HC Deb 13 December 1995 vol 268 cc962-70 1.30 pm
Mr. Michael Spicer (South Worcestershire)

I am grateful for the opportunity to raise the issue of the Government's intended decision, announced yesterday, to move the Army Technical Services Agency from Malvern to a collocated site at Chertsey. I am relieved that my hon. Friend the Minister of State for the Armed Forces, rather than the management of ATSA, has the final word on the matter. That was not immediately apparent from a letter that I received dated 5 December from the parliamentary branch of the Ministry of Defence, which said:

The Defence Secretary has asked me to thank you for your letter of 29 November about the collocation of ATSA. The matters raised are, however, the responsibility of the Chief Executive, Army Technical Support Agency and I have therefore transferred the correspondence to that Department and asked them to reply to you direct. I should be grateful to have the Minister's assurance that the decision is ultimately for him and my right hon. Friend the Secretary of State to take and not one for the management of an agency.

I am not clear about the precise status of the decision to move the agency. In his letter to me which I received today, my hon. Friend the Minister says two things about the decision. First, he says:

I have decided that, subject to the outcome of a period of consultation, the ATSA should collocate at Chertsey. In a subsequent paragraph, he says:

I can assure you that I will take full account of all representations before making a final decision. I hope that the position is that expressed in the second quotation and not that implied in the first, and that my hon. Friend is in a position to change his mind on the matter if he is persuaded to do so.

The Minister's decision seems to spring from advice which is a reversal of advice that his predecessor received just over two years ago. I have here a document which, inevitably, as it is from the Ministry of Defence, is identified by numbers. It is the MAN S(ORG) study No. 761 dated May 1993. It is clear as to the advice that the Minister of the day had received. Paragraph 5.30c on page 73 says:

Malvern is the cheapest option,"— that is, comparing Chertsey and Hullavington—

with a range of buildings which would seem suited to the type of organization we are proposing. It is Army owned and could be adopted with the least difficulty of the three sites to the requirements of the TSA, although Married Quarters and a Mess will be required. Of the three sites, it offers the best prospect of retaining quality non-mobile staff and it has a nucleus of electronics trained personnel ( who may be particularly difficult to replace elsewhere). Also it would offer some possibilities for long distance career development. Finally. although it is some distance from Andover, it is within easy reach of Bristol and Donnington, (the recommended site for the PPD)"— which has now transferred to Bristol—

and has good road transport links. Given the savings that would result, the apparently favourable condition and structure of the accommodation, reasonable employment prospects and geographical location, we recommend that the TSA should be located at Malvern". The point is that the advice is all based on criteria which are clearly laid out, and rather more clearly so than the advice report, to which I shall refer in a moment. The criteria are laid out in terms of costs, suitability of site, availability, any political considerations, environmental impact, recruitment potential and accessibility to senior management, customers and others.

Under the cost heading, the report clearly says that the investment appraisals

show that locating the TSA at Malvern would result in the greatest savings (some £18M over the LTC period)". In relation to Malvern, the report says:

The effect of the increase in staffing levels would have less impact than at Chertsey as the site is large, considerable refurbishment has taken place already"— that is an important point—

and more existing buildings are available for use. There are important issues on the question of recruitment. The report says:

Chertsey is not a promising recruitment area given that it is in the London travel to work area, housing is expensive, unemployment is low and there is competition from the many private companies in the area who generally pay more than MOD. The obvious question is, what has changed in the past two years completely to reverse the present advice on the decision from the advice that the Minister of the day received just a few years ago? That question is particularly relevant when one considers the nature of the new advice which has been given to the Minister.

I have a document with the reference QMG/205, dated 15 November 1995, which is headed "Loose Minute"— I am not sure what that means.

The Minister of State for the Armed Forces (Mr. Nicholas Soames)

It is an MOD speciality.

Mr. Spicer

I have not had time to check, but I think that QMG/205 is the same document as the one which the Minister issued last night as the basis for the advice that he gave. Some strange things are mentioned in the advice, to which I believe the Minister should respond.

In relation to cost, for example, which is clearly an important issue, the general tone and content of the paper—I am not trying to cast aspersions—is much less substantive and analytical and much more bland and assertive than the paper to which I have previously referred. This paper simply states that the cost of refurbishing Malvern, which it accepts is an option, would be £317 million or £319 million if everything were to be rebuilt. The paper goes on to say that the cost of totally rebuilding a site at Chertsey would be £312 million, which is some £5 million less than refurbishing at Malvern.

At this stage, one can only work on a gut feeling. The argument that the cost of refurbishing Malvern, which is in an area where costs are generally much lower than in the south-east, is £5 million more than the cost of completely rebuilding Chertsey needs further justification.

There are further matters in the report, and I shall write to the Minister about them, because there is not enough time on this occasion to get through them all. I have 16 fairly substantive questions that I want to put to him about the report. I will put two to him now. The first is on the rather crucial issue of where ATSA's client base will be should it move, or even if it does not move. The report which is the basis for the Minister's decision says that the agency has

its Owner and main customers at Andover". It goes on to imply that, because Andover is much closer to Chertsey, having those customers nearby would be another reason for collocating at Chertsey.

The work done at Andover is in fact related to the quartermaster general's operations. But half of ATSA's work—this was anticipated in the earlier report—is now undertaken for the MOD procurement executive at Bristol, which is considerably closer to Malvern than is Chertsey. That, too, should be given rather more consideration than it is given in the report.

According to the report, there is scope for hard roads for tank movements at Chertsey. The report does not mention it, but Malvern too has a hard road that is used for tanks: that too could be analysed. This report—which is slim in comparison with the earlier one—contains discrepancies, and refers to matters that need more careful examination.

Although I agree that the final decision should be made in the best interests of national defence—in other words, in the most cost-effective way—the fact remains that the original advice was accurate. Malvern has the experience, the buildings and the relative cost structures that are likely to make it more cost-effective for purposes of collocation than Chertsey, which has been sucked into the cost structures of London and the south-east.

I ask the Minister not to rely exclusively on the second report and on the advice of the internal accountants who prepared it, and who might be thought to be fitting the figures to suit the decisions required of them by senior management in ATSA and elsewhere. I ask him to secure the independent advice of an independent accountant or auditor and have the figures checked—especially those relating to the investment appraisal—before making his decision. At present, the figures do not seem to add up.

Representatives of the civilian staff at Malvern have assured me that they will accept the findings of an independent auditor. If the move to Chertsey took place, it would mean considerable disruption to members of the defence staff, some of whom are long-serving and valued for their expertise and experience. In the interests of good man management, the Government owe it to those staff members at least to ensure that the decision is made on the basis of accurate, transparent figures.

I intend to put a further 16 questions to the Minister in writing, as time does not permit me to ask them now. Meanwhile, let me simply ask him to recognise—as I am sure he does—his responsibility to ensure that the period of consultation is genuine. Although his mind appears to be firmly made up—no doubt that is how the position will be presented to the public—I ask him to be open to persuasion, and to re-analyse the arguments that have been put to him. In particular, I ask him to consider arranging an independent examination of the figures with which he has been presented.

1.42 pm
The Minister of State for the Armed Forces (Mr. Nicholas Soames)

I congratulate my hon. Friend the Member for South Worcestershire (Mr. Spicer) on securing an Adjournment debate at such a timely stage, while we are making up our minds on this important matter. I am sorry if the phrasing of the letter that was sent to him gave him the impression that we had already made up our minds; the point of writing to him was to tell him of the conclusion that we had reached following our many studies of this thorny problem in an attempt to resolve it.

It was important for us to give some idea of the way in which the collective mind of the Ministry of Defence was moving, so that we could consult my hon. Friend and his constituents and they would be able to have their say. I give my hon. Friend an absolute assurance that the decision is one for Ministers to take: no one but Ministers should be held responsible for it, as he well knows.

My hon. Friend will now have received a copy of the document outlining our proposals, which, as he knows, are subject to consultation from now until 12 February. I note that he will be submitting a further 16 questions to me, and I shall be happy to provide him with a detailed written response. If he subsequently wishes to discuss the matter with me and, perhaps, bring a delegation of his constituents, I shall be pleased to receive him. I am under no illusion about the importance of this matter to my hon. Friend and his constituents.

Let me make it clear not only to my hon. Friend but to all his constituents who are understandably anxious about what is in the consultation paper that we take our obligations to consult extremely seriously. We have noted so many of those obligations in the defence costs studies that we fully appreciate the sensitivities that may arise, and the need for consultation to be real rather than merely cosmetic. As I have said, I shall be happy to receive representations, which will be given careful and detailed consideration before we reach a conclusion.

My hon. Friend has made a good start this morning. He has been pretty hot on the trail, given that the consultation document was issued only yesterday. He has made a number of relevant and important points about the Malvern site. We are well aware of the local impact that our proposals could have, and we shall consider those points very carefully.

As my hon. Friend knows, ATSA is a mixed military and civil service-manned defence agency which provides the Army with essential technical and engineering advice. The current organisation was formed from the amalgamation of the Army's six technical branches and authorities, and the majority of its staff are currently dispersed on seven main sites—Chertsey, Malvern, Middle Wallop, Chilwell, two sites at Woolwich and a small headquarters at Andover.

ATSA was formed in October this year as a result of a study conducted in 1993, which recognised that it would make good business sense to bring the various activities carried out at those disparate sites under one roof. The work done since then has borne out that view, and that is why we now propose collocation. We believe that it will result in a leaner and more efficient organisation, better suited to serving the front line. I was grateful to my hon. Friend for pointing out that the decision must be in the best interests of our management of defence; I know that, having been a Minister himself, he will accept that that is genuinely the case.

The chief executive is confident that collocation will enable him to make the best possible use of modern logistic support and management techniques, and to promote the efficient delivery of technical support. An equally important consideration is the value for money that should and will be achieved if we go ahead with rationalisation and standardisation. Overall, we believe that the case for collocation is both compelling and necessary to the achievement of optimum effectiveness and value for money.

In August 1993, the trade unions were informed of the outcome of the original study—which my hon. Friend mentioned—including the recommendation that the agency should be collocated on one main site. They were advised that no firm decisions would be made until investment appraisals had been completed and the fullest consultation undertaken. Since then, the staff have been kept fully informed through management briefings and quarterly newsletters. I emphasise, however, that I understand the anxiety that is felt by my hon. Friend's constituents during the decision-making process: I have every sympathy with them.

The chief executive has conducted a range of studies over the past 18 months, both to re-examine the original study findings—which my hon. Friend rightly mentioned—and to establish the best solution for ATSA in terms of value for money and business sense. In common with other Departments, the Ministry of Defence is extremely sensitive to the need to consider the effect that its proposals for the relocation of units may have on local economies. I know that people are anxious about that proposal, as I have seen their anxiety expressed in the Malvern press.

As a result, we have considered some 17 options, 11 of which have been subjected to an extremely full and detailed appraisal. Those options range from doing the minimum, through twin-site options, to a variety of single-site options. All 17 options have been discussed in the document that now forms the basis for consultation but the most logical, and those that I shall deal with in detail now, minimise disruption both for staff currently employed by the agency and for the business that it conducts.

The "do-the-minimum" option, which would keep things more or less as they are and therefore cause least disruption, is the most manpower-intensive of all the options. It is also unattractive, because it fails to realise the anticipated benefits of establishing the ATSA, even with improved communications and a rationalised management structure. My hon. Friend will understand that that option is therefore a non-starter.

Another factor against maintaining the status quo is that the ATSA units at Woolwich occupy buildings that are nearing the end of their economic life and must soon be vacated. The only possible alternative accommodation available to the ATSA in south London would be a new build on the Aquila site at Bromley, currently occupied by the Defence Evaluation and Research Agency. Largely for that reason, the "do-the-minimum" option is one of the most expensive of those considered.

For many, including my hon. Friend, an obvious choice might be to concentrate ATSA on both Chertsey and the north site at Malvern, the current locations for much of ATSA's activity on land systems. On close examination, however, that proved to be the most expensive option. Financial considerations apart, the two-site option also fails to offer the business advantages of an agency collocated on a single site. Although I recognise that continuation at both Chertsey and Malvern offers least disruption for staff, it would unfortunately perpetuate many of the inefficiencies of the current arrangements and offer no financial advantage. For this reason, we rejected the option.

The other option, which obviously finds favour with my hon. Friend, is to locate the entire operation at Malvern. As the consultative document explains, collocation at Malvern would involve either the refurbishment and use of the existing buildings or the construction of a new building. Both those options are more expensive than collocating at Chertsey. Malvern has one advantage as a single-site option: it would be better placed than Chertsey, in travelling terms at least, for communications with the centre of the new MOD procurement executive at Abbey Wood near Bristol. Balanced against that, however, is the fact that Malvern is far less convenient for meetings with ATSA's owner and main customers at the headquarters of the quartermaster general at Andover.

A collocated ATSA establishment would also introduce many additional military staff into Malvern, which would necessitate a major new build of married quarters and single living accommodation. The cost of that work, along with the need to refurbish or build new office accommodation, means that Malvern is a more expensive option than Chertsey.

Compared with the Malvern option, collocating at Chertsey would involve less building work. Some new office accommodation will be required, but the married quarters and messes for military staff can be met from existing resources. All that adds to the cost-effectiveness of the Chertsey option. In terms of net present value over 25 years, the Chertsey solution is also £5 million cheaper than the cheapest Malvern option.

From a business point of view, Chertsey is also the preferred option, as the agency's owner and major customers, the equipment support management staffs, are at Andover.

Mr. Michael Spicer

The Minister is simply reading out, almost word for word, the advice contained in the document that we have all seen. As I requested at the beginning of this debate, will he reconsider that advice in the light of what I have said?

Mr. Soames

I shall indeed, but it is important that I put our view on the record. The point of the consultation process is to take account of all the views that my hon. Friend expressed today, which his constituents will wish to express in the coming weeks and the more detailed questions that he will submit to me.

Of all sites considered for the ATSA, Chertsey is the closest to Andover in travelling time, which can represent a significant saving in staff travel costs for meetings at either location. Also, as it is geared to large armoured fighting vehicle support, Chertsey has the most extensive support facilities of all the current ATSA sites. I acknowledge my hon. Friend's comments about the road at Malvern.

The facilities at Chertsey are shared with the Defence Evaluation and Research Agency, and it would be extremely expensive to re-create them elsewhere. The appraisal of other sites has included the assumption that a detachment at Chertsey would have to be maintained to use those facilities. Chertsey also has ready access to test areas for large vehicles on MOD-owned property, a feature absent from other site options.

My hon. Friend quite rightly wants me to understand and take account of the effect that our proposals will have on the local economies of areas from which ATSA will withdraw and the disruption that it could cause to the families involved. He knows that I fully understand that. Nevertheless, it is a sad fact that reorganising in this way to allow the introduction of new working practices will often result in some job losses. On this occasion, if our proposals go though, we expect them to yield some 300 posts, both civilian and military, by the time and if collocation is fully achieved.

We expect our proposals to affect around 230 posts, both service and civilian, at Malvern. The majority of those losses are likely to fall on non-mobile staff and, although it is anticipated that many will be met by natural wastage, it would be wrong of me to rule out the prospect of some redundancies. If we go ahead, we shall attempt to minimise the number of redundancies as much as possible and shall examine the scope for civilianising some military posts, which may help us in this area.

As the consultative document explains, if we proceed with the proposals, up to 50 staff may ultimately have to be made redundant at Malvern. I stress, however, that, wherever possible, it is intended to transfer civilian staff, provided that job vacancies exist in the reorganised agency. We shall also seek to find staff posts elsewhere within the Department or the civil service generally. As well as reducing possible recruitment difficulties at the new site, transferring staff should reduce the number of redundancies and retain as many existing experienced staff as possible.

My hon. Friend will understand that I do not underestimate the upheaval that can be involved for staff who may need to move house. But if we proceed with our proposals, we shall offer our relocation package to mobile staff who transfer. That includes significant financial assistance to cover many of the costs associated with moving. I note my hon. Friend's comments about the costs associated with moving into an area like Chertsey.

We shall do all we can to ensure that any reductions are handled sensitively and compassionately, recognising the significant contribution that the staff have made to the extremely efficient functioning of the agency and its predecessors over many years.

I do not wish to underplay in any way the job losses that may flow from our proposals. Malvern will remain a major centre of employment for my Department, with the DERA continuing to employ more than 1,700 civilians there. In addition, more than 4,500 service and civilian staff will continue to be employed at establishments in the surrounding area. Where possible, opportunities would be sought to offer staff other posts in the MOD or elsewhere in the civil service.

All staff, both service and civilian, employed by the various branches that make up the ATSA—including those at Malvern—have provided first-class support to the armed forces. One does not get the chance often enough to praise those people who undertake important work, which, although well away from the spotlight, is vital in ensuring the fighting effectiveness of the front line. Troops now deploying to Bosnia will have equipment that the ATSA has dealt with. The staff at Malvern are no exception to that, and I am well aware of the need to ensure that all the arguments that my hon. Friend put forward, and the 16 questions that he will submit to me—he may choose to bring a delegation to see me—are carefully weighed before I come to a final decision on the ATSA's future site.

The facts described in the consultative document strongly support ATSA's collocation on a single site. As Minister of State for the Armed Forces, I must ensure that the Ministry of Defence adopts the most effective solution in operational, business and cost terms. Nevertheless, I assure my hon. Friend that the consultation period will be just that—a period for thorough, sensible and real consultation. That is the least we owe those people who have served their country so well.

I am grateful to my hon. Friend and congratulate him again on raising this important matter at such a timely moment. He may be assured that we shall deal with it in a thorough and comprehensive way.

It being Two o'clock, the motion for the Adjournment of the House lapsed, without Question put.

Sitting suspended, pursuant to Standing Order No. 10 (Wednesday sittings), till half-past Two o'clock.