22 Mar 22. Another day and yet another new economic report is published – one that quite rightly outlines the crucial value of the defence sector to UK jobs, businesses, exports and although the MOD does not mention it withing its opening remarks, the UK Exchequer, skills and training.
However, the MOD does at least say that the new economic report reinforces value of defence sector to the UK, that thousands of organisations paid for defence work and 5,000 apprentices employed and most importantly, that over a fifth of UK defence procurement spending is, according to the MOD, with SMEs
This report for the MOD has been published by the Joint Economic Data Hub (JEDHub), a collaborative initiative that aims to improve understanding of the defence sector’s contribution to the UK economy and that is clearly what the MOD as being an important deliverable in the so-called 2021 Defence and Security Industrial Strategy (DSIS).
Key stats confirmed in the report include:
- 10,000 – Organisations paid directly by the MOD globally in 2020/21
- 5,000 – Estimated apprentices employed in the UK defence sector
- $4.6 billion – Average of annual UK defence exports between 2016-2020
Launching the report, the Minister of State for Defence Procurement, Mr. Jeremy Quin said: that the defence sector is driving prosperity, strengthening the economy, That is something of an understatement and it doesn’t need a mathematician to work out how Defence is supporting jobs and building necessary skills that we need right across the UK if our spoken ambitions are to be met. As it happens, I think it is fair to say that Mr. Quinn is in fact the most highly regarded Defence Procurement Minister since Philip Dunne and whose loss to defence when he was most regrettably moved on to Health for a short period by Terresa May.
Mr Quinn added that “This first report from the JEDHub provides some new insights on the value of the sector – beyond keeping us safe in times of trouble – and I am delighted to see industry and government working together to help us grow our understanding of that vital contribution.” And “I would particularly like to thank the companies in the Defence Growth Partnership and members of their supply chains for their support in this important initiative.
Based in the UK Defence Solutions Centre, the JEDHub is designed to provide better, consistent and impartial data to help inform decision-making processes. The JEDHub is supported by government, industry and academia.
The fresh insights referred to by the Minister include:
- 37% – Number of the surveyed jobs supported by overseas sales, showing the contribution of defence exports to sustaining jobs in the UK
- 6% – Increase in graduate and apprenticeships entrants into surveyed companies from 2019 to 2020
- £45,000 – Average full-time salary for surveyed defence roles, over 16% higher than the UK mean average annual full-time salary in 2020.
Speaking personally, while the above are all at least to be deemed as positive I not that sure they provide sufficient evidence of self-congratulation. However, for the record some of the other detail views provided include:
The report suggests that the defence sector continues to invest in developing highly skilled careers for the future, with the report including an estimate from ADS of 5,000 apprentices in employment in the UK defence sector in 2020. The JEDHub survey also covers recruitment of apprentices and graduate trainees and that figure shows growth of 4.6% from the previous year.
The report follows the recently refreshed SME Action Plan which was/is designed to further improve engagement with Small and Medium Sized Enterprises, focusing on procurement models that are easier to navigate, a recognition of the role the MOD and its major suppliers play in supporting the whole of the defence supply chain and understanding how best to support innovation and exports for UK suppliers.
The latest data shows the MOD spent £1.1 billion directly with SMEs in 2019/20 and a further £3.4 billion indirectly through the supply chain. This accounts for 21.3% of procurement spend that year and shows procurement spending with SMEs continues to grow, with the intention of procurement spending with SMEs reaching 25% by 2022.
Comment – So why is it that years after I brought this particular company to the MOD’s notice – a company by the name of Cam Lock Ltd based in Aldershot and that designs and manufactures world leading personal protection life support systems, for the world’s military and large industries such as petrochemical including FAST-Mask Escape sets and importantly, CBRN tactical Respirators mask systems used in Typhoon, Gripen, Rafael, F-15, Hawk, F-16, F-18, F-22, F-35 and a number of international military transport fixed and rotary wing aircraft and exports over 90% of what it produces and YET – struggles make the necessary contacts within the MOD particularly those that should be of great relevance right now to the nuclear submarine industry. I will hopefully look forward to reading the Defence Procurement Ministers response to my above observations because if this turns out to be a typical example, it shows how little further forward, we have come and that the MOD still has a lot of work to do.
Research & Development
The report highlights that Research and development (R&D) is central to our Armed Forces being able to stay ahead of our adversaries for combating future threats. No disagreement about that. The JED Hub report shows the MOD spent £1 billion on R&D in 2019/2020 noting that UK Research and Innovation estimates every £1 of public R&D investment generates around £7 of benefit to the UK. Over the past five years industry’s own private investment in UK R&D has also grown, by 8.9% across 2015-2019 to £464 million.
Frankly, the amounts being spent by HMG on research and development are pathetic. We have had the talk, we have had the promises but we are yet to see any actions that demonstrated convincingly that the MOD believe any more now in the old adage, say what it means and means what it said.
JEDHub next steps
The JED Hub’s report is, according to the MOD and some within industry, an important deliverable of the 2021 Defence and Security Industrial Strategy, Whether or not it has managed to build much on the extremely useful Independent report written for the then Secretary of State for Defence Gavin Williamson by Philip Dunne is at best unlikely and probably best to be considered as being very little if any. The Dunne Report by the way, highlighted some of the crucial contributions made by the UK defence industrial sector to UK prosperity and what more needed to be done.
In the coming year, we are told that the JEDHub aims to provide more data about the economic contribution at a national, regional, and local level.
Come on MOD – Get your act together and stop searching for self-congratulation. You can and must do better than this.!
CHW (London – 22nd March 2022)
Howard Wheeldon FRAeS
Wheeldon Strategic Advisory Ltd,
M: +44 7710 779785