Select Committee on Defence Minutes of Evidence


Examination of Witnesses (Questions 60-79)

MR GUY GRIFFITHS, MR ROGER MEDWELL, DR DAVID PRICE AND MR CHRIS CUNDY

31 JANUARY 2006

  Q60  Chairman: That was, though, the question I was asking.

  Dr Price: I understand that. I think it is always very difficult with long life. Clearly one of the classic examples on a submarine is the nuclear steam raising plant where the technology gets gradually older and a requirement for insertion of new capability is required to maintain your fleet moving forward anyway, so I hope I have answered your question, Chairman.

  Q61  Chairman: No, you have said it is very difficult to answer.

  Dr Price: Yes, I think it is very difficult. To answer your specific question can you retain capability for a new design, because that is where difficulty comes, if you take JSF, as a good example, if you look at a replacement of JFS going forward, is it at all feasible for the UK to claim to be able to retain the design for doing that on its own 40 or 50 years from now?

  Q62  Chairman: What is the answer to that?

  Dr Price: I think the answer is probably no.

  Chairman: I see, thank you very much. Moving on to research and technology, Robert Key.

  Q63  Robert Key: Does this Defence Industrial Strategy provide you with sufficient coverage? Were you expecting it to say anything different?

  Dr Price: With respect to R&T?

  Q64  Robert Key: Yes.

  Dr Price: It is a very interesting question specifically on R&T. I think there is and there has been a lot of consultation with industry over a significant length of time on the research and technology strategies. There is always the problem that to maintain a broad width of capability the affordability criteria of how much money goes into R&T is always under threat. I think the Tower of Excellence and the defence university technology centres have generally been welcomed by industry in terms of giving clear focus of where MoD wants to put its investment. Probably our biggest concern is that it is almost separated from the sector technologies in terms of this industrial strategy. It is very difficult, I would argue, from our perspective, particularly from the smaller companies' perspective, to read the technology and research part and to link it to what is in the main sectors. So I think what it says is quite acceptable. I think where we find difficulty is understanding how it links into the sectors. Are my colleagues with me on that? Does that answer your question?

  Q65  Robert Key: Yes. Given future defence programmes are going to be about supporting and upgrading existing equipment, what signal does that give you for your investment in research and technology?

  Mr Griffiths: I do not think that necessarily tempers it because one can still see substantial opportunities in the area of technology insertion and the upgrade of programmes for new technology based on R&T investment to still have quite an interesting financial payback for us. What I would observe is that if one looks at the £300 million or so currently spent by the MoD on R&T, then I think the question (which bears on what you are saying) is whether or not there is adequate linkage between the areas for which that spend is being targeted and the future vision of actually needing to look at upgrading and inserting technology into existing platforms, rather than perhaps blue skies thinking aimed at completely new concepts of military capability. I think that linkage is missing.

  Q66  Robert Key: In their evidence to us QinetiQ[5] say that clearly the Government recognises that research and innovation is very important but they are silent on the level of government defence research. Do you think there should be more money spent on defence research by the Government as opposed to private companies?

  Mr Griffiths: At the moment in statistical terms it represents about 1% of the combined EP and STP budgets. Intuitively, that feels low but there is some interesting analysis within the White Paper as to the payback in terms of military capability from different projected levels of R&T spend. I do not know if we are necessarily qualified to critique it here but that analysis does indicate that perhaps the level of spending they have today is at broadly an optimum level. There is certainly no indication in the White Paper that there is an aspiration to increase it substantially.

  Q67  Robert Key: Do you think the government is funding the right things? The government can accept a risk which you might not be able to accept in terms of investment and research. Have the government got it right?

  Mr Medwell: With the current problems we have in Iraq, we have not spent nearly enough on studying the issues there in respect of our personnel and what we could do to protect them. Things have skewed. We are still looking at Cold War investment as opposed to peace keeping investment. There are a lot of issues there and, had we known more about this, we could have redirected that money and probably have saved lives.

  Q68  Robert Key: The Defence Industrial Strategy does say here that there is a need for further work in 2006 to inform our research and technology priorities. Are all four of you involved in that further work to inform research and technology priorities?

  Mr Medwell: We have not yet participated but we have been invited to participate in a number of think tank sessions aimed at responding to that action during the course of the first half of this year.

  Q69  Robert Key: Are any of you members of the UK Council for E-Business?

  Mr Griffiths: The DMA has a number of companies that are members of it.

  Q70  Robert Key: What about the Transatlantic Secure Collaboration Programme? Are you involved in that?

  Mr Griffiths: Personally not.

  Q71  Robert Key: We are told about all these splendid organisations. The Transatlantic Secure Collaboration programme is clearly very important, looking at the whole question of other people's secrets and technologies that you are going to be able to share critical bits of at critical times. Yet for example, in paragraph B12.18, the Strategy is talking about the development of a European Defence Agency, saying that EDA work may lead in due course to a longer term strategy to consolidate testing and evaluation capabilities across Europe. On the one hand, you are looking at Europe and developing more of Europe in that particular regard; on the other hand, we know the transatlantic work with the United States is of critical importance. How is the United States going to look at companies like you if you get too involved with European companies?

  Mr Griffiths: You will probably have to ask them.

  Dr Price: It is a difficult balance but the ITAL waiver provision remains a critical issue with respect to transatlantic technology.

  Q72  Robert Key: That is interesting because I certainly have been convinced that the ITAR waiver is not as important as we thought it was. Am I wrong?

  Dr Price: You still have the problem with early research activity for companies that are operating both sides, as obviously we do with 50% of our business in the United States. It is very difficult with the TAA restrictions on the transfer of very early ideas which often start the innovative process going, where you have quite significant bureaucracy on one side of the pond to start the discussions. That can create a bifurcation of technology investigation which probably is to the detriment of the UK side of the technology balance.

  Q73  Robert Key: In the end, the employees of our defence companies are going to be the people who deliver these strategies. Investment in people is therefore critical. Is the United Kingdom now capable of producing young people sufficiently educated in science and technology to fulfil our dreams for the future of defence in this country?

  Mr Griffiths: There is no question that they are capable of doing it. There may be concerns as to whether, notwithstanding the pressures on the market here, we are producing them in sufficient quantity. In particular, it is a real theme for me within my own business when I look at the throughput of young people through the A level system, perhaps acquiring very high quality qualifications at that level in those sorts of subjects that you think would be applicable through the tertiary education system, to developing careers in this sector and how many people with those sorts of qualifications are then lost to the engineering community as a whole and perhaps take preference in banking, accountancy, the legal profession or whatever.

  Dr Price: The attractiveness may be the most important thing rather than the skill.

  Q74  Chairman: Dr Price, is it not your view that the prospect of getting any meaningful ITAR waiver is dead?

  Dr Price: Yes. I am not waiting for one.

  Q75  Chairman: It is not a crucial issue from your point of view?

  Dr Price: Not in that sense, other than the fact that it makes quite a big difference in terms of your industrial strategy. That was the point I was making. It makes a difference to how an industrial strategy from a company point of view would unfold, compared to if it does not exist.

  Q76  Chairman: Mr Griffiths, you said that you thought from the Defence Industrial Strategy the figure—I think you are referring to the graph on page 30 under A58[6]—for research and technology spending in the UK suggested that it was at an optimal level. That deals with 2001. Is it not right that there has been a long term decline in UK spending on research and technology?

  Mr Griffiths: I cannot quantify it but I believe that is the case, yes.

  Q77  Chairman: Does that not, even according to this graph, suggest that the future capability of British defence equipment in, say, 15 years' time will be seriously deficient?

  Mr Griffiths: I think that is true.

  Q78  Chairman: That does not sound optimal to me.

  Mr Griffiths: I did not say it was optimal. I said there was an argument within the White Paper that suggested that the current level of expenditure shown on that graph is the additional payback from increasing the level because the shape of the graph was quite modest. If you see a reduction in the level of that spend, you would fall very rapidly down that graph.

  Chairman: Finally, can we get on to the crucial issue of implementation?

  Q79  Mr Jones: The foreword to the White Paper says that the strategy will not be delivered unless the whole of the defence acquisition community, including industry, is able to make the necessary shifts in behaviours, organisation and business processes. What happens next? This document is quite challenging to you in industry. Are there any signs that the same tough questioning and hard decisions will occur in terms of DPA who have not come out in the many years they have been in existence with great valour?

  Mr Griffiths: If I deal with the second part of that first, it does present huge challenges for the wider MoD, not just the DPA. Where do those challenges exist? First of all, they are behavioural. We have talked about the fact that the bedrock of MoD procurement policy now, as described in this document, is on value for money for defence; whereas if you went back to the 2002 strategy statement competition was the bedrock. That does drive huge behavioural changes in terms of mindset within the MoD and industry. It raises questions as to how you are going to measure value for money for defence and those are not answered in the White Paper. There is this emphasis on through life management. I would observe frankly that if one is genuinely to take a through life approach to this it begs the question as to whether the organisational structure within the MoD, the DPA and the DLA is aligned to that.


5   Note: See Ev 77 Back

6   Note by Witness: He was referring to the graph on page 39, A5.8, not page 30, A58. Back


 
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