1 Introduction
1. In October 2011, we launched two lines of inquiry
into the Referendum on Separation for Scotland. We have published
several Reports so far related to the first area of the inquiry:
the mechanics and process of the referendum itself.[1]
The second area is a series of inquiries examining key substantive
issues. This Report is the third looking at the implications of
separation upon defence in Scotland,[2]
and is focussed on how separation would affect the current defence
industry in Scotland.
Economy and jobs
2. The defence industry is very important to the
Scottish economy. Ian Godden, Chairman of Farnborough International,
told the Committee that although the UK is the sixth biggest economy
in the world, its defence industry is the second biggest, above
France and Germany, and that "Defence as such is a very significant
part of our heritage and industrial base, of which Scotland plays
a key part."[3]
3. Estimated annual sales for the defence industry
in Scotland are between £1.8 billion and £2 billion,
with Scotland benefitting from growth in both the UK and international
markets. The defence industry supports "probably north of
15,000 jobs" throughout Scotland,[4]
with wages around a third higher than the Scottish national average.[5]
The Ministry of Defence (MoD) itself employs around 18,000 Service
personnel and civilians in Scotland, in sites covering 30 out
of 32 local authorities throughout Scotland, and has over 700
direct contracts in Scotland.[6]
The MoD, as a buyer of equipment and services, is very important
to the Scottish defence industry. Between 50% and 80% of defence
work in Scotland is directly dependent upon the MoD contracts,
and in the opinion of Professor Taylor, Royal United Services
Institute (RUSI), the figure would, "certainly be nearer
the 80% than the 50%".[7]
In addition, there are a percentage of export sales made on the
strength of the product being sold to the MoD or to allies, particularly
the US.[8]
4. Those jobs and contracts are in a range of businesses,
including a high proportion of manufacturing and traditional engineering
such as shipbuilding,[9]
but "the guts of the most of the defence industry is very
high technology", including research, design and manufacturing
in airborne radar, optronics, and electronics design and manufacture.[10]
The supply chain is important as contracts will have sub-contracts
for components or maintenance services that benefit smaller businesses.
We were told that there are more Small and Medium sized Enterprises
(SMEs) in the UK defence industry than in the industries of France,
Germany, Italy, Spain and Sweden combined.[11]
During the course of this inquiry we visited several of the major
firms, including Selex Galileo in Edinburgh, Raytheon in Glenrothes,
Vector Aerospace in Perth, Chemring in Ardeer, DM Beith in Ayrshire,
the Aircraft Carrier Alliance in Rosyth, BAE Systems and Thales
in Glasgow. We would like to thank all those who made our visits
possible and welcomed the Committee.
5. We have used the term UK to describe the current
UK (including England, Wales, Northern Ireland and Scotland).
In February 2013, the UK Government published a paper, Scotland
analysis: Devolution and the implications of Scottish independence,[12]
in which it said that, in the event of Scotland leaving the Union,
the remainder of the UK would be the continuing state and still
be called the UK. In the hypothetical situation where the people
of Scotland voted to leave the Union, we describe the two resulting
states as 'the UK' (consisting of England, Wales and Northern
Ireland) and 'a separate Scotland'. Where it is necessary to make
the position clear, we sometimes use the term 'a future UK'.
1 Eighth Report of Session 2010-12, The Referendum
on Separation for Scotland: Do you agree this is a biased question?,
HC 1492; Second Report of Session 2012-13, The Referendum on
Separation for Scotland: making the process legal, HC 542;
Third Report of Session 2012-13, The Referendum on Separation
for Scotland: a multi-option question, HC 543, Sixth Report
of Session 2012-13, The Referendum on Separation for Scotland:
The proposed section 30-Order Can a player also be the referee?
HC 863 Back
2
Fourth Report of Session 2012-13, The Referendum on Separation
for Scotland: Terminating Trident-Days or Decades?, HC 676;
Seventh Report of Session 2012-13, The Referendum on Separation
for Scotland: Separation shuts shipyards, HC 892 Back
3
Q 225, Q 1879. See also, A Question of Independence, Defending
an independent Scotland, Scotsman Conference, 15 May 2012 Back
4
Q 1879 Back
5
Sixth Report of Session 2007-08, Employment and Skills for
the Defence Industry in Scotland, HC 305 Back
6
Scotland Office, Defence in Scotland, March 2010 Back
7
Qq 1897-1898 Back
8
Q 1899 Back
9
HC (2012-13) 892 Back
10
Q 1880 Back
11
Q 1919 Back
12
Scotland Analysis: Devolution and the implications of Scottish
Independence, Cm 8554, February 2013; Qq 2542-2547 Back
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