Select Committee on Defence Minutes of Evidence


Examination of Witnesses (Questions 140 - 151)

WEDNESDAY 17 JANUARY 2001

MR KEVIN TEBBIT CMG, MR COLIN BALMER AND MR DAVID GOULD

  140. Forgive me, an example of using peacetime criteria for a situation it does not match is an extraordinary statement, if I can say so. You may not use material at all if it is only going to be needed in war. You may have no movement at all, however you may need vast quantities of it when you go into action.

Chairman

  141. I am sure Mr Gould is aware of that. As your first sentence excited several of us perhaps you would like to explain in detail the criteria you take into account?
  (Mr Gould) First of all, there is applicability criteria, if the equipment is no longer in service or is coming out of service or it is reducing in numbers. Stock movement is important, but you need to apply judgment to it. Clearly you would not apply that to weaponry. It is not munitions.

Mr Brazier

  142. None are munitions.
  (Mr Gould) You will find items in stock where, you are right, it does not move, but you better have one just in case. I can give you a very good example of that, but I will not bore you with that. We had something for about 17 years and it had not moved and then suddenly we needed it. It was to do with a ship, I will not tell you which ship because it will only make things worse. Finally, of course, there is the speeding up of supplies from industry. If you have gone into a contractual arrangement with industry and have date of order pricing and you have delivery schedules contracted into the arrangements you have with the supplier, you can look at how much you are holding and probably reduce that in accordance with the contracts.

Chairman

  143. I do not want to impose additional burdens on your successor, if you can give us what the official view is on the criteria, it would be quite helpful to have some information on the stuff you have got rid of, whether it goes to a scrap yard or is given to our allies.
  (Mr Tebbit) I would be happy to do so. One of the benefits of the SDR is for the first time we have tried to specify readiness levels for the Armed Forces in a much more precise way than we had before. That helps you in the exercise because you know how quickly you need to put them into the field.
  (Mr Gould) The rate at which the disposal industry can dispose of the stuff is a constraint.

  144. When we were exercised about Bishopton we were told there was a review of war stockpile requirements that was underway. We do not expect this to be in the public domain, would you have a look through the promises that were given to see whether we could be given information on this or a look on a classified basis of this context? I would not expect you to give an answer now.
  (Mr Balmer) Those studies are still in train. We have not yet reached final conclusions on them. We can look to see what we can release to you.

  145. Thank you. We took evidence last week on the Six Nation Framework Agreement which covered, amongst other things, security of supplies. Is the MoD planning to be able to make further stock reductions on the basis of assurances assumed in the Framework Agreement? We trust our allies, basically, to deliver stuff to us.
  (Mr Gould) Not as a result of the Framework Agreement. It is as a result of the assurance we get from our contracts with industry. What the Framework Agreements may do is make it more likely that some of those contracts will be placed overseas. It is the contracts with industry that is the driver there.

  Chairman: Thank you.

Mr Viggers

  146. May I follow the point about war stocks. I am not as well briefed as my Chairman on the study which you are about to carry out. The Committee has heard occasional random stories of the danger of war stocks running out, of shortages which nearly occurred during the Kosovo War. If I may report, without naming the item in question, I was asking about the stocks of a particular kind of missile and asked where the reserve stocks were and I was told that they would need to be procured from the supplier. I asked who the supplier was to check the availability of supplies and I was told that the supplier had stopped making this particular type of missile. Will your study follow through that kind of issue and will you be making it available to the Committee, if necessary on a secure basis?
  (Mr Tebbit) Are you talking about a particularly big thing?

  147. A large missile.
  (Mr Tebbit) I think I know what you mean. We will make available as much information as we can. Can I just make two general comments? We do have, as you know, spares equipment shortfalls within the organisation. I am satisfied that the stock reduction programme we have does not affect that issue at all. What we are doing to reduce stocks does not touch on spares equipment shortages we have in the department. What we are doing there, having exposed the problem, and this is partly as a result of the Strategic Defence Review, is we now have a premium on making sure we have what we need. That is a major challenge for us, because what the defence logistic organisation has been created to do is integration for organisations. Some of the most immediate problems are ones which we are addressing right now with the immediate money we got this year as part payment of settlement. It was for this year, before the settlement period began, for things like secure to air communications, missiles, GPS facilities for freefall bombs, an intimate, intermediate solution for our freefall bombs before we have a planned replacement in 2007. I would like you to know that the need to act on lessons from Kosovo is a high priority, particularly in this field.

  148. In calculating the need for war stocks of all kinds do you make assumptions about the lead period that you will be given before it will be necessary to press the button and go to war?
  (Mr Balmer) The study we are conducting and the reason it is taking a long time is that there are about ten different parameters that one has to feed into these calculations. You have to make an assumption about consumption on the battlefield; about having the right munitions in the right place to be available on the battlefield; the lead time for getting them there; the shelf life for some of the items; there might be a need for training and a variety of other factors which all contribute to the total holding. Having established the total holding we then need to apply the factors you are alluding to, of do we need to buy the entire stock in one go? Does it make more sense to buy it over a period? Does it make more sense to rely on supplies? When do we perceive the need? Do we think there will be enough warning time? All of those factors are at play in this study, that is why it is taking a long time to reach clear conclusions on the right guidelines to give.

Chairman

  149. The stockpile study was due at the end of last year, I know we are just beyond the end of last year, can you tell us when it is likely to be published? What progress are the Defence Logistics Organisation making in cutting their own costs?
  (Mr Tebbit) That was the output cost reduction or increased output with the same cost target, which is the 20% reduction by 2005. That comes, essentially, from integrating these three big separate organisations with a sort of small headquarters with a much more devolved management system. Like a lot of things, this is an area where it is spend to save. We need a lot of investment in IT systems necessary to reduce the size of the organisation. 2005 is the date for doing this, Mr Chairman. We have now started putting pressure on the organisation with progressive cuts in budget to make sure those things happen, but not so big at this stage as to offer a sledgehammer blow. Brigadier Sam Cowen and his organisation need a lot of capital investment to deliver that.

  150. Thank you. Thank you very much. Your individual command of your brief is, as always, most impressive. I am delighted you decided to become bureaucrats and not politicians.
  (Mr Tebbit) I have to send you the details of our balanced score card.

  151. After we publish your response to the Kosovo Report we expect the balance will be even wider.
  (Mr Tebbit) If only to show that military operation and military capability are the first two highest priorities in that approach.

  Chairman: Thank you very much.





 
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