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11 May 04. The Times reported that, whereas Sir Richard Evans, BAE Systems chairman, likes to call a spade a spade, one of the men who could be deemed an adversary, the MoD’s Sir Peter Spencer, is a far more skilled diplomat.
After Sir Richard’s dire prognosis to the Commons Defence Select Committee last week about the fate awaiting Britain’s defence industry, Sir Peter steered well clear of getting involved in a verbal punch-up. In part, he had the committee itself to thank, which had nothing to ask about the poor state of relations between BAE and the Ministry of Defence and was less than inquisitorial about some of the controversial defence procurement contracts under review.

Not that the soft-spoken Sir Peter appeared like a man who could be steamrolled into answering something that he did not want to. Asked about delays in delicate negotiations with America about transferring sensitive technology to Britain, Sir Peter spoke up for the first time: “Clear the room and I’ll tell you.” Some committee members seemed almost startled. But perhaps they were also disarmed by the clinical frankness with which Sir Peter heaped criticism on the regime that he inherited last year.

Though having promised to do something about resolving the problems in defence procurement, Sir Peter can expect a rougher ride if they are not settled.
Indeed, it was with a certain sense of weariness that Bruce George, the chairman of the Defence Select Committee, opened yesterday’s hearing by remarking that he had heard many times over the years that the MoD would put its house in order.

On analysis of this statement it appears that Sir peter may have been sniping at his predecessor, fellow mariner, Sir Rober Walmsley. Certainly there must be more streamlining of defence procurement. One way in achieving this must be for industry and the MoD to work together as is more noticeable in the USA and to stop this constant bickering. The MoDs wish to have a lead role in CVF may be a huge turning point, if it gets it wrong, perhaps it may take a different view as to industry’s work in manufacture and procurement.

The FT reported that spending row between Geoff Hoon, the defence secretary and Gordon Brown, the chancellor, reignited yesterday as the Treasury in effect blamed the Ministry of Defence’s £800m cash shortage on financial incompetence. The spat ups the ante in a tough spending round, where Mr Hoon is fighting to avoid potentially severe defence cuts.

Mr Hoon is lobbying the chancellor to relax new accounting rules to ease the case squeeze on the armed forces, as part of the 2005-08 spending round negotiations, the most senior defence civil servant revealed yesterday. But the Treasury suggested the defence secretary may face an uphill battle.

“There have been financial management difficulties at the MoD. Having been allocated record spending increases, the MoD must ensure proper controls are in place,” a Treasury official said. The MoD blames accounting rules imposed by the Treasury for its cash squeeze, which has caused emergency cuts to areas such as training. Mr Hoon, who appealed to Tony Blair about the squeeze earlier this year, wants the Treasury to bend the rules to free up cash. Sir Kevin Tebbit, permanent secretary at the Ministry of Defence, refused to reveal the extent of the cash curb, saying this was part of the confidential haggling ahead of July’s spending settlement. He insisted there was not a cash crisis at the MoD, telling the defence select committee: “A crisis is when I’m unable to control the budget. That’s not happened.”

However, Sir Kevin admitted it would be “wrong for me to say we’ve
got enough [money]”. Bruce George, the committee’s Labour chairman, urged the MoD to stand up to the Treasury, saying: “It may not be a crisis to you but it looks like a crisis to us.” More bad news on cost and time overruns on weapons programmes can be expected, the committee was warne

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