Motion made, and Question proposed, That this House do now adjourn.—[Mr. Alan Campbell.]

I believe that this is an important debate about procurement and about its effects if we do not get it right. I shall touch on many issues, but I start with Royal Ordnance, which is based all over the country, though I am particularly concerned with the Chorley site. Royal Ordnance at Chorley still employs 200 people, so it is an important employer. It produces initiators. It is the only site within the BAE Systems umbrella that can produce initiators, which means that security of supply would be put at risk if the Chorley site were closed.

I am very concerned that BAE Systems and Royal Ordnance seem to think that there will be an alternative. We know that they have shopped around in Singapore and sought to find out who could supply initiators if they were not produced at Chorley. I assure everyone that we should not put at risk our supply to the armed forces. It is a major risk, particularly in times of crisis and when we are committed all over the world. The one thing that the troops require is ammunition that can be trusted. Our ammunition can be trusted because it is produced thoroughly by RO from start to finish. We should not allow BAE or RO to weasel their way out of commitment to the Chorley site.

Yes, there has been a problem with production at the Chorley site and, tragically, someone lost their life on that facility. I would not like to think that someone had lost their life in vain. BAE must look at the line again, put in the necessary investment and ensure that it is safe. I do not want it to take the easy option of closing the facility down. We should put the investment in and ensure that the commitment signed with the Government to ensure the supply of ammunition continues. That means using Chorley. We should not let BAE off the hook. BAE would be the first to complain to MPs if the Government were to renege on an order. So when it is the other way round, we should not let BAE renege on its agreement regarding Royal Ordnance.

Aerospace is another important subject. Much is said and made of the joint strike fighter, but there is a big worry about it. We know that the Americans are still holding back and the international traffic in arms regulations waiver is still in place. The Americans are still not fully committed to letting the technology come through to us. The other problem is that we need to see final assembly of the jets that we are to order and we need to secure those jobs. Some of the highest skills in the country are based in Lancashire. All that could be put at risk because we cannot get the agreement of the Americans. Well, if there is a special relationship out there, it is time that the Prime Minister used it. We should be securing those jobs in Lancashire by getting what we need.

Another company called CSC Computer Sciences employs many people in Chorley, delivering high-tech services for BAE Systems. There is talk about a new company, Alfred McAlpine Business Systems, and I am worried. A long-established link between BAE and CSC has delivered the systems that ensure that nuclear submarines sail safely. All that could be put at risk and we must think about using untried and untested companies that do not have a background in what we are asking for.

I am listening with great interest to the procurement issues that my hon. Friend raises, all of which relate to that excellent company BAE Systems. Does he share my concern that there is a risk that that company may be over-committing itself to work, especially in debt support of fast jets—attack jets in particular—in this country, and that that could impact on some of the other businesses to which he refers?

Quite rightly my hon. Friend is standing up for the workers at St. Athan, where there is a highly skilled work force and a great background in servicing jets. The MOD must ensure that work goes to that factory as well and that we do not lose this country's skills.

There is a worry about Alfred McAlpine Business Systems and about the software, and we must not allow anybody to tender for work without a proven track record. That brings me to the subject of the army uniforms with which the MOD decided they wanted to be supplied.

A company called Cooneen, Watts and Stone tendered for the contract, and a so-called company in Belgium was meant to be supplying. However, behind all the smoke and mirrors was a state-owned and, no doubt, subsidised factory in China. We have ended up sending work from this country to China, which has meant jobs being lost in Lancashire. A factory in the Constituency of the Secretary of State for Foreign and Commonwealth Affairs, my right hon. Friend Mr. Straw, has closed; that is how bad it has got.

The Prime Minister was questioned on this matter. I understand that he is briefed, that he does not know everything and that he answers on the basis of what he is told. He was told, "Do not worry, this will not only protect jobs in Northern Ireland but increase them." That is not the case; there are fewer jobs now than before the company got the contract. That was another red herring and we were all hoodwinked once more.

I am worried about my constituents at the Pincroft factory in Adlington, which has a great reputation for bleaching and dyeing and producing these uniforms, which they have done for many years. The camouflage is good enough to be used around the world, but it is not good enough for here. As usual, we have penny-wise and pound-foolish policies. It is meant to be about saving money, but it is not.

I congratulate the hon. Gentleman on procuring the debate this evening. [Interruption.] I am sorry that the Liberal Democrats are laughing, because it is important that our armed forces have the right equipment. If we do not have the necessary supply chains for getting the best possible equipment to our armed forces, jobs will be lost in our constituencies. If the Chancellor of the exchequer does not make money available to buy the right equipment for our armed forces personnel, they will buy their own equipment. The Minister will know that all too many members of the armed forces buy equipment because they are not given equipment that is good enough. It is not right that—

Order. Interventions should be brief.

The hon. Gentleman is right. He raises a question that is asked by our armed forces. They are worried about their equipment, and we should not allow that to happen. We should ensure that they have the right equipment for the job that we expect them to do. Instead of trying to shave a few pennies off the cost, we should give them the right gear in the first place.

As my right hon. Friend the Minister can see, I am holding up a camouflage jacket made in China. The problem is not that he can see it, although it is meant to be camouflage; it is that this piece of combat uniform has 19 faults. That may be hard to believe, but it is what we expect our service personnel to put up with

I shall list some of the jackets faults. The waist channel, front and neck, is 41 cm when it should be 42 cm. The front length is 78.5 cm, and it should be 80 cm. The usable zip length is wrong, and the back length, collar to waist, is not accurate. The distance between the breast pockets and the collar is wrong, and the back measurement is wrong. The front edge and front bottom of the hip pocket are both inaccurately cut. The hip flaps and the front zip pockets are wrong too, and the left storm guard is not fused. Why are our armed forces supposed to put up with that? We all know that the last thing a soldier on active service needs is to get wet.

It gets worse. The Pincroft factory in Adlington is now having to make the one-off, special garments, that cannot be made in China. However, it was told that the infra-red capability of its products—vital for camouflage purposes—did not meet Ministry of Defence standards. If the factory in my Constituency was to blame for the errors, I would be the first to say that it was not good enough to do the job, but eventually it turned out that the Ministry had not been applying the right test. That means that the infra-red capability produced in Chorley was right—as the factory always insisted that it was, in the face of the Ministry's claims to the contrary.

The problem was that the Ministry had used a back plate for the tests that was black instead of white. Given that that was the case, and that the same test was applied to the uniforms produced in China, does that mean that all the Chinese uniforms are wrong, and that they might put our troops at risk? That is the question, and it is a very serious matter.Was the wrong test applied to the Chinese-made uniforms, or were they not tested at all? After all, irrespective of the deficiencies in the uniforms' infra-red capability, the jacket that I have demonstrated to the House still has 19 faults of other kinds.

What comes next? I can tell the House that soldiers are telephoning the Pincroft factory and asking for special garments to be made for them. They claim that the dye in the uniforms provided has a tendency to get washed out. That is very serious, but how have we allowed the problem to arise? What real savings have been made? I do not think that there any, but I know that we have got ourselves in a mess.

Is it not ironic that the Americans refused to give us the ITAR waiver in order to protect American jobs at the same time as we were prepared to give away good Lancashire jobs to China?

Absolutely. It is daft. We are giving jobs to China yet Peter Mandelson the commissioner is asking why we are allowing all these textiles in from China and saying that we have to put some barriers up and that we are going to reduce the amount coming in from China next year. At the same time, we are putting contracts for the making of uniforms out there. I agree with my hon. Friend.

The worry is that we are getting uniforms with faults on them. There are worries about the safety of our soldiers. Why are we doing it? Why are we putting soldiers at risk? Why do we not stop the order now and have a full investigation? Let us put the jobs where they belong—where the taxpayer expects; back in this country supporting the textile workers in Lancashire. Let us have enough of this nonsense. Let us do something about it. Let us have an end to the Chinese market and the Chinese takeaway in this country.

I congratulate my hon. Friend Mr. Hoyle on securing the debate and providing me with the opportunity to speak on these important issues. My hon. Friend has raised four issues—the future of supply for initiators at BAE systems Chorley, the cut and sewn contract, the joint strikefighter programme and the issue of Alfred McAlpine business systems. I will try to respond to them in the time available.

It is critical that our armed forces receive the equipment that they need to do the jobs that we ask of them. Our service personnel are among the best equipped in the world and the measures and programmes that the Government have put in place will ensure that they remain so in future. I do not have time to go into every procurement in which we are currently engaged, but it is exceptional compared with previous years—the largest sustained shipbuilding programme for a generation, massive investment in the Air Force and massive investment in land systems. But getting the procurement process right is of course fundamental, not only to the delivery of enhanced military capability on time but to securing best value for the taxpayer. That is why we are devoting so much effort to ensuring that Smart procurement works. We recognise that there is more to do in this respect, but we are nevertheless confident that we are making good progress. We are confident, too, that the defence industrial strategy, which I will touch on later, will help industry understand our requirements better when it is launched later this year.

My hon. Friend's concern is the future of the BAE Systems Land Systems site at Chorley in his Constituency. I am aware of the present difficulties at this site, following an industrial accident in March this year, which tragically resulted in the death of a production worker. Chorley's main output are initiators, or fuses, for various types of munitions. Since the accident, production at Chorley has been suspended pending a Health and Safety Executive investigation.

Clearly, the Health and Safety Executive's report will have implications for future operations at the site. This is, however, first and foremost a matter for the company. It is BAE Systems' responsibility to maintain the supply of initiators to the MOD in the interim, and we are confident in its ability to do so. It is meeting that requirement at present.

It is fair to say that a mixture of explosives has to be used up because it is too volatile to be moved. So the company will have to run down what is on site. The agreement was that the material would be supplied from this country and from within BAE Systems sites, and that is what the MOD is trying to get out of.

I was coming on to that. Obviously, the MOD's interest is in securing long-term security of supply. My hon. Friend is absolutely right on that. It may be helpful if I set out our policy in this area.

The significance of the munitions strategic supply position was underlined when the framework partnering agreement—the FPA—was signed in December 1999 between the MOD and RO Defence, which now trades as BAE Systems Land Systems. The FPA covers the Majority of the MOD general munitions range, including initiators, and is due to expire in March 2010.

The FPA provided a significant step toward achieving a sustainable UK source for general munitions supply and is projected to exceed the financial targets envisaged. Obviously, we are looking to build on that success. Because of that success, we have also recently underpinned our partnership with BAE Systems in the munitions field, through the signing of a new set of partnering principles. That provides a demonstration of commitment to a long-term objective for munitions provision.

At the same time, we are examining the supply of munitions provision beyond 2010 through project MASS—or munitions acquisition, the supply solution. The general munitions position will form one element of the wider defence industrial strategy. The DIS is a logical development of the defence industrial policy, which we set out in 2002, and is aimed at ensuring that the capability requirements of the armed forces can be met now and in the future. Conclusions on the DIS will be reached by the end of this calendar year. Industry continues to be involved in that work and, of course, the trade unions are also heavily engaged in the discussions.

I have given the background to the situation and I hope that it serves to indicate the seriousness with which the Government view strategic defence industrial issues in general, and munitions supply issues in particular. We are conscious of the need for security of supply in munitions, and we also recognise that we need to get to grips with the range of systems and equipment delivered by British industry. We need to examine what is achievable in terms of the retention of key industries. That will take time. We will need to talk to industry and it will not be an easy process. We will wait and see how that plays out, but the process is consistent with the views expressed by my hon. Friend.

My hon. Friend referred to the possible closure of the Chorley site, and we are aware that the company is considering options for various parts of its business. My officials have engaged with the company on that, to ensure that its plans are compatible with our needs. It is a matter for the company, but it has to ensure that it meets the agreement laid down in 1999 and the new set of partnering principles. My hon. Friend will recognise that I cannot comment on those discussions in this forum, nor speculate on future outcomes, not least because they are fundamentally commercial matters for the company itself.

My hon. Friend also raised the question of the cut and sewn contract. He knows very well the background to the contract award. Indeed, from what he said tonight, he obviously has a detailed knowledge of it. He correctly pointed out the extensive correspondence and communication between the previous Secretary of State and me, including meetings with the trade unions, hon. Members and representatives of industry to hear their concerns. As a result, we reviewed the cut and sewn garments contract earlier this year. We examined the process used for the procurement, the outcome of tender evaluation and the decision taken. We also revisited the capability of the winning contractor, Cooneen, Watts and Stone. At the end of that exhaustive process, we concluded that there was no reason to alter the original decision. I want to make it clear—as we have done on previous occasions—that the contract was let after a fair and open competition against published criteria. Cooneen, Watts and Stone was the clear winner against those criteria.

Under the five-year contract, Cooneen, Watts and Stone will supply the MOD with up to 2 million individual items of clothing a year. The contract will gradually replace some 60 individual contracts for clothing supply and will save the taxpayer £23 million over the contract life, by comparison to previous arrangements. Subcontract opportunities exist for previous suppliers to present themselves competitively to the prime contractor over the life of the five-year contract.

Having examined the matter, I genuinely believe that the contract is an excellent example of how the MOD is making procurement smarter and better. We have taken away a complicated supply chain and put in place a straightforward contract under which subcontractors can bid, and have made a significant £23 million saving. We are determined that our armed forces should have the best clothing appropriate for the extreme environments in which they may be asked to serve and the demanding nature of the tasks they undertake.

Again, having examined the issue, we are confident that Cooneen, Watts and Stone can meet those demands, while providing good value for money to the taxpayer. That confidence has been recently reinforced by the results of the first annual contract review. Savings in excess of £1 million have been made to date, and those savings are in addition to the £23 million in savings already secured by comparison with previous arrangements. Cost and quality targets are being achieved and exceeded. The bulk fabric was tested by a UK accredited laboratory ahead of the main production run and conformed to the required specification. Finished garments have also been randomly tested by a UK accredited laboratory.

Clearly, I will take on board the points made by my hon. Friend the Member for Chorley. If he had cared to write to us before the debate, we could have had answers for the debate this evening. I have no problem about saying that the equipment is the best in the world. I could hardly see the jacket against the green Benches—that shows how good the camouflage is—but I take the point that, if serious imperfections have been brought to his attention, I am duty bound to investigate them.

We have received no complaints from units. As I have said before at the Dispatch Box, I am fortunate that I am one of those people who probably meet more serving members of the armed forces than any other hon. Member, given the way I get round our estate and meet our people. The issue has never been raised with me, and the members of the armed forces do not hold back: they tell me what they think, and they have not told me about this. That does not mean that there is no problem, but it has not been brought to my attention until this evening.

I am also aware of my hon. Friend's concerns about the overseas element of the contract. As I have said before in the House, the idea that there was a sole British manufacturer seeking to place all its output in the UK sector is simply wrong. Countries that appeared on the list of bidding companies included Ukraine, Bulgaria, Romania, Sri Lanka, Dubai, as well as China. UK companies are free to trade with Chinese companies. I do not know whether he is arguing for an embargo on trade with China.

Of course, there is a worry about China—the Chinese are being given intelligence about the design of the camouflage because they are printing it—but the bigger question is that a state factory is being used and subsidies are being applied so that it can win work. My worry is that the competition is not fair.

I mentioned other countries—Ukraine, Bulgaria, Romania and Sri Lanka. We check out the quality of the factories that supply the camouflage, and we ensure that it meets high standards. The idea that China is somehow the sweatshop of the world is not accurate in terms of the quality of the work that it does and the way in which its economy is growing dramatically. My hon. Friend may think that we should simply cease trading with China; I do not think that is realistic. All companies in the UK are free to trade with Chinese companies. Moreover, the UK is not alone in sourcing its military clothing from abroad. Germany, Spain, the Netherlands and Denmark, to name but four of them, all procure clothing made in other countries. However, as I say, I will take on board the points that have been made about quality and investigate them further.

Turning to the joint combat aircraft, I am pleased to say that the joint strike fighter programme is progressing to plan, and we are confident that the joint strike fighter will meet the UK's joint combat aircraft requirements. The new aircraft will be a sophisticated, stealthy and multi-role aircraft that will provide UK forces with a significant step up in military capability. When embarked upon our new aircraft carriers, the JCA will be the key element of a more versatile and capable carrier force. That represents a significant opportunity for UK defence companies and the UK aerospace industry. Clearly, there are still issues to resolve in respect of the ITAR waiver. Intensive lobbying goes on, and we make the point time and again—we will not cease to do so—that there are huge opportunities for British industry on the back of the contract.

The final point that my hon. Friend made related to Alfred McAlpine Business Systems. He is correct to say that that company does not currently deliver IT systems for submarines. Any decision to change suppliers would be a matter for the prime contractor, BAE Systems submarines. The management of subcontractors is principally the responsibility of the prime contractor, who is selected on the basis of technical competence and ability to manage the supply chain in accordance with the MOD requirements of governance and probity.

I am aware that Alfred McAlpine Business Systems is currently undergoing security accreditation checks to enable it operate as a subcontractor on MOD contracts. It would be inappropriate therefore to comment further on that point, other than to say that the more British-based companies we can encourage into the supply chain, the better. We should be encouraging more start-up companies, growth companies and competition, but the key issue is that they must undertake robust accreditation processes, satisfy the governance aspects of that approach and show probity in going about their business.

My hon. Friend seems to be saying that the more we can encourage companies to put tenders in and the more we have supplying us, the better. That flies in the face of what we did on uniforms, where we wanted to reduce the number of suppliers.

No, we did not want to reduce the number of suppliers. We wanted to change the way in which the supply chain was managed. The number of suppliers, depending on how many subcontractors tender, is a matter for the prime contractor. We do not regulate the supply chain in that sense.

The motion having been made after Ten o'clock, and the debate having continued for half an hour, Mr. Deputy Speaker adjourned the House without Question put, pursuant to the Standing Order.

Adjourned accordingly at 10.51 pm.