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Defence Aviation Repair Agency

11 am

Mr. John Smith (Vale of Glamorgan) (Lab): I am grateful for this opportunity, however brief, to draw hon. Members' attention to the important matter of the future of the Defence Aviation Repair Agency at RAF St. Athan and, in my opinion, the future of the whole Defence Aviation Repair Agency. This is the first opportunity to debate the subject since the Minister announced his preferred option—I stress "preferred"—on 16 September 2004, effectively to remove the deep repair and maintenance of virtually the entire front-line Royal Air Force fleet of fast jets, the Tornado GR4, from St. Athan to RAF Marham in the east of England. That follows his decision earlier this year to remove repair and maintenance of the Harrier GR9 from RAF St. Athan to RAF Cottesmore in Leicestershire.

The work has been carried out at St. Athan for nearly 50 years. Generations of workers and RAF personnel have successfully carried out repair, deep repair, major repair and overhaul of our front-line fighter fleet at St. Athan for many years. I hope that my right hon. Friend will take my comment in the spirit in which it is intended by a friend and long-standing supporter of the Government's defence policy, which has been brave, radical, and until now, very successful, but I must place it on the record that the decision is wrong in principle and in practice. It will turn out to be bad news for the military and particularly for the RAF, because it will   undermine front-line capability, and for British taxpayers, because the cost of the work will spiral out of control, as it did in the past, which was the very reason for creating DARA.

I recognise that the decision is not entirely my right hon. Friend's responsibility, but it will have a devastating effect on the south Wales aviation industry.

Lembit Öpik (Montgomeryshire) (LD): I agree that the decision is bad news for the Welsh aviation industry as a whole, because we are becoming a global centre of excellence in just the areas that the hon. Gentleman is describing.

Mr. Smith : The hon. Gentleman is right, because the success of the south Wales aviation industry has been predicated on the existence of that centre of excellence for military aircraft repair for many years. Many of the industries that now exist have been a spin-off from that. Future plans for the aviation industry in south Wales, most notably the centre of excellence, the aviation business park, will be fundamentally undermined by the decision, because the only way of making it a centre of excellence is to build on the skills and expertise of the people who already operate from the site.

I want to explain why the decision is so wrong and why it is such bad news. However, I had better spend a minute or two explaining what DARA is, because it has not been with us for long. Her Majesty's Government formed the agency as a trading fund as recently as April 2001, with a specific strategic role in supporting our front-line forces: to provide—I shall say this slowly—a competitive alternative to sources of repair in the commercial sector in Britain.
 
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A review carried out by the Ministry of Defence in 2003 came up with three clever options. We either move the work forward to military operational bases, or we move all the work—that is deep support for military aircraft—back to DARA at St. Athan and other locations. Alternatively, we come up with a hybrid solution, which the Minister has done. However, that end-to-end review of logistics undertaken by private consultants and the RAF is fundamentally flawed, because it completely ignores the strategic role of DARA, which was created by the Government as recently as three years ago. DARA became a full trading agency just a few months ago, on 1 April 2004. Within a few months, the role of the agency created by the Government is being ignored and Government policy is being completely reversed.

In the past, there have been four lines of support for the British Air Force and our military aircraft: front-line reinforcement, second-line reinforcement at military operational bases, third-line at DARA and fourth-line within industry and the private sector. Quite rightly, a review of logistics needed to take place to ensure a smaller logistic footprint and a tri-service provision for all our forces—Army, Navy and Air Force—for all aircraft, to stop duplication and waste. There has been a post-cold war consensus by Governments of both persuasions that that is necessary. Of course we support that, but nobody expected that during the end-to-end review the new, critical role given to DARA would be ignored in the way that it has been.

The creation of DARA was based on the post-cold war consensus that there is no longer any military case whatever for servicemen and women to carry out factory repair of aircraft. Clearly, there is a military case for carrying out servicing and immediate repairs—kicking tyres, filling up with petrol and keeping the things in the air—but there is no military case for service personnel acting as factory workers and carrying out major overhauls of aircraft. There used to be such a case during the cold war because of the threat of a direct invasion of this country, and the possibility of a long, high-intensity military engagement in the central plains of Europe and of having to move forward deep repair to support our air-to-air fighter aircraft in the sky. That scenario no longer exists and nobody in government, in opposition or in any other NATO country in the alliance believes that that work should be carried out by military personnel.

The move is a disaster for the military, because if they go back—I stress go back—to carrying out deep repair of military aircraft, which they have not carried out since the origins of DARA in 1991, that will have to be paid for, and the only way to pay for it is to take away capability from the front line.

Everybody knows that the military are not cut out for that sort of work. That is another fundamental mistake made by the review: it makes no proper distinction between military personnel—I speak as an ex-serviceman and member of the Royal Air Force—carrying out their work in the committed and loyal way that they do, under a military code and Queen's regulations, and skilled factory workers, who are civilians operating in a commercial environment, which is what we have at DARA. That is why it took more than 4,000 military personnel just five years ago to undertake the work currently done by 1,450 civilians. Is
 
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the Minister honestly suggesting that it makes economic sense to move that work back to the military? Of course it does not. It is the economics of the madhouse if we are to expect military personnel to do that work either efficiently or cost-effectively. It will undermine military front-line capability. Members of the services will not be able to carry out the work, which is already happening with the Harriers that have been moved to Cottesmore, where there is a reliance on private contractors being brought in to bail them out. Six aircraft have already been returned to DARA St. Athan, which has been asked to bail out the Royal Air Force. In the past, the RAF has had to turn to the private sector to bail it out with blank cheques, and it will have to do that again in the future.

I recently met representatives of a major defence contractor—I am sure that my right hon. Friend will not have difficulty working out which one—and their smiles went from ear to ear because they knew the consequences of this decision, if implemented: a reliance on contractors to help out the RAF with all its work at military operational bases, or to act as a semi-permanent support. The policy is wrong for the RAF, and in its heart of hearts, the RAF knows that it is wrong. It marks a step change in the strategic defence review, which until now has attempted to introduce smart procurement in many fields. One element of that is the outsourcing of unnecessary tasks that the military has no need to carry out on either economic or military grounds.

The policy is a complete reversal: it is a form of renationalisation through the back door. We have not seen such nationalisation since the Government of Ted Heath and the overnight nationalisation of Rolls-Royce. The previous Conservative Government were going to privatise part of the work—the part of the agency made up by Magda—through "Competing for Quality". The Labour Government said that the work should be outsourced because there is no military case for keeping it, but privatising it carries security risks—there may be no surge capacity in a crisis—so they created DARA at RAF St. Athan to operate in a purely commercial environment for profit, showing a return on investment and with flexibility of labour practices. In the Minister's own words, it was to become a "world-beating centre of excellence" in military aviation.

The policy will be a disaster for the taxpayer, because I confidently predict that he or she will pay through the nose for the work to be undertaken initially by the RAF, and when it fails, through a partnership with the private sector, but with the RAF dependent on the private sector for support. There is no competitive element whatever in the formula—it is a recipe for disaster. That is very sad, because other strategic defence reviews in other NATO countries, and even statements by the former Supreme Allied Commander Europe, General Wesley Clark, used the British example for other countries to follow in relation to outsourcing non-essential work. We did that, and we have done it successfully, and now those countries are contemplating introducing it.

During the past year, £18 million of taxpayers' money has been invested to build a state-of-the-art military hangar at RAF St. Athan. It is the size of six football
 
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pitches and is purpose-built to repair 47 fast jets at any time—the entire fleet. We have massive capacity, a work force who have broken all the records for productivity and efficiency gains, and a brand new hangar. Before the hangar was finished, and on the spurious notion that the RAF had all of a sudden invented a need for a deep repair capability in their services to move forward—God knows in what scenario—at times of crisis, the Minister announced that he would split up all the work. The work will now be handed back.

The Minister and the Department are in danger of making the biggest mistake they have made since this Government took on responsibility for defence. Until now, they have been more or less on the right course. I    asked the Auditor General to investigate the expenditure, as I believed that it was my duty as a Member of this House to do so, and I am delighted that the Defence Committee will investigate the matter as a result of the letter that I wrote to it.

The decision is bad news for the south Wales economy. It will devastate our aerospace industry for the reasons that I have already given, and it will destroy the training base. The provision for the training colleges sector to train apprentices at the facility will end, as it is dependent on RAF St. Athan and DARA to supply the mainstay of apprentices, and companies such as British Airways Maintenance Cardiff, which carries out major repair and overhaul of private wide-bodied jets for British Airways, the British Airways avionics centre, and General Electric, which repairs engines in south Wales, will all be affected by the decision.

The chances are slim indeed that Red Dragon, which is a joint project of the Ministry and the Welsh Development Agency, will be a success. Red Dragon is in grave danger of becoming a white elephant. We could well see in the six football pitches inside the new hangar just one Hawk training jet. God knows how that can be considered an efficient use of defence expenditure.

I have not had much time to develop many of the arguments, but I hope that I have been able to give hon. Members a flavour of the grave mistake that the Government are about to make. Such a mistake could rub off on other services and provision in the military. Traditionally, the mistakes made in strategic defence reviews have not been the big visions. By and large, "Options for Change", "Front Line First", the strategic defence review and "A New Chapter" have been good visions and have garnered a consensus on where we ought to be going vis-à-vis our defence policy. Where they have fallen down is in the detail, the application and the failure to implement reconfiguration of regiments, organisations and resources. The resulting horse-trading ends up in death by a thousand cuts and huge gaps in military capability.

The decision smacks exactly of horse-trading. I know that my right hon. Friend has had a difficult job persuading the RAF to rationalise, given its new front-line objectives. We will have fewer aircrew and fast jets. We hope that we will have a bigger capability. I must tell him that this is not the way to go about delivering the capability. People in blue uniform would never have joined the RAF if they had known that they would become factory workers. Speak to the workers—the civilians—at St. Athan, almost half of whom are ex-RAF. They did not join the RAF to become garage
 
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mechanics permanently based in factories. They will not operate in a commercial environment, and we will pay dearly for this decision.

The trade unions know that the decision is wrong. I understand that for the first time the national unions have come out and failed to agree with the policy. Under the partnership, the Ministry has previously had the support of the unions on every DARA proposition. The local work force and other NATO countries know that the decision is wrong. Deep down, the RAF knows that it is a mistake. I ask my right hon. Friend to think again, and if he is unable in principle to change his preferred option, for goodness' sake, if he intends to implement this strategy he should do it gradually, step by step, and ensure that at each step we see it working, with capability being maintained. We do not want another Airworks debacle—he will be familiar with that because it affected the Tornado.

I hope that I have been able to put some of my arguments across.

11.20 am

The Minister of State, Ministry of Defence (Mr. Adam Ingram) : I shall try to answer a 20-minute speech in 10 minutes, and I pay tribute to my hon. Friend the Member for Vale of Glamorgan (Mr. Smith) for his wholehearted advocacy on his constituents' behalf. He is to be congratulated on that, but I do not agree with the fundamental thrust of his arguments, although I recognise some of the graphic scenarios that he painted.

The background to the issue is straightforward. In 2002–03 we undertook a comprehensive end-to-end review of how logistic support was provided to our air and land forces. It looked across the whole logistics process to maximise the opportunities for improving logistic support to our forces. Its clear, fundamental aim was to achieve our target of reducing the £15.4 billion cost of logistics support by £1.4 billion by 2008 so that those savings could be invested directly in the front line. That was the overriding driver.

On support for military aircraft, the review concluded that there was both need and substantial scope for improvement in all areas: in industry, in the Defence Logistics Organisation and in all three services. That reflected the duplication of facilities across the services and in other parts of the MOD such as the Defence Aviation Repair Agency. It also reflected the fact that, with some notable exceptions, the Department and the services were not using industry modern best practice—a given fact—to drive down the cost of supporting military aircraft. The case for significant change was unarguable. It is wrong to ignore those essential features.

The review concluded that aircraft support, which comprises deep repair, scheduled maintenance and modification of aircraft—not garage work, as my hon. Friend suggested, but important technical work, whoever carries it out—could best be rationalised by concentrating facilities at existing military main operating bases.

My hon. Friend set out the background and asked whether the programme should roll forward or back, or whether a hybrid solution can be found. We tested that by having an investment appraisal. There was no
 
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predetermined outcome; we decided to examine the matter in the cold light of the information and facts in front of us. We put in place a demonstration phase, launched in September 2003, to test the end-to-end review principles and reduce risk. We also put in place at that time a formal, transparent process to evaluate the    options for support infrastructure in the air environment. That was not under the counter; it was all up-front, open examination.

The investment appraisal was led and overseen by head office at the Ministry of Defence, and was conducted under the direction of the Department's senior economic adviser. All interested parties, including DARA and the services, were engaged in the investment appraisal, and there was trade union consultation throughout. As I have said, there was no predetermined outcome. The process was designed to establish the best result for defence in terms of operational effectiveness—that is what the RAF is for, not saving jobs or economic regeneration. The key platforms of Tornado GR4 and F3, Harrier GR9, and the Lynx and Sea King helicopters were addressed in detail in that examination. As my hon. Friend said, it came out with three options: forward, back or the hybrid solution.

That investment appraisal was supplemented by a subsequent affordability analysis, which identified the investment needed for each of the three options. There is no point in conceiving a new way forward if we cannot afford it. However, in order not to prejudice the required in-service date of 2006 for the upgraded Harrier GR9, the investment appraisal focused first on the options for its future depth support. I announced in March that Harrier support will concentrate forward to RAF Cottesmore. My hon. Friend is wrong about the work that is being carried out there. The first Harrier major maintenance there was completed in June 2004. No unexpected issues were experienced and the turn-round time was as planned. It was similar to a minor maintenance undertaken at the base and shorter than that experienced at DARA.

We had budgeted for the major repair to require an additional 500 man hours compared with a minor repair, but in the event only 340 additional man hours were required. No additional skills were needed, so we did not have to undertake any additional training and the Harrier pulse line team and a new joint repair organisation based at Cottesmore undertook all the necessary structural repair work. If my hon. Friend has different information—he keeps raising the matter—I need to see the facts, because as far as I am concerned, they are not as he presented them.

The completed investment appraisal and affordability analysis demonstrated that concentrating support of the Tornado GR4 aircraft forward at RAF Marham would provide best value for money compared with the alternative of concentrating backward at DARA St. Athan. In essence, the choice was either to move the aircraft to an existing main operating base for depth support or to move RAF personnel to DARA St. Athan. The latter would have meant significant up-front infrastructure costs, but either option would have meant a significant reduction in civilian posts. That was the reality. The investment appraisal and affordability
 
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analysis also showed that it would not be cost-effective to concentrate the Tornado F3 aircraft either forward or back, given that it will soon be replaced by the Typhoon.

For rotary wing aircraft, helicopters, the investment appraisal and analysis demonstrated that it would provide better value for money to concentrate depth support for the Lynx, Sea King and Chinook back to DARA Fleetlands, a civilian base, not a military base.

On 16 September, I announced my preferred way ahead, which was subject to full trade union consultation. The consultation period ended on 27 October, and I have received a formal response from the trade unions which is now under consideration. I hope to make a final decision shortly and am only a matter of days away from doing so.

I am well aware that my preferred way ahead has substantial adverse implications for DARA St. Athan and its work force, and it would be wrong to pretend otherwise. However, my hon. Friend should be in no doubt that the streamlining of our support functions is    not simply an option for defence. We must move    forward to streamline that support because transforming logistics through more efficient ways of working is vital if the Ministry of Defence is to make the best use of its resources.

The impact of what we are doing goes wider than DARA St. Athan. We are not sacrificing civilian jobs to protect RAF personnel. Implementation of the end-to-end review will lead to a reduction of some 1,600 RAF personnel, which forms part of the overall reduction of 7,500 set out by my right hon. Friend the Secretary of State for Defence on 21 July when he announced force structure changes and defence change programmes. We are not protecting the light blue at the cost of civilian workers. We are making a complete examination of the way in which we deliver that support.

I am conscious that that is a hard message, and of the fact that when my father joined the RAF in 1938 the first place he went to was DARA St. Athan, because he wanted a trade and that was the best way to obtain one. He would not like to have been called a garage hand, because of the technical work that he did, although the aircraft were much simpler in those days.

To mitigate the effect, we are working with the Wales Office and the Welsh Assembly Government to consider all the options for sustaining DARA St. Athan after 2009. The Department of Trade and Industry, the Department for Transport and other Departments are working alongside us.

I am sure that my hon. Friend understands that the Ministry of Defence is obliged to deliver maximum front-line capability and to make best use of taxpayers' money. Those have been the key drivers in my preferred way ahead for air depth support. I do not believe that we have achieved one at the expense of the other. Instead, we have achieved the right balance, which will deliver the right outcome and maximum front-line capability for the RAF, the Royal Navy and the Army.

11.30 am

Sitting suspended until Two o'clock.
 
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