Ordnance Factories and Military Services Bill

HC Deb 21 May 1984 vol 60 cc735-74

Order for Third Reading read.

Queen's consent, on behalf of the Crown, signified.

7.12 pm

The Minister of State for Defence Procurement (Mr. Geoffrey Pattie)

I beg to move, That the Bill be now read the Third time.

The purpose of the Bill is to enable the royal ordnance factories, which are at present an integral part of the Ministry of Defence, to become an independent commercial organisation established as a Companies Act company. Under its terms, the Secretary of State for Defence could transfer Government assets — largely those that are at present in the ROF trading fund—to the company, taking complementay action to extinguish the trading fund. He would transfer with the assets, to become company employees, the non-industrial and industrial staff currently paid by the fund or who are engaged in work closely connected with its operations.

At the heart of the Bill are the provisions in clauses 1, 2 and 3 about schemes. Schemes are the chief mechanism by which MOD and other Government property —including that of copyright presently vested in the Queen —will be transferred to the company to ensure that it can function as a successful commercial organisation.

In response to the wishes of the Opposition, and following discussion in Committee, we have amended clause 3(9) so as to provide that, within a month of any scheme coming into force, it will be laid before Parliament with only minimal omissions to protect essential security and commercial interests. It is important that the scheme should, with those necessary exclusions, thus be made generally public so that all those whose rights are affected should know where they stand. The schemes will have full legal effect and will explain as comprehensively as possible what is being transferred from the Department to the company.

In return for that transfer of property, rights and liabilities, the Secretary of State will receive consideration in the form of securities to be issued by the transferee company. Initially, the Secretary of State will be the sole shareholder. Work is in hand to identify and value all the assets that are to be transferred and we shall, of course, take steps to ensure that the Government secure a full financial return for the transfers.

During our earlier consideration of the Bill in Committee, we had a very full discussion about valuation. I shall, therefore, limit myself to essential principles. There will be a rigorous valuation, the principles of which will be made clear in the published scheme, and a closing account for the ROF trading fund, to be audited by the National Audit Office, reporting to the Public Accounts Committee, and published. We have also undertaken to publish as soon as possible the opening balance sheet of the company. In that way we shall ensure that proper value for the taxpayer will be both achieved and seen by Parliament to have been achieved.

Mr. Lewis Carter-Jones (Eccles)

How will the Minister publish for the stock exchange details that are of great security value and that cannot be revealed? How will they be evaluated? Will there be a public declaration giving details of everything that is secure within the ROFs?

Mr. Pattie

I think that the hon. Gentleman is aware that I am talking about the transfer of the ROFs in their present position as a Department of Government to their future position. The hon. Gentleman asked about security considerations. The same considerations will apply to the new company as apply to any other company seeking to notify the stock exchange about security matters. Many companies in Britain have dealings with the Government and are involved in security matters. They notify the Stock Exchange without any infringement of principles. It is not a problem.

Crucial to the success of the ROF enterprise is its work force. Thus, a vital part of the Bill — contained in schedule 2 — are the provisions relating to those who will be transferred with the enterprise to the employment of the new company. Employees will transfer under the terms of the Transfer of Undertakings (Protection of Employment) Regulations 1981 — TUPE '81 — which means that they will do so on, broadly, their present terms and conditions of employment. As has been made clear in previous discussions, there will be no change in such things as employees' pay, leave or in retirement policy as a result of transfer. In addition, the current rights of trade unions — whether Civil Service or otherwise — to negotiate on behalf of their members will be transferred unchanged.

I recognise the concern that many of those being transferred have about the loss of Civil Service status that will be involved. There are real anxieties here, and it is precisely for that reason that my hon. Friend the Under-Secretary of State and I have given the House, at previous stages of the Bill's progress, as much information as possible about the terms and nature of the transfer; and it is precisely for that reason that my Department has been engaged in intensive consultations with the Ministry of Defence trade unions where we are endeavouring to reach clear understandings and, we hope, agreement. My right hon. Friend the Secretary of State and I have also seen the unions on a number of occasions.

It is because of the TUPE '81 regulations, to which I referred, that the proposed legislation contains no detailed provisions relating to terms and conditions of service in the new employment; schedule 2 does, however, contain some incidental provisions necessitated by the particular circumstances of the transfer. Certain terms and conditions of employment of civil servants are directly related to the fact that they are employees of the Crown. There are, for example, restrictions on the political activities of civil servants, and they have a right of recourse to certain Civil Service appeals boards. Clearly it would be inappropriate to transfer those to the new employment.

The schedule also provides that the act of transfer of employees to the new organisation shall not give rise to an entitlement to redundancy benefits under the Superannuation Act 1972. Indeed, as employment and terms and conditions are unaffected, it would be indefensible—and quite contrary to common sense—if the position were otherwise. Under TUPE '81, the conditions of employment of the staff transferred will be unchanged apart from the minor matters specifically related to Crown service to which I have referred. Security of employment in that sense will be no different after the transfer from what it is at present.

Superannuation arrangements are specifically excluded from the regulations, and staff who are transferred from the Civil Service cannot remain in the principal Civil Service pension scheme. A new company scheme is therefore being devised that will provide benefits comparable to those of the Civil Service scheme, including the continuation of index-linking. The proposed scheme will be governed by trust deeds and will be fully funded in respect of the employees' past service with the Crown. There have already been a number of discussions with the trade unions, and these continue. I understand the concern that the unions have expressed on behalf of their members, and I appreciate that they are not yet fully satisfied that the company scheme will in all circumstances match the Civil Service scheme, but, as I have said, discussions continue and will, I hope, result finally in an outcome acceptable to all parties. I repeat that it is our intention that there should be no detriment in this respect.

One other crucial personnel issue is that of redundancy compensation. On this I repeat what we made clear on Second Reading and on Report, that compensation levels for existing employees will match those currently provided for in the Civil Service pension scheme. On this issue, too, we are in continuing discussion with the unions.

Mr. Paddy Ashdown (Yeovil)

The hon. Gentleman has mentioned again the point about no detriment, which has been central to the argument. Will he accept that, although he believes that there will be no detriment, he has yet to convince either the work force or—judging by the debate the other day — many Conservative Back Benchers that there will be none? Should not something more be done to convince them that there will be no detriment?

Mr. Pattie

I said a moment ago that our discussions with the unions are continuing and it is, I hope, implied in that remark that they are continuing because we have not yet got final agreement. To that extent, I agree with the hon. Gentleman.

In Committee, and also on Report, a number of queries were raised about the proposed structure of the Companies Act company, its board of directors and the subsequent relinquishment of Government control over it. In responding to what has been said, the Government have made clear their intentions, and have done so in sufficient detail to enable judgments to be formed on the merits of our plans, although, inevitably at this stage, a large amount of administrative work is in train to enable the ROFs to cease being an integral part of the Ministry of Defence and to become an independent fully commercial operation.

The main features of our thinking have been made clear. The ROFs will be incorporated as a holding company with four fully owned subsidiary companies, acting as operating divisions. This is a straightforward commercial arrangement, following examples elsewhere in British industry. ROF employees will work for the new ROF plc, and negotiations with trade unions on pay and conditions of service which have general application will be conducted at national level. The four subsidiary companies — which will be small arms, ammunition, weapons and fighting vehicles, and explosives — will divide between them the 11 factories in the ROF trading fund, and the two agency factories. To the explosives company will go those parts of the propellants, explosives and rocket motor establishment—PERME—which are an integral part of the Ministry at present, and also the agency factory managed by IMI at Summerfield.

PERME was one of the establishments I visited earlier this year to hear at first hand the views of those most affected by the legislation. As a matter of historical fact, the ROFs took over responsibility for the PERME establishments at Waltham Abbey and Westcott and the Summerfield agency factory on 1 April. This reflected the fact that the United Kingdom capability in the design and manufacture of rocket motors is spread among these three sites, among the ROFs and elsewhere. Although we have been capable of designing and manufacturing rocket motors to the highest standards, the industry was diffuse and unproductively complex to manage. Furthermore, with the increasing commonality between the technologies of rocket motors, propellants and explosives, it was our aim to increase the success and competitiveness of this industry so as to make best and most efficient use of its skills and expertise. By integrating PERME with the ROFs, we have created a more managerially cohesive industry which can co-ordinate all its design, development, production and sales activities. This was not previously possible. We believe that the ROFs will now be better able to exploit to the full the capability which PERME represents by cross-fertilisation between the technologies, and by aggressively seeking out new markets both at home and abroad. This we believe will be enormously to the benefit and long-term security of the staff at the PERME establishments, the ROF company, and the United Kingdom capability in rocket motors, propellants and explosives. In all conscience, we could not responsibly continue to preside over the earlier patchwork arrangements.

Overall, the new ROF company structure will allow the ROFs to function in a fully commercial way, to delegate authority wherever appropriate, and, most importantly, to build on the strengths which already exist in the organisation while assimilating the new functions that are being transferred. It recognises the inter-dependent nature of much of ROF business and also its natural operating units. Others may disagree, but the intention has been not, as has been argued by some Opposition Members, to take issue with the findings of the Mallabar committee, but to bring its work up to date by taking it forward to its logical conclusion.

There are some other main issues. I note that we have explained that the relationship between the Government and the ROF company, as long as the Government remain the major shareholder, will be governed by the terms of a memorandum of understanding between the Secretary of State and the chairman of the company. We have also explained that we intend to take powers in the articles of association of the privatised company to inhibit foreign control, and we have had lengthy discussions in Committee and on Report about the justification for that and about ways and means.

One important addition to the Bill since it was introduced is that of a clause and schedule under which my right hon. Friend the Secretary of State will continue to employ on site at the factories after vesting day, with their existing responsibilities, the Ministry of Defence police. We had full discussions about security in Committee and on Report. I think I can fairly say that our decision has in principle been endorsed, as was our proposal that, in due course, the company should recruit, train and deploy its own guard force. I appreciate the concern that has been expressed by hon. Members on both sides of the House on this issue, but I repeat what I said on Report, that, in the light of our plans as announced, there should be no risk that after vesting day the ROFs will become more vulnerable than they are at present to the risk of theft of stores potentially useful to terrorists, or be exposed to attack.

Clause 14 is concerned with the contingent liabilities of the Secretary of State for Defence in connection with International Military Services Limited — IMS. This clause is in the Bill to meet Parliament's wishes that statutory cover should be taken to provide all sums paid in connection with the Secretary of State's 100 per cent. shareholding in the company, or in consequence of arrangements for financial support of the company. I should emphasise that we are concerned here with a contingent liability. There has been no recourse to public funds so far. The recent trading performance of IMS has been impressive, with substantially increased turnover and reserves. There was a full discussion of this clause in Committee and I do not seek to detain the House further on it.

The Bill remains a short one and is indeed a limited enabling measure, but the change of status for the royal ordnance factories which it will make possible is an important step forward in the evolution of the ROFs. They have proved their success in manufacturing over several centuries, and they have proved themselves capable of commercial success in their incarnation as the trading fund which was established following the recommendations of the Mallabar report in 1971. It is now time for the significant step taken by the creation of the trading fund to be extended by two further steps.

First, we are removing the constraints recognised by Mallabar as natural to part of a Government Department but inappropriate for a trading company operating in a fully commercial environment on all fours with its competitors. Secondly, the enterprise is being provided with a research and development capability based upon the transfers from PERME to which I have referred.

Our aim is to build on the experience of the trading fund to allow the ROFs full freedom to develop commercially as a manufacturing industry, and to respond to the challenges of both domestic and world markets. It is in the market place that the ROFs' management and work force will shape their future. We have provided the means for the ROFs to ensure a healthy order book from the armed services—in 1979 the ROFs secured MOD work worth £210 million, and last year that figure had risen by two thirds to £350 million. The ROFs have not done badly by us and we have not done badly by them. We intend to remain close to each other, but increasingly the ROFs will have to ensure their market competitiveness by building upon this baseload of work for the armed forces with a buoyant export order book. We want them to be as free as possible to do so. That is the heart of our proposals. Our aim is to improve the competitiveness and performance of British industry generally and of this particular—and important—part of defence industry.

At a later stage but, we hope, a not much later stage, we propose to seek the introduction of private capital into the company. The route and timescale for that will depend essentially on the ROFs' trading record, once freed from the constraints to which I referred, but we have made it clear that our preferred method of privatisation, if feasible, would be a stock exchange flotation of the enterprise as a whole. The present Bill is, however, concerned with the incorporation of the ROFs as a wholly Government-owned company. We will at a later date put forward detailed proposals on privatisation in the light of the circumstances at the time. There will no doubt be an opportunity to discuss them, should the House so wish at that time.

The Bill enables the royal ordnance factories to control their own commercial future. It will be best for the company, provide the best long-term guarantee of employment for the work force, and suit the Ministry best as a customer. I commend it to the House.

7.31 pm

Mr. Denzil Davies (Llanelli)

The Minister of State read his brief, but he did not tell us why the Government have embarked on this exercise. He tried to tone it down, saying that the Bill was concerned only with forming a company to be owned by the Secretary of State. However, we all know that that is a preliminary to selling the ordnance factories in the market place, when they will be totally on their own.

I should like the Parliamentary Under-Secretary to give a clearer reply to the intervention of my hon. Friend the Member for Eccles (Mr. Carter-Jones) in respect of the problems of informing the stock exchange about assets that might be of a secret nature. The Minister, in reply to my hon. Friend, said that apparently other companies had notified the stock exchange, and there had been no problem of security. I hope that we shall receive an expanded answer, because the Minister of State was thrown a little by my hon. Friend's question and was concerned to choose his words carefully.

No one has told us why it is necessary for profitable and productive factories, like the ROFs, which have provided the armed forces with weapons and ammunition of the highest quality at a very reasonable price for a long time, with a loyal and skilled work force, to be sold into the market place, with all the turmoil, uncertainty and consequences that no one can foresee. What on earth is the benefit of this exercise to the country? What is the benefit to the country's defences? What benefit is there to the employees of the ordnance factories and to the British taxpayer? We received no answers to those questions on Second Reading, in Committee, on Report, or now on Third Reading. However, the Parliamentary Under-Secretary still has to wind up. Perhaps we shall receive answers then, but I doubt it.

At one time it seemed that this was a small operation by the Ministry of Defence and that it was not terribly important; but, having studied the sections in the defence White Paper on the reorganisation of the defence industry and the Secretary of State's plans for contracting out for the dockyards, gunnery ranges and all the paraphernalia of management, I believe that the Bill is just part of a grand design by the Government to change the relationship that has existed for a long time between the Government and—

The Parliamentary Under-Secretary of State for Defence Procurement (Mr. John Lee)

indicated assent.

Mr. Davies

I am glad that the Parliamentary Under-Secretary is nodding assent to what I am saying. The Government are changing the relationship between the Ministry of Defence and the defence industry. I once described it as a symbiotic relationship; it has its advantages. It seems we are debating the forerunner of a substantial change in that relationship.

The Prime Minister is on her own ideological high, and is determined to sell everything in sight, including part of our armed forces. The Secretary of State for Defence is suffering from what I would call managerial mania. He wants to sell or contract out whatever he can find. He wants to change the relationship to which I referred. It is curious that the two have somehow come together. On the one hand, we have the Prime Minister's ideological need to sell everything and, on the other, the Secretary of State's managerial desire to do so.

Conservative Members who have defence interests in their constituencies should start thinking about this. The whole exercise could be very damaging not only to the ordnance factories, but to Britain's defence interests, the armed forces and jobs in the defence industry. Many jobs will be lost over the next few years as a result not only of the Bill but of the changes that will be made.

One thing is clear. The Bill is proposed not because the ordnance factories are unprofitable. They have made profits most of the time. They have made no claim upon the Treasury or the public sector borrowing requirement. Indeed, they have paid money back into the dreaded PSBR and helped the Government to reduce it slightly. There is no question about their efficiency. They have been awarded the Queen's Award for Industry. We have not heard any criticism of the ordnance factories' efficiency.

There has been no criticism of the prices that the ordnance factories charge. There are problems in respect of establishing prices, even now when the prices are established between private manufacturers, the defence industry and the Ministry of Defence. That is, and always will be, a problem. I do not think that anyone would suggest that the trading fund has overcharged the Ministry of Defence. I should have thought that it could not do so, because the Ministry of Defence knows very well what the costs of the trading fund are and can determine the prices. Therefore, there is no question of overcharging. The ordnance factories have produced good quality armaments, ammunition and weapons at proper and reasonable prices.

There is no question about the quality of the product, which is first class. On Second Reading the Minister of State said that the efforts of the staff in the ordnance factories have made the organisation a success not only in terms of the quality of its products, which are second to none in the world, but in its trading performance."—[Official Report, 16 January 1984; Vol. 52, c. 26.] Why on earth is it necessary to tamper with this organisation when its products are second to none and its trading performance is so good? I should have thought that it was not possible to improve on that, in the light of the Minister of State's words.

What about the quality of staff? One should go back to the Mallabar report, which was dismissed by the Government as it was embarrassing. It is as up-to-date today as it was in 1971 when it first came out. The reference to staff in the report was read out on Second Reading, and it is right to read it again before we vote on Third Reading. In chapter 6, it stated: The main features which prompt general comment are:

1. (1) the degree of identification with the Armed Forces operates in all the factories. This identification provides strong motivation towards the manufacture of a high quality, reliable and safe product …
2. (3) The calibre of management staff generally; the ability of the more junior managers (foremen and assistant foremen) to express their views and the freedom with which they did so. They were articulate to a degree not often found in industry …
3. Those of us who have spent our careers in industry and who, between us, have covered all aspects of industrial management felt that the factories were well managed and controlled. Our view was endorsed by our specialist colleagues".

The staff are first class, loyal and intelligent. How will it be possible to improve the situation by selling them off into the market place? As I have said, the reason for the sale is ideological.

I came to the Second Reading debate as a cynical ex-Treasury Minister thinking, "It is the money that they are after." The Government need every penny that they can get. The oil revenues are about to peak and will start slowly to decline, and supporting the 3.5 million unemployed is expensive. The Government will sell anything off in order to try to finance themselves for the next three or four years. However, the sale will not provide very much money.

We are told—not by the Government but by some City analysts, who multiply the profits by a certain multiplier—

Mr. Nicholas Baker (Dorset, North)

Merchant bankers.

Mr. Davies

Yes; the merchant bankers will collect huge fees if the sale goes through.

Mr. Robert Atkins (South Ribble)

How much money did the right hon. Gentleman make?

Mr. Davies

I wish that the hon. Member for South Ribble (Mr. Atkins) would not intervene from a sedentary position.

Mr. Atkins

No doubt the right hon. Gentleman, from his experience as a merchant banker, about which we heard so much in Committee, will be able to guide my hon. Friend the Minister of State about the details and the price.

Mr. Davies

It is my experience which enables me to say how much the merchant bankers used to get. As a person of high moral standards, I left the merchant bank when I realised what high fees it was demanding.

The Government will not make much money out of the sale. The figure given by the City analysts was £300 million, but they did not take account of the new climate of competition and the fact that in future the new ordnance factories will have the right to sell first to the Ministry of Defence. The figure is bound to be much less than £300 million, given the new bracing competitive climate which will accompany the changes taking place in the defence industries. Even if the figure is £300 million, about £250 million will be spent on preserving pension rights. After the stockbrokers' and merchant bankers' fees have been deducted, the PSBR may benefit by only £50 million, or less. The motive cannot be financial. The factories are being sold because of the ideological fix of the Prime Minister and the Secretary of State.

One specific reason for the sale is that it will expunge 18,000 civil servants from the books of the Ministry of Defence. That will keep the Prime Minister happy. When the Secretary of State makes his end of term report, he will be able to show that he has got rid of all those civil servants, and done so on the cheap. Despite some concessions, it is clear that, in relation to the pension arrangements, the Government are getting rid of those civil servants on the cheap. They will not have pension arrangements similar to those in the Civil Service.

The Tories are opposed to the index-linking of Civil Service pensions, but they should remember that index-linking was introduced by a Conservative Government, and the Scott report, which was set up by a Conservative Government, did not recommend abolishing it. Conservative Members must therefore accept that it would be wrong for the Government to chuck away the index-linked pension rights of the people concerned. Because of the nature of the funding of Government and private pension schemes, it is not possible to give the same index-linking to the employees of a private company as to members of the Civil Service pension scheme.

The Government are taking away pension rights from the employees, and it was the height of cheek for the Minister of State to say that new entrants will receive comparable benefits. There are to be two pension schemes. There will be one for the employees who, like helots, are to be transferred to the new company from the Civil Service. It will not be as good as their present scheme. The second scheme will be for new entrants, and that scheme will be even worse. It will be a second-class scheme. If the two schemes are to provide comparable benefits, why are two schemes to be provided? This is a way of saving a little money on the cheap. The problems of having two separate trust deeds and two funds will be such that it will not be worth having two schemes if the benefits are to be comparable. The Minister of State knows that they are not and cannot be comparable.

Clearly the Bill is part of a major exercise in selling off and freeing from Government influence and control—I choose my words with care — the whole defence industrial base. The Government are changing the order of things. The existing relationship, involving the Ministry of Defence and the private defence manufacturers, will be changed by what the Secretary of State has in mind. The Prime Minister and the Secretary of State — the ideological dry and wet—have found a common cause and point of coalescence in selling off, and ending the control of, our defence industries.

An important point was made by the Minister of State on Second Reading. I missed its significance at the time, because of his genial bonhomie and soporific prose. He said: The Government's message, loud and clear, to companies in the defence industrial base has been, and continues to be, 'concentrate more on your exports because in real terms the Ministry of Defence will be less and less able to provide the proportion of work that you have enjoyed with us in the past.' The quotation marks in the Official Report must have appeared in the Minister's notes. If not, Hansard would not have known that they were there.

That was a most important statement, although neither I nor the hon. Member for South Ribble took note of it at the time. The Minister of State continued: We recognise that we must help industry to improve its export performance by earlier involvement in the planning of our future requirements and also by assisting it to design and produce equipment that is more saleable abroad. That follows from the first proposition. We will do this not by insisting on the so-called gold plating of requirements"— more jargon— which adds greatly to costs and also often produces over-elaborate sophistication."—[Official Report, 16 January 1984; Vol. 52, c. 27.] That statement is important in regard to the ROFs and changing the emphasis in the relationship between the Ministry of Defence and arms manufacturers. Later, we had the defence White Paper and its obsession with changing the defence industries. Now we read in today's newspapers that British Shipbuilders is to sell off its only profitable yards. Its warship building yards are to be sold off as part of this exercise. We recently read of the silly proposed takeover bid by Thorn-EMI for British Aerospace. Conservative Members will not listen and will probably scoff at this, but, in the next few years, there will be many takeovers and mergers in the defence industry because of what is happening now. The result will be detrimental to Britain's defence industrial base, to our armed forces and to the people who work in the industry because many jobs will be lost. Experience shows that is the case once the City gets involved in takeovers and realises that there is money to be made and shares to be shuffled around.

The Minister has told the defence industry to sell abroad — to export or die. We heard that one years ago. However, it is the new doctrine in relation to defence industries. We have also heard about gold plating. When stripped of the jargon, export or die and gold plating mean, "Scour the world to find as many tin-pot dictators as you can and sell them defence equipment. It does not have to be gold plated. You can make second-rate equipment because the Ministry of Defence will now buy it for the British armed forces as well so that it is easier for you to sell it." Conservative Members might not like that, but it is true. Frigates for Uruguay do not have to be as sophisticated as those for the eastern Atlantic. The complaint has always been that the Ministry of Defence's requirements are too stringent, with the result that frigates, for example, cannot be sold. I admit that we sold a few to Argentina—perhaps under a Labour Government. No more gold plating really means inferior equipment which second or third-rate countries will buy. Apparently it is now thought good enough for our armed forces as well.

The British defence industry, like the defence industries of most western countries, such as France and the United States, has been protected though the protection has not been in the form of import controls. Governments have generally tried to buy British, because that has been felt to be right. The industry has been protected a little by the gold plating or special requirements of the Ministry of Defence, as those requirements have made it difficult for others to compete. The industry has also been protected a little on price because a blind eye has been turned on cost to protect the industrial base. Such protection has maintained our defence industry and its viability, despite the fact that our civilian manufacturing base has been eroded rapidly since 1980. It now appears that the Government are removing that protection. If that is the case and countries such as France and the United States retain it, our defence industries will suffer, and companies, especially small subcontractors, will go to the wall. Ultimately that move might not serve the best interests of our armed forces or our defence industrial base.

I am afraid that, in the next five years, there will be the same erosion in our defence industrial base as we have seen in the civilian manufacturing base. There will be no exports, and the imports that have been coming in quite quickly recently will come in even faster.

If the Bill receives a Third Reading and goes through the other place unscathed and if the Government sell off their majority stake in the ROFs, irreparable damage will be done to factories that have shown themselves to be efficient and productive and to equipment that the British armed forces have relied on. Moreover, many people who have served the ROFs loyally and with skill will be put out of work. The only beneficiaries will be the defence industries of other countries. For that and other reasons, we shall vote against the Bill receiving a Third Reading.

7.56 pm

Mr. Robert Atkins (South Ribble)

I do not intend to speak for long, because I have a dreadful cold and because many of us have heard many of the arguments go round and round. We have not made much progress since Committee. It has been confirmed for me today that the Opposition's heart has not been in the campaign against the Bill. It is clear from what the right hon. Member for Llanelli (Mr. Davies) said about gold plating and other matters that he was short of things to say and had to make up some things that are clearly not true.

Mr. Denzil Davies

It was the Minister of State who on Second Reading mentioned gold plating, and I was merely responding to what he said.

Mr. Atkins

I apologise if I misled the House in regard to what the right hon. Gentleman said, but, like many of my hon. Friends, I got the impression that he went a little over the top on matters that are not strictly relevant to this debate.

I should like to deal with gold plating, or its reverse—sanitising—which is the jargon expression we hear. When making equipment for sale abroad, because of restrictions from the Foreign Office or the Ministry of Defence, manufacturers sanitise it so that potential customers do not get the state of the art equipment. It cannot be construed that we are selling third-rate equipment; they just do not get the top quality stuff that we might need for a role that we fulfil. They might need to fulfil a lesser role. Our and the customers' interests are therefore protected.

Many hon. Members, especially after the Select Committee report on defence procurement, criticised gold plating. The changing requirements of the armed forces have resulted in changes having to be made to bring equipment up to the highest possible standards. The continuously changing objectives have made it difficult for industry to manufacture that equipment. I have heard it argued from a variety of sources that the sooner we can persuade the Ministry and other purchasers to freeze designs—which is what the French and the Americans do—and retrofit modifications when required, the better it will be.

But enough of that. Let me get back to the ROFs. I was waylaid by the comments of the right hon. Member for Llanelli. I support the Bill and I have a substantial constituency interest, because the Chorley ROF comprises much of the southern boundary of my constituency and is one of the biggest, if not the biggest, ROF employer. The Blackburn factory is not far from my constituency and some of my constituents work at the Patricroft ROF.

I meet quite a few of the people who work at ROFs and I am delighted to agree with the right hon. Member for Llanelli and my hon. Friend the Minister of State that the ROF employees are remarkable men and women. They are a superb and dedicated work force and there is no doubt about their commitment to their jobs.

We conceded on Second Reading and in Committee that there are anxieties. When there are changes, there are bound to be anxieties about the future. They centre primarily on jobs, but I do not take kindly to the Opposition talking about job losses in defence industries. Their policies propose job cuts in defence industries that would make what the right hon. Member for Llanelli claims will happen after the Bill becomes law—which I do not accept—seem small beer.

Of course we cannot guarantee jobs. In the last few years, jobs at ROF Bishopton have been lost while the factory has been under the control of the Ministry of Defence. Market trends and problems associated with propellants and products made at Bishopton have led to a reduction in the work force. Even under Government control there would be no guarantee that work forces would be maintained at present levels.

The only guarantee that we can give is that if the factories continue to produce their products as well as they produce them at present and can maintain existing markets and find new markets, they will maintain existing job levels. Indeed, I believe that the factories are good enough to develop new markets and create new jobs. I cannot guarantee that, but that is my view on the basis of what I have seen in the ROFs and elsewhere in the defence industries.

It is ridiculous for the Opposition to keep throwing the jobs issue in our face. They know as well as we do that jobs depend on the market, prices, demand, supply, backup and so on.

The other area of concern is the welfare and pension arrangements. My hon. Friend the Minister of State mentioned TUPE '81 and the continuing discussions. I am happy to go along with him, while recognising that there is still anxiety about welfare and pensions. I know from what my hon. Friend has said previously that the discussions will continue to a proper conclusion.

There has also been anxiety about security. In Committee and on Report hon. Members on both sides of the House mentioned the problems relating to the Ministry of Defence police. My hon. Friend the Minister recognised that there were genuine worries across the parties and I am glad that he decided to maintain the Ministry police at the ROFs for the intervening period and to introduce a new guard force to take over a variety of the activities carried out by the Ministry police.

Mr. Ashdown

How does the hon. Gentleman feel about the Minister of State's clear suggestion that ultimately a private security force will not have access to arms?

Mr. Atkins

My hon. Friend the Minister spoke clearly and carefully about that issue the other day and he made it plain that the Ministry police would remain in post until the evaluation by the Ministry suggested that they should be withdrawn. The Ministry police have access to arms, although I understand that they have been used only once in the past 10 or 12 years. The evaluation may suggest that in some cases the Ministry police, should not be withdrawn. The hon. Member for Yeovil (Mr. Ashdown) and I share, in differing ways, the anxiety about this matter. I was heartened by what my hon. Friend the Minister of State said.

There has also been concern about communication with employees. I was at Chorley when my hon. Friend the Parliamentary Under-Secretary visited the factory and was told about the complaint that communications with the work force and the trade unions had not been as good as one might wish. My hon. Friend recognised the justification of that complaint.

We are human and we make mistakes—believe it or not—and we tried in Committee to rectify that. I have not always been as successful as I had hoped. Some offers made to the work force have not been taken up, but representatives of trade unions have come to see me and I have been able to explain matters that have worried them. I hope that that process will continue and that we will try to reinforce it as changes occur in the next few years.

At the end of the Committee stage questions were asked about the sales and turnover of the ROFs in the context of International Military Services. Questions have been asked about how much the ROFs contribute to IMS and I should like my hon. Friend the Parliamentary Under-Secretary to tell us what part of the equipment budget is represented by ROF sales and what proportion they represent of IMS activities.

I want to see with the ROFs—as I saw with British Aerospace, another major manufacturer in my constituency—a genuine involvement by the work force and genuine public ownership of the company and organisation. I hope that we will be able to produce a scheme to build on the service and commitment of the superb and dedicated workers in the factories throughout this country.

The factories are making excellent products to an excellent design and with excellent productivity. They will have nothing to fear when the Bill becomes law. I believe that they will be able to open new markets and get involved in wider areas of activity. If that proves to be the case, the future for the ROFs will remain as bright as it is now.

8.8 pm

Mr. Lewis Carter-Jones (Eccles)

I hope that the hon. Member for South Ribble (Mr. Atkins) will forgive me if I do not take up his comments until later in my speech, though I wish him a speedy recovery from whatever he is suffering from.

The royal ordnance factory at Patricroft is in my constituency and was founded by Naismith, the man who invented the steam hammer, which was a vital part of the industrial revolution. It goes all the way back to the days of the industrial revolution. I suppose that the Minister would say that that is a good reason for privatisation. However, it has a history of considerable length, and this year it won the Queen's Award for Industry and Exports. Therefore, it is not old fashioned or out-of-date. I think that everyone in the Chamber will agree with me if I use a service expression and say that the Queen's Award for Industry and Exports does not come up with the rations. In other words, it has to be earned. The quality of the royal ordnance factory at Patricroft is the same as that of all other ROFs. All the ROFs represent quality and superb workmanship.

It is those who use the equipment that is produced by the ROFs who perhaps are most closely involved with their work and efficiency. It is they whom the ROFs are supposed to serve. When we talk about ex-service men we include those of both high and low rank. The hon. Member for Windsor and Maidenhead (Dr. Glyn) fought in the second world war and so did I. He was an officer and I was a flight sergeant. The Minister should have asked ex-service men whether they thought that they received a bad deal from the ROFs. He should have asked the generals, the admirals, the squaddies and the erks. If he had done so, they would have said that they were extremely well served by them.

It might be said that that is history. I was not a member of the Committee which considered the Bill, but I have been meeting service men of high rank and low rank who are currently serving in the forces. I made a thorough search but I could find no consumer of the ROFs' products who had any complaints. There are very few organisations throughout the world which never receive complaints. However, it is the Government's policy to privatise organisations that are serving the country well. They implement this policy for no good reason.

The Minister of State and the Under-Secretary of State are pleasant enough. They are cheerful and kind but they know not what they do to the supply of equipment to the armed forces.

Mr. Robert Atkins

Come on!

Mr. Carter-Jones

I am coming on. Perhaps I am being a bit too strong but there are some who say that I am too friendly. The study group of Lord Strathcona and Mount Royal produced a report that contained five options. I think that Lord Strathcona and Mount Royal was right to back the first option, an evolved trading fund. If that line had been pursued, everyone would have been satisfied and the ROFs could have expanded. Why expand a royal ordnance factory? In answer to a nicely planted parliamentary question from the hon. Member for Bolton, West (Mr. Sackville), a letter was reproduced by the Minister of State with great joy and gusto. Part of the letter reads: Over the many years in which the Royal Ordnance Factories have been producing equipment for the Armed Forces and for overseas customers, and especially since they began to operate under a Trading Fund in 1974, their overall performance has been very satisfactory, and all their customers have been delighted with the service that they have received. That was the starting point. The study group's first option would have provided the right answer. Evolved and enhanced trading would have produced more money and more resources to meet needs.

The hon. Member for South Ribble asked a question which I do not think was planted. The then Secretary of State replied to him and said: The co-operation of existing staff at all levels is vital for the success of the ROFs both during the transitional period and when Companies Act status is achieved; and the need is well recognised for early discussions with the trade unions concerned on the terms and conditions of service to apply on the change of status ."—[Official Report, 20 May 1982; Vol. 24, c. 151.] It is about two years since the hon. Gentleman asked that question and there has been more than adequate opportunity for discussions to take place in great depth and understanding. Part of the Minister's letter to the hon. Member for Bolton, West read: Turning to the effect of privatisation on the conditions of service of ROF employees, your constituent will know that we have already informed the Trade Unions in a consultative document issued last Autumn that it is the Government's intention that the transfer shall not result in a worsening in terms and conditions". If all the preparations have been made, why, two years later, is everyone in the ROFs complaining? Why, two years after the hon. Member for South Ribble asked his question, have the members of the ROFs sent little billets-doux to the Secretary of State to tell him that they do not want to be privatised? The work force does not want to know and the users of the equipment do not want any change to take place.

Let us consider the product against this background. We are told from time to time that private industry is best, but is that right? The royal ordnance factory at Patricroft delivers rocket motors of better quality and at a cheaper price than any of its private industry competitors. It has a very low failure rate. I shall never know why an evolved trading fund has not been put into practice.

I shall spend my last few moments appealing to the those in another place.

Mr. Robert Atkins

Oh, dear.

Mr. Carter-Jones

I was referring to the last few moments of my speech. If the hon. Gentleman is hoping that I shall go away, I must tell him that I shall remain here at least for this debate.

Those in another place may take a rather different view from the Government. They may hold the armed forces in higher esteem than do the Government. There may be some old generals and others in another place who are prepared in the national interest to vote against their party. Ministers cannot praise the quality of workmanship, the standard of efficiency and the capacity to produce high technology products that the ROFs possess and then surrender those qualities to squalid free competition.

8.20 pm

Mrs. Anna McCurley (Renfrew, West and Inverclyde)

Sir Robert Walpole liberally applied the maxim "quieta non movere" to his political career, and I am inclined to adhere to the wisdom of letting well alone. Therefore, I offer an anxious welcome to and acceptance of the Bill. My acceptance is strengthened by the exaggerations of Opposition Members. It is amazing how such exaggerations can turn one off a case.

One of the three largest royal ordnance factories is at Bishopton in my constituency. It employs more than 2,000 workers. Key industries in Renfrewshire have had a rough time during the last decade. The last time that I spoke in the House was to applaud warmly the Government's actions in supporting the development of the micro-technology industry in my constituency, which also facilitated the transfer from the public to the private sector of the ailing Scott Lithgow yard, thus saving employment on the lower Clyde from annihilation. It was a loss-making and scarcely viable firm.

Tonight we are considering a totally different set-up at ROF Bishopton. It is exceptionally well managed, its industrial relations track record is excellent, it has a steady performance and market—indeed, a developing market — for its high quality products. Recently ROF Bishopton secured substantial orders from the United States of America, and there has been only a slight decrease in employment during the past few years. It is an ideal set-up for men and management. Now it must transfer from being a Government-run body to being free from financial constraints and scrutiny in the broader commercial field.

There are two distinct trains of thought running through the minds of the personnel at Bishopton. They are worried that the change of status may mean a contraction of employment or, worse still—depending on the way in which the company develops—that the facility could be under threat because it is remoter than most locations and most of its processes could be absorbed into ROFs in England. It is the largest producer of propellants for use in gun ammunition, rockets and guided weapons, and the sole United Kingdom manufacturer of combustible charge containers. That is some guarantee of continuity at Bishopton.

Nevertheless, there is already more than 20 per cent. unemployment in the area, and any further loss through alterations to the status quo will be met with firm resistance, not least from me. On the other hand, because of its excellent production record, Bishopton is thought by personnel to be fettered by the constraints of the present system. There is a solid volume of opinion that good can be made better by improved commercial status and that Bishopton will prosper and flourish, thus giving employment for many years to come. That is why I support the Bill.

There are, however, some small points that the Minister should consider. I was not a member of the Committee, but during one of our recent all-night sittings I spent some time, profitably, reading all 27 reports. [Interruption.] If there were not 27, it seemed like that. I distilled what I read to three pages of foolscap, which must be a comment on the Standing Committee system. I regret that some small but significant details were overlooked in the morass of duplicated speeches and fatuous arguments about paper panties from Marks and Spencer.

Mr. Ashdown

Does the hon. Lady accept that, if it had not been for Opposition Members, she could probably have distilled the reports to two sentences?

Mrs. McCurley

No, Sir. It was the hon. Gentleman and other hon. Gentlemen who extended the Committee's life beyond reason.

Will my hon. Friend the Minister assure me that he will pay special attention to the transfer of farm tenancies on ROF property, offering them for sale to the existing tenants? Will he also assure me that tenants in ROF houses will be treated like local authority tenants and offered either appropriate discounts at sale or some form of guarantee of tenancy in future? There are a substantial number of people in that category, and their wishes must be respected.

Will my hon. Friend bear in mind the apprentices who are employed at ROF Bishopton and, no doubt, at other ROFs? I hope that he will guarantee them continuous training. There are few apprenticeships these days. I hope that something can be done for them in this instance.

I am pleased that the question of security has been resolved. In many ways, it was the most important issue in a factory that has 900 installations on a vast open site, and whose manufactured items are portable and pocketable. I commend the shop stewards who put that aspect even above the consideration of their membership and terms and conditions of employment. I am satisfied—and I hope I am proved right—that the new scheme will not be to their detriment. The loyal dedication of the work force must be given the highest consideration under the transfer scheme.

8.27 pm

Mr. Paddy Ashdown (Yeovil)

I am grateful to the hon. Member for Renfrew, West and Inverclyde (Mrs. McCurley) for mentioning the security issues, to which I shall return. She said that the matter had been resolved, but I do not believe that, and many Conservative Members will agree with me.

On Second Reading I said that this was a squalid piece of Tory ideology of short-term advantage to few and long-term benefit to none. Despite sitting through 24 sittings in Committee, to which the Government made little contribution, and despite the arguments between Ministers and Opposition Members, I remain of that opinion.

We are undertaking a matter of no small importance. We are breaking up an organisation which has for no fewer than 40() years had a royal charter, granted by King Henry VIII, to serve Britain's defence industries. I am not a traditionalist, perhaps I am something of an iconoclast, but when one does something of that order without good reason, there is cause for anxiety.

The hon. Member for Eccles (Mr. Carter-Jones) argued powerfully that the organisation has served our arms and defence systems magnificently, and the Minister agreed. We are breaking up an organisation which during that time has developed a sense of integration, and common purpose and aim with our defence forces. It is an integral part of the strength of Britain's defence forces. If we are to break it up, we must have good reasons for doing so, and therefore I shall examine the Government's reasons.

First, is it in line with the Government's policy of increasing competition? On this occasion and many others the Government have said that it is. They believe that if we increase competition we will provide a better service, greater output and a better product. All the evidence shows that when the organisation is sold it will be bought by other organisations already in the defence industry. Therefore, instead of more organisations providing the service to the Ministry of Defence, there will be fewer. We shall enlarge those organisations which are already involved, and, instead of increased competition, there will be less competition.

I was somewhat amused by the recent interesting amalgamation of the defence industry and entertainment, with the projected merger of Thorn-EMI and British Aerospace. Those who were members of the Committee will recall that people's experiences and professions played a great part in their contributions. The hon. Member for Nottingham, South (Mr. Brandon-Bravo) brought to bear his considerable experience in the manufacture and marketing of items of ladies' underwear, while the hon. Member for South Ribble (Mr. Atkins) was previously an insurance broker, and the right hon. Member for Llanelli (Mr. Davies) revealed himself as a merchant banker. It came to my attention that the Minister of State for Defence Procurement, the hon. Member for Chertsey and Walton (Mr. Pattie), was at one time under contract to my hon. Friend the Member for Cambridgeshire, North-East (Mr. Freud) as a cabaret act. It was not a song-and-dance act, but a rather tasteful and successful singing act. One wonders whether this interesting new amalgamation of defence and entertainment is at least partly his doing. However, the chances of the entertainment industry buying out the ROFs are rather slim.

The result of the privatisation will be fewer employees and less competition, not more, as the Government hope. What other reasons can there be? Perhaps the change will provide better value for money. I must doubt that, because, as the Minister agreed, no less than 38 per cent. of ROF production goes overseas. Therefore, one must assume that the ROFs are already competitive. If they did not provide reasonable value for money now, they would not enjoy such success abroad. The evidence is to the contrary: the ROFs continue to serve our defence forces effectively, and they enjoy a large overseas market.

Perhaps the ROFs are considered to be a burden on the taxpayer. Again, the contrary is the case. Since 1974 the ROFs have made £140 million of profits, of which between £45 million and £47 million passed direct to the Treasury. Rather than being a cost to the taxpayer and an enterprise that might be hived off to the private sector, the ROFs have made a significant contribution to the Treasury.

Is it said that the ROFs are lacking in efficiency? The facts point in the opposite direction. In the ROFs, value added per employee increased from £5,900 in 1976 to £7,500 in 1981. If the rest of British industry had managed to improve its value added per employee along those lines, we would not be in our present difficulties. The Government have conceded that the ROFs are extremely efficient.

I was especially interested to hear the Minister say that the Government were not contradicting the Mallabar report, but were bringing it up to date. The hon. Member for Eccles said on Second Reading: The Mallabar committee, following an in-depth study, said that one must stick with a royal ordnance factory-type of solution."— [Official Report, 16 January 1984; Vol. 52, c. 51.] That was the committee's conclusion, yet the Minister argues that by overturning that conclusion the Government are not contradicting it, but simply bringing it up to date. They are bringing it up to date, not to the commercial realities of the world, but to the ideology of the Government. Only in that sense can the Minister's proposals be considered as bringing the Mallabar report up to date.

Are the Government saying that when the ROFs are privatised they will provide a better service to the defence of the realm? The answer must be no. I agree wholeheartedly with the hon. Member for Eccles, who said that senior officers, officers of middle rank and, indeed, men of other ranks, to whom I have spoken, view the Government's decision to privatise the royal ordnance factories with much anxiety. The Minister said that the ROFs make a magnificent contribution to the defence of the realm, and it is difficult to imagine how that can be improved under the present proposals.

Will privatisation improve the products? Again, one must assume not. There is no doubt that moving this section of the defence industry into an area where the primary concern must be the exercise of economics rather than the exercise of the value and usefulness of the product might result in a deterioration of the product enjoyed by the services.

I agree that private defence firms are important and make a valuable contribution. The Under-Secretary of State for Defence Procurement is smiling; no doubt he is thinking, as I am, about Westland Helicopters. I recognise that in a mixed economy private firms make a great contribution. However, the ROFs have established a standard of quality which other private firms must live up to. By turning over these vital factories to the private sector we might be in danger of diminishing that overall quality. ROFs have set standards of excellence which might not relate to the exigencies of providing an economic return for money. Therefore, it is possible that standards will be lowered.

Those can be the Government's only reasons for wishing to privatise the ROFs, but none of them stands up to inspection. What then will be the result of the privatisation? The integrity of our national defence effort will inevitably be damaged, because the Government are removing the essential and integral relationship between the ROFs and the services to which they provide equipment. Whatever the Minister might say to the contrary, there is no doubt that the morale of the ROF work force has been damaged by the proposals and that it will continue to be damaged. I was especially interested to hear the Minister agree that much work must be done to convince the work force that it will not suffer as a result of the Bill.

I understand from those to whom I have spoken in ROFs that they are uncertain about the future. We must recognise that many people enter the Civil Service, in some cases accepting lower wages than they could get outside, because they know that they have some job security. They are prepared to play one off against the other. Now they are worried about asset stripping, factories being bought and closed, the possibility of takeovers and the possibility of foreign involvement. We are all worried about that. The result is that our defences will, to some extent, be weaker after the Bill than they were before it. The Government will argue that, after two or three years, problems with the quality of the service, the product and morale of the work force will be overcome. However, for some time our defences are likely to be weaker.

The hon. Member for Renfrew, West and Inverclyde mentioned security, which is where the true nature of the Government's narrow-minded commitment to ideology shows. The party of law and order has reached a position where the Minister agreed that, in the final analysis, when the Ministry of Defence police are withdrawn from the factories, those who then seek to protect those factories and all the valuable targets to which the hon. Lady referred will not have access to arms; and that against a background of increasing terrorist capacity and threat. This must be of great importance to hon. Members on both sides of the House. A representative of my local police force believes that it is nonsense that, for instance, ROF Bridgwater must, in the ultimate line of defence, be protected by the Avon and Somerset constabulary.

I know of one place, which for obvious reasons I shall not name, where the policeman who might have to protect the royal ordnance factory against terrorist attacks is about three quarters of an hour away, unarmed and alone in a village police station. Perhaps the Minister believes that our intelligence will be so good that we will be able to predict a terrorist attack on a royal ordnance factory. There is no evidence that, bearing in mind the Libyan siege and all the other recent occurrences, our intelligence is that good or ever will be.

The Minister and the hon. Member for South Ribble, who is not in his seat, said that the evidence does not support the need for arms and that they have been drawn to be used only once. I have said previously, but I tell the Minister again, that I am astonished that the Opposition have to tell the Government and a Minister in the Ministry of Defence of the value of deterrence. It is extraordinary. The Minister would not expect us to use the arguments in the cruise missile debate on Wednesday that we do not need cruise missiles because they have never been used. The point of having an armed police force and access to arms at the royal ordnance factories is that they will act as a deterrent and as a last line of defence. I am astonished that the Minister cannot see that and advances the arguments that he does.

I hope the Minister will reconsider the protection of the royal ordnance factories. I hope that those who protect them will have access to arms. If the Minister cannot withdraw his statement for reasons of face—one well understands why he may not be able to—I hope that when he replies to the debate he will tell us that before the royal ordnance factory protection is handed over to an unarmed, private security force he will bring the issue back before the House for a full debate so that we can assess the position.

If the Minister allows a private security force to take over the protection of the royal ordnance factories and does not allow it access to arms, it will not be long before he has to return to the House to explain—he will have a difficult time when he does—a major and perhaps even tragic terrorist incursion, with possible serious consequences for us all.

The Bill is a folly. It does not make economic sense. It will dismantle an old and respected institution which has served us well for over 400 years. It is likely to weaken the defence of our nation. If the Minister carries through his proposals for a private security force without access to arms, it is certain to make our society more dangerous. That is why we shall vote against the Bill tonight.

8.42 pm

Mr. Martin Brandon-Bravo (Nottingham, South)

This measure has been presented as a clash of political dogma between advocates of the utter sanctity of public ownership and those who can find no place for that mode of operation. I hope that I fall in neither of those camps. The Bill is ultimately about jobs — security and prospects. It is on that point that I speak in support of the Bill.

I cannot speak for the other royal ordnance factories, but Nottingham, in full public ownership and Ministry of Defence control, has declined in recent years from about 2,000 employees to 1,100.

I could take the cosy way out and decline to support the measure and probably please a large percentage of the Nottinghamshire work force. I could sit tight and say nothing, and if it all went sour I could claim, "Well, it was not me, Sir." I doubt whether either course would save one job or offer any prospect of improvement in the present position.

Present defence policies are unlikely to produce an improvement in the procurement of conventional arms. As has been said by one or two hon. Members, the policies of Her Majesty's Opposition would produce a substantial reduction. Left to their own devices, terminal decay would not he long delayed for the ROFs. It would not be long before someone was looking for amalgamations. That is what my constituents fear most.

That fear remains the same whether or not the Bill goes on to the statute book. There is the fear that if something is not done to obtain more work, someone will talk about an amalgamation. Privatisation will not increase that threat. I hope fervently that it will reduce it. My task and duty as a Member representing a constituency with a royal ordnance factory bang in the middle is to consider those fears to see whether they are real and try to make a considered response. With its predominance in exports, I believe that the new framework that is being offered will allow management to go out and sell, not just what they make now but what I know their skills will enable them to make and sell and which perhaps is not currently within their remit.

I find it sad that the formal trade union response seems to ignore completely that new opportunity. The hon. Member for Eccles (Mr. Carter-Jones) sought to show that privatisation would loosen public control and that the quality of the product would therefore worsen. Some of my constituents work for Plessey or Thorn, and they would take great exception to the suggestion that their companies, executives and work forces are any less loyal to this country and less conscious of the quality of the product they make for the Ministry of Defence than the employees of the royal ordnance factories, of whom I make no criticism. The hon. Member for Eccles and other Opposition Members have sought throughout the debate to imply that only those people employed in the public sector have that sense of dedication and duty. I utterly challenge that argument.

The Opposition argument and trade union submission to Members on both sides has been that the royal ordnance factories are not allowed to refuse an order regardless of its size or profitability. They suggest that no private company would provide such a unique service. That shows a complete lack of understanding of the private sector. That subject brought about a serious debate in Committee, but one which had some lightheartedness. It was on that subject that my hon. Friend the Member for Renfrew, West and Inverclyde (Mrs. McCurley) referred to a certain retail chain with a turnover of £2.5 billion a year which needs no lessons from anyone about quality. I was not going to mention the matter tonight, but as the hon. Member for Yeovil (Mr. Ashdown) referred to those unspeakable female garments, dare I say that for some the possession of panties is just as vital as the possession of ordnance for others.

Mr. Ashdown

The hon. Lady said it.

Mr. Brandon-Bravo

The hon. Gentleman said it as well as my hon. Friend.

It is suggested that a high-ranking officer—I do not know whether it is one or many — has said that competition will cost lives. I return again to the speech of the hon. Member for Eccles. If competition costs lives, why do we purchase 90 or 96 per cent.—whichever it is—of our defence procurement from the private sector?

Mr. Pattie

It is 93 per cent.

Mr. Brandon-Bravo

I am grateful to my hon. Friend. It is 93 per cent. We buy from the United States, arid I believe that this country has every reason to be grateful for the quality of some of its products used in the Falklands war. No one questioned the quality of those products. They are the products of a society dedicated to competition.

In opening the debate, my hon. Friend the Minister described the new structure—the four subsidiaries and the holding company. Again, the Opposition have argued that that is somehow a false, weak approach and is liable to lead to disaster. As I said on Second Reading, if we were setting up from scratch a company as complex as the multiplicity of the ROFs I believe that we would conclude that it would be quite wrong to run it as a single management unit and that it clearly fell into three or four parts. We should want a main board to keep overall control, but there would be three or four clearly identifiable parts. For those parts to succeed — that is what this debate is all about—we would want a chief executive in charge of the components capable of making his own decisions without having to work his way through all the Civil Service jargon before being able to make the simplest decision. In my experience, in the brief time in which I have tried to deal with ROF Nottingham, I believe that the best thing to come out of the Bill will be the removal of all those constraints. If a managing director dealing with Nottingham arid Leeds can act in the best interests of those two units making complementary equipment, those two units will have a greater chance of success. Therefore, I welcome that structure and the appointment of four managing directors. I believe that that is what we should have done if we had been starting from scratch.

On terms and conditions, the trade union side has constantly suggested that there may be circumstances in which pensions could not be fully index linked. That is probably true, but I can think of only one circumstance in which it might happen—in the event, heaven forbid, of a Labour Government who would let inflation rip and thus destroy the foundations of the schemes to be approved today.

A further unjustifiable criticism has been levelled against the Minister. On Second Reading and throughout the Committee stage we said that we had an absolute duty to do the best that we could for existing employees. I believe that we have done our very best to deliver that pledge. I see no conflict in making provision for people who have already given their lives to the ROFs in terms of pensions and redundancy provisions, but telling people who join ROF plc in the future that they will enjoy no more than the terms that they would obtain elsewhere in private industry. The two-tier system does not worry me. My main concern was the duty of the House to those who had given their lives to the existing ROFs. I believe that we have delivered that pledge.

Therefore, not because I believe it to be the greatest thing since sliced bread—no one has a crystal ball to see that far into the future—but because I believe that, with the current problems of defence procurement, this is probably the greatest hope and promise of a reasonable future that we can offer the 20,000 employees, I hope that the Bill will be passed.

8.53 pm

Mr. Peter Pike (Burnley)

When the Minister opened the debate, I hoped that he would give some reason for the Government's wish to proceed with privatisation or, better still, that after his visit to my constituency last Friday, of which I read in the press at the weekend, he had returned a wiser man and had changed his mind about the Bill. Unfortunately, he has neither changed his mind nor produced one good reason for privatisation.

When the Minister opened the debate on 16 January he seemed to be making the case for public ownership rather than for privatisation. He said: The present organisation and its antecedents have served this country well for nearly 400 years, through the Napoleonic wars, the two world wars, the recent Falkland Islands conflict, and now, in times of peace, in the development of the most up-to-date equipment to meet an increasingly sophisticated threat. As we all know, whatever their peace-time features, the ROFs have always been able to step up production at times of crisis to meet the needs of the nation.

The Minister continued: Other countries have taken a keen interest in purchasing the ROFs' high-quality products. We wish this record to continue, subject of course to the control which the Government exercise over all arms sales abroad. Today, as in the past, the ROFs are staffed by a loyal and dedicated work force numbering just under 18,500. Their efforts have made the organisation a success not only in terms of the quality of its products, which are second to none in the world, but in its trading performance."—[Official Report, 16 January 1984; Vol. 52. c. 26.]

At no stage on Second Reading or in the 24 sittings of the Standing Committee was there any criticism of the ROFs in their present form. On every occasion the staff were described as doing a good job and their efforts as praiseworthy. Like the Minister of State, I was impressed by the fact that in Blackburn and elsewhere in many cases three generations of the same family have served in the ROF structure. That is the kind of loyalty that people have to the organisation.

The record of the ROFs on productivity, profitability and every other criterion by which a private enterprise company would judge its performance has been extremely good. The trading profit last year was £68.8 million, making a total of £270 million since 1974 when the trading fund was established. The forecast for the coming year is £50 million profit. Last year, sales exceeded £448 million and exports accounted for 40 per cent. of sales. The ROFs are naturally proud to have won two Queen's Awards for Exports. That is an excellent record of achievement, not a case for public ownership.

Mr. John Golding (Newcastle-under-Lyme)

It may have been a slip of the tongue, but my hon. Friend said that this record was not a case for public ownership. I am sure that he meant privatisation. This is a case for public ownership, and I am sure that my hon. Friend fully agrees with that.

Mr. Pike

I certainly do. It was a slip of the tongue. My hon. Friend can be reassured that I am not in favour of privatisation. Indeed, there is a strong case for the ROFs remaining in public ownership.

The hon. Member for Congleton (Mrs. Winterton) referred a letter to the Minister on behalf of a constituent, a Mr. Shotter, and the hon. Member for Buckingham (Mr. Walden) referred a similar letter to the Minister. In his reply the Minister said: I can tell that the purpose of the Government's privatisation policy is to increase competition within the defence industry. Following the establishment of the Royal Ordnance Factories as an independent commercial organisation under the Companies Act, the Government will hold all the issued shares. The new organisation will trade as a wholly Government-owned entity until such time as private capital is introduced. No decisions have yet been taken as to when this will be, or by what means it will be achieved. Much depends on the kind of track record which the ROFs can establish for themselves in the initial period of trading in the private sector. Then comes the important point: However, to split up the organisation into its constituent parts and sell each one off separately to existing firms within the defence industry would be unlikely to lead to that greater degree of competition which it is the Government's purpose to ensure." —[Official Report, Standing Committee D, 7 February 1984; c. 103.]

The retention of part of the industry in public ownership would ensure that there is competition with the private sector. To put the lot into private enterprise will remove an element of competition, not increase it. Therefore, the Government's own objective is very much defeated by what is proposed.

The Minister has told us that the Government's preferred option is to invite capital at a later stage through the holding company. That important point should be remembered, because it seems that the Government wish not to sell off individual sections, but to ensure that the ROFs will remain a separate entity. If that is the preferred option, it should have been clearly laid down in the Bill. Had that been established at the start, the Government might have been able to make a case for the ROFs becoming a plc. However, they have not moved sufficiently to prove the case for privatisation.

Five options were considered by Strathcona, three of which were considered viable and the other two were discounted. The first three options were: "An evolved trading fund;

Disposal to private industry;

Creation of a Companies Act structure". The Bill moves towards three, and ultimately two, of the options recommended by Strathcona. But that report also said that any proposed change should be "broadly acceptable" to the ROF work force. That is important, because it is clear that the proposal that the Government are now pursuing is not acceptable to the employees. For that important reason, we should oppose Third Reading.

If the Government sincerely believe that privatisation should not be to the detriment of the employees, they should have accepted Opposition amendments moved in Committee and on Report that would have guaranteed such safeguards. We would have felt much happier, as would the employees, and that would have assured the House that the Government were sincere in their intention that privatisation would not be detrimental.

9.3 pm

Mr. Tom Sackville (Bolton, West)

Several Labour Members, particularly the right hon. Member for Llanelli (Mr. Davies), asked why it was necessary to transfer the ROFs into the private sector in view of their record, their profitability, their skilled and loyal work force, their dedication in the past and their good service to this country and our armed forces.

That question is based on the premise that the ROFs are being transferred simply to punish them unjustly. The suggestion behind the question is, "The child has been good, why must it be punished?" However, the transfer of a business into the private sector cannot be viewed in that way. There is no evidence to justify doing so, and, indeed, all the evidence is to the contrary. For example, British Aerospace at Lostock in my constituency was transferred into the private sector only a few years ago, and has gone from strength to strength ever since. At present, its shares stand at about twice the issue price of only a few years ago. That is testimony to its success.

The assumption is that if such a great change is made everything will be mined. It is assumed that nothing will improve as a result of change and that if things are good now they can only get worse. That is clearly a very negative view, and it is also entirely mistaken. Let us examine the proposition that the profitability or commercial success of the ROFs will be impaired. They are profitable, although in terms of their turnover they are not particularly profitable as commercial companies go. But then they should be profitable. The sector in which the ROFs operate is unfortunately one of the few assured growth sectors of recent years. Unfortunately from a world standpoint, there is a growing and wide demand for armaments and munitions, including those made by the ROFs. There is every reason why they should be a thriving and expanding business and why they should be profitable.

It has been suggested quite wrongly that because the ROFs are already exporting, they are efficient and no further improvements can be made. The hon. Member for Yeovil (Mr. Ashdown) made the rather questionable assertion that, because a certain percentage of production is exported, the ROFs must already be as competitive as they could he in world markets. The idea that they could not be more profitable or competitive through privatisation is quite mistaken, as events will no doubt prove.

Opposition Members have also made the very questionable assertion that privatisation will somehow alter the whole relationship of the Ministry of Defence with its suppliers. As has been said, more than 95 per cent. of the Ministry of Defence's procurement comes from the private sector. It is strange to assert that suddenly altering the ownership of the ROFs will somehow have an enormous effect on the Ministry of Defence's attitude to its suppliers. The system between the Ministry of Defence and its private sector suppliers works extremely well now, and will continue to do so when they are joined by the ROFs.

It has also been quite erroneously stated that, because the ROFs are to be encouraged to export more in future, they will be exporting second or perhaps—as the right hon. Member for Llanelli said—even third-rate goods to our overseas customers. That is a very odd idea, and it is a slur on the hundreds of thousands, or perhaps millions, of men and women who work in our export defence industries. They export first-rate goods to our customers overseas.

It has also been suggested that once the present very close link between the Minister of Defence and the ROFs is ended, the procurement executive will somehow go and buy second-rate cheaper, foreign goods. There is no evidence to suggest that it would do so. I have no doubt that the ROFs can continue to be as efficient—and even more efficient—than at present, and will present the procurement executive of the Ministry of Defence with the right goods at the right price.

All that is fairly self-evident. What really interests me is the continuing campaign based upon misinformation and the intimidation of those who work at royal ordnance factories, including several of my constituents who work at Patricroft and Chorley. They have been told repeatedly by Labour Members and certain trade unionists that what is proposed in the Bill will ruin their job prospects and their rights. A shameless attempt is being made to oppose Government legislation, using the fears of people who work in the ROFs.

I make it clear to my constituents and to all the others who work in ROFs that they have nothing to fear from this measure. Their future is not threatened, but is made brighter by all the opportunities that the measure opens up.

As I see it, the future of ROFs can be threatened in only two ways. The first is if the Government decide to featherbed ROF suppliers by preferential treatment, and to insulate them from the real world of competition. That will always result in cuts and more money being spent on defence equipment than is needed, and featherbedded suppliers will undoubtedly suffer.

The second way that ROFs could suffer is if, by chance, the Labour party came to power. It has made it clear that it intends to make major cuts in defence expenditure. The ROFs have continued to prosper in the past few years because this Government have spent a proper amount on defence. That will continue to be Government policy. I have no doubt that ROFs will continue to prosper as a result.

9.13 pm

Mr. Bruce George (Walsall, South)

I had not intended to comment adversely on the speech of the hon. Member for Bolton, West (Mr. Sackville), but some of his comments deserve a response. He talked about a campaign of misinformation and intimidation at ordnance factories. He talked of a shameless attempt at exploiting fear. He was talking about the exercise of legitimate trade union activity in ordnance factories. For the hon. Gentleman to use such language to describe legitimate campaigning is unfair. If he feels so strongly about intimidation, he should have opened his mouth in Committee and not kept his remarks until 45 minutes before the end of the Bill's proceedings. The trade unionists who worked closely with Opposition Members put forward an excellent case, which has not been refuted. The comments of the hon. Member for Bolton, West did not refute their argument for ordnance factories remaining within the public sector.

At a time when the Government should be addressing their limited abilities to resolving other defence problems, such as the cessation of relations between the Soviet Union and the United States, procurement policies and intra-Alliance tensions, it is ironic and sad that they are concerned with such a small unnecessary Bill.

It has been said time and again that ordnance factories are not involved in the commanding heights of the economy. They involve about 7 per cent. of armaments production. I believe in a mixed economy, and a mixed economy in defence. I believe in a public sector defence system working alongside the private sector in defence. The Government want to obliterate the public sector in defence production. Perhaps I am being naive and idealistic, but the production of weapons of war and mass destruction should inherently be within the public sector—at least 7 per cent. of it. To wipe out the public sector in armament production, where it has been involved not just for a century, but through a lineal descent from the 13th century to the ordnance factories of the day, will be to turn aside many centuries of public control of armament production. It is being done in the name of dogma—dogma is prevailing over reason.

In Committee we said time and again that the work force was unanimously opposed to privatisation. Ministers have gone round the country with their double act—almost Bonnie and Clyde—and been given short shrift by the majority of the work force.. The measure is being put through against their wishes. We have been told how production has become profitable and efficient. Government reports commissioned to analyse the future of the ROFs have said that they are capable of improvement within the existing framework. The ROFs have a proven record in war. The hon. Member for Nottingham, South (Mr. Brandon-Bravo) may eulogise about the private sector during the Falklands war, but he should look at some of the correspondence from the Ministry of Defence to the ROFs, complimenting them on what they did during that conflict.

The Bill is a package which neatly groups together the companies. We know full well the purpose of the 24 Committee sittings — it was to prepare an attractive package which could be sold to the highest bidders. Already the wolves are gathering. Rumours are circulating of companies wanting the more profitable sectors of the ROFs. From the integrated structure will be stripped the profitable sectors, leaving only the less profitable, which will wither and die. That will be the end of the ROFs, other than the highly profitable sectors.

We were told last week that somehow the MOD police would train a new ROF mark 2 police force. The MOD police are already overstretched. They are involved not only in their duties in their own ordnance factories, but they must provide staff to police military installations in response to demonstrations. There is definitely a correlation between the low level of staffing in the ordnance factories, which have been stripped of their MOD police, and the potential rate of crime.

We are now being told that the overstretched MOD police will take on the task of training, from scratch, a new private police force. I hope that the Minister has given some thought to that. There is no scope within that organisation to devote the proper time to deal with the adequate training of a new private police force, unless the Minister wants, as I suspect, the most cursory training programme, which will produce an inadequate security force. As I have said many times, it will be a soft touch for anyone wishing to plunder the armaments in the ordnance factories.

I was privileged to participate in the Committee proceedings, and a few interesting aspects came out in Committee. We have often heard about the Labour party's opposition to certain matters. In Committee we heard the Labour party being positive on one aspect of defence—the ROFs. I suggest that the Government introduce more legislation, and there will be a more positive response from the Labour party to other areas of defence. The Minister can rush out and propose new Bills to his heart's content.

I Want to issue a warning—not a threat. There are people in this House with expertise in defence, but in another place there are people with far greater expertise. They include men who have served in the armed forces, such as ex-chiefs of defence staff. I hope that they have been following the proceedings in this House.

I hope that when the House of Lords looks at this superfluous legislation, which in many ways is vindictive, it will do what it sometimes does better than us—oppose the enlarged majority in the House of Commons which has pushed through, albeit legitimately, desperately unnecessary legislation. If the Lords and the ex-chiefs of defence staff do their job properly, the Government may have more trouble in the other place than, regrettably, they have had in this.

9.20 pm

Mrs. Ann Winterton (Congleton)

I am glad that you called me, Mr. Deputy Speaker, and I intend to make only a brief contribution to the debate. I feel rather like the Lone Ranger on the Conservative Benches, but I intend to stick to my guns. As many hon. Members who have followed the passage of this legislation through the House will remember, I made a speech on 16 January on Second Reading. I was here last week and listened carefully to the debate on Report. However, I was not on the Committee and so was not able to listen to the blow-by-blow account of the things that went on there. Although I have listened carefully to all these debates, I have not yet changed my mind.

Most of us are realists and will understand that the legislation will go through and will go on to the other place. I hope that their Lordships will look at it with fresh eyes. In the meantime, one or two other points remain to be made.

I have two vested interests. First, I have in my constituency Radway Green, which is the biggest 'single employer and a very successful small arms manufacturing company that is part of the ROFs. Many of the employees there have been in touch with me during the passage of this legislation. My other vested interest is that I have a son in the British Army, and naturally I am concerned about the high quality of the safe and reliable products provided for the three armed services over the years by the ROFs.

Three points have arisen from the debates that we have had in the House. The first, which I mentioned on 16 January, relates to security and the Ministry of Defence police. That matter has been aired by hon. Members on both sides of the House this evening. We had an unfortunate incident at Radway Green connected with internal security, which is at the moment sub judice and therefore I cannot comment on it. Many of us are concerned about the possibility of terrorist attack and about security in the future. I was pleased that my hon. Friend the Minister decided to look at this problem again. I hope that when he sums up he will give further assurances that, post vesting day and the setting up of the new company, security will be absolutely assured. This is an important point.

My second point is about the pay and conditions of the people who have been working for many years in the ROFs. I am not concerned about the new entrants who will join the company post privatisation, because they will have a new contract and will know what it is and can either work or not for the company. However, many people have worked for a long time, with service of 30 or 40 years, in the ROFs and therefore the Civil Service. I hope that the Minister will go even further than he has and assure those people, who are most fearful for their pay and conditions, and especially pensions, in the future. I hope that there will be no detriment to them on pensions and that the talks that he is having with the trade unions will have a favourable outcome.

Another point that was discusssed on Report concerns the time when the companies are floated and the public will be able to buy into them. I am pleased that the employees will be able to buy shares at favourable rates, but at the same time there should be a limitation on foreign ownership. I was equally concerned that parts of the defence industry could fall into the hands of foreign owners. There are many multinational companies, trading under British names in this country, that I would not like to see own a great part of Royal Ordnance Factories plc. I do not need to name names. I am sure that many hon. Members will know those firms, which have been tremendous asset strippers. They have plonked vast amounts of capital in the banks and shifted money from one place to another to get the maximum interest; they have not invested it in manufacturing companies in this country and have not helped employment one little bit. I should not like that to happen when the ROFs go private.

The legislation is inevitable. I am sure that most of us realise that. I shall stick to my guns and not support the Government — most reluctantly, but basically for the reasons that I gave on 16 January. I do not believe that the legislation is in the best national interest. I do not believe for one moment that it is necessary. I cannot understand why the Government have given so much valuable parliamentary time to it, when we have so many other more important problems to deal with and to solve. I cannot understand why this small matter has been tackled in the way that it has.

As my hon. Friend the Member for Renfrew, West and Inverclyde (Mrs. McCurley) started with a quotation, I shall end with one by Oscar Wilde. I hope that the Government are not one who knows the price of everything and the value of nothing.

9.26 Pm

Mr. John Golding (Newcastle-under-Lyme)

The Bill is an abomination. Why are the ROFs being privatised? Not because they are inefficient — Ministers have constantly praised them for their efficiency. Not because they are unprofitable — they have made £270 million since 1974. Not because they have failed in the export market—they have won two Queen's awards. They are being privatised solely because of political dogma, because the Prime Minister's philosophy, blind and without justification, is that private enterprise is best, and because of her irrational hatred of civil servants. That is why the ROFs are being pinched, filched and stolen from the public by the Government. There is no rhyme or reason for it.

I have studied the Committee reports carefully. It is clear that the situation is the same as it was for the Telecommunications Bill. Two junior Tory Ministers did their best with a bad Bill that they, in their heart of hearts, did not support. They suffered the indignity—day in, day out—of presenting bad arguments. Why? Because their Secretary of State was kowtowing to the Prime Minister. Bluntly, the Ministers did not seem to know what they were doing. If they were tried for offences against the State they would be found guilty, but insane.

The Bill is insane. For hundreds of years the ROFs have served Britain well, making the weapons of war efficiently and to a high quality, without anyone making enormous profits. All the profit has been made for the country. The workers have been loyal and hardworking. For most of the time they have been badly paid, but they put up with the low pay because of the relative job security and the pension at the end.

Now the Prime Minister has a touch of the DPs—dogmatic privatisation. What will be the consequences? The brief from the Transport and General Workers Union sums it up well: It will damage Britain's defence, lead to a financial loss for the Government and the taxpayer, endanger the future of a profitable and successful organisation of over 300 years standing, damage the future jobs and conditions of the workforce. Having studied the reports of the Committee stage, I congratulate the Labour Opposition on the case that they presented. I congratulate them on behalf of our armed forces, the workers in the industry and, above all, the British people. In particular, I congratulate my constituency neighbour, my hon. Friend the Member for Stoke-on-Trent, Central (Mr. Fisher). After serving on the Telecommunications Bill Committee, he went straight on to the Committee on the Ordnance Factories and Military Services Bill to make sure that our concern for Radway Green was expressed. I hope that after the Finance Bill has been dealt with he will be given a day off, or perhaps half a day off, so that he can get his breath.

The importance of this change for the Army is well summed up in a paragraph of the union briefing. A high-ranking army officer has voiced the concern of the armed forces. He has told the unions that "competition will cost lives". He has accused the Government of wanting to compel the Army to buy the cheapest in the market. He says: We can buy cheaper. But the failure rate will multiply tenfold". That is not our view; that is the view of the Army.

Privatisation will not only cost lives; it will also cost the taxpayer money. It appears that the factories may be sold off at a loss. The Secretary of State underlined the dogmatic basis of the Bill when he said that any gain for the public purse would be purely incidental.

That is a scandal. The Government are selling off at a loss a profitable firm which has won the Queen's award. Is that businesslike? Would any other Government in the world sell off such a fine concern at a loss? It does not make sense. It is dogma gone mad.

Who will suffer? Members of the armed forces will suffer—their spokesman has said that the Bill will cost lives—and the staff will lose their livelihoods. The staff have been loyal and hardworking, and in return their jobs and pensions are to be jeopardised. The ending of the preferred source policy, and the policy of break-up and sale, are both threats to job security. If anything is clear, it is that the Bill has brought great insecurity to the staff. The Labour party did not have to make that clear to the staff. My hon. Friend the Member for Stoke-on-Trent, Central will agree that it was the workers of Radway Green who made it clear to us—and to the hon. Member for Congleton (Mrs. Winterton). They saw the danger.

The fact that Ministers have failed to give adequate assurances is appalling, and so is their attitude to pensions and to index-linking. The pensions have been paid for by years of low wages. Those civil servants are entitled to their historic rights, and to redundancy payments for loss of Civil Service status. They are entitled to a continuation of the conditions that they have in the Civil Service.

The Bill threatens lives and livelihoods and is based on the politics of dogma. The Government may well live to regret it.

9.33 pm

Mr. Mark Fisher (Stoke-on-Trent, Central)

In Committee, on Report and today, Opposition Members, with the support of some courageous Conservative Members such as the hon. Member for Congleton (Mrs. Winterton), have shown that the Government's case is wrong for Britain's defence, for workers in the ROFs and for security.

As I believe that we have established the wrongness of what the Government are doing, I should like to deal with its financial sense. My hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding) said that he fears that there will be a loss. He is undoubtedly right, and I wish that he had been a member of the Committee so that he could have pursued the point with us. The figures show that a loss is almost certain. In an unguarded moment, the chairman of the ROFs valued the company at £300 million. The Minister of State has been trying to avoid that figure ever since it was set. Nevertheless, the company's book value is £456 million and that does not include good will.

There is a distinct fear, if not certainty, in many people's minds that the Government are giving away control of public assets worth £450 million in the book in return, if they sell only 51 per cent. of the company, as was the case with British Telecom, for a probable £150 million. The Government tell us that the cost of such action and making good the pension fund will be £250 million, so there will be a cash loss of £100 million. For that sum the Government will have lost control and effectively given away £250 million worth of public assets that have been paid for with taxpayers' money. That is why valuation is so important. The Treasury should note that, far from contributing to the £2 billion that the Chancellor put into the public expenditure White Paper as asset sales for the year, this asset sale will almost certainly cost the Treasury money. That is nonsense.

In Committee we pushed the point on valuation and repeatedly asked the Government for the basis of their valuation. Eventually, the Under-Secretary said that the valuation had been made on the basis of usefulness to the new company. I hope that the City, the Treasury, Coopers and Lybrand, the Property Services Agency, Customs and Excise and everyone else understand the theory of usefulness. It is not historic cost or current cost or the price-earnings ratio, but the wholly specious theory of usefulness. The Under-Secretary had to live with that slip throughout Committee stage and has not been allowed to get away with it. It is appalling for the Government to value public assets on such a subjective and insubstantial basis. I hope that the Under-Secretary will present a more substantial method of valuing the shares tonight.

It is not just valuation on which the Government are so hopelessly shaky. The Under-Secretary is looking down at his wholly inadequate brief. This is not a case of presentation. We know that there is to be a new balance sheet. Can the Under-Secretary tell us what the depreciation policy will be? Will it be the same as that under which the ROFs have worked for the past few years or, like British Telecom, will the Government suddenly produce out of the hat a completely new one? A few weeks ago we learnt that BT's new depreciation policy had knocked £993 million off the company's value, even after a 24 per cent. increase in depreciation the year before. Will the Under-Secretary juggle with the figures with the ROFs as well? In the new balance sheet that he has announced, will he set out what loans will appear to the Government and what form they will be in? Will they be debentures or non-voting preference stock? What will be the equity debt ratio and when will the Secretary of State make a statement? If, like BT, there is to be a 1:1 equity debt ratio, it will be extremely unattractive and, unlike BT, the ROFs do not have the attraction of being a new technology industry.

I hope that the Secretary of State, the Minister of State or the Under-Secretary will make a statement soon, because the House has a right to know. That is why we have tried to ensure that the House receives such statements as, otherwise, public money will be thrown away by a thoroughly bad Bill. This is an enabling Bill and the Minister of State had the cheek to say when opening today's debate that, through the Bill, control of the ROFs will be in their own hands. That is nonsense, and he knows it. He knows that the Bill means selling off the factories and therefore control passing to whoever buys them. This is a disastrous Bill, not only for the defence of this country and our future, but for the Government's financial and economic policies.

9.40 pm

Mr. Kevin McNamara (Kingston upon Hull, North)

I congratulate the hon. Member for Congleton (Mrs. Winterton) on making a brave statement for a new Member. Having been in a similar position in the past, I can assure the hon. Lady that she may be certain of her reward in the future, but it will only be on the Opposition Front Bench.

This is a miserable little Bill. The case against it was argued forcibly by the Minister of State on Second Reading. He outlined fully the reasons why the ROFs should not be privatised. He pointed out their distinguished history, their profitability, their ability to meet the needs of the armed services, the fact that they have never failed the nation, the quality of their products and the dedication of their workers. Yet he went on to suggest that, in some strange way, the Government would improve on a highly successful and competitive publicly owned organisation by putting it on to the private market and bringing in private capital.

If, as we believe, the Minister of State's logic is turned upside down by his decision, we have to look elsewhere for the real reasons for the denationalisation of the royal ordnance factories. We find them not so much in the factories as in the ideology of the Government and their determination to turn anything that makes a profit in the public sector over to their friends in the City and elsewhere.

If the efficiency of the ROFs is good, their profits are secure, innovation is present and the armed forces have a guaranteed supply of essential services, why should it be necessary to go through the ritual of privatisation? The answer must lie in the character of the Secretary of State and his determination and ambition to prove his mettle to the new intake of Tory Members.

The right hon. Gentleman seeks to improve his reputation with the arids and ideologues, as he tried in Liverpool to improve his position with the wets in his party. He will seek to do that by cutting the Civil Service. With this one Bill, he gets rid of 18,500 civil servants at a vote. Of course, those people will still be there and will have to be paid by the new ROF plc, but the right hon. Gentleman has met the demands of his political mistress. He has cut the number of civil servants in his Ministry —18,500 civil servants on a platter for a new political Salome. However, those civil servants will be not less of a cost to the Ministry but an increased cost. Every private firm that employs those civil servants and the new ROF plc which maintains them in their present jobs will seek an additional profit from the Minister.

We do not have to look far for other reasons for the Secretary of State's keenness to privatise the ROFs. One is to reward the Conservative party's friends and supporters in the City. That is what it is all about. The Government are not quite certain how to do that, but this is one way that they have chosen.

Mr. Robert Atkins

Does the hon. Gentleman think that no union pension fund will buy shares in the new company in the foreseeable future?

Mr. McNamara

I have no idea because I do not control the policies of the unions' pension funds. I know what the courts have said and I know, too, that unions that have wanted to decide where their pension funds are invested have been stopped from doing so. I have in mind the National Union of Mineworkers and the National Coal Board's pension scheme. The unions do not have a veto over where they invest and the hon. Gentleman knows that.

There are rich pickings for the Government's select group of friends. What happened when Amersham International, Associated British Ports, British Aerospace, Britoil, Cable and Wireless and the National Freight Company were nationalised? Seven firms of primary underwriters and financial advisers, three firms of legal advisers and six firms of stockbrokers received in fees and commission a total of £22,694,000. Those were the rich pickings of the Government's City friends. That is what the selling of public undertakings to private companies is all about. The Government are rewarding their friends and supporters.

As my hon. Friend the Member for Stoke-on-Trent, Central (Mr. Fisher) has asked, which group within the charmed circle of only 16 firms will be privileged to float the royal ordnance factories? Which solicitors will be involved? Which firm of underwriters will enjoy all the rich pickings in the City? The Government's City friends are interested in trying to make money out of the flotation, and that is what this is all about. This is a measure that is designed to further the Government's interests and those of their friends who supported them in the general election.

The producers of wealth will not enjoy the rich pickings. They will be enjoyed by those who batten down the producers, and they are the Government's City friends. In previous flotations 16 firms have received over £22 million in fees and commissions. There was not much distribution on those occasions. There was little distribution to the Conservative party's property-owning democracy. Will the Government choose to break the charmed circle of 16 firms?

Despite the platitudes of the hon. Member for South Ribble (Mr. Atkins), we have not been told what percentage of shares will go to the work force. It is certain that there will not be public ownership or worker ownership. We know that the shares will go outside the factories.

What protection will exist to prevent the ROFs being taken into the ownership of their competitors? We have all read the Secretary of State's letter in which he states that it would not be his intention to privatise the ROFs if he felt that they would end up in the hands of their competitors, but how can he guarantee that that will not happen? Once we have a plc on the market, how can he guarantee that the factories' rivals will not appear on the scene? How can he say that some show-biz company will take them over in the way that Thorn-EMI has taken over British Aerospace? We shall probably have Billy Smart's circus taking over the ROFs. That is the way in which the Government are behaving by allowing privatisation to go ahead.

What have the Government promised the loyal and dedicated work force of the ROFs? What has been offered to these much appreciated workers? The Government achieved what Hitler, Kaiser Bill, Louis XIV or even Philip II of Spain failed to realise, for they brought out on strike all the ROF workers on the same day in protest against what is being done to their terms and conditions of employment and to their standard of living. That was their reaction to the threat that the Government are posing to national security.

We find on Third Reading that all the Government's commitments to the work force have been completely dishonoured. After five months of debate there has been no agreement on pensions or redundancy payments. The Government know that if they were to guarantee redundancy payments, the profit from the flotation would be even less. The Government have not, either in Committee or on Report, come forward with a guarantee so that we could go from this Third Reading with a clear, straightforward statement that there would be no detriment to the conditions of the people employed in the industry.

The major change in the Bill was the pressure which forced the Government to change their mind about security. I am not quite as worried as the hon. Member for Yeovil (Mr. Ashdown) about what will happen with an internal security force, because I do not believe that it will materialise. Not even this Government would be so foolish as to create opportunities for terrorists such as those suggested by that proposal.

For all the reasons that have been advocated since the day we first debated the Bill on 16 January to the present, on the grounds of organisation, efficiency and justice to the work force, but above all on the grounds of national security — something which the Government are continually prepared to squander—we oppose the Bill.

9.50 pm

The Parliamentary Under-Secretary of State for Defence Procurement (Mr., John Lee)

We are drawing to the close of many hours of debate on the Bill from Second Reading, through 24 Committee sessions and Report stage to Third Reading. From the Opposition we have had—it was amply demonstrated tonight by the speeches of the right hon. Member for Llanelli (Mr. Davies) and by the hon. Member for Kingston upon Hull, North (Mr. McNamara) —the usual mix of sarcasm and exaggeration. On Second Reading the right hon. Member for Llanelli made a ludicrous and disgraceful attack on private defence companies. He did not do so tonight, but he made equally dismissive comments about our overseas military sales—the £2.5 billion worth of goods that we sell overseas, the 150,000 jobs that are involved in defence exports, and the 40 per cent. of ROF products that are sold overseas.

By contrast, the contributions from my hon. Friends the Members for South Ribble (Mr. Atkins), for Nottingham, South (Mr. Brandon-Bravo) and for Bolton, West (Mr. Sackville) were models of balance, and I appreciate their support. The line of my hon. Friend the Member for Congleton (Mrs. Winterton) has been consistent, and she has maintained the family tradition of independence.

Security was mentioned repeatedly this evening, as it was many times in Committee. Security is continually kept under review, and we acknowledge the comments of the hon. Member for Walsall, South (Mr. George). Significant improvements in security arrangements are being made, but I cannot go into precise details at this stage. On Report the House had a full debate on our new proposals for security arrangements at ROF sites. To reiterate our position, we have taken powers in the Bill to enable Ministry of Defence police to remain at ROF sites for as long as we consider it necessary. Parallel to that, the ROFs will set up a company guard force to take on the responsibility of guarding ROF sites where that is considered appropriate. Our eventual aim is to replace Ministry of Defence police with company guard personnel. That will, of course, depend upon an assessment of the threat at various sites.

Several detailed questions were asked about the organisation and training of the new company guard force. It is far too early to give full answers to those questions. The Ministry of Defence will liaise closely with the ROFs on recruiting and training such a guard force, with the aim of creating a reliable and efficient organisation.

Much has been made of the fact that Ministry of Defence police have access to arms. The new company guard force will not be armed, but security arrangements must be cleared with local police authorities and contingency plans will be made for civil police support, where necessary, on each site. As the House knows, the civil police can draw arms should the position so warrant it. Contingency plans will include the possible need to call upon armed police. As the new company guard force is built up during the coming months, liaison arrangements with existing MOD police guards will be worked out. I emphasise that MOD policemen will remain subject to the ultimate control of my right hon. Friend the Secretary of State for Defence.

Foreign control has also been mentioned repeatedly during our debates. We have always made clear our intention that the new ROF companies should not come under foreign control. The best way to ensure that objective would be to have appropriate articles of association for the company once it ceases to be under Government control. Accordingly, we have drawn up drafts, which were made available to the Standing Committee which examined the Bill.

The draft articles require the company to maintain a register of shares held by people who are not British citizens. They limit the number of these shares to 15 per cent. of the issued share capital of the company and provide for a special share to be held by my right hon. Friend the Secretary of State. Even after he has disposed of the bulk of his shareholding, it will give him the power of veto over any attempt to change the articles in question. It will also enable him to veto the share of any substantial part of the business which is more than 15 per cent. of the value of the business, or produces more than 15 per cent. of the profits. It will be open for consideration at the time whether the Secretary of State should exercise that power in the case of a projected sale to a British interest, but he would certainly do so to prevent a sale to a foreign interest.

My hon. Friend the Member for South Ribble asked about the relationship between ROFs and International Military Services Ltd. Of the total IMS budget for 1984, ROF products account for approximately half the turnover, but less than 25 per cent. of the profits before tax. Most of that relates to the performance on contracts which were signed several years ago. On the new business budgeted for signature in 1984, ROF products represent only 25 per cent. of the contract value.

The hon. Member for Stoke-on-Trent, Central (Mr. Fisher) and my hon. Friend the Member for Renfrew, West and Inverclyde (Mrs. McCurley) asked about houses. My hon. Friend asked about farm tenancies. The rights of tenants will not be diminished and tenants whose houses are transferred to the company will enjoy all legal safeguards. The same applies to farm tenants. House properties that lie inside the ROFs' perimeters will be transferred to the company together with the houses that fall within the safeguarded areas at the explosives ROFs. Those unaffected by safeguarding will remain with the MOD, except where the company requires the house or land on which they stand. The details of that arrangement are being worked out, together with what consideration should be paid for the properties where they represent an asset to the company.

The hon. Member for Stoke-on-Trent, Central asked about the valuation of the assets. As we made clear in Committee, it will not be possible to value every item of property and each right or liability which is to be transferred initially before vesting day. The precise identity of many of the assets cannot be ascertained until vesting day; for example, a large proportion of them in terms of value will consist of work in progress. Work is carried on in respect of such assets for the benefit of the trading fund until vesting day, and after vesting day for the benefit of the new company. It will therefore be necessary to make an inventory of these assets at vesting day, and only then can their precise value be ascertained. The same is true of some liabilities, such as payments due to suppliers.

During our proceedings right hon. and hon. Members have repeatedly and rightly referred to the long and distinguished history of the ROFs, the quality of their products and the loyalty, integrity and dedication of the work force at all levels. That must not prevent us from reviewing their structure and role in our evolving defence procurement strategy. The ROFs served our nation nobly in the past. Our proposals will ensure a strengthened organisation. It will consist of a holding company with four subsidiaries, considerably enhanced managerial, research and marketing resources, greater flexibility in recruitment and salary levels and, assuming privatisation by flotation of the whole, will give employees a real opportunity for the first time to invest and participate in the company.

The ROFs have a bright future, but they cannot be above criticism or change. The Government would be failing in their duty if, in the search for greater competition and efficiency in defence spending, they preserved the sheltered position relative to other defence contractors which the ROFs have historically enjoyed.

I am confident that the royal ordnance factories will respond to the challenge and opportunities, and I commend the Bill to the House.

Mr. McNamara

rose—

Mr. Speaker

Order.

Mr. McNamara

Why, Mr. Speaker, will you now not give—

Mr. Speaker

Order. I think that the Minister has sat down.

Mr. John Major (Huntingdon)

rose in his place and claimed to move, That the Question be now put.

Question, That the Question be now put, put and agreed to.

Question put accordingly, That the Bill be now read the Third time.

The House proceeded to a Division—

Mr. McNamara (seated and covered)

On a point of order, Mr. Speaker. May I humbly request information as to why hon. Members were not called to speak in the debate when there was still a minute of the allotted time to go?

Mr. Speaker

The hon. Member had already spoken and therefore had exhausted his right to speak again. The Minister had sat down.

Mr. McNamara

Further to that point of order, Mr. Speaker.

Mr. Speaker

Order. If an hon. Member who had not spoken had risen to intervene, of course I should have called him.

Mr. McNamara

If I had asked the leave of the House—

Mr. Speaker

Order. The hon. Member did not ask the leave of the House.

The House having divided: Ayes 244, Noes 172.

Division No. 309]	[10 pm
AYES
Aitken, Jonathan	Bendall, Vivian
Alexander, Richard	Berry, Sir Anthony
Alison, Rt Hon Michael	Best, Keith
Amess, David	Biffen, Rt Hon John
Arnold, Tom	Biggs-Davison, Sir John
Atkins, Robert (South Ribble)	Bonsor, Sir Nicholas
Atkinson, David (B'm'th E)	Boscawen, Hon Robert
Baker, Rt Hon K. (Mole Vall'y)	Bottomley, Peter
Baker, Nicholas (N Dorset)	Bottomley, Mrs Virginia
Baldry, Anthony	Boyson, Dr Rhodes
Banks, Robert (Harrogate)	Braine, Sir Bernard
Batiste, Spencer	Brandon-Bravo, Martin
Bellingham, Henry	Bright, Graham

Brinton, Tim	Holland, Sir Philip (Gedling)
Brooke, Hon Peter	Holt, Richard
Brown, M. (Brigg & Cl'thpes)	Hooson, Tom
Browne, John	Hordern, Peter
Bruinvels, Peter	Howard, Michael
Bryan, Sir Paul	Howarth, Alan (Stratf'd-on-A)
Bulmer, Esmond	Howarth, Gerald (Cannock)
Butterfill, John	Howell, Rt Hon D. (G'ldford)
Carlisle, John (N Luton)	Howell, Ralph (N Norfolk)
Carlisle, Kenneth (Lincoln)	Hubbard-Miles, Peter
Cash, William	Hunt, John (Ravensboume)
Chapman, Sydney	Hunter, Andrew
Chope, Christopher	Hurd, Rt Hon Douglas
Clark, Hon A. (Plym'th S'n)	Jenkin, Rt Hon Patrick
Clark, Dr Michael (Rochford)	Johnson-Smith, Sir Geoffrey
Clark, Sir W. (Croydon S)	Jones, Gwilym (Cardiff N)
Clarke, Rt Hon K. (Rushcliffe)	Joseph, Rt Hon Sir Keith
Cockeram, Eric	Key, Robert
Colvin, Michael	King, Rt Hon Tom
Coombs, Simon	Knight, Gregory (Derby N)
Cope, John	Knight, Mrs Jill (Edgbaston)
Cormack, Patrick	Knox, David
Couchman, James	Lamont, Norman
Cranborne, Viscount	Lang, Ian
Crouch, David	Latham, Michael
Currie, Mrs Edwina	Lawler, Geoffrey
Dorrell, Stephen	Lawrence, Ivan
Douglas-Hamilton, Lord J.	Lawson, Rt Hon Nigel
du Cann, Rt Hon Edward	Lee, John (Pendle)
Edwards, Rt Hon N. (P'broke)	Leigh, Edward (Gainsbor'gh)
Eggar, Tim	Lilley, Peter
Emery, Sir Peter	Lloyd, Ian (Havant)
Evennett, David	Lord, Michael
Eyre, Sir Reginald	McCurley, Mrs Anna
Fallon, Michael	McCusker, Harold
Farr, John	MacKay, John (Argyll & Bute)
Fenner, Mrs Peggy	Maclean, David John
Finsberg, Sir Geoffrey	Major, John
Forman, Nigel	Mather, Carol
Forsyth, Michael (Stirling)	Miller, Hal (B'grove)
Fowler, Rt Hon Norman	Miscampbell, Norman
Franks, Cecil	Molyneaux, Rt Hon James
Fraser, Peter (Angus East)	Morris, M. (N'hampton, S)
Freeman, Roger	Morrison, Hon C. (Devizes)
Gale, Roger	Moynihan, Hon C.
Gardiner, George (Reigate)	Murphy, Christopher
Glyn, Dr Alan	Neubert, Michael
Goodhart, Sir Philip	Newton, Tony
Goodlad, Alastair	Nicholls, Patrick
Gow, Ian	Onslow, Cranley
Gower, Sir Raymond	Osborn, Sir John
Greenway, Harry	Page, John (Harrow W)
Griffiths, E. (B'y St Edm'ds)	Page, Richard (Herts SW)
Griffiths, Peter (Portsm'th N)	Parkinson, Rt Hon Cecil
Grist, Ian	Parris, Matthew
Ground, Patrick	Patten, John (Oxford)
Grylls, Michael	Pattie, Geoffrey
Hamilton, Hon A. (Epsom)	Porter, Barry
Hamilton, Neil (Tatton)	Powell, Rt Hon J. E. (S Down)
Hanley, Jeremy	Raison, Rt Hon Timothy
Hannam, John	Rathbone, Tim
Hargreaves, Kenneth	Rhodes James, Robert
Harvey, Robert	Rifkind, Malcolm
Haselhurst, Alan	Rippon, Rt Hon Geoffrey
Havers, Rt Hon Sir Michael	Roberts, Wyn (Conwy)
Hawkins, C. (High Peak)	Roe, Mrs Marion
Hawkins, Sir Paul (SW N'folk)	Rossi, Sir Hugh
Hawksley, Warren	Rost, Peter
Hayes, J.	Rowe, Andrew
Hayhoe, Barney	Rumbold, Mrs Angela
Hayward, Robert	Ryder, Richard
Heathcoat-Amory, David	Sackville, Hon Thomas
Heddle, John	Sainsbury, Hon Timothy
Henderson, Barry	Sayeed, Jonathan
Heseltine, Rt Hon Michael	Shaw, Sir Michael (Scarb1)
Hickmet, Richard	Shelton, William (Streatham)
Higgins, Rt Hon Terence L.	Shepherd, Colin (Hereford)
Hill, James	Shepherd, Richard (Aldridge)
Hind, Kenneth	Shersby, Michael
Hogg, Hon Douglas (Gr'th'm)	Silvester, Fred

Sims, Roger	Thornton, Malcolm
Skeet, T. H. H.	Thurnham, Peter
Smith, Sir Dudley (Warwick)	Townend, John (Bridlington)
Smith, Tim (Beaconsfield)	Tracey, Richard
Smyth, Rev W. M. (Belfast S)	Trippier, David
Soames, Hon Nicholas	Twinn, Dr Ian
Speed, Keith	van Straubenzee, Sir W.
Speller, Tony	Vaughan, Sir Gerard
Spencer, Derek	Viggers, Peter
Spicer, Jim (W Dorset)	Wakeham, Rt Hon John
Spicer, Michael (S Worcs)	Walden, George
Squire, Robin	Wall, Sir Patrick
Stanbrook, Ivor	Waller, Gary
Steen, Anthony	Ward, John
Stern, Michael	Wardle, C. (Bexhill)
Stevens, Lewis (Nuneaton)	Warren, Kenneth
Stevens, Martin (Fulham)	Watts, John
Stewart, Allan (Eastwood)	Wells, Bowen (Hertford)
Stewart, Andrew (Sherwood)	Wheeler, John
Stokes, John	Whitfield, John
Stradling Thomas, J.	Wilkinson, John
Sumberg, David	Wolfson, Mark
Tapsell, Peter	Wood, Timothy
Taylor, Teddy (S'end E)	Woodcock, Michael
Temple-Morris, Peter	Yeo, Tim
Terlezki, Stefan	Young, Sir George (Acton)
Thatcher, Rt Hon Mrs M.	Younger, Rt Hon George
Thomas, Rt Hon Peter
Thompson, Donald (Calder V)	Tellers for the Ayes:
Thompson, Patrick (N'ich N)	Mr. Tristan Garel-Jones and
Thorne, Neil (Ilford S)	Mr. David Hunt.

NOES
Abse, Leo	Conlan, Bernard
Adams, Allen (Paisley N)	Cook, Robin F. (Livingston)
Alton, David	Corbett, Robin
Anderson, Donald	Corbyn, Jeremy
Archer, Rt Hon Peter	Cox, Thomas (Tooting)
Ashdown, Paddy	Craigen, J. M.
Ashley, Rt Hon Jack	Crowther, Stan
Atkinson, N. (Tottenham)	Cunliffe, Lawrence
Banks, Tony (Newham NW)	Cunningham, Dr John
Barron, Kevin	Dalyell, Tam
Beckett, Mrs Margaret	Davies, Rt Hon Denzil (L'lli)
Beith, A. J.	Davies, Ronald (Caerphilly)
Bell, Stuart	Davis, Terry (B'ham, H'ge H'l)
Benn, Tony	Deakins, Eric
Bennett, A. (Dent'n & Red'sh)	Dewar, Donald
Bermingham, Gerald	Dixon, Donald
Blair, Anthony	Dobson, Frank
Boothroyd, Miss Betty	Dormand, Jack
Boyes, Roland	Douglas, Dick
Bray, Dr Jeremy	Dubs, Alfred
Brown, Hugh D. (Provan)	Eadie, Alex
Brown, N. (N'c'tle-u-Tyne E)	Eastham, Ken
Brown, Ron (E'burgh, Leith)	Ellis, Raymond
Buchan, Norman	Evans, John (St. Helens N)
Callaghan, Jim (Heyw'd & M)	Ewing, Harry
Campbell, Ian	Fatchett, Derek
Campbell-Savours, Dale	Faulds, Andrew
Carter-Jones, Lewis	Fields, T. (L'pool Broad Gn)
Clark, Dr David (S Shields)	Fisher, Mark
Clay, Robert	Foot, Rt Hon Michael
Cocks, Rt Hon M. (Bristol S.)	Forrester, John
Cohen, Harry	Foster, Derek
Coleman, Donald	Foulkes, George
Concannon, Rt Hon J. D.	Fraser, J. (Norwood)

Freeson, Rt Hon Reginald	Morris, Rt Hon J. (Aberavon)
Freud, Clement	Nellist, David
Garrett, W. E.	O'Brien, William
George, Bruce	Orme, Rt Hon Stanley
Gilbert, Rt Hon Dr John	Pavitt, Laurie
Golding, John	Pendry, Tom
Gourlay, Harry	Penhaligon, David
Hamilton, W. W. (Central Fife)	Pike, Peter
Hardy, Peter	Powell, Raymond (Ogmore)
Harman, Ms Harriet	Randall, Stuart
Harrison, Rt Hon Walter	Rees, Rt Hon M. (Leeds S)
Hart, Rt Hon Dame Judith	Richardson, Ms Jo
Haynes, Frank	Roberts, Allan (Bootle)
Heffer, Eric S.	Roberts, Ernest (Hackney N)
Hogg, N. (C'nauld & Kilsyth)	Robertson, George
Holland, Stuart (Vauxhall)	Robinson, G. (Coventry NW)
Howell, Rt Hon D. (S'heath)	Ross, Ernest (Dundee W)
Howells, Geraint	Rowlands, Ted
Hoyle, Douglas	Ryman, John
Hughes, Robert (Aberdeen N)	Sheerman, Barry
Hughes, Roy (Newport East)	Sheldon, Rt Hon R.
Hughes, Sean (Knowsley S)	Shore, Rt Hon Peter
Hughes, Simon (Southwark)	Short, Ms Clare (Ladywood)
Janner, Hon Greville	Short, Mrs R.(W'hampt'n NE)
John, Brynmor	Silkin, Rt Hon J.
Jones, Barry (Alyn & Deeside)	Skinner, Dennis
Kaufman, Rt Hon Gerald	Smith, C.(Isl'ton S & F'bury)
Kilroy-Silk, Robert	Smith, Rt Hon J. (M'kl'ds E)
Kirkwood, Archibald	Snape, Peter
Lamond, James	Soley, Clive
Leighton, Ronald	Steel, Rt Hon David
Lewis, Ron (Carlisle)	Stott, Roger
Lewis, Terence (Worsley)	Strang, Gavin
Lloyd, Tony (Stretford)	Straw, Jack
Lofthouse, Geoffrey	Thomas, Dr R. (Carmarthen)
Loyden, Edward	Thompson, J. (Wansbeck)
McCartney, Hugh	Thorne, Stan (Preston)
McGuire, Michael	Torney, Tom
McKay, Allen (Penistone)	Wallace, James
Mackenzie, Rt Hon Gregor	Wardell, Gareth (Gower)
McNamara, Kevin	Wareing, Robert
Madden, Max	Weetch, Ken
Marek, Dr John	White, James
Marshall, David (Shettleston)	Wigley, Dafydd
Martin, Michael	Williams, Rt Hon A.
Mason, Rt Hon Roy	Wilson, Gordon
Maxton, John	Winnick, David
Maynard, Miss Joan	Winterton, Mrs Ann
Meacher, Michael	Woodall, Alec
Meadowcroft, Michael	Young, David (Bolton SE)
Michie, William
Millan, Rt Hon Bruce	Tellers for the Noes:
Mitchell, Austin (G't Grimsby)	Mr. James Hamilton and
Morris, Rt Hon A. (W'shawe)	Mr. John McWilliam.

Question accordingly agreed to.

Bill read the Third time, and passed.