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5 Dec 2006 : Column 67WH—continued

Most people think of a naval base as a place where ships are repaired. Portsmouth is not. In fact, only one
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third of the naval base’s non-Royal Navy salary costs relate directly to ship maintenance. The naval base alone looks after some 13,000 sailors and more than half of all naval families. It includes accommodation, medical centres, dental centres and training. It stores 80 per cent. of naval equipment. All Ministry of Defence ration packs and sea survival equipment are prepared and maintained there. It is, in effect, a small industrial town. However, it is a modern, forward-looking industrial town with a unique and successful partnership with the MOD and private industry. Much of the naval base is operated by Fleet Support Ltd, which is seen by many as a benchmark industry partner and which has developed an innovative joint working relationship that has delivered over £50 million in savings to the MOD.

Portsmouth’s delivery record for major ship repair is among the best in the country, and now it does not just repair ships but builds them too. In 2002, VT Shipbuilding built the UK’s most modern and productive shipbuilding facility at Portsmouth naval base. VT is the UK’s largest exporter of warships. It is building large elements of the Type 45 destroyer and is a builder and owner of offshore patrol vessels. Portsmouth naval base is a unique one-stop shop for designing, building, launching, upgrading, repairing and eventually disposing of ships, all at one small, cost-effective site. The synergies between ship support and ship repair are starting to reduce costs for both. However, Portsmouth is not resting on its laurels.

Mr. Mark Hoban (Fareham) (Con): I support the hon. Lady’s case for the benefits of Portsmouth dockyard. Does she agree that what is important is the synergistic benefit of all those things coming together? It is vital to keeping costs down and ensuring that more resources are available to our front-line services.

Sarah McCarthy-Fry: Absolutely. I shall develop that point further. It is a big jigsaw. To take one bit out would mean losing those synergies.

The naval base is continuing its drive for further efficiency savings. Under project dreadnought, a strategy has been devised to reduce costs still further without damaging output. This year, costs have been reduced by £10 million, and plans are already in place to save a further £20 million next year, again without damaging output. The defence industrial strategy published last year pragmatically considered defence levels nationwide and resource allocation for years to come and made it very clear that future capability will not rely on volume but will require mobile, well equipped and well supported forces, whether on land or at sea. It envisaged the development of industry to support a through-life approach to delivering that military capability and taking responsibility for cost and performance risks. Portsmouth naval base is uniquely placed to deliver. But, as the hon. Gentleman mentioned, it can do so only because of the synergies between all the interlocked elements located there. To take away part of that jigsaw would be to lose those synergies.

The noble Lord Drayson made it clear when launching the defence industrial strategy that it was not a job creation scheme. If British industry and British workers are to benefit from defence contracts, they
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must demonstrate that they have accepted a partnership and risk-sharing approach. Portsmouth has not just accepted that; it has embraced it. Portsmouth is not looking back to its historic past and asking for special favours. It is looking forward to a modern and inspiring partnership for naval support in the future, delivering effective support at a price that the MOD can afford. Headline figures about the cost of maintaining Portsmouth naval base are meaningless without a full understanding of the synergies and interdependencies between different naval establishments and our industrial partners. Portsmouth has demonstrated that it is willing to take hard financial decisions in order to deliver resources to the front line. What is more, we have demonstrated that we have already delivered some of those savings.

I move to the military-strategic case. Current plans are to base Type 45 destroyers and the new aircraft carriers in Portsmouth. The decision was made after long and expensive studies of the various options, and Portsmouth was chosen for good reasons. All the facilities to support Type 45 destroyers already exist in Portsmouth. Critically, in addition to normal base facilities, the principal anti-air missile systems will be tested and stored in nearly Gosport and loaded on to ships in Portsmouth naval base. The safety of PAAMS missiles is paramount and permission is governed by a robust system of licences. Transferring the ships to another naval base would mean transporting the missiles by road from Gosport, with substantial safety and security implications. No other naval base has a sufficient explosives licence to load PAAMS missiles on to a warship, and achieving such a licence might not be possible at any cost.

I turn to the new aircraft carriers. Portsmouth has invested some £40 million in new jetties in preparation for the carriers, and it has the infrastructure to support the ships and their people. We should bear in mind that 50 per cent. of the Navy’s service accommodation is based in Portsmouth. Where will the crews of those very large ships live if they are based somewhere else? Realistically, where else could the carriers be based? They cannot get into Devonport, as they are too big. Faslane only has 15 m jetties, not the required 35 m jetties that Portsmouth has. Also, would we seriously want to base our flagship aircraft carriers in the same place as our Trident submarines? Portsmouth is unencumbered by major nuclear facilities and the associated risks and costs. Operational and ammunition-laden warships cannot be berthed near nuclear facilities. Uniquely among our naval bases, Portsmouth can emergency-dock a warship carrying fuel and weapons. However, military-strategic considerations are not just about hardware. We must consider recruitment and retention, and the wider issue of the British public’s attitude to armed forces and defence expenditure.

Dr. Julian Lewis (New Forest, East) (Con): Before the hon. Lady moves to that particular part of the military-strategic aspect, does she agree that the Government’s welcome decision yesterday to renew the nuclear deterrent because of the unpredictability of future threats means that concentrating all our major naval warships in a single port on the south coast is a reckless strategic gamble that should not be considered?

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Sarah McCarthy-Fry: I could not agree more. Does the hon. Gentleman mean a single naval port on the Scottish coast?

Dr. Lewis: No, I meant if two went down to one.

Sarah McCarthy-Fry: I understand the point. In my view, we should still be considering a three-dockyard strategy to keep the military-strategic figures.

Portsmouth makes a major contribution to the British public’s attitude through its naval heritage area. We are the Navy’s shop window. Nelson’s flagship HMS Victory, the first ironclad ship HMS Warrior and Henry VIII’s flagship the Mary Rose are all sited in Portsmouth historic dockyard alongside the naval base. Each year, 400,000 people visit the naval base and the heritage area. More than 8 million people look at the warships, as they pass by on Portsmouth car ferries, and the Trafalgar 200 celebrations last year brought the navy to life for hundreds of thousands of people.

I could go on to explore the wider economic consequences for the city of Portsmouth if the naval base were to close, given that 26,000 people are directly employed in maritime defence in the area, but time is limited and I want to give the hon. Member for Portsmouth, South (Mr. Hancock) an opportunity to make a contribution.

In conclusion, I accept entirely the point made by my right hon. Friend the Secretary of State when he said:

However, I hope that I have demonstrated that if the MOD is looking to close Portsmouth naval base as one of the options in the review, it is looking in the wrong place. It is far better that the MOD supports Portsmouth naval base and its industrial partners in making the defence industrial strategy a reality. The city of Portsmouth is a genuine success story: a city proud of its past and looking to its future.

I do not know which bases, if any, will be scheduled for closure as a result of the review, but I know that those that survive will do so because they facilitate a modern and efficient service for combat operations. I hope that I have shown today that Portsmouth naval base does just that. Thousands of jobs in and around Portsmouth and a business sector worth hundreds of millions of pounds hang on the outcome of this review. Portsmouth naval base works—let us keep it working.

1.41 pm

Mr. Mike Hancock (Portsmouth, South) (LD): I thank the hon. Member for Portsmouth, North (Sarah McCarthy-Fry) for the courtesy of giving me the opportunity to take part in the debate. How right she was to recognise, at the beginning of her excellent and—I hope—persuasive contribution to the debate, the importance of the co-operation that has existed between the local authority, Members of all parties, the unions, the Royal Navy and the partners already in the naval base. It is important to recognise that those partnerships were the foundations of the maritime industrial strategy and when Lord Drayson spoke to the Select Committee on Defence, he emphasised their importance. Moreover, how right the hon. Lady was to
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put on the record the existence of important and well engaged partnerships that are vital to their future success.

The hon. Lady is also right to recognise that we are not trying to score points. It is not the battle of the bases, as some in the west country have described it in a wholly unfortunate and, in some ways, very mischievous manner. I ask that both the Secretary of State, who gave a commitment to visit the naval base before a final decision was made, and other Ministers in the MOD take the opportunity to visit the city in order to understand what an enormous issue it is for the community in Portsmouth and in south Hampshire generally, and to engage with the partners in the naval base.

Service personnel have benefited enormously from that interaction and through working with Fleet Support Ltd. and VT, which is to the credit of everyone who has put that process together. As we have heard, project dreadnought has already offered significant benefits and will continue to do so. It is not a one-off saving, but an effort on the part of the whole defence community, and the “family” within the naval base, to make those savings ongoing. It is open to close scrutiny and inspection and that process is not a matter of just glossing a report or massaging figures in a particular case. Hard-fought decisions have been taken, some of which have been enormously painful, for the naval base and the Royal Navy, but they have been taken and those savings have been made. Those changes for the better will continue to be made.

I want the final decision to be the best one for the Royal Navy, the defence of the country and the city of Portsmouth and its surrounding area. Our case is well made. The hon. Lady talked about some of the economic issues, and I would add that the base generates about £500 million for the local economy in one form or another. That is an enormous amount of money coming into the city. Most of that process derives from the fact that the traditional home of the Royal Navy is Portsmouth.

When presentations were made at the Defence Committee I tried to explain what I felt was important for Portsmouth. There are five reasons that I see as crucial. First, Portsmouth is the traditional home of the Royal Navy, the home of the Victory and many other historical ships, and it has the only port in the country that could take both new aircraft carriers alongside each other at the same time, which is vital. It is the only base in the country, excluding commercial ports, that has the surface area that allows for the carriers’ overhang to be dealt with satisfactorily and is able to provide for their supply or any other support that is needed.

Secondly, Portsmouth is the home of ship arming. Traditionally, ships would come to Portsmouth from the depot in Gosport to be armed. Are we seriously suggesting that we want to engage in the road transportation of vulnerable missiles? If ships were ported in Devonport, they would have to come to Portsmouth to be armed because it is extremely unlikely, if not impossible, that Devonport will be able to secure the sort of arming licences needed. Thirdly, there is the fact that 50 per cent. of the Royal Navy’s
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married housing stock and its largest concentration of shore-based personnel in the country is in Portsmouth. Fourthly, it is the traditional home of the Royal Fleet Auxiliary Service, which is very important.

Fifthly, I cannot emphasise enough the importance of the partnership arrangements. I listened carefully to Lord Drayson in his ministerial statements and the Defence Committee looked long and hard at the defence industrial strategy. It is founded upon the belief that we can make partnerships work and that they can deliver real benefits for the MOD, the nation and the communities they serve. Portsmouth is a living testament to that. It would be a sad reflection on that achievement if the Royal Navy and those ships were removed from the city, because they are an integral part of it. It is easy to say that many of those things would not happen, and to say that we would not lose the partnership arrangements because many activities would continue. However, what brings the whole process together is the fact that Portsmouth is the home base for the majority of the Royal Navy’s surface fleet.

I hope that this debate goes part of the way to securing the future of Portsmouth. That is vital for the economy of the city. When I grew up there, 48,000 people worked in the dockyard. As the hon. Lady has said, many changes have taken place and there are now fewer than 200 industrial employees directly employed in the dockyard. However, 26,000 people in the greater Portsmouth area derive their livelihoods from involvement in defence industries. It is vital that that continues, and long may it do so.

1.48 pm

The Parliamentary Under-Secretary of State for Defence (Derek Twigg): I congratulate my hon. Friend the Member for Portsmouth, North (Sarah McCarthy-Fry) on securing the debate on the future of Portsmouth naval base and for giving me the opportunity to speak on this important issue.

I acknowledge the strong links between the naval base and the city of Portsmouth, which go back for more than 800 years. The people of Portsmouth have provided unparalleled support to the Royal Navy in peacetime and in wartime. I am mindful of my announcement of the planning for next year’s commemoration of the 25th anniversary of the Falklands conflict; the role that Portsmouth played in that conflict should be recognised. I believe that my hon. Friend had occasion to visit the Falkland Islands recently and no doubt witnessed at first hand the stability secured by our armed forces that is now enjoyed by the Falkland Islanders.

My right hon. Friend, the Secretary of State for Defence announced on 18 September that we were about to undertake an in-depth review of infrastructure requirements at the naval bases at Devonport and Portsmouth and on the Clyde. He pointed out that the defence industrial strategy published in 2005 laid down a challenge to the UK maritime industry to reduce its overheads and invest in the facilities and skills needed to meet the demands of the Royal Navy’s future warship programme.

We have also made it clear that we cannot expect to rely on the industry alone to achieve the necessary rationalisation to ensure the future affordability of the
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warship programme. We also need to look at our support capacity at the naval bases, to ensure that it is matched appropriately to the future needs of the Royal Navy. We need to ensure that every penny counts and that resources are rightly focused on the front line. We must not lose sight of the fact that the number of ships requiring maintenance and repair has been steadily declining. As my hon. Friend has heard before, we must be realistic, and look to the future rather than dwell in the past. That is not to say that we should not celebrate the remarkable achievements of the past, but we need to take this opportunity to consider our future support needs in detail.

Dr. Julian Lewis: Could the reason for the fact that fewer ships require maintenance be that although the Government’s strategic defence review in 1998 predicted that we would have 32 frigates and destroyers, that number has been slashed to 25? Might not circumstances arise in which it will be necessary to increase the size of the surface fleet to that which was originally anticipated?

Derek Twigg: I shall come to that issue about the fleet later in my speech.

It would be remiss of the Ministry of Defence not to review the way in which it supports the fleet and not to see how we can improve efficiencies. The naval base review is an important part of the maritime element of the defence industrial strategy. The terms of reference, which are available for all to see on the MOD’s website, clearly show the intention for a wide-ranging review. The review team is currently looking at a number of options, some of which could radically reduce overheads and naval base capacity. The options range from doing nothing, at one extreme, to closing all three naval bases and building a new naval base at a single location at the other.

I emphasise that all options remain open. Ministers and I have made no advance decisions on the future of Portsmouth or the other naval bases. We will reserve judgment until we see the results of the review, which is unlikely to be before spring next year. It is simply far too early to say now what, if any, impact the review will have on Portsmouth.

Sarah McCarthy-Fry: I should like to clarify the point that my hon. Friend has made about the end of the review. Will the report of the review be available in the spring or will the Department make its decision in the spring?

Derek Twigg: The review will report in the spring, after which Ministers will have to consider it, but we shall make a decision as soon as possible after that. I well understand that that means a period of uncertainty, to which my hon. Friend alluded, for the naval base and its work force, industry and, more widely, the people of Portsmouth and the surrounding area. It is important, however, for the review to take a carefully considered and objective look at how best to meet the Royal Navy’s future support needs before making its recommendations.

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I assure my hon. Friend that the review will take account of all the relevant factors, including the findings from other MOD initiatives, such as the developing surface ship support alliance and the home basing strategy, which was chosen with care to reflect the needs of the fleet, including carrier vessel futures and Type 45 destroyers. As she hon. Friend is aware, on current plans both the Type 45s and the CVFs will be base ported at Portsmouth.

My hon. Friend will be reassured that business improvement activities, such as project dreadnought at Portsmouth, will also be given due weight in the naval base review. The aim of project dreadnought and the efficiency drives at the other naval bases is to deliver savings locally. It is important that those savings should be recognised by the review and taken into account as part of that process. Only by considering all the relevant factors will we be able to determine the best value for money option.

Only when the review has been completed will we be able to quantify the likely costs and savings of any changes to the naval base infrastructure. In the meantime, it would be premature to speculate on what those might be. Initial costs and savings that were identified locally were derived from many sources and have not yet been validated by the naval base review team. The review will, however, be the subject of a robust analysis, including a full investment appraisal, which in turn will be the subject of rigorous scrutiny as it develops.

Mr. Hancock: Can the Minister give an assurance that past, present and future investment plans for the commercial interests in the bases will be taken into full consideration, and that guarantees will be sought to ensure that that investment is delivered?

Derek Twigg: The hon. Gentleman makes an important point. I have made clear what account we are taking of all the issues to which he and my hon. Friend the Member for Portsmouth, North have alluded, although I shall return to that later.

As with any review on such a scale, the team will engage not only at local and regional levels, but with officials in the Treasury and other Departments as necessary. I am fully aware of the mutually supportive relationships that exist between the naval bases and their local communities, which have been strongly emphasised in this debate. We intend to engage fully with those stakeholders who are likely to be affected by the naval base review, including the Government offices for the regions. Indeed, the Government office for the south-east has been invited, among others, to a meeting with the naval base review team later this week. It will be briefed on the aims and objectives of the review, and on the range of options under consideration. Trade unions, too, will have a part to play. Several informal briefings have already taken place with trade unions and more are planned for the new year.

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