Defence Procurement

7. What steps his Department is taking to expedite defence procurement.

We inherited a broken procurement system of red tape, delays and high costs. Some 47 of 49 major defence programmes were delayed or not on budget when we came to office. We are speeding up procurement, buying British and aiming to increase direct SME spend by 50%, which represents an extra £2.5 billion that we will spend with UK SMEs.

In the south-west, the defence sector and associated supply chains provide more than 40,000 jobs and contribute more than £3 billion to the economy. In West Dorset, firms provide skilled employment and apprenticeships, but they are frustrated by repeated delays to the defence investment plan and a slow and uncertain procurement process. Companies in my constituency tell me that, at this rate, they will be headquartered in Europe or the US by this time next year. We risk losing jobs, sovereign capability and billions of pounds of investment. I welcome the Secretary of State announcing that the DIP will be released before the NATO summit, although I am sure the House will note that with a degree of scepticism, but how will the release of the DIP and the procurement process benefit businesses in the south-west, especially small and medium-sized enterprises?

As a fellow south-west MP, I know how important defence is for businesses large and small in our part of the world. That is why we have signed 1,200 major defence deals since the general election, and analysis of just 500 of them shows that they are delivering benefit for 8,000 SMEs and micro-SMEs. We will continue to increase the amount of direct spend with small businesses, just as we are speeding up procurement. We inherited a system that was broken and did not work, and we are speeding it up to ensure that we can get more contracts to those brilliant innovators in our economy as soon as we can.

Those of us interested in subsea cables will have been delighted to hear the news announced over the weekend about the AUKUS arrangement, which the Government spoke about, and the development of new technologies with unmanned drone vehicles for subsea capability. Beyond that, will the Minister look at drone capability in this country, specifically at companies such as Skycutter and our other sovereign capabilities, to ensure that we get the right investment with the investment plans into those companies and ensure that they stay here in the United Kingdom?

My hon. Friend is absolutely right. After many years of much talk under the last Government about AUKUS pillar II, this Government have delivered a project and a capability that, in the hands of our British, Australian and American warfighters, will make a real difference.

My hon. Friend is right to talk about autonomy and drones, for which the Government are committed to increasing funding. We have invested in more capabilities in the United Kingdom, and we are actively exporting those capabilities to our friends and allies abroad. He should expect to see more of that in the defence investment plan, which will be published soon.

FalconWorks, which is part of the BAE Systems family and the enterprise zone at Warton, has been at the cutting edge of learning the lessons from rapid deployment and redesign of unmanned aircraft in Ukraine. A key part of that is including the pre-investment in research and development as part of the procurement of defence systems. Will the Minister commit to continuing to work with companies such as FalconWorks that support huge numbers of jobs in Fylde and across Lancashire?

I join the hon. Gentleman in commending FalconWorks and BAE Systems for their innovation. The Government have established UK Defence Innovation, with a £400 million annual budget to support innovation. That is making a difference in bringing more innovation to the market as well as dual-use potential. We will continue to invest in that, just as we set out that 10% of our equipment budget will be spent on novel technologies, helping to drive the latest kit and equipment for our troops.

I note with interest that the Minister rightly says that the need to focus on drone production is gaining more and more ground, but are we anywhere near understanding in the Ministry of Defence the sheer size and numbers of drones and counter-drones that will need to be produced now and in the future, and on a mass scale, should any conflict break out? Can he assure the House that that is understood in the MOD?

Yes, I can. One of the key pillars of the strategic defence review is learning the lessons from Ukraine. When it comes to autonomous systems and drones, that is not just about the continuing investment that we are making in high-end drone capabilities—intelligence, surveillance and reconnaissance, one-way strike and others—but about how we can deliver mass effect. Due to the rapid iteration of drone technology, it does not necessarily always make sense to have a warehouse full of millions of drones. However, having the ability to produce millions of drones while recognising the shortages in the supply chain, especially around motors, magnets and cameras, is the way that we can enhance our capabilities and our deterrents. We are actively working on that.

I call the Liberal Democrat spokesperson.

I regularly meet defence SMEs, and they all tell me the same thing: without a defence investment plan, investment decisions are being delayed, expansion plans are being put on hold, and opportunities risk being lost overseas. British firms stand ready to grow, hire, and strengthen our national resilience, but continued Government delays are creating damaging uncertainty across the sector. Can the Minister tell me whether the MOD, or indeed any other Department, has conducted an economic assessment of the impact that the delayed publication of the defence investment plan is having on British businesses? If not, will he commit to publishing one?

I can tell the hon. Gentleman about the 1,200 contracts we have signed since the general election, because we are not waiting for a defence investment plan to sign contracts with companies large and small. Those companies are producing new jobs and apprenticeships, more demand for skills, and new technologies that are being used by our frontline forces and exported to our allies. All the work that the hon. Gentleman refers to is part of our bigger picture for the defence investment plan. We know that increased defence spending will produce more UK jobs. We are spending more with British companies, and will continue to do so. I will stand up for our armed forces and our defence industry, and I hope that the hon. Gentleman will be able to talk our defence industry up, rather than talk it down as he has today.