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Remembering Paul Drayson’s 2005 Defence Industrial Strategy! By Howard Wheeldon, FRAeS, Wheeldon Strategic Advisory Ltd.

To those such as myself that have over many years followed various attempts by government to get defence industrial strategy right you can imagine the surprise that we got on first setting eyes on Paul Drayson’s Defence Industrial Strategy (DIS) White Paper of December 2005. Locked in a room in MOD Main Building to read it before publication, I remember it as if it was only yesterday. It is, I believe, timely to remind of what it set out to achieve and of how well it went down.

Workable, affordable, well thought out and one that the majority in industry, the MOD and military user believed they could work with, DIS 2005 was the first and so far, only time in living memory that the Government had appeared to get defence industrial strategy close to being right. The pity is that within months of its appearance, Paul’s Drayson’s superb strategy document was already deemed to be history as the Labour Government of the day and by whom it was authorised and produced, failed to fund it.

Can it really be almost twelve years now since we cast our eyes with great delight on a White Paper that seemingly all to whom it might impact were happy to sign up to? Yes, in less than a month now it will be twelve years since Lord (Paul) Drayson published his White Paper on Defence Industrial Strategy and began what would be a very short fight to see it implemented.

Looking back, it really was a great shame that the Labour Government of the day disliked what Drayson had produced and effectively killed it off the very next day by failing to fund it. It is though worthy of being remembered and I have no doubt that if we were to read it again today there would be many lessons that should have and could still be learned.

So what was it about Paul Drayson’s Defence Industrial Strategy White Paper that set it apart from anything that had gone before or since? I’ll start by suggesting that it spoke the same language of all of its various participants, that it recognised the technological challenges and high value systems involved plus the necessity to support and upgrade product through life, the need of industry to reshape itself and to improve productivity and also adjust to lower production levels. Importantly, it recognised the need to retain skills together with the specialist systems engineering capabilities that defence required. Finally, it demonstrated a healthy respect for the defence industry and what it had achieved and would need to achieve in future. It recognised the importance of sovereign capability and exportability and it considered options of how best to achieve both.

In doing all this, Paul Drayson also set out to consider which sovereign defence industrial capabilities the UK needed to retain, which were appropriate to protect our national security and which needed to be not only sustained but nurtured. He made no bones about stressing that in order to implement the strategy would require change on behalf of both industry and Government. Industry, he suggested, “will need to adjust to sustain the capabilities we need once current production peaks are passed.

Drayson emphasised that Government, (effectively the MOD) too would need to drive forward improvements in the way it acquired equipment, support and how it went about upgrading equipment through life. Together, he suggested, both the defence industry and government would need to change their relationship and work better together to ensure that our Armed Forces continue to have the equipment that they need.

Doing this, he suggested, would help ensure the UK defence industry has a sustainable and bright future. Recognising that all this would require continuous effort on both sides in the coming years would not be easy, he considered that by starting the process now, while defence workloads were considered to be high, future crisis could be avoided.

For all that, Paul Drayson recognised that some within the defence industry would find the strategy’s conclusions difficult to implement, but his firm belief was that industry, the City, the government and the nation needed the additional clarity that the White Paper offered in order to allow industry to reshape itself for the future.

When it chose to look at the 2005 Defence Industrial Strategy (DIS) in April the following years the House of Commons Defence Select Committee, chaired then by the highly respect James (now Lord) Arbuthnot was also very positive in its conclusions. The report summary suggested that DIS set out with the aim of providing greater transparency to the UK’s future defence requirements and, for the first time, set out those industrial capabilities the UK needs to maintain appropriate sovereignty and operate equipment independently. Emphasising that to produce DIS wide consultation with industry had been taken place, it said that the Minister for Defence Procurement and his team should be congratulated on the work that they had done. The DIS, the report said, was well received by industry even though it was being required to reshape to adjust to the future requirements of the MoD. In the future, the HCDC report suggested, there will be more focus on upgrading and maintaining platforms rather than designing and building new equipment. The reshaping of the different sectors of the defence industry will result in job increases in some areas and job decreases in others. The MoD also needs to change to demonstrate that it is serious about the DIS.

 

HCDC said in its report that work was already in hand to identify improvements to the way in which the MoD procured equipment and that it will be important for these improvements to be implemented quickly. The MoD should, it said, “also provide more information to industry about its future requirements and that in several areas, such as the Maritime sector and Defence Research and Technology (R&T), further work is required and specific strategies need to be developed. Emphasising something that we all know to our cost today and that is despite the subsequent good work now being done by the Defence Growth Partnership and its own creation of the UK defence Solutions Centre UKDSC and its close working relationship with UKTI DSO, HCDC emphasised the point that Defence R&T has experienced a decline in funding which, if not addressed, would result in lower quality defence equipment in the future. The HCDC report emphasised very strongly a belief that Defence R&T should be a key investment for the future.

 

Emphasising that ‘Small and Medium-size Enterprises’ (SMEs) are a vital part of the UK’s Defence Industrial Base, the HCDC report suggested that the MoD’s knowledge of SMEs and the important role that they play within the supply chain has been weak. While it accepted that the MoD was seeking to become more “user friendly” to SMEs and to understand better the supply chain, more needed to be done.

Mentioning as it did that in some sectors, such as fixed-wing aircraft, the UK has only one company with the capacity and capability to deliver the MoD’s requirements, the HCDC view was that competitive procurement would not be possible if the UK is to retain national capability.

 

Finally, the HCDC Report on Paul Drayson’s Defence Industrial Strategy made mention that the MoD planned to make more use of long-term partnering arrangements. HCDC concluded a belief that there were risks that this would result in monopoly supply and that there are considerable concerns about the access of other companies to sub-contract work. There will, it suggested, need to be rules in place to ensure that ‘sub-primes’ and SMEs can compete for sub-contracts.

 

The bottom line of the HCDC Report on DIS was that its success would depend upon how well it is implemented and whether the MoD is adequately funded by the Treasury to deliver it. The HCDC view was that the Minister for Defence Procurement had provided the impetus for implementing DIS and that this must be maintained. “The Minister has provided us with a timetabled programme for implementation of the DIS and we plan to monitor closely its progress”.

 

HCDC never did get to monitor the Drayson DIS plan more closely because Gordon Brown, presumably on the recommendation of Shriti Vadera, ensured that DIS was effectively still born.

 

What eventually followed was the Levene Plan which attempted to make the MOD structure more efficient and transparent and the Bernard Gray Report which later led to his being asked to implement a radical; shake up of DE&S. Both had their merits and despite having no funding from Government, the Defence Growth Partnership has and continues to do its best to encourage research and technology investment. Industry has worked hard to make itself more efficient and cut the cost of defence too but with too little acknowledgement from Government. Regulation has impacted too and dramatically increased the amount of process required. Still, we are where we are and that is still without an effective and workable defence industrial strategy – more’s the pity!

Just yesterday I learned that HCDC apparently wants to look at the reasons behind the recent job loss announcements at BAE Systems – this I might add, before, it has even begun to look at the impact of SDSR 2015 on air power capability and that was published more than two years two ago! Some of the answers as to why job losses have been announced might just be found in the above. As to HCDC priorities, rather less said the better!

 

CHW (London – 9th November 2017)    

Howard Wheeldon FRAeS

Wheeldon Strategic Advisory Ltd,

M: +44 7710 779785

Skype: chwheeldon

hwheeldon@wheeldonstrategic.com

@AirSeaRescue

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