HL Deb 05 February 2001 vol 621 cc931-2

2.44 p.m.

Lord Burnham

asked Her Majestys Government:

What are the financial and other implications of the delay, until 1st July, of the break-up of the Defence Evaluation and Research Agency (DERA).

Lord Burlison

My Lords, on 24th July 2000, we announced the public/private partnership model for the Defence Evaluation and Research Agency. Around three-quarters of the current organisation will become a company. For strategic reasons, the remainder will be retained within the Ministry of Defence.

Operational separation is envisaged by 1st April 2001. Legal separation will follow on 1st July. This was chosen in preference to the earlier dates to ensure sufficient time for testing and risk reduction. The choice does not affect the overall PPP timetable nor does it have any significant financial or other consequences.

Lord Burnham

My Lords, I thank the noble Lord for repeating the Answer given a couple of weeks ago by his right honourable friend in another place in response to a Written Question. However, it would seem that additional costs will be incurred. What will be the profits accruing to Her Majesty's Government as a result of this separation? What sum of money will accrue to the Ministry of Defence to relieve the defence budget?

Lord Burlison

My Lords, I do not think that it would be in the interests of taxpayers to speculate at this stage on how we believe the new DERA will be constructed and what it will be worth. As regards the precise timing of these transactions, given that value for money will ultimately be the determining factor, it would not be possible or right of me to give a definitive response on this particular issue in view of the discussions that will be taking place over the coming months.

Lord Wallace of Saltaire

My Lords, can the Minister speculate whether the delay until 1st July might have anything to do with the possibility of a general election intervening between now and then, given that the Labour Party will be defending a number of marginal seats containing DERA employees?

Lord Burlison

My Lords, this issue has been in progress over the past 18 months. Those who have followed it closely know that it has not been without its backers or its opponents. Ultimately, although the vesting day has been scheduled for 1st July, this is no indication that it has been in any way determined by a general election. Who knows which side of an election that date will fall? I could not tell the noble Lord the answer to that question.