Professional Engineering

We need clarity on defence spending plans if we’re not to lose thousands more jobs

Editor's comment

It’s tough out there – let’s make no bones about it. Continuing uncertainty in global financial markets, along with the first impact of government spending cuts in areas such as defence, are combining to hamper growth in the engineering and manufacturing sectors. What started out looking like it was going to be a year of recovery now feels more like a year of stagnation.

Indeed, the 3,000 planned job cuts announced at BAE Systems at the end of last month came as a particularly savage blow to industry morale. The defence firm’s factories at Warton and Samlesbury in Lancashire and Brough in East Yorkshire are real centres of excellence. They are strategic facilities that have been built up over many years. The job losses, should they be implemented on the scale indicated, will inevitably lead to an erosion of technical capability that, once gone, will be difficult to recreate.

Then there’s the effect on the wider supply chain. When giants like BAE Systems suffer, many small and medium-sized companies suffer too. Lower demand in the sector for materials and parts ripples through the market, meaning that companies six or seven times removed from BAE and the local economies will lose out.

That is a real worry – because defence is one of the few remaining engineering-related industries in the UK that can genuinely claim to be world class. The UK is the biggest defence equipment provider in Europe, and second only to the US worldwide, with a 17% global market share. The industry employs 100,000 people directly and supports 360,000 jobs in total. And many of these jobs are well-paid, highly-skilled engineering and manufacturing positions that cannot always be migrated to other sectors.

There’s no doubt that the industry hasn’t been helped in recent years by defence budget cutbacks by successive governments. Defence outlay 20 years ago was 10% of government spending and 4.5% of gross domestic product, while today it is 5% of government spending and 2.3% of GDP. That’s quite some decline, by any standards.

Of course, some people might argue that, in these times of austerity, defence budgets should be falling as they are elsewhere. But if this downward trend is allowed to continue, the defence industry will get to the stage where it becomes sub-scale. It will get dragged down to a point where it becomes uncompetitive with foreign rivals such as France and Germany.

That’s why it is imperative that the government publishes its defence white paper at the earliest opportunity. It needs to set out in a clear, concise manner how it intends to work with industry, so that all companies across the defence supply chain can plan with confidence and choose to invest here. 

Industry particularly needs a clear signal from government as to what its priorities are in terms of new programmes and how they will translate into actual requirements. There have been too many examples over the years of military programmes chopped and changed halfway through, such as with the new aircraft carriers, because of short-term thinking and bad planning in Whitehall. That’s no basis upon which firms can make important investment decisions.

Ultimately a failure to reinvest in defence capability means we risk losing our world-leading position and the exports that brings. And, if that’s allowed to happen, we run the risk of many thousands more job losses to follow.