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Arms Exports

6. Dr. Vincent Cable (Twickenham): If he will make a statement on the role played by his Department in the promotion of arms exports. [40902]

The Parliamentary Under-Secretary of State for Defence (Dr. Lewis Moonie): The Defence Export Services Organisation, within the Ministry of Defence, is responsible for co-ordinating Government support to industry in promoting legitimate defence exports. Other areas within the Department provide assistance as required.

Dr. Cable: Is the Minister aware of the work done by senior economists in his Department, as well as by independent academics, that suggests that the economic benefits of such export sales are negative? In particular, is he aware of the York study's conclusion that if arms exports were cut by half within the life of a Parliament, the national income would be unchanged, and there would be a net gain of jobs from civil redeployment? In view of that, why are the Government promoting arms exports in highly inflamed situations, such as with the export of Hawks to the Indian subcontinent?

Dr. Moonie: An independent study by two leading academic economists and two MOD economists into the economic costs and benefits of defence exports was published on 11 December last year. The Government broadly agree with its findings. It concluded that, rather than being subsidised, defence exports represented a significant net benefit to Government and to the UK economy more broadly. The study reported that defence export sales averaged about £6 billion in 1998 and 1999, and supported almost 100,000 jobs, many of which are high-quality jobs in cutting-edge industry. Its conclusions suggested that the ending of defence exports from the UK would involve a one-off adjustment cost of between£4 billion and £5 billion, which is equivalent to about0.5 per cent. of one year's gross domestic product. In addition, there would be a continuous net cost to Government of between £90 million and £200 million.

European Defence Co-operation

7. Dr. Nick Palmer (Broxtowe): If he will make a statement on progress in multinational defence co-operation in Europe. [40903]

The Secretary of State for Defence (Mr. Geoffrey Hoon): Both the NATO defence capabilities initiative and the European capabilities action plan encourage nations to co-ordinate their efforts and work together in enhancing military capabilities.

The United Kingdom participates in a wide range of successful multinational co-operative arrangements, such as the UK-Netherlands amphibious force andthe European air group. We also operate daily in multinational formations in the Balkans. We are actively seeking to build on such experiences and initiatives. The United Kingdom and France reviewed recently the work

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conducted under the letter of intent on naval co-operation signed in 1996, and further useful progress has been made.

Dr. Palmer: I am grateful to my right hon. Friend for his reply. Anyone except the most fanatical of Europhobes would accept that progress in this area is valuable. Can he give further concrete examples of projects on which we work with our European allies, and of the impact on our defence capability?

Mr. Hoon: I am grateful to my hon. Friend for his interest in this subject. As he indicates, this is hardly an area where there ought to be any kind of criticism at all. By improving our joint capabilities, we are clearly enhancing the ability of European nations to contribute not only to their own defence but equally to the defence of others through the NATO alliance. One practical example is our work with Denmark, Finland, Norway and Sweden to develop a Nordic brigade under the Nordic co-ordinated arrangement for military peace support. I shall attend the conference of NORDCAPS Ministers in April.

Dr. Julian Lewis (New Forest, East): Does the Secretary of State recall the advice that his office gave to No. 10's foreign policy adviser that, if an EU-led force goes into Macedonia at this stage,

The advice continues:

I congratulate the Secretary of State on the forthright position that his Department took and remind him that, by contrast, the Foreign and Commonwealth Office said:

What was the outcome of that disagreement in view between his Department and the Foreign and Commonwealth Office?

Mr. Hoon: Of course, there are never any disagreements between different Departments, or between hon. Members. However, I have to note the exception to my earlier comments about Members taking a sensible view of European initiatives.

To bring the hon. Gentleman completely up to date, I refer him to the outcome of the Barcelona summit that considered the possibility of European Union operations in Macedonia. It was a very good outcome that reflected the prudent British approach to the issue. It allows the European Union to make decisions later in the year on the basis of military advice and after agreement has been reached on permanent arrangements for EU access to NATO capabilities and staffs.

Mr. John McFall (Dumbarton): I remind my right hon. Friend that the regular forces at Faslane in my constituency will, as ever, wish to play their part in the multilateral defence force. However, the need for harmony at the naval base is important and the concerns of the civilian work force should also be considered. He knows that my colleagues from Portsmouth, Plymouth and Rosyth have been pressing the case for the civilian

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work force in the naval warship modernisation programme. Does he recognise the loyalty and the commitment that the work force have shown and accept that the status quo is not an option? Will he allow them to play their full part in any proposals regarding multilateral defence force co-operation?

Mr. Hoon: My hon. Friend and I have had regular discussions about the excellent work conducted at the Ministry of Defence naval yards. He and I recognise that the working arrangements and practices of those places cannot remain at a standstill, and I pay tribute to the work force's efforts to try to find new ways of organising their work. The Government have yet to take a decision about how the matter will go forward, but I assure him that we will take fully into account the views of the work force concerned.

Mr. Bernard Jenkin (North Essex): May I point out to the Secretary of State that the document quoted by my hon. Friend the Member for New Forest, East (Dr. Lewis) was an account of the military advice that had been given? It said:

By agreeing in Barcelona to an EU operation, has not the Prime Minister chosen to ignore the military advice for reasons of politics and nothing else?

Mr. Hoon: Before the hon. Gentleman asks questions of that kind, he should read the text of the Barcelona summit statements. It says that it will allow the EU to make decisions later in the year on the basis of military advice.

Mr. Jenkin: I put it to the Secretary of State that we have the military advice already. Besides, the Government have always given the assurance, in the words of the Prime Minister, that

NATO has not been given any right of first refusal in this case, so why has the Prime Minister betrayed that assurance?

Mr. Hoon: Again, all I can do is refer the hon. Gentleman to the details of what was agreed. He is trying very hard to suggest that something other than what was actually agreed was decided upon. However, if he looks very carefully, he will see that the EU said that it could take decisions later in the year on the basis of military advice. That seems to me to be a wholly sensible, practical reaction to the very difficult situation in Macedonia. Had he read the text carefully, I would have thought that he would have strongly supported that view.

Mr. David Heath (Somerton and Frome): The Secretary of State mentioned the importance of the amphibious capabilities of the United Kingdom and its co-operating allies. Naval capacity is fundamental to that, so when will the two new carriers, HMS Bulwark and HMS Albion, enter service? Given that there is only one bespoke helicopter carrier—HMS Ocean—has any

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thought been given to permanently converting one of the old carriers for rotary-wing use in the way that one was deployed recently?

Mr. Hoon: The timetable for procurement is proceeding according to previous announcements; there has been no change to it. We certainly look consistently at the range of capabilities, including platforms required for military operations. However, I am entirely confident that the present plans and proposals meet the needs of the United Kingdom, as expressed in the strategic defence review and as part of the work currently being conducted in response to the appalling events of 11 September.

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