Original URL: http://www.theregister.co.uk/2009/02/27/arms_biz_dominates_defence_kit_debate/

Arms biz glovepuppets Parliamentary kit probe

Profiteers' voices the only ones heard

By Lewis Page

Posted in Government, 27th February 2009 08:02 GMT

Comment A long-awaited Parliamentary investigation into British defence equipment purchasing has just been published. Both the report itself and the media response to it reveal the astonishing degree to which the onshore UK arms industry has managed to dominate this area of debate.

The report, from the MPs of the parliamentary Defence committee, can be read in full here (pdf). It mainly consists of criticism for the Ministry of Defence (MoD), for failing to treat the British arms industry nicely enough. The UK media has followed this line more or less without thought, as this effort from the BBC indicates.

There's surely plenty to criticise the MoD about. Outdated military thinking and strife between the three armed services leads the MoD to order unnecessary equipment in huge amounts, intended to fight enemies which are simply no longer there or which could be better fought by other means.

So yes, the armed forces often seek to build or preserve their own empires at taxpayers' expense without any serious consideration of what the nation actually needs. Examples include the RAF's fascination with manned deep bombing raids against strong air defence networks; the navy's pigheaded insistence on trying to fight battles with surface warships no matter the cost; the army's increasingly ridiculous obsession with the tank/artillery tactics which became obsolete in the latter half of the last century.

But the armed forces - the MoD, corporately - have redeeming features. They want to acquire tools and abilities to do jobs on our behalf, even if the jobs are often unlikely or nonexistent. At some level, the people arguing for deep bombing and the rest of it genuinely believe in what they say. Their demands in terms of personal reward are modest. The uniformed among them - the majority - also stand ready to die for us if necessary. When they are given a task they make every effort to accomplish it, generally with very little regard for their own comfort and security.

Contrast this with the position of the British arms industry, whose voices totally dominate the argument over the Forces' equipment budget.

The armsmakers' position is clear: they should be allowed to have a total monopoly to supply everything that the UK forces want, regardless of price. If they can't produce any given thing yet, they must be given time and development money to learn how at the taxpayers' expense. If this is clearly absurd - if the UK plainly can't bear the development costs alone, as with a new fighter or large aircraft - they must be allowed to ally with overseas firms in the way which gives them the most workshare, not the way which would be cheapest for the taxpayers.

If someone abroad is already offering any given thing at a much lower price than British industry can, too bad: this must be ignored and Blighty must reinvent the wheel at vast expense. If this means lives lost among our troops, there may be some scope for small things to be imported in small numbers using supplementary funds - under the so-called Urgent Operational Requirement (UOR) system - but this is to remain a very small part of the budget and only allowed as a war-emergency measure.

Classic examples include the trend in UAVs. Owing to the embarrassing idiocy of the British-built "Phoenix" drone, the RAF managed to buy some effective Reaper roboplanes using UOR cash: the Army is likewise leasing smaller ones from Israel. But, as soon as it became clear that there was money to be had, British industry swooped in and scooped almost all the planned future cash. Despite the fact that Hermes and Reaper are already operating, we will spend hundreds of millions developing homegrown Mantis and Watchkeeper alternatives.

Again, rather than buying proven Hercules and C-17 airlift planes - even though we already have some - most of our airlift money is going on the A400M collaborative Euro plane, which costs hugely more for a given amount of lift and was always going to mean a long wait. Now it is delayed even further: so badly have the manufacturers defaulted on the deal that we actually have an opportunity to cancel and buy more C-17s, but it will be a miracle if we do.

The list goes on. And it isn't as if the arms industry people, whose jobs are established and preserved at the cost of our money and our soldiers' lives, make modest demands or big commitments. They don't risk their lives; they don't go on six-month overseas tours; they don't train hard in the freezing mud even when at home; they don't help out when there's a flood or a firemen's strike or a foot and mouth outbreak.

They have very comfortable lives here in the UK, and at every level - shop floor to boardroom - they are paid hugely more, from the same public purse, than the equivalent military personnel. Consider this discussion during the recent Parliamentary investigation, between James Arbuthnot MP and Mike Turner, lately CEO of BAE Systems and now chairman of the Defence Industries Council.

Arbuthnot [discussing equipment price inflation]: Is that because you pay yourselves more?

Turner: We do and rightly so.

So why on Earth would we do this? Pay these comfortable industry profiteers to leech off us, even as it cripples our armed forces?

Explain it again - the Eurofighter increases British sovereignty?

The same old bankrupt arguments get trotted out again and again, unchallenged. "Building our own" will give us "sovereignty" - parts and tech support for homebuilt gear will be free of foreign control, allowing us to disregard what other governments think when we want to go and fight somewhere.

It simply passes belief that people are able to say this about things like the Eurofighter and A400M with a straight face. Obviously the Euro-projects involve dependence on other countries. They don't even free us from dependence on America: both of those aircraft contain large amounts of technology from the US, covered by American ITAR rules.

We need US consent to keep them flying; we need US consent to export them. This is true of just about all modern Western-made military equipment, no matter where it supposedly comes from. Supposedly UK-only programmes like Nimrod, Type 45 etc are also riddled with ITAR kit.

"Sovereignty" is a joke - yet it is the main justification for the endless robbery of the UK defence budget by UK industry.

The only other argument is economic, and it is even feebler. Despite huge government support - the great bulk of the £15bn annual defence-materiel budget goes to UK industry, every deal is underwritten by government, even bribery is handled via MoD accounts controlled by nominal MoD employees - resulting manufacturing exports amount to a measly £1-2bn in a normal year. This is less than one per cent of our overseas business.

As for the idea that it's somehow worthwhile paying billions for overpriced and long-delayed kit because the money trickles down and stimulates the domestic economy, think again. The minister in charge of kit buying, Quentin Davies, being grilled by Mr Arbuthnot for the recent report, actually made some cogent points here.

Davies: Let me explain to you about that. If you want to go in for a fiscal stimulation package... First of all you need to have spending which feeds through very rapidly into consumption — in other words you cannot use Crossrail, for example, because by the time you have all the planning inquiries...

[Interruption and needling from Arbuthnot]

Davies: The lead times in defence are quite long between you signing a contract... and when the money actually flows through in the pay packets of the people who are being employed - by contrast to other sectors of economic activity. That is the first thing that really needs to be said.

[More irrelevance from Arbuthnot]

Davies: The second thing is that ideally to use your money for maximum impact you need to spend it on goods and services which are labour-intensive rather than capital-intensive in their manufacture so that the benefits flow through into pay packets rather than into rewards for providers of capital — banks and shareholders and so forth... you need those wages to flow through to people who are relatively low-paid. That is not the case with defence - defence is capital-intensive rather than labour-intensive.

And indeed, whenever you look at a UK weapons contract supposedly set up to preserve or create jobs, it always turns out that one could simply buy better kit from overseas, give every sacked or not-hired UK worker a huge sum of money - a million pounds is typical - and still save hundreds of millions for the Treasury.

As a means of creating jobs and economic wellbeing, the UK defence industry is an incredibly inefficient way to spend money. As a means of putting huge rewards at the disposal of cynical business interests, often foreign-based ones, it is excellent.

Anyone who doubts the latter should recall the history of BAE Systems plc, the only remaining UK-headquarted major arms company and owner of the vast bulk of the UK defence sector. The firm has not ploughed its decades of huge disposable incomes into Britain: instead it has let go the great majority of its former workforce here, closed factories up and down the land, and sunk the cash into other countries - particularly the USA.

Seventy per cent of BAE's employees are now foreigners, and the firm employs more Americans than it does Brits. Mr Turner's protestations of British patriotism, his desire to free us from Washington's domination, ring more than a little hollow - he having supervised much of this process. The idea that giving money to BAE builds the UK's industrial base in some way is quite simply unbelievable - but people keep on believing it.

How does this keep on happening? Why is it that the Parliamentary defence committee itself is controlled by James Arbuthnot, a tireless advocate for the weapons biz? Why is the committee formally advised (pdf) by paid arms industry lobbyists? Why does a fairly lefty media outfit like the BBC quote industry mouthpieces like Arbuthnot, Mike Turner and Ian Godden rubbishing the MoD - and we hear nothing about the other side of the argument?

Because the MoD operates in total silence, utterly failing to make its case against industry - and be assured, there are plenty in the MoD who know who their enemy is (though they spend much more time on internal battles). Because there isn't a politician in the land who dares to take responsibility for job losses. Because nobody cares a jot that we have the second biggest defence budget in the world, but only the sixth, seventh, maybe tenth most powerful armed forces.

It literally seems to be true that Brits don't really care about this stuff. The vast majority of people who do are employed in the field, and usually on the industry side - as the amount of general hatred I get for saying this sort of thing makes clear.

Maybe taxpayers who won't keep their eyes open deserve to get robbed. But it seems very unfair on the fighting men and women of the armed services, whose lives stand forfeit for ours, who actually do - at the lower levels, anyway - work hard for their rubbish pay. The money is there to buy them all that they need, to hire more of them in some categories so that they could actually achieve the tasks we set them, to give them a taste of that well-paid, comfortably-off skilled-professional life when they get some time at home.

The money's there, but it isn't doing any of those things - it's being used as a halfbaked, crooked industrial subsidy scheme which largely gets siphoned off overseas.

In the end that's our fault as citizens, because we simply can't be bothered to pay attention. ®