Select Committee on Defence Minutes of Evidence

Examination of Witnesses (Questions 184-199)


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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