Examination of Witnesses (Questions 184-199)
SIR JOHN
CHISHOLM
28 FEBRUARY 2006
Q184 Chairman: Good morning and welcome
to everybody on this inquiry into the Defence Industrial Strategy,
particularly John Chisholm from QinetiQ. Sir John, perhaps I could
begin by thanking you for coming to give evidence about the Defence
Industrial Strategy. I wonder if I could open up our inquiry this
morning by thanking you particularly for your memorandum on the
Defence Industrial Strategy[1]
and read out a couple of bits of that. It says in your memorandum,
"The Committee should consider this apparent internal contradiction
in a document that speaks so strongly to the importance of technology
and innovation on almost every page, yet is silent on the level
of defence research funding." I am not trying to put words
in your mouth, but I think you are pleased with the recognition
of the importance of research and all that that implies within
the Defence Industrial Strategy. Do I detect a degree of disappointment
with what is actually said about it in the White Paper?
Sir John Chisholm: Good morning,
Chairman. Yes, I think you have seized the substance of our evidence.
The first point is that we are pleased with the overall thrust
of the Defence Industrial Strategy. I think Lord Drayson has done
an excellent job in a short period of time to grab a hold of the
whole issue of procurement in the United Kingdom and to devise
the main themes of a strategy as to how to improve procurement
and also improve the industrial base which underpins procurement.
We have counted that there are some 600 mentions in the DIS to
the words "research, technology and innovation" and
that underpins what you have already said, that clearly research
and technology appear to us to be well represented as key to a
Defence Industrial Strategy. Having said that, there is not a
carry through in this version of the DIS as to what the consequences
might be in terms of the provision for research and technology
in the future.
Q185 Chairman: What do you think it should
have said about that?
Sir John Chisholm: We would argue
that the logic of the DIS is that research and technology expenditure
should be increased to something closer to what it used to be.
The paper says that research and technology is important in creating
the quality of equipment that the Armed Forces eventually buy;
that is clearly implied in the work that underpins the DIS. If
that is the case, the equipment that we are buying today reflects
the amount that was put in to research and technology in years
gone by. If the amount that is now being spent on research and
technology is less than what was spent 15 years ago then the implication
is that eventually we will suffer from a lower quality of defence
equipment than we currently buy. If we actually want the same
quality of equipment as we now have then the logical conclusion
would be that we should increase the amount currently being spent
on research and technology.
Q186 Chairman: On page 39 it says, "A
recent MoD sponsored study analysing 11 major defence capable
nations has uncovered a highly significant correlation between
equipment capability and R&T investment in the last five to
30 years."
Sir John Chisholm: Indeed so.
Q187 Chairman: So more should have been
said, you would suggest, in the Defence Industrial Strategy about
the way that that R&T was going to be encouraged.
Sir John Chisholm: I do not think
I am able to say that more should have been said. I would say
that more can be said on that subject.
Q188 Chairman: On page 142 of the Defence
Industrial Strategy the words appear "specifically, we will
review the alignment of our research programme with MoD needs,
conduct further work better to understand the underpinning technologies,
update our defence technology strategy, develop a better understanding
of the innovation process . . . " In other words, there is
a lot of work still to be done.
Sir John Chisholm: That is how
I understand it. As I understand it, this paper says that this
is an area which is incomplete in the DIS and more work is now
going to be done in order to fill out that gap.
Q189 Chairman: The way you put it suggests
that QinetiQ is not involved in this work or has not been asked
to be involved in this work. Is that right?
Sir John Chisholm: The work that
needs to be done is obviously Government work and QinetiQ, as
the other contractors, will eagerly participate in any way they
can in helping the government proceed with its strategy.
Q190 Chairman: Have you been asked to
be involved in that work yet?
Sir John Chisholm: There is every
indication that we will be involved in that work, yes.
Q191 Chairman: What do you think you
would be likely to do in relation to that work? What would you
like to do in relation to that work?
Sir John Chisholm: We can certainly
assist, as we have been doing in the past, in helping the Ministry
of Defence decide what the areas of significant priority are.
It is, however, for the Ministry of Defence to decide exactly
how much money it is appropriate to spend on research and technology.
The evidence that we can provide would say that the increased
expenditure in research and technology will lead to the quality
of equipment which the Armed Forces require in future years.
Q192 Mr Crausby: You argue that there
is a strong case for increasing funding for defence research and
that was effectively the line that Mr Ferrero took on 7 February
when he said, "As I look at the labs today I see a constant
reduction in government investment in these technologies and,
ultimately, a reduction in the level of innovation that is coming
out of the labs." In your memorandum you say that the Defence
Industrial Strategy fails to address the implications of the decade
long decline in research funding. What are the implications, and
what is likely to be the long-term consequences of this obvious
reduction in UK defence research investment?
Sir John Chisholm: The obvious
consequence of a decline in research expenditure is less resources
being available in the labs. Eventually they fall below a critical
level and you simply have to stop doing that research. In recent
years what we have seen is that the remaining funding has gone
as a proportion more to shorter-term research which supports more
urgent needs and therefore the larger cutbacks tend to fall upon
the longer term, more generic research which is the area from
which many of the more profound developments in technology eventually
emerge.
Q193 Mr Crausby: I know it is difficult
to predict the future without doing the research. Have you got
any concrete examples as to how you see that that will put us
behind?
Sir John Chisholm: The area which
generates new sensor systems, for instance, is an area of technology
which in the past has produced important innovations, such as
thermal imaging. That is an area where there has been a consistent
cutback in the research funds. The consequence of that is one
has less resources to investigate very promising future developments.
If you do not investigate those you then do not get the breakthroughs
and you do not get the equipments which eventually come from that.
Q194 Robert Key: I am very concerned
about this level of research spending. As you point out in your
memorandum to the Committee, in the Defence Industrial Strategy
the government talks about the real terms decline but it does
not make any mention of how much defence expenditure should rise
by. You assume it will be a drop in real terms though an increase
in cash spending but the government does not even say that. Were
you very surprised it said nothing about the level of research
spending?
Sir John Chisholm: We would certainly
argue for an increase in research spending if the objective is
at least to ensure the same quality of equipment as we are getting
right now in the Armed Forces.
Q195 Robert Key: What do you think is
the main driver of research spending by universities? Is it blue
skies research, their reputation internationally or are they waiting
for signals from government in particular areas that the government
would like to see research done in?
Sir John Chisholm: If your question
is what is driving university research spending, that is driven
largely by the research councils and their process. Their process
is heavily driven by the academic quality of research. The research
assessment exercise in universities is what drives it. That is
driven by citation indices in publication in journals. That is
an entirely different mechanism to the mechanism which we are
talking about here where the objective of defence research expenditure
is superior equipment in the hands of soldiers, sailors and airmen.
Q196 Robert Key: Do you consider yourselves
to be in competition with that university-based research?
Sir John Chisholm: Certainly not.
It is our role to draw upon the university-based research and
make it useful to soldiers, sailors and airmen.
Q197 Robert Key: Is it getting more difficult
to recruit and retain the sort of researchers you want?
Sir John Chisholm: It is always
difficult to recruit and retain researchers if you do not have
the funding to support them. Our business is to win research contracts
and conduct them for the Ministry of Defence primarily. If the
money is not there for those research contracts we cannot obviously
employ the staff.
Q198 Robert Key: Have you given thought
to how much money the government should be spending on defence
research?
Sir John Chisholm: We have done
a calculation and it runs along the lines that if defence expenditure
has reduced by 50% in real terms over this period of time and
it was that defence expenditure which gave us the equipment today
which we feel satisfied with, you might argue that you need to
increase defence expenditure back to where it was. We could mitigate
that a little by saying that surely we are more efficient now
than we were 15 years ago, but an increase of the order of 25%
is what we believe would be a sensible policy decision.
Q199 Chairman: Is that an increase of
25% in relation to defence as a whole or in relation to research,
technology and innovation?
Sir John Chisholm: Research.
1 Note: See Ev 77 Back
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