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Defence Remains Vital For UK Prosperity By Howard Wheeldon, FRAeS, Wheeldon Strategic Advisory Ltd.

 

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Commissioned by Secretary of State for Defence, Gavin Williams in March and launched at the Royal United Services Institute by its author, Philip Dunne MP on the 9th July, I live in hope that the Government accepts many of the independent and very well-conceived recommendations made in ‘Growing the Contribution of Defence to UK Prosperity’ report.

My apologies for having not been able to comment on this otherwise excellent report until now. The Dunne Report as it has come to be known and which I genuinely recommend as one that should be read by all proponents of defence, is fully accessible by placing the title above into Google.

Making no fewer than 41 recommendations in relation to how the UK can better embed prosperity into Ministry of Defence thinking and also improve agility throughout the procurement processes, the report is a timely reminder for the Treasury and Cabinet Office as well as the MOD of the impact that defence already makes to the UK economy and which includes 500,000 people employed in defence (1.5% of UK total) along with 25,500 apprentices currently employed across the defence industry and that are developing skills required for the next generation of equipment requirement, confirmation that defence has delivered 15% productivity growth since 2009, a figure that is 3x as much as the rest of the economy and finally, that at an average of £7.3bn exports annually over the last 10 years, defence plays a big part in the national economy, trade balance and funding for the Treasury.

The £22 billion figure that is oft quoted as the amount spent on the defence sector in the UK annually may well now need to be updated but the US$88 billion figure identified by the Defence Growth Partnership as being the addressable market for UK defence capability over the next five to fifteen years, with 24 partner nations over and above our NATO allies looks to be spot on.

Separating Defence in relation to national prosperity through separate National Life, Economic Growth, People, Ideas & Innovation and Place chapters, the Dunne report makes a raft of key observations along with a total of 41 key recommendations of how the UK needs to embed prosperity into MOD thinking and to improve agility throughout procurement processes. Some of the key recommendations include:

The MOD needs to scale up its approach to innovation so that it becomes an integral part of larger procurement.

The Government should commission independent academic research into assessing and measuring the net economic benefit from defence consistent to HM Treasury’s Green Book.

The MOD should develop incentives for the Armed Forces to provide support for defence exports.

Develop a common MOS-industry approach and format from collection of data around the defence supply chain.

MOD, the Armed Forces and industry should improve their evidence base of the skills they need to meet future requirements.

The MOD should support DIT plans to strengthen DIT-DSO (Department of International Trade / Defence and Security Organisation)

Uncertainties over Intellectual Property ownership need to be resolved so as not to discourage defence innovation for occurring.

As a critical enabler of growth and productivity in both defence and the wider economy, MOD should focus on technical education, skills and training in MOD’s strategic approach to prosperity, including when talking with potential investment partners;

The MOD and its key suppliers should develop a common approach and format for collecting data, preferably based on a digital solution, to underpin new guidance and metrics on key prosperity factors;

MOD should increase agility and pace in defence procurement, adopting a culture more focused on finding the right procurement solutions and less on defining and avoiding obstacles at the outset;

In specialist sectors such as space and cyber, the armed forces should consider facilitating whole career flexibility with secondments occurring cross Defence, including in industry.

MOD should adopt open architecture across the Defence spectrum; and

MOD to consider whether its commitment to spend 1.2% of the defence budget of S&T is sufficient following the Government Industrial Strategy target to raise total UK R&D investment to 2.4% of GDP by 2027.

I suspect that the main point made by Philip Dunne is that Defence continues to punch above its weight in terms of skills development and that with 25,500 active apprentices currently enrolled across the sector and with career-long support being provided by the majority of the UK’s largest defence companies, any further reduction of UK based defence related activities would not only damage the skills base and the ability to encourage STEM subsects but that once gone this could not easily be recovered. The report emphasises again and again the importance of maintaining skills in defence and the overall importance that defence plays in the economy and overall prosperity agenda.

Having spent four years as Minister of Defence Procurement and been very well respected by his peers, by industry and the military, there was probably no-one better that Philip Dunne, the MP for Ludlow, to be asked to undertake the work required to produce this excellent report. Yes, it could have gone further and my own regret is that while it emphasised the need to strengthen DSO I am not sure that there was a full realisation of just how low DSO has been allowed to sink since Gordon Brown moved responsibility for it from the MOD to Trade. If I was to make one other criticism it would be that in relation to exports of military aircraft, still the largest element of defence exports, the report makes too little mention of the need for the UK to further invest in facilities that are required to train customer military on the equipment that they wish to procure.

One of the principal purposes of this Review is to assess how the MOD is doing in meeting this objective and to make recommendations as to how it could do more. The starting point, according to Philip Dunne in the address he gave to launch the review at RUSI, had been to assess the data available. Dunne was forced to acknowledge that Defence data is hard to disentangle given the interdependencies between defence and civil applications within the supply chain and the interconnected nature of many defence contractors supplying each other and he expressed concern that the Office of National Statistics has not collected specific data on the defence sector for some years.

This is not only a positive report that looks at some of the things that need to be done to allow defence to play an even larger part within the prosperity agenda but also one that is realistic in what it demands. Coming just before the Combat Air Strategy and which I have already written the first of what I am sure will be many commentary pieces on, in his RUSI address Philip Dunne talked of successes such as the F-35 Lightning Joint Strike Fighter programme where the UK is the only Tier One partner reminding that from an initial investment of US$2 billion the UK has already benefitted from around US$13 billion of contracts awarded to 500 companies in the UK supply chain. He pointed to the fact that with only 290 aircraft of a planned number of 3,200 aircraft likely to be built for the global JSF programme and which the UK supplies 15% of each aircraft built, how important this programme now is to the UK citing that the potential net contribution to the UK economy of the capital acquisition cost of this programme alone had been estimated at £35billion and up to 25,000 jobs.

In his report Dunne also talked about capitalising on the excellent reputation that our Armed Forces are held internationally and using this to assist in achieving export success. Highlighting weaknesses as well as strengths I very much support the comments made in relation to whether the existing Government pledge made in 2010 to dedicate 1.2% of the defence budget into science and technology is enough particularly when set against a separate Government target made in relation to Industrial Strategy to raise total research and development investment to 2.4% of GDP by 2027.

Another of many interesting points made by Philip Dunne in his report is that around 14,500 people leave the Armed Forces each year and that because of this the MOD is one of the largest providers of skilled workers joining the UK civilian workforce mid-career, further evidence if it was needed that defence is a very major contributor to developing skills and high paid jobs in the UK.

An excellent report that should be read in full. Key will be not just in how the MOD responds but how it acts.

CHW (London – 31st July 2018)

Howard Wheeldon FRAeS

Wheeldon Strategic Advisory Ltd,

M: +44 7710 779785

Skype: chwheeldon

hwheeldon@wheeldonstrategic.com

@AirSeaRescue

 

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