Liam Fox attacks Labour's record on defence funding as he promises that a Conservative Government would want to see British defence and security companies flourishing

Liam Fox delivered a hard-hitting speech to the UK Aerospace, Defence and Security industries this morning in which he was highly critical of Labour's record on funding defence:

"We have had the truth dragged from the Prime Minister’s lips.  His humiliating climb down has confirmed the truth about the defence budget. His credibility and Labour’s credibility on defence and the Armed Forces have been shot to pieces. We have always believed that he never sympathised with or understood the Armed Forces. Now we know that while we were fighting wars in Iraq and Afghanistan he cut the defence budget on four occasions in real terms while he was chancellor.

"If you are not willing to fund our defence at a time of war you should not send our troops into war. Right to the coming election, we will remind Gordon Brown and Labour at every opportunity how they denied our troops vital body armour in Iraq, cut the helicopter budget in the middle of two wars by £1.4bn in 2004, and did not provide sufficient armoured vehicles in Afghanistan. The electorate will not forgive a Government that has clearly failed in one of its basic duties."

He went on to cite a McKinsey study which looked at benchmarking defence performance around the world which showed Britain registering very badly in three areas:

"First, the global benchmark percentage of the defence budget that goes towards administration is 11%. In the UK it is 20%. Secondly, the global benchmark percentage of the defence budget that goes towards maintenance is 5%. In the UK it is 13%. Thirdly, the global benchmark percentage of the defence budget that goes towards procurement of military hardware is 33%.  In the UK it is only 18%.

"It appears, and it is a narrative widely believed among the Services, that we are unable to invest in research and technology and the purchase of new equipment because of the costs of maintaining too many types of legacy equipment and absurdly high levels of administration. All of this is going to change."

Dr Fox also spoke in detail about the importance of the UK defence sector, emphasising that not only were the Conservatives "committed to maintaining a vibrant and diversified British economy where defence and security companies can flourish", but that "a future Conservative Government will make it its policy to maximise the UK’s share of global defence exports". He listed three reasons for this:

• Economies of scale from increase sale volume maximises returns for the taxpayer;
• Increased sale revenues through exports increases revenue t the natioanl purse through the multiplier effect;
• Exports can be used a foreign policy tools to help underpin strategic relationships with key allies and partners.

In addition he announced a reversal of the existing policy to return the Defence and Security Organisation from within Lord Mandelson's empire back to the MoD. After listening to the view of the industry, he said that "we will have a period of assessment to see how we can best bring together the skills and management required to maximise Britain’s defence exports. While change is not ruled out we need to avoid throwing the baby out with the bathwater."

Jonathan Isaby