David Robertson, Business Correspondent
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The Treasury is threatening to cut defence projects worth up to £35 billion in the Government’s next spending round, The Times has learnt.
Des Browne, the Defence Secretary, and Sir Jock Stirrup, the Chief of the Defence Staff, were at the Treasury last week to discuss the decision to send 1,400 extra troops to Afghanistan but also to lobby against cuts to key procurement projects.
These cuts could leave British defence companies without the billion-pound contracts that they are counting on in coming years.
Wrangling between ministers and Gordon Brown, the Chancellor of the Exchequer, is common in the run-up to the comprehensive spending review (CSR), which outlines spending for the next five years. These negotiations are taking place regularly with all departments before the CSR’s publication this summer.
However, it is unusual for big-hitters such as the Defence Secretary and the Chief of the Defence Staff to attend a meeting with Treasury officials. Gordon Brown is not thought to have been involved.
The high-level representations are being made because the Ministry of Defence (MoD) is understood to be concerned that key projects could be cut in the spending review.
The MoD is arguing that the cost of replacing the Trident nuclear deterrent should be added on top of the existing budget as it represents a special circumstance.
Mr Browne is thought to have already raised this with Downing Street and is demanding that the MoD budget be substantially increased to reflect these exceptional costs.
The Treasury view of a budget increase is, typically, more sceptical and it is understood to be questioning the need for a number of high-profile projects.
Those questioned include the next batch of Eurofighter Typhoons, to be built by BAE Systems. The RAF has already bought 144 Typhoons, which cost £65 million each, and has another 88 on order.
The Treasury’s view is that the MoD does not need Tranche 3, as the supplemental order is called, as well as Joint Strike Fighter, a next-generation fighter currently under development.
Another possible RAF casualty is FSTA, the tanker refuelling project. The Treasury is not thought to be keen on this project, but as a Private Finance Initiative there is less pressure to kill it.
The Royal Navy is expected to lose at least two destroyers, and possibly even four, but will at least get its aircraft carriers. The Treasury is understood to have signed off the £3.6 billion to £3.9 billion cost of the two carriers.
The Army could be the biggest loser as the Treasury is thought to be unhappy with Future Rapid Effects System (FRES), a £14 billion project for up to 3,000 armoured vehicles. The Treasury is understood to favour buying a replacement off the shelf, possibly from a US company, rather than have the UK develop its own.
A spokesman for the MoD said: “The Secretary of Defence meets regularly with Treasury ministers to discuss a range of issues.” The Treasury refused to comment on meetings with ministers.

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If they save as much as they did by closing the dockyards and then having to spend extra to get nuclear submarines refitted in the USA it will probably make good financial sense. Shifting costs from one purse to another seems to work for all governments. The trouble is,hitting a potential threat to the country with a purse or handbag just doesnt seem to work when reality takes hold.
bob adcock, suaux, france
Should we be surprised surely not-the money had to run out eventually,so the nation is now left with a crippled health service ,crippled education system,debts that future generations will be burdened with for ever.A police and justice system labouring under burden of asystem not fit for purpose,illegal immigrants sharing in the spoils with the government,of the poor taxpayers hard endeavour they by getting free handouts and the government with inflated expenses,so much so the prime minister now has five new properties.Sorry we can't afford armed forces we have a government not fit for purpose to support .
Owen Haren, Gateshead, TYNE&WEAR
Despite the current overstretch of capabilities and the difficulties with recruitment and retention of forces personnel, they've put a bean counter in charge of the budget negotiations. God help the Armed Forces, because nobody in the Trasury is going to!
David Leslie, Perth, Scotland
If the UK had a competitive industrial base, comprised of at least, I emphasise, at the very least, three major suppliers for each segment of each industry, supported by accountable and acute minded procurement targets at the staff level in each service, and that backed up by a civil service that had its eye on the overall success of the nation, the UK would be a great and ongoing success. But, sadly, that will require leadership, something the UK has very clearly lacked for decades.
The starting point is for the City of London to recognise that it holds the keys to the success of the UK, not the government. That will absolutely require a competitive capital marketplace to be created so that those new, fresh thinking competitors are permitted to survive past the first few years of their existance as independent businesses. Not as clones of some make believe DTI inspiration like BAE. The damage myoptic thinking from the DTI has done to UK defense industry must at last be recognised.
Chris Coles, Medstead, Alton, UK
defence is just simply our insurance policy for our future security. you hope you don't have to use it, but will feel really stupid if caught without it...so we have to decide what risks we want to be insured against, and pay the premium. BAe and other private contractors work on a cost+5% basis. This is no recipe for U.K. to purchasing good kit as BAe's incentive it to make the kit cost as much as possible. There is nothing wrong with buying the right kit from the USA - it's always been better than ours, and on economies of scale cheaper too! Why do we always ask our lads to do too much with too little?
chris dainty, aylesbury, Bucks
"The Treasury is threatening ......." Strongwords sell newspapers-surely they are just considering and discussing the options which are feasible and are good for the country !
I hope.
Peter, Berkshire, England
It is the reluctance to invest properly in our defence systems that has led to an over reliance on the USA for our protection ( this goes for the whole of the EU), which means that if the USA wants to embark on any adventure as the paymasters of NATO it is not unreasonable for them to use it as a backup for their own forces, It should be remembered that he who pays the piper calls the tune.
Michael Rudd, Barking, UK
If Gordon Brown seriously thinks he wants to be and intends to be Prime Minister then he really needs to get his act together and decide which side of the fence he is sitting on. This government has committed the country and our Armed Forces into more conflicts than any other and yet the Treasury, for which read Brown, is hell-bent on reducing the Armed Services at every twist and turn of the Treasuries quill pens. I suspect there are few politicians who have any understanding or appreciation of warfare and I suggest they start by reading some basic words on the subject by Sun Tzu. Either that or we need to seriously remove many of the present lot in Parliament and also reduce their numbers to help pay for our Armed Forces.
Kenneth Armitage, Suffolk, England
If Gordon Brown seriously thinks he wants to be and intends to be Prime Minister then he really needs to get his act together and decide which side of the fence he is sitting on. This government has committed the country and our Armed Forces into more conflicts than any other and yet the Treasury, for which read Brown, is hell-bent on reducing the Armed Services at every twist and turn of the Treasuries quill pens. I suspect there are few politicians who have any understanding or appreciation of warfare and I suggest they start by reading some basic words on the subject by Sun Tzu. Either that or we need to seriously remove many of the present lot in Parliament and also reduce their numbers to help pay for our Armed Forces.
Kenneth Armitage, Suffolk, England
Well we need to save for the 2012 Olympics.....
Mike Hoyes, Newcastle Emlyn, Wales
FRES is a £14 billion white elephant. The Treasury would be right to scrap it. The purpose of the project is to provide the European Rapid Reaction Force with hi-tech vehicles to fight fantasy future wars against fantasy future enemies.
Meanwhile, in the real world, our soldiers are being killed because they lack the kind of mine-protected vehicles that would provide them with effective protection against I.E.D.s. These vehicles are available for purchase now and off the shelf. Its time for the Army top brass and the MOD to stop kissing the E.U.s backside and start putting the lives of British soldiers first.
Lance Grundy, Liverpool, Great Britain
Tridant and the Aircraft Carriers... as long as we get those, we remain a key world power. destroyers, aircraft, armoured vehicles... all can be built/bought at a latter stage, but the Nuclear Bomb and the ability to launch a naval expedition are the core of our military ability. This is important - it signals that there is no secret intention in the Government to down grade ourselves. Time now to start pushing for extra spend to BUILD our capacity.
G Fincham, Norwich, UK
Gordon Brown has been slowly wrecking this country with his public/private finance initiatives and it is all about to blow up in his face.
He wants the successor to Trident yet we can't afford to protect our troups on the ground.
We did have a navy but most of our ships are in mothballs!
We have been reduced to a third world banana republic if only we realised it!
Barry Reed, Hounslow, UK
Clearly not the best reading. For the Treasury to be proposing such cuts at a time when UK forces need their help demonstrates a clear lack of vision moreover, leadership.
No public servant be they health or defence should have to put their life on the line with shoddy or no equipment. This really isnt funny anymore and in fact you could underlines the lack of awareness by the current government on Defence.
They could save Billions of pounds if they bought US made aircraft, the exchange rate at $2 = £1 should be fairly straight forward for any mathematician, they can buy 2 for the price of one and make a saving.
I am very surprised this hasnt been done already, but there again, the treasury and MoD never were too bright.
james, London,
Cutting our defences as we deploy yet more troops and maintain world leading forces in the face of increasing and unpredictable threat defies belief. Terrorism is an extra threat, not a replacement for the conventional.
With my feet on the ground, I consider what could fundamentally change my life but overwhich I have little control. Defence and Health care top the list of insurance.
What are the politicians doing to us in the cause of their own re-election?
Philip Markham, Reading, Berkshire
Why no buy of the shelf instead of FRES Bae own stakes in some of the best wheeled AFV manufacturers in Europe like Sisu of finland and GKN had the license to manufacture the Piranah AFV 2 of the most used afv's so why waste money reinventing the wheel.
Darren, York, England
Once again Gordon Brown deliberately absents himself from such high level meetings and hides behind his officials who will then take the flak for his decisions. Another example of his inability to relate to people. How we are going to fare when he becomes the unelected prime minister is something that should strike fear in into everyone.
Sid Cass, Ashford, Kent
The best defense is a rational and independant foreign policy. This does not exist currently and we will be dragged into the Bush-Cheyney abyss when they nuke Iran.
Barrie M Machin, Perth, Australia
Of course it is cheaper to buy our defence requuirements off the shelf but the treasury needs to look at the bigger picture.
The defence industry is one of the last segments of british industry that maunufactures and exports its products abroad ,but this needs investment and support principally from our own government in the form of orders for our own armed forces.
If we consistently insist on procuring overseas which has been the case for transport, shipbuilding, automobile, train and rolling stock, machine tools, utilities, powerstations, etc etc , we really will become, as Napolean famously quipped 'just a little nation of shopkeepers'
,
andy James, Lyon, France
Just when is the UK Government going to get the ever-arrogant know-all Treasury under control? These dry economists (you know, the ones who are wet behind the ears) know the cost of everything and the value of nothing; they have no concept of strategic planning, and if they had their way the only money spent would be on a greater number of Treasury staff, and nothing else.
And Treasuries are the same everywhere. Treasuries should find the money, NOT decide how much can be spent on what.
It really is TIME for Ministers to GET THEM UNDER CONTROL AND REMIND THEM WHO SETS POLICY - AND IT IS NOT (OR SHOULD NOT BE) TREASURY.
Gerry Watts, Hobart, Tasmania, Australia
Back to the 1920s and defence commitments without resources, then Ramsay MacDonald and the 1935 Naval Treaty allowing Hitler to re-arm, and within 3 years Britain unable to constrain what it had unleashed and facing decline. Here we go again !
TomTom, Leeds, England
gordon brown along with his allies wish to play the game of being the worlds policemen. but he doesnt want to spend his (taxpayers) money to equip the men who are doing the job. being a scott how can he sleep at night.
hamish, nairn, scotland
Question #1: Why is the Treasury so hell-bent on stripping the nation of its ability to defend itself?
Question #2: Why do Treasury bureaucrats wish to remove the nation's chair from the table of responsible governments willing to defend humanity?
Bob Evans, Anaheim, California
This government like all labour governments are notorious for turning our armed forces into little more than a defence force. The only difference this time is that they are committing more and more of our forces to action across the world without providing the logistical support that they deserve.
It is time that our armed forces called their bluff and stated that any more defence cuts will result in the resignations of every serving member hitting the M.O.D's intray within 48 hours.
If this shower of a so called government can afford to spend millions on giving drugs to addicts, billions in overseas aid and lets not forget the billions given to that great democracy of unaccountable spending called the E.U. they can ensure that our services are provided for.
If our army need armoured vehicles, they should be made in the U.K. to ensure British jobs not given to overseas countries to keep their workforces employed.
THE FIRST PRIORITY OF ANY GOVERNMENT IS DEFENCE OF THE REALM.
Jeffrey E. Cox, Conifer Grove, New Zealand