§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Durant.]
§ 11.6 pm
§ Mrs. Edwina Currie (Derbyshire, South)
At Hilton in my constituency there is a vehicle depot that is run by the Royal Army Ordnance Corps. It covers some 270 acres just outside Derby. I understand that it is responsible for the storage of about 7,000 vehicles of every kind—scooters, cars, taxis, fire engines, ambulances, lorries, Land Rovers: in fact, everything that moves and belongs to the armed forces, right up to huge tank transporters which sometimes block up our local villages. They are not regarded, in technical language, as specialised vehicles. They are "B" vehicles.
On the same site, there is also a REME workshop, whose job it is to repair those vehicles. The whole operation at Hilton is the maintenance and storage of vehicles. It is one great big garage—one of the largest in the country. It covers a very large area. It employs about 250 of my constituents and also constituents of my hon. and learned Friend the Member for Burton (Mr. Lawrence), who wishes to be associated with my remarks.
After the war there were dozens of these depots all over the country. Recently most of them have been closed. Only three are left in England. The others are at Ashchurch and Ludgershall. All of them are now associated in management terms. The other depots specialise in vehicles such as tanks that are known as "A" vehicles, but Hilton is the only depot that is entirely a civilian operation. It reports to military personnel who are based at one of the other depots.
In August 1982, as part of the review of military spending, it was decided by the Director General of Ordnance Services to take a look at Hilton. The question was this: "We reduced the number of depots from about 30 down to 12 and then down to three. Do we need three? Would not two do?" In the aftermath of the Falklands, an investigation team was set up to see whether Hilton should be shut.
My involvement started a year or so later, in 1983, when I was elected to this House. My constituents came to see me and I exchanged letters with Ministers. I have examples of the signatures of every person who has been a Minister in this Department. I asked lots of parliamentary questions. An official visit was arranged. I was delighted to meet Colonel Bowden, and Brigadier Berrigan showed me around. I was most impressed by the quality of the work done there, by the efficiency of the place and by the good humour, flexibility and commitment of the work force at all levels. Therefore, I made representations about this potential closure. Eight months after my visit and nearly two years after the study started, back came the message: Hilton was indeed needed and would not be closed. This came, for example, in a letter from my noble Friend Lord Trefgarne dated 5 July 1984 in which he said:The study has now been completed and its conclusions recommend a continuing requirement for a Central Vehicle Depot organisation for the forseeable future based on the three vehicle depots at Ashchurch, Hilton and Ludgershall.That was confirmed a few days later in the answer to a written question that I tabled. It reads:its main conclusion was to confirm the need for the existing three depots, of which CVD Hilton in South Derbyshire is one."—[Official Report, 10 July 1984: Vol. 63, c. 457.]269 So Hilton was needed. However the Ministry of Defence was not satisfied and another study was to be undertaken to see whether it was possible to privatise Hilton. Indeed, the term that has been used in most of the letters since has been to contractorise. From 1984 to now, another two years, they have been investigated all over again. I believe that the report that was the result of that investigation was available in September 1985. I have seen a one-and-a-half page summary of it. Since then we have had silence.
I asked to see the Minister, my noble Friend, but I was told it was not quite appropriate because a decision had been taken. Nothing has been published; no decision has been taken as far as we know, hence this Adjournment debate. I am sure that my hon. Friend the Minister will realise that a patient Job would have got fed up with all that, and would be having a screaming fit by now. After four years of investigating this depot my constituents and I are thoroughly fed up.
What we are all after is a better, cheaper service. In recent years at Hilton the service has been streamlined quite considerably, even though the military commitment has been maintained. In 1979, I am told, there were over 200 industrials working for the RAOC. Now there are 123, and that includes security staff. In 1979 there were more than 100 people working for REME in the workshops. Now there are, I believe, 68, so the industrial staffing numbers have come down by over 50 per cent., from over 300 to 191. In addition, there are approximately 50 non-industrial staff working there.
There has been a ban on recruitment for more than a year for all grades, and the resulting squeeze on manpower has not done Hilton's reputation all that much good, because its job is to get the vehicles out and it has to leave undone other things that are low priority, such as valeting the vehicles. What the majors and the lieutenant-colonels must think of the rather grubby vehicles they are getting I do not know. It does not help the service at all. I should add that all of my figures come from diligent searching in public sources and nobody has contravened the Official Secrets Act. Hilton has been forced as a result to use contract labour, such as contract drivers, willy-nilly, and I am not sure that doing it in this way, almost by the back door, is at all satisfactory. The view taken is that the work has to be done.
The policies of the MOD in recent months have made the continued existence of Hilton even more important. My hon. Friend said on another occasion that much of our MOD work is done in the south of England. Seventy per cent. of military personnel and 60 per cent. of civilians working for the MOD are based in the southern region. Those are areas that do not need the extra jobs, but Derbyshire and Staffordshire do. The south can do without the extra competition for land and for housing, but the north and the midlands are keen to see growth and development and are desperately anxious not to lose what they already have. Unemployment in Derby is 13 per cent. and I have a feeling that is more than in Pirbright and in one or two other places down south that could probably manage with less work.
If the MOD wants to save money while not compromising the service, there are a number of things it could do, probably without contractorising and certainly without investigating the place all over again. But it would involve listening to the people who work at Hilton and who have some good ideas. For example, within the fence of the depot they all work as one—the depot and the 270 workshops. There is complete flexibility among the work force. Electricians will do fitting, storekeepers will drive, the drivers will put a battery in, and so on, and yet they report separately to RAOC and REME.
They have allocated to their budget two lots of headquarter expenses, all of it military. Therefore, one of their suggestions is to make it a single company. That would be more efficient and would save money. Another proposal is to ask whether civilianisation is not a better way to run this service. Of the three depots only Hilton is entirely civilian: the others are part military. I am told that there are reasons for this, that the military personnel need to know how to run them. Fine, but they can be seconded to Hilton, they do not need to be permanent staff. I am also told that a 24-hour commitment is required and that only the military can provide that.
The experience at Hilton, particularly during the Falklands crisis, surely shows—I hope that my hon. Friend the Minister will confirm this—that civilians can and do offer exactly the same commitment, and do so without question. In any case, the argument about commitment applies just as much if the depot was privatised. The military have no monopoly on patriotism. I think that we dealt with the argument in the debate on the privatisation of the royal ordnance factories.
But the military are expensive. If we compare the salaries of civilians with the appropriate military equivalent, we get some interesting figures. For example, the top rank civilian who works at Hilton costs £17,823. The equivalent military rank is a lieutenant colonel, who costs £32,385—that is only his pay—almost twice as much. The executive officer at Hilton costs the state £11,117. The equivalent rank is a captain, who costs £19,661—again almost twice as much. The lowly clerical officers, the people who actually keep the place going, cost £7,641 each. The equivalent is a staff sergeant costing £14,827, again a ratio of almost two to one. May I emphasise that the military costs are only pay, national insurance, pension and gratuity costs? If we add accommodation costs and the other little extras that the military have, such as school fees, the cost of employing a soldier, especially a senior soldier, instead of a civilian, become astronomical. I believe that the case is firmly made that it is cheaper to have civilians, such as my constituents, with no loss of efficiency in service.
The case made by the people who work there was summed up best, not in my words, but in the words of Mr. O'Hara, who is one of the union representatives, in a letter dated 24 July 1985, in which he said:"FACT We at Hilton can issue vehicles more efficiently, more cheaply than the other Depot with a military presence.FACT We have greater flexibility of labour than the other depot with military management.FACT We have a loyal work force who, when called upon, can, and do, work the same hours and often more than our military counterparts, sometimes if needed on 24 hour call out, many with some 17–20 years service to the crown behind them …FACT We are a shining example of how to run a Vehicle Depot cheaply and efficiently …FACT We have been studied countless times for a number of reasons and every study has been sponsored by the military. It's time the picture was looked at by an independent body.He went on to say—I have a lot sympathy with this—The truth is that we are an embarrassment because of our efficiency.My constituents are worried and suspicious about some of the advice that my hon. Friend the Minister has been 271 given. If Hilton were to shut, we would lose the strategic benefits of having our vehicles on more than one site, and we would lose a site giving major employment in an area not overly well endowed with employment. If Hilton were to be privatised we would disrupt an excellent and smoothly running service. We would probably save very little. Indeed, redundancy costs would make it quite an expensive operation.
In either case, we would lose the dedicated and loyal service of a first-class work force and we would end up with something less efficient in both performance and cost. But if Hilton were allowed to stay open, with some of the ideas of the work force put into practice, the service would benefit, the Ministry of Defence would benefit and my constituents could continue to be as fanatically proud of the work that they do for our nation as they are now, and quite rightly so. I hope that my hon. Friend will consider these points and set our minds at rest tonight.
§ The Parliamentary Under-Secretary of State for Defence Procurement (Mr. John Lee)
I congratulate my hon. Friend the Member for Derbyshire, South (Mrs. Currie) on her good fortune in securing this Adjournment debate. I welcome the opportunity to give as full a statement as I can about the Royal Army Ordnance Corps vehicle sub-depot at Hilton. Before dealing with the more specific issues raised by my hon. Friend I think it would help if I were first to explain the background against which decisions concerning support to the Army are made.
It is a major objective of this Administration to instil into all areas of the public sector a much greater awareness of costs and cost-effectiveness. We have done much, for example, to encourage the participation of the private sector in support of those administrative activities which it is not strictly necessary to have done by MOD employees. The taxpayer is already benefiting from greater competition, either as resources are released for more effective use elsewhere or where cost-cutting reduces the burden the public sector imposes on the economy. This is evident, for example, in the way in we have been able to reduce the size of the Civil Service, so that expenditure on salaries, and so on, is correspondingly lower than it would otherwise have been.
The financial management initiative is a catalyst for much work in the Ministry of Defence, in part aimed at improving the knowledge that managers at all levels have of their costs. Indeed, some of the studies to which I shall refer later result from the more creative thinking which the FMI has encouraged.
As I have said before, it is a paramount point of principle that we have a duty to the taxpayer to see that defence funds are spent only on essential activity, and spent in the most cost-effective manner. In the defence support area it is the policy of the Government to retain activities in the public sector only where this is operationally essential or where there is a clear advantage to the taxpayer. In this way, we aim to extend the scope of activity which benefits from the effects of competition.
Support for the army, and logistic support in the case of the vehicle sub-depot at Hilton, must be considered against the background I have just outlined. More 272 important, resources released from the support area can be redeployed to front-line and other operational areas—from the "tail" to the "teeth", as we put it.
I turn now to the Hilton situation in particular. The vehicle sub-depot at Hilton—as my hon. Friend well knows—is about 15 miles from Derby and occupies a site of about 250 acres. It employs some 236 civilian staff and holds about 6,500 vehicles.
It is one of three vehicle depots which between them receive, inspect, maintain, store and issue all Army vehicles—from tanks to trailers, from cars to cranes. They also handle vehicles for the Royal Navy and the Royal Air Force.
The other two depots are Ludgershall in Wiltshire, which deals with armoured vehicles—"A" vehicles—and Ashchurch in Gloucestershire, which, together with Hilton, processes the remainder. Hilton's main work load involves "soft-skinned" vehicles—"B" vehicles—which are identical with, or very similar, to commercially available vehicles. Hilton is wholly civilian manned; the other depots are staffed by both military and civilian personnel.
I and my fellow Ministers pay a tribute, too, to our civil servants who serve us so well in so many different capacities and especially at Hilton. I know how much, too, the Army appreciates their loyal service in carrying out their important role. I thank my hon. Friend for the opportunity to make these remarks. I know how committed she is to the welfare of the Hilton work force.
Clearly, I accept the point that there can be valuable economies from replacing service personnel with civilian staff. Indeed, it is quite proper to do so where this can sensibly release soldiers for service in front line units. In the case of the two other depots, however, the military presence is justified by the mobilisation and reinforcement roles which they are assigned in a period of tension or war.
My hon. Friend made reference to possible improvements to costs and efficiency in our current vehicle depot operations by rationalising the management structures of the depots and their associated workshops. The professional oversight of all workshop operations in the Army is the proper responsibility of the Royal Electrical and Mechanical Engineers. They are responsible for technical standards and practices, as well as for training and various aspects of interposting, for military and civilian mobile staff alike. It therefore makes no real sense, except in the case of contractorisation, for 91 Vehicle Workshop at Hilton to be disconnected from REME's wider control, and I have to say that significant economies are unlikely to accrue from an amalgamation of the storehouse and workshop elements. The same applies in even greater measure to the REME workshops at Ashchurch and Ludgershall, which reflect the discrete specialisms of the supply and the engineering staffs.
Our experience of involving the private sector and introducing competition into Government activity has shown significant savings. Hilton's work load embraces vehicles that are in everyday use up and down the country. It was quite appropriate, therefore, to consider whether there would be advantage in putting the work out to contract. We mounted a feasibility study late in 1984 and received a report which recommended that the idea be pursued. In the normal course of events, we would have then consulted the work force and its representatives about our resulting proposals. This would have taken place last autumn.
273 However, the armed forces, and the Army in particular, are dependent on vehicles for all types of operational and support activities, and our vehicle holdings are considerable. It is not surprising, therefore, that recently we have been looking even more closely at ways and means of ensuring that we get maximum value from expenditure in this area and that our vehicle holdings are no more than the minimun needed for our purposes. There are a number of studies in train which could impact upon vehicle requirements, and thus on the numbers we need to keep in store. We are examining, for example, greater use of the private sector for the provision of the Army's day-to-day administrative transport. Vehicle leasing is a possibility, and there are other examinations of both our holdings and our purchasing arrangements under way.
What this means is that we are currently unable to forecast with sufficient accuracy Hilton's workload over the next four to five years, and so we are in no position—on that count alone—to frame a viable tendering exercise to which industry could reasonably be expected to respond. The result is that the Hilton work force, knowing full well that a study into contracting-out has taken place, and, indeed, having been given a summary of its findings, has so far heard nothing further about progress. I naturally regret that, but we have not been in a position to say anything useful while the other studies continue.
The climate of sustained uncertainty endured by the work force is most unfortunate, and I should have preferred to eliminate it entirely. However, as I have mentioned, we are still engaged in studies which might materially affect the numbers of vehicles that we need to process through or store in the depots. Certainly, in this 274 situation, we cannot sensibly embark on contracting out, and I am tonight taking the opportunity to announce that it is to be suspended.
But, as I said, I cannot remove the air of doubt entirely. These very studies will make it necessary for us to consider whether the overall load will drop sufficiently for our vehicle support needs to be met by just two depots. This is a very complex area, involving, not only our internal vehicle management arrangements, but our system of the procurement and delivery of new equipment. If it emerges that it may be possible for two depots to meet our needs, we shall have to be clear what impact, if any, there will be on the existing arrangements with our vehicle suppliers.
My hon. Friend raised our intention to ease the concentration in the south of defence units and establishments by encouraging relocation northwards. As I said in reply to the hon. Member for Bolton, North-East (Mr. Thurnham):This is a matter for continuing review as opportunities arise, such as when major investment is required … all proposals will need to stand on their operational and economic merits."—[Official Report, 11 March 1986; Vol. 93, c. 802.]It will be no different in our consideration of the Army vehicle depots.
It is unlikely that we shall be able to reach conclusions quickly, and though I know that my hon. Friend would no doubt prefer that her constituents were given a clear indication of the future, I fear that the necessary work will not be completed before the end of this year. Nevertheless, an announcement will be made at the earliest possible moment.
§ Question put and agreed to.
§ Adjourned accordingly at twenty-seven minutes past Eleven o'clock.