§ Lord Hylton
asked Her Majesty's Government:
Further to the Written Answer by Lord Bach on 7 February (WA 109), whether they agree with the conclusion of a study by two academic economists and two Ministry of Defence economists into the economic costs and benefits of a 50 per cent reduction in defence exports (published on 11 December 2001), that such a reduction "would result in the loss of nearly 49,000 jobs in the defence sector…offset by the creation over a five-year period of around 67,000 new jobs in non-defence employment".[HL2914]
The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Bach): As set out in my reply to the noble Lord on 7 February, the Government 14WA broadly agree with the overall findings of this independent study. One of its individual conclusions, that some 49,000 jobs would be lost as a result of a 50 per cent reduction in defence exports, represents the best estimate presently available but, as the report notes, the method of estimating the number of jobs supported by defence exports is under review. The figure of 67,000 for the number of offsetting jobs that might be created is heavily dependent on the assumptions adopted by the authors in this study. It should be noted that the authors estimate that it would take five years for these jobs to be created and these would be less skilled, paying on average only about 70 per cent of the pay of the defence jobs lost. There is a substantial cost associated with this transition. The losses to defence workers were estimated at between £735 million and £1,260 million, compared with gains to other workers from the offsetting jobs created of only between £445 million and £695 million.