Industry and Regulators Committee

Tuesday 14th July 2026

(began 2 weeks ago)

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11:03
11:04
None Portrait Speaker 2
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Thank you, Madam Chair, and I am Lord Robertson of Port Ellen. I was once upon a time Secretary of State for defence. Then I was Secretary general of NATO, and I was asked by the. Incoming Prime Minister and now outgoing Prime Minister, to be the lead reviewer of the three people who would do the external review of. Of UK defence. So we produced our report last June during the second uh last year. And we were told at that point that our job was over.

Uh, and I think it's worth, it's worth emphasizing that point that at that stage we were told that we had we were done, we were finished, and that we had no further role to play inside the ministry of, of, of defence. And therefore, there is a certain limitation on what we can tell you. Since then, we've had one major session at the Ministry of Defence inside the Ministry of, of, of defence. I can tell you since then we've had one major session at the Ministry of Defence with the officials in charge of implementing the defence review, who went over in some detail the 62 recommendations that we made.

All were told that we had we were done, we were finished, and that we had no further role to play inside the Ministry of, of, of defence. And therefore there is a certain limitation on what we can tell you. Since then, we've had one major session at the Ministry of Defence with the officials in charge of implementing the defence review, who went over in some detail the 62 recommendations that we made, all of which were accepted by the government at that at that point. But that's the only point at which we have received any feedback on what we what we said at the at the time, subsequent to that, however, the other committee of this House, the International Relations and Defence Committee, which I.

Chair has had the chief of the Defence Staff, uh, in order to ascertain from him his view about the implementation of the recommendations. And we've also had the National Armaments director, Rupert Pearce, along with his senior staff, in order to give us a full briefing about how they see the implementation of the recommendations that we made. And it may be that your committee would want to see the transcript of, of of that, uh, a particular interrogation. I think it will help you with the work that you're, you're doing on the implementation of the, of the supply chain aspects of the, of the review itself.
11:06
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11:08
11:08
None Portrait Speaker 2
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It's an important dimension of of what we recommended. I think I should say that the process that led to the SDR as a whole, uh, involved, uh, various propositions being put out at the beginning of the process to, to the wider community, the defence and external community with a series of questions that, you know, in many ways, like you asked for evidence. Um, we got some 9000 submissions. Uh, we had to use artificial intelligence to, to sift them because otherwise we'd still be reading them now, uh, today.

Um, but we, we used that and then we set up a series of panels. We had a committee, a committee of experts underneath us, uh, a NATO expert, an industry expert, a tech expert who I think Grace Casey, who you've already had in front of the, of the committee. We had, uh, Sir Jeremy Quin, who was one of the, the previous government's defence procurement ministers. Uh, we, we had a treasury official as well, a senior Treasury official as part of that group. Then we, we, we sent out to various experts each of the propositions.

So the acquisition side of this was hugely important. You know, we were determined that we were going to get the right answer to the way in which procurement had been done previously. Where the six year period took between an idea and the contract being placed. We had to address that. We also had to address the perennial view of the Treasury, which is that giving money to defence is a waste of money, and it just goes into a black hole and gets eaten up and wasted.

Uh, we had to we had to tackle all of that. So we had each of these, these groups then looking, scrubbing all the information that we had received in order to then get the draft and, and then in order to produce the recommendations from the from the report. So we considered the procurement side, the Innovation and industry chapter, which was 4.2 of the Strategic Defence Review, is hugely important in terms of getting the right equipment at the right time, at the right price. Um, a in order that the fielded forces would have the equipment on time.

And we, we believe that we had produced a series of recommendations which if they were carried out in full, would lead to a wholesale reorganisation of the procurement process and eliminate a lot of the waste that previously had characterised it in the past. But anyway, Richard might want to give some more.
11:11
None Portrait Speaker 3
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Thank you. Uh, I pick it up at that point. So at the heart of the review is this extraordinary pivot away from the the way things worked in the post-Cold war era to get the armed forces fit for war in the 21st century, war in the digital age. And this is the biggest transformation of how you, you build and, and operate armed forces for 150 years. And, and it will only work if there is the same step change in acquisition. And at the heart of this partnership is the idea.

The armed forces must constantly evolve. So never really finished at the speed of innovation, most of which will come from the private sector. So an acquisition organisation that that used to, and I'll use this metaphorically by a battleship every 30 years in a very steady cycle where someone would spend years, even decades writing a specification, which industry would then read, argue about and compete against. And eventually they would come to a decision. And then and then there would be a contract, and then they would make it.

And then they found it didn't work, and then they make it again. That really doesn't that really doesn't work. So, uh, in, in the review and it's, it's impressive in the way the services have responded in articulating that demand signal for their transformation. So, so where defence needs to go is pretty clear. And the question now is, how do you get there?An element of that is, is there enough money to do it quickly enough?We're not talking about that this morning.

And now we're talking about the new industrial partnership. And what that requires is, first of all, a new organisation to draw on private sector innovation. And in the Mod they are creating UK defence innovation. They still haven't appointed the director general of it. And it's sitting on about £400 million of budget, which it can use. So that's going into the right place, but it hasn't got there yet and a year has passed. And secondly, it needs a a different and tiered approach to acquisition.

This is in the review. The National Armaments director absolutely gets it. But because it's taken a year to get the defence investment plan out, almost none of those changes have yet been enacted. So we are not yet in a place where the National Armaments Director has had the scope, the programme, in order to refashion the acquisition organisation to attach to innovation at the speed that it is, it is coming and there's a third and often forgotten dimension to this, which is in the world we live in.

This will only work if acquisition is attached to private capital and there are some allergies to this in the body politic, there's no shortage of money. But the conversation between the Mod and the Treasury and the city about how private capital does those things that private capital will do. Well, it's it's hard to call it even embryonic, but it is coming. So in some this has to be completely different or it will fail. The thinking is quite good. The action so far pretty poor.
11:15
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11:16
None Portrait Speaker 3
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So first of all, let me let me start by being a bit clausewitzian. Uh, and I'm going to argue that the nature of war, this human phenomenon, that's not changed at all. We're still dealing with this brutal and feral thing. What we're actually talking about is the character of it, how it's fought. It's changing so dramatically. And you've described the, the drone in in enthusiasm. And at the heart of that change are, are it has become very clear.

Our three core ideas. First of all, you build the armed forces around what some will call a digital kill web architecture in the review. It's called a digital targeting web, but it's essentially networks. Every form of sensor, satellite, aircraft, ship, submarine, tank, aircraft, mobile phone, database, everything that lets you understand the world is networked into a database which will be in secure cloud, and the volume and speed of that data is such that it has to be managed by AI, and the outputs of that data activity is to identify what needs to be done or could be done, and specifically allocate targets that are ranked in priority to every form of weapon that you have kinetic.

And so it goes bang, or it's cyber and that that network. And you've just, you are actually watching it today playing out over Iran that allowed the US to hit Iran a thousand times a day. Now, all the technology that makes that work, the sensors developed in the private sector, the secure cloud from the private sector, the AI from the private sector, the weapon systems are bit nichey, but the network is from the private sector. And this thing evolves every single day. So in order to build that architecture, you need a relationship where you have the operator, the people doing the fighting or thinking about the fighting sat alongside the technical expert, and they are co-developing this and the reach back into industry.

In some cases, as you see in Ukraine, is in measured in hours, sometimes days, and occasionally weeks. And it's that partnership which needs to be established. And there are plenty of examples, both in the UK and Ukraine, of how that that works. Uh, make some people uncomfortable because how do you inject competition into that?Um, how do you constantly refresh that arrangement so that, you know, you're getting the best?And then there's another layer down there, which is those sensors and those effectors, which in, in an analog way used to be the ships, tanks, aircraft with people on them that we remember are evolving rapidly into still some of those.

And it's really clear that there's no such thing as a silver bullet. The drone is a is a word that has become synonymous with autonomous and uncrewed capability, but it actually works as part of a wrap with other things. So we are talking about evolution, not a complete change, but that crewed uncrewed and increasingly autonomous mix relies on artificial intelligence, uh, autonomy and robotics, all of which comes from the private sector. So the Google driverless car, and there are others are available. Technology is the same technology that will allow ships or things that float or go under the water, or fly or drive to collaborate and to move autonomously.

It's all coming from the private sector. And then the third element of that is you have some high end stuff, cruise and ballistic missiles, which are autonomous weapons. They're very specialist, really expensive ages to make, and they partner with a very large element of, of low end weapons, which is what most people think a drone is. But actually a long range drone with a range of 2000km, with last mile artificial intelligence. So, so it finds the target that's still quite sophisticated, but it's much cheaper.

And you can mass produce them. So we're talking about a partnership that allows you to constantly evolve the digital kill web architecture. And this crewed uncrewed autonomous mix in high, low variety at the speed of innovation. And, and you could not write that down today and specify it. You've got to sit with the industry and co-develop it. And, and remember that this is a global arms race. So you're going to develop it at the speed of benchmarks set by other powers.

And that will cause you to go faster than you're comfortable with.
11:20
None Portrait Speaker 5
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Well.
11:20
11:21
None Portrait Speaker 4
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Easy.
11:21
None Portrait Speaker 1
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Thank you. Uh.
11:21
11:22
None Portrait Speaker 3
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Okay. So, um task force. Kindred is a is a body established by the Ministry of Defence in order to take what is currently now about £3.5 billion a year of support that the UK gives to Ukraine for the for its fighting and to turn it into usable capability. And at the heart of it is a process which I'm sure the Mod will explain better than I can, where they have a pile of money and they have the Ukrainians with a problem. They define that problem to industry and industry then comes up with solutions as quickly as possible, and the best ones are bought and delivered really quickly.

And, and this means that the acquisition of, of, say, a shell or, uh, or a cheap drone happens at the speed of what's on the market or what been made really quickly. This is not a new idea. And the Army have a thing called task force capstone, which seeks to do the same. Uh, and the Royal Air Force have a rapid capabilities office. And the Navy have an equivalent. So everybody is absolutely clear. There are some things generally, uh, medium to low end capability where it's not complicated.

So don't make it complicated. Uh, and if you've got money, go and buy it. And then don't expect everything to last forever. Uh, so cycle it through. However, there are two challenges to the supposition that everything should be bought that way. So if you're in the business of buying the new nuclear deterrent, the new dreadnought boats, that won't work that way. This is a multi-year, almost generational programme where you're going to have an industrial partner.

It's pretty niche and and you will make it in the way, frankly, it's made now. And I'm trying not to say cost plus contract, but it will feel like that you've got to manage the risk and efficiency in a different way. And the second one, and it's often forgotten about is the war in Ukraine. It's a big war at scale and it consumes a lot of stuff. So task force kindred can go to industry by thousands of drones or shells and send them to Ukraine, and they'll get consumed.

NATO is about deterrence. So what NATO is never going to do is to fill warehouses with lots and lots of stuff that goes out of date. The moment you shut the door behind it. So in a deterrence model, you need to work out prototypes for things like drones. So, you know, you're on the front edge of technology and then know how apart from your frontline stocks, you can get it made quickly in a crisis, which is the merit of a thing like a drone or a shell.

Um, but you can't do that with nuclear submarines. So the thinking doesn't, um, directly move across. But when we started the review, we found that for any mod project valued at more than £20 million. The time between I have an idea and I want this thing to a contract being signed six and a half years. And that reflects a world that's that's that's past. So the challenge for the national armaments director is that he needs to decide where the things that you can work with industry quickly can be done quickly.

So that's like buying a commodity, how to manage those really high end things that take years. Submarines, ships. The global combat air programme would be in that bracket. And then in the middle, helicopters, armored vehicles, that sort of thing, which which need to be built sensibly. But but but not in a 30 year cycle. And he has that segmentation. He just needs to take the book of rules that they've fashioned over decades and throw it away and produce the rules for war in the 21st century.

He absolutely knows how to do that. He just now needs to to do that on your money point. So the city, UK, the City Trade association, listened to what was in the Strategic Defence Review and they realized two important things. One is there on the pitch now in as war as a whole of society, endeavor and war as a battle of wills. The city is not a bystander, it's a target and an enabler. And they think they have two parts to play here.

One is in resetting their own resilience, since that is their job of their businesses, their investments, um, and their supply chains to take that really seriously because the government isn't going to do that for them. And secondly, um, it's been the case for 2000 years that government here eventually, when it wants a war paid for, it goes to the city for the money. And we've interfered with that in recent decades by just using the taxpayer. And now the city is back on the pitch.

And it understands two things. One is there's a lot of money that wants to do this, and it likes the things that's common logistics, infrastructure, digital architecture. It's it will get into innovation, but there's different risk profile there. And more than that, it understands prosperity. And, and one of the core ideas in the review is if the UK seizes on how to do war in the 21st century. Well, this transformation and it's got all the intellectual capital and engineering brilliance in order to make things that it needs.

But they're so good. Our allies will buy it. And therefore there's a direct link in principle between this transformation and export led prosperity. And the city understands that what the city, including the regions. And we had really interesting conversations from, uh, from regional representatives like Durham University in Scotland, in the West Country that they understand they have a role to play in fueling up defence in their own interests, but also in their commercial interests. Um, the challenge is in the absence of the defence investment plan, there wasn't a demand signal you could get behind.

And, and we're still waiting for the articulation of that relationship between acquisition and the private sector, capital and industry, which the national armaments director has got it in his head. And he just needs to deliver it now. Um, and also in wider government. How do we bring private capital to fuel up defence?And I should, I must, I must make clear there are two bits of defence we're talking about here in ways that reflect a commercial interest. Payers interest and efficient delivery.

And the most annoying thing here is, is people are stuck on things like the Annington Homes challenge. When the city is offering new commercial vehicles where they will. They will take all the delivery risk because they're confident they can do it better. And it can be done off balance sheet. But this is just a new way of doing business, and it seems to be really hard to get that conversation going. And allow me one comment. So we talk about the defence investment plan, and that's the stuff that made the cut.

There's an awful lot of defence related requirements that were just not even remotely affordable. When we did the review. The 60 to £80 billion hole in infrastructure, if you wanted an integrated air missile defence of the UK, an iron Dome, that's money that is absolutely outwith the defence investment plans, ambition and I would say the same in things like digital architecture. So the city can not just resolve the little gap in the dip. Properly enabled, it can tackle the other half of the iceberg that the Defence Investment Fund doesn't even get close to.

And when it does that, that will fuel prosperity. And so if that is the opportunity, my view is the government should now seize on it, having exhausted all other options.
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11:31
None Portrait Speaker 2
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I think it is. And as Richard has clearly, clearly said, that there is an appetite in the commercial sector to link up, you know, both both on the the innovative side of the normal procurement side as well as on those elements that have not been covered by either the strategic defence review or by the Defence Investment plan, the big the big issues, you know, which if backed by government as collateral, can attract a lot of private, uh, private business, it should be said that the concept of risk is an interesting one, you know, the risk is used a lot in the Ministry of Defence.

You know, if you if you if you walk out into the street, um, and cross and cross the road, you're risking your life at that point. And I think that's a common view about risk risk in the Ministry of Defence terms is basically stuff that is unfunded. You take a chance on it, it goes into the programme and you sort of risk is an involved in involved in that. But the reason why the system has become so bureaucratic over the years, layers and layers of assurance have been built in.

Every time something goes wrong. And the National Audit Office writes a report, another level of assurance goes goes into the into the process. That's why you have this, this, this, uh uh. Incredible six year gap, you know, taking place in terms of, in terms of procurement. And we need to be much more agile and we need to change the culture of risk aversion and bureaucracy, which has bedevilled the whole of procurement for so long.
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11:35
None Portrait Speaker 2
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Put it mildly here.
11:35
None Portrait Speaker 3
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The second reason, um, if we focus more on the demand signal is now we have a defence investment plan. The Mod has set out the things it's going to buy broadly over time with some money attached against it. What it has yet to do is, is tell industry and the city which bits of that it wants to put to private investment. And my read of this as I, I sort of have a foot in both camps. Is that where the mod is on this?It has identified some things that it's thinking about putting out to private capital.

Uh. But in the opinion of the. Of the outside world, it's too small. It's taking too long to get there. It just doesn't reflect the ambition of the peril that we that we face. And if you're in the city side of the equation. So, so. So let's say the dip gap over the first four years. And we're just talking about the dip at this point is still £15 billion. As far as the city is concerned, if you wanted £50 billion over four years, of course that can be found.

The question is, well, what's it for?And on on what terms?And and so the next step is for the mod. And this is very firmly in the National Armaments director's mind, as I understand it, is to go to the city and say, uh, these are. The things we might start with, but I also think, what else could you do?Because in things like major infrastructure, refurbishment, the city has more money and much greater expertise in putting that right than the Mod is for all sorts of good reasons capable of, um, of, of mustering.

So, uh, until that demand signal is set out and there's a deal on what it is. The, the city doesn't know where it's welcome and it wants a conversation with the Mod and the Treasury about how it can be far more welcome than they currently anticipate. And on SMEs. Well, first of all, for many SMEs, last year was a disaster because we didn't have a national arms director and the dip wasn't out. And they saw the promise of the SDR, and they knew the thing they were trying to make, whether it was software or hardware, was SDR compliant because they read the document.

But they couldn't get a contract and they couldn't see their way to a contract. And then in many cases, they were told it might be four years away. And then any small businesses, you understand really well, it can't sit not making any money for four years. And so some and, and I thought they were a tragedy like reaction engines, which is a hypersonic, uh, venture went out of business. Others couldn't get. Money out of the mod. And so they got money out of America.

And in the case of many businesses, they saw where the big spend is, which is in Germany and Poland, and they've gone there. And and that has depleted our defence industrial base. And it means that when we want those things in four years time. And I think that's still too late, um, we'll have to import them. So that's that I thought was deeply regrettable. But most of the core innovation in the things we talked about, um, artificial. Science, uh, how, how you make a drone that swarms, um, and becomes autonomous.

Most of that is sitting in small companies. And so they need to be attached to um, public and. Private money in a way that allows them to partner with the mod and partner with the primes who will remain really, really important. Um, players here. Otherwise we will pass on the innovation that frankly you only get with a hungry SME and everyone understands that, but the machinery to make it happen is currently insufficiently funded. And the money seems to be too far away.

And of course, businesses will go where the money is.
11:40
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11:41
None Portrait Speaker 1
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Thank you.
11:41
None Portrait Speaker 7
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Thank you, Lord.
11:41
11:43
None Portrait Speaker 3
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Um, so I don't work in the mod. We um, with Lord Robertson, we, we were taken prisoner by it for about nine months and very much enjoyed the experience. And then we were essentially shown the door. Mission accomplished. So we're both on the embankment on, you know, shouting at this building. Now where's our review?Where's our review. Um, what I see and I obviously maintain close contacts, um, with people who do work in the mod with the industry that supports it and many people who observe it is a massive struggle to make that culture change happen.

Um, it first of all requires the senior leaders and they do absolutely understand this to insist that these changes are made. And that starts at the level of politics, because the senior official and military leadership of the Mod, um, are essentially going to have to smash apart ways of working that have been developed over decades and, and install new ones. And that will make a number of people very uncomfortable. And some of them very significantly unemployed because they'll need fewer people. Um, and this is before you introduce the, the essential role that AI will play in restructuring much of our, of, of our, of our public service.

And where I think the frustration is, is first of all, um. Within. The mod a culture is entrenched that produces, um, ever more polished admirations of a problem. Um, without coming to grips with the solutions and those solutions don't appear either because there isn't any money or because they, they require really difficult change. You're going to, you're going to smash organisations apart. And in the dip, there is some money with private capital, there'd be more money. So I think we can resolve that.

But it's the smashing of part of the organisation. And one of the achievements of the review, which I think we were particularly, um, proud of, and it fits with defence reform, was the creation of the integrated force because it had taken since 1959 to get to the point where the chief of Defence Staff was the commanding officer, essentially of the armed forces, where the service chiefs report to him. And in the new military strategic headquarters set up, you now have a machine by design for top down decisions on balance and investment and what's going to happen.

And they're still building that machine. But the point of that machine is it removes the, the, the sense that everybody in the mod above the rank of lance corporal and equivalent has a veto on any decision, on anything. Um, and in other words, this is to be done, do it in a wartime way. So they know they have to do that. Um, without the dip, they didn't really have the focus for it. They've got to dip. It is not a brilliant answer, but it's an answer.

Now they need to get on with the organisational change. And that will be in the way the Mod works. And it will be in the way. For example, specific things like the defence equipment and support the acquisition organisation works. And my view, and I think this will be shared by many people who don't work in the mod is. If they haven't done that within a year, if they haven't shown visible signs of this reorganisation, then we've got the senior leadership role.
11:46
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11:48
None Portrait Speaker 8
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Thank you.
11:48
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11:49
None Portrait Speaker 3
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Um. So that degree of sovereign control is essential, but it needs, it needs to discriminate because there's quite a lot in that digital kill whereby described as sensors communicating with each other to a device that affect us doing the same thing. It's just going to be a standard. Form of, of networked AI based capability. So there's going to be a level of technology which is, um, which is common and, and you need it to be interoperable with your, your allies. So, so we shouldn't worry about everything.

However, there are some things we should really worry about. And the first is in the operation of a digital targeting web. You need the space to consider and. Take sovereign decisions privately. So there going to be some areas which aren't shared with allies and should be inaccessible to allies. That isn't actually anything new. What we're talking about is how do you do that in the in the AI era?And some of that can be accomplished by having common AI tools, but they operate behind a firewall.

So they're isolated essentially, or possibly AI tools, which have been developed nationally. They may therefore be less good, but they might be good enough. But but we must be absolutely certain that. It is it is possible to control your military operations in ways that not your enemies, nor necessarily your allies are privy to. Until you're ready to tell them what you're doing or or you have done, there is another dimension to this which, which I think, um, uh, gets. Less traction, which is when we think about AI and a lot of this is about artificial intelligence, and we understand the potential evolution of AI.

I think it's best compared to the evolution of the aircraft. So if you go back to the First World War and you had canvas and string aeroplanes wheezing around over the battlefield, I think that's pretty much where AI is now. And you might conceive of it as an app that's going to go to ever, ever better. But in 1914, no one ever saw the F-35 where you would be 80 to 100 years later. So in thinking about AI, we we have to assume that it is going to quite quickly, absolutely outgrow the capability of, um, of the human to keep up with it, to understand it and possibly control it.

And, and that's why I think a lot of people who make AI are profoundly disturbed that they're making a thing that could get beyond us. And, um, and, and do harm in all sorts of unanticipated ways. And so another reason for maintaining sovereign control is are you in control?Are you sufficiently controlled to stop the AI outgrowing your, your human controls on it?And there is an element of this, which is as long as we subscribe to things like the laws of armed conflict.

Um, and we do in international law, then if you're going to have increasing an AI enabled system, which is the only way you'll be effective on the battlefield, how do you know that that's compliant with your values?And so one role for AI is going to be, and some of these programs are in development now, where an AI sits on the AI. Essentially auditing it as it goes for compliance with our laws and values and producing an audit trail. So we're going to use AI to police AI.

So this does get, um, really quite complicated.
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None Portrait Speaker 2
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Well, it's a question of judgment, political judgment really about how much sovereign capability that you have and how much you're going to you're going to share the Strategic Defence Review was based, as we were told, on NATO first, and therefore, you know, the the, the. The basis of our security, our national security is common security. And therefore the nature of NATO is the interoperability of the forces that that is what gives it its enormous strength and and resilience against any any potential enemy. So a balance has to be struck between what our sovereign capabilities, because there are domestic industries involved, as well as the shared capabilities that we can have our experience of, uh, multinational, capability.

Building is not to be a good one. Um, when I became defence secretary in 1997, my deputy was Lord Gilbert. Lord Gilbert had been the deputy to Fred Mulley 18 years before, when Labour were last in power. And there were two projects on his desk 18 years before, still on his desk in 1997, the Eurofighter Typhoon and the Merlin helicopter. Uh, now we we dealt with them and we got them to deal with that so that the experience of, of multinational operations is not a great one.

But maybe we have to become more sophisticated in the future. And therefore GCap, which is a joint programme for the sixth generation fighter jet, which might be, might be crewed or uncrewed in the future, is based on Italy, Japan and the United Kingdom. But there are other countries desperate to join that join that program, and it has to be a balance as to how how much you can afford to, to, to, to share it in order to make sure that at the end of the day, you get the product on time and on budget.
11:57
None Portrait Speaker 3
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So it's a really complicated question and there are no cheap answers, which is why many people shy away from from trying to answer it. The the first part, when we talk about sovereign capability, is we have to revisit the resilience of the UK under NATO article three and its other obligations, because um, if if the country. Running on the fumes of just in time and globalization from the post-Cold war era can't take a modest blow. Uh, and that, and that includes not just the physical preparations of the population, but the cognitive preparation of the population for a day without water or power or telecoms.

Um, then everything you might do in a, in a military is for naught because you've given up on, on day one. And we call for a whole of society discussion on resilience and it's embryonic, it's a generous term. The second thing is we've made some commitments in, in the SDR, um, to NATO based on what NATO asked the UK to do. And they are for the Navy, the Atlantic bastion for the Army, the strategic reserve called the thing that NATO keeps saying it wants more than anything else.

And the thing that's pretty much at the back of the queue, and an Air Force that makes, frankly, the most impressive European contribution to the NATO air and space component in in Europe. So we know what we've committed to doing. And the requirement now is to deliver those three capabilities, not just at the level where they they can fight tonight and tomorrow, but where they they can endure. So some of that is about investing in stocks. And during the post-Cold war, most nations held about three months worth of ammunition.

Because at wartime rates, because they knew they would they could consume that ammunition. And then industry will kick in. In the intervening 35 years, that entire system collapsed. So the stock levels were run down. They're expensive days and maybe a week in some cases, hours in 1 or 2 other cases. And and industry in the absence and ordered isn't there anymore. So we have to rebuild our stock levels and then understand the manufacturing capacity to keep up, which is why we come back to munitions factories.

I would think the amount of money that's currently allocated to that problem in the defence is about a quarter of the true cost of doing that. So we're going to have to get there with help. So fulfill our commitments. And then as Lord Robertson's right, it's a question of edge. So right now we're very focused on the Russian problem as part of a NATO wide issue. And the clock is owned by Russia. And we've talked about 2030.

The review is really clear that the the medium term tech challenge was set by China. And it's not so much what China intends to do or does. It's the proliferation of Chinese technology, particularly AI and missile technology, which will flood other parts of the world because it'll be good and it'll be cheap. So the investment case in the Global Combat Air programme, for example, means that we can be sure that we, with our extremely good aerospace defence industry, are investing in a technological edge which will deter into the 30s.

40s and 50s. And that's an important sovereign act. And it means that we aren't reliant on anybody else because. Other allies like the US, they don't really share this. This technology, uh, so much. Um, and then the final aspect and we've talked about it is in all circumstances, the country must be able to exercise, command control of its country and its armed forces. And that's about resilient data architecture. How many data centres in this country on Mod land are underground?Of the 64 data centres?None.

And you watched Iran hit Amazon Web Services in UAE. So there's some very basic things to be done so you can maintain command and control, operate your digital, uh, targeting web, communicate with your, your, um, population and know that that doesn't require the cooperation of any ally. And it will, it will withstand the interference of your opponents. These are thoughts no one has had for 30 years. And a relatively small part of it is for the Ministry of Defence. An awful lot of it is a whole of government, whole of society thing.

I don't see much of that.
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None Portrait Speaker 9
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Yeah, absolutely.
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None Portrait Speaker 7
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Yes.
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None Portrait Speaker 2
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Um, we've.
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None Portrait Speaker 4
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So, um, when we say the mod, I think this is a good moment to, to, to be a little less homogenous. So from the perspective of the, of the service chiefs as I know them and the way that they operate, they know they're in this world, that they know they have to have money, which allows them to experiment in the knowledge. Not not everything will work. And some things will only work for a short period. So, for example, the Army's 2040 40 evolution, 20% crude systems, 40%, 40% consumable is an extraordinarily capable exposition of how a land force fights in the 21st century.

But they need to experiment, and they need money to experiment, and not all of it will work. The problem is set aside. They haven't. The money is is that um, they are going to be spending um public sector. Money. And there's an entire bureaucracy that wants to know what every penny was spent on in advance in triplicate. And, um, and if it doesn't work, then who's to blame?And the answer is, well, somebody else, it seems, uh, so, um, this risk aversion has been about trying to cap waste and, and so in this cultural change, failure cannot be seen as waste in every case.

Now, where there is a failure because of incompetence, that's clearly different. But let's discriminate between those, those two things. Um, and there was a legacy here of, of, um, proven poor performance in some big acquisition programs. Ajax being the most recent, uh, case where if you examine what happened with Ajax. There were a lot of, there were a lot of reasons for saying that program was going to fail. I mean, a thousand specification changes to an original vehicle, which went from one version to 2 to 6 vehicles and from 20 tons to 40 tons.

And that's just the start of the of the problem. So, um, some of this is for the national armaments director, as we talked about, to fix. A lot of it is about giving the services, the money and the freedom to experiment and accept waste and do that in partnership with the private sector who understand this perfectly well.
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None Portrait Speaker 3
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We. It is the job of the politicians. It's easy to see the Treasury or the Mod, but actually it's the politicians who are in charge and they can drive the system. Uh. And I'm trying not to constantly criticise the Treasury or even the mod when it's in fact, the politicians who are in charge, who are able and capable of driving, driving that change. Um, there is an obsession with the likes of Ajax and some of the other projects that have got out of control.

But if you look at the Lower Thames Crossing or HS2, for example, you know, it is, you know, that that sort of risk aversion is not confined to to defence procurement as a whole. If you're going to get risk mitigation, it has to come culturally from from the very top. And I believe John Healey was doing that. And and I've no doubt that Dan Jarvis is in the process of, of, of, of driving that as well. I remember Colin Powell in between the times when he was chairman of the Joint Chiefs and became the Secretary of State in America, coming to lecture at the at the Ministry of Defence about racialism in the armed forces.

That day, how do you how do you stamp out racialism in the armed forces?Well, I ask you the question, how do you change the direction of a column of ants?The answer is step on the first ten. Um, and I constantly, when he was American Secretary of state, kept quoting that to him as well. But there is a lesson there as well. Sometimes you have to be pretty brutal in order to get that change in culture. And the risk averseness that seems to affect so many as well.

And by the way, I should have said at the beginning, I am senior councillor with the Cohen Group in Washington, just to declare a momentary interest here.
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None Portrait Speaker 7
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Thank you.
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None Portrait Speaker 8
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Lord Teverson.
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None Portrait Speaker 4
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Absolutely agree that, you know, moving some furniture isn't the total answer to this, but giving the mod responsibility for exports directly is really important. Um, I think the key to this is if you, if you take the defence investment plan, uh, it lays out some things that the services are going to do which are transformative. So the hybrid navy for the Army, the autonomous collaborative platforms to fly with the attack helicopter, and the same for the Air Force. So for me, the solution is to make export ability key to the requirement at which they are now beginning to, to, to.

Right. So it is the intention that these bits of kit. Uh, by design, by requirement will be exportable from the get go. And, and that requires therefore a conversation with um allies. It requires the government to get behind industry in the way that they attach to international customers and they need to pick their targets carefully. So some countries like Germany, seem to be quite self-contained and are doing really well, although I think they're building a lot of the wrong stuff.

Other countries, if they see the UK kitemark on something, they're really interested in it. So, um, if you make it part of the requirement, if you allow the mod to, uh, to campaign in partnership with industry abroad. And then the final thing the mod should do is it has some frameworks, it has bilateral treaties, it has the framework role in the Joint Expeditionary Force. It's just, it just doesn't really use those. Certainly not in the in the Joint Expeditionary Force sense as a vehicle for gathering like minded allies to say, look, we're going to make this thing.

Don't you think we should we should all have it. It relates to the munitions conversation. For example, um, that we had. But I come back to the point we discussed earlier in the review. The idea is more money goes into defence. It's spent on globally. Pacesetting transformation. And in doing that it fuels export led growth. Well, what we're talking about here is the export led growth. So let's make it happen.
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None Portrait Speaker 12
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Thank you.
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This debate has concluded
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