§ Lord Hyltonasked Her Majesty's Government:
Whether they agree with the Oxford Research Group and Saferworld that the annual cost of subsidising British arms exports is approximately £420 million (or £4,600 per person employed); whether The Subsicly Trap was discussed at an official seminar in December 2001; and, if so, what conclusions were reached. [HL2201]
§ The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Bach)As I reported to noble Lords during the Second Reading of the Export Control Bill on 8 January (Official Report, col. 515) a study involving two leading independent academic economists into the economic costs and benefits of defence exports was published on 11 December 2001. It found that the benefits to government (for example, in reducing our defence equipment costs) outweigh the costs by a significant margin. The Government broadly agree with its findings, which concluded that, rather than being subsidised, defence exports represented a significant net benefit to the UK economy.
It reported that defence export sales averaged about £6 billion in 1998 and 1999 and supported almost 100,000 jobs, many of them high quality jobs in cutting-edge industry. It estimated that the ending of defence exports from the UK would involve a one-off adjustment cost of between £4 billion and £5 billion, equivalent to about 0.5 per cent of one year's GDP. In addition there would be a continuous net cost to government of between £90 million and £200 million.
As I made clear on 8 January, the Government's policy of supporting the legitimate efforts made by UK industry to win export orders are primarily based on their contribution to our defence and international security interests. Defence exports help support a strong UK defence industry and contribute to the security of our friends and allies.
I am not aware of any recent official seminar that discussed the Oxford Research Group and Saferworld report The Subsidy Trap.