Defence Industrial Strategy 2025: Economic Growth and Job Creation

Question

Asked by

To ask His Majesty’s Government what assessment they have made of the potential impact of the Defence Industrial Strategy 2025 on promoting economic growth and job creation in English regions and devolved nations.

My Lords, investment in defence is investment in jobs and growth in every nation and region in the UK. That is why we have invested £773 million in the defence industrial strategy, which will position the UK as a global leader in defence technology by backing UK businesses and harnessing the sector’s strengths. There are five defence growth deals, revamping our procurement framework and launching an ambitious skills programme. The defence industrial strategy will create new good-quality and highly skilled jobs across the UK and drive economic growth.

My Lords, in warmly welcoming the Government’s commitment to significantly increasing defence expenditure and the opportunity to use this lever to promote economic growth, especially through the development of dual-use technologies and extended supply chains, I draw my noble friend the Minister’s attention to the fact that only seven of 14 mayoral combined authorities have so far produced local growth plans that explicitly name defence and national security as priority growth sectors for their area. Does he share my view that better connections between combined authorities and the Ministry of Defence are required to ensure that there are real and tangible economic benefits in every nation and region to increase defence spending? Will he ensure that His Majesty’s Government engage systematically and effectively with regional leaders to ensure that this welcome investment creates the maximum number of jobs possible?

I agree with that. It is really important for the defence industrial strategy that we liaise with all the devolved Governments and, as my noble friend says, with local devolved councils and mayoral authorities. Kim McGuinness is the Mayor of the North East, in my noble friend’s part of the country, and I know of the work that he has done with local authorities. It is essential that we work with them to deliver the economic growth that we want across all the regions of England and nations of the UK.

My Lords, the defence industrial strategy will have no economic effect. What might make an impact is a defence investment plan, backed up by the necessary level of resources. The absence of such a plan is undermining business confidence and investor confidence. When will the Government start taking such crucial decisions at a pace that matches the urgency of the international situation we face?

I accept the point with respect to the publication of the defence investment plan. As the noble and gallant Lord will know, that will be published as soon as it is ready. Look at what has been happening. Noble Lords across this Chamber demanded that the Government spend money on Leonardos, and we announced investment in them just recently. We have also invested huge sums of money on the Clyde and at Rosyth to build new ships. We are investing huge sums of money to develop the dockyards in Plymouth to improve the availability of the submarines, and we are also making numerous investments, such as in Rolls-Royce, with a £9 billion nuclear programme over the next few years. I understand the point the noble and gallant Lord is making, but the Government are not standing still—we are already spending billions of pounds investing in our defence industry.

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It is the turn of the Conservative Benches.

My Lords, may I press the Minister a little on the point that the noble and gallant Lord just raised about the defence investment plan? When I asked him about this in January, he referred to the comments of the Secretary of State at the beginning of January that the Government were working flat out to get this plan done, and there were rumours that it would be ready for the spring. Looking at the pleasant weather outside, spring seems to have arrived. When will the defence investment plan arrive? People will judge the Government not on what they say but on what they do.

I understand the point the noble Lord is making, and it raised some mirth in here, but the defence investment plan will be published when it is ready and when the Government have made the decisions about matching the budget to the capabilities they want. These capabilities should be matched to the demands of the future, learning the lessons of Ukraine.

As I said to the noble and gallant Lord, Lord Stirrup, the Government are not waiting for the defence investment plan before investing billions of pounds in our defence industry across the country, in the ways I laid out. I go back to the point about the Leonardos. We did not wait for the defence investment plan to do that: £1 billion is going to be spent to ensure we have helicopters. Numerous noble Lords have also been to Rosyth and the Clyde and have seen the ships being built there. This Government are investing in our defence industry, and the defence investment plan will be published when it is ready.

My Lords, of course we welcome the decision to award the helicopter contracts for Yeovil, which the local MP, Adam Dance, has been campaigning for, and we are glad that it has been signed. But the reality is that without this investment plan, there are jobs and investment on hold in defence installations right across the UK. They desperately need to know when the orders are going to flow and when the money is going to come through. We also need to ensure that small and medium-sized businesses have a real stake in building up our high-tech capacity and in filling in our munitions requirements.

On the last point, of course munitions are important, as we see particularly at the moment. That is why the Government are investing £1.5 billion in six new munitions sites. Thirteen sites have been identified, they are being reviewed, and we will come forward with those munitions sites so that we have them available. Again, that is money being invested. We are also talking about small and medium-sized businesses. We know that the future is not just in the big primes but in small and medium-sized businesses. That is why we have set up within the Ministry of Defence an organisation to drive that growth. Small and medium-sized businesses are crucial, and we will develop those as well.

My Lords, I agree that we should judge the Government on what they do. My noble friend the Minister has referred to the £10 billion defence contract with Norway to build Type 26 frigates, which has for the first time in many years brought sustainability to the shipbuilding industry on the Clyde. I ask my noble friend the Minister to double down on commitments to make sure that the jobs and investment that flow from this benefit all in Scotland, most particularly those in deprived communities. I ask him to set up a taskforce to make sure that all Scots and all people in the west of Scotland benefit from this—as I say, particularly the most deprived. This Government are taking action; let us make sure that people get the benefit of that action.

I thank my noble friend for the question. I will consider her suggestion to ensure that the most deprived communities benefit from the investment. That is why we have the skills agenda and why Scotland has a defence growth deal. My noble friend will know that nearly 12,000 jobs are dependent on MoD investment in Scotland and that on the Clyde and in Rosyth we are seeing significant investment. This Government will drive that investment forward.