COMMONS

Government must consider how separation would affect defence industry jobs

14 June 2013

UK Government response reinforces Committee’s concerns.

The Commons Scottish Affairs Committee is today publishing the UK Government’s response to the Committee’s Report The Referendum on Separation for Scotland: How would Separation affect jobs in the Scottish defence industry?

Commenting on the Government’s response, Ian Davidson MP, Chair of the Committee, said:

"We are pleased by this positive response to our report. The UK Government echoes and reinforces our serious concerns about the future of the defence industry in Scotland in the case of Separation.

In the evidence it took the Committee was unable to identify any defence supplier or product which would benefit from Separation, but did find a large number that would suffer. 

Scotland’s defence industry is high-tech and highly skilled, involved in the design and build of complex warships, aerospace engineering, electronics and electro-optical systems. It provides thousands of jobs in Scotland, many of which are paid above the national average.

As part of the UK, Scotland’s defence industry has access to the UK and international markets. The UK’s annual defence budget is £34 billion, the fourth largest in the world. Companies in Scotland benefit significantly from being part of this UK defence industry, which is also one of the largest defence exporters in the world. Scotland benefits from being able to sell products to the MoD and from being able to share the defence exports from the UK to its allies, particularly the US. This would not be the case if Scotland were a foreign country.

As the Government itself explains in this response: Defence and security are areas in which the US-UK relationship is especially close. The UK has invested considerable resource understanding and negotiating the regulatory challenges associated with the US defence marketplace ... As part of the United Kingdom, companies in Scotland currently benefit from a privileged level of access to the US market, for example, through the UK-US Defence Trade Cooperation Treaty and the UK-US Reciprocal Defence Procurement Memorandum of Understanding. It is difficult to assess the impact Scottish independence would have on the work share of existing joint programmes.

There are currently fifty companies that hold List X status in Scotland. This is required for companies to undertake classified defence work on their premises at Confidential level. An independent Scotland would be required to develop its own national security regulations or continue to apply the Security Policy Framework and to develop the required and appropriate security infrastructures to perform the necessary security activities

If Scotland were to separate from the UK, it would need to start from scratch and develop its own head office and procurement framework. This would be added to all the other costs that come with having to untangle and duplicate what the Ministry of Defence does. However, ‘domestic’ demand could never sustain the industry that the UK defence budget sustains, and Scotland ‘going it alone’ is highly unlikely to be able to support the kind of industry that could take advantage of export markets, such as the United States.

Despite previous requests the Scottish Government have still not made clear what they intend to do about Trident—the UK’s nuclear deterrent—which is currently based in Scotland, and if the Scottish Government insisted on eviction of the deterrent, on what timescale they would do it. Without clarity on this prime issue of international security, it is hard to see how key allies—and export markets—could regard Scotland as a trusted and reliable partner.

The response makes clear that the Government shares our belief that the defence industry in Scotland would be fundamentally affected should Scotland leave the UK.

We reiterate our call, supported by the UK Government in this response, for the Scottish Government to carefully consider the issues highlighted in this report and clearly set out how their proposals would affect jobs across the defence sector as part of their future plans for an independent Scotland."

Further information

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