Royal Electrical and Mechanical Engineers (Newark) (Hansard, 4 April 1985)

§ Mr. Richard Alexander (Newark)

On 25 June last year I was advised by Lord Trefgarne in a letter that it was proposed to close Newark's static workshops of the royal Electricial and Mechanical Engineers with a loss of 193 posts in Newark. This is part of a much larger review and my comments relate to the Newark closure only.

I very much regret the way in which this has been done. Leaving aside for a moment the lack of consultation with those most intimately involved — the men and women who work there — I find it astonishing that proposals of this nature and magnitude were taken without any statement or debate on the Floor of the House. Until this moment, I have been unable to make any meaningful representations to a Minister in this Chamber. I was able to make a protest to my right hon. Friend the Leader of the House when requesting a debate on this subject during Business Questions.

My astonishment and regret have been shared by the workers at the workshops who find it incredible that their Member of Parliament could not raise a matter of such fundamental importance — namely, a decision by a Government Department to close their workshop — unless he was fortunate in the ballot for an Adjournment debate, which I have been. Such a debate has been refused many times before today.

This regret has been compounded by the tactics of my political opponents in my constituency who have milked the matter for all it is worth. The Labour party on the Newark district council proposed a motion of no confidence in me because I had not been able to raise the matter here. I received an unpleasant letter from the district secretary of the Amalgamated Union of Engineering Workers who, after a meeting of his members, wrote: I was instructed to write a letter to yourself voicing their criticism and disgust at your total lack of practical help where it matters—in the Commons. That sort of offensive stuff and party political capital being made out of a difficult position may be par for the course for the individuals concerned, but it is unfair that I should have been put in the position where this is publicly stated.

Before the proposals were announced on 25 June, I understand that there had been no prior consultation with the work force. They had been given no opportunity to explain to those conducting the review the importance of their work, the skills they exercise and the hardship that the closure would bring to them and their families. Yet the REME workshops are the fourth largest employer of labour in the town of Newark.

Newark's unemployment is high — at the last count 14.7 per cent. in the Newark travel-to-work area. Of that, 16.8 per cent. is male unemployment. Therefore, the 1355 proposal, if implemented, will be disastrous for those involved. There was clearly no thought of the effect on the unemployment situation when the proposals were formulated, and I regret that very much. The decision was an enormous shock to all concerned. The proposal is that the work force can get work at the Old Dalby workshops, which are in a different county and easily an hour's drive away, each way, when the weather and the road conditions are good. That is not practical for most people, and in bad weather it will mean three hours added to a person's working day. It will prohibit most women with families from even contemplating the move.

The people involved are not clerks or semi-skilled manual workers; the work done is the repair of Clansman radios. The workshop has been certified to the same standards as are applied to civilian contractors who manufacture or repair equipment for the services. I understand that it is the only unit in the country to be so certified.

The work force must be specially trained, and the training takes up to four years. Emergencies often occur. The vastly increased travel to work requirement would mean that it would not be possible for those travelling those distances to carry out emergency work or to do short notice priority work. The local technical college is geared to meet this specialist training requirement. That would be lost if the proposals were put into practice.

Nor would it be wise to have all this work done at one location and at one workshop. If there were a fire or other disaster at the Old Dalby works, no other place would have the expertise and equipment to do the necessary emergency work. In any event, why should the work be transferred from an area of high unemployment such as Newark to a prosperous area such as Old Dalby in Leicestershire?

If there had to be rationalisation, it would have been more equitable to bring the work to an area of high unemployment rather than to take it away. It has all been so unfair. Newark may have a high unemployment rate, but it can offer excellent transport access, which Old Dalby cannot. We are in a prime communications position, virtually on the A1 and on the east coast main rail line. REME makes sense at Newark. It does not make sense to move it away.

We shall be told that money will be saved. In relation to some of the other closures, that may be the case, but I have seen no figures to show that closing Newark will save money. There are 193 people involved and redundancy and unemployment benefit will follow if the closure takes place. Even if some jobs are taken up at Old Dalby, there will be relocation costs.

If there will be savings—I dispute that there will be—we should be told precisely what they are and how they are made up before the decision to close is implemented. At present, we do not have that information.

I submit that there are no proper grounds on which the proposal should be implemented. From the point of view of the skills that will be lost if No. 33 central workshop closes and of ease of communications, and from the taxpayers' point of view and, not least, from that of the many loyal workers there, these workshops should not be closed. It will be a crying shame if they are, and I urge the Minister not to allow it to happen.

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

I congratulate my hon. Friend the Member for Newark (Mr. Alexander) on securing this Adjournment debate. I am grateful to him for providing me with this opportunity to explain—more fully perhaps than in earlier answers given in the House —the reasons that have led us to reduce the Army's overall static workshop capacity and, thus, to the closure of No. 33 central workshop at Newark.

Before dealing with the specific issues raised by my hon. Friend, I want the House to be clear about three points of principle which underlie our decision, announced last December, to proceed with the measures that we proposed in June 1984. The first and paramount point of principle is that we have a duty to the taxpayer to see that defence funds are spent only on essential defence needs and are spent in the most cost-effective manner. The review of the REME static workshops in 1982 showed that, overall, we had substantially more capacity than our operational needs could really justify—nearly 20 per cent. more at that time. Recognising that some reduction was thus inevitable, we allowed some slimming of the work force through not replacing many of those who left it in the normal course of events. But this is not an economic answer in the long term, because it merely converts the over-capacity problem into one of under-utilised capital assets.

Plainly, retaining excess capacity is not efficient; but nor is it efficient to retain under-utilised facilites, since that just pushes up the overhead costs of the operation. We really have to reduce overheads, and this means concentrating our programmed base repair activities into fewer, better designed, and better located workshops.

The Army, and the other services too, for that matter, should not be retaining in-house workshop capacity to do work that can be done quite satisfactorily, and less expensively, by industry or the motor trade—provided this involves no operational penalty. We have looked closely at the scope we have for putting out to contract repair work on — for the most part — what we call "commercial equivalent" equipments. Since these tend to be equipments such as Landrovers or hydraulic vehicle jacks, which are more readily replaced off the shelf, it is less vital that they are repaired by the Army. By having these repairs or overhauls performed under competitive contract, we can save money where the private sector is able to give a more cost-effective service because it can spread its overheads across both its military and its commerical work load.

Having started the study of the REME static workshop organisation in 1981, we found it necessary to recast its terms of reference in early 1982, following the report of the Public Accounts Committee "Repair of B Vehicle Assemblies". This widened the scope of the review quite substantially; moreover, the review team's main report was in turn followed by subsidiary studies dealing with separate functional and geographical problems, with the result that the full report was not considered by the Army Board until June 1983.

The submission to Ministers in July 1983 proposed reductions at a number of base and command workshops and the closure of No. 33 central workshop at Newark and No. 38 central workshop at Chilwell. It also envisaged doubling the amount of base repair work put out to 1357 contract. The combined effect of these measures would eliminate the 20 per cent. over-capacity in static workshops, redress the imbalance of trades and skills between workshops and allow significant savings in manpower, capital expenditure and running costs.

Ministers asked for further research to validate the proposed enhancements at certain workshops and for examination in greater depth of the potential for increased repair by contract. The final proposals, summarised in the consultative memorandum referred to in my answer of 28 June 1984 to a question from my hon. Friend the Member for Dorset, South (Viscount Cranborne), involved the same closures, a raising of contract repair to 36 per cent. of the base repair load, and net manpower reductions of 504 posts on the 1 December 1984 strength figures and 1,071 posts on the 1 January 1983 strength figures.

The benefits that we expected from restructuring the static workshops along these lines were not only a tauter and more cost-effective organisation, but one that would still be able to fulfil its operational tasks quickly and competently and residual workshops that would be well sited to perform their respective roles in both the United Kingdom and in Germany. The proposals assumed less backloading of armoured vehicles from BAOR for repair in the United Kingdom, but a compensating increase in the number of B vehicle assemblies to be backloaded for this purpose, since this was more economical and less operationally undesirable.

The Ministry of Defence recognised the far-reaching nature of these proposals, and especially the consequence for a large number of its employees. It therefore made every effort to ensure that ample time was afforded for consultation with the work force and its trade union representatives. Indeed, the initial period for such consultation was twice extended at the trade unions' request. Furthermore, various delegations and representations were received by Ministers and their officials well after the 1 October conclusion of the formal consultation period, and delegations continue to be seen. My noble Friend the Under-Secretary of State for the Armed Forces visited Newark on 26 November 1984. The decision that we announced on 10 December was therefore taken after full consideration of all the points that had been made to us during the consultation phase.

Let me now turn to the specific points made by my hon. Friend and contained in the petition from Newark town council.

The consequences for Newark of the closure of 33 central workshop REME are fully appreciated by Ministers, not least because they have been underlined very clearly both in various written representations and by the delegation which accompanied my hon. Friend when he visited my noble Friend on 17 October 1984.

I can also assure the House that the economic implications of the rundown of the REME organisation as a whole have been considered most carefully, and that the decision arrived at provides the optimum solution for increasing the effectiveness of repair support for the Army within the resources available to us.

I am very conscious of the disappointment that will be felt by the people of Newark—not to mention the work force itself—as a result of the closure of 33 central workshop. The fact remains that the Army as a whole now 1358 finds itself with more base repair capacity than it can justifiably retain. Wherever the ensuing closures or reductions were effected, our employees and the local community would be certain to question it, and to remonstrate with us accordingly. But the Ministry of Defence, having identified excess capacity and the inefficiencies that that would produce, is bound to look for the most cost-effective way to put the problem right for the longer term, even if it involves unpalatable decisions. At least in this instance many of our people will, we hope, feel able to apply for jobs in 35 central workshop at Old Dalby—which I think must mean that this closure will prove to have much less of a profound effect than might otherwise have been the case.

A number of points relate to questions of cost. The costs estimate supplied with the consultative document that I mentioned earlier—an expanded version of which has been passed to the trade unions—has been queried by various parties. It has been observed that there is no figure for redundancy compensation in our estimates. Redundancy costs are excluded from all Government investment appraisals, in conformity with Treasury instructions.

Some doubt has also been expressed about the validity of estimates for the transfer of existing plant from Chilwell and Newark to other workshops. Our estimates were based on the best available information at the time they were made, bearing in mind that detailed on-site studies of, for instance, new workshop layout, were not possible before the conclusion of consultations. Moreover, I think there has been inadequate recognition of the fact that much existing plant is now nearing the end of its economic life. The costs of maintaining and repairing it in the future would mean that its transport to the appropriate new location would not really be a sound investment—and, of course, some new plant for the surviving locations has already been in the pipeline for a considerable time.

Another area questioned is our costing of future repair by contract. It should not be forgotten that REME has quite a lot of experience in this field already—contracting out repair work is not a novel practice. Our estimates for this have aimed to be conservative, since we clearly did not wish to be accused later of having viewed the problem through rose-tinted spectacles. However, we would expect that, as the level of repair work put to contract rises, so will the competition to tender. That in turn should lead to keener pricing. Additionally, firms undertaking this kind of work will see it as being more regular and more plentiful, and therefore deserving of their investment in improving their plant which, in due course, will help to reduce their overheads. It will remain our responsibility, naturally, to ensure that the quality of repair work produced under contract remains fully acceptable to the armed services.

I am sorry if this has been a disappointing reply for my hon. Friend. No one could have done more than he has for Newark's retention, and I am sorry to hear of some of the personal criticisms that he has suffered in this regard. They are wholly unfounded and unwarranted. But it would be wrong of me to suggest in any way that the decision will be changed. I hope that I have been able to explain to the House the reasons for our decision.