Scottish Affairs Committee
Wednesday 24th June 2026
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09:29
Speaker 1
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Speaker 1
Defence review. And broadly, if you've read the Strategic Defence Review, the Defence Investment Plan will be very familiar in terms of the. The trends that we are following retiring old equipment, bringing new equipment is what we will spend over the next ten years on the capabilities to implement the. In terms of the. The trends that we are following. Retiring older equipment, bringing new equipment on a focus on autonomy and learning the lessons from Ukraine. So more drones, more industrial capability to deliver drones as example, and more investment in innovation and high end, operations.
For the first time, the Dip looks at not just equipment, but also people and estates and enablers. So it's broadly the whole defence budget rather than just a subsection of it. Now, the two debates that are taking place at the moment seem to be one on the Dip document itself. That's what capabilities, and I think more time is spent on that side of the debate is a good one. So whatever the level of defence spending we have, the dip is designed to be a scalable strategy informed by the military logic, the military strategies are commitments to NATO, but also the um projected increase in defence spending.
The second part of that debate is how much should we spend on defence. And as a defence Minister who stayed to help complete the dip, when two of my colleagues resigned, um, I'm very clear. Would I like more defence spending?Yes I would. Um are we increasing defence spending over the next decade?Moving up to 3.5% of GDP on defence by 2035. Yes we are. Can we bring that forward?How much could we have?That's a debate that I welcome.
But I think it's important that it's not just an abstract amount of money or an abstract percentage that we focus the debate on, although that is helpful and a key part of delivering our commitments to NATO. Um, the 3% that we've committed to in the next Parliament, 3.5 by 2035 and increasing to 2.5% on defence, um, in April next year, a figure not met in any of the last 14 years. But I want to make sure that the debate is equally about what are we spending that money on, what capabilities, what investments, and if we're looking at the legacy that we inherited of underinvestment and hollowing out of our forces.
And that's especially true if you look at some areas in Scotland, for instance, that haven't had some of the infrastructure upgrades that have been required, Faslane being a really good example of that, we're going to have to spend large amounts of capital spending, upgrading using the Faslane example. Again. The submarine infrastructure on the Clyde to make sure that we can meet the threats that we're facing, and we're dealing with a backlog of underinvestment, especially in some of that capital, those capital projects, and that will be laid out in the dip.
And so if we get more money, can we scale the plan?Yes. That's what it's designed to be delivered. Um, and um, the capabilities broadly are in there will scale. So if we had more money, we'd be able to transform faster. We'd be able to invest more in our people. We'd be able to recover the workforce faster because we're on a workforce recovery, having dealt with the majority of the retention and recruitment crises that we inherited from the previous administration.
But there's no additional major capabilities that we would be seeking to buy if we had an extra additional monies, we'd scale the plan to deliver it faster. And that's what when the dip is published, hopefully very shortly, the whole committee and the House will be able to see.
For the first time, the Dip looks at not just equipment, but also people and estates and enablers. So it's broadly the whole defence budget rather than just a subsection of it. Now, the two debates that are taking place at the moment seem to be one on the Dip document itself. That's what capabilities, and I think more time is spent on that side of the debate is a good one. So whatever the level of defence spending we have, the dip is designed to be a scalable strategy informed by the military logic, the military strategies are commitments to NATO, but also the um projected increase in defence spending.
The second part of that debate is how much should we spend on defence. And as a defence Minister who stayed to help complete the dip, when two of my colleagues resigned, um, I'm very clear. Would I like more defence spending?Yes I would. Um are we increasing defence spending over the next decade?Moving up to 3.5% of GDP on defence by 2035. Yes we are. Can we bring that forward?How much could we have?That's a debate that I welcome.
But I think it's important that it's not just an abstract amount of money or an abstract percentage that we focus the debate on, although that is helpful and a key part of delivering our commitments to NATO. Um, the 3% that we've committed to in the next Parliament, 3.5 by 2035 and increasing to 2.5% on defence, um, in April next year, a figure not met in any of the last 14 years. But I want to make sure that the debate is equally about what are we spending that money on, what capabilities, what investments, and if we're looking at the legacy that we inherited of underinvestment and hollowing out of our forces.
And that's especially true if you look at some areas in Scotland, for instance, that haven't had some of the infrastructure upgrades that have been required, Faslane being a really good example of that, we're going to have to spend large amounts of capital spending, upgrading using the Faslane example. Again. The submarine infrastructure on the Clyde to make sure that we can meet the threats that we're facing, and we're dealing with a backlog of underinvestment, especially in some of that capital, those capital projects, and that will be laid out in the dip.
And so if we get more money, can we scale the plan?Yes. That's what it's designed to be delivered. Um, and um, the capabilities broadly are in there will scale. So if we had more money, we'd be able to transform faster. We'd be able to invest more in our people. We'd be able to recover the workforce faster because we're on a workforce recovery, having dealt with the majority of the retention and recruitment crises that we inherited from the previous administration.
But there's no additional major capabilities that we would be seeking to buy if we had an extra additional monies, we'd scale the plan to deliver it faster. And that's what when the dip is published, hopefully very shortly, the whole committee and the House will be able to see.
09:32
Speaker 2
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Speaker 2
Thank you for that, Minister. I'll come on to the financial side of it in a second. But just something you said sparked a thought, which was that this committee had an inquiry into space last year. And one of the things that was one of the points that was made very forcibly to us, and I think one that most of the committee have not all agreed with, was that the importance of having sovereignty in our space sector, so that we are not beholden to any other country for the launch of satellites, for example, will be important going forward.
And I think, um, one of our recommendations, I think, was that we would have a minister for space, which has been rejected. Um, and I understand that, but, um, I wonder whether that's an area that you think has been given enough consideration in our plans going forward.
And I think, um, one of our recommendations, I think, was that we would have a minister for space, which has been rejected. Um, and I understand that, but, um, I wonder whether that's an area that you think has been given enough consideration in our plans going forward.
09:33
Speaker 1
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Speaker 1
I'm a proper space nerd, so I could fill your entire two hour session just talking about this. Um, so I agree broadly that we need to update our space strategies. And so the space strategy that the last government published was a good strategy for the time, but then the sector accelerated past it quite quickly. Um, Dcit, who are the lead for civilian space, um, and the mod for military space. We are working very closely together on the refresh of the broad strategic approach.
And that has helped by bringing in, um, the Chief Secretary to the Prime Minister as effectively the lead space minister to coordinate descent in ourselves, agree on nearly everything in the in the broad approach, the subtleties of sovereign launch as an example. So there's, um, there are a number of options in Scotland, Shetland in particular for sovereign launch capabilities. For instance. Um, the Mod does not require a UK based sovereign launch capability, partly due to the orbits in which we'd want our satellites in place and the orbits available from the UK.
So for the Mod, the importance is on assured launch. So can we guarantee that our satellites. And our space capabilities could be launched. Um from a um safe secure allied nation. That's our key priority. However, we're very much aligned to the fact that we want to see more UK sovereign launch capabilities further building out that sector. There are some, um, NATO allies that might be interested in some of the satellite, um, spots that could be secured by a UK launch facility.
And we're in discussions with a number of those at the moment. I've joined that together, but I can't see any military operation that we will undertake from now forwards that does not have space as a key component part of it. So one of the trends that you saw in the Strategic Defence Review, not only is the kind of ending of expeditionary warfare moving to war, fighting readiness against a peer adversary, but it's also the kind of reinforcement of all domain warfare that whether it is a naval operation or a land based operation, unless you have space, cyber, digital, the entire integrated approach through the digital targeting web and all the different effectors and sensors coming together, you won't have the full picture or the ability to communicate.
So the more focus I think we have on how we secure our military space. Places and the slots, the protection of our assets in orbit, I think is a debate that I welcome some of that's held at higher classification for obvious reasons. Um, but broadly, we have a really effective space sector across the United Kingdom, including in Scotland, where we have in particular a really good sector building component parts for the small satellites that the UK is really good at making. And so I think there's a growth area on that.
Um, but whether he's the official minister for space, I think Darren Jones is a is our lead coordination between Dcit and Mod at the moment.
And that has helped by bringing in, um, the Chief Secretary to the Prime Minister as effectively the lead space minister to coordinate descent in ourselves, agree on nearly everything in the in the broad approach, the subtleties of sovereign launch as an example. So there's, um, there are a number of options in Scotland, Shetland in particular for sovereign launch capabilities. For instance. Um, the Mod does not require a UK based sovereign launch capability, partly due to the orbits in which we'd want our satellites in place and the orbits available from the UK.
So for the Mod, the importance is on assured launch. So can we guarantee that our satellites. And our space capabilities could be launched. Um from a um safe secure allied nation. That's our key priority. However, we're very much aligned to the fact that we want to see more UK sovereign launch capabilities further building out that sector. There are some, um, NATO allies that might be interested in some of the satellite, um, spots that could be secured by a UK launch facility.
And we're in discussions with a number of those at the moment. I've joined that together, but I can't see any military operation that we will undertake from now forwards that does not have space as a key component part of it. So one of the trends that you saw in the Strategic Defence Review, not only is the kind of ending of expeditionary warfare moving to war, fighting readiness against a peer adversary, but it's also the kind of reinforcement of all domain warfare that whether it is a naval operation or a land based operation, unless you have space, cyber, digital, the entire integrated approach through the digital targeting web and all the different effectors and sensors coming together, you won't have the full picture or the ability to communicate.
So the more focus I think we have on how we secure our military space. Places and the slots, the protection of our assets in orbit, I think is a debate that I welcome some of that's held at higher classification for obvious reasons. Um, but broadly, we have a really effective space sector across the United Kingdom, including in Scotland, where we have in particular a really good sector building component parts for the small satellites that the UK is really good at making. And so I think there's a growth area on that.
Um, but whether he's the official minister for space, I think Darren Jones is a is our lead coordination between Dcit and Mod at the moment.
09:36
09:36
Speaker 3
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Speaker 3
Yes. Supplementary question. Thank you. Minister, you mentioned in your first answer fast Lane. Can I bring you back to that fast lanes on the edge of my constituency, both directly and indirectly employs over 10,000 people, much of that from my constituency. And you did mention years of underinvestment. What can we expect from the Defence Investment Plan in relation to spend?Will we be setting out spend for the next decade or decades to come?
09:37
Speaker 1
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Speaker 1
Yes. So there are a number of projects that are kind of multi-decade projects that we are undertaking as a department. So GCap being a good example, Aukus being another um there platform based. But when it comes to the infrastructure, I think if you look at the defence nuclear enterprise more broadly and the activities within the defence ring fence, which are the nuclear ring fence, which would include, for instance, some of the submarine activity that the Royal Navy undertakes. We haven't seen the investment for quite some time.
In fact, there was deliberate decisions made by the previous administration to move some of that investment to the right, to manage some of the kind of austerity policies they had at the time. That has left a real backlog at Faslane. And, you know, having visited Faslane a number of times, I think it's fair to say, and I think you'd probably agree with me that some of the facilities there, not just for the submarines, but for the people, need massive investment. Um, and so what we will be setting out is the high level spending lines for some of the nuclear transformation.
Now that is both at, um, uh, on the Clyde where we will be announcing what kind of high level investments in there because it's part of the nuclear enterprise. We won't be going into the line item details, but as a local MP, you'll be familiar with broadly what we need to do. We need good facilities to dock the submarines. We need good facilities to maintain the submarines, and we need good facilities for our people who work there. I think at the moment, it's fair to say that what we inherited doesn't deliver all three of those.
The plan will get after that, just as it gets after the necessity to have more deep refit facilities in Devonport and the constituency I represent, for instance, that's again, something that was pushed to the right. And I think one of the bits of inheritance that we're trying to get after in the in the dip and more broadly in defence programs is saying, yes, the threat is rising. We need greater availability of our platforms. One of the reasons we don't have the availability that I think we would all like is not because of the platform itself, not because of the people, but because of the infrastructure that hasn't been invested in.
And I can see why previous governments made the decision to delay what on paper, looks very expensive, unsexy projects. The problem is they're absolutely vital for the ability for us to deploy those assets. And that's why you should expect to see investment in in Faslane in particular in the dip. Thank you.
In fact, there was deliberate decisions made by the previous administration to move some of that investment to the right, to manage some of the kind of austerity policies they had at the time. That has left a real backlog at Faslane. And, you know, having visited Faslane a number of times, I think it's fair to say, and I think you'd probably agree with me that some of the facilities there, not just for the submarines, but for the people, need massive investment. Um, and so what we will be setting out is the high level spending lines for some of the nuclear transformation.
Now that is both at, um, uh, on the Clyde where we will be announcing what kind of high level investments in there because it's part of the nuclear enterprise. We won't be going into the line item details, but as a local MP, you'll be familiar with broadly what we need to do. We need good facilities to dock the submarines. We need good facilities to maintain the submarines, and we need good facilities for our people who work there. I think at the moment, it's fair to say that what we inherited doesn't deliver all three of those.
The plan will get after that, just as it gets after the necessity to have more deep refit facilities in Devonport and the constituency I represent, for instance, that's again, something that was pushed to the right. And I think one of the bits of inheritance that we're trying to get after in the in the dip and more broadly in defence programs is saying, yes, the threat is rising. We need greater availability of our platforms. One of the reasons we don't have the availability that I think we would all like is not because of the platform itself, not because of the people, but because of the infrastructure that hasn't been invested in.
And I can see why previous governments made the decision to delay what on paper, looks very expensive, unsexy projects. The problem is they're absolutely vital for the ability for us to deploy those assets. And that's why you should expect to see investment in in Faslane in particular in the dip. Thank you.
09:39
09:39
Speaker 4
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Speaker 4
Minister, thank you for that answer. Just on the infrastructure investments, it's needed across Vaseline and other Scottish bases in terms of procurement. Um, what reassurance can you give us that Scottish companies, British companies will be able to bid for those contracts um to support jobs across our communities.
09:40
Speaker 1
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Speaker 1
Yeah. So um it's been a key policy that we've adopted since coming to office that with an increasing defence budget, we want more of that spent with British based companies now within Scotland. It's quite uniquely as one of the parts of the United Kingdom, Scotland has nearly every single major prime. I think it does have every major prime in there, compared to other regions that might have a Babcock or a B heavy bent. Um, and so what we're seeing there is a very strong spend with primes.
And so correspondingly less direct spend from the mod with SMEs, but a stronger spend with SMEs coming from the primes, which roughly account for three quarters ish of our UK wide spending with SMEs. I want to see more spending with British based firms. And we've made that very clear both to primes, but also in how we are seeking to procure ourselves via the National Armaments Director group. Um. To do that, we need to invest in the skills in the supply chain.
We need to invest in the, um. The connectivity and shorten the procurement timetables because especially for small SMEs, what I've seen when I've been in Scotland, for example, when we launched the defence Growth Deal earlier this year, small businesses are saying we've got some really good kit. We think we could provide good advantage to the military, but by the time we go through a procurement exercise, we might not be here by the time it comes out because it takes too long, which is the reason why in the defence industrial strategy, we set out very clear timetables for shortening that contracting period and more um measures to literally get after um the, the shortened delivery.
And you know, if you take the example of the single source contract regulations, the scars, which is when you only buy from one company, um, we've adjusted the threshold of that up to 25 million, which pretty much takes out all SMEs from that regime, which is good news for small businesses. Um, but we need to get after more of that because, you know, when we say defence is an engine for growth, we mean it. We know there's huge opportunities to do more. Um, but from my point of view, you know, if I'm looking at, say, in Scotland, whether it's a Babcock or Bay systems, as British headquartered businesses or say, Leonardo or Thales as, uh, as businesses headquartered elsewhere, if they're based in, if they have operations in the UK, if they employ people in the UK, if they pay their tax in the UK, they're companies that we want to support.
And so correspondingly less direct spend from the mod with SMEs, but a stronger spend with SMEs coming from the primes, which roughly account for three quarters ish of our UK wide spending with SMEs. I want to see more spending with British based firms. And we've made that very clear both to primes, but also in how we are seeking to procure ourselves via the National Armaments Director group. Um. To do that, we need to invest in the skills in the supply chain.
We need to invest in the, um. The connectivity and shorten the procurement timetables because especially for small SMEs, what I've seen when I've been in Scotland, for example, when we launched the defence Growth Deal earlier this year, small businesses are saying we've got some really good kit. We think we could provide good advantage to the military, but by the time we go through a procurement exercise, we might not be here by the time it comes out because it takes too long, which is the reason why in the defence industrial strategy, we set out very clear timetables for shortening that contracting period and more um measures to literally get after um the, the shortened delivery.
And you know, if you take the example of the single source contract regulations, the scars, which is when you only buy from one company, um, we've adjusted the threshold of that up to 25 million, which pretty much takes out all SMEs from that regime, which is good news for small businesses. Um, but we need to get after more of that because, you know, when we say defence is an engine for growth, we mean it. We know there's huge opportunities to do more. Um, but from my point of view, you know, if I'm looking at, say, in Scotland, whether it's a Babcock or Bay systems, as British headquartered businesses or say, Leonardo or Thales as, uh, as businesses headquartered elsewhere, if they're based in, if they have operations in the UK, if they employ people in the UK, if they pay their tax in the UK, they're companies that we want to support.
09:42
09:42
Speaker 5
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Speaker 5
Thank you, Chair Minister. Big investment in the nuclear enterprise. Um I don't think we've seen the ten year rolling figure for the nuclear enterprise for a number of years. This is clearly the investments you're making are clearly going to have an impact on that. When will the department publish the ten year rolling costs for the nuclear enterprise?
09:43
Speaker 1
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Speaker 1
So within the Defence investment Plan. Um although it's quite high level for obvious reasons, um and doesn't go into line item spend, um there will be a total figure in there for how much D and E is being allocated as part of the defence investment plan. Some of those items can be broken out from that. A number of those for obvious reasons around classification can't be. Um but what I want to do, and something that the former Secretary of State was exploring, and I think the new one will be as well after the dip is published, is how can we provide both the House and the wider public with the correct level of detail around what will be an increasing area of defence spending?Because we know it matters, we know it's really significant.
And as we seek to recapitalize both the submarines, the warhead and the infrastructure, as well as investing in the people, I think there's an element of how we tell that story through proper publication of information, you know, correctly at the appropriate classification that I think could support the understanding around why nuclear is so important and why it creates good, decent jobs in Scotland, in Raynesway, in Derby, in Devonport.
And as we seek to recapitalize both the submarines, the warhead and the infrastructure, as well as investing in the people, I think there's an element of how we tell that story through proper publication of information, you know, correctly at the appropriate classification that I think could support the understanding around why nuclear is so important and why it creates good, decent jobs in Scotland, in Raynesway, in Derby, in Devonport.
09:43
09:44
09:44
09:44
Speaker 1
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Speaker 1
If I answer that question, taking two parts, the first one is we've continued to sign contracts with industry as we develop the dip. Um, so 1400 major defence contracts since the general election. Um 90% plus of that spend has gone to UK based firms. Um, and that is a record that we're proud of in terms of doing that. Um, I recognise that industry wants the dip published. Um I can tell them I want the dip published as well.
They won't have to wait very much longer. I hope now to see that when it comes to orals and the example you used, you know, the mod has been financially supporting orals for some time and given its financial difficulties, we actually brought forward some of this spend that we were planning to make with our allies to support them as they were overcoming their financial difficulties. They were seeking to bid into the um, jet training system procurement, which is for a new, um, jet trainer that trains our pilots.
And that's the same platform that the Red arrows use. Um, that is a competitive tender. Um, we're buying a plane, not a PowerPoint. And I say to all companies that are bidding into that the planes, one part of it, the training system is absolutely vital. That is more than just the plane. And anyone bidding into it needs to have a plane that is successful and a jet training system as a whole, that would make that package work. Um, it's a shame that orals weren't able to sustain their business during this period.
Um, but the timetables and the work that we're doing on the procurement for jet training system is widely understood by colleagues. And we're working up that procurement, which is a major procurement for the Mod. And that has been pretty much shared with, you know, many of those firms that are wanting to bid in for that for quite some time.
They won't have to wait very much longer. I hope now to see that when it comes to orals and the example you used, you know, the mod has been financially supporting orals for some time and given its financial difficulties, we actually brought forward some of this spend that we were planning to make with our allies to support them as they were overcoming their financial difficulties. They were seeking to bid into the um, jet training system procurement, which is for a new, um, jet trainer that trains our pilots.
And that's the same platform that the Red arrows use. Um, that is a competitive tender. Um, we're buying a plane, not a PowerPoint. And I say to all companies that are bidding into that the planes, one part of it, the training system is absolutely vital. That is more than just the plane. And anyone bidding into it needs to have a plane that is successful and a jet training system as a whole, that would make that package work. Um, it's a shame that orals weren't able to sustain their business during this period.
Um, but the timetables and the work that we're doing on the procurement for jet training system is widely understood by colleagues. And we're working up that procurement, which is a major procurement for the Mod. And that has been pretty much shared with, you know, many of those firms that are wanting to bid in for that for quite some time.
09:46
09:46
Speaker 1
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Speaker 1
Yeah. So I agree that a clear demand signal is is a necessary part of where industry, um, gains advantage and can make investment decisions against. It's one of the reasons why we set out the approach of having the strategic defence review that looks at the threat and the changes that threat demands, a defence industrial strategy that says we'll invest in, um, in people in skills and British firms and in always on, which is a, which is an important part of dealing with the kind of feast and famine that I think we've had in defence for quite some time.
So why do frigates and submarines cost quite a lot of money?Well, one of the reasons for that is because you've had to mobilize an entire workforce that had been stood down previously because of a lack of orders. So we want to, against a number of key areas have always on now. Now that helps create a clear demand signal for certain both munitions and military capabilities. But the broad sentiment about how we are doing that is bringing industry more into kind of our engagement to say, these are the capabilities we're broadly investing in.
This is how we're going down there. We've tried to be very clear with the SDR and subsequently that our purchasing will involve retiring old equipment, leaning into autonomy. In particular, we're planning to spend £4 billion on autonomy. That's a huge demand signal, especially for what our most companies that operate in the autonomy kind of drone space, um, relatively small firms compared to some of the big primes, although some of the big primes do operate in as well. You can see in that space that we will be buying quite a lot during there.
And for some of those works, you can, um, those firms could see it in terms of what we're buying for Ukraine as well, because in some cases we are buying similar technologies for Ukraine as we buy for the United Kingdom. Um, and so I want to see a clear demand signal. We've heard that loud and clear at a high level. That's what the dip will present. And then we'll be able to take that and start the procurements, um, that we are looking to announce subsequent from the dip, um, that have been phased to be delivered in the course of this year.
So why do frigates and submarines cost quite a lot of money?Well, one of the reasons for that is because you've had to mobilize an entire workforce that had been stood down previously because of a lack of orders. So we want to, against a number of key areas have always on now. Now that helps create a clear demand signal for certain both munitions and military capabilities. But the broad sentiment about how we are doing that is bringing industry more into kind of our engagement to say, these are the capabilities we're broadly investing in.
This is how we're going down there. We've tried to be very clear with the SDR and subsequently that our purchasing will involve retiring old equipment, leaning into autonomy. In particular, we're planning to spend £4 billion on autonomy. That's a huge demand signal, especially for what our most companies that operate in the autonomy kind of drone space, um, relatively small firms compared to some of the big primes, although some of the big primes do operate in as well. You can see in that space that we will be buying quite a lot during there.
And for some of those works, you can, um, those firms could see it in terms of what we're buying for Ukraine as well, because in some cases we are buying similar technologies for Ukraine as we buy for the United Kingdom. Um, and so I want to see a clear demand signal. We've heard that loud and clear at a high level. That's what the dip will present. And then we'll be able to take that and start the procurements, um, that we are looking to announce subsequent from the dip, um, that have been phased to be delivered in the course of this year.
09:50
09:50
09:51
Speaker 7
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Speaker 7
Mr.. I am um. We went to the speakers, the square in front and that fantastic display of all the sort of military things which I couldn't have enjoyed more. There were some people talking about drones who were very knowledgeable, and they said, we have a very major issue that the CAA and the military equivalent are not are making conditions too difficult to to do. The process of developing drones. Um, do you have a comment on that?And, and has, has that going to be relieved?Yes, I do.
09:52
Speaker 1
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Speaker 1
Um, so our airspace management system in the UK was broadly designed for disaggregating and protecting the multiple uses of airspace at any one time. And so we have a number of, um, drone testing companies or drone companies that wish to test the United Kingdom for whom it's not just cleared airspace that's necessary to do so, but then also looking about, um, what's the electronic warfare environment?So are they allowed to jam in an area now?Clearly jamming for lots large parts of the United Kingdom is very hard there.
Um, but if you look at, say, the kinetic ranges and the Hebrides and kinetic run the mod's um ranges, um that employs kinetic employ, I think it's 200 people in the Hebrides in support of testing and evaluation. And T&E is a really important part of military spend, doesn't often get the headlines, but as we develop new capabilities, we would expect to see even more of those. Now, to deliver that, we need to adjust the regulatory environment. Um, and that's why in the regulating for growth bill that was announced in the King's Speech, um, we've included a regulatory sandbox powers.
What this broadly means is that the government, if this bill passes, will be able to draw an area around and say, right, we'll be able to adjust the regulation within those areas to deliver stuff. I think it's that's a good opportunity both for drone testing. Um, and some of the testing that we've seen of, say, project break stops. So our new low cost cruise missile in the Hebrides, but also for marine autonomy, where it's not necessarily CAA problems, but a maritime M.c.a. Sorry.
Um, regulation, um, about, you know, hundreds of years, our regulations have been built around having people on board ships and moving to having no people on board ships means they're quite substantial change. So we're working with both DFT. And DBT, some of the lead areas on this to look at how we can get there. I have to say the regulators are quite flexible within the powers they've got today. And I've been quite impressed by the level of cooperation I want to see more.
And if we can get that right, which I hope will happen fairly soon with the if that when that bill passes, um, that will give us the ability to do more around the Hebrides, for instance, and some of the testing areas that we have in Scotland, more around some of the cleared airspace that we have in the south west of England, for instance, which is cleared airspace and maritime space. But then also looking at where our test and evaluation ranges could be elsewhere around the world. So, um, you might have seen Sky news talk about batus, the British Area Training Unit, Suffield, which is a really large part of Alberta in Canada that the UK um operates.
Um it used to be for heavy armour but now would be for um drones, missile technology, directed energy, weapons jamming for instance. So our test and evaluation will be able to operate UK based sites. Really, you know, Scotland has a large amount of um ranges that will be, you know, would benefit from this. Um and um I think I would make the distinction between, say, drones that fly uav's land based drones, which generally speaking, don't have that same type of regulatory obstacle and marine autonomy, which we see as a hugely important area.
And we've set out already our move to a hybrid navy. Um, which means that we'll have crewed ships with uncrewed ships alongside uncrewed units in the air and uncrewed submarines. Underneath that is the movement that the First Sea Lord is pioneering. But to get that right, we need more test and evaluation ranges, and we've got to adjust the regulation to get there. It's a little bit like the submarine stuff for me to get my subs to sea. I need better infrastructure.
For me to get autonomy, I need the regulatory environment to work as well. And these enabling pieces, that's not necessarily going to be in the dip because that's a separate piece of work around the regulatory framework. But we're also working with the national Shipbuilding office that the Mod kind of hosts to look across government as to how we do this. And the new, um, shipbuilding and autonomy, um, plan that they're developing technology. Yes. Maritime technology action plan. Thank you for the title will be coming out in due course, and that will set out some of that regulatory change that we have to get on.
But more parliamentarians pushing that case, I think the better. Thank you.
Um, but if you look at, say, the kinetic ranges and the Hebrides and kinetic run the mod's um ranges, um that employs kinetic employ, I think it's 200 people in the Hebrides in support of testing and evaluation. And T&E is a really important part of military spend, doesn't often get the headlines, but as we develop new capabilities, we would expect to see even more of those. Now, to deliver that, we need to adjust the regulatory environment. Um, and that's why in the regulating for growth bill that was announced in the King's Speech, um, we've included a regulatory sandbox powers.
What this broadly means is that the government, if this bill passes, will be able to draw an area around and say, right, we'll be able to adjust the regulation within those areas to deliver stuff. I think it's that's a good opportunity both for drone testing. Um, and some of the testing that we've seen of, say, project break stops. So our new low cost cruise missile in the Hebrides, but also for marine autonomy, where it's not necessarily CAA problems, but a maritime M.c.a. Sorry.
Um, regulation, um, about, you know, hundreds of years, our regulations have been built around having people on board ships and moving to having no people on board ships means they're quite substantial change. So we're working with both DFT. And DBT, some of the lead areas on this to look at how we can get there. I have to say the regulators are quite flexible within the powers they've got today. And I've been quite impressed by the level of cooperation I want to see more.
And if we can get that right, which I hope will happen fairly soon with the if that when that bill passes, um, that will give us the ability to do more around the Hebrides, for instance, and some of the testing areas that we have in Scotland, more around some of the cleared airspace that we have in the south west of England, for instance, which is cleared airspace and maritime space. But then also looking at where our test and evaluation ranges could be elsewhere around the world. So, um, you might have seen Sky news talk about batus, the British Area Training Unit, Suffield, which is a really large part of Alberta in Canada that the UK um operates.
Um it used to be for heavy armour but now would be for um drones, missile technology, directed energy, weapons jamming for instance. So our test and evaluation will be able to operate UK based sites. Really, you know, Scotland has a large amount of um ranges that will be, you know, would benefit from this. Um and um I think I would make the distinction between, say, drones that fly uav's land based drones, which generally speaking, don't have that same type of regulatory obstacle and marine autonomy, which we see as a hugely important area.
And we've set out already our move to a hybrid navy. Um, which means that we'll have crewed ships with uncrewed ships alongside uncrewed units in the air and uncrewed submarines. Underneath that is the movement that the First Sea Lord is pioneering. But to get that right, we need more test and evaluation ranges, and we've got to adjust the regulation to get there. It's a little bit like the submarine stuff for me to get my subs to sea. I need better infrastructure.
For me to get autonomy, I need the regulatory environment to work as well. And these enabling pieces, that's not necessarily going to be in the dip because that's a separate piece of work around the regulatory framework. But we're also working with the national Shipbuilding office that the Mod kind of hosts to look across government as to how we do this. And the new, um, shipbuilding and autonomy, um, plan that they're developing technology. Yes. Maritime technology action plan. Thank you for the title will be coming out in due course, and that will set out some of that regulatory change that we have to get on.
But more parliamentarians pushing that case, I think the better. Thank you.
09:59
10:00
Speaker 5
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Speaker 5
Thank you chair. Minister, given your commitment to defence, which is well understood, um and that the dip will presumably come out before recess and then will be gone for six weeks, and then we'll be back and parliamentary timetable will mean that in big handfuls. Two and a half ish years after you took up your role in the Ministry of Defence, will be the delay or the duration, rather that it will take for Parliament to get a chance to discuss your government's plans for defence going into the future.
Did you imagine it would take that long back?Back when your government was formed?
Did you imagine it would take that long back?Back when your government was formed?
10:00
Speaker 1
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Speaker 1
So the amount of time I spent at the despatch box talking about our plans for defence procurement, I think there's plenty of opportunities where people have been able to look at that, and because the announcements aren't. vacuum well, the announcements haven't all been waiting for the dip. And so we've announced a large amount of capability changes during this period. If you just look at the last few months alone, you know, the announcement of a £1 billion helicopter contract with Leonardo, the announcement of radar upgrades for typhoons, which is based out of Edinburgh, um, the CH155 mobile artillery, billion pound investment there.
10:00
10:00
Speaker 1
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Speaker 1
No, the dip is important. I set it out, but we haven't waited for the dip to, uh, to, to make announcements. And we've been able to discuss some of those in Parliament. And certainly for interested parliamentarians have been having quite a lot of discussions with them around individual military capabilities. Um, we wanted a sequence of strategies when we came into office. That's why the SDR, the industrial strategy and the Dipper sequence like this, the Defence finance and investment strategy, although perhaps not a headline grabber frequently, will be published later this year.
And that looks at how do you crowd in private finance to get there?We're deliberately doing it as a sequence. Of course, I'd like to dip out, and as someone who's appears regularly at the despatch box saying, I want it out soon, you know, the Chancellor set out yesterday at Treasury questions that she's confident that the dip will be published. Um, before the Prime Minister and the Defence Secretary get on a plane to Ankara for the NATO summit.
And that looks at how do you crowd in private finance to get there?We're deliberately doing it as a sequence. Of course, I'd like to dip out, and as someone who's appears regularly at the despatch box saying, I want it out soon, you know, the Chancellor set out yesterday at Treasury questions that she's confident that the dip will be published. Um, before the Prime Minister and the Defence Secretary get on a plane to Ankara for the NATO summit.
10:00
10:00
Speaker 1
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Speaker 1
Yeah. So we're still seeing investment by those large firms in defence. Um, I want to set out a clear demand signal in the dip for a variety of platforms, which will give people more confidence to invest. But we, we are still seeing defence companies invest in these areas. And we're still seeing a new contract signed that creates more job opportunities. So we know that the broad employment within, uh, within this area has grown. But it's not just what we buy.
It's also what we've been able to support through exports. So if you look at, say, the Norway deal that sustains shipbuilding on the Clyde now for I think 15 years further with the purchase of um, I think they've described it as at least five type 26 frigates. That's a really important part of this work. The Tokyo typhoon deal, for instance, um, produces work for both radars in Scotland, radar work out of Leonardo and Thales and then construction in Lancashire. But a supply chain that includes many Scottish businesses as well.
So we're continuing to support that work.
It's also what we've been able to support through exports. So if you look at, say, the Norway deal that sustains shipbuilding on the Clyde now for I think 15 years further with the purchase of um, I think they've described it as at least five type 26 frigates. That's a really important part of this work. The Tokyo typhoon deal, for instance, um, produces work for both radars in Scotland, radar work out of Leonardo and Thales and then construction in Lancashire. But a supply chain that includes many Scottish businesses as well.
So we're continuing to support that work.
10:01
Speaker 5
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Speaker 5
But previously we used to talk about a 30 year pipeline of shipbuilding. That was the plan. Is it still the plan and how does that how does that how should that land with the workforce in Babcock at Rosyth, for example, who are gusting well past half way through their current order for type 31?Will the Dip cover off the procurement of type 32?And even more broadly, type 83?Will the dip look at that, or are we going to find the dip published.
And it's going to have more questions in it than answers.
And it's going to have more questions in it than answers.
10:02
Speaker 1
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Speaker 1
So I can't go into individual line item platforms. Certainly we inherited um a. Of work streams from the previous government that were underdeveloped. So we've had to look at how that works. I want to see more investment in UK shipbuilding. It's really important. We've been I've been very clear about how I support the export campaigns. For instance, it's a shame we didn't win the Sweden export campaign, but we're working with Babcock on a number of export campaigns for the type 31 at the moment.
Um, I'm hopeful against some of those, but until we see contracts being signed or announced, I'll still keep pushing on those. Um, I want to see sustained shipbuilding in the UK, both on the Clyde and also at Rosyth. One of the reasons that in announcing the defence growth deal, we've announced funding for, say, the owl jib um innovation. At Rosyth is because we see the importance of having sustained shipbuilding there and an investment in innovation that comes from it. Um I think when the is published it will answer many of your questions, but I do want to see a sustained period of British shipbuilding.
Um, and that is both for UK and also for our allies in terms of this work.
Um, I'm hopeful against some of those, but until we see contracts being signed or announced, I'll still keep pushing on those. Um, I want to see sustained shipbuilding in the UK, both on the Clyde and also at Rosyth. One of the reasons that in announcing the defence growth deal, we've announced funding for, say, the owl jib um innovation. At Rosyth is because we see the importance of having sustained shipbuilding there and an investment in innovation that comes from it. Um I think when the is published it will answer many of your questions, but I do want to see a sustained period of British shipbuilding.
Um, and that is both for UK and also for our allies in terms of this work.
10:03
Speaker 5
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Speaker 5
Thank you. Just finally from you too. Is a defence, a defence investment plan. So clearly a big part of that strategic direction will be procurement rules and priorities around procurement. What assurance can you give countless shipyards around these islands who could easily have built the equipment that was required to support the nuclear deterrent, which Serco put to Damman in the Netherlands, and the government was powerless to do anything about that because of the way that that contract was written. What are you going to do to stop that sort of nonsense happening in the future?
10:04
Speaker 1
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Speaker 1
Yeah, so myself and, uh, the former defence secretary and the Chancellor have been pretty clear that we want to see more shipbuilding in UK yards when it comes to the Serco tugs contract because it. Began under the previous government and was well progressed by the time we got there. And it included the decision making on who to procure the tugs from, not by the Mod but from the by Serco and because. Of those tugs were so essential for the job that they're asked to do around our dockyards, and the deterrent in particular, stopping that.
At that point was not possible. I do, however, want to see future contracts, um, built in British shipyards. That's an argument that I make thoroughly. There's a balance to be struck about when we talk about, you know, Mr. McAllister's question around infrastructure because of a lack of investment that we've had, there's now an urgency against some of those platforms. I'm, um, very conscious that a number of shipyards need more capital investment to be able to compete internationally. I want to see us put more work through those shipyards.
That allows for the capital investment to be spread across a number of orders, rather than just loaded on one, which is one of the reasons why sometimes UK shipbuilding can seem uncompetitive with pricing of foreign yards, for instance, that have a greater throughput. But I know that we're not going to get the efficiency of our yards unless we put work through them. And so, you know, I do want to see more of that. I would also make the case that if we're looking at what a hybrid Navy delivers, it's not just a large crude platforms that traditionally we talk about in shipbuilding terms, that might be Rosyth.
Um, Clyde, uh, focused, but it will also be a wider range of, um, if I say smaller, some of them are only just smaller. Yeah. Larger surface vessel, a variety of those type of autonomous uncrewed vessels. There's more locations around the UK, including in Scotland, that could be building smaller craft for hybrid navy. And one of the things about a hybrid Navy in a in a period of greater um, greater threat is about um, how, uh, a treatable some of those platforms are.
So you would presume that we'd have a greater flow of construction of some of the hybrid platforms than we would on the crewed platforms that we want to be survivable. We'd want to ensure the protection of. But the mission sets that the hybrid Navy would be doing would allow more of that, which means more production in a greater range of shipyards.
At that point was not possible. I do, however, want to see future contracts, um, built in British shipyards. That's an argument that I make thoroughly. There's a balance to be struck about when we talk about, you know, Mr. McAllister's question around infrastructure because of a lack of investment that we've had, there's now an urgency against some of those platforms. I'm, um, very conscious that a number of shipyards need more capital investment to be able to compete internationally. I want to see us put more work through those shipyards.
That allows for the capital investment to be spread across a number of orders, rather than just loaded on one, which is one of the reasons why sometimes UK shipbuilding can seem uncompetitive with pricing of foreign yards, for instance, that have a greater throughput. But I know that we're not going to get the efficiency of our yards unless we put work through them. And so, you know, I do want to see more of that. I would also make the case that if we're looking at what a hybrid Navy delivers, it's not just a large crude platforms that traditionally we talk about in shipbuilding terms, that might be Rosyth.
Um, Clyde, uh, focused, but it will also be a wider range of, um, if I say smaller, some of them are only just smaller. Yeah. Larger surface vessel, a variety of those type of autonomous uncrewed vessels. There's more locations around the UK, including in Scotland, that could be building smaller craft for hybrid navy. And one of the things about a hybrid Navy in a in a period of greater um, greater threat is about um, how, uh, a treatable some of those platforms are.
So you would presume that we'd have a greater flow of construction of some of the hybrid platforms than we would on the crewed platforms that we want to be survivable. We'd want to ensure the protection of. But the mission sets that the hybrid Navy would be doing would allow more of that, which means more production in a greater range of shipyards.
10:06
10:06
Speaker 1
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Speaker 1
Yeah. So if I take the example that was on show in Parliament just yesterday, for instance. So the Kraken K3 Scout that was theirs, made by Kraken, uh, admittedly in Fareham on the south coast. Um, we've bought a number of those platforms as part of Project Beehive for, for seven Commando Royal Marines. Um, and we're also looking at that type of platform and its utility of interchangeable payload bay for the Strait of Hormuz operation, for instance. And so, um, we're leading in this effort and we're putting our money where our mouth is in terms of deploying hybrid navy.
Um, we've got. Autonomous mines, minesweeping capabilities already, uh, that we. With Tallis over a number of years. That's some of that capability is already pre-deployed in the gulf ahead of the, um, the, uh, conflict between the United States, Israel and Iran and our f line, our for Lyme Bay, forgive me. Um, is now in that part of the world with more capabilities on board that we want to be able to use when peace has been secured there and we can deal with the mines there.
More of that, um, hybrid navy activity more prominent in the international space, we believe is going to only support the exports of these platforms. We're seeing our allies very interested in the not just the platform, but the software technology that sits behind it as well.
Um, we've got. Autonomous mines, minesweeping capabilities already, uh, that we. With Tallis over a number of years. That's some of that capability is already pre-deployed in the gulf ahead of the, um, the, uh, conflict between the United States, Israel and Iran and our f line, our for Lyme Bay, forgive me. Um, is now in that part of the world with more capabilities on board that we want to be able to use when peace has been secured there and we can deal with the mines there.
More of that, um, hybrid navy activity more prominent in the international space, we believe is going to only support the exports of these platforms. We're seeing our allies very interested in the not just the platform, but the software technology that sits behind it as well.
10:07
10:07
Speaker 1
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Speaker 1
Um, indeed, and how we fight them. And so there's a training opportunity that flows from this as well. And that's why if you look at, say, how military training is now changing, both at, say, Sandhurst, Dartmouth as examples, how do you lead to fight in an environment where drone warfare and hybrid warfare and the Navy and the maritime sense are really significant now that provides export training opportunities, and the UK is genuinely leading in this work. And what we're also trying to do is be collaborative with our friends and allies.
So a key part of pitches, say for, say, new frigates would be the interoperability with the hybrid navy and the ability for us to work together with allies to have more interchangeable uncrewed assets. Because a key part of, say, the Norway frigate deal is our frigates are interchangeable. They have different signs in Norwegian on Norwegian ships, but they're pretty much the same frigate. Apart from that, that interchangeability, rather than interoperability. It sounds like a subtlety, but what it does mean is that we have the same ammunition, we have the same training, we have the same ability to fight it.
That improves our lethality and our readiness. And I want to see more of that, especially in the naval space, but not just naval space. The p-8s that operate out of Lossiemouth, for instance. You know, we know that many of our allies operate P-8 maritime patrol aircraft as well, but not all the Sonobuoys and not all the torpedoes fit in each other's p-8s. That doesn't make much sense to me. And so that's why we're trying to move to true interchangeability on a number of those.
And that will benefit, I think, some there's some.
So a key part of pitches, say for, say, new frigates would be the interoperability with the hybrid navy and the ability for us to work together with allies to have more interchangeable uncrewed assets. Because a key part of, say, the Norway frigate deal is our frigates are interchangeable. They have different signs in Norwegian on Norwegian ships, but they're pretty much the same frigate. Apart from that, that interchangeability, rather than interoperability. It sounds like a subtlety, but what it does mean is that we have the same ammunition, we have the same training, we have the same ability to fight it.
That improves our lethality and our readiness. And I want to see more of that, especially in the naval space, but not just naval space. The p-8s that operate out of Lossiemouth, for instance. You know, we know that many of our allies operate P-8 maritime patrol aircraft as well, but not all the Sonobuoys and not all the torpedoes fit in each other's p-8s. That doesn't make much sense to me. And so that's why we're trying to move to true interchangeability on a number of those.
And that will benefit, I think, some there's some.
10:09
10:09
Speaker 1
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Speaker 1
Whether it goes on a type 26 or not would be depending on the mission sets. But broadly, I would expect when the type 26 is sail, um, uh, not too many years away from now, they would sail with autonomy alongside them. It might not necessarily be in close formation, as you see in the kind of like the fleet photographs that we might be used to. Um, but they would operate in that environment with autonomy alongside on the surface, underneath the waves and in the air as well.
10:09
10:09
Speaker 8
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Speaker 8
Thank you very much, Minister. We've heard you talk about procurement a little bit earlier in relation to SMEs, and you talk about the single source contract regulation change to up to a value of £25 million. But in our discussions with SMEs, we heard that slow payments from the Mod can leave small, can leave them waiting years to be paid after winning contracts. What causes that delay?
10:10
Speaker 1
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Speaker 1
I don't want to see the Mod delay any payments, so we are consistent across the um across government that we should be paying uncontested invoices. Um within 30 days. We'd like to aim to pay uncontested invoices within five days. And that's the movement in the system we're trying to get at. I think there's a distinction here between where we agree and where we disagree on on the invoice. But if we just say on the ones we agree, I want to see it brought faster.
A key part of that is looking at what do we as the Mod have direct spend on. And due to the procurement model that most of our large platforms are based on, we procure via a prime. And then the prime procures the services underneath. So, um, I want to see us adjust how we have direct spend and increasing our direct spend with SMEs from roughly 5 billion that went down under the last government. But we have a target now to spend an additional 50% direct spend, with SMEs taking it to 7.5 billion by 2028, I think is a really important part of that.
I want to see on late payments industry pay their SMEs according to the terms and conditions. That's, uh, that are decent because we know that cash flows are really important. Part of being able to operate a small business where we've seen kind of like a financial services micro-climate create within this area is because a number of SMEs haven't been able to access the banking facilities that we'd like them to, that there's been a financial services product created by some of the primes that supported the SMEs and their supply chain.
In the abstract, that sounds great. What I would like to see is more banking support for SMEs that operate in defence. And so I mentioned earlier, the Defence Finance Investment strategy. Yes, that's mainly about crowding in private capital. A key part of that for me, though, is about stopping D banking of defence firms. And we've had examples in Scotland, across the UK where good defence businesses supporting our national security have been debunked by, you know, good household names, um because they work in defence.
Now, that's not acceptable in a time of increasing risk. And what I'm expecting to see as we move towards the publication of the D FIS later this year, is more um financial institutions not just recognise that concern, but then publicly say we're backing defence with investment and we've changed our policies to make sure SMEs in particular, because it's, generally speaking, SMEs that have this most affected um are supported by their by their bank.
A key part of that is looking at what do we as the Mod have direct spend on. And due to the procurement model that most of our large platforms are based on, we procure via a prime. And then the prime procures the services underneath. So, um, I want to see us adjust how we have direct spend and increasing our direct spend with SMEs from roughly 5 billion that went down under the last government. But we have a target now to spend an additional 50% direct spend, with SMEs taking it to 7.5 billion by 2028, I think is a really important part of that.
I want to see on late payments industry pay their SMEs according to the terms and conditions. That's, uh, that are decent because we know that cash flows are really important. Part of being able to operate a small business where we've seen kind of like a financial services micro-climate create within this area is because a number of SMEs haven't been able to access the banking facilities that we'd like them to, that there's been a financial services product created by some of the primes that supported the SMEs and their supply chain.
In the abstract, that sounds great. What I would like to see is more banking support for SMEs that operate in defence. And so I mentioned earlier, the Defence Finance Investment strategy. Yes, that's mainly about crowding in private capital. A key part of that for me, though, is about stopping D banking of defence firms. And we've had examples in Scotland, across the UK where good defence businesses supporting our national security have been debunked by, you know, good household names, um because they work in defence.
Now, that's not acceptable in a time of increasing risk. And what I'm expecting to see as we move towards the publication of the D FIS later this year, is more um financial institutions not just recognise that concern, but then publicly say we're backing defence with investment and we've changed our policies to make sure SMEs in particular, because it's, generally speaking, SMEs that have this most affected um are supported by their by their bank.
10:12
Speaker 8
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Speaker 8
Scotland told us that block orders can improve efficiency, reduce overall costs and better support the supply chain which would feed in, I think to this financial um. Precariousness that they feel should the mod place larger orders despite higher upfront costs to realise these benefits for the SMEs.
10:12
Speaker 1
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Speaker 1
The. The answer is yes or no on that one. Yes. There might be an efficiency in placing larger orders, but one of the things that we deliberately try to do is sometimes separate large orders into smaller parcels, so you can enable more SMEs to compete for them. And so I guess the answer probably is on a case by case basis. I think the argument that adds would be making there is about how do you get more spend into the SME environment.
And I'm up for that conversation. It's the reason we stood up. The Defence Office of Small Business Growth. Um, in fact, that was established when I was up in Scotland earlier this year. Um, we've deliberately gone after the issues that stopped SMEs, um being able to compete for contracts. Um and that is defence SMEs, but also SMEs that might not be a defence company yet. Like basic, like where do I go in to sell my product?Which front door do I go to in defence?There's now a single front door for SMEs with a defence officer, small business growth that can navigate the system behind it.
We're providing clarification on some of the cyber security and procedures around security clearances, which is an obstacle for some small businesses to be able to access some defence contracts as well. Um, and we've removed some of the technical barriers that have prevented some SMEs being able to access some of the contracts, both with primes and with the, with defence ourselves. So getting an additional £2.5 billion worth of spend, direct spend from SMEs from the Mod to SMEs is a substantial change. That's not going to happen just with me sitting in main building saying want to spend more with SMEs, it's going to change when we adjust the processes and we've seen good examples of that already.
By the end of this year, the Defence Office of Small Business Growth will be fully established and there'll be a number of other areas that we can go against. That hopefully will be dealing with some of those problems. But the final thing I'd raise is we want the feedback from SMEs to say what the problems are. It's the reason that on the Defence Industry Joint Council, the DIJC, which is our main industry, facing engagement piece. The Mod has. We've got academia, we've got um, trade unions, trade associations, defence companies, large but also small defence companies as well.
And some of the sprint activities they've been undertaking to deal with the problems or to highlight the mod, the problems that we're facing in a collaborative way. So then we can effectively go against their recommendations to change stuff. I've been really impressed by. And so, um, where there are problems and where there are stupid rules in particular, my real bugbear with mod, it's often not legislation, it's risk aversion. It's um, a process just that's just delayed things move things to the right that may have been suitable for peacetime, although I'd argue probably not.
It's definitely not suitable for where we are today. And if SMEs are encountering those type of problems, I want to hear what those are so we can go after them.
And I'm up for that conversation. It's the reason we stood up. The Defence Office of Small Business Growth. Um, in fact, that was established when I was up in Scotland earlier this year. Um, we've deliberately gone after the issues that stopped SMEs, um being able to compete for contracts. Um and that is defence SMEs, but also SMEs that might not be a defence company yet. Like basic, like where do I go in to sell my product?Which front door do I go to in defence?There's now a single front door for SMEs with a defence officer, small business growth that can navigate the system behind it.
We're providing clarification on some of the cyber security and procedures around security clearances, which is an obstacle for some small businesses to be able to access some defence contracts as well. Um, and we've removed some of the technical barriers that have prevented some SMEs being able to access some of the contracts, both with primes and with the, with defence ourselves. So getting an additional £2.5 billion worth of spend, direct spend from SMEs from the Mod to SMEs is a substantial change. That's not going to happen just with me sitting in main building saying want to spend more with SMEs, it's going to change when we adjust the processes and we've seen good examples of that already.
By the end of this year, the Defence Office of Small Business Growth will be fully established and there'll be a number of other areas that we can go against. That hopefully will be dealing with some of those problems. But the final thing I'd raise is we want the feedback from SMEs to say what the problems are. It's the reason that on the Defence Industry Joint Council, the DIJC, which is our main industry, facing engagement piece. The Mod has. We've got academia, we've got um, trade unions, trade associations, defence companies, large but also small defence companies as well.
And some of the sprint activities they've been undertaking to deal with the problems or to highlight the mod, the problems that we're facing in a collaborative way. So then we can effectively go against their recommendations to change stuff. I've been really impressed by. And so, um, where there are problems and where there are stupid rules in particular, my real bugbear with mod, it's often not legislation, it's risk aversion. It's um, a process just that's just delayed things move things to the right that may have been suitable for peacetime, although I'd argue probably not.
It's definitely not suitable for where we are today. And if SMEs are encountering those type of problems, I want to hear what those are so we can go after them.
10:15
Speaker 7
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Speaker 7
Thank you. Um. The basis of my question, which you've answered to some extent was, um we've had a call from the UK government to develop a greater appetite for risk and a willingness to be an anchor customer for start ups and SMEs. Um, in this, in this inquiry, um we have heard mention of the policies in America, the federal acquisition regulation, where any large defence company wins a federal contract over a specified threshold of 750,000, or 1.5 million is legally required to submit and execute a small business contract and proposal.
Now, my knowledge of big defence companies is that they're very, very difficult to deal with for a small company. Would this sort of thing not make a real difference to pushing a building, a SME defence industry in Britain?Maybe the Brigadier could answer that. He's looking like he's dying to answer that.
Now, my knowledge of big defence companies is that they're very, very difficult to deal with for a small company. Would this sort of thing not make a real difference to pushing a building, a SME defence industry in Britain?Maybe the Brigadier could answer that. He's looking like he's dying to answer that.
10:16
Speaker 1
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Speaker 1
Yeah. So, um, broadly, nearly all. Defence contracts go to a prime include SMEs. And so it's very rare that even things that are very associated with a single large prime are only built within the prime, the supply chain that supports those um are quite considerable, for instance. So the radar upgrades, for instance, that we um for the typhoons, that goes to a big prime in Edinburgh, you know, a quarter of that supply chain is Scottish SMEs. The rest of it is kind of like broadly across the UK and some international firms that buy into them.
So you'd expect the supply chain to have SMEs in there. I'm always open to the idea that there is a solution to doing this. I'm cautious about additional regulation for the sake of it, unless there's unless there's a real requirement for it, because I don't see that in the way that the UK defence industry structured versus an American way. It's structured all our large primes by default operate in an. With SMEs as standard. I want to see more of those.
And I think, you know, if the Brigadier wants to come in in a moment, he can um, to expand on that. But one of the bits I would just add the. Innovation that we see from SMEs is being deliberately supported now by UK Defence Innovation, a £400 million a year ring fenced fund to support innovation. Large chunks of that, for obvious reasons will be spent with SMEs and so being able to invest early um in terms of innovation and to bring it into the mod environment faster, is one of the reasons why we've stood up UK defence innovation to be able to go after some of those innovative products, because we know SMEs are a huge source of innovation in terms of defence kit and in particular, I mentioned it briefly earlier, but there's lots of companies that don't yet think of themselves as a defence firm.
And if I'm looking at, say, data companies, uh, people that operate in digital cyber autonomy, you know, more tech firms as example, lots of those have capabilities that are dual use. And I want to make it easier for them to be able to sell into defence and for us to be able to interact with them. I don't think our contracting environment, contracting systems we inherited in July 24th do that. That's why we've made changes to to support faster contracting and more innovative ways of of going after those big.
So you'd expect the supply chain to have SMEs in there. I'm always open to the idea that there is a solution to doing this. I'm cautious about additional regulation for the sake of it, unless there's unless there's a real requirement for it, because I don't see that in the way that the UK defence industry structured versus an American way. It's structured all our large primes by default operate in an. With SMEs as standard. I want to see more of those.
And I think, you know, if the Brigadier wants to come in in a moment, he can um, to expand on that. But one of the bits I would just add the. Innovation that we see from SMEs is being deliberately supported now by UK Defence Innovation, a £400 million a year ring fenced fund to support innovation. Large chunks of that, for obvious reasons will be spent with SMEs and so being able to invest early um in terms of innovation and to bring it into the mod environment faster, is one of the reasons why we've stood up UK defence innovation to be able to go after some of those innovative products, because we know SMEs are a huge source of innovation in terms of defence kit and in particular, I mentioned it briefly earlier, but there's lots of companies that don't yet think of themselves as a defence firm.
And if I'm looking at, say, data companies, uh, people that operate in digital cyber autonomy, you know, more tech firms as example, lots of those have capabilities that are dual use. And I want to make it easier for them to be able to sell into defence and for us to be able to interact with them. I don't think our contracting environment, contracting systems we inherited in July 24th do that. That's why we've made changes to to support faster contracting and more innovative ways of of going after those big.
10:18
Speaker 9
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Speaker 9
I just back up the minister's point that he was literally making there as he handed over to me that the those small companies that have got components of their business in perhaps dual use that we would like to see put to military use, that's a really important focus for us and how we enable them to scale up an aspect of their commercial offering into what would one day become a hardened fit for purpose military use case for that same technology. That is one of the key areas within the context of the hybrid navy that you've been hearing about earlier, that we really need to get after.
And the truth of it is that whilst we aspire to operate in a Navy context, large uncrewed surface vessels with major US warships, the integration between those two things is done by a whole series of cyber security functions, communications functions, and other really important integration functions. And they're all in the realm of SME, um offerings in the main. And how we do that and how we crowd in the right finance to do that movement from the low, relatively low TRL, but commercially available, operating perhaps out there somewhere in the supply chain up to a military standard is absolutely crucial.
And as the minister has said, our whole procurement modalities are not geared to do that at the moment, because this is what we call prototype warfare. It's not the old CAD mid model that we had through concept development, setting out a military requirement and slowly grinding through that through to operate and disposal in the context of a classic D and S capability insertion and withdrawal from service. This is prototype warfare at the speed of relevance on the battlefield and the finance that is needed to get in behind that valley of death gap is absolutely critical, and we have all got a responsibility to do that.
We've talked about classic banks and certain companies being debunked, but there's a whole separate set of conversations out there with venture capital and with other novel forms of finance as to how we're going to get after that, and in a Scottish context, I'd go further and say, you know, that there's a there's a question for the Scottish Government over the use of the Scottish National Investment Bank and other government funding sources where these things are right there on the nexus of defence and security, some of them even really within, you know, straddling the devolved and the reserved remits.
So it's a really interesting and important area and great that's been covered in this in this context, in a Scottish context.
And the truth of it is that whilst we aspire to operate in a Navy context, large uncrewed surface vessels with major US warships, the integration between those two things is done by a whole series of cyber security functions, communications functions, and other really important integration functions. And they're all in the realm of SME, um offerings in the main. And how we do that and how we crowd in the right finance to do that movement from the low, relatively low TRL, but commercially available, operating perhaps out there somewhere in the supply chain up to a military standard is absolutely crucial.
And as the minister has said, our whole procurement modalities are not geared to do that at the moment, because this is what we call prototype warfare. It's not the old CAD mid model that we had through concept development, setting out a military requirement and slowly grinding through that through to operate and disposal in the context of a classic D and S capability insertion and withdrawal from service. This is prototype warfare at the speed of relevance on the battlefield and the finance that is needed to get in behind that valley of death gap is absolutely critical, and we have all got a responsibility to do that.
We've talked about classic banks and certain companies being debunked, but there's a whole separate set of conversations out there with venture capital and with other novel forms of finance as to how we're going to get after that, and in a Scottish context, I'd go further and say, you know, that there's a there's a question for the Scottish Government over the use of the Scottish National Investment Bank and other government funding sources where these things are right there on the nexus of defence and security, some of them even really within, you know, straddling the devolved and the reserved remits.
So it's a really interesting and important area and great that's been covered in this in this context, in a Scottish context.
10:19
10:19
10:19
Speaker 11
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Speaker 11
Made a very strong case for the importance of SMEs in the sector this morning. And we know that interim prime contractors have a very key role in nurturing SMEs. However, we have also heard that risk is often pushed down the supply chain. Indeed, John Howard from Babcock gave evidence to the committee that when government transfers the risk to larger contractors, that then trickles down through the supply chain. And often you find that those SMEs that are least able to bear the burden of risk often are the ones carrying, carrying the load.
So, um, given what you've already said this morning about the need to have processes at work, whether that's in the regulatory framework, procurement investment, what more do you think that the Mod could do to ensure that primes actively support SMEs?I wonder if you could cover off the risk point as well.
So, um, given what you've already said this morning about the need to have processes at work, whether that's in the regulatory framework, procurement investment, what more do you think that the Mod could do to ensure that primes actively support SMEs?I wonder if you could cover off the risk point as well.
10:21
Speaker 1
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Speaker 1
Yeah. I'd make the broad distinction between how the mod used to operate and how it is being moved to operate. The SDR fundamentally changed the core mission of the Ministry of Defence from an era of expeditionary warfare. Iraq, Afghanistan, for instance, to one where our purpose is to get ready for war, fighting against a peer adversary, and for us to be tested, potentially by 2030, which is what the intelligence assessments and the announcements the Prime Minister has made subsequently reinforce that clarity of purpose means that the systems we inherited need to flex to deliver that outcome.
Now, risk transfer is one thing that I think has had, um, a traditional way of operating in the fact that a key part of Mod procurement over many years, especially when, uh, governments were taking the peace dividend, was to press it from the mod down to primes. The consequence of that on primes is they pressed it onto their supply chain, largely SMEs. Um, and that created, uh, how risk was managed. Um, more contracts were put into very long term packages. And we still had a situation where most of the platforms that we were operating, we'd had for quite some time, we still planned to have for quite some time.
So we were still operating challenger twos. For instance, we're expected to operate challenger twos quite some time. We had type 23 frigates, of which we still expected to operate for quite some time. What we're seeing now as we move for warfighting readiness is the need to adapt faster, to procure faster and to spiral develop faster. Now, that is a challenge to the contracting basis that we had previously. It's a challenge to the risk transfer models that were in existence previously.
It's a challenge to how we procure, but it's also a challenge to say, okay mod, if you want stuff faster, how are you going to enable that to come out faster?And so that's one of the reasons why for the very first time, the Mod decided to invest in skills. And I think, you know, the defence industrial strategy sets out a huge array of, changes that we wish to make, not just in support of SMEs, British based firms, but also skills for the first time. And if we want to get ready for war fighting, I need not only to have new capabilities Want to get ready for war fighting.
I need not only to have new capabilities for our forces. I need to have an industrial an industrial base that sits behind it, that is more agile, more forward leaning, and, you know, although it's perhaps not kind to say so, I can see across the industry firms that are really leaning into that change, really understanding it. And firms are perhaps a little bit slower to be able to get there. Some of that is because they're locked into long term structural contracts, contracts where that innovation is not encouraged or was kind of like price engineered out.
Now. That's we're taking. A different approach to how that contracts will be procured in the future and with more involvement from, um, um. From SMEs and the agility to bring on more tech. And so, um, I want to see. Quite a big transformation. And that's the reason why we hired Rupert Pearce as the new national armaments director. Um, and quite a substantial, significant hire. Former FTSE 100 chief executive, not the usual civil service leading um our procurement as it was in the past, the work that he has been doing with ministers to change the process, I think is already delivering quite substantial improvements.
And he's only been in place a relatively short amount of time. I'm expecting to see considerable improvements. Um, as we reengineer some of those contracting bases, but also how we reengineer defence financing. And that will include elements of risk.
Now, risk transfer is one thing that I think has had, um, a traditional way of operating in the fact that a key part of Mod procurement over many years, especially when, uh, governments were taking the peace dividend, was to press it from the mod down to primes. The consequence of that on primes is they pressed it onto their supply chain, largely SMEs. Um, and that created, uh, how risk was managed. Um, more contracts were put into very long term packages. And we still had a situation where most of the platforms that we were operating, we'd had for quite some time, we still planned to have for quite some time.
So we were still operating challenger twos. For instance, we're expected to operate challenger twos quite some time. We had type 23 frigates, of which we still expected to operate for quite some time. What we're seeing now as we move for warfighting readiness is the need to adapt faster, to procure faster and to spiral develop faster. Now, that is a challenge to the contracting basis that we had previously. It's a challenge to the risk transfer models that were in existence previously.
It's a challenge to how we procure, but it's also a challenge to say, okay mod, if you want stuff faster, how are you going to enable that to come out faster?And so that's one of the reasons why for the very first time, the Mod decided to invest in skills. And I think, you know, the defence industrial strategy sets out a huge array of, changes that we wish to make, not just in support of SMEs, British based firms, but also skills for the first time. And if we want to get ready for war fighting, I need not only to have new capabilities Want to get ready for war fighting.
I need not only to have new capabilities for our forces. I need to have an industrial an industrial base that sits behind it, that is more agile, more forward leaning, and, you know, although it's perhaps not kind to say so, I can see across the industry firms that are really leaning into that change, really understanding it. And firms are perhaps a little bit slower to be able to get there. Some of that is because they're locked into long term structural contracts, contracts where that innovation is not encouraged or was kind of like price engineered out.
Now. That's we're taking. A different approach to how that contracts will be procured in the future and with more involvement from, um, um. From SMEs and the agility to bring on more tech. And so, um, I want to see. Quite a big transformation. And that's the reason why we hired Rupert Pearce as the new national armaments director. Um, and quite a substantial, significant hire. Former FTSE 100 chief executive, not the usual civil service leading um our procurement as it was in the past, the work that he has been doing with ministers to change the process, I think is already delivering quite substantial improvements.
And he's only been in place a relatively short amount of time. I'm expecting to see considerable improvements. Um, as we reengineer some of those contracting bases, but also how we reengineer defence financing. And that will include elements of risk.
10:27
10:28
Speaker 11
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Speaker 11
Yes, it's a very good point. Um, primes have got a really important role in this. And some of them have mechanisms that can be, uh, can make it feel very difficult for those SMEs to work with them. Um, software interfaces, really stringent supply chain rules, and indeed a very high bar for the nature or the type of SME that they're prepared to on board, but it is all coming back to risk, which is what has just been explained there. Um, one of the things that we are doing through the Defence Growth deals is developing onboarding mechanisms to help get more companies into this space and to effectively train them and mentor them.
Mentoring being delivered through companies that are successfully playing within prime supply chains to explain to them and also give them confidence, because a lot of this is a confidence issue. And is it worth the hassle?Question well, yes it is, and here's why. Um, and that mentorship from companies that are already playing here can teach them a whole range of things, such as how to meet the ISO standards, which a lot of them are very severe and stringent, and they relate to things like their own subcontractor supply chains and whether they meet a defence standard.
And some of that can be expensive for them to actually get up to that level. And so through the defence growth deals, we are developing measures in different parts of the UK where we can help those companies, some of it by direct public subsidy, some of it by training and some of it by cooperation. To get up to that, to that standard. And as the minister said, by having more of those companies playing on the pitch, it's more likely that we can meet the rapid turnaround requirements that the operational environment is imposing on us, but we can't ignore the fact that the primes have that high bar for a very good reason.
And one of the really important reasons why there's a high bar, and not just any company can play on that. On that pitch is security. And there's no way that we're going to be advocating watering down, um, the, the security arrangements for playing in a defence marketplace where the espionage threat and the subversion threat is only rising. So there's no easy answers on this. Um, and so it's a really careful dance, I suppose, of sort of understanding what they want. The small companies understanding what the primes need, not exceeding our own risk threshold.
And yet finding innovative solutions to ease the problem. And you have to be able to do all those three things at once, rather than one silver bullet.
Mentoring being delivered through companies that are successfully playing within prime supply chains to explain to them and also give them confidence, because a lot of this is a confidence issue. And is it worth the hassle?Question well, yes it is, and here's why. Um, and that mentorship from companies that are already playing here can teach them a whole range of things, such as how to meet the ISO standards, which a lot of them are very severe and stringent, and they relate to things like their own subcontractor supply chains and whether they meet a defence standard.
And some of that can be expensive for them to actually get up to that level. And so through the defence growth deals, we are developing measures in different parts of the UK where we can help those companies, some of it by direct public subsidy, some of it by training and some of it by cooperation. To get up to that, to that standard. And as the minister said, by having more of those companies playing on the pitch, it's more likely that we can meet the rapid turnaround requirements that the operational environment is imposing on us, but we can't ignore the fact that the primes have that high bar for a very good reason.
And one of the really important reasons why there's a high bar, and not just any company can play on that. On that pitch is security. And there's no way that we're going to be advocating watering down, um, the, the security arrangements for playing in a defence marketplace where the espionage threat and the subversion threat is only rising. So there's no easy answers on this. Um, and so it's a really careful dance, I suppose, of sort of understanding what they want. The small companies understanding what the primes need, not exceeding our own risk threshold.
And yet finding innovative solutions to ease the problem. And you have to be able to do all those three things at once, rather than one silver bullet.
10:32
10:32
10:33
Speaker 1
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Speaker 1
I might bring Callum in in a moment because his team is, um, one of the broad teams have been working on defence, small business growth. The reason we stood it up in the first place kind of to get out why we're doing this is because we want to spend more money with SMEs. And we know from the engagement that I did when I was in opposition, that a lot of SMEs say, we just don't know where to go. It's too complicated. It's labyrinth.
It's like a labyrinth, labyrinthine in terms of finding the right person to buy my my stuff. And that was a fair challenge, I think. And, um, D, E and s are the then procurement arm of the Mod, now part of the National Armaments Director group. I think we're had a method of largely procuring from primes and having the SMEs as part of that supply chain. And we wanted to change that. But to change that, we need the Defence Office small business growth effectively to be a a one stop shop to enable the onboarding, but also to reflect back the concerns of SMEs to improve the processes within within defence.
So it is both a, you know, a single front door, but it's also a challenge to our procurement within. And if you look more broadly across the National Armaments Director group, it's not just the defence, small business growth. I would also encourage you to look at, say, commercial X, which is our fast, innovative procurement part of the of the NAD group. Small changes in commercial X, for instance, developing a small short eight page contract. So instead of giving an SME for a contract, a 300 page contract, which might have been very normal.
And to the question that we just heard about risk transfer, you know, if you're a small business and you've just achieved a big order with the mod, and then you have to hire in lawyers to be able to understand the full implications of your 300 page contract, that's going to put you off from bidding further. So we're trying to go after the the reasons that SMEs say it's hard to interact with defence to to knock those down. But the defence small business growth was one perhaps the most prominent one, but not the only measure we're taking.
But is there anything you want to mention?
It's like a labyrinth, labyrinthine in terms of finding the right person to buy my my stuff. And that was a fair challenge, I think. And, um, D, E and s are the then procurement arm of the Mod, now part of the National Armaments Director group. I think we're had a method of largely procuring from primes and having the SMEs as part of that supply chain. And we wanted to change that. But to change that, we need the Defence Office small business growth effectively to be a a one stop shop to enable the onboarding, but also to reflect back the concerns of SMEs to improve the processes within within defence.
So it is both a, you know, a single front door, but it's also a challenge to our procurement within. And if you look more broadly across the National Armaments Director group, it's not just the defence, small business growth. I would also encourage you to look at, say, commercial X, which is our fast, innovative procurement part of the of the NAD group. Small changes in commercial X, for instance, developing a small short eight page contract. So instead of giving an SME for a contract, a 300 page contract, which might have been very normal.
And to the question that we just heard about risk transfer, you know, if you're a small business and you've just achieved a big order with the mod, and then you have to hire in lawyers to be able to understand the full implications of your 300 page contract, that's going to put you off from bidding further. So we're trying to go after the the reasons that SMEs say it's hard to interact with defence to to knock those down. But the defence small business growth was one perhaps the most prominent one, but not the only measure we're taking.
But is there anything you want to mention?
10:36
Speaker 12
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Speaker 12
Yeah. I mean, just to echo what the minister said, I think we're already seeing the impact that the office for Small Business having, you know, it's helping, uh, over several hundred SMEs every single month. So we're already seeing that impact, uh, as the minister was saying earlier, we're going to have full roll out by the end of the year. So that impact should get greater. And this should all be seen within the wider context of how we're trying to help SMEs spend by £2.5 billion.
So all the reforms that we're doing around procurement, uh, the work we're doing around the SME commercial pathway, that is going to make it easier for SMEs to do business with the Ministry of Defence. And I think some of the other things I was speaking at the Defence Procurement Conference in Scotland a month ago. I think one of the key things that SMEs find really helpful is events like that, that can bring them together with primes to understand what collaboration opportunities, what dual use opportunities they can provide to defence.
So we're looking to do more of those things as well. And another thing, one of the things we did announce at that conference is an intention to launch a regional defence and security cluster in Scotland, for which negotiations will start later this year. Fundamentally, those clusters are all about how can we make it easier not just for defence SMEs, but for SMEs outside of the defence ecosystem currently, but can bring something into defence. How can we make it easier for them to collaborate with primes?So I think we're already seeing impact already.
I think some of the other things that the Minister and I have just mentioned now will make it, you know, greater impact over time.
So all the reforms that we're doing around procurement, uh, the work we're doing around the SME commercial pathway, that is going to make it easier for SMEs to do business with the Ministry of Defence. And I think some of the other things I was speaking at the Defence Procurement Conference in Scotland a month ago. I think one of the key things that SMEs find really helpful is events like that, that can bring them together with primes to understand what collaboration opportunities, what dual use opportunities they can provide to defence.
So we're looking to do more of those things as well. And another thing, one of the things we did announce at that conference is an intention to launch a regional defence and security cluster in Scotland, for which negotiations will start later this year. Fundamentally, those clusters are all about how can we make it easier not just for defence SMEs, but for SMEs outside of the defence ecosystem currently, but can bring something into defence. How can we make it easier for them to collaborate with primes?So I think we're already seeing impact already.
I think some of the other things that the Minister and I have just mentioned now will make it, you know, greater impact over time.
10:40
Speaker 1
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Speaker 1
If you're looking for recommendations as a committee, so the North West Regional Defence and Security cluster is a really good example of a cluster that's really, really doing great work, really empowering SMEs and pushing them forward. And where you can see the behavior of primes having changed because it's easier for them to interact with SMEs as well. And so that might be a model that that could be encouraged, a faster rollout in Scotland, because it's not just about defence standing something up there that is about an industrial response to a policy.
So that might be one worth also encouraging.
So that might be one worth also encouraging.
10:41
10:41
10:41
10:41
Speaker 9
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Speaker 9
Um, Minister, there was quite a lot of discussion with Lord Robertson about financing our um, our ambitions for our own defence sector. And one of the things we talked about was the UK joining the defence Security and Resilience Bank. Could you, could you tell us what our current position is with that and whether it is likely that when you go to Anchorage, you might sign up the dotted line.
10:42
Speaker 1
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Speaker 1
So I. Want to see more private capital in defence and. Though there will be reference to that in a high level in the Defence Investment Plan, the Defence Finance and Investment Strategy will set out broadly that that wider approach as to how we crowd in private capital from the different capital markets that are available and increasing the defence, defence and resilience funds that we see industry standing up. Now, that is both to look at core defence projects. So how do you have defence as a service to kind of translate it out of financial gobbledegook?Um which I think there's real opportunities to do.
So space as a service would be my kind of like first direction of travel within defence as a service to make it easier. So instead of us owning a satellite, we buy bandwidth on other people's satellites, just creating greater resilience and reducing the overhead costs of, of achieving that objective. But I do want to see us look at the innovative international measures. Now, broadly, there's two measures that are we're exploring at the moment. Um, these are Treasury leads rather than mod leads, but because they're defence focused we clearly have involvement with them.
One is the dssb that um that I know some people are very keen on, which looks at how do you create private investment or investment in the supply chain. Another one is the multilateral defence mechanism, which is both financing and procurement mechanisms. And Treasury are looking at both at the moment. Um we're seeing more favour on the MDM type model, but we're looking at both those options at the moment. And more will be set out in due course by the a debate that says what's the right mechanism to get more capital into defence is a good debate.
We need to make sure that the balance between um um. The balance between the speed of that capital, what it's procuring in what year are you spending the initial setup costs a few of those things which are quite significant. Um that will be increasingly laid out in elements perhaps in the dip, but I think that's more a defence finance and investment strategy piece that will be later this year.
So space as a service would be my kind of like first direction of travel within defence as a service to make it easier. So instead of us owning a satellite, we buy bandwidth on other people's satellites, just creating greater resilience and reducing the overhead costs of, of achieving that objective. But I do want to see us look at the innovative international measures. Now, broadly, there's two measures that are we're exploring at the moment. Um, these are Treasury leads rather than mod leads, but because they're defence focused we clearly have involvement with them.
One is the dssb that um that I know some people are very keen on, which looks at how do you create private investment or investment in the supply chain. Another one is the multilateral defence mechanism, which is both financing and procurement mechanisms. And Treasury are looking at both at the moment. Um we're seeing more favour on the MDM type model, but we're looking at both those options at the moment. And more will be set out in due course by the a debate that says what's the right mechanism to get more capital into defence is a good debate.
We need to make sure that the balance between um um. The balance between the speed of that capital, what it's procuring in what year are you spending the initial setup costs a few of those things which are quite significant. Um that will be increasingly laid out in elements perhaps in the dip, but I think that's more a defence finance and investment strategy piece that will be later this year.
10:46
10:46
Speaker 1
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Speaker 1
I'm aware that many of my colleagues in the Commons are very keen on defence bonds. Um, I haven't, if I'm honest, seen the detail from the party yet provided to enable me to look at that fully. I entirely understand the logic that says we need more defence spending. I agree, I want to see more defence spending. How you do it is important because effectively. The critique that I've heard normally from conservative colleagues rather than from Ministry of Defence on the Lib Dems propose about war bonds is.
It's just borrowing, but it's borrowing at a more expensive rate than if government were to borrow. And I get that argument, because whatever mechanism we use to crowd in outside finance to defence, it's got to present value for money for the taxpayer. So I'm up for looking at all different options on this one here. I think that would be a substantial one to overcome. I would also say, at what time is that type of mechanism best used. Um, you know, sometimes referred to as war bonds.
And in the midst of conflict, it can be a stronger argument to say everyone needs to chip in and you can invest in doing this in the period of contest that we're in, but not yet conflict. I would perhaps look at other measures at this time here, but I'm open to kind of seeing more of the kind of working out from Lib Dem colleagues on this one here. I haven't yet seen that presented, but I'm open to that kind of broader discussion. But I expect, you know, a debate around this, uh, is, is a, is a good one.
And I think, you know, question about is it off balance sheet?Is it on balance sheet?These are reasonable questions in a valid debate at the moment. But as a defence minister responsible for buying stuff for our military, a debate that says how much should we spend on defence?How quickly should we spend it?Are there outside sources of income?Are the ways of procuring faster, delivering better value for money?I think is a good debate and one that I don't shy away from.
Um, but I want us to have an honest, upfront debate about how we deploy more private capital in defence.
It's just borrowing, but it's borrowing at a more expensive rate than if government were to borrow. And I get that argument, because whatever mechanism we use to crowd in outside finance to defence, it's got to present value for money for the taxpayer. So I'm up for looking at all different options on this one here. I think that would be a substantial one to overcome. I would also say, at what time is that type of mechanism best used. Um, you know, sometimes referred to as war bonds.
And in the midst of conflict, it can be a stronger argument to say everyone needs to chip in and you can invest in doing this in the period of contest that we're in, but not yet conflict. I would perhaps look at other measures at this time here, but I'm open to kind of seeing more of the kind of working out from Lib Dem colleagues on this one here. I haven't yet seen that presented, but I'm open to that kind of broader discussion. But I expect, you know, a debate around this, uh, is, is a, is a good one.
And I think, you know, question about is it off balance sheet?Is it on balance sheet?These are reasonable questions in a valid debate at the moment. But as a defence minister responsible for buying stuff for our military, a debate that says how much should we spend on defence?How quickly should we spend it?Are there outside sources of income?Are the ways of procuring faster, delivering better value for money?I think is a good debate and one that I don't shy away from.
Um, but I want us to have an honest, upfront debate about how we deploy more private capital in defence.
10:51
Speaker 4
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Speaker 4
You, Minister, if we could look at reskilling and upskilling and the importance of apprenticeships and training, and we've heard a lot about the need to address the existing skills gaps that we have in Scotland, as well as the significant cost of delivering that increase in in skills in Scotland. So given the importance of that to defence, would the government consider providing additional support or direct funding to expand the defence related apprenticeship programs that we already have in Scotland?
10:51
Speaker 1
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Speaker 1
So that's what the Defence Industrial Strategy set out. So um, the Mod traditionally didn't really invest in skills. It was something that the assumption was that the supply chain either invested in skills be they primes or smaller businesses, or it was provided by um education settlements. Um and different educational settlements in the UK, across the UK, but broadly that what was apparent is to get the level of change that we were looking for, we have to start investing more in skills. So there's a number of initiatives that we've announced.
Um, one of those being um the defence technical excellence colleges. So we've announced five in England, one in Wales and we hope to in Scotland that will require match funding where we're engaged in skills activities in the devolved administrations. Then we have to make sure we're delivering it in partnership because skills is devolved and defence is reserved department. So that's why we've been undertaking conversations with the Scottish Government as to how best to, um, invest in skills. I want to see this being both a UK government Mod funded activity, a Scottish Government activity who has the lion's share of the involvement in there, but also a not forgetting the role of industry in here, because as someone who um.
Bangs on about skills quite a lot. Um, I want to see us go after more skills. And so if I was to give an example from Babcock, for instance, there. So scheme where they're taking people who would not have the qualifications to be an apprentice normally and giving them workplace experience, I have to say, is, is an exceptional scheme. It is really very good. And I've argued with Babcock about expanding that out, not just from Rosyth, where they have pioneered it to their other sites across the UK.
I think there's real opportunities for big firms to do more in that space, but I don't think we should. We've got to find a new framework for skills and a new balance between an mod as a Reserve Department funding skills across the United Kingdom and where skills funding is devolved at devolved competence. Um, I'm hoping that the dtcs that we've announced for the devolved administrations will be up and running by September next year, the English ones will be up and running by September this year. Um, that's a conversation we need to have and we'll continue to have with colleagues in those devolved administrations.
Detects are one part of the skills piece. Um, we've also announced the Defence Universities Alliance, which is looking at higher education skills, um, about how that is an announcement on the first tranche of membership of the Dua will be made. Um shortly. Um it will include Scottish universities within that part. Um and that helps set up the framing that we need not only investment in EFA, but we also need investment in HP to deliver the engineering courses and the defence adjacent courses, of which Scotland has quite a lot of courses already.
So we've seen a good environment, but we need more to bring those forward. And that's why I think the balance about how we deploy increased skills here is really important, especially in an environment where we've seen in Scotland some of the Fe investment in skills has reduced in recent years. You know, the Dtcs will not replace all of those. But we're hoping that if we can deliver a De take on the East Coast and take on the West Coast locations. TBC and I know lots of Scottish colleagues have strong views on where they think it should be.
I'm hoping we can have two that will start building. Um, an enhanced pipeline for defence skills that also importantly enable industry to contribute more as part of that.
Um, one of those being um the defence technical excellence colleges. So we've announced five in England, one in Wales and we hope to in Scotland that will require match funding where we're engaged in skills activities in the devolved administrations. Then we have to make sure we're delivering it in partnership because skills is devolved and defence is reserved department. So that's why we've been undertaking conversations with the Scottish Government as to how best to, um, invest in skills. I want to see this being both a UK government Mod funded activity, a Scottish Government activity who has the lion's share of the involvement in there, but also a not forgetting the role of industry in here, because as someone who um.
Bangs on about skills quite a lot. Um, I want to see us go after more skills. And so if I was to give an example from Babcock, for instance, there. So scheme where they're taking people who would not have the qualifications to be an apprentice normally and giving them workplace experience, I have to say, is, is an exceptional scheme. It is really very good. And I've argued with Babcock about expanding that out, not just from Rosyth, where they have pioneered it to their other sites across the UK.
I think there's real opportunities for big firms to do more in that space, but I don't think we should. We've got to find a new framework for skills and a new balance between an mod as a Reserve Department funding skills across the United Kingdom and where skills funding is devolved at devolved competence. Um, I'm hoping that the dtcs that we've announced for the devolved administrations will be up and running by September next year, the English ones will be up and running by September this year. Um, that's a conversation we need to have and we'll continue to have with colleagues in those devolved administrations.
Detects are one part of the skills piece. Um, we've also announced the Defence Universities Alliance, which is looking at higher education skills, um, about how that is an announcement on the first tranche of membership of the Dua will be made. Um shortly. Um it will include Scottish universities within that part. Um and that helps set up the framing that we need not only investment in EFA, but we also need investment in HP to deliver the engineering courses and the defence adjacent courses, of which Scotland has quite a lot of courses already.
So we've seen a good environment, but we need more to bring those forward. And that's why I think the balance about how we deploy increased skills here is really important, especially in an environment where we've seen in Scotland some of the Fe investment in skills has reduced in recent years. You know, the Dtcs will not replace all of those. But we're hoping that if we can deliver a De take on the East Coast and take on the West Coast locations. TBC and I know lots of Scottish colleagues have strong views on where they think it should be.
I'm hoping we can have two that will start building. Um, an enhanced pipeline for defence skills that also importantly enable industry to contribute more as part of that.
10:53
Speaker 4
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Speaker 4
At least eight bids being written as we speak around the table. Um, but I wondered, um, you know, you mentioned Babcock's and you're right, the work that they're doing is, is very, very good and an exemplar, perhaps for others to follow, but for um SMEs. The cost can be prohibitive. So I wondered what can be done to assist them in this particular area. But also I wondered how those discussions with the Scottish Government about the centre for excellence are going.
10:53
Speaker 1
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Speaker 1
Yes. So there's a risk that if we don't have skills investment across the entire supply chain, what you'll see is primes being able to support their, uh, their skills base a hollowing out of adjacent industries and hollowing out of supply chain. And ultimately that's not good for economic growth. It's not good for our economy. And it doesn't actually deliver the defence capabilities that we need. So it's got to have something that stretches across the entire piece. One of those that we are looking at, um, that was mentioned set out in the defence industrial strategy is effectively the expansion of clearing the Ucas system for apprenticeship skills, for instance.
Now that's a, that's a GB wide, um initiative that we're working on at the moment with colleagues across government. And that's deliberately being worked up because we know that if you are a very large prime, you will have a huge number of applications for your apprenticeship schemes and many of the people that you're not able to take on board are good and, you know, could really prosper in defence industry. For SMEs, it's hard to run an apprenticeship scheme at that same scale. And so the ability to effectively have a clearing system, a Ucas style system to enable people to transfer into supply chain.
We're seeing that ad hoc in industries at the moment. BA systems have a kind of micro version of that for some suppliers. Um, but I want to see that more established and structured that I think would make a big difference to enable SMEs to reduce the cost of onboarding an apprentice in that, in that respect, as an example, for instance.
Now that's a, that's a GB wide, um initiative that we're working on at the moment with colleagues across government. And that's deliberately being worked up because we know that if you are a very large prime, you will have a huge number of applications for your apprenticeship schemes and many of the people that you're not able to take on board are good and, you know, could really prosper in defence industry. For SMEs, it's hard to run an apprenticeship scheme at that same scale. And so the ability to effectively have a clearing system, a Ucas style system to enable people to transfer into supply chain.
We're seeing that ad hoc in industries at the moment. BA systems have a kind of micro version of that for some suppliers. Um, but I want to see that more established and structured that I think would make a big difference to enable SMEs to reduce the cost of onboarding an apprentice in that, in that respect, as an example, for instance.
10:54
Speaker 1
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Speaker 1
Yes, yes. Um and we need to continue that since the uh I've had conversations with the or correspondence with the new economic lead, Stephen Flynn. Now he's uh, in Scotland rather than in Westminster for these affairs. But um, but keen that we do because I think there is a shared opportunity here of increased growth and employment in defence, especially addressing um early careers and young people getting a career in defence. And to do that, I want the Scottish Government and the UK government to work in partnership on this area.
And I can, you know, if you take the example of, say, the transition announcement from oil and gas that was announced today with a £3 million contribution, both from the UK government and from the Scottish Government, although that's not a defence sector per se, the ability for us to work together on skills, I think, is one of those areas where, notwithstanding difference in political perspectives, there's a shared advantage for Scotland and the UK and defence by partnering together.
And I can, you know, if you take the example of, say, the transition announcement from oil and gas that was announced today with a £3 million contribution, both from the UK government and from the Scottish Government, although that's not a defence sector per se, the ability for us to work together on skills, I think, is one of those areas where, notwithstanding difference in political perspectives, there's a shared advantage for Scotland and the UK and defence by partnering together.
10:54
10:54
Speaker 8
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Speaker 8
Thanks, chair. Um, the. The £50 million from the Defence Growth Deal that went to your constituency Minister. I think it went to your constituency in full and did not require any match funding from anywhere else. The 50 million that's going to Scotland requires match funding is anywhere any of the other four growth deals require match funding?
10:55
Speaker 1
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Speaker 1
I think there's two different areas that you might have got confused there. The five growth deals that we have across the UK are £50 million each. They don't require match funding. They're 50 million in there. There's an opportunity to crowdfund and match fund more to make a bigger output from it, where we've had a deliberate match funding request is around dtech funding. Um, in Scotland, where we think there's a there's ability to have two D techs with light C2D techs.
Um, but we have funding available from an mod point to fund one and we've been in discussions with the Scottish Government about delivering.
Um, but we have funding available from an mod point to fund one and we've been in discussions with the Scottish Government about delivering.
10:55
Speaker 8
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Speaker 8
So, so I understand that I don't think I'm confused. The um so let's say that the Scottish Government who of course have got no responsibility for defence, decide that they can make better use of that money, investing it in skills and training somewhere else. They might do that. I don't know if they will. Um, what happens to the £50 million of mod money that would go to Scotland?
10:55
Speaker 1
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Speaker 1
So the £50 million of funding for the Scottish Defence Growth Deal is still being spent in Scotland irrespective. Yes. And so that's part of our £250 million UK wide commitment to those five growth deals. Um, they were allocated by my predecessor before I took took this particular role on in the last reshuffle. Um we will continue to spend that. And we've seen the first tranche announcements of that by both as example, the 5 million that's gone to the Gib campus, the 5 million that's gone to the Clyde engineering campus on on the other side of Scotland, and more investment that, you know, been set out in the answers today.
I want to see that £50 million laid out with a full funding profile. We're working that up with colleagues in Scotland at the moment. When it comes to Dtex, where we have an explicit match funding request, um, that's a conversation that we want to progress with the Scottish Government around this. But I think there is an opportunity, if the Scottish Government chooses to invest more in or to match fund or to um. Support some of this investment that we're making. We recognise that Scottish Government doesn't have responsibility for defence.
That's reserved matter for the UK government. But there are real opportunities to create growth, to create good skills and to create dual use opportunities. And that's where I hope that conversation can go.
I want to see that £50 million laid out with a full funding profile. We're working that up with colleagues in Scotland at the moment. When it comes to Dtex, where we have an explicit match funding request, um, that's a conversation that we want to progress with the Scottish Government around this. But I think there is an opportunity, if the Scottish Government chooses to invest more in or to match fund or to um. Support some of this investment that we're making. We recognise that Scottish Government doesn't have responsibility for defence.
That's reserved matter for the UK government. But there are real opportunities to create growth, to create good skills and to create dual use opportunities. And that's where I hope that conversation can go.
10:55
10:55
10:56
10:56
Speaker 1
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Speaker 1
No, I thought we were friends. Um uh um, I think the for all our five growth deals, we're in the process at the moment of working with the governance structures that have been set up there to set out what that will be delivered against. I'm hoping that all growth deals, the South Yorkshire Growth deal, the Plymouth Growth Deal, Wales, Scotland, Northern Ireland growth deals will be able to set out in due course how they wish to spend their their 50 million um and where possible, how that 50 million can help crowd in, although it's not a requirement can help crowd in partner match with other funding streams to deliver increased effect.
That would be you know, I think the the best use of that kind of that funding. But 50 million in those five areas will make a substantial difference. What we're already seeing is in the conversations we're having in Scotland, for instance, is, um, funding for universities, other courses going well, if that's happening, we can do this alongside it. So we're already seeing it being a catalyst for some of the aggregation of investment in defence and in defence skills that I think is most useful in.
That would be you know, I think the the best use of that kind of that funding. But 50 million in those five areas will make a substantial difference. What we're already seeing is in the conversations we're having in Scotland, for instance, is, um, funding for universities, other courses going well, if that's happening, we can do this alongside it. So we're already seeing it being a catalyst for some of the aggregation of investment in defence and in defence skills that I think is most useful in.
10:57
10:57
Speaker 5
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Speaker 5
Thank you, chair. Minister, can I ask therefore, the 10 million that has been allocated for the Defence Technical Excellence Colleges in Scotland. Um that is contingent on Scottish Government match funding, as I understand it, to allow us to have two. Because the idea is to have one East Coast based and one in the West region. Um and those talks are ongoing, but we're already one year down the line in relation to the roll out, um being delayed in Scotland. You mentioned earlier in your evidence that the colleges across England will be in September of this year, and we are looking at September next year, therefore for the potential detects in Scotland, if the Scottish Government do not wish to come into partnership.
With the Mod here. Are we looking at just one D tech for Scotland?Are the two contingent on Scottish Government match funding?Um we need to. There has to be two hubs, one in the east and one in the west. I think the location for the east is fairly obvious, but in the west we have West College Scotland and the Clyde is three campuses. It has Inverclyde is Paisley and it has Clydebank in my constituency. And our colleges are absolutely desperate for this investment, this investment in our Scottish colleges and our young people.
So if the Scottish Government do not go into partnership with you, does that mean just one or will the UK government step forward and allow us to have two college hubs in Scotland?
With the Mod here. Are we looking at just one D tech for Scotland?Are the two contingent on Scottish Government match funding?Um we need to. There has to be two hubs, one in the east and one in the west. I think the location for the east is fairly obvious, but in the west we have West College Scotland and the Clyde is three campuses. It has Inverclyde is Paisley and it has Clydebank in my constituency. And our colleges are absolutely desperate for this investment, this investment in our Scottish colleges and our young people.
So if the Scottish Government do not go into partnership with you, does that mean just one or will the UK government step forward and allow us to have two college hubs in Scotland?
10:58
Speaker 1
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Speaker 1
So the proposal that we have announced is we broadly agree with you that we want to see two in Scotland, one in the East, one in the West, where we've announced them in England. I think it's important. So if you take Blackpool and Fylde College, um as an example, which one of the detects that we've announced in England, although the hub is in Blackpool, they're working with colleges across the North West to support that. And to a certain extent I would it would be up to the conversations we're having with Scottish colleges and with providers in Scotland, to look at where that model is the right one.
I would expect a hub and spoke to be able to maximise the benefit. That's the model that we're seeing in England, for instance, which means more colleges can come in the match funding that we hope will deliver to D TECs. Um if we can't get the match funding from the conversations with the Scottish Government, then the Mod has funding for one Defence Technical Excellence College in Scotland. And we would need to kind of understand um with our Scottish colleagues there um how a decision would be made about location in that situation.
Our preference strong preference, which is the plan A that I'm still working on going down the path of, is to work with the Scottish Government to see. Two and then the question about um locations, I'm sure I will be heavily lobbied, uh, by colleagues. I am already as to how that goes, but we're continuing to have that conversation. And indeed, we, you know, ahead of the announcement that we made in March about the two D TECs, um, uh, the Mod team were in conversation with Scottish Government officials.
In fact, actually the letter that I wrote to the First Minister on the 12th of March set out that we'd had discussions with Scottish Government officials on the 19th of January, the 2nd of February, in the 23rd of February. And so they knew this announcement was coming in relation to match funding. We hope that it could be concluded positively, because there's absolutely an economic opportunity here. And we know that there are brilliant young Scots who could be getting a career in defence if we get this right, and that's why I hope we can achieve.
I would expect a hub and spoke to be able to maximise the benefit. That's the model that we're seeing in England, for instance, which means more colleges can come in the match funding that we hope will deliver to D TECs. Um if we can't get the match funding from the conversations with the Scottish Government, then the Mod has funding for one Defence Technical Excellence College in Scotland. And we would need to kind of understand um with our Scottish colleagues there um how a decision would be made about location in that situation.
Our preference strong preference, which is the plan A that I'm still working on going down the path of, is to work with the Scottish Government to see. Two and then the question about um locations, I'm sure I will be heavily lobbied, uh, by colleagues. I am already as to how that goes, but we're continuing to have that conversation. And indeed, we, you know, ahead of the announcement that we made in March about the two D TECs, um, uh, the Mod team were in conversation with Scottish Government officials.
In fact, actually the letter that I wrote to the First Minister on the 12th of March set out that we'd had discussions with Scottish Government officials on the 19th of January, the 2nd of February, in the 23rd of February. And so they knew this announcement was coming in relation to match funding. We hope that it could be concluded positively, because there's absolutely an economic opportunity here. And we know that there are brilliant young Scots who could be getting a career in defence if we get this right, and that's why I hope we can achieve.
11:00
11:00
Speaker 1
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Speaker 1
We have. Yes, we've had a reply from Stephen Flynn and um we've responded to those points in there. That letter has gone off to him and I hope that we can, uh, find a way of concluding this shortly. Um, I recognise that, um, uh, to do so, we need the Scottish Government and UK government working together. I think that's something that can happen here because, you know, this is yes, this is about delivering for defence and it absolutely is. There is a war fighting consequence of having more skills coming into a pipeline.
But the economic boost that can come from investing in young people and giving them decent, well-paid careers in defence, which is what these jobs are, I think is one that should benefit both the Scottish Government and the UK government.
But the economic boost that can come from investing in young people and giving them decent, well-paid careers in defence, which is what these jobs are, I think is one that should benefit both the Scottish Government and the UK government.
11:00
11:00
11:01
Speaker 10
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Speaker 10
Very quickly. Um we've now passed the Scottish elections and this is something that the Scottish Government has known about. Um is there any way that we can ensure that this happens quickly, more quickly, you know, another year, another number of months. Um yeah. How quickly or can this be pushed forward any faster?
11:01
Speaker 1
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Speaker 1
I'm hoping that now the elections are out of the way in Scotland. We can have those conversations, uh, in person soon. I hope that will be something achieved. I know that the officials already correspond regularly around, um both the Scottish Growth deal and the other aspects of the industrial strategy that apply to Scotland. So we have good official level conversations. I'm keen for more political level conversations on this, and I hope that the correspondence that we're having, um, will deliver that.
But encouragement from your committee to say this matters. We think there's a path forward and we encourage everyone to engage constructively. I think would be, uh, would be positive.
But encouragement from your committee to say this matters. We think there's a path forward and we encourage everyone to engage constructively. I think would be, uh, would be positive.
11:02
11:02
11:02
11:02
Speaker 7
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Speaker 7
Thanks very much, chair. Um, so sticking with reskilling and upskilling, Minister, to address the challenge of many skilled workers nearing retirement, very few apprenticeship spaces, reskilling has been identified as a key opportunity. What can the UK government do to help defense industries take advantage of this?And could and a defence skills passport be considered?
11:03
Speaker 1
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Speaker 1
Yes. So I think I'll bring Callum in to answer the details on the skills passport in particular. Um, I want to see more focus on mid-career reskilling. So the prioritisation of our skills work is of course on early years on early careers. Both Fe skills he skills, recent graduates and apprenticeships. Um and that will produce the biggest impact early. But we know that the skills required to deliver defence capabilities are also necessary to reskill people.
And in some cases that is just topping up training. Um, from traditional. Heavy mechanical skills, for instance, to add an understanding about greater digitisation in their skills. That can be additional modules that can be topped up, but there are reskilling opportunities that we need to have. There's some initiatives in the defence industrial strategy that go after that. Um but it's not an area that I think has attracted sufficient political attention anywhere in the United Kingdom yet, but I hope it will as we go down the skills journey, because we do need to be able to retrain as the economy fundamentally changes and as technology changes, that defence needs.
So if you look at the amount of technology that will be present in our both air, land and maritime platforms, we will need a different type of skill from the folks in uniform, but also the civilians that support it. And that's where retraining and reskilling is important. But Callum, do you want to add anything?
And in some cases that is just topping up training. Um, from traditional. Heavy mechanical skills, for instance, to add an understanding about greater digitisation in their skills. That can be additional modules that can be topped up, but there are reskilling opportunities that we need to have. There's some initiatives in the defence industrial strategy that go after that. Um but it's not an area that I think has attracted sufficient political attention anywhere in the United Kingdom yet, but I hope it will as we go down the skills journey, because we do need to be able to retrain as the economy fundamentally changes and as technology changes, that defence needs.
So if you look at the amount of technology that will be present in our both air, land and maritime platforms, we will need a different type of skill from the folks in uniform, but also the civilians that support it. And that's where retraining and reskilling is important. But Callum, do you want to add anything?
11:04
Speaker 12
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Speaker 12
I mean, just to say on the defence skills passport. So so for the committee's understanding, I mean this is going to be a digital record of an individual's experience and skills. And what that means is essentially, if you're somebody who's looking to either switch careers either within defence or come from the outside, but has the skills to work in defence, it just makes that flow easier. So when we're thinking about retraining mid-career professionals, that passports are really key part of it, and we're looking at skills passports as UK government, not just in the defence context, but also wider other industrial strategy sectors as well.
So we're working with DWP and other departments to see how we can align the defence one, with some of those other schemes coming down the line. And essentially, uh, you know, looking to make progress on that during this financial year.
So we're working with DWP and other departments to see how we can align the defence one, with some of those other schemes coming down the line. And essentially, uh, you know, looking to make progress on that during this financial year.
11:05
Speaker 1
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Speaker 1
Just to add very briefly to what Callum has just said there, we already do this, but we don't say we do and we do it about veterans, people that transition from the military into industry. We don't brand it as reskilling or something. And what we're making a deliberate attempt on is making sure that all military qualifications, the skills, qualifications needed to operate in uniform, have a civilian equivalent so people can transition because we're expecting the workforce of the future to be one that's much more defined by zigzag careers.
And that means making it easier for people to transition from regular service to reserves, to industry to regulatory reserves, whichever the pathway is at the moment, too much of our transition is very binary. You are either in military service or you're definitely not. And the transition between those um has. Not kept pace with the way that the workforce has changed. And so where we have reskilling already, we already value that in terms of companies employing veterans, be that people that have had a short military service or a longer one.
And I think understanding that this is not a new area, we already do this so we can invest further from it, I think is an important part of instead of the it being conceptually, this is a new area for skills. It's not in defence. We do it well. We want to do it even better. So let's build out from there.
And that means making it easier for people to transition from regular service to reserves, to industry to regulatory reserves, whichever the pathway is at the moment, too much of our transition is very binary. You are either in military service or you're definitely not. And the transition between those um has. Not kept pace with the way that the workforce has changed. And so where we have reskilling already, we already value that in terms of companies employing veterans, be that people that have had a short military service or a longer one.
And I think understanding that this is not a new area, we already do this so we can invest further from it, I think is an important part of instead of the it being conceptually, this is a new area for skills. It's not in defence. We do it well. We want to do it even better. So let's build out from there.
11:06
Speaker 11
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Speaker 11
I could just offer something on that just to say that Scotland's fully on board with that. And I think Skills Development Scotland were one of the really early partners in doing that mapping with armed forces skills that's just been alluded to. Um, and so almost they were ahead of the game on that. In terms of other parts of the UK that speaks specifically to military, mid-career, upskilling or reskilling. And to your earlier point, um, BA systems, when they develop their applied shipbuilding Academy, that was one of the very first instances of large scale reskilling of workforce, because the very first thing they did there before they even took in their first apprenticeship intake was they started a reskilling programme within their industrial workforce to good effect.
So, um, it would be wrong to give an impression that this is not happening in Scotland, albeit that it is an important thing that we do more of. And the initiatives that have been alluded to are going to help us accelerate it even further.
So, um, it would be wrong to give an impression that this is not happening in Scotland, albeit that it is an important thing that we do more of. And the initiatives that have been alluded to are going to help us accelerate it even further.
11:07
11:07
Speaker 3
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Speaker 3
Just staying on the defence skills passport. Um, so you mentioned how you're working with DWP and other departments. I just wondered how far along the journey we are, when we can expect to, to see this come forward. But also, how are you going to avoid duplications?For example, we've got the energy skills, passport. Um and we are seeing across sectors that it's the same key skills that are, that are lacking or where there's a shortfall. Um, and of course the government has committed to large scale investment into infrastructure projects that will require a lot of the same skills.
So there could be a bit of a tension there competing. Um, industries all after the same skill set. How are we manage it or how is the government managing?Um, that, that perhaps competing demand and making sure that all these sectors have the skills base that requires to deliver.
So there could be a bit of a tension there competing. Um, industries all after the same skill set. How are we manage it or how is the government managing?Um, that, that perhaps competing demand and making sure that all these sectors have the skills base that requires to deliver.
11:08
Speaker 1
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Speaker 1
Um, I'll let him come in on the details of how the passports interact, but what I would say is as defence has been identified as a key industrial sector in the modern industrial sector, um and modern industrial strategy. Um we are developing the defence jobs plan effectively in there that needs to mesh with all the other key strategies, uh, jobs plans to make sure that we are collectively having the skills requirement and the pipeline that delivers for construction, for AI, for defence, for energy, for instance, as some of those sectors.
Uh, and so that is a piece of work we're undertaking at the moment. Um, to align with the kind of like expected skills pipelines that we need, but on passports. Calum.
Uh, and so that is a piece of work we're undertaking at the moment. Um, to align with the kind of like expected skills pipelines that we need, but on passports. Calum.
11:08
Speaker 12
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Speaker 12
Yeah. I mean, so as I was saying earlier, we are, you know, continuing to engage with other government departments critical to the industrial strategy about how do we align this defence skills passport with others as well. I can't put a timeline on when that's happening, but obviously we want to roll this out very soon. This bit about making sure we're not duplicating effort and those passports work seamlessly. Uh, it's critical to why we just need to take that time to do that.
I think the other key point to make is around, you know, involving industry in this as well, making sure that this passport works for them. So, uh, the minister mentioned earlier, the Defence Industry Joint Council, we have a skills and training working group, uh, which is looking at how do we sort of deliver, uh, some of those initiatives in the defence industry skills programme that was launched alongside the strategy last year. One of those subgroups is looking at how do we launch this defence skills passport that works for industry.
And I think coming back to your third point about, you know, how do we sort of ensure that we're not competing for other, you know, talent based, you know, engineers as a key point, I think the key policy problem we're trying to solve is how do we sort of expand that skills base?And I come back to what the minister was saying. Those defence technical excellence colleges are going to be critical to that so that, you know, we're building that, you know, UK skills base in Scotland, particularly engineering skills, which we know are, you know, competitive not just in defence but clean energy.
And some of our other critical sectors as well.
I think the other key point to make is around, you know, involving industry in this as well, making sure that this passport works for them. So, uh, the minister mentioned earlier, the Defence Industry Joint Council, we have a skills and training working group, uh, which is looking at how do we sort of deliver, uh, some of those initiatives in the defence industry skills programme that was launched alongside the strategy last year. One of those subgroups is looking at how do we launch this defence skills passport that works for industry.
And I think coming back to your third point about, you know, how do we sort of ensure that we're not competing for other, you know, talent based, you know, engineers as a key point, I think the key policy problem we're trying to solve is how do we sort of expand that skills base?And I come back to what the minister was saying. Those defence technical excellence colleges are going to be critical to that so that, you know, we're building that, you know, UK skills base in Scotland, particularly engineering skills, which we know are, you know, competitive not just in defence but clean energy.
And some of our other critical sectors as well.
11:10
Speaker 3
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Speaker 3
Will these these two texts are really critical to addressing some of the key skills shortages that we have at the moment, and skills being devolved. Um, function. It's really important. I would imagine that we have the UK and Scottish Government working in partnership here, hence the request for match funding.
11:10
Speaker 1
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Speaker 1
I think. I make the distinction between areas where I think a cut and thrust and political differences can hold things up and areas where actually those people are lucky enough to be in political office, knowing the threats arising, have the opportunity to work together. And I think I'm very keen to work with the Scottish Government to deliver to Dtcs. I hope that, as I mentioned earlier, that it's not just 2D text, but the network that will flow from those two hubs will include more people to be able to access those skills and the opportunities, because our projections that will be accompanying some of the Defence Investment plan show that with increasing defence spending, there will be more jobs in defence.
We need to make sure that there's a skills pipeline to service that increased demand, and I'm thinking especially, you know, the perhaps the most visible example across the United Kingdom is when it comes to welders. And we know, for instance, that in in Rosyth, where Babcock have hired 240 ish, um, foreign welders, what they're delivering key defence capability. We need those welders. But ideally, I would like to see people from the local area trained with the skills to replace those. And so while we can work with the Home Office colleagues around exemptions and support in the short term, I don't want companies, big or small, to get used to bringing in labour from outside, where they should have a responsibility to, to grow more of those skills at home and provide opportunities for young people.
I mean, these are good, well-paid jobs. And so there's no shortage of people, I think, who want to do them. But there's a skills constraint in terms of the amount of places available to train people. And that's one of the reasons why the Mod stepped in. For instance, when there was um when the Scottish Government decided not to fund the welding academy in uh, in Glasgow. So we stepped in to fund that work because we know how important that is for the delivery of military capability that's being produced in Scotland.
That type of approach that says if you are a trained welder and defence frequently needs people trained to the very highest standards due to the stress of the, the, the end product and what it's used for. Well, there'll be jobs in clean energy and jobs in defence for their entire lifetime if we get this right. So training more people locally, I think, will help offset the, um, the risk of using contingent labour from abroad, which I want to see more, uh, more homegrown skills developed.
We need to make sure that there's a skills pipeline to service that increased demand, and I'm thinking especially, you know, the perhaps the most visible example across the United Kingdom is when it comes to welders. And we know, for instance, that in in Rosyth, where Babcock have hired 240 ish, um, foreign welders, what they're delivering key defence capability. We need those welders. But ideally, I would like to see people from the local area trained with the skills to replace those. And so while we can work with the Home Office colleagues around exemptions and support in the short term, I don't want companies, big or small, to get used to bringing in labour from outside, where they should have a responsibility to, to grow more of those skills at home and provide opportunities for young people.
I mean, these are good, well-paid jobs. And so there's no shortage of people, I think, who want to do them. But there's a skills constraint in terms of the amount of places available to train people. And that's one of the reasons why the Mod stepped in. For instance, when there was um when the Scottish Government decided not to fund the welding academy in uh, in Glasgow. So we stepped in to fund that work because we know how important that is for the delivery of military capability that's being produced in Scotland.
That type of approach that says if you are a trained welder and defence frequently needs people trained to the very highest standards due to the stress of the, the, the end product and what it's used for. Well, there'll be jobs in clean energy and jobs in defence for their entire lifetime if we get this right. So training more people locally, I think, will help offset the, um, the risk of using contingent labour from abroad, which I want to see more, uh, more homegrown skills developed.
11:12
11:12
11:12
Speaker 5
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Speaker 5
Please. Mr. Minister, what confidence can we seriously have?Can we really have that the Scottish Government are in any way going to work with the UK government?As you have made the obvious example of the welding centre in the Clyde that was a bespoke specialist welding centre, Rolls-Royce, in partnership with the moorland Group and £11 million centre. All the Scottish Government were asked to do was come up with the £2.5 million to get that over the line, and they failed. It took the UK government to come in and rescue it right at the end.
What confidence can we have as a government that in any way that relationship is going to improve in relation to the Scottish Government being serious about investing in the defence sector and the defence industry and our skills in Scotland.
What confidence can we have as a government that in any way that relationship is going to improve in relation to the Scottish Government being serious about investing in the defence sector and the defence industry and our skills in Scotland.
11:13
Speaker 1
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Speaker 1
So I hope that. The approach that we're setting out is one that we're offering partnership and cooperation and collaboration. Defence is a reserved matter, but the opportunities that come from defence are absolutely in the remit of the Scottish Government as well, and I think there is industrial advantage, economic advantage. And, you know, on the very micro level, these are not just numbers of apprenticeships, these are life changing moments for young people. Being able to get a career that will give them an entire lifetime's worth of skills and opportunity.
And I hope that we'll be able to overcome any politics to deliver for those young people that certainly my intent as a minister in the Mod, um, by all means, I've knocked on enough doors in Scotland to know that there's different political opinions going on. I think at this point, you know, I want to see the people that the the politicians that the people have elected working together when it comes to the skills that are required and that enhanced skills base will support defence, dual use and civilian sectors of the economy as well.
And I hope that we'll be able to overcome any politics to deliver for those young people that certainly my intent as a minister in the Mod, um, by all means, I've knocked on enough doors in Scotland to know that there's different political opinions going on. I think at this point, you know, I want to see the people that the the politicians that the people have elected working together when it comes to the skills that are required and that enhanced skills base will support defence, dual use and civilian sectors of the economy as well.
11:13
11:13
11:14
Speaker 1
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Speaker 1
Will I hope not, but we are. We propose two colleges because we believe that's the requirement for the skills pipeline that we need. And what I want to see is, a British based. Firms and international based defence firms continuing to invest in Scotland because we know the ecosystem that's been built around us. If you take shipbuilding as an example, the skills that we have there, they're exceptional. You know, the skills that we have around some of our aerospace space avionics businesses in Scotland, especially around the central belt, huge opportunities here.
And so what we're trying to do is realize those opportunities as quickly as we can, because the threat environment in which defence's operating within demands that we move at a pace that we have not done in the past. Now, that means we have to overcome and remove the obstacles that are currently that previously got in the way and are certainly, are necessary. And actually, uh, prevent us from achieving that objective. Um, I want to see us work together in doing that. And it's a, it's a collaborative joint endeavour.
If we get this right between the Scottish Government, the UK government and industry, working with colleges and providers across Scotland, we can deliver more of the skills that we need. And if we do that, the entirety of the Scottish economy benefits.
And so what we're trying to do is realize those opportunities as quickly as we can, because the threat environment in which defence's operating within demands that we move at a pace that we have not done in the past. Now, that means we have to overcome and remove the obstacles that are currently that previously got in the way and are certainly, are necessary. And actually, uh, prevent us from achieving that objective. Um, I want to see us work together in doing that. And it's a, it's a collaborative joint endeavour.
If we get this right between the Scottish Government, the UK government and industry, working with colleges and providers across Scotland, we can deliver more of the skills that we need. And if we do that, the entirety of the Scottish economy benefits.
11:15
11:15
Speaker 10
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Speaker 10
Um to an extent I think you've just been speaking about what I would like to ask about, which is about scale. You know, we are currently encouraging more people to go into engineering. We are looking at the MoD's working with Skills Development Scotland and, and progress is being made. Um in that sense, but given the strategic defence reviews, identification of a growing workforce crisis, um which I think you have been alluding to and skills shortages across defence. How far are we away from building that workforce?That is war fighting ready.
11:15
Speaker 1
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Speaker 1
One of the key lessons that I take from the war in Ukraine is, notwithstanding the incredible bravery and courage of the Ukrainian military on the front line, that Ukraine are only able to sustain themselves in the fight because of the industry that stands behind them. Um, both industry in Ukraine, but also across Europe in particular in the UK. Now, that is a logic which I think is a truth that we all recognise, but to get to war fighting readiness, I not only need to change the training of our people, the equipment that our people have, the platforms in which they operate, the way they operate with allies.
I need industry to be on as quick as, uh, urgent. A journey to deliver war fighting capability. Now, there's a lot of different parts to deliver that skills. Being one of those agility investment being others. Um, but if we're not seeing the investment in skills, if we're not seeing the pipeline of people coming through to work in our shipyards, to work in the factories, to work in R&D and innovation to support some of the growth sectors in Scotland, as we're seeing, especially around autonomy and drones, for instance, then we will not see the investment in those firms that are required to deliver those capabilities.
And, um, investment will flow to those locations where we can see an ecosystem that is working. And one of the deliberate, um, policies. That we have as a government, and I say this as a Devon MP is I want to see more investment outside London and the South east. And that means looking at areas where we can increase spend. Uh, so if I take within England, the north east of England being a good example, the spend on defence per head in the South west is over £1,000 per head.
Um defence in the North east is £60. So there's clear opportunity to deliver more there. Scotland roughly is I think is around £390 per head. I think it's the fourth highest, uh, region in the United Kingdom for defence spend. But I want to see more defence spend there. And we can only achieve that increased defence spending if there are people to work on it. That's notwithstanding some of the amazing improvements in robotics. I saw some of that myself on the National Manufacturing Institute of Scotland when we launched the Defence Growth Deal and how they're working to include more robotics, more automation in production in Scotland.
But we still need more people as well. And so it is very much an and not an or. And to deliver that war fighting capability, we need to invest in skills. And we need to be unafraid of talking about how skills produces the deterrent effect that keeps our nation safe.
I need industry to be on as quick as, uh, urgent. A journey to deliver war fighting capability. Now, there's a lot of different parts to deliver that skills. Being one of those agility investment being others. Um, but if we're not seeing the investment in skills, if we're not seeing the pipeline of people coming through to work in our shipyards, to work in the factories, to work in R&D and innovation to support some of the growth sectors in Scotland, as we're seeing, especially around autonomy and drones, for instance, then we will not see the investment in those firms that are required to deliver those capabilities.
And, um, investment will flow to those locations where we can see an ecosystem that is working. And one of the deliberate, um, policies. That we have as a government, and I say this as a Devon MP is I want to see more investment outside London and the South east. And that means looking at areas where we can increase spend. Uh, so if I take within England, the north east of England being a good example, the spend on defence per head in the South west is over £1,000 per head.
Um defence in the North east is £60. So there's clear opportunity to deliver more there. Scotland roughly is I think is around £390 per head. I think it's the fourth highest, uh, region in the United Kingdom for defence spend. But I want to see more defence spend there. And we can only achieve that increased defence spending if there are people to work on it. That's notwithstanding some of the amazing improvements in robotics. I saw some of that myself on the National Manufacturing Institute of Scotland when we launched the Defence Growth Deal and how they're working to include more robotics, more automation in production in Scotland.
But we still need more people as well. And so it is very much an and not an or. And to deliver that war fighting capability, we need to invest in skills. And we need to be unafraid of talking about how skills produces the deterrent effect that keeps our nation safe.
11:18
11:18
Speaker 1
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Speaker 1
We've got the defence sector jobs plan that I mentioned earlier that looks at where the gaps are and how do we go after those. Um, I'm always up for external challenge, but what I don't want to do is have um, a duplication of efforts in here. So I think we broadly know at the moment where we have skills gaps in Scotland and across the United Kingdom in particular, they're in some very key aspects of how you deliver some of the capabilities that we're building in Scotland. Um, I use the example of welders earlier, but that's not the only one.
Um, so a focus that delivers on those key crunch skills gaps, I think is a good one. However, this is not an area that we're doing once and forgetting about this needs to be constantly tracked. And that's why the partnership that we're trying to have with industry around skills to look at what's the pipeline that's coming through from Fe and what's the reskilling pipeline?Um, is a necessary one to make sure that we're managing the skills flow into this area. But my expectation is that the defence investment strategy, defence Investment plan will set out, um, a demand signal that will show increasing opportunities around defence delivered against an increasing spend profile for defence.
Now that should make people go. That's a great area to invest. That's a great area to work in. That's what I'm hoping. And we need to provide the opportunities to on board the investors, the the men and women that want to, uh, serve in. Uniform and those that want to serve in civilian roles. We need all of those to get us to war fighting readiness.
Um, so a focus that delivers on those key crunch skills gaps, I think is a good one. However, this is not an area that we're doing once and forgetting about this needs to be constantly tracked. And that's why the partnership that we're trying to have with industry around skills to look at what's the pipeline that's coming through from Fe and what's the reskilling pipeline?Um, is a necessary one to make sure that we're managing the skills flow into this area. But my expectation is that the defence investment strategy, defence Investment plan will set out, um, a demand signal that will show increasing opportunities around defence delivered against an increasing spend profile for defence.
Now that should make people go. That's a great area to invest. That's a great area to work in. That's what I'm hoping. And we need to provide the opportunities to on board the investors, the the men and women that want to, uh, serve in. Uniform and those that want to serve in civilian roles. We need all of those to get us to war fighting readiness.
11:20
11:20
11:20
11:20
Speaker 1
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Speaker 1
So as. A Reserve Department. We don't have a Barnett formula for defence spending because it's a reserve spend. So as part of the £182 million skills package, we've allocated £20 million for the devolved administrations, I think uh, I mean, Scotland gets the lion's share of that, but it does cover Scotland, Wales and Northern Ireland.
11:21
11:21
Speaker 1
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Speaker 1
So it's not the so that funding is not the only funding that we're providing for Scotland. So the uh, the growth deal funding, for instance, has a skills element to it. Um, and there's other initiatives that are kind of both UK wide and also, um, uh. And also Scotland specific. And so, you know, we've spoken about the clearing system, the Ucas style affair, we've spoken about the Defence University Alliance and the skills capacity. So there's quite a lot more than just the breakdown of the 20 million between the devolved administrations.
11:21
11:22
11:22
11:22
Speaker 4
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Speaker 4
While we're training all these young people that we want to have working in the industry going forward, we're still going to rely for some time on international workers. And the industry has suggested that raising the English language requirement for the skilled worker visa A risks that some of those critical roles are not being filled. The government ensure that that issue and those changes will not adversely affect the skills shortage that we have in the defence sector.
11:22
Speaker 1
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Speaker 1
So it's worth saying that within the defence industry, because of the nature of it, quite a lot of those roles are for UK um systems only. Um where we have brought in the enhanced English language, um requirements and the immigration that is to encourage greater interoperability with society. Um, but also importantly, it is to reflect the fact that we want to signal to industry that we want people investing in, in homegrown talent, not importing it. And I think the example that we spoke about earlier around Rosyth is a good example of that.
Um, the work that myself and Mike Tapp in the Home Office are doing to look at the support that we can provide to Babcock around the welders in particular. Yes. I need to deliver those capabilities. And so there will be decisions that we take in the short term, which are about capability delivery that I want to see replaced in the medium to long term, um, with homegrown talent. And so yes, the increase of the English language requirement does have an impact.
We're the Babcock already have a visa exemption from some of that work at the moment. And we're discussing with the Home Office as to whether a further visa exemption is the right opportunity here. But I want to be very clear with people, just as the Home Secretary has and the Prime Minister has, I expect companies to be investing in home grown British talent. And in particular, there's a huge pool of talent around Rosyth that could be trained to replace that capability in due course.
That's what I want to see Babcock invest more in, and that's why I want to see an environment, an ecosystem that gets after those skills. So we do not need to either to import that that type of skilled labour, nor that we need to have an exemption from any of the rules that apply to other parts of the UK economy to deliver the military capabilities that we need.
Um, the work that myself and Mike Tapp in the Home Office are doing to look at the support that we can provide to Babcock around the welders in particular. Yes. I need to deliver those capabilities. And so there will be decisions that we take in the short term, which are about capability delivery that I want to see replaced in the medium to long term, um, with homegrown talent. And so yes, the increase of the English language requirement does have an impact.
We're the Babcock already have a visa exemption from some of that work at the moment. And we're discussing with the Home Office as to whether a further visa exemption is the right opportunity here. But I want to be very clear with people, just as the Home Secretary has and the Prime Minister has, I expect companies to be investing in home grown British talent. And in particular, there's a huge pool of talent around Rosyth that could be trained to replace that capability in due course.
That's what I want to see Babcock invest more in, and that's why I want to see an environment, an ecosystem that gets after those skills. So we do not need to either to import that that type of skilled labour, nor that we need to have an exemption from any of the rules that apply to other parts of the UK economy to deliver the military capabilities that we need.
11:23
11:24
11:24
Speaker 7
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Speaker 7
Joins me again. Thanks very much, chair. So we've heard how the negative. We've heard how negative public perceptions of the defence sector are impacting operations and recruitment for many companies in Scotland. Beyond the destination defence campaign. What is the UK government doing to combat this?
11:24
Speaker 1
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Speaker 1
Yes. So, um, let me start with a really simple one. Um that a career in defence is a good career. I think there has been a culture within the Mod for too long where we have not told our story. I don't want defence companies giving the way the secret squirrel aspects of what they work on. I want them talking about how a career in defence is a good career for people, and that is everything from a good career in uniform to a good career in industry, a good career in R&D and innovation.
That storytelling is an important part of what we need to do. That is not the only thing we need to do, but starting to challenge it. Challenge a negative perception that has built up sometimes in the absence of the positive being made, I think has led people to argue for this. Now, um, I want this to be part of a broader national conversation. So one of the SDR recommendations that Lord Robertson made was to start a national conversation. We're working up the more formal parts of the national conversation at the moment, but you will have already seen steps towards that national conversation.
That defence has taken, partly by being more transparent and vocal about the threats we're facing. So the decision that the defence sector and myself took to previous defence secretary took to disclose the activities of the Russian spy ship Yantar, for instance, is a part of a national conversation that starts saying here are the increasing threats that we are facing as a nation. And so that reflects the increasing importance that we're providing to defence, but also the increasing opportunities that comes from increasing defence spending and the national conversation.
I'm expecting the Mod to publish more details of. That's not just an mod responsibility. It's really important that we talk about this is the threats we face as a whole of government approach. We all every government department needs to be making the case for increased resilience and the threats that we are facing. So it's not just the men and women in uniform that respond to those. Um, as part of that, we also need to make a case about the more specific aspects.
So we've got destination defence as the, as the key UK wide, um, kind of like, uh, marketing campaign to talk about how we increase awareness of defence opportunities, the ease of accessing those, both for businesses and procurement. Um, so we grow our defence industrial base, but also grow the skills we've spoken about as part of this. But there is something here that is a shared endeavour that I want defence companies to be louder in their own local communities about the contribution they make, the benefit that they make, they bring to their local communities.
That storytelling is part of this. And what I've seen recently, if I look at, say, how some of our trade, some of the trade unions that work in the defence sector have been supporting that storytelling, these are good, well-paid, unionised jobs in much of those large, large shipbuilding yards on east and west Scotland. These are good stories that we should tell, and I think caution that traditionally spoke about this is, um, a. Peace dividend had been taken. We didn't want to talk too much about defence.
We wanted to share the risks, spread it out and not invest. That is not where this government is. We are moving at pace to warfighting readiness. The volume about the threats that we face is there because the threat is increasing and real, and the opportunities for communities, industries, individuals to benefit from that increase in defence spending is an important requirement in the Mod getting an increase spend from the taxpayer, because we need to demonstrate that this is money well spent, provides good value and delivers a good effect.
That storytelling is an important part of what we need to do. That is not the only thing we need to do, but starting to challenge it. Challenge a negative perception that has built up sometimes in the absence of the positive being made, I think has led people to argue for this. Now, um, I want this to be part of a broader national conversation. So one of the SDR recommendations that Lord Robertson made was to start a national conversation. We're working up the more formal parts of the national conversation at the moment, but you will have already seen steps towards that national conversation.
That defence has taken, partly by being more transparent and vocal about the threats we're facing. So the decision that the defence sector and myself took to previous defence secretary took to disclose the activities of the Russian spy ship Yantar, for instance, is a part of a national conversation that starts saying here are the increasing threats that we are facing as a nation. And so that reflects the increasing importance that we're providing to defence, but also the increasing opportunities that comes from increasing defence spending and the national conversation.
I'm expecting the Mod to publish more details of. That's not just an mod responsibility. It's really important that we talk about this is the threats we face as a whole of government approach. We all every government department needs to be making the case for increased resilience and the threats that we are facing. So it's not just the men and women in uniform that respond to those. Um, as part of that, we also need to make a case about the more specific aspects.
So we've got destination defence as the, as the key UK wide, um, kind of like, uh, marketing campaign to talk about how we increase awareness of defence opportunities, the ease of accessing those, both for businesses and procurement. Um, so we grow our defence industrial base, but also grow the skills we've spoken about as part of this. But there is something here that is a shared endeavour that I want defence companies to be louder in their own local communities about the contribution they make, the benefit that they make, they bring to their local communities.
That storytelling is part of this. And what I've seen recently, if I look at, say, how some of our trade, some of the trade unions that work in the defence sector have been supporting that storytelling, these are good, well-paid, unionised jobs in much of those large, large shipbuilding yards on east and west Scotland. These are good stories that we should tell, and I think caution that traditionally spoke about this is, um, a. Peace dividend had been taken. We didn't want to talk too much about defence.
We wanted to share the risks, spread it out and not invest. That is not where this government is. We are moving at pace to warfighting readiness. The volume about the threats that we face is there because the threat is increasing and real, and the opportunities for communities, industries, individuals to benefit from that increase in defence spending is an important requirement in the Mod getting an increase spend from the taxpayer, because we need to demonstrate that this is money well spent, provides good value and delivers a good effect.
11:27
Speaker 12
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Speaker 12
I was just going to add another initiative that will look at this is the Defence Universities Alliance, as the Minister was saying was earlier. Um we are due to announce who the founding members of that alliance will be over the next couple of weeks. But one of the key things, um, that is part of that charter is how do universities promote a career in defence on that university campus. So once we've got the alliance set up, there'll be a conversation with universities about how they can do that.
And I think that's a really you know, I think that's a really critical part of this, both in terms of promoting defence industry careers, but also just having that broader conversation about defence.
And I think that's a really you know, I think that's a really critical part of this, both in terms of promoting defence industry careers, but also just having that broader conversation about defence.
11:28
Speaker 7
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Speaker 7
And just to pack up, I think, part of the national conversation for me, certainly, I think probably about 85% of my constituents don't understand the threats that we face, because that message isn't landing. It's not, you know, it's not on our television screens. Ukraine's been wiped off the news almost. And so they don't understand that that threat is still there. And so for me, I think it's really important that any national conversation that we're having with with the country is to make sure that absolutely lands squarely in our communities so that they understand.
And also, I would hope that that raises the perception that defence is a really, really good career and it's national defence, it's security. So thanks very much for your.
And also, I would hope that that raises the perception that defence is a really, really good career and it's national defence, it's security. So thanks very much for your.
11:29
Speaker 1
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Speaker 1
I entirely agree. And in Armed Forces Week, as we are now, there are activities right across right across Scotland in support of our service personnel. Um, and I think because the threat is growing and it is real and we are talking more about it. Um, it is not just something that happens further afield. It's not just something that's happening in Ukraine. You know, the United Kingdom is under daily constant cyber attack from our adversaries. They're not just targeting military infrastructure.
They're targeting civilian infrastructure as well. And the, the, the way that conflict is changing means that in the in the period of contest that we are in with Russia in particular, we might not be getting missiles or artilleries coming over our border artillery shells in the way that Ukraine is. But we are certainly seeing the undermining of our institutions, gray zone attacks and cyber attacks against the United Kingdom. Now, if they if Russia takes down a water company, are we at war?If they take down a supermarket, are we at war?Cyber attack?We are responding that with increased investment in our cyber defenses.
But that also means we've got to tell a different story about what conflict looks like today. And we only need to look at our friends in Ukraine to see what Russian tactics are, what the impact is on all their lives of Putin's illegal war. Now, I want to deter aggression against the United Kingdom, being clear that the threats are real, that there is activities taking place to deter. That is a key part of that. Some of that is stuff we can't talk about, but where we can, we should.
And if I look at the contribution that Scotland makes to that, the quick reaction aircraft that we have at RAF Lossiemouth, for instance, the incredible capabilities, the skills, the professionalism of the of the typhoon teams there, the P-8 maritime patrol aircraft that keep our oceans safe, the missions that leave from Faslane for our submarines. You know, one of the things that makes me incredibly proud is the way that the defence sector in the Prime Minister have welcomed back our nuclear bombers after their times at sea. Now I want to reduce those times at sea by investing in infrastructure and the submarines.
But the contribution that Scotland makes to keeping our nation safe is real and it is visible and it is every day, all day. And I think the story that we can tell is about saying, yes, the threats are real. We're responding to them, we're enhancing our capabilities. Of course, we'd like more defence spending, and there's an argument to be had about that. But the plan that we're presenting is a scalable plan. And so with more defence, spending over the next decade, we'll scale up what we have.
Scotland's a key part in delivering our national security. There's good jobs and opportunities that will be created if if we get this right. But to do that, we need to invest not just in the the pointy end of the spear. We need to invest in the entire spear. And that includes all the civilian support for our military.
They're targeting civilian infrastructure as well. And the, the, the way that conflict is changing means that in the in the period of contest that we are in with Russia in particular, we might not be getting missiles or artilleries coming over our border artillery shells in the way that Ukraine is. But we are certainly seeing the undermining of our institutions, gray zone attacks and cyber attacks against the United Kingdom. Now, if they if Russia takes down a water company, are we at war?If they take down a supermarket, are we at war?Cyber attack?We are responding that with increased investment in our cyber defenses.
But that also means we've got to tell a different story about what conflict looks like today. And we only need to look at our friends in Ukraine to see what Russian tactics are, what the impact is on all their lives of Putin's illegal war. Now, I want to deter aggression against the United Kingdom, being clear that the threats are real, that there is activities taking place to deter. That is a key part of that. Some of that is stuff we can't talk about, but where we can, we should.
And if I look at the contribution that Scotland makes to that, the quick reaction aircraft that we have at RAF Lossiemouth, for instance, the incredible capabilities, the skills, the professionalism of the of the typhoon teams there, the P-8 maritime patrol aircraft that keep our oceans safe, the missions that leave from Faslane for our submarines. You know, one of the things that makes me incredibly proud is the way that the defence sector in the Prime Minister have welcomed back our nuclear bombers after their times at sea. Now I want to reduce those times at sea by investing in infrastructure and the submarines.
But the contribution that Scotland makes to keeping our nation safe is real and it is visible and it is every day, all day. And I think the story that we can tell is about saying, yes, the threats are real. We're responding to them, we're enhancing our capabilities. Of course, we'd like more defence spending, and there's an argument to be had about that. But the plan that we're presenting is a scalable plan. And so with more defence, spending over the next decade, we'll scale up what we have.
Scotland's a key part in delivering our national security. There's good jobs and opportunities that will be created if if we get this right. But to do that, we need to invest not just in the the pointy end of the spear. We need to invest in the entire spear. And that includes all the civilian support for our military.
11:32
11:32
11:32
11:32
Speaker 1
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Speaker 1
Defence policy is a reserved matter. So when it comes to the kind of core defence policy that is um Events in London where it comes to the enabling policies. Industry skills. Um uh, everything including planning. For instance, um, we do need, we do maintain a good official level conversation. I would like to see more political level conversations that look at the areas where we can work together to deliver increased effect and increase benefit to Scotland. Um, there's a lot of work that is, uh, that takes place every single day that doesn't trouble the, the headlines, um, that I can see of good close cooperation between the Scottish Government, the Ministry of Defence, but also the armed forces that are directly based in Scotland.
And some of the work that we see managing the threat, for instance, which for obvious reasons, we don't talk about frequently for. Me demonstrates incredibly close cooperation between Scottish Government officials and the defence apparatus. Um, we don't talk about those for obvious reasons, but it just shows to me that we can and we do cooperate, and we'd find more ways of doing so because Putin really doesn't care about our political differences. He does care if we have a strong United Kingdom, strong armed forces and strong deterrence.
Now, that is the deterrent ability that by working together, we can help deliver. And yes, I'm always up for a debate about strongly held views towards defence policy. We live in a democracy. We should be unafraid of engaging constructively and decency, and with respect for other views that we don't share around that. But I think there's an opportunity here to do more together, and I hope that we can take it.
And some of the work that we see managing the threat, for instance, which for obvious reasons, we don't talk about frequently for. Me demonstrates incredibly close cooperation between Scottish Government officials and the defence apparatus. Um, we don't talk about those for obvious reasons, but it just shows to me that we can and we do cooperate, and we'd find more ways of doing so because Putin really doesn't care about our political differences. He does care if we have a strong United Kingdom, strong armed forces and strong deterrence.
Now, that is the deterrent ability that by working together, we can help deliver. And yes, I'm always up for a debate about strongly held views towards defence policy. We live in a democracy. We should be unafraid of engaging constructively and decency, and with respect for other views that we don't share around that. But I think there's an opportunity here to do more together, and I hope that we can take it.
11:34
Speaker 9
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Speaker 9
We've heard from the defence sector in evidence to this committee that some of the Scottish Government policies, um, have had quite a negative impact on the perception of of defence companies with one company spending £1 million on its physical security due to attacks. What is your assessment of how past and present Scottish Government policies are affecting Scotland's defence sector?
11:34
Speaker 1
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Speaker 1
So I recognise that the Scottish Government has taken a different approach to the United Kingdom. Government has, in terms of its language and in terms of its policy positions around a number of different issues. I think at a high level there's common agreement, especially when we see around, um, what's happened in Gaza. You know, I want to see peace. I want to see a two state solution. I want to see an end to the conflict. I want to see aid gotten into support.
Um, everyone in Gaza and I want to see an end to the violence in the West Bank as well, where we have disagreed is the best way to deliver that. And I think the policies that the Scottish Government has put in place, both their munitions policy and their wording around genocide at the moment. Um, I understand why they have done that. I understand the public response to it. I share a similar view to them as to wanting peace in the Middle East.
I also recognise that Scotland is essential to the defence of our nation, and there are brilliant companies in Scotland delivering exceptional capabilities for the United Kingdom and our allies, where there is a risk that any production in the United Kingdom could be used in breach of international humanitarian law, then of course, we should take that seriously. And that's why we have a robust export licensing regime that, for the UK is run out of the Department for Business and Trade. Um, and that's the right place to be.
But I hope that there is a place that we can have strong, robust political views about the decency and the values that we have as a nation and as a family of nations across the UK, as well as supporting defence industries as well. There's a balance here. I think we can find that.
Um, everyone in Gaza and I want to see an end to the violence in the West Bank as well, where we have disagreed is the best way to deliver that. And I think the policies that the Scottish Government has put in place, both their munitions policy and their wording around genocide at the moment. Um, I understand why they have done that. I understand the public response to it. I share a similar view to them as to wanting peace in the Middle East.
I also recognise that Scotland is essential to the defence of our nation, and there are brilliant companies in Scotland delivering exceptional capabilities for the United Kingdom and our allies, where there is a risk that any production in the United Kingdom could be used in breach of international humanitarian law, then of course, we should take that seriously. And that's why we have a robust export licensing regime that, for the UK is run out of the Department for Business and Trade. Um, and that's the right place to be.
But I hope that there is a place that we can have strong, robust political views about the decency and the values that we have as a nation and as a family of nations across the UK, as well as supporting defence industries as well. There's a balance here. I think we can find that.
11:36
Speaker 9
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Speaker 9
And just my final question to go back to schools now, you did mention how you would like to see more political level conversations. Um, being able to take place, but can I ask if you do currently have a formal forum, either politically or between officials to discuss skills issues that are really quite critical and pressing at the moment.
11:36
Speaker 1
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Speaker 1
So there's regular skills, engagement with officials and Callum's team and himself has a lot of engagement with Scottish Government officials. And indeed, as he as we do with the Welsh Government and the Northern Ireland Executive. Um, there's not the formal political moment for for political the political level at the moment. I hope we can achieve that because there is a benefit to be delivered by us speaking and us working together and as pooling resources. Dtex being the easiest, the closest crocodile to the canoe, to borrow an old phrase.
Um, but it absolutely is an opportunity that we can achieve together. And if we can achieve two desks in Scotland, then we can build from there to deliver increased skills and increase opportunities for Scottish businesses to sell into defence procurement.
Um, but it absolutely is an opportunity that we can achieve together. And if we can achieve two desks in Scotland, then we can build from there to deliver increased skills and increase opportunities for Scottish businesses to sell into defence procurement.
11:36
Speaker 4
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Speaker 4
I was just going to add, I mean, as we now take forward the Scotland Defence Growth Deal, of which those details are a part of it, we are setting up governance structures to take forward the various work streams that include skills. Of course, as Minister was saying earlier, we want Scottish Government to be part of that conversation. I think that obviously depends on some of the negotiations we've got ongoing around funding, essentially, which will take place in the next.
11:37
09:14
09:14
09:15
Speaker 1
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Speaker 1
And I would I want to see a similar approach tailored to Wales, Scotland and Northern Ireland. But broadly we need to have regular contact between the men and women in uniform and the devolved administrations for Mod officials and the cross-government work that we have across UK government and, as much as possible, political conversations to crack on and deliver stuff. And that's what I'm keen on.
09:15
09:15
Speaker 10
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Speaker 10
Minister. Brigadier Mr. Taylor, that brings us to the end of our evidence session today. Thank you all for your comprehensive evidence to the committee today, and we're very grateful for that. And we will conclude our. Deliberations very, very soon. And we will produce a report which obviously you will receive in due course. But thank you again very much for your evidence today. Order. To this morning's meeting, which is in support of.
Our inquiry. Into securing Scotland's future defence skills and jobs. And welcome to Minister. To Brigadier Muddiman and Mr. Taylor. We will just get straight. On to the questions. If that's okay with all of you. We took evidence from Lord Robertson a couple of weeks ago and. He was very clear when he spoke to us that the threat to the UK is no longer a theoretical. So in light of that commentary and the commentary that we've heard in recent weeks.
Our inquiry. Into securing Scotland's future defence skills and jobs. And welcome to Minister. To Brigadier Muddiman and Mr. Taylor. We will just get straight. On to the questions. If that's okay with all of you. We took evidence from Lord Robertson a couple of weeks ago and. He was very clear when he spoke to us that the threat to the UK is no longer a theoretical. So in light of that commentary and the commentary that we've heard in recent weeks.
09:22
09:22
09:22
Speaker 1
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Speaker 1
Thank you chair. It's good to see you all today. And for the interest that you're taking into defence in Scotland. Um. The threat that we are facing is real and it is growing. And the Strategic defence. Review that Lord Robertson um helped co-author with the other SDR leads sets that out very clearly. Um. And so his strategic assessment. Assessment and the one that the department has are aligned in that respect.
The Defence Investment plan.
The Defence Investment plan.