HC Deb 14 December 1992 vol 216 cc269-76

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

9.1 am

Mr. Ian Bruce (South Dorset)

I am grateful that the Minister and I can come fresh to this important debate after a long all-night sitting. I am pleased to see in his place my hon. Friend the Member for Dorset, West (Sir J. Spicer), who, I understand, will also try to catch your eye in this debate, Mr. Deputy Speaker.

We often read lurid headlines about the numbers of people who are about to lose their jobs or be transferred away from Dorset if the decisions pending or already taken by the Ministry of Defence are implemented. I should like to outline the figures as I see them and ask the Minister to give his estimates of those figures when he replies.

If operational sea training moves away from the naval base, I understand that 475 civilians will be affected, most of whom would lose their jobs. Four hundred and twenty service personnel would transfer away and 130 service posts would be lost altogether. That makes a total of 1,025.

The sea systems controllerate is a moving target. When it was thinking of moving away from Portland, it employed about 600 civilians and 100 service personnel, making a total of 700. The Defence Research Agency is planning to shrink its operations by 297 people, and another 70 would initially be transferred to the sea systems controllerate. Those jobs would be lost as well—367 of them. Five hundred and ninety people would either transfer to Bincleaves—still at Portland—or away to Winfrith. In south Dorset, 188 people at Holton Heath, at the Defence Research Agency site, would be transferred out of the constituency. That makes a grand total of 2,280 jobs lost from my constituency, and 2,600 jobs that would move away from Portland.

Even more important than the lurid-sounding headline figures are the total knock-on effects. The figures that I have listed do not include the many people who are part of the contractorised operations. They do not include all the people employed by other suppliers to the Navy who work almost permanently on the base, or those located in my constituency and that of my right hon. Friend the Member for Dorset, West who are employed by defence manufacturers. I know that my hon. Friend the Minister has a copy of the excellent report by Portsmouth university which suggests that the direct and knock-on employment in the Weymouth and Portland travel-to-work areas accounts for 43 per cent. of all employment—so such redundancies must be taken into account by the Government.

I am pleased that when I met my right hon. Friend the Prime Minister last evening, he was able to tell me that the Government are willing to fund part of a study into the consequences for Portland naval base if people moved away and to put some seedcorn money into the possibility of establishing some sort of enterprise agency. Perhaps my right hon. Friend the Minister can tell me more about the initiative that my right hon. Friend the Prime Minister mentioned last evening.

The sea systems controllerate is part of the procurement executive and is used by the Navy to liaise with all the different arms that need to be consulted when any form of equipment is installed for use by the Navy. It was relocated in south Dorset from Bath because it is sensible that an organisation involved in such liaison work should be located by the sea, so that it can work with the Navy, be close to the Portland research facilities and enjoy the excellent living conditions available at Portland.

It was therefore something of a shock to find that the sea systems controllerate has for five or six years been part of one study or another in relation to moving those jobs away. At various times, it was suggested that the controllerate should move to Bath, but that was knocked on the head by my right hon. Friend the Prime Minister when he was Chief Secretary to the Treasury and found, when he examined the case, that it did not stack up in terms of value for money. At that time, a 13-year payback period was being considered.

The project seemed to die a death for a while, until the powers-that-be decided that it might be a good idea to link that project with the relocation of the land and air systems from London to a cheaper area—ignoring the fact that it would involve moving personnel from the Portland area to Bath, Bristol or Keynsham—all of which are more expensive.

For a long time, we had difficulty getting from the MOD any figures on the costs and the number of personnel involved. Eventually, I was given some figures in confidence, which I shall not divulge now—but the figure in general circulation is that the co-location exercise involving the relocation of the procurement executive to its new site north of Bristol will cost £300 million for 5,000 civil servants. Not all of them will be relocated, because many in London and Portland will lose their jobs and be re-recruited back to the north of Bristol. The figure is equivalent to £60,000 per desk, so that will clearly be an expensive operation for the MOD's budget in these stringent times.

I am reliably informed that that whole exercise is being looked at again. Perhaps my right hon. Friend the Minister can say whether there is any truth in that, and what he intends to do to ensure value for money. He may wish to refer to column 695 of Hansard for 2 June 1992, when he reassured me—perhaps unwisely—that the MOD would not go around buying new green-field sites for operations such as this. Perhaps he now wishes to eat his words: unfortunately, someone else in the MOD without his good sense promptly went off and bought one. That is a strange decision when the MOD is trying to sell a number of such sites.

There appears to be problems with the Defence Research Agency, which currently has a number of sites in my constituency. The largest "co-locates" at Southwell—a wonderful word; the MOD thinks that it is a good idea when it is happening in someone else's constituency, but apparently not when it is happening in mine—with the sea systems controllerate. The agency has been left with the thought that in three or four years' time the controllerate will move to a new site, leaving it like a pea rattling around in a very large pod and with the thought that it will cost a great deal to maintain the site. It needs 12,000 sq ft. and finds that 30,000 sq ft are available to it in Southwell.

The DRA now intends to spend £13 million of taxpayers' money co-locating on another site, which is likely to be at Winfrith. That, too, is in my constituency. I thank the agency for at least trying to co-locate within the same travel-to-work area; but the fact remains that a large amount of Government money is being spent on cutting employment. I wondered whether the right way of tackling the matter would be to tell the Minister how delighted I was that we were to receive £13 million of Government money, £9 million of which would save £1 million a year, and to congratulate him on wasting so much money on my constituency. That, I thought, might make him think even harder about whether the move would provide value for money from the MOD's point of view.

The subject that has produced the biggest headlines is that of the naval base, because the question whether to close a naval base is more easily understood by the public. I well understand how the proposal has come about. Currently we have five naval bases—four of which have operational ships—and Portland naval base, which exists specifically to carry out operational sea training away from the other operational bases.

The Navy board is clearly under considerable pressure from the MOD and the Treasury to show real savings in the MOD budget. It therefore seems a good accountant's trick to say, "Minister, I am willing to cut 20 per cent. of your naval bases and save you some money. Aren't we doing well?" We must ask, however, why the Portland naval base—which, over the decades, has probably featured in dozens of studies about the possibility of closure—is constantly being found, after intensive scrutiny, to be the most cost-effective sea training centre.

It is interesting to note that, under the Navy's new costing system, Portland is much the most cost-effective place in the country in which to have a ship repaired—although it is the smallest base and would not be expected to operate economies of scale. But why is operational sea training done there?

I believe that what we are about to lose is Portland's greatest strength—the co-location of the helicopter station for Lynx helicopters with the operational sea training function. Even if there were no good financial case for retaining the Portland naval base, I believe that it would still be in the MOD's interest to keep the helicopters and the sea training exercise together.

The helicopter station was brought down to Portland because it was deemed essential, if one was to get a helicopter crew and all the necessary staff properly integrated with a frigate or a destroyer, to have the helicopter station next to the place where the ships were working up.

The partnership between the Navy and the helicopters has gone from strength to strength, and my right hon. Friend the Minister will see from the record of the Navy in action in recent times that, at least in respect of the non-aircraft carriers—the destroyers and so on—the helicopters are not only the eyes and ears of the Navy but its teeth. It is not the 4.5-in gun on the front of a ship or its self-defence missiles that are the real weapons system but the helicopter that goes out and attacks other ships. That is what makes the Navy the potent force that it is. Any attempt to split the helicopter activity from the naval training side simply would not work; it would be a false economy.

Will my right hon. Friend the Minister tell the House about one aspect of the detailed costing figures that we have been given? How is it that, whereas we shall need even more service personnel and even more spending on fuel and on helicopters, the civilian labour force of some 475 people is almost magically to be absorbed into the current staffing levels at Devonport, with fewer than 100 additional posts being created? Either there are 400 spare bodies down at Devonport who are just waiting for the work to arrive in two or three years' time or the figures are wrong. I hope that, having been asked that question on a number of occasions in the past few weeks, my right hon. Friend will have a good answer for us.

I am conscious of the time and I know that my hon. Friend for Dorset, West would like to comment. Moreover, we should like a response from my right hon. Friend the Minister. Without further ado, therefore, may I ask my right hon. Friend most earnestly to reconsider all the facts and figures surrounding the three possible moves for Dorset; to check the MOD's case, which in itself is too weak to convince us that we should go ahead with the moves; and to look at the knock-on effects for the whole south Dorset economy? I know that other Secretaries of State would be extremely concerned if they saw the figures, which no doubt my right hon. Friend the Minister will give us later, in respect of the knock-on effect on their budgets in the coming years.

9.17 am
Sir Jim Spicer (Dorset, West)

I am conscious of the time, and I shall therefore come straight to the point. The lead has rightly been taken in this matter by my hon. Friend the Member for South Dorset (Mr. Bruce), who has performed a doughty task in supporting his constituents.

The words "peace dividend" have a very unhappy ring to them in south-west Dorset. As far as we are concerned, it has all turned sour. Three years ago, none of us ever envisaged that the effect of the peace dividend would be felt so starkly in our area.

It is not in my nature to prepare a fall-back position. My nature has always been to go forward and win. On this occasion, however, I shall deal only with the fall-back position. I hope that the remarks made by my hon. Friend the Member for South Dorset will be taken on board clearly by the MOD. In terms of employment, the effect of the changes on south and west Dorset is quite shattering. I am not yet sure whether our right hon. and hon. Friends in the Department of Trade and Industry have taken that point on board. That is why I direct my plea to that point.

There is no area in the country where house prices have been higher than in south and west Dorset. Therefore, because of the very nature of the fall of house prices, people will not be able to move if all the changes take place. They will be locked in there and be unable to move. The effect in our area will be disastrous.

I know that my right hon. Friend the Minister has written to our right hon. Friend the Secretary of State for Trade and Industry about assisted area status. I beg him to write again and to get my right hon. and learned Friend the Secretary of State for Defence to write as well. If we do not have assisted area status, we will have an area of desolation, unseen in the south of England in the past 50 years. I beg my right hon. Friend also to do all in his power to ensure that all Ministers are aware of the situation.

9.20 am
The Minister of State for the Armed Forces (Mr. Archie Hamilton)

I advise my hon. Friend the Member for Dorset, West (Sir J. Spicer) that of course I shall draw the attention of my right hon. Friend the President of the Board of Trade to his demands for assisted area status.

My hon. Friend the Member for South Dorset (Mr. Bruce) produced the figure of 2,280. My figure for civilian job losses in the area is about 1,400. My hon. Friend is adding in all the service jobs on top of that figure. Clearly, that will have an impact on the economy in Portland—there is no doubt about that whatsoever—but it is unfair to suggest that that will add to the unemployment totals in his area, as most of those jobs will be moved away. However, I must take his point about the effect of the service jobs on the local economy in terms of spending power. Also, there are my hon. Friend's points about contractors in the area who would be affected as well, and they do not show up in our figures.

I cannot give my hon. Friend figures relating to the overall financial impact on the area about which he is talking, but I shall certainly see whether we can work up a figure for him. Of course, the figures are somewhat speculative, but we will see whether we can do something.

I pay tribute to my hon. Friend the Member for South Dorset because he has worked tirelessly to represent the interests of his constituents who may be affected by the extensive restructuring of defence facilities in his constituency. The end of the cold war, which the whole House and, indeed, the whole country welcome, means that we can reduce the share of our national resources devoted to defence.

My hon. Friend the Member for Dorset, West made a point about the peace dividend not being altogether welcome in his part of the world. I am afraid that the peace dividend means that the Government have resources to spend on other things, but, at the same time, it inevitably means that we start cutting defence facilities. That affects to a deleterious degree the south, south-west and south-east of England, because, by an accident of history, that is where most of our defence facilities are located. The Royal Navy is reducing in size, but we intend to ensure that it is equipped and manned to meet the tasks that it will face.

Reductions in the front line must be matched by savings in support provision if we are to achieve value for money from what is still a great deal of taxpayers' money. If we fail to achieve that, we will face the prospect of further reductions in the front line to pay for the cost of maintaining excess support facilities. That is not an acceptable alternative. I acknowledge that the period of transition will be painful for a number of communities, including Portland, whose economies have relied heavily on defence-related expenditure.

We must face hard decisions if we are to achieve value for money, but those decisions must be based on a wide range of factors, not just the savings offered. That is why we announce proposals as the basis for consultation before final decisions are taken. My hon. Friend is right to probe our proposals in depth. My right hon. and learned Friend the Secretary of State is committed to ensuring that the process of consultation is as open as possible, subject only to issues of security or commercial confidentiality. That may sometimes be uncomfortable for Ministers and their officials, but if there are flaws in the proposal they must be identified.

The proposal to close Portland naval base and transfer operational sea training to Devonport in 1996, announced on 12 November, is at present the subject of such consultation. We have opened a dialogue with my hon. Friend—he will acknowledge that I have had a number of meetings with him—the trade unions and the local authorities. Many detailed questions have been raised already and no doubt there will be more. We shall do our best to answer them fully and promptly.

The purpose of operational sea training is to bring ships to a high state of operational readiness, ready to cope with any eventuality. The crew must learn to operate together as a team, making the best use of all the ship's sensors, systems and weapons. Ships need to work up in that way whenever they come back into service after a refit, with new equipment and new crew members.

In addition to the training of ships returning to service after refit, there is also the role fulfilled by flag officer sea training in providing continuation training for ships in commission. That is used to ensure that ships and their crews are maintaining adequate standards of readiness. The transfer of operational sea training to Devonport would provide useful opportunities for the ships based there to work with ships under training, thus enhancing the opportunities for this important continuation training.

By the end of the training, ships' crews will be trained to meet, as individual units or as members of a task group, the full range of submarine, surface and air threats. A team of instructors moves between ships, monitoring standards to ensure that the crews of every Royal Navy warship and Royal Fleet Auxiliary support vessel are fit for their task. The value of such training has been amply demonstrated in the Falklands campaign and in the Gulf.

Operational sea training at Portland began in 1958, when the flag officer sea training was moved there for five years, although no money was then available for capital expenditure. In 1961, the dockyard closed and the Portland harbour area was designated as a naval base. In 1963, at the end of the initial five-year period, it was decided that operational sea training should continue to be based at Portland, where it has remained since.

As my hon. Friend said, no warships are base-ported at Portland on a long-term basis—they remain at the naval base only when undergoing training. The naval base provides only the infrastructure and personnel needed to provide day-to-day support and minor repairs and maintenance. It does not offer the range of facilities available at Devonport, Faslane, Portsmouth or Rosyth.

It is true, as I have said on many occasions to my hon. Friend, that Portland provides an extremely good centre for operational sea training. However, we are convinced that the move to Devonport will result in significant savings and certain gains in sea training. Any lack of facilities that we may suffer at Devonport would not be enough to make any difference to the savings that we reckon on making.

No doubt those supporting the Portland case will continue to draw attention to the perceived disadvantages of transferring operational sea training to Devonport. Whatever new information may emerge during the period of consultation will be considered before a firm decision is taken. We will take on board the points that my hon. Friend has raised this morning.

I am pleased to confirm to my hon. Friend the message given to him by my right hon. Friend the Prime Minister that, following my hon. Friend's representations, we have agreed to extend the consultation period until the end of January. That decision recognises the fact that the consultation period that we have envisaged covered the Christmas period. One must accept that, over Christmas, things quieten down and there is a fortnight of lost time. Our decision to extend the consultation from the middle of January to the end of it takes that factor into account.

My hon. Friend mentioned the undertaking given to him by my right hon. Friend the Prime Minister that the consultants' report would be jointly funded by the Ministry. We expect contributions to be made by local councils, the Crown Estate, which owns much of the real estate, and the Ministry of Defence. We thought that the solution might be to use the working party that is considering the future of the area to draw up the terms of reference for a consultancy firm. I do not like to anticipate a bad decision for Portland, but, in the circumstances, it might be sensible to work out the terms of reference of the report now so that if the decision went against Portland we could get the consultants working quickly thereafter on the future of the area.

I congratulate my hon. Friend on obtaining this debate and bringing this important matter before the House. I am aware of its enormous importance. It gives me absolutely no pleasure to have to take these very hard decisions. As my hon. Friend the Member for Dorset, West said, although we look forward to spending the peace dividend on other areas of public expenditure, it means that we have to take these hard decisions. Areas that have relied on defence expenditure in the past, such as Portland, suffer from the cuts and closures that we envisaged in the proposals that were put to my hon. Friend in the middle of last month.

Question put and agreed to.

Adjourned accordingly at twenty-nine minutes to Ten o'clock.