Britain’s defence budget has begun moving at a speed the supply chain has not seen in years. In his first keynote as Defence Secretary, delivered at the AGF Defence Summit at Farnborough, Wes Streeting told industry that more than £11.8 billion of contracts were agreed in the 10 days following publication of the Defence Investment Plan. “Defence is up and flying again,” he said.
For firms that spent much of the past year waiting for the DIP to land, the message was that the waiting is over and the delivery risk now sits with them. “I know that the months leading up to the DIP weren’t easy for many of you in this room and beyond,” Streeting said. “With a plan now published, I’m relying on all of you to make it a success.”
The headline numbers are large. The government has committed £298 billion over the next four years, including an additional £15 billion on top of last year’s Spending Review settlement, with NATO members having reaffirmed a commitment to 3.5 per cent by 2035. The full breakdown is set out in the Defence Investment Plan published by the Ministry of Defence.
What should interest smaller suppliers more than the totals is the pace Streeting set as the new standard. He pointed to a Typhoon upgrade, a precision weapon system capable of defeating drones at a fraction of the cost of existing missiles, that went from start to finish in 42 days. “This is a mark of where we need to be,” he said.
That ambition comes with an explicit instruction on procurement culture. Working with the Defence Industrial Joint Council, Streeting said he would direct his department “to take a new approach to risk. Not every decision will come off, but that’s the price of moving at the pace of modern warfare, where delay and inaction pose the greater threat.”
A department more tolerant of failure is, in principle, a department more willing to buy from firms without decades of programme history behind them. Whether that translates into contracts at tier two and below is the test, and it lands against a backdrop in which ministers have already set up a dedicated unit to open MoD contracts to smaller firms and in which manufacturers have pressed for binding offset commitments to channel spending into the SME base.
The programme detail points to where the work will sit. Streeting confirmed an ambition to get a demonstrator flying next year under the new StormFighter collaborative combat air programme, with the system operational by the end of the decade and supporting 2,000 jobs once the full production line is running. He put the global CCA market at more than £125 billion to 2050. “This is a sector in which I expect the UK to excel.”
Elsewhere, more than £1 billion is going into the Typhoon fleet to keep it flying into the 2040s, £8.6 billion is pledged to GCAP, and a £708 million contract extension has been signed with BAE on sovereign technologies. Canada has joined the GCAP programme as an observer alongside Italy and Japan, confirmed by the MoD this week.
Some 4,500 people already work across the UK on the integrated combat air system, and the air sector employs 70,000. Streeting framed all of it in industrial terms: “Defence will not just be a recipient of the proceeds of economic growth. It will be a central contributor to building that growth.” Business owners in the regions have heard versions of that before. The difference this time is that the money has been voted, the plan is published, and, as analysis of the wider economic dividend has suggested, the multiplier only works if the spending reaches beyond the primes.
