The whole House is no doubt grateful for the speech made by the right hon. Member for Plymouth, Devonport (Dr. Owen). I hope that he will forgive me if I do not develop his detailed analysis of the problems of the Labour Party policy.
I understand the reasons for the publication of the Defence Estimates and I look forward to the next White Paper, such as it will be, on the Falklands. I imagine that that will be towards the end of the year. It would be unwise of me to speak at length on the Falklands until all the results are known, except perhaps to make three brief comments. I pay tribute, as all hon. Members have rightly done, to the contribution made by our Armed Forces. That almost goes without saying, but ought to be said, and said continually.
I intervened in the speech of my hon. Friend the Member for Blackpool, South (Mr. Blaker) to ask about the equipment captured during the Falklands conflict. My question followed an article this week in Aviation Week. The article specified in detail some of the equipment that was taken over. What will happen to that captured equipment? Will it stay in the Falklands, or will it be utilised for training and other purposes in this country, particularly among those forces which so often suffer—the cadet forces, the Territorial Army, and the home service units?
Before directing my remarks to the substance of my speech which, hon. Members will not be surprised to learn, deals with the P110, I refer to the requisition of merchant ships, aircraft and other property where that property, particularly aeroplanes, is subject to leasing or other financial arrangements that involve foreign banks and foreign companies. Are our requisition powers capable of taking them over? I am led to believe by some informants within British Airways that they are not entirely certain that some of their equipment could be taken over by the Ministry of Defence, even though it was not needed in this instance.
I also refer to the Trident offset agreement—or the lack of it—and the lack of dual sourcing. I know that my hon. Friend the Member for Chertsey and Walton (Mr. Pattie) is to answer the debate and I therefore want to deal with some industrial problems. I quote from a leading article in The Engineer of 3 June. This states:
Etched in tablets of stone at the time Britain agreed to buy Trident was this statement: 'United Kingdom manfacturers are to compete on the same terms as United States firms for subcontracts for Trident 2 weapon system components for the programme as a whole.' … The Engineer's evidence is that the invitation from America has been treated as cynical. The timetable of the programme is such that one-quarter of the subcontractors will have been selected by the year end. And British companies new to the technology appear daunted by the suffocating documentation and approval procedure.
If that is the case and 50 per cent. of subcontractors will have already been selected by next year, clearly British industry will have to work extremely fast and realise that the administrative, bureaucratic security and contract period constraints will have to be overcome. Is the Ministry of Defence doing enough?
There is a requirement under air staff target 1228 for an urgent and early decision on what are loosely known as either Alarm or Harm anti-radar missiles, essential for Tornado. On 2 April I asked my hon. Friend for information, but he said that no news was forthcoming. I want to know when that news will be available.
I now turn my attention to the P110 which, in a number of ways, is essential to this country. It is also important to the Fylde area of northern Lancashire. My hon. Friend the Member for Blackpool, South (Mr. Blaker) will also be aware of this problem because his constituency is directly affected. There is no mention of the P110 in the White Paper. We all know that AST403, as it used to be called—the European combat aircraft or, loosely, the Jaguar replacement—was effectively cancelled by statements in the last White Paper.
The Prime Minister's exhortation to the aerospace industry at the SBAC dinner in 1980, when she expressed the view that the Government were entitled to look to the aerospace industry to point out export opportunities and reminded us that the prospect of overseas orders would be a factor that would play an increasing part in defining our own operational requirements is most appropriate to the P110 project. A market survey carried out by British Aerospace shows that in a collaborative programme it could expect to produce 850 aircraft—500 for the United Kingdom, the Federal Republic of Germany and Italy, and 350 for export. These conclusions have been validated by an independent consultant and the Ministry of Defence, Sales, is in broad agreement.
For those who are not familiar with it, the P110 is a single-seat, air superiority aircraft powered by two Rolls-Royce RB 199 engines. I inquired on Thursday whether the 67R derivative of that engine, which is related to Tornado and which will be essential to the P110, will be ready. Again, I am not entirely happy with the answer that I received. Much of the P110's structure is of a carbon fibre composite. Its systems and equipment are either based on existing developments or on already funded research programmes. The high power of the engines, combined with light weight, the sophisticated aerodynamics, and the fly-by-wire control system result in a highly energetic and agile aircraft outstanding in the air superiority role and equally effective in ground attack roles.
An aircraft like the P110 is essential to the defence needs of the United Kingdom. There is an operational case for the Royal Air Force to purchase P1lOs to fill a gap in its commitments in the central region in the 1990s and to satisfy the AST 403 and replace air defence Phantoms. There is a further operational case for additional P1lOs to complement the Tornado interceptor in defence of the United Kingdom air defence region.
The aircraft is designed to make cost-effective use of a combination of Tornado-related developments and new technology available from demonstration programmes. This approach has the advantages of reduced development costs, reduced time scale, reduced risks, and confidence in performance predictions, in service dates, and so on. Moreover, the project is in accord with paragraph 20 of Cmnd. 8288 of June 1981.
The development of a new fighter aircraft would represent a logical technology step towards the development of an advanced short take-off and vertical landing aircraft—the so-called STOVL—to meet air staff target 410 planned for entry into RAF service towards the end of this century. Furthermore, the aircraft would be operationally complementary to the STOVL aircraft.
The threat is not just in strategic terms. There is also a threat to industry. The industrial case for launching a new high performance military aircraft revolves around the need to maintain a national capability. The main thrust of this argument is that without such a project the military side of the aerospace industry could run down to a level from which it might not be possible to recover. Furthermore, the equipment manufacturers depend on new aircraft projects to launch their products on the export market. The recent Falklands crisis also produced a strong argument for the retention of a national defence industrial base with the capability of effective, flexible and rapid reaction.
In this project the industry, recognising the trend in rising costs for the development and production of defence equipment, proposes a partnership between Government and industry aimed at easing financial and management problems. International co-operation with Germany and Italy has arrived at the stage where the aircraft configuration and the development programme have been finalised. Discussions are proceeding rapidly towards contractual agreements. It has the added bonus of keeping the French aircraft industry at bay.
The proposal to the United Kingdom Government represents a radical change in procurement procedures, but it is hoped that a step-by-step plan will be agreed by British Aerospace and by the consortium involved that will minimise the joint commitments and risks at each stage.
Until now the project has been supported by private venture funding, by a consortium of British Aerospace, Rolls-Royce, Dowty, Ferranti, Lucas, Marconi and Smiths Industries—that in itself represents a unique situation and a roll-call of our successful industries—amounting, by the end of this year, to £25 million and to £35 million by the middle of 1983. Understandably, without some limited customer commitment, industry cannot continue indefinitely to write off this level of expenditure against profits. Some urgent commitment by the Government is needed.
The cost of the P110 as presently constituted has the United Kingdom providing 40 per cent., the West German Government 40 per cent. and Italy 20 per cent. Over 10 years, that represents about £500 million to the United Kingdom Government, not the £1,000 million figure that is sometimes bandied around. From that £500 million, it is anticipated that the industry will provide between £150 million and £175 million, reducing the Government's commitment to between £300 million and £350 million.
The aircraft industry runs down this year. This certainly applies to the aircraft division based at Warton, near my constituency. Jobs, especially among the design team, are at risk. The P110 is vital in this regard. Once a design team is broken up, it is extraordinarily difficult to reconstitute it.
In regard to exports, the possibility of £6,000 million in foreign income is at stake. It may appeal to the right hon. Member for Llanelli (Mr. Davies), with his Treasury experience, to know that about £2,000 million in tax revenue, together with support services income, is also possible. Operationally, the aircraft meets the demands of what was the AST403 and is a step technologically towards the AST410, the STOVL aircraft.
Most important perhaps in terms of the emotion that surrounds defence is that any alternative to the P110, a necessary aircraft, will entail buying foreign. That prospect is unacceptable to me, and I suspect to many hon. Members. It is, I hope, recognised that defence spending must be raised at least to the 4 per cent. level suggested by SACEUR. This argument was eloquently expressed by my right hon. Friend the Member for Aldershot (Mr. Critchley) last Thursday. By following this course, many of the problems to which hon. Members have referred will be resolved. Above all, we shall be able to fund the P110, which is vital not only to the Preston factories of British Aerospace but to the subcontractors and other members of the consortium who are actively involved.