Scotland - Military Industry

The aerospace, defence, and security sectors are significant contributors to the Scottish and wider UK economies. Each year they contribute billions of pounds in sales, millions of investment in research and development, and many thousands of jobs. According to a Scottish Affairs Select Committee report, in 2008 the defence industry, along with the Ministry of Defence, supported almost 50,000 jobs in Scotland with wages around a third higher than the Scottish national average. A more recent report by that Committee suggests that the defense industry supports more than 15,000 jobs throughout Scotland.

In its report The Referendum on Separation for Scotland: Separation shuts shipyards, the Scottish Affairs Committee concluded that, if Scotland separated from the UK, shipyards on the Clyde were "doomed" as they would not be eligible for UK-restricted orders and would have little prospect of winning export work. A similar fate awaited Rosyth as there would be no Royal Navy refit work and a Scottish navy would be based at Faslane.

The Scottish Government regarded support for Scotland's shipbuilding industry as a priority given the focus on maritime defence capabilities. While keeping within EU procurement requirements, the Scottish Government will protect the future of Scotland’s shipyards and maintain capabilities important to Scotland's long-term interests.

This Scottish Government will take forward the procurement of four new frigates, to be built on the Clyde, preferably through joint procurement with the rest of the UK. Two of these will be ordered in the first parliamentary term of independence and, when built, will bring the number of frigates in the Scottish navy to four (the two new frigates as well as the inherited Type 23s). The Scottish Government believed that is the appropriate number of frigates in the longer term, and will order the further two frigates in time to replace the Type 23s when they are retired from service.

Westminster decisions had demonstrated the importance of Scotland’s shipbuilding industry to the Royal Navy. The Ministry of Defence has also shown that it is keen to develop opportunities for joint procurement and there are strong reasons why both the Scottish and Westminster Governments would want to explore the potential for joint procurement of future naval vessels.

This Scottish Government also planned to prioritise procurement within the first five years of maritime patrol aircraft, based on a detailed specification of need (the numbers maintained by comparable nations suggests a potential fleet of four). Depending on negotiation with the rest of the UK on division of assets, further procurement needs will have to be addressed, including for offshore patrol vessels.

An independent Scotland will where appropriate work with the Scottish defence industry to deliver identified Scottish defence capability requirements. Scotland would seek to work in partnership, build the necessary alliances and align our defence requirements with the collective needs and priorities of NATO allies, including the rest of the UK.

Joint procurement is in the interests of Scotland and the rest of the UK, preserving the strengths of defence industries around the whole of the UK. Joint orders would maintain the expected numbers of jobs in the defense industries sector, including shipbuilding, and support companies as they seek to expand their business internationally.

The EU Defence Procurement Directive aims to open up the defense equipment market to competition and to contribute towards the development of an efficient European market for defence equipment. While EU law allows an exemption from the requirement for open competition in certain, very limited, circumstances related to national security, it should be the exception not the norm.

Outwith Europe, Scotland will also build bilateral defence and security relationships with a range of key partners and on a range of security issues. These countries will also provide potential markets for Scotland’s defence industries.

The Scottish Government planned to explore the potential for Scotland’s defense industry capabilities to diversify into other activities. For example, in a report in 2007 the STUC and CND noted that “many of the skills currently used to maintain Trident would be directly relevant to renewables” and the report highlighted the advantages the Lower Clyde area offers such activity. The Scottish Government’s work will therefore focus on the potential offered by energy, particularly marine renewables, although it will also examine other aspects of defence diversification, for example those relevant to the shipbuilding industry.

The research and development capacity of Scotland’s defense industries offers the opportunity to boost Scotland’s business R&D. Other comparable countries have much higher levels of R&D activity (a key driver of economic growth). Finland, for example, uses an innovation agency as its primary tool for R&D activity. Defence diversification could play an important role in Scotland’s future industrial strategy.