North defence jobs on line

Apr 29 2008 by William Green, The Journal

THE North East’s defence industry could be hit by delays or cuts to major equipment programmes because of a budget crisis at the Ministry of Defence.

Thousands of people are employed directly and indirectly in the region’s defence sector, but a Whitehall review of equipment schemes could put a question mark over billions of pounds worth of orders.

The Fres (Future Rapid Effects System) programme to build a new generation of armoured vehicles could be among schemes to be affected by a reported £2bn cash crisis at the Ministry of Defence.

The news comes as the future of 660 employees at BAE Systems’ tank factory in Scotswood Road, Newcastle, depends on the Government finalising its plans for the Fres project.

BAE has announced a £20m “transformation” of its business in anticipation of Fres work.

Under its plans, the Newcastle plant would be responsible for the final assembly of a new utility vehicle.

But industry insiders have warned the Fres project could be a cost-cutting target for the MoD.

Plans for new helicopters, submarines and navy destroyers may also suffer because of the MoD budget crisis, according to reports yesterday.

But two new aircraft carriers costing £4bn may still get the political go-ahead from Gordon Brown, with North East firms already winning contracts to work on the programme.

Northern Defence Industries (NDI), which represents 200 companies, said there had been “considerable deliberation” in the MoD of the affordability of programmes as part of its planning process.

Managing director Trevor Harrison added it was important to get the programmes moving, with around 8,000 people working in the region’s defence and aerospace industries.

He added companies wanted to see clarity from the MoD and that NDI was working with local firms to minimise the effect of any cuts or delays to projects.

A BAE Systems spokesman said it could not comment on speculation and referred calls to the MoD.

The MoD said reports of cuts were speculation, adding decisions had not yet been taken because it has not completed its planning process.