Examination of Witnesses(Questions 160-179)|
TEBBIT KCB, CMG, LIEUTENANT
REITH CB, CBE AND
MONDAY 21 OCTOBER 2002
160. Because these resources which would have
been deployed elsewhere are free to you for this exercise.
(Sir Kevin Tebbit) I would not put it
that way. We would be employing these people and we would be using
the defence infrastructure in any case, whether in this exercise
or elsewhere. If the troops had not been here, they would have
been exercising somewhere else or they would have been in barracks
or they would have been in Germany or wherever. Therefore, certain
things are constant. The cost of the manpower would have been
the same whether we exercised or not. The reason we use extra
cost is to capture the real cost of this activity in relation
to other things we might be doing. This is why we use extra costs.
161. I understand that a vehicle has depreciation
and if I run a vehicle for an extra 10,000 miles in an exercise
it gets used up, burned out and just written off. So that is an
additional cost. We do not actually cost manpower and the depreciation
of manpower in any way shape or form because in exercises people
get used up and burned out to a degree, do they not? Is there
no evaluation of this cost at all?
(Sir Kevin Tebbit) No; they would have
been just as burned out or used up doing other things. The people
who went to Afghanistan found that quite arduous as well. When
we do an operation for real, we receive money back from the Treasury
for the actual operation's extra costs. That is the system we
use, it is the one they have told us to use, it is the one we
implement. We operate our training and exercise programme on the
same basis, so we capture the extra costs.
162. I notice in the report that the final out
cost of the exercise, that is the marginal cost, the additional
cost, should be known to you by July 2003. You give a prediction
of a total cost of £85 million.
(Sir Kevin Tebbit) That is my current
guess of how it seems to be coming out at the moment. I asked
people before I came to the hearing what it looked like.
163. What assurance do I have that this way of
costing that you have, with additional costs and marginal costs
is accurate, and will not be fudged and money will not be put
from one heading to another heading and lost in the equation back
into mainstream costing rather than being identified as the original
marginal cost of this exercise?
(Sir Kevin Tebbit) The assurance I can
give you is that we use exactly the same costing system for this
as we do for real operations. For real operations the Treasury
are prepared only to give us the additional cost of the operation,
not a subsidy of core costs. They are not prepared to pay us double
from the main budget for general activity and then from the reserve
for an operation. So the Treasury patrol this extremely carefully
on a detailed basis, item by item with my staff. This exercise
used the same costing approach. Therefore the assurance you have
is that the Treasury are not in the business of giving departments
double. They will only give us the true extra cost of any activity.
164. I shall no doubt keep a record of that because
I should like to go back and talk to the Treasury at some time
about their inability to control some of these costs.
(Sir Kevin Tebbit) It is my duty to control
Mr Jenkins: I think the Treasury need
to look at it.
165. I want to go back to the tank again, although
I want to ask you about vehicle support as well. When I read this
report it occurred to me that there was negligence by the supplier
of the tank in the sense that they were failing to meet the design
spec which was 14 hours in the worst possible conditions of zero
visibility. Then I read Figure 10 which tells me that the Challenger
2 was purchased for a north-west European theatre of operation
and that you were perfectly well aware in fact that it was not
going to work under desert conditions. If that is the case, then
clearly they were not negligent and neither were the design authority
on whom you seem to rely to defend your own position. The fact
is that you knew these tanks were not going to work in desert
conditions and you even allocated money to make them ready for
desert conditions yet you failed to spend the money. Is that not
(Sir Kevin Tebbit) We certainly knew
that they were not `desertised'. You are quite right that we did
not put that modification on when we bought them. We did have
assumptions which were given to us by the design authority about
the filters. We have discussed all of that. Life is a series of
making judgements about where we put our money and where we spend
our money. Earlier we decided not to spend on desertisation. The
full cost of desertisation, if we wanted to fully `desertise'
our tank fleet, and that includes air conditioning, things like
that, would be about £90 million. There are different variants.
166. I rely on the report which you have agreed.
(Sir Kevin Tebbit) We judged. I have
accepted that and said that we made the wrong call and we should
have done some more of this.
167. It says here in Figure 10 that for £464,000
you could have prepared 116 Challenger 2s in terms of new seals,
dust strips and track guards. We now know that a filter costs
£1,000. So for 400 filters you could have gone a long way
towards preparing over 100 Challenger 2s. It says you even made
the money available following the decision that we would need
to use these tanks on a worldwide basis rather than just in north-west
Europe. That being the case, the money was found and the Strategic
Defence Review required you to prepare these tanks and you failed
to do that. How many filters did we actually use in the operation?
(Sir Kevin Tebbit) It was an exercise.
I do have the number. I am not sure I should be giving it in open
session, but I can certainly give you the number in writing afterwards.
Mr Williams: A note would be welcome.
168. Twenty thousand filters cost £20 million
and that was the sum of money
(Sir Kevin Tebbit) Nothing like that.
169. Four hundred thousand is the figure here,
but I am not going to go fishing for information which you are
going to provide us with. I simply do that in order to draw to
the attention of yourself and the rest of the Committee that in
terms of some sort of cost benefit analysis, it might well have
been worth judging the amount for filters against the cost of
preparing for desertification. Let me move on and ask you about
the design authority, which you said was PALL Aerospace. Do you
have a contractual relationship with them?
(Sir Kevin Tebbit) Yes, we do.
170. Have you considered that they may well have
been negligent in the advice they have given you since they were
saying a minimum of 14 hours for a filter and it turned out to
be one third of that? Have you considered whether they are in
breach of contract?
(Sir Kevin Tebbit) No, we have not judged
them to be in breach of contract.
171. Have you considered whether they were in
breach of contract? Have you taken legal advice?
(Sir Kevin Tebbit) No, I have to say
that it is true that we have been more concerned to up the production
rate of the air filters. We have not considered whether they are
in breach of their contractual arrangements.
172. Was their advice inaccurate to a startling
(Sir Kevin Tebbit) I was not going to
say the precise number of things but you are wildly inaccurateit
is not your fault, because how should you know? A figure of 600
or 700 would be more accurate in terms of how many air filters
173. So three quarters of a million.
(Sir Kevin Tebbit) Yes, that is right.
I am not even trying to make the argument that it was sensible
or the best call. In the light of our experience
174. With all due respect, I have moved on now.
I am now talking about the contractual relationship between the
design authority and yourselves. Obviously you have a contract
with the supplier. As I understand it, the performance of the
tanks is partly underwritten by the design authority. You have
a contract with them. It seems to me that they have given you
really poor advice. Have you considered whether or not they are
in breach of contract? I think you have said no, you have not
(Sir Kevin Tebbit) It is a very good
question. I know people criticise me for commenting on the wrong
type of sand, but it was only in this one very specific place
that we had a problem.
175. Fourteen hours with zero visibility.
(Sir Kevin Tebbit) It was above their
176. If Mr Williams agrees, that is a line we
might ask you to reflect upon and give us a note on that as well.
(Sir Kevin Tebbit) I may say that we
were more concerned, given the judgements of operational efficiency
and cost-effectiveness, to up the production level of these filters.
177. I understand. Referring to Mr Williams'
comment on the global supply of filters, I notice on the same
page that the exercise requirements effectively exhausted the
global supply of air filters.
(Sir Kevin Tebbit) I ought to comment
because you are trying to get to the truth here. I know you are
making points and they are all very valid, but may I just comment
on this one? Again I must apologise, because I let this through.
A lot turns on the word effectively. We never exhausted the global
supply of air filters.
178. I think we can draw our own conclusions
from the wording of the report. I want to move on to the care
of potential combatants. I accept that this was an exercise. It
is curious that we relied on Dutch nurses. As you are probably
aware, I have tabled questions. I am referring now to paragraph
2.38. Thirty-five nurses from the Dutch army were provided to
look after our personnel. In terms of a medium-scale war, you
talk about the possibility that you would require about 2,300
medical staff and presumably that is partly a lesson drawing on
this particular exercise. I have asked questions of both yourselves
and the Department of Health to try to discover how many doctors,
nurses, consultants you actually have on staff and how many reservists
you have. So far I am not making much progress. I wonder whether
you can help me?
(Sir Kevin Tebbit) Firstly, let me say
that I would feel very uneasy about suggesting that it was not
a good thing to have other countries with us on training and operations.
179. I am not suggesting that.
(Sir Kevin Tebbit) The co-operation with
the Dutch is not just a one-off thing, this is part
8 Note by witness: The number of air filters
issued for the exercise was in the region of ***, although not
all of these were used. The air filters are treated as `consumables',
so that after they have been issued to the units no track of their
use is kept by the central stores system. In the event of the
units not using all the filters they can either be returned to
the depot, at which point they would be registered on the stores
system as returned, or retained by the unit. Our current IT systems
do not allow us to determine the exact number that have been retained
by the unit unused. Back
Ev 26-27. Back