BAE Systems fires warning shot over vote on Scotland

Defence giant BAE Systems today ended its silence on the risks to its business and thousands of employees if Scotland votes for independence, in a huge boost to the “No” campaign.

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, chief executive Ian King has consistently declined to comment on what a vote for independence later this year would mean for BAE’s 3600 staff — including 3000 on naval work — north of the border.

But in BAE’s annual report, released today, 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.”

He added: “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 said: “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.”

There has been increasing frustration over BAE’s failure to outline its position. Other corporate leaders have recently been making their position on the referendum known. Last month, Bob Dudley, the chief executive of oil giant BP, warned that there were “big uncertainties” over the possibility of an independent Scotland, saying: “Great Britain is great and it ought to stay together.”

Meanwhile, pensions and savings firm Standard Life has warned it could relocate from Edinburgh to London if the “Yes” campaign prevails.

BAE’s annual report also revealed that 2013 was another lucrative year for King, who took home just shy of £2.5 million, including a bonus of nearly £1.16 million. However, this was marginally down on his £2.57 million pay package in 2012, when the bonus was more than £1.2 million. King also warned that “budget pressures in some of the group’s larger markets are expected to prevail”. Defence businesses have been hit by huge spending cuts in the US, which remains the industry’s most important market.

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