Previous SectionIndexHome Page

Mr. Davidson: The Minister urged me earlier to await his utterances on industrial policy. I did so, but they were a trifle too delphic for me. In other words, I did'nae understand them completely.

I did of course understand what the Minister said about the merits of competition, and about the advantages of partnership and the disadvantages of monopoly supply.

17 Jul 2002 : Column 330

Perhaps, though, I can take him into the fourth dimension. Many of these matters cannot be seen in isolation here and now, because some of the decisions we make here and now have implications for our future capacity to tender for orders. What is the Government's industrial policy in relation to, in particular, the aircraft carrier, in the context of retaining intellectual property associated with systems design in this country so that we can bid for future orders?

Mr. Ingram: I am sorry if I was delphic. I did not intend to be. I thought I was being very clear about what we require from industry, what we will not accept from industry—which my hon. Friend now accepts—and how we can move forward together.

I spent some time talking about shipbuilding capacity. The MOD alone cannot save the shipbuilding industry. We can do a lot, but the industry must be much more forward-looking and much more commercially intensive. It must look for the opportunities that are out there so that it can spread its workload to secure the broad capacity and skills base that we need.

We must seek at all times to purchase the best possible equipment for our front line. That means that we cannot be a patsy to Government. There is no longer any sacred cow. It cannot be thought that we will roll over and accept things because of political pressure from one quarter or another.

I know that my hon. Friend engages with the company in his constituency. No doubt he will make its members aware of what is being said now, and has been said consistently, by defence Ministers, if they are not already aware of it. We want a lot from industry, and we are prepared to give a lot, but industry must produce the best equipment, and it must produce it at a good price. That must be the core of our approach.

Overall, I consider that we have the right resources, the right industrial policies, the right approach to smart acquisition, and a wide range of impressive equipment projects to help ensure that our armed forces have the capabilities that they need in order to deal with the complex challenges of the future. We ask a lot from the men and women in our armed forces, and they have the right to expect the best from us in return. That is this Government's objective, and I think we are on course to achieve it.

6.5 pm

Mr. Gerald Howarth (Aldershot): I think the Minister has received general acclamation for what must be described as a marathon. He entered into the spirit that the House wanted by giving way and engaging in debate—a debate that will continue this evening.

This is a timely debate, occurring as it does on the eve of the Farnborough air show in my constituency. I hope the Minister and others will go to that: it is the greatest air show in the world, and the greatest showcase for an important component of British manufacturing industry. I am bound to add that it might have been better to hold the debate after the publication of the new chapter tomorrow, when we could have had the benefit of seeing it. No doubt its publication will give us another opportunity to question the Minister. I hope he will ensure that we have a proper debate about the new chapter.

I too pay tribute to the United Kingdom's defence industry. Notwithstanding the occasional criticism, British industry delivers some first-class equipment to Her

17 Jul 2002 : Column 331

Majesty's forces. It gives employment to 345,000 people throughout the United Kingdom, and contributes significantly to our national prosperity. The British aerospace industry alone has earned the United Kingdom £100,000 million in exports in the past 10 years, with defence exports playing their part.

The Minister made an important point when he said that British companies must look overseas to ensure that they are not wholly dependent on the United Kingdom defence market. That means, however, that those companies must have the support of the British Government and of Parliament for their efforts to provide defence equipment to defend our allies overseas.

I welcome the Minister's announcement about the Terrier, and the £350 million order for Royal Ordnance. We are talking about a British company and a British order for the benefit of some first-class British Royal Engineers. I am particularly pleased because the Royal Engineers have a major base at Gibraltar barracks in my constituency, and I think they have demonstrated that when others are on exercise they are doing it for real. Exercise Saif Sareea proved that last November.

As we expected, the Minister made much of the Chancellor's financial largesse—although delivery of the largesse announced on Monday is not scheduled to start for nine months. Before the Minister gets too excited, let us examine the figures. On Monday the Chancellor told us that defence spending would increase by £3.5 billion over the next three years from today's base of £29.3 billion; but, as my hon. Friend the Member for North Wiltshire (Mr. Gray) implied, that figure refers to the new resource accounting standards recently introduced in all Departments, to which we shall all have to become accustomed.

On the old cash accounting basis, this year's figure would be £24.2 billion. Under that convention, and allowing for annual inflation of 2.5 per cent., the increase in spending over the next three years will amount to just £1.2 billion—about £400 million a year. Even on the Government's figures, there will only be a 1.2 per cent. real annual increase.

The Minister trumpeted the marvellous settlement that his Department had secured. I do not want to be too churlish, but I think it only fair to point out that his 1.2 per cent. compares with a three times greater increase for the Department for Culture, Media and Sport, which received 3.5 per cent. for each of the next three years. Some may of course regard sport as an extension of war, but I am afraid the fact remains that the Minister's Department did not do quite as well, in comparison with other Departments, as he tried to pretend to the House.

Mr. Kevan Jones: The Tory Government cut the defence budget by one third, although I accept that times were different then. It is interesting to hear the hon. Gentleman go through the figures, but can he give a commitment that a future Conservative Government would at least match the increase that has been announced? If not, will he say what increase such a Government would provide?

Mr. Howarth: That was a good try by the hon. Gentleman, who anticipates part of my speech. I had expected that he would ask that question, and he may rest assured that I will come back to it.

17 Jul 2002 : Column 332

As a percentage of gross domestic product—a yardstick constantly applied to NATO applicant states—UK defence spending will fall to a post-1979 low of 2.2 per cent. That compares with 2.9 per cent. of GDP when the Conservative Government left office in 1997.

When the threat was high and real, as in 1982–83, the then Conservative Government found the resources to match it, and spending rose by 6.6 per cent. in that period. Even when that Government cut defence expenditure after the fall of the Berlin wall—I am sure the hon. Member for North Durham (Mr. Jones) is old enough to remember that there was a great clamour then for a peace dividend—I do not recall that any member of the then Opposition said that the cuts were too great.

Mr. Bruce George (Walsall, South) rose

Mr. Howarth: All the argument was the other way—except, I suspect, from the right hon. Gentleman who is about to intervene.

Mr. George: I am grateful to the hon. Gentleman. I hope that his highfalutin statistics were not the ones provided for him by the Defence Committee this morning, or we would get very angry. Does he accept that much of the increase in defence expenditure after the Falklands war was used to replace the ships that were sunk, of which there were too many? Also, in 1985 the Conservative Government broke the commitment given by Fred Mulley in response to a NATO request that the UK, like all NATO members, would increase defence expenditure by 3 per cent. in real terms. The decline in defence expenditure began in 1985, well into the cold war. I hope that the hon. Gentleman will look again at his brief, and be more careful. It is true that the Conservative Government left office with defence expenditure of around 2.8 or 2.9 per cent. of GDP, but it was 5.3 per cent. when—

Mr. Deputy Speaker (Sir Alan Haselhurst): Order. The right hon. Gentleman is a very experienced Member of this House, and he must know that his remarks have gone well beyond the bounds of an intervention.

Mr. Howarth: I can safely conclude that, whichever party was in government, its defence expenditure would not be sufficient for the right hon. Gentleman, who has long been a stalwart supporter of defence expenditure.

The figures that I have came from the House of Commons Library, not the Defence Committee or the Government. The right hon. Member for Walsall, South (Mr. George) is right that there was subsequently a reduction in expenditure, but in the years 1982–83, 1983–84 and 1984–85 there were increases of 6.6 per cent., 2.9 per cent. and 5.3 per cent. respectively. That shows that there were substantial increases, not just post-Falklands, but at a time when the UK faced a threat.

As I said, I doubt whether any Opposition Member at the time said that the then Conservative Government were cutting defence expenditure too much. Indeed, when I was resting between engagements in the period 1992–97, one Labour Member whose name I shall not reveal told me that a Labour Government on taking power would not have to worry about making cuts, as the Tories would have done all that for them.

17 Jul 2002 : Column 333

Does the Minister of State wish to intervene?

Next Section

IndexHome Page