Achieving Economic Recovery: Defence

Written by Andy Johnston, Defence Policy Adviser and Caroline Donaghy, Defence Director

Following an incredibly difficult and challenging time for our members, ADS believes that the UK Defence Sector presents an opportunity to catalyse and contribute to economic recovery. The relative strength of the UK Defence Sector, when compared to adjacent manufacturing and engineering industries, should be seen as a chance to place work with UK industry and increase industrial activity across the four nations.

The UK is the second largest defence exporter in the world and in 2019 had a turnover of £22.7bn directly supporting 132,000 jobs, including 5,000 apprentices, across the whole United Kingdom. Now is the time to capitalise on this position and align the Defence and Security Industrial Strategy (DSIS) and Prosperity Agenda to use investment in UK Defence as a catalyst for wider economic recovery.

As an overall guiding principle ADS believes the Dunne Report and subsequent collaborative work on the Defence Prosperity Agenda provides a useful blueprint for supporting UK industrial capability. Adopting these recommendations will allow Government to maximise UK industry’s role in value generation, technology development, creating jobs and maintaining high-level skills and delivering national security alongside the Armed Forces.

This line of thinking requires a number of elements to be aligned in order to ensure that Defence can work quickly enough to keep defence businesses active and finances flowing through the supply chain. ADS believes that Government should take a more flexible approach to major capital projects and identify areas of planned Government procurement that could be accelerated to support the UK supply chain and benefit from the spill-over in adjacent sectors. Maintaining the pace and trajectory of procurement that existed within the Department prior to March 2020 will not catalyse the forward momentum that is needed to boost productivity.

ADS believes that the DSIS provides an ideal opportunity for industry and Government to come together and share more information, both ways, on planned research & development activity and planned investments. Likewise, more clarity on the forward development of the Equipment Programme and aligning these capability priorities with national technology challenges can help UK Defence make more efficient use of the money that it has within the Department.

National strategic projects such as the Combat Air Strategy, shipbuilding and digital technologies must be considered as contributors to national recovery to sustain innovation, support the supply chain and create long-term high-value jobs. Similarly, industry would welcome the development of sector-specific strategies such as a Land Strategy and Rotor-craft.

ADS is working with our members and Government colleagues to discuss these opportunities, both short and long term. We believe this is an opportunity to lock-in this direction of travel and accelerate towards a new way of defence procurement in preparation for the Integrated Review. Now is the time to use the MOD’s procurement power to strengthen and revitalise the national economy.