Select Committee on Defence Minutes of Evidence


Examination of Witnesses (Questions 340 - 359)

WEDNESDAY 8 MAY 2002

LORD BACH, SIR ROBERT WALMSLEY KCB, AIR MARSHAL SIR JOCK STIRRUP, KCB, AFC AND MR JOHN COLES

  340. Yes, in relation to the front-line activities.
  (Lord Bach) I am going to ask Sir Robert to start off and then I am going to come in on this.
  (Sir Robert Walmsley) I think characterising a military capability as a provision of a service, by which I mean training people and similar because that is the provision of a service, providing a hosepipe in the sky is right at the other end of the spectrum, that is the air tanker process, and providing you can specify what you want the thing to do in terms of a service, you have to think very carefully about whether or not you can PFI it. I used to have a very simple rule which is that if it does not move, you can always PFI it. If it moves a bit near the front line, you can think about it and if it is in the front line, you should not do it. That is sort of something you can explain to thousands of people and they can get it.

  341. Well, I am sorry, I might be a bit slow because I do not get that! In terms of, for example, a fire service which I think Mr Knight raised with you, the issue about whether, for example, in deployed operations in Afghanistan, would it be appropriate to have a private PFI delivery fire service which is a front-line operation?
  (Sir Robert Walmsley) I think what I said was that if it moves, you have to think about it carefully, but if it is in the front line, and a nuclear-powered ship would be a nonsense, in my view, as a PFI proposition, and one reason was you could—

  342. Why?
  (Sir Robert Walmsley) You could not specify it as a service. What on earth did you want from it? This thing is full of sailors, but what service are they providing? You do not know and you cannot really specify what service they are providing.

  343. It might be a cargo ship powered by nuclear in the Arctic, and that is legitimate.
  (Sir Robert Walmsley) I meant a nuclear-powered warship. There are no non-warship nuclear-powered vessels in service today that I am aware of. There have been.

  344. There have been certainly.
  (Sir Robert Walmsley) And they all fluffed it.

  345. In terms of an operation, are you talking about the delivery of fuel, for example? Obviously in a combat situation where you have got fuel being delivered in any operations, is that PFI-able on your criteria?
  (Sir Robert Walmsley) Well, I think we have explained that it did not work, so we tried it and it did not work. I say that is something which is going near the front line, it was worth exploring, industry thought it could work and as we looked into it more and more deeply, we decided it could not and I think we were right to stop, so the answer is we tried it and we did not make it work.

  346. So is that an example of one which you actually pulled?
  (Sir Robert Walmsley) Yes.

  347. I am not very clear yet as to what you mean by front line.
  (Sir Robert Walmsley) Fighting.

  348. I am aware of that, but I mean in terms of where the PFI line is drawn. In terms of, for example, again the last point about fire services, would that be an appropriate use of PFI, a private company, or let's give another example of catering facilities?
  (Sir Robert Walmsley) There is no way I would contradict what the Minister said on the fire service.

  349. Let's change it slightly and let's say, for example, catering services in Afghanistan or anywhere else where there are operations.
  (Sir Robert Walmsley) What I was trying to say was if they are not in the front line, but they are deployable, you need to think about whether PFI could be made to work. If they never move out of the United Kingdom and they are brick buildings, it is pretty obvious it is PFI. If it is right in the front line and involves fighting, how do you specify that as a service? You cannot, so we should not waste time trying to pretend that things like nuclear-powered submarines could be provided by a PFI.

  350. Catering?
  (Sir Robert Walmsley) Well, I just said we would need to think about it and look at it in detail. The Minister opened this morning by explaining the fact that—

  351. Wait a minute and answer the question rather than actually trying to avoid answering it. The fact of the matter is I accept what you are saying in terms of catering facilities and things which never move out of this country. For example, you know when you have deployed forces abroad, a large element of extra support in there is catering. Would you, for example, envisage a situation where you could deploy forces abroad and the catering was provided under a PFI?
  (Sir Robert Walmsley) It would depend what they are deployed for. It is quite clear to me that static forces deployed in buildings in countries, for instance, the United Nations forces in Cyprus, there is nothing wrong with relying on contractors. If you are going to say that the Royal Marines currently deployed in south-eastern Afghanistan today can have a PFI contractor climbing up the mountain and providing them with bacon and eggs, then I find that preposterous.

  352. Well, let's go back to Bagram air base which Jim Knight mentioned. What about providing breakfasts at Bagram?
  (Sir Robert Walmsley) I just cannot answer it because it depends on the circumstances at Bagram today. My own instincts are that we would think pretty carefully about that. Cooks, as is well known in the Army, are still capable of firing rifles and defending themselves. The idea of private contractors being near fighting I think is pretty dodgy.
  (Lord Bach) Yes, I share that view and I think Sir Jock wanted to come in.
  (Air Marshal Sir Jock Stirrup) Well, I just say that it is a complex issue and it is to do with geography and distance. I might also say to you that it is to do with time. To take your specific question about caterers, we absolutely have to have some uniformed caterers to look after these people in those sorts of circumstances and we have done a lot of work on that in the past, on the numbers required, but we do not need them all to be uniformed caterers. So, for example, you could deploy regular servicemen at the start of an operation, but as it then becomes enduring, then you could replace them with some kind of contract, perhaps in theatre, and move them elsewhere to where they are needed and that is precisely what we have done.

  353. So the answer is yes.
  (Air Marshal Sir Jock Stirrup) The answer is yes, in some circumstances.

Chairman

  354. I think it is really a political issue. We have heard Sir Jock and we have heard Sir Robert and we have heard about his gut instincts which are usually quite good, but it is not a decision to be made by Sir Robert Walmsley or Sir Jock Stirrup; it is a political decision. As this issue is going to crop up time and time and time again, I think it would be very helpful, Minister, if you could drop us a rather detailed note as to what you consider to be sort of value for money, appropriate, what you consider the battlefield to be, what you consider the distinction should be between those who are engaged in combat and those who are not engaged in combat. It seems to me that in the Thirty Years War, you could see pretty clearly who was fighting and who was not, but in this modern era of war or non-war, because we have not declared war for a hell of a long time now, it is very indistinct and it seems to me that if it is indistinct, then this gives opportunities for those who wish to see the private finance initiative process pushed further the opportunity of so doing. Now, I know you cannot give the definitive answer, but certainly as there have been a number of private finance initiatives where it has been questioned as to whether the private sector is relevant for this programme, I think it would be immensely helpful—don't provide it now—if you could please give it some thought and perhaps you could tell us the guidelines that you are operating to and instructions you have given to Sir Robert et al as to what is acceptable for the private sector to be involved in and what is not
  (Lord Bach) I think you are absolutely right, Chairman, that this is a political question, although I am not sure that I am convinced there is not a definitive answer to it, if that is not nonsense, and I do not think it is. I think guidelines is probably the best that can be done and we have to take each case on its merits. You know clearly on the one side what is inappropriate, I think everyone would, and we want on the other side what is clearly appropriate, but it is that middle ground—

  355. Which is quite large.
  (Lord Bach)—which may be larger than most middle grounds in this particular case, so I agree with you.

  356. Absolutely, so if you don't mind, it would be really helpful to us.
  (Lord Bach) I hope it will be helpful and we trust and intend it to be helpful and we will certainly do it, but I am not sure that it will clear up all the questions.

  357. And then also, if you don't mind, you can tell us what value for money means because when you deal with military matters, I can think that a lot of things cannot be addressed in terms of value for money because fighting a war, defending your national territory is not always amenable to an accountant's rationale.
  (Lord Bach) Well, I would like to say something on that, if I may. Value for money does not just mean, even if its name implies, that all you think about is, to use an old-fashioned phrase, pounds, shillings and pence. It means value. It means you have to look in the round to see what is the best value for British Armed Forces in a particular state and I do not want this Committee to have the impression that all we are concerned about, which is clearly not accurate, that all we are concerned about is what pounds, shillings and pence we are going to have to spend. It is not true.

  Mr Jones: Can I pick you up on that point, and I do look forward to this explanation and it will obviously be some great, huge tome in terms of explanation because what we have so far had is as clear as mud. In terms of value for money, and you have said it is not just about pounds, shillings and pence, there has obviously got to be a crossover between the Armed Forces providing the service and obviously the interface with a private contractor. If I can give you one example, catering again, but don't get the impression that I am actually obsessed by catering—

  Chairman: I might be, but Kevan Jones is not!

Mr Jones

  358. Can I mention one incident which occurred last summer when Jim Knight and I were on HMS Ark Royal and one of the issues which we asked a senior officer there about was to ask him what were the main problems. He was saying that the real problem is not recruitment, but retention. I think Jim asked him what area of retention and he was talking about cooks and I said, "Well, what is the real problem with cooks?" and he said, "Well, we train them, and we can keep them for so long, but we cannot keep them after a certain period of time because you cannot rotate between ship and shore, as they used to, because on shore a lot of the caterers are now PFI". Is that not an example where on the accountant's bottom line you might be saving money, but it is actually costing you more because you are losing people from the Armed Forces and having then to retrain them?
  (Lord Bach) It might be an example of that, yes.
  (Air Marshal Sir Jock Stirrup) I think I can give a pretty direct answer to that which is that that was precisely the situation, going back to my previous experience, that we found in the Air Force and, as a result, what we have done is recruited more service chefs and redressed the balance between servicemen and civilians for precisely that reason.

  359. That could occur in other areas though, could it not, where if for operational purposes you need to rotate people, you limit yourself by PFI? Should that not be something that is taken into account before actually deciding whether you have a PFI contract?
  (Air Marshal Sir Jock Stirrup) It is, it is.


 
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