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Royal Ordnance Factories: Privatisation

Volume 489: debated on Tuesday 20 October 1987

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3.23 p.m.

My Lords, I beg leave to ask the second Question standing in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government whether they have any plans to monitor the consequences of privatising the Royal Ordnance factories, bearing in mind the announced closure of the Enfield small arms factory.

My Lords, Royal Ordnance is now owned by British Aerospace and free to operate unfettered in the private sector without the hindrance of government control. We have no plans to monitor this company any differently from other non-publicly owned defence contractors save in respect of the specific assurances relating to competition and ownership given by British Aerospace at the time of the purchase.

The planned closure of RO Enfield is of course unwelcome from the point of view of those who work there, but the decision was one for the management and was taken on purely commercial grounds without reference to Ministers.

My Lords, is the Minister aware that the new owners of the Enfield small arms factory intend not only to close the factory but to sell the land at an estimated profit of £100 million—almost 50 per cent. of what they paid for 12 factories? Has the Minister any concern for the local community in Enfield and the workforce? As a result of privatisation the local economy will be decimated and hundreds of people will be put out of work.

My Lords, I do not think the noble Lord is right in either of his suppositions. As for the value of the site, far from the figure of £180 million which I think appeared in the press—

My Lords, our assessment of the site value is £1.5 million. That of course is substantially less. As for the people who work there, of course I am sorry that their employment opportunities will disappear but as the noble Lord knows that will not happen immediately. In that context, 450 or 500 new job opportunities will emerge in Nottingham.

My Lords, does the noble Lord agree that defence planning necessarily involves making some provision for spare capacity in the defence industries? Is he satisfied that the redundancies now being made in the newly-privatised industries are not just commercially profitable, as they no doubt are, but are in the national interest? Surely it is the Government's duty to bear that in mind and not just to remove themselves from this problem altogether.

My Lords, yes, it is of course our duty to ensure that we can procure our weapons and associated products when we need them from time to time. Current orders at Royal Ordnance which are being executed at Enfield will, I understand, if not completed in time be transferred to Nottingham. Additional orders have been placed with Royal Ordnance, for example, for the SA 80 weapon which I gather will be made at Nottingham. We are satisfied that Royal Ordnance will retain important capacity in this area. In any event, it is not the only company in this country that can meet our requirements.

My Lords, has the noble Lord, as he was required by courtesy so to do, warned his former colleagues that he was once more going to repeat the criticism that they interfered unwisely in the affairs of the Royal Ordnance factories?

My Lords, I am not sure that I follow the question, but the position now is that Royal Ordnance is part of the private sector and Ministers are no more entitled to interfere in that company than they are in any other company in that sector.

My Lords, the noble Lord said that he did not fully follow my question. He has just told us once more that the advantage of this is that the Government are no longer free to interfere in the affairs of the Royal Ordnance factories.

My Lords, if these are purely commercial decisions, will the noble Lord say in what sense the national interest is protected?

My Lords, the national interest requires that we retain the necessary industrial capacity to meet our requirements in times of tension or war. We are entirely satisfied that that position is covered.

My Lords, the figure the Minister gave for the value of the site may well be right, but the company did not buy just the site; it bought the land around the site. In that part of England, land is valued at in the region of £1 million an acre. The company bought many acres and it intends to sell land and make a huge profit. Having sold assets to an asset stripper—in this case that is what it is—do the Government want merely to wash their hands of the local community and the people who work there?

My Lords, if I may say so, I do not think the noble Lord is doing justice to the situation. The valuation of the site, including the land, is about the figure I gave. It is industrial land at present.

The interests of the people who work at Enfield are matters for Royal Ordnance under its new owners. However, the noble Lord may be reassured to know that for those who cannot be found work at Nottingham or in some other part of Royal Ordnance—I know that British Aerospace plans to do its best to find work within the organisation for as many as possible—the redundancy terms that applied when Royal Ordnance was part of the Civil Service remain broadly in place.