DEFENCE Secretary Michael Portillo yesterday used the second visit of the Scottish Grand Committee to Fife to confirm that a deal to privatise Rosyth royal dockyard, eagerly awaited by both management and workers since the summer, had been clinched.

Once lawyers for both the Government and operators Babcock International had checked the fine print, the latter would become owners of the yard, with a contract expected to be signed by Christmas and the formal change of ownership following in the early days of the new year.

The privatisation would save the taxpayer #100m over the next 10 years, claimed Mr Portillo, who, among other announcements yesterday, said that the #244m cost of Britain's contribution to peace-keeping in Bosnia would come from contingency reserve funds rather than from the defence budget.

The yard's union leader, Mr Brian Negus, said that although they welcomed the privatisation as an end to uncertainty, these savings could only come out of the conditions of the workforce, and he criticised the time it had taken the Government to conclude the deal since the plan was announced three years ago.

Babcock's managing director at Rosyth, Mr Allan Smith, said they had improved productivity and profitability, adding: ``We are delighted to have secured ownership of the facility and look forward to managing its future interest.''

Councillor Alex Rowley, leader of the administration on Fife Council welcomed the news, saying: ``The purchase will put into contractual terms the surface ship programme offered to the dockyard by Malcolm Rifkind when Trident submarine refitting was given to Devonport. I'm sure that Rosyth will become the UK's premier surface ship refitting yard.''

Scottish Secretary Michael Forsyth said: ``Negotiations about the sale have been tough and sometimes difficult, but I am confident that the deal which has now been reached offers a very bright future for the dockyard and its highly skilled workforce.''

However, questions remain. Crucial details such as redundancy and pension liabilities are among those still to be thrashed out.

The other major question mark is over just how firm the promise of Royal Navy refitting work for the yard was. Mr Portillo said examples of work which would go the the Forth yard were the carriers HMS Ark Royal and HMS Invincible, and nuclear-powered submarines HMS Sceptre and HMS Spartan. There would be others, he pledged.

However, given broken Government promises to the yard in the past, there was still suspicion.

Leading the defence debate for the Opposition, Shadow Armed Forces Minister John Reid said it was amazing how often decisions which were postponed, cancelled or delayed by dithering and incompetence were miraculously resurrected in time to bolster ministerial visits. He scorned the Government for spending #500m to make soldiers redundant only to have to spend #15m now on a recruitment drive.

Mr Menzies Campbell, Liberal Democrat MP for North East Fife, and party spokesman on Defence, dismissed the occasion as an attempt to use the Scottish Grand Committee as a platform for a party-political announcement on the future of Rosyth dockyard.

He said of Mr Portillo: ``In truth, he had nothing new to say and the workforce at Rosyth is still being affected by uncertainty.''

All the rival parties criticised the prospects for defence in an independent Scotland. Mr Portillo said: ``In defence, separatism is not even a zero sum game. Scotland's economy and the UK's defence would be the losers.''

Dr Reid called the SNP policies ``a blueprint for a glorified Celtic constabulary which bears no relationship to the traditions and capabilities of Scottish fighting forces.'

Mr Campbell said their plans were for little more than a gendarmerie.

The defence brief fell to SNP parliamentary leader Margaret Ewing, with leader Alex Salmond leaving Cupar early to attend another speaking engagement and the other two MPs late to arrive.

However, Mrs Ewing's driver had a heart attack on arrival in Cupar and was rushed to hospital in Dundee.

The visibly distraught Moray MP protested misrepresentation by the SNPs opponents, saying they envisaged no need for conscription in an independent Scotland, and pointing out that the party had put its full defence policy in the public domain.