Defence Investment Plan

Wednesday saw the publication of the very long awaited Defence Industrial Plan. This was initially pencilled into the calendar for last autumn and its non-appearance has been the most painfully obvious example of how the Government has been paralysed by indecision at the highest levels – something which has effectively cost the PM his job.

Most of the media comment has focussed on the headline figure allocated to the plan. John Healey resigned as Defence Secretary when he couldn’t secure Treasury sign off on the £18bn uplift he believed was necessary. The shock of that, and the recognition that a new PM was unlikely to have quite the same deference to the Treasury’s view, has enabled an extra £1.5bn – taking the increase up to £15bn and the projected total to £298bn over four years – to be found from somewhere and given the new (for now) Defence Secretary, Dan Jarvis, something to point to. To be honest, this focus on the headline figures is quite frustrating: arguing about £1.5bn in a £298bn programme to be delivered over four years is not strategy, it is accountancy.

The bigger picture is what that money will buy and – from an industrial point of view how much value can it create. Here, the Plan is better than some other recent defence documents in that it does put industrial capacity at its heart. Industry needs to be seen, not just as a supplier of ‘kit’, but as an integral part of a nation’s defence capability. That we had moved away from this understanding, which was there in the twentieth century, probably says a lot about the ‘wars of choice’ era that we have lived through since the end of the cold war. The Plan is a necessary corrective.

But (of course there is a ‘but’), there is not enough that explicitly recognises that role of manufacturing SMEs in supply chains, as opposed to innovative SMEs from whom MoD might want to procure directly. The new(ish) Defence Office for Small Business Growth has been focussed on the latter not the former. That needs to change if we are to capitalise on the breadth of capabilities that exist – or could potentially exist – in the UK’s manufacturing supply chain. The Plan does hint at a greater role for the British Business Bank here but there are no targets for investment in SMEs integrated into supply chains, which would be welcome. The SME infrastructure is a crucial part of defence resilience. Sustained wars will find weaknesses and create bottle necks away from the front line (this has been borne out in Ukraine, but the lesson is older: the Shell Crisis of WW1 was actually a crisis of the supply of machine tools…), without visibility they will go unrecognised and uninvested in. Finally, most of the timeframes in the Plan are actually quite short, much of it looks forward to the early 2030s (which makes the fact that it was nearly a year late particularly unconscionable). That is not a long time for companies that are looking to make major capital investments.

So, while the headlines have been about political rows and the rise of the drones, there is something more substantial in the Defence Investment Plan, a recognition that UK manufacturing can be part of the solution to a national issue. But, what is needed now is an expansion of that to include a wider conception of what UK manufacturers can bring (and already bring) to the table. It is not just about eye catching new technologies it is about developing a depth in the defence industrial base that enables us all to be more secure. The Plan is a good step towards rebuilding sovereign capability, but the industrial component still feels like the supporting act rather than the main performance. For a country that wants to be able to ramp up production in a major conflict, the resilience of the domestic supply chain arguably deserves equal billing with the platforms themselves.