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Mr. Blunkett: I agree entirely. That is precisely what my colleagues are seeking to do in pulling the group together: to learn from experience and share best practice, enabling us to configure similar social and demographic factors in other areas and consider what has worked best there.

Make no mistake, though: the issues of regeneration, avoiding alienation and tackling some of the greatest social scourges of our time are not ones solely for areas where there are inter-racial or ethnic tensions. They also exist on the white housing estates such as those that I represent. We must balance the two if the message is to be clear that we care about all, regardless of race, colour or creed. If we do that, we will stop those who deliberately stir up hatred and use those factors to light the flames that we saw on Saturday in Bradford. That is a task for all of us.

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Type 45 Destroyer

4.18 pm

The Secretary of State for Defence (Mr. Geoffrey Hoon): With permission, Mr. Speaker, I would like to make a statement about the procurement strategy for the type 45 destroyer.

It is almost a year to the day since I announced to the House the decision to procure the first batch of three type 45 destroyers, as part of a planned class of up to 12 ships. The type 45s will be the largest and most powerful air defence destroyers ever ordered for the Royal Navy.

Since that announcement, we have made good progress. The contract to complete the design and build of the first three ships was placed with BAE Systems on 20 December last year. Design work is also progressing well. An integrated design team—whose members come from the prime contractor, BAE Systems, and the two shipbuilding companies BAE Systems Marine and Vosper Thornycroft—has been established at Scotstoun for the last six months. In addition, a number of key subcontracts, such as those for the Rolls-Royce WR21 engine and much of the combat system, have now been placed. There have been a number of successful test firings of the Aster missile, the ship's main armament, which is being developed with France and Italy.

However, progress towards the shipbuilding subcontracts has been more difficult. The procurement strategy for the type 45 was based on the allocation of shipbuilding work for the first three ships between the BAE Systems Marine yards at Barrow-in-Furness and on the Clyde, and Vosper Thornycroft. Thereafter, it was assumed that both companies would compete for the assembly of batches of the succeeding ships.

At the end of last year, however, BAE Systems Marine put forward an unsolicited proposal for the construction of all 12 of the type 45 destroyers. We have been examining this proposal carefully to establish whether it offered better value for money for the taxpayer. We have also called on the services of RAND—a highly respected independent consultancy, experienced in this type of issue—to take a fresh look at possible procurement strategies for this programme in the context of the future warship programme as a whole.

For the original procurement strategy to work, the shipbuilding companies need to work closely together during the development and manufacture of the first batch of ships already on order. Such co-operation has not been encouraged by the existence of the unsolicited proposal, nor by the prospect that the companies would have to compete against each other for the second batch of ships.

We have been keen to resolve these problems, as has industry. Working with the companies, we have developed a revised strategy, which allocates work on the ships between the two shipbuilders for the whole class of type 45 destroyers. The first-of-class ship will be assembled and launched at Scotstoun. The focus of design support to the whole class will remain there, with continuing participation by both shipbuilders. The remaining ships will be assembled and launched at Barrow-in-Furness.

Vosper Thornycroft at Portsmouth, and BAE Systems Marine—on the Clyde and at Barrow-in-Furness—will both build and outfit substantial sections of each ship. The

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yards will continue to build the same sections throughout the programme, to increase efficiency and produce better value for money for the taxpayer.

Under the strategy, a commitment has now been made to six ships in a planned class of up to 12 ships. That commitment has therefore doubled the number on order. This larger volume of guaranteed work, and a stable foundation to the project, will allow industry to make long-term investment decisions.

Subject to negotiations being completed satisfactorily, I propose to adopt this revised approach, through which we are confident that we can secure demonstrable value for money. We are seeking demanding efficiency improvements from industry. The initial findings of the RAND study support this new approach. It reflects the best features of the BAE Systems Marine bid in terms of learning from experience from one ship to the next, but it also preserves the possibility of competition for a number of subsequent defence programmes. The new strategy gives a welcome level of stability to our warship building industry. Above all, it offers the best prospect of achieving the in-service date for the type 45 destroyer, with deliveries to the Royal Navy starting in 2007. Any significant delay in that date would have significant operational and cost penalties.

The new approach gives Vosper Thornycroft a defined and significant role in the type 45 programme. The company will be able to move its operation, as planned, into the Portsmouth naval base, and to invest in new shipbuilding facilities there. The new approach also provides a solid foundation from which the company can sustain its export business and enter competitions for future naval programmes. The company estimates that the substantial level of high-quality type 45 work should sustain a steady level of some 650 jobs well into the current decade.

Type 45 work, together with the first three Astute class submarines and the order for two alternative landing ships (logistic) announced last year, should support BAE Systems Marine shipbuilding for the rest of the decade. The company's own estimates show that, once the total construction programme is up and running, work on type 45 vessels can sustain a steady level of some 1,200 jobs on the Clyde and about a further 900 jobs at Barrow- in-Furness. I understand that, in the light of this package of work, the company has no plans to close any of its yards.

This revised procurement strategy for the type 45 destroyer is a further example of the benefits of smart acquisition, which involves an integrated team approach by the key industrial partners. The companies involved have welcomed this new strategy, and I commend it to the House.

Mr. Iain Duncan Smith (Chingford and Woodford Green): I start by thanking the Secretary of State for his courtesy in allowing me to see a copy of the statement.

I unequivocally welcome today's announcement. Whatever else I have to say about it, the Royal Navy has been waiting a great deal of time—through two Governments—for these ships. I hope that the Government will also be able to guarantee that the in-service dates will be met and that they will stay strict and firm on the penalties they have proposed and will not allow the dates to slip any further.

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I congratulate Vosper Thornycroft and BAE Systems on finally receiving an order and wish them well as they set about building those important ships. On that note, however, will the Secretary of State clarify Vosper's role? Will he confirm that it will continue to be fully involved in all stages of design? The company would be grateful to know that, as would Conservative Members.

Despite all the words about competition and smart procurement, nothing in the statement can disguise the fact that the announcement marks the end of competition policy in warship design and build as we have known it in the past few years. From what I have heard and read, it appears that there has been a U-turn on existing Government policy and the Secretary of State needs to confirm that and explain the reasons.

It is important to cast the matter in context. The chief executive of the Defence Procurement Agency, Sir Robert Wormsley, said:

I agree, and the Prime Minister went on to say:

The Secretary of State needs to explain carefully, therefore, why he has broken with that position and that pledge. How can the Government realistically expect competition for the final two batches when only BAE will assemble and launch all six of the ships as ordered? Surely the right hon. Gentleman should admit today that the arrangements will continue into the next two batches as well, regardless of cost, and that there is no real chance of any future competition.

It is important also to remember that competition is not only about pitting one company against another but about deriving savings, not only for the Treasury but in this case for the Navy. For example, in the type 23 order, I understand that about 36 per cent. savings were made over the lifetime of the build programme. Will the right hon. Gentleman be able to indicate what savings he expects over the lifetime of this programme if he is not going to compete it?

I also understand that Vosper Thornycroft is asking much the same question and wants the Secretary of State to clarify that the decision to move away from competition relates to the type 45 programme alone and is not a statement of the Government's intent to leave competition altogether. If the right hon. Gentleman fails to give us that reassurance, we can assume that the Government intend to move away completely from the procurement system that has operated until now.

On the systems to be installed on the ships, what was most remarkable about the statement was that the Secretary of State gave little or no detail about how the ships will be fitted out for their real role. Will he confirm today that the type 45 as now planned and contracted for will in essence have little or no anti-submarine capability, particularly when the Lynx helicopter is not operational, as I understand that the ship will carry no torpedoes?

Will the right hon. Gentleman confirm that the type 45 was originally due to carry the new Merlin helicopter, but that since the Government are not including a platform

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for the Merlin it will only be able to carry the Lynx, which will not have anything like the capability by 2007 that the Merlin would have had in the anti-submarine role?

Will the right hon. Gentleman confirm also that he is not providing any close-in-range weapons system, such as Phallanx, and finally, that the type 45 will have no real anti-surface capability and no land-attack capability?

The Secretary of State said in his statement that the type 45s would be the largest and most powerful air defence destroyers ever ordered for the Royal Navy. The real point is that they were intended for far more—they were meant to be ships that were capable not only of defending themselves but of defending other ships in a fleet operation. However, now it appears that unless those concerns are met the ships will have to put to sea defended by other ships.

Although I welcome the Secretary of State's announcement that the ships will be ordered, too many questions have been left unanswered and too many concerns about future programmes remain to permit us to give an unequivocal welcome across the board.

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