HC Deb 23 July 1985 vol 83 cc869-81 3.45 pm
The Secretary of State for Defence (Mr. Michael Heseltine)

With permission, Mr. Speaker, I should like to make a statement about the royal dockyards, at Devonport and Rosyth.

On 17 April I outlined a number of options for the future management of the dockyards which have an annual turnover of over £400 million. They ranged from a trading fund in the public sector to full privatisation.

I said at the time that the Government's preferred strategy was for a scheme of commercial management and I initiated a period of consultation with a view to a final decision before Parliament rose for the summer recess. I have now had the opportunity to consider the many representations submitted during the consultation period, including the timely reports of the Public Accounts Committee and the Select Committee on Defence.

There is almost unanimous agreement that a significant change is needed in the way that the dockyards are run. Indeed, the House will be aware that action has been called for in reports associated with the Mallabar committee in 1971, with Hughes in 1973, with Brightling in 1978 and with my hon. Friend the Member for Ashford (Mr. Speed) in 1980. Last year we had the PAC stating: We regard determined—and if need be radical—action as essential to resolve the fundamental issues still outstanding". But little has happened as a consequence of the reports, as there was no agreement on how to proceed.

The option of a trading fund would not, in the Government's view, go far enough in freeing management and work force from the restrictions and interference of Government. Full privatisation today, on the other hand, would leave the Government with insufficient influence over a major establishment in the defence field at a time of considerable transition.

Commercial management, on the other hand, has the advantage of freeing the local management from the more restrictive public sector constraints and of enabling the private sector to seek to expand the opportunities in the areas concerned, while retaining a significant degree of accountability to the Royal Navy and particularly of securing a climate of maximum competition.

The option of commercal management remains therefore the Government's preferred solution and we intend to proceed along these lines. I should tell the House that I am much influenced by the fact that this is also the preferred solution of the Navy itself.

The Government are convinced that the right way ahead is to retain ownership of the fixed assets and to bring in commercial management to run them. I therefore intend to seek competitive tenders from competent British companies to manage the dockyards. These tenders, which would be for a period of some years, would be evaluated for their management and pricing proposals and would be expected to contain a strong incentive element. I am encouraged by the number of companies that have shown interest in these proposals, including those of the stature of Babcocks, Balfour Beatty, Costain, Plessey, STC, Trafalgar House, the Weir Group and other major industrial concerns acting either alone or in consortia.

I hope to introduce the necessary legislation as early as possible, with the intention of introducing commercial management no later than 1 April 1987.

Regardless of the longer-term management structure for the dockyards, there must be improvements in efficiency in the dockyards now. These will involve reductions in jobs. We believe that the majority of these will be achieved by means of natural wastage and voluntary redundancy. Compulsory redundancies will be kept to the minimum possible.

I should tell the House that my hon. Friend the Parliamentary Under-Secretary of State for Defence Procurement has informed my hon. Friend the Member for Gosport (Mr. Viggers) that we are making available to the trade unions today a consultative document proposing how best we might improve efficiency in the Marine Services organisation.

In view of the extra work associated with the Trident programme, the problems at Rosyth will be relatively small and shortlived. But there will be a special problem at Devonport. We have already embarked upon a programme to help. We have set up a Devonport development unit which will be the focal point for the activity necessary to generate new jobs, and I have announced our immediate intention to make available for development two small but significant areas of land in prime positions in the city. My Department is examining its expenditure profile with a view to identifying any opportunities for expanding local commercial activity. We are looking urgently at the potential of the historic and attractive site at Royal William yard for development and the creation of employment. It should be possible also to identify other opportunities for expansion.

Each dockyard will have a core programme of essential work as the basis for its long-term future. Commercial management will ensure that that work is carried out in as cost effective a way as possible and that, through greater efficiency, the dockyards are in a position to win orders in a wider market than at present and expand their activities.

Mr. Denzil Davies (Llanelli)

The right hon. Gentleman's statement is at least predictable, because, for the second time in a few weeks, he has demonstrated his total contempt for a unanimous report of a Select Committee, which found that there was no evidence for the proposals that he and his Department have put forward. Even worse, the slipshod, cavalier, irresponsible and "inept"—as the Select Committee said—way in which the right hon. Gentleman has treated the royal dockyards has been deeply insulting to those in the Royal Navy who are so dependent upon the expertise of the yards and to the thousands who work in Devonport and Rosyth, who have served the Navy and this country with such dedication and skill over many years, many of whom will apparently join the dole queues in Devonport and Rosyth.

Is the Secretary of State aware that, despite his statements about the Navy — he has produced no evidence to show that the Navy prefers this solution—almost no person in the Royal Navy, the dockyards or the Civil Service would agree, if he were honest, with the right hon. Gentleman's plans? Indeed, the only enthusiasts left are the right hon. Gentleman and Mr. Peter Levene, whose slipshop and shoddy report, produced earlier this year, would not have obtained a D-grade at O-level.

Did not the right hon. Gentleman mislead the House on 17 April when he said: The proposal is based upon American experience."—[Official Report, 17 April 1985; Vol. 77, c. 263.] As was known then, and as the Select Committee has shown, the naval dockyards in the United States are operative in the public sector through a trading fund. If the right hon. Gentleman did not know that, a telephone call or perhaps a quick VC10 flight to his friend Caspar Weinberger would have told him of the realities. Is it not the case that the figures that the right hon. Gentleman's Department cobbled together for the Select Committee and the Public Accounts Committee bear as much relation to realism as the figures contained in a balance sheet of Johnson Matthey Bankers? Is it not a fact that the managerial, accounting and commercial problems in the dockyards—we accept that there are problems—could all have been solved within the public sector without going down this ridiculous road, which will make matters much worse?

The Secretary of State should have had the courage and the grace to accept that he has made a mess of these proposals. He should have accepted that nothing can be done to revive them, taken them away and brought back proposals to make the development and operation of the dockyards better, and not worse, as these proposals will do.

Mr. Heseltine

Of course, I have to reject all the right hon. Gentleman's assertions. This matter has been under active political review by various Governments for a long time. There is now almost universal agreement, first, that the way in which we are managing and accounting for public money on a large scale is wholly unacceptable and, secondly, that there is a need for action. The Government are facing up to the logic of that imperative and taking the decisions that are necessary.

The House may wish to judge the effectiveness of the right hon. Gentleman's response. He talks about the dole queues in Rosyth, but the Labour party is committed to abandoning Trident, on which employment in that area depends. When he has the effrontery to talk about the honesty of those who advised me, as if the Admiralty Board was acting in any interests except those of the Royal Navy, he shows the complete contempt that the Labour prty has for the Armed Services.

The Labour party had every chance to grip the matter when it was in power, but it examined the position and made no decisions. In 1978, having looked at the option of a trading fund, the Labour Government announced that there would be no decision to make progress. Once again the Labour party ran away. It is now desperately trying to oppose what we are doing, although it had no proposals and no integrity to deal with issues of public administration.

Sir Antony Buck (Colchester, North)

Is my right hon. Friend aware that his announcement will be greeted with satisfaction by many of those both serving in, and with recent experience at the head of, the Royal Navy? Will he assure the House that at the end of the day sufficient refit capability will remain for our 17 hunter-killer nuclear submarines and our new Trident submarines when, in due course, they need to be refurbished?

Mr. Heseltine

I am most grateful to my hon. and learned Friend, who takes a wholly constructive view of these matters, and I can give him the assurance that he requires. However, I must say that I am equally concerned that that capability should exist, whether in the various areas surrounding Rosyth and Devonport, or in other areas that have levels of unemployment that are as high, if not higher. Delegations from such areas continually come to my office asking us to put more refit work into the less privileged parts of the north of England and Scotland.

Mr. Robert Sheldon (Ashton-under-Lyne)

Will the Secretary of State acknowledge that the Public Accounts Committee commented on the savings as a percentage of annual operating costs, which may be as little as 1 per cent. within the margin of error? What does he estimate the net savings as a percentage of annual operating costs to be?

Mr. Heseltine

The right hon. Gentleman, who has a great responsibility to account to the House for these matters, will know the difficulties of trying to be wholly accurate in predicting large sums and the changes therein, especially against the background of having to negotiate both with the unions about enhanced efficiency, and with contractors, who will seek to drive the deal that most suits their natural interests. We must be sure, therefore, that we do not put on the table a range of figures that we believe to be possible but which those with whom we must negotiate will see as an opportunity to drive an even harder bargain.

The initial figures that we had in mind, which were based on a 20 per cent. efficiency gain, suggested savings of about £12 million a year rising to £18 million after 10 years. That was about 3 per cent. rising to 4.5 per cent. of turnover of £400 million. In our view that is the worst case, and there are much more optimistic scenarios. A later assessment based on the likelihood of greater efficiency gains showed gains of about £24 million to £26 million a year, rising to about £29 million or £33 million, which is 6 to 7.5 per cent. of turnover.

Miss Janet Fookes (Plymouth, Drake)

Does my right hon. Friend understand that many of my constituents will find his decision perverse in the extreme since it flies in the face of all the advice offered to him by two Select Committees and many other organisations in Plymouth, including the report of the accountants Peat Marwick Mitchell? Does he also understand that many of the misgivings arise from the fact that there is likely to be a change in leadership at regular intervals if he follows the original plan in the consultative document? What does he mean by "some years", which is an enigmatic phrase, yet a key one?

Mr. Heseltine

I am most grateful to my hon. Friend for taking a real interest in the proposals that we have in mind. I am anxious to keep closely in touch with local feelings. The House will understand that there is a legitimate difference between the essentially local interests of those who represent Devonport, who must be interested in securing the largest possible cash flow into that economy, and the interests of those who have to administer the national purse, which in this context is the defence budget. I have to be sure that the country's interests are regarded by obtaining competitive prices and ensuring that I obtain value far: money for the defence budget.

My hon. Friend's remark about the perversity of the decision in the light of the evidence has to be tempered by the fact that I have received a range of views from those who think that there is considerable benefit from commercial management. These views are expressed by companies that are prepared to become involved in the negotiating process to secure that management. They argue in favour of the proposals. I have to consider the views of the Admiralty Board, which believes that these are the best proposals for the Navy which, after all, is the customer.

I assure my hon. Friend that I understand the concerns that are being expressed locally. I hope that the work that we are doing in the Ministry to try to help further job creation in the area will be seen as our determination to look after that interest. I have also to consider wider defence interests, and I believe that they will be best served by the way in which the Government will decide the matter.

Dr. David Owen (Plymouth, Devonport)

Surely the Secretary of State will accept that the devastating criticism of the Public Accounts Committee has nothing to do with local interests and that no member serving on that Committee had any local interest. The contemptuous brushing aside of the Committee's recommendations and criticisms, and those of the Select Committee on Defence, makes most people believe that the consultative process has been the sham that many predicted at the start. Will the right hon. Gentleman make clear what he means by I hope to introduce the necessary legislation". Will the legislation be introduced in the next Session? If not, will the Government be able to meet 1 April 1987?

Mr. Heseltine

The right hon. Gentleman has not been out of Government for so long as to have forgotten that conventions are observed by Ministers when announcing future programmes. It would not be right for me to announce the contents of the Queen's Speech. It is our intention to proceed as fast as we can but in a manner that is compatible with achieving the introduction date that I have mentioned.

I cannot accept the right hon. Gentleman's contention that the consultative process has been a sham. The issue has been under consideration for nearly 15 years and little new argumentation has emerged during the period in which the issue has been at the forefront of public concern. Until now, Governments have failed to take decisions, and I must take into account the words used by the PAC, that there is a need for "radical" and urgent action. We intend to take that action and we are not prepared to run away from the issue, which the Labour Government, of which the right hon. Gentleman was a member, did consistently.

Mr. Robin Maxwell-Hyslop (Tiverton)

Will my right hon. Friend make it clear to the House that, in any redundancy there may be in Devonport, the employment of those who have served there over many years will take priority over those who have been moved there from Chatham to try to reduce the Government's embarrassment when Chatham was closed? No such transfers must be allowed to take precedence over the claims of those who have put a lifetime of work into Devonport.

Mr. Heseltine

My hon. Friend has raised an important issue and I shall give it my personal and urgent consideration. I hope that the rundown in jobs that will be necessary to attract the increased efficiency that we want will be secured, to the greatest extent possible, by voluntary redundancy and natural wastage.

Mr. A. E. P. Duffy (Sheffield, Attercliffe)

The Secretary of State claims widespread support for the significant change that is proposed. Is he aware that the relevant trade unions are on record as saying that they are not opposed to change provided that it takes place in the proper consultative atmosphere? He has said also that the problems of Rosyth would be small and shortlived. Is he not minimising, and therefore jeopardising, the maintenance programme of the ballistic nuclear force? Is he sure that his proposals will not impair the Navy's flexibility to cope with emergency work, which was so admirably demonstrated at the time of the Falklands crisis?

Mr. Heseltine

The hon. Gentleman is familiar with these issues and they were considered carefully by the Admiralty board before it made its recommendations to me. The board judged that in all the circumstances the relevant factors had been taken into consideration and that it could still advise me to proceed in the way that I did.

The hon. Gentleman has asked me about the attitude of the unions that are concerned. Whenever change is proposed that involves a transfer from the public sector to the private sector, the unions are opposed to it. There is nothing new in that, for that is the essence of their political faith. I respect their entitlement to have those views. However, if I have the feeling that such views are expressed for doctrinal reasons as against practical reasons, I am entitled to take that into account. Whenever the Government privatise something, the unions forecast doom and gloom, and every time they are proved wrong.

Mr. Peter Viggers (Gosport)

Does my right hon. Friend agree that the superb contribution made by the naval yards at the time of the Falklands war demonstrates the performance of which are capable? Does that not contrast sharply with the poor level of efficiency and serious level of absenteeism at the Rosyth and Devonport yards. Does he accept that it should be possible for the naval yards to benefit from privatisation in much the same way as other industries have? Surely management, workers and customers should benefit alike?

Mr. Heseltine

I am grateful to my hon. Friend for his remarks. I have written today to all the dockyards' employees urging them to recognise the constructive opportunities that are now on offer. After the warship building yards were nationalised there were no new sales of frigates. Before nationalisation we had an export market in frigates. Private warship builders in Germany have been selling frigates consistently and we have been failing to do so. Obsessive slavery to the concept of public ownership is positively inimical to the interests of the workers concerned.

Mr. Gordon Brown (Dunfermline, East)

Will the Secretary of State for Defence, who today sounds more like the Secretary of State for defence of the private sector, explain his enthusiasm for these high-cost and high-risk proposals, which have been rejected by every committee that has considered them since the second world war, and which subordinate the interests of national security to those of commercial gain? Will he tell us how many loyal civil servants, recently and rightly praised by Sir Henry Leach, Admiral of the Fleet now retired, for their professional alacrity, will be summarily dismissed if these unpatriotic proposals go ahead?

Mr. Heseltine

The hon. Gentleman is fully aware that the private sector responded just as magnificently as the public sector when we had to face the Falklands crisis. As I said to the right hon. Member for Llanelli (Mr. Davies), it is nothing short of scandalous to believe that the Admiralty Board would put the interests of private contractors above Britain's defence interests.

Mr. Barry Henderson (Fife, North-East)

What proportion of the work force at Rosyth depends on the maintenance of the submarine independent nuclear deterrent, which the Labour party will abolish? What reduction is anticipated in the work force after these measures become effective and how will it compare with the 1979 measures? Finally, what is the length of contract that is envisaged under these proposals?

Mr. Heseltine

I am sure that my hon. Friend will appreciate that the work involved in arriving at the agreed detail of the contract is extremely lengthy and complex. We must now make progress on that and we shall keep the House fully in touch. The detailed examination of any legislation that is introduced will enable the House to be kept informed.

I understand that about 40 per cent. of the Rosyth work force is employed on the nuclear deterrent. We have announced recently large extensions in the amount of work that is to be concentrated at Rosyth in connection with the Trident programme. The potential job losses at Rosyth and Devonport, which come from the management measures to which I have referred, are those that I produced to the House in April when discussing dockyard reorganisation. On that occasion, I spoke of about 2,000 job losses in the 13,000 work force at Devonport and about 400 job losses among the 6,300 who comprise the Rosyth work force.

Mr. Nicholas Brown (Newcastle upon Tyne, East)

Is the Secretary of State seriously inviting privatised warship yards such as, potentially, Swan Hunter to tender for work that is now carried out solely at the naval dockyards?

Mr. Heseltine

I think it right and in the best interests of the country for there to be a competitive environment in which companies such as Swan Hunter have the opportunity to tender for the maintenance and repair work of the Royal Navy. Undoubtedly they would be interested in such work. I have seen experiments conducted in respect of frigates and submarines recently and contractors outside the Devonport and Rosyth dockyards are carrying out the work. A competitive environment must be in the interests of workers in different parts of the country and it is certainly in the interests of the defence budget.

Mr. Robert Hicks (Cornwall, South-East)

Is it not a fact that the agency management concept is speculative and non-proven, in that nowhere in the world is there a comparable model on the scale envisaged? In view of the lack of substantive evidence since the publication of the consultative document, does my right hon. Friend think that is the way to treat the defence and security of this country?

Mr. Heseltine

I realise that my hon. Friend must press me in the interests of his constituents——

Dr. Owen

That is a shameful reply.

Mr. Heseltine

My hon. Friend will discover whether it is a shameful reply. I am going to answer his question carefully. I have talked to him about these matters and I do not seek to make party capital out of them, unlike the right hon. Member for Plymouth, Devonport (Dr. Owen). If the right hon. Member for Devonport cared about his constituency he would have taken steps to ensure that there were efficiency gains when he had the power to do something about it, as opposed to supporting a Government who ran away from every major issue that confronted them in the management of the dockyards. It is a classic example of the right hon. Member. He wants it both ways on every conceivable occasion as long as he is not asked to make any real decisions about any thing.

Mr. Dennis Skinner (Bolsover)

Hear, hear.

Mr. Heseltine

At least the hon. Member ought to agree with me about that.

Mr. Skinner

Yes, get stuck into him.

Mr. Heseltine

This must be the most unholy alliance this Parliament has ever seen. If I could come back to my hon. Friend—[Interruption.]

Mr. Speaker

Order. We must hear the answer to the hon. Member for Cornwall, South-East (Mr. Hicks).

Mr. Heseltine

I am glad to see that the right hon. Member has run out of arguments. My hon. Friend the Member for Cornwall, South-East (Mr. Hicks) says that there is no precedent for this anywhere in the world. It is true that there is no example known to me where a dockyard is managed by commercial contract, but the precedents I have looked at are defence establishments in the United States, which have more people employed, are in the defence industries and which operate a commercial management arrangement. If, for example, General Dynamics can manage production employing 16,000 people on the F-16, there is no issue of principle in saying that one cannot manage a dockyard on the same lines.

Mr. Tam Dalyell (Linlithgow)

Representing, as I do, some of those who work at Rosyth, may we return to the question that the Secretary of State's hon. Friend the Member for Plymouth, Drake (Miss Fookes) very properly put on behalf of her constituents? What exactly is meant by the sentence: These tenders, which would be for a period of some years"? Perhaps I could explain the problem. In the west Lothian area we have the problem of Plessey, one of the firms that the Secretary of State mentioned. In complicated circumstances, with which I will not bore the House withdrew. How are we to know that on the banks of the Forth the same thing will not happen again?

Mr. Heseltine

Because we would not be prepared to enter into contracts with anything other than extremely substantial companies, and there would be contractual liabilities and commitments to ensure that such a situation did not develop. My hon. Friend was quite right to ask her question and I should like to take the opportunity now to answer it. We have yet to finalise the precise date of the contract and, in a sense, it must be influenced by the nature of the element of competitive pricing within the first contract we draw. We have certainly talked in terms of five years minimum, and there was a suggestion that we should go for longer periods. I expect to keep the House informed on this matter as the discussions proceed. It must be in our interests not only to get a competitive environment, but to get a degree of stability into the areas concerned.

Several Hon. Members


Mr. Speaker

Order. I will endeavour to call hon. Members who have been standing if they have a constituency interest or a direct interest through the Select Committees. Could I ask for brief questions, please?

Mr. Michael Marshall (Arundel)

As a member of the Select Committee I was one of those who listed some anxieties and questions to my right hon. Friend in our report. Will he say that he still hopes to address his mind to those questions? On the specific point about the period for commercial management, will he accept that the vast majority of industry—that known to me at any rate—is concerned that five years is far too short? It is not sufficient time on which to obtain a return on that sort of investment and could lead to major problems about work in progress and transition if another company is licensed to carry on. Does he accept this is a serious point and that a longer period appears to be vital?

Mr. Heseltine

My hon. Friend is quite right. Those points have been put to us by industry, but one would expect industry to look to the longest possible period before it has to face the competitive challenge of an alternative contractor. A balance must be struck, but I am not unsympathetic to a longer period, provided the competitive disciplines and the costing arrangements are sufficiently sharp to meet the national interest. I will bear that in mind. Of course, the Government will be responding to the Select Committee on Defence and to the Public Accounts Committee in the proper way.

Mr. Michael Foot (Blaenau, Gwent)

The right hon. Gentleman sneers and jeers in his usual offensive fashion against any of those who were members of previous Governments. Will he not take into account that it was the provision for the royal dockyards and for their maintenance as such which enabled them to perform great achievements during the Falklands war and thereby to contribute to the safety of the nation? That has been one's experience of the royal dockyards in every crisis the nation has had to face. What right has he as a twopenny-ha'penny cheapjack to come along and say, "We will hand them over to commercial interests"? Will he not listen to the people who know something about it? When is he going to face the people in Devonport dockyards and hear what they have to say?

Mr. Heseltine

I give the right hon. Gentleman the unqualified assurance that I will listen to people who know something about it, but this nation made quite clear what it thought about his ability to know something about it.

Hon. Members


Mr. Speaker

Order. Let us keep the temperature down.

Mr. Peter Griffiths (Portsmouth, North)

Will my right hon. Friend agree——

Mr. Skinner

The Secretary of State is only a privatised soldier: he bought himself out.

Mr. Speaker

Order. Mr. Griffiths.

Mr. Griffiths

Does my right hon. Friend agree that his statement today will provide a sense of purpose and direction which has been lacking in the royal naval dockyards for many years? The statement will therefore be widely welcomed. In his comments about the opportunities available for contracts outside the naval dockyards, will he say whether this includes fleet maintenance bases such as Portsmouth?

Mr. Heseltine

The statement I made today covers the two specific dockyards. The maritime services consultation document which I also announced will extend across the country at large, outside the dockyards as well as within them. I have no doubt that there will be examples relevant to Portsmouth, but I will confirm that to my hon. Friend. I appreciate the thought behind his question, because within the dockyards there is great anxiety about being faced with change. But there is a great willingness to recognise that change is necessary, and a great sense of dedication and frustration, which can be put to great opportunity for the benefit of the local economies.

Mr. Andrew Faulds (Warley, East)

The right hon. Gentleman will, in due course, get his own come-uppance, however insulting he may be to former Ministers. But, to my question, Mr. Speaker. To safeguard the public interest, will it be made a requirement that all of the tenderers for management of the docks shall make no contribution hereafter to Tory party funds?

Mr. Heseltine

I am sure that the hon. Member for Warley, East (Mr. Faulds) means that as seriously as a suggestion that any trade unions involved in the dockyards should make no contribution to Labour party funds.

Viscount Cranborne (Dorset, South)

Will my right hon. Friend confirm that he has no similar plans for the dockyard at Portland in my constituency, and that the jobs at Portland will be preserved against the drafting-in of long-service people from Tiverton and Rosyth?

Mr. Heseltine

I cannot refuse to give my hon. Friend an encouraging answer in the light of the reply I gave to my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop). I will have to look at these matters, but I can give him an unqualified assurance in the terms of the question he asked that I have no plans before me at present to deal with the installation in his constituency.

Mr. James Wallace (Orkney and Shetland)

The Secretary of State will be well aware that the Select Committee took the view that the Government should not adopt the option of commercial management unless they could demonstrate that the advantages of a trading fund, subject to modification, were outweighed by commercial management. Despite that, the option of the trading fund was dismissed in one simple sentence, to the effect that it did not go far enough in freeing management from restrictions and interference by the Government.

What evidence has the Secretary of State for that, apart from blind dogma? What are these interferences and restrictions, no doubt within his own Department, which he is incapable of resolving?

Mr. Heseltine

I think that the hon. Gentleman will know that the option of a trading fund has been looked at time and time again. It has been looked at by this Government and by the previous Government. The previous Government decided not to proceed with the trading fund, and they published their decision in 1978.

One of the reasons why it is so difficult to see the commercial opportunity within a trading fund is simply that the restrictions of the public sector in terms of union negotiations, pay claims and gradings in various areas impose a constraint on management from which it is very difficult to break. If we are looking for the opportunity for the real development of a facility such as the dockyards, we are far better to have local autonomy, local decision-taking, local management and local unions seeking out the markets that suit them, without the need constantly to refer these matters to central Government.

Mr. Bill Walker (Tayside, North)

My right hon. Friend will be aware that there is a royal naval workshop in my constituency. He will also be aware that a number of royal naval officers who serve on Her Majesty's submarines also live in my constituency and, down the years, they have complained about the management at Rosyth and the long time that it has taken to get their submarines made fit for sea again. They will welcome the changes in the improvement of management and, further, they will also welcome the assurances that we have given on the Trident programme, which guarantees their jobs.

Mr. Heseltine

I think that my hon. Friend will be proved to be far more wise in these matters than many Opposition Members who have spoken. Those who have the ultimate responsibility for the management of the Fleet are in favour of these proposals. As Secretary of State for Defence, responsible for the defence budget, I believe that they are in the best interests of the public.

Mr. Anthony Steen (South Hams)

Since I have a large number of constituents who work in one of these dockyards — the Secretary of State will know this, because he used to represent part of my constituency—will he comment on the numbers of people working in the dockyard who will be made compulsorily redundant? He skated over that somewhat, and I think that he should say how many redundancies he envisages in the next few years.

Will my right hon. Friend also say a little more about the job creation proposals? He mentioned Plymouth, but one of the real problems arises outside Plymouth, especially in Ivybridge where many people live who work in the dockyard. They need new jobs there, and there is a lot of land in Ivybridge which could be used by starter firms and starter businesses to create new jobs. Will he say a little more about that?

Mr. Heseltine

My hon. Friend asked me two important questions. The first is about the number of compulsory redundancies. It is my hope that we shall use every endeavour, to secure this purpose, to ensure that the job losses can be achieved by way of natural wastage and voluntary retirement—[HON. MEMBERS: "How many?"] That will be the momentum that the Department now pursues. We cannot know how many people will accept voluntary retirement. In those circumstances we cannot quantify how many inevitably will be made compulsorily redundant. But all our endeavours will be directed to trying to minimise compulsory redundancy.

My hon. Friend then asked where any help that we can give will be located. That will he a matter for my hon. Friend the Parliamentary Under-Secretary of State for Defence Procurement, who is personally chairing the Devonport development unit. It is not of concern to us specifically if sites are within the city boundary or outside it so long as there are work opportunities in the area. My hon. Friend the Parliamentary Under-Secretary will have heard the question, and I have no doubt that he will bear it very much in mind.

Mr. Skinner

Will the Secretary of State assure the House that, in view of the unreliability of private money, as evidenced recently by a number of events, he will make sure that certain companies are not given licences to operate in the royal dockyards when they get the opportunity? Will the right hon. Gentleman assure the House, for instance, that Gomba UK, run by Abdul Shamji, will not be given the opportunity to get its dirty fingers down there, as it did when it managed to find itself in an enterprise zone at Strood, near Rochester, a few months before anyone else seemed to know about the existence of the zone? That kind of preferential treatment is to be abhorred by everyone. When, into the bargain they do not pay back the money, what guarantee can the Secretary of State give that none of those people, of whom there are now an increasing r umber, will be able to move down there, make a killing, and leave the taxpayer to pick up the bill?

Mr. Heseltine

The hon. Gentleman knows that we shall take all proper care to ensure that those who get contracts for this vital part of the defence establishment are of impeccable standards.

Mr. John Browne (Winchester)

Does my right hon. Friend accept that if we are even to maintain let alone increase real levels of spending on defence, the Government will come under increasing pressure to show value for money in their spending? Does he also accept that this privatisation of the dockyards is not only a bold but an imaginative step long overdue, which is part of the drive to ensure that there is value for money in defence spending and which will be welcomed widely throughout the Royal Navy, especially at senior levels, and also in the country at large?

Mr. Heseltine

I am sure that my hon. Friend is right. All the precedents are on his side. Every time that this Government have taken a bold and courageous step to transfer public assets to the private sector, it has been widely welcomed by the customers and by those working for the companies concerned.

Mr. Denzil Davies

Will the Secretary of State now answer the question that he has not yet answered? How many jobs will be lost as a result of this operation, especially at Devonport? Will he also say how much money can be put into the development unit to try to find other jobs?

Will the right hon. Gentleman also answer the question that the hon. Member for Plymouth, Drake (Miss Fookes) asked? Why is he taking a perverse decision? He said that there had been argument over the past 15 years. Yes, but he is the only person who has not been involved in the argument. He has not put forward any arguments. Indeed, the Select Committee refused to accept what the Ministry of Defence said. By all means let the right hon. Gentleman take decisions. All that we ask is that he takes decisions on a rational basis instead of taking them in the dark and purely on the basis of ideology. The Opposition have always argued that changes are necessary, but all informed opinion believes that the changes can be carried out in the public sector.

There is one saving grace, however. By the time that the right hon. Gentleman has put through all these different legislative operations, he will not be Secretary of State, and the Labour party will ensure that the dockyards are taken back into public ownership.

Mr. Heseltine

If all these changes could be put through within the public sector, why did the Labour Government announce in 1978 that they had no intention of proceeding with a trading fund and give no alternative way forward? What conceivable explanation is there? There is only one explanation. It is that they could not carry their own people, including the unions, with them towards the enhanced efficiency that we are determined to achieve.

I wish that the right hon. Gentleman had listened to what I have said several times. I have already given the figures. He knows full well that in Devonport there are at present some 13,000 people employed and that the potential job losses involved in the management improvements are of the order of 2,000. At Rosyth, it is 6,300, with job losses of the order of 400. I gave those figures in April and I gave them again earlier this afternoon.