HC Deb 13 June 1988 vol 135 cc21-5 3.31 pm
Mr. Martin O'Neill (Clackmannan)

Will the Minister answer the question of which I have given him notice?

The Parliamentary Under-Secretary for State for Defence Procurement (Mr. Tim Sainsbury)


Mr. Robin Maxwell-Hyslop (Tiverton)

On a point of order, Mr. Speaker—

Mr. Speaker

Order. I think that the House must hear the question. Will the hon. Member read out his question?

Mr. O'Neill (by private notice)

To ask the Secretary of State for Defence if he will make a statement on the proposed redundancies at Devonport dockyard.

Mr. Sainsbury

Hon Members will be aware that Devonport Management Ltd., the commercial managers of the royal dockyard, announced last Friday that there would be a further reduction of 1,900 in the jobs available there. That, in addition to the 1,400 job losses already announced, brings to 3,300 the reduction in jobs at the dockyard by April 1990. I very much regret the need for these job losses, and appreciate the potential impact on the local economy.

I understand that DML intends to make the maximum use of natural wastage and voluntary redundancy, consistent with preserving the balance of skills and trades necessary to its organisation. The number of compulsory redundancies will be kept to the minimum. My Department will fund the cost of redundancy of ex-dockyard civil servants on generous Civil Service scales of compensation.

In the run-up to commercial management, there was an extensive consultation exercise. We made no secret of the fact that substantial job losses would be needed whether or not the dockyards were managed commercially, and my right hon. Friend the Secretary of State confirmed to the House on 24 February 1987 that, at the time, DML envisaged a reduction by 2,300 jobs in the period to 1990. Further job losses were expected after that date.

There is understandable concern that subsequent decisions by DML have increased that early estimate. Several factors have caused this. First, DML was deprived of the opportunity to enter the dockyard before vesting day to study the facilities on the ground and evaluate methods of operation. Secondly, there was considerable scope for improvements in productivity. DML accepted a target of a 30 per cent. improvement in efficiency over the seven-year period which was incorporated in the term contract. Thirdly, in continuation of a trend already apparent, the naval refit load allocated to the dockyard as a core programme has been reviewed twice since vesting day as part of the normal Ministry of Defence annual costings, and reduced on each occasion. In part, this reflects the fact that modern gas turbine ships are more reliable and need less maintenance than older ships.

These factors have led to a need for a reduction in the work force on a greater scale and earlier than previously expected. They will, however, result in the Royal Navy achieving better value for money in its refit programme and make the dockyard more capable of winning further work in competition from the naval unallocated programme, the private sector and overseas.

I should like to assure the House that Plymouth will remain a major naval base and our largest dockyard for the foreseeable future.

Mr. Martin O'Neill

I thank the Minister for his reply. Can I assume that the failure of any of the hon. Members who represent Plymouth to raise this question can only be attributed to the fact that this is a matter of national security? It is, of course, but at this stage it can only be seen as a devastating blow to those individuals who work in the yard, their families, and, indeed, to the entire economy of the south-west. However, is the Minister aware that, when it first became known that the right hon. Member for Henley (Mr. Heseltine), when Secretary of State for Defence, was to embark upon this scheme, there were, on 1 April 1985, 13,000 people employed in the yard? We were told that there would be 2,000 jobs lost. The figure was then increased to 2,300 and then to 5,000. We now know that by 1990 the number of 13,000 employed will have fallen to 6,000—a loss of 7,000 jobs.

Does the Minister appreciate the cynicism and bitterness of the local community when on Saturday 11 June it read the report by Michael Chilvers in the Western Evening Herald? The report stated that, earlier last week, Chase Manhattan bank was advising its clients in a confidential investment review to buy shares in the Weir Group, one of the consortium members. That was primarily because the initial £300,000 which the Weir Group invested in the yard would mean a profit of £1 million, which was likely to be increased to £2 million by 1990. Does the Minister not agree that, instead of handing out money in that way, DML would be better off equipping itself to seek work in the commercial sector and looking for work in the refitting of the type 42s? The last one of the guaranteed programmes is going to Portsmouth.

Is the Minister not ashamed that 7,000 jobs should be sacrificed to Tory ideology in this way? Not only are we losing jobs in the local community, but we are denying the Fleet and the country the services of men and women who have served us well for a long time and whose energies and support the fleet and the country now require.

Mr. Sainsbury

I understand that there is great anxiety among those employed. However, I am encouraged by the fact that the managing director of DML said, that he looked to the number of jobs stabilising at around 6,000. I hope that the hon. Member appreciates that these reductions in job opportunities at the royal dockyard are not a consequence of commercial management as such, but of the changes that I set out in my answer to his first question, which are a reduced naval refit work load and the need for a great improvement in productivity and efficiency in the dockyard.

That is exemplified in two ways. First, DML itself accepted, before it had an opportunity fully to assess what happened in the dockyard, a target for a 30 per cent. —30 per cent.—improvement in efficiency over the seven years. Secondly, the lower refit requirements of the Royal Navy are exemplified by the fact that in 1981 the average time spent in refit by our surface warships was 20 per cent.—one in five days. That time is now down to 12 per cent. and I would expect there to be further reductions in due course.

Mr. Robert Hicks (Cornwall, South-East)

May I say how distressing it was for everyone in the Plymouth travel-to-work area to receive on Friday the information about the loss of a further 1,900 jobs? While we all recognise that the refits of the modern Royal Navy are less frequent and take less time, does the Minister not agree that that is so, essentially, in peacetime circumstances? The fundamental purpose of the royal dockyards is to service the Royal Navy—[HON. MEMBERS: "Was."]—is to service the Royal Navy in peacetime and in times of emergency and conflict. In view of the reduced work force, can the Minister give an assurance to the country and the House that we are capable of servicing the Royal Navy in a national emergency?

Mr. Sainsbury

I am well aware, as I am sure is everybody in the area, of my hon. Friend's concern for the well-being of those of his constituents who work in the dockyards or whose prosperity is associated with the work of the dockyards. I appreciate the concern of those people.

On my hon. Friend's important point about the strategic capacity of the refitting industry, we keep that under review. However, I must point out that Devonport is only part of the industry and that we keep under review the industry's total capacity. I can assure my hon. Friend that we would not let that fall below our crisis requirements. The existing facilities at Devonport represent a substantial surge capacity, and a great deal more surge capacity is available in the industry, in both the public and private sectors.

Dr. David Owen (Plymouth, Devonport)

I hope that the Select Committees and the Audit Commission will look at how Ministers have consistently misled the House about redundancies in Devonport. Will the Minister now do for Plymouth at least what the Ministry did with extreme success for Chatham dockyard when it was closed, because more jobs have been lost in Plymouth than were lost in Chatham? Will he make available land for industry and consider especially freeing up the south yard because Plymouth desperately needs industrial land if it is to attract new industry to the area? Will he also talk to the Secretary of State for Trade and Industry and try to ensure that Plymouth, like Chatham, gets enterprise agency status and extra help to meet this severe blow to its economy? Will he give the ancient dockyard buildings the same plans as Chatham enjoyed in association with the Heritage Trust? A Ministry of Defence commitment is needed to help the Plymouth economy. Will that be forthcoming?

Mr. Sainsbury

The right hon. Gentleman may have forgotten that the Department of the Environment is responsible for enterprise zones, not the Department of Trade and Industry, but I take his point. We appreciate that it would help the local economy if we could make more land available for redevelopment and for a variety of other purposes. We recognise that and, as the right hon. Gentleman will be aware, we have already released two central sites and have several other sites under active consideration—including the historic Royal William yard —for which job creation schemes are being considered. I believe that, in addition to the Royal William yard, six other sites, covering nearly 70 acres, are currently under active consideration for release. It is for DML to make proposals about the south yard in the first instance. We understand that the company will shortly be ready to present us with the results of its study into the south yard.

Mr. Robin Maxwell-Hyslop (Tiverton)

Will my hon. Friend consider for a considerable proportion of the dockyard employees who are being made redundant a reserve scheme with an annual premium paid, analagous to reservists for the armed forces themselves, so that, if it becomes necessary to expand capacity at short notice—as it did, for instance, for the Falklands or the cod war, when there was a high utilisation, none of which was a large international war—the people with the necessary skills will be available? That would also provide a measure of stabilisation which would tend to keep those skills locally rather than having them dispersed through the world and not available at short notice.

Mr. Sainsbury

My hon. Friend, as so often, has come up with an interesting and ingenious point, to which we shall certainly give careful consideration. As I told my hon. Friend the Member for Cornwall, South-East (Mr. Hicks), Devonport is not the only refitting capacity that is available. The yard's facilities have considerable surge capacity to meet emergencies or crisis requirements. As I have said, that is also true of the rest of the industry.

Mr. Michael Foot (Blaenau Gwent)

I mean no reflection on the Minister who has made the statement, but is it not deplorable that the Secretary of State for Defence did not insist on coming to the House to make the statement himself? If the House has been misled, as the workers in Devonport dockyard have been gravely misled, it appears that the Secretary of State bears a direct personal responsibility, and he should be here to answer that point. Is not this part of the callous way in which the Government have dealt with the whole matter? When the Dockyard Services Act 1986 was introduced, the previous Secretary of State for Defence did not even trouble to come to the House to move it himself. How can the Minister say that he will give guarantees, when one grievous aspect of the privatisation programme is that no guarantee given by Ministers from the Dispatch Box has been worth anything.

Mr. Sainsbury

I can assure the right hon. Gentleman that we take very seriously the scale of the job losses and the pace at which they are having to be introduced. May I explain to the right hon. Gentleman and to the House that the need for substantial job reductions was known long before we even started discussing commercial management. The longer-term need for very substantial reductions in the work force, down almost to the level that is now being postulated, had already been disclosed in discussions with the unions before discussions about the introduction of commercial management. Therefore, we can decisively reject the right hon. Gentleman's allegations that we have sought to deceive the work force or the House on this matter.

Sir Peter Emery (Honiton)

Will my hon. Friend accept that no one can be happy about the extra redundancies? Will he make clear to the House the Government's commitment to Plymouth by stating the amount of capital work that went on last year, has gone on this year and is continuing now in the modernisation of certain quay work further upriver with concreting to enlarge the capacity of the docks to deal with shops—[Laughter.]—to deal with ships, with their engineering shops, close to the moorings? Does he agree that such work can be dealt with more efficiently through the improvements than at present, and that that is a good thing for Plymouth?

Mr. Sainsbury

My hon. Friend draws attenion to a very important point. I cannot answer offhand his question about the scale of the capital works, but I can certainly write to him about that. In addition to improving the productivity and efficiency of the work force, a substantial amount of work is being carried out involving capital expenditure, in rationalising the layout of the dockyard and in producing improved capital facilities to carry out work for the Royal Navy and also to give the dockyard greater capacity to compete on the open market for work from other private sector sources in this country and from naval and private sector sources overseas.

Mr. Matthew Taylor (Truro)

The Minister must accept that the scale of the job losses is far higher than the Ministry suggested to the work force. The job losses are happening more quickly and the savings from the management scheme have been nothing like as large as was originally suggested. If the Minister is telling us that the House and the work force have not been misled, at the very least there has certainly been bungling. Is there not an obligation on the Government to step in and save the jobs immediately? If jobs must go, we want to hear news about the plans that the Government will implement to provide other jobs for the work force which has done all it can to save the industry and work for this country in Cornwall, Plymouth and Devon.

Mr. Sainsbury

I am surprised that the hon. Member does not recognise the benefit to the Royal Navy of a 30 per cent. improvement in the efficiency of the dockyard labour force. I would have thought that that would have been obvious. Only by achieving that level of improved efficiency will the dockyard be able to compete for other work, which would secure the remaining jobs and provide an opportunity to increase employment in the area. There is work outside the naval sector, including work from British Rail which the yard has already obtained, for which the dockyard can compete using its skills and capital facilities.

Several Hon. Members


Mr. Speaker

Order. I must have regard to the fact that this is a rare private Members' day and that this is a private notice question, not a statement. We must now move on to the statement.