A large amount of our defence industry nowadays belongs to just one company, BAE Systems plc. People still tend to refer to it as British Aerospace or BAe for all that the company changed its name 25 years ago. That made sense, as it is no longer British nor particularly focused on aerospace.
Long ago in the 1990s, not long after its creation by the government, BAe – as it then still was – had 127,000 British employees. It later absorbed other large British workforces such as that of Marconi.
Today, despite constant and enormous revenues from the British taxpayer throughout its existence, BAE has 93,000 employees worldwide. Barely 30,000 of them are in Britain.
Giving defence money to British companies does not even preserve British jobs, let alone create them. In this case, it has resulted in a British company using its UK revenues to move offshore.
Another popular way to spend defence money is on attempts to revive the British shipbuilding industry. There are often foolish dreams that dead shipyards, restarted by MoD contracts to build warships and fleet auxiliaries, could then go on to compete in building merchant shipping. Well-paid jobs in the yards would bring new life to post-industrial towns.
You would think people might have learned from the attempt in the early noughties to build two fleet auxiliary amphibious ships on Tyneside in the moribund Swan Hunter yard, which had built no ships since the 1980s.
The project was a disaster. It was planned to cost £148m with the ships delivered in 2004. By 2006, one ship had been delivered in terrible condition and one was launched but not fitted out. The government had been compelled to hand over no less than £309m.
Nobody on Tyneside had built a new ship from scratch for a long time: the yard was learning on the job, and the government had to keep giving it money just so it could pay its workers.
In the end, even the Labour government of the time realised that this was not sustainable and Swan Hunter closed down again. The ships were finished in Scotland.
This sort of thing illustrates the madness of trying to run military procurement as a social benefit scheme. And it shows us just why we get so little defence – such small amounts of military power – for our money.
But the lesson of Tyneside has not been learned. Another yard that has not built a ship for decades, Harland & Wolff in Belfast, is currently being reanimated with £1.6bn of defence money. Maybe one day the Royal Fleet Auxiliary will get the promised new fleet of solid support ships.
That would be nice as it only has one such vessel at the moment, RFA Fort Victoria – often, as now, broken down and without a crew – and a naval task force without a solid support ship is a sorry thing. But even Harland & Wolff don’t think they’ll have the job done until well into the 2030s, long after the coming crisis with Russia.
If the Swan Hunter project is any guide it will cost double, take much longer, and still not deliver usable ships in the end.
