Certain types of defence contracts are exempt from EU procurement laws in what is known as an article 346 exemption, allowing the Westminster Government to choose where it purchases equipment and services. However, it has been revealed that the proportion of contracts awarded to firms in Scotland has been far below Scotland's share of either population or Gross Domestic Product [GDP].
The figures show that of UK Government's Ministry of Defence [MoD] contract expenditure since 2007 which is exempt from EU procurement laws, just 5.3% was spent in Scotland. This equates to an underspend of over £1.8 billion in Scotland over the last five years compared to Scotland's population share.
The MoD figures raise serious questions for the Westminster Government after UK Defence Procurement Minister Peter Luff recently claimed in evidence to the Scottish Affairs Select Committee that 10% of defence procurement takes place in Scotland, despite official figures indicating that this is not the case.
A Parliamentary Question last year also revealed that in 2010/11 just 50 out of 6,000 MoD contracts placed with Small & Medium Size Enterprises [SMEs] went to companies in Scotland, a rate of just 0.83%.
Commenting, SNP Defence Spokesperson Angus Robertson MP said:
"Scotland's defence footprint has been disproportionately cut over the last decade, with over 11,000 jobs lost and a £5.6 billion defence underspend which has seen the closure of bases and the creation of significant capability gaps.
"What is crystal clear from these new figures is that the choices made in Westminster mean that Scottish businesses are still seeing a far lower share of defence contracts than they should be.
"These shocking statistics makes a mockery of some of the statements that have been made by anti-independence politicians and suggests that they urgently need to get a grip of what is actually happening.
"Instead of attempting to come up with misleading figures, the Westminster Government would be well advised to actually look at the evidence their own civil servants are producing and address the fact that Scotland has seen a defence underspend for far too long.
"Instead of these decisions being made by a Westminster Government with its head stuck firmly in the sand, choices on Scotland's defence footprint should be made by an independent Scottish Government - which means getting rid of unusable and unwanted Trident nuclear weapons, and investing in strong conventional defence."
The following exchange took place during the Scottish Affairs Select Committee on 13 June 2012:
Q400 David Mowat: I was reflecting on the fact that you say 10% of defence procurement is done in Scotland.
Peter Luff (Defence Procurement Minister): That is the story I have today.
