Defence Industrial Strategy 2025: Economic Growth and Job Creation
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Lord Forbes of Newcastle
To ask His Majesty’s Government what assessment they have made of the potential impact of the Defence Industrial Strategy 2025 on promoting economic growth and job creation in English regions and devolved nations.
The Minister of State, Ministry of Defence (Lord Coaker) (Lab)
My Lords, investment in defence is investment in jobs and growth in every nation and region in the UK. That is why we have invested £773 million in the defence industrial strategy, which will position the UK as a global leader in defence technology by backing UK businesses and harnessing the sector’s strengths. There are five defence growth deals, revamping our procurement framework and launching an ambitious skills programme. The defence industrial strategy will create new good-quality and highly skilled jobs across the UK and drive economic growth.
Lord Forbes of Newcastle (Lab)
My Lords, in warmly welcoming the Government’s commitment to significantly increasing defence expenditure and the opportunity to use this lever to promote economic growth, especially through the development of dual-use technologies and extended supply chains, I draw my noble friend the Minister’s attention to the fact that only seven of 14 mayoral combined authorities have so far produced local growth plans that explicitly name defence and national security as priority growth sectors for their area. Does he share my view that better connections between combined authorities and the Ministry of Defence are required to ensure that there are real and tangible economic benefits in every nation and region to increase defence spending? Will he ensure that His Majesty’s Government engage systematically and effectively with regional leaders to ensure that this welcome investment creates the maximum number of jobs possible?
Lord Coaker (Lab)
I agree with that. It is really important for the defence industrial strategy that we liaise with all the devolved Governments and, as my noble friend says, with local devolved councils and mayoral authorities. Kim McGuinness is the Mayor of the North East, in my noble friend’s part of the country, and I know of the work that he has done with local authorities. It is essential that we work with them to deliver the economic growth that we want across all the regions of England and nations of the UK.
Lord Stirrup (CB)
My Lords, the defence industrial strategy will have no economic effect. What might make an impact is a defence investment plan, backed up by the necessary level of resources. The absence of such a plan is undermining business confidence and investor confidence. When will the Government start taking such crucial decisions at a pace that matches the urgency of the international situation we face?
Lord Coaker (Lab)
I accept the point with respect to the publication of the defence investment plan. As the noble and gallant Lord will know, that will be published as soon as it is ready. Look at what has been happening. Noble Lords across this Chamber demanded that the Government spend money on Leonardos, and we announced investment in them just recently. We have also invested huge sums of money on the Clyde and at Rosyth to build new ships. We are investing huge sums of money to develop the dockyards in Plymouth to improve the availability of the submarines, and we are also making numerous investments, such as in Rolls-Royce, with a £9 billion nuclear programme over the next few years. I understand the point the noble and gallant Lord is making, but the Government are not standing still—we are already spending billions of pounds investing in our defence industry.
Lord Harper (Con)
My Lords, may I press the Minister a little on the point that the noble and gallant Lord just raised about the defence investment plan? When I asked him about this in January, he referred to the comments of the Secretary of State at the beginning of January that the Government were working flat out to get this plan done, and there were rumours that it would be ready for the spring. Looking at the pleasant weather outside, spring seems to have arrived. When will the defence investment plan arrive? People will judge the Government not on what they say but on what they do.
Lord Coaker (Lab)
I understand the point the noble Lord is making, and it raised some mirth in here, but the defence investment plan will be published when it is ready and when the Government have made the decisions about matching the budget to the capabilities they want. These capabilities should be matched to the demands of the future, learning the lessons of Ukraine.
As I said to the noble and gallant Lord, Lord Stirrup, the Government are not waiting for the defence investment plan before investing billions of pounds in our defence industry across the country, in the ways I laid out. I go back to the point about the Leonardos. We did not wait for the defence investment plan to do that: £1 billion is going to be spent to ensure we have helicopters. Numerous noble Lords have also been to Rosyth and the Clyde and have seen the ships being built there. This Government are investing in our defence industry, and the defence investment plan will be published when it is ready.
Lord Bruce of Bennachie (LD)
My Lords, of course we welcome the decision to award the helicopter contracts for Yeovil, which the local MP, Adam Dance, has been campaigning for, and we are glad that it has been signed. But the reality is that without this investment plan, there are jobs and investment on hold in defence installations right across the UK. They desperately need to know when the orders are going to flow and when the money is going to come through. We also need to ensure that small and medium-sized businesses have a real stake in building up our high-tech capacity and in filling in our munitions requirements.
Lord Coaker (Lab)
On the last point, of course munitions are important, as we see particularly at the moment. That is why the Government are investing £1.5 billion in six new munitions sites. Thirteen sites have been identified, they are being reviewed, and we will come forward with those munitions sites so that we have them available. Again, that is money being invested. We are also talking about small and medium-sized businesses. We know that the future is not just in the big primes but in small and medium-sized businesses. That is why we have set up within the Ministry of Defence an organisation to drive that growth. Small and medium-sized businesses are crucial, and we will develop those as well.
Baroness Curran (Lab)
My Lords, I agree that we should judge the Government on what they do. My noble friend the Minister has referred to the £10 billion defence contract with Norway to build Type 26 frigates, which has for the first time in many years brought sustainability to the shipbuilding industry on the Clyde. I ask my noble friend the Minister to double down on commitments to make sure that the jobs and investment that flow from this benefit all in Scotland, most particularly those in deprived communities. I ask him to set up a taskforce to make sure that all Scots and all people in the west of Scotland benefit from this—as I say, particularly the most deprived. This Government are taking action; let us make sure that people get the benefit of that action.
Lord Coaker (Lab)
I thank my noble friend for the question. I will consider her suggestion to ensure that the most deprived communities benefit from the investment. That is why we have the skills agenda and why Scotland has a defence growth deal. My noble friend will know that nearly 12,000 jobs are dependent on MoD investment in Scotland and that on the Clyde and in Rosyth we are seeing significant investment. This Government will drive that investment forward.
Baroness Foster of Aghadrumsee (Non-Afl)
My Lords, I refer to my register of interests. I welcome the defence growth round table that took place in Belfast last week. By all accounts it was a very worthwhile event, particularly its focus on the challenges to growth. Does the Minister agree that it is incumbent on political leaders in Belfast, Cardiff and Edinburgh to get behind the defence industry and not shy away from it at this particularly turbulent time?
Lord Coaker (Lab)
I do agree. The noble Baroness will know how many jobs in Northern Ireland are dependent on the defence industry—not least Thales, which has seen a £1.6 billion investment. I would have thought that everyone would have welcomed that for the jobs and prosperity it brings.
The Earl of Minto (Con)
My Lords, while I accept what the Minister has said about current investment, there is a continuing delay in defence investment and orders, which not only is damaging to the Government’s relationship with the home defence industry but risks pushing urgent UK requirements down the queue for future deliveries. Will the Government confirm that the UK’s orders remain prioritised for the Type 26 frigate programme?
Lord Coaker (Lab)
We will ensure that we deliver the frigate programme as announced. We are delighted with the frigate deal that has come from Norway, and we are hoping to bring forward other significant investments. The noble Earl, with his Scottish roots, will know how important this investment is to Scotland. We will continue to drive that investment forward. We will make sure that we protect our own frigate programme as far as we can, but exports are an important part of what we do as well.
Lord Rogan (UUP)
My Lords, Northern Ireland is rightly designated as one of the five key UK regions that are pivotal to the success of this strategy, thanks to the Province’s expertise in cyber security, shipbuilding and missile manufacturing. Can the Minister update the House on precisely what progress His Majesty’s Government have made in delivering this strategy in the six months since it was published and what benefits it has brought to the people of Northern Ireland?
Lord Coaker (Lab)
As the noble Baroness, Lady Foster, said, there have been meetings in Northern Ireland to drive the strategy forward. We are hoping to make an announcement about the growth deal for Northern Ireland to build on the consultations that have taken place. Northern Ireland is home to Thales and a diverse range of defence and dual-use industries. The country is recognised as a leading cyber security hub, boosted by the Queen’s University Belfast Centre for Secure Information Technologies and Momentum One Zero. It is also a critical home to Thales and Harland & Wolff, companies that are critical to our support for Ukraine and our maritime strength. That is a good news story for Northern Ireland and for the whole of the UK.