Examination of Witnesses (Questions 180
- 199)
TUESDAY 24 APRIL 2007
DTI
Q180 Mr Binley: Can I pursue this
question of RDAs because you know the audit report of 2006 was
pretty damning about the way they worked and you are right it
is a £2.4 billion budget this year. They were especially
damning about the assessment process, the monitoring of their
effectiveness.
Margaret Hodge: Of the RDAs?
Q181 Mr Binley: Yes, of the RDAs
and whilst I take what you say about there was a need to improve
dramatically the way they work, particularly in some areas it
was very patchy, I wonder what you have done as a minister to
ensure that you are assessing and monitoring their work on a regular
basis because that was a major criticism.
Margaret Hodge: It is not entirely
within the remit of this inquiry.
Q182 Mr Binley: Of course not. With
respect, Minister, you said that aerospace would lead the RDAs
in this respect so I am following on from that comment.
Margaret Hodge: I agree with the
general point that you are making that we have to improve the
way in which we ensure that the RDAs for their £2.4 billion
expenditure are providing added value and I am working very, very
closely with them on this particular issue as well.
Q183 Mr Binley: Minister, I do not
wish to push you anymore other than to say, would you be kind
enough and let us know what monitoring and assessing processes
you will put in place, that would help us enormously.
Margaret Hodge: What I can assure
you of is as we emerge to the Comprehensive Spending Review settlement
and the review of sub national regional structures, you will see
in those documents that emerge I hope an improvement in monitoring
the effectiveness of the RDAs that will emerge when the CSR come
out.
Q184 Mr Binley: You have nothing
you can let us have at the moment?
Margaret Hodge: I think it is
best to leave it until that point, but it will be in the public
domain.
Q185 Mr Hoyle: Just a quick question,
obviously welcoming the investment that is going into research
and technology, in the case, if we took it on aero-engines
Rolls-Royce that if you invest in a military engine there is technology
transfer that can go into civils, what can we do now that there
has been the break up between civils and military? How do we get
that technology transfer that the Government is investing between
the two in order to support British jobs and get the best value?
Margaret Hodge: I think that is
a really good point. Again, what we demonstrated over the negotiation
over the work share for Airbus is that we are getting better at
working across Government. I work really closely with Paul Drayson
on many of these issues and on the defence technology strategy
ensuring that that is coherent and links into the rest of the
technology strategy. That is a current piece of work we are doing,
we are trying to make sure that it does make sense and it complements
and strengthens and creates a whole which is more than the sum
of its parts, so I take that point entirely and all I can tell
you is that we are addressing that as we speak.
Q186 Mr Hoyle: You still hope there
will be transfer of that technology from military to civils, even
though they are under different ownerships?
Margaret Hodge: Of course.
Q187 Chairman: It is a very important
point, Minister, because as we move on to the World Trade Organisation
and the Samaritan's questions we have had some very interesting
evidence indeed from Professor Philip Lawrence about support in
the United States of America for aviation aerospace. He makes
the point that, and I am quoting from his evidence, "The
critical capability that Boeing is using in carbon composites
was done in the 1980s when Boeing was a sub-contractor on the
Northrop Grumman B-2 Bomber project" so it is a really central
point and on that note I will move on to Mr Marris.
Margaret Hodge: I completely take
it.
Q188 Rob Marris: What is your assessment
of how much direct and indirect public subsidy Boeing gets?
Margaret Hodge: Golly!
Q189 Rob Marris: We have had some
figures from Professor Lawrence to which the Chairman adverted
but I wondered what your Department's assessment was, in a sense,
what we are up against?
Margaret Hodge: The only figure
I have got—we are struggling on this one—is $17 billion
over 20 years in R&T, and I do not know where we got that
comparative data.
Rob Marris: Which 20 years? Is that past,
present, future or what?
Q190 Mr Binley: It is the Ministry
of Defence, is it not?
Mr Scott: The source of this information
is from the EU's case against the US in the WTO at the moment
where that is the sort of magnitude of support that is being mentioned
in that context as our case against the US.
Q191 Rob Marris: How much direct
and indirect public subsidies does Airbus get? Minister, I think
you mentioned in response to Brian Binley something like £1.2
billion spent by the Government—
Margaret Hodge: That was launch
investment.
Q192 Rob Marris:—for which
we received back £1.3 billion, I think were the figures that
you gave him. We have also been talking about launch aid and R&T
support and so on and of course there are the other partner countries
who are involved, you mentioned Germany, et cetera. If we are
talking about $17 billion for Boeing, what sort of figures, if
any, are we talking about of direct and indirect public subsidy
for Airbus?
Margaret Hodge: I do not think
I can give it to you if I am honest. The £1.2 billion was
launch investment. We also put considerable money into R&T,
I do not know whether we have had any SFIE projects that have
gone through Airbus. Can I go away and think about it and then
write to you?
Q193 Chairman: Can I suggest perhaps
you draw on Boeing's case against Airbus for that bit of evidence
and Airbus's case against Boeing for the other side of the argument.
Margaret Hodge: We can have a
stab at that and we will write to the Committee on it. When we
look at the support we give any industry it is a package. There
will be money through state funding, launch investment, R&T
and skills and training, there may be money through the local
authorities and RDAs, you tend to put a package of measures together.
Whether we can compile that in relation to Airbus, I am a bit
uncertain, but I will have a go and if we cannot, I will write
and tell you the best information we have.
Q194 Rob Marris: You have got a figure,
and I am not trying to hold you to it but it has sprung to your
mind if I can put it that way, of $17 billion over 20 years for
Boeing from the WTO case. Presumably the figures have been compiled
for submissions to the WTO on behalf of Airbus, have they not,
even though I appreciate you might not have those figures with
you?
Margaret Hodge: The figure that
we have been given is the US claim, so presumably their submission
is that we have given 15 billion since the 1970s.
Q195 Chairman: 15 billion?
Margaret Hodge: Dollars, across
Europe since the 1970s, that is the US claim.
Q196 Rob Marris: In a 30-year period
roughly?
Margaret Hodge: That is in a 30-year
period.
Q197 Rob Marris: You are a minister
in the Department of Trade and Industry. My understanding is that
this disagreement, shall we say, between Airbus and Boeing was
referred to the World Trade Organisation in the summer of 2004,
that is almost three years ago. Why on earth is it taking so long,
and what is the current state of play on that? It sounds pretty
ineffective if the WTO cannot deal with it in three years.
Mr Scott: I think in a way the
answer is very simple, it is just an extremely complex case. Of
course, there are two cases, the US case against Europe and the
case brought by the EU against the US in return, and both of them
are extremely large and complex. I have heard it said that each
case individually is larger than any other case which the WTO
has taken, although I am not quite sure how that is measured.
The WTO is dealing with a very large and complex issue and it
needs to bring these two cases together and deal with them in
tandem at some point down the line. There has been a lot of time
spent on gathering the cases and allowing both sides to prepare
their representations. Choosing the panels has not been straightforward
either, as you can imagine. It is desirable to have some sort
of expertise of these issues but not from either the EU or the
US and there are not very many people around the world in that
position. Virtually every single step of the process has been
complicated and I suspect that pattern will continue.
Margaret Hodge: The only other
thing I would add to it is, certainly in the time that I have
had some dealings with this, we have constantly been trying to
settle this outside litigation and I think there have been attempts,
certainly at the EU level, to prevent this reaching the courts.
Q198 Rob Marris: Presumably this
case is hanging over those who are employed by Airbus and Boeing
in their respective supply chains. When do you anticipate that
this case is going to be concluded?
Margaret Hodge: I am not sure
I would agree with you that it is in any way inhibiting the progress
we are making with Airbus. Mark Russell said to you that we are
waiting to see whether or not any support is required for the
development of the A350 extra wide body model. There are a range
of options around which are WTO-compliant and would not cause
any difficulty which we can investigate and explore with Airbus
and the institutions if necessary. Clearly, we want it out of
the way and we would like the sort of rules settled, but I am
not sure I would agree that it is inhibiting developments.
Q199 Rob Marris: The anticipated
conclusion date, another three years, another six years?
Margaret Hodge: I saw some figure
the other day; no, I think it is a year or two down the line because
we have also now to ensure that the case the EU is taking against
Boeing comes in at the same time as the case the US Government
is taking against Airbus, and the case against Boeing is behind
the case against Airbus, so we have got to bring those two together.
I think I saw a year or two down the line, is that right?
Mr Scott: The US case against
the EU is more advanced in terms of process. At the earliest,
the panel there might make a report in October.
| 
