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U.K. Fails to Promote Defense Industry, Lawmakers Say

Britain is failing to promote its defense industry to the same extent as countries like France because equipment-buying policy is more focused on getting value for money than wider economic factors, lawmakers said.

The cross-party House of Commons Defense Committee urged Prime Minister David Cameron’s government to reconsider its strategy for defense procurement. It was critical of a decision to change the type of fighter planes being ordered for new aircraft carriers at short notice.

“We believe that the absence of a defense-industrial strategy which supports appropriate national sovereignty puts the U.K. at a disadvantage against competitor countries,” the panel said in a report published in London today. “We do not understand how we can have confidence in a national security strategy which does not show a clear grasp of what is needed for the defense of the United Kingdom, and how this can be ensured.”

The committee recommended that the government “should take into account in buying equipment the enhanced opportunities for export of equipment in use by U.K. armed forces,” arguing that such sales bring “significant benefits to the UK in terms of employment opportunities, economies of scale and enhancement of influence.”

The government’s 2010 decision to switch from the F-35B to the F-35C variant of Lockheed Martin Corp. (LMT)’s Joint Strike Fighter, which later had to be reversed, was “taken at great speed, without full consultation, and without the Ministry of Defense understanding how it could be implemented nor how much it would cost,” the panel’s chairman, Conservative lawmaker James Arbuthnot, said in an e-mailed statement.

‘At Risk’

“Industry has warned that, without a defense-industrial strategy, tens of thousands of jobs are at risk,” Jim Murphy, the opposition Labour Party’s defense spokesman said in an e- mailed statement. “There is a loss of skills, contradictions in export policy, worries over investment in science and no strategy to support sovereign capabilities.”

He said any new industrial strategy must improve the speed of procurement, share the burden of risk with industry, support small businesses and strengthen collaboration between companies, the defense ministry and the military.

“This government has worked tirelessly to eliminate the multibillion pound black hole we inherited and transform the way we fund and manage the delivery of military equipment,” Defense Equipment Minister Philip Dunne said in an e-mailed statement.

“Our recently published 160-billion-pound ($252 billion) 10-year equipment plan will deliver fully funded hardware for our armed forces, giving them much more certainty,” Dunne said. “The increased financial contingency will help cover future risk and make our equipment program affordable. There is also greater information for industry about our priorities, helping them to invest in the future capabilities our troops need.”

To contact the reporters on this story: Kitty Donaldson in London at kdonaldson1@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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