We took the dockyards away from the Admiral Superintendents. I believe that the Minister has opened up a can of worms by asking that question. I brought someone in from ICI, Mr. Leslie Norfolk, as chief executive of the dockyards to bring in more expertise from the private sector, and he did a great deal. The Mallabar committee, established at that time, considered the longterm structure and supported the trading fund. Ever since that committee report, I and others have supported the importance of the trading fund. The hon. Member for Ashford (Mr. Speed), the last Minister with responsibility for the Navy, also supported the idea of the trading fund.
In evidence to the Defence Select Committee, published in a report on 10 July 1985, I said:
The advantage of a Trading Fund approach is that it retains a unified Dockyard—assets, management and workforce all being part of an integrated enterprise under overall Government control. If the Government will not take the employees out of the Civil Service numbers count while still retaining their terms and conditions of service, then it would be better to retain the Trading Fund concept with the workforce employed by the Trading Fund direct, in effect the MoD, but no longer part of the Civil Service.
It is clear that that is one option. The other option, to retain a unified dockyard, would be a Government-owned plc. Given the Government's philosophy and the Dockyard Services Act 1986, there is no doubt that the only option that the Government can consider—without
losing face—is a Government-owned plc. Even at this late stage I plead with the Government to reconsider this matter.
If the Government adopt the agency management proposal, there will be considerable resentment among trade union leaders and the vast majority of the people who work in the dockyard. They are not militants; they are decent, honourable men. The trade union leaders have fought the proposals with great skill. I admire what they have done. They have been objective and have put forward sound arguments. I believe that the trade union leaders have been treated shabbily. To put it bluntly, the consultation exercise appears to be a sham.
Nothing could do more to rebuild some respect in our democratic process within the House than for the Secretary of State, who has no past history of involvement in the affair, to come to it with a fresh mind and sit round the table with the trade union leaders. He should say that he is prepared to consider the Government-owned plc proposal. At one stroke that would go some way to relieving the work force's anxiety about pension and redundancy payments. The Government would be the controlling interest. Perhaps they would not control everything, but they would be pooling assets with the management. There may be some proposals for selling shareholdings to other commercial companies or the employees. If so, I would not be terribly upset about that. However, I am upset at the proposal to give up Government control. That is not in the Navy's interest.
If we consider the practical arguments we have got the experience of putting the refits out to private companies. Comparisons have been made in the past. Indeed, the Labour Government had such a comparison. The Conservative Government are supposed to be making such a comparison at the present time, but we have had no figures for it. The Navy has been dissatisfied about private refits. Why? The reason is quite simple. It is like taking a car into a garage. People may not know exactly what is wrong until the car is opened up. The same principle applies to ships.
When a ship comes in for a refit, estimates have already been made about what is likely to be needed. However, once it is opened up, rust or some major mechanical problem may be discovered that could not have been anticipated. Under the dockyard system, which operates under Government control, all the work would be carried out regardless of the time, so that the ship was properly repaired. If the ship was placed with a private commercial contractor, it is likely that it would close down the hatches, pretend that the rust did not exist and ignore the unforeseen problems. That is understandable.
If HMS Invincible has a propellor shaft that is bent or some other major problem, it is in the interests of the Navy that a capital ship of that size can go straight into the dockyard, disrupt the refitting cycle and be turned around as soon as possible. The Navy can do this under the present system. Under private control, the agency management would say that it has not got this or that, the cost will be tremendous and it will have the Government across a barrel. The Navy cannot go anywhere else; big ships can only go to Devonport. There is no doubt that if the dockyards were in private hands the Ministry would be absolutely screwed. The agency could charge any price. There is nothing that the Government could do about it.
That is the problem. The Navy has suddenly realised that it has been taken for a ride. The Admiralty Board originally endorsed this type of proposal—look at the towpath papers—but it has discovered the problem. It is clear that the Navy thought there would be savings, but that is not so because it will have to finance the pension fund. Money will be taken from the Navy. The Government are taking £1 billion from the defence budget in the next three years and the Navy will be squeezed and there will he less available money but it will have to pay out more for dockyard refits.
It has been argued that on the basis of the comparison of costs the agency management option would represent a £5 million saving on top of those anticipated by the Government-owned plc option. Thus, there would be £5 million saving on the Devonport dockyard turnover of £300 million per annum. Such a saving over seven years represents 0·2 per cent. per annum. That is well within the margin of forecasting error, especially when one considers that that estimate is in the Ministry of Defence's document, and that it favours the agency management proposal rather than a Government-owned plc.
I have said enough. All sense demands a re-think. OK, we shall not get a trading fund, with people still in the Civil Service. OK, the Government may not give us the next best option, which is a trading fund outside the Civil Service. But pressing ahead with the agency management under the present proposals is folly. The Government will regret it, the Navy will regret it and the city of Plymouth will he dealt a devastating blow. Even at this late hour, I beg the Government to think again.
Perhaps I can say more openly that the Government would get a good response from the trade union leaders. They would be ready to discuss a compromise. They do not like it, but they are practical, realistic men. Their whole life is made up of cutting out deals. If they can go away with only half a loaf, they will do so. The Secretary of State would get the co-operation and commitment of the work force at Devonport which served the country mighty well during the Falklands crisis.
I urge the Government not to turn down a possible compromise, which would give them many of their objectives and get most of what is needed—in the longer term it will probably provide all that is needed—in terms of efficiency and effectiveness at Devonport dockyard.