New BAE-made warship to be scaled back - sources

LONDON (Reuters) - Specifications for a new type of British warship designed by BAE Systems will be scaled back to shrink costs, which could prompt the country to order more ships, defence sources said on Monday.

The new Type 26 frigate, due for delivery in the early 2020s, is being developed under Britain's Future Surface Combatant programme. The vessel's specifications will be lowered partly to save money as Britain tackles a record budget deficit.

One senior defence ministry source said the cost of a ship will be cut to 250-350 million pounds, from about 500 million.

Another senior defence ministry source said that could allow more ships to be ordered, countering criticism that the navy has sacrificed numbers in favour of fewer high-tech vessels, leaving it more vulnerable if they were lost.

BAE Systems was not available to comment.

"We want numbers. We want quality, but if you have cheaper unit costs, you can have more of them," the source said.

It was unclear how many ships Britain will order. The Type 26 will replace the Type 23 frigate, of which there are 13 in service. A 250 million pound cut in the cost of each unit would save Britain up to 3.25 billion pounds if 13 ships were ordered.

However, defence and security reviews were due in 2015 and 2020, which could alter future plans. In a sweeping review of the armed forces last month, Britain cut its defence budget of 36.9 billion pounds by eight percent in real terms up to 2015.

The review reaffirmed the government's drive for cheaper, more adaptable and less specialised equipment that is more suitable for export markets.

The costs of previous equipment programmes have risen significantly due to changes to specifications while the hardware was in development, and more adaptable equipment is meant to reduce that cost by allowing changes later.

Separately, Britain is boosting defence ties with Baltic and Scandinavian states, in particular bilateral ties with Norway, a member of NATO but not the European Union. British defence secretary Liam Fox visited Oslo earlier this month.

One defence source said one reason for the deepening defence ties was to allow Britain, which relies heavily on sea trade, to gain a better understanding of regional security concerns as new shipping routes open up with rising temperatures in the Arctic.

The cooperation on defence was not seen as being as extensive as Britain's ties to France -- both countries signed wide-ranging security treaties this month. But British media have speculated Norwegian jet planes could use British bases.

"We want to boost our bilateral defence ties with Norway. There is more work to do in boosting relations with Scandinavia," the source said.

(Editing by Dan Lalor)