Examination of Witnesses (Questions 13-19)
MR BILL
JEFFREY CB AND
MR TREVOR
WOOLLEY CB
28 NOVEMBER 2007
Q13 Chairman: Good morning and welcome
back to this hearing on the report and accounts of the Ministry
of Defence. We have had a bit more time now to look at the figures.
I am afraid in the kafuffle of a couple of weeks ago I failed
to congratulate you on winning the Corporate Reporting Award of
the Year for the second time round; I am delighted that you did
so. We have a lot to get through this morning because this morning
clashes with Prime Minister's Questions later on in the day and
we would like to get through as much as we can so I would be grateful
from the Committee for short and concise questions and from both
of you short and concise answers please, even though these are
complicated issues. Can we begin by looking at the comprehensive
spending review settlement? What happens next? What will you do
in relation to making subsidiary budget allocations, for example
equipment, programmes, things like that?
Mr Jeffrey: We would in any event
be doing a planning round at this time of year in which we build
from bottom up the estimated costs of the programme and consider
it against the financial envelope that the spending review left
us with. That process is going on now; I imagine it will take
some months yet. Essentially what we will be doing is taking the
spending review outcome as the starting point, looking at where
the pressures are in the programme—and there undoubtedly
are some—and trying to put together the sort of advice that
our ministers will need in order to set priorities and ultimately
to set budgets for the next three years.
Q14 Chairman: When do you expect
that planning round to finish?
Mr Jeffrey: It is difficult to
be precise about that; it is certainly going on now. We have had
some discussions with the Secretary of State and his colleagues
recently. I think at the moment it is likely to take into the
new year and it normally would. There is an extent which it involves
early discussions with ministers about where their priorities
lie, but it is also quite a detailed process that goes on within
the department which the finance director leads to test the propositions
that are coming from different parts of the department and to
see where, if we need to make reductions—as I imagine we
will in some areas—these reductions can most sensibly be
found.
Q15 Chairman: You have promised us
a White Paper—maybe two White Papers—in the spring
to deal with, for example, planning assumptions. When in the spring
are those expected?
Mr Jeffrey: There is an expectation
normally that there will be a White Paper at some point during
the course of a parliament. I do not think our ministers have
yet taken a view on exactly when the next defence White Paper
should be so I cannot give any detail on timing for that. It is
certainly the case that as we get into the early part of next
year, we will need to be much clearer about the budget for the
three years that begin on 1 April 2008.
Q16 Chairman: So it would be helpful
to have that White Paper before then.
Mr Jeffrey: It might well make
sense to do so but I need to be careful because our ministers
have not taken any decisions yet on whether and when to have a
White Paper in the short term.
Q17 Mr Jenkin: If I understand correctly,
Mr Jeffrey, you are balancing or going to try to balance commitments
and expenditure and planned expenditure against your income.
Mr Jeffrey: Yes.
Q18 Mr Jenkin: Those are the decisions
you are making and therefore by the end of it you will arrive
at a programme of procurement of all the equipment you need now
and what you are putting money into now and what you get in the
future. So you have a rolling plan of procurement needs for the
next five or six years.
Mr Jeffrey: Except for the fact
that, Mr Jenkins, what we are examining now is the whole defence
budget; it is not just the equipment aspects of it. Clearly the
equipment programme is important.
Mr Jenkin: If you got this equipment
programme do you intend to go back in the equipment programme
and be rigid and very rigorous with regard to what money is being
spent on? This year you wrote of £195 million on a rocket
system that was not finally developed.
Q19 Chairman: We will be coming to
that precise question later on. Still on the overall timetable,
the question of the Defence Industrial Strategy arose last week
when we were told it was delayed. Do you know when until?
Mr Jeffrey: The position the Defence
Industrial Strategy—DIS 2.0—is as Baroness Taylor
set out when she addressed your Committee last week. We had always
thought that it would be good to publish a second version of the
strategy around the time of the second anniversary of the first.
Our previous minister I know was keen that we should do that and
I was keen as well. It is pretty clear now that the process that
I described a moment ago will extend into next year. We discuss
this with industry quite regularly and both we and the industry
feel that it would be much better to publish a second version
of this strategy when we have really gone through the programme
in the way I described and are clear about its implications for
equipment.
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