Hammond claims the government is to slash defence spending by millions

The British defence secretary, Philip Hammond, will establish an independent watchdog to negotiate defence contracts with private agencies in order to save the taxpayer hundreds of millions of pounds annually.

The government is concerned that the current lack of tender on security contracts, of which 48% are owned by one company which cannot be named, has meant a lack of competitive pressure maintaining high prices.

The Defence Procurement white paper, to be published today, will outline plans to privatise other parts of the defence contracts and the new watchdog hopes to ensure good value for money.

The government is assessing ways to cut £11.5 billion of the current £34 billion annual defence expenditure, without reducing spending on front-line services.

David Cameron is expected to welcome the spending deal for 2015-2016 agreed between the chancellor, George Osborne, and Hammond.

According to The Telegraph a Ministry of Defence source said: “Unlike previous governments which failed to get to grips with the underlying problems that led to project delays and ballooning budgets, we’re determined to forge a more positive legacy.”

The source added: “Having already balanced the defence budget, we’re now focusing on implementing lasting structural change in defence procurement. The proposals in the White Paper will deliver real reform to ensure our Armed Forces get the equipment they need at value for money for the taxpayer.”

Sarah Francis