MoD looks at selling Royal Dockyards

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THE Ministry of Defence is considering selling the Royal Dockyards at Devonport, Plymouth, and Rosyth in Fife, five years after the two facilities were handed over to commercial management.

Private sector companies were yesterday invited to register their interest in buying one or both dockyards by 18 September. If the MoD decides to go ahead with a sale, invitations to tender will be sent out next spring.

The private management at each dockyard welcomed the MoD's decision to examine an outright sale of the assets. But the General Municipal Boilermakers union, the biggest at the yards, described it as 'bad news', saying: 'The security of our country could be placed in the hands of private speculators.'

When management of the two dockyards was taken over by private operators in 1987, the MoD decided to retain ownership of the assets, partly for reasons of national and strategic interest.

A spokeswoman said yesterday that circumstances had changed since then, because of the MoD's experience of commercial management, reductions in the armed forces and overcapacity in the ship refitting industry.

However, the MoD is likely to want to keep a controlling golden share in facilities for refitting nuclear-powered submarines. This work is currently split between the two dockyards but each has put forward proposals to take on all nuclear refitting.

A decision on whether nuclear refits should be undertaken at only one dockyard is likely to be made before the two are sold.

When the yards were transferred to commercial management their fixed assets were valued at pounds 397m on a current cost basis.

Since 1987 the combined workforce at the two dockyards has fallen from 17,000 to 9,400 with Devonport bearing the brunt of the job losses.

A seven-year contract to run Devonport was given to Devonport Management Limited - a consortium involving Brown and Root, BICC and the Weir Group - while Rosyth's management was handed to Babcock-Thorn.

At the time George Younger, then Secretary of State for Defence, said commercial management could save pounds 123m at Devonport alone.

According to a report from the National Audit Office in May, Devonport claimed that it had achieved pounds 50m in savings up to 31 March 1991 and was committed to a further pounds 60m saving in 1991-92.

However, the NAO said it could not prove whether these savings had been achieved. It also noted that in 1990-91, 15 of the 17 projects completed at Devonport and nine of 11 at Rosyth overran their original targets.

Rosyth has just been awarded a pounds 120m contract to refit the nuclear-powered submarine HMS Sovereign while Devonport is refitting the aircraft carrier HMS Illustrious and HMS Trafalgar, a nuclear hunter-killer submarine.