Abbey Wood

HC Deb 05 March 1996 vol 273 cc141-3

8. Mr. Berry

To ask the Secretary of State for Defence what action he has taken to investigate the overrun on the construction of the new MOD building at Abbey Wood, Bristol; and if he will make a statement. [16845]

Mr. Arbuthnot

Requirements for the buildings at Abbey Wood are being met; costs and risks are being controlled; collocation of procurement executive HQ staff has started and is expected to be complete by this autumn; overruns are not on our agenda. We are committed to achieving the running cost savings that will result.

Mr. Berry

Will the Minister confirm that the construction contractors have lodged a claim with the MOD for an additional £60 million, which corresponds to a staggering 30 per cent. of construction costs? Is the Minister aware that many subcontractors are suffering from late payment from the contractor because of the contractor's cash-flow problems?

Mr. Arbuthnot

The hon. Gentleman has got the wrong end of the stick. There is a perfectly constructive and amicable dialogue between the core and shell contractor and the Ministry of Defence, as would occur on any project of this size. This is the largest office building project in Europe, and it is a dramatic success. The question of the health of the relationship between the contractor and the sub-contractors is interesting, and we believe that it is very good. In every contract that we sign, a requirement is placed on our contractors to ensure that they pay their sub-contractors within 30 days of a valid invoice being submitted. We have no reason to believe that there is anything other than a healthy relationship between the contractors and the sub-contractors.

Mr. Brazier

Does my hon. Friend agree that there has been a remarkable transformation in procurement practices under the Government? 1 am referring to the new headquarters for the Procurement Executive. Does he also agree that we are able to afford more equipment and more bangs per buck because the procurement executive has been reorganised and redeployed on much more efficient lines?

Mr. Arbuthnot

My hon. Friend has hit the nail on the head. Once the building of the Procurement Executive is completed, it will save approximately £105 million a year. It is an astonishing success story, and I am sorry that Labour Members do not recognise that. For example, approximately 1,000 local jobs will be created in the Kingswood area; approximately 200 local firms will be involved in contracting; approximately £200 million will be spent on construction; and approximately £90 million of extra spending power will be realised. The Abbey Wood procurement is a dramatic success story, and I am grateful to my hon. Friend for giving me the opportunity to discuss it.

Dr. David Clark

Will the Minister confirm that this was a fixed-price contract? Will he give the House an assurance that, in the event of a cost overrun, not a penny will be spent out of the public purse?

Mr. Arbuthnot

I regret to put it like this: that is a fatuous comment. The contract will be finished on time and within budget—that is what we intend to achieve, that is what we are negotiating to achieve and, so far, it has been a major success story.

Mr. Ian Bruce

Does my hon. Friend agree that the carping from a Labour Member in relation to these additional jobs is reprehensible? Does he agree that, if there is any problem with the people of Bristol wanting to have the jobs, we would be only too pleased to keep the Southwell site open a bit longer on Portland? We are very proud of working for the Royal Navy. I am grateful to my hon. Friend for announcing that one of the new frigates will be called HMS Portland, in honour of the excellent work that has been done by my constituents over the decades.

Mr. Arbuthnot

I can confirm that. I am grateful to my hon. Friend for his suggestion, which we have taken up, that we call the new frigate HMS Portland. It is a pity that the good news that is coming to Bristol as a result of the Abbey Wood procurement has not been brought out at all. It must be noted that Abbey Wood is a success story. We have had to provide, and we have been willing to provide, significant funds towards the building of a new railway station near Abbey Wood because so many workers are flooding into the area. It is a victim of its own success—and the Labour party simply cannot see that.