Defence Procurement: Small and Medium-sized Enterprises

Richard Foord Excerpts

Tuesday 28th January 2025 Westminster Hall

[Richard Foord (Honiton and Sidmouth) (LD)]

It is an honour to serve under your chairship, Mr Stringer, and I pay tribute to the hon. Member for Newton Aycliffe and Spennymoor (Alan Strickland), who has done us all a great service in securing this debate. I want to use my limited time to draw attention to some fantastic SMEs, including one in particular that is based near Honiton in the south-west.

The south-west has an absolutely fantastic defence industry, which is powering up the region and making for some fantastic industrial developments. The Ministry of Defence employs about 33,000 people directly in the south-west, but of course there is also a huge, integrated supply chain that supports many more jobs besides. It is surely the aim of the new Government to have a more innovative and resilient supply chain.

Supacat has been producing vehicles in Dunkeswell in Devon for more than 40 years and is at the forefront of designing and supplying cutting-edge tactical military vehicles. Its high-mobility transporter vehicles have been used by British forces in Afghanistan and on UN deployments in Mali. More than 95% of its supply chain comes from UK-based SMEs, 85% of which are in the south-west. It currently has a contract with Defence Equipment and Support; the Ministry of Defence is buying 70 Jackals and 53 Coyotes, as the Minister will know.

In the past, there has sometimes been an instinct to buy off the shelf and from overseas, which would be a huge mistake in relation to the procurement of vehicles for the impending short-range air defence—SHORAD—programme. That instinct to look overseas in the first instance weakens investment, reduces long-term job security and, ultimately, puts future domestic procurement at risk. Supacat has more than 150 skilled workers in Devon, but its future depends on orders that will be delivered beyond November 2025.

The Defence Secretary intends the new defence industrial strategy to boost world-class production and manufacturing, and I understand that supporting UK exports will be key to that. It is incumbent on us to buy from fantastic companies such as Supacat, if we then look to countries such as Saudi Arabia, Czechia and Ireland to buy the Jackal, as they have done. To conclude, there are some fantastic SMEs, including Supacat at Dunkeswell, and I commend to that company the House.

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[Fred Thomas (Plymouth Moor View) (Lab)]

It is an honour to serve under your chairship, Mr Stringer. I thank my hon. Friend the Member for Newton Aycliffe and Spennymoor (Alan Strickland) for securing this important debate. He is a huge champion for SMEs in his constituency and for national security in general.

I will begin by pointing out that defence primes are not evil. They do not set out to harm British national security. They do amazing things, and some of the things we are proudest of in Britain—sovereign capabilities —are delivered by those primes. It is no surprise that a huge proportion of defence spending goes to them, because some of the capabilities that they deliver—things that give us our unique edge in the world—are the most expensive things on the British balance sheet.

Primes do not have to be negative in the context of SMEs either, because they can offer SMEs something that we all know is missing: the ability to communicate with the Government. By joining with primes, SMEs are sometimes able to advertise their ability to the Government in a way that they would not be able to otherwise.

[Richard Foord]

To reinforce the hon. Member’s point, the way that Supacat has teamed up with Babcock in Plymouth in recent years to scale up its skilled workforce by 60% is an example of what he is describing.

[Fred Thomas]

The hon. Member is absolutely correct. It is not quite in my constituency—it is in the neighbouring constituency, Plymouth Sutton and Devonport—but I agree.

In terms of SMEs, primes can also offer a service to the Government and the Ministry of Defence. If we had a massive change in system, which would be extremely hard to execute, and the MOD was suddenly able to procure directly from SMEs across the country, we would have an enormous challenge of integrating the different capabilities into a usable platform. Half of the things would not be able to talk to each other; they would be made to do their one task and we would then try to put on top of them a second radar system or some piece of satellite that could speak down to whatever comms link we were using. That is enormously expensive. However, primes can do that integration. They can go to the Government and say, “You have a demand signal to do something,” rather than to have a particular capability—to monitor the North sea, for example—and then go out to the SMEs in different constituencies that hon. Members have highlighted so fantastically, gather various bits of capability and knit that into one big package to sell to the Government. That would feel more expensive and slower to the Government, but it could be cheaper in the long term, in some instances.

That said, I and colleagues are overwhelmed almost daily by individuals in the UK defence industry reaching out on LinkedIn or by email, begging the Government to listen to what they are offering. They are patriotic people who think they can save us money and give us strategic advantage by delivering a piece of capability, when we currently spend obscene amounts of money on something that sometimes does not work well or produce the desired effect. I would love the Minister to give us a sense of what the Government are going to do differently from previous Governments to actively offer a forum for those SMEs to pitch their capabilities. I am immensely proud of the Secretary of State and the Minister who joins us today for their work so far—