Private Eye Reports on Land Trillium Departure

The latest edition of Private Eye reports on the recent announcement which stated that Land Trillium were dropping out of the Metrix consortium. The Metrix consortium are lined up to deliver the PFI deal that will lead to the privatisation of defence training:

Land Securities was to convert a "super-hangar" at St Athan, South Wales, into a huge new defence academy for around £1bn, but it seems the credit crunch has put paid to it raising that kind of cash. Whether another property company - most of them struggling to raise money - steps forward looks uncertain. The problem with the private finance initiative is that although the profits are great, they come over a long period and not many firms are in the mood for splashing out and waiting for their cash. If the Ministry of Defence can't persuade another company in, the whole scheme could collapse.

Meanwhile the list of compromises on quality that will be made if the deal does go ahead lengthens by the week.

Tory MP for the Wrekin Mark Pritchard, whose constituency will lose out when aeronautical training moves from RAF Cosford to St Athan and who has described the scheme as "a privatisation too far", recently raised a host of concerns with the National Audit Office.

This latest Private Eye article on Defence Training (DTR) which was part of a 'Defence Special', can be viewed here along with their full report on recent Defence news.

In related news 'Wales on Line' reports on the £100m plus plan that is being considered, to build a new road to Cardiff International Airport:

It has been suggested that the road would be to serve the St Athan training academy.

Personally, I think it would be an outrage to spend such huge amounts of Welsh public money on feather- bedding the training academy project.

This is a scheme of the UK government and will be provided by a consortium of private companies. It will cost £12bn.

They will understandably want to make a profit but why should Welsh taxpayers subsidise private organisations?

The full article entitled 'Why Subsidise Private Profit' can be found here.

More information on DTR from a Shropshire perspective can be found here.

A Privatisation Too Far

These are the words of Conservative MP Mark Pritchard when he spoke out against the Defence Training Review (DTR) which would see defence training privatised and delivered by the Metrix consortium.

PCS has been talking about the pitfalls of DTR for several years but now its message seems to have reached the attention of the mainstream media.

From today's edition of The Guardian:

"The project involves planning applications and big investments in infrastructure projects as well as the sale of large amounts of existing MoD property. Defence officials have expressed doubts about the impact on military ethos.

Mark Pritchard, Conservative MP for The Wrekin, who stands to lose the Defence College of Aeronautical Engineering at Cosford in his constituency if the project goes ahead, describes it as a "privatisation too far".

He added: "St Athan does not have the infrastructure so it needs new roads etc. We have all that in the West Midlands."

The consortium and finance is unravelling, he continued, giving the MoD a "massive headache". He called on ministers to make an urgent statement in the Commons on the project.

A consortium called Metrix, consisting of Qinetiq, the MoD's privatised former research and development agency and Land Securities Trillium as equity partners, was set up to finance and manage the project. But Land Securities recently dropped out, leaving Qinetiq having to look for a new partner."

Interestingly, The Telegraph has also picked up on the story. The Telegraph seems an unusual place for a Conservative MP to be reported speaking out against privatisation...

• Guardian Article.

• Telegraph Article.

Media Bias & Freedom of Speech

Last week the BBC published an article about the Defence Training Review (DTR). It was entitled '£12bn military academy 'on track'. The article was quite biased and lacking in research. Chris Ames sums it up very well here.

The article doesn’t mention that the project is already delayed and over budget nor the fact that Qinetiq, the equal equity partner along with Sodexho, are themselves experiencing difficulties. See the following articles:
The Cost of Privatisation
Qinetiq Prepares to Tighten Finances

I won’t go into whether or not the 5000 jobs figure is accurate, but that number of ‘new’ jobs won’t be created at the base. The jobs are already held by Civil Servants around the country who will be expected to relocate to Wales or lose their jobs.

Many of the trainers will be unable to relocate to Wales and the loss of these skilled trainers will put Defence Training and front line troops at risk.

In addition to the above there is the question of putting the Defence of the United Kingdom in the hands of private companies that are ultimately out to make a profit for their shareholders. A further risk is that the companies involved may get taken over by a non-British organisation which could generate a conflict of interest between corporate aims and loyalties and national security.

You may also be interested in this article entitled ‘The Ministry and the Media'.

It's all in the Timing

Earlier this week it was brought to my attention that the MoD have just sold off their remaining 19% stake in Qinetiq for £257.3 million. They have however kept their golden share which prevents the company falling into foreign hands.

The government has sold its remaining 19 per cent stake in the defence firm QinetiQ for £257.3 million but will retain control of the company through a 'golden share'.

The Ministry of Defence has sold all its remaining 125 million shares at 206p per share to several institutions, taking advantage of a recent surge in QinetiQ's stock.

The MoD have always intended to sell these shares but the timing is rather interesting because an announcement about the outcome of the Defence Training Review (DTR) is expected later this month. You might recall from some of my earlier posts that the preferred bidder for DTR is the Metrix consortium which includes Qinetiq.

Qinetiq was formed in 1991 from part of the in house Defence Evaluation and Research Agency (DERA). At this time 31% of the shares were sold to the the Carlyle group with the intention of eventually floating the firm. The government received a lot of criticism when the firm was eventually floated in 1996.

When QinetiQ was floated on the London Stock Exchange in 1996, the government was criticised when it became clear that the Carlyle Group and several senior civil servants had profited hugely from their shares.

In addition, the initial public offering (IPO) was only available to institutional investors, excluding the general public.

Tomas Carruthers, chief executive of Interactive Investor, criticised the deal: "Once again the private investor - that's you and me - is treated with utter contempt.

For those of you who like number crunching, more details can be found in the Financial Times here and here. Or if you are interested in the outcome of the report on the controversy surrounding the original sell off that can be found here.

Squandered

Or... "How Gordon Brown is wasting over one trillion pounds of our money".

I am currently reading this book, which is written by David Craig. It explains how the government has squandered our money to a tune of £50,000 per family. The book is quite fascinating, but not a recommended bedtime read or for anyone with high blood pressure!

It has the following to say about Public Finance Initiatives (PFI):

“However the greatest benefit of PFI is that it enables ministers to announce magnificent ‘investments’ without immediately having to land us taxpayers with a huge and possibly indigestible bill for the corresponding massive costs. Moreover, the Byzantine complexity of PFI means that it remains largely incomprehensible to most taxpayers, to journalists looking for more interesting,, ‘easier’ stories and to the majority of Members of Parliament. It thus escapes scrutiny, except by a few rabid PFI-phobics whom nobody listens to anyway."

Afternote: Today in the last Prime Ministers Question Time before the parliamentary recess local MP Mark Pritchard challenged Gordon Brown to admit the Government made a mistake in awarding the Defence Training Review (DTR) contract, a PFI deal, to Metrix rather than to RAF Cosford.

AGM Season

The time schedule is tight in the run up to the PCS National and Group conferences. At the moment it is time for all the branches to hold their AGMs and ratify business that will be discussed at the conferences.

Our AGM will be held on Friday, but today Cosford held their AGM and I attended with a couple of my colleagues. The meeting rattled along quite quickly and it was the first time that we had experienced 'speed debating'. (Please read that last comment carefully...)

The guest speaker was a PCS National Officer, referred to by the Shropshire Star as 'A top union chief'. It was news to him ;-)

He was able to update the members with information on the national pay negotiations and also the latest Defence Training Review (DTR) developments.

PS: Do I need to say the AGM = Annual General Meeting?

The Latest from Private Eye on PFI

The latest edition of Private Eye tells of a recent NAO report “allocation and management of risk” in Ministry of Defence PFI Projects.

"with its standard introduction whitewash declaring that “deals are delivered satisfactorily, on time and on budget”.

Only the small print reveals that they were only “on time and to budget following the contract signature”. Given that costs frequently go through the roof in the 45 months it takes on average to get to this stage for deals worth more than £50m, the statement is therefore meaningless."

It has this to say about the Defence Training Review (DTR):

Undeterred, as the Eye has reported, the MoD now plans a £12bn PFI deal to privatise defence training across all the services. Unsurprisingly about 30% of this plan has already been pulled and the rest is way behind schedule.

And on the "defence fixed telecommunications system":

"meanwhile on the "defence fixed telecommunications system" PFI contract with BT. The NAO reported that "staff in call centres operated under the contract were artificially inflating call numbers to meet targets for successfully completed calls". Though the filched "service payments" of £1m have been repaid, as has the £122K cost of an MoD police investigation, no compensation or fine has been paid and BT keeps its £200m a year contract."

The full article can be viewed here.

Our country in their hands...

More on Defence

Following Private Eye's recent article on the Defence Training Review (DTR) and its associated risks to the front line our local MP Mark Pritchard has written to the National Audit Office.

The Shropshire Star reports:

"Mr Pritchard said: "These high level secret discussions have confirmed what I have been saying for the last three years: that a move from RAF Cosford would put frontline operations at risk; would be at huge extra cost to UK tax payers with little extra tangible return; and the contract figures do not add up.

The best thing for the country, for our armed forces personnel, and for the welfare of my constituents would be for the Government to come clean and scrap this flawed project all together."

In further defence news the Shropshire Star also reported on the 18 month delay to the £7.1 billion programme to equip the armed forces with a new computer system. The project is already £182 million over budget according to the Whitehall spending watchdog.

The full article can be viewed here.