John Robertson (Glasgow, Anniesland) (Lab): Thank you, Mr. McWilliam. It is a pleasure to see you in the Chair. I hope that we will have an interesting debate.

I believe that it was Napoleon who once said that military victory results from three parts courage and only one part equipment. I will not quarrel with such a renowned strategist, given that my military experience is confined to the more humble armed forces parliamentary scheme. Nevertheless, I want to focus on the equipment on which our forces rely, what is needed, where it is bought, and how it is made. First, I shall consider the way in which decisions about defence procurement are made, the security of Britain’s defence requirements, and the scarce financial resources with which we must meet those requirements. Secondly, I shall consider in greater detail the marketplace for defence equipment and the role that our Government should play.

The central problem of defence procurement is how to plan for the uncertain threats in a rapidly changing world that the US Defence Secretary has described as “unknown unknowns”. We are not certain about the equipment that our forces will require in future campaigns. For decades, the transatlantic alliance was focused on the containment of Soviet expansion, but in the early 1980s how many people predicted the end of the cold war? Likewise, no one could have foreseen the terrible attacks that were launched on the United States on 11 September 2001 and which caused the US and its allies to reassess the nature of the threats that they faced. In the face of such uncertainty, we are right to emphasise the need for broad-based capabilities.

In recent weeks, concern has been expressed about the resources that are available for procurement. It has been reported that the war in Iraq led to the Ministry of Defence’s having to borrow £500 million from procurement budget funds to cover short-term costs and that that sum was due to be paid out on the Eurofighter programme in the mistaken belief that it would be delayed and therefore payment would be put off. Will the Minister comment on the procurement budget and update us on discussions between the Secretary of State, the Chief Secretary to the Treasury and the Chancellor of the Exchequer about the defence budget for the years ahead?

Although those concerns about funding are real, we should put them into context. Labour introduced five years of year-on-year real-terms increases in the defence budget, and the last round of spending was particularly beneficial to the armed services. That compares with a swingeing cut in defence spending of nearly one third in the previous decade. I am not making a party political point. Indeed, politicians across the spectrum recognise that the end of the cold war reduced the threats that our conventional forces and nuclear deterrent were designed to repel. I want to emphasise the wider context of these funding issues: massive long-term investment in the armed forces and a vision of the armed services as a worldwide force for good.

Having established the need for strong armed services and the Government’s firm belief in the need for effective procurement, there are still controversial issues about what equipment is required. There has recently been controversy over the Royal Navy’s needs as it transforms from a cold-war-based service to one that can genuinely project global power. As the Minister knows only too well from my frequent questions, the BAE Systems yard in Scotstoun in my constituency is building the first of the Type 45 destroyers. The decision to buy Type 45s has been much criticised, most recently by Sir Max Hastings in The Spectator and by a retired naval officer, Lewis Page, in Prospect. I want to make the case for the Type 45s, and I would appreciate the Minister’s active and vocal support.

The arguments against Type 45s have focused on the changing threat to the UK-the end of the single, overwhelming threat from the Warsaw pact and the rise of less predictable, and unstable, threats from failed states, rogue regimes and international terrorism and crime. Sceptics say that where a global projection is required, destroyers such as Type 45s are of use for little more than as venues for cocktail parties. However, that does not recognise the fundamental role of destroyers and frigates in the successful delivery of maritime force projection. They are equipped with a suite of defensive systems that were vital in the Iraq crisis, during which 95 per cent. of all United Kingdom military equipment travelled to the Gulf by sea. They also contribute enormously to our layered defence. Aircraft based on land, on aircraft carriers and on destroyers and frigates form the outer layer of our defence. Medium-range ships are carried in escorts such as the anti-air missiles in destroyers and the anti-ship missiles in frigates.

Much has been made of the danger of obsolescence, particularly in relation to the Type 42 destroyer. However, I have seen in person the first of the new Type 45s that are being built in Scotstoun, and they are vastly more capable and therefore have the potential to make the Royal Navy even more effective. It is also important to remember that destroyers and frigates are useful and can be utilised when international events take an unexpected turn for the worse. For example, in 2003 the frigate HMS Iron Duke sailed to fulfil our north Atlantic patrol commitment. After it arrived in the Caribbean, the situation in Sierra Leone deteriorated and the ship was sent 3,500 miles to west Africa, arriving in Freetown less than two weeks later. The riverine operations and armed patrols that were carried out by the forces involved were decisive factors in reducing the strength of the rebels at that point. Not only that, but on returning to the Caribbean the Iron Duke conducted counter-drug operations and seized more than 3 tonnes of cocaine. Destroyers and frigates have been able to undertake tasks ranging from high-intensity war fighting in Iraq, smaller-scale regional engagements such as those in Sierra Leone, and humanitarian disaster relief such as that in Montserrat. Does my right hon. Friend agree that those ships are not merely relics of the cold war, but have an active role to play in the 21st century?

Another area of concern is that of equipment and clothing for our armed forces. That was the subject of a great deal of media criticism in the run-up to the war, some of which was fair, some less so. After all, Britain deployed a force comprising roughly the same amounts of men and kit as that which we despatched to the 1991 Gulf war, in half the time. We made great strides forward in the intervening 13 years, and that should be appreciated. Nevertheless, the need to modernise our communications, particularly in-theatre, is seen as of paramount importance. Will my right hon. Friend give an up-to-date position on new communications systems for our armed forces? If that is not possible today, will he be good enough to write to me? Clothing for our front-line troops in Iraq was not all that it should have been, although it was not quite as bad as the media presented. I would argue that a sufficient supply of desert clothes and boots could have been achieved in advance of deploying our forces. In the context of this debate, however, I make no apology for concentrating mainly on naval procurement, about which I have spoken many times in the House. I will continue to fight my corner for shipbuilding on the Clyde.

Now that I have established the strategic need for ships such as the Type 45, I want to examine the ability of the defence market to provide them. The Scotstoun yard, along with its sister yard across the river in Govan, is owned by BAE Systems. We should recognise the benefits that that company brings to the UK economy. In 2002, it employed 40,220 people in the UK and invested £500 million in fixed capital. BAE Systems represents a substantial base of intellectual capital in the UK and continues to invest in maintaining and upgrading that capital. I would therefore be grateful if the Minister gave his views on the need for a defence industry strategy that recognises the need to retain intellectual capital in the UK, because that generates employment and contributes to the independence of our foreign policy.

I want briefly to consider three points: first, the future of the Scotstoun yard; secondly, the performance of BAE Systems; and thirdly, competition in the defence market. As my right hon. Friend knows, there has been speculation about the Scottish shipyards in the media, especially the Glasgow Evening Times. Scotstoun appears vulnerable as more of the work on the Type 45s transfers to the Govan yard. BAE Systems has so far been able to provide little clarification other than to emphasise its obligation to shareholders to consider approaches from all of its businesses. That is of great concern in my constituency.

Decisions about defence procurement cannot and should not be based primarily on the need to protect jobs. The needs of our armed forces must, and always will, come first. The case that I want to make is twofold: first, that as the capabilities of the Scotstoun yard meet our current requirements, it is good for the Navy if those shipyards are secure; and secondly, whatever decision is made about the Type 45s, we owe it to the workers of the yard not to leave them in a state of uncertainty.

Mr. Mohammad Sarwar (Glasgow, Govan) (Lab): These are not just speculations. When we met the managing director of BAE Systems, he told us clearly that if he received an offer for the shipyard he would sell it. That is causing a lot of anger and uncertainty among the work force in the Govan and Scotstoun shipyards. What does my hon. Friend think will be the impact on the work force if BAE Systems sells those yards? BAE Systems is a very large employer that is vital to the UK economy. Does my hon. Friend agree that there should be a better relationship and understanding between the Government, BAE Systems and trade unions?

John Robertson : I thank my hon. Friend, whose constituency shares the lower Clyde with my constituency, for making valid points to which I shall return later. It is important not only for BAE Systems, but for all shipyards, that the Government and shipbuilders understand what is required in terms of the need to keep shipbuilding both in this country and afloat-if Members will excuse the pun.

Can the Minister give guarantees regarding the contracts on which the Scotstoun and Govan yards rely? Can he confirm that our war vessels will be built only in the UK , and that no work, either for the Type 45 or for any other warship, will be lost abroad? There are rumours about some kind of get-together with the French in their design of the third aircraft carrier-it would be their first carrier-so that the work for the three carriers is split between France and Britain. Can my right hon. Friend assure me and workers in British yards that that is not the case and that the two carriers will be built in Britain?

My hon. Friend the Member for Glasgow, Govan (Mr. Sarwar) referred to the wider issue of BAE Systems and its relationship with the Ministry of Defence. We all recognise that the position of BAE Systems as the principal defence contractor based in the UK means that the Government must have a close working relationship with it. My experience leads me to believe that both sides can take action to help each other to work together better. BAE Systems has delivered late and over budget on almost every project for years, although, to its credit, its latest accounts show improvements. I am in regular contact with representatives of the company in connection with constituency issues, and many of them are open and helpful. However, the management can be evasive and unhelpful in their contact with politicians. Although such an attitude is by no means typical of all in the company, it is a particular problem at the upper management level. Does the Minister have a view about what can be done to improve the situation? Will he put on record his recognition of the improvements that the company is making?

A good relationship between the Ministry of Defence and our prime defence contractor is vital. It is a two-way street, and I hope that both sides will work hard to improve the relationship. During my debates and meetings with MOD representatives, I have found that, although they have the needs of the country at heart, a slight paranoia is creeping into the relationship with BAE Systems. That paranoia is perceived among those on both sides. Will my right hon. Friend try to ensure that the two bodies can get together to work in a constructive manner? That is of paramount importance to the armed forces for whom the company makes its goods.

A happy resolution to this matter would be in BAE System’s interests, given the competition that it faces. The Government operate an open procurement system. There are other strong players, such as Thales, and on the continent EADS is working hard to build up its military and space businesses. Defence companies are working hard to break into new markets, and BAE Systems has been successful in that-according to Bank of America Securities, 21 per cent. of the company’s sales are made in America.

Governments need to think strategically about co-operating with partners. It is natural that we should look first to our close ally, the United States. There are, however, impediments to US-UK co-operation in defence procurement-for example, America’s protectionist legislation, as has been admitted by Bob Bruce, director of Atlantic armaments at the Pentagon. Likewise, the Americans are unhappy because they perceive a fortress Europe of national champions and directed competition. What steps can the Government take to encourage competition and innovation?

I believe that there are many reasons for optimism about Britain’s defence procurement policy and its future prospects. I thank the Minister for all his work and for his assistance in my attempts to help the workers of the yards in Scotstoun. I am sure that my hon. Friend the Member for Glasgow, Govan feels the same. I also thank the Minister for Defence Procurement, Lord Bach of Lutterworth, who has been unfailingly helpful and courteous in his dealings with me.

I believe that we are well placed to meet Britain’s security needs in the years ahead. I am sure that my right hon. Friend will address the issues that remain to be resolved and that he will do his utmost to respond to my questions and the fears of the workers throughout the country.

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