BAE Systems, the massive defence contractor, says it wants to merge with the Franco-German giant EADS, to form a super defence conglomerate. Should we approve of the deal?
For years, I've listened to defence lobbyists argue in favour of "defence sovereignty" to ensure we award contracts to UK firms. Now it seems they're out to sell the UK defence industry to a conglomerate controlled by the French and German governments.
Big contractors have spent years telling us needed a Defence Industrial Strategy to help UK plc. They never seemed to mention anything about selling it off to the French.
Look on the bright side though. If this deal goes through, at least we won't keep having to pretend there's anything patriotic about defence contracts that give poor value for money and leave our armed forces ill equipped.
No doubt those behind the BAE / EADS deal will tell us that it is going to mean greater economies of scale. It will, they will say, mean we get better value from the defence budget.
We should take such claims with a large pinch of salt. For years, the UK supply base has been consolidated. Rival firms have been rolled into one in order to ensure supposed economies of scale. Far from giving us more bang for our buck, the lack of competition as a consequence of the consolidation meant we got even less value for money.
So what should politicians do about the deal?
We should allow the deal to go through – but in return for doing so, treat the new EADS/BAE entity as just another firm bidding for business.
No more favourable terms for favoured contractors. No more fatuous arguments about "defence sovereignty" to justify spending money in the interests of the contractors. No more pretence that the defence budget is some kind of giant job creation scheme.
If this deal means the beginning of the end of the Defence Industrial Scam, we should let in go ahead.blog comments powered by Disqus
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