Examination of Witnesses (Questions 160
- 179)
TUESDAY 25 OCTOBER 2005
LORD DRAYSON
AND SIR
PETER SPENCER
KCB ADC
Q160 Chairman: Minister, you made
some interesting comments just now about the in-service date and
you said you reserve the right absolutely as the Minister to decide
on the in-service date when you have made the Main Gate decision.
I think that was what you said. Does that mean that you no longer
regard 2012 as in any way a date set in stone for the first Carrier?
Lord Drayson: All I can say, Chairman,
is that I have noted the target date which the Department has
set itself in the past. However, given the importance of this
project in the context of how I have described, the in-service
date must be set on the basis of the Main Gate decision, on the
criterion which I have set and I reserve to set that date when
I know what that is.
Q161 Chairman: So the date is no
longer set at 2012?
Lord Drayson: I reserve the right
as the Minister to set the in-service date on the basis of the
Main Gate decision, when we take that decision.
Q162 Chairman: And you have not yet
set it?
Lord Drayson: I have not had a
submission to my satisfaction on the Main Gate.
Q163 Mr Havard: We have been told
previously that the in-service date was 2012. Although the decision
about the Main Gate and the decision about the design manufacture
may be delaying things, the plan was not to prejudice the in-service
date. We were told that if there were delays—and there have
been in these first two stages of the Main Gate and design manufacture—that
would not prejudice that in-service date. You seem to be suggesting
now that three things are under review and that at some point
or another you will use the decision of confidence to allow you
to move to those three stages but that they are not artificially
set by 2012. Is that right?
Lord Drayson: I think it is important
that the Department sticks to the discipline of setting an in-service
date for a project such as this many years out which is based
upon a proper understanding of the risks and the costs and the
implications which that has in terms of the wider interface of
this project with other projects and so forth.
Q164 Chairman: That in-service date
was set as 2012.
Sir Peter Spencer: In the context
of the way in which these projects are independently audited by
the National Audit Office we do not formally set the dates until
we make the main investment decision at Main Gate. What has been
a source of confusion is the status of dates which were stated
publicly at an earlier stage in the programme before we had finished
the assessment phase. In terms of the principles of Smart Acquisition,
we have made it very clear that the dates by which the Department
will be held accountable are those which are set at the Main Gate.
Indeed this Committee last year recommended that we should not
reveal dates prematurely. Now we recognise that problem. We are
certainly not doing it with other programmes, but there is a bit
of history to this project which we need to deal with in the right
sort of way. From my perspective, the support that I am getting
ministerially to ensure that we do mature these decisions properly
and get a really robust understanding of the performance time,
the cost and risk is fundamental. Interestingly enough, as the
Minister mentioned earlier, industry is equally concerned to get
this right because they have got more skin in this game because
of the form of contracting which we are entering into.
Q165 Mr Jones: The Minister has made
himself very clear to me. This is the first time ever anyone has
come before this Committee from the MoD and been honest, frankly,
in terms of their replies. What you are trying to do now, Sir
Peter, is weave it back to your Civil Service speak.
Sir Peter Spencer: That was not
my point.
Q166 Mr Jones: Why do you not do
what the Minister has just done and be honest with us instead
of this fantasy figure you keep coming up with?
Sir Peter Spencer: I merely cited
the history of how this date came into the public domain and I
pointed out that the basis on which we are audited in terms of
performance is the date which is announced when the main capital
investment decision is made, a point which we have not quite arrived
at, which is precisely the point the Minister is making.
Q167 Mr Jones: Last week Mr Coles
said 2012 was the target date.
Sir Peter Spencer: The Department
has to have some basis—
Q168 Mr Jones: The Minister said
something different which I agree with.
Sir Peter Spencer: Clearly plans
iterate over time and you have to have something as a basis for
planning in an informal sense and that is the basis on which all
of the rest of the Department looks at it. These get iterated
over time and the final decision is made at the Main Gate and
then we set those plans in concrete. That is very clear. That
is precisely what the Minister has said.
Q169 Linda Gilroy: I want to go back
to the relevance of the Defence Industrial Strategy to the Main
Gate decision. At a RUSI conference on 12 September, Minister,
you said, "By December, we will not be able to cover all
the sectors to the same depth, and there will be an element of
ongoing work. But I am demanding gritty conclusions on shipbuilding
and ship support . . . " Are you confident that when you
come to those conclusions you will be in a position for Main Gate
to go ahead in the way that you have described and that you are
well aware of the importance of that to the issues of uncertainty
in the dockyards?
Lord Drayson: I am confident the
Defence Industrial Strategy will be delivered in December. It
will contain within it the Maritime Industrial Strategy which
will provide a framework to enable decisions to be taken. I must
say that the way in which the Ministry of Defence have responded
to get this Defence Industrial Strategy done by December has been
admirable.
Q170 Robert Key: Minister, Mr Coles
told us last week that the British and French governments have
been discussing the project for the past couple of years. Can
I ask you when you or any other ministers have met French ministers
to discuss this project?
Lord Drayson: I have met French
officials from the DGA to discuss this project at several periods
during the summer.
Q171 Robert Key: Sir Peter, have
you also met officials to discuss this?
Sir Peter Spencer: Yes, I have.
Q172 Robert Key: When do you expect
the French to come to a decision on this? We were told last week
that probably December is the sort of time when the French will
finally decide whether they are going to get involved. Is that
your understanding, Minister?
Lord Drayson: That is a matter
for the French, but that is the understanding. Whether or not
that is a definite date I think is a matter for the French, but
that is my general understanding, yes.
Q173 Robert Key: You have been very
clear with us this morning that there must be multiple usage of
shipyards in order to construct these enormous ships. Presumably
that would include French shipyards if the arrangement is concluded
with them. It is also true that it was the Ministry of Defence
in June this year who suggested to the French that maybe a third
each of the three ships should be made in the UK and France and
that the final assembly would be in their respective countries.
Is that right?
Lord Drayson: There are some important
principles which within the Department we have set out in terms
of the way in which this potential work jointly with the French
should be done. The first is that it must not negatively impact
the British project. We are in the position of having a design
for the ships and it may be that our decision is suitable for
the French need. That is for the French to determine. It is very
important that the way in which this potential working together
is managed does not prejudice our work. At the same time, I think
we should be open to opportunities to see if it is possible through
this joint working to garner some benefits, either benefits in
terms of cost or benefits in terms of timescale. One of the things
which the Department has learnt over the years is the importance
when looking at this type of joint working with other international
partners, that it is the industrial partners who drive the work
to explore possible solutions, not that it is done from a political
direction. So this is another very important principle which has
been adopted in this project.
Q174 Robert Key: The French have
suggested that there is about 85% commonality between the French
and British requirements, but then there is the thorny issue of
what happens to the equipment and the subsystems that go on at
the final stages here and whether the French would actually be
needing completely different requirements for a completely different
aircraft. Surely that would affect the original design of the
aircraft Carrier itself. After all, you have had all the problems
of weight with the JSF as well. Have you discussed at that sort
of level of detail how this might work?
Lord Drayson: My understanding
is that discussions have taken place relating to the suitability
of the British design for French need and that there is clarity
over the level of commonality in the design. I am sure Sir Peter
can go into more detail for you if you wish. It is very important
for there to be an understanding as to what areas of difference
would be required by the French and that there are solutions put
in place to meet those differences without prejudicing the British
project.
Q175 Robert Key: Sir Peter, I wonder
if you could respond to what the Minister said and tell us a little
more detail.
Sir Peter Spencer: This is clearly
a decision for France to take. They have had access to sufficient
detail of the CVF design to form their own judgment as to what
changes they would have to implement to that basic design at their
own expense in order to make it meet their own purposes. The reason
why this is even feasible, of course, is because we are designing
the Carrier to be adaptable throughout its long planned life and
therefore it has much bigger design margins than would have been
the case in, say, the current class of CVS. We have answered a
number of quite detailed questions in terms of what it is we do
and why and made it clear that we will not countenance anything
which will do any damage to the timescale of our programme or
do anything to adversely affect risk and cost as well.
Q176 Robert Key: The MoD put out
a statement saying you would not let French involvement "hold
up our plans". I am still anxious about when this cut-off
date is going to happen. If the French do not come up with a decision
in December, how long will you give them?
Lord Drayson: I have asked the
question of the project team whether or not they are satisfied
that the discussions which are taking place on the potential of
joint working with the French are prejudicing the British project.
The answer I have been given is that they are not. I would expect
to be informed if we were getting towards a position where it
was beginning to.
Sir Peter Spencer: The crucial
test here, as the Minister said earlier, is that industry has
to believe that this is worthwhile doing and that there are benefits
which they could obtain as well. So there is no intention whatsoever
to stuff this down industry's throat.
Q177 Chairman: Sir Peter, you said
you would not allow the French to hold up your timetable. What
is your timetable?
Sir Peter Spencer: I have got
nothing to add to what the Minister said earlier.
Q178 Mr Borrow: At last week's evidence
session we were told that there was a range of possibilities for
French involvement in the project. Could you outline what those
possibilities are?
Lord Drayson: Where we are at
the moment is that the industry partners are looking at the alternative
options. There are a range of different options which we are expecting
them to come forward with, but it is up to industry on both sides
to come up with a proposal which we find acceptable or not, it
really is down to industry and not for us to prejudge or give
direction to industry. I think this is one of the key lessons.
We have seen projects in the past which have been done through
international collaboration and which have been very successful
and they have been successful because the industrial partners
were left to get on to decide what is the most effective way to
do the collaboration and to identify areas of joint working. That
is the way in which we are doing this project and we need to stick
to that principle.
Q179 Mr Borrow: Would it be fair
to say that the range of possibilities that were mentioned last
week are a range of possibilities that are being discussed by
the industry and which at government level there is very little
knowledge of? Is that an accurate reflection?
Lord Drayson: It is important
for industry to come up with a proposal that industry is happy
with which can then go to the Government to approve or not. We
are waiting for industry to come up with proposals. This is an
iterative process; this is not something which is a one-time event.
We do not have, as it stands at present, a proposal on the table
which is satisfactory and it is up to industry to come up with
those plans. It is important for industry to decide that they
have a plan which they regard as workable for us to then look
at.
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