On Tuesday 9th March, the APPG on Sovereign Defence Manufacturing Capability held a virtual meeting with Professor Trevor Taylor, Professorial Research Fellow in Defence Management at the Royal United Services Institute (RUSI).
The Group was delighted to welcome MPs and peers from across the country and the political spectrum, which helped to facilitate a truly cross-party discussion on the possible strategic importance of maintaining a sovereign defence capability. Members present questioned Professor Taylor in a thought-provoking and lively Q&A session following his presentation.
Professor Taylor was asked to focus on the potential operational advantages of having all defence manufacturing onshore, the sustainability of the UK’s defence manufacturing ecosystem and whether Government procurement decisions should include an operational sovereignty consideration.
Concerning Government procurement as a way to ensure operational sovereignty, Professor Taylor referred to the 2012 Government policy paper National Security through technology:
“In searching for national security capabilities in general, freedom of action rests on the assurance that we will be able to use them or continue to use them whenever we need to, and that when we do so…… they will perform as we require. Freedom of action includes being able to conduct combat operations at a time and place of our choosing.”
Commenting on this, he noted that inter-dependence with a reliable partner was better than dependence on an unreliable partner. Pure independence would rely on having an adequate level of stockpiled equipment and materials, but the ability to up-grade and modify equipment during a campaign might be constrained, if a country were too reliant on overseas suppliers.
Considering the desirability of the UK to source all of its defence capability on-shore, Professor Taylor observed that the UK now didn’t have this ability, and was heavily reliant on imported US equipment, in the region of $8 – 10 billion annually, according to US sources. He also noted that where UK companies had invested in the US, there were strict rules about access to US technology.
Professor Taylor also noted that no one state is completely self-sufficient in defence technology. He cited the reliance of the West on rare earth minerals where China either produced most of the output, or owned the mines producing them. Semi-conductors are predominantly produced in either Taiwan or South Korea.
The amount spent by MOD on Research funding has fallen by 50% compared to the 1991 figure (the end of the Cold War). Development funding has fallen by 75% in the same period, Professor Taylor estimated that today’s figure for Development funding is close to £1 billion.
The UK’s defence manufacturing ecosystem was able to sustain itself through Foreign Direct Investment (FDI) into the defence sector, by US and European contractors. It was suggested that the UK’s defence budget had remained relatively stable in monetary terms, even if the percentage of GDP figure was reduced.
In other comments, Professor Taylor noted the ability of the MOD to reach out to industry for rapid up-grades and modifications when required by campaign pressures, which spoke to the resilience of the UK’s industrial capability. Examples were cited, such as the Falklands campaign of 1982 and the Libya campaign of 2011.
If defence policy is based on the UK Government’s stated ambition of being ‘strong, influential and global’ then international perceptions matter. This requires an ability to deploy and operate without the risk of losing capability if a foreign supplier chose not to supply some equipment. The role of exports was also noted; many countries are trying to develop their own defence industries.
During the Q&A session, the matter of protecting the UK’s Intellectual Property and new technology was raised. It was recognised that trying to define ‘key technologies’ was risky, given the speed at which technology is evolving. Export controls can play a role.
Professor Taylor cited a RUSI study which reported that for every pound the UK invested in the defence sector, one third of the value found its way back to the UK economy. It was also noted that where manufacturing capability is allowed to diminish, it can take time and be expensive to reinstate. The case of nuclear submarine building was cited as an example.
Concerning exports – it was important that UK equipment or systems were not too expensive for export. UK designed equipment was built with potential adversaries in mind, so it was more likely that sales would be to countries with which the UK was allied, as part of a wider relationship building exercise. If UK Armed Forces prioritise ‘inter-operability’ with the US, this could make equipment too expensive to potential export customers.
It was also noted that exports include some of the systems, or sub-systems, that are incorporated into bigger platforms. The Swedish Gripen aircraft was cited as an example; although nominally a Swedish aircraft, 20% of the value of the aircraft is UK built.
As for ‘buying British’ it was noted that EU regulations were not a block on choosing a contractor (e.g. a shipyard), so much as the wish for MOD to run a competition to drive down price. The problem arises where there are not enough shipyards to run a purely UK based competition. When running a competition, the MOD should be encouraged to consider other factors, rather than the lowest bid, such as the economic value to the UK of sustaining a viable industrial base.