A new report has criticised the amount of subsidies given to British defence firms.

According to the think-tank Saferworld, the government is subsidising the industry to the tune of £4,600 for every defence worker in the UK.

The report claims that £420 million is given in subsidies to defence firms through export credit guarantees, marketing and other government support.

The report calls for Labour to scrap the financial support to defence exports and switch the funds to other economic sectors. The view that a thriving defence system is vital for national security is out-dated, the study says.

Paul Ingram and Ian Davis, the report's authors, are critical of the "buy British" ethos which, they claim, has delivered poor quality equipment and poor value for money.

Davis said: "At least £420 million of taxpayers' money goes directly into enabling foreign governments to purchase British arms. Ending the subsidy to the UK defence industry as a whole, which has no clear benefit to our armed services or national security, could save a further £4 billion."

Alan Sharman, the director general of the Defence Manufacturers Association, said the retention of a domestic defence industry remained important.

"If you wish to continue to be a country that plays in the big league, on the UN security council and so on, then I believe you have to have a defence industry to back that up," he said.