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The Treasury Board is supposed to be unhappy with the terms previously agreed to with BAE, who believes have contributed to the black hole of expenditure transactions from ￡ 38bn is to address. This financing gap is the "elephant on the table" that made much more difficult to negotiate reductions in annual budget of ￡ 37bn, Ministry of defence sources said.

Antipathy between the Treasury Board and Department of Defense has become clearly evident review of expenditures, with calling the Department "chaotic and disorganized" budget Chancellor .Liam Fox, the Secretary of Defense, has pushed against cuts of Mr. Osborne 10pc set out in the budget of the Ministry, and a compromise autour 8pc reduction is now understand have been agreed.

BAE has made presentations to Government review and said that it expects that the process "to provide greater clarity of security and defence of the United Kingdom priorities in the coming years", but a spokesperson said that it would be "inappropriate" commentary on the nature of discussions during the review period.

Defence businesses think more training, maintenance and repairs carried out by members of the armed forces in the defence industry is an effective way to reduce the costs of the Department of Defense.

Some British budget 37bn ￡ ￡ is devoted to equipment, with approximately ￡ 6bn on acquisitions and more than ￡ represents medium.

"Take costs of purchasing equipment can take time, while addressing support can produce WINS fastest and best service", said Alberto de Benedictis, UK Executive Director of Finmeccanica holds AgustaWestland.

"It is now a proven model", he said.

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