Select Committee on Defence Minutes of Evidence


Examination of Witnesses (Questions 440 - 459)

WEDNESDAY 17 NOVEMBER 2004

AIR CHIEF MARSHAL SIR MALCOLM PLEDGER KCB OBE AFC, MAJOR GENERAL A J RAPER CBE AND MAJOR GENERAL M D WOOD CBE

  Q440  Mr Havard: Perhaps we can try to find out whether more information could be given to us because in terms of transparency it would be nice to see it. Who helped in doing the appraisal? Did the National Audit Office, for example, get involved? Who did you use in order to help you do the process of deciding who was the best?

  Air Chief Marshal Sir Malcolm Pledger: It was done under the direction of the senior economic adviser in the Ministry of Defence.

  Q441  Mr Havard: The National Audit Office were not involved? It was domestically done by the MoD?

  Air Chief Marshal Sir Malcolm Pledger: That is absolutely standard practice in accordance with Treasury guidelines for all business cases that we then consider.[4]


  Q442  Mr Havard: Can you say anything about what will now happen to the money that has already been invested in the infrastructure in St Athan?

  Air Chief Marshal Sir Malcolm Pledger: As far as we are concerned, the benefits that were apportioned to that particular business case for Red Dragon will still be deliverable.

  Q443  Mr Havard: We know from discussion elsewhere—maybe it is not a question you can answer—but you will understand the reason why we need to pursue it. We had a letter from the Ministry of Defence yesterday which addressed some of the concerns that the trade unions had raised about some of these things and really it comes to this business about your capacity. Part of the reason we asked the questions about military rationale is three years ago there was a requirement for assured access to repair capabilities and a capacity for surge workloads at a time of crisis. Is there still such a requirement?

  Air Chief Marshal Sir Malcolm Pledger: There is currently a review of the needs for that. Surge will obviously be a part of our requirement in building up to some of the contingencies we prepare for.

  Q444  Mr Havard: Where will that be met?

  Air Chief Marshal Sir Malcolm Pledger: We are going to have to create the means of doing that in that organisation at Marham.

  Q445  Mr Havard: St Athan will not be involved in doing anything?

  Air Chief Marshal Sir Malcolm Pledger: If St Athan is the means of creating that surge and that is the best way of doing it—

  Q446  Mr Havard: If this element of DARA effectively suffers and goes out of business because it cannot track all the foreign, other commercial and other military work which the work from the RAF is going to provide a core for, you will have to go away and go presumably back to the manufacturers.

  Air Chief Marshal Sir Malcolm Pledger: I think you are slightly forgetting that that was an original condition on the formation of DARA anyway. They had to attract external work in order to make this organisation—

  Q447  Mr Havard: They were going to attract further work on the basis of the core work which has now been taken away.

  Air Chief Marshal Sir Malcolm Pledger: That core work has been available for a certain length of time already and will continue for another length of time in order to derive the benefits associated with Red Dragon.

  Q448  Mr Havard: This letter we had from the Ministry of Defence said, "We accept that there are risks associated with any decision on the options but that the effects on the workforce and hence the impact on costs need to be carefully managed." It addresses the question about the extent to which you might fall inadvertently into a position where you are dependent upon suppliers of the equipment to do things. It says this will not happen. It says to me that the monopoly situation in respect of both the decider and provider functions would be avoided and the means of avoiding it is a very fancy—half of it, it seems to me, has come out of the McKinsey book of boys' own management—management process, which is described here, that is needed in order to establish clear demarcations of responsibility to allow the MoD to manage effectively any monopoly supply of risk. Why is this construct having to be put in place when not too long ago we had a debate about providing a trading fund and set up an organisation called DARA in order to do all these things? What was there seems to be having to be replaced by a new, fancy mechanism which frankly I have very little confidence in, as it is described to me, in order to avoid the very question that DARA was meant to help to address.

  Air Chief Marshal Sir Malcolm Pledger: If I may, you answer your own question because this is perceived to be a better solution to the issues that you have just raised.

  Q449  Mr Havard: Why is it better? How is it better?

  Air Chief Marshal Sir Malcolm Pledger: Because the business case shows how we will do it, how we will manage those risks. If the Minister decides, which of course he has not yet done; he has simply indicated his preferred option, we will manage those risks in the implementation plan.

  Q450  Mr Havard: When is he going to make his decision?

  Air Chief Marshal Sir Malcolm Pledger: As you know, the consultation phase ended on 27 October and each of the points made in that consultation period had been looked at very carefully before then, offering the Minister advice against his preferred decision. I expect that advice to be available in the very, very near future.

  Q451  Mr Havard: I am trying to struggle with the idea of where this particular issue of these particular aircraft and the situation between Marham and St Athan fits with the rest of the whole of DARA, where it fits with the rest of the whole of the logistics, where it fits with the whole thing about your transformation and how that all fits in with what is mysteriously called a medium term work strand, which I am not clear about at all; and how that all fits with whether or not there is a change of policy going on here. If that change of policy is being driven by the operators of the system, as it were, maybe the military, DARA and the agencies, and not by the politicians, then I have a bit of a problem.

  Air Chief Marshal Sir Malcolm Pledger: This is not a preconceived outcome and it is not a re-nationalisation in the way that you describe because other aspects of this review have resulted in a roll back. An example of that is that the helicopter community will go back into Fleetlands because that was seen as the most effective and efficient way of conforming with depth and forward requirements in the future.

  Mr Havard: You said earlier on this could have been done and could be done at St Athan. You say for whatever reasons it is more efficient and effective, by whatever criteria which I still do not understand. You decided it was more efficient and effective to do it the other way. My colleague has a question about how that decision is effectively the opposite to another decision.

  Q452  Mr Roy: I still disagree with you on your renationalisation where jobs in the private sector going into the public sector. That is the same as what used to be nationalisation the other way and I wish we had more of it. The Minister announced on 16 September that concentrating support for rotary aircraft at DARA Fleetlands offers the opportunity to exploit fully the economies of scale that may be achieved by collocating these platforms at a single centre. That seems to be a contradiction to the approach taken with the Tornado GR4 aircraft where support has been concentrated at the main operating base that you have just been trying valiantly to defend. What are the economies of scale from concentrating support at DARA Fleetlands? I am not an expert at all on helicopters but I know you are. My understanding is that the rotary helicopters have different engines, different structures, so where you have aircraft with such differences in the engines, frames and systems, where can you find the economies of scale?

  Air Chief Marshal Sir Malcolm Pledger: The reference, as I understand it, is about overheads being apportioned across a larger number of aircraft at that location.

  Q453  Mr Roy: Just overheads?

  Air Chief Marshal Sir Malcolm Pledger: That is that particular reference. What it does not say seemingly from your quote is that there is also the significant opportunity, because of the nature of those platforms and lean support mechanisms, to take advantage of collocating those platforms at Fleetlands. There is more than one potential benefit in what we are trying to do at DARA Fleetlands.

  Q454  Mr Roy: You would accept that there is not an overall economy of scale for repair or whatever?

  Air Chief Marshal Sir Malcolm Pledger: We are in danger of what I will call taking one comment out of context and believing it is the only reason for a particular outcome. It is not.

  Q455  Mr Roy: The Minister spoke about rotary and the economies of scale and, not being an RAF person, they are all the same.

  Air Chief Marshal Sir Malcolm Pledger: They are not all RAF either. For example, the Lynx will go. The Lynx services the Army and the Navy. Helicopters are currently within the Joint Helicopter Command which is in Land Command.

  Q456  Mr Roy: What about the contradiction where you have just been defending moving St Athan where there is a direct contradiction of doing this at Fleetlands? Do you think that is a contradiction?

  Major General Raper: No, I do not. We need to come back to the principles I sought to outline earlier. Those principles were about reducing the amount we bring forward, creating a single depth hub and concentrating around a logistic centre of gravity. From the military perspective, those are things we need to look at. There is then the investment appraisal and the business case which will determine where the centre of gravity should be.

  Q457  Mr Havard: In one case that depth support, albeit it in one place, has to be done by military personnel and in other cases it does not.

  Major General Raper: The number of military that we need is that number which you need to sustain deployed operations and no more. Therefore, that number of people has to be employed.

  Q458  Mr Havard: I am not wrong earlier on in talking about a lot of this, as far as the RAF is concerned, is to do with your crisis manning levels and where you keep these boys gainfully employed in the meantime.

  Air Chief Marshal Sir Malcolm Pledger: That is one of the elements because our whole purpose in peace is to create readiness.

  Q459  Mr Havard: There might be other ways you could do it without disturbing St Athan.

  Air Chief Marshal Sir Malcolm Pledger: In the option which was St Athan, which was included in this, we would still have had to employ the right number of military people in this single depth hub.


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