斯德哥尔摩国际和平研究所-Special-treatment_-UK-Government-support-for-the-arms-industry-and-trade_36页_3mb

Summary of UK Government Support for the Arms Industry and Trade

Core Content

This document examines the extent of UK government support for the arms industry and trade, highlighting the unique status of the industry and the various forms of financial and political assistance it receives. It also analyzes the implications of such support, particularly in relation to arms exports.

Main Points

1. Unique Status of the UK Arms Industry

• The UK arms industry is a protected and influential sector, with the Ministry of Defence (MOD) as its primary customer.
• Unlike other industries, it is subject to active government industrial policy and is exempt from many international trade treaties.
• The industry is partially exempt from EU trade and procurement rules, allowing governments to favor national suppliers.
• The MOD frequently engages in single-sourced procurement, with non-competitive spending averaging 48% of total MOD contracts from 2010/11 to 2014/15.
• BAE Systems, the largest UK arms company, has an even higher proportion of non-competitive spending, at 89%.

2. Economic and Political Support

• The UK arms industry is supported by a combination of direct and indirect subsidies.
• The government provides significant financial support through mechanisms such as:
  • Export Credit Guarantees (ECGs): These reduce the financial risk for arms exporters.
  • Defence Assistance Fund (DAF): Supports export-related activities.
  • Defence Attachés: Help promote arms exports abroad.
  • Official Visits and Government Efforts: Facilitate international arms sales.
  • Commercial Exploitation Levy: A tax on arms exports that is not fully applied.
• The industry also benefits from political influence, including the "revolving door" between the MOD and arms companies, and high-level advisory bodies like the Defence Suppliers' Forum and the Defence Growth Partnership.

3. Arms Exports and the Economy

• The UK arms industry contributes around £16.8 billion to the economy annually, with an estimated total turnover of £19.2 billion when including military services.
• This represents about 1% of GDP and 0.6% of total UK employment.
• Arms exports account for approximately 45% of the industry's total turnover, yet they represent less than 0.5% of overall UK employment.
• Despite the emphasis on the "jobs argument" by politicians and industry, arms exports are not a major economic driver.

4. Previous Estimates of Arms Export Subsidies

• Various studies have estimated the level of subsidies provided to UK arms exports, but results vary widely due to differing methodologies.
• Key estimates include:
  • £1 billion annually (Paul Dunne, 1996)
  • £228 million (Stephen Martin, 1999)
  • £40–£100 million net annual cost (The York study, 2002)
  • £420 million direct subsidy and £570 million indirect subsidy (Ian Davis and Paul Ingram, 2001)
  • £453 million direct subsidies and £483 million through R&D (Paul Ingram and Roy Isbister, 2004)
  • £130.5 million direct subsidies and £576 million through R&D (Susan Jackson, 2011)

5. Identifiable Subsidies to Arms Exports

• UK Trade & Investment Defence & Security Organization (DSO): Established in 2008 to support arms exports through marketing and diplomatic efforts.
• Export Credit Guarantees (ECGs): The ECGD (Export Credits Guarantee Department) provides guarantees that reduce financial risk for exporters, with a risk premium that is a key factor in subsidy calculations.
• Defence Assistance Fund (DAF): Directly supports export activities.
• Defence Attachés: Act as government representatives to facilitate arms sales abroad.
• Official Visits: Help establish and maintain international arms trade relationships.
• Commercial Exploitation Levy: A tax that is not fully applied to arms exports, effectively subsidizing them.

6. Broader Costs and Benefits

• Government support for the arms industry includes not only direct subsidies but also indirect support such as funding for military R&D.
• This support allows companies to spread fixed costs over a larger production volume, potentially reducing unit costs for the MOD.
• However, it also distorts procurement decisions, leading to inefficiencies and increased costs.
• The MOD's procurement decisions are influenced by the desire to promote exports, which can lead to longer timelines and cost overruns.

7. Conclusions

• The UK arms industry receives extensive government support, both directly and indirectly, far beyond its economic significance.
• This support includes significant subsidies to arms exports, which are difficult to quantify and often underestimated.
• The industry's influence over policy and the lack of transparency in arms export data raise concerns about the fairness and efficiency of the arms trade.

Key Information

• Total UK arms industry turnover: £16.8 billion (excluding services) or £19.2 billion (including services).
• Estimated employment: Around 87,500 direct jobs, with a rough estimate of 175,000 total jobs (including supply chain).
• MOD equipment spending: Increased from 33–35% of total MOD spending in 2005/06 to 47% in 2014/15.
• 10-year equipment plan: The MOD plans to spend £166 billion on equipment from 2015/16 to 2024/25.
• Major projects: Includes the Typhoon fighter aircraft, Voyager strategic tanker, Astute submarines, and Queen Elizabeth-class aircraft carriers.
• Top MOD suppliers: BAE Systems is the largest, followed by Babcock International, Airbus, Finmeccanica, Rolls-Royce, and others.
• Subsidy estimates: Ranging from £130.5 million to £1 billion annually, depending on the methodology and assumptions.
• Transparency issues: The UK lacks comprehensive data on arms exports, making it difficult to assess the true cost and benefit of the industry.

Appendices

• Appendix A: Overview of UK military spending, including reporting and measurement methods.
• Appendix B: Details on estimating subsidies through Export Credit Guarantees.