Select Committee on Defence Minutes of Evidence


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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