BAE Systems

Part of Backbench Business — [Un-allotted Day] – in the House of Commons at 2:25 pm on 24th November 2011.

Alert me about debates like this

Photo of James Wharton James Wharton Conservative, Stockton South 2:25 pm, 24th November 2011

I congratulate hon. Members of all parties on what has been a passionate and heartfelt debate on behalf of constituents right across the country. It is always reassuring when there is a consensus across the political divide on an issue of such importance.

I shall speak primarily about one facet of this decision—the policy that successive Governments of whatever colour have taken towards defence procurement and how it should be considered by BAE as it moves forward. In broad terms, there are two camps on defence procurement. There are those who believe—we have heard some of their arguments put forward eloquently today—in the strategic imperative of retaining our defence industrial production base: our capability as a nation of building our own defence and aerospace systems. At one extreme, that could mean everything from building the wings and canopy on a fighter jet to supplying the bullets that go in SA80 A2. That is a valid argument that retains an integrity and strategic independence for the UK, which has been valued highly by Governments for many years.

At the other end of the spectrum—the other argument put forward by the likes of Lewis Page in his book, “Lions, Donkeys and Dinosaurs”—is the suggestion and proposal that we should buy “off the shelf” and look to find the most effective but also cheapest option that meets our defence requirements and needs. We should not falsely subsidise an industry, as some argue, for strategic reasons when so many other countries across the world supply their defence needs by “off the shelf” methods because they do not have that home-grown capability.

The reality for BAE is that it is a company that is a product of political decisions taken over many years. It is a product of decisions taken by the British Government to retain the defence infrastructure and capability for a variety of strategic and economic reasons, including the benefits that flow from that in jobs, development, R and D, new technologies and exports. In 2009, BAE exported about £4.9 billion-worth of equipment, expertise and knowledge from the UK. That is very valuable for our economy and helpful to the Exchequer.

BAE is a product of a series of policies. This debate sends an important message to the company. If by the decisions it takes it loses the skills base that allows it to be competitive, and if it stops delivering, or reduces, the jobs benefits and economic advantages to this country, there is a danger that those who propose a more purist free-market approach to defence procurement will feel that their argument is strengthened. BAE’s great strength is that it has provided British jobs, growth, investment, technology and research. If it loses skilled workers and finds itself having to re-recruit when future contracts are secured, thereby driving up its costs and driving down its competitiveness as well as damaging our skills base nationally, it will weaken its future prospects and strengthen the argument of those who believe that we should be looking to buy more off the shelf and to rely on others to do the heavy lifting of developing defence technologies, all of which are expensive. Although at heart I am a free marketeer, I am extremely concerned that BAE might take a decision that benefits its short-term profit margin but in the long term could damage its capabilities, strategic position and ability to compete successfully for British contracts.

I am concerned that the arguments of those who do not believe in, or support, our home-grown defence production infrastructure will be made stronger by what appears to be a short-term decision that will benefit neither the company nor this country. I therefore urge BAE to listen to what Members have said today, and to look at the options available to it. I ask it to reconsider its decision at this time of great economic need for the United Kingdom, and to come to a different decision that would be better for its long-term future and that of its work force.