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New offensive needed on defence

Defence, like City financial services, is one of Britain's least glamorous but most successful industries. Exports at pounds 5bn a year are second only to those of the US, but with the end of the cold war and the sharp decline in armaments spending here and abroad, the going is tougher than ever for the companies involved.

A joint inquiry by the Commons defence and trade and industry committees, published yesterday, shows that our own Ministry of Defence, rather than helping, is only exacerbating the problem. Witnesses complained bitterly about the MoD's attitudes. The Defence Manufacturers Association said MoD procurement policies were seen as "verging on the hostile to the indigenous industrial base".

Though things seem to have improved a little over the past 18 months - attempts to forge partnerships with suppliers have helped - most thought there was a long way to go. To the extent that the MoD adopts a more sensitive approach to the needs of British industry, it only appears to go as far as big spending decisions. The valuable stream of smaller purchases that in total have a tremendous influence on the fortunes of manufacturing companies, are still back in the Dark Ages.

Long-term national security depends equally on the creation of wealth as the strength of the armed forces, the MPs say, and who can argue with that. The most serious impact of this strategic vacuum is a damaging drop in research and development, which in this industry - as in pharmaceuticals - is fundamental to long-term health.

The MPs are surely right in arguing that the MoD should make maintenance of the defence industry's technology base a key priority. They also also urge the Government to look to European collaboration as a better bet than deals with the US. The MPs backed the creation of national monopolies where necessary, presumably because they approved of GEC's recently acquired control of a large part of warship building.

Specialist government departments such as defence are more interested in their constituency, the armed forces, than in the companies they deal with, which are watched over by the DTI. This seems to be the core of the problem. A solution would surely be for the MoD to measure its success at least in part by the health of the defence industry, so that it can be ticked off when it is seen to fail. The MPs' suggestion that it should share some of the responsibility for overseeing the defence industry and its technology with the DTI is a sensible one.