Defence and aerospace industries in Scotland generate nearly £2.31 billion in sales and together with the MoD support almost 50,000 jobs and a record number of apprentices. As well as a recognised expertise in naval ship building, Scotland also has a strong defence electronics industry and a strong aerospace industry based around Prestwick. This report examines the delay in the signing of the contract for two new aircraft carriers: the Committee is concerned that similar delays during the construction phase could lead to job losses and damage the ship-building skills base the UK needs to support if it wishes to retain sovereign capability in key areas. The Committee also comments on the Government's decision to treat the Military Afloat Reach and Sustainability (MARS) vessels as commercial rather than naval vessels, making them subject to EU competition law. There is confusion over the status of these vessels. The report also looks at the supply of skilled, semi-skilled and graduate workers, the Modern Apprenticeship programme, and the funding for adult apprentices. It is vital for Scottish industry to look at upskilling throughout the workforce, including mature workers who were not able to access apprenticeships as school leavers. The issue of constitutional change also affects the future sustainability of the Scottish defence industry. In the long term it is unclear what naval requirement an independent Scotland would have and whether this would make up for the potential loss of UK MoD orders. Government and industry need to work effectively together to ensure that Scotland's engineering and manufacturing base continues to be world class.

Work of the Committee In 2007 : Fourth report of session 2007-08, report, together with formal Minutes

In this report the Defence Committee says the information published so far by the Scottish Government on the defence and security implications of Scottish independence falls far short of requirements. The Committee also cannot currently judge the likely running costs of the proposed Scottish defence force, given the limited information it has so far received. The Committee is, however, unconvinced that the proposed budget of £2.5bn can support both the proposed Scottish defence force and the purchase of new equipment including fast jets and submarines. The report seeks answers to the following questions: how would a sovereign Scottish Government ensure the defence and security of an independent Scotland? For what purposes would Scottish armed forces be used? How would Scottish armed forces be structured and trained, and where would they be based? How much would it cost to equip, support and train an independent Scotland's armed forces and how much of this could be procured and delivered domestically? And how many jobs in the defence sector would be placed at risk? The Committee also raises detailed questions about the proposed Scottish defence force: the numbers and types of aircraft and naval vessels which would be needed and how they would be procured and maintained; the numbers of combat troops the Scottish Government envisages (including its plan to re-instate historic Scottish regiments); and the availability of training facilities to maintain the appropriate professional standards. In the event of independence, the defence industry in Scotland would face a difficult future.

The defence industry is very important to the Scottish economy, providing more than 15,000 jobs and contributing between £ 1.8 billion-£2 billion annually to the Scottish economy. Those firms or subsidiaries dependent on British Army, RAF or Royal Navy orders under Article 346 of the European Union Treaties (which allow the UK to reserve certain orders to national suppliers) will lose such work, which will be transferred to other parts of the UK. It is also recognised that the market offered to defence suppliers in a separate Scotland will be negligible in size compared to that of the United Kingdom as a whole and the joint projects in which it participates. A separate Scotland, particularly one which has deported the Royal Navy's submarine force and potentially enforced unilateral nuclear disarmament upon the United Kingdom will not necessarily be seen as a reliable ally. Similarly a future separate Scotland's access to secret technology owned elsewhere is unlikely to be automatic. There will not necessarily be the maximum security clearance necessary to allow export to, or collaboration with, US or other suppliers or purchasers. A separate Scotland is unlikely to be able to fund the level of research and development necessary to maintain Scottish companies at the cutting edge of technology. The defence industry in Scotland is designed to meet the needs of its main customer-the Ministry of Defence. It is essential that the Scottish Government spells out, as quickly as possible, its intentions for procurement and research budgets, and foreign and defence policies.

This report examines the arrangements in place for communication between the UK Government and Scottish Executive, particularly when the UK Government formulates international policy which will specifically affect Scottish interests and devolved matters. Generally there are effective channels of communication at both ministerial and official level between the two governments. Whitehall tends to overlook the Scottish angle of policy and legislation more often in those departments which are unfamiliar with devolved matters. We recommend that the Government ensures that each department has a devolution champion to ensure that there is a good level of awareness of devolution issues. The revival of the Joint Ministerial Committee should provide an important forum for discussion between Ministers of the UK Government and devolved administrations. However, there is little opportunity for parliamentary scrutiny of the outcomes and effectiveness of the Committee's meetings. The report welcomes the publication of the new Protocol for Avoidance and Resolution of Disputes as the 2001 Memorandum of Understanding did not provide adequate guidance on how disputes between the UK and Scotland should be resolved. This was demonstrated during the communications between the governments on the UK's negotiations with Libya on the Prisoner Transfer Agreement. Both Governments should display the necessary political will to ensure that both understand each other's point of view and demonstrate the mutual respect which should characterise all their dealings.

This report examines the impact on Scotland of the current economic crisis, specifically the recapitalisation of two of its largest banks: Royal Bank of Scotland (RBS) and the newly merged Lloyds TSB and Halifax Bank of Scotland. Evidence suggests that customers are not being fairly treated by the very banks being supported by taxpayers' money to the tune of hundreds of billions of pounds. The Committee is disappointed that both banks and the Minister consider it a necessary evil to reward to certain bank executives with enormous bonuses when thousands of rank and file employees face redundancy. They are not convinced that there has been a change of culture within banks as a result of the crisis and are concerned that front-line staff are still being pressured to sell potentially unsuitable products such as loans and credit cards to customers at pre-crisis levels. Furthermore, small and medium sized businesses vital to the Scottish economy have experienced extreme difficulties in the past eighteen months in accessing the finance necessary to keep themselves afloat. This inquiry specifically covered the effect of the banking crisis on jobs, services to the public and small business lending in Scotland; the effect of the failure of Scottish banks and building societies on the international reputation of Scotland's banking sector and the effectiveness of measures put in place by the UK Government

This report examines the recommendations of the Commission on Scottish Devolution ('the Calman Commission'), specifically the parts which relate to relations between the two parliaments. The Scottish Affairs Committee concludes that closer cooperation between the UK and Scottish parliaments and governments is only possible if backed up by political will. Removing procedural barriers is only one part of improving communication and cooperation; structural changes alone will not make the difference. The Committee's key findings are: the Government should make time for a regular 'State of Scotland' debate, to include devolved matters; The UK and Scottish governments have given a positive response to the idea of appearing before committees of either Parliament; the idea of a 'Scottish Super Grand Committee' composed of Scottish MPs, MSPs and Scottish MEPs should be revisited; changes should be made to allow UK and Scottish parliamentary committees to work together; positive consideration should be given to whether Scottish ministers can give evidence to UK Parliament committees examining Scotland Act Orders; arrangements should be made to remove any unnecessary barriers to access for MSPs visiting Westminster; a programme of exchanges and secondments with the Scottish Parliament should be funded and encouraged by the House.

Andrew W. Neal argues that while 'security' was once an anti-political 'exception' in liberal democracies - a black box of secret intelligence and military decision-making at the dark heart of the state - it has now become normalised in professional political life. This represents a direct challenge to critical security studies debates and their core assumption that security is a kind of illiberal and undemocratic 'anti-politics'. Using archival research and interviews with politicians, Neal investigates security politics from the 1980s to the present day to show how its meaning and practice have changed over time. In doing so, he develops an original reassessment of the security/politics relationship.

The author notes in the preface that an opportunity for significant cuts in nuclear and conventional forces by major global powers has appeared. Presenting the evidence that the West can cope successfully with disarmament, he identifies policies which need to be adopted for that end.

The Ministry of Defence plans to replace the Royal Navy's current strength of three aircraft carriers with two larger, more versatile carriers capable of carrying a more powerful force, including new aircraft to replace the Harrier. This report analyses the progress of the Future Carrier and related Joint Combat Aircraft programmes. There is a serious risk that the two carriers will not enter service in 2012 and 2015 as planned, due to delays in investment decision-making. The novel 'Alliance' between MoD and three commercial companies has not yet been finalised. Delays are already impacting UK shipyards, and threatening jobs and the survival of the yards.The Joint Strike Fighter, a US-led programme, is the aircraft of choice for the new carriers, but there are unresolved weight problems. The target In-Service Date has been put back from 2012 to 2014, so it is possible that the new carrier would be operational (in 2012) before the new aircraft is available. There must be adequate assurances that the UK will have access to all the relevant technology (the 'Sovereign Capability') to enable maintenance and upgrading of new aircraft. Otherwise, the UK should consider withdrawing from the Fighter programme.