The UK is the world's fifth largest military spender. Since 1945 the Labour Movement has been calling for the defence budget to be cut and the resulting savings invested in the UK civil manufacturing sector and social services. or and social services. The end of the Cold War afforded Governments with a real opportunity to concede to calls for arms conversion and defence diversification. The Thatcher and Major governments, in line with Governments across the Globe, introduced significant cuts to defence spending during the 1990s. Total world military expenditure declined by 29% during that decade. In the UK expenditure fell both in real terms from £28.3 billion in 1988 to £22.3 billion in 1999 and also as a proportion of total Government spending from 4.1% of GDP to 2.7% of GDP.
However rather than benefiting from the 'Peace Dividend', the UK found its manufacturing base experiencing a 'Peace Penalty' as hundreds of thousands of defence workers lost their jobs, devastating their communities. UK industrial employment dependent on defence expenditure decreased from 740,000 in 1980 to 345,000 in 1999. Scotland, the North and the South East were particularly hard hit with the loss of thousands of jobs and hundreds of millions of pounds of MoD income to local economies. Well over 10,000 defence jobs have been lost in Fife since 1990. Strathclyde has seen a reduction of 25% in defence related employment since 1990, and Lothian has lost more than 40% of its defence related workforce in the same period. A report published by the Arms Conversion Project in 1996 revealed that since the end of the Cold War, the total number of defence and defence related jobs lost in the Strathclyde region amounted to 28,910. The job losses were estimated to have cost the Strathclyde economy in excess of £65 million per year in terms of lost income.
It was therefore not surprising that the 1990s was a period when trade unions and local authorities were to step up their calls for Government support for defence diversification. However the Conservative Government was blinded by political dogma and refused to interfere in the 'free market' despite recognising that "in defence Government is the Market".
The Labour Party, which had been the focus for much of the political pressure, finally conceded to demands from local communities and trade unions and in its Manifesto of 1997 committed itself to establishing an Agency to assist the process.
"We support a strong UK defence industry which is a strategic part of our industrial bbase as well as our defence effort. We believe that part of its expertise can be extended to the civilian use through a Defence Diversification Agency" - Labour Party Manifesto 1997
If truth were known the Labour Party policy on defence diversification was a blank sheet of paper. The Arms Conversion Project (ACP) and the Scottish Trade Union Congress had however been working on the issue for some time and had presented a draft Working Paper on such an Agency to the Labour Party's Shadow Secretary of State for Defence, Dr David Clarke in December 1997. Dr Clarke welcomed the paper as containing "the most comprehensive proposals on defence diversification".
The Secretary of State for Defence, the Rt. Hon. George Robertson MP, speaking at an Arms Conversion Project (ACP) Seminar held in Glasgow in early March 1998 agreed, stating:
"I know that Ian Goudie's Arms Conversion Project already has a draft Working Paper on a Defence Diversification Agency. This paper, which I have personally studied, will have a powerful input into the debate on our future plans for a Defence Diversification Agency, which we hope to have in place by the year 2000".
The ACP's Paper considered the various aspects of defence spending including the Defence Estate, Defence Procurement and Defence Research. A few days after George Robertson's speech the Government published its Green Paper entitled Defence Diversification: Getting the most out of defence technology. Proposals for a Defence Diversification Agency. Following consultation a White Paper was published on 5 November 1998 setting up the Agency.
The Defence Diversification Agency (DDA), was heralded as a 'key UK Government initiative aimed at creating greater benefit for small to medium sized businesses from the nation's investment in research and development within DERA - the MOD's Defence Evaluation and Research Agency. It encompasses a range of developments already under way at DERA sites including dual-use technology centres, science parks and innovation centres.' DERA is the largest science and technology organisation in Western Europe, with a turnover of £1,041 million and 13,000 staff, including more than 1000 PhDs.
Few could argue with George Robertson's statement that he was "determined to derive maximum benefit from our substantial investment in advanced technology for defence use by getting that technology working for the wider economy. We want to use our world-beating defence skills to strengthen the UK's industrial base and help improve our economic performance".
However the DDA will only deal directly with diversification as a means of technology transfer from DERA, rather than the diversification of companies and communities. These wider defence diversification issues were partly recognised by the planned creation of a Defence Diversification Council (DDC) which would include representatives of industry, local authorities, trade unions, the Department of Trade and Industry and devolved government. No serious effort has been made to establish a DDC.
Whilst the Thatcher Government had flirted with the idea of privatising DERA, it was the 'New Labour' Government which, in the face of stern opposition, introduced a Public Private Partnership (PPA) to the Agency. On April 17, 2000 the Ministry of Defence published a consultation document on a proposal for a PPP of DERA. Under this proposal around three-quarters of the DERA organisation would be turned into a company. This company (known as NewDERA in the consultation document) would be floated on the Stock Market as soon as its 'potential is judged to be suitably developed, which could be during 2001'. NewDERA would continue to be a major supplier of science and technology advice and research to the UK Ministry of Defence and, increasingly, other customers.
Such a PPP of DERA was bound to open up a debate on the future of the DDA. On 19 December 2000 an Early Day Motion (EDM 181), in the name of Diane Abbott MP, urged the Government to consider 'locating the DDA within the Department of Trade and Industry (DTI) where the Agency could best work co-operatively with the regional development agencies to promote defence conversion and technology transfer from laboratory to civil industry'.
Despite receiving some 70 signatures the EDM was ignored when, on 5th
February 2001, the MoD issued a consultative document providing only three options for the future of the DDA.
Option A - Placing the DDA in New DERA
Option B - Placing the DDA in DSTL, that part of the existing DERA being retained by MoD
Option C - Plcing the DDA within MoD Head Office
Whilst the MoD may be correct that Option C, represents 'by far the best solution', this is only out of a limited choice. It is true that the DDA would tie in the MoD to a commitment to defence diversification, however the DDA with a budget of £2 million would represent one thousandth of MoD spending and would be less than influential. The creation of the promised Defence Diversification Council would help to provide the 'joined-up Government' which Labour claims to have adopted. Whereas relocating DERA within the DTI would place it within a Department whose sole role is to promote UK industry. Furthermore DDA is a 'regional based' Agency, however the MoD has no 'regional' role whereas the DTI has extensive links to industry, Regional Government Offices and Devolved Government and would appear to be a more logical home for diversification initiatives.
A further EDM (421) was put down, this time in the name of Vincent Cable, which urged the Government to use this opportunity to relocate the DDA within the DTI and to set up a DDC without delay.' Despite sixty-one MPs signing this EDM there is no sign yet of the 'listening government' actually hearing what is being said.
In the meantime unions are warning that over 2,500 Scottish defence jobs are under threat. 1,000 jobs at Rosyth and 1,110 at Faslane are threatened by the government's attempts to offset overcapacity in the privatised dockyards by handing them lucrative contracts at our Naval Bases. 'Private good/public bad' is back on the agenda. With no proper Defence Diversification Agency established it looks as if Scottish defence workers and their communities will continue to receive a 'peace penalty' in the form of their P45s whilst private companies increase their profit margins and bask in their 'peace dividends'.
Ian Goudie is the UK Government appointed representative on the European Co-operation in the Field of Scientific and Technical Research (COST) Action 10 programme on Defence Restructuring and Conversion.