05 Dec 24. The most recent iteration of the UK Government’s approach to defence industrial strategy was unveiled by the Secretary of State for Defence. Howard Wheeldon was a great champion of the UK’s defence sector, and this new Commentary will follow suit.
The previous Defence Industrial Strategy was published in 2021, before Putin’s invasion of Ukraine in February 2022 upended the calculations of governments across Europe and throughout the world. The new government has opened a conversation with industry, workers, academia and media, inviting comments and suggestions. The final version is due to be released in the spring of 2025. Commentary will follow developments with interest!
The new Defence Industrial Strategy will be structured around six priorities:
- Prioritise UK business – it has long been a demand of the Labour Party and others, that the UK Government awards its defence contracts to UK companies. Our European colleagues do so, so it would seem the UK may fall into line with this practise.
- Create partnerships – it is the ambition of this new government to harness the latest technology, by bringing together defence industry, research establishments and also with allies. The aim is to speed up the adoption of new capabilities.
- Certainty and Stability – the government aims to send ‘demand signals’ to industry and the investment community. This is intended to speed up the process of adopting new technology, and to promote investment in the UK.
- Seize the future – it is the intention of the government that efforts to hasten all aspects of the procurement process; research, innovation and adoption into service. In particular the government hopes to be able to mobilise the creative energy of the SMEs across the country.
- Spread prosperity – the government hopes that the defence sector will be an engine of growth across the country. This feeds into the stated aim of prioritising UK business.
- Deterrence – the government rightly believes that deterrence is necessary if the UK is to be a reliable and credible ally.
The common theme of these priorities is to speed up the adoption of new technology into front line service. Using the acquisition process can also benefit the wider economy. Moreover by putting more emphasis on the SMEs it will hopefully avoid ‘big and expensive’ projects becoming a cuckoo in the MODs nest, consuming budgets on a too big to fail basis.
The Defence Industrial Strategy fits in with the government’s Green Paper (a discussion document) on its proposed Industrial Strategy published in November 2024, which identified the defence sector as one of eight growth sectors. It is hoped that this Strategy will drive R & D investment, boost defence exports and draw in new entrants to the defence sector, as a career with a future.
Comment:
In 1914 Britain found itself involved in a major continental war. Expectations that it would ‘all be over by Christmas’ proved unfounded. Despite contingency planning by the war office to mobilise men to travel to France, the government of the day failed to mobilise industry. The attritional nature of trench warfare placed a huge strain on supplies of ammunition, creating the shell crisis of 1915. The Government passed the Munitions War Act the same year to guarantee supplies. Similarly, Britain belatedly began a rearmament effort in the run up to World War ll.
The UK may not be at war at the moment, but the outbreak of a major war in Europe means that it should be ready if the need arises. The outbreak of war in Ukraine has highlighted the same problem across many of our NATO allies, which must call into question the credibility of the Alliance’s conventional deterrent capability.
The announcement by the previous Prime Minister and the statement by the previous Secretary of State for Defence on April 23rd and 24th, that the UK’s defence industry will be put “on a war footing” were welcome, this paper picks up the baton from the previous government, and must now be translated into action.
There has been an increasing tempo of comments from senior military staff and others, at recent public fora, that the NATO Alliance must increase its defence effort. This is driven in equal measure by the threat from a belligerent Russia, but also by the fear that an incoming Trump administration may turn its back on Europe and concentrate on the threat from Asia. It would seem that the new Secretary General of NATO, Mark Rutte, has been making reassuring noises to the Trump transition team, to the effect that the Alliance is getting its act together on military spending. However that may be, what matters is capability.
Capability does not just consist of more tanks and aircraft, but in the ability to bring new capabilities into service. Equally, existing equipment needs to be capable of upgrading, to respond to an evolving threat environment. Nor does this just mean lots of drones. Senior commanders need to remind their political masters of what it takes to prevail in a military campaign against a near peer adversary. Russia may be using hybrid tactics to undermine the cohesion of the Alliance, but at the operational level what matters is understanding the enemy’s intentions and defeating them. Understanding the centrality of artillery in Russia’s land tactics would be a good start.
Situational awareness derives from the use of sensors and surveillance capability. This is where drones can be a force multiplier, but the commander must have something to defeat the enemy’s attacks. This requires all arms action, and this is where the defence sector comes in. Manufacturers in Ukraine get up to the front and see for themselves what is happening. Adaptation of equipment happens in weeks or days, not years. If the UK’s Defence Industrial Strategy is going to be of any use, it needs to prioritise speed of innovation and delivery.
For the UK to sustain its sovereign defence manufacturing capability there needs to be a better understanding of what industries and skills it already possesses, and how these can be switched in times of emergency to undertake warlike production. The UK Defence Solutions Centre (UKDSC) maintains a Joint Economic Data Hub (JEDHub) which policy makers can use to understand the value of the defence sector to the UK economy. The most recent statistics show that the UK defence sector employs over 417,000 people.
Understanding this will allow for the identification of ‘strategic’ industries, and will also identify shortfalls that could act as a constraint. Workers will leave an industry if there is no work, investors will likewise put their money into activities that generate a higher return on their investment. In April 2024 industry sources were quoted in the media noting the shortage of skilled steel workers and the effect this is having on the production of the UK’s Type 26 frigate.
Similar comments have also been made relating to the transition from the production of Typhoon aircraft which is due out of service by 2035 and the next generation of combat aircraft the Tempest. Industry needs a cohort of skilled staff who can manage the production as well as train up the next generation.
One test of the UK’s defence industries being truly on a ‘war footing’ is that Government ensures a regular flow of both orders and funding where necessary. Industry sources report their frustration at funding being released in small packages. Hopefully this will now change.
The MOD and industry should explore how the UK can develop a ‘can do’ culture, to create strength in depth to enable re-scoping of military capability in the event of a large scale war in Europe. Major defence contractors could be encouraged to maintain some production capacity ‘at risk’ to provide a contingent surge capacity. Another option could be to provide joint development funding for the UK’s vibrant ecosystem of SMEs:
- Helsing
- Arondite
- Flarebright
- Overwatch
- Subsea
There are others, but small amounts of funding – compared with the contracts needed by the primes – would keep these companies going and enable the development of AI and other capabilities.
In addition funds could be used to employ the UK’s SME network to develop low cost designs for missiles/drones that can be rapidly scaled with civilian production. The MoD wouldn’t need to build them, but could own the IP and deploy it in times of need. Therefore Commentary offers the following suggestions to the government:
- Central government – defence manufacturing capability should be monitored at National Security Council (NSC) level
- The NSC should maintain a register of capabilities that government needs
- The NSC should maintain a register of critical UK companies that supply key components / capability
- Government needs to identify ways of mobilising investor capital to fund research and sustain supply chain resilience
- The UK government should keep its criteria for export controls under review, especially where friendly states are attacked and request UK supplied equipment to resist.
- MOD – The Integrated Procurement Model announced by the MOD in February 2024 is to be welcomed. It needs to achieve results swiftly.
- The UK Government should maintain buffer stocks & storage facilities on shore. Finland maintains stocks of materials for scaling up production in times of need. It could be a good example of what prepared looks like.
- The UK Government should implement contractual arrangements with key suppliers to ensure surge capability when needed.
Commentary will return to this topic…..
NPW 05 12 24
Nick Watts
07714 246478