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Mr. Gerald Howarth (Aldershot) (Con): I thank the Minister for giving me advance sight of what has been an extremely lengthy statement, and for his courtesy in affording me more than the conventional amount of time to consider it.

I doubt whether I am alone in experiencing a shudder every time this Government announce a plan to modernise. If it relates to our institutions, it generally means to destroy. In the case of our national defence, it usually heralds a cut. Sadly, today's announcement appears to be no exception.

I feel particularly sorry for the DARA operation in the constituency of the hon. Member for Vale of Glamorgan (John Smith). The Government built up
 
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hopes of creating a substantial aviation repair facility to provide a valuable skills base in south Wales, only to   dash them again. Just months after agreeing a   £70 million investment in the Red Dragon site, a new   chief executive, Archie Hughes, was brought in to   undertake the challenging task of preparing the business for sale. No sooner had he arrived than Ministers promptly announced the removal of Tornado GR4 work to RAF Marham, cutting the ground from beneath him and his team. That followed the transfer of Harrier work to RAF Cottesmore early last year, at a   cost to DARA St. Athan of 550 jobs. Removing business from a company is not a sensible way to sell it as a going concern.

The indecision over DARA has led to what can only be described as a shambolic state of affairs, and great uncertainty for a work force to whom the Minister has rightly paid tribute—some reward they have had for their commitment. I have a number of questions to ask the Minister in respect of DARA.

First, what was the result of the market testing carried out by Morgan Stanley earlier this year? Is it true that there has been no serious expression of interest in a purchase? Secondly, can he tell us how the front-line servicing operation for Harriers at RAF Cottesmore is performing? Is it true that, as Amicus claims, the cost of transferring work from DARA St. Athan to Cottesmore was substantial?

The Minister says that he intends to remove all fast-jet work from St. Athan, but what about the Hawk contract currently placed there, which he did not mention? He said that the VC10 business has been transferred there, but that he is planning to market-test that, too—I presume that he is going to sell it, so what will be left of St. Athan if that goes? He said that DARA had been unable to secure commercial aviation repair business following the rundown of military work, so what is his plan for the future of the facility? I dare say that his hon. Friend the Member for Vale of Glamorgan will put that question to him even more vigorously.

Again, the Minister said that he was planning to sell   the helicopter repair business at DARA Fleetlands, in the constituency of my hon. Friend the Member for   Gosport (Peter Viggers). If that goes, what will be   left there? Can he explain why, uniquely, DARA's electronics business at Sealand will not be market-tested, when that is apparently being done with everything else?

As for ABRO, that organisation has been subject to a steady process of attrition. In July, the Ministry of Defence announced the loss of 250 jobs across the country, with today's phase 2 leading to a further 1,061 net redundancies. The NAO's major repair and overhaul report of 2002—I acknowledge that it is from three years ago, but I would welcome the Minister's response—stated:

"Despite trends towards contractor logistics support, however, parts of industry acknowledge that they do not have well developed repair and overhaul capabilities. Some manufacturers are therefore looking to ABRO to provide this expertise and capability. In addition, Alvis Vehicles Limited and Vickers Defence Systems both entered into partnering arrangements with ABRO in 2001. And ABRO intends to work more closely with other potential industrial partners on future equipment programmes."

Can the Minister tell us whether the deficiency identified by the NAO has been resolved?
 
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Will the Minister explain why he now sees no further need for deep repair for military land vehicles? It seems that the closure of the one-stop shops at Warminster and Colchester will take out a whole capability. He referred to smaller units being placed there, but what will they do that is not currently carried out by the existing one-stop shops? Although we welcome any moves genuinely designed to make the logistics back-up for our armed forces more efficient, we shall resist measures that have the effect of so cutting our logistics capability that they starve the front line of vital support, or which eliminate scope for spare capacity that may be required during conflict. It is against that yardstick that we shall judge today's announcement.

Our front-line forces are at full stretch and they need to have confidence that the essential back-up is actually there. My initial fear is that the announcement today represents a substantial cut in capability, which far from reinforcing the front line will only serve to weaken it.

Mr. Ingram: That shows that one should not give out a statement too far in advance. The hon. Gentleman should look at his own statements in the run-up to the last election—statements on which the Conservatives campaigned. Does he remember the James report? It referred to savings of £1.6 billion in addition to the £2.8 billion we have announced, taking £4.4 billion out of defence logistics support. It proposed a sell-off of ABRO and DARA. It did not propose to test the market, but made a simple commitment to sell it off, along with the Warship Support Agency and everything else to do with defence agencies. I can take some criticism—I am sure I will get it—but not from the Conservative party.

In terms of DARA St. Athan, I set out why the business has contracted: because of platforms being taken out of service—that was going to happen anyway; they were just brought out of service earlier—and because increased periods between maintenance reduces the number of aircraft going downstream. It is also a result of the transfer of the Harrier and the Tornado to RAF main operating bases. That means that the totality of the workflow had ceased to exist, by and large. Of course, the work could have remained there, but it would have done so at cost greater than that which I set out in my statement.

I indicated that the savings made as a result of the Harrier transfer were substantial and they will be replicated for the Tornado. If the view is that the RAF main operating bases cannot maintain those aircraft, it is a significant charge—effectively, the hon. Gentleman is saying that the technicians cannot maintain aircraft to the same standards and ability as those within DARA.

The purpose of market testing is to find out if there is an expression of interest. If there is, we will have to see if it satisfies us in terms of cost and guaranteed support for the future, with the element of risk contained within that. There is no guarantee that market testing will necessarily lead to the sale of VC10 business, although I   must say that I am under some pressure to do that. Whoever buys it could, effectively, grow the capacity of the engineering aerospace work that is carried out at St.   Athan, because the large manufacture capability could bring in other work using the facilities built there.

The hon. Gentleman talked about Fleetlands and the decision to take that to the market; again, it is proving to be effective. It is right that we test the market on
 
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helicopter support, using the same criteria for the fast-jet business and for the rest of the fixed-wing business. In one sense, that is not too dissimilar to what the hon. Gentleman was campaigning for before the election, although he was not going to market; he was going to sell to the first bidder. We will market-test to see if there is a bidder and then get value from that.

Sealand is being retained within the MOD for a good reason—it does very important work at present. With the Typhoon coming along, we believe that it is important that capacity be retained at Sealand. We are looking into whether we can invest to give the work force a better future, either in the public sector or in an area where market testing may be necessary.

As was said three years ago, the market has changed and ABRO is under intense competitive pressures. The way in which it is structured has made it inefficient, so we are rationalising. The depth support that the hon. Gentleman mentioned is going to Bovington, while other work will be distributed across other sites. As I   said in my statement, there will be 185 additional posts. The aim is to get closer to the customer and closer to front-line need.What we are taking from ABRO is excess capacity, not capability. The situation had to be assessed properly before we acted, and we will still have a 40 per cent. surge capability to meet any of the demands to which the hon. Gentleman rightly alluded.

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