BAE boss anti-indy letter at odds with company’s earlier statements


  By Martin Kelly
The Chief Executive of BAE Systems has sent out letters warning of the potential risks to pensions and jobs if Scotland becomes independent.
In his letter, Ian King claimed a No vote would put at risk the “certainty and stability” for those elements of BAE systems’ business that operate in Scotland, “especially in Glasgow”.

King, whose company employs 3500 people in Scotland, said that a Yes vote would lead to uncertainty over jobs and pensions and that the company could not “be specific about the implications” for employees and the business. 

The Chief Executive said that recent investment in the Scotstoun Yard was based on the expectation of an announcement by the UK Government for Type 26 Frigates later this year.  Work on the vessels is due to commence in 2016.

He wrote: “If Scotland became independent, we would no longer have that certainty and stability.  We would then have to talk to our major UK customer, the MoD, and jointly work out a plan for the future.”

The BAE boss added: “In addition, the issue of pension schemes has been raised and is especially complex.  If Scotland became independent and then subsequently joined the European Union, our pension schemes, along with many other UK company schemes, may be caught up in EU regulations relating to cross border pensions.”

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However the letter (click image to enlarge), which was sent out on Wednesday, appears to contradict statements issued by the company in November last year when it denied a decision to invest in its Clyde workforce had anything to do with politics. 

On November 6th, on the day it was confirmed that 835 jobs were to go at the Govan and Scotstoun yards, BAE confirmed that a decision to keep building ships in Glasgow was based on industry needs and not political pressure.

BAE’s Busines and Transformation Director Charlie Blakemore told the BBC that the decision to keep shipbuilding on the Clyde was “absolutely not” political and that the decision was a commercial one.

He said: “The Clyde has been chosen purely based on industrial grounds, all to do with capacity, capability and skill-mix.”

In November BAE also confirmed that its shipbuilding capacity would be confined to the Clyde with Portsmouth losing out.  With no shipbuilding capacity in England it meant all future orders will now go to Glasgow, something which caused anger at BAE’s facility in Portsmouth.

Three new offshore patrol vessels are already confirmed to be built at BAE’s Govan and Scotstoun yards in Glasgow.  The order had been strategically announced in order to fill the gap when aircraft carrier work finishes in 2015.

The No campaign has claimed shipbuilding would be at risk if Scotland became independent and that EU regulations that allow contracts to be awarded would mean Scottish Yards being forced to tender for future contracts.

Last year Lib Dem MP, and Secretary of State for Scotland, Alistair Carmichael claimed that the EU regulation 346 would not apply to an independent Scotland.

“Where work is not conducted under the Article 346 exemption it must go out to tender.  In an international market many countries are able to produce at a lower cost.” he said.

However the claim was undermined when a UK Minister confirmed that EU procurement regulations would not prevent naval orders from the rest of the UK being undertaken by yards on the Clyde without tender.
Appearing in front of the Scottish Affairs Committee at Westminster, Andrew Murrison said EU competition law – known as Article 346 – would allow for orders to be completed in Scotland provided the Westminster Government said it was for national security reasons.

Asked about EU Article 346 and whether the rest of the UK could place orders with a yard outwith its borders without a need to go through a tendering process, Dr Murrison said: “I think the answer is technically yes, if it was in our national interests to do so”.

Pressed if this meant that the Clydeside yards could indeed be awarded rUK naval contracts, the minister replied: “Yes … You’d have to make a case that the residual UK’s defence is best secured by placing that contract with that particular yard.”

Asked if a case could be made that the Clyde was best placed compared to other foreign yards, Dr Murrison said: “Well I suppose you could make a case around transferrable skills, you could possibly make a case around a notion that SMEs and other consequential businesses in the supply chain might be within Great Britain for example,”

Andrew Murrison later confirmed the situation with regards to article 346.