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23 Jan 2002 : Column 300WH

MOD Site Disposals

1 pm

Mr. Deputy Speaker (Mr. Nicholas Winterton): Before I call the hon. Member for Stroud (Mr. Drew) to introduce his debate, I welcome the Secretary of State for Defence to the Chamber. He will respond to the debate and his presence is a recognition of the important role of Westminster Hall.

Mr. David Drew (Stroud): We are part of an august Assembly, so we shall act responsibly. When I secured this Adjournment debate, I did not realise that I would be asking questions directly of my right hon. Friend the Secretary of State. However, I welcome him to the Chamber. I hope that some of my general comments will be useful for the future.

I intend to concentrate on two sites that are partly within my constituency and that draw many of their work force from it. Lessons can be learned from what happened in both cases. The two sites are RAF Quedgeley, which is on the outskirts of Gloucester, and MOD Aston Down, which is midway between Cirencester and Stroud.

The two cases illustrate the problems that have occurred when sites are closed and how the work forces are deleteriously affected by that. I hope that we can consider some recompense for them, but I particularly want to look to the future so that we can improve matters. I also hope to draw some general conclusions.

I realise that we are dealing with legal matters and that it is not entirely within the power of even the Secretary of State for Defence to deal with all the issues involved. However, these cases provide a useful example. I have been wrestling with the problems for a considerable time. In fact, after my election to the House, the action group from RAF Quedgeley was among the first groups to see me to complain about what had happened to its members.

I wish to consider four key elements. First, I shall provide some of the background, but I do not want to consider it in great detail, because the Ministry of Defence knows exactly what happened and will have its own views. Secondly, I shall consider the implications for the employees and, thirdly, what the MOD could and should do in the future. Finally, I shall pull the strands together by considering how we can move forward.

RAF Quedgeley was an equipment supply depot on the outskirts of Gloucester and, before 1984, the base was fully staffed by people employed directly by the MOD. As a result of changes to contracts, a contract was awarded in 1984 to SERCO, a private contractor, and it had responsibility for the site for some time.

The point of dispute is the basis on which the redeployment of the employees was engineered. I accept that the issue has been gone over with a fine-toothed comb by those who have considered the legal arguments. It has gone all the way to the House of Lords and a judgment was made not just on this case, but on the way in which the previous Government had, in a number of instances, misunderstood or deliberately got wrong the Transfer of Undertakings (Protection of Employment) Regulations 1981 and the subsequent acquired rights directive.

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In 1990, the site returned to the direct employment of the MOD, but contractual obligations meant that the work force were disadvantaged because they were not taken on as full-time employees of the MOD. They had a contractual arrangement and, when the closure of RAF Quedgeley was announced in the 1990s, they lost some of their rights. They have campaigned ever since to demand the restitution of those rights and to ask for an apology given that a legal statement makes it clear that what happened to them was wrong. There is no dispute about that.

I draw particularly on the evidence of Mr. Deryck Waterhouse who is one of the leading advocates in the RAF Quedgeley action group. The argument is that people were disadvantaged because it was not possible to right the wrongs that they had experienced. I am aware that the case went to the House of Lords and that the judgment was that nothing much could be done. My right hon. Friend is a lawyer, so he will know better than me that there have been precedents.

I became involved in the case and contacted the Treasury solicitor. She argued that, because the case fell outside the six-year rule, it was not possible to obtain recompense. She also argued that those involved had been compensated in any event so recompense would probably not have led to them being any better off. However, the difficulty is that we do not know what would have happened and, because people returned to work at the site as contractually employed employees, they were placed at a disadvantage when RAF Quedgeley closed. Although I cannot dispute the Treasury solicitor's legal opinion, I not sure whether in moral terms the employees are no worse off than they would have been.

The case at the MOD site at Aston Down is more recent and took place under this Government. I was placed in the unfortunate position of having been told that the strategic defence review meant that the site would be kept open. However, a year later I was told that it would close, and that left a rather bad taste in my mouth. I had met the unions—mainly representatives of the Transport and General Workers Union—on a number of occasions to assure them that the site was safe for the immediate future, but the decision to close it was then taken.

The site was largely used for the storage of munitions and spares, but the common feature that it has with RAF Quedgeley is that SERCO has been involved in its running. Supposedly, SERCO had made a bid for the work at the site only for that bid to be turned down. However, I, as an innocent bystander, believed that that site could continue to operate even if it were not owned by the MOD. That would have ensured the continuing employment of the work force. Once the site's closure was announced, despite the good work of the rapid response team in helping to re-employ those losing their jobs, many people did not find suitable employment. The 80 employees feel rather let down.

My right hon. Friend will know whether there have been similar cases elsewhere, but the closures of those two sites were not handled with the sensitivity that should have been shown. A moral issue relates to the way in which the employees were treated, and the

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employment tribunal and the courts became involved. Although the courts have arrived at a judgment, the Government must be seen to be transparent and cleaner than clean in the way in which they treat the work force. People from both sites are disenchanted. Those from RAF Quedgeley, such as Deryck Waterhouse, are continuing to campaign. They realise that it is a moral case. They do not blame the Government for the decision, because they were not in power at the time, but they think that they could right a wrong.

In the case of Aston Down, I have drawn on the work of Alan Beale, who was employed there. It is thought that much more could have been done. The authorities should have been more honest and open with the work force by explaining the basis on which a deal with SERCO was possible, if at all. I have put parliamentary questions to that effect and asked Ministers in the Ministry of Defence about that. Indeed, I met the former Minister of State for Defence, my right hon. Friend the Member for Warley (Mr. Spellar), to clarify the situation. I knew that it had been decided to close Aston Down, but I wanted to get the ground rules clear. If there was a way to get the site taken on by another organisation and to allow its employees to have continuous employment, I wanted to ensure that we sorted that out, but nothing much seemed to happen. The message was that that was not possible. Apparently, there was no reason to pursue that course of action because there was an argument over the value of the site and of the work. That left me in a difficult position.

Will my right hon. Friend the Secretary of State consider the implications of the decisions? Can he reassure me about the way in which we handle such problems? Such matters will arise again and there is no point pretending otherwise. We have to rationalise what we have available and ensure that the right services are in the right place and that the right people are doing that work. In so doing, however, we have to handle the issues with great sensitivity. We must consider the legal implications and we must learn from the fact that the previous Government got it wrong in the case of RAF Quedgeley. If people are to be dismissed, we must ensure that they have the appropriate packages. That is not just a financial consideration. We need to retrain and give people the opportunity to find similar employment, which might be on other sites. Again, it was argued that the work force at both sites was weak and they were not able to access work within other Ministry of Defence establishments. That comment is much felt by the work force.

On a more general matter, has the MOD such a thing as a protocol on how it goes about closing a site and dealing with the work force? It might be that the work force is subcontracted, because that is the way of the world, but the process needs to be more transparent and open. The debate is opportune, not only with regard to the two sites that concern me. I am sure that the problem has arisen elsewhere, and we have to do more. I have highlighted the relationship with SERCO. I do not intend to go off at a tangent, but as it is such an important provider of services for the MOD, I hope that it is brought into the loop. It was involved in both cases and will probably be involved if such circumstances arise at other sites.

The issue is one of fairness and morality. It is also about putting good, practical considerations into place. The decisions could have been handled better and the

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work force in both cases feel hurt. We can learn lessons from that and I hope that my right hon. Friend will address that, not just in the historical context, but in terms of today and the future.

1.14 pm

The Secretary of State for Defence (Mr. Geoffrey Hoon): I begin by congratulating you, Mr. Deputy Speaker, and your colleagues on your new positions.

I am pleased to be here to respond to the debate. I also congratulate my hon. Friend the Member for Stroud (Mr. Drew) on securing it. He raises concerns about the Ministry of Defence's policy on site closures and disposals, and how those can affect civilian employees. I hope that my remarks will set out clearly the processes that the MOD now follows, and address the points that my hon. Friend makes. I shall also deal with Mr. Deryck Waterhouse, who was formerly employed at RAF Quedgeley. He has exchanged letters with the Ministry over a number of years and I am well acquainted with his claims.

The relevant facts are that until September 1984, the management of the storage activities carried out at Quedgeley was undertaken by Ministry of Defence civil servants. It was then contracted out to a private company, SERCO. At the time, the Transfer of Undertakings (Protection of Employment) Regulations 1981—known as TUPE—were thought not to apply. More than 200 MOD staff were made redundant and then re-engaged or subsequently recruited by SERCO to do largely the same work.

In 1990, the work was again put out to competition and was brought back in-house. Again, the TUPE provisions were not thought to apply. Thus the staff involved were made redundant by SERCO and re-employed by the MOD on fixed-term appointments. Subsequently, as a result of the "Options for Change" review, it was decided to rationalise the RAF's equipment supply depots, with the effect that RAF Quedgeley ceased operations as a depot on 31 March 1996. It finally closed on 31 March 1997.

Before dealing with the details of Mr. Waterhouse's case, I shall say something about the process by which MOD sites are closed and disposed of. It is, of course, a major decision to close or change the role of a site. It may have long-standing connections with a local community and provide employment for members of it. If it is decided that a site should be retained for use by another service or by a different part of the MOD, the Department would try to ensure that as many former members of staff were re-employed as possible. If the site is to be closed and disposed of, it is the Department's usual practice to undertake an extensive staff preference exercise to establish whether individuals would wish to transfer to a new location or be redeployed locally. I can assure my hon. Friend that every effort is made to find people alternative postings within the Department and to minimise the need for redundancies. I shall ensure that such a difficult issue is handled sensitively and sensibly.

Any individual who is made redundant is, of course, fully compensated in accordance with the terms of the civil service compensation scheme. Highly experienced consultants are made available to help individuals review and assess their skills, achievements, priorities

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and ambitions for the future. Advice is also provided on self-employment options, planning for retirement and financial matters.

I should also like to make it clear that the MOD is fully committed to a policy of consultation with civilian personnel on all issues that are likely to affect them. It is routine to involve the recognised trades unions from the outset in any study, investigation or proposal that might lead to a change in a site's use, right through to the final implementation of the decision. There is a general principle to consult the recognised trade unions and staff associations in the following circumstances: first, when proposals are still at a formative stage; secondly, to provide adequate information at all times; thirdly, to give the trade unions sufficient time to respond; and, fourthly, to consider carefully and conscientiously all the points made before a final decision is reached. Once that final decision has been reached, consultation, especially on sensitive personnel questions, continues throughout the implementation process.

On the transfer of MOD staff to the private sector, the Department signed a groundbreaking agreement with the Confederation of British Industry, the Defence Manufacturers Association, the Business Services Association and the trades unions as long ago as 1998. That code aims to provide clarity on the application of the TUPE regulations; to maintain the integrity of the contractual process and equity of treatment between different bidders; to provide reassurance to MOD staff that issues concerning their transfer and future employment are fully addressed; and to enable the transfer of staff between the employer to be as smooth as possible.

It is important that we identify as early as possible whether TUPE is to be applied. Nowadays, it is generally assumed that TUPE will apply if there is a transfer of significant assets or of a major part of the work force. Non-TUPE bids are considered only if they are properly justified. Indeed, bidders are required to provide full information on their intentions for the work force. That might include, for instance, the way in which terms and conditions of employment, including pension arrangements, will be replicated and any proposals to amend civil service terms and conditions. Once again, the trade unions and individuals are fully consulted throughout the whole TUPE process. The code of practice has been a success and continues to enjoy the full support of industry and the trade unions. Had it been in place earlier, I am sure that the problems experienced by Mr. Waterhouse and his colleagues would not have occurred.

Turning to the problems faced by Mr. Waterhouse, it was initially—I emphasise initially—conceded at a preliminary hearing of an industrial tribunal that TUPE should have applied both in 1984 and in 1990. In January 1997, the tribunal found that the ex-employees, of whom Mr. Waterhouse is one, were entitled to compensation. However, on legal advice the MOD appealed to the employment appeals tribunal, which could not resolve the case immediately, as that, in turn, was dependent on a decision by the House of Lords. That decision was made in October 1998, when the House of Lords concluded that the fixed-term employments were valid.

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Although I am conscious of Mr. Waterhouse's disappointment at that turn of affairs, because the decision by the House of Lords is the final word on the case, the Ministry has no proposals to provide further compensation. Indeed, because of the legal position, it would not be appropriate for it to offer further compensation. I am sorry that I can add nothing further to the details of the case.

My hon. Friend compared the process followed at Quedgeley with that followed at Aston Down. The contract for the operation of the defence storage and distribution centre at Aston Down was placed with SERCO. More recently, in April 2000, the MOD decided to close the depot in parallel with the formation of the Defence Storage and Distribution Agency. That approach will result in considerable efficiencies and savings. However, the contract with SERCO was allowed to run its course until 31 March 2001, when the unit ceased operations. Stores held at Aston Down were relocated to other sites within the Defence Storage and Distribution Agency, which owned Aston Down. SERCO is currently on site at Aston Down providing a site protection and security guarding service under a MOD contract sponsored by Defence Estates while the property is being marketed for disposal.

In conclusion, I shall say something about the reasons why the MOD disposes of surplus sites and the way in which it does so. Obviously, military requirements change as a result of changes in the security environment, technology and the nation's needs. Consequently, the estate occupied by the armed forces cannot, and must not, remain static, whether as barracks, storage depots, airfields and so on. The MOD does not aim to hold on to land that it does not need; it always intends to release it back on to the market so that it can be used productively by other sectors of the economy. In addition to making land available for redevelopment, the receipts which can come from disposal are of considerable benefit to the taxpayer, contributing to defraying the not inconsiderable costs of the armed forces.

When the MOD has surplus sites to dispose of, we work closely with the local planning authorities to achieve solutions which balance the needs of local communities with the taxpayers' interest in maximising

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the return on the sale. We seek to take a joined-up approach to align the Department's need to extract best value with the interests of other Departments. I recognise that sometimes those processes and marketing can be slow, but about 70 per cent. of all surplus sites are sold within a year of being handed over to Defence Estates, although they may occasionally be empty for some time before that happens.

As part of the strategic defence review, the Department was set a target of £700 million in estate disposal receipts over the four years to March 2002. That target was particularly challenging, given that the value of the sites identified in the review fell short of that figure. To date, receipts generated through property disposals against the £700 million target amount to over £690 million. We are therefore confident that the Department will achieve its target of £700 million by April. The sites involved range from small plots of land to airfields and are dispersed across the whole country.

The public service agreement in 2000 set a further demanding target for the Department. Defence Estates expects, however, to achieve a further £485 million from the disposal of land and property in the three years between the financial years 2001-02 and 2003-04. I hope that my hon. Friend will accept that the disposals and the change that is required to meet the new challenges faced by the MOD are necessary; that process is extraordinarily beneficial for local communities, as it allows the land to be put to effective and productive use. It is obviously beneficial for the MOD as it releases financial assets that can then be used to support the rest of the Ministry's budget.

Mr. Deputy Speaker: The Chamber thanks the Secretary of State for Defence for replying to the debate. Although the hon. Member for Romford (Mr. Rosindell), who will initiate the next debate, is present, sadly the Under–Secretary of State for Transport, Local Government and the Regions, the hon. Member for Southampton, Test (Dr. Whitehead), who will reply, is not, so, for the second time this morning, I must suspend the sitting in Westminster Hall until 1.30 pm.

1.25 pm

Sitting suspended.

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