first day's debate

Part of Oral Answers to Questions — Defence – in the House of Commons at 8:17 pm on 12th June 1985.

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Photo of Gordon Brown Gordon Brown Shadow Spokesperson (Trade and Industry) 8:17 pm, 12th June 1985

The underlying theme of the debate, acknowledged if under-played by most Conservative Members, including the hon. Member for Dumfries (Sir H. Monro), has been the Government's growing revenue crisis. The immediate shortfall in Government funds has not spared the Ministry of Defence and now threatens to engulf it. The shortfall in the defence budget is obvious not only from the report of the Defence Select Committee, but from the Defence Estimates. It is caused by Trident, which Mr. David Greenwood of Aberdeen university says will involve a £4 billion gap in the defence budget by 1988.

The implications of the gap are most obvious in the effectiveness and readiness of the Navy. According to a defence document that I have been given, the Navy will have less money in real terms in the years to come. It will be undermanned and overstretched, with perhaps 11,000 fewer men in the 1990s, possibly 17 fewer escort vessels, and with a wholly inadequate merchant fleet available for logistic support.

If that were not difficult enough, we have a shortfall in new naval building, increasing demands on aging frigates and submarines at sea and, therefore, an increasing requirement for dependable and speedy refits on land. We therefore need more investment in, and more commitment to, the royal dockyards. Yet the Government have chosen to risk everything by proposing to end the centuries-old public stake in the royal dockyards and to throw them to the hazards of a franchise market.

According to the Secretary of State, the defence gap, which we know exists in the funding available to the Ministry, is to be bridged not by a realistic reappraisal of our defence commitments, as promised by the Secretary of State last year but, as the Defence Select Committee says, not yet delivered. It is not to be bridged by cutting the expensive commitment to Trident, which will remain a wholly unusable weapon of indeterminant cost, nor by any enhanced contribution from the Treasury, as the Chancellor of the Exchequer is already hovering on the edge of bankruptcy in other areas.

Under this Government, the gap between our requirements and our resources, between our growing burdens and falling budget, is to be bridged by ideology. There is to be more competition, more contracting out, more privatisation and more franchising. Somehow the gap in our defence budget is to be bridged by what has been called the voodoo economics of privatisation. From what they call open competition, the Government, as the Select Committee reports, hope for savings of £566 million, but admit that it may be only just over £100 million, or nothing. From contracting out services, another of the Government's favourite themes, the Government hope—according to the Select Committee—for savings of £400 million but concede that they may be only £100 million. Indeed, they might be nothing. From these experiments, the Government hope for savings of more than £1 billion. The Defence Committee says that the savings may be less than £500 million or, indeed, they may amount to nothing. The Government hope to cut costs by 40 per cent., but have to concede that the figure may be less than 10 per cent., and it may even be nothing.

The Government are gambling on the outside chance that when it comes to all the support services and the management of the dockyards, the private sector is cheaper simply because it is the private sector. That is not defence economics or even the economics of the grocer's shop, to which we have become accustomed under this Government, but more like the economics of the betting shop.

Nowhere is the Secretary of State's gamble more irresponsible than in the case of the royal dockyards. They are to be subjected to the disruptions of privatisation on the basis, as I have said before, of a sketchy and contemptible document written by the highest paid civil servant in the land, but which would not rate even a bare O-level pass in business studies.

The proposals, which threaten a private take-over of the dockyards, the dispersal of naval refitting work round the country, and a disruption of the integrity of the naval bases at Plymouth and Rosyth, ignore the experience of every country that possesses a nuclear deterrent and discard every respectable report that has been done on the dockyards, including one by the hon. Member for Ashford (Mr. Speed) under this Government.

What evidence can the Secretary of State or the Minister give us for their gamble that as they privatise, they will economise, when the whole assumption of their case is that defence work should be carried out in the public sector only when there are "significant" financial advantages? In other words, if the dockyards are cheaper in open competition, they may nevertheless lose the work because of the Government's dogmatic commitment to privatisation. With no evidence beyond simple prejudice, the Secretary of State and the Minister are gambling on the supremacy of the private sector in the management of our naval refitting, against the contention of all previous reports that the dockyards have a far better and proven track record as being more efficient, cheaper and better in time and quality than the commercial shipyards.

In January, the Secretary of State for Defence announced a comparison exercise between the private and public sectors in the refitting of submarines and frigates precisely because, as he admitted, he could not yet expect the private yards to submit "realistic tenders". The comparison exercise was to take at least two years. Now that we are only a few months into that exercise, which was to test the Minister's theories, we are told in a document entitled "The Rosyth Challenge" the con-clusions. They are: That the indications are that the dockyards are more expensive than the private shipyards and that consequently there must be a 15 per cent. reduction in dockyard costs and a 5 per cent. reduction in dockyard staff. It is said that if the dockyards do not respond quickly by the end of the year, they could start losing large elements of their programmes, including the Leanders and the type 42s.

Hon. Members may find it deeply suspicious that, a few weeks after the Minister announced a two-year long competition, he should be able to announce its results, and that in doing so he should ignore the uncomfortable but clear fact that the private shipyards doing the refit work in that exercise have become wholly dependent on the expertise, equipment and even the personnel of the much despised dockyards. The refitting work has been proved to be beyond their own skills and sophistication.

If the private sector is over-stretched and manifestly inadequate to the task of refitting one submarine and one frigate, how could they cope — if the dockyards were run down—with 46 escort vessels, 24 submarines and even with four Polaris deterrents? The Government have forced the royal dockyards to enter a competition in which the winner and the loser have already been declared, and in which the Ministry of Defence has chosen to add insult to injury by demanding that the public sector should subsidise its competitor in the private sector. Even then, the Ministry's whole philosophy is to say that even if the public sector is cheaper and proves that it can do the job at a lower cost, it will not necessarily get the work.

Surely Admiral Leach should be taken seriously when he said last month that he was very "proud and deeply grateful" for the "professional alacrity of the dockyards in a crisis". He added: It is a little premature now to kick them in the teeth". The Defence Estimates, and particularly the dockyards experiment—where dogma matters more than evidence —represent the triumph of ideology over experience. In defence, in particular, the national interest is not the sum of the private interests in the economy. The House should reject proposals for privatisation that are doctrinaire, dangerous, unproven and unpatriotic and that have been discarded in the freest of free economies in America, and which, like Trident, have nothing to contribute to the real defence of this country.