Defence Industrial Strategy

Nusrat Ghani Excerpts

Monday 8th September 2025 Commons Chamber

[The Minister of State, Ministry of Defence (Luke Pollard)]

With permission, Madam Deputy Speaker, I wish to make a statement on the defence industrial strategy. Today we fulfil another manifesto commitment by publishing our plan to strengthen our security and grow our economy. It is a plan to back British-based industry, create British jobs and drive British innovation.

Before I set out the detail of the strategy, I would like to place on the record my thanks to my right hon. Friend the Member for Liverpool Garston (Maria Eagle) for her work in developing the strategy. I also extend a warm welcome to my hon. Friend the Member for North East Derbyshire (Louise Sandher-Jones), who has joined the Ministry of Defence team.

This is a plan supported by £773 million of investment—a plan to make defence an engine for economic growth in every nation and region of our country. The men and women who serve our nation are rightly respected across the world for their dedication and professionalism, yet as we know from the war in Ukraine, when a country is forced to fight, its armed forces are only as strong as the industry that stands behind them. The UK has one of the most advanced, innovative defence industrial bases the world over, but we are in a new era of threat, which demands a new era of UK defence.

Our strategic defence review set out our vision to make Britain safer—secure at home and strong abroad. Through our defence industrial strategy, we will ensure that we have an industry to deliver that vision. All the pledges made today can only be met because this Labour Government have committed the largest sustained increase in defence spending since the end of the cold war: 2.6% of GDP by 2027, and 3.5% by 2035, alongside our NATO allies. But with the promise to invest more comes the responsibility to invest better. By implementing our strategy, we will ensure that workers and businesses across the UK feel the benefit of the defence dividend.

In opposition, the now Defence Secretary told the House:

“Labour’s determination to see British investment directed first to British industry is fundamental.”—[Official Report, 23 March 2021; Vol. 691, c. 798.]

Today, ambition in opposition becomes action in government. Using every lever available to the Government, our strategy will prioritise British-based businesses. We will make it easier for British-based firms to do business with the Ministry of Defence. We will launch an office of small business growth to support small and medium-sized enterprises in accessing MOD contracts, and we will give greater clarity by sharing our five-year acquisition pipeline, allowing businesses to invest with confidence.

The £10 billion frigate contract signed with Norway last week was the biggest warship deal in our history—a demonstration that when we export defence capabilities, we not only strengthen our security abroad, but create high-skilled jobs at home. Through our strategy, we will back British businesses to go out and win—win more contracts and create more jobs. The new office of defence exports brings responsibility for defence exports back into the Ministry of Defence and creates a Government-to-Government exports structure that reflects what our allies and industry need.

Sustaining sovereign capabilities is the cornerstone of national security, so our strategy sets out the requirement to onshore key assets. We will maintain the advantages afforded by open international competition, but in a way that improves value for the British taxpayer. For the first time ever, we will introduce an offset policy, designed in consultation with industry. It will mean that when we buy from our allies, the UK economy will be strengthened in return through new jobs and novel technologies.

Our defence industrial base represents a commitment to innovation and excellence. Today, it supports over 460,000 jobs and over 24,000 apprenticeships across the UK, the vast majority of which are unionised. As a trade union member, I know that good, well-paid and unionised jobs are good not only for defence but for growth. The defence industry is a source of not only prosperity but pride; it proves that we are still a nation of makers. When I speak with defence workers, I see their deep sense of purpose in what they do. They are right to feel that way; their efforts keep our nation safe. Through our strategy, more people will be afforded the opportunities and rewards of working in this industry.

To ensure that the benefits of the defence dividend are shared across every nation and region of the UK, we are investing £250 million in defence growth deals. Our deals will build on inherent strengths in defence communities by improving skills and infrastructure. The first phase will be launched in Plymouth, where we will focus on advanced marine technologies and autonomous systems, and in south Yorkshire, where we will build on our recent investment in defence and steel. Further locations in Scotland, Wales and Northern Ireland will be announced, because there is not only a defence dividend from our uplift in defence spending, but a Union dividend, strengthening our United Kingdom.

ADS analysis indicates that the defence industry workforce could grow by 50,000 people by 2035, when defence spending increases to 3% of GDP. To ensure that the UK can take full advantage, we must ensure that we have the workers with the right skills to fulfil those roles, so I am today announcing the biggest ever investment in defence skills: £182 million of new Government funding to establish five defence technical excellence colleges, so that we can promote to over 800,000 school pupils the benefits of a career in the defence industry; and our new defence skills passport, which will make it easier and faster for veterans and workers in other industries to move into the defence sector.

Over the past few years, defence firms have expressed growing concerns about attending jobs fairs. The harassment and intimidation to which they have been subjected has forced companies to cancel events on university campuses. The campaign to boycott and target defence firms misunderstands the purpose of deterrence. We know the full measure of freedom and security in Britain because of what our defence industry does. The strategy will help the industry to attract the talent it needs by creating a dedicated presence on the UCAS website, a new defence apprenticeship and graduate clearing system, and a defence university alliance to strengthen careers in the sector.

The war in Ukraine reminds us that innovation is the central pillar of deterrence. To ensure that we meet our objectives of better capability and increased growth, we are committed to spending at least 10% of our equipment budget on novel technologies. The newly established UK Defence Innovation is backed by £400 million of ringfenced investment and has the authority to reallocate funding and resources, ensuring a focus on priorities and value for money. Today’s strategy outlines how we will employ UKDI to rapidly produce technologies that give our armed forces an advantage. We will set out the first of the innovation challenges that we want industry to go after, as well as how we will better support firms in testing their innovations.

This Government inherited what the Public Accounts Committee described as a “broken procurement system”. For too long, defence has been burdened by waste, delay and complexity, yet today we know that whoever gets technology to its frontline forces the fastest, wins. We have proved that we can do it for Ukraine; now we must do it for Britain. Our segmented approach to procurement sets ambitious targets to drastically reduce the timescales to get new projects on contract. As part of the biggest shake-up to the Ministry of Defence in over 50 years, we have created the role of National armaments director, and because we want UK firms to win not just at home but abroad, we will improve our export licensing system with a new digital platform, better training for staff, and reformed procedures, including allowing exporters to apply for licences during the bidding process.

Unlike previous strategies, our one is funded. It is also the culmination of months of detailed work and close engagement with industry, academia, and trade unions. Throughout the process, our aim has been to produce a strategy with the defence sector, rather than to it. With a clear plan backed by historic investment, our Government, alongside industry, will now deliver for Britain. I commend this statement to the House.

[Madam Deputy Speaker (Ms Nusrat Ghani)]

I call the shadow Secretary of State for Defence.

--- Later in debate ---

[Luke Pollard]

I think the shadow Defence Secretary really wanted to welcome this strategy, but is finding it difficult, because the politics have got in the way. I will deal with some of that, but first let me say that I am grateful to him for his words about the attack in Kyiv. It is so important that, although we may disagree about some things across this House, there is strong cross-party support against Putin’s illegal invasion. That must never wane.

I suggest politely to the hon. Gentleman that the mess in defence procurement that we inherited was one that he was in charge of when he was in government. It is, therefore, a bit cheeky of him—though, generally speaking, I like cheekiness—to raise these questions. The platforms that he asked about should have been sorted out under his Government, but never were. He knows for sure that our investments will be in the defence investment plan we will publish later this year. He also knows that for the national armaments director, recruitment is well advanced—we have appointed Andy Start as the interim NAD, but it is important that we get the right person for the role. We will continue that process. The shadow Secretary of State also asked about defence growth deals, and that is new money. He also knows that we have signed 900 deals for defence procurement contracts since the election. We will sign more on the back of the defence investment plan later this year.

The hon. Gentleman also accuses us of dithering and delay, but I fear that that is political projection from the failures of his time in government. We have a clear increase in defence spending and a clear strategy published today that directs that increased defence budget at British companies, that backs British SMEs and that creates the skills that our industry needs. I know that he wants to back it. I know that he is passionate about drones, which is why I know that he will back our doubling of funding for drones and autonomous systems in the SDR. I say to him politely: this is a huge opportunity for British businesses up and down the country, in every single nation and region of our land, and the strategy sets out the objectives and opportunities. I hope that, on reflection, he will be able to welcome the strategy thoroughly and to give it full-hearted support, because our industry deserves the support of this House. It has the support of this Labour Government, and we will continue to increase defence spending, directing more of it at British businesses.

[Madam Deputy Speaker (Ms Nusrat Ghani)]

I call the Chair of the Defence Committee.

--- Later in debate ---

[Luke Pollard]

The offset policy that we will shortly consult on with industry provides not just the opportunity for us to bring our industries closer together, but means that in circumstances where we have to buy from a foreign provider, which could be because of quality or specific opportunities, we have the ability to then invest more in UK businesses. This is commonplace and has featured in the Norway deal and in procurement by the Australian Government and South Korea. It is a model that works and it creates an environment where we can mesh our industries together more closely with those of our allies, helping to share research and development costs for new platforms and ensuring that when we are not able to spend money on British purchases, British industry still benefits from increased skills and increased investment in novel technology. This is an area that will directly benefit UK firms and our entire defence ecosystem, especially with those investments in skills, which will last a lifetime for the workers involved and show a real defence dividend.

[Madam Deputy Speaker]

I call the Liberal Democrat spokesperson.

[Helen Maguire (Epsom and Ewell) (LD)]

I thank the Minister for advance sight of the defence industrial statement. I welcome the announcement today of the new defence industrial strategy because for too many years, the Conservatives chose to ignore the challenges across our defence industrial base. In light of the threats that we face from an imperial Putin and other revisionist powers, it is right that this Government have a serious approach to the defence industrial base in our country.

The opportunities offered through the defence skills passports will add vital channels for people who are already in employment to make the transition to the sector. UK businesses are playing a vital role in supporting military operations in Ukraine, yet we know that many businesses operate internationality. Will the Minister ensure that all British individuals working in the defence sector in offices abroad will also have the skills that they need to support our allies? As the need to work closely with our European allies continues to grow, will he provide an update on what progress the Government have made on securing the UK’s access to the EU Security Action for Europe fund?

It is vital that we properly incorporate small and medium-sized companies into the defence supply chain across Britain. While I welcome the Government’s commitment to a new defence office for small business growth, will the Minister set out how the new office will effectively support the integration of small and medium-sized companies into supply and procurement?

It is crucial that the UK is prioritising spending its money at home and with the best businesses. To create a forward-thinking defence industry, will the Minister support an innovative approach to the development of new defence capabilities that continue to give businesses opportunities to innovate, even when the product is in use?

While the Type 26 deal with Norway is a positive step in working closely with our allies, will the Minister confirm that the delivery timeline for expanding the UK’s own Type 26 fleet will not be delayed?

Finally, last week my hon. Friend the Member for St Ives (Andrew George) asked the then Foreign Secretary to assure the House that the Government would not award a £2 billion contract to Israeli defence manufacturer Elbit, to which he replied with a resounding yes. Will the Minister reconfirm that position today?

--- Later in debate ---

[Several hon. Members rose—]

[Madam Deputy Speaker (Ms Nusrat Ghani)]

May I ask Members to be brief, and the Minister to be even shorter?