Defence: Aircraft Carriers and UK Shipbuilding

Lord Palmer of Childs Hill Excerpts

Wednesday 6th November 2013 Lords Chamber

[Lord Astor of Hever]

My Lords, we must face up to the fact that the coalition Government inherited a much smaller Navy from the noble Lord’s Government. On the operational requirements, the First Sea Lord came to see me this morning and has offered to brief Peers on how he sees these carriers being used. I quite agree with the noble Lord, Lord West, that we need the carriers. They are built to be used.

[Lord Palmer of Childs Hill (LD)]

My Lords, when the cost of building two new aircraft carriers is set to rise by £800 million to £6.2 billion, Harry Truman’s adage, “The buck stops here”, is bound to be inverted. We have heard this in recent exchanges. The coalition Government blame the previous Labour Government; indeed, the contracts in my view and that of many experts, were flawed because the contractor only has to pick up 10% of the overrun. The Ministry of Defence and the Secretary of State must be complimented on negotiating for the overrun costs to be spread at 50/50 between both. However, I note in the repetition of the Secretary of State’s speech that the arrangement is to go on until the contractor’s profit is lost overall. I think we need some more meat regarding how that profit is to be calculated, because there are many ways of calculating what a profit is and not much was said about that in the Statement.

Once we get rid of the blame element we must ask, as the noble Lord, Lord West, asked, whether we need the carriers. We have exchanged views on this before. There are people who say that in an era of conflict marked by counterinsurgency, terrorism and cyberwarfare, carriers are not quite the necessity that they have been in the past. My first question to the Minister is whether the saga of carriers supports the GOCO—government-owned contractor-operated—arrangements we are suggesting should go into procurement. The Chief of the Defence Staff gave an interview on 3 November in which he said he wants the Armed Forces to be available in international crises such as striking firemen, foot and mouth, and intervention in terrorist heartlands. How do the carriers and the F-35Bs fit into that scenario?

Finally, turning to the three offshore patrol vessels, we are told that the marginal costs will be less than £100 million; what guarantees are there?

[Lord Astor of Hever]

My Lords, we do need these carriers, as I said to the noble Lord. On the question about GOCO, as the Statement said, the chair of the Public Accounts Committee has described the carrier programme as one of the most potent examples of what can go wrong with big projects in the public sector. We need to change this and we feel that a change of procurement is necessary. We will all have a chance to discuss this when the Bill comes to this House later this year. As for the operational use of the carriers, they are very flexible ships, they have full strike capability and they can also be used for humanitarian aid and the use of Special Forces. My noble friend asked what guarantee there is on the OPVs. The deal secured today is for a fixed price.