UK DELAYS INDUSTRIAL STRATEGY

The government has postponed publication of a new defence industrial strategy until next year rather than incorporate it into an upcoming defence and security review, as industry leaders had hoped, writes Defense News

Procurement and technology minister Peter Luff admitted last week that the long-awaited replacement of the government's 2005 defence industrial strategy (DIS) would not be part of the strategic defence and security review (SDSR) expected in late October.

Derek Marshall, who directs policy at A|D|S, said the government might throw out, not just update, the defence industrial strategy put in place by the previous Labour administration.

"I don't think they are going to call it DIS2," Marshall said. "Implicitly, they may put the work of Lord Drayson in 2005 to one side and start again with a blank sheet of paper."

The delay will disappoint some in the defence industry. A|D|S and others have lobbied for months to have the industrial strategy included in the SDSR, saying they need clarity on government spending, program plans, and industrial strategy in order to lay their own plans.

But Marshall said industry is being pragmatic. "With the SDSR being produced in such quick time, the government has a fantastic amount of work to do. The delay is something we accept we are going to have to live with," he said. "This is not a slight by government. There is a huge amount of work going on between the MOD and industry. Industrial issues such as defence exports and the help companies can bring in bearing down on defense costs already have top priority at the ministry."

One MOD source said separate studies promised by the new government on SMEs and operational sovereignty might get wrapped into the defence industrial strategy.

The news of the industrial-strategy delay emerged the day after George Osborne hinted in his emergency budget speech that defence might be protected from the worst of the spending cuts expected in October.

He said most departments would have to cut their budgets by 25 percent - only health and international aid spending has been spared so far - but said he recognised the pressure defence and education budgets were under.

The MOD has already committed to cutting running costs by 25 percent. Major changes are expected to be pushed through in the SDSR.

Luff said there were lean years ahead for defence, and it was important to get commitments and resources in balance. He said the review gave the MOD the opportunity to dispense with much Cold War arms and gear.

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