Select Committee on Defence Minutes of Evidence


Examination of Witnesses (Questions 200-219)

LORD DRAYSON, MR DAVID GOULD CB, MR NICK BENNETT AND REAR ADMIRAL ANDREW MATHEWS

21 NOVEMBER 2006

  Q200 Willie Rennie: Why is that different from armoured vehicles, fighter jets, even Trident missiles? Why is the submarine any different?

  Lord Drayson: The nuclear issues provide a greatly enhanced burden on us in terms of the regulatory burden which we have to meet in terms of the safety case and so forth. That is what puts it in a different league to everything else in terms of military equipment as opposed to armoured fighting vehicles which you mentioned.

  Q201 Willie Rennie: The DIS is silent on alternative options for the deterrent, on whether it is air based or submarine or land based; it is silent on the alternative options for the deterrent. Do we have the capability in the UK to develop those capabilities for air and land if it was decided that that was the route we were going to go down?

  Lord Drayson: We would have the capability in those alternative areas and the alternative possibilities are being looked at in terms of the basis of the system. Those are being looked at in the various options as to whether it should be a preferred solution which continues to be submarine based or another system such as air based. Those options are being looked at. We have to recognise though that we have an existing level of significant knowledge and expertise and experience in operating a nuclear deterrent on the basis of a submarine and therefore, should we look at an alternative in terms of it being air based or land based there would be a significantly greater technological risk because it has been some time since the United Kingdom has deployed an air-based system and the United Kingdom has never deployed a land-based system. We would need to recognise the difference in technological risk in those two areas and the difference in capability here in the United Kingdom.

  Q202 Willie Rennie: Does that rule out the other two options then?

  Lord Drayson: This is an example of the issues which are being looked at as part of the preparation for the White Paper. As I have said, no decision has been taken.

  Q203 Mr Hancock: Forgive me if I misheard you. I was under the impression that when the White Paper was going to be published there was going to be a government-preferred option that would be the starting point for the debate on this issue. However, when you were giving your answer to the Chairman, you alluded to a ministerial view but it did not appear that the view was going to be expressed in the White Paper. How is it going to be presented to the country?

  Lord Drayson: Yes, it will be expressed. I apologise if I was not clear on that point to the Committee. The White Paper will express that view as to the preferred option.

  Q204 Mr Hancock: What? A ministerial view or a government view?

  Lord Drayson: A government view.

  Q205 Mr Hancock: So there will be a decision of Government on the preferred solution, whether we have a deterrent or not or what version we have?

  Lord Drayson: Ministers will review it and then the White Paper will be published.

  Q206 Mr Hancock: I wait to see what that decision will be. May I just ask a question? When the existing Trident boats were being planned, they were planned originally for a 30-year life, were they not?

  Rear Admiral Mathews: A 25-year life.

  Q207 Mr Hancock: Not originally 30 years downgraded to 25?

  Rear Admiral Mathews: I do not know the answer to that. My belief is that we designed them for 25 years.

  Mr Hancock: It would be interesting to know for sure, because my recollection is that the original spec was that the boats would be for a 30-year service life which was then downgraded to 25 years.

  Chairman: Could you possibly write to us? Mike Hancock is probably older than you are so he may remember it.

  Q208 Mr Borrow: Would I be right in assuming then that when the White Paper is published, there will be analysis of the options of a land-based and an air-based system and in that analysis it would include the timescales involved in developing a land-based or an air-based system and obviously if those timeframes were less, significantly less than a submarine-based system, that would obviate the need, were that the one to be chosen, for us to do anything significant straightaway?

  Lord Drayson: What we expect to see coming out in the White Paper—and, as I have said, this is a work in progress—is that the options will be reviewed and they will be set out in the White Paper as I have described. We do need to recognise that we know today, and as we have expressed to the Committee today and in the submission from the Ministry of Defence, our views on the timescales that exist predicated by the length of time it takes on the basis of a submarine system. Alternatives to that are being looked at within the White Paper and, as I have expressed today, the challenges that that would present, beyond the submarine base comes from the fact that the United Kingdom has not for some time had an air-based system and has never had a land-based system and that needs to be reflected in the assessment of the technical challenge, the technical risks that would be present.

  Q209 Mr Havard: I am not going to talk about the skills at the moment, but as you are on the White Paper and this is the first opportunity we have had, it will obviously mention platforms but will it mention other things? For example, I want to ask you later something about the virtual arsenal concept; the idea of saying "We are not going to have one" but still retaining the capability to revitalise one should we wish to have it. To what extent is the White Paper actually going to look at the options? Is it just simply going to be narrow? How wide is going to be and does the end of the year mean when Parliament is sitting?

  Lord Drayson: My understanding of the end of the year is a calendar end of the year.

  Chairman: Your focus in relation to the defence industrial strategy was exemplary and you got it in four days before time, so we expect and hope for great things.

  Q210 Mr Crausby: It is generally argued that one of the major reasons for the cost overruns for Astute was the extended gap between the Astute and the Vanguard programmes. What lessons have you learned about the problems of skill retention caused by that gap and what are you doing to ensure that similar problems do not occur between the Astute programme and a potential Vanguard successor?

  Lord Drayson: The central lesson that we have learnt is that if we are to maintain the level of skills that we need within an industry, this is not just applying to the submarine industry but is a general fact of the defence industry, then if we need to maintain those skills, we need to provide sufficient work to do so, but the way skills can be maintained is only by putting them into practice. It is not realistic—the United States looked at the possibility with its submarine programme—to have a pause and then look at regenerating the capability. It was deemed that it was just not practical to do so. What we have learned from the gap, which as you rightly say, occurred between Astute and Vanguard, is that we need to have a very clear understanding of the frequency of orders and therefore the frequency of build of submarines that is required as a minimum to maintain those skills, to make sure that we do have that capability. That requires quite a detailed look at the various trade-offs, taking into account that we have considerably reduced the submarine industry in this country; it is now at a minimum critical mass, therefore we need to make sure it does not get any smaller and we do not lose any of those skills. The analysis which we have done, which has been vindicated by external analysis, is that a frequency of orders, the drumbeat that is talked about in the industry, of approximately 22 months is what is needed to require the maintenance of that level of skills. Whether or not these are submarines which will be used for the nuclear deterrent—they could be entirely attack submarines, not bomber submarines—we should still need to be maintaining a build of submarines at that frequency to maintain those skills.

  Mr Gould: It is a whole raft of skills that goes from high level design, detailed design, actually practising those skills. One of the things we learned on Astute was that you could not, for example, take specialised submarine designers, give them work on surface ships, which we did, and then expect them to reconvert back from surface warships to submarines at the level of skills with which they left the submarine business. The skills inevitably fade if you do not practise them. It goes beyond that. This is not just about building a submarine; it is also about building the reactor plant and the supply chain for the reactor plant and the steam-raising plant and the systems inside the submarine. To keep those skills alive and to benefit from changes that you can make to make the submarines easier to operate, easier to build, you need to do the 22-month/24-month delivery of a new submarine, but progressively, you need to change and adapt the design to reflect changes in the supply chain, changes in the way in which you maintain the submarines and that actually also keeps the skills going. We have now got that sort of rhythm built. We have been working very closely with the companies—BAE Systems, Rolls-Royce, Strachan & Henshaw, DML at Devonport and they are increasingly coming together to do this as a single submarine enterprise and work together. Clearly, if you stop that, if you slow it down, then you might save some material costs as you slow down the number of submarines you build, but you carry the overhead of keeping the skills there and inevitably you get skill fade, so that when you try to build up again it takes you longer to do it and if you let it go too far then it becomes a very, very difficult problem to solve. That is borne out by US experience as well.

  Q211 Mr Crausby: So you do accept that the slowing down of that rhythm—BAE seem to be fond of this word "drumbeat"—would affect the retention of those skills. We have heard as well from SMEs that it particularly affects them; probably more than it affects BAE. If you accept that there has to be a rhythm of about two years, does then the production of the Astute submarines in some respects dictate when we will want to produce a replacement for the Vanguard submarine?

  Lord Drayson: The two issues are absolutely connected. It is firstly about having a critical mass of know-how and skills within the industry which are submarine design and build skills, which are, in many aspects but not entirely, common to both attack and bomber submarines. However, we also need to recognise that the length of time it takes to design a new class of submarines, should it be decided a new class of submarines is needed to replace the Vanguard, is considerable, which in itself is what is determining the timing. It is a combination of two issues which we need to manage, but within the Ministry of Defence we absolutely do accept what industry is saying, that maintaining that critical mass of skills does boil down to maintaining the frequency of build at approximately this two-year cycle.

  Q212 Mr Crausby: I suppose if we accept that there is going to be a regular drumbeat of two years for submarines and the number of Astute submarines is going to be six, then we almost do not need the White Paper do we? We pretty well know when you will be making the decision to produce the Vanguard successor because these things are absolutely linked. Rather than us working it out that way, when is the ideal date for a potential Vanguard successor from the point of view of skills, not from the point of view of the decision or the White Paper but from the point of view of skills retention? What is the ideal year for a potential Vanguard successor?

  Rear Admiral Mathews: If I just take you back to my 2024 date for the successor, if there were one, to go on patrol, then that ties in nicely with our plans for Astute which currently sit at seven boats, that is our target, if that is deemed affordable when we get there, then that sets a nice drumbeat to get to that date. So that is an integrated programme. If the decision is not to build a successor nuclear submarine, then we are in a different business.

  Q213 Mr Crausby: So that is taking it out 30 years then from the 2024 date?

  Rear Admiral Mathews: Yes. I am sure that the design life was 25 years when the original staff requirement was set.

  Q214 Mr Hancock: I have a quote here which says that the Government assume the lifecycle for the whole system is 30 years.

  Rear Admiral Mathews: But the staff requirement, when we set it, was 25 years and we design the submarine around the staff requirement. We shall send you a note.

  Q215 Chairman: Mr Gould, may I come back to something you said which was that a 22-month/24-month drumbeat was roughly what we needed? The difference between 22 months and 24 months may be important if, as the Minister says, we are at the moment at a minimum critical mass. As I understand it, we are currently operating at a 22-month drumbeat. Do you think that the difference between 22 and 24 could be critical?

  Mr Gould: It is the gap between deliveries. What is critical is the confidence that the industry has that that is the rhythm that they are working to, because then they can plan and size their workforce on that. Twenty-two is a good figure but individual submarines might actually vary a small amount without destroying or undermining that confidence.

  Q216 Chairman: It is just that my memory is seared with memories of "We will have around 50 ships".

  Mr Gould: Yes, I remember that.

  Q217 Chairman: It somehow seems to get down to about six and I worry that the "around two years" might become two- or two-and-a-half-year drumbeats. Would that entirely endanger the submarine industry in this country?

  Mr Gould: The size of the fleet that the Government decide they want to have in terms of the number of attack submarines, SSNs, and the number of SSBNs is the critical factor. Once you have that size of fleet, you can plan the industrial programmes but what the industry tells us and what we actually agree with from our own analysis is that 22 months, or around that figure, is what we can economically and sensibly do with the size of workforce and the skill base that we now have put in place. But the critical factor is the type and number of submarines that you want to run.

  Q218 Mr Crausby: May I just try to link that to affordability as well because affordability is all part of this in the sense that our understanding is that the price for boats two and three is not yet agreed and therefore you could not commit yourselves to boats two and three, never mind the next three, until you can agree the price of all of that. All of these things seem to be becoming dictated together: affordability, the price, the drumbeat and the 20 years or 25 years. Almost the whole business is dictating back to affordability. We hear as well that the French and the Americans are spending a good deal more than we do on submarines. Are we trying to get these boats too cheaply and is affordability affecting the whole issue of production as to whether we do produce a Vanguard successor?

  Lord Drayson: You have rightly highlighted that there is a real interdependence between the costs, and therefore the affordability of the system and the size of the industry which can be sustained which is determined, because we are the only customer, by the number of submarines that we require. We have looked very carefully; the whole point of the Defence Industrial Strategy was to look into each sector and really get a clear understanding of where there was an interdependence between the Ministry of Defence's requirements as customer and the supply base. In the case of submarines, given that we do not export submarines so it is entirely the MoD as customer, we need to recognise that a nuclear submarine of either type is an incredibly complex piece of machinery which requires the highest levels of skills from the defence industry at the top level of systems integration skills through to a number of vitally important, very small companies who are providing very small numbers—twos, threes, fours—of items of equipment in terms of those items required for the submarines. Those companies, in particular those smaller companies within the supply chain, do need the clarity over the numbers of pieces of equipment that they will be asked to provide, therefore the number of submarines and the cost, and therefore the affordability, are directly related to those numbers and the frequency with which those orders will come. In the past the Ministry of Defence has had a policy which has been largely on the basis of looking for competition between bids, but in certain sectors it has become increasingly clear to us that competition does not work where the market has reached a point where it is not big enough to support competition and where there is such a small number of suppliers in that market that we have—to recognise our dependence on the supplier staying in the business at all. We recognise that some companies will take the decision to exit this business, if we do not provide sufficient clarity to them to provide us with this equipment. Our worry is that once they leave the market it is going to be much more difficult for us to be able to regain that capability in the future.

  Q219 Mr Crausby: So back to the question of the French and the US. Why do we expect our boats to be so much cheaper than the French and American submarines?

  Lord Drayson: I cannot speak to the way the United States or France go about their procurement processes. We can be proud of the job that is done by the defence industry in this country in this area. It really is world class. We have to recognise though that the number of orders which we are placing for submarines is a small number and therefore making sure that we are maintaining the efficiency of the industry to continue to invest to improve efficiency and therefore improve affordability is what we need to make sure happens. The data which we have seen, comparing prices which we have seen on the Astute class of submarines, are what give us the basis to believe that we are getting good value for money from the submarines which we are procuring at the moment.


 
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