MOD Llangennech

Part of the debate – in Westminster Hall at 4:15 pm on 22nd March 2006.

Alert me about debates like this

Photo of Don Touhig Don Touhig Parliamentary Under-Secretary (Veterans), Ministry of Defence, Parliamentary Under-Secretary (Ministry of Defence) (Veterans) 4:15 pm, 22nd March 2006

I congratulate my hon. Friend Nia Griffith on securing the debate. I know that she and my hon. Friend Mr. Caton have championed the interests of the work force of Llangennech quite vigorously and this is a further expression of their support for and solidarity with the work force there.

It may be helpful if I start by setting out the background to the decision to close the defence storage and distribution centre at Llangennech. It is critical that our armed forces receive the support they need to do the jobs we ask of them. Our servicemen are among the best equipped and supported in the world and the measures and programmes that the Government have put in place will ensure that they remain so in the future. One such measure is the future defence supply chain initiative, which was launched in 2002 with the aim of assessing a range of options for managing and operating the defence supply chain to reduce costs of ownership, while maintaining or improving service levels and enhancing operational capability.

Alternative models of in-house provision were compared with a potential partnered solution for which proposals were sought from industry. In July 2005, the Secretary of State for Defence announced that one of the in-house options, known as "do different", had been selected. That option was chosen as it offered the best balance between delivering improved logistic support to operations and achieving better value for money for taxpayers. The solution, together with the improvements that are being introduced across the supply chain, including monitoring and tracking the movements of military supplies, will result in the United Kingdom having a world-class military supply chain, dedicated to ensuring that the support provided to soldiers, sailors and aircrew operating on the front line is second to none, which must be our prime objective.

Examples of improvements include: the ability to increase outputs rapidly in support of operations; providing a single, accountable point of contact for MOD storage and distribution customers; and delivering changes to process that will increase confidence at the front line that requirements will be met on time and in full. Overall, implementation of the initiative is expected to make savings of over £50 million per year by 2010 and more than £441 million over the next 10 years. As my hon. Friends will recognise, those are precious resources that we need to free up for use elsewhere.

Under the "do different" proposal, three storage and distribution centres are expected to close: Stafford by 2007, Llangennech by mid-2008 and Longtown by mid-2009. There will be further streamlining at other establishments. In addition, the defence regional distribution centres, including the one at Llangennech, will convert to trailer drop points by 2009–10. That means that when goods arrive at the distribution centres, they will no longer be unloaded and placed in a warehouse. Instead the trailer body will be removed and swapped to another trailer before being transported to its final destination, which will minimise double handling in the majority of cases, improve transit times and result in a more effective use of MOD's estate and vehicles.

The closure at Llangennech alone will bring savings of more than £5 million per annum, and closure will affect all of the activities carried out at Llangennech. I can confirm that a project team has been assembled to look into the print, storage and distribution of forms, civilian personnel records, metal stockholding and wood, bar and tube cutting activities. The project team will look at outsourcing the functions, or moving the business to an alternative DSDA site or another MOD department. It is not true, as I believe has been rumoured, that decisions have already been taken to outsource those services. The review process is at a comparatively early stage. Indeed, detailed planning and reporting dates have yet to be agreed. I can assure my hon. Friends that the trade unions are being given every opportunity to participate in that work. My hon. Friend the Member for Llanelli has made a number of proposals for involving the trade unions in more detail, and possibly involving them in the future operation of the site. Those proposals, if put to us, will be considered. We are considering all issues.

The value for money issue is crucial to us, and there will be full consultation with the trade unions. My right hon. Friend the Minister of State for the Armed Forces will keep all interested parties informed. Should my hon. Friend the Member for Llanelli seek a meeting to develop any of her arguments with him directly, I have no doubt that having read the Hansard record of today's proceedings, he would agree to meet her.

Turning back to the implications of the future defence supply chain initiative, I fully understand the consequences of those changes for the future employment of MOD staff. The decision to move to the implementation of that important initiative is in no way a reflection of the contribution that the work force in the supply chain have made. I know that there is some uncertainty among them, but I also acknowledge the loyal and dedicated service our people have given to the Ministry of Defence over the years.

In overall terms, the new supply chain organisation will require around 2,000 fewer posts, the majority of which are occupied by civilians. We estimate that about half those reductions will be achieved through natural wastage and the majority of the remainder will come through voluntary early release. Some compulsory redundancies will be necessary, but the intention is to keep them to a minimum.

There may be some opportunities for staff to transfer to other MOD sites or other Departments. A staff preference exercise will be undertaken and the MOD will liaise with Jobcentre Plus in the lead up to the closure. Team Wales has done fantastic work in circumstances like those that we face at Llangennech. The trades unions were kept fully informed and consulted throughout the planning phase of the future defence supply chain initiative, and they continue to be involved during its implementation. We would want that.

Looking more specifically at Llangennech, as the rundown progresses there will be a gradual transfer of inventory and stock within existing sites, with a corresponding gradual reduction in staff numbers. It is anticipated that natural wastage will account for some reductions, and there may be opportunities for relocation to other MOD sites. However, some redundancies will be unavoidable. At present the number is estimated to be 120 from both the defence storage and distribution centre and the defence regional distribution centre.

The MOD outplacement service will be available to support staff and spouses affected by the reductions at the site, offering support with relocation, financial advice and preparation for alternative employment. Training will be available to assist staff with transition to life in the private sector, and the services of the MOD welfare organisation will be available also to help staff with their personal circumstances. Redundancy payments and pension entitlements will be in accordance with the civil service compensation scheme and the principal civil service pension schemes.

It has been decided that the transformation can be achieved by the DSDA remaining an Executive agency, but with a revised framework document. That document will give the appropriate freedoms and delegations to the agency's management team, allowing it to complete the transformation plan. In the third year, "do different" will be reviewed, as the plan is to have completed the bulk of the transformation by that point.

Changes will include reinforcing the senior management team. In addition the DSDA work force will receive significant amounts of training with the subsequent multi-skilling, providing greater flexibility and effectiveness. With improvements in processing, such as selecting for destination from the warehouse, much less double handling and, hence, fewer process costs will be incurred.

I want to pay tribute to the contribution that the staff at Llangennech have made and continue to make to the work of their agency and to defence. These are very difficult, trying and uncertain times for them, and I fully recognise the very powerful case argued by my hon. Friends the Members for Llanelli and for Gower in defence of the work force. My hon. Friends are doing what is perfectly proper, and they championed their constituents in an exemplary way. However, I must emphasise once more that the changes taking place at Llangennech are in no way a commentary on the expertise or effectiveness of the staff. They have been fantastic. I should like to underline the fact that we are doing all we can to support them at this time when their future is uncertain.

It is always a difficult decision to implement staff reductions and site closures. But we must do what is right for defence as a whole, and we remain convinced that the implementation of future defence supply chain initiatives, and the benefits that they will bring, are firmly in the national interest. Having said that, I shall certainly read the Hansard record of today's proceedings and take into account the comments of my hon. Friends. I have no doubt that if they were to seek a meeting with our right hon. Friend the Minister of State for the Armed Forces, he would meet them to explore the issues that they have raised and, perhaps, give them further reassurance that, as we take the agenda forward, we are trying to involve everybody—the trade unions in particular—in discussions.

It is not an easy time for us, and it is certainly not an easy time for the people involved. I fully appreciate that. However, I want my hon. Friends to know that we shall do everything possible to make this difficult decision effective in the interests of defence, while being sensitive to its consequences for the people whom my hon. Friends have represented so well this afternoon.