HC Deb 23 February 1987 vol 111 cc113-20

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Portillo]

10.11 pm
Mr. Jim Lester (Broxtowe)

I am delighted to have this Adjournment debate because, as you may know, Mr. Speaker, throughout last week the Opposition were unsure as to whether they would vote in the Aye Lobby or the No Lobby. My debate has been off and on, but since they voted tonight that the House should not adjourn, I can make a constituency case to the House about which I feel strongly.

My hon. Friend the Minister will know that since 25 June 1984, when the first notification of the closure of 38 REME workshop was received in my constituency, the trade unions and I have tried to offer constructive proposals to the Ministry of Defence, with a real interest in the defence capability as well as my constituents, to reverse that decision. I acknowledge that every facility has been given to me and my constituents to make that case. Indeed, after two trade unionists met the Secretary of State in July, we received a letter on 18 December in which he said that although it would be impossible to reverse the decision, I appreciate that the closure of 38 Central Workshop is a very painful process for our employees there; and I naturally regret this.

Events since then have made the closure even more painful and the knife has been turned in the already sore wound. Tonight I wish to make one more attempt, first, to ensure that the men affected are treated fairly and, secondly, on the basis of real evidence, to prevent the Ministry of Defence from falling into a no-win situation where they may lose the skills inherent in 38 REME workshop. It is the only place in the entire REME set-up where a tank can be totally stripped, repaired and rebuilt. The Ministry of Defence might discover that, for reasons that have been argued many times, even by rejigging existing provision, Bicester workshops, which will take part of the work from REME in Nottingham, will be unable to meet the targets set. The review that was designed to save money glossed over the most important element, which is a trained, coherent, committed work force. It takes years to create those skills and that ability, and it is easily dispersed. I submit to my hon. Friend that people and skills really matter.

May I deal first with fairness. Despite the fact that the operation of 38 REME workshop has been extended to build engines, many men—especially those aged under 50—with considerable service have been advised to take voluntary redundancy before April 1987 on the grounds that no better terms would be available and that the quicker they entered a difficult job market the better for them, because they might find alternative work.

Some have followed that advice. I am satisfied that at no time were they advised by their trade unions that the unions were negotiating a new redundancy package which affects all Ministry of Defence workers and which was first announced on 2 December 1986. It was a fundamentally changed basis of redundancy which represented a real improvement for the over-50s in technologies that are unlikely to get more orders. They are the very people who are working out their voluntary notices.

The transition arrangements are worked out on a national basis. Intelligently, we always introduce them, but here they miss virtually every man at the workshops who is now under notice. The already painful process of losing a job has turned into a lottery which affects some 556 men significantly.

I should like to quote from just one letter of the many that I have received. It is from Mr. Hadfield. He wrote: Dear Jim Lester, As you know, 38 Central Workshop, Chilwell is closing down. I am being made Redundant on 27 March 1987. With the new Redundancy Terms starting April 1, I would have been getting about £12,000 more Redundancy pay. I feel it is very unfair that some employees will be getting up to three time their original Redundancy pay, whilst others like myself stay on the old terms. We are all being made Redundant from 38 Central and I feel we should always all be treated equally. I am 49 years old and have been at Chilwell for 10 years as a Coach Trimmer … With taking … promotion … men with less service will be there after me, which I was not told at the time. People with less service will get more redundancy pay.

My hon. Friend the Minister will I am sure agree that this is a matter of heartfelt concern. People who have given many years' service have patently been given wrong and damaging advice.

I agree with the way in which the Nottingham Evening Post summed it up when it reported: It seems inconceivable to us that the date for this scheme could have been agreed in ignorance of the Chilwell situation. It must be the largest body of civil servants being made redundant at the present time, so it could hardly have gone unnoticed. And if the Chilwell redundancy date was know n, then steps should have been taken to treat the workers there as a special case. The argument that I want to put before my hon. Friend the Minister is that there is a fair way out.

The non-industrial staff have terms and conditions which allow them to choose which option is most beneficial. I acknowledge that the majority of workers at the workshops will benefit from the new arrangements. The unfairness arises for the people who have been advised to take voluntary redundancy in the last year. They will be badly affected. Some people in their 50s who worked on the basis of getting a redundancy payment to set up in small business or whatever will not have that option under the new scheme, but a pension arrangement instead. I ask my hon. Friend to consider this matter. If it would be helpful, I shall be pleased to see him and discuss the details.

My hon. Friend will know that there has been voluminous correspondence over a considerable period of time. I know that he has been to Bicester. He wrote to me on 31 December 1986 as follows: As for the difficulties affecting Bicester which led to the adjustment of the Chilwell rundown plan these are being overcome. The recruitment of non-industrial supervisory staff has improved and is now well back on track. Recruitment of industrial staff of the right calibre is admittedly more of a problem because of the relatively high cost of housing in the Bicester area and the competition with other industries in Oxfordshire. Steps have, however, been taken to attract recruits from our maturing apprentices from other REME Base and District Workshops and from the Chilwell workforce, as well as through local job centres and the media. Manning levels are in consequence very nearly up to requirements. I quote that part of the letter because recently another letter came into my possession from a Mr. Ward who is the unit civilian staff manager responsible to Colonel Ayscough, who is the chairman of the local joint productivity council which is doing the recruiting. My experience of Bicester goes back to when I was stationed there in 1950–51. Mr. Ward's voice is much more accurate and authentic, because he is the man at the sharp end who has responsibility for recruiting these very scarce and necessary craftsmen. His letter says: The facts are these. There is a shortage of Vehicle and Electrical Fitters in Oxfordshire. The wages the Ministry of Defence pays equates, at best, to that of a semi-skilled person in outside industry in this area. For this rate of pay we ask the highest qualifications of a formal apprenticeship. There is not a great pool of unemployed craftsmen in Oxfordshire awaiting to start work here, nor is there a group able to increase their earning power by giving up their present job and coming to work at 32 Base Workshop.

Then Mr. Ward talks about recruitment from a distance. The letter says: Now let us turn to recruitment from a distance. It is true that there is a large number of unemployed people in various parts of this country. Among those there are craftsmen but, believe it or not, those who have been made redundant in ship-yards, coal-mines, steel-works, railway workshops and the like do not have the qualifications and experience you demand. When recruiting from a distance not only does pay present a problem but so does housing. In the last 12 months the lowest priced housing in this area has advanced from around £30,000 to £40,000 and the trend is upward. Prospective employees are not prepared to sell their own house for £25,000 in the North, which in some places is a substantial property, and come down here and live in a box for a mortgage they cannot afford on the wages paid by MOD. They are not prepared to step down from home ownership to rented accommodation.

Two sentences in this letter bear out the fears that I have had the whole time. They read: At the time the decision was taken to expand operations in Bicester it was made known to all concerned that there would be difficulties recruiting all forms of craftsmen. We have exactly the same difficulties over Painters and Carpenters for the COD. The letter goes on to say: the Department of Employment is continually approached, but I am not responsible for their inadequacies. We are not pursuing new advertising avenues through the Daily Mirror's Job Line and that service provided by Central TV on Teletex. There arc therefore many aspects of the recruitment of craftsmen which are beyond our control or perhaps even influence. We cannot change the cost of housing in Oxfordshire nor can we alter Government legislation. We have little chance of changing wage levels, though we may have a little influence.

The only proposal that he can make is that they dilute the skills required simply to make to make up the numbers. Yet these men are charged with the responsibility of repairing our A vehicle, the Chieftain tank, an essential part of our defence capability. I should like to make one further point from this letter. It indicates to those who were not present at the meeting as a result of which the letter was written, that no recruiting had taken place in September 1986. The letter says: The wastage rate is of great concern to me. A cursory look at this wastage indicates that craftsmen leave for the same reasons as we cannot recruit them. On the 9 January 1987, for instance, you lost a Vehicle Mechanic, who we recruited in September 1986, who left for other employment. Others who left just before Christmas did so for employment giving more money or because there were difficulties living away from home. That letter echoes an authentic voice speaking about the real problems of getting a committed craftsman in the centre at Bicester who would stay and build on the acknowledged skills that my constituents have gained over many years to provide the service that the armoured divisions require.

I put it to my hon. Friend most emphatically that he should take this question seriously. I would welcome him on an urgent visit to Chilwell. As I said at the beginning, a reappraisal will be too late if it is not done quickly. The skills and capacity will have gone before capital expenditure at Bicester is undertaken, and the sheer inability to recruit sufficiently skilled men to meet the task is well proven.

I return to the original constructive suggestion that we made on behalf of 38 REME workshop at Chilwell. It should be kept in existence so long as Chieftains stay in Army service. The Chieftains should go to Chilwell and the Challengers to Bovington. That solution would be better for the Army and my constituents and would do something to correct the drift from north to south about which politically, in terms of employment and jobs, we should be extremely conscious.

10.25 pm
The Parliamentary Under-Secretary of State for the Armed Forces (Mr. Roger Freeman)

I congratulate my hon. Friend the Member for Broxstowe (Mr. Lester) on securing this Adjournment debate, and I pay tribute not only to the interest he has shown in the future of 38 central workshop at Chilwell but also to his concern to ensure that the Army continues to receive the support that it needs from the REME static workshop organisation as a whole. I am sure that those of his constituents who work at 38 REME workshop, Chilwell, are appreciative of all the efforts that he has made over recent years, as on this occasion, in pursuit of the interests as well as those of the Army as a whole.

My hon. Friend raised two issues. The first was the effect of the new redundancy provisions that will operate from 1 April. The second was the recruitment problem at Bicester. I shall try to deal with both issues. However, it might be helpful if I take this opportunity to explain the basis of the reorganisation of the REME workshop organisation which is currently under way and how it is progressing.

Before dealing with the specific points raised by my hon. Friend, I should like to set out briefly the principles that underly the plan that we announced in June 1984—and following a period of consultation with all interested parties confirmed in December 1984—to rationalise the static workshop organisation in this country, of which the sad closure of No. 38 central workshop at Chilwell is but one element.

The first principle is our duty to the taxpayer to ensure that the funds which Parliament has voted to meet defence needs are applied in the most cost-effective and efficient manner. The MOD review of the REME static workshop organisation in 1982 was undertaken against that background. It showed that overall the organisation was running with substantially more capacity than the Army would need to meet its forecast workload—nearly 20 per cent. more, to be precise. Clearly, retaining excess capacity of that order is not efficient or economic, and we accordingly needed to reduce the overhead costs of the operation. That meant concentrating the Army's base repair work at fewer workshops. I ask my hon. Friend to contemplate those essential facts. With overcapacity in the REME central workshops, it was essential for us to contract the reorganisation for efficient and economic reasons.

The second principle we have followed is that work should not be retained in-house if it can be done satisfactorily but less expensively by industry, except where operational considerations preclude this. We therefore looked at the scope for putting out to contract repair work, in particular on equipment of relatively low operational priority and significance—for example, B vehicles. By having repair and overhaul work on such equipment performed under competitive contract, we found that we could obtain better value for money and significant cost savings.

The plan that we announced in 1984 involved the closure of the workshops at Chilwell and Newark and an expansion of those at Bovington, Bicester and Old Dalby, a substantial increase in the amount of base repair work carried out by contract, and manpower reductions of the order of 500. This would produce a leaner overall organisation with the right capacity and at the right locations to meet the Army's requirements and deployment.

That plan has significant consequences for many of the Army's employees. Therefore, we made every effort to ensure that ample time was allowed for consultation with the work force and its trade union representatives. I hope that my hon. Friend will agree that we have gone to considerable lengths to consult the trade unions and their representatives both in the trade unions and in Parliament. As my hon. Friend will be aware various delegations and representations were received by Ministers and their officials. Our decision to proceed with implementation of the rationalisation plan was taken only after most careful consideration of all the points which had been put to us.

Over the past two years since we announced that decision most of the changes to which I have referred have been proceeding according to plan. For example, the transfer of the residual load from 33 central workshop at Newark into 35 base workshop at Old Dalby has now been completed. The transfer of part of the workload of 38 central workshop, Chilwell into 18 base workshop Bovington and 34 base workshop Donnington is also running well on schedule.

At the beginning of his speech my hon. Friend implied that tanks can be stripped and repaired only at Chilwell, but Bovington also has that capacity. However, there have been some difficulties over the transfer of the residual part of the Chilwell workload to the workshop at Bicester. These have led to a one-year deferment, to March 1989, of the originally planned closure date for 38 central workshop, although the bulk of the manpower savings expected from closure will still be achieved by March 1988.

The rundown of the workshop at Chilwell is already well under way. Its total strength has already reduced by more than half since May 1984. Its industrial strength has reduced by 260 by the end of January this year and 154 of the workers there have received compensation on early retirement terms. We expect that a further 59 members of the work force will have left on similar terms by the end of March. Fifty-four of those who have already left have been transferred to other Ministry of Defence employment and have received the normal public assistance with the costs of their transfers to other locations.

My hon. Friend mentioned the fact that the new terms for early retirement were announced on 1 December 1986 to take effect from 1 April 1987. These represent a significant improvement for members of the industrial Civil Service leaving on redundancy. Negotiations on these new terms began in 1985, and in June 1986 a joint statement was made by management and the trade unions informing all staff—I stress "all staff" including those at Chilwell—of the broad outline of the new arrangements.

My hon. Friend suggested that that created some inequity for those who have already left or expect to leave prior to 1 April. I shall certainly look with care at his point and write to him. If a meeting would help, I am happy to have one. I must make it plain that our run-down plans at Chilwell pre-date these general improvements for the industrial Civil Service. Irrespective of them, we have still needed to meet our manpower target reductions by voluntary or, sadly, compulsory redundancies. As I have said, I shall consider further the seeming inequity created by the new redundancy provisions and write to my hon. Friend.

I turn now to the financial aspects of the static workshop review and the question whether the balance sheet of costs and savings had altered since our decisions were announced in 1984 in a way which affects its validity.

As my hon. Friend knows, we undertook a re-appraisal of the original costings last year at the request of the trade unions. This, indeed, showed some changes. The expected non-recurring net savings—that is, once-only savings net of once-only expenditure—have reduced from just over £1 million to £300,000. However, the expected recurring net savings have increased from £750,000 to £2.5 million per annum. This increase in the recurring savings has arisen largely because the costs of putting work to contract are less than orginally estimated. The figures that I have quoted do not include redundancy costs. We estimate that these might amount to about £4 million for the two workshops at Newark and Chilwell which are closing. Nor do they include the extra costs of about £1 million arising from keeping the Chilwell workshop open for an extra year until 31 March 1989. However, my hon. Friend will see that even if these additional elements are taken into account, we should break even within two years of full implementation of the reorganisation. Therefore, there are no financial grounds for reconsidering our decision.

The point was also raised whether the revised disposition of repair work under the plan would guarantee that the Army continues to receive the repair service that it requires, especially in the light of the loss of the expertise which exists at Chilwell. I pay tribute to the long and dedicated service of those who have worked and are still working at Chilwell.

I am satisfied that the Army will continue to be well served. For example, the concentration of tank main equipment repair at Bovington will capitalise on experience there of handling first and second line tank repair. As I have already mentioned, the transfer of this work is going well, and the people we are recruiting as skilled fitters have all completed four-year apprenticeships and are thoroughly competent to undertake the work we require of them.

I turn now to the recruiting problems at Bicester. It is true that recruiting was always likely to be more difficult at Bicester than at Chilwell. Factors such as competing local industries and housing all contribute to this. My hon. Friend was right to emphasise that.

The problem needs to be put into perspective. For example, 18 months ago the Bicester workshop employed 34 industrials as the direct labour force—that is, those who actually carry out the repair work as opposed to those who supervise or work in a supporting capacity. Today. their number has risen to 73, which is only 10 fewer than the number required for the prime task—the repair of heavy armoured vehicle assemblies. The plan requires an increase to 145 by March 1989 to cater for the other work that we intend to transfer to the Bicester workshop in order to provide a balanced work load. The current rate of recruiting may leave us a little short of this requirement.

There is sufficient flexibility within the static workshop organisation for part or all of this other repair work to be undertaken elsewhere at the continuing workshops. Indeed, this flexibility will stand us in good stead should the manpower reduction at Chilwell reduce more quickly in the future than we expect.

So, recruiting is proceeding reasonably well at Bicester, despite the difficulties. But we are not being complacent. The Department is taking vigorous steps to maintain and, hopefully, improve the rate of recruitment. I visited Bicester on 16 February, and was greatly impressed by those members of the work force whom I met. These included several young men from northern cities such as Liverpool, Sheffield and Leeds who were returning to their homes at the weekends. I am conscious that housing in the Bicester area is a particular difficulty and may be hindering recruitment. Therefore, I have arranged for a review to be made of MOD-owned housing in the area to see what scope there may be for providing temporary accommodation for new recruits while they are seeking permanent housing.

To sum up on the main issues raised by my hon. Friend, we are confident that the rationalisation of the REME static workship organisation, of which the closure of Chilwell is a necessary part, is financially well founded. As my hon. Friend knows, all the ground has been gone over most thoroughly by my right hon. Friend the Secretary of State for Defence. He has made it clear that he can see no grounds for throwing the whole plan back in the melting pot at this late stage. We have a duty to manage our resources responsibly and cost-effectively and unfortunately this can involve painful decisions. We much regret the closure of 38 central workshop at Chilwell, which is a necessary but unpalatable consequence of our overall plans. I assure my hon. Friend that I shall take careful account of what he said about inequities, and I shall be writing to him.

Question put and agreed to.

Adjourned accordingly at twenty-two minutes to Eleven o'clock.