Defence industry faces shake-up

Mr Reid said change would not be 'without pain'

The UK's defence industry must adapt to a more technology-driven future while meeting the needs of the armed forces, Defence Secretary John Reid has said.

In future the government will expect manufacturers to focus on hi-tech weapons, but basic items such as ships' hulls could be built abroad, he added.

Shadow defence secretary Liam Fox said the new strategy hung on whether the Treasury would provide the funds.

Investment in guided weapons will also be cut by 40% over five years.

'Not sufficient money'

Speaking on BBC News 24, the defence secretary said the government was giving the defence industry "prior notice" of its equipment needs for the coming 20 to 30 years.

Changes were needed so that the industry could begin to make the investment in areas where it was needed and so that the armed forces "would get what they need at the time".

Industry could face "painful" changes in a time of "rapid transformation" in defence requirements, he told the BBC.

"People and industry are aware that there is not sufficient money around to keep every industry going and not every industry continues to be relevant to forward planning assumptions," he said.

But it would be more painful if the industry did not change and continued with products no longer wanted, he stressed.

Mr Reid said cuts in weaponry might "require us to temper international competition in the short term", the minister told the Commons.

Mr Reid told MPs that "overcapacity in production" had to be reduced, adding that aircraft and warships currently being developed would have "very long service lives".

He said future business for the industry would be in support and upgrade capacities, "not immediately moving to design and manufacture the next generation".

Mr Reid said the government was investing in several hundred fast jets between now and 2015, which would last a further 20 years.

Trident question

Industry he said needed to retain the capacity to upgrade these, while looking ahead to a time when "drones" or pilot-free aircraft would be used.

He said the government had no plans to replace Trident, the UK's nuclear deterrent, saying it was "good for another 15-20 years".

Announcing the Defence Industrial Strategy, which follows a six-month MoD study, Mr Reid told MPs: "This is a challenging agenda requiring real change in the shape of the industrial base.

"Only if we collectively face up to the need for change will we succeed in being able to provide our servicemen and women with the equipment they deserve."

Shadow defence secretary Liam Fox said, while he welcomed the move towards a "mature partnership between government and industry", it remained "unclear" whether the Treasury would pay to ensure the strategy was viable.

'Boom and bust'

He also questioned why the future of Trident did not feature in Thursday's announcement.

The aerospace industry is being told that in 25 years' time the requirement will be for unmanned aircraft.

Britain's largest defence contractor, BAE Systems, welcomed the MoD's new Defence Industrial Strategy.

Chief executive Mike Turner said the company could now look forward "with great confidence" in all three sectors: air, land and sea. Britain's armed forces, he added, could also look forward to improved operational freedom.

He said the rationalisation of the industry would have an impact on jobs, but that this would not be "significant".

Mr Reid said the government's aim was to make the defence industry leaner and more sustainable, and to avoid the past "boom and bust" cycle.