15,000 defence industry jobs could go in a separate Scotland

08 April 2013

The Scottish Affairs Committee publishes its report on jobs in the Scottish defence industry of a Separate Scotland.

In a report published today, Monday 8 April 2013, the Commons Scottish Affairs Committee says the many thousands of people whose jobs depend on the defence industry in Scotland need to be told, before the referendum, what their real prospects for future employment would be in a Separate Scotland.

The defence industry is very important to the Scottish economy, providing more than 15,000 jobs and contributing between £ 1.8 billion–£2 billion annually to the Scottish economy. If Scotland were to separate from the UK in the upcoming referendum, the impact on the Scottish defence industry would be substantial and negative.

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.

The UK research budget is £400 million whereas estimates of a future research and development budget for Scotland vary between £20 million and £30 million.

A Scottish defence budget of £2.5 billion would represent 6.5% of the UK defence budget.

A procurement budget of £1 billion would represent about 6% of the UK defence procurement budget. This is before costs associated with intelligence and the transition period is taken into account.

The MoD has said that the costs of having to sever contracts as a result of separation would be factored into any separation negotiations.

The Committee says Separation would impact negatively on the defence industry in Scotland six main ways:

  • The market offered to defence suppliers in a separate Scotland would be negligible in size compared to that of the United Kingdom as a whole, and the joint projects in which it participates e.g. Typhoon.
  • Those firms or subsidiaries dependent on British Army, RAF or Royal Navy orders will lose all UK exclusive work, which will be transferred to sites still in the UK
  • A separate Scotland – especially one which has expelled the Royal Navy’s submarine force and imposed unilateral nuclear disarmament on the United Kingdom  - will not be seen as a reliable ally or partner, by  the North Atlantic Treaty Organization (NATO) or others, for collaboration in those large international  projects which are the main routes to market for many Scottish defence products
  • A separate Scotland’s access to secret technology owned elsewhere is unlikely to be automatic. Even if access for US and other nuclear forces to Scottish sea, land and air is allowed on a “don’t ask, don’t tell” basis, which is in undecided, there will not necessarily be the maximum security clearance necessary to allow export to, or collaboration with, US or other suppliers or purchasers
  • A separate Scotland is unlikely to be able to fund the level of research and development necessary to maintain Scottish companies at the cutting edge of technology, thus they will soon degenerate to commodity suppliers which will face international competition.
  • The defence industry in Scotland is designed to meet the needs of its main customer—the UK Ministry of Defence. Defence Procurement in a separate Scotland would have a much smaller budget and need very different equipment.

The Committee says it is essential that the Scottish Government spells out, as quickly as possible, its intentions for procurement and research budgets, and foreign and defence policies, after Separation.

The Committee has produced a series of reports as part of a major ongoing inquiry into the referendum on Separation. This report is the latest on the implications of Separation for issues of defence and the defence industry. Annexes to the report detail the likely impact on the eight defence industry employers it has visited in the course of this inquiry so far.

Ian Davidson MP, Chair of the Committee, said;

“No job in the Scottish defence industry will be safe under Separation.
“We have been unable to identify any job gain which will flow from Scotland’s breaking away from the United Kingdom – but thousands which will be lost and thousands more which will be put at risk.

“Most of these are well paid and highly skilled – is their loss a price worth paying for Separation?

“The Scottish Government must tell Trade Unions and employees what alternative opportunities they will offer for these workers, who will be joining those from the Clyde shipyards and Faslane on the scrap heap unless other employment can be found.

“Scotland must be told, before the referendum vote, the full foreign and defence policies, including procurement and research budgets, which are planned for a Separate Scotland.
“The Scottish Government must explain how it intends to obtain orders from its largest customer while expelling Trident and how it intends to access secret commercial and military information from the UK and the US while disrupting the Nato Alliance”.

Further information

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