The economics of the Madhouse


July 31

In an effort to save money from the defence budget and to make UK shipbuilding more competitive, the government has decided to put a £1 billion order for three military support ships out to international tender.
It is almost certain that the successful bidder will be a highly subsidised foreign shipyard. Money saved from the defence budget will be dwarfed by the taxes to be received and unemployment pay that would not have to be paid if the ships are built at a UK shipyard. Over 1,800 jobs will be created or saved in UK shipyards plus another 4,700 jobs in the local community.
Essential ship design and engineering skills will be lost in the UK, leading to the possibility that a future similar order may not be able to be supplied from the UK.
Foreign competition may well have reduced, leaving a monopoly situation, which would undoubtedly be exploited, and the UK would have to pay a great deal over the odds for future ships.
It is obvious to any sane observer that subsidised international competition will not save the UK taxpayer money and will not make the UK ship building industry more competitive.
The ships will be required to carry ammunition via a sophisticated delivery system to be available for supply. They may even carry a gun. The government has had to work hard to have this order classified as non-military and therefore open to foreign competition.
In their ideological quest for a free market, they forget that they are wasting UK taxpayer’s money in the process.
Irony upon irony upon irony. It is possible that a Spanish, Italian or German shipyard could ‘win’ this tender.
It is inconceivable that any of these countries would put such an order out to international tender. In the incredibly unlikely event that they did, UK shipyards would be barred from tendering because they would be from a non-EU country.
The third irony is that all these countries dramatically fail to meet their NATO commitment to spend 2% of their GDP on defence, preferring to rely on US and UK defence spending.
Is the government trying to destroy our manufacturing base by subjecting tenders to subsidised foreign competition?
After the absurd award of printing passports to a highly subsidised foreign consortium, an award of this contract to a foreign shipyard will rightly cause a furore throughout the country.
The government still has the ability to ensure that these ships are built in the UK and may well regret not doing so.
If they go ahead with opting for international tenders, foreign governments and foreign shipyards will think we are mad. They will be right to do so.

Chris King

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