With permission, Mr. Speaker, I will make a statement about the replacement of the Chieftain tank.
In his statement to this House on 20 December 1988, the former Secretary of State, my right hon. Friend the Member for Ayr (Mr. Younger), announced the Government's intention to replace the Chieftain with a new tank. The Challenger 2 tank being developed by Vickers was to be given the opportunity over the next two years to demonstrate that it could meet three demanding milestones.
At the same time, my Department has conducted an extremely thorough assessment of three other contenders —an improved version of the United States Abrams tank, manufactured by General Dynamics; an improved version of the German Leopard 2, manufactured by Krauss Maffei; and the French Leclerc tank manufactured by GIAT. That work has been greatly helped by the full assistance we have had from the companies concerned and their Governments.
In reaching our decision, we have had to take into account a wide range of factors, many of which did not apply two and a half years ago. Chief among those is the major political and military transformation within Europe which will mean that, by the mid-1990s, over 30,000 fewer tanks will be ranged against NATO in Europe. That has led to our study of "Options for Change" and allows us to make significant reductions in the size of our tank fleet.
But the main battle tank remains at the cutting edge of a modern army and, without it, high intensity conflict would be impossible. Indeed, the Gulf war demonstrated the continuing importance of the tank in the land battle.
A decision of this magnitude requires a wide range of factors to be carefully weighed and taken into account. Our appraisal has now been completed. We have reviewed the progress of the Challenger 2 programme, in which Vickers Defence Systems has achieved all the performance criteria, known as milestones. We have also assessed the competing claims of the Leopard, Abrams and Leclerc tanks.
I can inform the House that, subject to the negotiation of satisfactory contract terms, we have decided to go ahead with the Chieftain replacement programme and to place the order for the new battle tank to replace Chieftain with Vickers for Challenger 2.
In making the choice of the new tank, an important consideration has been the advantage of maintaining a single ammunition type without the smaller fleet. In addition to this order for Challenger 2, and taking into account the lessons of the Gulf war, we intend to proceed with a substantial upgrade programme for the Challenger 1 fleet. In particular, this programme will significantly increase the firepower of the Challenger 1 fleet by the fitting of a new and more powerful gun.
As a result of the acquisition of Challenger 2 and the enhancement of Challenger 1, the British Army's tank fleet will be well placed to meet its new commitments, both within NATO's Rapid Reaction Corps and elsewhere.
The choice of Challenger 2 testifies to the skills and capabilities of British industry and will deservedly ensure jobs at VDS and its sub-contractors. It is an excellent tank and likely to command close attention among our friends and allies. I am confident that it is exceptionally well placed to compete in the important overseas markets where there are genuine defence needs.
This announcement carries forward the process announced by my right hon. Friend in July last year. As he then made clear, our aim is to achieve smaller but better forces. The Government are determined to ensure that our armed services receive the equipment that they need to do the job. This decision is an important step in that direction. I commend it to the House.
I thank the Minister for that long-awaited but somewhat thin statement. The whole House will welcome this vindication of British technology and skill. While we understand why the right hon. Gentleman has not mentioned the price of the new tank or the cost of retrofitting the existing tanks, will he reveal the size of the order, at what rate the tanks will be purchased and over how long the contract is expected to run? Will he confirm the number of Challenger 1 tanks that are likely to be retrofitted?
While I do not wish to carp unduly this morning, I should tell the House that yesterday afternoon, during business questions, at about 4.30, my hon. Friend the Member for Leeds, Central (Mr. Fatchett) asked the Leader of the House whether there would be a statement about this matter. He was told that a statement would be made before the end of the month.
It would appear that a number of Conservative Members have not been detained by legitimate constituency business, as have been my right hon. Friend the Member for Morley and Leeds, South (Mr. Rees) and my hon. Friends the Members for Sheffield, Attercliffe (Sir P. Duffy), for Tyne Bridge (Mr. Clelland), for Rotherham (Mr. Crowther), for Leeds, Central, and for Blaydon (Mr. McWilliam), all of whom have played an active part in campaigning on a cross-party basis to secure the order for Vickers.
It is extremely regrettable that the courtesy that was shown to me late last night—and clearly was extended to Conservative Members—was not extended to the House as a whole. That has meant that some of my hon. Friends are not present today to welcome the order and to give it the sort of support that they have shown since December 1988, when the statement was first made about the milestone procedures. I must make that point because, while I welcome the order, I regret the somewhat unparliamentary way with which the matter has been dealt.
I am grateful to the hon. Gentleman for his support. I apologise to him and the House for the fact that the statement is being made on a Friday. The House will appreciate when I explain that negotiations with the company were completed only late yesterday afternoon, so this is the first opportunity I have to disclose the matter to hon. Members.
This has been for many months the subject of widespread concern and comment, inside and outside the House and in the press. Much of that comment has not been well informed, so I am sure that hon. Members will appreciate that, had we left the matter over the weekend, the likelihood of leaks, uncertainties and comment, inaccurate or mischievous, would have multiplied. For that reason, I felt it appropriate to come to the House immediately to make a statement.
It is our intention to re-equip completely two regiments of Chieftains. We believe that after the Options arrangements are fully in place, there will remain two regiments of Chieftains. They will be replaced with the new tank. The numbers in this contract will be up to about 130, which is larger than required to equip two regiments but includes tanks for training and logistical support.
The number of Challenger 1 tanks to be retrofitted under the improvement programme will depend on how many Challenger 1 tanks remain in service under the finalisation of the Options arrangements, but it is our intention that every Challenger 1 remaining in service should be retrofitted.
Does my right hon. Friend agree that this is great news not only for the British Army but for the north-east, with thousands of jobs being secured? Can he confirm that Vickers won the order on merit against great international competition? Does he accept that great credit is due to the Vickers work force for their achievements in connection with the Gulf and in bringing this design to a successful fruition?
I know that the work force would want me to thank hon. Members on both sides of the House who helped them. I particularly pay tribute to my hon. Friends the Members for Sheffield, Hallam (Mr. Patnick) and for Leeds, North-East (Mr. Kirkhope), who have been gagged in public by serving as Whips. They have helped enormously behind the scenes in putting our case.
Does my right hon. Friend agree that this vote of confidence by the British Army should help to pave the way for export orders and further job opportunities in our region?
I echo my hon. Friend's tribute to colleagues who have worked behind the scenes and spoken on this subject on the Floor of the House. As my hon. Friend says, although my hon. Friend the Member for Sheffield, Hallam (Mr. Patnick) must, technically, remain silent in the Chamber, he has played a significant part in concentrating our minds on this issue.
Every tribute should be paid to the work force, especially for its help to the 1st Division in the Gulf. It provided thorough, continuous and effective maintenance of the Challenger 1 tanks, which enabled them to perform so effectively throughout the war. That performance augurs well for the quality of workmanship that we expect to find in the new tank.
We welcome the Minister's statement, as to the trade unions that have been involved in the campaign, including my union—the Amalgamated Engineering Union—the Transport and General Workers Union, Manufacturing Science Finance and many other unions concerned about employment in the two main companies in Leeds and Newcastle and the subsidiary companies that supply other components for the vehicle.
We accept that we must have such weapons, but it is essential that we buy British. The Government have taken long enough, but we welcome their decision. Will the orders be sufficient to maintain employment at both the major plants and in the subsidiary companies involved?
I am grateful for the right hon. Gentleman's support. The House will be pleased that our decision has resulted in buying British. I assure the right hon. Gentleman that we took into consideration a wide number of factors, of which the maintenance of an indigenous tank production capability was only one. It took a long time to weigh those factors carefully, but that passage of time allowed us to make a thorough examination of all the factors. It would not be appropriate for me to comment on work loading in the factories. However, as the right hon. Gentleman knows, York university carried out a study and attached a figure of 2,400 jobs to the order.
Does my right hon. Friend agree that his important statement is good news for Britain, Britain's technology, our famous armoured regiments and the soldiers who may one day be required to take these sophisticated tanks into action? What will my right hon. Friend do to encourage our embassies and military attachés abroad to ensure that the tank is widely perceived by the world tank market as a desirable purchase?
My hon. Friend raises an extremely important point. A number of countries among our friends and allies are considering re-equipping their armed forces, particularly in the light of the lessons of the recent conflict. As I said in my statement, Challenger 2 is excellently placed to take advantage of that demand, subject to the appropriate scrutinies of the supply of heavy armaments to countries overseas. Although our embassies and posts abroad require no urging from me, they will know about what has been said in this place.
Although I welcome the decision in favour of Vickers, especially the sub-contractors who have been anxious about this order, will the Minister say whether the export market will be considered by Vickers—he said that there will be fewer than 200 tanks—and, if so, will the Ministry of Defence have an input into that decision and into deciding where the tanks will go?
Of course. All exports of arms are subject to detailed scrutiny by ourselves, the Foreign Office and the Department of Trade and Industry. That would always be a factor in determining whether a sale could be allowed. We are well aware of a considerable demand for new armour from many countries that we regard as friends and allies.
My right hon. Friend will remember that I wrote to him on behalf of my constituents who work for the steel makers, F.H. Lloyds of Burton-on-Trent. May I convey to him their thanks for the decision? Does my right hon. Friend agree that it is good news not only because we are buying British but because we are buying the best in the world? That augurs well for the engineering and metal-bashing industries of the midlands and the rest of the country.
I am grateful to my hon. Friend for making that point. She wrote to me in persuasive terms, and I am sorry that I could not at that time give her a fuller assurance than the stage of our negotiations allowed. My hon. Friend's points are valid, and I hope that the order will give a considerable boost, not only to direct employment—including employment for the sub-contractors—but in illustrating and enhancing the prestige of the closely-related trades in metal working and high technology.
In deciding the contract, did the right hon. Gentleman discuss with his colleagues the number of Challenger tanks that were left to rust at the end of the Gulf war? Has he read the report that, of the 157 Challenger tanks, the vast majority were inoperable because, as a senior officer said, there was vandalism by neglect? As a result, the repair bill ran into tens of millions of pounds.
Will the Minister comment on the fact that the Germans offered to loan 130 Leopard 2 tanks to replace the defective Challengers only on the basis that they would receive the contract that he has just announced? Yet the Germans call themselves allies.
Will the Minister accept that some of us believe that the decision was delayed unduly because the Tories thought that there would be a June election and somebody else would have got the contract?
I am always delighted to see the hon. Gentleman in his place and I pay tribute to the fact that he is such an assiduous attender, even on Fridays. On an occasion such as this, when the entire House welcomes the Government's decision, I looked to the hon. Gentleman to supply a note of discord and I was not disappointed.
I am well aware of the report to which the hon. Gentleman refers. It is entirely groundless—there is no truth in it whatsoever—and was published in one provincial paper. The national papers that inquired into the issue were rapidly disillusioned, as there is no substance in the allegation or the figure that the lion. Gentleman quoted.
The German's offer to loan Leopard 2 was unrelated to the alleged deficiencies in the remaining Challenger I fleet. It was a move in the contractual negotiations and was carefully considered, as was every aspect of all offers and every detail in a long and complicated series of negotiations with several different suppliers. However, we reached our conclusion having weighed all the factors.
I thank my right hon. Friend for his wise decision and the goods news that it will bring for jobs in Burton-on-Trent, particularly at F. H. Lloyds already referred to by my hon. Friend the Member for Derbyshire, South (Mrs. Currie). I appreciate the care with which my right hon. Friend made the decision. It is all too easy to be chauvinistic for chauvinism's sake. I appreciate that he had a difficult decision to make and made it as a result of the particularly good technology that has been put into those tanks. This will also help to boost the morale of our troops if they ever have to go into battle again because they will know that they are riding proudly on a British product.
Certainly the Government will always ensure that, if our service men have to go into battle, they have the best equipment available. I am confident that, in this case, we have made the right decision. However, as my hon. and learned Friend the Member for Burton (Mr. Lawrence) said, a large number of factors had to be taken into account, including technical merit, risk, contract conditions, time scale, cost, the balance of inter-operability considerations, stretch potential, logistical implications, employment and overseas sales. It takes considerable time to equate all those differing factors and place them in the context of the operational lessons that we learnt in the Gulf war. I am entirely satisfied that we have come to the right conclusion.
Is it a complete coincidence that this important announcement was timed to take place at just about the same time as the victory parade for the Gulf, despite the fact that, when the Leader of the House was asked yesterday when the announcement was to be made, he could not tell us? Surely the Minister would not expect us to believe that the information was not very much in the mind of the Leader of the House yesterday.
Obviously, because of the job implications, I welcome the statement, but why does it appear that British industry is capable of leading the world in producing the arms of death and destruction, but is bottom of the league when it comes to consumer goods, machine tools, computers and motor vehicles?
I completely reject the allegations with which the hon. Gentleman concluded his question, which offered a good example of the insatiable appetite of some Opposition Members to welcome bad news, talk down British achievements and try to attach an unhappy side to anything.
On the hon. Gentleman's main question, yes, the timing of the announcement is a complete coincidence. As I have explained, we were in negotiations until late yesterday afternoon. If we had not been, I would have attended the parade myself.
On behalf of everyone in Leeds who campaigned for the Challenger tank, may I thank my right hon. Friend the Minister for the decision announced today, both in respect of the order for the new Challenger 2 and the upgrading of Challenger 1, which vindicates the view that we have produced the best tank in the world—an opinion which the campaigners have expressed from the beginning.
This project opens the way for significant exports to secure the future of the Leeds and Newcastle factories. Is it not clear that the only threat that remains to the future of the factories is the prospect of a Labour Government, committed to further deep defence cuts in order to fund their profligate expenditure on other programmes?
I welcome what my hon. Friend said, and I should like to single him out as one of the most energetic and tireless advocates in helping us to reach the right decision.
Yes, it is perfectly true that many Labour Members are quick to complain about cancellations and redundancies in the defence sphere, when they think that they can protest with impunity, but when they hear of substantial defence orders they tend to stay away or avoid the subject—[HON. MEMBERS: "Not true."] It is not true of the hon. Members now present, but we have heard examples of such behaviour. If Opposition Members are honest with themselves, they will know that what I say is true and applies to many of their colleagues. However, I certainly exclude those hon. Members who have spoken in support of today's announcement.
My hon. Friend the Member for Elmet (Mr. Batiste) is entirely right to say that the decision reflects great credit on the factories involved, and will enhance their prestige and substantially improve their overseas sales prospects.
Is my right hon. Friend aware that this morning's tremendous news is a vindication of the beliefs of all those who have always maintained that British is best, and who now have the proof of it? Can he confirm that the decision announced today was largely brought about by the work of the many defence sub-contractors in constituencies across the country, including my own, Swindon, and the efforts put in by the contractors' employees during the recent Gulf war?
Yes, the sub-contractors have played an important part in contributing to the specification which has won the competition and led to our decision. I am glad that my hon. Friend the Member for Swindon (Mr. Coombs) raised the issue because I always welcome an opportunity to pay tribute to the tireless work of a number of sub-contractors during the Gulf war, when they worked continuous overtime, seven days a week, in many cases during the Christmas holiday. That was a good example of the resources and quality from which we can draw in crisis from our widespread, and exceptionally skilful and diverse sub-contracting industry.
May I join other hon. Members with constituencies in the north-east in congratulating my right hon. Friend? I am sure that what he has done today will bring great encouragement for jobs and industries in the region. Now that my right hon. Friend will have some spare time on his hands, will he lend some assistance to his junior colleague, the Parliamentary Under-Secretary of State for Defence Procurement, who is having great difficulty in announcing a date when the Ministry of Defence quality assurance directorate will move to the north-east of England, as his predecessor, now the Minister for Trade, promised nearly two years ago?
I did not expect to hear the closing passages of my hon. Friend's question. I shall refer the subject to my colleague, the Parliamentary Under-Secretary. My hon. Friend the Member for Langbaurgh (Mr. Holt) will appreciate that, as someone with responsibility for procurement, the subject is not one on which I would wish to make an off-the-cuff comment. I know that he is greatly concerned about the issue, and my hon. Friend the Parliamentary Under-Secretary will read the report of this statement to which I shall personally refer him.
The Minister will know that the announcement that the order is to be placed with British industry is welcome to the Opposition, especially those of my hon. Friends who campaigned for months and years to achieve the order. However, as a matter of parliamentary courtesy, will the Minister state whether, after the decision was made last night or when it was realised that a decision was to be arrived at, his office or his Whips' Office contacted Conservative Members who might have an interest in the announcement? If that was done, were Opposition Members similarly alerted to the fact that the announcement was to be made today?
I cannot answer for my colleagues in the Whips' Office, but I can assure the right hon. Gentleman that, as soon as the decision was confirmed, we were at pains to advise the hon. Member for Clackmannan (Mr. O'Neill). Any other arrangements that may have been made were outside my control or knowledge.
I congratulate my right hon. Friend on making this important announcement as soon as he could. I know that my colleagues on the Select Committee on Defence will be disappointed not to be here today. Some of them are participating in the Gulf parade and others, like me, were not informed about the announcement this morning. I can assure the right hon. Member for Swansea, West (Mr. Williams) that Conservative Members were not asked to be here today. I did not know about the announcement until I saw it on the annunciator and came straight to the House. As a member of the Select Committee on Defence, I should have thought that I would be one of the first to be informed by the Whips if they were notifying Government Members.
I am sure that my colleagues would want to say how delighted they were at the announcement and, probably, would also want to ask how large a part experiences in the Gulf played in the decision-making process. I am sure that the way in which Challenger 1 performed in the Gulf had a profound effect on the decision taken by my right hon. Friend the Minister. He mentioned that Challenger 1 was to have a new gun designed for it. Will he confirm that that gun will use British ammunition? One of the annoyances of the Gulf conflict was to find that, when we looked for extra supplies of ammunition which were to come from another country in the Common Market, our soldiers were deprived of the ammunition due to some political decision taken by the Belgians. We do not want that to happen again. Will my right hon. Friend, therefore, please confirm that any weapon that is mounted on Challenger 2 will have British ammunition supplied to it?
I am grateful to my hon. Friend for having returned to this important point, to which I referred in my statement. The intraoperability of ammunition was at the forefront of the factors that we considered in coming to our decision. I am also grateful to my hon. Friend for his swift retort and effective repudiation of the accusations levelled against this side of the House by the right hon. Member for Swansea, West (Mr. Williams). My hon. Friend is a colleague whose opinion and expertise I value greatly. Although he is a member of the Defence Select Committee, he told us that he had not been advised that a statement was to be made and that, simply because he is a regular attender on Fridays and saw on the annunciator that a statement was to be made, he came to the Chamber.
I welcome the decision to place an order for the Challenger 2 tank. A number of my constituents work in the industry. However, will the Minister of State say how many tanks will be delivered to the forces each year? That will have a significant bearing on the length of employment in the industry.
I am sure that next week we shall experience the wrath of Members of Parliament in my area, especially those with Leeds constituencies, who have been pressing all this week for information. It is sad to think that, after trying all week to obtain it, they have been denied the opportunity to make a contribution today. The Secretary of State for Defence will, rightly, have to reply to questions that were put to him. Regardless of what Conservative Members may say, the Labour party has been fully behind the programme to acquire the Challenger 2 tank for the United Kingdom services. It is very disappointing, therefore, that those who have a keen interest in the matter have not been allowed to make a contribution on this statement.
I have already apologised to the hon. Member for Clackmannan (Mr. O'Neill) for any apparent discourtesy on this subject. I ask the hon. Gentleman to appreciate that this has been an extremely sensitive topic in market terms. If there had been any authoritative leak or communication that might have led to the recipient knowing what had been decided, there would have been an immediate reaction on the stock market—either way. Companies that were not going to get the order might have suffered weakness in the value of their equity, while those that were going to get it might have suffered a run of speculative buying. The decision, therefore, had to be closely protected. We could only say that the matter had been conclusively decided at a very late stage yesterday afternoon.
I am not responsible for, and it would be inappropriate for me to comment on, the Opposition's internal arrangements for alerting the hon. Gentleman's colleagues, or putting his colleagues on notice of the possibility of a statement relating to their constituencies being made. It is desirable, as far as possible, to do that, but such discourtesies as may be thought to have occurred were unintended and related to the need for absolute secrecy until the very last moment. Once the decision has been made—again to prevent speculation and uninformed comment of various kinds—it was thought right that a statement should be made to the House immediately.
As to the delivery rate of Challenger 2 tanks each year, we anticipate up to about 40. As I told the hon. Member for Clackmannan, we intend to re-equip two Chieftain regiments. That will involve a total buy of up to about 130, including training tanks and logistic support vehicles.