EXPENSES OF SECRETARY OF STATE

HC Deb 08 April 1986 vol 95 cc115-35

Mr. Denzil Davies

I beg to move amendment No. 11, in page 3, line 44 leave out 'or operation'.

Mr. Deputy Speaker

With this it will be convenient to take the following amendments: No. 12, in page 4, line 2 after 'dockyard', insert 'or the operation of any such company wholly owned and controlled by the Secretary of State'. Amendment (a) to amendment No. 12, in line 2, leave out 'and controlled'.

Mr. Davies

The object of the amendment is to make clear, which the Bill does not, the expenses incurred in the formation and operation of any company—the crucial word is "operation".

As the Bill is drafted, the Secretary of State could come to the House and assort money for the operation of any company to run the dockyards. In other words, if A and P Appledore International could not do so, under clause 3 the Secretary of State could get money from taxpayers to do so. That might or might not be a good thing, but I do not believe that it was intended. It would have extraordinary effects. The Under-Secretary of State said that that was not intended, and we have tabled the amendments to put the Government's intention in words.

I see from the Government amendment to our amendment No. 12 that there is not the word "resist". At last the Under-Secretary of State and the Minister have got their way, and have been allowed to accept one of our amendments. The Minister shakes his head, and perhaps that remark was premature, but I think that on this occasion we can claim a small victory.

Mr. Lee

As the right hon. Member for Llanelli (Mr. Davies) said, clause 3(a), among other things, allows my right hon. Friend the Secretary of State to pay out of money voted by Parliament expenses incurred in operating any company formed by my right hon. Friend at either of the dockyards. When that was raised in Committee, I said that that provision in clause 3(a) would allow my right hon. Friend to incur expenses in the event of his operating the dockyards as a Government-owned public limited company.

The right hon. Gentleman said that the clause does not refer specifically to a Government-owned plc. He is quite right; it does not. But if one looks at the rest of the subsection it is, I believe, clear enough what is intended. The clause refers to expenses of my right hon. Friend incurred in connection with the operation of any company formed with a view to the provision of dockyard services at a designated dockyard. What expenses would my right hon. Friend incur, if the company were not being operated by a Government-owned plc?

I accept, however, that amendments on the lines of those suggested by the right hon. Gentleman would make explicit what I believe is already implicit. Therefore, I would not wish to oppose the right hon. Gentleman's amendment to remove the words "or operation" in page 3, line 44. So it is victory. Obviously, however, as the right hon. Gentleman's further amendment implies, if the words "or operation" are to be removed, they would have to be replaced by others to ensure that my right hon. Friend could operate a government-owned plc at each dockyard if he wished.

I hope that we can leave Report stage on a note of agreement. I cannot, however, agree the wording of the right hon. Gentleman's second amendment to this subsection in its present form. If the words wholly owned by the Secretary of State are included, no purpose would be served by including the words "controlled by". I have therefore proposed an amendment to the right hon. Gentleman's amendment which is as he has proposed, but without the tautology.

I could not accept the right hon. Gentleman's amendment to leave out the words "or operation" without a substitute. I would not, however, oppose it, if the amendment I have proposed were acceptable to the right hon. Gentleman and his hon. Friends.

Amendment agreed to.

Amendment made: No. 12, as amended, in page 4, line 2, after 'dockyard', insert 'or the operation of any such company wholly owned by the Secretary of State'.—[Mr. Denzil Davies.]

10.25 pm

Mr. Norman Lamont

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

We have had a long line of reports on the past performance of the dockyards, and the shortcomings and problems have been extremely well documented. Nobody could do other than agree, and I think that the right hon. Member for Llanelli (Mr. Davies) accepts this, that change is greatly needed in the dockyards. Right hon. and hon. Members may not agree with the particular method we have chosen, but the case for some change is extremely strong, given the record of the dockyards. We would certainly not have put forward this scheme unless we were strongly convinced that substantial improvements in performance and savings to the Exchequer could be achieved.

During the debate on new clause 1, I attempted to indicate some of the calculations behind the overall calculation that we have made of savings of £21 million in the first 10 years and of a higher amount after the initial costs have been amortised. Ever since I have been connected with this Bill I have always emphasised that these costs are, in a sense, illustrative. They are based on certain assumptions. The efficiency savings assumed could be even greater.

I repeat the point I made when we were discussing new clause 1. Many of the costs that people have been so anxious to analyse and investigate in these debates would have to be incurrred in any genuine attempt to improve the performance of the dockyards. I refer to proposals such as setting up new management accounting systems. It is a terrible comment on the state of the dockyards that it should actually be necessary to go to such lengths to install proper management control and accounting systems. If Opposition Members were genuine in saying that they wanted to improve the efficiency of the dockyards, they would admit that costs such as to cost of having consultants advising on those systems and the cost of hardware and software would have to be incurred.

The hon. Member for Clackmannan (Mr. O'Neill) said that I did say what would be the cost of setting up a trading fund. That question cannot be answered, because the answer depends precisely on what level of efficiency it was assumed a trading fund would achieve. The cost of buying out restrictive practices is the same either under a trading fund or under commercial management, but there is a crucial difference. Under the trading fund there is not a separation of the customer and the supplier. That is really one of the key reasons why we have gone for the introduction of this method of commercial management rather than simply setting up a trading fund whereby, because the customer and supplier are so closely related, it is possible for the supplier merely to price himself into profit.

Part of the debate that we had in Committee and again today has been about the effect on the work force and what would happen in the cases of pensions and entitlements to redundancy benefits and other negotiated benefits. I believe I managed to demonstrate to the House that there is no reason to think that people would be worse off; there is a considerable safety net. One cannot guarantee security for people for ever in any world, and certainly when people have moved into the private sector there are changes. Naturally, big changes will be brought about, but there will be a core programme. Obviously, we believe that there will be continuing work for the dockyards.

Particularly as regards Rosyth, I am amazed at what Labour Members are prepared to say about the effects of commercial management, when we contemplate even for a moment their proposal to get rid of our independent deterrent, because getting rid of Trident would remove 40 per cent. of the work load at Rosyth. It is absurd for right hon. and hon. Gentlemen to spread scare stories about the cost of redundancy when what they propose in relation to the independent deterrent would leave a gaping hole in the work load at Rosyth. I wish to refer to letters written by the Leader of the Opposition to workers at Devonport and Rosyth. They show the utmost cynicism. The letters were identical except that three sentences in the letter to Devonport workers referred to the need to get rid of Trident and there were no references to Trident in the letter to Rosyth workers. The second paragraph in the Devonport letter states: You know of the plans to cut the workforce by 400 by next April. Behind that comes the threat to a further 4,000 jobs under the proposals of the 'Levine Report which, fostered by Michael Heseltine, prepares the way for the privatisation of the Royal Dockyard as a 'managing agency'. At the same time, the Government is locked into the Trident programme which will swallow at least £12 billion of defence expenditure and strip the rest of British defence provision. The Rosyth letter states: You know of the plans to cut the workforce by 400 next April. and so on, except that the sentences about Trident are omitted. I shall gladly give way to any Labour Member who will tell me why those sentences are left out. Labour Members always want to intervene during my speeches, but they do not want to do so this time. What possible reason, other than the greatest cyncism, can they have? They know that their proposals will have a devastating effect on Rosyth. The number of jobs at risk under our proposals are as nothing compared with the effect of the Labour party's defence policy.

Mr. Gordon Brown

Nonsense.

Mr. Lamont

It is not. It is the absolute truth, as the hon. Gentleman well knows. I make no apology for mentioning those letters, because they should be on the record. They were cynical letters.

By introducing commercial management into the dockyards we seek to achieve full value for money from the defence budget, a climate of maximum competition, freedom for local management from public sector constraints, enabling them to operate effectively in a competitive environment, better levels of efficiency, a clear separation between the dockyards as suppliers and the Navy as customer, financial and accounting arrangements which reflect normal commercial practice and scope for commercial management to expand employment opportunities in the regions concerned by bidding for some of the commercial work available as well.

Mr. O'Neill

Argentina.

Mr. Lamont

Even the hon. Gentleman might think occasionally that it is a long way to come from Argentina for a ship refit. I do not think that that is likely.

Mr. O'Neill

Touche Ross referred to it.

Mr. Lamont

Touche Ross listed all the navies in the world. If the hon. Gentleman cannot do better than that, he should go away and do a little more studying.

There are good, sound reasons why commercial management must be introduced if we are willing to face up to the problems which Governments have so often identified in the dockyards. The difference is that no one has been prepared to do anything about those problems. That is why we have the Bill. I am confident that it will give better value for money and a better service to the Royal Navy.

10.33 pm

Mr. Denzil Davies

The Minister made a knockabout speech, and we understand why. He knows that he has a weak case. It was clear in Committee that his heart was not in the legislation. He had to come back to it, jetlagged from the Khyber pass, or wherever he had been, and was thrown straight into Second Reading. There were many problems in the background when the Bill was in Committee, including the famous Lygo letter and the difficulties at the Department of Trade and Industry, from which the hon. Gentleman had just come. He found it difficult to concentrate in Committee on this little Bill. He had played no part in its preparation—not that that was his fault.

The Minister knows very well that the Bill does not make any sense and that it is part of the frenetic ideology of the former Secretary of State for Defence, the right hon. Member for Henley (Mr. Heseltine). Were it not for the right hon. Member for Henley, I do not think that we would have had this Bill tonight.

The Bill was ill-thought-out and ill-considered. None of the options were considered, and certainly none were costed. This scheme was not costed, and that was clear from our debates in Committee.

The Minister discussed unemployment in Scotland, but under his Government unemployment in Scotland has trebled. Given the Government's record, I do not think that the Minister should say anything about unemployment in Scotland.

The Bill is neither one thing nor the other. It is not privatisation, and it is not public sector. It is an extremely hybrid scheme and it has no basis. I do not think that any other country, including the United States of America, operates, or would operate, its dockyards in the way that the Government propose for Rosyth and Devonport.

The Minister spoke of the great difficulty of introducing other schemes, but there would be no difficulty in doing so. It is possible to run the dockyards under a trading fund. The royal ordnance factories were run very successfully under such a fund. The Minister was extremely insulting when he kept on referring to the ordnance factories as pricing themselves into profit. That was not the case. The ordnance factories operated commercially and profitably. The problems have arisen after privatisation. The ordnance factories are now being run down and are facing redundancies. Their future is insecure. I do not wish to spread alarm, but, frankly, if this proposal goes through I can see the same thing happening to the dockyards.

The ordnance factories operated well under a trading fund. We hear that we had to buy all those computers and all that hardware and software. I counted the number of times that the Minister mentioned hardware and software. He talked about enough hardware and software to sink an aircraft carrier. Apparently all the costs would go on hardware and software—how ridiculous.

The Minister has still not answered the question about costs. He said that according to the Government's figures—pretty ropy figures—£21 million a year over 10 years would accrue to the Exchequer. I asked what the deficit would be to the budget of the Ministry of Defence, but he was afraid, properly from his point of view, to answer.

The deficit, a coincidental figure, will be £21 million a year. The Minister knows that, because it is in the documents. That deficit has gone up since the original calculations in June 1985. The deficit will be £21 million, and multiplied by 10 that is over £200 million deficit to the Ministry of Defence's budget. The Minister knows that, and he should have answered the question.

That deficit comes partly from having to pay £11 million a year for this new organisation. Another 800 new staff will be taken on—that is what the efficiency is about. The staffing level will rise by 800. Other functions and other co-ordinations will have to be carried out. Secretaries will have to be employed, and they in turn will require secretaries. We know what will happen—the bureaucracy will increase. A further 800 new staff are to be employed while 2,500 dockyard workers at Rosyth and Devonport are apparently to be sacked. Is that the sort of efficiency that we can expect from this commercial management?

The Ministry of Defence will also have to pay the pensions, which means another £9 million a year. Altogether, it adds up to £20 million a year out of the Ministry's budget. On top of that, if there are redundancies the cost will be charged to the Ministry. When we discussed new clause 3, the Minister admitted that the only way to replicate the redundancy payments under the Civil Service pension scheme if the contractor did not have the money to make the payments would be to put the cost of such payments on the price of the article and the customer would pay, as the customer always does.

That again will come out of the Ministry of Defence's budget, so the figure of £200 million that I mentioned earlier is a conservative estimate. The Minister of State shakes his head. All he can say is that the Treasury will somehow or other look at the matter, think about it and take it into account. I am sure that he does not believe that the Treasury will hand over £200 million to the Ministry of Defence to pay for the scheme. The money will come from the Ministry of Defence's budget, and the Minister knows that well.

The Bill may be given its Third Reading, although the Government's majority has been going down and down. Perhaps we should have put down a few more amendments. Last time they had a majority of 34 or 35. I can understand why the Minister of State galloped through his speech. He is having difficulty keeping his troops here. The Minister of State, Department of Trade and Industry, has apparently gone abroad rather than vote for this legislation. Nobody believes that the Bill will improve efficiency in the dockyards or that costs will be saved. As I said earlier, the Royal Navy will receive an inferior service, and it will do so at a higher cost. That will be the effect of what the Government are doing.

Even if the Bill receives its Third Reading this evening, may I suggest, gently and kindly, to the Minister that he should put the Bill to one side, forget about it and leave it where it should have been left before the right hon. Member for Henley tried to introduce it. It will be damaging to the Government, to the dockyard workers and to Britain's defence.

Mr. Deputy Speaker

Miss Janet Fookes.

Hon. Members

Oh!

10.43 pm

Miss Janet Fookes (Plymouth, Drake)

I hear noises from Labour Members, but I hope that I am entitled to speak, particularly on Third Reading.

I want to put two points to my hon. Friend the Under-Secretary. First, I want from him assurances about the terms and conditions of the employees. I am well aware that that has been discussed at length in Committee, but it is appropriate that on Third Reading the assurance should be given that, so far as possible, the terms and conditions for employees should be no less good than before. Indeed, I am rather more optimistic than Labour Members because I hope that in the fullness of time they will be better. We should now look on this as an opportunity for things to be made better rather than simply assuming, as Labour Members seem to assume, that they will be made worse. It is obviously of importance to individual employees that they have those assurances. I know that many rumours have abounded in the city quite understandably in the period of uncertainty and transition, and it would be helpful to have that assurance tonight.

Looking now at the rather broader issue of commercial management, my hon. Friends on the Front Bench will know my reservations about that. When the management put in its bid I was greatly encouraged because I genuinely believe that that represents the best way forward and the other assurance that I would like from my hon. Friends tonight is that they will be looking at the management's bid seriously. Clearly, I do not expect it to be successful regardless of the management's capacity to perform. It must operate in fair competition with any other company. I believe that only one consortium is in competition. But it is of the greatest importance to me that that assurance should be given. I have the highest regard for the management at the dockyard, particularly for the managing director. If anyone can make a success of this for the employees, the dockyard and the city it is Mr. David Johnston. I have backed his bid strongly right from the beginning—from the time when I first knew about it. However, I do not want window-dressing. I need to know that the Government are serious about the hid. I believe that if the management team can win the competition for the commercial management it will be a very good thing for the city and the employees —especially as I understand that the management would wish to buy locally many of the supplies that now have to come from other parts of the country. That would be very good for the economy of the city.

I hope, too, that the new company will be able to find opportunities to take on other work not related to the Royal Navy. I recall that that was one of the original objectives of the major change that is to be made. I hope very much that it will come to fruition, because it must be for the good of the dockyard and the city if other work can be found apart from the immediate Royal Navy work. The amount of that work has always fluctuated. I remember a newspaper report some 20 years ago making dire predictions of a downturn in the amount of work provided by the Royal Navy for the dockyard. If those fluctuations can be evened out by other work not related to the Royal Navy, that will be to the good of the dockyard.

Mr. Douglas

Such as?

Miss Fookes

I do not pretend to be an expert on what might be done in that dockyard. I believe that there is an enormous residue of skilled labour there because generations of Plymouthians have gone into the dockyard. I do not believe that it is beyond the wit of man—or, specifically, of Mr. Johnston — to find other opportunities for all the skills there. I would not pretend to teach Mr. Johnston his business, but I believe that those opportunities exist.

I conclude with those two points, and ask for those assurances.

10.47 pm

Dr. Owen

Listening to the hon. Member for Plymouth, Drake (Miss Fookes), I am reminded of T. S. Eliot's line: Not with a bang but a whimper There was a moment when the hon. Lady joined us in opposing the Bill on a cross-party basis. If this is the end of her opposition, she would have done much better never to start it. Whatever one's view on the hon. Member for Plymouth, Sutton (Mr. Clark) and whether or not he should resign from the Government, at least his views on the Bill are so perfectly clear that he has sought neither to be here nor to vote on it. With such support, I certainly think that the city of Plymouth has a right to draw some attention to what has been happening.

I must say that I am angry tonight. This is a bad Bill. It is very bad for the city of Plymouth. It is a poor way of repaying years of loyalty to successive Governments by the people who work in the dockyard. Furthermore, it is my fear and belief that the service to the Royal Navy will be damaged, and that thereby the Navy will be damaged too.

I have no doubt, too, from our earlier discussions on the costs, that all this will be achieved at a heavy price. It is time that hon. Gentlemen on the Government Benches, and the hon. Lady, realised that the defence budget is now being cut by 7 per cent. in real terms over the next three years. The additional extra cost which no one has denied will fall on the dockyard over the next few years will damage the defence of this country.

There is little to be gained by going over old arguments. The Government have got what they wanted, on paper. They will get the Bill. They have been able to take out of the Government service a very large number of people. On paper, the Civil Service will be much reduced. That the Government have achieved. In the process, they have also declared substantial redundancies. Most of the redundancies have been voluntary, and I am pleased about that, but 2,000 jobs have been lost in Plymouth and in my view more will be lost over the next decade. I believe that eventually the dockyard will employ about 7,000 people.

I face the fact that the Government have the power, but I ask them not to use it. There is no doubt that there is a massive body of opinion, much of it in the Tory party, a substantial number of industrialists and an increasing number of people in the Navy who are waking up to what is really happening to them. They say to the Government "Create Devonport plc, but do not fragment the dockyard". It is nonsensical to cut into the dockyard in the way that has been done, separating the management from the control of the assets. We have heard today and seen in the report what substantial assets there are. If anything can be salvaged out of this mess let it be a rolls royce solution in that the Government have a commercial company. The employees are no longer civil servants, but at least let them all be employed and operate one single industrial enterprise which would be Devonport dockyard and Rosyth dockyard. It is not what we wanted and it is not ideal but if the Secretary of State were to go to the unions and say that he would be prepared to not implement the Bill he would find that there would be a response and, even at this late stage, I hope that the Secretary of State will look at that.

On the matter of employment prospects at Rosyth, I want to make it clear that although we have opposed this Bill with the Labour party we do not hold its view on what should happen to Polaris. We would not decommission Polaris. It would continue for its natural life. Even though we would cancel Trident, I believe that it would be possible, by expanding the SSN build rate, to pick up the slack and retain a substantial dockyard and submarine refitting at Rosyth. I do not believe that the cancellation of Trident, provided it was with the continuation of Polaris to the end of its natural life—which is certainly until 1997 — need harm Rosyth dockyard. It also need not harm employment at Vickers because we would be increasing the submarine build rate to take up a good deal of the slack.

That having been said, the substantive issue is the Bill. The Bill deserves to be rejected. My hon. Friend the Member for Portsmouth, South (Mr. Hancock), who was on the Committee for the Social Democratic party and the alliance, and I will vote against this as will many of my right hon. and hon. Friends. We shall do so because we think that it is a damaging Bill. It is bad for the Navy and bad for employment. It is a relic of the right hon. Member for Henley (Mr. Heseltine) that should be dispatched to the wastepaper basket. If the present Secretary of State had any sense he would have nothing to do with the Bill.

10.52 pm

Mr. Henry Bellingham (Norfolk, North-West)

I am aware of the fact that I do not have any expert knowledge on this matter and I do not have a constituency interest. However, I was on the Standing Committee along with other right hon. and hon. Members. The right hon. Member for Plymouth, Devonport (Dr. Owen) mentioned that his hon. Friend the Member for Portsmouth, South (Mr. Hancock) was on the Committee. He came and went; as I remember, he did a runner and did not come back, or at least I cannot remember his coming back. However, I understand that he then issued press releases, took on the Government single-handed and did a great deal of good in getting them to change their mind. However, I do recall the hon. Gentleman doing a runner.

One of the characteristics of the Committee was the number of contributions from different hon. Members. It was a good-natured Committee. The Bill has met widespread opposition from many quarters, but it is easy to forget the background. Many local industry groups, local Members of Parliament, trade unions, the City and local authorities agree that change is vital for the long-term future of the dockyards.

The past 15 years have seen many reports, reviews and studies on the performance of the dockyards and many of them make extremely grim reading. Until now, no Government have dared to grip the situation. In 1978 there was a report and the then Labour Government had the opportunity to introduce a trading fund but they ran away from that. They had an ideal opportunity, but nothing was done. I do not feel that doing nothing in this case was a viable option. That is why I congratulate the Government on having the courage to make a brave attempt to tackle head on a situation that was becoming extremely serious.

I have a number of reservations on that matter, as have other Conservative Members, and my preference was for a trading fund. However, I am a realist and it would be churlish of me not to support the Government tonight, as they are making an attempt to do something positive and constructive.

I hope that the Minister will clarify two points which are causing me concern. The first relates to costs. The right hon. Member for Llanelli (Mr. Davies) raised three points which relate to additional costs which will arise as a result of the Bill, but other costs were mentioned in a series of press articles towards the end of last week and I should be grateful if the Minister would comment on them.

The first point relates to the estimated £30 million consultancy fees and to an unquantified cost in Ministry of Defence staff time. There is also the sum of £46 million to ensure the continuation of a supply service to the Ministry of Defence and the matter of VAT which will now have to be paid on dockyard contracts. Another point which the right hon. Member might have mentioned was the fact that the dockyards will be supplied by the Ministry of Defence with a management financial ledger—an accounting package for the use of contractors—and that will lead to an additional cost.

It is surprising that detailed figures have not been given. There is an urgent need for those additional figures and I urge the Minister, if he cannot give them tonight, to provide them in the very near future.

The final point which concerns me is that the Comptroller and Auditor General will no longer have access to the books of the dockyard operators. Therefore, there will not be, as I understand it—I may be wrong and I hope that the Minister can clarify this for me—any accountability to Parliament once the Bill reaches the Statute Book.

I am worried about those points, but I congratulate the Government on tackling this matter, on biting the bullet and on coming forward with a positive and constructive Bill. I wish the Bill every success and I am pleased that I had the chance of serving on the Standing Committee.

10.58 pm

Mr. Gordon Brown

This is a bad Bill, which no amount of amending could have improved. It is very interesting to note that the main argument from the Conservative Back Benchers who have spoken in favour of the Bill tonight is that they have no expertise in the matter of dockyards. They would have done better to adopt the course taken by the hon. Member for Plymouth, Sutton (Mr. Clark), who, knowing that he could not succeed in the amendments that he wanted and that he could not get the guarantees he sought about removing the possibility of foreign control, absented himself from the House and said that, if he had been here, he would have had the guts at least to have voted against the Bill.

There are no guarantees in this very short Bill about apprenticeships, conditions of service or preventing foreign control. We have seen in the documents issued today that the possibility of a foreign state holding in the dockyards is being contemplated. There are no guarantees about security and, in the documents, the Ministry of Defence contemplates that the Ministry of Defence police may pass into private hands within a year of the privatisation exercise. There are no guarantees in the Bill about those matters.

The Ministry of Defence civil servant leading the operation was right to tell the Public Accounts Committee and the Select Committee on Defence that the Bill is the high-risk option for the future of the Navy and for the efficiency of the fleet. When risks are involved in the dependability of the service to the Navy, in the reliability of that service and the capability of the dockyards to respond in times of emergency, the only certainty about the Bill is that it will cost the defence budget more.

Nothing that the Minister has said so far today alters the Opposition's view that, in the first years, in the first decade and indeed until the end of this century, the Bill will cost the taxpayer more. At the same time jobs will be lost both at Devonport and at Rosyth. It ill befits the Minister of State to talk about Labour's policies when his Government have been responsible for closing Chatham, for the reorganisation of Portsmouth and in the last year for a cut of 2,000 jobs at Devonport and 400 jobs at Rosyth.

That is not the end of the matter. In the documents which we should have had days ago but which have only been made available to us today, it is made clear to the contractor that the Government expect substantial job cuts at both Rosyth and Devonport as a result of privatisation. Indeed, the contractors are asked to list the scope for cost effective subcontracting and how this could affect the size of the work force and facilities. They are also asked to state their intentions for taking work out of the dockyard not bringing work in— for completion in other parts of their organisation or through subcontracting".

Mr. Norman Lamont

The hon. Gentleman made that point in Committee and alleged that we never answered it. It is true that contractors were asked whether they would take work out. I am sure the hon. Gentleman will agree with me that it is a good thing that we should know whether they intend to do that. He will know too that the document also asked whether they would bring work in. If the hon. Gentleman quotes one, he should quote the other. We want to know what will happen. The hon. Gentleman is totally misrepresenting the position, not for the first time.

Mr. Brown

The Minister is right to say that the document asks what work will be taken out and what work will be brought in. Of course, the assumption behind the whole manoeuvre and behind the costings, which have not been properly brought to the House, is that jobs will be lost as a result of the scheme. [Interruption.] I shall give one illustration of that in the document that was issued today.

It says that contractors should also indicate how they would minimise the impact on the local community of any future reductions in the dockyard work force. If that is not the Ministry of Defence expecting job reductions as a result of the scheme, I do not know what evidence the hon. Member for Plymouth, Drake (Miss Fookes) needs.

It is all confirmed in the report to the Public Accounts Committee by the Ministry of Defence last summer, when the Ministry of Defence specifically asked that the figures that it had given about the possibile redundancies resulting from the privatisation scheme should be kept secret by being marked "confidential" and therefore denied to hon. Members and to the public.

The Bill's proposals have found no favour with any organisation or committee that has examined the future of the dockyards since the war. They have been rejected as options by them all. The proposals have been resisted unanimously by every section of the work force in Devonport and Rosyth; they have caused anger among the work force, because this is a change not by consent but by the unilateral imposition of the Minister's own ideas.

The proposals threaten jobs, risk the efficiency of the Navy, risk the dependability of the service to the Navy and involve additional costs. Indeed, now that we have debated them for 70 hours in Committee and for five or six hours today, it is obvious that the proposals are just privatisation for the sake of privatisation. No shares will be issued, so there is no mass capitalism. No savings will come to the public sector borrowing requirement, because the Government will still have to fund all new investment. The Minister has satisfied neither us nor any of the Committees of the House that have examined the matter that savings will come on day-to-day costs. The Minister would do better to drop the proposals by refusing to implement the Bill if it ever gets through both Houses.

11.3 pm

Mr. Hancock

We have had a long debate today and we spent many hours on the Bill in Committee. The hon. Member for Norfolk, North-West (Mr. Bellingham) made an intervention to criticise my performance in Committee. That was a bit rich, when his only two contributions in Committee were, first, to inquire whether or not we should leave the room when the fire alarm went off, and secondly, to congratulate the Minister of State on his considerable leadership and charisma on the issue. Having missed the Report stage, he should not have come in on Third Reading to try to score a cheap point.

We have today explained as best we can that the only winners tonight will be the Government, but that there will be many losers in the future because of the Bill's effect on the Navy, on dockyard workers and on the country's defence.

You have been in the Chair for a substantial part of the debate, Mr. Deputy Speaker, and I am sure that you cannot have failed to accept the valid arguments that have been raised time and again about the problems that the Bill will create. The sadness that fills my heart arises from the fact that I have seen the dockyard in Portsmouth being run down. In my lifetime, the work force has fallen from 30,000 to about 5,000 now in the Navy base. I have seen what such devastation can do to a city, and I have nothing but fears for Rosyth and Devonport. I am sorry that I do not have the enthusiasm of the hon. Member for Plymouth, Drake (Miss Fookes). I do not see the opportunities, but only the enormous problems that the Bill will create for the nation and those who have worked loyally on our behalf.

Many hon. Members have offered Ministers suggestions about what they should do after the Bill receives a Third Reading. Some have suggested that Ministers should sit on the Bill, others have suggested that it be put in the dustbin. Ministers should take a tip from those who have examined the Bill carefully. They should take the advice that my right hon. Friend the Member for Plymouth, Devonport (Dr. Owen) and Labour Members have offered. They should not try to enact the Bill. They should not inflict such damage on people who have been loyal or risk damaging the effective and efficient operation of the Navy. The Bill is a mistake, and although the Government may win tonight, the nation will lose in the long run.

11.6 pm

Mr. Douglas

It is interesting to reflect on the country's response to legislation as it passes through Parliament. When, for example, in the Defence Select Committee and in discussions with responsible local authorities in Fife and elsewhere, we first examined the Government's proposals, the Government claimed that this was a good and necessary measure. They told us that everyone agreed that change was necessary.

One would therefore expect that, since the Bill was published, there would have been a great wave of public support and acclaim for this great new measure designed to improve efficiency and to ensure that the Royal Navy got not the service to which it has been used, but an improved one.

After 70 hours in Committee and on Report, we have heard from only two Conservative Back Benchers. That is a measure of the number of friends that the Bill has acquired in the House and the country. With such friends, the Bill does not need enemies, one might argue. The Government have manifestly failed to enthuse dockyard workers, the Navy or the areas concerned. The more the Bill has been explained and exposed, the more support for it, even from Conservative Back Benchers, has diminished.

The hon. Member for Plymouth, Drake (Miss Fookes), in an engaging revelation, told us that she is not an expert. All the experts who have examined this proposal damn it. It is damned by the Navy, by the locality, by the Select Committee on Defence, upon which the Government have a majority, and by the Public Accounts Committee. The only way in which to get approval for this nasty, paltry little measure is to impose a three-line Whip and drive the Government's majority through the Lobby.

This Bill has no friends. The Minister said that this expenditure will be needed anyway. If it is so essential to set up an organisation in Bath to monitor future project management day by day, why not do it now? If this is a device to make the dockyards more efficient, why not do it now without the Bill? What is the difficulty about employing Peat Marwick Mitchell and Co. or Touche Ross and Co. to examine the dockyards' accountancy system without the passage of this stupid, paltry little measure?

The hon. Member for Drake said that she supports the managing director over the management buy-out of the Plymouth dockyard, but she said not a word about the possibility of a conflict of interest. Is there no conflict of interest for serving naval officers and men who are engaged on the refitting and repair of naval vessels in working hand in hand with private enterprise groups with which they will have to consort to achieve the Government's aims in this Bill? Does not that disturb right hon. and hon. Members on the Government Benches? This is a devilish and stupid little measure that does not provide for efficiency in the fleet. I have sought overwhelmingly to prove that it will be costly both to the Exchequer and to the budget of the Ministry of Defence.

The Minister of State for Defence Procurement referred to the damage which he said Labour party policy would cause to employment in Rosyth. I am willing to go to Rosyth and Dunfermline this weekend and debate the Government's policy for Rosyth compared with the Labour party's policy. I make that open challenge to the Minister. I take the view about patriotism that was expressed the other week by the right hon. and learned Member for Richmond, Yorks (Mr. Brittan). Who are the patriots now? We are witnessing the ending of 500 or 600 years of history. For 500 or 600 years the dockyards have been in the public domain. They have served the navy and the national interest. They have served not just Rosyth, Devonport and Plymouth but the national interest as a whole.

The patriots on the Conservative Benches are putting aside the interests of the nation because of their view about what private enterprise should do. I feel that I speak for the whole of the Labour party when I say that we give notice to contractors that if they spend valuable managerial time going through the proliferation of documents that have been issued today, it will have been wasted. The Labour party believes that the Navy is in the public domain and that therefore the dockyards should also be in the public domain. When Labour is returned to power it will bring back the dockyards into the public domain.

11.14 pm

Mr. O'Neill

It is two years since Mr. Levene visited Rosyth. He spent two hours there and produced the recommendations which have borne fruit in this Bill. The only thing upon which hon. Members on both sides of the House agree is that the status quo is not an option. No hon. Member can be happy with the prevailing conditions at Rosyth, but the Opposition object to the manner in which the initial investigations were conducted. We object to the so-called consideration of the options and the farce of the consultation process. We now object to the implementation of the preferred option. We disagree with the assumptions on the costs and benefits. We disagree with the impact of the new contracts on industrial relations We have received no assurances tonight that wages, conditions, redundancy arrangements and pensions will be copper-bottomed or guaranteed by the Government or by the legislation. We expect that the redundancies that will ensue after vesting day will be met with bitterness and industrial strife, which will render all the Government's ambitions to improve the efficiency of the yards as naught.

The Opposition disagree with and disapprove of the arrangement in its entirety. It will be bad for those who work in the yards and for the communities surrounding them. It may be acceptable to the hon. Member for Plymouth, Drake (Miss Fookes) that 2,000 jobs should go in Devonport through voluntary redundancy. What about the lost opportunities for apprentices? That statement shows no consideration of what alternative employment can be found in a community which I understand to be in considerable economic difficulties. We hear nose arguments from Rosyth and from the trade unions. It might have been better had the hon. Lady drifted into the Standing Committee now and again and heard those arguments being repeated hour after hour as we considered the Bill.

Miss Fookes

The hon. Gentleman's point is less than fair. I did not drift into the Committee because I was chairing another Committee, which I am required to do as a member of Mr. Speaker's panel of Chairmen.

Mr. O'Neill

I am sorry about the hon. Lady's priorities, and I accept the point that she made—[HON. MEMBERS: "Withdraw".] I am sorry that the priorities of the House intervened in this way. I did not mean it in the other sense. But the hon. Lady told the House that she was not expert in the workings of the dockyards and then proceeded to make those points, ignoring the fact that 2,000 jobs were lost to the community—2,000 jobs that could have been taken by people apart from those who were prepared to give them up.

Miss Fookes

When I said that I was not expert, I was referring to one specific point. I was asked whether I could suggest ways in which the dockyard could be used for outside work. I said that, in that respect, I could not offer expert advice but I knew that people such as Mr. Johnston, the managing director, had ideas in that direction and I was prepared to accept his view that this could be done. Others also suggested it.

Mr. O'Neill

All that I can say is that work which is being carried out on Merseyside, Tyneside and on the Clyde will go to other parts of the country because of the reorganisation, and that the misery that exists in some areas will be compounded by the foolhardiness of the Government's proposals.

The Bill is bad for workers and for the prospects of ship repair and ship-fitting for the Navy. It will damage the Navy incalculably and will be bad for Britain's security. The only prospect for change is a change of Government and direction so that Britain can be properly defended by people who are happy and confident in the knowledge that their work will continue.

11.19 pm

Mr. Lee

I am pleased that the right hon. Member for Plymouth, Devonport (Dr. Owen) has returned, because even at this late hour I want gently to tease him and ask whether he recalls writing an article in October 1983 in the Economic Affairs magazine entitled Agenda for Competitiveness with Compassion. In it he said: The SDP has not yet developed a strategic view on the role of the commercial public sector. Is it just a staging post between public and private ownership, or can it be the vehicle for the imaginative, practical and enthusiastic development of industrial democracy … Franchising could be a very attractive approach for it provides a way of enabling enterprises to act competitively, but within a framework which protects the public interest in a way which entirely unregulated competition would not.

Dr. Owen

Why does the Minister not go on to mention the passage about the dockyards and why that is not appropriate for the dockyards? It is in the same speech.

Mr. Lee

It is a long speech.

Dr. Owen

I think that it would be appropriate.

Mr. Lee

Certainly, the dockyards were referred to, but those quotes stand. As I said in my opening comments, I was half teasing the right hon. Gentleman. Nevertheless, he flirted with franchising at that time.

I have no intention of repeating all the arguments used on Second Reading, in the 25 Committee sittings or today on Report. As my hon. Friend the Minister said earlier, over the years our naval dockyards have had any number of reports and investigations, and have been calling out for radical change. The Bill will introduce commercial management and, for the first time, a real separation between the Royal Navy as customer and the dockyards as supplier. Financial benefits will come to taxpayers, especially in the long tem. The Navy will benefit from greater efficiency and the speedy return to operational service of its fleet.

I am grateful for the speech of my hon. Friend the Member for Plymouth, Drake (Miss Fookes), who has taken a deep and continuing interest in the progress of the Bill and in the dockyards. I am sorry about some of the remarks made in criticism of her. Regarding terms and conditions, I am happy to give her the assurance for which she asks. TUPE will apply, and was covered extensively in the earlier speeches of my hon. Friend the Minister.

I am also grateful for the speech of my hon. Friend the Member for Norfolk. North-West (Mr. Bellingham) and for his participation in our lengthy Committee stage. The questions of costs and accountability were fully covered by my hon. Friend the Minister earlier, and I can tell my hon. Friend that VAT is not payable on production work in the dockyards.

Our approach, involving the private sector in management while retaining the physical assets in public ownership, is innovative. It is being studied overseas, and may even have application in other areas of the United Kingdom public sector. I commend it to the House.

Question put, That the Bill be now read the Third time:—

The House divided: Ayes 213, Noes 171.

Division No. 124]	[11.23 pm
AYES
Ancram, Michael	Fraser, Peter (Angus East)
Arnold, Tom	Freeman, Roger
Ashby, David	Fry, Peter
Beaumont-Dark, Anthony	Galley, Roy
Bellingham, Henry	Gardiner, George (Reigate)
Best, Keith	Gardner, Sir Edward (Fylde)
Body, Sir Richard	Garel-Jones, Tristan
Boscawen, Hon Robert	Goodlad, Alastair
Bowden, Gerald (Dulwich)	Gorst, John
Brinton, Tim	Gow, Ian
Burt, Alistair	Gower, Sir Raymond
Carlisle, John (Luton N)	Grant, Sir Anthony
Clark, Sir W. (Croydon S)	Gregory, Conal
Cope, John	Griffiths, Sir Eldon
Couchman, James	Griffiths, Peter (Portsm'th N)
Cranborne, Viscount	Grist, Ian
Currie, Mrs Edwina	Ground, Patrick
Dorrell, Stephen	Hamilton, Hon A. (Epsom)
Douglas-Hamilton, Lord J.	Hamilton, Neil (Tatton)
Durant, Tony	Hampson, Dr Keith
Eyre, Sir Reginald	Hanley, Jeremy
Fairbairn, Nicholas	Hannam, John
Favell, Anthony	Hargreaves, Kenneth
Fenner, Mrs Peggy	Harris, David
Fletcher, Alexander	Harvey, Robert
Fookes, Miss Janet	Haselhurst, Alan
Forth, Eric	Hawksley, Warren
Fowler, Rt Hon Norman	Hayes, J.
Fox, Marcus	Hayhoe, Rt Hon Barney
Franks, Cecil	Heathcoat-Amory, David

Heddle, John	Prentice, Rt Hon Reg
Henderson, Barry	Price, Sir David
Hickmet, Richard	Rathbone, Tim
Hind, Kenneth	Renton, Tim
Hogg, Hon Douglas (Gr'th'm)	Rhodes James, Robert
Holland, Sir Philip (Gedling)	Rhys Williams, Sir Brandon
Holt, Richard	Ridley, Rt Hon Nicholas
Hordern, Sir Peter	Roberts, Wyn (Conwy)
Howarth, Alan (Stratf'd-on-A)	Robinson, Mark (N'port W)
Howell, Ralph (Norfolk, N)	Roe, Mrs Marion
Hubbard-Miles, Peter	Rossi, Sir Hugh
Jackson, Robert	Rowe, Andrew
Jessel, Toby	Rumbold, Mrs Angela
Jones, Gwilym (Cardiff N)	Ryder, Richard
Jones, Robert (Herts W)	Sackville, Hon Thomas
Jopling, Rt Hon Michael	Sainsbury, Hon Timothy
Joseph, Rt Hon Sir Keith	St. John-Stevas, Rt Hon N.
Kellett-Bowman, Mrs Elaine	Shaw, Giles (Pudsey)
King, Roger (B'ham N'field)	Shaw, Sir Michael (Scarb')
Knight, Greg (Derby N)	Shelton, William (Streatham)
Knight, Dame Jill (Edgbaston)	Shepherd, Colin (Hereford)
Knowles, Michael	Shepherd, Richard (Aldridge)
Lamont, Norman	Shersby, Michael
Lang, Ian	Silvester, Fred
Latham, Michael	Sims, Roger
Lee, John (Pendle)	Skeet, Sir Trevor
Leigh, Edward (Gainsbor'gh)	Smith, Tim (Beaconsfield)
Lennox-Boyd, Hon Mark	Soames, Hon Nicholas
Lester, Jim	Spencer, Derek
Lilley, Peter	Spicer, Jim (Dorset W)
Lloyd, Peter (Fareham)	Spicer, Michael (S Worcs)
Lord, Michael	Squire, Robin
Luce, Rt Hon Richard	Stanbrook, Ivor
McCrindle, Robert	Stanley, Rt Hon John
McCurley, Mrs Anna	Steen, Anthony
MacKay, Andrew (Berkshire)	Stern, Michael
MacKay, John (Argyll & Bute)	Stevens, Lewis (Nuneaton)
McNair-Wilson, M. (N'bury)	Stewart, Allan (Eastwood)
McNair-Wilson, P. (New F'st)	Stewart, Andrew (Sherwood)
Madel, David	Stewart, Ian (Hertf'dshire N)
Major, John	Stokes, John
Malins, Humfrey	Sumberg, David
Marlow, Antony	Taylor, John (Solihull)
Mates, Michael	Taylor, Teddy (S'end E)
Mather, Carol	Terlezki, Stefan
Maude, Hon Francis	Thompson, Donald (Calder V)
Mawhinney, Dr Brian	Thompson, Patrick (N'ich N)
Mayhew, Sir Patrick	Thornton, Malcolm
Merchant, Piers	Thurnham, Peter
Meyer, Sir Anthony	Townend, John (Bridlington)
Miller, Hal (B'grove)	Townsend, Cyril D. (B'heath)
Mills, Iain (Meriden)	Trippier, David
Moate, Roger	Twinn, Dr Ian
Monro, Sir Hector	van Straubenzee, Sir W.
Montgomery, Sir Fergus	Viggers, Peter
Moore, Rt Hon John	Waddington, David
Morrison, Hon C. (Devizes)	Walden, George
Morrison, Hon P. (Chester)	Walker, Bill (T'side N)
Moynihan, Hon C.	Wall, Sir Patrick
Mudd, David	Waller, Gary
Neale, Gerrard	Ward, John
Nelson, Anthony	Warren, Kenneth
Newton, Tony	Watts, John
Nicholls, Patrick	Wells, Bowen (Hertford)
Norris, Steven	Wells, Sir John (Maidstone)
Onslow, Cranley	Wheeler, John
Oppenheim, Phillip	Whitfield, John
Oppenheim, Rt Hon Mrs S.	Whitney, Raymond
Ottaway, Richard	Wilkinson, John
Page, Richard (Herts SW)	Winterton, Nicholas
Parkinson, Rt Hon Cecil	Wolfson, Mark
Parris, Matthew	Wood, Timothy
Patten, Christopher (Bath)	Woodcock, Michael
Pawsey, James	Yeo, Tim
Peacock, Mrs Elizabeth
Pollock, Alexander	Tellers for the Ayes:
Porter, Barry	Mr. Michael Neubert and
Powell, William (Corby)	Mr. Gerald Malone.
Powley, John

NOES
Adams, Allen (Paisley N)	Hattersley, Rt Hon Roy
Alton, David	Haynes, Frank
Archer, Rt Hon Peter	Healey, Rt Hon Denis
Ashdown, Paddy	Hicks, Robert
Atkinson, N. (Tottenham)	Hogg, N. (C'nauld & Kilsyth)
Barnett, Guy	Home Robertson, John
Beckett, Mrs Margaret	Hoyle, Douglas
Beith, A. J.	Hughes, Robert (Aberdeen N)
Bell, Stuart	Hughes, Roy (Newport East)
Benn, Rt Hon Tony	Hughes, Sean (Knowsley S)
Bennett, A. (Dent'n & Red'sh)	John, Brynmor
Bermingham, Gerald	Kaufman, Rt Hon Gerald
Bidwell, Sydney	Kennedy, Charles
Blair, Anthony	Kilroy-Silk, Robert
Boothroyd, Miss Betty	Kirkwood, Archy
Boyes, Roland	Lambie, David
Bray, Dr Jeremy	Lamond, James
Brown, Gordon (D'f'mline E)	Leighton, Ronald
Brown, Hugh D. (Provan)	Lewis, Terence (Worsley)
Brown, N. (N'c'tle-u-Tyne E)	Litherland, Robert
Brown, R. (N'c'tle-u-Tyne N)	Livsey, Richard
Bruce, Malcolm	Lloyd, Tony (Stretford)
Buchan, Norman	McCartney, Hugh
Caborn, Richard	McKay, Allen (Penistone)
Callaghan, Jim (Heyw'd & M)	McKelvey, William
Campbell, Ian	McNamara, Kevin
Campbell-Savours, Dale	McTaggart, Robert
Canavan, Dennis	Madden, Max
Carlile, Alexander (Montg'y)	Marek, Dr John
Cartwright, John	Marshall, David (Shettleston)
Clark, Dr David (S Shields)	Martin, Michael
Clarke, Thomas	Maxton, John
Clay, Robert	Maynard, Miss Joan
Clelland, David Gordon	Meacher, Michael
Clwyd, Mrs Ann	Michie, William
Cocks, Rt Hon M. (Bristol S)	Mikardo, Ian
Cohen, Harry	Millan, Rt Hon Bruce
Cook, Frank (Stockton North)	Miller, Dr M. S. (E Kilbride)
Corbett, Robin	Mitchell, Austin (G't Grimsby)
Corbyn, Jeremy	Morris, Rt Hon A. (W'shawe)
Craigen, J. M.	Morris, Rt Hon J. (Aberavon)
Crowther, Stan	Nellist, David
Cunliffe, Lawrence	O'Neill, Martin
Dalyell, Tam	Owen, Rt Hon Dr David
Davies, Rt Hon Denzil (L'lli)	Park, George
Davies, Ronald (Caerphilly)	Parry, Robert
Davis, Terry (B'ham, H'ge H'l)	Patchett, Terry
Deakins, Eric	Pavitt, Laurie
Dixon, Donald	Pendry, Tom
Dormand, Jack	Penhaligon, David
Douglas, Dick	Pike, Peter
Dubs, Alfred	Powell, Raymond (Ogmore)
Duffy, A. E. P.	Prescott, John
Eadie, Alex	Radice, Giles
Eastham, Ken	Randall, Stuart
Evans, John (St. Helens N)	Redmond, Martin
Ewing, Harry	Rees, Rt Hon Peter (Dover)
Fatchett, Derek	Richardson, Ms Jo
Faulds, Andrew	Roberts, Allan (Bootle)
Field, Frank (Birkenhead)	Robertson, George
Fields, T. (L'pool Broad Gn)	Robinson, G. (Coventry NW)
Fisher, Mark	Rogers, Allan
Flannery, Martin	Rooker, J. W.
Foot, Rt Hon Michael	Ross, Ernest (Dundee W)
Forrester, John	Sedgemore, Brian
Foster, Derek	Sheerman, Barry
Foulkes, George	Sheldon, Rt Hon R.
Fraser, J. (Norwood)	Shore, Rt Hon Peter
Freeson, Rt Hon Reginald	Short, Ms Clare (Ladywood)
George, Bruce	Short, Mrs R.(W'hampt'n NE)
Gilbert, Rt Hon Dr John	Silkin, Rt Hon J.
Godman, Dr Norman	Skinner, Dennis
Golding, John	Smith, Rt Hon J. (M'ds E)
Gould, Bryan	Snape, Peter
Hamilton, James (M'well N)	Soley, Clive
Hamilton, W. W. (Fife Central)	Stott, Roger
Hancock, Michael	Strang, Gavin
Harman, Ms Harriet	Thomas, Dafydd (Merioneth)
Hart, Rt Hon Dame Judith	Thomas, Dr R. (Carmarthen)

Thompson, J. (Wansbeck)	Wigley, Dafydd
Thorne, Stan (Preston)	Wilson, Gordon
Tinn, James	Winnick, David
Torney, Tom	Young, David (Bolton SE)
Wainwright, R.
Wallace, James	Tellers for the Noes:
Wardell, Gareth (Gower)	Mr. John McWilliam and
Wareing, Robert	Mr. Chris Smith.
White, James

Question accordingly agreed to.

Bill read the Third time, and passed.