The United Kingdom's Future Nuclear Deterrent Capability - Public Accounts Committee Contents


Examination of Witnesses (Questions 80-99)

MINISTRY OF DEFENCE

WEDNESDAY 19 NOVEMBER 2008

  Q80  Mr Davidson: It is genuinely mutually dependent but it is more mutually dependent for us than it is for them in the sense that they can more easily allow it to slip to the right in time terms than we can. Are there any signs? Under budget pressures, who knows whether or not the Americans might feel able to relax the timetable a little in order to save money in the short term? What guarantees are there that they will not do that?

  Sir Bill Jeffrey: My colleagues will correct me if I am wrong, but I do not think there is any significant respect in which what we are planning here is dependent on US timetables. As was exposed by the earlier questioning, if anything an issue arises from the fact that the Ohio class will come to the end of its life partway through and, indeed, the extended D5 missile will come to the end of its life partway through the expected lifetime of our successor deterrent. I do not see immediately the sort of dependency you are implying in which any delay on the US side would impact adversely on us.

  Q81  Mr Davidson: Can I just clarify. We are in more of a hurry to get this new system than they are, are we not?

  Sir Bill Jeffrey: We need to replace the existing Vanguard class of submarines earlier than they need to replace their equivalent.

  Q82  Mr Davidson: So if they take their foot off the gas in order to save money, which is entirely understandable give the financial pressures they might be under, then that is going to impact much more upon us than on them. What guarantees do we have that they will not do that?

  Sir Bill Jeffrey: I may be misreading this, and my colleagues will tell me if I am, but I do not think what we are doing is dependent on the pace of their replacement programme, it is dependent on the quality of the co-operation, in particular over the important issue of the missile itself and the missile compartment, and that co-operation is of a very high quality.

  Rear Admiral Mathews: The common missile compartment is the nub of this question because that is the piece of equipment we need from the US. We have not designed it in the past, it has traditionally been a served-in design from the US because they have been ahead of us in developing the Polaris system and the Trident system. We are in a different place here. The exchange of letters between the Prime Minister and the President, and subsequently between the Secretary of State for Defence and Sec Defense in the US, have underpinned the continuing relationship under the Polaris Sales Agreement. That is an international treaty that gives us significant protection in terms of the US commitment to us. The Americans are committed to delivering the common missile compartment design to us. They are on the programme with us, they are working with us. You are right, there is some risk to us if they do not deliver, but in terms of going down a separate route of UK design to design our own missile compartment, which would still take the Trident D5 missile which the US would then insist on underwriting in terms of certification through a complex testing programme, this is the best value for money deal that we will get.

  Q83  Mr Davidson: I understand that there is no alternative, I understand that aspect of it, I just want to be clear about the extent to which our timetables gel. I want some clarification on the question of technology transfer. Are there any difficulties that are conceivable with the United States in terms of technology transfer to us for any subsequent upgrading at all? We had some of this in relation to Joint Strike Fighter when there were discussions, but is there any parallel here at all?

  Rear Admiral Mathews: No, this is completely different because the Polaris Sales Agreement is an international treaty, it is a government-to-government agreement which cuts through all the Foreign Military Sales type issues and ITAR issues such as we have had with the Joint Strike Fighter. This has stood the test of time for 50 years. We are well-rehearsed in technology transfer through the Polaris Sales Agreement. It happens constantly and we are currently in an obsolescence management programme for the strategic weapons system within the Trident system and it is not an issue.

  Q84  Mr Davidson: Can I turn to the major point about the cost of supporting the submarine industry. As part of the Defence Review we agreed that we were going to maintain all sorts of things for submarines. As I understand the report, the cost of maintaining a British submarine capacity is not being borne by the nuclear programme, in which case by whom is it being borne, or by what programme? Is this a way, as it were, of hiving some of the costs off the nuclear programme on to conventional submarine provision?

  Sir Bill Jeffrey: The submarine programme is either to be the deterrent or nuclear powered submarines, namely the Astute, so the cost of the indigenous industry can be attributed to one or the other of these. What we are very keen to do both in relation to the construction part of the submarine industry and the support part is to use such leverage as we have through this programme, and for the reasons that we discussed earlier there are some limits on that leverage, to encourage industry to drive costs out, to be open with us about the costs and to make the whole thing affordable.

  Q85  Mr Davidson: I just want to be clear about the ongoing costs of maintaining a submarine building and reactor capacity. Is part of the cost of maintaining that capacity being borne by this programme or is it only going to be borne by other programmes?

  Rear Admiral Mathews: The way to look at this is that we have a UK industry which comes with an overhead and what we have done is by designing the Astute programme we have optimised the throughput through the Barrow BAE Systems' yard to get to an optimum build drumbeat, as we call it, basically to sustain industry and to flex skills. Though our aim is clearly to deliver a seven Astute programme, because that is the capability that we need to meet our defence outputs, underneath that sits a programme and an approach to programme management that has optimised the rate we build submarines against the workforce we have and the facilities we have to make an efficient, lean organisation delivering the output we require. The longer term commitments we can make in terms of forward programme, the better planning we can make in terms of managing business across build and support. This is a long-term programme that makes long-term commitments that enables us to make long-term planning decisions about how we manage UK industry and the overhead that goes with it.

  Q86  Mr Mitchell: Can I pursue the point Ian Davidson has mentioned. The Defence Industrial Strategy in 2005 established the principle that the United Kingdom would retain all those capabilities unique to submarines. Why? Submarines are perhaps a useful weapon in a Cold War situation when you are opposing another submarine power with nuclear submarines, but when it comes to the kind of work of the Navy or the Defence Department, whether against pirates, Sierra Leone, touring the Gulf or whatever, nuclear submarines are no use at all. It is just a residue of Cold War thinking that we have got to have this.

  Sir Bill Jeffrey: The thinking behind that part of the Defence Industrial Strategy was that the technologies involved in constructing nuclear submarines for our use, and in particular the capability required to support them once they have been got into service, were in that category of defence capabilities that ought to be kept on. What I would add to that is not at any price. If you look at the White Paper, paragraph 6.3 signals our intention to build the new SSBNs in the UK but this is dependent on proposals from industry that provide the right capability at the right time and offer value for money. We are not saying it will be done in the UK at any price, but I think it will very probably be done in the UK for the kinds of reasons that are set out in the Defence Industrial Strategy.

  Q87  Mr Mitchell: Are we a big enough, serious enough and powerful enough nation with a strong enough engineering and construction tradition to be able to afford to maintain a submarine capacity? What other countries have it besides the US and Russia?

  Sir Bill Jeffrey: The French do.

  Rear Admiral Mathews: Nuclear powered submarines or nuclear deterrents?

  Q88  Mr Mitchell: The French will want to build a euro nuclear sub, I have no doubt!

  Rear Admiral Mathews: France, US and UK have deterrent submarines. Others are aspirant to it and a number of other nations operate nuclear powered but not nuclear armed submarines.

  Q89  Mr Mitchell: It is very specialised. 5.2 tells us: "The industry is made up of a number of monopoly suppliers, including BAE Systems and Rolls-Royce ... " That means two things. One, they have got you over a barrel when it comes to negotiating with them because they are the only people you can buy from. How do you control their costs? How do you manage the contract?

  Sir Bill Jeffrey: That has been the challenge of the Astute programme. As I said earlier, we have learned from that programme. To my mind, the essential starting point is to acknowledge that we are dealing with single suppliers in this case, as we sometimes are in the defence field and as other nations are in their own particular contexts as well, and how best to get value for money within that sort of context.

  Q90  Mr Mitchell: Do these firms do anything else? Are they so specialised they only exist if you are building nuclear submarines?

  Sir Bill Jeffrey: The Barrow shipyard in recent years has very much specialised in the construction of nuclear submarines, yes. It has not only done that.

  Rear Admiral Mathews: It's surface ships as well.

  Q91  Mr Mitchell: It must be a drain on lots of other aspects of industry, whether it is making cars, washing machines or better fridges, that so many skills are tied up in this particularly useless sector.

  Sir Bill Jeffrey: Without rising to the word "useless", these are very specialist skills. Undoubtedly, one of the issues we have is to ensure that the nuclear submarine industry continues to—

  Q92  Mr Mitchell: If you are a mother or a teacher advising a son, I notice posters around Yorkshire, "Go into coal mining, it's a job for life", but you would not say, "Go into nuclear submarine design, lad, it's a job for life", would you? It is a very fraught thing, it depends on contracts and in the ultimate it is a very narrow concentration of skills of no use anywhere else.

  Sir Bill Jeffrey: Just at the moment it is a job for quite a while is one answer to that question. Secondly, as the civil nuclear industry is built up, as appears likely, the challenge for us is to ensure that we, as the Report brings out, have a flow of suitably skilled people because people with these skills will be in very high demand.

  Q93  Mr Mitchell: Is the cross-subsidisation there similarly with the nuclear industry?

  Sir Bill Jeffrey: Certainly there is an extent to which the same skills are relevant to both and we are in competition for these skills. We are very conscious of it and have a project going on at the moment to think about how we can become more successful in recruiting people with this skill set.

  Q94  Mr Mitchell: I want to ask the Rear Admiral why the Navy wants these big beasts. You could have lots of frigates, you could be shooting and arresting pirates in the Indian Ocean.

  Rear Admiral Mathews: We are.

  Q95  Mr Mitchell: You could be deployed in the Gulf massively, you could have lots more frigates, destroyers, anything you wanted. Why do you want all the money put into these big beasts, 5-6% just to keep them going?

  Rear Admiral Mathews: There are two separate issues here. There is the strategic submarine, the ballistic deterrent submarines, which is government policy which the White Paper—

  Mr Mitchell: That is an excuse that it is government policy. Why does the Navy want them?

  Q96  Mr Curry: It is your Government.

  Rear Admiral Mathews: Then there is the—

  Q97  Chairman: The poor Admiral cannot start disagreeing with the Government, it would not do his career any good!

  Rear Admiral Mathews: There is a fundamental question about what Hunter Killer submarines do. They have a wider range of capabilities, including intelligence gathering, which is extremely useful in these days of piracy at the moment, for example, special forces. I could go on and bore you, but they are far more capable than you probably think.

  Sir Bill Jeffrey: The policy was set out in the White Paper which was the subject of a parliamentary vote.

  Q98  Mr Mitchell: Given the absorption of skills that could be usefully employed elsewhere that are needed to keep this industry going, why do we not just pack it in and buy from the Americans?

  Sir Bill Jeffrey: In practice I do not think that would be feasible.

  Q99  Mr Mitchell: Why?

  Sir Bill Jeffrey: That is a judgment that has been made because of the supply base in the US. History also suggests that although it may seem very expensive to acquire the Astutes, per boat they are probably less expensive than those that—



 
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