CAAT Issues - Jobs & Subsidies

Jobs & Subsidies

One of the few ways the Government and the arms companies can rally public support for the arms trade is to claim that it keeps people in work and helps the UK economy. However, the Government's own figures show that the number of people employed in producing military equipment for export is far fewer than popularly supposed and many such jobs are located in areas with very low unemployment where there is competition for skilled workers.

Arms trade employment

The arms industry has changed markedly since the 1980's. There are no longer national industries primarily supplying national armed forces. Instead, there is a global military-industrial network, dominated by US-based companies, and weaponry is produced incorporating components made in many countries. Only a handful of local economies, including Preston, Barrow-in-Furness, Yeovil and Brough, are dependent on arms production, and even here the jobs are vulnerable to rationalisation.

Military exports account for abut 1.5% of the UK's total visible exports. Ministry of Defence estimates show that 55,000 jobs are directly and indirectly sustained by them, just 0.2% of the national labour force. Between 1995 and 2002, jobs dependent on military exports fell from 145,000 to the present level of around 55,000 with no major impact on the economy.

The MoD-York report, which was co-written by MoD economists, concluded in 2001 that halving military exports over a two-year period would lead to the loss of almost 49,000 jobs, but that 67,400 jobs would be created in non-military sectors over the following five years. The report concluded that “the economic costs of reducing defence exports are relatively small and largely one-off.”

Central government could play a role in moving away from support for military industry to an emphasis on meeting environmental challenges - a change likely to generate more jobs than those lost in the arms industry.

Government subsidies

The UK government support for the arms trade includes providing subsidies to the tune of hundreds of millions of pounds, which means that far from benefiting financially from the arms trade, the UK taxpayer is shelling out to finance it.

The exact amount of the subsidy is difficult to gauge, due in large part to the lack of official information and secrecy, but CAAT's 2004 estimate was that the government subsidy to arms exports was around £900 million. This support includes taxpayer support for research and development, export promotion assistance through UK Trade & Investment and export credits.

Even the Government accepted, in the MoD’s Defence Industrial Strategy published in December 2005, that the balance of argument about military exports should depend mainly on non-economic considerations.