HIGHLIGHTS-Cameron's statement on UK defence review

LONDON Oct 19 (Reuters) - Prime Minister David Cameron set out the conclusions on Tuesday of Britain's first review of its armed forces since 1998.

Following are some of the highlights of his statement to parliament:

ON NUCLEAR DETERRENT

"We will retain and renew the ultimate insurance policy, our independent nuclear deterrent. This guards our country round the clock every day of the year.

"We can extend the life of the Vanguard class so the first replacement submarine is not required until 2028. We can reduce the number of operational launch tubes on those new submarines from 12 to 8. We can reduce the number of warheads on our submarines at sea from 48 to 40 and we can reduce our stockpile of operational warheads from less than 160, to fewer than 120.

"The next phase of the programme to renew our deterrent, the so called 'initial gate', will start by the end of this year but as a result of the changes to the programme, the decision to start construction of the new submarines need now not be taken until around 2016.

"We will save around 1.2 billion pounds and defer a further 2 billion pounds of spending from the next 10 years."

OVERALL LEVEL OF DEFENCE CUTS

"Over four years the defence budget will rise in cash terms and fall by only 8 percent in real terms and it will meet the NATO 2 percent of GDP target for defence spending throughout the next four years."

AIRCRAFT CARRIERS

"We will build both carriers but hold one in extended readiness. We will fit the 'cats and traps' - the catapults and arrestor gear to the operational carrier. This will allow our allies to operate from our operational carrier and it will allow us to buy the carrier version of the Joint Strike Fighter which is more capable, less expensive, has a longer range and carries more weapons. We will also aim to bring the planes and the carriers in at the same time."

TROOP NUMBERS

"Our ground forces will continue to have a vital operational role, so we will retain a large well-equipped army, numbering around 95,500 by 2015 that is 7,000 less than today."

"Total naval manpower will reduce to around 30,000 by 2015."

"RAF manpower will also reduce to around 33,000 by 2015."

HARRIER AIRCRAFT

"We have decided to retire the Harrier which has served this country so well for 40 years."

"The Harrier is a remarkably flexible aircraft but the military advice is that we should sustain the Tornado fleet as that aircraft is more capable and better able to sustain operations in Afghanistan."

NIMROD CANCELLED

"Take the Nimrod programme for example. It has cost the British taxpayer over 3 billion pounds, the number of aircraft to be procured has fallen from 21 to nine, the cost per aircraft has increased by 200 percent and it is over eight years late. Today we are announcing its cancellation."

CYBER SECURITY

"Over the next four years, we will invest over half a billion pounds of new money in a national cyber security programme."

AIR FORCE TRANSPORT FLEET

"The A400M transport aircraft together with the existing fleet of C17 aircraft and the Future Strategic Tanker Aircraft will allow us to fly our forces wherever they are needed in the world."

HELICOPTERS

"The introduction of 12 new heavy lift Chinook helicopters, new protected mobility vehicles and enhanced communications equipment will make the Army more mobile, more flexible and better equipped to face future threats than ever before."

UK SHIP FLEET

"By 2020 the total number of frigates and destroyers will reduce from 23 to 19."

MINISTRY OF DEFENCE CUTS

"The MoD will cut its estate, dispose of unnecessary assets, renegotiate contracts with industry and cuts its management overheads including reducing civilian numbers in the MoD by 25,000 by 2015."

RETURN OF TROOPS FROM GERMANY

"We will also adjust and simplify civilian and military allowances. The new higher operational allowance stays but there will be difficult decisions although these will be made easier by the return of the army from Germany."

"Together all these changes in the Ministry of Defence will save 4.7 billion pounds over the spending review period."

"In terms of return from Germany, half our personnel should be back by 2015 and the remainder by 2020."

(Compiled by Estelle Shirbon, Adrian Croft and Kylie MacLellan)