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REARRANGING THE DECK CHAIRS

September 4, 2009 by

REARRANGING THE DECK CHAIRS – THE DIC PLEADS FOR FUNDS
By Julian Nettlefold

01 Sep 09. Using the backing of a comprehensive and positive Report from Oxford Economics, the grandees of the U.K. Defence Industries Council set out their stall for more money in the forthcoming Strategic Defence Review. They failed to do the Report justice or give a good argument for the rise in spending they asked for. The reactions to this Report will no doubt be discussed during the forthcoming Party Conference season with neither labour nor Conservatives seen to put Defence high on the agenda, particularly with the huge debt pile legacy form Labour’s policies.

Chaired by Mike Turner, Chairman of the IDC and Babcock Plc., the DIC gave its case for more not less money in the next round. “As the economic frailties of the economy become more apparent, there has perhaps never been a better opportunity to harness the full potential of our world-class defence and security industrial base and use it as one of the paths out of recession,” he said.

“We are determined to highlight the benefits the industry delivers to the UK and its armed forces. We believe that, contrary to the prevailing mood in Westminster, now is the time to consider investing more for our future safety, not less.”

He went on to say that the industry had delivered 75% of projects on time and to budget. That puts a whopping 25% over budget and late, a performance no other industry would tolerate.

The industry supplies 10% of manufacturing jobs in the UK. Investment in defence research and technology must be maintained to protect the industry, its trade body has warned in two reports. The Defence Industries Council has published two reports amid fears spending could face major cuts in the next Ministry of Defence review. The sector currently employs 300,000 people in the UK. It also generated an annual turnover of £35bn in 2008. Defence takes £38bn out of a total budget of £671bn, 5.6%, less than most major Government Departments.

“The Peace Dividend has been taken when there is actually no peace, cutting defence spending from 4% to 2.3%, when it should rise.” Mike Tuner continued. “The UOR capability has proved the need for a strong Defence Industrial base. The need is to articulate the best possible requirements in the next five to ten years and to bring spending in line with commitments.” With all due respect to Mike turner, it is not the DIC’s job to formulate Foreign Policy. He said that the last SDR was good for the industry. Of course it was, it was huge and unattainable, which has brought the current crisis to a head. A senior general told BATTLESPACE earlier this year that the MoD had its Credit Crunch two years ago. Turner went on to say that the gap between current Requirements and actual money was £2 billion, a figure everyone in the audience knew to be wildly wrong as it is nearer £7 billion – Ian Godden’s face said it all after this remark. The CVF project has already cost £1 billion extra and rumours are that the MoD and BAE Systems don’t know the actual final cost.

The Ministry of Defence review will decide the future direction of defence after the next general election. One of the DIC’s reports examines the economic contribution the defence industry makes to the UK, while the second focuses on the support it gives to the UK’s armed forces. It concludes that investing more in defence would be good for the economy as a whole. Mike Turner went on to say that the SDR should be linked to another crack at the Defence Industrial Strategy (DIS) which is stalled in its current form. Many observers saw the first crack at the DIS as capitalising the Industry for sale making lots of money for the City and lawyers. We said this in our piece BATTLESPACE UPDATE Vol.11 ISSUE 14, 01 April 2009, ‘COOL BRITANNIA’ – A RECIPE FOR DISASTER. Of course, any acquisition would also make a fortune for the Directors of the Company concerned, many whom would l

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