"The overriding reason for the purchase of any item of defence equipment must be its quality and the requirements of the armed forces. We consider nonetheless that the Government should take into account in buying equipment the enhanced opportunities for export of equipment in use by UK armed forces."
Defence equipment minister Philip Dunne said the MoD's newly published 10-year equipment plan would ensure the armed forces get the hardware they need in the years ahead.
"The increased financial contingency will help cover future risk and make our equipment programme affordable. There is also greater information for industry about our priorities, helping them to invest in the future capabilities our troops need," he said.
He insisted that the switch to the carrier variant of the F35 had been "right at the time", but that "unacceptable cost growth, technical risk and project delays" meant the decision to revert to the jump jet was "in the best interest of defence".
Shadow defence secretary Jim Murphy said: "This is another blow to the country's confidence in the Government's competence on defence.
"Days after confusion and contradiction on defence spending the chaos of the aircraft carrier decision is laid bare.
"This wasted time and money led to a serious capability gap and exposed lacking knowledge of defence procurement.
"The UK has paid at least an extra £100 million to have no aircraft to fly from an aircraft carrier for years.
"This is an important report. Industry have warned that without a defence industrial strategy tens of thousands of jobs are at risk and now influential experts outline the damage and competitive disadvantage brought by its absence.
"There is a loss of skills, contradictions in export policy, worries over investment in science and no strategy to support sovereign capabilities.
"A new industrial strategy must improve the speed of procurement, share the burden of risk with industry, support small businesses and strengthen collaboration between companies, the Department and the military.
"Labour has consistently called for a defence industrial strategy and our procurement review chimes with this report's analysis. Ministers must respond, listen to these arguments and change course."
