Defence

9th July 2018

Philip Dunne MP launches his independent Review of Defence’s role in securing the nation's prosperity at the Royal United Services Institute on Monday 9th July.

As a former Minister for Defence Procurement, the MP for Ludlow, was asked in March to carry out the quick-fire review by the Secretary of State for Defence, Rt Hon Gavin Williamson MP.

The review has been prepared to inform the Modernising Defence Programme due this year. The Ministry of Defence accepted a strategic objective of contributing to the prosperity of the United Kingdom in the previous Strategic Defence and Security Review in 2015. 

This report looks at progress made to meet this objective and makes 41 recommendations how to embed prosperity within MOD decision making, improve agility in procurement, and take up the opportunity provided by Brexit and latest Treasury guidance to consider the UK economic impact of major procurement.

Commenting on today’s launch, Philip Dunne said:

“I am pleased to have been able to undertake this review and am grateful for the help of all those in and outside the Department who have contributed. 

This is the first time for some years that an independent report has sought to look at the whole impact of Defence on the UK economy, its devolved nations and regions in England. 

Defence has made a number of important steps in meeting its prosperity objective. It makes a major contribution to our economic well-being, with 500,000 people working directly and indirectly in Defence and over 25,500 apprentices developing skills. In several local communities Defence is one of the leading providers of high skilled jobs.

But there is more that can be done as Defence has to adapt to rapidly evolving technological threats, so too should it seize the opportunities to adapt and improve its own processes to help meet the challenges of the high-tech defence future.

I look forward to seeing how the MOD responds to this report and have confirmed to the Defence Secretary that I am willing to revisit in some months’ time how the Department is implementing these ideas.'

A synopsis of the report follows.

Growing the contribution of Defence to UK Prosperity: Synopsis of Report

Defence keeps secure our domestic environment and rules based international order so that we can live and prosper, protected from the devastation of war and the impact of terrorism.

It also enables many of the benefits we rely on to conduct our daily lives. It protects the trade routes that carry the goods we consume and export. It guards the underwater cables and satellites that convey the communications which connect us with other nations. It counters the cyber-attacks that could bring our technologically-dependent lives to a standstill. Virtually invisible, this protection underpins our economic growth.

Defence’s direct contribution to GDP includes over £7bn of exports generated on average each year in addition to the MOD budget of £37bn. Defence’s role as a customer and industrial partner with high growth sectors in the economy generates more growth, notably in the aerospace, space, cyber, and now the knowledge and creative sectors. It is hard to quantify. But it is very valuable, both to the ability of the Services to deploy successfully and to keep the UK ahead of its competitors and adversaries in the future.

The recommendations of this review boil down into a few key themes.

• The first is what MOD can do to embed prosperity as an explicit objective into its decisions. It needs to take account of prosperity in all major procurements, in the way that it has started with the new Type 31e Frigate. MOD also needs to prioritise and incentivise export promotion work.

• The second is around increased agility in procurement. The current approach to procurement is quite properly driven by the need to spend public money wisely and the correct view that competition helps drive value for money. But alongside the EU competition rules, the result has been a process-heavy approach, not just for major platforms but for smaller capabilities, focused more on the upfront capital cost than driving value through the life of the capability. 

This approach lacks the agility needed to bring innovation to the frontline and meet rapidly evolving threats from advancing technologies. Establishing the ability to consider impact on the UK economy from jobs, skills and productivity, can - if the MOD grasps the opportunity - enable a beneficial change in how Defence does things. That could not only drive faster procurement for the MOD, but also sustain a stronger more diverse defence industry with more chance of export success.

• Thirdly is the relationship between the defence industry and the rest of the economy. Historically there has been a strong correlation between defence research and technological advances across society. That can still happen - as the recent defence-funded discovery of a new way of working titanium bears witness. But Defence now needs to be able to absorb the huge technological change - particularly around data - that is taking place across the economy. It needs to work with the innovative, often smaller companies generating some of the most interesting digital advances; and to get new technology into service while it can still provide a technical - or information - edge. 

The report also covers people and skills as a shared challenge, especially the shortage of technically qualified staff. The MOD and Armed Forces have an impressive record in training staff and providing them mid-career to the economy. The report recommends that as the Government implements its Industrial Strategy it needs to include the defence industry - which can both contribute and benefit.

Finally, the report recommends greater investment in defence innovation to produce a dividend for the economy, though such investment reaps rewards over a longer timeframe than the parliamentary cycle. Defence R&D has suffered as resources have tightened. There will be many demands on future resources. But a focus on innovation will be essential to drive military advantage and secure the nation's future prosperity.  

Philip Dunne at the Royal United Services Institute
Philip Dunne at the Royal United Services Institute

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