Defence Industries: North-East

Maria Eagle Excerpts

Tuesday 13th May 2025 Westminster Hall

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

It is great to be here under your chairmanship, Mrs Hobhouse. I congratulate my hon. Friend the Member for Middlesbrough South and East Cleveland (Luke Myer) on securing the debate and shedding light on the vital defence industry in the north-east, and particularly his part of the region.

I thank my hon. Friends the Members for Stockton North (Chris McDonald), for North Durham (Luke Akehurst), for Hartlepool (Mr Brash), for Newton Aycliffe and Spennymoor (Alan Strickland), for Darlington (Lola McEvoy), and for Bishop Auckland (Sam Rushworth) for accompanying him to show the great strength of will among elected representatives in the north-east to boost and push the development of their defence industries. I congratulate them all on the contributions they made. I have managed to visit some, but not all of the constituencies represented here today. I know that people will now ask me to go to the other ones, and we will have to bear that in mind as time goes on.

As we heard today, defence makes a considerable contribution to the north-east in terms of jobs, investment and growth, but my hon. Friends have also made clear that a huge contribution could be made beyond what has already been done. The nation as a whole needs us to boost our defence industries, and this Government are determined to do that. It is clear that the world is becoming much more dangerous and Britain is facing rising threats. At the same time, the Government face the challenge of rebuilding and reinvigorating our armed forces to meet those threats better, after a decade and a half of underfunding and hollowing out.

We are conducting the strategic defence review to assess fully the threats we face and to determine what capabilities we need to meet them. It is also why we brought forward an increase in defence spending to 2.5% of GDP from April 2027, with plans to raise it to 3% in the next Parliament; and it is why we are working hard on defence reform and the new defence industrial strategy. We cannot continue to spend money in the MOD as we spent in the past. We have to get better value. There is no point in increasing spending if we pour some of it down the drain. We have to do things better, and that is what defence reform is about.

The defence industrial strategy is in part about how we can transform procurement to unlock the potential of suppliers across the country. My hon. Friend the Member for Middlesbrough South and East Cleveland spoke about the need for us to do procurement better and reform it. He mentioned some very good small firms, including Tees Components, which I know to a degree. It is a family firm in a small community that does wondrous things.

There is enormous potential in north-east communities for innovation and dual-use technologies, but the way we do procurement now positively excludes small companies from being able to participate, partly because it takes us so long to do it and partly because of the requirements on the firms to prove all kinds of things and produce all kinds of documentation that they do not normally have the staff to produce. BAE Systems might, but a small family firm does not. The system excludes small firms and they end up, at best, in the supply chains of the primes, which is fine as far as it goes, but does not enable them to show us what they can do in terms of agility and innovation.

My hon. Friends will recall the Chancellor’s announcement in her spring statement that we are going to reform defence procurement. Part of that reform will be to speed up getting to contract. The average time to contract is six years, which is ridiculous in the current situation. Procuring a nuclear submarine might take a bit longer than procuring the latest drone, so we are going to segment our procurement arrangements to recognise the fact that not every contract is the same.

We will do this in three layers. One layer will be major programmes, on which we will aim to cut the time to contract from the current average of six years to three years. The second layer is developing new upgrades—a new radar for one of our platforms, for example. For that segment, we aim to get to contract within one year instead of within three. At the faster end—I will not say the smaller end—we aim to get to contract for novel and agile dual-use technology within three months. That will challenge the MOD, but we are determined to do things better and make sure that our spending gets better value and better capability faster into the hands of our warfighters. Many companies in the north-east will be able to benefit from this.

My hon. Friend the Member for Middlesbrough South and East Cleveland will recall that the Prime Minister announced the formation of an SME hub, which ought to enable small firms to plug into the available opportunities and help them to know where to get finance, which is a problem for small firms. We need a clearer idea of what the capabilities are to enable them to plug their ideas and their dual-use technology into the opportunities that are available.

The establishment announced by the Chancellor of UK Defence Innovation, with a £400 million ringfenced budget this year, which has already started, means that there is more money available for dealing with innovative and novel technologies. The Chancellor also committed us to making sure that there is a ringfenced budget that will increase to 10% of our acquisitions budget.

I therefore think the prospect is good for our small and innovative firms. When I go to trade fairs, go on constituency visits and do roundtables to find out what industry wants, I meet many of these small firms from around the country, including the north-east—I have met some on a couple of occasions in the north-east. Many of them say the same thing: “We need a way in. We need to know what you are doing, and what you want and when you want it. And we need to be able to engage faster and more effectively.” I hope that we will be able to do that.

It is going to require wholesale reorganisation, and us to learn how to do things differently, but I will just say to this Chamber and to my hon. Friends that the efforts we have put into supporting Ukraine show that we can do things faster, we can procure better, and we can ensure that we get capability into the hands of warfighters who desperately need it on a much faster timescale than we have done traditionally. The people who have done that are the same people in the MOD who have traditionally done the slower, more long-term, more stately work. It is just about risk appetite and about what we want them to do.

With the strategic defence review publication coming up shortly, in due course, and with the defence industrial strategy also to be published—not at the same time, but not too far away from that—we ought to have an obvious and transparent framework, backed by resources that are guaranteed to be increasing into the future. That is not something that industry has had in the past, which is something that it has always complained about, telling us, “We need a demand signal. We’re not going to invest until we know that you really want this long term.”

I think we will have the kind of ecosystem and opportunities that small firms and large firms in the north-east, in the constituencies of my hon. Friends who are here today, will be able to take advantage of to grow and bring forth their agility, ideas, energy, and patriotism. As my hon. Friend the Member for Middlesbrough South and East Cleveland said, many people in the north-east who work in the defence industry are very proud of doing so and really do want to support our country in its defence and security needs. They will be that much more motivated because there will be more opportunities.

I know that my hon. Friends, who are here in numbers today to represent the north-east, will make sure that I know what the opportunities are in the north-east and what more can be done, and I will rely on them to do that. I cannot get out of the office as much as I might like, so I rely on right hon. and hon. Members to let me know what is going on, what the issues are and what the problems are. I hope that, between all of us, we get into a position to boost our defence industries in a way that not only increases our defence and security, and our ability to deter our potential adversaries and, if needs be, make sure that our warfighters are properly equipped, but leads to regional growth and job opportunities, real lives and careers for our young people and our older people who work in the defence industries and in dual-use technologies, and also enables us to grow our economy as a whole, nationally.

I know that if we get this right and harness the skills, capabilities, commitment, good sense and effort of people who work in the defence industries, we will be in a much, much better place. It is a win-win for all of us—not only for my hon. Friends, but for the north-east and for the nation as a whole.

Question put and agreed to.