MPs slam revised plans for defence research sell-off

22 Jun 00
A cross-party group of MPs has refused to accept the government's revised proposals to partially privatise the defence research laboratories, warning that they are based on a 'wing and a prayer'.

23 June 2000

The Defence Committee said the risks of selling off up to three-quarters of the Defence Evaluation and Research Agency (Dera) far outweigh any benefits. It warned that the financial rationale, that private means cheaper, is based purely on assumptions that have yet to be tested.

The committee's report is the second investigation into the Dera sell-off and critiques the government's revised proposals that were intended to overcome virulent opposition in the UK and the United States.

The new approach, dubbed Core Competence, would split Dera into two new bodies. The larger would form a private company and would be floated as early as next year. The remaining Dera, with around a quarter of the staff, would retain high security work such as the chemical and biological defence sector in Porton Down.

But the committee questions the Treasury's influence on the privatisation, which could raise up to £1bn. The Ministry of Defence would receive just £250m with the rest going into the Chancellor's coffers. 'This whole arrangement seems to us to set up an entirely unhealthy set of conflicts between the Exchequer and the MoD,' the report said, adding: 'We expect the Treasury's priorities will be influential on the timing of the sale.'

The committee also suggested the privatisation may not lever in the extra funds and efficiency savings envisaged. But Baroness Symons, Minister for Defence Procurement, denied the allegations and insisted that Dera was no longer securing enough work from the MoD to be viable as a public concern.

A final decision on Dera will be announced before the parliamentary summer recess.


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