BAE Systems and EADS

Debate between Lord Lee of Trafford and Lord Marland

Wednesday 10th October 2012 Lords Chamber

[Lord Lee of Trafford]

To ask Her Majesty’s Government what is their policy on the proposed merger between BAE Systems and EADS.

[The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Lord Marland)]

My Lords, earlier today the Government were advised by BAE Systems and EADS that they have decided not to proceed with the proposed merger. The two companies will remain as independent companies, each with a significant presence in the UK. The Government were clear that the merger would only ever work if it met the interests of all the parties involved. Today the two companies decided that a merger cannot be concluded.

[Lord Lee of Trafford]

My Lords, many of us will be disappointed at today’s breakdown in merger talks and the lost opportunity to create a unique, major, pan-European group across the defence and civil aviation sectors. Given the pressures on defence spend on both sides of the Atlantic and the move to UAVs—drones—away from more labour-intensive fighter aircraft, has not BAE Systems serious problems to face over the medium to longer term as a stand-alone plc? Does my noble friend know whether BAE Systems has a plan B? Sadly, are not further job losses inevitable?

[Lord Marland]

It is important that BAE Systems, as an independent organisation, now delivers a strategy and business plan to satisfy its shareholders in terms of its future. As a Government, we will be looking very closely at that because we are obviously highly dependent on the company for our defence support. However, this is a terrific British business. It is not a business that we should question. It turns over £19 billion and is therefore of significant value to the economy. It makes £1.6 billion profit, which is of significant value to the taxpayers, and employs some 35,000 people. We look to hear from BAE on this matter, but I thank the noble Lord for this very topical Question at a very apposite time.