Turner warns the government to pay in cash or it will pay in power

Posted on 26 Aug 2008 by The Manufacturer

Outgoing BAE chief Mike Turner has warned that the UK needs to restructure its defence budget and up spending for the sake of the domestic manufacturing sector and the country’s power standing in the world.

Speaking to the Financial Times, Turner, who retires on Friday, cautioned that BAE could be forced to quit the UK as its base if defence spending fell to a level where it would not be sustainable for the company to stay. This would incur the loss of jobs as well as leading technology that one of the world’s biggest defence companies affords. He said: “If priorities are low in terms of defence spending, you would have to be concerned about that. I hope it doesn’t come to that.”

Turner is concerned that Britain’s “say in the world” will be diminished unless it invests considerably in defence. “I’m very concerned that the politicians, and it’s up to the politicians to decide, are not giving the priority to defence that is needed,” he said.

“It’s right for the country to keep the Armed Forces strong, you get listened to in the world . . . It’s also good for jobs, for skills, for technology and for exports,” he added.

The FT reported how a 1.5 per cent annual rise in funding agreed between the treasury and the Ministry of Defence only translates in reality to a 0.9 per cent increase due to depreciation and writing off of equipment. This in turn leads to less available funds for contracting firms like BAE who, the FT note, now take 50 per cent of its orders from the US.

Turner retires on Friday after 42 years with BAE and six-and-a-half as chief executive.