HC Deb 04 December 1992 vol 215 cc568-74

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

2.34 pm
Mr. Richard Page (Hertfordshire, South-West)

I wish to raise, more in sorrow than in anger, the subject of employment for the skilled workers at Rolls-Royce. I regret that I have had to come to the House to criticise the position taken by the Ministry of Defence. In essence, the reason behind the Adjournment debate is to ask the Minister why the Ministry is not giving British workers at Rolls-Royce in Leavesden the opportunity to quote for a Ministry of Defence contract but is instead handing the work on a plate to a French company. To reinforce that message, last night I presented to the House a petition on the subject of jobs and skill losses at Leavesden.

The background to this sad affair is that Rolls-Royce has operated on the Leavesden site for decades. Quite understandably, it is consolidating its activities on fewer sites. While it is moving many of its present operations to other sites, which is commercially understandable in difficult economic times both here and abroad, it is not moving every activity from Leavesden. That is the nub of the problem.

Because of the change, the repair and maintenance of the MOD-owned Turbo and Astazou 3N and 16D French helicopter engines, which takes place on the Leavesden site, will be not transferred but terminated. The 70-plus workers—who have more than 1,000 years' experience between—them who do the work would like to bid for it and to have the contract. To put it bluntly, the Ministry will not even give them the opportunity to quote, which effectively means that a skilled and technically qualified team of specialists will be broken up and its use and value lost to the nation.

The Ministry of Defence wishes to give the work on a plate to the original engine manufacturer Turbomeca, and thus at a stroke increase United Kingdom unemployment and our already sad balance of payments deficit. I argue that as those British workers have been doing the work for decades and have been providing repair and engine support work for the facilities at Leavesden, they should be given the chance to quote, to find out whether the work could remain in the United Kingdom.

That is the background to, and the reason for, this debate. As the House may imagine, there has been correspondence on the matter between myself, the Ministry of Defence and the Minister. As the replies to those letters rolled in, the words of a fellow Conservative Member of Parliament came to mind. About four years ago he was in a dispute about monopolistic practices concerning supplies to the MOD and he wrote: If we cannot…get the assurances…which my constituents seek then I shall feel obliged to embark on a parliamentary campaign until the matter is resolved. That is exactly how I feel. I have a suspicion that my hon. Friend the Minister will closely identify with the position, the words and the person who uttered them.

In the same vein, I confess that I am at a loss to understand the Ministry's reaction to the request by my constituents to be allowed to quote. What they are asking for is directly in line with what I understand to be the Ministry's policy.

I should like to refer to an article in The Guardianon 18 November concerning the programme that my hon. Friend the Minister of State for Defence Procurement announced to allow British firms to quote for MOD work. The article reported that my hon. Friend emphasised that he did not want foreign companies to win the work. 'Any suggestion, say, that the Italians or the Germans might win work to service our ships and planes is remote.' He also threatened to use articles under the Treaty of Rome to ensure that foreign competitors do not win the work. Those were strong words and I would not want to go as far as that, but I could go along with the sentiments that my hon. Friend expressed in an article in the Financial Times when it reported that he envisaged the companies which won the contracts using the staff who currently carry out the work. The Daily Telegraphreported that my hon. Friend had explained that the aim was to invite bids from private contractors and in-house MoD workforce. Areas will include helicopter maintenance". I stress that my hon. Friend said that that work would include "helicopter maintenance". It seems to me that what I am asking for sits neatly and squarely inside my hon. Friend's policy. Instead, I received a letter from my hon. Friend, dated 21 November, which said—I shall not read out the entire letter, only the appropriate part: In line with our policy to widen our competitive base for the repair of all helicopter components, including engines, we are holding discussions with Turbomeca with a view to offering the work for competition in the future. Although progress is being made, we have no alternative at the present time but to place the new contracts with Turbomeca for a period of up to three years That letter is extraordinarily insensitive. It was probably drawn up by a civil servant with an inflation-proof pension to whom the scythe of unemployment is virtually unknown. It is insensitive to say to men who will lose their jobs in about three months, "No chance this time, lads, but come back in three years' time." What chance will they have to compete then? My hon. Friend knows the answer, and so do I—absolutely zero. The team will be broken up, the opportunity lost and my constituents will be out of work.

It is not as though the work force are going along blind. They have got together with a company, Strongfield International, the managing director of which also lives in my constituency. That company is not a newcomer to the scene. It is an engineering support service company with worldwide interests. The mainstream business of the company is the provision of engineering services to the aviation industry. I understand that, among its major projects, it provides support services to MBB for the Tornado. It is also helping with an aircraft-build programme in Indonesia. In fact, the managing director is in Indonesia today to meet with Baroness Thatcher, who is inspecting that plant.

I am just a Back-Bench Member doing my level best to promote my constituents' cause, which I believe to be just. I am not pleading for subsidies or handouts. All I am asking is that my constituents, who, under the Rolls-Royce banner, have done such work for decades, be allowed to quote. They should be allowed to see whether they can continue in work. If their quote is too high and the work goes to France, so be it. All I am asking for is an even break.

2.45 pm
The Minister of State for Defence Procurement (Mr. Jonathan Aitken)

I congratulate my hon. Friend the Member for Hertfordshire, South-West (Mr. Page) on securing the debate, and it has been entirely appropriate for him to use our Adjournment debate procedure to voice the concerns and fears of his constituents. He adduced a forceful and lucid case.

I also congratulate him on the interesting nature of his research. He attempted, in a subtle way, to pin on me the charge of inconsistency between my previous correspondence as a Back Bencher and now my ministerial speeches and letters. Far from indulging in monopolistic practices, about which I was complaining in the correspondence from which he quoted, I shall later in my remarks hope to persuade him that we at the Ministry of Defence intend to follow our declared policy of full and fair competition. I shall go into that at some length later.

I share his understandable concern for the plight of those who are being made redundant by Rolls-Royce at Leavesden, and he presented their case admirably. He was right to call it a sad affair, but it is much more complicated than he suggests and, before coming to the issue of those jobs at Leavesden, I shall explain the background to the situation.

The repair and overhaul of United Kingdom-owned French helicopter and Jetstream engines, with a number of other engines, has been undertaken by Rolls-Royce at its Leavesden site for many years.

As part of its business rationalisation plans—which my hon. Friend thought were justified—the company has advised us that it intends to withdraw from the support of the three types of French engines currently in service. They are the Astazou 3N for the Gazelle; the Astazou 16D for the Jetstream; and the Turmo 3C4 for the Puma. I understand that Rolls-Royce intends to transfer the repair of its other engines elsewhere.

I should stress that all of those French engines are proprietary to Turbomeca, the French engine company based in Bordes, southern France, which is the original equipment manufacturer. Neither the French nor the United Kingdom Ministries of Defence have any user rights in the design. That is what the phrase "proprietary to" means. That sort of arrangment is common to most engine manufacturers, which in that way retain full responsibility for the quality and, above all, safety of their engines.

Clearly, any manufacturer would have to be satisfied that an incoming prospective repair company was fully competent to meet the extremely exacting safety and other standards before granting it a licence. Rolls-Royce is at present licensed in that way by the French company to conduct repair and overhaul of the United Kingdom-owned engines, and it is the only British company so licensed.

The present maintenance contracts are due to expire at the end of this year. To put its closure plans into action, while still maintaining support for our helicopter fleet, Rolls-Royce has successively sub-contracted more of that repair and overhaul work to Turbomeca.

That situation left us with a difficult decision. Plainly, to hold an immediate competition for the requirement would be fraught with difficulties. Competitors would have to meet Turbomeca's standards as well as ours: if Turbomeca wished to compete, how could a level playing field be maintained; and how could we ensure that Turbomeca would grant a licence to the winning contractor?

The easy option would have been to award a non-competitive contract to a company which we knew well and with which we felt comfortable. But that would have been a monopolistic practice, it would have been bad for defence, bad for the industry and, worse still, bad for the taxpayer, apart from the fact that there was only one company, apart from Rolls-Royce, with the qualifications necessary to take it on now. That was Turbomeca. So the House will not be surprised to learn that we wished to avoid that option.

We shall have a competition, and I shall give the details. It will be apparent to the House that a competition that is to surmount the obstacles that I have described will be a complicated affair, but the arrangements for it are being put in hand.

We intend to advertise our requirement in the contracts bulletin to ensure that every company that feels that it has the necessary capacity and capability to undertake the work has an opportunity to bid, whether for prime contractorship or as a sub-contractor. A number of companies will rightly expect that opportunity. Many suitable qualified companies are hungry for business. We shall select a short list of suitably qualified bidders, from among those companies.

It will be for the bidders to enter into negotiations with Turbomeca for a suitable licensing agreement., and Turbomeca has given us satisfactory assurances that it will co-operate fully in that.

We intend to seek competitive tenders as quickly as we can, but, given the amount of work involved in that critical flight safety area, it is likely to be towards the end of 1993, with contracts placed by the end of the following year. That will allow a minimum of 15 months for a new contractor to begin to tackle the tasks concerned while Turbomeca starts to relinquish its responsibilities.

It is vital, for both operational and safety reasons, that there be no break in the repair chain. Therefore, in the meantime, to ensure continued support beyond the end of the year when our contract with Rolls-Royce expires, we have little choice—indeed we have no choice—but to turn to the manufacturer for an interim arrangement. That is why we have placed a contract for the repair and overhaul of the engines with Turbomeca. It will commence on 1 January next year and will last for up to three years.

We intend to ensure that the interim contracts with Turbomeca contain the flexibility to allow the contractor that we eventually select to take on the work as soon as possible. That may well be within the three-year deadline that we have set ourselves. It may be before that three-year time limit expires, but we could not realistically have set the time limit at less and, for the time being, there is simply no company other than Turbomeca capable of taking on the work.

My hon. Friend's principal complaint was that Strongfield International should have been awarded the interim contract. That is not a realistic opportunity for us.

Mr. Page

I am sorry to interrupt my hon. Friend, but I should hate him to go away with that thought. Turbomeca must obviously charge for the work that it will undertake. My simple request was that we should also allow Strongfield International to quote for the work. If it is more expensive, it should not get the job. I was not seeking a one-off contract for Strongfield alone on that basis.

Mr. Aitken

Strongfield will have an opportunity to hid in a full and fair competition, but at present it cannot qualify or bid for the reasons that I shall explain.

Our paramount concern is the need to maintain front-line support to our troops. It is my and my Department's duty to assure the safety and airworthiness of the helicopter fleet.

If we are to be confident of achieving that, the successful bidder must give us firm assurance on his existing capabilities in a number of areas. First, he must have the expertise and facilities to undertake the work; secondly, he must have the necessary quality and process controls to assure us that the work is being professionally managed; and, thirdly, he must assure us that he is financially strong enough to take on that substantial commitment. Fourthly, and most importantly, the successful contractor will need to negotiate a licence with Turbomeca. Strongfield does not yet appear to be in a position to offer us or Turbomeca those assurances. Although my Department has been advising the company on the steps that it will need to take to gain such approval, it does not appear that any such steps have been taken.

It is not a question of bureaucratic delay. It is not a question of the Ministry of Defence being insensitive, as my hon. Friend suggested. The House would not expect me to award contracts on the taxpayers' behalf without checking thoroughly that a company could do the job.

Nothing that I have said is intended in any way to criticise Strongfield. I welcome the involvement of new companies in the business of defence, provided they meet the criteria that I have outlined. I should be delighted if Strongfield entered the competition. It knows the procedures, and it will have time to go through them before it bids. I am sure that the House would agree that we should not award a contract to a company that has not met such important requirements. However, that is what we would have had to do if we had not decided to make our interim arrangement with Turbomeca.

I emphasise for the House an important point about quality assurances and airworthiness. The criteria for safety and airworthiness dictate that those companies that seek to repair and overhaul any engines must have the requisite corporate quality controls for, and experience with, engine overhaul in the appropriate engine power range. Aero engines are qualified to meet stringent controls aimed at safe operation of the aircraft within the declared flight envelope, and the integrity of vital rotating components necessitates the observance of strictly controlled procedures during the overhaul process. Therefore, to meet the Ministry of Defence's minimum requirements, tenderers need to be registered with the Department as complying with the quality control and inspection requirements—AQAP/4 or ISD 9002—which would guarantee the control of processes, maintenance schedules and so on, and assure airworthiness.

I hope that I have shown the House that the whole saga, which my hon. Friend calls a sad affair, was more complicated. The Ministry of Defence had to take more precautions and move more cautiously than we would have wanted.

As for the human concerns mentioned by my hon. Friend, naturally, we are all anxious about the plight of the work force that is being shed by Rolls-Royce. I also come from a constituency in which there are serious unemployment problems. I wish that I could find some way to assist those 70 employees of Rolls-Royce to avoid unemployment, but there simply is no responsible way in which my Department can help at present. I am sorry that I have to tell Strongfield to come back, perhaps not in three years' time but in a few months' time. That is all I can say at present.

I emphasise that the decision to withdraw the work was taken not by my Department but by Rolls-Royce. Rolls-Royce is the prime mover and creator of the problem that we are discussing.

As I have said, it is our intention to hold a full and fair competition for the engine repair requirement in accordance with our declared competition policy. We are in the process of setting up the arrangements with the engine manufacturers. By those means we will ensure that industry is treated fairly and that all companies that want to bid for the contract are treated fairly. We will also ensure that the taxpayer is well served and that our defences are well maintained. The policy also helps to keep the British defence industry efficient, which underpins its superb export performance—now at record-breaking levels—in bringing jobs and wealth to this country.

I understand the consternation and distress that job loses can cause in a local area. My hon. Friend has been right to raise the subject tin the House this afternoon. I am sure that it will be given proper attention by the newspapers in his district. However, I hope that they will understand that my Department cannot take risks with safety and that we cannot intervene to stop industry restructuring, much as we sympathise with the plight of individuals and companies. We support industry and we need it. I hope that this has been a useful opportunity to explain how our policies for procurement translate into action and why it is to the benefit of industry, our forces and the taxpayer. I am only sorry that my words cannot extend any real comfort to the 70 employees whose plight we have been discussing this afternoon.

Question put and agreed to.

Adjourned accordingly at two minutes to Three o'clock.