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The Parliamentary Under-Secretary of State for the Cabinet Office (Mr. Jim Murphy): The civil service has made good progress towards increasing diversity, including at its senior levels, but there is still much more work to do. Last week, Sir Gus O'Donnell, head of the home civil service, launched a 10-point plan. Its aim is to deliver a civil service that is truly representative of society.
Mary Creagh: I know that the civil service as a whole is representative in terms of gender and ethnicity, but does my hon. Friend agree that we need a civil service in which women and people from ethnic minorities are represented at senior levels? It is not good enough to have a bulge at the bottom, with middle-aged white men determining the strategy at the top, especially, for example, at the Treasury, the Foreign Office and the Ministry of Defence.
Mr. Murphy: I absolutely agree with my hon. Friend. In the few months that she has been in Parliament, she has taken a keen interest in such matters. She is right to say that the civil service is broadly representative in respect of gender and ethnicity. There has been important progress in ensuring that there is double the number of women and those from ethnic minority backgrounds in the senior civil service compared with seven or eight years ago. However, much remains to do, which is why the 10-point plan has been published. It will be applied across Departments. We have a real job to do in ensuring that meaningful careers in the civil service are available to those who are disabled as well as to women and those from ethnic minorities.
The Minister of State, Ministry of Defence (Mr. Adam Ingram): I am pleased to have been able to secure the opportunity to make an oral statement to the House today in place of the written statement that I had tabled.
As the House knows, the Government are committed to the transformation of defence logistics support as an essential part of the ongoing and extensive programme of modernisation of the armed forces. Indeed, my right hon. Friend the Secretary of State for Defence made an announcement to that effect to the House on 21 July. We believe that logistics transformation is a critical part of providing more effective support to our armed forces while releasing resources for the front line and making the best use of taxpayers' money. The National Audit Office recognises that the Ministry of Defence's logistics transformation programme will deliver about £2 billion of efficiency savings to the Ministry by 201011.
Our objective is to deliver more adaptable, efficient and effective support structuresforces that are better configured to enable our expeditionary operations. Let me make it plain to all hon. Members that every penny that we refuse to release by not implementing our modernisation programme is a penny less that is available to provide our forces with the life-saving support they need. Let me also make it plain that I know how much our employees have contributed to providing that support over the years and how proud they are of the role that they have played. Nevertheless, we have to accept that we must adapt to the changing strategic environment, and that means having more adaptable, efficient and effective support structures, which are better configured to enable our armed forces to conduct expeditionary operations.
We support those forces with two businesses that provide depth support in the air and land environments. They are DARAthe Defence Aviation Repair Agency and ABROthe Army Base Repair Organisationwhich provides depth repair for the land and armoured vehicle fleet. DARA and ABRO were established as trading funds in 2001 and 2002 respectively, thereby recognising their need to operate on a largely commercial basis at arm's length from the Ministry of Defence. In common with all parts of logistics support, DARA and ABRO are significantly affected by the modernisation programme. It has already led to a number of significant savings, including a planned reduction of more than 2,000 RAF personnel by 200708. After careful analysis by my Department, it was determined that there was no strategic need to retain in MOD ownership the capabilities that those trading funds provide. I announced that to the House, in respect of DARA, in December 2004. Instead, judgments on their future must be based on the best balance of value, cost and risk, compared with the alternatives.
In the case of DARA, on 25 November last year I announced in a written statement to the House the introduction of new depth repair arrangements for the Tornado aircraft, in addition to those made earlier for the Harrier. Under those arrangements, maintenance and repair is being consolidated at two RAF main operating bases. Previously, there had been four levels of support for aircraft, stretching from industry to the
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front line. These are being reconfigured to just twodepth support and deployable forward supportconcentrated at the most cost-effective location.
Those arrangements are proving successful and have already increased operational effectiveness by reducing the number of aircraft in maintenance. In the Harrier fleet, for example, the number of aircraft in maintenance and upgrade at any one time will reduce from a planned 24 to an average of 13, freeing 11 additional aircraft to the front line at any one time. Similar benefits are expected once the Tornado future support arrangements are fully implemented.
Those improvements, together with the implementation of complementary and innovative changes to the way in which logistic support is provided, will significantly enhance our ability to deliver required front-line readiness, and will do so at much lower cost. Consolidating support for fast jets and helicopters will deliver net savings of some £70 million over the next four years, with recurring annual savings of £40 million thereafter.
I come now to the future of DARA's five business units: St. Athan in south Wales; Almondbank in Perth, Scotland; Sealand in north Wales; and the two units at Fleetlands in Hampshire. I shall deal first with DARA's fixed-wing business at St. Athan. Fast jet workload has reduced for a number of reasons. We have announced the withdrawal of the Jaguar fleet. We have also reduced the number of operational Tornado F3 squadrons, resulting in a reduction in the required Tornado operational fleet of 17 aircraft. We have increased the interval between major servicing for the Tornado F3 and GR4 fleets and, as part of our end-to-end review of air logistic support, migrated maintenance of Harrier and Tornado GR4 aircraft to the RAF's main operating bases at Cottesmore and Marham.
DARA has been unable to secure commercial aviation repair business in a market that faces overcapacity and is fiercely competitive. My judgment, therefore, is that, regrettably, the fast jet business at St. Athan does not have a long-term future, so I am announcing, subject to consultation, that it should close by April 2007 with the loss of up to 500 jobs, primarily in south Wales. However, the same end-to-end review has resulted in more VC10 work transferring to DARA's large aircraft business, helping it to remain a viable and sustainable business and to secure about 350 jobs at the St. Athan site. I am therefore announcing, again subject to consultation, that this VC10 business should be taken to the market now, to test whether sale might deliver improved effectiveness and value for money for our armed forces and a better long-term future for the work force.
The Department's investment in the Red Dragon project has enabled DARA and the MOD to achieve major reductions in operating costs, and it has enabled significant site rationalisation at St. Athan. We anticipate that we should have recovered our investment at St. Athan by April 2007. By investing in that facility, in partnership with the Welsh Assembly, we have provided south Wales with a state-of-the-art engineering capability that can form the centrepiece of the proposed St. Athan aerospace park. I therefore make no apology for taking the bold decision to build this world-class facilitya decision that was taken in good faith, based on the best available information at the time. Not to have done so would have immediately
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rendered DARA uncompetitive. We are continuing to examine, with the Welsh Assembly, a number of military and civil aerospace opportunities for the future use of the facility.
The next area concerns DARA's helicopter repair and associated component businesses at Fleetlands in Hampshire and at Almondbank in Scotland. Those businesses continue to offer a cost-effective repair capability. The facilities will continue to employ in the region of 860 people: more than 580 at Fleetlands and more than 270 in Almondbank. Again, I am announcing, subject to consultation, that those two parts of DARA should be taken to the market now to test whether sale might deliver improved effectiveness and value for money for our armed forces and, again, a better long-term future for the work force.
I come now to DARA's engine maintenance business at Fleetlands in Hampshire. Regrettably, this business has become uncompetitive and is unable to sustain its market share. This has followed DARA's recent loss to Rolls-Royce, in open competition, of work on the RB199 engines for the Tornado aircraft. Also, DARA did not secure the Gnome and Gem helicopter engine repair contracts. That work will now be carried out by Rolls-Royce. I have therefore decided, subject to consultation, that this business should close by April 2007, with the loss of 225 jobs in Hampshire.
The final business unit in DARA is the electronics business, based in Sealand, north Wales, which employs some 600 people. This will be retained within MOD ownership. That business provides critical support to our current aircraft and has scope for further growth as we optimise the Department's future avionics support arrangements.
I want to deal with ABRO's future. ABRO provides depth repair of much of the Army's fleet of armoured fighting vehicles, as well as other military vehicles and fighting equipment. Change at ABRO is essential for a number of reasons. First, the Defence Logistics Organisation is introducing a series of reforms to improve the efficiency with which the fleet is being managed and maintained. That reduces the requirement for deep repair. Secondly, ABRO has become more efficient, reducing the required manpower. For example, the cost of base overhaul of the Warrior armoured vehicle has been reduced by 15 per cent. and the time taken cut by half, from 107 days to 53. As a result, it has been possible to release 40 more vehicles back to front-line commands.
Thirdly, the reality is that while ABRO has some unique capabilities, it is facing increasingly direct competition as a result of new and more efficient DLO contracting strategies. While there is no long-term strategic need to retain ABRO within MOD ownership, I judge that we will not be ready to expose all or parts of the business for sale for a number of years. However, the business needs to become significantly more efficient and some of the MOD's long-term support strategies need to mature. The consequence is that significant rationalisation is necessary so that ABRO can become more competitive.
Subject to consultation, I am announcing that ABRO's armoured vehicle and engine facilities, together with its one-stop shop for unscheduled
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repairs at Donnington in Shropshire, will close by March 2007, with up to 628 redundancies. Instead, depth maintenance and repair of the armoured fleet will be concentrated at Bovington in Dorset, retaining some 384 jobs, although up to 107 will be lost by 2010. ABRO's one-stop shops at Warminster in Wiltshire and Colchester in Essex will close by March 2007, with up to 281 redundancies. There will be up to a further 210 redundancies across other ABRO sites, including the head office function based in Andover in Hampshire.
In addition, and to provide more efficient and effective service, ABRO will create a number of new smaller facilities closer to the Army front-line customer, including in the Warminster and Colchester areas. Up to 165 new posts will be created. Having rationalised its core defence business, ABRO will be looking to develop profitable commercial revenue across the defence sector and beyond into other markets. There are no guarantees of success, and of course we must ensure that the taxpayers' position is protected, but if it can become much more competitive, ABRO could have the potential to grow into new markets. It has already had some success in the rail maintenance and public sector fleet management markets.
I pay tribute to the excellent service that the employees of DARA and ABRO have provided to our armed forces. The redundancies across both DARA and ABRO will have an impact on individuals and their families. I am particularly mindful of the impact of this announcement on south Wales, Donnington in Shropshire, and Hampshire.
We are working with the Welsh Assembly in Wales, and we will of course engage with the other regional bodies to mitigate the consequences of these necessary decisions and to provide appropriate outplacement services to help those affected. As a good example of that, we have already been able, through joint working with the Welsh Assembly, to attract ATC Lasham, a civil commercial aircraft maintenance and repair company, to St. Athan, creating up to 300 new jobs. We will help those affected by these announcements to find alternative employment and we will make every effort to use natural labour turnover, redeployment and voluntary redundancy to mitigate the loss. However, while we will seek to keep them to a minimum, a significant number of compulsory redundancies can be expected.
We are committed to modernising our armed forces. To do so, we must continually look for more efficient support solutions to enable us to invest more resource to support our men and women in the front line. These changes are an essential part of that strategy.
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