Navy supply fleet 'to be privatised', as MoD seeks £200m cuts

The Ministry of Defence is expected to take the first steps tomorrow towards privatising the fleet that supplies Britain's warships.

It will announce a review into the future of the Royal Fleet Auxiliary (RFA) as part of a series of cost-cutting measures which should be announced early next year.

Unions say privatising the RFA, which employs 2,000 people and runs 16 supply ships, is a "done deal" that could result in the fleet being manned with cheap labour from countries such as the Philippines.

They also fear that new ships will be built in China or India rather than Britain.

Backbench Labour MPs are also likely to rebel against the measures.

Ministerial sources say that the MoD is struggling with severe cash-flow problems because of Afghanistan and has asked the head of every department to identify 10 per cent cuts – adding up to £200m – by Christmas.

One sources spoke of "blind panic" in the MoD, such is the scale of the cash crisis. "Wherever they can save money, it's forget about the long term."

The Rail, Maritime and Transport (RMT) union says it is planning a fierce campaign against privatisation. The RMT leader, Bob Crow, said a loophole in the minimum-wage legislation exempted shipping.

"The RFA is mainly a British crew," he said. "But this is purely a cost-saving exercise. The only way they could save large sums of money is by cutting the cost of the staff. So the people who supply the fleet with fuel and munitions would be casual labour, and it doesn't take much imagination to see the inherent security risks in that. It could also mean that new ships are built in India or China, rather than British shipyards. We will use every tool in our possession to fight this."

John McDonnell, the left-wing Labour MP for Hayes and Harlington, predicted there would be a backbench rebellion over plans to privatise the RFA.

"There will be a lot of anger. It is lunatic in the extreme at this point in time – who in their right minds would make us vulnerable in this way? It's extraordinary. There would be a rebellion of backbench MPs. It comes close to a general election and covers a lot of concerns – from security to the principle of privatisation," he said.

An MoD spokeswoman said: "The ministry is looking at ways we can improve efficiency across defence. We are considering a number of options how we achieve this, and trade unions are fully engaged in the process. No decision has yet been made."