Category: News and Blog

We were delighted to welcome the former Secretary of State for Defence, the Rt. Hon. Liam Fox MP. He was able to draw on his experience to consider whether the UK gains operational advantage from having all of its defence manufacturing on shore. The main points arising were:

He drew attention to the lack of any apparent cost control process at MOD, when he entered office. He instituted a Major Projects Board to manage both progress and costs of the MOD’s major projects. He estimated that in 2010 the 10 biggest projects accounted for 90% of the equipment budget.

He considered that any Secretary of State has to balance the questions of cost control, operational utility and the domestic economy (the Prosperity agenda) when assessing what equipment to buy.

Concerning the acquisition of platforms, such as ships and other systems, the real value lies in the systems and sensors to be used for missions, that provides operational utility. This also enables the UK to retain the Intellectual Property Rights (I P) throughout the lifetime of that particular system.

A key element to ensure proper cost control is the avoidance of ‘re spec-ing’, where a project is re-evaluated with additional attributes, causing delay and costs.

He considered that it was unlikely, given budgetary constraints, that the UK could ever buy all of its equipment needs on shore. Defence Secretaries need to be able to assess what the UK really needed, plus what could usefully be shared with allies.

Following the Covid 19 pandemic, he felt that the matter of supply chains across a range of activities would be re-assessed. It is likely that increased stocks of spares & supplies would be needed for the foreseeable future.

An important matter to consider was the nature of the threat. The advent of Hybrid – Grey zone conflict means that the enemy is becoming invisible. In which case numbers of platforms becomes less of a consideration, so much as the ability to operate in a conflicted environment, particularly where access to space-based communications, or in the face of a sizable cyber-attack. In this instance, a low-cost platform (such as an OPV) equipped with good sensors can perform the same task as a high spec frigate.

Working with partners entails risks if political priorities diverge, but the benefit is increased inter-operability if joint operations are undertaken (e.g. NATO allies).

There is a strong case for the professionalisation of the procurement cadre – with wider education in the economic arena. The present system means that too many people are re-learning lessons during the lifetime of a project. The risk is that the contractors manage the MOD, rather than the other way around.

Technology transfer within the UK is a good way to re-coup investment costs & retain  I P. This is especially the case where IT applications are concerned e.g. Artificial Intelligence etc.

The UOR process used during the Iraq campaign (and other campaigns) showed what the acquisition system can achieve, given the will & the necessary political impetus.

We were delighted to welcome Francis Tusa, editor of Defence Analysis, to address the APPG. Some of the main points arising during this session were:

The difference between pure operational sovereignty, versus mutual dependency, or reliance on one country, is a question of balance. Key factors are the cost of maintaining an on-shore capability, versus the risk that is run by co-operating with others.

A good example of maintaining operational sovereignty where risks and costs are shared, is Team Complex Weapons (Team CW) which produces missiles. MBDA is a joint venture where the UK co-operates with other European countries.

The risk of relying on one supplier e.g. the USA, is that unless there is a good negotiation at the outset, customers are subject to the costs involved in accommodating up-grades required to retain the capability to operate the system.

The MOD needs a single figure with the authority to challenge programme managers on cost and the ability to up-grade a capability or adjust the specifications of a system.

The value of a defence industrial strategy pays dividends by encouraging co-operation between the customer (MOD or the services) and the contractor. A good example is the Aircraft Carrier Alliance, where all involved were able to co-operate to get the projects delivered. Similarly, the Typhoon support contract has achieved savings plus operational availability.

The comparison was drawn between practice in the UK versus that of France. Both countries have similar sized defence budgets, but Tusa believed France derived more benefit from its equipment budget than does the UK.

Where the MOD or the services over specify their requirements, the result is often that projects become too expensive, and in some cases are cancelled altogether. Also, the MOD often fails to negotiate with the suppliers, to enable specific equipment to be fitted: the example was given of the acquisition by the UK and India of the P8. It is possible to negotiate with suppliers to be given Design Authority status, which enables UK contractors to carry out maintenance and up-grades for UK and other countries.

We were delighted to welcome General Sir Richard Barrons, who spoke to the APPG on the basis of his experience as an operational commander, as Commander of Joint Forces and before that as Deputy Chief of Defence Staff for Military Strategy and Operations.

He was of the view that for too long UK defence policy makers have viewed the world with a ‘Post – war’ mindset. Following the end of the Cold War the UK (along with its allies) has hollowed out its defence capability. The recent Integrated Review exercise painted a picture of an increasingly complex and contested world.

He was of the view that the new defence paradigm, outlined by the Integrated Review, will need the UK to widen the framework of how it thinks about defence, to include more emphasis on societal resilience and a way to mobilise resources to deal with this new ‘pre-war’ threat environment, which is enduring. Among the sovereign capabilities that the UK should secure is access to space; for communications, Global Positioning technology – which is crucial to modern weapon systems or for observation. The UK must also ensure that it has adequate stocks of munitions.

He referred to the Joint Strike Fighter (JSF) as an example of a capability which the UK could not design and build on its own. Also the case of Chinook helicopters which remained grounded for lack of the appropriate software from the manufacturer. The majority of platforms (ships and aircraft) now rely on IT which derives from technology developed in the civilian sector. He characterized the UK’s defence industry as being too small; certain sectors he saw as being on the scale of a cottage industry.

Above all the main requirement for sovereign capability is access to secure encrypted communications, enabled by cyber security and data. The servers must be based in the UK and underground. He cited the example of UK Special Forces who must be able to go anywhere in the world, either for a rescue mission, or to assist allies. This capability requires the ability to project forces at long range and good communications.

The recent example of the Suez Canal blockage caused by a single ship showed how brittle modern society is. An adversary might choose to direct their efforts at the backbone of a country – its critical national infrastructure, to produce chaos in a very short time. This would render the armed forces largely redundant.

All of which means that the UK needs a more agile approach to how Defence manages acquisition and definition of equipment requirements. Those things that we do not make at home must be stockpiled – which costs money. To be credible the UK’s defence capability must be resilient and able to manage the loss of equipment on campaigns. In particular, Gen Barrons drew attention to the work on the development of a long-range precision conventional missile, being developed by Russia. He was of the view that the UK had no defence against this threat.

Q & A

During the Q & A session, the following points emerged: In terms of ‘going it alone’ on another Falklands style operation, Gen Barrons suggested that the UK should re-think what the key consideration might be. Was it the re-occupation of the Falkland Islands, or was it a way of dissuading Argentina?

Concerning the funding of defence expenditure, Gen Barrons suggested that resources would be better used by investing now in the sort of autonomous capability referred to in the Integrated Review, to ensure that the UK’s Armed Forces had the capability to meet evolving threats. He believed that a figure of 3% of GDP spent on the defence budget would ensure that Defence did not suffer from stop – go funding problems.

Defence exports and co-operation with allies, as exemplified by the T 26 Frigate programme, mean that the UK is able to buy equipment at a reduced price. The pace of change in technology means that the MOD should devote more energy to spiral (evolving) development, rather than locking itself into big programmes which take years to develop.

Gen Barrons was of the view that politicians have a role to play in shaping the thinking of policy makers, to shift away from a ‘pre-war’ mentality, to a more urgent approach.

The Government today published its Defence and Security Industrial Strategy, which you can read here.

On Tuesday 9^th 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.  

Filton and Bradley Stoke MP Jack Lopresti has been re-elected Chair of the All-Party Parliamentary Group on Sovereign Defence Manufacturing Capability at their annual general meeting this week. The Group aims to facilitate an ongoing discussion on the strategic value of maintaining a sovereign defence manufacturing capability and was first formed in 2020.

Alongside Jack, Khalid Mahmood (Labour, Birmingham Perry Bar) was elected Vice Chair; Mark Menzies (Conservative, Fylde) was elected Treasurer and Kevan Jones MP (Labour, North Durham) was elected Secretary.

The Group is now planning it’s work for the year ahead. The first session will hear from Professor Trevor Taylor, Director of the Defence, Industries and Society Programme at the Royal United Services Institute. Further details will be released in due course.

Commenting, Jack Lopresti MP said:

“With the ongoing Integrated Review of Security, Defence, Development and Foreign Policy, and the £16.5 billion increase in defence spending announced in November, it’s vital that parliamentarians have a forum to hear about the potential strategic advantages of developing and growing our sovereign defence manufacturing base.

“I’m very proud to represent a constituency that plays such a leading role in the UK’s world-class defence industry. Major employers within this industry have a significant presence in the area I represent, including Airbus, Rolls-Royce, GKN, BAE Systems, MBDA and Boeing. With 8,000 MOD civil servants based locally at DE&S Abbey Wood, I have seen for myself the great work that they do in ensuring that our armed forces get the equipment they need.

“This APPG will allow colleagues to hear from distinguished industry figures, people with experience on the front line and others to discuss and debate the sector and how it can be best supported in the months and years ahead.”