FT: "RAF to be given its share of defence equipment orders"

Air force to be given its share of defence equipment orders

By Sylvia Pfeifer, Defence Industries Correspondent

Published: March 29 2010 03:00
Last updated: March 29 2010 03:00

Ministers are poised to sign new equipment orders for the Royal Air Force, including the A400M military transport aircraft, just days after announcing awards for the Royal Navy and the Army - a move likely to add to criticism of a pre-election spending spree.

The Ministry of Defence is expected to announce it has signed an agreement with EADS, the pan-European aerospace and defence group, for the A400M, which has been beset by cost overruns and delays. The UK, along with six other government customers, agreed to a €3.5bn (£3.1bn) bail-out package on the €20bn programme this month.

To limit its contribution towards the rescue, the MoD is understood to have agreed to cut its original order of 25 aircraft to 22. However, it is expected to have to provide about £200m in exchange for a share of future export sales.

The MoD is also expected to announce it has agreed a support and maintenance contract with Rolls-Royce for Tornado aircraft, and confirm its intention to acquire Chinook helicopters from Boeing, the US aerospace and defence group.

The contracts mean the MoD will have signed several hundred million pounds worth of equipment orders in the past 10 days and secured thousands of jobs in regional areas such as in Wales and on the Clyde. The news has prompted the Conservatives to accuse Labour of going on one last spending spree.

The MoD defended decisions such as going ahead with the assessment phase for new frigates for the navy. "These are sensible decisions to go forward with now and they also underpin what our armed forces need."

Bob Ainsworth, the defence secretary, said last week that decisions he was announcing were "not being rushed through" but were being judged carefully against certain parameters, including whether they would help to bring the defence programme into balance in the short and long term.

Market researchers at Tullett Prebon, the inter-dealer broker, said the awards for the navy should be welcomed, whatever their political motivation, as they represented capital investment rather than current spending.

"Capital spending at least has spin-off benefits. So capital investment, particularly in high-tech areas, is to be welcomed. On this basis, and perhaps as a pointer towards a new and more flexible strategic defence review as well, these warship orders are good news - whatever the government's actual motivation," said Tim Morgan, global head of research in a note.
Re: FT: "RAF to be given its share of defence equipment orde

The governments sudden willingness to place orders for big ticket defence items just a few weeks before a General election should firstly be welcomed and then viewed with a very jaundiced eye.A Strategic Defence Review is due later this year which could decide all this spending is unnecessary and in the long term unaffordable and cancel the lot.

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