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6.28 p.m.

Lord Carver: My Lords, I should make clear from the start the fact that I am no longer a member of the Science and Technology Committee and am therefore in no way associated with the report. I congratulate the noble Earl and his committee on having produced an interesting and valuable report which illuminates the problems that the Defence Research Agency faces and those that have been created by its formation. The report does not attempt to gloss over the fact that there are unsatisfactory elements in the anomalous situation in which the agency has been placed: its dependence on and tight control by the Ministry of Defence; its remit to contribute as much as possible to fields other than defence, in particular, those considered to be in the national interest; and the demand that it should earn revenue by doing so, affecting its relations with other government departments, with industry, with which in some cases it is competing, and with other research organisations. There is also a delicate problem concerned with relations with similar organisations in allied countries.

The Government's response, published three days ago, underlines those problems. Their defensive arguments, complacently protesting that all the conflicting demands and loyalties can be, are being and will be reconciled in a satisfactory way, illustrate in a repetitive fashion the anomalies inherent in the attempt to make the defence research and development establishments fulfil a number of conflicting purposes.

It would seem to me that the committee had some difficulty in finding solutions to these problems. I doubt whether the noble Earl, its chairman, would claim that its recommendations go very far towards solving them, although they may do something to alleviate them. I believe that that is so because they are not radical enough, and do not go to the heart of the matter. The committee has perhaps been constrained by its acceptance that, as the report states:

The heart of the matter is that the requirement for re-equipment of our Armed Forces over the foreseeable future does not justify the maintenance of defence research and development establishments of the size and nature of those now left in the DRA. They were built up and endowed with many of their valuable assets in the Second World War. Although much reduced since then, they are out of proportion to the future

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requirement, certainly in terms of the quantity of equipment which would be produced in this country; and it is not acceptable to justify their existence on the basis of their contribution to the arms export industry.

Because that is the case, the pressure, clearly recognised in the report and in the Government's response, is that greater emphasis should be given to their potential contribution to other fields of national life, particularly to industry, and to their cost to the taxpayer being offset by sale of their services. That produces conflicting demands and loyalties and many other problems, some of which I have already mentioned. The report clearly acknowledges them. Although its recommendations edge in the direction of loosening the Ministry of Defence's tight control and of associating other government departments with the agency, notably the Department of Trade and Industry and the Office of Science and Technology, it treads warily and in my view does not go far enough. The report, in paragraphs 2.34 and 5.14, to which the noble Earl referred, recommends a close study of French and American defence research as examples of directing it towards wider national interests than just the support of a national defence equipment programme. I would urge a study of the German method. As I understand it, the Germans have no defence research establishments as such, controlled by their defence ministry. Their armed forces depend upon a combination of research carried out by their prestigious civil scientific institutes, such as the Max Planck, which also serve industry and other national objectives, and development carried out by the armament firms themselves. One must of course make allowance for all the differences which exist between how science is organised, supported and financed in this country and how it is done in Germany. Nevertheless I believe that a close study of the German solution, which is no less successful than the French and American both in developing military equipment and in supporting broad national objectives, would repay a very careful study.

If we were to move in that direction, my proposal would be to split up the Defence Research Agency into its former four establishments—the Royal Signals and Radar Establishment, the Admiralty Research Establishment, the Royal Aircraft Establishment and the Royal Armament Research and Development Establishment—and detach them, with the probable exception of RARDE, from the Ministry of Defence. The agency, as it now is and as the Ministry of Defence plans it to be, is an uneasy amalgam of establishments of different natures and objectives. I would then convert RSRE at Malvern into a National Electronics Institute, RAE at Farnborough into a National Aerospace Institute and most of ARE into a National Maritime Institute, some elements of it perhaps being absorbed by the Electronics and Aerospace Institutes. In my view, those institutes should have close links with a specific university: perhaps Cambridge for electronics; London, particularly Imperial College, for aerospace; and Southampton for maritime. They should also offer shared use on a commercial basis of some of their assets with other research organisations, as has recently been agreed in the case of the ship testing tanks at Haslar

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between the former Admiralty Research Establishment and British Maritime Technology Ltd. I would envisage those three institutes coming under the aegis of the Engineering and Physical Sciences Research Council.

Parts of RARDE might be amalgamated with other institutes: the former Fighting Vehicle Research and Development Establishment perhaps with what is now the Transport Research Agency; but the weapons and ammunition side, formerly Fort Halstead, should probably remain a Ministry of Defence establishment.

I believe that such a fundamental reorganisation would provide a solution to the problems to which the recommendations of the report, in my view, offer only palliative alleviations. It is unrealistic today, and will be more so in the future, to think of a defence procurement programme based on national research and development and national production. The quantities are too small, the cost too high and the industrial base too narrow. We need to seek a European procurement programme, backed by high quality national science, supporting a thriving British electronic, aerospace, maritime and general engineering industry, working in a European context.

That was the message that the Minister for Defence Procurement gave forcefully yesterday in his address to the Defence Manufacturers Association. I suggest that he should try to persuade his right honourable friend the Defence Secretary to apply it to the Defence Research Agency.

6.37 p.m.

Lord Trefgarne: My Lords, I had the honour to serve on the committee whose report your Lordships are now considering. I wish to start by paying tribute to our chairman, my noble friend Lord Selborne, for the wise and effective way in which he guided our deliberations and which I believe is reflected in the report which we have produced.

I have listened with interest to the speech of the noble and gallant Lord, Lord Carver. I wish that we had had an opportunity, during the course of our deliberations, to know the noble and gallant Lord's views so that they could perhaps have been tested, examined and considered more than they were.

I am wholly supportive of the report which your Lordships are considering. However, there is one matter which is not wholly removed from what the noble and gallant Lord has been talking about today to which I should like to refer; that is, the possibility in due course of moving the Defence Research Agency into the private sector.

We were not charged with considering that proposition. There was no particular support for it among the members of the committee and, indeed, when the Minister, my right honourable friend Mr. Aitken, came to speak to us, he made it clear that there were no government plans for such a move. I am told that the Government's response to our report—and I am sorry to say that my copy arrived only today and I have not yet had an opportunity to study it—refers also to the fact that there are no present government plans for that particular course of action. But I believe that some of

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the difficulties to which the noble and gallant Lord, Lord Carver, has just referred, which are real and which were identified in our report, would be overcome by moving the Defence Research Agency into the private sector.

Having said that, I agree also with the conclusion which the committee reached to the effect that the DRA has been subjected to all sorts of reorganisations and changes in recent years and now would not be the time for a move into the private sector. The agency deserves and is entitled to a period of consolidation. I recognise the fact that the noble and gallant Lord did not think that that was wholly desirable. However, I certainly believe that to be desirable as, indeed, did the committee.

However, when that period is over in, say, two, three or even four years from now, I believe that it would be right to revisit the question of whether or not the DRA should be privatised. As the noble and gallant Lord said, the fact is that the capacity of the DRA at present exceeds that which can usefully be fully employed by the Ministry of Defence. I am very much attached to the thought that the excellent resources and facilities available within the DRA ought to be more widely available to our national effort in terms of generating more and better technologies for use not only for military purposes, but also for civil purposes, to a much greater extent than they are at present.

As I said, the committee was not charged with examining whether or not the DRA should be privatised; nor, therefore, did we reach any particular, immediate conclusions on that point. But I should like to see the question of the ownership of the DRA revisited after a period of consolidation. I hope that the Government will find it possible to do so.

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