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The Parliamentary Under-Secretary of State for Defence (Stuart Andrew)
It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate the hon. Member for Rutherglen and Hamilton West (Ged Killen) on securing the debate and for the tone of it. My hon. Friend the Member for Stirling (Stephen Kerr) is right that it has been a considered debate about how we might diversify the defence industry in Scotland.
Before I address some of the specific points that have been raised, I want to emphasise the importance of the UK’s defence industry, both in delivering world-class military capabilities to our armed forces and in contributing to the UK economy. Last year’s report into the contribution of defence to UK prosperity by my right hon. Friend the Member for Ludlow (Mr Dunne) showed that defence benefits every single part of the United Kingdom. It is a sector with an annual turnover of £22 billion supporting some 115,000 jobs. Scotland shares in that national success by benefiting directly from every pound spent on our defence, which is in itself the biggest defence budget in Europe. The report highlighted the range and diversity of the defence industry across the whole of the UK, including in Scotland, and the UK Government’s support for the defence industry in Scotland.
Last year, defence spend with industry in Scotland amounted to £1.65 billion, supporting some 10,000 jobs and equivalent to £300 per capita, which is above the UK average. The hon. Member for West Dunbartonshire (Martin Docherty-Hughes) said that Scotland wants its fair share, but as a Yorkshire MP I would say that £300 per head in Scotland compares very favourably with the £60 per head that we get in Yorkshire and the Humber. I think it is we who want our fair share.
Martin Docherty-Hughes
There is a difference between a nation and a region, clearly.
Stuart Andrew
There are many Yorkshire people who would argue very differently.
We invest in shipbuilding in Scotland to maintain world-class capabilities for our Royal Navy, recognising the incredible expertise of the Scottish shipbuilding sector. With a history that dates back more than 150 years, it has long been the envy of the world and today remains a global leader. As we have heard, in the past few years Scotland has played a major part in the building, assembly and successful delivery of HMS Queen Elizabeth, the most powerful surface vessel in British history. The MOD has also placed a £3.7 billion contract to build the first three state-of-the-art Type 26 global combat ships on the Clyde, where all eight will eventually built. The first of these City-class frigates has been named HMS Glasgow and the last will be HMS Edinburgh. Coupled with our order for five offshore patrol vessels, this work will sustain some 4,000 jobs in Scottish shipyards and throughout the supply chain until the 2030s. No other industry in the UK can boast such a pipeline of future work.
Many other businesses are investing in Scotland, and I have heard many people congratulate and praise them. They include Babcock, BAE Systems, Rolls-Royce, Leonardo, Thales, Raytheon and QinetiQ. Denchi Power is an innovative smaller company, based in the far northern coastal town of Thurso in Caithness, which from its factory overlooking the beautiful islands of Orkney provides much of the essential advanced battery and charging technology and subsystems for the UK’s combat radio systems. These companies demonstrate the diversity of size and geography of the Scottish defence supply chain.
In the air, Leonardo manufactures state-of-the-art radar systems in Edinburgh. I had the great privilege of seeing some of the fantastic work it is doing there, and it is world beating. We want to see more of that as part of the combat air strategy. At RAF Lossiemouth, work has commenced on a new £132 million strategic facility co-funded by the MOD and Boeing. Up to 200 local jobs will be created at the peak of construction and we expect over 400 new jobs in the operation, once the P-8A fleet is based there permanently.
On land, companies across Scotland have provided and continue to logistically support high-technology subsystems on the Army’s critical warfighting platforms. These include Challenger 2 main battle tanks, Warrior infantry fighting vehicles, Foxhound patrol vehicles and the new AJAX reconnaissance fleet. The hon. Member for Glasgow North East (Mr Sweeney) asked for an update, and I can tell him that there is an ongoing competition on package 2 between the two contenders, and we are waiting for their revised bids, which we expect to have soon. The winner will be announced later this year. As it is a live competition, there is not much more I can say at this stage, but it is ongoing.
It is right that there is more that we can do, and I am absolutely determined that we do it. Scotland also benefits from the defence innovation initiative. The Defence and Security Accelerator finds and funds exploitable innovation to support UK defence and security quickly and effectively. It brings together the private sector, academia and Government organisations to find innovative solutions to some of the challenging problems facing defence. In the last year, DASA has launched 14 new themed competitions and run five cycles to open call. It has received nearly 800 proposals from over 480 organisations; some 228 proposals have been funded, of which over half are from small and medium-sized enterprises, with over £36 million of funding allocated. DASA’s competition events and outreach work are supported by a team of regionally focused innovation partners. This year DASA has been building relationships in Scotland and liaising with Scottish Enterprise, Textiles Scotland and the Universities of Glasgow, Strathclyde and St Andrews, to name but a few.
We also heard about space; Scotland has a great opportunity in that sector. Scotland is developing innovative defence technologies in that area, which is one reason that the Government’s flagship cyber-security event was hosted by the National Cyber Security Centre in Glasgow last week. Raytheon, which I met this morning and which specialises in the development of cyber-technologies, has recently announced new investment in a hi-tech manufacturing facility in Livingston, as we heard in the debate, as part of the diversification of its portfolio and its investment in British jobs. That is exciting news that will build on the support that it already gives.
More broadly, the hon. Member for Rutherglen and Hamilton West is right that space funding is an area that we need to develop carefully and take every possible opportunity from. That is why our space strategy, setting the direction for the defence space sector, will be published shortly. I regularly meet companies across the country, including many in Scotland, to talk about the space sector. I can assure hon. Members that it is something we are taking very seriously, because we know it will provide a great deal of opportunity in the future.
On 14 March this year the Defence Secretary reaffirmed his commitment to increasing defence’s contribution to UK economic growth, setting out a new package of measures to drive productivity and innovation in the sector. We held prosperity conferences and SME workshops, and we want to engage with as many people as possible. Many Members who have an interest in defence have arranged for me to meet businesses. I am happy to do that because we want to engage with as many of them as possible, so that we can take advantage of what they offer for the security of our nation, and so that every part, including Scotland, benefits from the wider prosperity that defence spending can bring.