Defence Industry: Environmental, Social and Governance Requirements

Katie Lam Excerpts

Wednesday 28th January 2026 Westminster Hall

[Katie Lam (Weald of Kent) (Con)]

It is a pleasure, Ms McVey, to serve with you in the Chair this afternoon, and I thank my hon. Friend the Member for Windsor (Jack Rankin) for securing this important debate.

It is often said—including by my hon. Friend in his opening speech today—that we are living in an ever more dangerous world. In fact, it is the most dangerous world in my lifetime or that of my hon. Friend, although he never tires of reminding me that he is a year younger than me.

The Government’s own 2025 strategic defence review stated:

“The threats we now face are more serious and less predictable than at any time since the Cold War”.

Clearly, therefore, we should do everything in our power to ensure that our armed forces are well-staffed and well-equipped. The defence of the realm is the first duty of any Government. However, for that to mean anything, defending our nation must take priority over other aims. Yet far too often we have seen our armed forces and the companies that supply them being forced to put social value requirements ahead of their existential duty to keep us safe.

As crazy as that sounds, it is no exaggeration or hypothetical concern. In 2022, the Royal Air Force paused recruitment of white men to try to raise its proportion of women and ethnic minorities. The RAF quite literally and explicitly would rather have hired nobody to defend this country from the air than hire a white guy. That is lunacy.

Cruel or unpleasant behaviour towards women is repulsive and clearly should have no place in our armed forces, their suppliers, or indeed any workforce. Where women want to jobs that have historically been filled by men—where they can do them; many roles in the armed forces have physical requirements that cannot be compromised—there should be no barrier to them doing so. I applaud those women, as I applaud the men who are willing to risk their lives for our freedom. However, to abandon our defence of the skies in the name of diversity quotas is completely and utterly mad. The RAF has since apologised for its decision, but I mention it today because it is crucial in the context of this debate. It shows the climate in which British companies that want to supply equipment to our military must operate.

As has already been said by many hon. Members, in order to trade in the UK, defence companies must comply with the general ESG regulations set out under the Companies Act 2006. If they wish to sell their equipment to the British Government, they must comply with the rules set out under the Ministry of Defence’s climate change and sustainability strategic approach. That includes the publication of a carbon reduction plan and compliance with rules designed to minimise environmental impact. If the firms wish to be publicly listed, they must wrangle the Financial Conduct Authority’s rules on ESG ratings.

Generally, defence companies are not considered to be an ethical investment, meaning that they are often scored badly for the purposes of ESG ratings, as my hon. Friend the Member for Windsor and several other hon. Members have already said. Given that the FCA has consistently pushed funds to focus on ESG-compliant investments, that is clearly a significant cause for concern.

Just last year, some of the country’s largest investors, including the National Employment Savings Trust, which is the workplace pension scheme set up by the Government, reiterated their determination to refuse to invest in defence stocks, in the name of “ethics”. What exactly is ethical about shunning those companies that dedicate themselves to equipping our defence forces and protecting our freedom? As the FCA moves to standardise rules for ESG ratings providers, we still have no clear indication about how it intends to treat defence companies for the purpose of ESG ratings. In pursuit of secondary aims, we are making life more difficult for British defence companies and, in turn, for the armed forces that we expect to keep us safe.

One way or another, our armed forces will need to procure the equipment they need to do their jobs. While ESG requirements continue to stifle the British defence industry, we are forced into choosing one of two options, neither of them good. We could pay over the odds for equipment produced in this country. The compliance costs created by ESG rules and the disincentives to private investment created by the ESG ratings regime could force many defence firms to put up their prices, meaning higher costs for the British taxpayer, should we wish to rely on military equipment produced here. This situation also makes our kit more expensive and therefore less desirable to our allies; having fewer customers will drive up prices even further. Alternatively, we will have to rely on equipment from overseas, leaving us dependent on other countries.

Neither of those outcomes is acceptable. The status quo is bad for our armed forces and bad for the British taxpayer. The answer, of course, is to reject this dichotomy entirely. We should unleash the natural strength of the British defence industry, including by scrapping those ESG requirements that make life more difficult for British defence firms.

It would be remiss of me not to mention that, as heavy manufacturing firms, British defence companies are also likely to be disproportionately damaged by the energy policy that the Government are pursuing, which has produced the highest industrial energy prices in the developed world.

We know that our defence industry has the capability to be one of the best, if not the best, in the world. As recently as 2013, this country’s defence industry was second in the world in the export of military equipment when measured by total value of new orders. Today, partly thanks to the growth of the regulatory burden on defence firms, we have fallen to seventh. That is bad for our own military, which must now choose between importing its equipment from abroad or paying over the odds for equipment produced in this country, and it is bad for our interests overseas. After all, militaries around the world will always need new equipment. I would much rather they were able to buy British than from competitors in Russia or China.

It is clearly true that the problems the British defence industry now faces did not begin under this Government, or even under the previous Government. But it does, of course, now fall to this Government to address them. I hope the Minister will be able to tell us whether the Government have any plans to exempt defence firms from existing ESG regulations or to make changes to those regulations for all companies. I hope she will also be able to offer us some insight into whether the Government have engaged with the FCA about the classification of defence firms for ESG purposes ahead of the consultation deadline on 31 March.

Ajax Programme

Katie Lam Excerpts

Wednesday 14th January 2026 Westminster Hall

[Katie Lam (Weald of Kent) (Con)]

It is a pleasure, as ever, to serve with you in the Chair, Mr Stuart. I thank my hon. and gallant Friend the Member for Huntingdon (Ben Obese-Jecty) for securing this debate today.

As has already been laid out, the Ajax programme has been a disaster. It has been repeatedly delayed and enormously expensive. We have known for years about problems with noise and vibration. It is mystifying how these vehicles were signed off as safe, despite so obviously not being so. British soldiers have been permanently injured as a result. Clearly the problems with Ajax did not begin under this Government; the vehicles were expected to be combat ready by mid-2019. However, the decision about what to do with the programme now does fall to this Government. Whatever they decide, this debacle cannot be allowed to continue.

The programme’s consistent failure sends a clear signal to those who have committed their lives to serving our country that, while they may be doing their duty to this country, the British Government are not performing their duty to them. How else are our armed forces personnel supposed to interpret a programme that has been repeatedly delayed, has racked up enormous costs and, as we heard last year, poses a direct risk to soldiers? When we ask people to put their lives on the line to protect our freedoms, the very least we can do is provide them with functional equipment, on time, that does more harm to the enemy than to our own troops.

The Ajax programme does an appalling disservice, not just to Britain’s armed forces—although that is awful—but for British taxpayers. The programme has a budget of £6.3 billion, enough to pay for the running of every court in England and Wales for two years. It is £6.3 billion of people’s hard-earned money. These vehicles do not work, and I would like my money back.

If Ajax was the only failure, that would still not be acceptable, but it might at least be written off as an aberration. However, the pattern of the British Government failing their duty to the armed forces is, sadly, far more widespread. In March 2024, a former armed forces Minister told the House of Commons that the British Army’s ammunition stockpile would be exhausted in just 10 days of warfare. The Ministry of Defence has said it believes we will need to spend an additional £28 billion to meet its costs over the next four years—yet at the Budget just two months ago, defence spending rose by £500 million less than was projected in the summer.

The Government have not just failed in supplying our armed forces with the tools they need to keep us safe. In repealing the protections put in place by the previous Government’s Northern Ireland Troubles (Legacy and Reconciliation) Act 2023, for example, they are opening the door to another wave of prosecutions against those who have previously served. How can all of that be the right way to treat those who have risked their lives to keep us safe? What message does it send to those who might consider enlisting in the future? What other country would treat its former service personnel with such disregard?

Ajax does not tell the whole story, but it is one recent and important example. How the Government choose to proceed from here will send a signal to those who are serving, and those who might serve in the future, about whether their Government intend to uphold their side of the bargain. Regardless of political party, we should all want our armed forces to know that we support them, not just with words, but materially. I hope the Minister will provide some clarity on when we can expect a final verdict on Ajax, and what steps the Government are taking to ensure that future procurement is faster, more cost-effective and safer for those who are serving. That is the very least that our armed forces deserve.

Northern Ireland Troubles Bill: Armed Forces Recruitment and Retention

Katie Lam Excerpts

Monday 5th January 2026 Commons Chamber

[Al Carns]

The hon. Member knows better than I the difficulties of Northern Ireland politics. My role in this is to ensure that veterans are protected. I speak to the Northern Ireland Veterans Commissioner on a weekly basis for hours on end to make sure that we are defining, refining and implementing the correct protections for our veterans. Whether they served in Northern Ireland or were deployed to Northern Ireland from here on the mainland, from my perspective they are one and the same.

[Katie Lam (Weald of Kent) (Con)]

The relentless and malicious lawfare to which our brave Northern Ireland veterans have been subjected has exposed the fact that, in Britain, human rights laws can be used to attack those who have risked their lives for this country, not to protect them. The conditions in which soldiers and veterans are forced to live, even if they are accused with no evidence and no credibility, are inhumane. What will the Minister do about the situation, and if it cannot be resolved through the European Court of Human Rights and the Human Rights Act, will he call for them to be, respectively, left and repealed?

[Al Carns]

I have made it very clear that anyone who served in Northern Ireland, and indeed any veteran, will receive the full legal and welfare support of the Ministry of Defence. We saw that in the Soldier F case, and we will see it in any case that goes through. The full weight of the Ministry of Defence will be provided to protect veterans, in any way, shape or form, from vexatious claims or the lawfare to which the hon. Member has referred.

Oral Answers to Questions

Katie Lam Excerpts

Monday 18th November 2024 Commons Chamber

[The Minister for Defence Procurement and Industry (Maria Eagle)]

The MOD will continue to invest in the company’s people to ensure that the facility has a sustainable future. Octric’s leadership team is currently finalising its future resource plan, which will cover the need for new high-tech roles such as engineers and scientists to ensure that the facility is best placed to develop new technology and meet defence needs. I am more than happy to meet my hon. Friend about that.

[Katie Lam (Weald of Kent) (Con)]

T3. I was so pleased to go to His Majesty’s Lord Lieutenant of Kent’s cadet awards recently to hear about the fantastic work of our local cadet forces. What might the Secretary of State have to say to the brilliant young people I saw there to justify the recent decision to cut funding for state school cadets?

[Al Carns]

I will not comment on other parts of the Government’s funding priorities; what I would suggest is that the MOD absolutely supports the cadet forces. We have over 140,000 cadets and 26,000 adult volunteers, and we will review the cadets process and make sure it is fit for purpose as we move forward.