Examination of Witnesses (Question Numbers
280-299)
SIR BRIAN
BURRIDGE, MR
IAN GODDEN,
MR IAN
KING AND
DR SANDY
WILSON
8 DECEMBER 2009
Q280 Chairman: Mr Godden, everyone
is looking at you.
Mr King: I will answer if you
want.
Mr Godden: No. There is a shortage,
in general terms, of skill-base in programme management, systems
engineering and equivalent, and you can see that across many industries
in the West actually—it is not just a UK problem. Overall
there is a shortage of high skill in that area, but the skill
level within DE&S and equivalent is lower than you would expect
and is lower than necessary. There are two other factors as well,
which is authority levels to make decisions that go alongside
the skill base and it is the combination of those two factors—the
authority levels and the skill base being missing—that causes
a lot of issues around how to make decisions and the time taken
to make decisions with the lack of skill. So it has an effect
on all sorts of things—time, the quality of the decision
itself and the quality of the management of the whole process—and
we do believe there is a shortage that needs to be dealt with.
Q281 Mr Crausby: Is that a real problem
continuity-wise? How long do people stay with the MoD? Do they
move on into industry, in the sense that industry gives better
rewards than the MoD?
Dr Wilson: Can I interject there.
It is not just an MoD versus defence industry issue. In fact,
as we progress into the reinvigoration of nuclear energy in this
country, we are going to find a whole gamut of technologists being
required across a much wider industrial landscape than we currently
have in defence, and they are the same skills—systems engineering,
complex contracting—all of the usual things that we put
a premium on—programme management. So there is a problem
in defence just now. We can always do with more programme managers
and more systems engineers. As other industries come up in importance,
that is going to be a greater problem, and it speaks to us having
to have a skills strategy that feeds all of those industries over
the next 10 to 20 years.
Q282 Mr Crausby: So what do we need
to do?
Dr Wilson: Have a skills strategy
that reflects the importance of programme management and systems
engineering.
Chairman: Can you save it up, Mr King,
just for a moment.
Q283 Mr Borrow: I just want to be
clear in my own mind whether this is a money issue or whether
this is a systems issue within the MoD. Is this something where,
basically, the taxpayer is going to have to pay a lot more cash
to get the right sort of people to do the job properly and do
that in a climate when both major parties are talking about reducing
the pay of top public servants? Are we just going to have to bite
the bullet and pay a lot more to get the right people, or does
something have to happen within the MoD to make it more comfortable
for these people to actually be there and it is not necessarily
a cash issue at all?
Mr King: It is a nice feed into
what I was going to say. There is no doubt that there is a salary
structural issue; that if you were to look at what industry is
paying these people—because they are a scarce resource across
those—then there is a differential, and so, to take your
point, you probably do have to bite the bullet if you regard this
as a key resource going forward. You then have to put in training
schemes, you need a skills strategy and there has to be a commitment
to meet these training schemes, because there is not a surfeit
of these types of people with these skill sets. If you look into
my company, in particular, it is a very recognised function—programme
management, project management, whatever you want to call it—and
we invest a lot of money in both graduates and training to keep
their skills up, so it is a long-term commitment. Then you have
to put a career structure around these people. They have got to
want to stay in that sector, because these are long-term programmes
and you want continuity; so they need to know how they can be
promoted within the Civil Service, or the military, or wherever
they are sat. It is a really long-term commitment; and I know
that DE&S are looking at it, because I have personally spent
time discussing the structure of how we have built up our function,
and we have had joint activities going on in that area, but there
will be a differential in financial rewards.
Q284 Mr Hancock: The problem is,
if the MoD did that, you would end up poaching them, would you
not? You would stop training them and you would poach them. It
is not to your advantage, is it, really, because your edge at
the moment is there is not the skill and the project management
within the MoD, which allows you to take them to the cleaners
time after time after time?
Mr King: That is absolutely wrong.
Q285 Mr Hancock: Are you sure?
Mr King: Absolutely and fundamentally
wrong.
Q286 Mr Hancock: So why have you
spent so much money engaged in buying people out of the Services
when it suited you, when you needed their skills?
Mr King: Because we need those
skills, because, as we have moved along providing integrated support
availability contracts, we need to marry up our design capability
with the operational capability to provide real cutting-edge capabilities.
If you look at the benefits of the Tornado attack programme, it
has taken £1.3, £1.4 billion of savings to the taxpayer.
Q287 Mr Hancock: Over and above all
the other costs that it had already cost us. Over and above the
original figures.
Mr King: No.
Q288 Mr Hancock: Yes, it has cost
us a lot more money than we originally—
Mr King: Not true. On Tornado
that is not true. We are very professional about the way that
we do these things. We do not go in and just recruit people from
the Services. We enter into debate as to where would be the right
placement of those skills for the UK.
Q289 Chairman: Can I come back to
something that you said, Dr Wilson, that it is going to get more
difficult to recruit these people. The Bernard Gray Review suggests
that the problems in the acquisition field in the Ministry of
Defence are bad but accelerating. So things are going to get more
difficult in that respect, and putting them right is also going
to get more difficult, if what you suggest about the shortage
of skills in the future is right. Would you say that was an accurate
summary of where we are?
Dr Wilson: Yes, I think that is
a fair comment, given what Bernard Gray has said and what I have
said today, in terms of the wider industrial landscape for skills.
Q290 Chairman: You accept that things
are bad and getting worse—that comment in the Bernard Gray
Review—do you?
Dr Wilson: I think that is hard
for me to judge, frankly.
Sir Brian Burridge: There is one
area where things could change. Acquisition reform over the years
has had to see the MoD change its approach from a strictly writing
contracts type of approach (and they had many people who were
very talented at that) to a commercial approach. When you think
of the way in which acquisition of both capital equipment and
services has changed through PFIs, availability-based contracts,
then there is a greater need for people with commercial nous,
and that is an area that they are short of in the DE&S and
that is potentially an area where they can actually expand, because
the nature of the economy will release a number of these people
on to the market. So the challenge for the MoD is to get the commercial
expertise; the challenge for industry is to understand the user
better, particularly, again, in these areas where acquisition
has changed, and that speaks to Ian's point about needing people
who really do understand what the users do with their equipment.
Q291 Chairman: That is helpful.
Mr Godden: I do not want to prolong
the debate, but, just to reinforce it. I think this is one of
the single biggest important features which possibly has not got
enough follow-through attention or enough implementation aspects
to it to make this real. As I survey the four sectors I am involved
in—civil aviation, defence, civil aerospace and security—there
is no doubt what Dr Wilson said, that the demands on that type
of skill are increasing over time, and, with the civil nuclear
coming into that equation quite dramatically, there is a real
risk of a further skill drain out of the traditional defence sector,
particularly because, as we look at careers—and I listen
to people every day talking about their careers—they are
beginning to fear that the security space and civil nuclear are
much better future careers for them because it has got growth,
it has got expectations of more money, it has got more research,
etc, and there is therefore a belief that defence has got this
risk of being stuck in a box and not going anywhere. So I think
we have also got that challenge, which we are dealing with. To
me the programmes associated with this are critical. You may or
may not know that the DoD have just hired, or are in the process
of hiring, 30,000 people into procurement, as we speak, because
they feel they have deskilled too far. So they themselves are
trying to reach in and deal with it.
Q292 Chairman: When you said "the
DoD", you are talking about the United States.
Mr Godden: The United States DoD,
I am sorry, are hiring 30,000 people in and they are paying above
market rate.
Q293 Chairman: They are paying above
market rate?
Mr Godden: Yes.
Q294 Chairman: Mr King says that
the Ministry of Defence pays below market rate. Mr King, are you
able to quantify the differential that you have referred to?
Mr King: Not here and now. I suspect
it would be fairly easy to do so, but I have not got that data
to hand.
Q295 Mr Jenkins: I would love to
ask you about the rationale and the reason why I need, in the
Ministry of Defence, a very good commercial manager to deal with
a partner, but the question is more basic than that. As you may
be aware—and some people will not face up to it—only
a percentage of our people have the ability to acquire and develop
these skills. So what are you doing as companies? Do any of you
actually finance a chair at a British university to develop these
types of skills and how many do you pull in to stop them drifting
off into useless occupations like lawyers or accountants?
Mr King: We do a lot. You are
quite right. We do have relationships with a lot of universities
in terms of sponsoring the types of skills needed. At any given
time we have got about 1,000 in apprentice schemes, we have got
300 in graduate schemes and we keep on turning up that wick to
make sure. We do lose a percentage of them, but it is recognised
that if they can stay within the sector, or stay within the UK
industrial sectors, then that is the right thing to do. You cannot
turn that wick off. And that is why I come back to the earlier
comments about the need for a proper SDR which then determines
the Defence Industrial Strategy and that allows us to invest,
because it takes a long time to train these people. We are a very
specialist sector. They just do not appear. We have gone past
the belief that you can just go to other engineering sectors and
pick up people who are directly attuned for the defence sector.
It does not work that way. You then have to spend a lot of investment
in it.
Q296 Mr Jenkins: Do you all do the
same?
Mr Godden: Yes. On behalf of the
industry we are trying. For example, at Farnborough we are creating
a Futures Day, the Friday, all around this subject about attracting
youth into the sector and attracting the science philosophy amongst
youth. Our long-term aim is to build that up into something much
more significant than it is. Last year I think we had 700 or 800.
These need to be thousands. We need to get thousands in here.
This will not solve the problem in the next few years. It will
not solve it in the context of what we have just talked about
in terms of some of the skill bases in the MoD, but it will start
feeding the hopper for five, 10 years down the road.
Q297 Chairman: Still on the analysis
contained in the Bernard Gray report, would you say—from
the sound of things you probably would—that this was the
most important issue contained within the Bernard Gray Review:
the absence of skills within the Ministry of Defence?
Sir Brian Burridge: There are
two fundamental issues. One we touched on at the outset, the fact
that the programme and the resources are out of balance and that
generates particular behaviours, but, certainly, in parallel with
that is the depth of skill in programme management and in commercial
management.
Q298 Mr Hancock: Is it possible to
bring those two things closer together?
Sir Brian Burridge: One assumes
that it would be possible. One would have to defer to the Treasury
to know what is in the art of the possible, but, yes, in theory,
as a standard piece of business practice, that is what you would
seek to converge.
Q299 Mr Hancock: He did not come
up with any real suggestions of how that could be achieved, though,
did he?
Mr Godden: That was my comment
about implementation.
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