Newspaper article The Evening Standard (London, England)

Why Britain Should Beat a Retreat from the Defence Industry

Newspaper article The Evening Standard (London, England)

Why Britain Should Beat a Retreat from the Defence Industry

Article excerpt


BAE SYSTEMS' plunge back into the red is a symptom of much deeper troubles in an industry still widely considered to be a pillar of the British economy.

British Aerospace, as it used to be called, is the once-Stateowned successor to many of the great names which, as we will remember on Battle of Britain Day next week, helped the Allies win the Second World War and supplied our armed forces with distinction down the years.

But recently, besides drawing anti-arms trade campaigners' fury, BAE has been responsible for debacles such as the expensively redesigned Astute submarine, the much-delayed Nimrod maritime patrol aircraft and, in part, the [pounds sterling]19 billion Eurofighter Typhoon, described by former Defence Secretary Sir John Nott as "one of the worst decisions I made at the MoD" and still not yet in operational service.

Cost overruns on major defence projects amounted to a net [pounds sterling]3 billion last year alone, and the top four offenders involved BAE.

Yet the defence industry seems able to claim it is still an important enough part of the economy to merit special treatment.

For example, the MoD chose last year to buy the Hawk 128 trainer f r om BAE in Brough, Yorkshire, where redundancy letters had already started to go out, rather than open competition to a potentially-cheaper Italian alternative. At that stage, no export orders had been won for the Hawk for five years.

Sir Richard Evans, BAE's combative former chairman, told the Commons Defence Committee recently: "Actually (to) give five billions' worth of business to the Italians or somebody else, and at the same time shut a factory and make a lot of people unemployed, whatever the bloody rules of economics are, that is certainly not economics as I understand it."

But maybe it is. We will never know whether, as rumoured, the Italian alternative could have cost [pounds sterling]1 billion less, but on a contract of that size even a small saving could have been worthwhile. And all the classic free trade arguments suggest protection and featherbedding is disastrous in the long run.

The argument for protecting domestic jobs in the face of competition from abroad did not prevail-in the coal industry. …

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