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Mr. Quentin Davies (Grantham and Stamford): It is all too characteristic of the Government that they make a statement after the news has been all over the press: in the Financial Times this morning, on the "Today" programme and, as the hon. Member for Hereford (Mr. Keetch) pointed out, on the internet. Once again, Parliament has been treated—on the last day before the recess—with characteristic levity by the Government.

It is also characteristic, and typical of new Labour spin, that the Secretary of State should set out the positive job news without mentioning the negative job news. Is it not a fact that Thales will have to lay off several hundred people in its former Racal subsidiary?

The Conservative party unreservedly welcomes the fact that a decision has now been taken on this important matter. Never again must the British Army go into battle, as it did in Kosovo, with such an unreliable communications system: soldiers were forced to use their personal mobile telephones, which were insecure. That was utterly disgraceful. There is no doubt that the Government have a mixed record on this matter, having spent three years being taken for a terrible ride by the Archer consortium. If they thought that they could do better than us, and our record on this matter is far from exemplary, they might have done so without waiting three years.

One or two things were clearly missing from the statement. I did not hear any mention of an in-service date. Will the Secretary of State tell the House, precisely and unambiguously, the in-service date for the system? In what respects have the specifications, which CDC will be working to, been altered from those to which the Archer consortium was asked to work? In other words, to what extent have the specifications been set back in the past year?

How much public money will the Government have to write off because of the Archer fiasco? [Interruption.] Yes, it was a fiasco, and it was entirely a fiasco of this Government. Labour Members are misinformed: the Archer fiasco lasted from 1997 to 2000. The National Audit Office says that between £35 million and £102 million of public money will have to be written off. Will the Secretary of State tell us the correct figure?

Will the Secretary of State give us an unambiguous assurance that the full source codes will be made available to this country, and that in future we will have total control of this important software?

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Mr. Hoon: I have heard some astonishing performances by the hon. Gentleman recently, but today he probably wants to outdo himself before he goes off for a well-earned rest for the summer.

On the responsibility of the previous Government, I can only remind the hon. Gentleman of the dates that I set out to the House. The requirement for the system was originally endorsed as long ago as 1988, and the House does not need reminding which Government were in power at that time. It also does not need reminding about the collapse of the competition in 1996 and the decision in March 1997—we all know when the general election was held that year—to pursue a single source procurement with Archer Communications Systems Ltd. All those are matters of fact, and I find it astonishing that the hon. Gentleman should choose to comment on them when he lives in a very large greenhouse—[Interruption.]

Mr. Speaker: Order. The hon. Member for Grantham and Stamford (Mr. Davies) has asked several questions of the Minister, and he must allow him to reply.

Mr. Hoon: Perhaps I have dwelt on the hon. Gentleman's discomfort for long enough, save to say that this Government tried hard to make the single source procurement system work. I recognise that we failed to do so. That may have had something to do with the way in which the contract was originally placed, but I will pass over that. We took a difficult decision to abandon that programme, and we have now been rewarded by the fact that we have had a vigorous competition involving three very successful companies.

The in-service date should be early 2004. Specifications have been adjusted in certain areas, but not with any great significance. I will write to the hon. Gentleman with precise details if he requires them. There will be some write-off. The final figure has still to be determined, but we judge that the great majority of the write-off will benefit the existing procurement because the work that has been done will not be wasted. We will not waste significant sums as a result of abandoning the previous process. If the hon. Gentleman requires assistance with other matters, I will pass him the relevant information.

Mr. Robert Walter (North Dorset): The Secretary of State will be aware that the headquarters of the Signals and the Royal School of Signals are located at Blandford in my constituency. He mentioned the creation of 1,600 jobs. There has been considerable speculation in the Blandford area about the three bidders and how many jobs will be based there. Can the right hon. Gentleman give us an idea of the establishment which the winning contractor will locate at Blandford for implementation, training and support purposes?

Mr. Hoon: As I have already said, and as I must make clear, some 1,600 jobs will be secured. I mentioned the range of detailed technical equipment that will be required, from radios and computers to equipment that will be fitted inside helicopters. Although there are early indications across the country of the numbers of jobs that are likely to be created in each place where the subcontractors are currently located, it would not be sensible to give out precise details of the proposals because of the nature of the contract. It has only just been placed and still needs to be signed up to, which we hope

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will happen later this summer. It would not be right to create expectations unless we are absolutely confident about where the jobs will be located. However, I shall ensure that the details are sent to the hon. Gentleman as soon as I have them.

Fiona Mactaggart (Slough): The Secretary of State has placed on the record his appreciation of the significant contribution that Thales makes to the United Kingdom defence industry. Has the company told him about the impact that the decision will have on its 14,500 employees in the UK?

Mr. Hoon: I have had discussions with Thales about the contract's implications, and it is right that those remain confidential for the moment. It is obviously for the company to determine how it organises itself in light of the decision.

Each of the three companies would have established new facilities rather than continuing at existing facilities had they been successful, and the percentage of work in relation to each company's bid would have been roughly the same in the UK.

The developments in communications for the armed forces are important. In those circumstances, had the decision been in favour of Thales, I doubt whether the precise number of jobs created would have differed significantly. If there are job losses as a result of the decision, it will not be the direct consequence of Thales failing to win the contract; rather, it will be the result of its reorganisation of its business across the UK.

Tony Worthington (Clydebank and Milngavie): I want to congratulate those parts of the UK which have benefited from the contract, but the decision will be a major disappointment to my constituents who work for Thales in the Govan area at a company previously called Barr and Stroud, which was tremendously well known. However, when making such announcements, the Secretary of State should talk not just of job gain, but about the overall situation. Thales certainly thinks that 400 jobs will be going as a consequence of the decision. It is also worried that its ability to tender for very important contracts on aircraft carriers will be damaged by the award of this contract to CDC. Will he comment on that?

Mr. Hoon: As I said to my hon. Friend the Member for Slough (Fiona Mactaggart), it is for Thales to determine how best it organises its work force across the country in light of the decision. I well understand the disappointment to which my hon. Friend refers. Had the contract gone to Thales, it would have been able to create a significant number of new jobs across the UK, but the percentage would have been slightly less than the percentage work-share that CDC has proposed. That is not, however, the basis of the decision. There is absolutely no reason why Thales should not continue with the excellent programme on which it has been working for the design of future aircraft carriers. Indeed, as I said in my opening statement, we very much value Thales's presence in the United Kingdom. It is has a substantial

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amount of defence work already, and we look forward to its winning more defence work and creating still more jobs in the United Kingdom in future.

Mr. Ian Taylor (Esher and Walton): The key to the announcement is that, at last, our armed forces may get a secure communications system, and I agree with my hon. Friend the Member for Grantham and Stamford (Mr. Davies) that that is absolutely crucial in battlefield conditions. Let us hope that the Secretary of State has chosen the right winner of the competition and that the contract succeeds this time. He will know from shadowing me when I was the Minister for Science and Technology that the technology is vital, and it is essential that it is kept within his power, as Secretary of State for Defence. Will he tell us a little more about his reference to intellectual property and about the research centre, because the United Kingdom will suffer if British industry is denied full access to the technological developments in the Bowman contract?

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