Defence Industrial Base

I know the whole House is united in condemning the dreadful attacks on the LNER train from Doncaster to London over the weekend, and our thoughts are with the victims, their families and their friends. This is also the period in which we mark remembrance. Thank you, Mr Speaker, for your ceremony in opening the garden of remembrance for constituencies this morning. We will wear our poppies with pride, and we will remember them.

In September, we published our Government’s new defence industrial strategy, backed by nearly £800 million in funding. We are making defence an engine for driving economic growth. We are backing British jobs, backing British industry and backing British innovation.

I recently visited Avocet, an innovative manufacturing company based in Holmes Chapel in my constituency. It is looking to grow its business by diversifying into supplying components and materials for drone battery production. However, it has expressed to me the potential for improved support and guidance from the Government in order to break into and thrive in this competitive international market. What steps is the Department taking to support British manufacturing businesses such as Avocet? Does he agree that helping these organisations will unlock vital opportunities for economic growth?

I do indeed, and my hon. Friend is right. Firms such as that in her constituency hold the future of our security and our economic growth. That is why we have set up UK Defence Innovation and ringfenced it with at least £400 million in the Budget this year, with fresh freedoms. We have also doubled to £4 billion the amount of money that we will invest in British drones and autonomy over this Parliament.

A key ingredient in strengthening the industrial base is the innovation that our companies bring to the table. A&M EDM Ltd in my constituency is a specialist engineering company working with aerospace, automotive, Formula 1 and other industries. When I visited recently, it was testing a drone engine that it had designed and built, with most parts being produced in house. What routes are available to companies such as A&M EDM Ltd to bring that innovation, specialist engineering capacity, and research and development ability to the defence industrial supply chain?

UK Defence Innovation has been set up to transform defence’s innovation system. One of its priorities is to foster collaboration with small and medium-sized firms in fields beyond defence, just like A&M EDM Ltd in my hon. Friend’s constituency. I have set out my determination to see Britain become the best place to start, grow and invest in new defence companies.

It is always good to follow another Member for the Black Country. I was recently very pleased to meet with Babcock International, which is based in Walsall, just over the M6 from my constituency, where it makes armoured cars. Can the Secretary of State comment on future opportunities for defence manufacturing in the Black Country and the wider west midlands?

The west midlands has a very proud tradition of being at the heart of British invention and engineering, and it has huge potential for the future of defence engineering and invention. In the last year, the Ministry of Defence has spent £1.7 billion directly into the region, which is the highest level for the last 10 years. The Minister for Defence Readiness and Industry, my hon. Friend the Member for Plymouth Sutton and Devonport (Luke Pollard), met with the Mayor of the West Midlands just last week to discuss what other opportunities there may be for firms such as that and areas such as that of my hon. Friend the Member for Tipton and Wednesbury (Antonia Bance) in the west midlands.

As the Secretary of State knows, I have brought a company over from Ukraine to show us what it can do with drones. Us getting hold of that technology from Ukraine helps us to supply Ukraine, as well as ourselves. However, the key issue I want to ask about is that of rare earth minerals. They are normally discussed in a business context, but they are critical to the defence of the United Kingdom, and having a supply here in this country, directly owned by us, must surely be a critical issue. Has the Secretary of State looked at this issue, talked to his colleagues in Government and said, “We need a supply that we produce in our own country and use here”?

The short answer is yes. The slightly longer answer is that that we are doing so with close allies. We are also doing so with Ukraine. The right hon. Gentleman has been one of the voices in this House that has pushed us to do more with Ukrainian industry, and I know he will welcome our groundbreaking agreement with Ukraine, through which it will share for the first time with another country its intellectual property for the critical interceptor drone called Octopus. We will develop that further, manufacture those drones at scale within weeks and months, and return thousands to Ukraine to help its fight against Putin.

The Ministry of Defence spent £1.2 billion with SMEs in 2024-25. Sadly, though, only 2.5% of that spending went to SMEs in Scotland, which report extreme difficulty in accessing those MOD contracts. This is an inevitable consequence of the MOD spending more in one region of England than it spends in Wales, Northern Ireland and Scotland put together. Does the Secretary of State agree that this is an undesirable outcome, and what steps will he take to increase SME expenditure by the MOD in Scotland to at least Scotland’s per capita share, which is what it contributes to the cost of defence?

The first useful step, of course, would be for the Scottish nationalist Government to lift their bar on any support for defence and associated firms. One of the biggest problems for SMEs in the defence field in Scotland is that they cannot get any support from their own Government, despite the big contribution that those SMEs make to jobs, opportunities and security, not just for Scotland and the UK.

As the Secretary of State said, the defence industrial strategy promises to boost British export success, British businesses and British jobs. As such, I am sure he is as excited as I am about the Aeralis bid to replace the Red Arrow Hawk aircraft, which would deliver around 600 skilled jobs at StandardAero in my constituency. Will he ensure that there is an early decision on the replacement of the Hawk aircraft, and that that decision fully reflects the opportunity that exists to create high-value jobs, drive exports, strengthen British sovereign capability, and enable the United Kingdom to design and build its own aircraft?

The hon. Lady is absolutely right. Like her, I am very excited about the defence industrial strategy, and she is right to urge me to ensure we take an early decision about the replacement of the Hawk trainer. We will, because that is a long-overdue decision that should have been taken years ago by the previous Administration and the previous Defence Procurement Minister.

I call the shadow Minister.

I associate Conservative Members with the Secretary of State’s remarks about the appalling attack in Huntingdon over the weekend.

We all know that the Government cannot deliver a strong defence industrial base without seriously boosting defence spending, yet multiple media outlets have very recently reported that the Secretary of State’s Department is asking the armed forces to make cuts of £2.6 billion this financial year. Very simply, can he tell us what will be cut to find the money?

Quite simply, we have boosted defence investment. We have done so by a record amount since the end of the cold war, and three years earlier than the Conservatives’ unfunded plans proposed. Since the election, we have signed over 1,000 major contracts, 84% of them with British firms. We have brought £1.7 billion of foreign direct investment into defence, and we have won major export deals that the Conservatives never managed. On Monday, the Prime Minister and I signed an £8 billion deal with Turkey to buy 20 British Typhoons, which will help secure 20,000 jobs in the wider supply chain for the years to come. I would like to hear Conservative Members welcome that.