asked Her Majesty's Government:

What revised plans have been made for the future of heavy lift aircraft in the light of the partial withdrawal from the A400M project by the German Government.

My Lords, I can reassure the noble Lord that there has been no partial withdrawal from the A400M project by the German Government. The German commitment to proceed with the A400M programme is subject to Bundestag funding approval, which the German defence ministry is working to obtain by the end of March. There is therefore no present need to revise our plans for acquiring that capability.

My Lords, I thank the noble Lord for that reply. However, are not the vibes strong that the German Government will not provide the money for the project? Is it not time that Her Majesty's Government exercised the right that they rightly reserve to themselves totally to abandon the A400M programme and plan for an aircraft that has the lift, capacity and range that the services require?

No, my Lords, it is not time to abandon the A400M. It is the best deal for the taxpayer and for British industry. I remind the noble Lord that it has a 50 per cent greater payload than the ageing Hercules C130K that it replaces, with the flexibility to operate in both strategic and tactical roles. As a joint programme with our European partners, it also delivers clear benefits in interoperability, sheer development and through-life costs. Finally, I remind the noble Lord that it can create or sustain thousands of British jobs.

My Lords, while supporting the A400M, does the Minister agree that there may be a gap between the decommissioning of the ageing Hercules fleet and the date on which the A400M comes into service? If so, what will fill the gap? If it is the American heavy lift aircraft, will we have to buy it, or will we lease it?

My Lords, we will not have to buy it. We have leased four C17s—I think that that is the aircraft to which the noble Lord refers—and will continue to do so until the A400M is on-stream. We expect that to be in 2010.

My Lords, how many jobs will be created in the now hard-pressed aerospace industry by the A400M project? As the American President now aims to put steep tariffs on Britain's steel exports, why should we contemplate the leasing or buying of further C17s? Mighty Boeing is mighty enough.

My Lords, I shall not answer any questions about steel tariffs; I am looking forward to hearing the Answer to be given by my noble friend Lord Sainsbury in a few minutes. Airbus UK, which is the company responsible for the aircraft, estimates that the programme will directly create up to 2,500 high-quality jobs, notably in design and advanced manufacturing. Indirect employment could bring that figure to more than 8,000.

Noble Lords:

My Lords—

My Lords, perhaps we may hear from the noble Baroness, Lady Strange. She has risen three times, I believe.

My Lords, I thank the noble and learned Lord. Is the Minister aware that last week the defence study group visited the C17 at Brize Norton and was impressed not only with the charm and morale of the three-man crew but with the speed with which the aeroplane could be emptied—30 minutes flat—and its capacity? It could take a Tornado or a Chinook or two Pumas as well as heavily loaded lorries and pallets and 50 passengers.

My Lords, the noble Baroness is quite right: the C17 is a superb aeroplane—I have had the good fortune to see inside one myself. But that does not take away from the need for the capability of the A400M. Although the C17 is a fine aircraft, it is not an answer to our needs in the field.

My Lords, what contingencies are in place for the survival of the A400M project should programme approval not take place by 31st March? What are the implications for the European rapid reaction force if the project does not proceed?

My Lords, if only partial German funding were to be achieved by 31st March—that is, for the first 40 of the 73 aeroplanes that they would still require—the contract could become effective. However, partner nations would expect the German Government to secure balance of funding for 73 aircraft at the earliest opportunity and—this is important—to compensate them for their additional cost, in other words, increased unit price, if that funding were not secured.

My Lords, is not the A400M essential to the heavy-lift capability of any European rapid reaction force, so that the credibility of such a force hinges on the project continuing? Will the Minister confirm that that is fully understood by the German Government and that he is confident that the in-service date of 2010 can and will be met?

My Lords, I have no doubt that the German Government are in favour of the A400M project. They have done nothing to suggest that they are not. It is an essential part of our defence project, both at home and abroad.

My Lords, it is not the case that only a Liberal Democrat Peer could think that the A400M was essential for our heavy-lift capability when it will not carry a modern main battle tank, our AS90, tank transporter equipment, heavy bridging equipment and so on? But leaving that aside—it is of course a joke of a plane as it exists only on paper at present—can my noble friend tell us what was the initial full unit cost of the A400M, what it was after the Italians sensibly cancelled their order for 20, and what it will be after we have the new engine that we are told we suddenly need, which is not even at the design stage, and after the Germans have failed to pay any of the development costs until they have received the plane?

My Lords, I have the highest opinion of my noble friend. He has been extremely good and generous to me since I took on this job and it is rarely that I disagree with him, but I do so profoundly with regard to this aeroplane. I shall try to answer his questions briefly.

The original unit cost of the A400M falls under commercial in-confidence rules, so I am unable to give my noble friend the information. I should like to, but I am unable to; my noble friend should understand that better than most. The withdrawal of Italy from the programme occurred during the latter stages of price negotiation. While it is fair to say that such a reduction in overall aircraft numbers would have had a negative cost impact, it was one of many changing factors—some of which were positive in their financial effect—considered at the time. The company, which, as I said, is responsible for the project, did not identify any specific cost impact of that withdrawal.