Select Committee on Defence Minutes of Evidence

Examination of Witnesses (Questions 280-299)


28 FEBRUARY 2006

  Q280 Mr Havard: You have said that you are "assessing" companies in terms of how they actually manage this process themselves, the larger companies, the primes, and so on. As I understand it, you have made statements about the joint management of SMEs by the MoD and the primes. I am not quite sure what that means. All of that is all very well, but the MoD presumably, which you have responsibility for, is changing its practices and taking a particular view. How is that being done in concert with the Department of Trade and Industry?

  Lord Drayson: It is very important that this is joined up government, and the DIS sets a good basis for this. This was a joined up process, and we have taken on board a lot of the input which we have had from the DTI on the way in which this is done. It is important for me to stress that it is not about managing companies. It is not our job to manage companies, but it is our job to make sure that we properly understand and manage the complexity of the supply chains. The challenge within defence is many of these systems which deliver the military capability are very complex and involve many different companies coming together effectively. The way in which we do that jointly with the large companies is both the MoD and the larger primes having clarity on, for example, the technology tree. If you take a particular capability and you look at what is the tree of support for that technology going right down into the research, sometimes into the universities themselves, you have clarity over that and the way in which we judge a large company is on how well does that company really understand this and does it actively manage it. If not, this is where we need to work together to encourage that to be done better.

  Mr Gibson: To add to that from a DTI perspective, we have a small aerospace marine defence team of about 25 people, with about five people working on defence, but we do have a formal relationship management with the 15 largest aerospace and defence companies. We have quarterly meetings with them and we have reinforced the messages in agreed Government documents like the Defence Industrial Strategy. We also work pretty closely with the regional development agencies, who have clear sector leads now to the south-west RDA, and we expect them to have a good relationship with the supply chain and to work with them to try and improve productivity, and there are regular meetings between the DTI's aerospace and defence team and the RDA contacts who lead in this sector. We are trying to reinforce the messages all the time, both in the primes and through the RDAs, with the supply chain.

  Chairman: So the sector lead for defence is in the south-west.

  Q281 Mr Havard: For England.

  Mr Gibson: For England.

  Q282 Chairman: BAE Systems is based all round the country but its centre seems to be in Warton, which is not in the south-west. How does that work?

  Mr Gibson: The north-west RDA does take a really close interest in the aerospace industry. The Chairman of the north-west RDA is Bryan Gray, who is on the Aerospace Leadership Council. He has been involved in the whole aerospace strategy for the last three or four years and he takes a particular interest in aerospace issues; so he is closely involved and talks to BAE regularly in the north-west.

  Q283 Mr Crausby: The Defence Industrial Strategy states that industry will need to reshape itself, and you, quite rightly, are demanding a substantial change in a number of sectors. Is industry willing to reshape itself into the shape that you require, how painful will this be in terms of jobs and over what timescale do you envisage that reshape?

  Lord Drayson: This is a ten-year process. The point of the Defence Industrial Strategy is to set out clarity to industry about those areas in which we expect to have an increasing requirement, those where we expect a decreasing requirement to take place and to give industry that clarity to enable them to plan ahead. This is not about changes happening tomorrow, next month, this year. It is about changes which need to take place over a period of time to get   alignment between the defence industry's capabilities and our capabilities in terms of our security and defence priorities. The pain comes from that change, but change is always painful. One of the big changes which we are asking in some sectors is for industry to put less of a focus on the design and development of new platforms and more of a focus on the insertion of upgrades and new capabilities and through-life maintenance of existing platforms. That is, for some companies, a change of culture in terms of their type of business and that is difficult for them to do. It is for industry, though, to step up and do it. It is not, we believe, the role of government to manage this process. The role of government is to set out, as we had in the DIS, what it is we need, what our priorities are, where we regard it as essential to our defence interest to have a capability in the United Kingdom and then to expect industry to respond to that. The pressure on industry to do so, I think, will come both from the fact that this clearly sets out where the key growing markets are, and you would expect management to therefore reflect that. We need to work with industry to facilitate this process and to manage it as well as possible, and I am saying to industry, pretty bluntly, this needs to start now. The evidence that industry is responding to it, I think, is beginning to be there. I have been encouraged by what I am seeing just in the first few months after the publication of the Defence Industrial Strategy. In some sectors we are asking for companies to come together into structures to address inefficiency. It is patchy, as you would expect. There are some companies who are looking to see whether or not this is really going to happen and then really getting involved in it. There are some companies who seem to really get it and are getting on with it now. Our job within the Ministry of Defence, and my job in particular, is to encourage them that the Defence Industrial Strategy is a plan for action, it is not just a policy document and that we do expect industry to respond and get on with it in 2006.

  Q284 Mr Crausby: Is there a danger that some companies will focus on a non-defence future, the companies that want to do that, and that the reshape will become a different shape to the one that you really want? How do we protect ourselves against that risk?

  Lord Drayson: We have set it out very clearly. We have said that the number one priority, as set out in the Defence Industrial Strategy, is putting the defence needs first. That is something which has been a real achievement of the DIS, giving industry the clarity of how our defence capabilities are going to be linked to the defence needs going forward, and we have said very clearly that we have come to the conclusion that having a healthy defence industry in this country is strategically important to our defence interest. Therefore what we are indicating is not a decline in the demand for defence products, we are indicating where the shifting priorities are as the world is changing. That gives great opportunity to industry. In fact, the way I would put it to industry is that, given the nature of the clarity which the UK has now given, given the nature of the tempo of operations which our Armed Forces undertake, if industry responds to the DIS, it is going to lead to it producing products and services for which there will be a clear world market. Some of the responses we have had from some of the international pilots which we have to the clarity of the DIS back that up. I do not think we need to be worried about companies exiting the defence market and looking towards the civilian market, and I think the way in which we have seen commentary about the DIS in the press and analysis suggests that that is correct.

  Q285 Mr Hancock: Could I take you a little further down that road. You said in an article fairly recently that there will be job increases in some sectors but inevitably there will be job reductions, but you were not specific about which sectors you were talking about. In an area like mine—I represent Portsmouth which is heavily dependent on defence industries—that would send nervous shivers down people's spines. Would you care to clarify that a bit more today?

  Lord Drayson: Yes, I will give you two examples, one of each. In terms of where we think that there are going to be job decreases, it is going to be in areas such as the complex weapons area whereby we can see the decreasing need for a certain type of weapon, and so we are working with that industrial sector, who have very important skills, which are not just relevant to complex weapons, and looking to encourage them to be using those skills in areas where we have a growing demand. I must say, from the maturity in the response in that particular sector, that is a sector where we have seen industry responding very well and I am optimistic that it is going to be possible for us to manage that process effectively. Nonetheless, we are going to see a decrease in requirement in that sector. To give you an example, a sector where we see an increase is in shipbuilding, the maritime sector. There the challenge is that we need to ensure that the way we manage the increase which is built upon the very strong shipbuilding warship orders which we have over the coming years does not create an unsustainable level of employment which is then going to go into a bust situation after boom. We have got many years to plan this well. Therefore, when you are in a situation like this where we can see increasing orders, increasing demand, we need to be intelligent about using that period to make sure that we are getting real efficiency into the industry and that we do not create an unsustainable level. Do you want to add anything to that?

  Mr Gould: One point I want to add is that the nature of the defence industry is changing over time quite dramatically. There is a bit in the DIS that talks about the amount of defence activity that is open to the private sector. If you go back 30 years, it is really just the manufacture of defence goods, then you get into the services and now increasingly you find the private sector involved. For example, in military communications right from here in the UK up to day-to-day operations in Iraq the private sector is involved; so there is an expanding scope of work available to the private sector in defence which will enable us to build up. A lot of the companies involved in that, of course, will be involved both in defence and in civil because the technologies in communications and elsewhere are very similar and feeding off each other.

  Q286 Mr Hancock: Can I ask Mr Gibson the role of the DTI in managing the change in those various sectors and where you fit into the matrix of change that is going to take place?

  Mr Gibson: We fit in in the same way that we fit in for other sectors of British industry. Where there are large industrial closures—MG Rover is an example—we expect the RDAs to look closest to the ground to work with the local arms of other government departments—Jobcentre Plus, Learning and Skills Councils—to pull together packages which help the workers who very unfortunately lose their jobs to gain opportunities elsewhere.

  Q287 Mr Hancock: Could I come back to you, Minister. You rightly raise the issue about the shipbuilding capacity, and the horizon looks very bright for the Type 45s and the carriers there, but, as you rightly say, we have to plan for what happens after that. With the way in which the ships are being designed now there is little chance of much of a follow-on to increase the number of surface ships the Navy will require. How do you envisage the MoD working with industry to prepare for that downturn that will come post 2014 or whatever the date is?

  Lord Drayson: We have analysed the ship-building industry in this country and we can see that we have got companies and yards which are absolutely world-class—there is no doubt about it—and are able to go toe-to-toe against international competition and win. There are other areas where they are not as efficient as they need to be. When you look at the overall industry, it is clear that too much of the industry is represented by the MoD as a customer. What we want to see is that. by the changes which we encourage in the way in which we work with industry over the next 10 years, we help the industry to become more internationally competitive, we see the spread of best practice throughout the industry, such that industry is able to win more orders from other customers apart from the MoD. What we have seen in the DIS is a focus towards a high value-added end of the ship-building industry. That is the area which we believe we can really compete in, the area of complex systems integration. I have visited yards and seen, for example, the Astute submarine build and you see the complexity of that vessel—it is more complex than the space shuttle and a lot more modern and it is British built—so there is no doubt that our industry can do this, but we need to get best practice throughout the industry and I think that then will provide us with a sustainable industry into the future, and that is what we are aiming to achieve. I think we have the time to do it. The key is the implementation of the Defence Industrial Strategy and the Maritime Industrial Strategy particularly through this year. 2006 is a very important year, because there are some important milestones on some of the projects which we are working on, not least of all Carrier. Carrier is going to be one of the ways in which we are going to help to encourage and drive this process, and I am very focused on making sure it really does happen, but I think the opportunity is there.

  Q288 Chairman: Minister, I understand that when you were talking to the Defence Manufacturers Association last week you said, in effect, that you were "a man in a hurry". I hope that Mr Gould will keep his ears shut when I ask this question. Do you find that your officials are in as much of a hurry as you are?

  Lord Drayson: I think they are getting there, Chairman, yes.

  Q289 Chairman: You have also said that you recognise that the Ministry of Defence has got to change. In what respects do you think that the Ministry of Defence has got to change and how do you think those changes will be put into effect?

  Lord Drayson: I think that the industry has to change and the MoD has to change—that is the point—but I think there is a duty on the MoD to demonstrate through its change that it is serious about the Defence Industrial Strategy being real. If I was in industry running one of the defence companies, I would be looking carefully to see how quickly the MoD is getting on with the things that it has promised to do. The way in which that is happening in the Department I am actually seriously encouraged by, and I aim to surprise this Committee, if you like, in the future by the pace of change which we are able to achieve in the Ministry of Defence. Why do I say that? Firstly, the way in which the MoD responded to the challenge of getting the Defence Industrial Strategy published in the timescale, the way in which it went about that, and the team of people that were responsible for it, I believe, did an absolutely outstanding job and I saw real excellence in the Civil Service which I think industry then responded to. We have set out a "to-do list" of changes and we have set timescales. The Permanent Secretary has put a small targeted team of people to look at the whole acquisition process, based upon what we have set out as principles in the DIS, and to report back by May on the changes which we need to make, building on the improvements that have been made to date. Things like Smart Acquisition, the series of improvements in procurement which have been achieved by this Department have been good, in my view. It is about building on that and going further. In June, Chairman, we should be seeing the outcome of that as one example. The impression I get within the Department is that it is the recognition of the changing environment, and it is the changing environment that we face, in terms of the threat of globalisation and increasing complexity of technology, which requires MoD to improve. Your Committee and other committees have said that when the MoD does things well it is a real gold standard. We need to make sure that that practice is spread more evenly, and there are some very clear things which we need to do to achieve that in terms of increasing things like commercial skills within the Department. The whole emphasis on tough commercial partnerships in the DIS requires the Department to have the people with the know-how to manage those types of relationships. We need to ensure that that happens. The way in which the Department tends to be very good at the urgent operational requirement, tight procurement process, very good indeed, but less good at some of the longer term projects means that we need to come up with processes which take the best out of the UOR process and apply them more effectively to the longer term projects. There is a whole list of things—a to-do list—which is set out in the DIS. The impression I get is that the Department is really up for this change. Both industry and the MoD recognise that we have an opportunity here to make a step-change in performance. The DIS has given us a good framework and an action plan to do that, and what I am seeing is that the Department is responding. The way in which I think we should be judged is in the quality of the decisions that we take and the difference we actually make to procurement. What I have said both to the Department and to industry is that 2005 is the year we came up with the Strategy, 2006 is the year that we seriously implement it to be able to show results both to your Committee, Chairman, and to others who scrutinise us, that we really have made a difference. When I say I am a man in a hurry, I am in a hurry to show in 2007 that this has made a real difference to our defence capability and the strength of our defence industry.

  Q290 Chairman: You may have read that some witnesses in front of us have said that there was more information provided to the defence industry in the United States when the United States took some of its procurement decisions. The Ministry of Defence used to be more forthcoming in relation to its future intentions, its priorities and its plans. Do you think that that is a fair accusation? Is the Ministry of Defence planning to be more forthcoming in relation to its priorities and its plans?

  Lord Drayson: Yes, it is. The DIS sets out explicitly a recognition that there needed to be more transparency because industry did not have enough clarity to be able to make the investment decisions which were going to drive the improvements which we needed to see. Without going into the historic reasons, I think it also reflects that the relationship between the MoD and industry was not as effective as it needs to be, and I think that the DIS has made a positive difference to that, and that is something which we need to build upon. We also need to be mindful that some of the things which the United States has done in terms of the release of information has had some negative consequences, and we were very mindful to learn from that. For example, I was very concerned to make sure that in going into the gritty detail which I promised in the Defence Industrial Strategy we did not make the mistake of providing such clarity over where we saw the really smart, young, innovative companies that we will provide a shopping list of acquisitions for bigger companies. We need to be careful. We do need to push the transparency issue consistent with our security interests, but also being intelligent about the global market place which we operate in and making sure that we do this in a way which helps companies provide solutions to our needs without actually making life more difficult for them.

  Chairman: We are moving on to the issue of sovereignty.

  Q291 Robert Key: Minister, I found one of the more intriguing chapters in your Defence Industrial Strategy B1 on Systems Engineering and I would like to ask you a little bit about appropriate sovereignty. Obviously, if we are going to retain sovereignty over a proportion of our production and systems, it is going to come at a price. Has the Government thought how much? What price? Whether it is a 5% premium, a 10% premium, a 20% premium. Can you give us a little more of your thinking on what you mean by appropriate sovereignty?

  Lord Drayson: Yes. We did a thorough analysis of the defence market by sectors and we looked at it from the perspective of, in a particular sector were there defence capabilities which we regarded as being so strategically important to our defence interest and where we were concerned that not having those capabilities on shore may lead to others having an impact on the operational freedom so that we had to have that done here in the United Kingdom, and so we set that out. We have also said very clearly that we do have and want to have one of the most open defence markets in the world. Therefore, we are not concerned about where the shareholders owning these companies live, but we are concerned in certain areas where the intellectual property resides, where the design authority is held. What we have found, and this is why a section on systems engineering is so important, is that as defence equipment is moving in a direction where the actual platform, such as an aircraft or an armoured fighting vehicle, may be in service for a considerable length of time, decades in some cases, the subsystems—communications, sensors and so forth—which really deliver the advance military capability have a much shorter life cycle and therefore need to be upgraded much more frequently. We need to have the capability in this country to do that, which is why systems engineering skills are important in this country, it is why we need to have clarity when we go into a project—FRES is going to be an important example—that we know where the intellectual property is held and that we manage intellectual property linked to the delivery of freedom of operational capability. To answer to your question about price, we then rely on the market to operate on a basis whereby the competition within that—as I say, that balance of openness and encouragement of people to bring those resources and skills into the United Kingdom to deliver us the requirement at best value for money. I think the important thing, which I have not touched upon this morning, is that we have shifted our emphasis in the Defence Industrial Strategy to make value for money the bedrock of the whole thing away from a particular technique, such as competition, to saying that competition is one of the many tools which we will use and that is a recognition of the realities of the different markets and environments we have in the different sectors. For example, take the C4-ISTAR type sector—very healthy, lots of innovation, does not give you much intervention—and take another sector with much less competition, which does have a key strategic defence capability for us, we need to be much more clear about how much we manage that.

  Q292 Robert Key: How does that relate to investment decisions of private companies? We have just heard from BAE Systems on explosives production, for example, that they do not believe they should be investing in low technology, and so they are not very interested in the Royal Ordnance factories at Bridgewater and Chorley, it seems. They do not mind if you cannot acquire ammunition from the United Kingdom. Are you happy with that? Does it fit in with your analysis?

  Lord Drayson: I have looked at all of that very closely because it is very important that the UK retains the ability, in terms of advance munitions like that, to be able to source what it needs when it needs it, and I am satisfied that the changes which are being made, which are about coming up with a more efficient supply chain for the supply of these munitions by British Aerospace, does satisfy our needs. The key thing there is to be very clear in a manufacturing process, whether it is munitions or anything else, of where the really clever bit is and making sure that we have visibility of that clever bit, that we know where the skills are to do that, and, where those skills are important to our defence capability, such as they are in this particular case, that they are done in the United Kingdom. Do you want to add anything to that?

  Mr Gould: Yes, several things. Certainly on the general munitions subject, it is difficult to distinguish between the raw materials, which have always been bought in. Even when things were being manufactured in Bridgewater and Chorley raw materials were being brought in from outside, quite a lot of the supply chain came from overseas. As I understand it, if you have got a secure supply chain of raw materials, so long as you can assemble and manufacture the munitions and have the capability to do that, then you are in control of your own destiny. That is the important point. I would just like to pick up on one point. Is there a premium for keeping things in the UK? I am not sure that there always is or has to be. I was thinking in particular of combat management systems in war ships and submarines. I cannot mention individual companies, but some of the companies who work for us doing that are very competitive internationally, and so, although we are keeping some of those skills in the UK, and need to (this is very important), the fact that they are competitive internationally tells me that maybe there is not a premium for that. Very often, if it is managed well, there does not have to be a premium, but we do need to work very closely with the companies to make sure that is the case.

  Chairman: I will come back to you on that issue in just a second. David Borrow, is there anything you want to ask in relation to Bridgewater and Chorley or has the subject been covered?

  Q293 Mr Borrow: I wanted to perhaps seek some more reassurance. I am aware that the closure of Bridgwater and Chorley will lead BAE Systems to purchase certain munitions from overseas, and they are currently looking at a number of companies. I have seen details of some of the companies overseas that they are looking to buy from. There is an argument around jobs, but there is a bigger issue around security of supply. Obviously, before we end UK production of some of those munitions and rely on overseas suppliers, the MoD will need to be absolutely certain that there is security of supply and that it is not possible for another government, at a time when we are involved in military operations, to stop us getting access to the munitions we need. I recognise that it is an issue around whereabouts in the technology tree we should be putting investment, but, irrespective of that, and that may be an issue for BAE Systems, as far as UK Plc and as far as UK Military are concerned we need to be certain that we can get access to the munitions that we need should we find ourselves in a situation of military conflict in any part of the world. At the moment those contracts have not been signed by BAE Systems, and I just want some assurance that the MoD are going to be absolutely sure that there is absolute certainty of security of supply before we allow those facilities at Bridgwater and Chorley to disappear.

  Lord Drayson: That is absolutely central to our thinking. You are absolutely right. The DIS sets out this point about defence needs coming first. We are very mindful of this point, and that is what is guiding our thinking. We are not able to go into the detail of this process, but you need to recognise that there is a generational technology change taking place in these types of munitions which is going to require us to go to the next generation of process anyway. This is the opportunity to look at this process and to look at how we can make it more efficient but also making sure that we have got, as you say, absolute control over security of supply for the United Kingdom. The way in which this is being brought together, looking at the shift to manufacturing of certain elements in Glascoed, is consistent with the objective of making sure that we have maintained this capability.

  Q294 Chairman: Can I double check something there. When Mike Turner was before us previously and he was asked about the closure of factories at Bridgewater and Chorley, the phrase he used was that they would want to be "fairly sure", but you would accept the phrase that has just been used by David Borrow, "absolutely sure" that we would have security of supply, would you?

  Lord Drayson: Yes, absolutely sure, and absolutely sure not just in terms of the security of supply of the elements, as David has said. Often it is about the cleverness of the process. What I think we need to be absolutely sure about is what we do to the raw materials and how we bring these things together and what is done here. I want to be absolutely sure, in terms of security of supply of the elements coming in and I also want to be absolutely sure about the robustness of the manufacturing process that we are moving to, and I have spent quite a lot of time checking that.

  Q295 Mr Hancock: How can you prevent that? How can you be absolutely sure if, as we were told by the boss of the operation, they are determined to close these plants? I am interested to know how you can insist upon this and be assured that you are going to get what you have asked for?

  Lord Drayson: We are the customer.

  Q296 Mr Hancock: Whilst the customer is always right, the customer does not always get what they want. We have been in that situation as a nation where we were dependent on certain elements of our weapons which were not delivered, which we were restricted from using, and our soldiers were seriously disadvantaged by it.

  Lord Drayson: That is absolutely right.

  Q297 Mr Hancock: I am interested to know how we can be absolutely sure of that now.

  Lord Drayson: We are learning the lessons of the past, and it is very important for us as a nation to recognise that to get the defence capabilities we need in many cases we have to enter into international collaborations, because the nature of technology these days means you have to do that, but we also need to be mindful of the point, which you rightly raise, of avoiding getting into a position where in the future we are unable to use the defence equipment in the way in which we wish to use it because of restrictions which are being placed upon us, which is why we are thinking very intelligently, as set out in the DIS, differentiating between the different types of equipment and capability and making sure that we are taking decisions to deliver that defence capability. This is an example where we have got both a shift towards a different manufacturing process in a different location and a shift in terms of procurement of certain elements in that and we need to manage that very carefully indeed. There is no easy answer to this. The way in which you do it is by being very intelligent as a customer, being robust in terms of what you expect your suppliers to do and making sure that you have got these assurances in place and you check that they are in place as you go forward.

  Q298 Mr Borrow: I can accept the situation that, if we were dealing with a small UK manufacturer of munitions who had decided that it was not economic to continue to produce those munitions, there is not a lot that the MoD can do, but in this situation we are talking about a special arrangement and agreement between the MoD and BAE Systems to supply the bulk of munitions. That is part of the Defence Industrial Strategy. They are in a sense the preferred customer. Therefore, if there are parts of that package of munitions which they currently produce which as a company they decide it is not economic to produce in the future, there is a strong obligation on them to satisfy the customer that they can still supply those munitions, with an absolute guarantee of supply, even if they as a company are not doing all the manufacturing. As I understand it, that is the key element of the DIS in relation to explosives and munitions, the fact that BAE are central to that role. Should they as a company decide not to do certain things, they have still got the obligation to deliver those munitions and explosives and guarantee absolutely that they will be supplied as and when required by our military personnel.

  Mr Gould: We have had a partnering arrangement with Royal Ordnance for several years now in response to the very incident that Mr Hancock referred to earlier with the artillery ammunition. That has worked, on the whole, pretty well for us. Clearly, I could infer that it has not worked quite so well for the company in some areas, but you are absolutely right: in seeking to have a negotiation with a company that will continue that sort of long term arrangement, they must, as part of that deal, satisfy us that the supply chain they are putting in place does all the things that we require it to do. They must do it differently from the way it has been done in the past but they must satisfy us or we do not do the deal, we do something different. I am optimistic.

  Mr Hancock: You might be interested to know in the letter that BAE Systems sent us today[4] one of the companies that they put forward as one of the five is in the very country that caused us all the problems last time.

  Q299 Robert Key: Hardly a day goes by without somebody talking, either in the Houses of Parliament or in the media, about the two-way street in defence procurement, particularly with the United States of America. I was delighted to see an interview with you at the time in February in which you said that the battle over technology transfer was your top priority for this year. How is it going, Minister?

  Lord Drayson: I would say it is progressing reasonably well, but the test will be where we have got to at the end of this year, and the test will be the Joint Strike Fighter. We are working very hard indeed, I am working very hard indeed, on this issue because it is central to our defence needs, and I know that the Secretary of State is also working very hard, and throughout government. JSF is a project where we recognise the real benefits which the United Kingdom is gaining through working with the United States on this aircraft. However, we are also clear, as set out in our Defence Industrial Strategy, that being able to exercise the operational freedoms which we need over time with this aircraft is affected by technology transfer. Therefore, the reason it is my top priority is because we know that we need, by the end of this year, to have got clarity over certain elements of technology transfer which need to happen (and I need to stress) on a government to government basis to enable this to happen satisfactorily. I am optimistic that we can solve that. It is not a naive optimism, it is based upon the progress which I think we are seeing, but we are working very hard on it. I also think it indicates a general shift which is taking place within the defence industry, and which you have alluded to a bit already in your earlier question, which is the growing strategic importance of intellectual property to defence capability. Therefore, what I am looking to see happen, alongside the emphasis which we are placing on research and technology, is strategic management of intellectual property in procurement decisions up front in terms of clarity of the design authority, relationships with international partners and technology transfer, and that is something which we are actively working on this year, but I am expecting, frankly, for this to be resolved satisfactorily for us by the end of this year.

4   Note: See Ev 121-122 Back

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2006
Prepared 10 May 2006