Examination of Witnesses (Questions 140
THURSDAY 25 APRIL 2002
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.
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.
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.
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.
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
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 myI nearly said babyissue. 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 thingsoriginal
sin it is called sometimesthings 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 governmentforgive
me, Patrickto 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
(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.