HC Deb 08 April 1986 vol 95 cc39-82

'The Secretary of State shall set out and itemise in a report to be laid before each House of Parliament all the costs and savings in excess of £100 incurred by and owing to the Exchequer from any arrangements made in consequence thereof for the provision of designated dockyard services by any company or companies'.—[Mr. Denzil Davies.]

Brought up, and read the First Time.

Mr. Denzil Davies (Llanelli)

I beg to move, That the clause be read a Second time.

My hon. Friend the Member for Workington (Mr. Campbell-Savours) raised an important point of order and rightly said that the Bill's Third Reading should not be debated until we have received the report of the Public Accounts Committee, which inquired into costs. We quite understand why the Government are concerned not to have to say too much about the costs and possible savings that will result from the Bill.

4.30 pm

In the 24th sitting of Standing Committee D on 13 March the Under-Secretary made an extraordinary statement which is germane to the point of order raised by my hon. Friend the Member for Workington: The Government's plans are about more than profit and loss. I shall not follow the right hon. Member for Llanelli (Mr. Davies) down the path that he took on costings. It is not relevant to the Bill. I should have thought that costings were germane and basic to the Bill. The cost to taxpayers should be part of the whole investigatory function of the House. The Under-Secretary also said: the House will be able to debate on Third Reading the policy issues, including questions of costings on which the Public Accounts Committee may by then have reported."—[Official Report, Standing Committee D, 13 March 1986; c. 777.] Of course the Public Accounts Committee has not reported. As my hon. Friend said, we would have been in a much better position to debate the Bill if we had had the report of the Public Accounts Committee.

I understand why the Minister of State and the Government Whips want the Bill to proceed. Costings are very embarrassing for the Government. The Minister of State may deny this, but it seems to be clear that there will be no savings to the Ministry of Defence. As we have said from Second Reading onwards, this ill-considered and highly speculative Bill will cost the Ministry of Defence and the defence budget money. Therefore, I can understand why the Government are happy that the Bill should be debated today before the publication of the Public Accounts Committee's detailed report.

Mr. Campbell-Savours

Having seen all the documents, may I point out to my right hon. Friend that it is impossible for the House to consider the Bill unless hon. Members see the figures that were presented to the Public Accounts Committee?

Mr. Davies

My hon. Friend has seen the figures and I have not. We shall have to do the best we can with the various statements from Ministers. Indeed, last week a civil servant in the Ministry of Defence held a fairly late press conference, no doubt hoping that the press would not pick up some of the things he said. That civil servant made it clear that there would not be any saving and that the budget of the Ministry of Defence would suffer because of the Bill.

Mr. Dick Douglas (Dunfermline, West)

On a point of order, Mr. Deputy Speaker. I apologise for raising the matter in the House but I have just been to the Library and I have here the only documents that are available to the House. These are the articles of association of the companies which the Government propose to set up under the Bill. I have here the only copies that are available to the Library. I have also got copies of the document which was referred to by the right hon. Member for Plymouth, Devonport (Dr. Owen). These, too, are the only copies that are available to the Library.

While I respect the difficulty you are in, Mr. Deputy Speaker, I do not think it was right that the documents should have been presented at the end of a recess. If they had been available at the beginning of the recess hon. Members would have had the opportunity to discuss them and to put down amendments. Opposition Members pressed time and time again in Committee for the articles of association and other documents to be made available. For the documents to be placed in the Library at this late hour is an abuse of the Government's position and shows arrogance on their part. They had plenty of time to make the documents available sooner.

I am in training for the London marathon but not for lifting these documents. I can hardly carry them. As I have said, these are the only copies available. I urge you, Mr. Deputy Speaker, to consider the matter with the Clerks and perhaps to ask for a business statement from the Leader of the House on the suspension of the sitting so that hon. Members may have an opportunity to examine these documents.

Mr. Deputy Speaker (Mr. Ernest Armstrong)

I can only reiterate what Mr. Speaker has said. That is a matter of complaint against the Government; it is not a matter for me in the Chair.

Mr. Davies

The points made by my hon. Friend are again indicative of how ill-thought out, how ill-considered and how ill-prepared the Bill is.

Mr. Michael Foot (Blaenau Gwent)

Further to the point of order, Mr. Deputy Speaker. A most serious point has been made by my hon. Friend the Member for Workington (Mr. Campbell-Savours) and others. Can we not have a statement from the Government? I fully understand that it is not in your power to change the proceedings that have been put down, but it is certainly within the power of the Minister who is supposedly in charge of the Bill to get up and make a statement. He could be asked to make a statement and to give some explanation. If he cannot give an explanation to the House, it is utterly intolerable that the Bill should proceed in these circumstances. I urge that an opportunity be given to a spokesman for the Government to make a statement about the complaints.

Mr. Campbell-Savours

Further to that point of order, Mr. Deputy Speaker. I am sorry to press the matter but my right hon. Friend the Member for Blaenau Gwent (Mr. Foot) has raised a point in addition to the points that were raised earlier by my hon. Friends. My hon. Friend the Member for Dunfermline, West (Mr. Douglas) brought documents to the Chamber after Mr. Speaker had given his former ruling. This was new evidence in support of the case for the suspension of the sitting. In the light of the new information, Mr. Deputy Speaker, I wonder whether you would suspend the sitting for 15 minutes to examine whether there has been an abuse of our proceedings in so far as it is unreasonable and unfair to place a responsibility on hon. Members to consume all the information that is available in those documents prior to being able to debate the Bill responsibly.

Mr. Deputy Speaker

I have listened carefully and understand the concern of hon. Members, but this is not a matter for me. The complaint is against the Government. I have no doubt that the Minister has heard it and will reply in due course.

Mr. Denzil Davies

Further to that point of order, Mr. Deputy Speaker. The Minister of State owes the House at least an explanation why these important tender documents—I understand that we have not got the articles of association—arrived in the Library only a short time ago. It is extremely difficult for hon. Members to consider them. As well, we have not got the report of the Public Accounts Committee. I appreciate that Ministers did not give an assurance on that, but it is difficult for us to debate the new clauses without the PAC report, without having had time to consider the documents that are now available and without the articles of association which are germane to new clause 2. In view of the time the Government had to prepare the Bill, the time it was in Committee and the fact that there was the Easter Adjournment, we should expect a statement from the Minister of State at least as to why it has taken so long to make the documents available in the Library.

The Minister of State for Defence Procurement (Mr. Norman Lamont)

If I may intervene, I must point out that documents were made available on 3 April only to the companies interested in tendering. This has been the first opportunity since then when the documents could be made available to the House. The choice of business for the first day was discussed through the usual channels. The documents could not have been made available to the House before today. Of course, I accept that the right hon. Gentleman is making a serious point, but we are discussing the principles of the Bill. I appreciate that he would have liked to have had the documents earlier but there is no way in which they could have been made available to the House sooner.

Mr. Davies

That really will not do. It is all very well for the Minister of State to say that the companies had the documents only on 3 April and so this was the first opportunity on which they could be made available to the House. The Government could have postponed today's consideration of the Bill. It is no good saying that the Government's business managers brought the Bill on today. The Ministry of Defence is in charge of the Bill. The Minister of State could have said to the Government's business managers, "We cannot have this Bill on Tuesday because on Tuesday I shall be delivering in a pantechnicon or whatever these enormous documents to the Library of the House and I want to make sure that hon. Members have time to read the documents before the debate takes place." The primary responsibility for putting the Bill through the House lies with the hon. Gentleman. It is no good the hon. Gentleman trying to hide behind the Government's business managers. He should have said, "Postpone the Bill for a week," and that would have happened.

Dr. Owen

Further to the point of order, Mr. Deputy Speaker. There may be some misunderstanding because the documents which I have relate only to Devonport, and there is only one copy. The copies that the right hon. Member for Llanelli (Mr. Davies) referred to relate to Rosyth. We are discussing both dockyards, in which we have a considerable interest, and the only documents available are the contractual tenders. When the Minister of State and, more important, the Secretary of State reflect on this, they must realise that we are in an intolerable position because new clause 1 relates to financial assets and costs and the Government's judgments about the effects and consequences for the defence budget.

We could help the Minister out. We are reasonable people. If we could have a suspension of an hour or two, the business of the House would be expedited. The danger in the Government not giving way is that we may have to resort to the traditional weapon available to all Oppositions. We have been most reluctant to use that weapon as none of us wishes to filibuster.

Mr. Gordon Brown (Dunfermline, East)

Further to that point of order, Mr. Deputy Speaker. Are you aware that the Minister of State's statement does not fully accord with the facts available to me? He has given us the impression that these documents were put in the Library on the earliest possible occasion. When I telephoned the Ministry of Defence this morning to ask that these documents be made available immediately, I was told that it was under instructions not to place them in the Library until 2.30 this afternoon. When I went to the Library at 2.30 pm, the documents had not arrived and I had to remind the Ministry about them. The documents arrived at 3 pm, so the Minister of State's statement that he did everything possible to make them available at the earliest opportunity does not accord with the timetable of events that has led to this sorry state of affairs this afternoon.

The Minister of State was asked specifically in a written question before Easter to delineate the costs involved in the Government's dockyards privatisation scheme. He replied that he would write to me as soon as possible. We are now debating new clause 1, but there has been no reply. The Leader of the House should come to the House to make a statement about why official business has been affected by the Ministry of Defence's reluctance to bring vital documents to the House.

Mr. Douglas

Further to the point of order, Mr. Deputy Speaker. I must apologise to the House because, in my eagerness, I brought not the articles of association, but the tender documents. To the best of my knowledge, we do not have the articles of association of these companies. Nevertheless, it is very clear to all who have eyes to see and ears to hear that we are most disturbed at the method and approach adopted by the Government.

4.45 pm

I suggest, Mr. Deputy Speaker, that you consider whether it is in order to suspend the sitting until the Leader of the House is available to make a statement on the business of the House and to decide whether we should proceed, in view of the difficulties in which we have been placed by the Government's mismanagement.

Mr. Tam Dalyell (Linlithgow)

Further to that point of order, Mr. Deputy Speaker. You may recollect that this is not the first occasion in this Session when Ministers have engaged in such parliamentary hanky-panky. You will recall that, during the debates on the Westland affair, the text of the Solicitor-General's letter was promised by the Leader of the House. When we went to the Library, we found that it was there, but under embargo on the orders of a higher authority—which later turned out to be 10 Downing street—that it should not be released.

Some of us believe that the heart of the Leader of the House is often in the right place. He said that the full text of the Solicitor-General's letter, and not the selective text leaked for political purposes, should be made available before the debate on Westland. Should we not wait, Mr. Deputy Speaker, until the arrival of the Leader of the House, who has previously proved himself to be relatively enlightened and has put the House of Commons before party political interests?

Mr. Foot

Further to that point of order, Mr. Deputy Speaker. The Secretary of State for Defence has now arrived and he will have heard the strong sense of dismay that has been expressed in many parts of the House on this matter. He must recognise that he has a responsibility. It is open to him to move that the sitting be suspended for 10 minutes, or to get agreement to that. I am not suggesting that that would solve the problem, as the House has a right to study the documents.

The Government's statement has only made matters worse. It would be intolerable if the House were asked to discuss the Bill when there is confusion about the availability of documents and the form in which they have been presented. I urge the Minister to communicate with the Leader of the House. The proceedings here are his responsibility. The Secretary of State for Defence also has a responsibility, and he should announce that he will send at once for the Leader of the House to come to the House's aid to get our business in proper order.

Mr. Deputy Speaker

Perhaps I can help the House. I have listened carefully to the strong representations that have been made on the point of order, but the complaint is against the Government and not a matter for the Chair. I see no reason why we should not pursue our discussion of new clause 1. The Secretary of State and others have heard the point of order. It is for the House to decide how it will get the information that it requires. It is not a matter for me.

Mr. O'Neill

Further to the point of order, Mr. Deputy Speaker. I think that, with respect, you are not in full possession of the facts. The volumes are the Ministry of Defence royal dockyards invitation to tender for the operation and management of Her Majesty's dockyards at Devonport and Rosyth. We have so far skated around the nature of the documents. If we are to be in any position to consider the Bill, we have to have an opportunity to reflect on those documents.

The two substantial documents beside me relate only to Rosyth dockyard. I think that the right hon. Member for Plymouth, Devonport (Dr. Owen) would not regard it as disrespectful of me to say that he filched the documents relating to Devonport from the Library without the permission of the Librarian. The dockyard is in his constituency, but we were not allowed to take the documents out of the Library. My hon. Friend the Member for Dunfermline, West (Mr. Douglas) requested and was subsequently granted the loan of the Rosyth documents.

We are discussing three substantial volumes, one of which is complex, to say the least. Its contents are set out in indexes which run to some four pages. The information might seem somewhat arcane to the hon. Member for Wells (Mr. Heathcoat-Amory) who participated virtually not at all in Committee, but some of us became students of the publications of Touche Ross, albeit only those which were made freely available. Some were not made available in Committee as there was a cloak of secrecy masquerading as commercial confidentiality which prevented our seeing the documents.

We could get through this pile of memorandums fairly quickly, as most of us know our way around the dockyards, having spent some 70 hours debating them in Committee. That is all the more reason to be given a reasonable amount of time to consider the documents.

This is not an attempt at filibustering. We are anxious to make progress. However, the Government's managers should appreciate the difficulties under which not only Opposition Members but Conservative Back Benchers will labour today unless there is an adjournment during which we can look at these documents. I admit that that will be very difficult, because there is only one copy. However, if we could have a 30-minute adjournment it could be split up between those Opposition Members who served on the Standing Committee and looked at very carefully.

Surely there is a mechanism whereby the Leader of the House, the Government's business manager, can be summoned to the Chamber to explain why the Government have allowed the Ministry to deal with hon. Members in such a disrespectful manner. There ought to be a mechanism whereby the rights and responsibilities of the Government can be questioned in this Chamber. You as our protector, Mr. Deputy Speaker, should be able to bring the Leader of the House to the Chamber and ask him to provide an explanation for an action that is leaving an extremely sour taste in the mouths of, I think, all hon. Members, certainly in those of Opposition Members.

Mr. Deputy Speaker

Let me remind the House that all that is happening at the moment is that new clause 1, which was tabled by the Opposition, is being proposed. I see no reason at all why we should not continue to discuss new clause 1. If the usual channels, or any other hon. Members, want to make representations to each other, that is another matter, but it is not a matter for me. I see no reason why we should not continue to discuss new clause 1.

Mr. Dalyell

Further to that point of order, Mr. Deputy Speaker. I am wondering whether this is symptomatic of the difficulties that the Leader of the House may have with the Ministry of Defence. It will be within your recollection that on 25 March, at column 865, I raised in detail and at some length the case of Mr. Jim Smith, a whistle blower at the Ministry of Defence—

Mr. Deputy Speaker


Mr. Dalyell

—on which my hon. Friend the Member for (Workington) (Mr. Campbell-Savours) has done so much work.

Mr. Deputy Speaker

Order. I am on my feet. I do not see the relevance of that point of order.

Mr. Dalyell

The relevance of that point of order is to be found in column 879 when the Leader of the House said: I shall look at the points made by the hon. Member for Linlithgow about Jim Smith and shall get in touch with my right hon. Friend the Secretary of State for Defence. I understand the analogy the hon. Gentleman drew with the pit prop case in the 1960s and 1970s. I then asked him: Will the right hon. Gentleman raise James Smith's case with the Treasury? The Leader of the House said: Yes, certainly."—[Official Report, 25 March 1986; Vol. 94, c. 879.] Since then I have heard nothing. I am wondering whether the Leader of the House stands in too much awe of the Ministry of Defence. These are matters on which he ought to be in a position to tell the Ministry, whatever the pecking order may be, what it ought to be doing.

Mr. Deputy Speaker

Order. I am even more convinced now that the hon. Gentleman's contribution is not relevant to the discussion of new clause 1.

Mr. John McWilliam (Blaydon)

Further to that point of order, Mr. Deputy Speaker. As you rightly said, the fixing of the business of this House is a matter for the Leader of the House, but that is not what we are discussing. We are discussing documents that have been laid in the Library of this House. The assumption is that those documents are available to all hon. Members. Since the only copy is lying down there at the Dispatch Box, it is patently not the case that all hon. Members had an opportunity to see the documents before this debate began. Ministers have seen those documents and copies have been laid in the Library, but my hon. Friends and I have not yet had an opportunity to see them. The contents of those documents are germane to the debate.

My hon. Friend the Member for Clackmannan (Mr. O'Neill) raised a point that is germane to new clause 1. We are asking that the House should be adjourned for 15 minutes so that the advice of the Leader of the House can be sought about how to proceed. I do not know how we can continue with this debate since we have been unable to consider properly the information that is contained in those documents. It will be impossible to consider the amendments without having had an opportunity to study them. The Minister chose to lay those documents in the Library. It was his choice. If he had chosen not to do so it might have been possible to continue with this debate. However, as he chose to lay those documents in the Library he will undoubtedly say that the information is there, although we have had no opportunity to study it. Therefore, both sides of the House are being put in an unfair position.

I agree that it is the duty of the Leader of the House to fix the business of the House but it is for the Chair to determine whether a debate can properly and fairly take place. Information has been made available and placed in the Library of the House and all hon. Members must, in justice, be given an opportunity to study it, otherwise the matter cannot properly be debated.

Mr. Deputy Speaker

I have listened carefully to that lengthy point of order. It merely reiterates what has already been said. The complaint is against the Government. I have said already on four or five occasions that it is not a matter for me.

Mr. Douglas

Further to that point of order, Mr. Speaker. I have great respect for your views and constitutional knowledge and for the guidance that we receive but, with great respect, you keep reiterating that the complaint is against the Government and that it is not a matter for you. However, I ask you to reflect upon the need to defend the rights of hon. Members. We are discussing the Report stage, and we will presumably also debate the Third Reading of a four clause Bill. It is an enabling Bill. In order to put flesh upon it, the Government, in their wisdom, or otherwise, have provided information to the House regarding their intentions.

During the Committee stage, the Government produced a large number of documents, to some of which hon. Members have access, including volume 1 of the Touche Ross report. There was also access, on a restricted basis, to volumes 2 and 3. The documents that were placed in the Library today are either important or unimportant. The Government thought that they were so important that they placed them in the Library. In order to protect the interests of the House, hon. Members are entitled to ask for your support, Mr. Deputy Speaker, in seeking an opportunity to examine the documents.

The Bill was amended in Standing Committee D. It says: Ordered, by the House of Commons, to be Printed, 18 March 1986. It also says: Presented by Mr. Secretary Heseltine …Mr. Secretary Brittan. Neither of them now holds office. This point ought, perhaps, to have caught my eye earlier, but I ask you now to pronounce on the authenticity of the document and to say whether it is in order that the names of the right hon. Member for Henley (Mr. Heseltine) and the right hon. and learned Member for Richmond, Yorks (Mr. Brittan) should appear on the face of the Bill as presenting it for Report and Third Reading since they no longer hole the positions set out on the face of the Bill. Therefore, the Bill that is now before the House is not in my view accurate.

5 pm

Mr. Deputy Speaker

As far as the presentation is concerned, as the hon. Member knows, the names mentioned were those of the Ministers who presented the Bill in the first place. I understand the concern but, if we are talking about protecting Members, and so on, it is in their best interests to allow the right hon. Member for Llanelli (Mr. Davies) to propose the new clause. The exchanges have been heared and I have no doubt that, according to custom, all sorts of other exchanges will take place. I see no reason at all why we should not get on with new clause 1, which has been tabled by the Opposition and which the hon. Member wants to propose.

Mr. Campbell-Savours

On a point of order, Mr. Deputy Speaker. You say that you "can see no reason at all". Perhaps I could give you the reason why, in my view, the Bill cannot possibly proceed.

My hon. Friend the Member for Dunfermline, West (Mr. Douglas) made an important point. He said that he had contacted the Ministry of Defence this morning about documents which were to be placed in the Library and had been informed that those documents would not be available, to use his words, until early this afternoon. The Minister states that he had them made available at the earliest possible opportunity. There is a contradiction there, unless the Minister can explain to the House that there was a reason why those documents, which were published and which we can see here, were not made available this morning when my hon. Friend sought them.

Mr. Deputy Speaker

Order. I may join in deploring conduct, and so on, but what the Minister said or did not say is not for me. It is not a matter for me as far as the proceedings this afternoon are concerned.

Mr. Campbell-Savours

Further to my point of order, I would say that indeed it is a matter for the Chair in so far as the Minister has indicated to the House what his intention was because his actions do not fit his intentions. Yet his actions have a direct bearing on the ability of Members to debate this matter.

Further to that, Mr. Deputy Speaker, may I refer you to the undertaking given by the Minister in Standing Committee D on 13 March. He said: The Government's plans are about more than profit and loss. I shall not follow the right hon. Member for Llanelli (Mr. Davies) down the path that he took on costings. The crucial word is "costings", because we have a whole series of amendments which deal, as I understand it, with that matter. The Minister went on: It is not relevant to the Bill. But, as I said last Tuesday, the House will be able to debate on Third Reading the policy issues, including questions of costings". Then he said, as an addendum to his statement,

on which the Public Accounts Committee may by then have reported."—[Official Report, Standing Committee D, 13 March 1986; c. 777.] It was clear at that stage: during the course of the Committee's proceedings that the Minister's way of dealing with the amendments was to draw attention to the fact that when those matters were to be debated on the Floor of the House there would be information available to Members of the House. That information is not available. In other words, the Minister effectively misled the Committee into believing that information would be made available. He may shake his head, but the record is there in Hansard. It is very clear from what he said that he intended that information on the question of costings to be made available to the House. It is not available, and it is on that basis—

Mr. Deputy Speaker

The hon. Member may feel that the Minister has not honoured certain undertakings, but that is a matter for debate; it is not a matter for me. I really think that we ought to get on and proceed with new clause 1.

Mr. Denzil Davies

Further to that point of order, Mr. Deputy Speaker. My hon. Friend the Member for Dunfermline, West (Mr. Douglas) made a very important point when he said that he was told by an official at the Ministry of Defence that he could not see the documents until 2.30 this afternoon. In view of that statement, we need to be told by the Minister of State whether that was indeed the case.

Mr. Deputy Speaker

That is a matter for the Minister of State; it is not a matter for me.

Mr. Davies

But it does affect the conduct of this debate because we are raising points of order that relate to documents that really should have been made available to the House before now. This is a four-clause Bill. It is a piece of enabling legislation. Most of the legislation—if I can use that word—takes place outside the Bill. It takes place in contracts, articles of association, invitations to tender, reports made by management consultants such as Touche Ross. It takes place in reports that we were not allowed to see in the Committee, that even hon. Members for constituencies where the dockyards are located, Rosyth and Plymouth, Devonport, were not allowed to see. This is an unusual Bill in that it does not contain much of the information that is needed to debate the Bill.

New clause 1 deals with costings, new clause 2 deals with foreign ownership, new clause 3 deals with redundancy payments. Many of these matters are dealt with in these very documents. The document about the scheduling and valuation of assets is crucial to new clause 1. It is not possible to determine whether there will eventually be profit or loss until we know what the value of the assets is. New clause 1 calls for a balance sheet, a report before the House of Commons. Without some kind of indication from the Government this is not possible.

The business of the House was determined in respect of this Bill before the Easter vacation. The agreements were made then. There was plenty of time from the beginning of the vacation to last week for these documents to be placed in the Library of the House. So I think that the Minister should tell us whether there was a policy decision that these documents were commercially confidential and could not be allowed into the Library of the House before the last minute, that they must be treated like quasi-secret budget documents. That is the issue at stake.

This Bill is open-ended. There is no guillotine on it. There was no guillotine in Committee. Therefore, it is quite possible for this debate to continue for most of today and, indeed, into tomorrow. There is no pressure of time.

What we are asking is that consideration be given to allowing an adjournment to enable us to look at these documents—documents which appeared in the Library of the House only 30 minutes before this debate was scheduled to take place. This would give us an opportunity to study them and see how germane they are to the new clauses we are debating. Then perhaps we could come back and start debating those clauses. We are merely asking for time to enable us to debate these new clauses properly.

Mr. Foot

Further to the points of order that have been put to you, Mr. Deputy Speaker. I certainly appreciate, as I think every Member of the House appreciates, the difficulty in which you are placed because you are asked to deal with a matter that is primarily a question for the Government.

This is an extraordinary state of affairs. We have had one short intervention from the Government when these points of order were being raised on matters concerning the proper conduct of this debate. We now have an unprecedented state of affairs. The Secretary of State in charge of the Bill looked in for a few minutes, but then he skedaddled; he seems to have gone off. He is not taking any responsibility although his name is certainly on the back of the Bill, whatever names have been removed. For the Secretary of State for Defence to look in for a few minutes, see that there is some trouble over a Bill for which he is primarily responsible and then run away is, I think, appalling.

We also had for a minute or so the presence of the Patronage Secretary. He should know what the situation is.

It is intolerable that the Government should think that they can continue with this Bill without the Leader of the House being brought here to say how we are to proceed upon it. For the very reason that you have underlined, Mr. Deputy Speaker, that you are put in such difficulties in the matter, I think it behoves the Minister himself to make a fresh statement. Surely he must understand that the Bill cannot properly be discussed in the circumstances in which he has presented it to the House of Commons. It is to him and to the Government that our main demands are made. We believe that the Government should take the procedural step of asking for an adjournment of the House. If that happened, matters could proceed in an orderly fashion.

Dr. Owen

Further to that point of order, Mr. Deputy Speaker. In the time that has elapsed during this discussion, it has become clear that the draft memorandum and articles of association of the dockyard company have been submitted to the House through annexe 4.1 to this document. Therefore, the third crucial document is available, although only in draft form, in an annexe to the tendering documents. That is a further argument on which the Government should reflect.

It is extraordinarily difficult to discuss the Bill and the corporate structure of the dockyards without having considered the articles of association which in Committee the Minister made clear he hoped to publish. The draft documents are now available, although I have not yet been able to get hold of the annexe in the time available to me. I assure the House that they were not filched, but given with the full authorisation of the lady librarian to me in my capacity as a constituency Member in order to carry out what we hope will he a serious examination of the legislation.

As the right hon. Member for Blaenau Gwent (Mr. Foot) said, you are in an extremely difficult position, Mr. Deputy Speaker. Everyone is aware that this is not a decision for you, and that we are having to use this procedural device to draw attention to the Government's problem. It would help us greatly if the Minister or the Parliamentary Under-Secretary of State would come to the Dispatch Box and explain how we should proceed.

The right hon. Member for Llanelli (Mr. Davies) made it clear that he conducted the business in Committee, ably assisted by my hon. Friend the Member for Portsmouth, South (Mr. Hancock), through consent. There were no problems and there was no timetabling. We are not in a mood to create difficulties for the Government. If they wish to reintroduce the matter on another day, the business of the House can be proceeded with on an arranged basis. I am a little sceptical about a short adjournment because the more we look at the documents, the longer we shall need to consider them. Business could be arranged through the usual channels. I understand that there is an order on general practice expenses to be debated after this matter, and the House could well examine it. It is not as if all the Government's business would fall if this business were withdrawn.

In that spirit, we should like the Minister to answer. You, Mr. Deputy Speaker, have valiantly sought to direct the attention to the Government, but, as yet, the Minister has not felt able to come to the Dispatch Box, apart from his rather short interjection. If the Minister will explain how he intends to proceed, I am sure that we would all be grateful. We should like to hear how he anticipates proceeding. Otherwise, this will take rather a long time.

Mr. Deputy Speaker

I am sure that an adjournment of 15 or 20 minutes would satisfy nobody. I have listened carefully and we have had a long time for substantial representations to be made. They have been made strongly, and a period of reflection has undoubtedly been made available to Government Members. I do not wish to take any further points of order on this matter. I have heard all that I want to hear. I am sure that we should proceed with new clause 1, and then we shall hear the Minister's reply.

Mr. Campbell-Savours

I beg to move, That strangers do withdraw.

Notice being taken that strangers were present, MR. DEPUTY SPEAKER, pursuant to Standing Order No. 136 (Withdrawal of strangers from House), put forthwith the Question, That strangers do withdraw:—

The House divided: Ayes 110, Noes 259.

Division No. 118] [5.14 pm
Adams, Allen (Paisley N) Fields, T. (L'pool Broad Gn)
Archer, Rt Hon Peter Fisher, Mark
Ashley, Rt Hon Jack Foot, Rt Hon Michael
Banks, Tony (Newham NW) Forrester, John
Barnett, Guy Foster, Derek
Barron, Kevin Foulkes, George
Beckett, Mrs Margaret Fraser, J. (Norwood)
Bennett, A. (Dent'n & Red'sh) Gilbert, Rt Hon Dr John
Bidwell, Sydney Gourlay, Harry
Blair, Anthony Hamilton, James (M'well N)
Boothroyd, Miss Betty Hamilton, W. W. (Fife Central)
Boyes, Roland Harman, Ms Harriet
Brown, Gordon (D'f'mline E) Hattersley, Rt Hon Roy
Brown, Hugh D. (Provan) Haynes, Frank
Brown, N. (N'c'tle-u-Tyne E) Home Robertson, John
Brown, Ron (E'burgh, Leith) Hughes, Dr Mark (Durham)
Buchan, Norman Hughes, Robert (Aberdeen N)
Caborn, Richard Hughes, Roy (Newport East)
Callaghan, Jim (Heyw'd & M) Hughes, Sean (Knowsley S)
Campbell-Savours, Dale John, Brynmor
Clark, Dr David (S Shields) Kaufman, Rt Hon Gerald
Clarke, Thomas Lambie, David
Clay, Robert Leighton, Ronald
Clelland, David Gordon Litherland, Robert
Cocks, Rt Hon M. (Bristol S) McKay, Allen (Penistone)
Cook, Frank (Stockton North) McTaggart, Robert
Corbett, Robin McWilliam, John
Craigen, J. M. Madden, Max
Cunliffe, Lawrence Marek, Dr John
Dalyell, Tam Martin, Michael
Davies, Rt Hon Denzil (L'lli) Mason, Rt Hon Roy
Davies, Ronald (Caerphilly) Maxton, John
Deakins, Eric Maynard, Miss Joan
Dixon, Donald Michie, William
Eadie, Alex Mikardo, Ian
Eastham, Ken Miller, Dr M. S. (E Kilbride)
Edwards, Bob (W'h'mpt'n SE) Morris, Rt Hon A. (W'shawe)
Ewing, Harry O'Neill, Martin
Fatchett, Derek Orme, Rt Hon Stanley
Faulds, Andrew Park, George
Field, Frank (Birkenhead) Patchett, Terry
Pavitt, Laurie Strang, Gavin
Pendry, Tom Thomas, Dr R. (Carmarthen)
Pike, Peter Thompson, J. (Wansbeck)
Powell, Raymond (Ogmore) Thorne, Stan (Preston)
Redmond, Martin Torney, Tom
Rees, Rt Hon M. (Leeds S) Wardell, Gareth (Gower)
Rogers, Allan Wareing, Robert
Sheerman, Barry Weetch, Ken
Sheldon, Rt Hon R. Wigley, Dafydd
Shore, Rt Hon Peter Wilson, Gordon
Short, Mrs R.(W'hampt'n NE) Winnick, David
Skinner, Dennis Young, David (Bolton SE)
Smith, C.(Isl'ton S & F'bury)
Smith, Rt Hon J. (M'ds E) Tellers for the Ayes:
Soley, Clive Mr. Dick Douglas and
Stott, Roger Mr. Bruce George.
Adley, Robert Gardiner, George (Reigate)
Alison, Rt Hon Michael Gardner, Sir Edward (Fylde)
Alton, David Garel-Jones, Tristan
Ancram, Michael Gilmour, Rt Hon Sir Ian
Ashby, David Goodlad, Alastair
Ashdown, Paddy Gorst, John
Aspinwall, Jack Gower, Sir Raymond
Atkins, Rt Hon Sir H. Grant, Sir Anthony
Atkins, Robert (South Ribble) Greenway, Harry
Baker, Nicholas (Dorset N) Gregory, Conal
Beaumont-Dark, Anthony Griffiths, Sir Eldon
Beith, A. J. Griffiths, Peter (Portsm'th N)
Best, Keith Grist, Ian
Biffen, Rt Hon John Ground, Patrick
Biggs-Davison, Sir John Hamilton, Hon A. (Epsom)
Body, Sir Richard Hamilton, Neil (Tatton)
Boscawen, Hon Robert Hampson, Dr Keith
Bowden, Gerald (Dulwich) Hancock, Michael
Brandon-Bravo, Martin Hanley, Jeremy
Brinton, Tim Hannam, John
Browne, John Hargreaves, Kenneth
Bruce, Malcolm Harris, David
Bryan, Sir Paul Harvey, Robert
Buchanan-Smith, Rt Hon A. Haselhurst, Alan
Buck, Sir Antony Hawksley, Warren
Burt, Alistair Hayes, J.
Carlile, Alexander (Montg'y) Heathcoat-Amory, David
Carlisle, John (Luton N) Hill, James
Carlisle, Kenneth (Lincoln) Hirst, Michael
Carlisle, Rt Hon M. (W'ton S) Holland, Sir Philip (Gedling)
Cartwright, John Holt, Richard
Chapman, Sydney Hordern, Sir Peter
Clark, Sir W. (Croydon S) Howarth, Alan (Stratf'd-on-A)
Cockeram, Eric Howarth, Gerald (Cannock)
Colvin, Michael Howell, Rt Hon D. (G'Idford)
Coombs, Simon Howell, Ralph (Norfolk, N)
Cope, John Howells, Geraint
Couchman, James Hubbard-Miles, Peter
Cranborne, Viscount Hunter, Andrew
Currie, Mrs Edwina Jackson, Robert
Dickens, Geoffrey Jenkin, Rt Hon Patrick
Dorrell, Stephen Jessel, Toby
Douglas-Hamilton, Lord J. Jones, Robert (Herts W)
Dover, Den Jopling, Rt Hon Michael
Durant, Tony Joseph, Rt Hon Sir Keith
Dykes, Hugh Kellett-Bowman, Mrs Elaine
Emery, Sir Peter Key, Robert
Eyre, Sir Reginald Kilroy-Silk, Robert
Fairbairn, Nicholas King, Roger (B'ham N'field)
Fallon, Michael Kirkwood, Archy
Farr, Sir John Knight, Dame Jill (Edgbaston)
Favell, Anthony Knowles, Michael
Fenner, Mrs Peggy Lamont, Norman
Finsberg, Sir Geoffrey Lang, Ian
Fookes, Miss Janet Latham, Michael
Forth, Eric Lee, John (Pendle)
Fox, Marcus Leigh, Edward (Gainsbor'gh)
Franks, Cecil Lennox-Boyd, Hon Mark
Fraser, Peter (Angus East) Lewis, Sir Kenneth (Stamf'd)
Freeman, Roger Lilley, Peter
Fry, Peter Livsey, Richard
Galley, Roy Lloyd, Peter (Fareham)
Lloyd, Tony (Stretford) Shaw, Sir Michael (Scarb')
Lord, Michael Shelton, William (Streatham)
Luce, Rt Hon Richard Shepherd, Colin (Hereford)
Lyell, Nicholas Shepherd, Richard (Aldridge)
McCrindle, Robert Shersby, Michael
McCurley, Mrs Anna Short, Ms Clare (Ladywood)
MacKay, Andrew (Berkshire) Silvester, Fred
MacKay, John (Argyll & Bute) Sims, Roger
McNair-Wilson, M. (N'bury) Skeet, Sir Trevor
McNair-Wilson, P. (New F'st) Smith, Tim (Beaconsfield)
Major, John Soames, Hon Nicholas
Malins, Humfrey Speed, Keith
Malone, Gerald Spencer, Derek
Maples, John Spicer, Jim (Dorset W)
Marlow, Antony Spicer, Michael (S Worcs)
Mates, Michael Squire, Robin
Mather, Carol Stanbrook, Ivor
Maxwell-Hyslop, Robin Stanley, Rt Hon John
Mayhew, Sir Patrick Steel, Rt Hon David
Meadowcroft, Michael Steen, Anthony
Mellor, David Stern, Michael
Merchant, Piers Stevens, Lewis (Nuneaton)
Meyer, Sir Anthony Stewart, Allan (Eastwood)
Miller, Hal (B'grove) Stewart, Andrew (Sherwood)
Mills, Iain (Meriden) Stewart, Ian (Hertf'dshire N)
Mills, Sir Peter (West Devon) Stokes, John
Miscampbell, Norman Stradling Thomas, Sir John
Mitchell, David (Hants NW) Sumberg, David
Moate, Roger Tapsell, Sir Peter
Monro, Sir Hector Taylor, John (Solihull)
Montgomery, Sir Fergus Taylor, Teddy (S'end E)
Moore, Rt Hon John Tebbit, Rt Hon Norman
Morrison, Hon C. (Devizes) Temple-Morris, Peter
Moynihan, Hon C. Terlezki, Stefan
Mudd, David Thatcher, Rt Hon Mrs M.
Neale, Gerrard Thompson, Patrick (N'ich N)
Nelson, Anthony Thorne, Neil (Ilford S)
Neubert, Michael Thurnham, Peter
Newton, Tony Townsend, Cyril D. (B'heath)
Nicholls, Patrick Tracey, Richard
Norris, Steven Trippier, David
Onslow, Cranley van Straubenzee, Sir W.
Ottaway, Richard Viggers, Peter
Owen, Rt Hon Dr David Waddington, David
Page, Richard (Herts SW) Wainwright, R.
Parris, Matthew Wakeham, Rt Hon John
Patten, J. (Oxf W & Abgdn) Walden, George
Pawsey, James Walker, Bill (T'side N)
Penhaligon, David Wall, Sir Patrick
Percival, Rt Hon Sir Ian Wallace, James
Pollock, Alexander Waller, Gary
Porter, Barry Ward, John
Powell, William (Corby) Wardle, C. (Bexhill)
Prentice, Rt Hon Reg Warren, Kenneth
Proctor, K. Harvey Watts, John
Rathbone, Tim Wells, Bowen (Hertford)
Rees, Rt Hon Peter (Dover) Wheeler, John
Rhodes James, Robert Whitney, Raymond
Rhys Williams, Sir Brandon Wiggin, Jerry
Richardson, Ms Jo Wilkinson, John
Ridley, Rt Hon Nicholas Winterton, Nicholas
Robinson, Mark (N'port W) Wolfson, Mark
Roe, Mrs Marion Wood, Timothy
Rooker, J. W. Woodcock, Michael
Rowe, Andrew Yeo, Tim
Rumbold, Mrs Angela
Ryder, Richard Tellers for the Noes:
Sackville, Hon Thomas Mr. Donald Thompson and
St. John-Stevas, Rt Hon N. Mr. Francis Maude.
Shaw, Giles (Pudsey)

Question accordingly negatived.

Mr. Denzil Davies

On a point of order, Mr. Deputy Speaker. The House has voted, and I understand that the Leader of the House is fairly close to the Division Lobbies. I now seek a statement from him about why the Government placed these important documents in the Library of the House less than one hour before the debate was due to take place. I remind the House that we are discussing a four-clause Bill; indeed, three of those clauses are little longer than two or three lines. We are debating enabling legislation, and this House has traditionally been suspicious and most concerned about such legislation.

The background to this is that, until numerous documents are studied, it is extremely difficult for the House to debate fully the difficult questions involved. As one example, I refer to the cost of privatising the royal dockyards. One document placed in the Library but half an hour before the debate was due to start sets out a schedule of the assets which will still be held by the Ministry of Defence but the use of which will be given to the private contractor to enable that contractor to operate the dockyards. The valuation placed on those assets and the cost of their use is absolutely crucial in determining questions of profit and loss.

The first new clause is concerned with striking a balance sheet and determining for the benefit of this House and the taxpayer whether the whole operation will result in a loss or gain of money to the taxpayer. Without studying that document, without being able to see what assets will be allowed to be used, leased or granted by licence to the private contractor, and without seeing what price will be put on these obligations, it is impossible for this House to consider new clause 1.

New clause 2 is concerned with foreign ownership of the dockyards and with the share structure of the different companies. I am told that two, three or four consortia of companies are involved. Again, the share structure of these companies is involved, and the key issue is whether the Government have been able to obtain for themselves the "golden share" control, as used in previous privatisation Bills, because this Bill contains nothing about it. It is also crucial to be able to study the articles of association, because it is impossible to debate new clause 2 fully until we have seen the articles to discover how the Government intend to ensure—if they want to ensure—that these dockyards do not finally fall under foreign control.

5.30 pm

There is a pile of documents called "Invitations to Tender". They will go out to the various companies which will then be allowed to tender for the contract to run the royal dockyards. The documents contain provisions which will be set in those contracts and those provisions must bear upon the three new clauses we shall debate. They must bear upon profit and loss, upon costs to the taxpayer and upon the share structure of the different companies.

New clause 3 is concerned with redundancy payments and pensions. I should have thought that the contracts must refer to the provisions regarding redundancies and pensions. We were told in Committee that, apparently, the Ministry of Defence would pay the pensions of the employees who had been transferred from the public to the private sector. We were told that, apparently, the contracts would contain provisions whereby the private contractor would have to add to the sum he would charge the Ministry of Defence to provide a proper pension comparable to the pensions provided in the public sector.

We are not asking for the contracts—we are asking to be allowed to see the invitations to tender. Many of the details are contained in these documents. A large number of the documents to which reference was made in Committee were considered to be secret or in confidence commercially and Committee members were not allowed to see them. The House will not be allowed to see them until the Bill becomes law.

It is not just a matter of documents not being available until within the last few hours. We are concerned with enabling legislation, which depends for its understanding and debate on a vast number of documents which have not been available to the House. When we debated the matters in Committee, we accepted Ministers' assurances in good faith. They told us, "These documents will be available for debate on the Floor of the House." We did not think that they would be made available only half an hour before the House was due to debate them. That is the burden of our complaint.

The documents could have been made available long before today. We have had the Easter recess. The documents could have been made available two or three weeks ago. It is no good the Under-Secretary of State for Defence Procurement shaking his head. He should tell the House why it was not possible to make the documents available. The Minister of State said that he could not do so because he gave them to the companies on 3 April. Time and time again, in the interests of the companies, their directors and outside parties, that is what happened with documents of paramount importance to Committee members. That is why we accepted the assurances that the documents would be provided. All the documents have still not been provided, but I think that most of those we were promised are here by now. They were available only half an hour ago and we have not, therefore, had an opportunity to study them before debating this important legislation.

This is not just another privatisation Bill. It transfers the operations of the royal dockyards from the public domain into the private sector. The Bill affects the livelihoods, pensions, redundancy payments and working practices of thousands of employees in Rosyth and Plymouth, Devonport. Because of the importance of these documents to this enabling legislation, which comprises four clauses—a skeletal piece of legislation—the Leader of the House should come to the Dispatch Box and tell us that the Bill will be withdrawn today, and will be brought back in a few days time. The Bill comprises only four clauses. It could certainly be dealt with next week without too much difficulty. If we had the documents, we could deal more rapidly with the Bill. If we do not have them, it will be much more difficult for us to deal with the clauses.

The Leader of the House should explain why we did not get the documents until half an hour before the debate was due to start. He should tell us that there is no urgency and that it will be possible to bring the Bill back next week. When we have had a chance to study the documents and to table amendments, the matter can be properly debated.

Mr. Deputy Speaker

Ministers have heard that request and submission. This is a matter not for me but for the Ministers concerned.

Mr. Douglas

On a point of order, Mr. Deputy Speaker.

Mr. Campbell-Savours

On a point of order, Mr. Deputy Speaker.

Mr. Deputy Speaker

Order. I shall not take any more points of order on the lack of documents. We must continue with the business.

Mr. Douglas

On a point of order, Mr. Deputy Speaker.

Mr. Deputy Speaker

Is it a different point of order?

Mr. Douglas

I ask you to reflect on your own words, Mr. Deputy Speaker. You said that you were not willing to take further points of order on the lack of documents. My point of order concerns not the lack but the superfluity of documents. With respect—

Mr. Deputy Speaker

Order. The hon. Member knows very well that we are talking about the lack of documents, whether they are the right documents, and so on. I am not prepared to take any more points of order on that matter. We must get on to the debate.

Mr. Campbell-Savours

On a point of order, Mr. Deputy Speaker.

Mr. Deputy Speaker

Order. Is it a different point of order?

Mr. Campbell-Savours

Yes, I want to raise a point of order about the position in which you find yourself when the Government take a particular approach to our procedures. In the past hour and a half, you have had to sit through a series of points of order. You have suggested repeatedly that those matters can be dealt with only by Ministers, especially the Leader of the House. It is clear that you believe that in your role as the protector of Members' rights you must, to some extent, rely upon Ministers fulfilling their responsibilities in the exercise of our procedures. Not once in the past one and a half hours—

Mr. Deputy Speaker

Order. The hon. Member is pursuing the issue which has been before the House for an hour and a half. I am not prepared to take any further points of order on that subject.

Mr. Campbell-Savours

It is a completely different matter.

Mr. Deputy Speaker

Order. The business will proceed better if hon. Members take note of the Chair.

Mr. McWilliam

I beg to move, That further consideration of the Bill, as amended, be now adjourned.

Mr. Deputy Speaker

I am prepared to accept the motion. Because the arguments have been raised over a considerable period, I shall use my powers to put the Question forthwith.

Question put:

The House divided: Ayes 169, Noes 239.

Division No. 119] [5.39 pm
Adams, Allen (Paisley N) Blair, Anthony
Alton, David Boothroyd, Miss Betty
Archer, Rt Hon Peter Boyes, Roland
Ashdown, Paddy Brown, Gordon (D'f'mline E)
Ashley, Rt Hon Jack Brown, N. (N'c'tle-u-Tyne E)
Atkinson, N. (Tottenham) Brown, Ron (E'burgh, Leith)
Bagier, Gordon A. T. Bruce, Malcolm
Banks, Tony (Newham NW) Buchan, Norman
Barnett, Guy Caborn, Richard
Barron, Kevin Callaghan, Rt Hon J.
Beckett, Mrs Margaret Callaghan, Jim (Heyw'd & M)
Beith, A. J. Campbell, Ian
Bell, Stuart Campbell-Savours, Dale
Benn, Rt Hon Tony Canavan, Dennis
Bennett, A. (Dent'n & Red'sh) Carlile, Alexander (Montg'y)
Bidwell, Sydney Cartwright, John
Clark, Dr David (S Shields) McKelvey, William
Clarke, Thomas McTaggart, Robert
Clay, Robert McWilliam, John
Clelland, David Gordon Madden, Max
Clwyd, Mrs Ann Marek, Dr John
Cocks, Rt Hon M. (Bristol S) Martin, Michael
Cook, Frank (Stockton North) Mason, Rt Hon Roy
Corbett, Robin Maxton, John
Corbyn, Jeremy Maynard, Miss Joan
Craigen, J. M. Meacher, Michael
Crowther, Stan Meadowcroft, Michael
Dalyell, Tam Michie, William
Davies, Rt Hon Denzil (L'lli) Mikardo, Ian
Davies, Ronald (Caerphilly) Millan, Rt Hon Bruce
Davis, Terry (B'ham, H'ge H'l) Miller, Dr M. S. (E Kilbride)
Deakins, Eric Morris, Rt Hon A. (W'shawe)
Dewar, Donald Morris, Rt Hon J. (Aberavon)
Dixon, Donald Nellist, David
Douglas, Dick O'Neill, Martin
Dubs, Alfred Orme, Rt Hon Stanley
Duffy, A. E. P. Owen, Rt Hon Dr David
Eadie, Alex Park, George
Eastham, Ken Parry, Robert
Evans, John (St. Helens N) Patchett, Terry
Ewing, Harry Pavitt, Laurie
Fatchett, Derek Pendry, Tom
Faulds, Andrew Penhaligon, David
Field, Frank (Birkenhead) Pike, Peter
Fields, T. (L'pool Broad Gn) Powell, Raymond (Ogmore)
Flannery, Martin Radice, Giles
Foot, Rt Hon Michael Randall, Stuart
Forrester, John Redmond, Martin
Foster, Derek Rees, Rt Hon M. (Leeds S)
Foulkes, George Richardson, Ms Jo
Fraser, J. (Norwood) Roberts, Allan (Bootle)
George, Bruce Robertson, George
Gilbert, Rt Hon Dr John Rogers, Allan
Godman, Dr Norman Rooker, J. W.
Gould, Bryan Ross, Stephen (Isle of Wight)
Gourlay, Harry Sedgemore, Brian
Hamilton, James (M'well N) Sheerman, Barry
Hamilton, W. W. (Fife Central) Sheldon, Rt Hon R.
Hancock, Michael Shore, Rt Hon Peter
Harman, Ms Harriet Short, Ms Clare (Ladywood)
Hart, Rt Hon Dame Judith Short, Mrs R.(W'hampt'n NE)
Hattersley, Rt Hon Roy Silkin, Rt Hon J.
Haynes, Frank Skinner, Dennis
Healey, Rt Hon Denis Smith, C.(Isl'ton S & F'bury)
Home Robertson, John Smith, Rt Hon J. (M'ds E)
Howell, Rt Hon D. (S'heath) Soley, Clive
Howells, Geraint Steel, Rt Hon David
Hoyle, Douglas Stott, Roger
Hughes, Dr Mark (Durham) Strang, Gavin
Hughes, Robert (Aberdeen N) Thomas, Dr R. (Carmarthen)
Hughes, Roy (Newport East) Thompson, J. (Wansbeck)
Hughes, Sean (Knowsley S) Tinn, James
Jenkins, Rt Hon Roy (Hillh'd) Torney, Tom
John, Brynmor Wainwright, R.
Kaufman, Rt Hon Gerald Wallace, James
Kennedy, Charles Wardell, Gareth (Gower)
Kilroy-Silk, Robert Wareing, Robert
Kirkwood, Archy Weetch, Ken
Lambie, David White, James
Lamond, James Wigley, Dafydd
Leighton, Ronald Wilson, Gordon
Lewis, Terence (Worsley) Winnick, David
Litherland, Robert Young, David (Bolton SE)
Livsey, Richard
Lloyd, Tony (Stretford) Tellers for the Ayes:
McCartney, Hugh Mr. Lawrence Cunliffe and
McKay, Allen (Penistone) Mr. Mark Fisher.
Alison, Rt Hon Michael Beaumont-Dark, Anthony
Ancram, Michael Best, Keith
Ashby, David Biffen, Rt Hon John
Aspinwall, Jack Biggs-Davison, Sir John
Atkins, Rt Hon Sir H. Body, Sir Richard
Atkins, Robert (South Ribble) Boscawen, Hon Robert
Baker, Nicholas (Dorset N) Bowden, Gerald (Dulwich)
Brandon-Bravo, Martin Hubbard-Miles, Peter
Brinton, Tim Hunter, Andrew
Browne, John Jackson, Robert
Bryan, Sir Paul Jenkin, Rt Hon Patrick
Buchanan-Smith, Rt Hon A. Jessel, Toby
Buck, Sir Antony Jones, Robert (Herts W)
Burt, Alistair Jopling, Rt Hon Michael
Carlisle, John (Luton N) Joseph, Rt Hon Sir Keith
Carlisle, Kenneth (Lincoln) Kellett-Bowman, Mrs Elaine
Carlisle, Rt Hon M. (W'ton S) Key, Robert
Chapman, Sydney King, Roger (B'ham N'field)
Chope, Christopher Knight, Dame Jill (Edgbaston)
Clark, Sir W. (Croydon S) Knowles, Michael
Cockeram, Eric Lamont, Norman
Colvin, Michael Lang, Ian
Coombs, Simon Latham, Michael
Cope, John Lee, John (Pendle)
Couchman, James Leigh, Edward (Gainsbor'gh)
Cranborne, Viscount Lennox-Boyd, Hon Mark
Currie, Mrs Edwina Lester, Jim
Dickens, Geoffrey Lewis, Sir Kenneth (Stamf'd)
Dorrell, Stephen Lilley, Peter
Douglas-Hamilton, Lord J. Lloyd, Peter (Fareham)
Durant, Tony Lord, Michael
Dykes, Hugh Luce, Rt Hon Richard
Emery, Sir Peter Lyell, Nicholas
Eyre, Sir Reginald McCrindle, Robert
Fairbairn, Nicholas McCurley, Mrs Anna
Fallon, Michael MacKay, Andrew (Berkshire)
Farr, Sir John MacKay, John (Argyll & Bute)
Favell, Anthony McNair-Wilson, M. (N'bury)
Fenner, Mrs Peggy McNair-Wilson, P. (New F'st)
Finsberg, Sir Geoffrey Major, John
Fletcher, Alexander Malins, Humfrey
Fookes, Miss Janet Malone, Gerald
Forth, Eric Maples, John
Fox, Marcus Marlow, Antony
Franks, Cecil Mates, Michael
Fraser, Peter (Angus East) Mather, Carol
Freeman, Roger Maxwell-Hyslop, Robin
Fry, Peter Mayhew, Sir Patrick
Galley, Roy Mellor, David
Gardiner, George (Reigate) Merchant, Piers
Gardner, Sir Edward (Fylde) Meyer, Sir Anthony
Garel-Jones, Tristan Miller, Hal (B'grove)
Goodlad, Alastair Mills, Iain (Meriden)
Gorst, John Mills, Sir Peter (West Devon)
Gow, Ian Miscampbell, Norman
Gower, Sir Raymond Moate, Roger
Grant, Sir Anthony Monro, Sir Hector
Greenway, Harry Montgomery, Sir Fergus
Gregory, Conal Moore, Rt Hon John
Griffiths, Sir Eldon Morrison, Hon C. (Devizes)
Griffiths, Peter (Portsm'th N) Moynihan, Hon C.
Grist, Ian Mudd, David
Ground, Patrick Neale, Gerrard
Hamilton, Hon A. (Epsom) Nelson, Anthony
Hamilton, Neil (Tatton) Neubert, Michael
Hampson, Dr Keith Newton, Tony
Hanley, Jeremy Nicholls, Patrick
Hannam, John Norris, Steven
Hargreaves, Kenneth Onslow, Cranley
Harris, David Oppenheim, Phillip
Harvey, Robert Ottaway, Richard
Haselhurst, Alan Page, Richard (Herts SW)
Hawkins, C. (High Peak) Parkinson, Rt Hon Cecil
Hawksley, Warren Parris, Matthew
Hayes, J. Patten, J. (Oxf W & Abgdn)
Heathcoat-Amory, David Pawsey, James
Henderson, Barry Percival, Rt Hon Sir Ian
Hill, James Pollock, Alexander
Hind, Kenneth Porter, Barry
Hirst, Michael Powell, William (Corby)
Holland, Sir Philip (Gedling) Prentice, Rt Hon Reg
Holt, Richard Proctor, K. Harvey
Hordern, Sir Peter Rathbone, Tim
Howarth, Alan (Stratf'd-on-A) Rees, Rt Hon Peter (Dover)
Howarth, Gerald (Cannock) Rhodes James, Robert
Howell, Rt Hon D. (G'Idford) Rhys Williams, Sir Brandon
Howell, Ralph (Norfolk, N) Ridley, Rt Hon Nicholas
Robinson, Mark (N'port W) Temple-Morris, Peter
Roe, Mrs Marion Terlezki, Stefan
Rowe, Andrew Thompson, Patrick (N'ich N)
Rumbold, Mrs Angela Thorne, Neil (Ilford S)
Ryder, Richard Thurnham, Peter
Sackville, Hon Thomas Townend, John (Bridlington)
Shaw, Giles (Pudsey) Townsend, Cyril D. (B'heath)
Shaw, Sir Michael (Scarb') Tracey, Richard
Shelton, William (Streatham) Trippier, David
Shepherd, Colin (Hereford) van Straubenzee, Sir W.
Shepherd, Richard (Aldridge) Viggers, Peter
Shersby, Michael Waddington, David
Silvester, Fred Wakeham, Rt Hon John
Sims, Roger Walden, George
Skeet, Sir Trevor Walker, Bill (T'side N)
Smith, Tim (Beaconsfield) Wall, Sir Patrick
Soames, Hon Nicholas Waller, Gary
Spencer, Derek Ward, John
Spicer, Jim (Dorset W) Wardle, C. (Bexhill)
Spicer, Michael (S Worcs) Warren, Kenneth
Squire, Robin Watts, John
Stanbrook, Ivor Wells, Bowen (Hertford)
Stanley, Rt Hon John Wheeler, John
Steen, Anthony Whitney, Raymond
Stern, Michael Wiggin, Jerry
Stevens, Lewis (Nuneaton) Wilkinson, John
Stewart, Allan (Eastwood) Winterton, Nicholas
Stewart, Andrew (Sherwood) Wolfson, Mark
Stokes, John Wood, Timothy
Stradling Thomas, Sir John Woodcock, Michael
Sumberg, David Yeo, Tim
Tapsell, Sir Peter
Taylor, John (Solihull) Tellers for the Noes:
Taylor, Teddy (S'end E) Mr. Francis Maude and
Tebbit, Rt Hon Norman Mr. Donald Thompson.

Question accordingly negatived.

Mr. Denzil Davies

Despite the lateness of the documents coming to the Library, I shall endeavour again to argue for the new clause which I moved some time ago. In effect, the new clause proposes that a report be placed before the House of Commons itemising all the costs and savings, if any, which we doubt, which will arise as a result of what has been an ill-conceived and speculative exercise in attempting to turn the royal dockyards into a private venture.

Ministers have been reluctant to talk much about costs. Information was dragged out of them towards the end of the Committee stage of the Bill. The Under-Secretary became a bit tetchy and did not want to talk about that, although he said that there might be a report from the Property Services Agency on these matters which could be debated. But we have not yet had that report, although there have been surmises in the press on its contents.

First, what savings or costs will fall on the budget of the Ministry of Defence as a result of this operation and, secondly, what costs or savings will fall upon the Exchequer in general? First, let me deal with the Ministry of Defence's budget. On the Government's figures we have calculated that over a 10-year period from the start of privatisation — I accept that 10 years is a highly speculative period, during which time anything could happen, but that is the period that the Government have used for amortising costs—there will be a loss to the Ministry of Defence's budget of about £20 million a year. If we are wrong, no doubt the Minister will tell us when he replies. That comes to £200 million. That is a conservative estimate and I shall return to the way in which it has been arrived at. I need not remind the Minister that £200 million would almost buy two type 23 frigates or eight, nine or perhaps even 10 Tornadoes. That is the nature of the loss that will fall upon the Ministry of Defence over that period.

We know that right at the beginning large payments will have to be made. We have been told that at the beginning there will be a cost of £70 million. Part of that cost will be the cost of redundancy and of setting up the scheme —the accountancy and financial measures that have to be taken. I understand that part of that cost is to some extent the refurbishment of fixed assets. The initial cost of setting up this privatisation is an extraordinary figure. The turnover of the dockyards ranges between £400 million and £500 million. The £70 million that will have to be found almost immediately is almost 20 per cent. of the dockyards' turnover. That is an extraordinary position for the Government to be in. I have not checked, but I should be surprised if any of the other privatisation measures involving far more money attracted an initial cost of £70 million. That money has to be found. I do not think that it will all come from the Ministry of Defence's budget. I understand that some will come from the Civil Service pension and redundancy fund. But £70 million will have to be found almost immediately.

On top of that, £200 million will have to be found for the transfer of the pension scheme to the private employer. I accept that that money relates to liabilities that would in any case have accrued and would have to be paid for in future. In that £200 million figure we have not,included the cost of any future redundancies. It is a conservative figure. We shall debate a redundancy fund when we come to new clause 3.

It was not clear in Committee what Ministers intended, but they said that the private employer, the management company, was hoping that the redundancy payment would be more or less similar to what would be paid by the Civil Service. If that is the case, where wiil the money come from? Will money for redundancies come from the Ministry of Defence in the same way as the money for pensions? In other words, will the contractor charge a bit more? The contractor does not have the money; he has only the contract with the Ministry of Defence and his only income is from progress payments from the Ministry of Defence. If the contractor wants to declare another 2,500 employees redundant in the two or three weeks or month after privatisation, where will he find the money for the redundancy payments to replicate—that was the word used in Committee—the kind of payments that would be paid by the Civil Service?

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We have not included redundancy payments in the cost of £200 million over 10 years. Nor have we considered the question of emergency work. We did not debate that question very fully in Committee, but we debated it on Second Reading. No calculation seems to have been made of the cost to the Ministry of Defence of emergency work carried out by the private contractor. There was an example last week. HMS Illustrious had sailed little further than the Isle of Wight before it needed emergency work. I understand that that work will be done at the fleet maintenance base at Portsmouth. The costings for work at the maintenance base will be no different from what they are now, and they will not change in future. However, if the work on Illustrious could not have been done at Portsmouth, presumably the ship would have had to go back to Plymouth. The work must be done in a rush because Illustrious has to proceed to wherever it is going.

If the work was to he done at Plymouth, there would presumably be negotiations between the Ministry of Defence—the new outfit that is to be set up in Bath or somewhere — and private industry. What kind of negotiations would there be? Would the Ministry of Defence be in any position to tell the private contractor that it was charging too much, and in consequence to keep Illustrious anchored for a year off the Isle of Wight instead of sending it to join all the other fine ships of the American fleet in the south Pacific? Of course not. The Ministry of Defence would have to pay for the repairs, and pay through the nose. In our very conservative figure of the loss of £200 million to the Ministry of Defence budget over 10 years, we do not take into account the cost of doing such work.

Thirdly, we have not taken into account the recommendations of the 19 working parties. Where are those recommendations? Perhaps we will see them before these matters are debated in the House of Lords. Working parties are bound to make recommendations, and I am sure that the recommendations will cost money. Those costs, too, will have to be found from the budget of the Ministry of Defence. I doubt whether the Minister of State can give us an undertaking that the Treasury will foot the bill. There will be the cost, for instance, of carrying out the recommendations of the working party on nuclear safety. Costs may well result from the splitting of responsibility between the Ministry of Defence and the private contractor. That and other recommendations of the 19 working parties may result in a cost of £X million and that money will have to be found from the budget of the Ministry of Defence.

Our figure of £200 million is a conservative estimate which takes no account of emergency work, redundancy payments—which may at the end of the day fall upon the Ministry of Defence—or of the extra cost arising from the recommendations of the working parties.

The Government have made some assertions about the effect on the Exchequer as a whole. The Minister of State gave us some figures on Second Reading, although he himself admitted that they were more like guesses. We know that nothing will be saved for the budget of the Ministry of Defence and that, in fact, there will be costs to that budget. I hope that the Minister will confirm that. However, there is apparently a magic wand to be waved. Apparently, at the end of the day, when the profits and losses have been calculated and the Parliamentary Under-Secretary of State has worked on the balance sheet as he used to in that back street accountancy practice in Manchester, there will be a profit figure of some kind. It will be a profit to the Exchequer for the greater good. The Defence Ministers will have subjugated their departmental duties to the greater good of the fisc. They were not operating in the Committee as departmental Ministers. They were operating for the Exchequer. No doubt the Treasury Ministers are very grateful to them.

How much will be saved for the Exchequer? The difficulty is that the figure keeps changing. The original figure was £26 million. That was the speculative figure suggested last June. That figure rapidly fell to £23 million in November. As we have not had the report of the Public Accounts Committee, we have to rely on what we can glean from statements. The figure for the amount by which the taxpayer will benefit fell again in February by the wondrously precise figure of £2 million, leaving a figure of £21 million. What is the figure now? We should be told. We have moved on since February and no doubt there are other costings to be taken into account. Has there been any further change in the figure?

Apparently, there is to be a saving of £21 million over the period of 10 years over which initial costs are to be amortised, although the initial costs are only part of the total exercise. Apparently, over that period about £21 million is to be saved every year. Let us consider how that figure was arrived at. No doubt the Minister of State will correct me—he has all the papers—but I understand that the figure was worked out as follows. First, there are the actual savings. There will be a reduction in personnel, or the sacking of people.

There will be a further saving because the Treasury will not pay the pensions any more. Curiously, although the Exchequer will not pay the pensions, the Ministry of Defence will do so. Pension payments will amount to £8 million or £9 million a year. Under the present arrangement they are paid out of the Civil Service pension fund. After privatisation they can no longer be paid out of that fund. They cannot be paid out of the pension fund of the consortium company or main company that is to run the dockyards because the employees are employed not by that company but by the management company, and the management company has only one contract—the contract with the Ministry of Defence. The effect will be the same as in the case of the redundancy payments. How will the company pay the pensions except by adding to the price which it charges to the Ministry of Defence?

That is what is envisaged. That is why the Under-Secretary has been able to give an assurance that the pensions will not be that different from the pensions paid out of the Civil Service pension scheme. The Exchequer will save about £9 million a year because it will not have to meet the pension payments. However, the Ministry of Defence will have to meet those payments so that the £9 million, or perhaps a little less, will come out of the defence budget. It will not come out of the Exchequer. Therefore, that will be a saving in terms of the grand balance sheet the Government are constructing.

Costs have to be deducted out of savings. As I have said previously, the figure for savings was £26 million, it then came down to £23 million and it is now £21 million. We have seen what the savings will be. Let us consider the costs of the operation to see how we arrive at the figure of £21 million. As I understand it, one figure of costs is for something called a customer organisation. Apparently, new jobs are being created; the Government are actually creating new jobs. The original costs for that customer organisation were envisaged to be £2 million. The Minister of State will correct me if I am wrong. The costs went up and up and are now estimated at £11 million a year.

What is the customer organisation? It will create new jobs, new bureaucrats and more paper to shuffle around. What will the people who will cost the Ministry of Defence £11 million be doing? They are there to negotiate and work out the arrangement between the supplier and the buyer, the private company and the Ministry of Defence, between the monopoly seller and buyer. We need some organisation within the Ministry of Defence to do that work. We do not need it at the moment. There is no need to spend £11 million for people to do that work because it is done within the same organisation. However, once a commercial organisation has been set up it will be necessary to negotiate with Trafalgar House about the costs of repairing warships, refitting or emergency work on HMS Illustrious or any other ship that has to come into Portsmouth or Rosyth.

Can the Minister of State tell us why, within a year, there has been a 500 per cent. increase in the cost of the so-called customer organisation? I do not know exactly where the organisation will be, but I think that the Under-Secretary will agree that it will probably be in Bath.

It is obscene that the Government have put 2,500 dockyard workers out of work in Rosyth and Devonport in the interests of so-called efficiency. Many of them, if not all of them, work on ships, do things with their hands and have technical skills. They will be put out of work and £11 million a year will be spent on some kind of customer organisation in somewhere like Bath where they will just shuffle paper around because of the operation the Government are setting up. It is obscene that the Government are taking money away from people who work at the dockyards and putting it into the hands of a bureaucratic body, which would not be necessary if the Government did not go ahead with their hare-brained scheme. Therefore, £11 million will be in respect of a new bureaucracy set up as a result of the Government's plans.

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The Ministry of Defence has to make some assessment of the profit that the contractors will make because the profit to the contractor must be a cost to the Ministry of Defence. No doubt those figures are commercially in confidence and, even if I knew them, I would not wish to breach that confidence on the Floor of the House because the Government have to negotiate with the companies. However, my understanding is that the original profit figure was much higher than it is now. The Ministry of Defence or the Government accountancy service, or whoever, have tried, I would not say to fiddle the figures, but to make them look a little better. They have done that by reducing by 35 per cent. the Government's assessment of the profits of contractors for Rosyth and Devonport. That is not a small reduction. We started with one figure in June 1985 and over a period the Government have become more optimistic in terms of the Ministry of Defence because they have scaled down the profit figure by 35 per cent. I do not know what that figure is, but my impression is that it is a fairly low profit figure on a turnover of £400 million or £500 million.

The Minister of State would obviously not wish to tell us what the figures are, but perhaps he could tell us how on earth the Government can scale down the profit figure by 35 per cent. It is very convenient to do so because it reduces the costs. By reducing the costs, it increases the savings and, as I have said, the savings are now £21 million a year. If the figure of profit had not been scaled down, there would have been a substantial cut in those savings. That is why the figure for savings is not worth the paper it is written on. It is a purely speculative statement. The Minister of State knows that, as does the Under-Secretary.

I am sorry to mention Manchester again, but the Manchester accountants had a high reputation within the Labour party at one time. I am sure that the Under-Secretary also had a high reputation. If somebody had brought in the balance sheet which is being presented, he would have thrown it in the waste paper basket in his office in Manchester. The figures of £21 million, £23 million or £26 million are not worth the calculation. The Government have thought of a figure, put it in a table and found some justification for it. Perhaps the Minister could tell us how he justifies the figure of £21 million.

Frankly, we do not believe that there will be any savings to the Exchequer, or anybody else, as a result of this exercise. There will be costs. Most of them, not all, will fall directly on the Ministry of Defence. Those costs will come out of the defence budget. Money will come out of equipment and items needed for defence and will be spent on bureaucracy and private contractors. Nothing that has been shown to us has dispelled that belief.

We believe that at the end of the day the Navy will get an inferior service and at a higher cost. It is no good the Minister of State shaking his head. He has not produced one figure to dispel that belief. There was a long statement on Second Reading about improved efficiency and improved working methods. Can the Minister of State put one figure on what will be saved from improved efficiency? All he can put a figure on is how much will be saved by sacking 2,500 people. He cannot put a figure on improved efficiency or so-called better working practices. The figures that are being produced have nothing to do with that. They are concerned solely with actual savings and actual costs. No money will be saved. There is no case for privatisation on the ground of saving money. Indeed, money will be lost to the Ministry of Defence. Perhaps the Minister of State will tell us that our figures are wrong and that there will be savings. From what we have seen and heard, there will be no savings. This is purely an ideological kick by the Government. It has nothing to do with saving money. It will cost the country and the armed forces money.

Dr. Owen

This is a probing new clause, but it goes to the root of this miserable Bill. There is no question, and the Government do not deny this now, but that in the first three and a half years of implementation there will be extra costs to the Royal Navy. The only question is whether, during the next six and a half years, there will be sufficient savings to compensate fully for the extra costs incurred in the first three and a half years. Nothing that has been presented to the House, to the Select Committee on Defence or to the Public Accounts Committee gives any confidence that this will do anything other than cost the Navy dear. It will certainly cost the Navy in money terms, but it will be an even greater cost in terms of the inability to turn round the capital ships of the Navy at the speed which the Navy requires.

We constantly forget that the task of the dockyards is to act effectively as a garage for the Royal Navy, to be available for instant use in cases of emergency and to have the capacity to ensure the full value of these capital ships.

I shall not refer to the lamentable delay in producing the information, but one advantage of the period that we managed to extract from the Government for analysis of the Bill is that we now have some figures for the costs and assets that we are discussing. The replacement value of the assets of Devonport dockyard has been estimated, taking 1985 as the base year, at £772,740,970. That is a vast sum of money. The existing use value of Devonport dockyard has been estimated at £227,727,830. The annual value is £23,911,090. We are dealing with a massive industrial enterprise. The Government have not been prepared to privatise those assets because they know that no one could possibly find the money to buy them. So there is an agency arrangement.

We had great difficulty in pinning down the extra costs. I gather that there is an estimated £30 million in consultancy fees and so far unquantified costs in Ministry of Defence staff time. That money has been spent before the exercise has started. There is the £46 million to ensure the continuation of the supply service to the Ministry of Defence, and between £150 million and £200 million to set up pension funds for transferred service. In addition, VAT must be paid on dockyard contracts.

A licence fee will be payable quarterly in advance when assets are described in the schedules. It is proposed that the licence fee will be equal to the annual value to which I have already referred. It will need to be adjusted periodically during the term of the contract to take account of changes in the composition of the assets as a result of new investment or the removal of assets to take account of inflation, depreciation and other factors. There is a continuing cost in dealing with the estimation of the assets.

Under these arrangements, we are told that the contractor will be fully responsible for the maintenance and repair of the assets at his expense. In some circumstances, the Ministry will bear the cost of replacing the assets and the contractor will normally be invited to tender for the supply and/or the installation of replacement assets. In other circumstances, the cost of replacement will be borne by the contractor. All of these carry heavy estimating costs, continuing consultancy arrangements and, indeed, bureaucracy.

On bureaucracy, it appears that the Ministry's organisation to monitor and oversee the contracts will employ as many as 900 people. I should be grateful if the Minister of State would let us know the exact size of the monitoring organisation, which will be set up in Bath or perhaps spread through the dockyards. How much will it cost? It may cost tens of millions of pounds.

I am told by the Shipbuilding Trades Joint Council that an internal Ministry of Defence report has identified future requirements for 11 officers in nuclear and radiological safety, five officers in nuclear qualified secondment, an unquantified extra requirement for naval base commanders for personnel work at Devonport and Rosyth, 18 naval personnel for local emergency monitoring organisations and 25 officers on ships acceptance trials. The biggest extra investment is expected in the proposed enhancement of the Navy's fleet maintenance bases as a direct consequence of agency management. We do not have real estimates of those, although the first estimate for the Ministry of Defence is £3.5 million in capital expenditure and 80 extra naval personnel. This is at a time when there is some difficulty in manning the Navy fully.

The dockyards will be supplied by the Ministry of Defence with the management financial ledger, an accounting package for the use of the contractors; the cost of that is estimated at £95 million. The story will be unravelled month by month. There will be probing and investigation and we shall calculate the costs of this enterprise. My view is that the Minister of State's heart is not in it. Certainly we cannot blame him as he was not in at the start of the exercise. This hare-brained scheme was initiated by the right hon. Member for Henley (Mr. Heseltine). There is no reason why the Minister of State or the Secretary of State should continue with this beyond the satisfaction of getting the legislation passed.

There will be increased costs in the commercial world. We are told that before entering into contracts for non-defence work that required deployment of significant resources or prolonged use of facilities, especially docks, or which are likely to result in consequential time or cost penalties to Ministry of Defence work, prior consultation with the DGSR — this new bureaucracy — will be required. So far from setting them free, they will have to look back over their shoulders to get permission from Bath.

We are told that on refits and repairs it should be clearly understood that this core programme is based on the current fleet requirements and that changes will be unavoidable as tasks and operational needs alter. The DGSR will review the core programme with the contractor on a quarterly basis and will also discuss changes as they arise at the earliest possible date. There is a constant Ministry of Defence involvement with this agency management at every stage, and at every stage there is duplication and cost.

We are also told in relation to operational defects and other unprogrammed works on Royal Navy vessels and auxiliaries that the contractor may, however, be required from time to time to carry out such work on a noncompetitive basis. The contractor will be required to comply with requests to undertake this work, which may be crucial to fleet availability. There will be contractual obligations over and above the core work imposed on the contractor, and the Ministry of Defence will demand that this work be done. What control will there be on the price? No one else is involved and there will be a monopoly.

HMS Illustrious is a perfect example. We are told that the work on that ship could be handled by the fleet maintenance base in the constituency of my hon. Friend the Member for Portsmouth, South (Mr. Hancock). But what happens if it cannot be done by that base? It comes into work unprogrammed to the fleet contractor. Big vessels, such as HMS Illustrious, can go only to Devonport. But the dockyard work programme is full, so the private agency management turns round to the dockyard and demands almost what it wants. There is no one else to go to.

We are also told about the company structure. We are told that this two-tier company structure is preferred by the Ministry for several reasons. The next bit is worth quoting. It says that one reason is that it will enable the Ministry more easily to detach the dockyard workforce from the contractor when the term contract ends for whatever reason. We are talking about people who have given a lifetime of service to the dockyards.

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We then try to find out what all this means. The document says: In the event that the term contract is terminated for whatever reason the original contractor will be required on termination to transfer all his shares in the dockyard company either to the new contractor or to the Ministry. This will in effect transfer the employment of the dockyard workforce to the new contractor or the Ministry. I assume that that means that when the contract is terminated the whole dockyard labour force is automatically transferred. But what would happen if the core programme for the new contract was substantially less than was given for the first 10-year contract? Will the whole work force be taken on? As the Ministry knows, there is a real difficulty. Someone must be responsible for those men before the redundancy payments are made. Effectively, the Government are saying that the new contractor will take on the work force even though, as a result of the new core programme for a further seven-year contract, the first task may be to make the men redundant.

We then find that there are no safeguards covering the second contract period. I believe that the only contractual arrangement is that guarantees have been given as to how to deal with this situation in the case of the initial redundancy. But there is no safeguard for the redundancies that we fear will follow the second seven-year contractual period. Thus, there would be no safeguards for a second agency management, which would never even be expected to employ the men. I believe that I am right in saying that.

Mr. Gordon Brown

Does the right hon. Gentleman accept that the Ministry's provision for redundancy payments is just on the first letting of the contract and that there is no provision for redundancy payments made during the first seven years?

Dr. Owen

Yes, but it is even more worrying that for the second term, when the contract starts again—since it requires a new core programme to be negotiated—those responsible for redundancies would not even be the people who employed those men for the first seven years. Those responsible would come in suddenly and would have no relationship with the work force. In those circumstances, it does not require much imagination to realise what poor redundancy terms would be offered. The more one looks at the programme, the more one sees that a lot of feeling will be aroused, that the parallel organisation built up in Bath will expand and that the cost will also increase.

The 10-year programme will obviously envelop one period when the term contract is likely to be changed and so the costs will be far higher than has been outlined by the Minister. We shall discuss later how something can be rescued from this mess, but I shall not anticipate that now. In the meantime, will the Minister give us all the information at the very least that has already been given to the PAC, and will he try to answer some of the questions put to him about the growth in costs? Indeed, senior naval officers are now anxious, and are saying that if it had been made clear to them that this extraordinary miasma of interlocking committees overseeing parallel organisations had been envisaged, they would not have dreamt of embarking upon such a course.

The Minister owes it to himself completely to rethink the situation. The Bill will no doubt be forced through tonight with the votes of Conservative Members, but before the final moment when no changes can be made, perhaps he will reconsider this whole issue. The point is that the cost to the Royal Navy, the taxpayer and the country is unquantified but is already quite imaginable, and is far greater than the Government have acknowledged.

Mr. Douglas

I shall be brief. We know that certain evidence was given to the Defence Committee and to the PAC last year. To coin a phrase, we shall deal not with a snippet from Tippet but with the information given by Sir Clive Whitmore to the PAC. In response to question No. 257, Sir Clive said:

We have got to say that we have to make a lot of assumptions in doing these costings about a situation we have not faced before. We have had to make assumptions about the rate of profit that the contractor would want to see. We have had to make assumptions about redundancies which in the end might not actually be fulfilled if the contractor came in and decided after he had some experience of running the dockyard that he wanted to adopt an expansionist approach by seeking non-defence work to add to the defence work. The redundancies might turn out to be fewer than we assume. We have tried to approach the costings on a worst case or near worst case basis, but we do not think that in the event the savings could turn out to be larger than those that Vice-Admiral Tippet had been mentioning. We know that the PAC has examined those so-called savings. However, in the interim, a Standing Committee has consistently probed the Government's estimates. The Government have not been very forthcoming about the nature of those savings. We have seen a change in attitude from the original proposals about a managing company and an employing company to the Government wishing to have a managing company and a dockyard company as the repository of the labour force.

There is no sign of any savings from the costing exercise. Indeed, there are no savings, but only costs and heartache. I could take up the time of the House by reading all of the Fuller Peiser report, but I shall not do so. Incidentally, I do not cast any aspersions on the chartered surveyors, as I recognise the difficulties. However, the Government propose to hand over plant and buildings. The report says: Most buildings have been visited and some have been inspected in detail with reliance being placed upon the drawings of the PSA plan library for dimensions. This has enabled us to estimate valuations which we consider to be reliable on the whole but it will be necessary to check the details of the scheduling and allocation of values during the course of stage 2. Plant & Machinery

Whilst buildings have been briefly visited no plant has been inspected in any detail, reliance being placed on existing records obtained from the Finance Department and Yard Services Department and a list provided by the Cost Centre. There is no way any responsible Government Minister can say to the House, "This scheme to change the ownership of the dockyards to a contractual relationship will produce savings." We assert that it will be costly. Why? First, because of disruptions. The Government have undermined the morale of the labour force at Rosyth and at Devonport. When the morale of a highly skilled labour force is undermined, productivity may tail off. That will be a cost. Currently management has to spend time holding the hands of contractors who are going through the yards, indicating what functions they might have to perform. That is a cost—not one which we will see immediately in the accounts but a cost in terms of satisfying the Navy.

Additional costs were mentioned by the right hon. Member for Plymouth, Devonport (Dr. Owen) such as the cost of redundancy, the cost of pensions and the cost of indicating to contractors what security functions they might have to perform. I have scanned the documents quickly and some of the details are frightening. At the beginning the Ministry of Defence police will have certain functions but in later years the so-called contractors may bring in security personnel. This is a tangential remark; in Committee I recall that the Under-Secretary could not assure us that such security personnel would not be employed where there were nuclear facilities. I hope that he can assure the House and the country that his further reflections will lead him to insist that no private security personnel will be employed on nuclear functions in Devonport or Rosyth.

This is an exercise in dogma. It is significant, as I mentioned earlier, that neither of two right hon. Members whose names appear on the back of the Bill is present in the House. Where is the right hon. Member for Henley (Mr. Heseltine), who was the arch-promoter of the Bill? Neither of the two hon. Gentlemen who are on the Front Bench has his heart in the Bill. It is the product of the right hon. Member for Henley and of the person whom he brought into the Ministry of Defence, Mr. Peter Levene. There is no evidence that any savings will accrue to the Exchequer or to the Ministry of Defence from the promotion of the scheme.

Although I may be out of order on the new clause, I suggest that the Government should reconsider their objectives. If they have the interest of the Navy at heart, they will cease this costly exercise and stop asking people to examine the dockyard facilities. That will not increase the value of anything. They should stop the nonsense of bringing in contractors and holding them by the hand. They should retain a wholly owned public corporation. All the other things that they want to do can be done just as easily by retaining all the assets, including the labour force, within the public sector. To continue producing huge documents and inviting Touche Ross and other consultants to go through the dockyards is a costly waste of time and will be of no benefit to anyone in the Navy or in the dockyard. It is costly to the country as a whole.

Mr. Gordon Brown

The purpose of the new clause is to ensure that information not available to us before the implementation of the scheme will be available to the House after its implementation. I emphasise what my hon. Friend the Member for Dunfermline, West (Mr. Douglas) has just said. We are worried about the absence not only of the right hon. Member for Henley (Mr. Heseltine), who was not just the author of the scheme, but who made such extravagant claims for it, but of the Secretary of State for Defence, who is a newcomer to the privatisation of dockyards. We are concerned, too, about the absence of almost all Conservative Members with constituencies in the south-west, who have said to local trade unionists at Devonport that, while they could not be present in Committee, they were examining the scheme with interest.

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I should have thought that the Government would be anxious to accept the new clause, because it will allow them to prove to the House that there will be savings and to test the philosophy of value for money and open competition. The new clause is very much in line with the recommendation of the all-party Public Accounts Committee, which asked that there should be proper monitoring of the scheme. The new clause would get over the problem which the Public Accounts Committee foresaw early on, when it said that the evidence presented to it by the Ministry of Defence about savings was about the worst evidence that it had ever received.

I can understand the embarrassment of Ministers if they were to accept the amendment, because they would have to show to the House and to another place, year in, year out, that an exercise whose sole purpose was to save money would end up costing money, not just in one year or two years, but for the rest of the decade, and almost certainly for the rest of the century. The evidence would show that the Ministry of Defence, the Admiralty Board, and the managing directors of Devonport and Rosyth dockyards had been duped by Mr. Peter Levene and by the right hon. Member for Henley into believing that it was possible, by this shabby scheme, to make savings. We tabled the new clause because effectively the Bill offers a blank cheque to two private contractors who will be in a monopoly position to dictate the terms of refits for vessels and submarines for the Royal Navy.

What we know already is alarming enough. The Ministry of Defence will have to ask the Treasury to set up a private pension fund, which will cost £150 million, or perhaps £200 million. The initial bill for redundancy payments will be about £40 million, and private consultants are to be paid £30 million, making a total of £70 million for transitional costs. Other costs associated with starting up the scheme will be involved in the creation of a new stores and supply organisation if the contractor decides that he wants to contract out, and we are reliably told that that could cost as much as £46 million. It has been conceded by the Minister's working party that the expansion of the fleet maintenance base will cost several million pounds.

The Minister of State has a duty to tell the House today what he will cancel to pay all the start-up costs, which I estimate to be about £300 million even in the first year of the scheme. Will he cancel the type 23s? Will he not proceed with the auxiliary oil replenishment vessels, for which there is such fierce competition between two shipyards? Are savings to come only from the Navy, or from the Navy, the Army and the Air Force? He should tell us how his Department proposes to pay an initial bill which could run beyond £300 million in the first year after the implementation of the scheme.

Those are only the known costs associated with the start-up of the privatisation project. The Minister ought to tell us his estimate for the profits of a private operator. My assumption is that on a turnover of £415 million for the dockyards they would not be less than 10 per cent., making an additional cost of £40 million, which must be recouped.

The Minister ought to tell us what exactly the cost of the new monitoring organisation which he is proposing to set up will be. Our estimate is that it will take about £11 million a year to pay for the additional hundreds of staff who will be involved only in supervisory operations. The Minister ought to tell us what the additional costs associated with value added tax will be, and the costs of setting up an additional and new form of accountancy organisation to which his Ministry is committed. We ought to be told what the known costs that the Ministry of Defence has to recoup by savings in other areas will be for each year that the scheme is in operation. Again, these are only the known costs associated with the year-to-year operation of the dockyards under private control.

There are also the unknown costs and the uncalculable costs because, no matter what it says in the tender documents, the Ministry of Defence, in its advice to contractors, is effectively enabling two companies to dictate the price at which they will do work.

The problem of emergency work during the period of refits has not been properly addressed by the Ministry of Defence in its proposals for this scheme. The problem of unprogrammed work, when the contractor will have to change his basic timetable to accommodate the Ministry of Defence, has not been dealt with either. The problem of emergency work is dealt with in only one paragraph of one of the working party reports, where the Ministry readily concedes that it will have to reimburse the contractor for taking on emergency work demanded by the fleet which would interfere with the private contractor's programme. This is unique. The Ministry of Defence will pay extra money to use a facility that it owns.

I do not understand why the Ministry of Defence has not been prepared to accept the advice of the Treasury, which in its privatisation guidelines make it clear that

When work is transferred to the private sector it is important to consider the problems that might arise if a department becomes tied to a monopoly supplier We know that the record of the private sector in naval refits is inferior to that of the public sector. The Minister cannot produce any evidence, either from the experience of the 1960s and 1970s or from recent refits such as HMS Redpole, that the private sector is better for quality, efficiency, delivery time or cost. All previous reports on dockyard work, whether the Speed report, the Hudson report or the Mallabar report, have concluded that the public sector is more dependable, more efficient and cheaper.

The Ministry of Defence admits that transitional costs will be very high, that the year-to-year costs to the defence budget will be greater than if the dockyards were run under the present public sector arrangements, and that there is a price to be paid for demanding emergency unprogrammed work under private control. Having heard all the evidence that the public sector is better for time, efficiency, delivery and cost, the Ministry is prepared to hand the dockyards over to private contractors.

The purpose of the Levene document, which initiated this sorry tale of events about the dockyards, was to save money. When the Gracious Speech announced that the dockyards were to be moved to commercial management, the stated objective was to secure value for money. When the right hon. Member for Henley defended his programme before the House, he said that he would secure that value for money. The evidence is now overwhelming and clear that there is not a hope of the Ministry of Defence saving money. Indeed, it will have to spend money. Far from diminishing the costs of naval support, the scheme will increase them.

The Minister should accept the new clause, tell us that there will be further consultation on the scheme, and withdraw the Bill.

Mr. Michael Hancock (Portsmouth, South)

The hon. Member for Dunfermline, East (Mr. Brown) has got to the crux of the matter. The absence of Conservative Members is a clear sign of widespread support for new clause 1 No doubt the Minister is hoping that their absence will mean that he has an easier task convincing his one hon. Friend who is present that the Bill should be accepted.

New clause 1 asks the questions that the Minister promised to answer time and again in Committee to justify the Bill and what gains there will be for the national purse, the Royal Navy and for the people who work in the dockyards. There has been no attempt to answer those questions. As my right hen. Friend the Member for Plymouth, Devonport (Dr. Owen) said, £750 million is invested in the Devonport dockyard alone. These are huge sums of money, so we should know what benefits will accrue from the transfer of responsibilities.

The Ministry's notes on clauses beg more questions. Many of us have been denied access to documents that might have provided the answers. The notes state the Ministry's objectives. The first is full value for money from the defence budget. How will such value be achieved? Where will savings be made? The second objective is maximum competition. The third is freedom for local management from public sector constraints, enabling them to operate effectively in a competitive environment. The fourth is improved efficiency. If efficiency is improved, there must be savings. Why are Ministers reluctant to elaborate on what efficiency and savings will mean? The fifth objective is a clear separation between the dockyard as the supplier and the Royal Navy as the customer.

HMS Illustrious returned to Portsmouth recently because of gearbox trouble. Both of the other Invincible class carriers were tied alongside the fleet maintenance depot in Portsmouth. What would have happened, as might happen in two years' time, if the fleet maintenance operation had been dealing with one of the other carriers? There would have been protracted negotiations between the Navy, the organisation in Bath and the contractor about shifting the ship from Portsmouth to Devonport and about the cost of the job. It is unfortunate and dangerous that we are putting the future role of the Navy at risk because we are allowing a contractor to name his price. The Government should ensure that there is no doubt about the financial justification for this Bill. The Minister surely cannot fail to answer the question that this new clause asks. Failure to do so must convince everybody, including the Minister's colleagues, that the Bill has no future, and must go into the wastepaper bin.

7 pm

Mr. Bruce George (Walsall, South)

When I look at the Government Benches, I am reminded of an Adjournment debate. It is a profoundly disillusioning experience for many hon. Members. I suppose that there are people who still naively assume that the Conservative party is the party of defence. That cannot be justified by the attendance of Conservative Members in the Chamber or by the Government's decisions. We know that Conservative Members are in the building because they all poured into the Chamber an hour and a half ago. However, it is clear that they have no stomach for what is being decided in their name. Apart from it being profoundly disillusioning, it is also unusual to find, perhaps for the first time, that those on the Opposition Benches this evening greatly outnumber those on the Government Benches; and those who are sitting in the Civil Service box outnumber both Opposition and Government supporters. It has been worth coming into the Chamber for just that experience.

My right hon. Friend the Member for Llanelli (Mr. Davies) said that the Government team is acting at the behest of the Treasury. That is wrong. It is acting at the behest of Tory Central Office and of those who drafted the last Conservative manifesto which eulogised privatisation. That was to be the solution and the cure for many of the ills in our economy. When that principle was applied to the Ministry of Defence, it was obliged to implement lunacies that had been decided upon years ago in the smoke filled rooms of Tory Central Office, or wherever the manifesto was drafted.

The result of the Government's policies provides an inane solution. It will exacerbate this country's already considerable defence problems. The Government are hopelessly over-committed. The resources available to them to meet their growing commitments are inadequate. As the Government are unable, for one reason or another—public opinion is one factor—to increase defence expenditure in order to meet their growing commitments, they have thrown the principles of the market place at these complex problems. However, when one looks rationally at how efficiency is to be gained and at how our fighting forces are adequately to be equipped and led, one winces at what one sees. By their dogmatic solutions the Government are trying to save money. However, the contracting out that has taken place has been something of an illusion. Those who have suffered most have been cleaners or those who are engaged in security. The Government have not gained, therefore, from contracting out.

The Government have also tried to reorganise the Ministry of Defence because they believe that that is a means by which efficiency can be achieved. However, the amount that has been saved by greater efficiency in the Ministry of Defence is marginal. The Government have tried the privatisation solution. I served on the Standing Committee that dealt with the privatisation of the royal ordnance factories. I do not think that the public has gained very much from that process. Political dogma and the desire for efficiency have resulted in the Bill that we have been considering for the past few months.

If the Government believe that the public will gain from the privatisation of the dockyards, they are making a great mistake. It has already been pointed out that when the ledger is finally drawn the public will be the net losers—and very heavy losers. The gainers will be those who are lucky enough to pick up the contracts. Further losers will be our armed forces. The Ministry of Defence will have to bear the additional cost of consultancy fees. This is a growth industry. Hundreds of consultancies and so-called public relations experts will be involved. There will also be the cost of setting up pension funds for the staff who have to be transferred. I agree that that has to be done, but it will be costly.

In accordance with Mr. Speaker's wisdom, I am sure that the Ministers are disappointed that they will be unable to listen to and comment upon points relating to security. Instead of just the Ministry of Defence police, there are to be two security systems in the dockyards. There will be the Ministry of Defence police—although Ministers might have liked to get rid of them, they were unable to do so, for all sorts of reasons—and alongside them there will be the gradual extension of private security. That, too, will have to be paid for. When one looks at the additional staff who will have to be employed by the Ministry of Defence, the cost of redundancies and the value added tax that will have to be paid, one begins to construct a ledger and to realise that the public will be the losers.

The clause is important because it points out to the House and to the public, if it needs to be pointed out, that this privatisation lark will be yet another disaster. The clause therefore seeks to establish a modicum of parliamentary accountability and scrutiny.

Before the debate began, I was in the Library. I was not looking through the documents to which reference has been made. They were being bandied about in the Chamber, probably to greater effect. I was looking at the legislative role of Congress. Congress is very much involved in the legislative process. Hon. Members discuss each year one or two defence Bills. This Bill was introduced in such a way as to make constructive criticism and constructive comment exceedingly difficult.

If one believes in efficiency, the Government ought to consider that they have been provided with a great opportunity to justify how clever they have been by being obliged to place before the House the savings that they intend to make. The new clause ought to be regarded by the Government and their supporters as providing an opportunity to justify those savings. However, none of the Government Back Benchers who served on the Standing Committee is in the Chamber. It has brought a new dimension to the term "Trappist". At least they were physically present in Committee, but they are not physically present, or even possibly spiritually or intellectually present, for these proceedings. Government Back Benchers fulfilled their obligations to the Whips and then cleared off. It is a pity that they are not here at least to justify to their constituents why they wasted space being on that Committee. At least two members of our Committee had the excuse of being simultaneously engaged in the inquiry into Westland.

This clause is an attempt to establish some form of accountability. In view of the proceedings in Committee and the charade that we are going through at the moment, being denied the information essential to us as legislators in achieving our objective of scrutinising Government policy and legislation, it is clear that the Government are seeking to bypass Parliament, or to use merely the shell of Parliament, in order to go through the process with as little inconvenience as possible to themselves.

If the vast numbers of Conservatives who are at present in their offices rush out when the call comes and, with superb efficiency, vote down new clause 1, the Government will lose an opportunity, even within their own warped ideological perspective, to show the House and the world how effective they have been in making savings for the public Exchequer.

I believe that this clause deserves, but will not get, proper attention from the Government and Government Back Benchers. It seeks to achieve a small degree of parliamentary accountability, which I believe that this Government will seek to deny. I believe that the reason that it will not be approved is that the Government realise, if they look very carefully at what they have decided and what they have put into this legislation, that the savings will prove an illusion. The people who gain from this process will be, not the services or the British taxpayer, but the dogmatists and those who may be able to pick up the contract and profit financially.

My name is appended to the list of those who tabled new clause 1, and I very much hope that those people who are not listening to this debate will have some pangs of conscience and will support it. If the clause is approved, the many hours that we spent in Committee and the hours that we are spending here may not prove to be such a waste of time.

Mr. Norman Lamont

A large number of points have been raised in this debate and I shall do my best to reply to them and to give the House some of the information that it has been seeking. First, however, I wish to direct my remarks to what new clause 1 does, because I do not believe that it is sensible.

The new clause would have my right hon. Friend the Secretary of State set out all the costs and savings of £100 or more resulting from the decision that the dockyards services should be provided by a company under commercial management. The new clause does not say when such a report is to be made. Clearly, since it talks of savings resulting from arrangements made, it does not mean that such a report is to be made before the Government's policy is implemented. It does not say whether the report should be made after the scheme has been in operation for a month, a year, five years or the full term of the original contract, which is seven years. The House should also consider what, even were the clause worded properly, it would achieve in terms of legislation. It does not say what should happen if the savings are large, small or non-existent. For those reasons, I do not think that the clause would achieve anything.

I appreciate that one of the reasons for tabling the new clause was to raise questions about the costs and the savings, and I should like now to try to reply to some of the points that have been raised.

It is open knowledge that our latest costings, which were made in February of this year, showed an annual surplus to the Exchequer of £21 million over each of the first 10 years of commercial management, during which time the setting-up costs would be amortised, and thereafter savings were estimated at some £28 million a year. On our latest estimates, therefore, there should be savings of £210 million in the first 10 years, and greater savings thereafter.

Hon. Gentlemen have referred to the amortisation of costs over the 10-year period and have criticised what they see as the heavy setting-up costs involved. One point that is ignored by hon. Gentlemen when they make these criticisms is that whatever system is evolved to try to improve the performance of the dockyards—hon. Gentlemen have been urging upon us another solution, that of having a trading fund, some other middle way, as they see it—many of these initial setting-up costs will have to be incurred.

It seemed to be common ground in Committee that we need to tackle the problem of inefficiency in the dockyards. Report after report has said that performance is not all that it might be, and that such things as the setting up of accountancy systems, which involve software programmes and the purchase of hardware, are necessary for the modernisation of the dockyards and the setting up of a proper commercial framework. That would have to happen whichever solution we adopted for the dockyards.

7.15 pm
Mr. O'Neill

Given that the Government undertook a wide-ranging survey of the various options beforehand, perhaps the Minister of State could tell us how much the start-up costs of a PLC would have been, so that we have some realistic basis of comparison. As far as we can see, none of the alternatives would have cost the £70 million or so which has been mentioned by various hon. Members.

Mr. Lamont

I shall go further into the question of the £70 million, and I hope that when I do that it will become apparent that many of the measures to improve efficiency would be necessary whichever vehicle was chosen, and many of them are the manifestations of increased efficiency.

Mr. Denzil Davies


Mr. Lamont

I shall give way to the right hon. Gentleman, but then I want to take my argument further, because it meets exactly the point raised by the hon. Member for Clackmannan (Mr. O'Neill).

Mr. Davies

The Minister said that the annual surplus to the Exchequer over the 10-year period would be £21 million. Can he tell us what the annual deficit to the Ministry of Defence would be in each of those 10 years?

Mr. Lamont

I am coming on to the impact on defence as well.

Mr. Gordon Brown


Mr. Lamont

No, I shall proceed just a hit further.

As the new clause refers to a report to Parliament, the House might like to know that it is our intention that the customer organisation—or, to give it its proper title, the Directorate General of Ship Refitting—will produce an annual report of the previous year's dealings with the dockyard company at each yard and with others involved in the refitting and repair of naval vessels. As, unlike now, there will have been a separation of the Navy as customers from dockyard to supplier, and there will be in existence commercially accepted accounting procedures, the annual report which the DGSR presents will have to be full and informative. Additionally, the books of the two dockyard companies will be open to my Department to the same extent as are any other defence contractors' books when we have negotiated a non-competitive contract with them.

The right hon. Member for Llanelli (Mr. Davies) outlined the structure of the savings and costs. While in no way retreating from the figures that have been given earlier to the House and to the Public Accounts Committee, I should like to say that the figures are based on worst case assumptions and are not a prediction of what will happen. There are many variables; for example, the savings that can be achieved and the efficiency gains that may be exceeded. The figures are not a prediction, but we have had to answer questions and make certain assumptions.

The right hon. Gentleman asked what changes had been made since the previous estimates. They include alterations to the amount of profit that has been assumed. The profit that is now being assumed is calculated according to the Ministry of Defence profit formula, but there is not one profit formula. Different profit formulae are applicable to different industries; for example, according to their capital intensity. Another example is the setting-up costs and the implementation of commercial accounting systems, which include software and hardware. All those fall within the £70 million initial costs that we have been assuming.

The right hon. Member for Llanelli outlined the structure of costs and savings as he saw it, and basically got the equation right. However, I cannot fill in all the figures under those headings, because it would not be right to do so. We would certainly not wish potential contractors to know certain of them, but I shall reply to some. The right hon. Gentleman is right in saying that the initial costs include the changes in working practices, the preparatory work that is being done, and worst case assumptions about redundancies, which may not happen. Annual costs cover the customer organisation, contractors' profits and amortisation. We estimate the initial costs at £70 million. The figures that we have been analysing are nowhere near the figures mentioned by the hon. Member for Dunfermline, East (Mr. Brown), who talked about £350 million. I noticed that he was at least modest in that he did not go as far as some trade unions have done in mentioning a figure in excess of £400 million.

Mr. Gordon Brown

If the Minister accepts the structure set out by my right hon. Friend the Member for Llanelli (Mr. Davies), obviously he is conceding that the scheme will cost the Ministry more. Will he answer the specific point about the initial start-up cost? If we include the cost, readily admitted in the Bill, of £200 million to set up the private pension scheme, the transitional costs of £70 million, the extension to the fleet maintenance base, the setting up of a new supply organisation, and the possibility of having to establish a new accountancy organisation, we see that the costs in the first year will be more than £300 million.

Mr. Lamont

The costs will be nothing like that.

Mr. Brown

Tell us why not.

Mr. Lamont

If the hon. Gentleman will allow me to answer the questions, he will possibly see the substance of my position, even if he does not agree with it. He is wrong about pensions. The cost is merely the shifting of a liability which the Government would have incurred in any case. It is not additional public expenditure, because those liabilities already exist. Future pension contributions will be an addition to the public purse, and I shall come to that.

The right hon. Member for Plymouth, Devonport (Dr. Owen) asked about the new DGSR organisation. We are now assuming on a worst case basis that as many as 800 people could be involved. Hon. Members asked why that may be necessary. I hope that it will not be necessary. However, new tasks are being done which were not undertaken under the old organisation. There were no contracts before for ship refitting. There is the production of specifications in support of project contracts, the negotiation, placing and monitoring of contracts, and overseeing in the dockyards. Part will be placed in Bath, and part in the dockyards.

Mr. Douglas

Will the Minister confirm this mind-boggling statement, which appeared in the letter from C. M. Edwards, the director of contracts ship refitting: The Ministry of Defence has established DGSR as a new organisation to act for the customer and exercise day to day project management responsibility for the Term Contract and for individual project contracts. Is it realistic to assume that the DGSR based in Bath or elsewhere will exercise day-to-day project management? The Minister shakes his head, but that is what the letter says. Do we already have a misleading document?

Mr. Lamont

The hon. Gentleman knows perfectly well that the customer organisation will not be managing projects as projects are at present managed in the dockyards. I hope that the customer organisation will not involve the sorts of numbers or costs that Opposition Members have been talking about. We have been open about that, and have been making our arguments about savings on the worst case possibilities.

The hon. Member for Portsmouth, South (Mr. Hancock) and the right hon. Member for Llanelli said that we do not know what the efficiency savings will be, and challenged me to disclose them to the House. The right hon. Gentleman is far too clever for that. He knows perfectly well that I cannot tell the House what efficiency savings we are assuming because we do not want to inform contractors of that at this stage when we are just going out to tender. We do not want to tell them our assumptions for productivity increases and cost reductions. It would make no sense for us to display that to the world at the precise moment when we are asking companies to place competitive tenders and when we want to choose the best one in terms of productivity and efficiency. We have an assumption which is built into the figures and is behind the £21 million and £28 million savings after the overheads have been recovered.

The right hon. Gentlemen the Members for Llanelli and for Devonport made great play of the impact on the Defence Vote. The Ministry of Defence will incur certain costs which are not at present incurred. Obviously, the contributions to pensions will in future be paid for by the Ministry of Defence as an overhead, as is the case with all customers of companies. Customers often pay a company's overheads in the prices charged. No other part of the Government can pay. The Treasury cannot pay the pensions of a private sector company through the prices. Obviously, the Ministry of Defence must do that, and that has an effect on the Defence Vote. The real point is not the effect it will have on the Defence Vote, but rather the effect it will have on the defence programme, and this extra cost will be taken into account in the public expenditure survey and when we decide what the programme will be for the defence budget.

7.30 pm

The hon. Member for Dunfermline, East (Mr. Brown), in another instance of his wild ideas about extra costs, spoke about the extra costs on a supply organisation, and he trotted out a figure of £46 million, saying that he had that sum on very good authority. I think that the hon. Gentleman was thinking of working group one, which was considering a possible need for proportionately higher stockholdings if the contractors decided to supply their own spares, and the possible value of the spares was assessed in the contract as being £46 million. However, that does not mean that an additional purchase must be involved, but simply that there would be a smaller reduction in the overall spare holdings so that operational support remained at an acceptable level. There again, just as elsewhere, the hon. Gentleman has been content to make wild allegations and exaggerations not based on fact. That was made clear to the hon. Gentleman in, I think, the Committee stage.

Mr. Gordon Brown

What is the point of duplicating these supply organisations?

Mr. Lamont

I explained to the hon. Gentleman on many occasions during the Committee stage that sometimes a contractor might wish and think it more efficient to have his own spares organisation and to provide them. However, the extra cost involved would be very small. At some time it could be that there would not be the access to that spares supply that there is at the moment from the naval base to the dockyard. That is the simple administrative point, but it does not involve a huge extra cost.

Hon. Members also asked various questions about consultants. I think that again a sum of £40 million was alleged by one hon. Member. Most of the money that has been spent on consultants has been spent on the setting up of commercial accounting systems. As I have said, that involves the purchase of hardware and software. The setting up of such systems has amounted to about £15 million, and the other support for consultants has amounted to £5 million, but that is all included within the £70 million initial costs. That cost, when it has been amortised, will result in savings to the Exchequer of £28 million, and of £21 million a year even before that.

Mr. Denzil Davies

The hon. Gentleman has said again that there will be an annual surplus to the Exchequer of £21 million a year over a period of 10 years. What will be the annual deficit to the Ministry of Defence budget over that 10 years? Will it not be about £20 million or £21 million every year over 10 years?

Mr. Lamont

I dealt with the point about the de fence Vote. I said that there might be adjustments and that obviously certain factors had an impact on the defence Vote. I explained what those factors were, but I said that this matter would be taken into account by my right hon. Friend the Chief Secretary when we determine what the Vote on the defence budget will be. The relevant point is that there will be savings to the Exchequer.

It is also relevant that everyone has agreed that there is a problem in the naval dockyards because of inefficiencies. Report after report has said that. Right hon. and hon. Gentlemen are not facing up to that fact, however much they complain about the costs of the changes that we are implementing. They have said that there are other ways of making the dockyards more efficient, but they should recognise that the costs to which I am now referring in answering questions would be incurred in any alternative solution as well. The only difference is that an alternative system would not work. We are the first Government who have faced the problem. To implement these efficiency measures is not a matter of dogma: it is simply common sense. It is of interest not just to taxpayers but to the armed forces and the Navy in getting a good service out of the naval dockyards. For that reason, I urge my right hon. and hon. Friends to reject the new clause.

Mr. O'Neill

Anyone who had not been on the Committee on the Bill and who was in doubt about why earlier we sought time to examine the information made available to us at such a late stage this afternoon will now understand our reasons, having heard the inadequacy of the Minister's reply. He commenced by talking about the amendment in the time-honoured way, saying that there could be shortcomings, that technical matters were involved, that the timing was not right, that the phraseology was incorrect, and so on. The Minister agrees to one of the later amendments. In that case he seeks to improve it himself by changing it. Therefore, if the Minister has difficulty with amendments, the remedy lies in his own hands.

The inadequacy of the Government's response this evening makes clear, first, that they do not really know how much the savings will be. As a last flourish, in what one imagined was the peroration of the Minister's speech, he referred to the inadequacy of any alternative solution to the problem, but he could not even tell us how much the commencement costs of a plc would be as against the option selected by the Government.

It has been broadly accepted by the Opposition (and the Minister has not chosen to refute this) that, starting last year, with a saving of £26 million, the figure had been whittled down by this February to £21 million, a figure which, on a turnover of about £400 million, barely makes the whole exercise worth the candle. As my hon. Friend the Member for Dunfermline, East (Mr. Brown) said, it is barely worth the candle when we consider the bitterness caused, the deterioration in industrial relations, and the problems created for management in these yards.

So far, no attempt has been made to calculate how long it has taken for management and staff of the yards to explain to consultants what the changes will involve, nor has the time been calculated that it has taken for the contractors to have introduced to them the workings of the yards. What will be the likely costs in the months and years ahead when the members of middle management who are still there will be working out the essential work to be carried out in the yards? Those people will have to hold the hands of the contractors while they begin to find their way around this complex industrial organisation.

This evening we have heard that there is a possibility that the customer and supplier organisations will be based at perhaps Bath, Devonport or Rosyth. According to my hon. Friend the Member for Dunfermline, East, who has had an opportunity to read some of the material on this matter, some of the customer organisations will in fact be responsible for day to day operations. The Minister says that that is not so because such operations are far too detailed. One can imagine that that is why such an operation would be in Rosyth, Plymouth or Devonport in the first place. People could be in Bath and jump on the train to get quickly to other places if they had to go there as consultants. Frankly, we know that this is merely evidence of the lack of thought by the Minister and his colleagues.

We know that there has been no lack of effort on behalf of the 19 working groups, which have produced report after report. The problem is that these reports have not yet been properly quantified. The suggestion has been made that once a year, following contractorisation, this customer organisation will produce an annual report of such detail that we shall be able to see clearly the extent of the savings. In this connection, the quality of the responses from the Government would suggest that there is no likelihood that the annual report from the director general of ship refitting will allay our fears or clearly indicate to us what will be the costs and savings of the new organisation.

The Opposition have cited different costings. We need not just a report by the DGSR but a report on which the Comptroller and Auditor General can comment. The Public Accounts Committee said that it was not satisfied that there had been a close enough examination of the massive assets to which the right hon. Member for Plymouth, Devonport (Dr. Owen) referred during his brief sojourn in the Chamber, which represent decades of investment by the Exchequer and the Ministry of Defence. A tuppence ha'penny report by the DGSR, perhaps from its headquarters in Bath with a couple of paragraphs produced in Rosyth and another couple in Plymouth, is not sufficient. These figures are not adequate.

The new clause specifically says that any savings of more than £100 must be brought to the attention of the House in an annual report. The Government's assurances are inadequate. I therefore ask hon. Members to join with us in support of the new clause. If the measure does nothing else for industrial relations in the dockyards and for the quality of the workmanship provided by the contractorised yard, it certainly will provide a modicum of protection for the taxpayers' massive investments. I hope that, in the long run, it will give the Navy the service enjoyed for centuries through our dockyards. That service has been jeopardised by the Government's cavalier approach.

Question put, That the clause be read a Second time:—

The House divided: Ayes 170, Noes 224.

Division No. 120] [7.42pm
Alton, David Evans, John (St. Helens N)
Archer, Rt Hon Peter Ewing, Harry
Ashdown, Paddy Fatchett, Derek
Ashley, Rt Hon Jack Faulds, Andrew
Atkinson, N. (Tottenham) Field, Frank (Birkenhead)
Bagier, Gordon A. T. Fields, T. (L'pool Broad Gn)
Banks, Tony (Newham NW) Flannery, Martin
Barnett, Guy Foot, Rt Hon Michael
Beckett, Mrs Margaret Forrester, John
Beith, A. J. Foulkes, George
Bell, Stuart Fraser, J. (Norwood)
Benn, Rt Hon Tony Freeson, Rt Hon Reginald
Bennett, A. (Dent'n & Red'sh) George, Bruce
Bermingham, Gerald Gilbert, Rt Hon Dr John
Blair, Anthony Godman, Dr Norman
Boothroyd, Miss Betty Golding, John
Boyes, Roland Gould, Bryan
Bray, Dr Jeremy Gourlay, Harry
Brown, Gordon (D'f'mline E) Hamilton, James (M'well N)
Brown, Hugh D. (Provan) Hamilton, W. W. (Fife Central)
Brown, N. (N'c'tle-u-Tyne E) Hancock, Michael
Brown, Ron (E'burgh, Leith) Harman, Ms Harriet
Bruce, Malcolm Hart, Rt Hon Dame Judith
Buchan, Norman Haynes, Frank
Caborn, Richard Healey, Rt Hon Denis
Callaghan, Jim (Heyw'd & M) Hogg, N. (C'nauld & Kilsyth)
Campbell, Ian Home Robertson, John
Campbell-Savours, Dale Howell, Rt Hon D. (S'heath)
Carlile, Alexander (Montg'y) Hoyle, Douglas
Cartwright, John Hughes, Robert (Aberdeen N)
Clark, Dr David (S Shields) Hughes, Roy (Newport East)
Clarke, Thomas Hughes, Sean (Knowsley S)
Clay, Robert John, Brynmor
Clelland, David Gordon Kaufman, Rt Hon Gerald
Clwyd, Mrs Ann Kennedy, Charles
Cocks, Rt Hon M. (Bristol S) Kilroy-Silk, Robert
Cohen, Harry Kirkwood, Archy
Cook, Frank (Stockton North) Lambie, David
Corbett, Robin Lamond, James
Corbyn, Jeremy Leighton, Ronald
Craigen, J. M. Lewis, Terence (Worsley)
Crowther, Stan Litherland, Robert
Cunliffe, Lawrence Livsey, Richard
Dalyell, Tam Lloyd, Tony (Stretford)
Davies, Rt Hon Denzil (L'lli) McCartney, Hugh
Davies, Ronald (Caerphilly) McKay, Allen (Penistone)
Davis, Terry (B'ham, H'ge H'l) McKelvey, William
Deakins, Eric McNamara, Kevin
Dewar, Donald McTaggart, Robert
Dixon, Donald Madden, Max
Douglas, Dick Marek, Dr John
Duffy, A. E. P. Marshall, David (Shettleston)
Eadie, Alex Martin, Michael
Eastham, Ken Mason, Rt Hon Roy
Edwards, Bob (Wh'mpt'n SE) Maxton, John
Maynard, Miss Joan Sedgemore, Brian
Meacher, Michael Sheerman, Barry
Meadowcroft, Michael Sheldon, Rt Hon R.
Michie, William Shore, Rt Hon Peter
Mikardo, Ian Short, Ms Clare (Ladywood)
Millan, Rt Hon Bruce Short, Mrs R.(W'hampt'n NE)
Miller, Dr M. S. (E Kilbride) Silkin, Rt Hon J.
Mitchell, Austin (G't Grimsby) Skinner, Dennis
Morris, Rt Hon A. (W'shawe) Smith, Rt Hon J. (M'ds E)
Morris, Rt Hon J. (Aberavon) Snape, Peter
Nellist, David Soley, Clive
O'Neill, Martin Stott, Roger
Orme, Rt Hon Stanley Strang, Gavin
Park, George Thomas, Dafydd (Merioneth)
Parry, Robert Thomas, Dr R. (Carmarthen)
Patchett, Terry Thompson, J. (Wansbeck)
Pavitt, Laurie Thorne, Stan (Preston)
Pike, Peter Tinn, James
Powell, Raymond (Ogmore) Torney, Tom
Prescott, John Wallace, James
Radice, Giles Wardell, Gareth (Gower)
Randall, Stuart Wareing, Robert
Redmond, Martin Weetch, Ken
Rees, Rt Hon M. (Leeds S) White, James
Richardson, Ms Jo Wigley, Dafydd
Roberts, Allan (Bootle) Wilson, Gordon
Robertson, George Winnick, David
Robinson, G. (Coventry NW) Young, David (Bolton SE)
Rogers, Allan
Rooker, J. W. Tellers for the Ayes:
Ross, Ernest (Dundee W) Mr. Allen Adams and
Ross, Stephen (Isle of Wight) Mr. John McWilliam.
Alison, Rt Hon Michael Goodlad, Alastair
Ancram, Michael Gorst, John
Ashby, David Gow, Ian
Atkins, Robert (South Ribble) Gower, Sir Raymond
Baker, Nicholas (Dorset N) Grant, Sir Anthony
Beaumont-Dark, Anthony Greenway, Harry
Biggs-Davison, Sir John Gregory, Conal
Body, Sir Richard Griffiths, Sir Eldon
Boscawen, Hon Robert Griffiths, Peter (Portsm'th N)
Bowden, Gerald (Dulwich) Grist, Ian
Brandon-Bravo, Martin Ground, Patrick
Brinton, Tim Hamilton, Neil (Tatton)
Brooke, Hon Peter Hanley, Jeremy
Buchanan-Smith, Rt Hon A. Hannam, John
Buck, Sir Antony Hargreaves, Kenneth
Burt, Alistair Harris, David
Carlisle, John (Luton N) Harvey, Robert
Chapman, Sydney Haselhurst, Alan
Chope, Christopher Hawkins, C. (High Peak)
Clark, Sir W. (Croydon S) Hawksley, Warren
Cockeram, Eric Hayes, J.
Colvin, Michael Hayhoe, Rt Hon Barney
Coombs, Simon Heathcoat-Amory, David
Cope, John Heddle, John
Couchman, James Henderson, Barry
Cranborne, Viscount Hickmet, Richard
Currie, Mrs Edwina Hill, James
Dorrell, Stephen Hind, Kenneth
Douglas-Hamilton, Lord J. Hirst, Michael
Durant, Tony Hogg, Hon Douglas (Gr'th'm)
Eyre, Sir Reginald Holland, Sir Philip (Gedling)
Fairbairn, Nicholas Holt, Richard
Favell, Anthony Hordern, Sir Peter
Fenner, Mrs Peggy Howarth, Alan (Stratf'd-on-A)
Fletcher, Alexander Howell, Ralph (Norfolk, N)
Fookes, Miss Janet Hubbard-Miles, Peter
Forth, Eric Jackson, Robert
Fox, Marcus Jessel, Toby
Franks, Cecil Jones, Gwilym (Cardiff N)
Fraser, Peter (Angus East) Jones, Robert (Herts W)
Freeman, Roger Jopling, Rt Hon Michael
Fry, Peter Joseph, Rt Hon Sir Keith
Galley, Roy Kellett-Bowman, Mrs Elaine
Gardiner, George (Reigate) Key, Robert
Gardner, Sir Edward (Fylde) King, Roger (B'ham N'field)
Garel-Jones, Tristan Knight, Greg (Derby N)
Knight, Dame Jill (Edgbaston) Roberts, Wyn (Conwy)
Knowles, Michael Roe, Mrs Marion
Lamont, Norman Rossi, Sir Hugh
Lang, Ian Rowe, Andrew
Latham, Michael Rumbold, Mrs Angela
Lee, John (Pendle) Ryder, Richard
Leigh, Edward (Gainsbor'gh) Sackville, Hon Thomas
Lennox-Boyd, Hon Mark St. John-Stevas, Rt Hon N.
Lester, Jim Shaw, Giles (Pudsey)
Lewis, Sir Kenneth (Stamf'd) Shaw, Sir Michael (Scarb')
Lilley, Peter Shelton, William (Streatham)
Lloyd, Peter (Fareham) Shepherd, Colin (Hereford)
Lord, Michael Shepherd, Richard (Aldridge)
Luce, Rt Hon Richard Shersby, Michael
McCrindle, Robert Silvester, Fred
McCurley, Mrs Anna Sims, Roger
MacKay, Andrew (Berkshire) Skeet, Sir Trevor
MacKay, John (Argyll & Bute) Soames, Hon Nicholas
McNair-Wilson, M. (N'bury) Spencer, Derek
McNair-Wilson, P. (New F'st) Spicer, Jim (Dorset W)
Madel, David Spicer, Michael (S Worcs)
Major, John Stanbrook, Ivor
Malins, Humfrey Stanley, Rt Hon John
Malone, Gerald Steen, Anthony
Maples, John Stern, Michael
Marlow, Antony Stevens, Lewis (Nuneaton)
Mather, Carol Stewart, Allan (Eastwood)
Maude, Hon Francis Stewart, Andrew (Sherwood)
Mawhinney, Dr Brian Stewart, Ian (Hertf'dshire N)
Mayhew, Sir Patrick Stokes, John
Merchant, Piers Sumberg, David
Meyer, Sir Anthony Taylor, John (Solihull)
Miller, Hal (B'grove) Taylor, Teddy (S'end E)
Mills, Iain (Meriden) Terlezki, Stefan
Mills, Sir Peter (West Devon) Thompson, Donald (Calder V)
Moate, Roger Thompson, Patrick (N'ich N)
Monro, Sir Hector Thornton, Malcolm
Montgomery, Sir Fergus Thurnham, Peter
Moore, Rt Hon John Townend, John (Bridlington)
Morrison, Hon C. (Devizes) Townsend, Cyril D. (B'heath)
Morrison, Hon P. (Chester) Trippier, David
Moynihan, Hon C. Twinn, Dr Ian
Mudd, David van Straubenzee, Sir W.
Neale, Gerrard Viggers, Peter
Nelson, Anthony Waddington, David
Newton, Tony Walden, George
Nicholls, Patrick Walker, Bill (T'side N)
Norris, Steven Wall, Sir Patrick
Onslow, Cranley Waller, Gary
Oppenheim, Phillip Ward, John
Oppenheim, Rt Hon Mrs S. Wardle, C. (Bexhill)
Ottaway, Richard Warren, Kenneth
Page, Richard (Herts SW) Watts, John
Parris, Matthew Wells, Bowen (Hertford)
Patten, Christopher (Bath) Wells, Sir John (Maidstone)
Pawsey, James Wheeler, John
Pollock, Alexander Whitfield, John
Porter, Barry Whitney, Raymond
Powell, William (Corby) Wilkinson, John
Powley, John Winterton, Nicholas
Prentice, Rt Hon Reg Wolfson, Mark
Price, Sir David Wood, Timothy
Proctor, K. Harvey Woodcock, Michael
Rathbone, Tim Yeo, Tim
Renton, Tim
Rhodes James, Robert Tellers for the Noes:
Rhys Williams, Sir Brandon Mr. Michael Neubert and
Ridley, Rt Hon Nicholas Mr. Archie Hamilton.

Question accordingly negatived.

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