Rt Hon Dr Liam Fox MP Secretary of State for Defence Ministry of Defence Main Building Westminster London SW1A 2HB

4th October 2011

Dear Liam You will be as concerned as I am about the impact of the recently announced 3,000 BAE job losses. These follow 2,500 job losses resulting from the SDSR and there are deep concerns about the loss of our advanced skills base in the UK. It is each of our responsibility to do all we can to support the families and communities affected as well as to protect the UKs defence industry, which employs over 300,000 people and generates over 35 billion per year to the UK economy. It is welcome news that your government is in discussion with both the trade unions and BAE and it is welcome that enterprise zones will be established in Lancashire and East Yorkshire. Without prejudicing ongoing discussions, however, I believe it is essential you go further to address the issue of UK defence manufacturing in your speech tomorrow. I have expressed my view previously that your default preference to buy off the shelf could have negative social and economic implications for the UK. Reliance on overseas suppliers brings high support costs; exportability is key to the strength of the defence sector yet this would be limited by increased overseas purchases; fewer sovereign capabilities would mean a weaker sovereign manufacturing base; and the UK becoming a passive purchaser of equipment would limit military flexibility. The current situation at BAE provides an opportunity for you to demonstrate that you will avoid such outcomes and put British manufacturing first. I believe it is important that tomorrow you provide a commitment to maintaining UAV and fast jet capability in the UK over the long-term, with an MoD-led industrial strategy for how they will be supported, designed in conjunction with industry and the trade unions. It would be terrible if there was an incremental loss of the ability to construct and maintain these important capabilities in the UK because the Government simply did not have a strategy. Such a commitment would give the defence industry the confidence and certainty they require to plan and minimise the detrimental impact of falling global demand. Tomorrow is an opportunity for the Government to put an end to the emerging pattern of Ministerial ambivalence towards UK manufacturing and make a commitment which could strengthen our military and contribute to vital private sector growth in the UK. I very much hope that you take it.

Best wishes,

Rt Hon Jim Murphy MP Shadow Secretary of State for Defence