EU plans could devastate British shipbuilding

Bureaucrats in the EU are preparing to threaten a $16 billion-a-year business in the British defence industry under controversial plans to force national governments to open up their lucrative contracts to foreign competition.

The market for defence equipment includes warships and marine equipment which could be opened up to competition from EU member countries under a blueprint to be unveiled later this month by the EU?s Internal Market Commissioner, Frits Bolkestein. The plan could impose a bottom-line demand for governments to award their contracts to the company that offers to do the work at the lowest price, regardless of whether they are based in Britain or not.

British ministers currently spend $21.5 billion every year on buying goods and services from private firms, and experts estimate that up to two thirds of that go to British-based firms. The shake-up that the EU proposes would allow ministers to concentrate on the bottom line which could assist the MoD?s desperate efforts to cut costs. Cost overruns on major defence projects amounted to $5.3 billion last year alone, and Britain?s largest domestic defence contractor, BAE, was involved in the four most expensive contracts.

The government has a ?defence industrial policy? designed to ensure the survival of the UK defence sector which employs 400,000 people throughout the country. A high-profile conference will this week discuss the need for a shake-up in the industry, to avoid procurement blunders that have cost the government billions of pounds in recent years. There is a mounting pressure that the UK government should stop propping up doomed sectors such as naval shipbuilding, allow British contractors to be taken over by foreign ones, and buy more equipment abroad.

Bolkestein?s green paper will suggest that pure defence products be brought within the EU?s public procurement rules – meaning countries would have to advertise across the EU and choose the supplier offering the best value for money.