The environment in which UK defence sector operates is going through what Paul Everitt, Chief Executive of ADS, in an exclusive interview with Nick Watts of Great North News Services called "an important and challenging time". With defence spending constrained in the UK, Europe and elsewhere, it became widely recognised by industry and Government, that reform is required to ensure that industry continues to deliver the right equipment and services at a price the taxpayer can afford.

As a result, the Government is currently undertaking a thorough review through the Defence Reform Bill, which is currently moving through the legislative process.

The UK's Defence and Security sector is struggling to come to terms with reducing budgets in a time of austerity. The recent publication of a House of Commons report on the MOD's defence acquisition practices and the National Audit Office's assessment of the affordability of the 10 year Equipment Programme has given industry plenty to digest. This follows the reforms set in train by the 2010 SDSR. Retired Rear Admiral Rees Ward spoke to Nick Watts of Great North News Services for the Defence Viewpoints Interview in the light of these developments, based on his experience in the MOD and in industry.

The proposed MoD plan to privatise the multibillion-pound arm of the government that provides military equipment and support suffers as many weaknesses as it provides
solutions and there are many key questions that need answering according to defence experts from the RUSI Acquisition Focus Group. Read more below

The UK MoD has concluded its Planning Round for 2011 - the annual budget review to ensure commitments match resources. This implements measures announced in the Strategic Defence & Security Review; our operations in Afghanistan and Libya are not affected. Details will be provided to Parliament after the recess break which has just started.

Implementing difficult SDSR decisions is claimed to have made significant inroads into the so called £38bn black hole while ensuring operations are fully equipped and resourced.

Defence budget savings examples:

HM Treasury have allowed MoD to keep savings it will make from lower liabilities around the decommissioning of equipment. This had previously been ringfenced (and was therefore previously subject to claw back by HMT).

HM Treasury have agreed that the operational allowance can now be fully funded from the Special Reserve. (Previously only 50% of this was planned to have been funded from the Reserve.)

Decommissioning and cancellation of assets as stated in the SDSR.

Re-negotiating contracts with industry, which is said to be producing greater savings.

Remove 80% of DES recruitment marketing

70% reductions in Domestic assistance costs for Land Command appointments

Reduce civilians' expenses and allowances

Reduce Main Building & DES civilians

Reduce Army photographers

"To safeguard operations and as part of the Defence Secretary's drive to increase financial discipline, a new strict spending control regime has been implemented at the MoD. The Comprehensive Commitment Control Regime will ensure all future spending focuses solely on Defence’s strategic priorities. All expenditure that is not already committed or does not directly contribute to operations in Afghanistan and Libya will now be controlled more tightly by the MoD and subject to clearance at more
senior levels."