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Mr. McFall: I accept my right hon. Friend's integrity, having worked with him in a ministerial capacity. However, I do not accept his explanation. The MPs should have been consulted, if for no other reason than to knock down the supposition that 1,000 jobs were at stake. Furthermore, it was disrespectful to make no statement in the House. The loss of 1,000 jobs in the UK is a big issue,

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especially on a project that has been running for two or three years, and on which MPs, trade unions, the work force and others have been negotiating with the MOD. I see what happened as a mark of disrespect and a discourtesy to the House.

The letter of my right hon. Friend the Minister of State, which was produced at 3.30 pm on the day in question, gave rise to further fears, as it was so thin that people could not find the details. It stated:

The letter refers merely to "all levels", giving no indicative number or indeed any idea that a number would be set. Neither is any idea given of the phasing of the privatisation or possible job losses—a matter that has a long history.

What happened was a discourtesy to the House and the MPs with vital constituency interests, and also to the work force, whose fears were heightened. I feel that my right hon. Friend the Secretary of State did not play fair, and I have written to my right hon. Friend the Prime Minister explaining my position and asking him to seriously consider the matter. Relationships between Departments and MPs need to be much better. At the Faslane base, there was a huge sense of betrayal, as a result of which, as my right hon. Friend the Minister knows, industrial action was proposed.

People are incensed about the treatment of this loyal and committed work force, who have existed in the area for 40 years. It is shameful that workers are being kept in the dark on the plans to transfer staff contracts to Babcock Naval Services. I suggest that Ministers must address the issue swiftly and clearly. With ministerial approval, for which I thank my right hon. Friend, I am meeting all the trade unions in Faslane on Monday morning. I will meet the naval representatives and, I hope, Mr. John Howie, managing director of Babcock Naval Services.

The meeting is being held not only to assuage the fears of the work force, but to ensure that there is a comprehensive list of questions that must be addressed by the MOD and Babcock Naval Services, and which I want to convey to my right hon. Friend next week. My colleague Jackie Baillie has raised the matter in the Scottish Parliament and has a commitment from the First Minister on retraining and keeping the skills in our area as much as possible. West Dumbarton and Argyll has been an area of comparatively high unemployment over the years, so we can ill afford to lose jobs. We must do everything we can to ensure that there is no employment haemorrhage.

I know that my right hon. Friend the Minister had a meeting yesterday with the industrial and non-industrial trade union representatives. From what I am told, I believe that the meeting was very helpful, although there is a long way to go. My right hon. Friend will be aware that the trade unions are stepping up their campaign against privatisation and for workers' rights, and laying out a triple challenge to the MOD. First, they ask that the Select Committee on Defence and the Public Accounts Committee scrutinise the proposals. The trade unions have not been informed why their proposal was not acceptable or successful. In the name of decency, that explanation should be undertaken.

The second challenge is to establish proper consultation, so that the trade unions and the work force can challenge the detail of the MOD's plans, rather than

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simply going along with the MOD's current debriefing proposals. A few months ago, a global savings figure of £250 million was mentioned, but according to a written answer from the Minister of State, that figure is now £300 million. To people who, unlike us, are not privy to detailed information, that seems like a shot in the dark.

The third challenge is that, if privatisation is to go ahead, there must be guarantees for the future of the work force. I am delighted to note that John Coles, chief executive of the Warship Support Agency, will be called before the Defence Committee on 23 April. However, Ministers owe it to workers at the bases to give them the opportunity to participate in the process, and to answer questions, so that fears can be assuaged.

Linda Gilroy (Plymouth, Sutton): I share the concerns expressed by my hon. Friend, as the Plymouth community also feels that it has not been given full consideration. I appreciate that the Public Accounts Committee and the Select Committee on Defence will be looking at the issue, but does my hon. Friend agree that putting all our eggs in one basket is dangerous, particularly if the initiative results in men transferring to—in the case of Plymouth—Devonport Management Ltd.? We may live to rue the day when that happens.

Mr. McFall: Exactly—we need to adopt a very sensitive approach to the issue. In the 1980s, I pointed out that Faslane was a highly sensitive base, and that we need the utmost assurances on security. The work force have been loyal and committed, and no-strike agreements have been established, which ensure that working practices are implemented 365 days a year. Such details must be taken into account, and I suggest that Ministers visit the bases. The Secretary of State has been invited to Portsmouth and Plymouth, and I should be happy to accompany the Minister of State on a visit to Faslane.

A letter to the Faslane work force from John Howie, chief executive of Babcock Naval Services—stating that there will be no significant change in the next year—has to some extent allayed their concerns. If change were to take place almost immediately, it would have a destabilising influence, but why was such information not made available in past few weeks, so that people could understand what lay ahead?

The trade unions have rightly asked for guarantees from the MOD in five areas: pay, conditions, pensions, redundancy entitlements and—importantly—non- compulsory redundancies. The work force should not be sold short, and relationships need to be restored. That is why, with the Minister's permission, I am holding a meeting at the base on Monday morning. Future relationships should be characterised by empathy with workers' interests and concerns; by communication, so that they know about everything that is going to happen as soon as possible; and—last but not least—by gratitude for the work that they have undertaken in the past 40 years in this highly sensitive area.

The need for change is recognised, but we must undertake it in a spirit of co-operation. That is the least that the Government can do to show gratitude to the work force and to the region for 40 years of dedicated service to the naval industry.

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3.34 pm

Mr. Mark Prisk (Hertford and Stortford): It is entirely fitting that this week, perhaps more than any other, we should debate the role, interests and future of our service men and women. In the past seven days we have seen again how their professionalism and organisation have in many ways put the "great" back into Britain. My only regret is that they do not run the railways.

Of course, those same people have by now returned to their daily duties—to the front line in the United Kingdom and abroad. That front line is now stretched to its limit. As my hon. Friend the Member for North Essex (Mr. Jenkin) pointed out, the ranks have declined by nearly 11,000, and since 1997 the number of trained officers has fallen by almost 800. According to the Armed Forces Pay Review Body, the Army alone is short of nearly 500 officers and almost 6,000 soldiers. With operational commitments continuing at high levels, that shortfall inevitably puts additional pressure on those who remain. Indeed, as the Secretary of State pointed out at the beginning of the debate, nearly a third of all service personnel are engaged in operational commitments. That figure cannot be sustained in perpetuity.

Other Members have chosen to examine the immediate problem of shortages and the challenge of retaining serving personnel. For my own part, I should like to focus on two other aspects: the quality of life for service personnel, particularly those in single living accommodation, and recruitment and retention for the next generation of service men and women.

Service personnel's quality of life is an essential issue that, in some ways, is as important as pay and pensions. It is important to the Ministry of Defence, because a quality of life that is perceived as good is a vital factor in retaining personnel. However, the quality of service life is even more important to the individual. No one minds working on a difficult, perhaps even dangerous, task, as long as they are looked after properly. The accommodation does not have to be the Savoy; it just has to be somewhere that can be made into one's home. As the Armed Forces Pay Review Body, among many others, has pointed out, service personnel have considerable and continuing concerns about the state of their living quarters, particularly single living accommodation.

The Armed Forces Pay Review Body raised those concerns in 1996, and has continued to do so for each of the past five years. However, its report of this year goes somewhat further, and I shall quote briefly from it:

As a member of the armed forces parliamentary scheme, I can reinforce that message. One example is Faslane, to which the hon. Member for Dumbarton (Mr. McFall) has referred, albeit in a different context. I had the pleasure of visiting Faslane recently and talking to service personnel. Both its service and civilian personnel deserve our congratulations and commendations. It is not an easy site to work on. It is fairly compact, and maintaining high standards is difficult. According

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to service personnel, to describe much of that accommodation as draughty would be an understatement. In many cases, you can put your fingers in the gap between the window frames and the walls. The heating is inadequate, and you may get hot water today—or not. That is how bad the service is. It is not simply Faslane and other UK bases that are affected; I understand that particular problems exist in Germany.

I am aware that the Government have announced a £1 billion programme, but why will no new beds be provided until 2004, and why will the programme take a further full eight years to complete? When I talk to service personnel, whether through the armed forces parliamentary scheme or more generally, they raise a series of points, and I hope that the Minister will be able to answer some of them. Why will there be such a delay between the announcement and actual improvements on the ground that service men and women can see? Does the Minister share their concern that some of that money is being sidetracked into other budgets?

Will the Minister guarantee that essential repairs and maintenance are not being held back in anticipation of the longer-term refurbishment package? That, I think, is known as the sticking-plaster approach. What steps will the Minister take to ensure that any delays are kept to the barest minimum?

Some claim that much delay resides in the Ministry's use of the Government's favourite scheme, best value, to assess the programme, yet the problem with the best value assessment is, of course, that it specifically considers the building element of the budget and excludes other costs such as retention, bonuses and additional special allowances. In that sense, best value fails, because it does not provide a genuine assessment of the total value for money delivered for taxpayers, although it does impose a series of delays that sap the morale of our front-line personnel.

On recruiting future generations to our armed forces, I shall raise a series of questions about the medium and longer terms. Young people no longer expect to have a single job or career. Instead, they look for variety and expect to have a range of experiences throughout their working lives. Some may say that that has always been the case, and it has in the case of the more ambitious, but it is becoming the norm across the range of experience.

Commanding officers tell me that personnel already routinely come to them seeking to leave after perhaps four or five years, not necessarily because of a bad experience or because they do not feel comfortable in service life, but because people of their generation wish to move on. A leading professional firm that I know in the commercial world cannot get younger people to commit themselves to a partnership, because the term required is too long for them, so the problem is not peculiar to the services; however, it represents particular difficulties for them, especially in a tight labour market.

Those changing aspirations, as well as the need to recruit both the numbers needed and the best and the brightest, demand a shift in service thinking and, in particular, their approach to the packages on offer. I recognise that changing those packages could be especially costly to the services, given the fitness required and the training provided compared with that for civilian jobs.

I know that the Ministry is considering those issues, but I say to the Minister that there is a pressing need for a review of the type and character of short-term contracts,

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not simply in specialisations, in relation to which I believe one is under way, but in general. Indeed, the Government may need to consider whether we shall have to offer future generations significantly greater contractual and financial flexibility than existing recruitment policies allow. In the medium term, there may have to be not simply incremental change, but a potentially radical shift in direction.

In making that shift, one option may be sabbaticals or unpaid leave. I am aware of a number of public bodies that are finding that the most popular unpaid benefit among those aged up to about 35 is being able to take six or 12 months out of work. People will work long hours and they will work hard, but they now want the flexibility to use their time constructively. It could be argued that, in some ways, given their broader resources, the services are ideally suited to responding to such a demand.

The services may also need to respond to such increased labour fluidity by overhauling pension arrangements. The pension review, which is in hand, has been carefully scrutinised by the Defence Committee, so I do not intend to revisit the arguments, although we need at the very least to create genuine transparency on the contributions made and the benefits on offer.

I suspect that, for the next generation, we shall also have to consider the portability of pensions. Conventional thinking has involved the use of an immediate pension point as a retention tool—usually the age of 40—yet those of the younger generation increasingly have no intention of being in the same job at 40. They will be long gone by then. To put the point briefly, that generation's attitude to careers may make pensions completely redundant as a retention tool. I suggest to the Minister that, in fashioning our pensions policies for the next 10 years or so, we must look forward, not at the present or the past. We must not focus solely on past or current service men and women, and we need to think ahead.

We are fortunate in the calibre and commitment of our armed forces personnel. For those currently in the services, although the Government have recognised the problem of poor accommodation, I say to the Minister that we need action, not announcements. He must surely recognise the benefits for morale and for his retention efforts of being able to show tangible improvements. If he makes improvements and speeds the processes up, there will be real potential to make gains. I hope that the right hon. Gentleman responds to that point.

In reviewing manning policy, we must have a clear understanding of future generations' aspirations and needs. That means being prepared to test whether existing personnel tools will retain those future generations. We must also consider whether the services can get ahead of labour market trends and use their wider social and environmental resources to increase the attractiveness of military life. I believe that that can be done; I hope that the Government have the vision and will to deliver.

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