Tories pinpoint three defence projects for cuts in 'snap Budget'
Three of Britain’s biggest defence projects, with a combined value of nearly £30 billion, could face the axe if the Conservatives win next year’s general election.
George Osborne today said that a Conservative government would hold a Budget within weeks of an election victory and hinted that early casualties could be defence projects —
£20 billion for the Eurofighter/Typhoon, £4 billion for 60,000-tonne aircraft carriers and £2.7 billion for A400M transport aircraft.
The Shadow Chancellor admitted that he did not know what the “break clauses” in the contracts would involve, if they were scrapped. However, the RAF already has 55 Eurofighter/Typhoons costing £3.8 billion and the Ministry of Defence has spent about £1 billion on early work on the two aircraft carriers. More than £500 million has been spent on the programme to buy 24 A400Ms, a replacement for ageing C130K Hercules planes.
As Mr Osborne was putting defence in the forefront of anticipated cuts, Bob Ainsworth, the Defence Secretary, exposed a potential Cabinet clash over the fate of the Trident replacement programme which could cost £20 billion. Speaking at King’s College, London, Mr Ainsworth insisted: “There is no intention on this Government’s part of moving away from our position on Trident.”
The Government declared in a White Paper published in December 2006 that it intended to replace the existing Trident ballistic-missile deterrent by 2024. Mr Ainsworth said that the only decision still to be taken was whether the Government would order three or four submarines to carry the deterrent.
However, Lord Mandelson, the Business Secretary, revealed on BBC Radio 4’s Today programme yesterday that no final decision had been made about the Trident replacement and emphasised that nothing had been ruled out. Mr Ainsworth did not seem to be aware of Lord Mandelson’s comments and maintained that a replacement for Trident would not be included in next year’s post-election strategic defence review.
Conservative sources said that a Tory government would look at the deterrent question because of the cost of replacing Trident.
Mr Ainsworth, however, admitted that tough decisions were going to have to be made next year and revealed that there appeared to be no appetite in the country for bigger defence spending.“Quite the reverse,” he said.
Mr Osborne revealed the Tory plans for a snap Budget after insisting that cutting public spending would not choke off a recovery.
Mr Osborne told a conference organised by the Spectator magazine that Gordon Brown’s admission that cuts were inevitable amounted to a “white flag” and claimed the Tories had “comprehensively won the spending argument”. But, anticipating the next front in the election battle, he said it was important that Britain’s economic policy did not repeat the mistakes of the past. Unless spending and debt were brought down rapidly any recovery would be short-lived and illusory, he said, adding that a Conservative administration was determined not to “pump up the bubble again”.
He cited the three defence projects when asked to identify specific savings for a Budget, although he added: “There are some things we do not know. I do not know the details of some of the major defence projects which have been the subject of speculation in the newspapers. I simply do not know what the break clauses are in the Eurofighter programme or the A400M or the aircraft carriers. We do have those limitations.”
Mr Osborne will know that naming the programmes will encourage speculation he plans to cut them. The Times revealed earlier this year that the Shadow Chancellor was looking at ditching the Airbus A400M aircraft, which has been dogged by technical problems and is several years behind schedule.
In his speech Mr Osborne dismissed the Government’s VAT cut — which was opposed by the Tories — as having had little effect in bringing Britain to the brink of recovery, claiming that low interest rates had been the key to limiting the recession. Ensuring that interest rates are kept low would be an over-riding policy objective of an incoming Tory administration, he said.