The Government have been and remain fully engaged in bilateral and multilateral discussions in support of the common aim to establish a more effective and competitive European defence equipment market. Those discussions involve member states of the European Union, the recently created European defence agency, the European Commission and industry and have included discussions on the European Commission's Green Paper on defence procurement. However, policy for defence equipment procurement rests nationally with individual member states, with any contribution from the Commission's being in support of initiatives developed by national Governments.
I thank my right hon. Friend for his comprehensive response. The Commission's current proposal is obviously for a European defence agency, which would be responsible for, for example, defence capabilities, research, acquisition and armaments. Does my right hon. Friend agree that it is vital to establish discussion on the European defence equipment market with a view to securing openness and transparency in the market's allocation of defence projects and strengthening its competitiveness when it comes about?
My hon. Friend has alighted on an important subject. We have to tackle the structure of the European defence market. We must consider how to improve it and make it more responsive to capability needs. As he said, a European defence agency deals with precisely that, and examines the key matters that must be tackled. We are at the beginning of the upward curve and we must first analyse and ascertain where we are and examine the way forward to ensure that we have that capable European defence market. We have given it impetus and the European Commission's Green Paper is an added spur to all that progress.
If we are to go down the path of a European defence policy, will the Minister confirm that we shall do so on the basis of fit for purpose, and not just value for money? Will he also confirm that, in the spirit of competitiveness, our companies will be able to apply for the EU budget line, allowing them to extend export credit guarantees from the EU budget?
We are addressing precisely those parameters. This is about the opening up and the transparency of the European market, as the hon. Lady knows only too well. We have an open market here, and we believe that that has benefited our defence budget. We get not only value for money but quality, and we hope that, in future, deliveries will also be made on time, although historically the industry has not been good at that. We have to take all those factors into consideration, and there are signs of growing awareness of this issue. This is about lifting the capabilities of our European allies as well as our own, and ensuring that the potential exists in the manufacturing sector to deal with the changes that have taken place. Great opportunities will come out of this for the UK and European defence industries.