Defence and Security Industrial Strategy

James Gray Excerpts

Tuesday 23rd March 2021 Commons Chamber

[Jeremy Quin]

I cannot promise the hon. Gentleman a new home for the Sea Cadets, but I take what he says very seriously. As a result of his question, I will look into the matter and find out where we are. The cadets have an important role to play around the country and they should be properly housed, but I cannot answer with any more precision than that.

More broadly, the hon. Gentleman recognises the value to south Wales of the Ajax contract. It is an incredibly impressive, fully digitalised vehicle. He is right, though, that often in defence, the real value is found with SMEs. As I said, over 19% of our equipment and support spending goes to SMEs now. We will have a refreshed SME action plan published later this year, and it will include issues already raised as part of this thesis—for example, the defence technology exploitation plan, which has worked well in Northern Ireland, will be put out right across the Union. There are measures in the strategy to support smaller companies, and I want smaller companies, which are often the most innovative and inspiring in our country, to have the opportunity to win larger contracts. I thank him for his question.

[James Gray (North Wiltshire) (Con) [V]]

[Inaudible.]

[Madam Deputy Speaker (Dame Eleanor Laing)]

Order. Could the hon. Gentleman start again, please? We had some sort of technical problem.

[James Gray]

Thank you, Madam Deputy Speaker. May I first call attention to my entry in the Register of Members’ Financial Interests and my involvement in the all-party parliamentary group for the armed forces and the Armed Forces Parliamentary Trust, both of which I chair and both of which are supported by the major UK defence companies? They are among the greatest defence manufacturers in the world, and I salute them for it.

Will the Minister acknowledge two other groups whose contribution we nurture? First, he mentioned small and medium-sized enterprises several times. I welcome the fact that there will be a refresher on the action plan produced during this year. When he does produce that refresher, will he please do two things? First, will he increase the number of direct contracts between the Ministry of Defence and the SMEs? Otherwise those SMEs risk being squeezed out by the original equipment manufacturers.

Secondly, will the Minister strengthen the contractual obligations on OEMs to use British SMEs? I understand his concerns about sovereign capability and I very much welcome his commitment to use British manufacturers as much as he possibly can in the future, but will he also recognise and support the very many companies that are overseas in ownership, but that make a huge contribution to our defence? Boeing, Raytheon and Elbit all spring to mind, and Leonardo has already been mentioned. They employ large numbers of people and make a huge contribution to our defence overseas, even if they are actually owned by overseas companies.

[Jeremy Quin]

On OEMs, my hon. Friend is absolutely right to draw attention to the fine international companies that choose to base themselves here. They make a real contribution to our economy and to our defence sector in the UK. We will continue to be uniquely open to the companies of friends and allies overseas choosing to locate, build and manufacture here in the UK, as well as to apply research and technology and development, and I absolutely thank them for it. He mentioned Boeing. That is one example of a company that has been assiduous in making opportunities available to UK SMEs. It sees it as a great way of tapping into more skills and increasing its resilience. I welcome what it and many others do in terms of making certain that there are opportunities for UK smaller companies as part of their supply chain.

There are two things that we can do. The first is that we will see an increase in direct company awards to smaller companies, but that is because of the nature of how defence is changing. As we become more digital, more cyber, there are many smaller companies that can produce the goods in these areas and it becomes a less capital-intensive business. The second thing is that, through the social value part of the tender process, we will be able to be more descriptive as to what we are expecting to see from companies. In that respect, I very much welcome the fact that, on Boxer, we expect to see 60% of all that supply chain flowing through from UK companies.