UK: Michael Heseltine - Political managers - Mapping the 'Which Blair?' Project - The Government has long ...

UK: Michael Heseltine - Political managers - Mapping the 'Which Blair?' Project - The Government has long ... - Michael Heseltine - Political managers - Mapping the 'Which Blair?' Project - The Government has long wanted the defence sector to consolidate

Last Updated: 31 Aug 2010

Michael Heseltine - Political managers - Mapping the 'Which Blair?' Project - The Government has long wanted the defence sector to consolidate with Europe while providing little means for it to do so. It is now time to put or shut up.

It is hard to identify the real Tony Blair. The prime minister has a tendency to urge one thing on others while doing something different himself - democratising the Lords but centralising the Government; reducing access to selective schools but sending his children to one; calling for more efficient industry but failing to deliver his 'joined-up' government.

Occasionally, there comes an acid test of government's commitment which separates the wheat of substance from the chaff of rhetoric. That is about to happen in the field of defence and aerospace, where the Government will soon be formed to reveal whether the PM's repeated commitment to a more integrated and competitive European aerospace and defence industry is more than just a soundbite.

Since being elected, the Government has pressed the UK's defence equipment suppliers to consolidate into a European core. Government deadlines for progress have come and gone. The Procurement Executive has been replaced by The Defence Procurement Agency in aid of 'smart procurement' which has so far raised little more than expectations.

The one thing that really would drive the process of industrial restructuring has meanwhile, been left standing on the runway, namely sizeable, committed-to collaborative projects around which European companies could cluster.

Unfortunately however, the list of European collaborations appears to be evaporating. The aptly named Horizon frigate has now disappeared beyond radar range. The armoured vehicles for which the Army has waited so patiently remain undelivered. The air transports required to provide the operational flexibility and reach to perform post-cold war duties can, at present, only bought from the US. And OCCAR, the European procurement office intended to progress such ventures appears, so far as UK participation is concerned, to be virtually stillborn.

In short, the demand side of European procurement is in as fine a mess as anyone can remember with the UK needlessly marginalised. This is not a good platform from which to lecture industrialists on the virtues of compromise and cooperation.

Against this background, and given the commercial and ownership-related constraints they have faced, the suppliers have, by comparison, moved forward remarkably.

The Anglo-Italian relationship appears to be thriving with British Aerospace and Alenia, and GKN Westland and Agusta combining across a range of fields. The consolidation of the UK position following British Aerospace's takeover of Marconi Electronic Systems ruffled feathers but at least it stimulated further consolidation - first as DASA bought CASA and, most importantly, as Aerospatiale-Matra merged with DASA. All of this brings the European industry closer to the structure long envisaged by its leaders.

Europe is now converging upon structures which encourage cooperation in missiles, space, electronics and underwater systems. While major steps have yet to be taken, for example in combat aircraft, the jigsaw is much closer to completion than even a few months ago. So what about the 'Which Blair?' Project?

The project I have in mind is the next generation air-to-air missile for the European Fighter Aircraft on which a decision is expected around the year-end. Competing are an off-the-shelf US missile and, relatively speaking, an off-the-drawing-broad European one.

As defence secretary and subsequently at the DTI and as deputy prime minster I saw many such competitions. The parameters of this one are therefore familiar. For example, there should be little doubt that the US missile will be cheaper - the US government will have funded the development and supported the prospective sale.

All kinds of offset and technology-related promises will have been made to enable even the most inept minister to present purchase from the US as a triumph of transatlanticism and of value-for-money and, in the short term, it could even appear so. However, such an outcome would be shortsighted and singularly destructive for three very simple reason.

First, the missile is a determinant of the overall performance and survivability of the European Fighter and will largely determine its competitiveness in export markets. To let a competitor determine your competitiveness is not sound strategy.

Second, the quality of the technology and jobs associated with a European development must be superior to anything available from off-the-shelf.

Third, there is absolutely no point in encouraging European companies to come together and then starve them of programmes around which to coalesce.

So Prime Minister, will you stand up and be counted-in as a driving force behind European restructuring and competitiveness in this vital sector, or will you stand aside and let European capability be counted-out by giving a key order to a competitor who has never bought such an important missile system from any industry other than his own?

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