The price of a soldier's boots

Observations on the arms industry

If you don't like the Iraq war, how do you feel about the way that the unfortunate Sergeant Steven Roberts died without the body armour that could have saved his life? Or the fact that some troops out there were obliged to buy their own desert boots? Or the £3bn that the Ministry of Defence wasted last year because the defence industry, despite the fat subsidies it gets, made such a bad job of supply- ing equipment such as the Eurofighter Typhoon and the Astute submarine?

There is much to criticise in the arms industry. Take a decision such as the one by Geoff Hoon, the Secretary of State for Defence, to buy the Hawk trainer for the Royal Air Force. Hoon chose to buy Hawks from BAE Systems (formerly British Aerospace) not just when the political pressures of the Hutton inquiry were at their height, but also against the value-for-money advice from his top civil servant, Sir Kevin Tebbit. There was no open competition for the contract, though Italy's Aermacchi could have offered the RAF an alternative plane for £1bn less.

Buying British meant that, at least for a few years, between 2,000 and 5,000 jobs at BAE's Brough plant in the East Riding of Yorkshire were preserved. That is all very well, but surely not at a cost of £200,000 or more per head? That sort of money would buy an awful lot of retraining for jobs in other industries, desert boots for Iraq or, indeed, health or education in Yorkshire.

Everybody knows that the defence industry has huge lobbying clout. A report by Saferworld, the Basic think-tank and Oxford Research Group estimates that subsidies for its exports run at between £450m and £940m a year. What the lobbying power also means, however, is that the repeated betrayal of our armed forces by an industry that fails to supply the right equipment on time is never condemned loudly enough. With a few honourable exceptions, the military top brass who might otherwise speak out take retirement jobs on arms company boards.

In every other area of life, the argument for protectionism has largely been lost, and rightly so. Industrial policies that seek to prop up declining companies in the face of overwhelming competition from abroad have been roundly discredited. Yet this government, by making the case for the value of defence contracts in maintaining British technology and industrial capability, allows itself to be exploited by lobbyists anxious to claim a national-interest justification for what happens to suit their businesses.

We will see this next month when the industry will argue the case for keeping yards on Clydeside and the Tyne in business with naval contracts, even though Britain is now so uncompetitive that it constructs only 1 per cent of the world's new ships.

What the government needs to do is make it quite clear which technologies must be retained in the UK for strategic reasons - a very small number - and open up the rest of the business for full competition. The industry cannot be allowed to exploit outdated, Second World War-era anxieties about security of supply at a time when interoperability of equipment with that of allies is usually much more important than being able to buy from a factory down the road. Usually, we need a diversity of suppliers, not one feather-bedded domestic producer. Other countries' defence industries may be more subsidised than ours, but that is no argument for subsidising our own. The arms business has already contracted substantially since the cold war ended, and constitutes less than 1 per cent of the UK workforce. Those made redundant could, the evidence suggests, reasonably hope to find other jobs quickly.

This is, after all, an international industry whose economics have been transformed by 9/11. By 2006, US military spending will equal that of the rest of the world put together. The extra billions will entrench the economies of scale in research and production that help to make US defence technology the only game in town, at least at the very high-tech end.

The Eurofighter debacle has not completely killed off the prospects for collaborative European defence projects, but defence budgets are under heavy pressure in most eurozone economies.

If you accept that the UK's involvements in Kosovo, Bosnia, Sierra Leone and Afghanistan were worthwhile, then you have to accept that we need the right kit for peacekeeping, and therefore for air support, aircraft carriers and the rest of the expensive paraphernalia of expeditionary warfare. That means having electronic gizmos that work in the same way as the American ones. If the US wants allies, it should share the technology.

The defence industry is no longer a pillar of the British economy. Its remaining political clout should not protect it from the kind of adjustment that coal, steel and commercial shipbuilding endured. We cannot continue to put its interests above those of ordinary servicemen and women.

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