A little more money?

[hulahoop7]

http://www.telegraph.co.uk/news/uknews/1965357/MOD-allowed-funds-for-kit-and-aircraft-carriers.html

Gordon Brown has agreed to let the Ministry of Defence free up funds to provide life-saving kit for troops in Afghanistan and Iraq and give the go-ahead for two aircraft carriers, it has been reported.

The government is loosening rules governing long-term budgets in order to allow military chiefs to plug a £2 billion black hole in its finances.
That will mean that a reported £200 million will be freed for much needed equipment in the middle east and contracts for the new super aircraft carriers promised to the Royal Navy pushed through safeguarding 10,000 manufacturing jobs (...)

[The Helpful Stacker]

.....will be freed for much needed equipment in the middle east and contracts for the new super aircraft carriers....

The way that is written it initially appears that the aircraft carriers are as much needed as equipment for the Middle East. Perhaps much needed as vote winers in the area they are going to be built in?

[hulahoop7]

http://www.ft.com/cms/s/0/e2b21996-22b4-11dd-93a9-000077b07658.html

Two days ago, executives at BAE Systems (http://markets.ft.com/tearsheets/performance.asp?s=uk:BA) and VT Group (http://markets.ft.com/tearsheets/performance.asp?s=uk:VTG)got the call they had been anxiously awaiting for more than six months. The Ministry of Defence was committing to a manufacturing contract for two aircraft carriers for the Royal Navy.

The tidings, delivered by Amyas Morse, the commercial director at the MoD, meant that BAE (http://markets.ft.com/tearsheets/performance.asp?s=uk:BA) and VT (http://markets.ft.com/tearsheets/performance.asp?s=uk:VTG) could at last finalise a longed-for joint venture that would combine the shipyards into a single British champion. An announcement is expected in the next 10 days, with the contract signed before the end of June.

But while executives in the industry alliance that is building the £4bn ships are privately celebrating, there is potentially less good news on the horizon for their counterparts at other defence contractors. The disclosure that the MoD is to launch an “examination” of the equipment programme will raise fears among executives that they may face further delays and cuts to big procurement schemes.

Decisions are still pending on “big ticket” projects such as Future Lynx, to replace the Lynx helicopters, as well as further orders for more Astute submarines, Type 45 destroyers and Eurofighter Typhoons.
Although the MoD is shying away from the word review to describe its three-month look at the MoD’s equipment programme, the consequences could be long-lasting for Britain’s defence industry.

Driving the move is a recognition within the department that it “needs to take stock” and reprioritise. It has to move away from purchasing equipment for the long term – equipment that could already be out of date by the time it comes into service – and concentrate on supporting its troops in the near to medium term.

Historically, the MoD has planned its equipment procurement programme over 10 to 20 years but the continued strain on Britain’s troops from the wars in Iraq and Afghanistan has focused ministerial minds on more immediate needs.
The MoD said: “We are determined to do more to support our people here and on the front line. To do that, we need to better prioritise our spending plans. The examination of the equipment programme will focus on two issues above all: bearing down on cost increases to the equipment programmes; and rebalancing the equipment programme to better support the front line.”

For industry, the potential impact cannot be underestimated. Defence sources insist that overall, the MoD will not be spending any less on equipment. It will simply be spending it differently. Instead of buying more Eurofighter Typhoons, a programme that was first begun more than 20 years ago, for example, it may decide to spend its money buying more armoured vehicles.

It sounds logical but in practice it could force some difficult decisions on the MoD. Ultimately the department may decide to cut programmes or reduce orders for certain items it had previously promised industry were on the table.

Whatever the eventual outcome of the “examination”, industry executives will want to make sure it does not lead to further delay. Privately, they stress that long-term investment decisions become problematic when there are delays and cuts to programmes that have already been agreed.
It is all very different from the ethos that Lord Drayson, the defence minister who stepped down last year, attempted to nurture during his tenure at the department.
He promoted radical reforms aimed at building a stable partnership with industry based on transparency and long-term decision making. The new way of working was meant to be a “win-win” for both government and industry.

Now – if the current budget crisis has not already done so – the MoD’s new plans will put those reforms to their first real test.