‘Off the shelf’ defence equipment from overseas will cost £1
billion in lost tax revenues
20 January 2012
Unite, the UK's biggest union, has welcomed a report -
"Destinations of the Defence Pound" - which demonstrates that
purchasing defence equipment from overseas suppliers will cost the
UK £1 billion in lost tax revenues.
The union says the report vindicates its position that UK
taxpayers’ money should be spent on UK produced defence equipment
for our armed forces.
The report, written by Dr John Louth and Professor Trevor
Taylor, shows that when a contract for defence equipment is placed
with a UK supplier, 35 per cent of the cost is recovered through
personal and corporate taxes as those employees building the
equipment live and work in the UK and pay taxes here. When a
contract is placed overseas all that tax revenue is lost. The
report argues that if the government's aim of sourcing up to a
third of defence equipment ‘off the shelf’ is achieved, £1 billion
will be lost to the Treasury.
Ian Waddell, Unite national officer for aerospace and
shipbuilding, said: “This report clearly shows the idiocy of a
defence procurement strategy which favours buying equipment 'off
the shelf', which effectively means buying abroad.
“We have a versatile and vibrant world-class defence industry in
the UK and it makes absolute economic sense for the government to
spend UK taxpayers’ money buying equipment made here for our armed
forces. The union pointed out that procuring abroad can also lead
directly to job losses, as well as lost tax revenues.
“In August last year, the government announced a decision to
spend £1 billion on 14 Chinook helicopters, manufactured by Boeing
in the USA. A few months later Agusta Westland, our UK helicopter
manufacturer, announced 375 redundancies - this is madness.
“When the government is examining every pound it spends, surely
it makes more sense to spend money on essential kit here and
support British jobs with the added advantage that taxes offset the
cost.”
ENDS
For further information contact Ashraf Choudhury in the Unite
Press Office on 020 3371 2061 or 07980 224761.
