Westland relief at £1.2bn order

Westland relief at £1.2bn helicopter order
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The Cabinet yesterday rejected the advice of RAF chiefs and approved a mixed £1.2bn order for 22 British-built EH101 helicopters and 14 US Chinook helicopters - to protect jobs and the long-term future of the industry.

The decision to order the helicopters from the Yeovil-based Westland will cost taxpayers an extra £300m and was taken after the Accounting Officer, Malcolm McIntosh, the Chief of Defence Procurement, advised ministers it would be lawful provided "the overall benefits outweigh the costs".

The RAF had been lobbying hard for an all-Chinook order to supplement its existing fleet of helicopters, based on a design that has been in service for more than 30 years, including the Korean war and Vietnam.

The announcement by Malcolm Rifkind, the Defence Secretary, was welcomed by MPs on all sides of the Commons, including Paddy Ashdown, who is MP for Yeovil. Tory MPs had warned the Government it would cost the Tories seats across the West Country if the Yeovil-based Westland company failed to win the contract.

Mr Rifkind said the EH101 was a modern design with operational flexibility but the Chinooks were required because only they could carry some large loads.

Welcoming the announcement, David Clark, the Labour spokesman, said: "We do commend the way he has decided to take into account the future of the UK industry. That is very wise."

In spite of the cross-party support, it will be seen as a highly political decision, which could be open to question in the future by the Public Accounts Committee of the Commons, the public spending watchdog.

Michael Heseltine, the President of the Board of Trade and Mr Rifkind were key players in the decision to overrule the RAF demands. It was reached by a small inner circle of ministers on Tuesday night, and recommended to the full Cabinet.

The decision to go for the mixed order, after the disclosure in The Independent that the RAF was engaged in a bitter battle for an all-Chinook order, will protect some of the 8,000 jobs at the Westland group plants, including the Isle of Wight, a Tory marginal seat.

Mr Rifkind said the order would also protect 1,100 jobs a year for the next 30 years in Westland suppliers, including Rolls Royce at Bristol, Racal in Slough, and GEC Marconi plants.

Boeing, makers of the Chinook, regarded as a tried and tested workhorse, had fought hard to win the order by offering a 200 per cent offset deal for jobs in Britain, if the whole order was for Chinook.

The US company is aggressively seeking orders in Europe after the end of big procurement contracts by the Pentagon. It will provide a 100 per cent offset for the order for 14 new helicopters, which include six replacements for existing helicopters. Only eight were ordered for expansion of the RAF helicopter fleet.

The decision involved heavy infighting behind the scenes at the Ministry of Defence, but little ministerial dissent. Mr Heseltine, who stormed out of the Cabinet in 1986 in protest at the threat to the helicopter company from US competition, was firmly behind Mr Rifkind's decision.

It underlined the Government's determination to give priority to jobs and industry, over the operational demands of the armed services.

It follows the ministerial row last year which ended in victory for Mr Heseltine in winning a Government commitment to participate in the European Future Large Aircraft (FLA) project, while Mr Rifkind won approval for a £1bn order 25 US-built Hercules heavy-lift aircraft.