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Press Release

'Off the shelf' defence equipment from overseas will cost £1 billion in lost tax revenues

20 January 2012

Unite, the UK's biggest union, has welcomed a report - "Destinations of the Defence Pound" - which demonstrates that purchasing defence equipment from overseas suppliers will cost the UK £1 billion in lost tax revenues.

The union says the report vindicates its position that UK taxpayers' money should be spent on UK produced defence equipment for our armed forces.

The report, written by Dr John Louth and Professor Trevor Taylor, shows that when a contract for defence equipment is placed with a UK supplier, 35 per cent of the cost is recovered through personal and corporate taxes as those employees building the equipment live and work in the UK and pay taxes here. When a contract is placed overseas all that tax revenue is lost. The report argues that if the government's aim of sourcing up to a third of defence equipment 'off the shelf' is achieved, £1 billion will be lost to the Treasury.

Ian Waddell, Unite national officer for aerospace and shipbuilding, said:
“This report clearly shows the idiocy of a defence procurement strategy which favours buying equipment 'off the shelf', which effectively means buying abroad.

“We have a versatile and vibrant world-class defence industry in the UK and it makes absolute economic sense for the government to spend UK taxpayers' money buying equipment made here for our armed forces. The union pointed out that procuring abroad can also lead directly to job losses, as well as lost tax revenues.

“In August last year, the government announced a decision to spend £1 billion on 14 Chinook helicopters, manufactured by Boeing in the USA. A few months later Agusta Westland, our UK helicopter manufacturer, announced 375 redundancies - this is madness.

“When the government is examining every pound it spends, surely it makes more sense to spend money on essential kit here and support British jobs with the added advantage that taxes offset the cost.”



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