If we resigned ourselves to simply buying overseas certified kit, then the obvious consequences would be final demise of our UK military aircraft industry - considerable tens of thousands of jobs at BAeS, WHL, and their hundreds (probably thousands) of sub-contractors. Plus, the net effect on the economy would probably be negative - gain by the T&E costs and something on the price of the kit, lose by the taxes those chaps pay, the corporation taxes, the export orders (how many overseas military forces use just Hawk and Lynx?), plus enormous unemployment benefit payments. The basic concept, from where we are now, just doesn't make sense.
If it did make sense, why are so many countries trying to develop their own defence and aerospace industries? Why does Japan, who isn't even allowed to export any military equipment, develop its own military aircraft and maintain its own T&E capability?
That said, we are probably looking at the end of UK defence T&E as we've known it; some of this is good. Historically the approach of (1) company development T&E, then (2) government acceptance T&E, then finally (3) operator's operational T&E is wasteful. Merging (1) and (2) into a "Combined Test Force" (or insert fashionable acronym of your choice) makes a shedload of sense, which is why pretty much everybody in the world has moved that way over the last 10-20 years.
(3) However is a much smaller effort than (1) and (2) - it does not require the massive infrastructure of telemetry, scientists and engineers, and suchlike which both require. So, the concept of putting (say) the Strike Attack OEU at Boscombe Down in the early 1990s, which ultimately only needed a handful of pilots, a few dozen ground crew (who did need to be separate to the Boscombe civilian groundcrew of-course, so that they could assess operating the aircraft in a war-like simulated ground environment) was a sound one. On the other hand, the SHAR OUE at Yeovilton and the Merlin OEU at Culdrose seemed to function very well where they were.
The real mess here is caused by a few idiot senior officers who have never been near the T&E environment, and so believe it's all about a few aeroplanes and pilots - it's not. It's about the massive joint company/OTC infrastructure that's needed to get T&E right. It probably will not be possible to fully integrate this - because Westlands will stay in Yeovil and English Electric (sorry, BAeS Military) will stay in Warton - and Boscombe needs some homogeneity. But then the only sensible place to put the test assets and CTF core can only be at either the OTC base (Boscombe), or the OEM base (Yeovil, Warton...).
Whether you then put the OEU there, or in a front line station is a moot point; but the US (which does understand T&E more than most) has tended to take the view of putting the OT&E structure at the OTC where it can also tap into the "boffin infrastructure".
Put bluntly, I think that the US is right, and the UK is wrong. The UK is not even saving real money when you start accounting for all of the costs of running telemetry, instrumentation, etc. etc. etc. from a frontline station instead of a company or government test facility.
No, it's a rot, and will badly damage UK defence as a whole.
Chinook, to be honest, is a pure c***-up, that could have happened at any site. The problem was management of the procurement, not the existence of an independent UK T&E capability. Had we genuinely tried to buy unmodified US kit (MH-47Es in other words), then the T&E process would almost certainly have been fairly trivial, but no we (HMG) tried to redesign it first ! Apparently fairly badly. Had there, for example, been a genuine CTF with Boeing and BDN joint leadership, probably based at manufacturer and able to heavily influence design decisions before full scale build was commissioned, then I'll bet the aircraft would have been slightly late, slightly expensive - but in service, working, and just another addition to the RAF Chinook fleet.
G