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Naval Base Review (Plymouth)

Volume 462: debated on Tuesday 10 July 2007

Devonport naval base provides support services to the Royal Navy and has done so for hundreds of years. Devonport is the largest marine complex in western Europe: the site covers 330 acres, with 11 operational dry docks, five outfitting basins, 5 km of deep-water berths and a wide range of support workshops. Devonport Management Limited is Devon and Cornwall’s largest private sector employer, and is almost double the size of the number two company. I know that the Minister is aware of the arguments for Devonport continuing or, indeed, growing that role, which we have set out in “The Case for Devonport”. That is our submission on the socio-economic impact of the review options and our input to the strategic sustainability appraisal carried out by his Department.

We have a long and proud record over the centuries and in recent years, which is relevant to the future, but we cannot rest on our laurels in this era of fast-moving global change. I want to set out why we believe that it is in the interests of the Ministry of Defence and UK plc to ensure the continuation of and to build upon the naval base in Plymouth. I do not, of course, expect the Minister in his response to say, “Yes, of course Linda, everything you say is true and the conclusion of the naval base review will go in Plymouth’s favour.” However, I shall provide some background and hope that he will respond to a series of questions that I have about what has become a more complex process than certainly we in Plymouth originally envisaged. We hope that that will help all of us to understand more about how the various ducks will line up in respect of the important decisions that lie ahead.

How that happens has implications not just for obtaining a reliable and high-quality support service for the Royal Navy, and for realising important value-for-money considerations—it has potentially huge implications for communities that support that activity and related activity, and for cross-Government impacts. Those potential impacts have been described locally as “hospital passes” because of the expenditure that other Departments might have to pick up if there is not full transparency about the basis for decisions on the future of the naval bases. We also want to understand what consultation there might be on any proposed decision, and the timing and transparency of any such consultation.

I am sure that the Minister understands that such clarification is absolutely vital to a city that has the proud history that I outlined earlier. We are very ambitious for the future of our city and its people. We have an urban plan—the Mackay vision—and an economic development strategy that we do not want to see suffer from the setbacks of former years. We are still recovering from the devastation of previous, poorly thought out cuts to the defence budget in the 1990s. Only one area in the UK is in receipt of convergence—formerly objective 1—funding, and our state of recovery is demonstrated by the fact that we receive regional aid as the key city on the edge of it. As the MP who inherited the poorest ward in England from my predecessor, I will fight tooth and nail any proposal that threatens the progress that we have been making in recent years.

In its terms of reference, the naval base review set out the need

“to take note of the emerging issues, costs and benefits from the Surface Ship Support Alliance, Submarine Acquisition Modernisation, Maritime Industrial Strategy, and other internal initiatives and industrial proposals”

In Plymouth, we believe that we can offer a great deal to the future support of the Royal Navy in a way that complements and supports the important work that we do to maintain the UK's submarine fleet. The skill base needed for that is fragile, as was clearly demonstrated in the Defence Committee report on that subject. One of the reasons why Plymouth has managed to maintain such a skills base is the synergy that has been realised between submarine work and work on the surface ship fleet. Like cars, new generations of subs have longer periods between service requirements, so it is essential for young submarine engineers to use their skills, to develop them and to have work that retains their interest. That is currently achieved primarily by enabling them to deploy their skills on surface ship work. Engineers who are skilled to work on submarines can turn their hand to work on ships. However, the training for work on submarines involves greater skills, so the reverse is not true for those trained to work on ships. If, under the naval base review, there were a reduction in base porting at Devonport, the successful recipe that has been developed in Plymouth for regenerating the skills base would be at high risk.

I appreciate the hon. Lady’s remarks and I congratulate her not just on obtaining the debate but on chairing the taskforce in Plymouth that has been spearheading our campaign to ensure that the Government take our arguments seriously. Is not one of the most important points that she is making that of the collocation between the naval base and the dockyard in Devonport, which gives the greatest strength to her arguments? It is vital to maintain the skill base in both those operations so as to ensure that the city has the core of trained men and women that can take us forward.

The hon. Gentleman knows a lot about these matters and has contributed to the strategy group during the period in which it has been meeting—since the naval base review was announced. He is absolutely right and he was almost reading my mind, although he has not seen my speech. I was about to say that decisions on the naval base review are integrally connected with the wider industry restructuring and with the timing of the decision on the future carrier, which itself appears to depend on the outcome of defence spending proposals in the 2007 comprehensive spending review.

The spending review outcome is expected in the autumn, which suggests that a decision on the naval base review may not be made until then, although I understand that it could be earlier. We sense that, if the future carrier proceeds, Ministers will be recommended to agree naval base review option 4, which involves finding further efficiencies at all three bases. Without a positive decision on the future carrier, there might still be a preference in some quarters for a three-base outcome, even though we believe that there is an investment case for a more radical solution.

The Minister will be aware that, within option 4, a number of alternative surface ship base porting and support scenarios have been considered. From a naval base infrastructure perspective, which is the focus of the naval base review, there might well be no significant cost benefits in pursuing any of those variant options. However, although they might not come about as a result of the immediate naval base review process, they could emerge over time through Navy decisions on base porting or as a result of industry proposals or pressures.

That seems a rather fine distinction. The implication is that any consultation on the naval base review options will only, in respect of option 4, be about keeping things broadly as they are in relation to base porting and work load. Our concern is that consultation will not take place on the option 4 variants, which, at one extreme—with transfer of type 23s and other ships to Portsmouth—are virtually the “minimise Devonport” option, with all the consequent impact on the city, and at the other extreme shift the centre of gravity over time to Devonport. In any consultation held with the communities—there is talk of that consultation occurring over the summer recess period—option 4, which involves retention of all three bases, must not become a default position without proper acknowledgment and analysis of the long-term impact of the decision.

We very much welcome the commitment that the naval base review team has made to assess the mitigation costs associated with some of the naval base review options and their potential impact on other Departments. The process involved in that has, however, been unsatisfactory. The key issue for the MOD is whether broad-order costs to other Departments are such that they largely or wholly outweigh the MOD's cost savings, but the assessment must also satisfy other Departments at a finer level of detail.

Work that Plymouth and Portsmouth were encouraged to carry out independently and in short order on a “quick and dirty” assessment of mitigation costs has, not surprisingly, exposed major inconsistencies in assumptions and in approach. A quick and dirty figure that meets the MOD's requirement to show that there are no showstoppers is therefore unacceptable unless it is done on a consistent basis and with some independent oversight. I understand, and very much welcome, that the naval base review team has recently agreed with regional stakeholders and other Departments that the Department for Communities and Local Government will take the lead in setting a common basis for carrying out that work, that regional partners will contribute, and that independent validation of data that are submitted will be provided.

Does the hon. Lady agree that it would be helpful if, in his response, the Minister told us to what extent the MOD is genuinely consulting other Departments, so that it gets the fullest possible picture of the economic, social and other ramifications of whatever decision is made, and of the outcome of that decision? I hope that the MOD is not acting in its silo and instead is taking account of Government as a whole.

I absolutely agree. I understand that the aim is to complete a first-stage, broad assessment of costs by the end of July so that consultation can proceed, and that the Department for Communities and Local Government is likely to commission more detailed work from expert consultants during the consultation period. I hope that the Minister will indeed offer some clarification and assurance on a number of matters.

The first such matter is clarification of the naval base review timetable and its relationship to announcements about the future carrier. Next is agreement that at least the first-stage work on mitigation measures and costs on a consistent basis will be completed ahead of any consultation on the naval base review options. We seek an assurance that the purpose and scope of the consultation, the way in which it is used to inform a final decision and the requirements for further consultation on the implementation of the preferred option will be clearly explained. We also seek an assurance that decisions on the naval base review will be based on an objective assessment of the most cost-effective and operationally acceptable deployment of naval base assets to deliver submarine and ship support.

In addition, we seek recognition of the need for the MOD, in influencing and endorsing future industry restructuring, to have regard to the cost and deliverability of surface ship and submarine support. We also seek an assurance that the MOD will continue to engage regional stakeholders on the future distribution of surface ship support, the impact on local communities of changes in distribution and the measures required to mitigate such impacts.

We also seek recognition of the fact that the positive relationship between the city and the Navy is built on the delicate balance and complementarity between nuclear and surface ship support and that that balance must be retained, not only in the immediate term, following the naval base review, but throughout the years to come. Finally, we seek recognition of the fact that Devonport cannot provide a long-term commitment or savings to the Navy on the basis of submarine work alone, and nor will it maintain the support of the local population if it is seen just as a decommissioning yard for nuclear submarines.

Of course, the recent purchase of DML by Babcock International Group will make DML part of the largest support provider to the Royal Navy and Ministry of Defence. That sits well with the MOD’s defence industrial strategy and should bring the MOD major economies of scale. It should also strengthen Devonport’s case for maintaining, and even developing, the naval base at Devonport, together with the base porting of the surface ship fleet. However, we are concerned, as the Minister will perceive from my remarks, that if the naval base review does not consider all the points that I have raised in the debate, and it is left to the companies to carry things forward, the short-term pressures to realise savings and to release profit to shareholders could take priority over safeguarding critical skills and maintaining the successful recipe that we have developed in Plymouth to refresh, renew, regenerate and retain a unique skills base and capacity.

I therefore seek the Minister’s reassurance that those important issues will be safeguarded as the naval base review proceeds, as the i’s are dotted and the t’s are crossed on the agreement with Babcock for the purchase of DML and as the Minister with responsibility for defence procurement begins to develop the full and legally binding terms of business agreement with Babcock’s marine division following the recently announced agreement to sell DML.

The debate has given me an opportunity to set out some of our concerns about the naval base review in Plymouth. Of course, the central issue must be the Royal Navy’s requirements as regards future naval base activity, but the Minister will understand that the potential loss of, or substantial reduction in, economic activity around the biggest employer in the whole Devon and Cornwall sub-region is also at stake. That could affect 5,000 Royal Navy personnel from ships and submarines, 1,150 Royal Naval base personnel, 950 naval base civilian personnel, 2,900 industry—that is, DML—personnel and 1,750 further indirect and induced jobs. We in Plymouth think that we can contribute to a high-quality, value-for-money service for the MOD and UK plc, and that will be achieved by retaining, or even growing, the naval base and its associated activity in Devonport.

I congratulate my hon. Friend the Member for Plymouth, Sutton (Linda Gilroy) on securing this important debate on the implications of the naval base review for Plymouth and on giving me the opportunity to speak on this important subject. I have also heard the points made by the hon. Member for South-West Devon (Mr. Streeter), which I shall address, as far as I can, during my response. I note that my hon. Friend the Member for Portsmouth, North (Sarah McCarthy-Fry) is here, and she takes a great interest in this matter. My hon. Friend the Member for Plymouth, Devonport (Alison Seabeck) has also been a great advocate for Plymouth, and although her duties as a Whip mean that she cannot take part in the debate, she is here to listen and will no doubt continue her lobbying elsewhere.

I listened carefully to the speech by my hon. Friend the Member for Plymouth, Sutton and I start by acknowledging the strong links between Her Majesty’s naval base at Devonport and the city of Plymouth. The west country and the Royal Navy have a long and distinguished history; indeed, the ships that defeated the Spanish armada sailed from the mouth of the River Plym. Since that historic moment, the people of Plymouth have provided unparalleled support to the Royal Navy in peacetime and in war.

As my hon. Friend is aware, my right hon. Friend the Secretary of State for Defence announced in September 2006 that we were to undertake an in-depth review of infrastructure requirements at the three naval bases at Devonport, Portsmouth and Faslane. He pointed out then that the defence industrial strategy, which had been published the previous year, 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. He also made it clear, however, that we cannot rely on industry alone to achieve the necessary rationalisation, and we must also look at support capacity at our naval bases to ensure that it is matched appropriately to the Royal Navy’s future needs. We need to ensure that every penny counts and that resources are rightly focused on the front line.

Although I, of course, pay tribute to the Devonport work force for their dedication and professionalism, we must not lose sight of the fact that the number of ships requiring maintenance and repair has been reducing. We therefore need to be realistic and to look to the future, rather than dwelling on the past. That is not to say that we should fail to celebrate the remarkable achievements of the past, and our commemoration of the Falklands conflict 25 years ago is a timely reminder of the vital role that Devonport played in preparing much of the fleet for its deployment in that conflict. However, we need to take this opportunity to consider in detail our future support needs; indeed, it would be wrong for the Ministry of Defence not to review the way in which it supports the fleet or to seek out efficiencies.

As I said, the naval base review is an important part of the maritime element of the defence industrial strategy. The terms of reference, which have been published and which are widely available, including on the Ministry of Defence website, clearly show that the intention is to hold a wide-ranging review. The review team is, however, now focusing on three possible core options, to which my hon. Friend the Member for Plymouth, Sutton alluded: first, an optimised three naval base solution; secondly, a scenario that would see Portsmouth naval base minimised through the withdrawal of all ships and their engineering requirements; and, thirdly, a scenario in which Devonport naval base would be minimised through the withdrawal of all ships and submarines—with the exception of flag officer sea training—but with ship and submarine deep repair and maintenance retained to provide a smooth engineering load. The other options, which ranged from doing nothing at one extreme to closing all three naval bases and building a new one at a single location, have now been dismissed as a result of the work done so far. I appreciate that the current position does not necessarily provide further certainty for any of the naval bases, but it clearly demonstrates that the review is making good progress.

As my hon. Friend is aware from her recent meeting with the then Minister of State with responsibility for the armed forces and her question on the Floor of the House last month, which was answered by my right hon. Friend the Secretary of State for Defence, the naval base review is considering a number of broad cross-Government issues. As part of that work, we are engaged with other Departments, including Her Majesty’s Treasury and the Department for Communities and Local Government, which have been briefed on the review’s aims and objectives and on the range of options being considered. Working with those Departments, we are assessing the cross-Government cost implications of the different naval base review options to ensure best value for the taxpayer.

That work is being supported by the regional development agencies, including the South West of England Regional Development Agency, which is providing important information about the Plymouth area. Indeed, my right hon. Friend the Minister of State with responsibility for the armed forces is due to meet the South West of England Regional Development Agency later this month. Although this complex pan-Government work is progressing well, further work is required before final conclusions can be reached. However, I take this opportunity to reassure my hon. Friend that this aspect of the review is being handled in as professional a way as all the other aspects of the review are. We always regard the speedy production of costing information as just the first step.

I referred a moment ago to further work being required before a final decision can be reached, and one aspect of that is the need for public consultation. We will continue to listen to the various representations that are being made, and this debate is one such representation. I have also visited both Plymouth and Portsmouth, and many representations were made to me by different people. An ongoing listening exercise is therefore taking place.

My hon. Friend has heard my ministerial colleagues state that it is important for the naval base review to be allowed to run its course to enable the right decision to be made for defence as a whole. We have always said, as, again, my hon. Friend is aware, that the outcome of the naval base review will be coherent in relation to other maritime initiatives. For that reason, we have been considering, in our thinking, the other key maritime industrial strategy initiatives. It is of paramount importance that we do that in order to deliver an overall outcome that is best for defence.

My ministerial colleagues and I have made no advance decisions on the future of Devonport or indeed the other naval bases as we are reserving judgment until we see the results of the review. I fully understand that that means a period of further uncertainty for Devonport naval base and its work force, for industry and, more widely, for the people of Plymouth and the surrounding area, but it is simply still too early to say what impact the review will have on Devonport and the wider south-west area.

I appreciate the emphasis that my hon. Friend puts on the need to provide value for money and quality services to the Royal Navy, but does he also understand that we are concerned that any consultation on that should have a very good evidence base? Will he cover, in his concluding remarks, the questions that I asked about the consultation, including its timing and transparency?

I am sure that my hon. Friend will not be surprised that I cannot give her any details about that at this stage, but I can tell her that accuracy, and obtaining a wealth of information, are very important. As I have said, I can guarantee our commitment to working with everyone and to listening to all sides and all views. In my visits in recent weeks and months to Portsmouth and Plymouth I have heard many views and opinions, so the process is and will continue to be transparent. I hope that my hon. Friend accepts that.

I am sure that my hon. Friend will be reassured that business improvement activities, such as the change programme at Devonport, are also being given due weight in the naval base review. The aim of Devonport’s change programme and the efficiency drives at the other naval bases is to deliver savings locally. Clearly it is important that those savings should also be recognised by the naval base review team and that they have been 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 and avoid incoherence and the loss of effectiveness and efficiency that goes with it. It is only when the review has been completed that we will be able accurately to quantify the likely costs and savings from any changes to naval base infrastructure. In the meantime, it would not be appropriate for me to speculate on what those might be.

I can give my hon. Friend an assurance that a full investment appraisal has, however, now been undertaken by the naval base review team, which outlines the relevant costs and savings. The appraisal is undergoing rigorous scrutiny as part of the Ministry of Defence’s internal approvals process. I hope that that, too, gives my hon. Friend some reassurance.

I should like to emphasise to the Minister the particularly important point that I and the hon. Member for South-West Devon (Mr. Streeter) drew to his attention: there is a fine balance between the work done on submarines, particularly by young engineers, and the work done on surface ship support and maintenance. In his final remarks, will my hon. Friend perhaps recognise that that is an important balance to maintain?

I completely understand my hon. Friend’s point, and can only reiterate that all aspects of the matter are being looked at, and that we take into account all the issues and concerns that are raised.

I know how proud Plymouth is of its past and present links with the Royal Navy, and that came across vividly when I visited Plymouth earlier this year. I pay tribute to those who have provided such sterling service at Devonport naval base over the years. I want to reassure my hon. Friend that I, my ministerial colleagues and my officials are fully aware of the local feeling in Devonport about the mix of submarine and ship support work. As I said earlier, it is too early to say what the impact of the review will be on Devonport, but the issue is being taken into account by the review team. Indeed, engagement on such important matters at all the naval bases is something that the Department takes very seriously.

I am also aware of how vital our partnering arrangement with Devonport Management Limited is in the successful day-to-day operation of Devonport naval base. As my noble Friend the Minister of State, Lord Drayson, who has responsibility for defence equipment and support, recently remarked, the transfer of ownership of Devonport Management Limited to Babcock International Group marks a significant step forward in realising the MOD’s plans for a vibrant and sustainable UK maritime industry. The formalities of the sale, I am pleased to say, are progressing well along the lines we anticipated.

I am pleased to have been able to respond to my hon. Friend on this important issue.

I am sorry; I did not mean to offend my hon. Friend. I just wanted to raise a point that she raised in her speech about the timing of the carrier vessel future decision, which the Minister did not respond to. I wondered if he would respond to it.

As a matter of timing, we will, as I say, put the information in the public domain as soon as we can. I reiterate what I have said about our intentions on transparency and the timetable. The important thing is to get the right decision for defence, and to take into account the concerns and issues that have been brought up.

I hope that hon. Members will be reassured that the naval base review will take into account the important issues that have been raised. I hope, too, that I have done enough to reassure my hon. Friend the Member for Plymouth, Sutton that the review is about securing best value for money for defence and for the taxpayer. I am aware that previous reviews concluded that three naval bases should be retained, but we have to recognise that we are in a fast-changing world and that the support that we provide must adapt as the strategic context, and hence the needs of the armed forces, alters.

As to the specific point about the way ahead for the joint venture and the carrier vessel future, we aim to make the main investment decision when the project is sufficiently mature and we have a clear understanding of the risks and robust estimates of cost and time, and when the contractual framework is in place. That is dependent on progress and we cannot give a firm date at this stage. We need to make sure that we have the right balance of capabilities to meet modern threats, and therefore that infrastructure will meet our requirements. I reiterate that no decisions have been taken about Devonport or indeed any of the naval bases. We owe it to our people on the front line to get the decision right.