Defence chief orders spending clampdown

LONDON (Reuters) - The general in charge of Britain's 16-billion-pound military equipment and support budget has ordered a freeze on new spending outside priority areas, the Financial Times reported on Monday.

It said General Kevin O'Donoghue, chief of defence materiel, called for the financial clampdown in an internal memo sent to Ministry of Defence officials earlier this month.

O'Donoghue wrote that with immediate effect "the default position is that no business cases are to be put to the approving authorities for approval," the paper said.

"Projects that have already received approval are not to incur financial commitment," he added.

The defence budget is reported to be short of between 1.5 and 2 billion pounds this year, hit by the cost of operating on two fronts in Iraq and Afghanistan, while government tax revenues are seen diving in the economic slowdown.

Earlier this month the Sunday Telegraph reported that leading defence contractors had considered issuing a public warning to the government that spending cuts and delays in signing big military contracts would damage the economy.

A number of exceptions from the spending freeze were listed in the memo, including the current operations of British armed forces over the next three years.

The FT said the exceptions would ringfence two new 4 billion pound Royal Navy warships, but not the Lockheed Martin F-35 jets due to fly from them.

The Ministry of Defence said it was reviewing financial priorities but that spending had not stopped.