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John Smith (Vale of Glamorgan) (Lab): My right hon. Friend will be well aware of my utter dismay at the incoherence of the Government's policy of depth support for their front-line military aircraft, which will undermine the RAF's capability in the defence of the nation. In the light of his statement, can he assure me that his Department will work very closely with the Welsh Assembly Government to retain as much of the highly skilled work force at St. Athan as possible, both by helping to secure more aviation business for the area and by expanding the DARA VC10 work that will be market-tested? Will my right hon. Friend also tell me whether he will accept in-house bids for any market testing of DARA business?
Mr. Ingram: I know of my hon. Friend's deep concern. He has been constant in both his comments and his trenchant criticisms. I pay tribute to what has been a high-profile campaign on his part, but I must balance what constitutes reality for the MOD against the reality in which he exists.
My hon. Friend has asked me important questions. I think it right to look to the future. Yes, we will work closely with the Welsh Assembly Government and other Government agencies to see what more can be done to protect the level of aerospace activity. I mentioned our success in attracting a major aircraft maintenance supplier, ATC Lasham, to the site. That will provide about 300 jobs, and the business could grow, but that is up to it. It is, after all, in the commercial sector. It may well be interested in purchasing the VC10 work. We will erect no barriers to any attempt to grow the business; indeed, we will do the opposite. We will do all that we can to ensure that that skilled work force is retained, and it may even increase over the years.
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I would not write out an in-house bid. We have shown a willingness to participate in such bids in the past, and will do so in the future. The future defence supply chain initiative, for instance, went in-house after an intensive period of assessment of what the market was offering. If a bid matches our requirements against commercial demand, we would be prepared to consider it if it offers value for money and covers the risk elements, and if we can ensure the sustainability of the fleet.
No one would dispute that we must modernise logistics provision for the armed forces, but anyone who has studied reports from the Defence Committee and the NAO will be aware of the massive gap between aspiration and reality. The cost overruns highlighted by the Minister's own answers to parliamentary questions make the situation worse, not better. On a quick calculation, the Minister has announced a net 1,500 job losses, which will be a major blow to each of the communities represented. Can he give the House further details of the redundancy and welfare packages that the affected individuals will receive?
On the fast jet business at St. Athan, can the right hon. Gentleman remind the House of how much the taxpayer has invested in the site in recent years? Can he set out, now or later, the figures that allow him to say that the investment will be recovered by April 2007? Given that he says that the commercial aviation repair business operates in a market with overcapacity, what will make the proposed St. Athan aerospace park viable?
Finally, when the Minister announced the creation of the DARA and ABRO trading funds, the idea was to improve both the efficiency and effectiveness of their operations. So what confidence can people in the armed forces, and the civilians who support them, have that when the MOD talks of modernisation, it does not just mean cost-cutting on a grand scale?
Mr. Ingram: The hon. Gentleman says that we have failed to match aspiration with reality, but the Liberals have perhaps failed in that regard for the last 100 years or so. The standard redundancy and welfare package will of course apply, and every effort will be made to find alternative employment. Indeed, in some areas, one or two other developments are taking place within the MOD that could create a small number of none the less real opportunities. There may well be opportunities for people to relocate if they are mobile employees, and we will do everything to assist in this regard. I do not minimise the scale of this announcementthat is why we are making an oral statement. It is right that we do so and that we be questioned on it.
The hon. Gentleman asks about investment at St. Athan. There was a view that the Red Dragon facility should not have been builtI do not know where the Liberals stood in that regardand this issue certainly had to be debated. Had we not done so, we would not now be best placed. Nor would DARA at St. Athan have been able to achieve many of the efficiencies that it subsequently achieved, which in turn assisted the rest of defence. As a result of that initiative, the investment in that project that was due to break even
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in 200809 will do so by 2007. I do not know whether we can release the relevant informationI know of no reason why not, but sometimes there are commercial or confidentiality issuesbut if we can, we will.
The hon. Gentleman also referred to the commitment given to St. Athan's viability in announcements that were made when the trading funds were set up. That was so, but following what happened with the Warship Support Agencynew ways of delivering support to the fleet were examinedboth the RAF and the Army decided to do something similar. This initiative was driven by people who realised that the previous arrangement was inefficient, ineffective and extremely costly. Was there a better way? Yes, there was, so we engaged consultants to look at the entire air support process in an end-to-end study. The new approach of reducing four levels of support to two emerged from that study.
The hon. Gentleman may want to retain four levels of support, but I consider that inefficient. If we reduce them from four to two, such support can be provided at the main operating base, or at the other base. What happened was that the St. Athan business moved to Cottesmore and Marham, and the rotary fleet returned to a civilian base at Fleetlands, so the process is not simply one way; it was carefully considered and subjected to a thorough investment appraisal. Of course, that stacks up in terms of the benefits to defence.
David Wright (Telford) (Lab): I have many constituents who work at Donnington, and I have to say that the Minister's decision today is plain wrong. It flies in the face of the Lyons review, which encourages us to move jobs to the midlands and the north. This decision simply reverses the Lyons proposals. I hope that he will think again, but if we are to proceed, I ask him to consider two issues. First, through a taskforce, will he work with Telford and Wrekin borough council, its leader, Councillor Keith Austin, and the regional development agency to try to secure new jobs and replacement jobs in Telford? Secondly, would he also look at the site on which the current ABRO plant sits, as there may be opportunities, working in partnership with the Defence Storage and Distribution Agency, to increase the defence presence in that location and build on the proposed rail freight terminal for Telford in close proximity to the ABRO site?
Mr. Ingram: I am sorry that my hon. Friend thinks that the decision is wrong, but I can well understand it. The work done there has been distributed not to the south-east, but to other areas; and I have already mentioned Bovington in Dorset. That is clearly a Lyons area and there will be a consolidation there. Obviously, when it comes to rationalisation, someone has to win and someone has to lose.
I would also like to remind my hon. Friend of one salient fact. I have already mentioned the future defence supply chain initiative, which we announced earlier this year, and it should be noted that Donnington was the beneficiary when the decision was taken to close Stafford and locate a large part of the main operation at Donnington, albeit with a rationalisation of a number of jobs. The defence footprint is there for a long time ahead.
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I am only too willing to assist as best I can with the taskforce in several areas. It is not just the Ministry of Defence that has a role to play, as we are doing our best to co-ordinate our efforts across government. My hon. Friend is right about the ABRO site. It will free up facilities, and DSDA, as part of the in-house process for the future defence supply chain, has indicated an interest in using some of those facilities, which may result in job creation. I admit that it will not match the loss of jobs, but it is an example of how we are attempting to provide the best logistic support while minimising the overall losses.
Peter Viggers (Gosport) (Con): The Fleetlands aircraft repair yard in Gosport has been rationalised and reorganised time and again, but we have always drawn confidence from the fact that excellent facilities, combined with a loyal and skilled work force, will provide continuity for the yard's future. It has taken the present Government to prove that wrong.
The Minister said that there was overcapacity in aircraft repair at present, but how can he be completely confident that it will continue, and what will he do if he finds that overcapacity has not continued and that we are short of capacity? I challenge him to say, in the context of modernisation, that the work force has failed fully to co-operate with any of the many changes imposed on the Fleetlands aircraft yard. What have they failed to do and why have they been put in this position?
Finally, so many changes have been announced that I believe that the work force will not accept this harsh judgment without having the opportunity to challenge it by talking to the Minister. Will he agree to a meeting and prove to us that the facts that he has given to underpin his judgment are correct?
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