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HAWK DEAL TESTS UK GOVERNMENT DEFENCE INDUSTY POLICY

30 Jul 03. Hundreds of jobs hung in the balance as the UK cabinet stood divided on whether or not to back BAE Systems Plc’s (London:BA.L – News) multi-billion pound military jet order, the Financial Times reported on Wednesday.

The government is weighing up whether to take as many as 31 of the latest Hawk trainer jets for the Royal Air Force or open the contract to foreign competition. BAE has told employees that 470 jobs were at risk at the end of July if the government had not made a decision.

Patricia Hewitt, the country’s trade and industry secretary, has rebuffed a plea from Defence Secretary Geoff Hoon, who called on her to back the BAE bid with DTI money, the newspaper said. Chancellor Gordon Brown has argued that the deal offered by BAE, hammered by huge overruns on two other UK defence projects, offers poor value and could cost taxpayers one billion pounds ($1.63 billion) more than a rival Italian one, the Financial Times reported.

The decision is seen as a test of Prime Minister Tony Blair’s defence industry policy, and whether it means the British jobs and exports will be more important than cost in future deals.

“If we do not get the Hawk, the policy is meaningless,” the newspaper quoted a defence official as saying. Earlier this month, Blair told parliament that while the government wanted to do the “best for the British defence industry”, any deal must represent value for money.

A spokeswoman for the Ministry of Defence said discussions were ongoing and a decision could come as soon as Wednesday.

BAE has said that the cuts would come at its Hawk factory in Brough, Yorkshire, in northern England, unless the government made a positive commitment to the aircraft. BAE could not be immediately contacted for comment.

Comment: BATTLESPACE readers have expressed astonishment at the government’s stand on this Hawk deal. Has the government calculated the true cost of purchasing the untried two engine Aermacchi aircraft? In addition to the £20bn market for trainers which would be lost, the RAF would have a two aircraft fleet which would cost billions to install new ground handling equipment. The Italian aircraft is twin engined and has not been orderd by its own Air Force! If this deal is lost the defence industrial policy will be reduced to a laughable attempt by the government to provide a paper commitment to the defence industry at the same time as wishing to dispose of parts of it to the USA. It is ironic that Patricia Hewitt has decided not to support Geoff Hoon when she made a major commitment to Multidrive in its bid to win the wheeled tanker programme. This comes at a time when BAE is being blamed for cost overruns on the CVF bid when the government is to blame for increasing the tonnage of the vessel from the original requirement which was bound to increase the price!

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