Treasury threatens to cut £35bn of defence projects

#1
The Treasury is threatening to cut defence projects worth up to £35 billion in the Government’s next spending round, The Times has learnt.

Des Browne, the Defence Secretary, and Sir Jock Stirrup, the Chief of the Defence Staff, were at the Treasury last week to discuss the decision to send 1,400 extra troops to Afghanistan but also to lobby against cuts to key procurement projects.

These cuts could leave British defence companies without the billion-pound contracts that they are counting on in coming years.

Wrangling between ministers and Gordon Brown, the Chancellor of the Exchequer, is common in the run-up to the comprehensive spending review (CSR), which outlines spending for the next five years. These negotiations are taking place regularly with all departments before the CSR’s publication this summer.

However, it is unusual for big-hitters such as the Defence Secretary and the Chief of the Defence Staff to attend a meeting with Treasury officials. Gordon Brown is not thought to have been involved.

The high-level representations are being made because the Ministry of Defence (MoD) is understood to be concerned that key projects could be cut in the spending review.

The MoD is arguing that the cost of replacing the Trident nuclear deterrent should be added on top of the existing budget as it represents a special circumstance.

Mr Browne is thought to have already raised this with Downing Street and is demanding that the MoD budget be substantially increased to reflect these exceptional costs.

The Treasury view of a budget increase is, typically, more sceptical and it is understood to be questioning the need for a number of high-profile projects.

Those questioned include the next batch of Eurofighter Typhoons, to be built by BAE Systems. The RAF has already bought 144 Typhoons, which cost £65 million each, and has another 88 on order.

The Treasury’s view is that the MoD does not need Tranche 3, as the supplemental order is called, as well as Joint Strike Fighter, a next-generation fighter currently under development.

Another possible RAF casualty is FSTA, the tanker refuelling project. The Treasury is not thought to be keen on this project, but as a Private Finance Initiative there is less pressure to kill it.

The Royal Navy is expected to lose at least two destroyers, and possibly even four, but will at least get its aircraft carriers. The Treasury is understood to have signed off the £3.6 billion to £3.9 billion cost of the two carriers.

The Army could be the biggest loser as the Treasury is thought to be unhappy with Future Rapid Effects System (FRES), a £14 billion project for up to 3,000 armoured vehicles. The Treasury is understood to favour buying a replacement off the shelf, possibly from a US company, rather than have the UK develop its own.

A spokesman for the MoD said: “The Secretary of Defence meets regularly with Treasury ministers to discuss a range of issues.” The Treasury refused to comment on meetings with ministers.


http://www.timesonline.co.uk/tol/news/politics/article1444192.ece
 
#3
armchair_jihad said:
The Treasury is threatening to cut defence projects worth up to £35 billion in the Government’s next spending round, The Times has learnt.
...
Wrangling between ministers and Gordon Brown, the Chancellor of the Exchequer, is common in the run-up to the comprehensive spending review (CSR), which outlines spending for the next five years. These negotiations are taking place regularly with all departments before the CSR’s publication this summer.
...
http://www.timesonline.co.uk/tol/news/politics/article1444192.ece


Given that the UK defence budget is approx £40Bn (Resource+Capital) per year (2007/8) . £35Bn over 5 years corresponds to 17.5% of the total budget.

If we say that the Army is 100,000 people and cut it proportionally - that's 17,500 people.

Something doesn't add up (hopefully it's my numbers).

PB
 
#4
It seems to be more of a cull of projects to free up cash for sensible things - I particularly like the buying AFV's off the shelf rather than the FRES approach, also binning some of the Typhoon order - could be good news........
 
#5
Without taking this thread off subject, how can we build carriers and ditch destroyers? Don't carriers require a large and widespread escort group for protection?
 
#6
armchair_jihad said:
It seems to be more of a cull of projects to free up cash for sensible things - I particularly like the buying AFV's off the shelf rather than the FRES approach, also binning some of the Typhoon order - could be good news........
Binning the 3rd tranche of Typhoon will not save any money, in fact it may cost more.

The MoD signed contracts with the Eurofighter consortium guaranteeing the purchase of 232 Typhoons many years ago (when Germany were threatening to pull out) and the government is locked into buying them with the threat of hefty financial penalties if we as a country were to cancel (I believe it works out at cost of a/c plus a percentage on top to compensate for any PR problems that may arise due to the largest customer pulling out). Perversely it'd actually be cheaper to receive the Typhoons and leave them to rot on an airfield somewhere.

Of course we haven't signed any such contracts for the F35 'Dave', so perhaps this is where we could trim the fat. It seems we're getting the rough end of the stick over the F35 deal anyway, with the promised sharing of production disappearing with the news from the senate being that they don't want to go with two engine types (RR made and US built), preferring to have just one US built engine for the entire line.
 

bt80

Old-Salt
#7
Not quite the 'blood and treasure' convenant that Gen Sir Mike Jackson was pushing onto the agenda - it would appear that the 'anti-defence' elements rumoured to be in the treasury do exist after all. :pissedoff:
 
#8
armchair_jihad said:
It seems to be more of a cull of projects to free up cash for sensible things - I particularly like the buying AFV's off the shelf rather than the FRES approach, also binning some of the Typhoon order - could be good news........
A-j - What do you think the FRES approach is? All the vehicles going forward to trial and already in production in some form, are not a special one-off design and therefore qualify already as off the shelf. This goes for the UV and I believe the likely candidate for the Scout variant.

Agree with the binning of Typhoon - if for no other reason than taking a step back and buying in due course a platform more appropriate to the role we now need.
 
#9
TheHelpfulStacker said
...with the promised sharing of production disappearing with the news from the senate being that they don't want to go with two engine types (RR made and US built), preferring to have just one US built engine for the entire line.
Have you got a link for this? I'm interested as this may impact on something I am dealing with. Thanks
 
#10
in_the_cheapseats said:
TheHelpfulStacker said
...with the promised sharing of production disappearing with the news from the senate being that they don't want to go with two engine types (RR made and US built), preferring to have just one US built engine for the entire line.
Have you got a link for this? I'm interested as this may impact on something I am dealing with. Thanks
Clicky
 
#11
Can any ARRSE - er honestly say they are surprised by this 'headline' ?

Until we are rid of this government and especially of the malign influence of the dreadful Chancellor and his team of miscreants, this nation has no hope.
 
#13
TheHelpfulStacker said:
in_the_cheapseats said:
TheHelpfulStacker said
...with the promised sharing of production disappearing with the news from the senate being that they don't want to go with two engine types (RR made and US built), preferring to have just one US built engine for the entire line.
Have you got a link for this? I'm interested as this may impact on something I am dealing with. Thanks
Clicky
Cheers.
 
#14
No surprises there then! To completely misquote and paraphrase Henry the Second "What a band of loathsome vipers WE have nursed in OUR bosom".

I wish this barsteward Broon and his ilk would just FOAD.

Unguarded aircraft carriers - hmm. We could save a fortune on the protective bubble they need - by not having one :frustrated:
 
#15
in_the_cheapseats said:
A-j - What do you think the FRES approach is? All the vehicles going forward to trial and already in production in some form, are not a special one-off design and therefore qualify already as off the shelf.
Really ?!?! Qualified as off the self at 4.3 million quid each? What sort of hover panzers are they?
 
#16
And Broon is going to be PM, oh joy. Let's hope he gets less of a hard on for expeditionary ops than the present incumbent, as all we'll have left to send anywhere is two pushbikes and an air rifle if this report is even half true.

But it's nice to see the Army's going to be fincially hammered as much as our sister services have been, as let's face it we haven't been doing much lately have we?
 
#18
eveyuk said:
Without taking this thread off subject, how can we build carriers and ditch destroyers? Don't carriers require a large and widespread escort group for protection?
Yes, yes...that can all be put out to tender on a just-in-time basis in line with the rest of the private business sector. Group 4 are already buying up all the pedalos they can find. Get with the programme, Evey!
 
#19
armchair_jihad said:


The Treasury’s view is that the MoD does not need Tranche 3, as the supplemental order is called, as well as Joint Strike Fighter, a next-generation fighter currently under development.


The Royal Navy is expected to lose at least two destroyers, and possibly even four, but will at least get its aircraft carriers. The Treasury is understood to have signed off the £3.6 billion to £3.9 billion cost of the two carriers.
Couple of points for the treasury:

What aircraft of the RAF do they think is going to drop bombs, accurately, in the coming years without Tranche 3 Typhon?

What is going to fly off CVF?

Don't blame the treasury over FRES though. HCDSC heavily criticsied the project recently over our inability to settle on the requirement, or to make a decision. I mentioned in an old post that any defence project with 'Future' in the title is doomed from the start. I might be right! :D
 
#20
In my professional opinion, FRES is a prime candidate for termination. The OR is outdated and has been overtaken by tactical experience and technological "art of the possible". A modular approach is always going to look good but ultimately fails to deliver at either end of the bell curve - which strangely enough is where it matters on operations - Murphy's Law of procurement specification I suppose!

As for CVF - well don't get me started. A project as badly managed - in terms of basic things like ooh, lets say risk management FFS - as that should be cancelled anyway. However the requirement just isn't justifiable especially, as someone else has mentioned, when the rest of naval force components are absent.

As for Eurofighter, that was never a military project - it was always a job creation/maintenance scheme based on the "strategic" character of the aerospace industry as viewed by the NDIC. Who got them to view it that way? SBAC, the aerospace paladins and the RAeS.
 

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