Select Committee on Defence Minutes of Evidence

Examination of Witnesses (Questions 280 - 299)



  280. I think you have already indicated the answer to the next question but I would like to pursue it just a shade further. Let us suppose on the black downbeat scenario, as it were, that there is a very significant delay after we had selected the JSF: we selected it and after we had committed ourselves to design the carriers appropriately, would it then be the case that if there were a very significant delay of JSF that the carriers would have to be delayed themselves, or would it be in any way practicable to switch to another contender to be an alternative aircraft for the carrier? I suspect the answer is that by this stage it would be too late to switch judging from what you have just said about the way the carriers would have to be designed and tailored to meet the aircraft that we selected.
  (Vice Admiral Sir Jeremy Blackham) I think it would depend on which version you had chosen. If you had chosen a conventional take-off aircraft then it is not impossible to suppose that one might switch. If you had chosen a vertical take-off version there are not many competitors. It is worth remarking that we are making the choice of aircraft manufacturer later this year and we do not have to decide at that point the form of launch, whether it is a vertical one or a conventional one. We do not have to fix the final design of the carrier until we do that, so we have actually got a bit of time to see the aircraft fly, to monitor the progress of the programme.

  281. My final question on this is the one I indicated earlier that I would be asking. Would you please tell us a little bit about some of the other aircraft that are in contention for this contract?
  (Vice Admiral Sir Jeremy Blackham) The F18 is well known about and Rafale is the French version which will have some carrier experience before we need to use it. There is thought about a marinised version of Eurofighter which we do not currently have in the programme. That involves changes to the structure of the aircraft. There has been some thought given as to whether an advanced Harrier might be designed. None of these aircraft yet exist in carrier form because we have not selected it.
  (Sir Robert Walmsley) The number of aircraft that the Royal Navy would require for carrier operations is relatively small and the loading on to the price of production of those aircraft, any significant development costs, really makes it a very unattractive proposition in terms of value for money.

  282. What numbers of aircraft are we talking about?
  (Sir Robert Walmsley) Perhaps 60.
  (Vice Admiral Sir Jeremy Blackham) It would probably be slightly more than that because one of the decisions that the SDR made was to replace the Harrier FA2, the naval Harrier, and the Harrier GR7, the RAF model, with the same aircraft, so I would expect the numbers[3] to be a little greater than that. The actual operational fleet combined might not be more than about 60.


  283. If the MoD selects Thomson-CSF will there be any advantage in going the whole hog and purchasing Rafale to fly off it? Is there any synergy between the French bid and the type of aircraft flying off it?
  (Vice Admiral Sir Jeremy Blackham) I would not have thought so, not unless it is the right aeroplane. We are talking about the design of the ship and that is an independent thing. It could be closely related to the aircraft but I would not have thought in a commercial sense—

  284. You gave a very serious answer to what was meant to be a very provocative question.
  (Vice Admiral Sir Jeremy Blackham) One I hope I will not have to answer.

  Chairman: The next question I very reluctantly hand to my colleague, Mike Gapes, but I might come in. One from Mr Hancock first.

Mr Hancock

  285. I am very interested in what you said, I thought your serious comment was to a serious question from the Chairman.
  (Vice Admiral Sir Jeremy Blackham) I always assume the Chairman asks serious questions.

  Chairman: I hope it was not a serious question.

Mr Hancock

  286. I thought it was. He does pose the question that you yourself have posed about designing the ship around the aircraft. Are we still on target, or is it the wish of the MoD to go for carriers in excess of 40,000 tonnes which would be capable of taking 30 aircraft or maybe more?
  (Vice Admiral Sir Jeremy Blackham) I know there is a great fascination with the tonnage of a ship which personally I do not share. The key issue is what is the aircraft going to be and what numbers are we going to deploy. The public position, and I have no reason whatsoever to dissent from it, is that we might want to deploy up to 50 aircraft but we would have to fix the number a bit more clearly than that. Once we have decided on the aircraft we will have to build a carrier to accommodate it. Should it be a conventional take-off and landing aircraft we will need arresting gear and catapults and that will cause the ship to be larger and certainly more expensive than if we do not need it. Depending on the size of the aircraft we will have to consider the size of the flight deck and the size of the hangar arrangements. Different sized aircraft require different amounts of space, you have got to build in a gap between them or they all bang into each other. It does not make sense to determine exactly what the size of the carrier will be until we know what the aircraft is.

  287. That goes right back to Julian Lewis' point about the type of aircraft delays in getting a decision on the conventional take-off fighter as opposed to the vertical take-off fighter. What is your timescale now?
  (Vice Admiral Sir Jeremy Blackham) For?

  288. For making a decision on these carriers?
  (Vice Admiral Sir Jeremy Blackham) The carrier will have to be ordered in about 2005. We are expecting to down select the type of aircraft, the make of aircraft, later this year and we will have to consider the actual version system after that. That will still be well before the decision to design and order the carrier.
  (Sir Robert Walmsley) I think I would like to just make a point there. It is absolutely true, of course, that these extra equipments have to be accommodated and designed if we choose a conventional take-off and landing aircraft. A carrier is not a complicated ship, it is basically a big box with a big hangar inside it and a flat deck and a sufficient degree of command and control arrangements to enable the ship to communicate, as it has to. It is not going to have lots of other weapons. It is not full of systems like a destroyer that is stuffed full of the most complicated electronics, etc.. When you go on board a carrier it is basically empty, it is just a box. What is complicated is the aeroplane. I do not want to allow us to create an impression in your minds that the construction of the ship is an immense technological achievement. I have got Mr Baghaei sitting behind me who is the leader of the Integrated Project Team, who I asked to come to hear the Committee's enthusiasm for this programme today. He used to be a production director at Kvaerner on the Clyde. He knows about building ships. He is not going to allow himself to get bogged down in some minutiae as to whether or not it is difficult to accommodate. We will do the ship.


  289. We went to Newport News and we have been on board the STENNIS. I had to forcibly stop Mr Gapes bringing his STENNIS hat. The ones we have been on are not strictly boxes.
  (Sir Robert Walmsley) That is very interesting, Chairman. I absolutely agree because I went on the sister ship HARRY S TRUMAN in Newport Shipyard and the reason that ship is so complicated is because it has nuclear propulsion. We are not going to do that.

Mr Gapes

  290. Sir Robert, you recently announced that your Deputy, Mr John Howe, was going to leave his present post at the Defence Procurement Agency to take up a secondment with Thomson for two years.
  (Sir Robert Walmsley) Yes.

  291. And continue to be paid by the MoD during that time. I would like to ask you a few questions about this. Clearly Thomson are involved in two projects we have been talking about this morning. What do you hope to gain by the secondment of Mr Howe?[4]

  (Sir Robert Walmsley) More effective competition from a potentially very significant UK based prime contractor. Everybody in the room will know that we saw last year the completion of the merger of the UK's two biggest defence companies. I have spoken often enough about my huge enthusiasm for competition as a method of stimulating innovation. I believe it is very important indeed to the armed services and to the Government and certainly to my organisation that we continue to derive as much benefit from competition as possible. Thomson have not so far been a prime contractor in the United Kingdom in a very big way. Their acquisition of Racal puts them in a position where it seems to me they are potentially able to begin to look a bit like Marconi used to look like, a hugely competent defence electronics company, with manufacturing and engineering facilities in this country, who is also able to take on prime contracting for ships like the carrier, just like Marconi took on the prime contracts for Astute-class submarines. Of course if you are going to do that successfully a number of pre-conditions have to be in place. The company has to understand how MoD works as a prime contractor. That is the first thing that Mr Howe will be able to explain very clearly to Thomson. I know they welcome it and it underpins in many ways this competition for the carrier that we have been talking about. The second point is security. When you have an owner who is basically centred in a foreign country and yet you wish to operate subsidiaries in this country, totally isolated in the security sense from the ownership of the company, the confidence with which other allies and the Ministry of Defence look to that company to operate security procedures is fundamentally important. These are not matters I would like to go into in open session but they are detailed and they are hugely important to the flourishing of the Thomson operations in this country. Mr Howe will take a very close interest in those aspects to ensure that we do not have any stumbles there.

  292. Is it right then that you are promoting, in fact, the consolidation of the British defence industry by doing this in a way? Your memo refers to the continuing consolidation of the defence industry. It seems you are almost wanting to build up an alternative power base to British Aerospace, is that what you are doing?
  (Sir Robert Walmsley) I do not like the phrase "power base". I want to build up an alternative competent prospective prime contractor. If we do not do that we will lose competition and all the benefits that we get from that in defence electronics. We are doing quite well in other areas. We have got Lockheed Martin but they have no substantial manufacturing base in this country, they are a good prime contractor but it is almost an administrative operation. We have to be very, very careful before we sink too far down this route. I would say that GKN Westland is potentially a competent prime contractor but, of course, they divested themselves of their armoured fighting vehicle business which, in a sense, has narrowed their focus again. We are struggling a bit to look for a good competent prime contractor. As soon as Thomson pressed the button on Racal I think I saw an opportunity there which we did not want to let slip through our fingers.

  293. You deliberately put Mr Howe into that company because you see that as a way to build them up and make them more effective?
  (Sir Robert Walmsley) To make them more effective, absolutely.

  294. Which means they are more likely then to get contracts in the future which would otherwise have gone to British Aerospace?
  (Sir Robert Walmsley) It means if British Aerospace win a contract in competition with Thomson they will have had to put forward some very good ideas.


  295. Are there any reciprocal arrangements? Are very senior French Defence Ministry personnel being seconded to us to help us win contracts against the French?
  (Sir Robert Walmsley) Let me be quite clear, Chairman, this is all focused on Thomson's competence in this country. It has nothing to do with that competence in France. I am not aware of any senior British Defence officials being seconded to France in Thomson-CSF.

  296. Vice versa? Senior Ministry of Defence officials in France seconded to British companies to help British companies compete successfully with the French companies?
  (Sir Robert Walmsley) More is the pity, Chairman, there are no British companies operating in a very big way in France in this field. This is a completely separate matter. As I think you know, the French Government are always putting people backwards and forwards to industry and if there was a British industry in France I am sure we would share a bit of that.

Mr Gapes

  297. Is it your view that we should be encouraging French companies to take a bigger and bigger share in the British defence contracts?
  (Sir Robert Walmsley) No, no it is not. My view is that we cannot get ourselves into a situation where we are placing defence contracts willy nilly with the only people in this country who are capable of executing them. It is much better if you have a choice.


  298. British Aerospace has quite a lot of competition making it one of the more efficient British companies. I am not trying to force this point but I am just trying to get my head around the whole concept of we encourage a French company to acquire Racal, we then allow them into a bid for a carrier programme in this country and then we complete the generosity of the British Government by handing them over a very senior civil servant who has given evidence to us on many, many occasions. He is an exceedingly senior and exceedingly competent person. We are now loaning him to them and we are actually paying for him. This is the bit that I find quite difficult, we are paying his salary whilst he goes over to France and tells the French how to screw the British in a competition with a British company. Now I am a great believer in competition but is this concept not taken to absurd levels when it is not even reciprocated by the French?
  (Sir Robert Walmsley) It would be absurd, Chairman, if it was anything like the scenario you describe. The first thing is the British Government did not encourage Thomson to take over Racal. We dealt with that situation when the two companies came to an agreement. It was a very important opportunity for us to think "How do we manage that?" Racal is a very good British activity. Thomson are huge investors in domiciled British defence industrial activities. They are the people who put money into Short's missile systems in Ireland. Money did not come from anywhere else. I hesitate to think what would have happened to the future of that company if Thomson had not been prepared to shoulder that burden. It is very interesting to see what Thomson have done in terms of Pilkington Optomics. They have been wholly responsible. Very interesting to see what they have done in terms of the Thomson Marconi sonar. That is what has enlarged that company's market. We are not relying on Thomson products coming from France, we are relying on products from a number of good defence companies operating in this country who happen to be owned by Thomson. It does not mean the bits are made in France. It does not mean the strings are being pulled from France. The chairman of Thomson-CSF UK Limited was a former Minister in the previous Government, as you know, in the Cabinet. We have got very, very senior people now, UK nationals, in the Thomson organisation in this country and I do not see it as a company which is, so to speak, having its strings pulled tight from Paris. It is a really important part of the scenario of the British defence electronics industry.[5]

  299. Right. Well, we have agreed on almost everything else you have said, Sir Robert, but I am afraid we dissent quite startlingly on that. One further question in deference to our late colleague, Michael Colvin. I do not think he ever allowed any of us to ask a question on OCCAR. Can you bring us up to date with the OCCAR Convention? Is everything now in place? What is the current status of Belgium's and the Netherlands' applications for membership of OCCAR? Another phrase I associate exclusively with Michael, do you see WEAG and the WEAO—he was the only one who knew what it meant—surviving the transfer of the WEU's main functions to the EU? What is the state of play with OCCAR, Belgium and the Netherlands and WEAG and WEAO surviving the transfer of the WEU's main functions?
  (Sir Robert Walmsley) OCCAR, as you know, we signed the Convention at Farnborough in 1998. Four countries—the United Kingdom, France, Italy and Germany. Since then the four countries have been going through the process of ratification which is necessary in order to obtain immunities, like not requiring OCCAR people having to open their cases when they cross borders and things like that. The position is that France has completed ratification and has not surprisingly deposited the instrument of her ratification in the appropriate building in Paris, because France is the depository nation for the OCCAR Convention. The United Kingdom completed that process last month, and we have deposited our instrument. Germany completed the parliamentary processes last year but, for reasons which nobody has been able to explain to me, has not so far deposited the instrument in Paris, which I just find inexplicable. It is the date of the last instrument being deposited in Paris which makes the ratification effective. Italy has not yet completed either her parliamentary process or obviously the deposition of the instrument. It is quite difficult to predict how it is going to turn out in Italy this summer. We are still hopeful that they will complete it before their summer break. Other perhaps more cautious people think September might be a more likely date. If it is September, of course, then OCCAR will be up and running as an independent international body in September of this year. I would be disappointed if it is that late because I would like to see OCCAR have a very formal launch ceremony inviting Defence Ministers and industry from across Europe to what will be a very significant development in the co-operative armaments process. We will need a few months to plan that. I hope to do that in November but if we do not get it all signed away until in September it will be a bit too much pressure on the timetable. Netherlands and Belgium, their applications are on the table. The Netherlands one is much more mature than Belgium but both countries accept all the founding principles of OCCAR. One of the key prerequisites though is that they participate in a programme and neither of them yet has found a programme which would be, so to speak, their entry ticket on those grounds. I hope this year that the Netherlands will sign up to join the Multi-Role Armoured Vehicle, GTK in German, programme which we have under way with Germany. That would be their entry ticket then and they would enter OCCAR almost instantaneously. My understanding is the Dutch Parliament has approved it.

3   Note by witness: the numbers referred to are those for the RN and the RAF. Back

4   Also see written answer from MoD p 48. Back

5   Note by witness: the cost of seconded civil servants' salaries are generally recovered from the receiving organisation; Mr Howe's civil service salary will accordingly be recovered from Thomson CSF (UK) Ltd. Back

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