Examination of Witnesses (Questions 100-107)
MR MIKE
TURNER CBE, MR
IAN GODDEN,
DR SANDY
WILSON AND
MR BOB
KEEN
18 NOVEMBER 2008
Q100 Chairman: There was a recent
article in Jane's Defence Weekly which suggested that the
UK industry and the MoD were developing ITAR-free programmes.
What does that mean in practice?
Mr Keen: Well, I guess it means
if in particular areas the MoD are concerned about access to US
technology they will drive a capability that is free from US technology.
Q101 Chairman: So it would be ITAR-free?
Mr Keen: If it were the case.
Q102 Chairman: It would be helpful
to US industry to see what progress could be made on this Treaty?
Mr Keen: I think so and I think
you had Dr McGinn give evidence to you from the AIA last year
setting out how supportive that association is of the ratification
of the Treaty, and certainly from the time I was in Washington
a couple of weeks ago that support is still very evident. I think
the industry over there is supportive and we have just got to
take advantage of that and hope that Vice President-Elect Biden,
who was the Chairman of the Senate Foreign Relations Committee
and was supportive of the Treaty in that role, gives us support
within the Administration in an effort to put it high enough on
the Congressional agenda.
Q103 Chairman: The Administration
has never been the problem there?
Mr Keen: No.
Q104 Chairman: Can I get on to exports.
I will ask this in as neutral a way as I possibly can because
there are two stories on it. What was the effect of the removal
of DESO from the Ministry of Defence and marrying the new organisation
into the Department of Business, Enterprise and Regulatory Reform?
Mr Turner: We were very concerned,
as you know, as an industry when the Prime Minister took the decision
to move it. However, we are pleased with the result. We have worked
hard with government to make the transfer as seamless as possible
and to keep—this was the important thing—the MoD involved.
All the evidence to date is that the MoD are very much still involved
in supporting the export of UK products, so it has gone far better
than we dared fear at the beginning. Is that fair?
Mr Godden: Yes.
Mr Keen: I think it is fair enough.
I am fresh from the DESO Defence Advisory Group of which I am
a member yesterday, as indeed is Ian Godden, and I think it is
very clear there that Richard Paniguian, the new head of the DESO,
is absolutely clear that the key test of how the arrangement works
will be the extent to which they deliver ministerial support particularly
from the MoD, and more general support from the MoD, so I think
it is absolutely on his agenda. The other important factor against
that background is the fact that John Hutton has made it very
clear over the last couple of weeks that he is going to take a
personal interest in supporting defence exports. I think that
is a hugely important commitment to industry.
Dr Wilson: I think there has been
a very positive development on exports with regard to the MoD
in the last year. In the first DIS there was hardly any mention
of it and in some of the documentation that we have seen from
review, using exports to maintain the UK's capability is actually
there in black and white. It is very attractive to us to see that
support for export because they have realised the on-going benefit
it would give to keeping the industrial capability which will
then deliver through-life capability to real programmes in the
UK. I think that is a very significant change and is to be welcomed
and maintained.
Mr Turner: It is always helpful
of course if you have products to export! Hawk has proved, if
you get it right at the beginning, what it can do for the country.
It would be useful to FRES and it would be useful to have Typhoon
fully developed as a multi-role fighter. It would be useful to
have frigates to export and that is why again the campaign to
improve the situation is so important.
Q105 Chairman: Can I ask you a question
about some of the things that we do try to export. Might there
be a criticism perhaps of the Ministry of Defence that the equipment
that the Ministry of Defence buys is so sophisticated, so difficult
to operate, so expensive, that other countries cannot afford to
buy it and therefore that damages our export markets and also
therefore the Ministry of Defence's own capability?
Mr Turner: It is how seriously
you take defence and your Armed Forces. Clearly we have a history
of wanting our Armed Forces to play at the highest level and you
have to give them the highest level of capability. I remember
the Horizon Frigate Programme where we were unable to come to
a conclusion in Europe because the requirements of the Royal Navy,
rightly, were that they were possibly going to fight with these
ships. Other countries, dare I say, did not have the same view
and therefore we have to have capability that supports our Armed
Forces. The good news on the Future Frigate Programme, if we ever
get there, is that we are looking at a modular construction where
you have units you can put on the hull that will be for the Royal
Navy and a lesser capability for export markets, and I think that
is the kind of thinking that we need. Today we have an aircraft
second to none in Typhoon that if we fully develop to its multi-role
capability there is not a competitor in the world for the capability
and the cost of that aircraft. That is why I am appealing to the
MoD to finish the job on Typhoon. Again we come back to the budget.
That would be a wonderful export for this country to a number
of countries.
Mr Godden: Just to reinforce Dr
Wilson's point, the exportability issue has clearly come up the
agenda. I think that is probably one of the issues where we have,
as it were, benefited from the thinking over the last six months
or so in terms of the economic impact, because there is an economic
impact. Clearly that has very little effect in the short term,
but in the medium term this is very important for the period when
we all think that there is going to be a pay-back period of some
sort in two, three, four or five years' time. Maintaining our
success at defence exportability to the type of nations that we
are comfortable with, which is a Government policy, is a very
important thing to encourage and to encourage the changes in attitude
that go with that.
Dr Wilson: Can I just come back
to DIS again and emphasise how right it was. Its emphasis on systems
engineering and its emphasis on open architectures are exactly
the things that enables things to be developed for the UK and
then slightly different things exported within the constraints
that the Government wishes to place on them. I think that is why
we were really enthused by the original Defence Industrial Strategy.
It got so much right that it does not just permeate the UK programme
but it enables UK industry to get to the point where we could
have open, architected systems and plug-and-play components that
would allow you to adapt it to whatever market you wished to play
in, and that seemed to me at the time fundamentally a good thing.
As I have said before today, I hope the MoD continues with that
thrust and its support of exports using that principle.
Q106 Linda Gilroy: I realise that
our time has come to an end but I have a fairly small question
and it was really just to pick up on a point that Mike Turner
was making earlier about the representations in relation to the
pre-Budget statement that we are expecting and the extent to which
the supply chain, small and medium enterprise part of maintaining
employment has been stated as a case within the global case that
you would have been making. Do you feel that has been made strongly
as part of your representations and can you just for the record
of the Committee perhaps give a broad-brush outline of how important
that is?
Mr Turner: Just to reiterate,
we have more SMEs in the defence industrial base of this country
than Spain, Italy, Germany and France put together. SMEs are a
very important part of the defence industrial base of this country.
They are suffering now because, frankly, the primes are suffering
on the major programmes. We are not flowing down and are unable
to flow down money to the supply chain. We have made the point
about SMEs in the defence industrial base. Frankly, I do not think
we are being listened to. I do not see us as part of the stimulus
package and I think it is a mistake.
Q107 Chairman: I think we will end
on that point and thank you very much indeed for a very interesting
and very helpful evidence session to start us off on this inquiry.
We are most grateful.
Mr Turner: Thank you very much.
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