Defence secretary tells City sector is ‘open for business’
Defence secretary John Healey has unveiled plans to open a “marketplace” that will allow suppliers from different areas of the economy to support defence firms, telling an audience at the London Stock Exchange that “UK defence is open for business.”
Healey announced the new scheme linking up the defence sector with companies in software, data and artificial intelligence before becoming the first defence secretary to close the day’s trading at the London market.
Procurement of warships and planes will also now be fast-tracked as part of efforts to boost the UK armed forces at a quicker pace.
The plans are seen as key to the government’s push to invest 2.5 per cent of UK GDP in defence by 2027, with the increased levels of public funding rising to three per cent in the years after.
It means the government will invest an additional £13.4bn a year in defence from 2027, putting total spending on defence at more than £70bn.
Defence firms Adarga, Haedean, Oxford Dynamics and WhiteSpace have signed up to the marketplace.
Ambitions to speed up defence procurement were spelt out by Chancellor Rachel Reeves in March but the government has now confirmed the time limit for the procurement of planes, tanks and ships will dramatically fall from an average of six years to two.
Contracts for communications and weapons systems will be reduced to one year while other kit, such as drones and software, will run on three-month cycles.
A new body, which has been called UK Defence Innovation, will also be set up this summer and run on an initial budget of £400m to deliver equipment and fresh technology to the army, with ten per cent of government budgets on equipments to be spent on new products.
‘Defence is open for business’
The new investment pledges are seen as a way of modernising the UK’s ageing equipment. They also come ahead of a defence review due to be published within a matter of weeks, which is expected to advise the government on rethinking military strategies in the Arctic and ways to boost army capabilities.
In a speech heard by investors and military personnel present at the London Stock Exchange, Healey said the war in Ukraine showed that a “military is only as strong as the industry which stands behind it”.
“UK defence is open for business and together we can make Britain secure at home and strong abroad,” he said,
“National security is at the heart of our plan for change, and is essential for economic security, investor confidence and social stability.”
A report published alongside Healey’s announcements also said that a Ministry of Defence scheme, which began in 2016, has supported nearly 500 small and medium-sized businesses resulted in £600m in private investment and created over 1,800 jobs.
Healey also suggested that spending in defence should become more efficient in response to a question on whether public bodies attached to the Ministry of Defence could face being eliminated in upcoming reviews.
“I will make it my challenge is to make sure that we don’t just spend more, but we spend better,” Healey told CityAM.
“How we spend [funds], not just how much we spend, is part of that challenge.”
The defence secretary also said defence would be a crucial part of the upcoming UK-EU trade summit, with the two parties still in the “hard yards of the final negotiations” over a new defence partnership.
Daniel Maguire, the head of the London Stock Exchange Group, said defence would continue to play a “vital role” in creating jobs and boosting national security.
“We welcome the Government’s new measures and hope that LSEG can support initiatives designed to help unlock capital for companies, boost growth, and promote innovation,” he said.