David Davis has added his weight to mounting Conservative criticism of the BAE-EADS merger as the two companies held a private briefing in Westminster to persuade MPs of the deal’s merits.
The influential rightwinger said the merger would cause the loss of a “massively important strategic British asset” and threaten heavy job losses.
“With strong French and German government interest in EADS, there is a risk that the British factories will come to be seen as peripheral to the core business of the merged company, with all the threats to employment that that involves,” said the MP, whose constituency is near BAE System’s Brough plant in Yorkshire.
Mr Davis questioned whether the new entity would gain entry to the American defence market.
“[The deal] raises serious concerns both in terms of competition and strategic national interest,” he warned. “Suggestions that this could be resolved before the end of the year strike me as wildly optimistic.”
On Monday afternoon two executives from EADS and BAE Systems took questions from MPs at a private meeting in the Commons. Journalists were banned from the briefing – I was politely ejected – and participants were asked not to talk to the press afterwards. (Although this was at the behest of the rather grand Ben Wallace MP, who chaired the gathering, rather than the companies.)
Bob Keen, head of government relations at BAE, told the MPs that the two companies had started talks on a merger after they lost the bid to provide Eurofighter jets to India in January, according to people in the room.
He told the MPs that French, German and Spanish influence over the combined business would be less than their current control over EADS – and that this was a condition of the deal. The French and Germans would end their current agreement to always vote in a bloc, he added.
The EADS executive, meanwhile – who had brought his own coloured charts – emphasised how many jobs the company had already created in the UK.
(I’m told that the new defence procurement minister, Philip Dunne, was also due to brief MPs about the deal last night in a room in the Commons.)
But the briefing seemed unlikely to quell unrest over the deal among some Tory backbenchers.
Julian Brazier, MP for Canterbury and member of the defence select committee, claimed that the French government would become the dominant force over the merged group and warned that UK and French interests were not always aligned. “If it went through it would wreck our relationship with America,” he said.
Mr Brazier, who takes a very close interest in defence issues, said that even as a British group BAE was “not on a par” with US companies when bidding for work in America and the merger would make it even more difficult to win US business.
The defence committee is meeting to discuss whether to launch an inquiry into the deal; that gathering could take place as early as today.
Another Tory, Brian Binley, has weighed in saying: “I can see in ten years’ time, when the crunch comes again as they always do, that it will be very easy for the Franco-German majority to say they’re going to gradually pull away and support their own industries.”
Jim Pickard
Kiran Stacey