Oral Answers to Questions

Peter Luff Excerpts

Monday 26th March 2012 Commons Chamber

[Mr Marcus Jones (Nuneaton) (Con)]

4. What recent progress his Department has made on co-operation with the government of France on defence equipment; and if he will make a statement.

[The Parliamentary Under-Secretary of State for Defence (Peter Luff)]

We have taken significant steps to implement the UK-France defence security co-operation treaty signed in 2010. The recent summit, in February, demonstrated that our bilateral co-operation remains strong and that both nations are committed to delivering the aims of the treaty. The summit declaration set out the areas of co-operation on defence equipment, and we continue to make progress across all the programmes by ensuring that our time lines and requirements are aligned, and in some cases by setting up joint project offices.

[Mr Jones]

I thank the Minister. Can he give the House an assessment of the long-term future of our defence relationship with France, and the outcomes that he sees it delivering both now and in future?

[Peter Luff]

Yes, I can give my hon. Friend a clear reassurance on those points. The politicians, armed services and acquisition communities of both countries understand the importance of the relationship, which I believe will endure for many years because of the benefits it brings in terms of both enhanced capability and lower cost, which are crucial tests for anyone interested in delivering effective equipment for armed forces at a price the taxpayer can afford.

[Alison Seabeck (Plymouth, Moor View) (Lab)]

May I associate myself entirely with the Secretary of State’s expression of sympathy following the loss of two service personnel today in Afghanistan?

The Opposition support further co-operation with the French, as industry does. However, the industry’s concern is that the French Government have an industrial strategy and are already looking at how they maximise business for French companies. They have been faster out of the blocks yet again, so given repeated delays in the announcement on planning round 12, can the Minister tell the House exactly when we can expect the announcement? Can he please not say “shortly”, because industry and employees deserve a little better?

[Peter Luff]

I assure the hon. Lady that she can expect a statement very shortly. As for her more general point, this country has a very effective way of supporting defence industries by making them competitive to ensure that they can take on world markets well and strongly, by supporting small and medium-sized enterprises and exports, and by supporting science, which the previous Labour Government cut. Those things will give us a very strongly competitive defence industry, not only in respect of the relationship with France, but around the world.

[Graham Jones (Hyndburn) (Lab)]

5. What steps he is taking to increase sales of the Eurofighter Typhoon abroad.

Defence

Peter Luff Excerpts

Thursday 23rd February 2012 Ministerial Corrections

[Mr Kevan Jones]

To ask the Secretary of State for Defence pursuant to the oral answer of 8 February 2012, Official Report, columns 300-01, on Libya, what the cost of the new C17 aircraft will be.

[Official Report, 20 February 2012, Vol. 540, c. 469W.]

Letter of correction from Peter Luff:

An error has been identified in the written answer given to the hon. Member for North Durham (Mr Jones) on 20 February 2012.

The full answer given was as follows:

[Peter Luff]

The cost of the new C-17 aircraft is subject to final commercial negotiations but, as announced by the Prime Minister on 8 February 2012, Official Report, columns 300-01, it is expected to be in the region of £300 million.

The correct answer should have been:

[Peter Luff]

The cost of the new C-17 aircraft is subject to final commercial negotiations but, as announced by the Prime Minister on 8 February 2012, Official Report, columns 300-01, it is expected to be in the region of £200 million.

Royal Fleet Auxiliary

Peter Luff Excerpts

Wednesday 22nd February 2012 Written Statements

[The Parliamentary Under-Secretary of State for Defence (Peter Luff)]

Hon. Members will wish to be aware of the progress being made with the Military Afloat Reach and Sustainability (MARS) programme. I am pleased to announce that after running an international competition, the Department has selected Daewoo Shipbuilding and Marine Engineering (DSME) as the preferred bidder for the MARS tanker project and intends to place a contract worth £452 million for the procurement of four double hulled MARS tankers, to be operated by the Royal Fleet Auxiliary (RFA). This contract will include two years’ initial provisioning for capital spares, training and training systems. The MARS tankers, which are planned to enter service at yearly intervals from 2016, will replace the existing single hulled Fleet tankers and allow the RFA and Royal Navy to continue to deliver maritime operational support capability worldwide.

The MARS tankers will maintain the Royal Navy’s dedicated replenishment at sea capabilities, operating individually and supporting specific warships or seamlessly integrated as part of a naval task group, including carrier strike and Littoral Manoeuvre operations, thereby helping to meet our aspirations for the Future Force 2020. They will supply aviation and ship fuel to the full range of surface ships worldwide, unrestricted by seasonal variations from tropical to Arctic regions. They will be easily adaptable to incorporate new technologies to meet future operational challenges and have been designed for increased reliability and ease of maintenance. They will meet extant and anticipated maritime safety and environmental legislation while also fulfilling MOD’s commitment to operating vessels to the highest environmental standards possible.

The support to be provided by the MARS tankers is vital to Royal Navy operations, but, they are, in essence, simple auxiliaries. As such, the design, build and integration requirements are not as military specific as complex warship procurements. The competition for the MARS tankers was therefore run internationally and involved leaders in the commercial shipbuilding industry, such as foreign companies in Europe and South Korea. I can confirm that a number of UK companies participated in the competition; however, none submitted a final bid for the build contract. The build contract has been awarded to DSME whose bid demonstrated best value for money proving that, in this case, the best outcome for defence and the UK taxpayer will be met by procuring the MARS tankers from overseas.

I would like to assure hon. Members that UK industry will have an important role in delivering the overall MARS tanker capability. First I am pleased to confirm that the winning design for the MARS tankers has been provided by a UK company BMT Defence Services. I am also pleased to confirm that the UK work content of the main contract is estimated to be up to 20% equating to approximately £90 million, money which DSME will be spending in the UK on contracts for the provision of key equipment, systems, design and support services.

There will be further opportunities for UK industry to be involved in the customisation package of work, to take place in the UK after the MARS tankers have been built, that will provide essential classified features required for deployment and capability assessment trials. All of this is good news for UK industry, particularly small and medium enterprises, who provide specialist skills in our supply chain as this, along with trials and specialist engineering support, will represent up to a further £60 million investment in the UK.

I would also like to challenge any suggestion that this contract signals a change in our commitment to the UK’s shipbuilding industry. The MARS tankers are part of a multi-billion pound investment programme underway for the Royal Navy. This includes Type 45 destroyers, Queen Elizabeth aircraft carriers and Astute Class attack submarines all of which are being built in the UK. Subject to approvals, we continue to work towards delivering a fleet of more modern and versatile Type 26 frigates as well as a class of successor submarines. Together these programmes will help to showcase UK industry at its best; sustain skills and specialist capabilities at home for several decades to come; and ensure that we have the skills base on which we can maximise export opportunities.

The MARS tanker procurement strategy of open and fair competition in the global market is fully aligned with the recently published “National Security Through Technology: Technology, Equipment and Support for UK Defence and Security” White Paper.

Oral Answers to Questions

Peter Luff Excerpts

Monday 20th February 2012 Commons Chamber

[Julian Smith (Skipton and Ripon) (Con)]

2. What steps he is taking to help small businesses secure more contracts with his Department.

[The Parliamentary Under-Secretary of State for Defence (Peter Luff)]

Innovative and efficient smaller businesses make an important contribution to defence, beyond the obvious benefits to the wider economy. That is why the “National Security Through Technology” White Paper sets out a wide range of measures to make defence and security procurement as accessible as possible to even the smallest of enterprises. I attach particular importance to the establishment of a new small and medium-sized enterprises forum, which meets regularly under my chairmanship to discuss and inform subsequent action on issues of concern to small businesses.

[Julian Smith]

What steps are the Minister and his Department taking to engage with Britain’s 3,000 defence SMEs much earlier in the procurement process?

[Peter Luff]

First, I congratulate my hon. Friend on the part he plays in the Skipton and Ripon Enterprise Group. I know that he takes a close interest in SMEs in general and I am grateful for his interest in defence SMEs. We are taking a wide range of steps to achieve precisely what he asks for, and the SME forum is but one example of that. He is particularly interested in the use of pre-qualification questionnaires. Their use is being minimised for procurements of under £100,000, and we are working to simplify or even eliminate them. We are already adopting the new core questionnaire, which is standardised across government. Many steps have been taken to encourage SMEs to engage earlier and more effectively with the Department, but if he has any ideas I would welcome them.

[Diana Johnson (Kingston upon Hull North) (Lab)]

A written statement on the White Paper that was recently published indicates that the Government will no longer prioritise UK suppliers when buying defence equipment. For the sake of small companies, and for BAE Systems workers at Brough, 850 of whom face redundancy, ought we not to have a debate on the Floor of the House about that change in Government policy?

[Peter Luff]

I have to say to the hon. Lady that such matters of debate are largely for the Backbench Business Committee to determine. No one would relish more than me an opportunity to explain the defence White Paper and the gross misrepresentation that she has just given. I would welcome such a debate, and I hope that it happens.

[Duncan Hames (Chippenham) (LD)]

The Minister solicits ideas on this front. The Ministry of Defence necessarily requires strict security credentials from its business contractors, but that sponsorship can act as a barrier to competition. Will the Minister consider giving new businesses wishing to seek contracts with his Department the opportunity to apply in advance for security clearance for their personnel entirely at their own cost to level that playing field?

[Peter Luff]

Actually, I think there is a widely shared misunderstanding in the SME community of the issues that it faces. I refer my hon. Friend to the box on page 61 of the White Paper, which explains in detail the security requirements and how the obstacles that I accept some small and medium enterprises think they have experienced can, in practice, be dealt with.

[Mr Speaker]

Order. I do not think that the House has access to the box in question, but we are immensely grateful to the Minister.

[Alison Seabeck (Plymouth, Moor View) (Lab)]

In view of the important role that SMEs play in some of our bigger programmes, and their need to be confident in the process and to have security of outcome, will the Minister give the House some clarity on the intention for the F-35 programme? In particular, given rumoured reductions in orders from the USA, Australia and Canada, does he expect the price that the MOD pays for each F-35 to rise, and does he have a view on the exact point at which they become unaffordable for the UK?

[Peter Luff]

First, I apologise unreservedly to you for my earlier answer, Mr Speaker, but you have encouraged me to be pithy in the past, and it would have been quite a long answer to give the details in full.

Addressing the concern of the hon. Member for Plymouth, Moor View (Alison Seabeck), the honest answer is that we do not know. The Americans are not reducing the total numbers for the purchase of the joint strike fighter, but they have changed the profile of those purchases. Other partner nations have indicated that they will reduce their offtake. That is likely to have implications for JSF prices, particularly those acquired in the early stages of the process, which is when this country intends to acquires its JSFs. We are watching those implications carefully, and I am happy to talk to the hon. Lady separately about the implications for the UK.

[Mrs Madeleine Moon (Bridgend) (Lab)]

3. How many times the medical emergency response team has been called out in Helmand province in the last year.

--- Later in debate ---

[Katy Clark (North Ayrshire and Arran) (Lab)]

7. What plans he has for the future of Defence Munitions Beith; and if he will make a statement.

[The Parliamentary Under-Secretary of State for Defence (Peter Luff)]

There are no current plans to change the status of Defence Munitions Beith. The weapons end-to-end initiative is working on the best through-life support solution for the MOD and industry, taking into account the strategic requirement, value for money and the linkage with associated industries. This is a wide and complex piece of work. There is a need to maintain Beith at least until the Spearfish torpedo has been converted to a single-fuel system, when the need for specialist facilities may lapse. The conversion programme is expected to be completed around 2018.

[Katy Clark]

I thank the Minister for that answer. Is he willing to meet me and trade union representatives of the work force at DM Beith to discuss what future contracts might be available to the depot?

[Peter Luff]

I am delighted to repeat the invitation that I made in a letter early last year, to which the hon. Lady has not so far replied, and to extend it once again on the Floor of the House. Of course I should be delighted to meet her to have the precise discussion that she seeks.

[Gemma Doyle (West Dunbartonshire) (Lab/Co-op)]

Will the Minister provide some more details on how cutting the MOD policing budget in half will impact on the policing and guarding of defence munitions sites such as Beith, and the armaments depot at Coulport, in which my constituents are particularly interested? Specifically, will he respond to concerns that the policing of those sites will have to be downgraded and that those sites will no longer be protected by armed guards or, indeed, with dogs?

[Peter Luff]

I understand and respect the hon. Lady’s concern, but she is simply wrong. We will maintain effective and proportionate levels of security on all our sites, including Coulport and Beith.

[Amber Rudd (Hastings and Rye) (Con)]

8. What plans he has for defence deployments to the Falkland Islands; and if he will make a statement.

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Defence (Peter Luff)]

At the beginning of this month, I was pleased to see published our White Paper “National Security Through Technology”, which emphasised the contribution that using, sustaining and developing technology makes to our national security. The Government are therefore prioritising investment in defence science and technology. The White Paper makes clear our intention to end a long period of declining budgets and maintain the Ministry of Defence’s investment in science and technology at a minimum of 1.2% of the defence budget as protection for our future.

[Henry Smith]

Before asking my supplementary question, I would like to pay tribute to my constituent Corporal Jay Baldwin, who was recently seriously injured while serving in Afghanistan and who is now being treated in the Queen Elizabeth hospital at Edgbaston. I am sure the whole House will join me in sending him and his family our best wishes.

How does the Minister believe that investment in science and technology supports not only our defence industry but our economy and companies such as Thales UK in my constituency?

[Peter Luff]

I obviously join my hon. Friend in his tribute to his constituent and hope that he makes a rapid and full recovery.

Of course, investment in science and technology is about not just industry but protecting and securing our troops, and I am glad to say that we are having phenomenal success in that regard in Afghanistan. I am glad to tell my hon. Friend that Thales is one of the many companies and trade organisations that welcomed the White Paper when it was published earlier this month. They recognise that investment in science and technology is crucial for their future as successful, enterprising and competitive companies operating here in the UK. Perhaps one of the most exciting recent examples of the importance of that investment was the four-year £40 million future combat air systems focused research contract, which we announced in December. It will generate capability for the future and provide important work for the high-tech advanced manufacturing businesses of the UK.

[Mr Philip Hollobone (Kettering) (Con)]

What emphasis is the Department placing on the development of unmanned air reconnaissance and attack vehicles? Surely that has to be the future for all three of our armed services.

[Peter Luff]

My hon. Friend is absolutely right, and that was a major feature in the UK/French summit that occurred last Friday, as my right hon. Friend the Secretary of State said earlier. The future of the unmanned combat air sector is very important, which was exactly why I highlighted in my earlier answer the contract with BAE Systems. That contract will take forward technology in a number of crucial areas and ensure that our skill base is sustained, maintained and can take advantage of the opportunities that the sector will provide in the future.

[Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)]

17. What discussions he has had with his NATO counterparts on Pakistan’s involvement in Afghanistan.

--- Later in debate ---

[Nick Smith (Blaenau Gwent) (Lab)]

19. What recent assessment he has made of the cost of the UK carrier programme.

[The Parliamentary Under-Secretary of State for Defence (Peter Luff)]

The overall cost of the Queen Elizabeth-class aircraft carrier programme is continually informed by the conversion development phase, which is developing a much greater understanding of the costs and risks involved. We will publish the findings as soon as we can and will keep the House informed in the usual manner.

[Nick Smith]

May I press the Minister to say what will be the total project cost after converting the carriers for the carrier variant aircraft? If he cannot tell us—and it does not look as though he can—does he recognise that that is a worrying, unfunded liability?

[Peter Luff]

I am afraid that I cannot answer the hon. Gentleman’s question, because we simply do not know the answer. In answer to the hon. Member for Plymouth, Moor View (Alison Seabeck), I talked about the possible price implications for the joint strike fighter as a result of the Americans’ decisions in rescheduling their profile. Similarly, we are still doing the work on the precise cost of the conversion. We will report to the House in the usual way. That will be part of the major projects report, so all the normal processes will be followed. I understand the importance of the hon. Gentleman’s question.

[Mr Edward Leigh (Gainsborough) (Con)]

Whatever the cost of the carriers, is not a key argument in their favour that if—God forbid—the Falklands were, despite all our preparations, taken in a surprise attack, it would be essential to have a carrier to regain them? Does not that prompt the question of why we do not have one at the moment?

[Peter Luff]

I understand my hon. Friend’s concern, and I am aware of the arguments about, for example, the use of carriers off Libya. However, I think that the correct decisions were taken in the strategic defence and security review regarding the Tornado aircraft, which enabled us to fight that war very effectively. I repeat what my right hon. Friend the Secretary of State said: the Falklands are well protected; we live in a different world; and the suggestion that aircraft carriers play an important part in the Falkland Islands in the near future is unhelpful at this stage.

[Ann McKechin (Glasgow North) (Lab)]

T1. If he will make a statement on his departmental responsibilities.

--- Later in debate ---

[Mr Stephen Hepburn (Jarrow) (Lab)]

T6. What is the current position concerning the aircraft carrier project? Has there been any change in strategy as far as the design and build are concerned?

[The Parliamentary Under-Secretary of State for Defence (Peter Luff)]

I think I can give a very short answer to that question: no.

[Gareth Johnson (Dartford) (Con)]

T5. I welcome my right hon. Friend’s decision to purchase the new C-17 aircraft for the Royal Air Force. Is that not evidence of the benefits of tackling the Ministry of Defence budget, which is vital to securing the future effectiveness of our armed forces?

--- Later in debate ---

[Miss Anne McIntosh (Thirsk and Malton) (Con)]

RAF Fylingdales and RAF Staxton perform key duties as listening and radar stations. There is concern locally about the impact of wind farms on them. May we have a rejection of any wind farm applications on the grounds that they will interfere with the RAF’s work?

[Peter Luff]

I am not sure whether this will be good news or bad news for my hon. Friend, but we are making increasing strides towards finding radar systems that do not interfere with RAF operations, so this particular obstacle to wind farm applications is diminishing. That is probably not the news that she wanted, but it happens to be the truth.

National Security Through Technology

Peter Luff Excerpts

Wednesday 1st February 2012 Written Statements

[The Parliamentary Under-Secretary of State for Defence (Peter Luff)]

I am pleased that we are publishing today our White Paper on “National Security Through Technology: Technology, Equipment, and Support for UK Defence and Security” which has been developed jointly with the Home Office. This fulfils one of our commitments in the strategic defence and security review and follows on from the Green Paper “Equipment, Support and Technology for UK Defence and Security: A Consultation Paper”. As its title implies, the White Paper emphasises the contribution that using, sustaining and developing technology makes to our security.

This is the first time that the UK Government have set a formal statement of our approach to defence and security technology, equipment, and support. This is our high-level policy until the next strategic review, which is expected to be held in about 2015. It supersedes the defence industrial strategy 2005 and the defence technology strategy 2006.

We must ensure that our armed forces, national security, and law enforcement agencies have the best capabilities we can afford at the best value for money for the taxpayer. Balancing these considerations appropriately is even more important given the economic situation we face.

Wherever possible, therefore, we will seek to fulfil the UK’s defence and security requirements through open competition in the domestic and global market, buying off-the-shelf where appropriate. We will look first for products that are proven, that are reliable and that meet our current needs. This is the best way of ensuring that our armed forces and security services have access to the equipment they need at the time they need it and at a price the nation can afford.

However, and importantly, where essential for national security, we will protect the UK’s operational advantages and freedom of action; when we do this it will mean sustaining the necessary people, skills, infrastructure, and intellectual property that allow us to build and maintain our national security.

Technology underpins this approach so it is our intention to end a long period of declining budgets and maintain MOD’s investment in science and technology at a minimum of 1.2% of the defence budget as protection for our future.

Defence and security procurement has a significant industrial and economic impact. Our policy on technology, equipment and support for UK defence and security also supports our wider economic policy objective to achieve strong, sustainable and balanced growth for the UK. A healthy and competitive defence and security industry in the UK contributes to growth and a re-balanced economy.

The White Paper reaffirms our commitment to doing our utmost to assist UK-based suppliers in obtaining export orders and to increase opportunities for small and medium-sized enterprises (SMEs) to fulfil their potential. We will continue to create the right conditions for SMEs to deliver the innovation and flexibility that we need and which they bring. We are doing this because of the benefits to the companies themselves, to the wider UK economy and to the security of the United Kingdom.

This assistance for SMEs is part of our wider work to ensure public procurement promotes growth, and includes publishing medium-term procurement pipelines; simplifying procurement processes to reduce burdens on industry, and engaging with potential suppliers at a much earlier stage, before formal procurement begins, to increase their opportunities to participate.

The defence and security sectors are vital to the success of the UK economy. In 2010 the UK was the second biggest exporter in the world with £6 billion of sales and the UK security industry was the fifth most successful exporter of security products with £2 billion of sales. The Government remain committed to robust and effective national and global controls to help prevent exports that could undermine our own security or core values of human rights and democracy; to protect our security through enhancing strategic defence relationships; and to promote our prosperity by allowing UK defence and security companies to operate effectively in the global defence market.

We are proud of the strength of the UK defence and security industries. They help provide the UK armed forces, national security, and law enforcement agencies with some of the very best kit available. They are better equipped now than they have ever been. We recognise the wider impact that Government spending choices on defence and security can have and we are therefore establishing a new ministerial working group to co-ordinate the cross-Government aspects of our new approach.

This White Paper, alongside the publication later this year of the MOD’s 10-year equipment plan, is intended to be a high-level guide to our approach to meeting the requirements of our armed forces. At a time of financial constraint across Government, it is even more important to provide the clarity that will help industry to invest in the right areas, protecting both our security and the contribution these companies make to the UK economy. We plan to continue to invest a significant amount in defence equipment and its support: over £150 billion over the next 10 years.

The White Paper is part of a broader defence transformation programme, which also includes implementation of the Levene review, the Materiel Strategy, and Lord Currie's review of Government Single Source Pricing Regulations.

As the companies offering defence and security products and services become increasingly aligned, these steps will encourage a vibrant UK-based industry that is able to win a significant share of the world market, and to meet the varied and changing capabilities required by our armed forces and security services.

Strategic Defence and Security Review

Peter Luff Excerpts

Thursday 26th January 2012 Commons Chamber

[John Woodcock]

Oh, there are no wind-ups. Perhaps the Minister could find time to intervene in the short time remaining to make something clear. There are significant cuts to the MOD police. Do they mean that there are plans to reduce the MOD police presence at Faslane or Coulport? Would the Minister like to intervene?

[The Parliamentary Under-Secretary of State for Defence (Peter Luff)]

indicated dissent.

[John Woodcock]

Okay. If he wants to write and make the position clear at a later stage, that is absolutely fine.

[Peter Luff]

indicated assent.

[John Woodcock]

On the risk that has been created around renewal, the alternatives to Trident review, to which my right hon. Friend the Member for Newcastle upon Tyne East referred, will be led by the Minister for the Armed Forces—it is a shame he cannot be here for the debate. Essentially, the review uses Government resources actively to explore the idea of adapting Astute class submarines for nuclear capability that falls far short of being a deterrent. That could be a cause of increased proliferation and could increase the risk of confusion. If a cruise missile is launched from a submarine at a point of war and the aggressor nation does not know whether it is nuclear or conventionally tipped, the prospects of escalation and horrible consequences increase. The Government have put that in train and we await the review.

In conclusion, the delay in the proposed in-service date of the successor to the deterrent is—it must be stressed—driven not by national security or primarily industrial concerns, but by a political fudge to delay the vote until the next Parliament. That creates increased costs for taxpayers because the overall cost of renewing our deterrent will increase. In addition, it risks stretching the life of the current Vanguard class submarine to the limit of safe operation. Pressure on the delivery timetable of the successor has been increased by putting political deals above the national interest.

Oral Answers to Questions

Peter Luff Excerpts

Monday 19th December 2011 Commons Chamber

[Jeremy Corbyn (Islington North) (Lab)]

5. What expenditure on the Trident replacement he expects to have incurred by 2016.

[The Parliamentary Under-Secretary of State for Defence (Peter Luff)]

We expect to spend £3.9 billion on the successor submarine programme by the maingate decision-point in 2016. We have deferred the decision on the future warhead until the next Parliament. We are spending around £900 million a year at AWE—the Atomic Weapons Establishment—on capital investment and running costs to ensure that we can sustain the capabilities to maintain the current stockpile. As a consequence of this sustainment, we will also have the capability to design and produce a new warhead, should that be required. We expect to spend around £8 million over the next three years to examine the condition of the physical infrastructure at the naval bases and current communications systems for the successor submarines.

[Jeremy Corbyn]

By the Minister’s own figures, the Government are proposing to spend £5 billion on the submarine replacement and the preparations for a new missile system from AWE Aldermaston, which means that after the next election the new Parliament will be confronted with the decision whether to renew the Trident system, having already spent £5 billion on it. Does the Minister not think that we are walking—indeed, sleepwalking—into a massive expenditure, after that, of £25 billion on a replacement, plus the running costs? Is it not time we brought this vanity project to an end and cancelled the Trident system?

[Peter Luff]

No, I do not think that at all. In fact, not spending that money would prevent us from preserving the option for the next Parliament to take the decision. The hon. Gentleman is fond of pointing out the problems in respect of the capability for the nuclear deterrent, but let me assure him that the work we are undertaking will have benefits for other classes of nuclear submarines in future— particularly in respect of the primary propulsion systems, for example with the PWR3. There are real benefits from doing this work—not just for the security of the nation in the short term, but for the long term as well.

[Dr Julian Lewis (New Forest East) (Con)]

Given that both the Polaris and Trident submarines came in on budget and on time, is that not a good precedent for the successor system? Will the Minister take the opportunity to repeat in resounding terms the assurance that the Prime Minister gave to Conservative MPs when the coalition was formed—that Trident will be renewed, whether the Liberal Democrats like it or not?

[Peter Luff]

I believe that, notwithstanding the views of the hon. Member for Islington North (Jeremy Corbyn), no programme is subject to greater scrutiny in the House than the nuclear deterrent. That is one of the reasons for the accuracy of our costings. Let me assure my hon. Friend that the primary responsibility for our nation is the security of the country, that the nuclear deterrent is the ultimate guarantee of the country’s security, and that we stand firmly behind it.

[John Woodcock (Barrow and Furness) (Lab/Co-op)]

Will the Minister tell us how many Government staff are working on his review of alternatives to the Trident system, when he now expects the review to end, and whether he has reached a final conclusion on whether its findings will be published?

[Peter Luff]

I cannot tell the hon. Gentleman off the top of my head exactly how many Government colleagues are involved in the review, but I will write to him about it. What I can tell him is that its findings will be available towards the end of next year for the Prime Minister and the Deputy Prime Minister to consider, and that, given that it will constitute a full and frank exploration of the alternative systems at a highly classified level, there are no plans to publish either the report or the information on which it draws. However, we are a long way from the end of the review, and it is therefore premature to speculate on how the final assessment might be used once it has been completed.

[Tessa Munt (Wells) (LD)]

What is the point of having a review if no one, except a select few, has an opportunity to look at its findings? Should not the Liberal Democrats, in particular, be allowed some access to that information? [Interruption.]

[Peter Luff]

As my hon. Friend the Minister for the Armed Forces says, I was of the view that the Deputy Prime Minister was a Liberal Democrat—and he will see the report.

[Eric Ollerenshaw (Lancaster and Fleetwood) (Con)]

8. What arrangements were included in the recent memorandum of understanding with Turkey.

--- Later in debate ---

[Mr Jim Cunningham (Coventry South) (Lab)]

10. What assessment he has made of the likely effects on the defence sector of the aircraft carrier programme.

[The Parliamentary Under-Secretary of State for Defence (Peter Luff)]

Having visited Govan and Rosyth to see the Queen Elizabeth class carriers under construction, I know that the project is good news for the UK defence industry. It is anticipated that 7,000 to 8,000 jobs will be created or sustained at the tier 1 shipyards, with a further 2,000 to 3,000 jobs in the wider supply chain. Apprenticeship schemes have also been reinvigorated, with nearly 800 apprentices now involved in the project. Some £1.35 billion-worth of equipment subcontracts have been placed, the majority of which have been awarded to more than 75 different UK companies spanning the length and breadth of the UK. With an expected 50-year service life, there will be continued opportunities for UK companies to benefit from this project.

[Mr Cunningham]

I am sure that companies such as Rolls-Royce will welcome the Minister’s statement, but does he agree with the First Sea Lord that if a British aircraft carrier had been available during the Libyan mission, it would have been most cost-effective and efficient to use it?

[Peter Luff]

Actually, I do not fully agree with that. A carrier might well have been deployed, but the aircraft that were necessary to deploy the missiles we needed were the Tornados and Typhoons, and they did a first-rate job. That proved that the Government made the right judgment in the strategic defence and security review by deciding on a gap in respect of that particular capability.

[Sir Menzies Campbell (North East Fife) (LD)]

Does the Minister recall that an important factor in the decision to continue with the construction of the two aircraft carriers was the availability of the F-35, the joint strike fighter? Is he aware of reports that there is a delay in its development programme? What will be the impact on the effectiveness of the carrier force if there are no aircraft to fly off them?

[Peter Luff]

The world is full of rumours about the future of the F-35 programme; I hear a new one almost every day. It is true that a lot of questions are being asked, and those aircraft are very important to carrier strike capability, but I shall wait to see what actually happens, rather than joining in the speculation.

[Alison Seabeck (Plymouth, Moor View) (Lab)]

In a written answer to me, the Minister put the estimated cost of converting one of the carriers to the catapult and arrestor system at about £1 billion. Can he therefore tell us whether the Chancellor’s announcement in the autumn statement of real-terms cuts in respect of procurement issues of almost £30 billion, extending into the first two years of the next Parliament, is apt, or whether the Prime Minister’s promise of a real-terms increase in defence spending of 1% will apply to this and other major projects?

[Peter Luff]

I can confirm that nothing has happened to our commitment to increase the equipment budget by 1% in real terms from 2015. I have to say that our job would be a great deal easier if the previous Government had not taken the decision to delay the carriers, thus adding an extra £1.3 billion of costs to the programme with no capability gain whatsoever.

[John Mann (Bassetlaw) (Lab)]

11. When he expects UK troops to be withdrawn from Afghanistan.

--- Later in debate ---

[Andrew Stephenson (Pendle) (Con)]

12. What steps he is taking to support research and development of military capability in the aerospace sector.

[The Parliamentary Under-Secretary of State for Defence (Peter Luff)]

I am committed to providing sustained support for science and technology across all aspects of defence. The Ministry of Defence has and will continue to invest in the aerospace sector, developing capability and undertaking research into new ideas. As part of that ongoing investment, I am pleased to announce today that we have placed a £40 million four-year research contract with BAE Systems to explore critical technologies and key systems integration for the UK’s next generation of highly capable air systems. The future combat air system research contract is expected to include significant benefits for the wider UK supply base.

[Andrew Stephenson]

I thank the Minister for that answer and, in particular, for the good news about BAE Systems. However, many companies based in Pendle and Lancashire are small and medium-sized enterprises. Will the Minister say a little more about what he is doing specifically to support SMEs in the aerospace sector?

[Peter Luff]

We have plans to do more to help SMEs and I had hoped to announce them in the White Paper that I was due to publish this month, but the pressure of Christmas business has delayed that until the new year. I can assure my hon. Friend that there will be good news in that for the SME sector and I also reiterate what I said in my original answer: the future combat air system contract will bring real benefits to small and medium-sized enterprises in the UK, including, I am sure, in my hon. Friend’s constituency.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

Does the Minister acknowledge that the British aerospace industry and sector are vital to British manufacturing and that the Department for Business, Innovation and Skills is at this moment conducting a rationalisation of procurement methods? Will he have an intelligent conversation with BIS about how procurement can be longer reaching and longer term in the defence industry?

[Peter Luff]

All my conversations with BIS are intelligent.

[Diana Johnson (Kingston upon Hull North) (Lab)]

14. What assessment he has made of the advice from the Armed Forces Pay Review Body; and if he will make a statement.

--- Later in debate ---

[Harriett Baldwin (West Worcestershire) (Con)]

T3. Cyber-security is an integral part of the nation’s defences, so may I invite the new Defence Secretary to visit the wide range of cyber-security firms located in cyber valley in Malvern in my constituency?

[The Parliamentary Under-Secretary of State for Defence (Peter Luff)]

The Secretary of State and I have just carved up our diaries and I, as the Minister responsible for industry, equipment and science, will be prepared to make the long and arduous journey from Mid Worcestershire to West Worcestershire to visit those firms, hopefully at an early date.

[Paul Flynn (Newport West) (Lab)]

What steps is the Secretary of State taking to reduce tension between the west and Iran, as there is a possibility of a war between our two countries, the consequences of which would be unimaginable?

--- Later in debate ---

[Alex Cunningham (Stockton North) (Lab)]

I am pleased that companies including Darchem Engineering in Stillington in my constituency still have contracts related to the new aircraft carriers, but with which of our partner nations’ carriers will the new carrier-variant aircraft be interoperable?

[Peter Luff]

One major gain of moving to the carrier-variant joint strike fighter is enhanced interoperability with our United States allies, in particular, but there will also be interoperability with the French. The change produces real opportunities for interoperability.

[Mary Macleod (Brentford and Isleworth) (Con)]

T6. I have recently urged Hounslow council to review its banding criteria for council housing for ex-service personnel. What discussions has my right hon. Friend had with the Department for Communities and Local Government and the Minister for Housing and Local Government to ensure that there is provision for ex-service personnel, who have done so much for this country?

--- Later in debate ---

[Caroline Lucas (Brighton, Pavilion) (Green)]

May I press the Minister for more detailed figures on the capacity being built at Aldermaston for a possible new warhead? When will he announce the specific breakdown of costs associated with that and, in particular, with the Octans and Orchard programmes, and will he do so through a statement to the House, rather than by slipping it out in a written answer?

[Peter Luff]

I do not know how often one has to say this: no expenditure at the Atomic Weapons Establishment is being incurred to enable a new warhead; it is to sustain the security of the existing stockpile. I do wish the hon. Lady would get this into her head: no money is being spent on new warheads.

[Mr John Baron (Basildon and Billericay) (Con)]

T9. The Secretary of State will understand the significance of the fact that only 3% of Afghan security forces are from the Pashtun south, particularly when it comes to how successful our handover will be in 2014. What progress is being made to improve the imbalance in ethnicities before our troops withdraw?

Defence

Peter Luff Excerpts

Thursday 15th December 2011 Ministerial Corrections

[Nicholas Soames]

To ask the Secretary of State for Defence what the Order of Battle is of the fleet.

[Official Report, 15 September 2011, Vol. 532, c. 1300-01W.]

Letter of correction from Peter Luff:

An error has been identified in the written answer given to the right hon. Member for Mid Sussex (Nicholas Soames) on 15 September 2011. The original answer included an error which failed to take account of the recent decommissioning of a Type 42 Destroyer on 30 June 2011.

The full answer given was as follows:

[Peter Luff]

As at 7 September 2011, the Order of Battle for the fleet was as follows:

[Peter Luff]

As at 7 September 2011, the Order of Battle for the fleet was as follows:

[Mr Redwood]

To ask the Secretary of State for Defence how many warships are available for active service in the Navy.

[Official Report, 2 November 2011, Vol. 534, c. 660W.]

Letter of correction from Peter Luff:

An error has been identified in the written answer given to the right hon. Member for Wokingham (Mr Redwood) on 2 November 2011. The original answer included an error which failed to take account of the recent decommissioning of a Type 42 Destroyer on 30 June 2011.

The full answer given was as follows:

[Peter Luff]

Details of the number of Royal Navy warships available, in various states of readiness, for active service are provided in the following table:

[Peter Luff]

Details of the number of Royal Navy warships available, in various states of readiness, for active service are provided in the following table:

Trident

Peter Luff Excerpts

Wednesday 7th December 2011 Westminster Hall

[Jeremy Corbyn]

I know from long experience with CND that nothing to do with CND can be counted as a pecuniary interest. Absolutely no one has ever made any money out of being a CND member. There is nothing financial to be declared, so I set the hon. Lady’s mind at rest. I thank her for her support and membership of CND and for the sincere work that she has done for a long time to try to rid the world of nuclear weapons.

Estimates of the cost of designing and constructing the Trident submarine replacement programme have grown significantly this year, with the MOD publishing figures in the May parliamentary initial gate report that represent a doubling of those in December 2005. The estimated submarine replacement cost has increased from between £11 billion and £14 billion to £25 billion. In addition, the Ministry recently announced significant spending plans for new warhead facilities at Aldermaston, despite officially not planning a decision on replacing or refurbishing the warhead until the next Parliament. That is the question.

[The Parliamentary Under-Secretary of State for Defence (Peter Luff)]

indicated dissent.

[Jeremy Corbyn]

The Minister shakes his head. It is his head, and he is allowed to shake it, but I hope that when he replies, he will be able to explain why Parliament has not been consulted on spending £2 billion on the Atomic Weapons Establishment in Aldermaston. If my figures are wrong, I am sure that he will put them right—that is the whole point of a parliamentary debate and of parliamentary scrutiny.

As I have said, the new figures announced this year for spending on replacing Trident are going up. The submarine will cost around £4 billion before the construction decision. As I understand it, it will cost £900 million on the concept phase before initial gate, which is from 2007 to 2011; £3 billion on the assessment phase between initial gate and main gate; and £500 million on long-lead items for construction. That will put the cost of the submarine replacement programme prior to main gate somewhat higher than what was spent on the Nimrod programme, which was cancelled in October 2010 after £3.4 billion had been spent on it.

Quite simply, we are moving to an enormous expenditure before a parliamentary vote in, presumably, 2016 or whenever, when all of us might still be Members of Parliament—or when none of us are. There will be a new Parliament, and a different Parliament will make that decision. I could write the speech for the Minister or his successor now. It will say, “We do not want to do it, and we do not like it. It is not good, but we have already spent so much money that it would be a shame to waste it.”

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Defence (Peter Luff)]

Mr Gale, without wishing to trivialise this very important subject in any sense, I had intended to begin my remarks by a reference to that famous line of Captain Louis Renault about rounding up the usual suspects at the end of “Casablanca”, but the number of usual suspects seems to have expanded today to a rather larger number than I had expected. I had imagined that only the hon. Member for Islington North (Jeremy Corbyn) and my hon. Friend the Member for New Forest East (Dr Lewis) would be in Westminster Hall today, but I welcome the larger group of actors.

I am delighted to be in Westminster Hall once again to explain to the hon. Member for Islington North why we are right to proceed with our plans to maintain the security of our nation and why I think that he made a number of serious misinterpretations of the facts—let me put it that way—during his speech.

The Government have been clear that the safety and security of the UK is our first priority, and although we are facing difficult economic circumstances and a challenging inheritance from the previous Administration, our security must be seen as a long-term issue.

At the outset and on behalf of the whole House, I want to pay tribute to the professionalism of all those Royal Navy and civilian personnel who answer this country’s call to operate and support this vital national capability. Having visited HMS Vanguard at sea and HMS Vigilant in refit, I have met some of our dedicated service personnel who support Operation Relentless, which is the UK’s mission to maintain continuous at-sea deterrence. I was deeply impressed by their commitment and I am very grateful to them; I think that we should all be grateful to them. It is important that hon. Members remember that, even as we speak, those men are out there somewhere in the oceans providing Britain’s ultimate national security guarantee. They and their predecessors have maintained a 42-year unbroken chain of continuous at-sea deterrence, keeping all of us and our allies safe.

In many respects, we face a more dangerous situation now than we have done for several decades. There are substantial risks to our security from emerging nuclear weapons states. Consequently, although we are committed to the long-term goal of a world without nuclear weapons, as we all are in this place, we believe that we can best protect ourselves against those threats by the continued operation of a minimum, credible nuclear deterrent. [Interruption.] Others might find that funny, but I do not find it funny at all. Maintaining that deterrent is a very serious judgment that is shared by all three major parties in the House. It is important to remember that the alternative study, which I will return to later, which has been promised to the Liberal Democrats and which is proceeding, only considers the delivery platform and not the alternative to a minimum credible national deterrent programme. All three major parties are committed to such a programme.

The UK has a strong record on nuclear disarmament. We have continued to work with other nations to achieve our goal of a world without nuclear weapons. In addition to the well-documented commitments in the strategic defence and security review, I draw the attention of the hon. Member for Islington North to the statement in June that we have already begun to implement the reduction in warheads that are carried on our submarines. In addition, earlier this year, the permanent members of the UN Security Council met in Paris to take forward the action plan from the 2010 non-proliferation treaty review conference. We agreed to work together on a number of initiatives and Britain has taken the lead by agreeing to host a meeting in early 2012 to discuss the lessons that have been learned from our bilateral work with Norway on the verification of nuclear weapon dismantlement.

Having set out the Government’s fundamental policy, I want to address one further issue before I turn to the specific details of Trident’s costs. One theme that frequently emerges—it emerged again today in the hon. Gentleman’s speech—is the engagement with Parliament on the replacement of the nuclear deterrent. The hon. Gentleman’s colleagues in CND often accuse the Government of having a culture of secrecy with regard to the deterrent.

Clearly, there are aspects of the programme that are sensitive and that must remain classified for national security purposes. I will also discuss the Trident alternative study in that regard. The Government have received many requests, including from the hon. Gentleman in his speech, for information on the Trident alternatives study. The nature of that study, which is led by the Cabinet Office, requires highly classified information to be analysed. Indeed, only a small number of people in my Department and in the Cabinet Office can see that information. Therefore, Members will appreciate that we will not be able to publish the study itself, as doing so would be irresponsible and put national security at risk.

No decisions have yet been taken about what it might be possible to say without compromising national security, and as the report to the Prime Minister and the Deputy Prime Minister will not even be concluded until late 2012 or early 2013, it would be premature at this stage to commit to any specific course of action; for that reason, I will not be doing so today. I have no doubt that the public would understand that we want to take great care of those secrets, but we have nothing to hide except that which it is essential to hide for national security. Where we can, we have explained as clearly as possible what we are doing and why we are doing it, and I will do so yet again today for the hon. Gentleman’s benefit.

[Dr Julian Lewis]

Before my hon. Friend the Minister moves on to the question of costs, I want to make a point about the alternative study. In response to the hon. Member for Islington North (Jeremy Corbyn), who has secured this debate, it is presumably reasonable to assume that, at the very least, a list of those alternatives to Trident that were considered and dismissed, as well as a rough idea of the reasons why they were dismissed, will be published even if technical details cannot be released. Does the Minister accept that, when the hon. Gentleman talks about nuclear weapons killing millions of people if ever used, surely the response is that they are being used every day, because their use lies in the prevention of the use of similar weapons against this country and our interests?

[Peter Luff]

I note my hon. Friend’s powerful argument. I am sure that it will be borne in mind closer to the time, but at present I can make no commitment about what will happen at the end of 2012 or in early 2013, when the report is due to conclude.

I note that this is the third time that I have debated this issue in this place. We also covered the topic extensively during the strategic defence and security review debate last year. Since assuming Government, my Ministry of Defence ministerial colleagues and I have answered about 180 parliamentary questions on nuclear issues, not to mention a significant amount of public correspondence. In May this year, we published a comprehensive report on the initial gate decision for the successor submarine. We have recently repeated an earlier commitment to make an annual statement on progress to Parliament, and I think that that frequency strikes the right balance. We have published the costs of various aspects of the nuclear programme, such as the Atomic Weapons Establishment, on numerous occasions. Moreover, in May last year, we announced for the first time the overall size of our nuclear warhead stockpile, giving the deepest ever transparency of our nuclear capability. That is hardly a culture of secrecy or sleepwalking.

[Jeremy Corbyn]

I am not quite sure why the Minister is getting into such a bad mood about Parliament asking questions to the Ministry of Defence. That is what Parliament is for; it is why we are here. Will he give us an accurate estimate of how much will be spent on the whole programme, on the initial gate and on the Atomic Weapons Establishment at Aldermaston, before any decision is made in Parliament in 2016? Can he not revisit the idea of a quarterly statement on the vast expenditure that is going on?

[Peter Luff]

It is my intention to do that, but I am conscious of the time. I hope to be able to answer all the hon. Gentleman’s questions.

I should now like to turn to the specific costs of the current and future deterrent programmes. The simple fact is that being a responsible nuclear weapons state requires investment. Submarines and their ballistic missiles and nuclear warheads are extremely complex and require considerable skill and expertise to design, maintain and operate safely, and I make no apology whatsoever for taking seriously our responsibilities for the safe custody of these systems, nor for spending the money needed to do that. That is not to say that we have not closely scrutinised the costs of the programme. Indeed, Members will be aware that we announced last year as part of the SDSR a number of measures to do just that.

I should like to dwell briefly on the different elements of the nuclear deterrent programme. The White Paper highlighted three key areas: the platform, the infrastructure and the warhead. At 2006 prices—I emphasise that it was at 2006 prices—the Department estimated that the platform would cost between £11 billion and £14 billion, and each of the other two elements would cost between £2 billion and £3 billion. Separately, there are also the costs of maintaining and running the in-service deterrent—what we have at present—such as the facilities at the Atomic Weapons Establishment, which I will come to later.

If I may start with the platform—the boats—earlier this year “The Initial Gate Parliamentary Report” stated:

“assuming a four boat fleet, the replacement submarines will remain within the £11-14Bn estimate.”

We made it clear in the report and, indeed, in the White Paper itself that those values are at 2006-07 constant prices, and the report also indicated that, when we take into account inflation, the costs equate to £25 billion. Costs have simply not doubled, as reported on CND’s website; that is wrong. This misreporting of the true position is extremely misleading. Of the £25 billion, we expect to have spent £3.9 billion by main gate. That includes the costs of the concept and assessment phases, and the majority of that work is in the maturation of the design.

With regard to long-lead items, we have been clear that we have minimised spend as far as possible. Over the coming years, we will place orders for different specialist items, which take a number of years to be delivered, totalling some £500 million. That is just 2% of the total purchase cost. We plan to place the order for the specialist high-grade steel only in 2014, so that it is ready for manufacture and cutting in 2016 after the main investment, or main gate, decision. We will not procure any items for the fourth boat until 2016, when the build decision is made. Any accusation that, by purchasing those items, we will be locked into a particular strategy before main gate in 2016 is simply wrong. The simple fact is that these highly specialised components take time to be delivered. Identifying long-lead items is part of any well-run programme, and nothing that we are doing will prevent us from being able to make the right decision in 2016. I should like to explore that at more length, but I am conscious of the time.

With respect to infrastructure, the value-for-money review concluded that no significant investment was needed in the immediate future. To study the infrastructure requirements in detail, we will spend about £8 million over the next three years and will continue to look for opportunities to drive down running costs and the need for any new investment. Despite being at an early stage of the programme, we still expect to meet the White Paper estimate of between £2 billion and £3 billion.

On the third element, my attention was drawn recently to speculation that implied that we had already spent at least £2 billion on a new warhead. That is simply not true. We are investing at the Atomic Weapons Establishment to ensure that we sustain the capabilities that we need to maintain the current stockpile. It is true that that will give us the capability that we need to design and produce a new warhead if and when required, but that is not the purpose of the expenditure. We will take the appropriate decisions at the right time, and Members will recall the commitment in the SDSR not to take any decisions on a new warhead until the next Parliament. We expect a replacement warhead to meet the White Paper estimate of between £2 billion and £3 billion.

BAE Systems

Peter Luff Excerpts

Thursday 24th November 2011 Commons Chamber

[The Parliamentary Under-Secretary of State for Defence (Peter Luff)]

It is good to see a constituency Member in the Chair for this important debate, Mr Deputy Speaker, and I will do my best to be as brief as the complex issues raised allow.

May I say how much I enjoyed both speeches that we have heard? My right hon. Friend the Member for Haltemprice and Howden (Mr Davis) seized the opportunity for this Back-Bench debate with his usual skill and aplomb, and he spoke with passion and conviction; and the right hon. Member for Kingston upon Hull West and Hessle (Alan Johnson) spoke movingly and thoughtfully. The company would do very well to listen to the concerns that they both expressed.

I must emphasise, however, the deep regret that the Government and I, personally, feel at the job losses that BAE Systems announced on 27 September. Such decisions, I hope, are never taken lightly by companies, and we fully recognise the very real impact that they will have on local industry and individual livelihoods. I emphasise also—it is clear from the debate so far—that the decision was a commercial one, made by the company, which explained that it was necessary to maintain competitiveness both in the UK and internationally. This debate is testing that rationale.

[Mr Stephen Hepburn (Jarrow) (Lab)]

I share the concerns about BAE that the mover and seconder of this excellent motion have expressed, because we are experiencing similar problems on the Tyne. The shock decision to switch work from A & P Tyne will have a disastrous effect not only on our region through the loss of hundreds of highly skilled jobs, but on the economy. Will the Minister urge BAE to rethink?

--- Later in debate ---

[Peter Luff]

I know the decision to which the hon. Gentleman refers, and it will of course please other parts of the country, because BAE Systems will do the work elsewhere in the UK, but I shall happily talk to him about it privately afterwards if he would find that helpful.

I do not want to labour the point, but we all know how important defence is as an integral part of advanced manufacturing in this country. It sustains about 300,000 jobs, many of which are highly skilled, in thousands of companies of all sizes. Those employed are at the pinnacle of manufacturing and engineering ability, and they do a significant job in helping to keep our country secure. The industry is a key sponsor of manufacturing apprenticeships and training, the quality of which is acknowledged by employers across a range of industries, and intensive research and development programmes also mark out the defence sector as a source of innovation and intellectual property.

The House will also be aware—this was at the heart of the two speeches that we have heard—that defence is a major contributor to export revenues. UK industry has an outstanding record of export success, second only to the US as an exporter of defence equipment and services. Despite the challenging market conditions experienced by many sectors of the wider manufacturing base, the UK has in the last year won almost £6 billion in new defence exports business. That represents an increase in our share of the global defence market from 18% to 22%, and we are committed to continuing that trend with strong support for future defence export campaigns, including the products mentioned by the Members who have spoken.

Within that vital and dynamic sector of the UK economy, BAE Systems has a significant role. It has been the MOD’s largest defence supplier for some time; it is the fourth largest supplier to the US Department of Defence, which accounts for 50% of its revenue; and it is, indeed, the world’s second largest defence company. I should like to pay a tribute to BAE Systems: its speed and adaptability in updating software for the Typhoon aircraft’s radar and defensive aids systems was one of the keys to the success of the recent action in Libya, and we owe all its staff a great debt of gratitude for that.

BAE Systems’ wider involvement, beyond Typhoon, extends to many of the MOD’s largest programmes, including the Astute submarine, the Type 45 destroyer, the Queen Elizabeth class aircraft carrier, the joint combat aircraft, general munitions and support for the armoured fighting vehicle fleet. Overall in 2010, BAE Systems’ revenue from the UK amounted to just over £4 billion, representing 20% of the company’s total revenue. So hon. Members should be in no doubt about the importance that the Government attach to the contribution of the UK defence industry in general and BAE Systems specifically to a rebalanced economy and export-led growth.

Let me turn to the specific programmes that are relevant to today’s debate. In the air, Typhoon, a triumph of European engineering, has really come of age. It is a first-class aircraft and the envy of discerning nations throughout the world. Already in service with six air forces—in the UK, Germany, Italy, Spain, Austria and Saudi Arabia—and at the forefront of the world’s media coverage following its recent exemplary operational deployment in the skies above Libya, the prospects for expanding Typhoon’s user community have never been better, and Ministers are working hard to ensure that we crystallise those opportunities.

Those export prospects meant that some changes were needed to the Typhoon programme. In May 2010, a request was made by the Eurofighter GmbH industrial consortium—I emphasise industry, not Government—to slow down the rate of Typhoon aircraft production in order to free up and sustain sufficient industrial capacity in the Eurofighter partner companies, comprising Alenia, BAE Systems and Cassidian, and to service export orders.

The UK, along with the other partner nation Governments, agreed to the industry’s proposal in July 2011—on the basis that it would not adversely affect the build-up of our own Typhoon fleet. As a result, there is now the prospect of Typhoons being made over a longer time frame, with the production lines open to 2018 rather than closing in 2015 as previously planned.

[Mr David Davis]

Will my hon. Friend give way?

[Peter Luff]

In just a second.

The letter that BAE Systems sent to Members ahead of this debate does not accurately explain the reasons for the slow-down, which in turn is responsible for many of the redundancies in Warton and Samlesbury.

[Mr Davis]

The Minister has answered my question.

[Peter Luff]

I will return on several occasions to that letter, which was disingenuous in several respects, and am grateful to my right hon. Friend.

The MOD has also invested £190 million in shaping a potential future unmanned combat air vehicle programme. BAE Systems has been our partner in that, and it led an industry team formed of Rolls-Royce, QinetiQ and GE Aviation. An unmanned combat air system programme could form part of a cost-effective solution in air-to-air and ground-to-air combat roles. That work includes the Taranis technology demonstrator, which is a world-class project and a testament to the UK’s advanced design, engineering and technology talents. It exhibits UK manufacturing capability at its very best.

We recognise and welcome the investment that the industry is making in technologies for unmanned air systems and encourage it to continue, so that it will have products that meet our needs and those of export customers. I have to say once again that the letter sent by BAE Systems to hon. Members does not appear to do justice to the partnership nature of the programme, because BAE Systems seems to take all the credit for it. The letter refers to the significant funding BAE Systems put in, but it does not emphasise the Government’s funding or the other three partner companies involved in the project. BAE Systems should be a little more modest from time to time in the claims it makes on behalf of the company.

[Graham Jones (Hyndburn) (Lab)]

Will the Minister explain the situation regarding UK air flights of Taranis and unmanned aerial vehicles, because there seems to be a problem with the Government not supporting test flights and not helping BAE Systems?

[Peter Luff]

The whole future of the unmanned combat sector is important for the Government and lies at the heart of the strategic future of aerospace and defence aerospace. We will be considering the matter extremely carefully later in close dialogue with the companies involved. The hon. Gentleman makes an important point. It is vital that the programme succeeds. The matter is complex as it plays into the UK-French bilateral relationship, but we are determined to take it forward in the best interests of UK industry and, crucially, the defence industry.

[Diana Johnson (Kingston upon Hull North) (Lab)]

I listened with interest to that last point about how important the sector could be to the future of the defence industry. As an MP representing a constituency in Hull, may I ask the Minister whether he has had any direct conversations with BAE Systems about how that type of work could help to deal with the issues identified at Brough regarding future work?

[Peter Luff]

The short answer to that question is yes. I have obviously discussed the future of the sector with the company, but I have not done so in specific detail about Brough—in general terms, yes, but not specifically about Brough. If the hon. Lady wishes to make a suggestion to me, I will happily take it forward.

The Government need an efficient defence industry, and I make no apology for saying that. Another line in the letter to hon. Members seems to suggest that we are in some sense to blame for wanting BAE Systems to be more efficient. We want it to be more efficient for the sake of taxpayers and also for the sake of export opportunities. I make no apology for demanding that efficiency of our suppliers.

Although using open competition on the global market is the MOD’s preferred option and its default position for purchasing defence capabilities—I listened carefully to what my right hon. Friend the Member for Haltemprice and Howden said in that respect—in certain situations, the MOD has had to enter into single-source procurement for some of the capabilities we must have in the UK. In these situations, we use the yellow book—it is called that because it is yellow—or “Government Profit Formula and Associated Arrangements” to give its full title. The yellow book covers the pricing arrangements to be used in single-source, non-competitive procurement. That can include reasonable rationalisation and redundancy costs, provided they are associated with a reduction in work related to single-source procurement.

The yellow book arrangements have remained largely unchanged for more than 40 years, which is why in January this year I commissioned Lord Currie of Marylebone to undertake a root-and-branch independent review of it. The MOD is currently undertaking a consultation, which runs until the new year, on Lord Currie’s proposals. No decisions will be made on his proposals until the consultation has been completed.

[Mr David Davis]

The Minister is making a very courteous and informative speech that is very helpful to us. Will he ensure that the response of the Public Accounts Committee and the National Audit Office to my request that they investigate some of the yellow book operations is taken on board in that consultation?

[Peter Luff]

Yes. In fact, there has already been discussion with the National Audit Office about aspects of the single-source regulations. My right hon. Friend makes a very important point and I welcome what he said about that in his speech. It is very helpful indeed to have those remarks on the record.

The scope of Lord Currie’s review covers not just rationalisation and redundancy costs but a whole range of other issues associated with the process. He made his views clear on that in the document he produced, which states:

“We do not recommend moving away from the requirement that the MOD should bear the redundancy and restructuring costs associated with programme curtailment or cancellation. The alternative, whereby the contract bears such costs, would be appreciably more expensive. Faced with the possibility of bearing such costs, the contractor would necessarily need to price in a significant, possibly prohibitive, risk premium into contracts against that eventuality, over which it has little or no influence.”

Let us put those observations on liabilities in a BAE Systems context. The Brough site has historically been used for a variety of purposes, including the manufacture of the Hawk advanced jet trainers. It also has a structural testing facility used for a number of different airframes, and has been involved in the manufacture of some Nimrod MRA4 and Typhoon parts.

Some of those projects were procured on a single- source basis, but many of them were not. In the course of normal business, BAE Systems has approached us to begin discussions on payment for a share of its rationalisation and redundancy costs at Brough. We will ascertain what proportion, if any, of those costs we should be liable for under the yellow book framework. I can assure the right hon. Member for Kingston upon Hull West and Hessle and my right hon. Friend the Member for Haltemprice and Howden that our negotiations will be robust in defence of taxpayers’ interests. I am very grateful for their support in that process.

We also recognise that the Government’s procurement decisions directly impact inward investment and exportability. Our involvement as the only level 1 partner in the joint strike fighter programme has brought significant high-end work into BAE System’s Samlesbury facility and, indeed, to UK industry more widely. That site manufactures the joint strike fighter rear fuselage for Lockheed Martin, in respect not only of the UK order but of orders from the US and other international clients. That production run should continue until at least 2035 and, on current plans, supply 3,000 aircraft. Following that, the UK should be very well placed to win additional competitively placed work within the JSF production support programme, potentially valued at £30 billion. Similarly, Government investment in the assessment phase of the electronically scanned radar for Typhoon will enable a capability leap for the Typhoon fleet. That not only benefits UK armed forces well into the 21st century, but improves Typhoon’s chances of success in the highly competitive, fast-jet market.

One issue that has not been raised is the fact that the letter from BAE Systems to hon. Members alludes to the withdrawal of the Harrier aircraft, but it does not provide the context and detail for that decision. In the bipartisan spirit of today, I shall simply say that we had a very challenging financial situation at the MOD and leave it at that. It is also true that the previous Government took the decision to delete the Sea Harrier in 2006, which is the air defence aircraft. In 2009, they took a subsequent decision to reduce the size of the remaining Harrier fleet, which meant it was not large enough to achieve sustained operations in Afghanistan and maintain an adequate contingent capability for the unexpected on its own. A combined fleet of Tornado and Harrier would not be cost-effective, because retiring an aircraft type delivers significantly greater savings than running two smaller fleets.

Although the withdrawal of the Harrier was a decision we took with regret, it was effectively forced upon us. Despite that sorry affair, we have worked hard to make the most of the situation. I can tell the House today that we have agreed the sale of the final 72 Harrier aircraft frames and associated parts, which will be used as a major source of spares to support the US Marine Corps Harrier AV-8B fleet of aircraft. The value of the sale is $180 million—some £110 million—and represents a good deal for UK taxpayers and the US Government. Added to the savings made from retiring the Harrier fleet from service, that sale takes the total estimated receipts and savings to the Ministry of Defence to around £1 billion. That will enable investment in a more modern and capable mixed fast jet fleet, including the state-of-the-art joint strike fighter, and therefore be good for British jobs.

The Harrier was a marvellous piece of technology and demonstrates the UK’s significant contribution to the development of fixed-wing aviation. I pay tribute to all those who contributed to its design and manufacture, as well as to our service personnel who flew and supported them. Accordingly, I am pleased to announce that we plan to offer two Harrier aircraft to museums in order to preserve the UK’s aviation heritage.

On the points made by my right hon. Friend the Member for Haltemprice and Howden about the overseas production of British aircraft, conditions in the international marketplace do influence commercial choices and outcomes —it is not just a matter of what the Government say. It is increasingly unavoidably the case that export customers are demanding that their orders be satisfied mostly or wholly by means of local production and technology transfer. There is often a need to satisfy that critical condition in order to secure an order. That is certainly a feature of many of the potential Typhoon and Hawk export orders. My right hon. Friend regrets it—I may regret it, too—but it is a fact of life. If we want to win business, this is the way we have to do business.

The insistence on local involvement by the customer becomes even more likely and significant with larger export orders. The choice is to offer that condition or not to compete for the contract at all. That would reduce the viability of the businesses themselves and would be bad for UK employment. Last year’s deal to sell 57 Hawk to India was worth several hundred millions of pounds for UK companies, even though the final assembly was in India itself, so it is good for both sides of a vital strategic partnership for this country.

However, we also fully recognise our responsibility to those whose livelihoods are threatened by changes in the market. Work will continue for some time at Brough and the Skills and Jobs Retention Group and the Jobcentre Plus rapid response service will assist skilled workers there and at the other sites in finding new roles.

[Mr David Davis]

I think everybody takes the point that, in the modern defence market, there will be offset. Everybody has offset; we have offset. As has been made clear, offset arrangements do occur. It is problem when those offset arrangements become the permanent new manufacturing base for the aircraft, which is effectively what has happened with Harrier and seems at least to have been discussed with the head of Hindustan Aviation with BAE.

[Peter Luff]

I agree that when overseas production becomes a source of rival manufacture for export purposes, there is an issue for us. We have to accept, however, that the success of the Typhoon contract in India will depend on significant participation by Indian aerospace industries in the manufacture and upgrading of the aircraft. That is the price for winning the contract, and it is a price that we have to be prepared to pay.

Additionally on the subject of support for those who are sadly affected by these decisions, last month the Chancellor invited strong and viable proposals for enterprise zones in the areas surrounding the sites, with a view to enabling those zones to be up and running by April next year. As the right hon. Member for Kingston upon Hull West and Hessle said, attracting new industry to these existing manufacturing hubs could soften the impact of BAE’s change in structure without undermining the lives of these highly skilled workers.

[Alan Johnson]

We are pleased to get an enterprise zone, but we need to look at other work that these skilled workers can do; many companies would be pleased to get them. Our point is that this requires a new way of thinking. There is no reason why we cannot bring packages of civil aviation work to Brough, where there is a fabulous site and a really good work force. The alternative is that these workers have to move, which is very difficult given the housing market and all the other problems that they face with schools, families and so on. We then find very highly skilled workers ending up as taxi drivers or dropping out because they have to stay in their local area. Will the Minister consider, with Allan Cook, attracting these packages, given that there is such a skills shortage in commercial aviation?

[Peter Luff]

I will do precisely that with the Under-Secretary of State for Business, Innovation and Skills, my hon. Friend the Member for Kingston and Surbiton (Mr Davey); it is very good to see him in his place today supporting this debate and showing the concern for the issues raised that is felt across Government more widely. Of course, I do not have responsibility for civil aerospace. Although I happen to agree with my right hon. Friend the Member for Haltemprice and Howden about the wisdom of selling the share in Airbus, that is a personal, not a ministerial, view. I believe that there are significant opportunities for the wider civil aerospace sector resulting particularly from what has happened at Brough, and I entirely agree that BAE Systems should be creative, thoughtful and active in making those opportunities come to fruition exactly as suggested by my right hon. Friend the Member for Haltemprice and Howden and the right hon. Member for Kingston upon Hull West and Hessle.

[Kerry McCarthy (Bristol East) (Lab)]

rose—

--- Later in debate ---

[Peter Luff]

I will give way for the last time, because I am anxious to conclude and let other Members speak.

[Kerry McCarthy]

Filton airfield is one of the enterprise areas linked to the local enterprise zone in Bristol. Is the Minister aware of concern about the closure of the airfield, which many people think will pose a real risk to aerospace jobs in the area? Does the Department have a view on that?

[Peter Luff]

I am aware of the issue, but the evidence suggests that that concern, although I understand it, is probably not well founded. I believe I am right in saying that today—

[Jack Lopresti (Filton and Bradley Stoke) (Con)]

rose—

[Peter Luff]

I give way to my hon. Friend, who might have more details than I do.

[Jack Lopresti]

I was concerned about the potential impact of the closure of Filton airfield on local jobs and industry, so the first thing I did was speak to local companies such as Airbus, Rolls-Royce and GKN, which all assured me that the existence of the airfield was not in any way consistent with their increased orders or viability in the long term—on the contrary.

[Peter Luff]

I am grateful to my hon. Friend. My understanding is that the Secretary of State for Business, Innovation and Skills is in the Bristol area today announcing additional jobs for Airbus. Although I genuinely respect the concern expressed by the hon. Member for Bristol East (Kerry McCarthy), I have heard other assurances similar to those given to my hon. Friend. However, I promise that I will keep my eye on the situation as best I can, as a Defence Minister, and I am sure that the Department for Business, Innovation and Skills will do exactly the same thing.

The defence sector and, in particular, BAE Systems have a significant role in rebalancing the economy by offering the taxpayer better value for money; and by offering the world the products, innovation and services required to compete on the global stage. However, BAE Systems must also be prepared to take responsibility for its decisions and to understand the debt that it owes to the country and the taxpayer.

--- Later in debate ---

[Mark Hendrick (Preston) (Lab/Co-op)]

BAE Systems is a world-leading manufacturer of defence and security products. It has bases scattered across the globe in places as distant as the United States, Australia and India. However, it is important that the UK remains at the core of its business and its base.

Before the recent announcements, BAE Systems employed 40,000 people directly. When the indirect employment throughout the company’s supply chain is factored in, about 120,000 British jobs are dependent on BAE Systems. To further demonstrate the company’s standing, it generated £9.2 billion in revenues in 2009. It made a direct value-added contribution to UK GDP of £3.3 billion and contributed more than £650 million to the Treasury’s coffers. The Prime Minister has spoken at length about wanting to support British manufacturers. No company has done more than BAE Systems.

BAE has a centre of excellence in the north-west. In 2009, a comprehensive report into the company by Oxford Economics stated:

“The North West is by far the most important region within BAE Systems UK, accounting for about half of all its UK employment.”

That is about 20,000 jobs. The report went on to make a point that has just been made by the hon. Member for South Ribble (Lorraine Fullbrook):

“BAE Systems now accounts for exactly one in eight jobs in knowledge-intensive production within the North West.”

BAE’s concentration in the north-west means that the recent announcement that the company will axe 3,000 highly skilled workers, half of them in Lancashire, is a body blow to the region, as I am sure it is in Yorkshire as well.

The Warton site, which employs more than 8,000 people and contributes more than £300 million to the local economy, will see 822 redundancies. A further 565 jobs will go in Samlesbury, and more than 100 elsewhere in the region. Many of them are in my constituency and the surrounding constituencies in central Lancashire. That is a tragedy for those employees, their families and the region. We have heard a great deal about Brough today, but to put the matter in context, more jobs are being lost in Lancashire than exist at Brough as a whole.

Contrary to some fairly derogatory remarks about the standard of the work force in Lancashire, Warton and Samlesbury are highly confident that they are capable of doing whatever work is required on any aircraft if the company asks them to undertake it. The north-west is where BAE Systems has placed the bulk of its operations, and it is where the company’s future lies. The north-west centre of excellence exists at Warton and Samlesbury, and it will be a major contributor to this country’s gross domestic product. Coming when they do, however, the changes are a particular problem for families on either side of the Pennines.

The Typhoon jet is a huge success story, which we want to be continued. As the hon. Member for South Ribble mentioned, the jet undertook its first major combat missions earlier this year, providing an invaluable service in the skies of Libya. Production of the Typhoon has taken place in three tranches, and although the previous Government signed up to tranche 3A, it has sadly been subjected to the coalition’s ill-thought-through and rushed strategic defence and security review. Rather than producing a carefully constructed industrial strategy, the Ministry of Defence is now planning to halve the UK’s tranche 3 order, and BAE will cut its annual production from 61 to 36 jets.

Last week, the Minister made the point that much of what was happening was due to the slowness of ramping up work on the F-35. Nigel Whitehead, the group managing director, has made it plain in a letter to me and other hon. Members that the main reasons for the decision were the cut in the Typhoon, not the F-35, along with the withdrawal from service of the Harrier and the decision to scrap the Nimrod. That is what the company is saying about the facts.

[Peter Luff]

rose—

[Mark Hendrick]

I am happy to take the Minister’s intervention, because I have only 16 seconds left and I shall get some extra time.

[Peter Luff]

I am very grateful to the hon. Gentleman. Whatever the rights and wrongs of his argument, the letter makes it clear that that decision was taken in 2008.

[Mark Hendrick]

Which decision?

[Peter Luff]

The decision by the four core Typhoon nations not to acquire the full quantity of Typhoon tranche 3 aircraft was taken in 2008. I do not think I can take responsibility for the last Government’s decisions.

[Mark Hendrick]

I think the Minister is talking about tranche 3, not tranche 3A.

It is important that people get the matter into perspective. For each of the 1,500 BAE Systems jobs lost in Lancashire, four other jobs will be lost in Lancashire as a result. It is a huge blow to the region, to Lancashire and to many hard-working families from Preston.