Defence Industry and Shipbuilding

Debate between Chris Stephens and Nia Griffith

Wednesday 11th July 2018 Commons Chamber

[Nia Griffith]

My hon. Friend makes a very good point about the need for certainty and long-term planning, so we can give business the confidence to invest here.

As well as ensuring that our armed forces have the very best equipment, a core objective of our defence industrial strategy should be to promote our national prosperity. We can only do that properly if we factor in the true value of defence contracts to the UK economy. Buying British is not just about the basic fact that a UK-based company will pay UK tax; it is also about the broader economic and social benefits, and the value of the skills and apprenticeships that the industry creates.

[Chris Stephens (Glasgow South West) (SNP)]

Is it not the case that if the fleet solid support ships were built in the UK, 20% of that cost could be recovered by the workers working on those ships paying tax and national insurance?

[Nia Griffith]

Indeed—at least that amount.

Reports by Oxford Economics highlight that the UK defence industry has an output multiplier of 2.3, meaning that £100 million in UK industry generates some £230 million to the UK economy. Its reports also highlight that each additional job created in the manufacturing element of the defence industry results in a further 1.8 jobs being created in the wider economy.

At present, the Government do not routinely factor in these wider socioeconomic values when making a procurement decision. We on the Labour Benches believe that to be a serious mistake. It is particularly anomalous when companies that bid with the Ministry of Defence are quite used to having to set out the socioeconomic value of contracts when bidding with Governments of other countries. Labour is committed to expanding the definition of good value to include wider employment, industrial or economic factors when making procurement decisions.