Britain committed to A400M deal - minister

By Harpreet Bhal

LONDON (Reuters) - Britain will press ahead with plans to acquire the pan-European A400M military transporter aircraft despite rising costs and delays in its delivery, a government minister said on Monday.

The A400M, being built by Europe's Airbus, has faced repeated production delays and cost overruns leading to disagreements over how to share the costs in a project worth around 20 billion euros (17 billion pound).

Britain has ordered 25 of the aircraft, worth about 100 million euros each, and has laid down strict financial conditions before it will agree to go ahead with the project.

"The A400M is a very important aircraft. We need the A400M as soon as possible for defence," Paul Drayson, the minister for strategic defence acquisition, told Reuters in an interview.

"We are disappointed by the delays and we would like to see the A400M delivered as quickly as possible."

Britain and France said in July they were committed to "finding a positive outcome" for the A400M and suggested they were ready to compromise with Airbus' parent company EADS over who should pay for delays as long as it bore some of the pain.

Airbus says the original contract signed in 2003 is too restrictive for a complex defence project and blames part of the delay on political interference in the choice of suppliers.

Seven NATO members -- Britain, France, Germany, Spain, Belgium, Luxembourg and Turkey -- have ordered the plane while South Africa and Malaysia have also placed orders.

The seven nations met in June to decide whether to agree to a renegotiation of the contract requested by Airbus Military, a unit of EADS, and agreed to extend a moratorium allowing time for discussions to the end of July.

Drayson said the matter was being discussed and declined to elaborate on details.

INNOVATION PUSH

Drayson, who is also a minister for science, said the government will stick to plans to increase the budget for science and innovation to 6.3 billion pounds by 2010 despite the economic slowdown.

He said the government wanted to raise the profile of science and technology firms to an international standard and said the sector could help Britain emerge from the downturn.

"What we want ... is the UK to be known as the leader for innovation. It needs to be an understood and recognised strength of this country," he said.

The government announced plans in June to commit 150 million pounds to set up a venture capital fund to help science and technology start-ups, and plans to rope in private investors to help the fund hit a target of 10 billion pounds over 10 years.