The defence industry can’t wait for the government to find its courage
The government slips from one deadline to another and insists all is well. But the damage is already being done, to our industrial base, our capabilities and our reputation, says Eliot Wilson
Sir Keir Starmer’s government cannot be blamed for all the shortcomings in Britain’s defence posture and capabilities, the roots of which can be found in the eager dash for the “peace dividend” in the 1990s. Every administration has to deal with the political, financial and economic circumstances it inherits, but each also has a clear choice: to improve the situation or exacerbate it. Labour is making things worse, and the defence industry is paying the price.
The UK’s defence sector is hugely important. Its gross value added (GVA) was £15bn in 2024 and it directly employs 181,500 people; these figures rise further if you factor in the security and resilience sector (£11.7bn GVA), while aerospace and space companies also make a valuable contribution. The UK is home to BAE Systems, the sixth-largest defence company in the world, as well as Rolls Royce, Babcock International and QinetiQ, while major international players like Lockheed Martin, Leonardo, Rheinmetall and Thales have a significant presence.
The government knows all this. Ministers have said that the defence industry is central to their decision-making, and the Prime Minister has promised an economic “defence dividend” as spending rises. Last September it published a Defence Industrial Strategy entitled “Making Defence an Engine for Growth”. Scarcely a day can go by without Defence Secretary John Healey referring to “the largest sustained increase in defence spending since the end of the Cold War”.
At the heart of this, though, is a multi-faceted problem. The increased defence spending is too little, it is too slow, the government is unresponsive and in denial, and some ministers genuinely seem to struggle to differentiate between announcing that something will happen, and it actually taking place. Meanwhile, the defence industry, with some of the best manufacturers in the world, waits impatiently but impotently.
The detailed spending plans flowing from last summer’s Strategic Defence Review will be set out in the Defence Investment Plan. It was due to be published last autumn, but has still not appeared. It now seems unlikely to appear before May, perhaps later, and one rumour suggested it might never be made fully public. It was also suggested, astonishingly, that officials had not allowed the Armed Forces Minister, Al Carns, to see the plan. All the government can say is that it is “working flat out” on the document. Clearly, that is not good enough.
Delays
Now we discover that another critical part of the SDR, the Defence Readiness Bill, has been postponed until 2027 at the earliest. This legislation, which ministers promised “at the beginning of 2026”, will require key industries to prepare their workforces for a conflict, allow the designation of critical national infrastructure like energy networks and railways as military priorities and give the government powers to increase the Reserves. Similar measures are already being taken in Germany, France, Poland, Finland and elsewhere. Britain, meanwhile, dithers.
The defence sector is not like other industries. There is a much more circumscribed customer base – no matter how prevalent shoplifting has become, Primark is not in the market for tanks – and industry needs a steer on where it should focus its capacity
The defence sector is not like other industries. There is a much more circumscribed customer base – no matter how prevalent shoplifting has become, Primark is not in the market for tanks – and industry needs a steer on where it should focus its capacity. Will the government priortise the replenishment of ammunition stocks, or invest in new drone technology? Is the Global Combat Air Programme, which will deliver what the RAF will call the Typhoon, going ahead, as ministers claim, or facing delays or even cancellation, as the UK’s international partners in the project, Italy and Japan, fear?
Industry needs stability and the ability to make long-term plans. This is especially true of the defence sector’s rich ecosystem of SMEs, which play such an important role in innovation. They are agile and dynamic but lack the financial resilience to endure long delays and quickly become prey to foreign acquisition.
A few weeks ago, the House of Commons Defence Committee took evidence on the effects of these delays from defence companies. The message was stark. ADS spoke of “paralysis”, while Make UK Defence said SMEs “are bleeding cash; there is cash out of the door every day to feed the baby birds, and they are simply on pause”. TechUK warned that “a credibility gap is developing [because of] the promise of increased expenditure and defence spending in the UK, versus the reality on the ground of the delay”.
The Ministry of Defence is notorious for ducking hard decisions and deferring or diluting spending commitments. Almost every important strategy of review since July 2024 has been late. At the moment, the problem the defence industry faces is clear, and the government has to own it. Yet the MoD continues to ape Professor Pangloss and deny any serious challenges.
Asked to comment on the postponement of the Defence Readiness Bill, an MoD spokesman flipped through the flash cards and found this one sufficient.
“National security is our first duty, and we have the resources we need to keep the United Kingdom safe from attacks, whether it’s on our soil or from abroad. We’re constantly hardening and sharpening our approach to homeland security, backed by the largest sustained increase in defence spending since the end of the Cold War, making the UK well able to respond to the threats we face.”
We’ve seen in the Middle East how well the armed forces can “respond to the threats we face” – it took three weeks to deploy the destroyer HMS Dragon. The government slips from one deadline to another and insists all is well. But the damage is already being done, to our industrial base, our capabilities and our reputation. Where does the buck stop?
Eliot Wilson is an author and historian