Defence Equipment 2010 - Defence Committee Contents

Examination of Witnesses (Question Numbers 380-392)



  Q380  Chairman: The sentence that Mike Hancock read out earlier was: "No evidence yet of a magic formula for acquisition reform that has been shown to deliver its intended benefit". He found that startling. I know it is the run-up to Christmas, but I am afraid I do not find that startling; only time will tell.

  Mr King: If you get reviews done of businesses generally they come up with there is no magic formula either.

  Chairman: I am delighted that you do believe in magic formulas.

  Mr Hancock: I was hoping that this guy would have come up with something.

  Chairman: Maybe he will and we can find out next week. I want to get on to research and development.

  Mr Hamilton: We will find out through David Cameron!

  Q381  Chairman: Research and development is a matter of extreme importance. What proportion of research and development on defence equipment is funded by industry?

  Mr Godden: I should have that, but do not have that number to quote here. I can bring it back later.[1]

  Q382  Chairman: Could you please bring that back. What is your reaction to the planned future expenditure on research and development in the UK? What is the reaction of industry to this?

  Sir Brian Burridge: Two points. One is that it is insufficient because this is, again, a strategic resource, an indigenous capability, which allows you to manage risk, allows you to develop capabilities. It cannot be turned on and off like a tap. Secondly, because it cannot be turned on and off like a tap it needs to be managed strategically in that there needs to be constant cognisance of where the research programme is going as IPTs, delivery teams, gradually converge on the solution to their requirement. We have seen occasions where the two for plausibly good reasons have just not linked up, and those good reasons are often about time in the sense of getting your programme agreed before the shutters come down even further.

  Mr King: I would just come back to one of the points I raised earlier. In the absence of a Strategic Defence Review, cutting back on R&D at this stage does seem to be putting the cart before the horse. You really need to have a plan. There is a long cycle for this activity. We are not talking about huge amounts of money that the MoD spends on R&D and it is precipitous to do it before we have got a clear Strategic Defence Review.

  Q383  Chairman: Mr Godden, I want you to come back on this. I am disappointed in what you have said so far because I have heard you speak eloquently about research and development and I want you to do it again, please.

  Mr Godden: I am sorry I do not have the numbers but I will get them.

  Q384  Chairman: You do not have to have the numbers.

  Mr Godden: For me, this is three things. One, it is an example of a knee-jerk reaction to pressure.

  Q385  Chairman: What is an example?

  Mr Godden: The cutting of the research budget, which is a 24% cut over three years.

  Q386  Chairman: A 24% cut over three years. Which three years?

  Mr Godden: That is 2007-10. The latest announcement is from £471 million to £439 million.

  Q387  Chairman: That sounds like figures. That is very helpful, thank you. Why is this a mistake?

  Mr Godden: There are two reasons. One is it is one of the few things that has been analytically proven that spending on research and technology six to seven years from now means a direct link to the quality and nature of our defence products and equipment. We are storing ourselves up a problem. Who knows who and what we will be fighting in seven years' time. This is a signal that we are not interested in that. That is number one. Sorry, you have wound me up so I will respond to you.

  Q388  Chairman: That is what I want.

  Mr Godden: Two, it is totally contrary to the beliefs of most political parties that we are seeking to rebalance the economy and create a high value, high technology industrial base out of the pieces that remain in this country. For me, given that defence, and I will look more widely than defence, is 15% of the total national R&D spending, therefore that is a signal that somehow or other—I do not understand this—one part of us says we are trying to create a high technology economy and the other part is cutting one of the largest R&D activities in the country. Personally, being on the board of two companies where the impact of research and development being cut not only affects defence but this company deals with medical equipment and some of the industrial and scientific equipment, I have already noticed that impact. My last point is that this is seen internationally as a signal. There are many signals that the country gives about a commitment to industrial base. One is, are the politicians committed to the international selling of this sector or these activities; two, how much research and development does the nation itself put into this sector; and, three, what is the mechanism by which the industrial base is attracted in. In the criteria as I look at it, and perhaps speaking out of school for some of my members, they say, "With the UK as a base with this uncertainty, with a cut in R&D and over the next year or two with the disruption of a general election, this is not a very good set of signals about whether to invest here or in the UK".

  Mr Hancock: Does it not go further than that? Is it not also about how the areas of research and development are geared, who is making the decision where the reduced resource is going to be spent? Who is telling the tale to make the decision a profitable one? One of the things I found mind-boggling over Drayson's first attempt was that he missed that point. Even though he talked the talk, the report did not produce the sort of commitment to research and development that I felt we needed as a country. This backs up what you said. Is it going to change?

  Q389  Chairman: I think that is a question that you should be asking us rather than us asking you.

  Mr Godden: I have addressed it with three Secretaries of State for Defence in a row and I have addressed it, as the Chairman will know, with the other political parties in opposition and have raised the subject quite openly. So far there is no action.

  Mr Hancock: No, it is pathetic.

  Chairman: I did not actually. Perhaps I should have done, but I am delighted you have.

  Q390  Mr Havard: Are you also saying it says something about what sort of future customer we are going to be, or what sovereignty or dependency we might have in relation to what we might wish to do and if we decide strategically we want to do X we may not have the capability to do X and will be dependent on someone else to deliver it in a way that we otherwise would not be able to?

  Mr King: Both the issues that you raise in terms of what sort of customer and what capabilities the UK will have in terms of sovereign capability, that is absolutely right.

  Q391  Mr Hancock: You must be looking around now, must you not?

  Mr King: Yes, absolutely.

  Chairman: I have one final question which is nothing really to do with the Equipment Report, it is more to do with the Report that we are doing into the MoD Annual Accounts. We have heard that we keep losing Bowman radios.

  Mr Havard: Misplacing them.

  Q392  Chairman: Dr Wilson, you have been making these with loving care. Is there any suggestion that you might have at a very affordable price, no doubt, for keeping track of these things?

  Dr Wilson: Yes. There is a raft of work already ongoing to look after assets in the field. I do not think there is a simple answer to this. There does need to be greater integration of the existing systems that deal with configuration management of the platforms in theatre, linking that to some of the ordering mechanisms that MoD uses to call up spares when they find they need them. One of the key things that industry can do to help with that is put more people in theatre with the right skill base to get round some of these problems. We have been delighted to be able to put only a couple of people in to do repair and overhaul activity in the last month or so, but I would hope to see that would migrate to a technical management role and also to looking after some of the assets for them in there. Fundamentally, I think there needs to be a greater level of control applied. We have got mechanisms to help do that. When JAMES comes along—Joint Asset Management and Engineering System—so long as it really does have embedded in it a suitable asset tracker and configuration management system, I think we will see some improvement. The message I would have is accelerate rather than delay in those programmes.

  Chairman: Thank you, that is very helpful. Gentlemen, many thanks indeed for this morning's evidence session. It has been very helpful, very interesting, and I hope that we can continue this on other occasions because it is very important. Thank you.

1   Ev 120, Ev 121 Back

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