http://www.telegraph.co.uk/finance/newsbysector/industry/defence/61...

UK told to back foreign policy with defence spend

Britain must step up defence spending to meet its foreign policy commitments or risk becoming a nonentity on the world stage, industry bosses warn.

By Amy Wilson, City Reporter
Published: 8:13PM BST 01 Sep 2009

The Government has been heavily criticised for failing to provide enough equipment for the 9,000 troops stationed in Afghanistan, particularly helicopters

"Our decline as a nation will become irreversible and we'll find ourselves with no real influence in the world," said Mike Turner, chairman of the Defence Industries Council (DIC) and former chief executive of BAE Systems. "We believe urgent action is needed."

Accompanied by the current chief executive of BAE Systems, Ian King, the boss of Rolls Royce's defence business, Martin Fausset, and the UK heads of other large defence companies Thales and Finmeccanica, Mr Turner said the Government's policy of prosecuting foreign wars while reducing the proportion of gross domestic product spent on defence was becoming unsustainable.

"There is a mismatch and has been for some time," Mr Turner said. "There's a war on but we're still trying to reap the peace dividend," he said, referring to the cut in spending since the end of the Cold War.

Mr Turner called for the Government to spend another £2bn a year, on top of the £38bn already allocated to defence, to make up for spending shortfalls in recent years while the conflict in Afghanistan has escalated. The proportion of GDP spent on defence has fallen to 2.3pc from 4.4pc 20 years ago. The £38bn is around 5.6pc of Government spending, compared to the 28pc which goes on welfare.

Mr King of BAE Systems called for "honesty" from the next government, of whichever party, over how much it is willing and able to spend on defence to enable the industry to plan for the future.

"We need a refreshed defence industrial strategy so we know what we're basing our capabilities on," Mr King said, and called for any new plan to be "adequately funded."

The DIC called for: a strategic defence review which recognises that the industry provides a significant boost to the UK economy; an updated defence industrial strategy which is properly funded; more support for UK defence exports; an increase in research and development spending; and procurement reform at the MoD.

The Government has been heavily criticised for failing to provide enough equipment for the 9,000 troops stationed in Afghanistan , particularly helicopters. Roadside bombs have become an increasing threat over the course of this summer, and 210 British have been killed there in the last eight years. A leaked MoD report by former defence adviser Bernard Gray called the department's equipment programme "incompetent" and said it is "harming our ability... to conduct difficult current operations."

The DIC's warning comes ahead of the political parties' conference season. The defence budget is at risk from serious cuts whichever party gets into power at the next election because of the enormous public debt and falling tax receipts, and the focus on health, education and crime. The first strategic defence review in a decade is expected early in the next parliament.

"Contrary to the prevailing mood in Westminster, now is the time to consider investing more for our future safety, not less," the DIC said.

The industry called for the Government not to indulge in "short-term budget-led exercises" and instead invest to alleviate the recession. The defence sector had a turnover of £35bn last year, employs 300,000 people in the UK, and brings in £5bn of exports.