Services Sound and Vision Corporation

HC Deb 15 October 1996 vol 282 cc861-2W

Mr. Colvin

To ask the Secretary of State for Defence if he will make a statement on his Department's relationship with the Services Sound and Vision Corporation. [40946]

Mr. Soames

The Services Sound and Vision Corporation is a registered charity and also a company limited by guarantee which supplies a range of goods and services to my Department and to other customers. It does not carry out any function of government as such. It is classified as a non-departmental public body sponsored by my Department because most of its income has derived from work which was automatically placed by my Department with the corporation on a non-profit basis, and the Ministry of Defence is represented by trustees in the higher organisation of the corporation. However, this arrangement has not provided MOD with the kind of control that it is appropriate for sponsoring Departments to exercise over their NDPBs. It has been decided that best value for money would be obtained if the relevant goods and services were obtained by normal contractual means. My Department intends, subject to any responses to the minute that it laid before Parliament on 14 October 1996, that all future work done for it by SSVC should be conducted under contract.

MOD's proposed contractual relationship with SSVC would be the same as its relationship with any commercial supplier, so it would be inappropriate for the corporation to retain its status as a NDPB. Therefore, subject to signing of the proposed contracts, it is intended that SSVC's NDPB status shall be revoked.

In order to prepare for the proposed new relationship with MOD, SSVC reviewed its activities. As a result of this, the corporation decided not to compete for some types of work that it previously undertook for MOD. This decision, and restructuring to enable it to compete for other types of MOD work, led to the need to reduce the SSVC work force by some 25 per cent. or about 200 posts. My Department has honoured its consequential liabilities towards SSVC by funding the restructuring costs, which mainly consisted of redundancy payments.

Another effect of the new relationship between MOD and SSVC concerns residual contingent liabilities. MOD would, under the proposed contractual relationship, retain some liabilities arising from the NDPB arrangement. This is explained in greater detail in the minute laid before Parliament to earlier.

With the removal of SSVC's NDPB status there would be no reason for MOD to continue to be represented in the corporation's higher organisation and, given the new contractual relationship between MOD and SSVC, it would be preferable for the practice to end as soon as possible.

Following the restructuring of SSVC and the removal of its NDPB status, the corporation should be able to operate more efficiently and with greater freedom than in the past. Given this, and its expertise in the business activity it will continue to undertake, MOD believes that the corporation should flourish.