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Public Bill Committee Debates

Draft Defence Support Group Trading Fund Order 2008

The Committee consisted of the following Members:

Chairman: Mr. David Marshall
Ainsworth, Mr. Bob (Minister for the Armed Forces)
Brown, Mr. Russell (Dumfries and Galloway) (Lab)
Burns, Mr. Simon (West Chelmsford) (Con)
Cox, Mr. Geoffrey (Torridge and West Devon) (Con)
Griffiths, Nigel (Edinburgh, South) (Lab)
Henderson, Mr. Doug (Newcastle upon Tyne, North) (Lab)
Hodgson, Mrs. Sharon (Gateshead, East and Washington, West) (Lab)
Howarth, Mr. George (Knowsley, North and Sefton, East) (Lab)
Kawczynski, Daniel (Shrewsbury and Atcham) (Con)
Rennie, Willie (Dunfermline and West Fife) (LD)
Robertson, John (Glasgow, North-West) (Lab)
Roy, Mr. Frank (Lord Commissioner of Her Majesty's Treasury)
Russell, Bob (Colchester) (LD)
Simon, Mr. Siôn (Birmingham, Erdington) (Lab)
Smith, Mr. Andrew (Oxford, East) (Lab)
Vis, Dr. Rudi (Finchley and Golders Green) (Lab)
Walker, Mr. Charles (Broxbourne) (Con)
Eliot Wilson, Committee Clerk
† attended the Committee

Third Delegated Legislation Committee

Monday 18 February 2008

[Mr. David Marshall in the Chair]

Draft Defence Support Group Trading Fund Order 2008

4.30 pm
The Minister for the Armed Forces (Mr. Bob Ainsworth): I beg to move,
That the Committee has considered the draft Defence Support Group Trading Fund Order 2008.
Thank you for presiding over our proceedings today, Mr. Marshall. I apologise to you and the Committee if I am a little hard to understand, but I have a dreadful cold. It is only through massive dedication to duty that I am here at all.
Following the successful conclusion of trade union consultation, I confirmed on 25 July 2007 that the Ministry of Defence will merge its ABRO operations with the electronics and large aircraft business units of the Defence Aviation Repair Agency. Subject to parliamentary consent and the outcome of this debate, the new merged organisation will be called the Defence Support Group and will form on 1 April 2008. It will be formed from two existing trading funds: the ABRO trading fund and parts of the DARA trading fund, namely, the electronics and the large aircraft business units.
ABRO and DARA are businesses that have evolved over time, most recently with the publication of the defence industrial strategy, which heralded further fundamental change to the defence support landscape. The Defence Support Group will continue to be a fundamental part of that strategy by providing core capability in maintenance, repair and overhaul, and support in urgent operational requirements. The latter point is vital if we are to maintain our current operational commitments.
DARA and ABRO have operated effectively as trading funds for the Ministry of Defence since 2001 and 2002, respectively. The order proposes that the Defence Support Group will continue to operate under the commercial disciplines of trading fund status, giving it an opportunity to take forward the excellent work of ABRO and DARA in delivering cost-effective support to our armed forces.
The Army Base Repair Organisation was established as a trading fund in April 2002. It provides a comprehensive engineering and logistics support service, principally for maintenance, repair and overhaul for land-based equipment for our armed forces. Historically, DARA has provided a similar service for the fixed wing aircraft of the RAF and the helicopters of all three services. In recent years, logistics reform has led to the migration of depth repair to industry, including at some main operating bases. As a result, DARA has progressively become less viable and has had to close its fast jet and engines businesses. Its remaining businesses are the large aircraft businesses, based at St. Athan, the electronics business at Sealand and the rotary wing and components businesses at Fleetlands and Almondbank respectively.
I announced on 5 February that the Department would sell DARA’s rotary wing and components business units to Vector Aerospace. In contrast to ABRO, the remaining DARA business units have a finite life in their current form. Privatisation could develop the business and secure a future for the work force and the skills that it possesses. Those businesses will therefore not form part of the Defence Support Group.
The defence industrial strategy bears heavily on the future of support to our armed forces. The Defence Support Group will live or die by its competitiveness and by whether it continues to ensure that a unique, operationally critical capability is provided. It must also align with new partnering arrangements, taking into account the MOD’s role as both customer and shareholder of the businesses.
Bob Russell (Colchester) (LD): The Minister has rightly mentioned the commercial viability of ABRO. Does he agree that it is a successful organisation, particularly in its activities in my constituency? However, paragraph 7.2 of the explanatory memorandum states that
“work is in hand to divest extant non-defence activities.”
If those activities help the viability of ABRO, surely they should be kept?
Mr. Ainsworth: I shall talk about what ABRO does for us, what capability it has, and what capability we require of it in the future. If I do not answer the hon. Gentleman, I am sure that he will seize the opportunity to take the matter further. However, I think that our business plan for ABRO will ensure that it continues to have all the capabilities that we require. It has provided effectively in the past, and we are confident that it can do so henceforth under the proposed arrangement.
It is clear that the Defence Support Group has a role in supporting and protecting the MOD’s position as a buyer of equipment and support, such as for Typhoons, the joint strike fighter, the armoured vehicle support initiative and the future rapid effect system, particularly in markets with little competitive tension or where the trading fund has a unique capability. Any move from MOD ownership of the Defence Support Group at this time therefore represents an unacceptable risk that would distort the finely balanced competitive tension that we can currently deploy within the defence industry.
However, the trading fund is not an end in itself, but a step along the road to greater efficiency in logistic support. The Defence Support Group will be set demanding annual key targets to ensure that it delivers year-on-year performance improvements, particularly to its principal customer: the Chief of Defence Materiel.
The first key objective of the Defence Support Group will be to provide a competitive in-house maintenance, repair and overall upgrade capability, to support the essential work of our armed forces. Such a capability is absolutely essential if we are to maintain operational sovereignty, as exemplified by the joint strike fighter aircraft. We need to own the knowledge of those systems. An agreement has been reached with the United States Government on the basis that the security of the systems is maintained by having our own in-house capability for upkeep and repairs. The merged organisation will be crucial in that regard.
If the Defence Support Group is to prosper as a trading fund, a further key objective will be to develop innovative support solutions and to establish new working arrangements with the private sector. Therefore, the Department’s strategy is that the Defence Support Group enters into partnering and subcontractual arrangements with original equipment manufacturers and others, if it does not distort fair competition and is to the Department’s overall advantage.
I am equally conscious of the need to retain the flexibility that the MOD’s ownership of the Defence Support Group provides, with particular reference to surge capability and the ability to respond to short-notice requirements. As demonstrated by urgent operational requirements for Iraq and Afghanistan, such capabilities are even more valid.
The ABRO and DARA work forces already have significant knowledge and experience of the armed forces. ABRO has deployed personnel to Iraq and Afghanistan during 2007-08, and further deployments are planned to meet the continuing customer requirements. The Defence Support Group has considerable and, in some cases, unique practical capabilities in maintaining land and air-based military equipment, particularly for armoured vehicles. The DSG will ensure that the MOD retains the use of the intellectual property and support skills required to maintain operational sovereignty, particularly in the key areas set out in the defence industrial strategy.
In order to establish the DSG as a trading fund, the MOD will merge the existing assets of both ABRO and the retained DARA businesses into the DSG. As a trading fund, the DSG will remain firmly a part of the MOD, and my right hon. Friend the Secretary of State for Defence will continue to own the assets vested in it. The chief executive of the DSG will be appointed by Her Majesty’s Treasury as accounting officer for the trading fund, and will be personally accountable to the House for the fund’s operation. The agency’s annual reports and accounts will continue to be laid before the House; the assets of the fund will remain vested in the Department; and civilian employees of the agency will remain civil servants.
The chief executive, who is the present chief executive of DARA and of ABRO, and his staff have engaged in regular dialogue and correspondence with the agencies’ recognised trade unions. That has included regular consultation by the agencies and updating on the progress with the trading fund. The trade unions have generally endorsed the proposal.
DARA and ABRO have continually provided excellent service to our front-line forces. Both have played a significant role in support of our operations in Iraq and Afghanistan, and we recognise in particular the commitment and flexibility shown by both businesses. I therefore believe that there is a compelling and robust case for establishing the DSG as a trading fund on 1 April. That will enable the new trading fund and the Department to realise a broad range of benefits and will safeguard any aspects of the DSG’s businesses that are currently essential to the conduct of MOD equipment support capability. My right hon. Friends the Secretary of State for Defence and the Chief Secretary to the Treasury agree that it will continue to be in the interests of improved efficiency and effectiveness for the DSG’s operations to continue to be financed by means of a trading fund.
To answer to the hon. Member for Colchester, if he does not feel that the point he raised has already been answered, we need to ensure that the merged business remains totally and absolutely focused on support that is needed by our armed forces. To dilute that might risk the capability that we badly need to maintain. We are determined to ensure our armed forces have the capability they need to do their job. I commend the order to the Committee.
4.43 pm
Mr. Gerald Howarth (Aldershot) (Con): Thank you, Mr. Marshall, for chairing this Committee. I also thank the Minister for giving me a short briefing, both oral and written, in advance of today’s proceedings. That was appreciated, because these statutory instruments can be somewhat opaque to the untutored eye. I am sorry that his hon. Friend the Member for Edinburgh, South is not present, because he is extremely well qualified to contribute to the debate. He managed, when he was a Minister, to undergo pilot training to obtain a rotary wing licence—a helicopter licence. As I am a lifelong aviator, he and I share a great common interest in matters aeronautical, so I am sorry that he is not here to take part in the debate.
That is where the civilities end and we enter into the true spirit of Parliament, wherein it is my duty to hold the Government to account and ask the Minister some questions. As he explained, the order arises from a decision made by the Government last May relating to the operations of ABRO and DARA. That decision was born of a pretty disastrous experience—the DARA business, where £70 million was invested in something called the Red Dragon facility in St. Athan in south Wales for fast jet repair. That turned out to be unprofitable, so there was a complete U-turn and work was moved forward to the front-line bases. I saw the managing director there, who was pretty fed up: having been hired to grow the business, he then had it taken away from under his feet. The former Minister, Lord Drayson, in a statement of 22 May 2007, said:
“The VC10 business unit at St Athan has also been subject to a market testing exercise. However, as it is now apparent that sale is unlikely to offer best value for defence, the sale of the VC10 business unit will not now proceed.”
In other words, the Government failed to find a bidder for it.
The Government’s operation of the deep repair business has been a complete shambles. When that press release was issued, the Government trumpeted that one of the key benefits of the merger of ABRO and DARA was that it would
“ensure that MOD retains the intellectual property and design skills to maintain operational sovereignty in key areas as set out in the Defence Industrial and Technology Strategies.”
Indeed, the Minister referred to some of those thoughts in his speech. Interestingly, the defence industrial strategy says on page 63:
“Maintaining key industrial capabilities and skills in turn depends on this knowledge being captured, refreshed, and utilised even when the next major platform of that type is not foreseen for many years.”
In other words, this is a continuing business of ensuring that we have the capability we need.
The Minister says that we need to own knowledge of these systems. It would be of some interest to those very proud people at Almondbank in Perthshire and at Fleetlands in Gosport to hear that they are no longer considered essential and are not considered to be in the mainstream of that part of the defence base of our country which we need to maintain within the United Kingdom, because shortly after it was announced that DARA and ABRO were to merge, it was also announced that the rotary wing elements of DARA at Fleetlands and Almondbank were to be sold.
A number of questions inevitably arise. Only in the past two weeks, the Government brought about the sale of the rotary wing element to Vector Aerospace, a small Canadian company. I do not know the company, but I gather from people to whom I have spoken and who are knowledgeable about these matters that it is a very competent company. What will happen to the intellectual property that currently resides at Almondbank and in Fleetlands? Will that remain with the Government or is to be transferred to Vector Aerospace? We need to know. We also need to know where operational sovereignty is now to lie in respect of that business, which is not to be included but which had previously been intended to be included in the merged organisation that is subject of today’s debate.
We need to know what there is to stop Vector moving offshore. Although it has maintained that it intends to invest in the United Kingdom, I do not know what commercial agreement the Government have reached with the company to ensure that it continues to operate within the UK. What would be the repercussions for our vital helicopter fleet if it decided to move the business offshore? The Minister said in his letter, and I think he also mentioned it in his speech today, that he regards the business as having a finite life and that is apparently why it has been sold.
Frankly, having been to Afghanistan and Iraq, I find it difficult to understand how the Government think that a business which is such a key part of our defence capabilities in Afghanistan and Iraq could, in the present world view, have a finite life. The Government are not contracting the helicopter fleet but propose to expand it by six Merlins and eight Chinooks. That is probably not enough, but at least it is a move in the right direction. I will come on to helicopter availability in a moment.
Importantly, under the order, the organisation will remain within the public sector. However, by virtue of the fact that it is a trading fund, it will be able to generate third-party business from UK and overseas customers. The Minister mentioned our relationship with the United States and assurances that had been given, but we need to explore a little further how free the Defence Support Group will be to solicit third-party business without imperilling the relationship with the United States.
I return to the question of helicopters. It will be instructive not only to the Committee, but to the wider public, to hear just how intensively our helicopters are being operated in the middle east. The hon. Member for Colchester—the other garrison town—is nodding in agreement. I know that he was in Afghanistan very recently and am sure that he will testify to the accuracy of my remarks. May I detain the Committee for a few moments to apprise it of this matter, Mr. Marshall?
I am sure that hon. Members will be interested to learn that of a forward fleet of 31 Royal Navy Sea Kings, only 12 are fit for purpose—less than 40 per cent. Of a forward fleet of 41 Lynx HAS3s and HAS8s, only 25 are fit for purpose. Our newest in service is the Merlin, a superb helicopter, of which there are 27 in the forward fleet with only 12 fit for purpose—only 40 per cent. The Apache would be described by the tabloids as a helicopter gunship and is a very sophisticated attack helicopter—a splendid piece of kit. The Army Air Corps has 48 Apaches in the front line, of which only half, 25, are fit for purpose. There are 26 RAF Chinooks in the front line and they are being seriously worked. Only 17 are fit for purpose, which is 65 per cent. of them. Only half the RAF Merlins are fit for purpose. It is a very sad story that our helicopter fleet is being hammered on operations. The work force at Almondbank and Fleetlands has its work cut out to maintain those helicopters.
Bob Russell: The hon. Gentleman makes a powerful case and I concur with what he has said. However, if the helicopter fleet is expanded, as he and I believe it should be, will the Defence Support Group trading organisation be sufficiently large to deal with that expansion?
Mr. Howarth: That is a good question. Much of the business on helicopters will have been transferred out of DARA or the Defence Support Group to Vector Aerospace. All that will be left is the electronics component group at Sealand. The essential engine work at Almondbank in Perthshire and the airframe work at Fleetlands in Gosport will be done by Vector Aerospace. What assurances has the Minister obtained from Vector Aerospace, beyond the fine words of its press release, that it will be able to maintain the current position or, preferably, improve upon it? Questions also arise about what will happen to the intellectual property. Why does the Minister not think that it is important to retain this business in accordance with the defence industrial strategy, unlike the rest of the ABRO and DARA business?
There is an interesting question about the deployability of the personnel. Mr. David Gould, deputy chief executive of the Defence Procurement Agency—I am afraid that the Government changes the titles of so many organisations that one finds it hard to keep up; I know that the organisation is now called Defence Equipment and Support—a long-standing, senior and knowledgeable professional in the defence procurement business, told the Select Committee on Defence on 29 January, barely three weeks ago, that:
“One of the reasons for keeping ABRO as a trading fund is the fact that because it is a Government-owned company it is quite easy to deploy people overseas and into operations and so forth. With a private company it is much more difficult to do it.”
I put it to the Minister that we need to know what will happen. Will the Vector people be deployed? With the assistance of those who advise him in those matters, perhaps he could tell us how many Fleetlands and Almondbank people have been out in the desert in Camp Bastion or in Basra. How many of DARA’s current personnel are deployed out there? Will the transfer to Vector Aerospace make a difference? They will become, in the jargon, “sponsored reserves”, and there is a great deal of debate about the extent to which sponsored reserves should be placed in the front line. That is another question to which we need the answer.
Returning to the point about the third-party business that the new organisation and Vector will be required to generate, what assurances has the Minister received that the pursuit of that business will not imperil our front-line operations? The trade unions at Almondbank and certainly my hon. Friend Elizabeth Smith, the Member of the Scottish Parliament for Mid Scotland and Fife, who has championed the matter vigorously in the Scottish Parliament recently—[ Interruption. ] She is a great lady. The people concerned need an answer as to their future under the new arrangements that arise, in part, from the order.
I have tabled two written parliamentary questions to the Minister regarding specific aspects of the sale. The first deals with the guarantees that the Government may or may not have given to Vector Aerospace regarding how much work they are prepared to give the company. As I have said, there is so much activity on the front line at the moment that I would have thought that plenty of work should be available, but in his letter to me the Minister refers to the business as finite. Before buying it, Vector presumably wanted to have some idea of what it was buying in the way of likely work load. I would be grateful if the Minister told us about that.
The Minister has answered the other question that I put him, on the matter of pensions. I picked his answer up off the board as I was coming up to the Committee a few minutes ago. He has told me that the current work force
“will not be able to remain members of the Principal Civil Service Pension Scheme (PCSPS) after sale completion. However, they will be entitled to three months notice to decide whether to retain their accrued pension contributions in the PCSPS until retirement age or transfer the benefits in to the new Vector Aerospace scheme.”
Obviously, as the Minister says, we will not know the number affected until the three months is up, but it would be helpful to know—and I think that the public are entitled to know—whether the Government have paid or deducted from the sale proceeds from Vector Aerospace a sum of money reflecting the additional liabilities that it has assumed.
As we know, pensions are a big question in this country, and when their company is sold from under their feet, the work force are always concerned that their pension arrangements might change. The public know that we, the right hon. and hon. Members of this House, continue to enjoy a pension scheme, which I think is entirely proper—I say that before my hon. Friend the Member for West Chelmsford seeks to chastise me. As far as members of the public are concerned, however, pensions are an issue, thanks to the stewardship of the economy and particularly of pensions by the current Prime Minister, who has betrayed millions of pensioners up and down this country—but that is, of course, a debate for another day, Mr. Marshall.
Suffice it to say, what looked on the face of it to be a rather simple, innocuous and perhaps slightly opaque order in fact carries serious ramifications for the whole defence industrial strategy, which, as the Minister knows, we supported when the admirable and late—in political terms—Lord Drayson originally published it.—[ Interruption. ] I made it absolutely clear that I was strongly in support of it.
I do not see how the sale to Vector fits in with the defence industrial strategy in relation to either the principles that the Minister set out when moving the order, or the points that I have further adduced, so I hope that he will be able to answer my questions. If I can leave at least one overriding issue in the Minister’s mind, it is that our armed forced are incredibly stretched. We have had report after report on that, most recently when the coroner, Mr. Andrew Walker, who is not related to my hon. Friend the Member for Broxbourne, delivered a damning indictment on the Government’s support for the armed forces. That followed remarks made by the defence chiefs in another place, and last week’s report from the Royal United Services Institute.
Helicopters go to the heart of that. The people at Almondbank and Fleetlands believe that they are doing a serious public service and are almost as much on the front line as the guys who are flying the helicopters. We owe it to them to recognise that they are a critical component in the present military operations and to reassure them not only that their skills and experience will be retained in the UK, but that our front line will continue to have the support in that vital equipment, which they so badly need.
5.3 pm
Willie Rennie (Dunfermline and West Fife) (LD): It is a pleasure to take part in the debate this afternoon. As the Minister said, it makes eminent sense to bring the two bodies together in a regime for a period of through-life support of maintaining intellectual property, which I believe is important, particularly during a period of high operational tempo and ageing equipment, to which the hon. Member for Aldershot referred. It makes sense to bring those two bodies together to make the best of them and to bring the strengths of the personnel together to create extra synergies and efficiencies.
However, I would like to refer the Minister to a 2005 report from the Defence Committee, which inquired into delivering front-line capability to the RAF. The report concluded that RAF aircraft support provision has
“undergone successive changes since the establishment of DARA in 1999, with each reconfiguration of support closely followed by the next one. These changes have been painful for the DARA workforce and have resulted in a loss of skills and wasted resources at St Athan. The DARA trading fund has produced consistently sound financial and performance results since 2001, but has now lost its prime role of providing depth support for fast jets.”
The report recommended that there should be a period of consideration. It also stated, in its recommendations:
“It is striking that MoD has reconfigured its air logistic provision only four years after a similarly significant reconfiguration had been completed. This suggests that either the original decision to establish DARA was unsound or the recent decisions affecting its future are misjudged.”
Why does the Minister think it appropriate to have yet a further change? Will we see a period of stability so that the work force can bring out those synergies and efficiencies for the benefit of the troops on the front line, or will we be back in this room in a few years’ time debating another change? I do not say that change is necessarily a bad thing, but I want to know that a long-term plan is in place so that we are not constantly chopping and changing the provision of logistics support. It is important to get these decisions right because we have ageing equipment and we are in a period of high operational tempo. Making sure that we get the best out of this work force at this time is vital.
I have a few questions for the Minister. What efficiencies does he foresee in bringing these two bodies together? What are the savings in monetary terms and in terms of a greater output? The efficiencies should not come at the expense of effectiveness. What measures are in place to ensure that we will not see a reduction in effectiveness, especially in this period of high operational tempo? Finally, because I do not believe in going on for too long, is the recent decision to sell the facilities at DARA Almondbank a stepping stone to a further privatisation or will it be retained within the public sector?
5.7 pm
Bob Russell: I wonder if I can bring the Minister back to the point that I raised in my intervention, because I was not satisfied at all by his response. I hope that I can get a fuller response now. He quite rightly praised the ABRO work force and what ABRO does in providing excellent service to our front-line forces. It must focus on the armed forces and thus I welcome the fact that it is to remain part of the MOD. I am pushing the constituency button here, but there is a loyalty among the work force who feel part of the military family. That ethos is critical.
Paragraph 7.2 of the explanatory memorandum states:
“work is in hand to divest extant non-defence activities.”
Although the whole purpose of the Defence Support Group is to support our armed forces, I acknowledge that there will be peaks and troughs. The divesting of the extant non-defence activities can be counter-productive during the occasional troughs. I ask the Minister to cast his mind back to the period of Conservative Government, when we had what was known as compulsory competitive tendering. It forced local councils with direct work forces to divest themselves of work that was not being done purely for that local authority or another local authority. In the case of my local authority when I was leader of the council it meant that we had to stop doing work that the local community and other organisations wished us to do, which meant that the operating costs for the council made that business less profitable. It became uneconomic and so helped it on its way to being done away with.
I am simply saying to the Minister that surely the Government must allow the Defence Support Group trading fund management, at all levels, to make management decisions to take on work during troughs that is not directly defence related. Clearly everything behind the wire has to be MOD work. Nobody suggests that lorries come in from the private sector to be repaired in a secure workshop behind the wire, but a lot of the work that ABRO does could help to offset its overall operating costs and thus make the organisation in total more viable. The explanatory memorandum states that
“work is in hand to divest extant non-defence activities.”
I seek assurance from the Minister that that decision will be made by managers and not by the Government.
5.10 pm
Mr. Ainsworth: I shall respond first to the hon. Member for Colchester, who makes a point that is well worth considering. There is a tension between having an organisation that concentrates on its core business—particularly when that core business is as important as ABRO’s—and one that is capable of smoothing out peaks and troughs. I give him a commitment that I will check this matter with officials. I agree with him that this should be a management decision and not a politically motivated one.
We need a viable ABRO. We need to be able to keep its skill base; we need to ensure that its skill base is developed; and we need to concentrate on the core. However, there may be good management reasons for not doing other things. I accept what the hon. Gentleman is saying and I will check out the matter. I promise that I will come back to him, hopefully having satisfied myself and being able to satisfy him that the proposals make sense from that point of view.
The hon. Member for Dunfermline and West Fife raised two issues. I thank him for at least recognising what the order is about. One would not have noticed what it was about from listening to the hon. Member for Aldershot, who speaks for the official Opposition. All of my efforts in writing a letter to him were of no benefit whatsoever. He listens only to people who can fly, whether they can fly a fixed wing aircraft or a rotary wing aircraft. If I could fly, he would be willing to listen to me. However, there is obviously not a lot of point in writing to him because I cannot fly.
The hon. Member for Dunfermline and West Fife asked me what efficiencies and synergies we expect from the merger. I cannot see any, other than management and clerical efficiencies. He recognises that with the fixed wing element of DARA coming out of service and the privatisation of the rotary wing element of DARA, what is left is relatively small compared with the organisation that DARA was when it was established as a trading fund in 2001. There are not a lot of synergies with the skill base down on the shop floor. We will need to discuss these issues with the work force and go through a proper consultation. However, I am sure that there will be management and clerical synergies that will lead to efficiencies. That is part of the motivation for bringing them into the overall group along with the ABRO business. That is what I expect there to be, but no more than that.
The hon. Gentleman asked for an assurance about whether this is a stepping stone to privatisation. I can understand why he asks that, because of the history of setting up DARA and subsequently doing the fixed wing aircraft business in a completely different way. I do not envisage privatisation happening. Officials in the Department and I do not envisage this being a stepping stone. We believe that the intellectual property and the capability within the organisation will lead to the continued necessity of its being in the public sector. That is required by our arrangements with the United States of America and the security that it requires for the intellectual property that it is prepared to transfer to us. However, who knows whether something else will become apparent in the future?
The hon. Member for Aldershot focused on the position of the fixed wing business over a period of time and tried to make much of the supposed chaos that there was. When we set up the fixed wing maintenance operation as a trading fund, that exposed for the first time the cost of fixed wing maintenance, which was there for all to see. That having been exposed, it would have been ridiculous not to have moved on to a new way of working and doing business, putting depth maintenance at main operating bases as we now do. That was a sensible thing to do and was recognised as such in the National Audit Office report—the hon. gentlemen failed to mention that in his description of what has happened. That move has led to considerable savings and efficiencies that have helped us to keep a greater capability at the front line. There are now 11 more Harrier aircraft available to the front line at any one time, because they spend less time in depth maintenance. The time spent in depth maintenance has been reduced by 59 per cent. We could not ignore such savings, which have been delivered by the reorganisation of fixed wing maintenance.
I can understand the concerns for the future, because of what happened with regard to fixed wing operations. Once we set the system up as a trading fund it became apparent that the costs were substantial and that considerable savings could be made and considerable efficiencies—and therefore considerable capability at the front line—could be gained. It would have been wrong not to have moved on and done that. However, privatisation is not the intention and is not currently planned.
The hon. Member for Aldershot raised many points, none of them to do with the order. Most of them were about fixed wing maintenance, and I have responded to those points. It was a natural progression through the trading fund to the method that we now use, delivering efficiencies at both points that are recognised by the National Audit Office, if not by the hon. Gentleman and his flying friends.
Mr. Howarth: In fairness, I ought to put on the record that I entirely approve of what has now happened. My point was that the system went through what the Minister acknowledges was a pretty horrendous interim period. However, the roll-forward programme to Marham and Cottesmore has been an undoubted success.
Mr. Ainsworth: I thank the hon. Gentleman at least for that. He recognises that progress has been made over time.
The hon. Gentleman talked an awful lot about rotary wing operations, and understandably so. The difference between rotary wing operations and what we are now proposing with regard to ABRO and those parts of DARA that are left is simple. There is no intellectual property at Almondbank and no core business, in that way, to hang on to. However, there is an extremely skilled work force at Almondbank, who are working mainly on legacy helicopter platforms. Unless we, as the Ministry of Defence, move out of our core business and, instead of concentrating on the operation and development of defence capability, start concentrating our minds on developing the business up there, we will lose that skilled work force, they will lose their jobs and their capability will be lost to this country. The proposal is overwhelmingly in their interests.
I am certain that most of the people on the shop floor at Almondbank—they are not stupid people—know that, unless we do something about that business, the writing is on the wall and it will cease to exist in a few years. The best opportunity for the work force is to give them a private sector owner who can get into relationships with manufacturers of the new platforms and become their maintenance arm, if that is what they are able to develop. There are already discussions with AgustaWestland and Boeing to try to do so, to deliver that capability in another way, and to branch out to exploit the work force’s skills, which clearly exist. It is a different situation.
I do not know whether the hon. Member for Aldershot is trying to create a scare story about the pension funds, but he knows that within the terms of sale, the pension that was offered to the work force at Almondbank—the rotary wing element of DARA—will have to be broadly comparable with their current pension. The sale will not go ahead if those terms are not met. Vector Aerospace has given assurances about maintaining that capability on shore and at the current sites. The hon. Gentleman talks about the availability of Merlin and so on, but the organisation does not do Merlin, and it will not be capable of doing so. Owing to the way in which the contracts are increasingly structured, manufacturers will provide not a helicopter for us to repair, either in depth or otherwise, but helicopter availability. They will take responsibility for delivering helicopter hours to the front line, and they will contract to do so. That is the structure of the defence industrial strategy, which he claims to support, or to have supported once, but he suggests that one of its main areas should not be followed.
Those are the reasons for the decisions about DARA’s rotary wing business, but they are not the issues before the Committee, which are the restructuring of what is left at DARA, and its amalgamation with the ABRO trading fund to create a viable trading fund.
Mr. Howarth: I understand the Minister, but the order would have encompassed what is now being sold had the sale not gone through. Indeed, if the sale does not go through, that which Vector Aerospace is currently acquiring will become part of the order, otherwise it will be out on its own. One question is pertinent: given the poor reliability of the helicopter fleet, as exposed by the answers to the questions that my hon. Friend the shadow Secretary of State for Defence posed, why is there such poor availability, and what will the order do to improve it?
Mr. Ainsworth: The helicopter fleet, and the people who maintain and fly it, are working very hard in operations; I do not suggest that they are not. The hon. Gentleman knows that the explanation for what is not available is more complicated than simply breakdowns. Operational issues have lead to non-availability of the fleet for at least part of the time.
Question put and agreed to.
That the Committee has considered the draft Defence Support Group Trading Fund Order 2008.
Committee rose at twenty-four minutes past Five o’clock.

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