Blow for Scottish nationalists as BAE says split would destroy jobs

Defence giant employing 3,000 in shipyards north of the border breaks its silence

(Getty Images)

The defence giant BAE Systems has finally warned that Scottish independence could threaten thousands of jobs north of the border, after months of refusing to comment on September's vote.

BAE has long been regarded as the most important corporate voice in the independence debate, as it builds warships on the river Clyde – sensitive work that the Ministry of Defence would almost inevitably move south if secession occurs.

However, its chief executive, Ian King, has consistently declined to comment on what independence would mean for BAE's 3,600 Scotland-based staff, including 3,000 on naval work.

There has been increasing frustration over BAE's failure to outline its position. In contrast, BP's chief executive, Bob Dudley, has argued the business benefits of continued union, while Standard Life has threatened to quit an independent Scotland.

In yesterday's annual report, Mr King admitted: "BAE Systems has significant interests and employees in Scotland, and it is clear that continued union offers greater certainty and stability for our business.

"In the event that Scotland voted to become independent, we would need to discuss the way forward with the Ministry of Defence and UK Government, and work with them to deliver the best solution in those circumstances."

Alistair Carmichael, the Secretary of State for Scotland, immediately seized on the news and told The Independent: "There is an increasing chorus of people from business who know that it is in the interests of the UK and their employees to remain part of the United Kingdom."

The report also revealed another lucrative year for the BAE boss, who took home just shy of £2.5m in 2013, which included a bonus of nearly £1.16m.

However, this was marginally down on his £2.57m pay package in 2012, when the bonus was more than £1.2m.

Mr King also warned that "budget pressures in some of the group's larger markets are expected to prevail".

Defence businesses have been hit by savage spending cuts of more than £270bn over 10 years in the US, which remains the industry's most important market. This is likely to result in a 15 per cent reduction in BAE's US defence and security work over this year and 2013.

Linda Hudson, who left as head of the US business last month, was paid nearly £2.3m last year, down from more than £2.6m in 2012.

A second big hitter who parted company with the business earlier this year, chairman Sir Dick Olver, received £740,000 in 2013, down by £5,000. Sir Dick, who was criticised for his role in the botched 2012 mega-merger with the pan-European aerospace group Airbus, has been replaced by the City grandee and former Centrica chairman Sir Roger Carr.

In his first chairman's letter in the annual report, Sir Roger at times struck a downbeat tone, arguing that "in a rapidly changing world, the road ahead will not be smooth".