Select Committee on Defence Minutes of Evidence


Examination of Witnesses (Questions 140 - 155)

THURSDAY 25 APRIL 2002

SIR ROBERT WALMSLEY AND MR JOHN COLES

  140. Lastly, we understand from the trade unions that you have underway a review of base porting policy, which it is rumoured is likely to raise the prospect of rationalising to a single southern naval base. I know your previous answer but would you like to comment on this base porting policy?
  (Mr Coles) I would doubt you could rationalise to a single naval base, it just would not be physically big enough for the ships that are coming on. Clearly with new ships arriving and a quite significant increase in size, and Sir Robert has talked about the 45 that is quite a large ship itself, then where we should base the ships and the infrastructure to support them needs to be reviewed and that is happening now in consultation with other stakeholders, the trainers and, indeed, the procurement authorities. We are looking at where these ships should be based in the light of the cost to provide support to them and change in infrastructure and that is going on now.

  141. If the firms have their proposals on estate rationalisation, do you have a veto power or do you have a right to look at those documents at a early stage or when any study has been concluded?
  (Mr Coles) This is a planning arrangement so we would hope they would take us into their confidence when they were doing these things. On estate rationalisation we want the output, how they deliver it is less of a concern to us. If they can do things differently by having a lower asset base then we will all be beneficiaries.

  Chairman: Thank you.

Mr Jones

  142. Therefore, if a contractor said that it could do refit work outside one of the traditional naval base dockyards, would that be acceptable to you?
  (Mr Coles) I think Sir Robert touched on this earlier. We do have a fixed cost, if you like, to support a naval base. What we would not wish to happen, and indeed take some effort to prevent happening, is to have that activity under-utilised and recreated somewhere else. There is a constraint really on where you could do some of these activities because we would not want a large infrastructure that we need for normal berthing of ships and then do the maintenance somewhere else. For example, as Sir Robert talked about Astute being supported at Faslane, we would not want somebody else to create another space somewhere else when we already have a facility there, to utilise what we actually have. Indeed, the contractors would find it difficult to do because they would have to fund it. To some extent it is a built-in control.

  143. No, it is not, is it? You mentioned one specific one but there is shipyard capacity around the country, is it not possible that somebody could say "Right, I want to take that work somewhere else"?
  (Mr Coles) I was speaking about warships. For non-warships we do compete them all around the country. So where they are RFA type ships, and there is a large number of those, they are competed and they go wherever the capacity is and the workforce to do it is there. Outside what I call the specialist sector it goes back to this set of artisan skills, I would call it. You need them and you cannot have them everywhere.

Mr Roy

  144. Could I raise a couple of questions on the very important subject of personnel. We all agree that we cannot do anything without them. The Maritime Logistics Sustainability Study concluded that there would be insufficient staff left in the MoD to sustain maritime logistics support should partnering, including the transfer of staff to the private companies, be taken forward. Why is it that that is the recommended way forward?
  (Mr Coles) There are some skills which both sides need and it is perfectly reasonable, and I think quite acceptable, and indeed it would be imperative in a partnership, for people to cross to the other side of the boundary from time to time otherwise both sides will become less well informed about the other's activities. I think that is a very healthy way of actually meeting expertise on both sides, particularly if you are partnering, ie you have the same objective, for a long-term relationship.

  145. Finally, again on the personnel issue, the issue of secondment was brought up to us when we visited the bases in Scotland. The TUPE transfer was raised by the trade unions specifically with us and I note yourself that you met opposition from the companies. Did the MoD give secondment serious consideration and, if so, why was it discarded as an option over the Transfer of Undertakings (Protection of Employment) Regulations
  (Mr Coles) The trade unions did indeed discuss the option of seconding staff as civil servants to the companies and then working for the companies. The companies themselves did not favour that as a proposal on which to base their arrangements for partnering with the naval bases because they believed that it would be a very difficult process to actually manage two workforces with different terms and conditions reporting to two fundamentally different organisations. So they themselves did not put it forward, although the TUs did discuss it with the companies.

  146. What you have is the existing TUPE arrangements for the existing workers but workers who will be brought in in the future will not be on the same TUPE rates and levels because that is what has happened at the moment on other PFI projects.
  (Mr Coles) Yes.

  147. Surely that could also cause a problem?
  (Mr Coles) Over time, of course, the company will negotiate, as they are required to, so the total workforce becomes harmonised, and that is what will happen at the time. That is the proper way of doing it. You could not have in the long-term two fundamentally different organisations working to different terms and conditions, over time you will negotiate, and that is what has happened in the privatised.

  148. The MoD asked the companies to look at the type of relationship that comes about from this TUPE arrangement. Maybe two years down the line, three years down the line, it is very important for the MoD personnel who are working for a company who are trying their best daily that the MoD give the assurance that they will go back and revisit the personnel issues.
  (Mr Coles) For those people who are TUPE-d over that does become the responsibility of the company. Our obligation is to ensure that the companies do honour the code of practice which we have all signed up to and that is, indeed, the whole way we have set this thing up. They have to honour the TUPE code of conduct when they are transferred over and any changes to their terms and conditions will have to be negotiated by the new owner with the employees.

  149. I am sorry, negotiated by whom?
  (Mr Coles) By the new company with the employees through their trade unions, that is how it is done. The terms and conditions you have in the dockyards today from 1987 are different from when they were TUPE-d over in—

  150. I understand that but what I am asking is will the MoD, for want of a better word, keep an eye on it?
  (Mr Coles) I think keep an eye on it is not quite true. We will be aware, of course, because it will come back by natural feedback, if the terms and conditions are not being honoured. We have a responsibility to do that.

Syd Rapson

  151. I am worried about the military use in these new contracts, that these new companies are going to take over the initiative and we are going to be using shore based service personnel, or they are, and that means uniform staff are going to be making profits for a private company at a time when we are under a lot of pressure for our service personnel to be doing what they are supposed to be doing. Is this a sensible arrangement for the long-term as they can be withdrawn at short notice if we have a problem in Afghanistan or somewhere?
  (Mr Coles) Two things, I think. First of all, the Chief of Naval Staff is fully on side with this whole proposal. Secondly, if we have military personnel who are essentially providers then they need to be part of the wider workforce to do the work. They are not there just as providers though, they are there to do other tasks and may not be there, for example, if foot and mouth comes up or they have to go to some other activity. Part of the Naval Commission Service is to have a sea-shore ratio and this is one way in which it can be provided. To use that manpower efficiently it is better as a whole one manpower rather than having two separate and for the provider to actually manage that ensuring that terms and conditions of the service personnel are maintained because they may not be there.

Chairman

  152. Thank you. Now for one completely different. One of the great sagas in British procurement policy that this Committee has followed for 15 years is the Upholder class submarine: bits of it put in back to front; was never deployed by the Royal Navy; tied up in Barrow, if I recall, and then finally it was given away to the Canadians for £300 million. Do you dissent from anything I say?
  (Sir Robert Walmsley) I dissent from every single sentence.

  153. I see now the Canadians are not happy. Has it come to you again, Sir Robert, or has it come to you, Mr Coles, or have you simply read the same newspapers that I have?
  (Sir Robert Walmsley) I have read the papers too, Chairman. This is my—I nearly said baby—issue. First of all, the submarines were deployed, as I know you know very well, Chairman. I have been to sea in them when they have been on deployment. We had a tremendously successful deployment with HMS UNICORN east of Suez. We know those are good submarines. The second point is we did try to sell them to quite a few countries and the best price we could get of a real deal was from the Canadians and when you are selling something you get the price you can get. I very much regret that it represented such a small proportion of what these excellent submarines had cost us. When you are selling something like that you are not in a position to impose a price on people. It is also true to say that reactivating the submarines has been done in Barrow and it was a personal decision of mine to spend the money storing those submarines, because I was Director General of Submarines at the time, to make them available for sale. If we had not done that then those submarines would not have been in any condition to be reactivated. The costs were tiny, it was to do with batteries and safety, etc., etc. I do not think leaving them in Barrow was a bad decision, that worked out quite well. I am afraid it has not been as simple to reactivate these submarines as it should have been. We discovered things—original sin it is called sometimes—things that had not been quite as we had wanted and some things had deteriorated more quickly than anybody had predicted, certainly me included. It has cost us a bit more than we had hoped to reactivate them. The deal is still a good deal. It has taken a bit longer and the Canadians, of course, are not happy with that but overall they are very content with the submarines they have got. Actually I am going to Canada next month so I shall confirm a bit of that face to face. Now I am only on newspaper reports, Chairman, but it is absolutely true to say that the Canadians have their own weapons system for these submarines. What I have seen in the papers looks quite closely linked to the work that needs to be done in Canada to make these submarines compatible with Mk-48 torpedoes etc., etc, and therefore is not our responsibility. I am absolutely confident that the Canadians will be very satisfied with these fine submarines in due course, as we were when we had them.

  154. Could you let us know how long they were deployed for because the story is a pretty sad one.
  (Sir Robert Walmsley) It was not very long, Chairman. I know it was not very long but they were deployed.

  155. I know you had responsibility but it was a pretty disastrous decision by the last government—forgive me, Patrick—to get rid of these very, very decent submarines when now we are down to 12. I am very sad we did not keep them. Have the Canadians made any formal complaint about them or is it simply Mr Eggleton making a statement in front of the Defence Committee?
  (Sir Robert Walmsley) The Canadians have made no formal complaint about these submarines of which I am aware, and I think I would be aware. Of course they would niggle about things that are not perfect but that is sensible on their part and it is not unexpected, but there is nothing strategically wrong with the submarines or wrong with them full stop.

  Chairman: I said 12.30, it is 12.33, I am sorry, I hope you catch your train. We will see you with the Minister. I warn you that no doubt my colleagues, who will be reinforced by our absent colleagues, will try very hard not to have a rerun of the same questions.

  Mr Roy: Or the same answers.

  Chairman: Or the same answers. Thank you very much indeed.





 
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