Defence Industrial Strategy

Baroness Goldie Excerpts

Wednesday 10th September 2025 Lords Chamber

[Baroness Goldie (Con)]

My Lords, I place on record my support for the enormous amount of work that has clearly gone into the production of this industrial strategy. It is very evident that those at the Ministry of Defence have put their thinking caps on, done the hard work and constructed a plan based around defence’s current and future requirements. There is therefore much to be applauded. The six priority outcomes are absolutely aiming in the right direction and the commitment to strengthening the MoD’s links with SMEs is particularly welcome.

A strong industrial base is vital for the future of our Armed Forces and our defensive resilience as a whole. The need has never been more evident than today, when we have seen a Russian incursion into a NATO ally’s airspace and the largest attack in Ukraine by Russia to date. This escalation is deeply troubling and underlines the importance of swiftly putting Britain into war-fighting readiness.

This is a solid piece of work, but the caveat is this: the solid piece of work crumbles if the bricks are not cemented together. That cement is implementation at a wartime pace. What matters now is that the words on these pages are translated into missiles, drones, equipment and ships. Critical to this is procurement. The chilling reality is that procurement has essentially dried up. There have been promising words in the SDR, but we have yet to see the major procurement contracts that the MoD has promised.

Procurement is the lifeblood of a successful industrial strategy. For example, I ask the Minister: how will the Government ensure that the Typhoon factory in Warton remains open and thriving? We have heard that the Government will be opening up six new munitions factories, but they must have orders. When will they be placed?

I understand that the promised defence investment plan will detail much of the procurement endeavour, but when? The defence industry has been waiting with bated breath since July of last year, and industry must have greater certainty. I implore the Minister to do everything in his power to ensure that the defence investment plan is published as soon as possible. In that connection, will the UK’s defence orders be joining a queue or with they be prioritised over orders for export?

When it comes to the new structures within the MoD, co-ordination of accountability to the Secretary of State is paramount. At the same time, duplication must be eradicated. The SDR and this strategy both mention the creation of a number of new bodies within the MoD: UK Defence Innovation, the Defence Industrial Joint Council, the office of defence exports, a defence office for small business growth and the national armaments director.

The strategic defence review identified a 10% reduction in Civil Service costs by 2030. Can the Minister clarify how, with the addition of these new offices, the MoD will achieve that staffing cost reduction? What existing structures will be merged or abolished, and who will be auditing progress? While I am on this topic, can the Minister update the House on the progress of appointing the national armaments director?

Page 30 of the industrial strategy details nine milestones to be reached by the end of this year. I do not believe any of these have as yet materialised, and the end of the year is fast approaching. Is the Minister confident that the 2025 timeline will be met?

In conclusion, I raise an issue that will come as no surprise to the Minister—budget. My right honourable friend the shadow Secretary of State and I have raised concerns about the bundling together of intelligence spending within the defence budget. That means that, despite the Government’s claims of spending 2.6% of GDP on defence by 2027, the actual money available to the MoD for defence spending is 2.2% of GDP. I am not trying to catch the Minister out, but I want to make this clear: the Government may have increased defence spending, but this level of spend is simply not enough to deliver everything in the SDR and indeed in this industrial strategy.

The Russian incursion into Polish airspace yesterday and the triggering of Article 4 of the North Atlantic Treaty serve as a stark warning: complacency is not an option. The contents of this strategy, which, as I have said, these Benches fully support, cannot be a prayer for the future. Wartime pace means delivering from now on and, quite simply, there is no safe alternative.

[Lord Fox (LD)]

My Lords, it is a pleasure and a challenge to follow the noble Baroness, Lady Goldie, who has such expertise in this area. We on these Benches also welcome the Government’s announcement of this new defence industrial strategy. We support the objectives of both boosting defence capability and increasing economic activity within our country. As someone who has worked in the sector—I no longer have an interest in it—I can say that, in the main, the jobs in the defence sector are high-quality jobs that pay well over the national average, so they are very worthwhile jobs for our citizens. More than that, they will contribute in large measure, we hope, to the resilience and security of our country.

Like the noble Baroness, Lady Goldie, I will focus on procurement. I will not repeat the questions that she has already asked, although I am very interested in the answers. It is clear that an improved framework is needed and that, in the Government’s own words, waste, delay and complexity have prevailed. Big changes are therefore needed. We also support the aims of involving more SMEs and driving innovation. These are important, but how? Section 7 of the strategy sets out some details of process, but I would suggest that, as well as process, this all requires an entire change of culture across the sector, from the MoD to the primes and the SMEs. How will the Government fast-track the necessary culture changes that we need in order to move at pace?

The implementation of a UK offset regime is welcome and the sections in the strategy are encouraging. I appreciate that consultation is needed, but I also note that there are—we hope—contracts being let already before this regime is put in. Can the Minister tell your Lordships’ House how any offsets will be gained from contracts that are let before then?

Similarly, a buy British focus is really good and very important. However, some contracts are being let at the moment that do the exact opposite. They are contracts that may call into question the future of established capacity in this country: capacity that, once lost, will not be regained. Can the Minister therefore ensure that these are reviewed as soon as possible to ensure that permanent damage is not being done before this strategy is implemented. I will be happy to discuss further details on that with the Minister.

In the Spring Statement, Rachel Reeves confirmed an extra £2.2 billion of UK military funding. This increase will be paid for by cuts in overseas aid, which the Minister knows we deplore. This strategy contains spending of £773 million on the Government’s estimate, but can the Minister confirm that this is not in fact new money, but money out of the pot that was announced in the spring by the Chancellor? At the time, the Chancellor also announced the new Defence Growth Board. Can the Minister say what role this will play, and indeed what role it has played in the preparation of this strategy? How does this fit with the new defence investors advisory group that is announced in the strategy?

I also seek information on the whereabouts of the Defence Growth Partnership, which has been in place for some time and shares many of the same aims, particularly around SMEs and innovation. What is its role? Is it still working and how does it contribute?

A key drag on the success of this strategy will be the lack of available skills. Part of this announcement includes skills investment, which is largely focused on five new defence technology colleges. This is also welcome, as is the emphasis on apprentices. However, what is the role of Skills England in all this, given that it was supposed to be part of the picture on the national skills programme.

Following events, it is very clear that things are moving very fast globally, and moving in the wrong direction. They underscore the vital importance of working alongside our European allies in securing the UK’s defence. As I am sure the Minister will tell us, we continue to play key roles in JEF, E3 and other groupings, while NATO is of course our foremost security defence relationship and always will be. However, more can be done to deepen the co-operation and integration with our European allies. They share security challenges and together we can build scale to rearm at pace. Will the Government, for example, now agree to seek the UK’s associate membership of the European Defence Agency?

While EU institutions have a more limited role in defence, the Security Action for Europe—SAFE—defence fund is being established by the EU Commission. Recognising the opportunity that SAFE presents, the Minister of State, Stephen Doughty, told the Foreign Affairs Select Committee on Monday:

“It is a €150 billion instrument. It is very significant and could lead to significant opportunities for our defence industries”.


Can the Minister therefore update your Lordships’ House on the UK’s discussions with the Commission and the nation states on our participation in SAFE and tell us whether UK industry will be eligible to bid in the first round, which I believe is in November?

I have lots more queries, but I close by saying that this strategy is a first step and I absolutely concur with the noble Baroness that implementation is key to its success. We will happily support and work with the Government to help deliver the strategy and its objectives.