabia and, potentially, France.

The French air force dimension has been gravely overlooked. When Mr. Chirac came to the Assembly of the Western European Union last week I advocated that the French air force and the RAF should jointly buy AWACS. The aeroplane has already been certificated for the Franco-American CFM56 engine and it will be much more economical than the AWACS currently in service in the USAF. The French chief of air staff has come out publicly and strongly in favour of the Boeing solution, saying:

"The crux of the matter is low and very-low-altitude detection. And at this stage only the E3A Sentry responds to the Armée de 1'Air's operational needs within reasonable delivery dates."

The needs of the French air force and those of the Royal Air Force are not so dissimilar as to lead to a different judgment. That is why the Royal Air Force unanimously recommended that Ministers should procure AWACS. If they do not do so, they will be irresponsible. The needs of the country's air defence are absolutely paramount. They will be more crucial if there are INF arms control reductions which, if so, will leave the country just as exposed to manned, penetrating bomber attack. Therefore—

With permission, Mr. Speaker, I wish to make a statement.

In the statement I made to the House on 25 November I undertook to make public the reports of the inspectors who investigated the damage to, and subsequent loss of, the vessel Kowloon Bridge on 23 November. I have now received the first report from the inspector who examined the vessel when anchored in Bantry bay on 20 November, and I have placed a copy of his report in the Library. A second report has been commissioned into the subsequent loss of the vessel, which will similarly be made available to hon. Members as soon as it is received.

In my statement I referred to the possibility of a link between the damage suffered by the Kowloon Bridge and the loss of the Derbyshire, one of her sister ships which disappeared in the Pacific ocean in 1980 with the loss of 44 lives. I undertook to consider whether, in the light of the loss of the Kowloon Bridge, there might be a case for holding a formal investigation into the loss of the Derbyshire.

The inspector's report contains details of cracks and distortions in the deck and hatch coamings of the Kowloon Bridge and of other damage sustained during her voyage across the Atlantic. The report concludes that there was no evidence of design defects or of structural failures of the kind that were suggested might have been the cause of the loss of the Derbyshire. However, I recognise that more than one interpretation of these findings may be possible. I also recognise that the subsequent loss of one of her sister ships has increased public concern about the unexplained loss of the Derbyshire, which was reflected by hon. Members on 25 November.

In these circumstances, I have decided that a formal investigation into the loss of the Derbyshire should now be held. Arrangements for the investigation will be made as soon as possible.

I thank the Minister for his statement. From the evidence that I have received, I agree that different interpretations could be placed upon the inspector's findings. The Derbyshire was lost without sending a Mayday call, and with all hands on board, six years ago. Since that time, the families of those on board and the seafaring unions have attempted to persuade, first, the Department of Trade, and then the Department of Transport to conduct a formal investigation into the loss of that vessel. It has been a long, trying and difficult six-year campaign.

Although nothing can compensate for the loss of the 44 people who died on board the Derbyshire, this news will be the best Christmas present that the families of the crew of the Derbyshire could receive. On behalf of the seafaring unions, the families of those who were lost aboard the Derbyshire and hon. Members, I thank the Minister for his statement and for conceding that a formal investigation is required.

I thank my hon. Friend for his courageous decision and for the speed with which he took it. My hon. Friend the Member for Eastleigh (Sir D. Price), who is not able to be present, also thanks the Minister on behalf of his constituents whose relatives drowned on the Derbyshire.

There has never been an attempt to seek recriminations or financial gain in our request for a formal investigation, but, rather, that every possible stone should be turned over that could prevent a similar occurence with sister ships. I echo the words of the hon. Member for Wigan (Mr. Stott). The news of the investigation is the best possible Christmas present for the families concerned.

I join the hon. Member for Wigan (Mr. Stott) in thanking the Minister for acceding to the pressure for an investigation. At the risk of sounding churlish, I hope that the Minister will put down a marker for the Department that, when a vessel of the size of the Derbyshire disappears without trace, it owes it to the families of seafarers to see that immediately an investigation is carried out.

Over the years, detailed inquiries have been carried out. This year, in March, a detailed report on the matter was produced. The only issue was whether a formal inquiry would produce new evidence about a ship that disappeared without trace. Today I said why we have taken the view that we have. There has never been any question of the Government not wishing there to be the maximum information about this disaster.

Seventeen of the 44 families who lost men on board the Derbyshire come from the city of Liverpool. For the past six years, many have pressed for an inquiry. I join other hon. Members in thanking the Minister for announcing this investigation. Many hon. Members have asked how on earth this ship got a certificate of seaworthiness in the first place. Does the Minister agree that, in general, with more British companies flagging out, standards will drop even further?

It is probable that the formal investigation will take place in Liverpool, which was the home port of the vessel. It is customary that such investigations are held in the home port. The classification societies or registries involved will not be affected in any way by flagging out. Obviously, from the point of view of insurance as well, which is largely based in this country, standards will be maintained in future.

I declare my interest as medical adviser to the National Union of Seamen.

I thank the Minister for his frankness this morning. Does he not think that seafarers suffer enough hardship and danger without extra problems being put in their way by ships such as the Derbyshire, which seemed to have some structural problem? The Kowloon Bridge has some structural problem, but I do not know whether it is the result of its fabrication.

The Minister was complacent when he said that flagging out has no bearing on the matter. The object of flagging out is to make more profits for the owners. I do not reject that; I do not object to profits. Even the new general secretary of the National Union of Seamen, Mr. McCluskie, said the same thing in an interview. He said that he does not expect companies to run their ships at a loss.

Does the Minister think that the goods that we export and import should be carried in ships made in Britain, which fly the British flag and which are manned by British sailors? Seafarers want a fair deal. The comparisons between our seafarers, and other seafarers are not fair. Will the Minister consider the reduction of our merchant fleet? It was once biggest and proudest in the world.

The hon. Gentleman has asked a perfectly fair question. The immediate question which it raises is whether obstacles are put in the way of seamen and whether what has happened over the past six years reflects the fact that there have been obstacles. I would argue that there never has been any question of depriving anyone of information. The problem has been how to obtain information about a ship that went down without any trace and whether a formal investigation would add to the information. That has been the only issue at stake.

As I am sure the hon. Gentleman knows, a great deal of flagging out, especially recently, has been with countries whose ships fly the Red Ensign—Hong Kong, Bermuda, and, increasingly, the Isle of Man. In those countries, the standards of the classification societies apply. I think, therefore that there is not quite the concern, that the hon. Gentleman perhaps imagines.

I join in the welcome given to the Minister's statement and I should like to echo many of the comments made by other hon. Members. I am sure that the hon. Gentleman will recall that he wrote to me about the Derbyshire only the week before the problems of the Kowloon Bridge arose. He stated all the reasons why a formal inestigation should not be carried out and the difficulties that might arise in such an investigation. Does the hon. Gentleman believe that it is now possible to overcome those difficulties and that this investigation will be relatively genuine?

The difficulties remain. There will now be a long process of formal investigation. I have to say that it is very difficult to see what new information will be forthcoming. Having heard what was said in the House, having noted the great feeling on both sides of the House and having looked at the inspector's report, I took the view—not that there was doubt perhaps in the Government's or inspector's mind—that there were different interpretations which led me to believe that there was not as strong a case for not holding a formal investigation. It was a balanced and very fine judgment. I have never felt dogmatic about this. I felt that the loss of the Kowloon Bridge just tipped the balance. I do not disguise the fact from the hon. Gentleman or from the House that there will be great difficulty in trying to investigate an event that took place six years ago when there is very little additional evidence.

Is not the truth of the matter that the Government are not very good about holding inquiries when it is possible that some of their friends in business might come out of them badly? Six years ago, the Derbyshire went down. Since then, the hon. Gentleman has been resisting any form of inquiry. The fact is that he should not be getting compliments for deciding to hold an inquiry. It should be plainly stated that it has been dragged out of him. The only reasons for the announcement are that another ship has broken its back and that my hon. Friend the Member for Wigan (Mr. Stott) and other hon. Members asked questions some weeks ago about the Kowloon Bridge and were able to inform the Minister that there might be some connection.

Will the hon. Gentleman give a guarantee that, when the inquiry is finalised, proper compensatory payments will be made retrospectively to all the families whose relatives were victims in the Derbyshire disaster?

The hon. Gentleman is not being quite his normal generous self. He said that the Government were defending some vested interest. I should like to know what vested interest that was. Was it, for instance, the good name of the British shipbuilding industry? One might argue about that. If it was compensation, to which the hon. Gentleman finally referred, he is absolutely up the creek.

Why?

Because, in respect of who is likely to have to pay compensation if the courts so decide, appropriate arrangements have already been announced. When Swan Hunter was sold by British Shipbuilders, the indemnification was made. What more can the hon. Gentleman require than that proper indemnification was made at the time of the sale? The hon. Gentleman is making, as usual, a hard political point which is totally unjustified and unmerited.

They sometimes say that timing in politics is all. The great advantage of being called at this time is that, occasionally, one gets the opportunity to make two speeches for the price of one. I shall not do that, but I shall continue the plea that I initiated before the ministerial statement at 11 o'clock.

There are certain similarities between the Nimrod AEW controversy and the Westland helicopter controversy a year ago. One linking strand is that defence equipment collaboration is not sufficiently well understood in the House. The Royal Air Force's role in airborne early warning was an ideal candidate for a collaborative solution. It is deeply regrettable that a collaborative solution was not followed. If it had been, there would have been great benefits of inter-operability, standardisation, reduced costs and the entry into service of an effective weapons system. AWACS would have them much earlier.

I pay tribute to the hon. Gentleman for his deep knowledge of this subject, for which I have great respect. Will he cast his mind back about 10 years? At that time I was a member of the Select Committee on Defence. The problem was that the Ministry of Defence could not make up its mind about the specifications it wanted for an early warning system. AWACS was developed mainly for use over large land masses. As a maritime nation, we wanted a system that could do the job over large sea areas. The avionics firms said to the Ministry of Defence, "Let us know what you want and we will supply it." What has happened?

As so often, the threat has evolved and become more acute, especially the threat of very low-flying, manned penetrating bombers and cruise missiles and, ultimately, there is the possibility of the Soviets acquiring stealth technology. We therefore need an airframe that has a much larger payload and the power generation to offer radar of sufficient size and effectiveness to be a satisfactory system throughout the life of a potential airborne early warning aircraft. This is the case for AWACS—an aeroplane with a 140-tonne maximum all-up weight at takeoff. It is not the case with Nimrod, which is an 85-tonne aeroplane. The size of the radar and power make a tremendous difference. The positioning of the Boeing AWACs Attenna on top of the fuselage rather than split fore and aft in the configuration of the Nirmrod 3 are all very much in favour of AWACS and have enabled Westinghouse to improve the capability of its radar. It has a continuing potential for improvement and enhancement. I am sure that Cabinet will take those factors into account.

Last week I had the honour to present a report to the Assembly of Western European Union on helicopters for the 1990s which was passed unanimously. I want to draw certain lessons from the report. We are all deeply conscious of the need for the Government to make certain key decisions on helicopter strategy. There must be much greater understanding in the Alliance as a whole of the importance of the helicopter in land-air operations. This was referred to by my hon. Friend the Member for Northampton, North (Mr. Marlow). As an aviator, I shall not quarrel with his expert judgments as a former member of the Royal Engineers. Nevertheless, the British Army has been slow to exploit that potential. In part that may be because the operation of helicopters has been divided between the Royal Air Force and the Army, but the adverse effect of that somewhat artificial division has been over-emphasised.

When the study of this matter is reviewed it is important for the optimum choice to be made on overall grounds—command and control, logistics and training—and not merely on administrative convenience and loyalty to a particular service. I am sure that my right hon. Friend the Secretary of State and his team will make that judgment.

Operational requirements and time scales must be much better harmonised. The independent European programme group is working well and has essential work to fulfil for helicopters. Above all, an initial study into the new helicopter for the 1990s, the NH90 programme, has been completed. The helicopter has potentially two variants—a tactical transport or light support helicopter and a helicopter for the new NATO frigate for the 1990s, the NFH.

It is not immediately apparent what the United Kingdom's interest in that aircraft is. Westland, rightly, wants to pursue the studies into it, is interested in it and its technical potential and may well participate. However, it is too early both for Westland and the Ministry of Defence to make an ultimate judgment on the programme.

More important for our country's helicopter industry is the decision that the Ministry takes on whether to procure a new light support helicopter. All hon. Members know that part of the reason for the Westland crisis last year was the failure of the Ministry of Defence to order more helicopters soon enough. In particular, there is a genuine need for new light support helicopters or new medium to light support helicopters.

I urge my hon. Friend the Minister to put to his colleagues in the Department the benefits of buying a Black Hawk with the RTM322 Franco-British engine as a replacement for the Wessex, which is in service with the RAF and the Royal Navy, and a transport version of the EH101 as a replacement for the Puma. The transport version of the Anglo-Italian EH101 would come into service sooner than the anti-submarine variant, which is more complicated.

If the Government could take those two decisions and come up with sufficient funding to order sufficient aeroplanes to make the orders worthwhile, this could transform the prospects of the Westland company, which has done well but which, nevertheless, has an evident gap in its order book until full production work for the anti-submarine warfare EH101 becomes available.

Finally, I ask my hon. Friends in the Government not to forget the importance of the associated industries to helicopter manufacture. They include avionics, electronics and the light turbine aeroengine industry. A great deal of Government money has gone into the RTM322 engine. I hope that the RTM322 will be definitely specified for the Agusta 129 Mark II light attack helicopter, which we all hope will be produced for the British, Italian, Dutch and Spanish armies.

It is a great step forward that our Army now recognises the need for such a dedicated anti-tank helicopter. The agreement on operational requirements which has taken place between the Italian and British general staffs is an example of what can and should be achieved. A negative example of the dangers in collaboration is seen in the so far abortive attempt of the French and Germans jointly to produce a new third generation anti-tank helicopter and, in the case of the French, a new anti-helicopter helicopter. The helicopter Apui Protection is the anti-helicopter helicopter and the helicopter Troisième Generation is the French anti-tank helicopter. The Panzer Abwehr Hubschrauber is the German version. In the anti-tank role all those aircraft will require the new third generation fire-and-forget Trigat missile.

The problem has not been a lack of political will, because during the past 10 years the French and German Governments at the highest level have tried to make the programme succeed, but the operational requirements of the Bundeswehr and the French army are manifestly different and it is impossible to reconcile them.

A great deal of progress is still to be made in arms collaboration. The AEW episode has shown us the dangers of trying to go it alone in expensive, sophisticated programmes which are of the greatest importance to our defence. There is a higher degree of security if a team of industrial partners is available from different nations. I wish that had been available and that we had participated in the AWACs from the start as some of our NATO European friends did.

The Government now have the opportunity for working out an effective helicopter strategy of great benefit to Westland, Rolls-Royce and our armed forces. It is overdue, but that is not to say that it will not be all the sounder for that extra time. I thank my hon. Friend the Member for Kingswood (Mr. Hayward) for the expert and well informed way in which he introduced this most timely debate.

I add my congratulations to the hon. Member for Kingswood (Mr. Hayward) on his timely choice of subject for the debate today. We should be particularly grateful because it looks as if this may be our only opportunity to discuss the airborne early warning system, if, as we understand, the Government are to announce their decision immediately before the Christmas recess.

I agree with the hon. Gentleman's thesis that it is probably unwise for politicians to produce snap judgments on something of this complexity when we do not have access to all the technical assessments, especially the views of the RAF. In 1977 I pressurised the Defence Minister, now Lord Mulley, to choose the AEW Nimrod. I must confess that in the past year or two there were times when I did not feel it appropriate to boast about that part that I played.

In trying to add up the balance sheet on this extremely complex issue, it is fair to say that from a technical point of view the Boeing AWACS would probably be the safe choice simply because the technology is tried and tested, it is generally in NATO use, and it may well be bought by the French, so the issues of standardisation and interoperability do not raise any particular problems.

It is also true that in terms of the jobs calculation Boeing has offered what appears to be extremely generous offset possibilities. That may well compensate for the 2,500 job losses that GEC and its sub-contractors would suffer, if the AEW Nimrod solution is not chosen. Major British firms, such as Plessey, Ferranti and Racal, see considerable opportunities in the Boeing AWACS proposal.

Some of those jobs would be created in areas of high unemployment, which desperately need that sort of support. Other hon. Members, especially my hon. Friend the Member for Yeovil (Mr. Ashdown), have drawn attention to the fears that these replacement job opportunities would be in fairly low-grade trades and skills and that the high technology involved in the GEC avionics operations may well not be replaced as a result of the offset proposals.

As the Boeings would not be swiftly available, we should presumably have to borrow American planes for the early years of the programme. The purchase of nine Boeing planes would also cost about £1 billion. As the hon. Member for Eccles (Mr. Carter-Jones) eloquently pointed out, 11 airframes are already available for the AEW Nimrod project and £1 billion has been sunk into avionics research in the past nine years. There is also at least a possibility of export opportunities. I think that it is generally accepted that if we reject the Nimrod option we shall pay the penalty of breaking up the design and hi-tech teams and losing their expertise. The hon. Member for Kingswood suggested that that expertise could perhaps be replaced in other ways, but initially it would be broken up. That, more than anything else, brings me down on the side of Nimrod as the more attractive proposal, provided—this is a very important proviso—that it can meet the detailed performance requirements of the RAF.

I am not so reassured as others have been by the Secretary of State's protestations that both systems work. As this stage of consideration, I should damned well hope that they do. I should hope that we would not be considering a system that did not work. The question is not whether they work but how well they work and whether one offers a substantial advantage over the other in terms of performance. If there is little to choose between them on technical capabilities and performance, I believe for a variety of reasons that we should stick with the British solution.

A procurement issue that has not been mentioned in the debate so far—the DROPS system of battlefield ammunition transporters—has caused considerable concern on both sides of the House. I understand that my hon. Friend the Member for Yeovil intends to explore this in greater detail if he catches your eye, Mr. Deputy Speaker. I therefore content myself with saying that there is a great deal of concern and suspicion that will not be allayed until there is a full and thorough inquiry into the whole issue.

The motion rightly draws attention to arms sales and exports. The hon. Member for Kingswood was right to stress the economic importance of our ability to export arms, but he will appreciate that the subject arouses controversy. There is always concern about the role of nations selling arms around the world and especially about developed nations selling arms to the Third world. I accept that those arms are sometimes needed for national defence, but all too often one feels that resources that should be used for other purposes are being used for the purchase of arms for not altogether worthwhile reasons. There is also concern about arms sales to nations with bad human rights records, especially if the equipment concerned could be used to suppress internal dissent. There is growing concern, too, about the activities of private arms dealers throughout the world, and especially those based in this country. On all those issues, the Government's position is less clear than some of us would like.

With regard to the Government's position on the supply of arms in the Iran-Iraq conflict, we appreciate that there is a problem in terms of contractual obligations. We understand that the supply of spares for the Chieftain tank and the Scorpion armoured vehicle arises out of contractual obligations entered into in the days of the Shah. Nevertheless, that seems a very long time ago and we cannot ignore the impact of those supplies on the Iranian war effort and the role that they play in that sad conflict.

There is also concern about the role of the International Military Sales Organisation. We read in the press that between 20 and 31 October a team of Iranian officials visited this country and had extensive discussions with that organisation, which is a wholly-owned subsidary of the Ministry of Defence. The talks seem to have covered issues such as infrastructure contracts which had been in existence for some years but which had been in abeyance. It is suggested that those contracts relate to matters such as repair bays and garage facilities for the Chieftain tanks. If there is to be further support for the Iranian effort in terms of that kind of back-up it should be publicly acknowledged by the Government. It is not good enough to argue that although the IMSO is a wholly owned subsidary of the Ministry of Defence it is entirely independent. We cannot accept that type of approach. We need to know exactly what is going on. We have seen from across the Atlatic the dangers that flow from supplying arms to the Iranians and trying to keep it secret. I hope that the British Government will be absolutely clear and open about any arms deals with the Iranians.

As a footnote to that, it would be interesting to hear the Minister's comments on reports that this country has supplied Chieftain spares to the Iraqis to enable them to re-use captured Iranian tanks in the conflict. If that were true, it would be a sad instance of Britain supplying both sides in a conflict which to many of us seems pointless and which has unnecessarily claimed hundreds of thousands of lives.

There is also concern about the role of the Iranian team based in London, which seems to have a vast shopping list of military hardware of all types. The supply may not come directly from the United Kingdom, but it is certainly masterminded in London. Again, there is a feeling that the Government are turning a blind eye because no British laws are actually being infringed. It would be interesting to hear the Government's view on the activities of that group.

A similar issue has arisen in relation to arms supplies to Libya. At the beginning of this week there were reports of the purchase by Libya of submarine lifting gear produced by a Clydeside company. This is apparently intended to equip a Libyan naval base near Tripoli. According to media reports, the company concerned consulted the Department of Trade and Industry and was advised that no export licence was required because the supplier to which the equipment was going was an Italian company. That may be so, but the entire work force at the yard knew that the end customer was Libya. In those circumstances, it seems strange that the need for an export licence was not even considered. In The Guardian on 8 December a spokesman for the Department of Trade and Industry was quoted as saying:

"We have a normal trading relationship with Libya, though it is doubtful that equipment which could have a military use would get a licence."

He went on to say:

"Sometimes the equipment is not easy to define."

I accept that there are problems in defining when and which equipment could be used in a military situation, but as the equipment in question was destined for a naval base near Tripoli and as the firm concerned was supplying similar gear for use in Polaris submarines and, potentially, Trident submarines, it is hard to accept that the potential military use was not obvious. Bearing in mind what the Government have rightly said about Colonel Gaddafi's role as the godfather of a great deal of international terrorism, it is strange that the Department of Trade and Industry does not fall over backwards to be absolutely firm and clear that we should not be supplying military equipment to the Libyan Government. The order was apparently placed in March 1985, well after the embargo on supplying arms to Libya was introduced. The equipment was due to be collected in December 1985 but was not shipped until November 1986. It would be useful to have the Minister's comments on that.

The hon. Member for Kingswood has painted the traditional rosy pictures of the opportunities that SDI offers British firms and academic institutions. In doing so he was echoing some of the early high hopes that SDI meant a lucrative gravy train for a range of companies in Britain. He was echoing the suggestions made by the right hon. Member for Henley (Mr. Heseltine) when he was Secretary of State for Defence, when he said that about $1·5 billion worth of orders were available to Britain through the SDI programme. General James Abrahamson, the head of the SDI office, talked in the summer of 1985 of hundreds of millions of dollars being available to Britain through the programme.

The Memorandum of understanding, which was signed in December 1985, did not involve any formal guarantees of how much money was to be involved. I understand that so far the contracts amount to the princely sum of £25 million for British firms, which is a long way short of the $1·5 billion prospectus that we were offered a year or so ago. Most of the orders that have come to Britain so far are for theoretical studies in areas such as computers, sensors, command control systems and potential counter measures. It may be that these theoretical studies will lead on to orders for hardware, but as the song says, "It ain't necessarily so". A good deal of concern is being expressed among some United Kingdom firms that their commercial research is being exploited by some of their American competitors with no guarantees of contracts coming at the end of the operation.

One independent body, the Strategic Research Initiative, is warning United Kingdom companies that are involved in SDI research that they risk losing copyright and patent rights. It would be useful if the Minister could tell us whether there is concern on the Government's part about the progress of SDI opportunities, whether the position is likely to improve in the foreseeable future and whether the original target figure given by the then Secretary of State, the right hon. Member for Henley, is ever likely to be achieved.

I shall echo what has been said about the need for much tighter European co-operation in defence procurement. It would have been better if the issue had been included in the motion. We talk constantly about the need for co-operation and we agree constantly on the principle and how necessary it is to implement it. Unfortunately, we make only slow progress towards achieving this element of European co-operation.

The hon. Member for Ruislip-Northwood (Mr. Wilkinson) talked about the Western European Union, and I have been a member of the North Atlantic Assembly for the past 10 years. Throughout that period the Assembly has produced reports on the need for greater European co-operation in defence procurement. It has constantly agreed about the principle and it was discussing the issue long before I came on the scene. I suspect that if I disappeared from it tomorrow, it would continue to discuss the issue for years. As I have said, it is unfortunate that we make extremely slow progress. There is pressure on defence budgets throughout NATO and it is essential that we co-operate more. If we want to see a genuine two-way street across the Atlantic and more equal defence procurement opportunities, we must co-operate in Europe. The two-way street currently is, in reality, one great highway from the United States to Europe with 14 individual winding lanes from Europe to the United States. If we want to sell in the American market, we must get together and work together in Europe.

We have had some successes in collaborative ventures, but even when we go down that road there is often an insistence on maintaining national production lines. We must accept that we cannot continue trying to maintain productive capacity and capability at a low level in virtually every type of weapon system. Rationalisation is inevitable. I know that there are problems when national security is involved. I know also that there are difficult issues to be faced involving economic considerations, especially when there is such high unemployment in western Europe and rationalisation means jobs going to one country rather than another. As I have said, however, we cannot continue avoiding the need for greater rationalisation and specialisation in defence given the enormous cost of research and development.

I hope that one of the Government's priorities will be to produce some real progress towards more co-operation within the European pillar of NATO instead of merely talking about it, adopting resolutions and reaching agreements. If we do not make progress we shall not obtain value for money from our defence investment, and that is needed desperately.

I am pleased to be able to contribute to the debate immediately after my hon. Friend the Member for Woolwich (Mr. Cartwright). I endorse wholeheartedly his comments about European co-operation and the sensible approach that he outlined on Nimrod and AWACS. I congratulate the hon. Member for Kingswood (Mr. Hayward) on introducing a timely debate which has already borne a considerable amount of fruit. I thank the hon. Member for Ruislip-Northwood (Mr. Wilkinson), who is not now in his place, and the hon. Member for Eccles (Mr. Carter-Jones) for their mentions of Westland. I hope that the Minister listened to their remarks with great care. The hon. Member for Ruislip-Northwood made some powerful and telling points of which I hope the Minister and the Government will take account. They are points on which I hope to touch briefly.

The hon. Member for Eccles said that the campaign to get the Government to see sense about Westland has not been run, happily, on a party-political basis. Hon. Members on both sides of the House have made a considerable contribution to the campaign and it is appropriate for me, in representing the community which has the largest dependence on Westland, to pay my tribute and express my thanks to both Labour and Conservative Members for fighting a long and strenuous battle on behalf of the company. I hope that their efforts will bear fruit in the near future.

I am sure that the House will not be surprised when I make a few comments on my own about the present position at Westland. I shall take as read some of the more detailed points which were made by the hon. Member for Ruislip-Northwood, who covered the ground with his usual diligence and the background knowledge for which he is widely respected on both sides of the House. The arguments which he advanced were powerful and ones that I wished to adduce myself, but in the interests of brevity I shall not do so. It will be more useful to leave them on the record in the hon. Gentleman's name. As I have said, I hope that the Minister will take account of them.

It is with pride and pleasure that I am able to call the attention of the House to a success story for Westland. Last year the company had a loss of about £95 million, but announced its end-of-year results yesterday and they showed a profit of £25 million. In Britain's present industrial climate it is rare enough for any company of any size to have turned round profit to loss a sum of £120 million in one year. But for a company to have done that against the background of political turbulence and turmoil that Westland suffered in the early and middle portion of the year is testimony to the skill and ability of its management, especially to its leader Sir John Cuckney, to the wisdom of the management's policies, to the strength of the company and most especially to the loyalty and dedication of the work force. The House and the Government should recognise and pay tribute to those qualities in Westland, which have ensured that one of our key defence companies has survived the past year and prospered as well.

I ask the Government to recognise that in all senses and in full measure Westland has played its part in restructuring itself. Westland has been able to fight through a period during which it has been a political football for the most powerful in our land. It has maintained the integrity of the company and prospered. I say again to the Government—I shall do so softly because this is not the time to be too raucous—that it is time that they fulfilled their part of the bargain. It is time that they stopped shilly-shallying over what orders the Government require of Westland.

I say again, as I have said before, that Westland does not ask for charity. It is strong enough to survive in the real world, but it is interested in its primary customer, the Government. The least that the Government can do is to say what they require of the company so that it can begin to address those needs.

We were told that the information on the study on helicopter procurement that we need so desperately to plan for the future would be available towards the end of the year. It is not. I understand that it will now be available early next year. It is now said that it may not even be in the first month of next year. I say sincerely to the Government that every day's delay undermines Westland's capacity to take advantage of its current position in the market place and to fulfil the needs of the British services for helicopters, which are great enough now, and undermines and threatens jobs. I hope that the Government will take account of that, and will move heaven and earth to ensure that the decisions over which they have pondered for so long will be delivered in the near future. For, if they do not do so, jobs will be at risk, and the design teams that Westland has accumulated over the years—its most priceless asset—will be in danger.

Let me be clear, for I do not want to be misunderstood. There is no question of Westland itself being threatened. The company is now strong enough, and, with our new partners, is capable of facing up to the world, whatever the competition may be. I am delighted to say that. I do not want this to be misunderstood. There is no question of Westland not being strong enough to survive. It can. What is at threat is Westland as Britain's majors "stand-alone" helicopter provider. The fact that the Government must now face is that further delay will mean that it cannot deliver the undertaking which we understand was previously concluded, that the Government wish Britain to have a helicopter manufacturing capacity from the design stage to final production. Further delay will threaten, not Westland in total, but that capacity.

We are capable of supplying the helicopters that the United Kingdom forces need so badly, which the hon. Member for Ruislip-Northwood articulated so clearly. We know that those helicopters are required. We are running the oldest helicopter fleet in the world, serving the British Army in the central plain of Germany. It is 100 short of what is needed to fulfil its tasks. The helicopter capacity is desperately needed. Helicopters are a force multiplier, which is doubly important when, by the Government's own concession, we stand at a disadvantage to the conventional forces of the Soviet Union. It makes no defence sense as well as no business sense not to recognise that and bring it to fruition by allowing Westland to know what the Government require of it.

We are discussing export orders abroad. That is important in terms not only of our defence needs in Britain but of the orders that Westland can win abroad. There are orders to be won. There is considerable interest in NATO and in Europe in the aircraft that Westland is producing and has the capacity to produce. There is particular interest in the Black Hawk. However, no nation will buy those aircraft from a British firm such as Westland unless the British Government make the commitment in the first place. That is the seal of approval that such firms look for. We must understand that.

I shall not say that those orders are at risk, but the potential for sales abroad, which could be great, will be enhanced immeasurably as soon as the Government make up their mind. I ask the Government to decide quickly and to recognise that the defence industry implications for Westland are great. About 70 per cent. of the final product, the modern helicopter, is produced not by the aircraft manufacturer in Yeovil or elsewhere, but by other portions of Britain's aerospace industry. That amount is bought in from Smiths Industries and instrument and avionics manufacturers throughout the country. A great swath of our high technology industry depends on the survival of Westland as a helicopter manufacturer and the winning of those orders overseas.

The hon. Member for Kingswood and other hon. Members rightly mentioned the Rolls-Royce RTM322 engine. It is a brilliant engine, with great potential. But it is now an engine waiting for an aircraft. The decisions that the Government now take will therefore have consequences for Rolls-Royce, for the winning of new orders and for large sections of the rest of the aerospace industry.

All that is at stake, and it now hangs on the Government's decisions, which have been delayed too long. Westland is a great firm, and is essential to our aerospace industrial base. It can win export orders, and the prosperity of my community depends upon it. I plead with the Government not to delay further and not to fudge. Let us have those decisions, which have been promised and have been delayed too long.

My second point on the export of British defence equipment is not relevant to Westland. It was mentioned by my hon. Friend the Member for Woolwich (Mr. Cartwright) and I believe that it will be mentioned by the hon. Member for Kingston upon Hull, North (Mr. McNamara), who will deal with it in detail. I wish to look at it in terms of export orders. I wonder whether the Minister realises what is happening with the DROPS contract, which is required by the British Army so that it can fulfil its tasks in the central plain of Europe and in NATO and so that it is supplied with the ammunition that it needs. The Minister may not know that in the present placing of that order we are involved in an unwitting export abroad—in fact, to the Soviet Union, by courtesy of the decision taken by the Procurement Executive of the Ministry of Defence.

Let me give the House the details. We know of the concern about the award of the DROPS contract. Boughton did much of the original work, but was excluded from the contract. Nevertheless, Boughton's bid for the contract was regarded by many independent experts as not only more viable and efficient for fulfilling the task but cheaper in real terms. Instead, the Government awarded the contract to Foden and Scammell. A portion of that contract, fulfilled by Multilift, is at the heart of the system. It is of concern that Multilift's solution to the hydraulics problem bears a startling resemblance to the system proposed by Boughton which was developed with Ampliroll for military application. That concern will, no doubt, be expressed by many other hon. Members in the debate. There may have been some leakage of technical information from Boughton to the people who succeeded in getting the contract, Foden and Scammell, using the Multilift hydraulics system.

What has not been known until now is that Multilift has a parent company in Finland called Pratek. It has been the supplier for a long time of hydraulic systems to Kamaz, the Soviet state truck manufacturers. According to the latest figures that I have, in 1982 Kamaz provided about 400,000 vehicles to the Soviet army, among other people. I am told that in 1982 that same manufacturer used a Pratek multilift hydraulic system to do a similar job to that which is now being done by DROPS.

There have been worries about the similarities between Multilift and Ampliroll. Leaving all other aspects aside, it is now evident that the contractor chosen by the Ministry of Defence supplies similar systems to the Soviet Union, very probably the Soviet army. How can we be assured that the advantages that DROPS will give to the British Army will not quickly become available to the Soviet army as well? It now appears evident that the Ministry of Defence Procurement sees its task not just to supply weapons systems to the British army, but possibly to supply systems to the Soviet Union as well through a firm's parent plant in Finland. Is that not extraordinary?

In the light of all those facts, we must have severe doubts about the competence of the MOD Procurement Executive because of the way it has handled this matter. We must have an inquiry into the full facts, and we must have it soon. I hope that when the Minister replies to the debate he will bear in mind that systems now being supplied to the British Army are also being supplied to the Soviet Union and the Soviet army. I hope he will look into these matters to ensure that the advantages of this equipment to our Army will not in the near future be available to the Soviet Union as well.

I welcome this timely motion and agree with most of its contents. That keeps me in tune with almost every hon. Member who has spoken in the debate. I hope that the hon. Member for Kingswood (Mr. Hayward) will not mind if I concentrate my remarks on procurement for the Royal Navy—because that has not yet been dealt with in depth — rather than discuss avionics or even helicopters. Before doing that, I should like to speak about our conventional defence industries. Those industries provide jobs and exports. Their export potential is underpinned by the domestic procurement programme of the Ministry of Defence. It is difficult to see how the industries would survive in their present form without that domestic underpinning.

In the next few years, about one third of all available money for conventional defence is committed to the Trident programme. Instead of supplementing NATO's conventional forces to bring the Western Alliance to a closer balance with the Warsaw Pact countries, we are duplicating a nuclear capability that is already provided. That provision is eating into a reasonble conventional defence programme. The effect of this on our conventional forces is substantial and in none of our forces is that more heavily felt than in the Royal Navy.

One third of the Navy's destroyers and frigates are over 25 years old and will be obsolete by 1990. In order just to retain our present position, a further nine frigates would have to be ordered before 1990 and by then about 16 destroyers and frigates of the present fleet would be between 25 and 30 years old. Nothing of the sort will happen.

At Question Time on Tuesday, I asked the Secretary of State for Defence if it was true:

"that the order for type 23 02 has been placed with Swan Hunter, that 03 and 05 have been placed with Yarrow, that type 23 04, 06 and 07 have been dropped from the programme altogether and that there will be no frigate orders next year?"—[Official Report, 9 December 1986, Vol. 107, c. 169.]

The Secretary of State did not refute what I said and did not even bother to hint at further frigate orders next year. Until there is some ministerial statement, the position will remain as I have described it. The Trident programme may never sink any ships in the Russian navy, but it has already sunk a fair bit of our Navy.

The motion speaks about exports. Although we build excellent warships, we do not sell many abroad. The naval sales task force that the Government have dispatched around the world is a worthwhile initiative. However, the real failure of the nationalised warship building industry to secure export orders is only partially related to a lack of world demand. Although that is an important factor, it does not have much to do with the often alleged complexity of our own warships. It is said that foreign purchasers look for simplicity but, if our builders of warships can build complex vessels, they can certainly build less complex ones.

Foreign Governments do not always make procurement decisions on the same basis as our Government. Nationalised industries find it difficult to respond to some of the criteria of foreign Governments. The Government believe that our newly privatised warship builders will do better, but so far there is no evidence of that.

Hon. Members have spoken about Nimrod. All the speeches assumed that procurement decisions are made on the merits of each case. With what little is left of naval procurement, that is not so. The last of the type 22 frigates—I think it was No.14—was won by Swan Hunter on a competitive tender basis.

However, the then Secretary of State placed the contract with Cammell Laird. As compensation, he promised a type 23 frigate—the 02—later that year. That frigate was eventually placed, some two years later, on terms and conditions that were more onerous than those that pertained to the original type of 22 frigate.

The effect of lead yard services on pricing makes first of class status imperative for warship builders. In previous debates of this kind I have referred to the way that this works in practice. It creates difficulties for follow-on yards and operates against true competition. Also it has the effect of creating monopolies. If the Government are not very careful, they will find that the virtual monopoly that already pertains in submarine supply may spread to the surface fleet, to the detriment of the shipbuilding industry and eventually to the detriment of the defence procurement budget.

Undoubtedly the greatest procurement scandal in recent years has been the procurement of the first of class auxiliary oiler replenishment vessel by Harland and Wolff. The design was undertaken by Swan Hunter which had supplied the Royal Navy with 84 per cent. of all its fleet auxiliaries in the previous 20 years. That should not automatically have meant that Swan Hunter obtained the work, even though the yard that had carried out the design study eventually obtained the order in every other recent, decision.

This important defence contract was placed with Harland and Wolff for political reasons. The Government tell us that the Harland and Wolff bid was lower, yet the detailed designs have not yet been cleared by the Ministry of Defence, despite the fact that on 24 April 1986 the Prime Minister wrote to me and said:

"You are correct that an undertaking was given to the Swan Hunter buy-out team before privatisation that the Harland and Wolff bid would be unsubsidised and comprehensively costed."

Comprehensive costing has to be based on the designs themselves, yet the bare bones of those designs have only just been released to Swan Hunter to enable it to prepare, in general terms, its bid for the AOR2. The crucial detailed designs, which are supposed to have been comprehensively costed last April, will not be released to Swan Hunter until January 1987. It is legitimate to ask why. Naturally, foul play is suspected on Tyneside.

The nationalised industry, Harland and Wolff, is given massive subsidies and it is using them to take work from yards that have been pushed into the private sector. Harland and Wolff is the most heavily subsidised shipyard in our country, yet the Government assure us that none of this subsidy is underwriting the AOR2 contract. Nobody believes them. The Ministry of Defence must think that it is getting value for money, but the Government are not playing fair with the private sector. The final outrage has been the failure to release the detailed designs to Swan Hunter to enable it to make its bid for the AOR2.

The last reason that the Ministry of Defence gave me was that the delay is due to the fact that the designs are being vetted for commercially confidential information. That is obviously untrue. Only two shipyards are involved. Swan Hunter is the preferred bidder. When it is given the detailed designs it will come forward with a bid, there will be negotiations with the Ministry of Defence, eventually a decision will be made, and Swan Hunter will be either successful or unsuccessful.

If Swan Hunter does not get the work, Harland and Wolff will have the opportunity to obtain it. No third parties are involved. There is no other shipyard from which this commercially confidential information must be kept. It is highly unlikely that Harland and Wolff, and certainly not Swan Hunter, would give this information to a third yard. By doing so, they would be cutting their throats. It is absolutely ludicrous, therefore, for the Ministry of Defence to say that this information is being vetted for commercially confidential information.

Because the explanation that has been given is so plainly ludicrous, those who take an interest in these matters look for another explanation. The suspicion is that the Ministry of Defence is still making adjustments to the designs with Harland and Wolff—designs which I understand have not yet been cleared by the Department of Trade and Industry for seaworthiness or, for that matter, by Lloyds. Harland and Wolff is still taking steps to conceal the extent of the Northern Ireland Office subsidy, which is undoubtedly underpinning the operation. The truth of all that may not emerge until after the event, but the entire episode will remain a public scandal, the more so because it betrays the privatisation that the Government say that they believe in. Undoubtedly the most serious point of all is that the Government are appeasing the terrorism that they say that they are committed to fighting.

I join with other hon. Members in congratulating the hon. Member for Kingswood (Mr. Hayward), who opened the debate. He and I disagree on some matters, but he has timed the debate very well as it has enabled both sides of the House to take part in an important debate on Nimrod, and to have our views aired in the House before the Government reach their final decision.

I join with the hon. Member for Woolwich (Mr. Cartwright) in saying that arms exports are a good thing, but we must be careful to whom we export. We must try to have some criteria by which we can assess the "worthability"—if one may put it that way—of the people to whom we sell our weapons of destruction. We cannot sell them to despotic, tyrannical regimes that threaten their neighbours and, perhaps more tellingly, their own populations. It becomes very difficult, in those circumstances, to understand how and why the scandal of the submarine lifting gear announced earlier this week came about, and how and why international salesmen in London have taken part in discussions on the sale of arms to the contestants in the Gulf war, especially when one of those contestants has been the protector of terrorists in the Lebanon who have taken hostages from many nations.

Out of the £18 billion defence budget, 46 per cent., or nearly £8 billion is spent on procurement. Britain probably spends more on procurement than any of its NATO allies, including the United States. That has an important economic effect on us. Nearly 400,000 people are employed in the United Kingdom defence industry and about 120,000 jobs are tied up directly with exports. It is an important industry for Britain and it needs to be supported, subject to the caveats that I mentioned earlier. Despite the vast sums that have been spent on defence and procurement, jobs are still being lost in our defence industries. Our defence industrial base is crumbling and our Service men do not always receive the standard of equipment that they deserve.

The Ministry of Defence has many plans and projects but those projects are either being stretched or never get beyond the feasibility study stage. The great gift from this Administration in regard to our defence problems and procurement is that they have probably commissioned far more feasibility studies than they have ever commissioned ships for the Navy of major equipment systems for the Armed Forces. The main reason for that is the demands that Trident will make on our defence procurement budget during the next few years.

My hon. Friend the Member for Newcastle upon Tyne, East (Mr. Brown) mentioned the way in which the acquisition of Trident was affecting the Fleet. I do not intend to proceed in that way. The Minister and the Government may argue that, over the period of acquisition Trident will account for only 3 per cent. of the defence budget and 6 per cent. of the procurement budget but within the next few years and stretching on into the next decade, it will take considerably more of the new equipment budget—perhaps as much as 30 per cent. That money, which should be spent on conventional weapons, and on helicopters for the British Army of the Rhine, on frigates, on improvements in our forces, on our Harrier squadrons, and so on, will not be available.

We know from the Defence Estimates earlier this year that the Secretary of State has delayed and cancelled conventional projects. Trident is absorbing so much of our money that the British people will have to decide whether they want to go ahead with it and so see our conventional forces rapidly weakened, or whether they want sensible and strongly organised conventional forces, but without Trident. There is a straight military choice, because the money does not exist for both, and the Government know that.

The Government are already cutting the defence budget. It is one thing to talk about taking new weapons systems through during a period of budget expansion, but is quite another to do that when the budget is declining, as it is now. The folly of it all is that when there is little money available, the Government have apparently decided to spend about £1 billion on AWACS instead of going ahead with our own better aircraft, the Nimrod.

One problem facing all Governments is the inexorable increase in the cost of new weapons systems. A type 22 frigate costs four times as much as a Leander did. The Phantom cost only 50 per cent. more per aircraft that the Lightning did, but he new generation Tornado F2s will be 175 per cent. more expensive. That trend affects us and our allies, and the problem is becoming more acute because we face an increasingly sophisticated threat.

Thus there is a vicious circle within our own arms industry. Equipment costs increase, so obsolete systems are retained in service. Because of the increase in costs, fewer new weapons are ordered. That means shorter production runs, which means that unit costs increase. Because the weapons are coming later, the services want gold plating. We understand that, but that increases the cost again and weapons take longer to develop. Admiral Lamb once made the off-the-cuff remark that

"One day the Navy will have one absolutely supership, and that's all."

Probably built at Harland and Wolff.

We have the problem of the gold plating of weapons systems and of systems being duplicated within NATO. I should like to take up the point made by the hon. Member for Woolwich, who has great experience of the North Alantic Assembly and of the military committee there. Many problems are involved in trying to standardise weapons systems and equipment throughout NATO. There are conflicting forces at work. We want to maintain our defence industries, just as the French, Belgians, Dutch and Americans do, but we must recognise the level of duplication. It means that we spend more than the Warsaw Pact countries on defence and are getting less for it. It is a myth that somehow the Warsaw Pact is shovelling roubles, zloty and whatever else into an enormous war machine in order to threaten us, because we spend far more than it does. We are also losing any technological advantages that we may have because of the duplication.

In general, the Warsaw Pact uses one specification when it comes to major capital investments such as tanks and aircraft. As a result, it can produce more, has better standardisation and benefits from long production runs. We have to take that on board when we consider our procurement policies.

And why we should buy AWACS.

In 1977, the House agreed unanimously that we should go forward with Nimrod. There was not one dissenting voice.

I was not here then.

The hon. Gentleman had been in and out, with obvious results.

We should not now throw good money at an American system and discard what we have already built. We must consider what is the best use of our money. Many people argue that we should buy off-the-shelf from the United States, that that would get us more weapons and that we should have all the benefits of United States production. That would be a policy for disaster in high technology and industry in Britain. It would make us overdependent on the United States. Our remedy, which is accepted on both sides of the House, is that, for the majority of equipment for our Armed Forces, we should depend on British industry.

There will, however, be major capital projects on which we have to collaborate. We often collaborate with the United States, but we should try more effectively and purposefully to secure greater European co-operation. There was very little until the right hon. Member for Henley (Mr. Heseltine) came along, and I pay tribute to him on that score.

So far, there has been only limited co-operation with Europe, but some of the projects have been highly successful—Tornado is the finest example. If we are to work with our European colleagues, we must strike a more positive and aggressive attitude. We must identify projects, as has been done with the EIPG, and be seen to be going about them more purposefully. That is where Trident and the European fighter aircraft come in. The hon. Member for Kingswood has had no clear, categorical undertaking and no contracts have been placed for the EFA.

The hon. Gentleman talked about TSR2. We should get the record straight. More military aviation projects were cancelled by Conservative Governments between 1945 and 1979 than were cancelled by Labour Governments—nine to six. I am not challenging those decisions, but on the basis of that track record one would be more wary of a Conservative Government than of a Labour Government.

As for the figures about Trident, the problems that face the Secretary of State, who has refused to produce a White Paper on defence, arise out of his trying to get a quart into a pint pot. The result is that conventional forces will suffer. The surface fleet is as likely to suffer as the EFA.

When the EFA prototypes are ready, however, we want the aircraft to be powered by a Rolls-Royce engine, as the hon. Member for Kingswood said. It would be nonsense to accept an American General-Electric engine as a fallback, as that would indicate that we lack confidence in Rolls-Royce, which has produced a highly successful and very exportable engine, and would stop the EFA being a European concept and make it a transatlantic one.

There is a real fear about what happens to European technology when it goes across to the United States. I agree with the hon. Member for Kingswood and I hope that when the Minister replies to the debate he will give those categorical undertakings that will delight both the hon. Gentleman and the workers of Rolls-Royce and British Aerospace. I trust that he will say that the Government will go ahead with these contracts and that the aeroplane will fly. If the Minister is prepared to do so and to tell us where the money will come from we will be even more delighted.

If we consider what is happening with regard to the Nimrod system we can see that we would be giving to the United States a complete monopoly in early warning systems. The arguments have been deployed from both sides of the House and I will not go through the great number that I have written down. I wish to make one or two points that are important and that should be borne in mind.

First, the supplier of the Nimrod system is a major electrical company in Britain, the biggest that we have in the multi-national league, but the signal from the Government is that they do not have confidence in it. That is what it amounts to. They do not have the confidence in the British system so they are going to the United States. If they did that the repercussions would cross the whole of our export field and would be profound. Secondly, the hon. Member for Kingswood spoke of the American failures, such as the shuttle, and various others. That is true, but one cannot compare like with like.

Britain has one major company, whereas the United States has half a dozen. Those companies have enormous defence budgets and the United States has an enormous economy. But we have just one company. The blow would be tremendous. We would be signing away £960 million worth of equipment and 2,500 jobs. The Government would be saying to British industry, in the private sector, that it cannot meet the competition from abroad in those areas of the highest technology. I do not think that we can afford to do that.

What has been interesting is that, apart from the contributions of the hon. Members for Ruislip-Northwood (Mr. Wilkinson) and for Northampton, North (Mr. Marlow), the almost unanimous cry in this House has been for Nimrod. Perhaps, we may create a new silly season. Last Christmas it was Westland and this Christmas it could be Nimrod. The Government seem to be willing to go across to the United States continually to find their remedies. They tried to do it with Land-Rover, British Leyland, Westland and now with the airborne early warning system. There are two reasons why it is not good enough that the Government should behave in that way.

First, the Secretary of State said on ITN that Nimrod was up to the job and that the system works. If it works, it works, but if it does not we should not have it. But if it does work we should have it because it is British. Not only has the Minister said it works, but Flight International in its editorial said:

"The RAF choice must be for quality. It is becoming evident now that the GEC equipment is performing almost impeccably, and is at least the equal to the Westinghouse equivalent in the E-3A, if not some years in advance of it."

That is an important comment from an independent source.

If we are to maintain our position we must examine the way in which the Government are pursuing their competition policy. Many criticisms were made when Mr. Peter Levene was appointed and many of us still doubt the wisdom of the contract under which he is serving. However, in fairness to Mr. Levene, one must say that he has attemtped an almost impossible task with tremendous courage and determination, and his work seems to be bearing fruit.

The parts of the Government's competition policy are contradictory. One example is Defcon 19 under which one person develops designs which can be passed on to someone else for production. That does not encourage firms to think that they will get long production runs after they have done the basic work. Companies do not think that they will be given the job of producing systems that they have helped to design. Competition policy needs to be re-examined carefully. The terms, conditions and appointments of contracts should be looked at.

My hon. Friend the Member for Eccles (Mr. Carter-Jones)—we sympathise with him and understand why he has had to leave—pointed out that on Monday the first PC-9 for the Saudi air force will be rolled out and handed over at Brough near my constituency. The PC-9 was the preferred choice of the RAF as a basic trainer and we are still awaiting delivery of the Tucano. It would be helpful if the Minister could tell us when we shall have our first squadron of Tucano trainers, how far behind time they are and whether the problem with the engine has been solved. When will Shorts fulfil its contract?

We are still running the old Jet Provost, at increasing cost. We were promised that that would not happen, because Tucano would be on time, there were no problems and eveything was excellent. It is interesting that Shorts has not received one export order for the Tucano, but the PC-9—our first choice: the one that we said would be part of the family of PC-9, Hawk, Tornado—is being built and developed in Brough, with Swiss partners, and is being exported to the Saudis, well ahead of the Tucano coming into service.

There have been other problems with contracts. Strange procedures were followed in the contracts that were awarded to Shorts. There was the strange case of the telephone call that was or was not made.

The mention of telephone calls bring us neatly to the Boughton saga. Boughtons is a small family firm in Amersham which has spent about £4 million in the past 12 years on designing its own ammunition and equipment carrier for the Army. The system is known as DROPS. Despite its work, the company was not selected to take part in feasibility studies in 1983. That did not seem to be particularly fair and was certainly not consistent with what Lord Trefgarne had been saying about giving small firms an opportunity to take part in important contracts.

We all know that the Amersham firm did not get the contract and much controversy surrounds the case. I am not competent to judge whether the right decision was made in terms of the Army's requirements and whether DROPS came up to it—though DROPS seems to be highly suitable for the American army.

I wish to put a number of questions to the Minister about this case. I trust that he will listen carefully to this matter. I also trust that his hon. Friend will be ready to rush to the Box to get the replies to my questions. They are of the utmost importance.

First, can the Minister confirm or deny that Multilift, the company that was awarded that part of the DROPS contract concerned with lifting equipment and hydraulics, is beneficially owned in Finland and that its Finnish parent company, or another subsidiary of the Finnish parent company has been, or is currently, engaged in a collaborative venture for similar equipment with the Soviet authorities for the Soviet armed forces. Can he confirm that this work has been carried out at the Kama river truck plant? If this Finnish company has this dual relationship, supplying NATO and the Warsaw pact, although I am sure the company is happy, it raises important questions about our technology going to the Soviet Union.

I am grateful to the hon. Gentleman for raising this matter. I wonder whether it will help if I read a brief extract from a Soviet trade magazine of 1982, which covers this matter, and which he might draw to the Minister's attention. I translate it from the French. It states:

"We have developed the conception of a system of interchangeable boxes on the back of trucks by Multilift which is sufficiently powerful in order for us to guarantee efficient usage."

The article goes on to state:

"In one year—"

—this is from Kamaz, the Soviet company that the hon. Gentleman mentioned—

"In one year we have constructed 150 systems using Multilift on the chassis of Kamaz trucks. These materials made by Partek are extremely in demand by our customer which shows that there are considerable possibilities for development and co-operation."

Surely it must be our concern that that development and co-operation does not include the passage of British information to them for further use in the Soviet army.

I am grateful to the hon. Gentleman for his intervention. It has saved me another two and a half paragraphs. He succinctly made the point.

My second question concerns the behaviour of the noble Lord Trefgarne in his relationships with the company. In the press last week, there was an article entitled "How minister 'gagged' MP". The hon. Member for Nottingham, North (Mr. Ottaway) said that he had written to Lord Trefgarne

"as, magically, the Chief Whip has got to hear about this matter, I have told him I accept your assurance and you can consider me suitably gagged for public utterings."

We must find out why he thought he was being gagged and what those utterings were about. Behind the controversy associated with this matter, did the noble Lord, Lord Trefgarne have a private meeting with the hon. Member for Nottingham, North at which he told him to stop his opposition to the Defence Ministry's handling of the DROPS questions, on the grounds that, as a PPS, he must therefore support and not oppose Government policy and that he must support all Government decisions?

Surely, it is one thing for a Government Minister to ask a PPS to support some plank of Government policy, but it is quite another thing to try to tell an hon. Member that, because he is a PPS, he cannot make inquiries about the placing of highly valuable Government contracts. Can the Minister confirm what we read in the paper—some of us have copies of the correspondence—that the right hon. Member for Chesham and Amersham (Sir I. Gilmour), himself a former senior Defence Minister, has taken the step of writing to the Secretary of State complaining of the way in which the noble Lord seemed to be abusing parliamentary privilege in his conversation with the hon. Member for Nottingham, North. Can he confirm that the actual words used by the right hon. Member for Chesham and Amersham were that the hon. Member for Nottingham, North was warned off and told to keep quiet, and that the former Secretary of State wrote to the present Secretary of State saying:

"My understanding is that for a Member of the House of Lords to seek to stop a Member of Parliament performing his parliamentary duties is a breach of privilege."?

That is a very grave charge. Was the noble Lord breaching parliamentary privilege in his treatment of the hon. Member for Nottingham, North?

There are other matters concerning this contract and the way in which the Government seem to have responded to criticism. A number of questions arise from the BBC Panorama programme on 7 July. In that programme, the BBC strongly implied that there had been serious impropriety in the handling of the DROPS contract in the treatment of the British engineering company, Boughtons, by the Ministry of Defence. However, the one major weakness in the charges made on Panorama was that the chairman of Boughtons did not say that his company had been mistreated. Indeed, a letter from the chairman of Boughtons specifically said that Boughtons had no complaint.

The Ministry of Defence, particularly Lord Trefgarne, made much of this apparent general silence by the chairman of Boughtons on Panorama and of the fact that it had received this letter from him. Now it appears that the reason for this silence was not the Boughtons had no complaint about its treatment by the Ministry of Defence but that the Ministry had made it totally and starkly clear to Boughtons that, if it did complain, it could say goodbye to any further Ministry of Defence business. Boughtons is heavily dependent on Ministry of Defence business and, in particular, is tendering for contracts at the present time.

As for the disgraceful intimidation of Boughtons by the Ministry of Defence, I have specific matters that I should like the Minister to answer. I am told that on 17 June this year, some three weeks before the Panorama programme, Major-General Stopford—then, as now, Director General of Fighting Vehicles and Engineer Equipment at the Ministry of Defence—telephoned the chairman of Boughtons at home in the evening to discuss the forthcoming Panorama programme. Despite having made it clear that Boughtons was not involved and did not intend to become involved in the making of the Panorama programme, the chairman was left with the clear impression that the programme would still result in serious damage to his company's interests.

General Stopford's call left Boughton's chairman noticeably shaken. What is more, he immediately described the call to third parties as being

"a final warning from the Ministry of Defence".

Thus it was clear to Boughtons that the consequences for the company would be disastrous if it was to complain publicly about the Ministry of Defence. In the weeks following, Boughtons also received warnings from other third parties connected with the Ministry of Defence who suggested that the company should write to General Stopford's department formally to dissociate the company from Panorama.

Worse was to follow. I have already mentioned the letter in which Mr. Boughton said that he had no complaint. Lord Trefgarne said in a letter to the hon. Member for Ealing, Acton (Sir G. Young) after the Panorama programme that the chairman had written this letter on his own initiative. In another letter, the right hon. Member for Chesham and Amersham was informed by the Secretary of State that the chairman's letter to the Panorama programme was sent

"entirely at his own initiative well before the programme was screened".

It was not so. The noble Lord and the Secretary of State were guilty—I hope unwittingly—of giving false information. The letter had not been written on the initiative of Boughton's chairman. I now understand that General Stopford again telephoned Boughton's chairman on 30 June, the very day before Lord Trefgarne was to be interviewed by Panorama for the forthcoming programme. General Stopford asked Boughton's chairman on the telephone to fax an urgent letter to him saying that the company had no complaints about the Ministry of Defence. In the words of the chairman's letter to the hon. Member for Nottingham, North,

"I felt this was a request I could not refuse"

Nor did he. He wrote the letter under pressure and intimidation and it stated the reverse of the truth.

In those circumstances, I must ask the Minister to tell the House whether either of those telephone calls was made at the instigation of the noble Lord. Were they made on the initiative of General Stopford? If they were made on his initiative, why has he not been disciplined for engaging in such conduct? If they were not made on his initiative, but under the direction, at the suggestion or on the nod and wink of the noble Lord, there is a serious case for Lord Trefgarne to anwer. That is why we want to know why the Minister brandished the letter on Panorama, making exaggerated claims about its importance. The letter had been carefully written and said that, while the company had no complaints, it wanted continuing inquiries to be made.

What was the role of Lord Trefgarne? What was the role of Major-General Stopford? Why were pressures put on the chairman? Who made the telephone calls? Why? Why did the noble Lord and the Secretary of State need those letters when the information they contained was patently untrue? That raises serious matters about the integrity of the noble Lord and the way in which the Ministry of Defence has been conducting its business. The House and the country are entitled to full answers to those questions.

I thank the hon. Member for Kingswood for giving the House the opportunity to consider the importance of the defence industry to our national defence and as an export earner. We have had the opportunity to deploy our various cases about Nimrod, Westland and the Fleet and, in particular, to raise the case about Boughtons on the Floor of the House for the reasons put forward by the hon. Member for Yeovil (Mr. Ashdown) and me. Are we passing our technology on to the Russians? Will the Minister give a full explanation of Lord Trefgarne's conduct in his treatment of that company?

It gives me great pleasure today in my first debate as a Defence Minister to welcome the motion on behalf of the Government and to congratulate my hon. Friend the Member for Kingswood (Mr. Hayward) on his choice of subject. He said that the debates on Fridays saw the House at its best and I support that and commend most of today's debate as being of an interested rather than a partisan nature. I also congratulate my hon. Friend on his capacity to speak without notes. That is something that I shall have some difficulty in emulating.

Many important issues have been raised, the first of which is the question of engines, which is of particular concern to my hon. Friend because of his constituency interest in it. He mentioned the RTM322 engine, the uprated Pegasus and the XG40. We are assisting Rolls-Royce and Turbomeca by funding one sixth of the development programme of RTM322. That is going well. We cannot say that it will definitely be the engine that goes into the EH101, but we have high hopes that that will be the case.

We have no formal requirement on the uprated Pegasus, but, in conjunction with the United States, we are looking at a Rolls-Royce proposal. I can assure my hon. Friend that we are maintaining progress.

The Government and Rolls-Royce are funding the XG40 as a technology demonstrator programme and we fully expect that its results will contribute substantially to the new engine which the European fighter aircraft nations agreed in Turin last August will be required. Rolls-Royce is the United Kingdom's member of Eurojet—the international consortium formed to co-ordinate the development of the EFA engine.

My hon. Friend the Member for Kingswood and the hon. Member for Woolwich (Mr. Cartwright) referred to the strategic defence initiative. I entirely agree about the need for British industries and universities to be at the table when SDI contracts are handed out. In answer to a question from the hon. Member for Ryedale (Mrs. Shields) on Tuesday, I was able to announce that the overall value of SDI research awards to the United Kingdom had risen to $34 million. That first year total is a solid foundation on which to seek more work in 1987, but it is worth pointing out that these are very much initial contracts and that one would not expect the larger money to come through until later.

My hon. Friend the Member for Kingswood and the hon. Member for Eccles (Mr. Carter-Jones) referred to the British Aerospace Hotol project, a dramatic concept at the very forefront of technology. We are fully aware of what the company is doing and we are watching developments closely.

My hon. Friend the Member for Kingswood stressed the importance of maintaining an adequate level of research and development and of expenditure in support of the defence procurement programme. Government support for that proposition is reflected in our current expenditure on defence research and development amounting to £2·3 billion, of which £1·7 billion will be spent outside the Ministry of Defence, the great bulk being spent on development contracts for weapons and equipment placed with British industry. The Government are examining the relative priorities of civil and defence needs for scarce scientific and technological resources with the aim of increasing the contribution made by those resources to the wider economy.

In this context, we recognise that the MOD research establishments are unique national assets. Although they exist first and foremost for their defence function, they have an important contribution to make to the broader economy. We have assisted in setting up a private company, Defence Technology Enterprise Ltd., with the object of helping to identify potentially marketable ideas and technologies generated in the research establishments and to promote their exploitation by the civil sector. The company now has ferrets in place at four of our major establishments and has more than 160 firms on its books as associate members. More than 450 items on its database are potentially exploitable and it has granted its first licences to entrepreneurs.

The Ministry of Defence and the Department of Trade and Industry are conducting joint military and civil research programmes with industry based on the research establishments, notably in information technology and space technology. The Ministry of Defence has also joined the research councils to sponsor programmes in universities and will contribute to the Link project announced by my right hon. Friend the Prime Minister this week to stimulate co-operation between industry, Government Departments and research institutions of all kinds in the translation of research concepts into marketable products. These are all valuable moves, but I should emphasise that, important though they are, they are complementary to the primary purpose of defence research and development to ensure that our forces are equipped to meet the threat at best value for money.

My hon. Friend the Member for Kingswood mentioned the European fighter aircraft. There is a strong political will in Britain and in Europe for that project to succeed. We are committed to playing our full part in the development of a cost-effective colloborative project, for which my right hon. Friend the Secretary of State for Defence signed the general memorandum of understanding in October. It is self-evident that we cannot order the European fighter now because there is no aircraft to order, so it is entirely misleading for the Opposition to accuse us of wavering on this. Our forward planning takes account of our requirements for the replacement of Jaguar and Phantom aircraft in due course. At the moment we are persuading EFA to meet that requirement.

Will the Minister tell us what sums of money have been set aside for which years for the purpose of those replacements?

I have already explained that we have large amounts of money available for research and development, and EFA is clearly part of that.

The hon. Member for Yeovil (Mr. Ashdown) mentioned helicopters and the problems that are being faced by Westland. My hon. Friend the Member for Ruislip-Northwood (Mr. Wilkinson) mentioned his concern. I support the hon. Member for Yeovil in congratulating the company on its year-end results, which were announced yesterday. I think that we would all accept that it has done great things to haul itself up from the rather low ebb that it had reached. We are well aware of the industrial position, and the key aspects from our point of view are affordability and military requirements. We cannot forecast our decisions, but we recognise fully the need to review our position on helicopters and to come to a decision next year, which we have said we shall do. That will be done as soon as possible in the new year.

I am sure that the Minister will understand that that should be done as early as possible next year. Will he give an undertaking that the decision will be made known early next year? If possible, will he say January or February, or later?

I can say only that I hear what the hon. Gentleman is saying and that a decision will be made as early as possible in the new year.

My hon. Friend the Member for Kingswood mentioned exports, which constitute a key element in Westland's future. He congratulated the company on the enormous efforts that it has been making in pursuing export markets. It is talking to the Ministry of Defence about having the Government's close co-operation in helping it to meet delivery dates, for example. We give serious consideration and every sympathy to these requests from the company if the result is to help to weld in export orders with our own requirements.

My hon. Friend the Member for Northampton, North (Mr. Marlow) raised the "tanks or helicopters" question. It is complicated and of great military difficulty. There seem always to be great dangers in terms of defence procurement in making dramatic and radical decisions to sweep away an armament and move on to another one. A Government many years ago decided that the future of the Royal Air Force was to have pilotless aeroplanes, and much planning was carried out on that basis. That is probably one of the radical decisions that has since been regretted at leisure. I prefer to await the considered advice of our professional military advisers, who are considering the role of helicopters.

The hon. Member for Newcastle upon Tyne, East (Mr. Brown) complained once again about the auxiliary oiler replenishment vessel and said that he feels that Swan Hunter has not been fairly treated. It seems that there is no gratitude in this place. As we all know, the order was switched from the best bidder for the contract. The order has been presented to Swan Hunter, and if it can come up with the right sums it will get it. That should be appreciated at Swan Hunter, and I am sure that it is.

The Minister is clearly new to these matters. I would stop banging on about Swan Hunter if the Minister, or one of his colleagues, were to answer my questions. Will he explain why the Ministry of Defence is still going through the details of the design about six months after the Prime Minister assured the House that the bid of Harland and Wolff had been properly costed? Will he give us firm assurances in specific terms that public money is not being funnelled through by the Northern Ireland Office to underwrite the contract from Harland and Wolff's point of view?

We have been informed and assured that the Harland and Wolff bid is not subsidised by the taxpayer. It is a matter of when the details and drawings come through. At that stage it will be possible for Swan Hunter to bid for the AOR. There has never been any question about that.

Will the Minister tell the House how he can say that the bid of Harland and Wolff was costed comprehensively if the details of the design that form the basis of "comprehensive costing" cannot be released to Swan Hunter? If the bid has been costed comprehensively, the details of the design should have been in existence when the Prime Minister gave her assurance way back in April, and should have been handed over to Swan Hunter last summer rather than next January.

I am sure that it was possible to produce a comprehensive costing of the ship without the detailed drawings, and we are waiting for them to come through.

The hon. Member for Woolwich raised the issue of International Military Sales and Iran, which arose the other day at Question Time. We are talking about pre-revolution contracts when we refer to IMS. Money is outstanding and that is why negotiations are still taking place. I can assure the hon. Gentleman that none of the existing contracts has led to the export of lethal equipment to Iran. No new orders are being planned for defence equipment because we fall in totally with the terms that have been laid down by my right hon. and learned Friend the Foreign Secretary, which are that there should be no equipment sold that will extend the conflict. That applies to Iran and Iraq. None of the export sales licences being given for equipment going to either of those countries should extend the conflict. The hon. Member for Woolwich also mentioned the Libyan ship lift. Let me put that into perspective. In practice, such ship lifts are used extensively across the Arab world. The ship lift was sold to the Italians. Therefore, the matter of export sales licences did not arise. There should have been no reason why one was needed to sell such equipment to the Italians.

We get into terrible difficulties on equipment which, in certain circumstances, can be used for defence. If we applied the rule that if equipment could have any conceivable use for military purposes we should not sell it to a country we would end up selling no equipment to a country such as Libya. We have substantial financial and commercial negotiations with Libya. It would be a pity to prejudice jobs in this country because we took the view that if we sold someone a pot of paint it could be used to paint defence equipment. Somehow a balance must be struck.

I accept that we must have a balance. I said that I recognised the difficulty with the potential use of a range of equipment, but there seemed to be a general understanding in the yard that constructed the ship lift that it was going to a naval base near Tripoli.

Surely that shows that a military end use was laid down from the beginning.

I hear what the hon. Gentleman says. All that I can say is that I do not know the details of where such equipment is going.

The hon. Member for Eccles (Mr. Carter-Jones) referred to Tucano. He says that that is not the right trainer for the RAF. We believe that it is a significant example of value for money from competition. We got Tucano at 35 per cent. less than the price that was originally envisaged, which is good evidence of the advantages of competition. I accept that there has been slight slippage in the programme, but I am sure that there is no major technical problem.

The hon. Member for Kingston upon Hull, North (Mr. McNamara) came up, as usual, with the Labour story of the cost of Trident and the fact that it is making it impossible for us to buy other conventional equipment. It is interesting that that comes up on Trident. Perhaps I was not listening carefully at the time, but I do not remember people endlessly saying that they were absolutely appalled by the Tornado programme, which would have a devastating effect on our capacity to order equipment.

The hon. Gentleman agreed that Trident represents 6 per cent. of our defence budget overall in the peak years and 11 per cent. of our procurement budget, but Tornado was 8 per cent. of our defence budget in the peak year and 18 per cent. of our equipment budget. Therefore, Tornado, at the peak time, must have put infinitely more pressure on other areas of conventional spending. At the end of the day, anything that we buy, we buy to deter our enemies. When it comes to the deterrent effect of Trident, there is no doubt whatsoever that, for every pound that we spend on it, we get a much better deterrent effect than with other forms of equipment.

I do not share the peaceful views about the Soviet Union felt by the hon. Member for Kingston upon Hull, North. If I were a Hungarian, a Czech or an Afghan who had seen Soviet tanks rolling through his city, I am not sure that I would share his views about how peaceful the Soviet Union was then. It is a serious threat to the Western world. We may be seeing changes in the Soviet Union at the moment, hut there is no evidence that those changes will necessarily lead to a more peaceful Soviet Union. Indeed, the reverse could be the case if we start to see the break up of the whole country.

I know that the hon. Gentleman would not wish to mislead the House. At no time did I give the opinion of the Soviet Union that he has just attributed to me. Secondly, if he had listened carefully to what I said earlier he would have heard me and the hon. Member for Yeovil express grave anxiety that some of our technologies might be going to the Soviet Union. The Minister has not yet answered that point. Thirdly, if the Trident defence system is so good, why are we bothering about anything else? Fourthly, should we not have SDI rather than spend money on Trident?

As the hon. Gentleman knows, SDI has a long way to go before it is perfected. Of course we should not only have Trident; we need to have all forms of defence equipment so that we can deter many different forms of attack. I shall be seriously worried if we ever reach the point where the Soviet Union on the other side of the divide in Europe has an enormous numerical superiority in conventional forces and nuclear weapons.

Will the hon. Gentleman give way?

I shall give way in a minute.

In those circumstances, there is no way in which Europe could build up its conventional forces to meet that threat.

The hon. Gentleman knows that the superiority of Warsaw pact conventional forces is a complete myth. That assertion was demolished by the American Secretary of State when he said that there is a precise balance. It has been demolished by the Institute for Strategic Studies. It is one of the myths that the Government keep trying to put forward. If the hon. Gentleman reads his own defence statement and looks at the footnotes about the figures on conventional defence, he will see that they are questions 1, 2, 3 and 4, do not compare like with like, and do not add up.

The Defence Estimates prove conclusively that the Warsaw pact has an enormous superiority in conventional equipment.

I listened to the allegations made by the hon. Member for Kingston upon Hull, North (Mr. McNamara). As my hon. Friend has said, they are quite incorrect. If the hon. Gentleman wants objective evidence which he might more readily accept, he should consult the latest yearbook by the Stockholm International Peace Research Institute from which he will discover that what my hon. Friend the Minister has said is right.

I appreciate my hon. Friend's intervention.

The hon. Member for Kingston upon Hull, North also spoke about DROPS. That needs a certain amount of clarification, and I am grateful that the subject has been raised. There has been much innuendo and press speculation about DROPS and in the Ministry of Defence many hours have been spent examining the matter in minute detail.

I shall begin by telling the House what DROPS is and about its value to the Army. DROPS is a demountable rack off-loading and pick-up system, and is essentially a sophisticated skip. The container holds up to 15 tonnes of ammunition and the system is designed so that one man can load the container on to his lorry from a storage site or railhead, transport it to the battlefield, unload it and then drive away.

It is worth noting that this broad concept was to be found in a demountable body for water transport developed by Scammell in 1929. The reason for wanting the capacity to transport large quantities of ammunition to the battlefield is that our new weapons fire shells which are twice as big and twice the weight of older shells and need to be replenished five times as quickly as previously planned. If we did not have DROPS we would face substantial increases in manpower and vehicles.

I should like to turn to the difficulty that has arisen over the Ministry of Defence and Boughtons. I am a newcomer to this saga, which has been running since 1982, but I shall try to paint in some of the background and that may help hon. Members to understand why feelings have run so high. In 1969 a Royal Armoured Vehicle Research and Development Establishment study about the future logistic needs advocated the adoption of demountable body techniques combined with the capacity to adapt to rough and muddy terrain.

Transport staff requirements started in 1975, using the Multilift load handling system. On the question of this firm being owned by the Finns and the technology being available to the Soviet Union, the hydraulic system supplied by Multilift was unclassified, in military terms. However, I shall need to check that point, and also the ownership of the company. Nevertheless, we have sound procedures to guard our information and technology. I remind hon. Members that we are referring to a hydraulic lifting system, not to top secret electronics.

Another point that is worth making is that we have the advantage of Finnish technology that may already have been made available to the Soviet Union. The Boughton load handling system was fitted to an in-service vehicle and was trialled in 1976. A further four Boughton land handling systems, not vehicles, were subsequently bought and fitted to Army trucks for operations concept trials. During this period Boughton staff worked closely with Army technicians.

The Minister has moved away from the question of the ownership of Multilift, but I should like him to confirm what he seems to have said: that the Ministry of Defence Procurement Executive has chosen, as the firm to fulfil this essential task for the British army, a firm that is owned by Finland—which is neither here nor there—and that also supplies the Soviet Union with very similar equipment. Is that what he is saying?

I am saying that Multilift has provided us with the possibility of this technology. What the firm does with it otherwise is up to it.

In other words, the Government have no objection to selling the DROPS equipment, which Multilift is providing for the British armed services, to the Red Army? Is that correct?

I am saying—

Is that correct?

Multilift already had the technology. I have no idea what else the firm has been doing with it. However, it offered it to us, and if it is the best technology it seems to us to be sensible to use it.

This is a very important point. In other words, there is nothing to prevent Multilift from selling this system, which was developed in Britain for sale to the British Army, direct to the Red Army. The Government do not seem to care what is done with it. Is that correct?

I am saying that Multilift already had the technology and that it has merely been developed further. Therefore, we are taking its technology.

During the trialling of the Boughton equipment, Boughton gained the impression that the production order would be given to it. When it failed to reach the final qualifying round of the tendering process, I suspect that, understandably, it was very disappointed. It used to be commonplace for the Ministry of Defence to select a preferred contractor for certain projects and then to negotiate the contract with that manufacturer without allowing other firms to compete for the order. However, we decided to go for competition. Accordingly, we allowed industry the maximum freedom in its submission of competitive proposals.

From an initial canvass of over 70 firms, eventually we were able to identify 11 main contractorship proposals involving over 20 firms, with Boughton among them. After a most intensive and careful examination, we were able to choose two main contractors, Foden and Scammell, to supply vehicles and two firms, Multilift and Powell Duffryn, to provide three different types of load handling systems for the further competitive trialling and evaluation stages. These trial occupied over a year and were among the most comprehensive ever staged for a logistics system in modern times, covering the full range of operations and soldier use in BAOR, as well as engineering proving in our research and development establishments. They provided firm evidence about the viability both of the concept and of the system choices that we had made earlier.

Thus, we were able to go on to discern the Multilift mark IV as our standard load handling system and to invite the competing main contractors to incorporate it in their final design and production proposals. These have provided the basis for the decisions that I announced last week, namely, the award of production orders for DROPS. These orders, worth about £220 million, will comprise about 2,000 vehicles and a range of ancillary equipment, including flat racks, trailers and rail transfer equipment. The contractors will go to Foden Trucks, Leyland Vehicles Ltd (Scammell Motors) with Multilift supplying the load handling systems and Marshalls of Cambridge and King Tractors of Market Harborough supplying the flat racks and trailers which are also vital elements in the system.

I emphasise that Boughton remains a valued contractor for Ministry of Defence business. We have no doubt that, although unlucky in the tender for jobs, it will surely be more successful in other opportunities on offer. We look forward to continuing to do business with it in the future.

The hon. Member for Woolwich asked about an inquiry. The Comptroller and Auditor General will make an examination of the entire DROPS programme and will report to the Public Accounts Committee in due course. The Ministry of Defence has nothing to hide and so nothing to fear. We welcome that examination.

The hon. Member for Kingston upon Hull, North mentioned my noble Friend the Minister of State for Defence Procurement. He told the hon. Gentleman that a parliamentary private secretary should accept Ministers' assurances. As the hon. Gentleman will know, a parliamentary private secretary is a member of the Government, and it is not unreasonable to ask him to accept Ministers' assurances. The hon. Gentleman also mentioned the telephone call to Trafford Boughton. General Stopford hotly denies that he put any pressure on him.

That is not the interpretation that has been put on those telephone calls by other people. Will the Minister answer the question that I raised? Where the telephone calls made at the instigation of the Minister, or by the general off his own bat? When did the Minister learn about them, and when were those letters—which patently contain misinformation—sent out and why?

I cannot answer precisely for my noble Friend on all those questions, but I shall certainly write to the hon. Gentleman.

It would be remiss of me if I said nothing about our airborne early warning system. That matter was raised by my hon. Friend the Member for Kingswood. The hon. Member for Eccles showed great technical expertise, no doubt as a result of his time in the RAF. He commented on the price involved. I am sorry that he is not with us, but I can assure him that his comments about the price were wrong. That is my final word on price.

The competition was set to meet the United Kingdom's airborne early warning requirement. My hon. Friend the Member for Northampton, North emphasised what a critical part this early warning system will play in our future defence requirements. The competition is now in its final stages. The company's proposals have been subjected to a thorough evaluation and we aim to reach a decision soon, with an announcement by my right hon. Friend the Secretary of State next week.

Hon. Members will readily understand that I cannot say anything today to anticipate the outcome of the competition, but I can certainly give an assurance to the many hon. Members on both sides of the House who are interested in the outcome that our final decision will be taken only after the fullest consideration of all the relevant factors, including technical, commercial, industrial and operational issues. Nevertheless, the major considerations in the evaluation of the two systems will be the ability of each to meet the Royal Air Force's pressing operational requirements and their comparative value for money.

We are being entirely even-handed in dealing with the two competitors, whatever rumours there may be to the contrary. What must be said about the competition and about the desirability of the recent tendering process is that we are now genuinely able to make a choice between two fixed-price contracts on the best way forward. Before we had no such choice.

I congratulate my hon. Friend the Member for Kingswood on the skill shown in choosing his subject for debate today, which has raised several important issues. I shall emphasise the essential elements of our procurement policy. The Department is the United Kingdom's largest customer. We intend to be a tough and demanding customer, and no less commercial than our suppliers.

Financial resources are, necessarily, limited and must always be used cost effectively. In the interests of the Ministry of Defence, the taxpayer and our suppliers, we are not prepared to underwrite industrial non-competitiveness. Competition in the domestic market should improve the competitiveness in the export market of those companies that rise to the challenge.

Collaboration is now an essential route in a world of international duplication and fragmentation. It has to be an opportunity for companies as well as Governments. It will require tough decisions to be made today, but we must take the long-term view or live to regret in the future.

The new regime in the Procurement Executive is helping us to understand the affairs of our suppliers, to work with them with greatest effect, and generally to raise our standards in the procurement of equipment.

The motion recognises those steps which the Government have taken towards obtaining greater value for money yet reminds us of the effort which we will need to maintain if we are to meet the challenges of the future with success. It recognises the effort that the Government put into supporting British industry to sell its defence equipment overseas. I pledge the Government to maintain that effort, and commend the motion to the House.

I congratulate my hon. Friend the Minister on the reply that he has given. As he said, it was his first speech from the Dispatch Box, and given his delivery, I look forward to hearing many more such speeches in future, particularly on the subject of defence. He has been surrounded by hon. Members of great expertise. For example, we were all impressed yet again by the knowledge shown by my hon. Friend the Member for Ruislip-Northwood (Mr. Wilkinson) about a whole range of subjects, but particularly about helicopters and aviation weaponry.

I agree with the hon. Member for Kingston upon Hull, North (Mr. McNamara) on many points. However, I still disagree with his analysis of the position of the European figher aircraft. Judging by what he said, it is now under as much threat as any other defence project. Presumably, that gives him carte blanche to visit every constituency, suggesting that the project under development there is also under threat. He has not answered the point that no commitment is every given while a project is in its development stage.

Several hon. Members emphasised the importance of European and international collaboration. We must recognise that we collaborate with many countries on defence projects, and long may that continue. I share the concern expressed by the hon. Member for Kingston upon Hull, North—just as he shared my concern—about the F404. From my conversation with Ministers in this Government I have no doubt about their commitment to ensuring that a European engine is used for EFA when it goes into production. I was worried about other Governments, elsewhere.

I am sure that we shall have a European engine. But it is that much more difficult for the European engine if there is an American engine too, even though a perfectly good European engine could be put in now.

I think that we can both agree about that.

There has been considerable discussion about Nimrod and AWACS. My hon. Friend the Minister has said that there will be an announcement next week. However, concern has been expressed that if Nimrod does not succeed, that will have a dramatic effect on all the technologies being developed in our defence industry. We have a rare capacity to denegrate ourselves unduly. If Nimrod does no succeed, it will be a comment on the technologies involved in that part of GEC. However, it should no be forgotten that the head-up display system was developed within that section of GEC has just been sold for aircraft in the United States. Thus the Americans recognise that company's expertise in that sector, and believe that it is worth purchasing because it is a world leader. That is the context in which different technologies should be judged.

I welcomed all the speeches that were made, but particularly that made by the hon. Member for Newcastle upon Tyne, East (Mr. Brown). Most speeches have revolved around aviation, but the hon. Gentleman reminded us of the importance of naval defence. There are other projects such as the NER90 and the aviation support ship, which he did not mention, to which we shall have to address ourselves as they evolve.

I beg to move,

That this House notes the wide range of education and training initiatives providing opportunities for employed and unemployed people to obtain and enhance skills; welcomes the greater publicity given to the schemes by television advertising; notes that now all 16 year old school leavers are able to have two years training and that 460,000 places are on offer; recognises the importance of the review of vocational qualifications and the extension of the Technical and Vocational Education Initiative programme; further notes that adult training measures have been increased to assist over 250,000 people; acknowledges the need for continuing education and training in industry and business; notes the proposed increase to 100,000 places per year on the Enterprise Allowance Scheme due to the demand brought about by its success; and recognises the important part played by Local Enterprise Agencies and other schemes in helping small businesses.

Parliament has been aware of employment and training initiatives for some time but it has tended to overlook them in general debates. The Government have put in place a wide range of measures to help the unemployed and people in employment who want to enhance their skills or obtain new ones. Such measures are among the most important factors in industrial and business life today.

By tradition, we are not as aware or as forceful about training in industry as some of our continental competitors. Even between the two world wars, our training provision was significantly smaller than that of Germany, which trained to a far higher level and on a broader basis. We had apprenticeship schemes and various other provisions, but we still had a restricted system which did not recognise the importance of training for the future.

Schemes that are run by the Department of Employment or which are run in association with it are being advertised in the press and other media. I welcome that. People are affected by advertising on television more than by any other source, and the people whom we are trying to communicate with concerning the availability of schemes are sometimes at home, depressed and watching television. Television advertising is therefore a successful method of getting the message over.

I have been impressed by the advertising of the youth training scheme, which shows people what opportunities are available to them and encourages them to explore what it offers. We want to communicate with people who have had difficulty in the past. The restart programme, which incorporates an interview procedure and counselling, has shown that, although several schemes have been in place for some years, people have not taken them up, perhaps because of lack of knowledge, lack of advertising or lack of communication in jobcentres.

The extra advertising has been shown to be helpful with the restart programme as it has got over to people the fact that their needs are recognised. That is extremely important in any training programme. The idea within the restart programme is the knowledge that many people go along with the same job or the same type of job that they did before. It is understandable that people who have worked in a trade or industry for some 20 years—I recognise that some industries may end completely—will, if they are looking for another job, seek one to which their skills will contribute directly. It is harder for them to look for something entirely different—to move from the manufacturing industry into a service job. Such people may have thought that they could never do a job that involved being in direct contact with the public. It is very difficult for such people to recognise that there are opportunities for them to undertake such work.

Having said that, there are the contradictions of skilled people in the engineering industry who were made redundant during the 1970s—perhaps they were skilled grinders—who did not look for another job in the industry but rather looked for a job as a milkman or something of that nature. Often they have been satisfied and happy in the new environment that they have chosen. However, most people are reluctant to retrain, or unaware that they can be retrained. Such retraining is not necessarily for unskilled or semi-skilled work, but there are skilled jobs that require a considerable amount of training.

One of the biggest advantages of the restart scheme is that it opens the eyes of people. The counselling and understanding of the interviewers will help such people to try to find out their aptitudes, which they may have been waiting to use. In the past, very often industry has not looked at the aptitudes of people and what they may have to offer. Those companies which have been facing redundancies and have carried out some redeployment that involveed considering the aptitudes of particular individuals have been successful. People have been taken from clerical work and put into something different, or vice versa.

This attempt to consider the aptitude and willingness of people to relearn, at all levels, is of great value. The restart scheme is successful in helping people to go out and retrain, to take the opportunities or at least, to consider those opportunities available to them. All this has been done within the general umbrella of the Government's measures and it is welcomed.

With regard to YTS, television advertising has been particularly successful. The first scheme came in for a great deal of criticism and perhaps it was not run in the same way as the present one. There have been a number of satisfactory developments. The young people I have spoken to who have been on YTS have welcomed the opportunity it offers. They consider that YTS has made a worthwhile contribution to their lives.

It is also important that, in a great many cases, YTS has enabled young people to acquire qualifications that they thought were impossible to achieve. The young people may have left school with modest or no qualifications, but under YTS, they are willing to take opportunities to qualify or to start qualifying for a particular trade. Something like a quarter of the people coming off YTS have some new qualification.

I welcome the Government's extension of the scheme to two years. There were many criticisms from people on the previous scheme that, just when they had got to grips with the work, they were having to leave and get a job. The extension was welcomed by both sides of the House and I think that that is a much more satisfactory basis on which young people can learn and be introduced into the work situation.

Whatever happens with the YTS, there will always be some individual criticisms, but I am encouraged by the fact that although there were many criticisms when the scheme started, the problems have diminished and the monitoring and control of schemes and agencies seem to be much more successful, which gives us hope that those coming out of the scheme will have a sound background for work.

Considerable progress has been made in the review of vocational qualifications. We have a proliferation of qualifications and bits of paper that people can pick up. I do not demean qualifications, but they are not readily understood or comparable, particularly by small employers.

The review of vocational qualifications up to higher national certificate level—the HNC is no mean standard to achieve—will produce a rationalisation and understanding of qualifications and that will encourage young people to look at the worth of courses when seeking qualifications that will help them when they look for jobs.

Not only individuals will gain; industry and business will gain enormously when people obtain qualifications on schemes. We need a sufficient number of well-trained and qualified people if our businesses are to prosper. It has not been uncommon for us, especially in the past 25 years, to have a shortage of skills in some areas. Companies have often not developed and the lack of skills has made us comparatively inefficient in our use of labour.

As training becomes available, companies will have a better source for the skills that they need. The issue is wider than the employment and training initiatives, because we have a long way to go in developing our education systems to give us what the country needs. The system has been too fragmented and too ad hoc. A rationalisation towards a more understandable system will be helpful.

The technical and vocational education initiative is being expanded and it is hoped that about 100,000 school leavers will be helped next year, at a cost of about £250 million. That is good, because it brings in the relationship between industry, the education system and the Manpower Services Commission. Through collaboration, many schemes are becoming more realistic and more in tune with the needs of an area.

In my own area, at the north Warwickshire college, the collaboration between the MSC and business has been successful. Any initial reluctance to see the MSC and employers directly involved was overcome without much trouble. There is a genuine willingness to have co-operation and involvement in these ongoing schemes. I refer to people of all ages, not just those who are leaving school or those still at school. Older people are embarking on other schemes involving open learning and the Open Tech, which provides an excellent opportunity for the development, extension and acquisition of skills.

I was impressed by the way in which the Open Tech system allows people to work at their own speed and ability. Many of us became used to set courses at technical colleges. Now, 50,000 people will take Open Tech courses. That is an important contribution to the development of skills.

The Government's proposed adult training measures are significant. They range from local training grants, job training schemes, training for enterprise, the Open Tech, and so on. About 250,000 people will take advantage of those schemes at a total cost of around £270,000. That is a major contribution towards helping industry and the unemployed. Many people taking part in the adult learning schemes will be unemployed. At that cost and with such a large number of people, it is a significant contribution. The training and employment initiatives are worthwhile. A number of people are engaged in community programmes and the Government are making a further 250,000 places available.

The criticism that they are not real jobs or that they do not help does not alter the fact that schemes help people to learn new skills and encourage people back to industry. As well as restart, there are other programmes, such as the community programme.

Another successful course that I am glad to see the Government recognise every few months by extending it is the enterprise allowance scheme. That scheme is expected to increase to 100,000 places a year. It has provided an opportunity for people to have a go at something. Those who have faced a bleak outlook will no longer be penalised. This scheme is successful and is attractive to people who have been absent from industry through redundancy. They know that they have some help. One hundred thousand places are available, and that shows the success of the scheme. So far, 190,000 people have taken advantage of the scheme. All hon. Members would welcome those who are enterprising. It makes the forceful point that we are creating new businesses, small though they may be. About 90-odd jobs for every 100 firms will be offered. That is one of the most successful and attractive schemes and every bit of advertising helps to promote it.

Local enterprise agencies have helped in setting up many small businesses and they have been very successful, although I am sure that their success varies from area to area. The Warwickshire enterprise agency has given enormous help to those starting on enterprise allowances and to those who already own small businesses. The Department of Employment has recognised the many difficulties faced by small businesses, which benefit from being able turn easily to enterprise agencies for assistance in continuing and expanding. In some cases, those agencies have enabled people to start small businesses.

There are more than 300 local enterprise agencies, and I am sure that the numbers will increase. Their work fills a gap. The Government provide £2·5 million to the enterprise agencies, but it is important also that such agencies are privately based. They give invaluable advice to small business men. The Government have set up other schemes to help small firms. It helps small firms to know that they can obtain impartial advice, some of which is free.

Small businesses still have some problems. Some large companies do not pay their bills quickly, which creates tremendous cash flow problems for small companies. A small company's very survival may be determined by how quickly large companies pay. I am sure that my hon. Friend the Under-Secretary of State is more than aware of this problem, which has been drawn to his attention many times. There must be careful consideration to determine what pressure will make large companies recognise the needs of small business people.

The Government's measures to build businesses, not barriers, are important. Many small businesses face financial problems, not just because they are unsuccessful but because of the reaction of the banks and other financial institutions. Manufacturing businesses have fairly large investments in relation to their size, so there may be difficulties in paying for supplies. The set-up is much more complex than it is for retail businesses. Many are at times threatened by the financial world's lack of understanding of their needs.

The Department of Employment and the Department of Education and Science have been involved in important training initiatives to alleviate unemployment and to enable people to look forward to new or better jobs. Even if people are involved in industry and commerce, a problem remains.

The Engineering Council in its document "A Call to Action" mentioned the problem of continued education and training. That is important and needs to be considered by industry and commerce. Even professional people in industry and commerce need to update their knowledge, awareness and skills. The Engineering Council has suggested continual education and training of engineers, whether qualified, chartered or technical. Many people in industry and commerce retain and attend courses to update their knowledge, but it is logical and important for most professions to produce a structured way of doing that. I certainly support that view and I know that the Department of Education and Science has been sympathetic and given universities some help with that.

Training does not end after initial training or after a job is found. It is continuous. All hon. Members know that it is important to retrain people who leave one job and go to another and we must recognise that training thereafter is equally important. A range of schemes is available through the Department of Employment, which provide opportunities and have a significant contribution to make to employment. They will give us a better trained work force in future. It is important that that information is conveyed in the most suitable ways to those who can take advantage of it. Television advertising and the restart programme have contributed.

We have the technology and the schemes to give people a better opportunity to return to work and to enhance their skills in work. Now is the time to use them.

First, there can be no question but that we in the Labour party welcome training and retraining schemes when they are proper schemes. One could hardly do otherwise considering that we have the highest level of unemployment anywhere in the industrial world and one of the highest levels of long-term unemployment in the industrial world. Indeed, the Department of Employment is getting itself a rather shady reputation. The notice outside its door states:

"Department of Employment: official Government massage parlour."

For the Department, any method of massage for employment statistics is considered. The notice continues:

"Eighteen methods currently in use. Reducing is our speciality."

If only the Government showed the same dedication to, obsession with and imagination for, dealing with the problems of employment that they show in dealing with the employment statistics, they might have a record of which they could speak with pride.

We are discussing training and retraining against the background of the worst trained work force in the developed world. That is astonishing considering that we used to be the workshop of the world and considering that we are told that the future of our economy must lie in high value added and new industries. How can it when there are not the people to man those industries?

In January, the Financial Times carried the headline,

"MSC warns of growing skills shortage".

The article stated

"British industry faces continuing and in cases increasing shortages of skilled workers across a widening range of jobs, says a report by the Manpower Services Commission."

That is the view of the MSC, the Government's own quango. The article continued:

It says various indicators point to skill shortages not only in the new advanced technology areas of engineering and electronics but in service sectors on which the Government's hopes of economic growth are pinned.

In new technology areas such as electonics and software, research indicates growing shortages at all levels of the engineering industry—craftsmen, technicians, professional engineers and computer specialists."

We are preparing ourselves for the economy of the future and the markets of the future with diminishing skill levels and the replacement of previous schemes with new schemes which are largely synthetic and cosmetic in aim. It is hardly surprising that at both skill level and graduate level we trail behind virtually all our competitors.

A remarkable feature of British industry is the idea that training is someone else's job. Business men turn up at meetings to bleat about the schools, the universities and the technical colleges, but they do nothing themselves. They do not put their money where their complaints are. In this country, industry spends 0·15 per cent. of turnover on training—about one sixth of 1 per cent. The Germans spend 3 per cent., so it is hardly surprising that their products tend to win in the market and that their efficiency is greater than ours. Productivity is not just a function of the work force. It is a function of the quality of the work force, the quality of investment and the quality of management. The best workmen in the world cannot match productivity if they do not have the equipment or if the firm is not adequately organised.

Before anyone comes out with the nonsensical argument that people in this country are incapable of matching productivity levels, let him talk to Japanese, American and German firms using their managerial techniques with a British labour force and obtaining productivity levels as good as those anywhere in the world. Yet according to the National Institute of Economic and Social Research productivity in West Germany is now 60 per cent. higher than in this country.

As I have said, productivity involves a combination of elements. I have quoted the view of the MSC that there is a desperate and galloping shortage over the whole spectrum of skills, especially in the new technologies. How much investment is being made in those areas? Are we making up for the skill deficiencies in the engineering of our products? Are we putting in equipment to provide the inbuilt engineered skill that the work force does not possess? The answer is no. Only today there are newspaper reports on this. I quote from a press notice from the Department of Trade and Industry, so the Government cannot question its authenticity. We are told that

"Total investment by manufacturers … is expected to rise by around 2 per cent. in 1987 compared with 1986."

That is wonderful. At that rate of matching resource to need—if the Government can sustain that marvellous increase in manufacturing investment—we shall only have to wait until 1995 to get back to the level of investment in 1979. They are making progress! The Opposition cannot be blamed, however, for being rather dubious even about the claim of 2 per cent. growth from next year, which is what the Government envisage. During Trade and Industry questions and questions to the Prime Minister during the year, the Secretary of State for Trade and Industry and the Prime Minister have said, "We are on our way." We have been told that investment is on the upturn. The right hon. Gentleman and the right hon. Lady have said, "Investment is growing and our predictions are being fulfilled." It must be noted, however, that the press release from the Department of Trade and Industry to which I have already referred shows that after a year of "marvellous" progress as a result of "highly successful" Government policies, investment will be £150 million less than a year ago. It seems that that will happen despite all that we have heard said from the Government Dispatch Box. Even if the increase is achieved next year that the Government are claiming, we shall return to the pathetic level of performance that the Government achieved a year ago.

British industry must shudder when it sees what is happening elsewhere. There is a shortage of manpower skills across the board. If we are lucky and if the Government can sustain the rate of growth in investment, we shall return to the level of 1979 only by 1995. How proud the Government must be of their success and achievements.

Industry seems to show no more sense of urgency than the Government. A recent report in the Financial Times showed that 56 per cent. of the companies surveyed had no formal training scheme. The investment figures suggest that companies do not have formal investment plans either. If the three components are a trained and skilled work force, adequate investment and good quality management, what can be said about the quality of our management when we are faced with an across-the-board shortage of skills because it will not train, and a lack of capital equipment to match that which is provided by our competitors because British industry will not invest because it has no confidence in the Government's policies and progress?

Various schemes are coming forward, some of which are interesting and some positively fascinating. Preliminary results in the nine pilot areas where the restart scheme is being operated show that only 1 per cent. of restart interviewees were placed in proper full-time jobs after leaving the scheme.

No.

I shall be glad to hear why that is wrong when the Minister replies. I shall be delighted if he can provide some information that is not as dubious as the unemployment statistics. I suggest that he sends a message along the Government Front Bench to the Box to ask whether the figures that he is to give when replying to the debate will have been massaged 18 times between leaving the Box and his receipt of them, bearing in mind that the unemployment figures have been massaged 18 times by the Government.

The hon. Member for Nuneaton (Mr. Stevens) used the term "real jobs". I can recollect the indignation that the Prime Minister displayed during Prime Minister's Question Time when she was told about the need for public expenditure. That was put to her by the CBI, the TUC and the Opposition. The right hon. Lady did not want to know and said, "We want real jobs". She argued that jobs created by public expenditure are phoney jobs. The clarion cry for years was "real jobs". We do not see any real jobs being created. Nearly all the improvement in the employment statistics is as a result of the creation of unreal jobs, using the very public expenditure that the Prime Minister was supposed to be disdaining.

Let us look at the phoney jobs and the statistical method used by the Government—the massage parlour approach, which removed over 1 million people from the employment record. The motion tabled by the hon. Member for Nuneaton mentions employment schemes. About 600,000 or 700,000 people are on those schemes, which, coincidentally, takes them off the unemployment register, but there is no guarantee that there will be a job at the end of the scheme for which, temporarily, the Government are using public expenditure.

The enterprise allowance scheme is mentioned in the motion, and the hon. Member for Nuneaton spoke about it. I gather that it is one of the Government's great success stories. An article in the "Financial Guardian" on 24 November this year examines the scheme and, to his surprise, the writer discovers:

"one man's job creation can become another's job loss."

There has been a new study of entrants to the enterprise allowance scheme, based on its operation in Strathclyde, Tyneside and London. It was carried out by the small business unit of the polytechnic of Central London. So the figures and effects have been looked at. It was fascinating to see what emerged. Nearly two out of five—40 per cent. — of the firms surveyed were sure that their business activities had either partially or completely displaced competitors. Surveys by the Manpower Services Commission, which controls the scheme, give a displacement rate of 50 per cent., so the very scheme that the hon. Member for Nuneaton is lauding in his motion is in fact destroying one job for every two that it claims to create. That displacement figure may be on the low side.

indicated dissent.

The hon. Gentleman knows that. He need not shake his head. He knows my background on the creation of small businesses, and so on. I think that I know as much about the matter as he does. Most of the people entering those schemes are going for the jobs for which entry is easiest. One cannot blame them. That is understandable and natural. They go for the sectors where the capital cost going in is lowest because they do not have the capital and, as the hon. Member for Nuneaton said, the local bank managers make sure that they do not find it easy to obtain the capital. Then those people try to knock out existing businesses so that they can take over their work. The newspaper article states:

"More than one third of survivors indicated that their preferred business strategy involved cutting prices, 'presumably below that of their competitors.' A further 15 per cent. used advertising and 14 per cent. said that they offered a faster service than their rivals."

This is the important point:

"In other words, more than 60 per cent. of surviving firms employed a strategy aimed at taking customers from their rivals rather than creating a new market."

The report goes on to suggest that the real 12-month job creation rate could be as low as 17 per 100 surviving firms when one excludes the number of people who have lost their job as a result of the consequences of the scheme. In many cases the schemes are not only fraudulent about what they purport to be, but are destructive of the objectives that the Government claimed in advancing them.

Far from having anything to be proud of, the Government should answer to the House why it is that the Manpower Services Commission is so worried about the future supply of skill. The Government chose to abolish the training board system and many of the other training systems. If these were genuine training proposals that in any way related to the scale and quality of our needs we would applaud them. Unfortunately, they are not.

I congratulate my hon. Friend the Member for Nuneaton (Mr. Stevens) on his success in the ballot and on his choice of subject for this debate. I welcome to the debate the right hon. Member for Swansea, West (Mr. Williams). We are old sparring partners from the time when I was a junior Minister in the Department of Trade and Industry. We shared many interesting hours together in Standing Committee on what became well known as the Co-operative Development Agency and Industrial Development Bill which is now an Act.

I shall not devote as much time as the right hon. Gentleman would wish me to devote to answering all his points, because if I did that I would be deflected from my main purpose, which is to thank my hon. Friend the Member for Nuneaton for his support for the "Action for Jobs" campaign. However, the right hon. Gentleman will not be surprised if I take him up on one or two issues. We have spent an enormous amount of money, £3,000 million, to provide opportunities and help for over 1 million people in more than 30 schemes and programmes.

We introduced our campaign in April because research told us that far too few people knew about the help that we offered through our employment enterprise and training measures, and both employers and employees proved to have little knowledge of our measures and suggested that we should do more to publicise them. That is why we produced the "Action for Jobs" booklet. It is an easy-to-read guide to the support and opportunity that we make available.

So far more than 3·3 million people have picked up a copy of the booklet. Many people, including my hon. Friend the Member for Nuneaton, have told us how useful it is. That view was endorsed this week because the "Action for Jobs" booklet was one of the winners of the Plain English award. We in the Department are proud of that because only eight awards are given in any one year. The Department of Employment won two awards and one went to the Department of Health and Social Security. I think it is unique for one Government Department to win two such awards.

It is clear that we are effective in putting across our message and we shall continue to put it across in a straightforward and simple way. Our principal aims are to make people more aware of the range of measures introduced by the Department and to improve the awareness of individual schemes. That is why we have also used television advertising because we want to get the message across to people who want to open more doors to more opportunities. That is why our campaign slogan "Action for Jobs, Opening more Doors" has caught on, and the evidence shows that our campaign is working.

I was fascinated to hear the right hon. Member for Swansea, West speak about 18 different changes. The Labour party constantly speaks about those changes. In many different ways the right hon. Gentleman accuses the Government of exaggeration. In reality, there have been just six changes that can be detailed and have already been detailed by my noble Friend the Secretary of State for Employment and my right hon. and learned Friend the Paymaster General when they were giving evidence to the Select Committee on Employment.

How on earth the Labour party can come up with 18 changes stretches credulity to breaking point. It is up to the Labour party to explain which of the six changes that have taken place it would reverse. Which category of people that we have removed would Labour put back on the register? It is up to the Labour party to explain what it would do. The Labour party's shadow spokesman on employment admitted on television that if he had been advised by the Chief Statistician in the Department of Employment, as Ministers have been advised, to change the methodology, he would have accepted his advice. By that admission, he blew the Labour party's cover. We have referred to that time and again in the past, and we shall certainly do so in the future.

The right hon. Member for Swansea, West said that the enterprise allowance scheme will lead to displacement, and he referred to the Manpower Services Commission's figures. There is an element of truth in what he said. It would be wrong of me to mislead the House; there is bound to be some displacement. The Manpower Services Commission's figure was agreed with the Treasury, which calculated that the cost of each job under the EAS would be £2,300. However, there should be detailed research of the displacement that will be caused by the scheme.

My hon. Friend the Member for Nuneaton rightly said that about 192,000 people have been set up under the scheme and that 99 additional jobs are created by every 100 businesses that succeed. Many of the small firms that have been set up under the EAS will employ even more people, and that figure will eventually be higher. Most of the firms that fail do so within the first 18 months. This scheme has been running for three years and three months, so we are able to compare it with other schemes on a three-year basis.

On the help that is available to the long-term unemployed throught the Action for Jobs programme, the central feature is Restart. By March 1987 we shall have invited 1·4 million people who have been out of work for over a year to an interview at their local jobcentre. We aim to offer everybody we interview a positive way back into employment. Restart has been amazingly successful. In the nine pilot areas to which the right hon. Member for Swansea, West referred, 91 per cent. of those who were interviewed were offered positive help. The right hon. Gentleman did not refer to the enterprise allowance scheme, because he thinks that those people are not employed. But they are in a job; they are self-employed. Therefore, I challenge his figures. They are completely wrong.

Included in the Restart package are a number of positive and practical opportunities, such as a job interview or a place on a Restart course or in a job club. The right hon. Gentleman and the labour party are quick to rubbish a number of these initiatives, despite the fact that they have been successful. The right hon. Gentleman is an honourable man in every possible sense and meaning of that word, but I challenge some of his colleagues, who do not, I believe, want the unemployment figures to come down. They do not like the fact that, for the last three consecutive months, the unemployment figures have come down. As the general election approaches, they do not like the fact that we are on top of the problem; it is unacceptable to them. Again I make the point that I do not accuse the right hon. Gentleman, but I am absolutely convinced that many of his colleagues are of that opinion.

After Restart, many people will go into the community programme, our principal scheme for providing help for the long-term unemployed. About 250,000 places are available on the programme, and this year 300,000 people will benefit from the scheme. Jobs are offered that last for up to a year on projects that significantly increase the long-term employment prospects of the participants and that result in the creation of something that is of practical value to the local community.

We are doing quite a lot to assist the long-term unemployed, and so we should. However, we are not neglecting those who are still at school or those who have recently left school—far from it. Young people need and deserve an education and training system that allows them to develop their talents and that equips them for future employment. Therefore, we have developed policies that are designed to reform and modernise our education and training system.

The technical and vocational education initiative programme announced by my right honourable Friend the Prime Minister in 1982 has rapidly become one of the most exciting and far-reaching developments in the school curriculum since the war. In my view, it was long overdue. In that programme emphasis is placed on the development of initiative and problem-solving skills. Its benefits are numerous—improved motivation, a more relevant curriculum and the giving of more impetus to school—industry links. But the main thing that hits one when one visits a TVEI school or college is the infectious enthusiasm of the pupils and teachers. That is why the £250 million being spent on the pilot projects is money well spent, and why, even at this early stage, we have committed £900 million over the next 10 years to extending TVEI to all secondary schools and colleges in Great Britain.

Of course, many young people will continue to leave school at the age of 16 or I7, and for them there is the new two-year youth training scheme, which builds on the enormous success of the one-year YTS which we launched in 1983. Opposition Members are far too quick to criticise or to rubbish the scheme. That is staggering, because it is an insult to those young people who are on such schemes. My hon. Friend the Member for Nuneaton was right to say that the vast majority—83 per cent.—were well satisfied with the training that they had received on the YTS.

In acknowledgement of a point made by the right hon. Member for Swansea, West, one must admit that Britain still lacks an adequately trained work force. The Conservative party has said that since 1979. We consider that a combination of the two-year YTS and the review of vocational qualifications is the one thing that will put that right. The two things go together. It is absolutely vital that we come out with a new system of vocational qualifications which will be respected and recognised by employers. Otherwise we are wasting our time.

I welcome the opportunity of paying a warm tribute to Mr. Oscar DeVille, chairman of the review vocational qualifications, for all the work that he is doing.

The motion refers to

"the need for continuing education and training in industry."

The Government entirely agree that effective training at all levels and throughout working life is an essential element in ensuring the competitiveness of British industry. It is primarily industry's responsibility to train its work force. Industry should consider that as an investment and not as a cost.

Hon. Members may be interested to know that a few weeks ago I had the privilege of visiting Sir John Egan, the chairman and managing director of Jaguar plc, in Coventry. I was interested to see what he was doing about management training, because no hon. Member would deny that Sir John Egan has effectively turned that company round. He puts its success down to two factors: first, quality assurance, and, secondly, management training.

The thing that I find interesting—the right hon. Member for Swansea, West will welcome this as much as I did—is that Sir John Egan insists that everyone, from the lowest rungs of management right up to the top, must take two weeks out a year to go on a management training course. That should be broadcast from the roof tops. When I asked Sir John whether that included him, he said that it did. I asked him where he went for his management training and he replied "The London Business School". He considered that it was important for him to get out of the company, perhaps to take a wider view and to find out what was going on in other companies. Jaguar plc, with Sir John Egan at its head, recognises the importance of management training. It knows that that permeates all the way down to the shop floor because, obviously it has concentrated on skill training with the company and that has led to the company's undoubted success. The company deserves to be warmly congratulated.

The right hon. Member for Swansea, West got it wrong when he referred to the article about skills shortages and to the MSC's statement. The truth is that skills shortages are not as he said, desperate and widespread.

There are shortages in some specific skills, such as in the new technologies, and in specific geographic areas, such as in London and the south-east. Indeed, only yesterday, I was dealing with a particular problem. I must admit that there are shortages, particularly in the construction industry, but we shall do something to try to put that right pretty quickly.

I should like to respond to the praise in the motion for our enterprise programmes, because I believe that the Department's prime aim is to encourage the development of an enterprise economy. To that end, the Government attach considerable importance to the local enterprise agency movement. My hon. Friend the Member for Nuneaton has a very distinguished and successful enterprise agency, known as the Warwickshire enterprise agency, which covers his constituency. It applied to my Department for grant under the local enterprise agency grant scheme, and I am pleased to say that we were glad to support it in August, by giving it a £16,000 grant.

Tribute should be paid to Mike Whitfield, who has done a tremendous amount to build up that agency. I know that my hon. Friend the Member for Nuneaton and many of our colleagues use that agency when dealing with constituency problems in relation to small businesses. It must be said time and again that, if only small businesses took advantage of the hand-holding service provided by enterprise agencies, they would be much more likely to succeed. The failure rate is one in 12 over a period of three years, compared with the average failure rate of one in three. Therefore, the proof of the pudding is in the eating.

My hon. Friend the Member for Nuneaton also referred to the enterprise allowance scheme, which the Department regards as the jewel in the crown. We are extremely proud of it. My hon. Friend made some forceful remarks about the importance to small businesses of being paid on time. He urged large companies to pay their hills to small businesses on time. I have been crusading for that for many months.

As a result of research that we had done, a new Government code of practice entitled "Payment on Time" was issued. It was well received, and has had to be reprinted. The most important thing that I had to do was to write to the chairmen of the top 100 companies in this country, saying that it was important that they should recognise that delaying payment to small businesses could make all the difference between survival and failure. If the reverse happens, the large firms could withstand the pressures.

But it is also important to point out that the procurement departments within Government must also pay their bills on time. I am pleased to say that they are under standing instructions to pay on time. If any hon. Member has evidence of that not happening, I hope that he will write to me so that I can endeavour to put things right very quickly.

In the short time available, I hope that I have given the House an indication of how wide-ranging our employment, enterprise and training initiatives are. It has only been an indication, and there are other important initiatives that I have not had time to mention. I again congratulate my hon. Friend the Member for Nuneaton on his initiative and enterprise in initiating this debate, and I am very happy to support the motion.

On Tuesday 11 November, the Merton and Sutton district health authority decided to recommend to the South-West Thames regional health authority the closure of acute services for children at Queen Mary's hospital in my constituency, and the future provision of those services on an enlarged site at St. Helier hospital, which is also in my constituency.

On Sunday 16 November, I issued a press release deploring the recommendation and recalling that I had consistently favoured the option of rebuilding and modernising acute services for children at their present site at Queen Mary's. I drew attention to the high standard of medicine and nursing at the hospital, the popularity with parents of the family-centred care for which it is renowned, and the fact that opposition to the relocation and support for the development of those services on their present site was by far the best-supported position taken by members of the public during the recent consultation process. I also emphasised that I would make further representations in an attempt to influence the outcome before any final decisions were taken.

I am so committed and concerned about this subject that, perhaps, I jumped the gun.

This debate is an important part of the further representations that I have mentioned as I want the Minister whom I warmly welcome to her new responsibilities, to be fully aware of the shortcomings of the district health authority's recommendation and of the powerful reasons why I favour a different course of action.

The district health authority eventually decided to recommend what was identified as option 1 in the pink document that it published following formal consultations on the earlier proposals, which were contained in a document entitled "The Strategy for Acute Services, 1986–94". Option 1 amounted to closing acute services for children at Queen Mary's, rebuilding them on an enlarged site at St. Helier and providing acute services for adults at St. Helier, Sutton and Nelson hospitals. I intend to concentrate on the shortcomings of the proposal with regard to acute services for children.

The first point of criticism of the district health authority's recommendation is that its preferred option 1 would not be the cheapest in terms of capital cost at a time when that consideration is bound to be an important factor in the regional health authority's mind. In terms of the four options which were deemed realistic by the district health authority, option 1, at something over £23 million, would be the most expensive in terms of capital cost according to the district health authority's estimate.

The second point of criticism is that there is nothing to choose between option 1 and option 2 according to the district health authority's estimates of the revenue consequences of each in 1993 and 1994. Indeed, both options, to use the words of the district health authority's report,

"meet the 1993–94 targets, as near as needs to be."

There is, therefore, no decisive financial advantage for option 1 over option 2 on revenue-saving grounds.

The third point of criticism is that the district health authority recommendation was arrived at by fairly dubious statistical methods, dressed up in the usual pseudo-scientific language of cost-benefit analysis. When one takes the trouble to look into this bureaucratic mumbo jumbo more closely, it soon becomes apparent that the figures used are highly tendentious and certainly open to challenge on grounds of their inevitable subjectivity, especially in terms of the weightings given to the various factors.

For example, according to something called the sensitivity analysis on the cost side, option 2 leads the field if the revenue savings on all of the options turn out to be 95 per cent. or less of the forecast for 1993–94 and if the capital costs turn out to be 105 per cent. or more of the forecast for that same year.

In view of the well-known fragility of all such financial forecasts over a period as long as seven or eight years, it seems wise to question any dogmatically expressed preference on these grounds alone. When we examine the benefit side, the outcome seems to be even more subject to the arbitrary weightings and value judgments of those who drafted the district health authority report. For example, the figures used appear to penalise any tendency towards centralisation of provision when, logically, that ought to be the hallmark of any rationalisation scheme.

In the scoring for quality of service for children it is not clear why Queen Mary's hospital scores lower than St. Helier when the former is a specialist children's hospital with an established international reputation. It is not clear why bureaucratic considerations, such as planning flexibility, scores 12 points, timing 12 points and compatibility with other strategies seven points. Together they amount to 31 points, yet the much more important consideration of public acceptability and staffing acceptability are weighted as low as seven and five points respectively.

The fourth point of criticism concerns the apparent inconsistency between what we know to be the policy of the regional health authority and indeed of the Government, in favour of concentration of services, and what appears to be the district health authority's preference, in option 1, for dispersing its acute services among no fewer than three different hospitals in the district. The merits of centralisation, when resources are scarce, were clearly recognised in paragraph 19·3 of the regional strategic plan 1985–1994 and included the need to rationalise capital-intensive radiological services, the concentration of high technology facilities and making the most effective use of specialist skills and equipment. All those factors strengthen the argument for option 2 in the district health authority report rather than option 1.

The fifth point of criticism concerns the failure of the regional health authority to ensure the most cost-effective and rational provision of acute services for children within its region. This may have been achieved by preventing Mayday hospital at Croydon from developing its children's unit at the expense of Queen Mary's and by discouraging the mid-Surrey district health authority from following suit and building its own children's unit at Epsom general. Such replication of expensive, specialist facilities, within a comparatively small geographical area, does not appear good policy at a time when resources are inevitably scarce.

It would be much more sensible to continue to take full advantage of Queen Mary's reputation for excellence in child services and to regard it as a specialist, regional centre for children in much the same way as St. Helier hospital, also in my constituency, is regarded as a regional specialist centre for renal dialysis and kidney patients.

A letter from Mr. Rolls, the director of planning for the mid-Surrey district authority, to my personal assistant, Mr. Robert Marshall, made it clear that facilities such as the Guthrie unit at Queen Mary's, which screens babies for physical and mental handicap, are complemented by the general paediatric provisions at the hospital. That hospital undertakes 25 per cent. of the total paediatric work load in mid-Surrey. Mr. Rolls refers to:

"the disadvantageous effect upon Mid-Surrey of a reduction in services from Queen Mary's."

A similar point in support of Queen Mary's was made during the consultation process by the general manager of the Royal Marsden hospital of London and Sutton, who expressed concern that the district health authority document does not take account:

"of the increasing needs of this Authority for paediatric services currently provided at Queen Mary's."

Once again, here is an example that concerns the care of children with leukaemia and solid tumours and which supports the many ways in which Queen Mary's, at its present site, provides an invaluable service for the whole region.

The sixth and final point of criticism—this is perhaps the most problematic aspect of the entire proposal—is that there seems to be considerable doubt and obscurity surrounding both the feasibility and the timing of the proposed translation of acute services for children from Queen Mary's to an enlarged site at St. Helier.

With regard to feasibility, it is already clear that capital shortages, especially for bridging finance, are worrying the regional health authority notably for the years between now and 1990. The regional strategic plan states:

"The full amount is unlikely to be affordable."

That means that any scheme, such as the district health authority's option 1 that is forecast to cost £23 million, must be regarded as financially doubtful. That does not take into account the other difficulties that may arise from the need to obtain planning permission for the development and extension of St. Helier hospital on what is now classified as metropolitan open space. Naturally, the London borough of Sutton wishes to protect that land as green belt for the benefit of the local community.

Even if all the other problems could be solved, great doubts would still surround the period of transition. For example, if the existing acute child services at Queen Mary's were reduced too soon or if the new services proposed at St. Helier were delayed for any reason, there would be serious problems for the children of mid-Surrey and elsewhere in the short to medium term.

Equally, the transfer of specialist staff and equipment from one hospital to another is always problematic and often results in poorer quality or less extensive provision for the patients during the transition period. I suggest that that would be another form of disruption and dislocation from which the children concerned should be protected.

For all those reasons, I believe that it would be wrong to go ahead with option 1 in the district health authority's document. In my view it would be far better for the regional health authority to endorse option 2 or something like it, as that would involve the rebuilding and modernisation of acute services for children at Queen Mary's hospital on its present site or, conceivably, on part of its present site and the concentration of all other acute services in the district at St. Helier, which would be consistent with the principle of centralisation.

That solution would be cheaper in capital costs and about the same as option 1 on revenue savings. It would enable Queen Mary's to continue as a specialist child services centre for the entire region and beyond. It would be more cost-effective than allowing the duplication or triplication of acute child services in quite a small geographic area. It would also be less likely to fall foul of planning difficulties than would some of the other proposals.

Above all, option 2 or something like it would be popular with the children, their parents, the nurses at Queen Mary's hospital, whom I know, as I have visited the hospital on many occasions during the time that I have had the honour to be a Member of Parliament, with the league of friends and with the general public in my constituency.

Therefore, I urge my hon. Friend the Under-Secretary to see that if the matter is referred to her Department the best decisions are taken in the interests of the children and all who care about them.

I congratulate my hon. Friend the Member for Carshalton and Wallington (Mr. Forman) on his success in the ballot and I thank him for his kind personal comments. My hon. Friend has again shown the great dedication and care that he devotes to his constituents, and I am sure that they know what efforts he has put into securing good NHS services for them.

I pay tribute to a long-established centre that provides specialist services for children. Queen Mary's hospital in Carshalton has been a special children's hospital for more than 70 years and I have no doubt that in the early years of this century the same agonising went on about what sort of services should be provided, the location of the unit, whether the money could be raised, and so on. We are seeing what is almost a 70-year cycle.

I also join my hon. Friend in paying tribute to the marvellous caring work done by all the staff at the hospital. Their dedication and expertise must be given the praise that they deserve.

I start by picking up a comment made by my hon. Friend. This is not a closure, and we should not use the word "closure". It is a reprovision of services in, we hope, new facilities and possibly on a different site. If we do nothing, it is certain that sooner or later Queen Mary's hospital will fall down. Given the age of the buildings, that will probably be sooner rather than later.

We have an obligation not to close the hospital or to have a closure forced on us by the poor condition of the buildings, but to make adequate and timely planning and provision so that the services can continue into the next century in more modern facilities.

I understand that the fabric of the building at Queen Mary's is substandard and is giving some cause for concern. The heating, electrical and building services need renewal. The wards alone might cost about £8 million to upgrade and, even then, the district would be left with an old shell and an inappropriate collection of buildings. I understand that many involved, including the staff and the community health council, have recognised the need.

The changes for paediatric services are part of Merton and Sutton district health authority's strategy for acute hospital services. Like every other district health authority in the country, Merton and Sutton has had to draw up a strategy for its health services up to 1994. This must take account of demographic changes, the needs of priority groups such as the elderly, the mentally ill or mentally handicapped, and flows of patients into and out of the district. Unfortunately, Merton and Sutton are some way behind most other districts in finalising their plans for acute hospital services. The DHA endorsed the proposals only a month ago, and they were considered by the region, as my hon. Friend said, only two days ago.

The district has about 1,000 acute beds for a catchment population of just under 250,000. That is a lot of beds. The problem today lies in the fact that they are spread over five different sites. This is costly in terms of overheads, and it means that essential diagnostic and back-up facilities have to be spread thinly or are sometimes available not at the levels that are required. The district decided that it wants to concentrate acute services on three sites in future instead of five. They are St. Helier, the present DGH; Sutton in the south of the district; and Nelson in the north. They propose to make the Wilson hospital a specialist hospital for the elderly, and indeed expect to increase beds for acute geriatrics and rebuild the acute part of Queen Mary's hospital on the same site as St. Helier.

There are three components to the services at Queen Mary's. They are general paediatrics, child psychiatry and regional specialty surgery for children. The hospital now provides some services for children from neighbouring districts. Future needs for child psychiatry will depend on the results of the option appraisal which the regional health authority is conducting on its policy document. A policy review is being undertaken for the region as a whole on facilities for surgery for children—that is, paediatrics and neonates. It is not on general paediatrics.

The people of Merton and Sutton, and especially the children, enjoy a high level of health services. Waiting lists are among the shortest in the country, plenty of beds are available, and they are well staffed. This is partly due to the determined advocacy and great efforts of all concerned, including the efforts of my hon. Friend the Member for Carshalton and Wallington. But some factors suggest that there might be room for improving efficiency. For example, the turnover interval in paediatric beds—that is, the time when they are empty—is way above the national average. In fact, it is higher than the length of stay. Consequently, bed occupancy is about 59 per cent. at Queen Mary's and only 34 per cent. at St. Helier. The throughput of patients is low and the incidence of day cases is also low. There are nearly 200 beds at Queen Mary's. They are clearly not being used as they might be. This raises several questions. Either the beds are over-provided or the patients are not being counted,—they could be there but are not forming part of the hospital census—or the patients are not being served. Something needs to be tackled. Nurse staffing levels in Queen Mary's are nearly three times the national average, and they have much higher doctor-patient ratios than average. That might be because of good working conditions, high morale and so on, but the fact is that the health authority has to consider whether that pattern of service provision may be draining resources from elsewhere in the district, where they are also needed.

I understand that, at its meeting on 10 December, the regional health authority received the acute services strategy for 1986–94 from Merton and Sutton district health authority. After discussion, the region agreed to support the central principles of opton 1, that is moving the children's services to the St. Helier DGH site and providing adult acute services on fewer sites within the district. It was agreed that the officers of the region and district should undertake further detailed work on the feasibility of this option, in terms of most of the points that my hon. Friend raised such as revenue, capital, land resources, and so on, and make a further report.

Given that that is going on—I am sure that our comments will be taken into account—I shall answer the eight points that my hon. Friend made. He said that option 1 would not be cheapest in terms of capital cost. That is true, but the trouble is that none of them will be cheap. Option 1 would cost £20·5 million, option 2 £18·8 million, option 3 £19 million, and option 4 £19·6 million. None will be feasible unless the money can be found. Therefore, the difference between them is not great. My hon. Friend said that options 1 and 2 are approximately equal in terms of revenue.

Revenue savings.

That is right. His statement is not strictly true. The revenue savings on option 1—if they are accurate—are about £2·79 million a year and on option 2 about 1·9 million a year. There is a difference of not quite £1 million, but it is still a fair amount.

My hon. Friend in his seventh question asked about land availability and option 2. It is worth pointing out that, if option 2 is pursued, it will mean the closure of three hospitals—Nelson, Wilson and Sutton. I have no doubt that that will mean at least three Adjournment debates on the subject. This will mean that even more land at St. Helier would be needed to take on board orthopaedic, psychiatric and geriatric facilities provided at those hospitals, and they tend to be land-hungry specialities. If there is a problem in getting land for some children's services at St. Helier now, there will be tremendous difficulty in getting even more land for those other services.

My hon. Friend's third point was that the cost-benefit analysis is not credible. In fact, he used terms such as "pseudo-scientific", "highly tendentious" and "subjective"—all of which may well be true, but we are not in a position to criticise the methodology of the exercise. It is for the district and regional health authorities to satisfy themselves about that. The options appraisal was carried out with oversight by the regional planning department. As I said, at a meeting on Wednesday, the authority asked the officers concerned to look again in depth at, among other matters, the revenue feasibility of the option.

My hon. Friend's fourth point was that policy seems to be to centralise acute services as far as the region and the DHSS are concerned but the district health authority is planning to disperse services on three sites. I mentioned that the district health authority is operating on five sites, so reducing them to three is a version of centralisation. It is worth pointing out that the Queen Mary's site is on green belt land. There might be some difficulty in abandoning its use entirely, simply because the site would not be of much capital value to the authority. I understand that it is not intended that all services should move from Queen Mary's.

The fifth point was about the duplication of paediatric services in adjoining districts. My hon. Friend suggested that we should have discouraged developments elsewhere—for example, at Mayday and Epsom general hospitals—to take advantage of Queen Mary's facilities. The trouble is that those district health authorities want their services and feel that it is in everyone's interest to have local paediatric services on their district general hospital sites. Croydon plans to provide all its paediatric services by 1 April. If we said that it should not open those facilities in order to maintain the service at Queen Mary's, I am sure that it would be outraged, and we would have another Adjournment debate on the subject. Queen Mary's hospital now has 199 beds. The occupancy of those beds, even now, is not much above 50 per cent. There is already a sign that perhaps some of the beds, even while the districts elsewhere are using them, are under less pressure than they might be. The problem, therefore, will get worse and the result will not be the one suggested.

My hon. Friend's sixth point was about feasibility and timing. That is under consideration. The feasibility of the district's option is now being considered in detail, and the availability of land, timing, revenue and planning permission, and so on form part of that discussion. As I understand it, there can be no question of Queen Mary's hospital being closed before alternative services are provided.

The district must now go back and discuss with the local planning authority whether it can obtain the land to rebuild St. Mary's on the St. Helier site. The borough of Sutton has specifically resisted extending the hospital into the borough's open space. It seems that there is a long way to go before the matter is resolved. If, or when, the site is made available, the health authority will have some detailed and time-consuming work to do on planning and preparing for the building work needed. The regional health authority has to find the cash to finance the scheme. In today's climate, with such a large-scale capital building programme in the NHS, I would not expect the plan for Queen Mary's hospital in Carshalton to come to fruition for many years. In case there is any question that the facilities at Queen Mary's would not be available, I must say that they will not be withdrawn unless and until better alternatives are available to the children of my hon. Friend's constituents. I am glad to make that statement categorically.

While I am glad to have had the opportunity to discuss the future of Queen Mary's hospital and to pay tribute to all concerned, I believe that we are jumping the gun by some time. If and when a proposal to close the buildings which at present house Queen Mary's hospital, goes ahead, the district health authority will have to carry out the normal consultation procedures, which are lengthy, specific and written into law. If the community health council objects to the plan, the proposal must come to the Secretary of State for a decision.

I can comment as freely as I have done because it is unlikely that I shall still be standing at the Dispatch Box in 1993. That is way in the future. The closure may happen in this current strategic period, that is by 1994, and it may not. Nevertheless, I know that my hon. Friend will find it helpful, in years to come, to have raised the question now and to have taken the chance to express to the House the depth of local views on the planned changes.