§ 7.36 p.m.
§ The Parliamentary Under-Secretary of State, Ministry of Defence (The Earl of Arran)
My Lords, I beg to move that this Bill be now read a third time. The Government believe that an industrial enterprise such as the Atomic Weapons Establishment, which deals with every stage in the life of a product from conception through manufacture to eventual dismantling, would be operated more efficiently in the private sector. The industrial management expertise which AWE needs is readily available in the private sector, and A private sector contractor would have greater flexibility to offer the terms and conditions of service necessary to deal with AWE's recruitment and retention difficulties. That is why we have decided to introduce contractor operation at AWE, and the purpose of this Bill is to provide the framework within which that process will take place.
I would like to thank all the noble Lords who have taken part in the debates on this Bill, which explored the issues associated with the Bill in considerable depth. Among my noble friends I would like to give particular thanks to the noble Lord, Lord Ironside, and also my noble friend Lord Strathmore who has valiantly acted as winged Mercury twixt Box and Bench. I also thank the noble Lords opposite, and in particular the noble Lords, Lord Williams, Lord Mayhew and, although he is not here, the noble Lord, Lord Kennet, whose speeches, although robust, have nevertheless been considered and courteous. From the Cross-Benches, the noble Lords, Lord Chalfont and Lord Sherfield—whom I am pleased to see in his place and Lord Zuckerman, have given us the benefit of their considerable experience and expertise.
I would also like to pay tribute to the staff of AWE. 340 It is a great credit to their hard work and dedication that the Trident warhead programme remains on schedule to meet the entry into service of the first submarine in the mid-1990s. The fact that change is needed if the requirements of the later stages of the programme are to be met does not reflect on them. Although it is natural that staff will be concerned about the implications for them of the change in AWE's status, we believe that they will come to see the benefits of working for a major and successful private sector contractor with a secure programme of work.
We are convinced that the introduction of contractor operation will not only ensure that the Atomic Weapons Establishment meets the requirements of the Trident programme, but will also he the basis for an efficient, effective, and safe establishment for the foreseeable future. This short Bill provides the framework within which contractor operation can be introduced, and it therefore deserves the support of your Lordships' House. My Lords, I beg to move.
§ Moved, That the Bill he now read a third time.—(The Earl of Arran.)
§ Lord Williams of Elvel: My Lords, it will be no surprise to the noble Earl that I repeat what I said at Second Reading: we are opposed in principle and detail to this Bill. This Bill will now leave your Lordships' House unamended despite our efforts on this side to incorporate amendments on the face of the Bill. Our only comfort—and I say this as a comfort —is that the noble Earl in the course of our debates has indicated that the contract will not be let until the end of 1992. By that time certain events will have taken place and it may well he that the contract will never be let at all. I wish to leave your Lordships in no doubt whatever that such is our opposition in principle to this Bill that, should my party take office after the next General Election, we will not implement this Bill.
§ We have had discussions on a number of points. As the noble Earl said, we have recognised that there needs to be improved performance in the Atomic Weapons Establishment. We accept that, but we remain of the view that if the Government wished to improve the performance of the AWE, they could do so without contractorisation. The prospect of contractorisation has caused enormous anxiety and disturbance in the workforce. It has already led to resignations and, to date, even under phase 1 it has not led to any improvement in the performance of AWE. Furthermore, the Government have produced no hard evidence that contractorisation will improve that performance. All experience in the United States of what are known as GOCO operations points to major problems in store.
§ If we are going down the route of GOCO operations in AWE, a second question arises: are the Government right in making sure that foreign ownership in the contractor is allowed? We had a debate on the matter in Committee and we divided on it. We remain unrepentant about our view. We believe that there is British expertise, properly managed and properly run, which could make AWE a successful and sensible enterprise. After all, it produces the weapons of mass destruction on which our nuclear 341 force is based. I have said before to the noble Earl and I have no hesitation in repeating that I find it extraordinary that the Government are prepared to allow foreign ownership of the contractor that will run our nuclear warhead production. It is not only production, but research into the effects of the warheads that will be produced.
§ We have had debates on the role of the compliance office. We still have no information about its size, how it will be staffed, what its precise functions will be. We do not even have an assurance that it is to be brought into existence with a full complement in sufficient time for contractorisation. The main argument of the Government for not including the role of the compliance office in the Bill seems to be constitutional, that they do not wish to bind the Secretary of State. However, as I pointed out, there are many areas where the Secretary of State is bound by Acts of Parliament and by organisations set up under Acts of Parliament. So we are still left in the dark about the compliance office.
§ We have no further information about the contract. We have only discussed it in so far as the noble Earl told us that the contract would not be available and anyway it is classified. Nevertheless, there must be some idea of what will be in the invitation to tender. By now it must be drafted in a reasonable form. I believe that the House of Lords and the House of Commons—if I may use those expressions—the Houses of Parliament, should be entitled in this important matter to see what the invitation to tender contains.
§ After our previous debates the noble Earl will be aware that there is considerable anxiety in the workforce about pensions and redundancy and the conditions of employment under contractorisation. My advice to the noble Earl is that there is considerable bitterness on the part of the workforce that they may well be forced out of their existing pension arrangements. Despite the assurances which have been given on the creation of a new funded pension scheme, it is still perfectly possible that the pension scheme could become underfunded and thus unable to meet its commitments. That could easily happen in a position where there is a high rate of inflation or a low rate of return on investments, which is prejudicial to the fund. For that reason, we pressed strongly that there should be a guarantee that pension provisions should be no worse than at present under the legislation.
§ Another question worries the workforce which I have to express to the noble Earl. Neither the Government, in any form whatever, nor the Ministry of Defence in the narrow form will give any guarantee that individuals who wish to remain with the Ministry of Defence will be able to do so. Those who are on mobile grades who would formerly have moved around the Ministry of Defence have now been trapped in AWE. If we are to believe the noble Earl, they are now to be forced out of the Civil Service and will be unable to pursue wider careers. If he can give us any assurance about that, I should be grateful.342
§ In general, I regret the Bill. It is a bad Bill, the operation is a bad operation and one that we shall not implement if we come into office. Having said that, I must return the compliments that the noble Earl paid and thank him very much for his courtesy and that of the noble Earl, Lord Strathmore, in making sure that the Opposition was kept fully informed about developments. They communicated with us on a courteous, sensible and constructive basis. I only wish that the noble Earl had a better Bill to support.
§ 7.47 p.m.
§ Lord Mayhew
My Lords, we on these Benches also consider the Bill to be a bad one. Whether we shall implement it if we come to power, I am not at present in a position to say; but we share the strong misgivings of the noble Lord, Lord Williams. We have expressed them throughout all stages of the Bill.
It is ironic that we should be passing the Bill the day after the Russians and Americans have agreed to reduce their strategic nuclear warheads by 30 per cent. to 6,000 each. In the meantime, we are passing a Bill to fulfil the Government's extraordinary aim of doubling and redoubling the number of our strategic nuclear warheads by the mid-1990s.
What, we may ask, has happened in the world to require Britain to double and redouble her strategic nuclear capability in the mid-1990s? Perhaps it is some small reassurance to us on these Benches that if the Bill does not succeed in expediting the production of Britain's nuclear warheads, it may be that the Government will find themselves in the mid-1990s with a smaller number of nuclear warheads than they plan, nearer the number we believe appropriate to the country at the time.
There have been no amendments to the Bill. It should have been amended on the subject of foreign share ownership. It should have been amended to spell out the status, constitution and size of the compliance office. It is a great shame that the powerful arguments made on those points did not yield an amendment from the noble Earl. However, in his defence I must say that as the Bill proceeded his language improved a little on one or two of the points. As regards foreign ownership he gave us the assurance that there would be an examination of the shareholdings of the contracting company before a contract was signed. The noble Earl added that the Government would have to he informed before any significant share transfers took place. It is not clear to us on these Benches how that process would work. Nevertheless, the noble Earl went a little further towards meeting our worries than had been the case at the earlier stages of the Bill. We were not given sufficient assurances about safety. Yet in Committee the noble Earl went a little way to reassure us about the time of establishment of the compliance office.
However, the main reservation we have on the Bill is the dilution of ministerial responsibility. On that point, the Minister has made no concession either in words or in amendments from the Government. We base our real opposition to the Bill on the point of the dilution of ministerial responsibility. It is not right that private, profit-making companies should be 343 responsible for the manufacture of weapons of mass destruction. I believe that principle enjoys enormous support in the country. I believe that as the Government go on they will find they have made a great mistake on that matter. Even if private companies can manufacture these weapons, it is not right that weapons of mass destruction should be in the Lands of profit-making companies. It raises the whole question of the motivation of the contracting company in matters of safety. We discussed that matter in some detail, but we did not receive a satisfactory reply.
Nevertheless the noble Earl has treated us with courtesy. He has written to me (and I understand he has written to the noble Lord, Lord Williams of Elvel) on some of the points we have made. He has tried to meet our anxieties—at least in his language—during the course of the Bill. Unless the next election is won either by the Labour Party or by the party I represent, I regret there is every prospect that a contract will be signed and that the provisions of the Bill will be implemented.
§ The Earl of Arran
My Lords, it will come as no surprise to noble Lords opposite when I firmly defend the Government's position on this Bill and refute the points that have been raised this evening.
First, I must say that the Government believe strongly that this Bill, in common with other Bills, should only address those issues which need to be dealt with by legislation. We have therefore been unable to agree with those noble Lords who wished to expand the Bill to cover other issues, some of which we have debated in your Lordships' House. That does not mean that we feel these issues are unimportant, but rather that there are other more effective and appropriate methods of dealing with them, such as through the contract.
The matter of overseas ownership is an example of what I have been talking about. I repeat, as I have done frequently throughout the various stages of the Bill, 1 hat the Government have no intention of letting the AWE contract to a foreign firm. I have assured your Lordships that the contractor will be a UK-based and UK-controlled company. There is no doubt about that. We believe that nuclear weapon information is best protected by the rigorous application of security procedures rather than by statutory provisions which could never be wholly effective.
Furthermore, the Government are also committed to providing safeguards through the contract for safety and security as well as pension and redundancy rights. We have said categorically that pension and redundancy terms will be at least as good as at present. Individuals' terms and conditions of service will also be safeguarded on transfer to the contractor through TUPE 81.
The noble Lord, Lord Williams, referred to an increase in resignations. I can assure the noble Lord that there has been no increase in resignations at AWE in response to the Government's plans. Staff recruitment and retention have, if anything, improved. As regards pensions, we have already guaranteed that no employee's pension will suffer as a result of contractorisation.
344 Similarly, the Government will ensure that the compliance office—noble Lords have mentioned that today—has the powers and resources necessary to regulate effectively the contractor, and in particular to enforce environmental, health and safety standards and compliance with the terms of the contract. It is very much in the Secretary of State's interests to ensure that this is done and that specific legislation is not needed.
As I have already said, we are convinced that the introduction of contractor operation will not only ensure that the Atomic Weapons Establishment meets the requirements of the Trident programme, but will also be the basis for an efficient, effective and safe establishment for the foreseeable future. This short Bill provides the framework within which contractor operation can be introduced. It therefore deserves, as I said before, your Lordships' support. I ask your Lordships' House to give the Bill a Third Reading.
§ On Question, Bill read a third time, and passed.