trailfinder
5th Jul 2001, 15:14
New Report Unveils £420million Government Subsidy To Arms Exports
(Source : Oxford Research Group; issued July 3, 2001)
The arms trade debate has often hinged on a trade-off between economic and employment benefits on the one hand, and moral and foreign policy costs on the other. As with many policy debates, the reality is a great deal more complex. Some military exports may be seen to have foreign policy and even moral benefits if, for example, they redress an imbalance or prevent aggression. On the other hand, the perceived economic and employment benefits have little evidence in proven fact, the debate resting on unchallenged assumptions.
A report published by Saferworld and the Oxford Research Group on July 3rd 2001 estimates that the British Government subsidises the defence industry and arms exports with an estimated £420 million of tax payers’ money each year, a net £4,600 subsidy for each person employed.
The report questions the economic, military and industrial rationale for this subsidy and calls on a comprehensive government review of its impact and effectiveness.
Direct subsidy:
The report outlines four main types of government subsidy and estimates the cost in each area:
* Export credit guarantees (£227m)
*Marketing and other support through government agencies (£68m)
* Tax breaks on bribes and other corrupt practices (£64m)
* Distortion of Ministry of Defence (MoD) purchasing and other priorities (£60m)
* Total direct subsidy: £420m
Wider export subsidy
The report also highlights a number of other significant indirect costs including the estimated subsidy of £570 million to arms exports spent each year by the Government on researching and developing (R&D) new weapons. Despite the fact that these weapons are for export, the taxpayer foots the bill.
Subsidy to support a UK defence industrial base
Developing the argument further, the report identifies potential savings of up to £4 billion if the UK Government were to rethink its whole procurement strategy.
The employment myth
The report disputes the claim that arms exports and supporting a UK defence industry are vital for jobs and calls for a new government initiative on defence diversification. The report estimates that the government spends £4,600 for each of the 90,000 jobs that are dependent on arms exports (0.3% of UK employment). In addition, the Government spends £12,300 per year subsidising each job in the wider UK defence industry.
The report argues that it would be in the long-term benefit of the British economy and employment for the Government to invest the money currently spent supporting the ailing arms industry on stimulating new jobs in other sectors of the economy.
Faulty equipment for British troops
The report argues that the government subsidy of the UK arms industry leads the MoD to pursue a "buy British" policy that has distorted procurement decisions. Furthermore, despite this support to the UK defence industrial base, British armed forces have found themselves with inferior and often faulty equipment. Examples include:
* Tornado - In the late 1980s Tornado aircraft were being brought into service without effective radar. The modification of the radar by a UK firm with inadequate experience of manufacturing radar equipment, led to a six-year delay and a 60% increase in costs.
* SA80 rifle - The army’s SA80 rifle has had serious problems since its introduction in 1986. It is known to have jammed during active service in the 1991 Gulf War and more recently in Kosovo. In May 2000, because their SA80 rifles failed, British troops in Sierra Leone were left defenceless when they came under attack.
Recommendations
Saferworld and the Oxford Research Group call on the UK Government to:
--Undertake a comprehensive review of arms subsidy policies.
--End Export Credit Guarantee Department (ECGD) support for arms exports.
--Close down the section in the MOD that promotes UK arms exports, the Defence Export Services Organisation (DESO).
--Levy charges on government services to defence exporters so that government costs are fully recovered.
--Institute full parliamentary and public transparency of government support to the defence industry.
--End MoD payment for military research and development (R&D) costs.
--Move the Defence Diversification Agency (DDA) from the MoD to the DTI and mandate a review of economic and industrial policy.
--Commission an independent study of UK defence procurement options.
Report joint-author Dr Ian Davis, Arms and Security Programme Manager at Saferworld said:
"At least £420 million of taxpayers' money goes directly into enabling foreign governments to purchase British arms. Ending the subsidy to the UK defence industry as a whole, which has no clear benefit to our armed services or national security, could save a further £4billion. We question whether this is an effective and justified use of public resources."
Report joint-author Paul Ingram said:
"UK Government support for arms exports and the defence industry has been based for too long on an unchallenged belief that it is good for jobs, the economy and our military. Defence export jobs alone are each subsidised by £4,600. It is time for an open and public debate on the arms subsidy trap in which the Government finds itself." (ends)
-ends-
Good to see someone else recognises it publicly.
(Source : Oxford Research Group; issued July 3, 2001)
The arms trade debate has often hinged on a trade-off between economic and employment benefits on the one hand, and moral and foreign policy costs on the other. As with many policy debates, the reality is a great deal more complex. Some military exports may be seen to have foreign policy and even moral benefits if, for example, they redress an imbalance or prevent aggression. On the other hand, the perceived economic and employment benefits have little evidence in proven fact, the debate resting on unchallenged assumptions.
A report published by Saferworld and the Oxford Research Group on July 3rd 2001 estimates that the British Government subsidises the defence industry and arms exports with an estimated £420 million of tax payers’ money each year, a net £4,600 subsidy for each person employed.
The report questions the economic, military and industrial rationale for this subsidy and calls on a comprehensive government review of its impact and effectiveness.
Direct subsidy:
The report outlines four main types of government subsidy and estimates the cost in each area:
* Export credit guarantees (£227m)
*Marketing and other support through government agencies (£68m)
* Tax breaks on bribes and other corrupt practices (£64m)
* Distortion of Ministry of Defence (MoD) purchasing and other priorities (£60m)
* Total direct subsidy: £420m
Wider export subsidy
The report also highlights a number of other significant indirect costs including the estimated subsidy of £570 million to arms exports spent each year by the Government on researching and developing (R&D) new weapons. Despite the fact that these weapons are for export, the taxpayer foots the bill.
Subsidy to support a UK defence industrial base
Developing the argument further, the report identifies potential savings of up to £4 billion if the UK Government were to rethink its whole procurement strategy.
The employment myth
The report disputes the claim that arms exports and supporting a UK defence industry are vital for jobs and calls for a new government initiative on defence diversification. The report estimates that the government spends £4,600 for each of the 90,000 jobs that are dependent on arms exports (0.3% of UK employment). In addition, the Government spends £12,300 per year subsidising each job in the wider UK defence industry.
The report argues that it would be in the long-term benefit of the British economy and employment for the Government to invest the money currently spent supporting the ailing arms industry on stimulating new jobs in other sectors of the economy.
Faulty equipment for British troops
The report argues that the government subsidy of the UK arms industry leads the MoD to pursue a "buy British" policy that has distorted procurement decisions. Furthermore, despite this support to the UK defence industrial base, British armed forces have found themselves with inferior and often faulty equipment. Examples include:
* Tornado - In the late 1980s Tornado aircraft were being brought into service without effective radar. The modification of the radar by a UK firm with inadequate experience of manufacturing radar equipment, led to a six-year delay and a 60% increase in costs.
* SA80 rifle - The army’s SA80 rifle has had serious problems since its introduction in 1986. It is known to have jammed during active service in the 1991 Gulf War and more recently in Kosovo. In May 2000, because their SA80 rifles failed, British troops in Sierra Leone were left defenceless when they came under attack.
Recommendations
Saferworld and the Oxford Research Group call on the UK Government to:
--Undertake a comprehensive review of arms subsidy policies.
--End Export Credit Guarantee Department (ECGD) support for arms exports.
--Close down the section in the MOD that promotes UK arms exports, the Defence Export Services Organisation (DESO).
--Levy charges on government services to defence exporters so that government costs are fully recovered.
--Institute full parliamentary and public transparency of government support to the defence industry.
--End MoD payment for military research and development (R&D) costs.
--Move the Defence Diversification Agency (DDA) from the MoD to the DTI and mandate a review of economic and industrial policy.
--Commission an independent study of UK defence procurement options.
Report joint-author Dr Ian Davis, Arms and Security Programme Manager at Saferworld said:
"At least £420 million of taxpayers' money goes directly into enabling foreign governments to purchase British arms. Ending the subsidy to the UK defence industry as a whole, which has no clear benefit to our armed services or national security, could save a further £4billion. We question whether this is an effective and justified use of public resources."
Report joint-author Paul Ingram said:
"UK Government support for arms exports and the defence industry has been based for too long on an unchallenged belief that it is good for jobs, the economy and our military. Defence export jobs alone are each subsidised by £4,600. It is time for an open and public debate on the arms subsidy trap in which the Government finds itself." (ends)
-ends-
Good to see someone else recognises it publicly.