Industry and Regulators Committee
Tuesday 1st September 2026
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11:17
Speaker 1
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Speaker 1
One. And then there's a hopefully a national armaments director one to to round it out. Finance community. We've had one on combined services. We've got one coming up on Army and Navy and then as an Air Force. But what that shows you, I think, is that there is a there is a big knowledge gap. There are a few specialists in the City of London who really understand this sector. But it's nothing like systematic or well enough.
Understood. So I think there's old fashioned communication is required to make these things happen.
Understood. So I think there's old fashioned communication is required to make these things happen.
11:17
11:17
11:17
Lord Camoys
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Lord Camoys
Thank you chair. John, you mentioned in your introduction the slow procurement processes that the mod as one of your as a blocker and friction. I'd like to take that a bit further. If you had to name three changes to Mod procurement, that would do the most to make defence companies, in particular SMEs more investable, what would they be?
11:18
Speaker 1
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Speaker 1
I think the first one would be about joining up the procurement process more closely with the credit scoring process that that that banks and investors have to go through. And what you find in practice is that let's take a firm which is negotiating its contract with the Mod. You know, as soon as it looks as if it's going to win that contract or actually wins it, it all goes dark, and understandably so, because a lot of these these goods are very sensitive.
So you don't want the wider world to know necessarily. But that makes life incredibly difficult for a lender or an investor. So what we are trying to work up is, is some thinking on how do you get a very small and limited group of trusted and appropriately cleared banks and bankers into that process so that as this company is evolving its contract with the Mod, the lenders know this is why you need £10 million to expand your factory or whatever it may be, because at the moment it's very, very hard to get a handle on on this.
And so you find lending decisions are almost expected to be taken on, you know, here's a thing which is so good, I can't tell you what it is, you know, and that doesn't work well with, with, with financial institutions. So, so that would be one thing. And there are technological ways to do that, which Joe Cassidy, the , the other co-chair of our group is very, very focused on. He's the head of technology, media and telecom at EY.
So this is very much part of part of that group's, that group's work. So that's the first thing. The second thing I think, which is particularly SME related, is about. Is about an acceleration of the process. And, you know, there are a vast number of SME contracts held directly with the Ministry of Defence. Can we have a sort of quicker way through that, that process, and I don't know if there's a specific stage of it that can be shortened or removed or concertinaed in some way, but that's got to be the prize, I think, to have this happen more quickly.
And what you've seen, you know, most notably in the Ukraine, because they're at war, obviously, but you also see it in the US as these decisions to award or not a contract or not happen very quickly. And that involves some acceptance on the part of the government that not all of these will work, you know, so there has to be some kind of risk acceptance and failure acceptance. But that would, I think, accelerate the process. The third thing goes back to financial regulation.
And this is the compliance passport that I that I mentioned before, you know, can can we remove the requirement for this to be so completely repetitive? You know, banks and lenders will obviously want to, to, to take their own precautions, but they shouldn't have to run through quite such a deep, systematic and time consuming process when the mod has already, one assumes, checked the bona fides of the of the company and the people they're dealing with.
So you don't want the wider world to know necessarily. But that makes life incredibly difficult for a lender or an investor. So what we are trying to work up is, is some thinking on how do you get a very small and limited group of trusted and appropriately cleared banks and bankers into that process so that as this company is evolving its contract with the Mod, the lenders know this is why you need £10 million to expand your factory or whatever it may be, because at the moment it's very, very hard to get a handle on on this.
And so you find lending decisions are almost expected to be taken on, you know, here's a thing which is so good, I can't tell you what it is, you know, and that doesn't work well with, with, with financial institutions. So, so that would be one thing. And there are technological ways to do that, which Joe Cassidy, the , the other co-chair of our group is very, very focused on. He's the head of technology, media and telecom at EY.
So this is very much part of part of that group's, that group's work. So that's the first thing. The second thing I think, which is particularly SME related, is about. Is about an acceleration of the process. And, you know, there are a vast number of SME contracts held directly with the Ministry of Defence. Can we have a sort of quicker way through that, that process, and I don't know if there's a specific stage of it that can be shortened or removed or concertinaed in some way, but that's got to be the prize, I think, to have this happen more quickly.
And what you've seen, you know, most notably in the Ukraine, because they're at war, obviously, but you also see it in the US as these decisions to award or not a contract or not happen very quickly. And that involves some acceptance on the part of the government that not all of these will work, you know, so there has to be some kind of risk acceptance and failure acceptance. But that would, I think, accelerate the process. The third thing goes back to financial regulation.
And this is the compliance passport that I that I mentioned before, you know, can can we remove the requirement for this to be so completely repetitive? You know, banks and lenders will obviously want to, to, to take their own precautions, but they shouldn't have to run through quite such a deep, systematic and time consuming process when the mod has already, one assumes, checked the bona fides of the of the company and the people they're dealing with.
11:21
11:21
Speaker 1
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Speaker 1
No, that comes that comes straight from financial regulation, which is in specifically about the anti-money laundering rules and, and the what's called the KYC, the know your customer regulation and when, when we've had meetings with the, the FCA who administer those regulations, I would say without putting words in their mouths that they are up for a serious discussion about how do you get rid of this blocker?
11:22
11:22
11:22
Baroness Drake
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Baroness Drake
Good morning. Building on Baroness Harding's question about what's actually happening on the ground to make the sensible possible, my question is in two parts. The first one, how can you sort of give us more granularity about how the government has engaged with the finance sector on investment in defence companies, particularly referring to both the qualitative and quantitative content of that engagement? And you've articulated the need for greater engagement. But if so, what aspects of form and content do you want from that engagement?
11:23
Speaker 1
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Speaker 1
Yeah, the I mean, the qualitative and quantitative data on this that that I've seen comes less from government and more from organisations like tech UK, who monitored very carefully during the during the period when we were waiting for the dip basically. And they ran some, some quite depressing but very interesting numbers about the, the, the, the SME world in the defence and resilience space and the extent to which they were, you know, either going bust or going into kind of stasis, basically putting everything on hold.
And I can send you those, those numbers later on. But that really is the best quantitative evidence that I've seen. The the qualitative evidence. I mean, there are a number of reasons that one hears anecdotally for, for, for investments not being delivered and not working out. Quite often what one hears is that there is a problem, as there is in all sectors with the UK venture capital and private equity world not being evenly distributed around the country.
There's a focus, you know, in the geography of London and the Golden Triangle, whereas the the defence economy, you know, is geographically different. So that is part of it. I think there isn't a big enough infrastructure . Infrastructure, not in the not not not in the technical sense of the word. But, you know, in terms of the numbers of venture capitalists that are active in different regions, I think that that is part of it.
The other part of it, I think, is just this endemic problem we have with scale ups, basically. And what one hears anecdotally is there are quite a lot of firms in this space who would find it very much easier to attract money from overseas. So in particularly from the US, and I've spoken to to people who operate in this space, some of them indeed former serving people who are trying to, to, to, to create a business.
And they say, well, I'm staying here because I'm British and I want to stay here, but I keep being asked to put my house on the line in order to do this. Whereas if I went to Texas A, it would all happen much, much quicker and be, you know, I wouldn't be asked to provide such personal security and take such personal risk for my business. So I think those are some of the things.
And I can send you those, those numbers later on. But that really is the best quantitative evidence that I've seen. The the qualitative evidence. I mean, there are a number of reasons that one hears anecdotally for, for, for investments not being delivered and not working out. Quite often what one hears is that there is a problem, as there is in all sectors with the UK venture capital and private equity world not being evenly distributed around the country.
There's a focus, you know, in the geography of London and the Golden Triangle, whereas the the defence economy, you know, is geographically different. So that is part of it. I think there isn't a big enough infrastructure . Infrastructure, not in the not not not in the technical sense of the word. But, you know, in terms of the numbers of venture capitalists that are active in different regions, I think that that is part of it.
The other part of it, I think, is just this endemic problem we have with scale ups, basically. And what one hears anecdotally is there are quite a lot of firms in this space who would find it very much easier to attract money from overseas. So in particularly from the US, and I've spoken to to people who operate in this space, some of them indeed former serving people who are trying to, to, to, to create a business.
And they say, well, I'm staying here because I'm British and I want to stay here, but I keep being asked to put my house on the line in order to do this. Whereas if I went to Texas A, it would all happen much, much quicker and be, you know, I wouldn't be asked to provide such personal security and take such personal risk for my business. So I think those are some of the things.
11:25
11:25
Baroness Drake
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Baroness Drake
Just a final part of the question you referred to demand signalling. But you know, to what extent have you got the level demand signalling. But you know, to what extent have you got the level of long term visibility of the MoD's priorities to give the investor community of long term visibility of the MoD's priorities to give the investor community that confidence? And to what extent the DIP is meeting that visibility that confidence? And to what extent the DIP is meeting that demand?
11:26
Speaker 1
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Speaker 1
Well, the DIPI mean, it had a sort of negative political reception, I think it's fair to say, in terms of markets, it does have a reasonable amount of detail and is encouraging in some areas. So there is almost for some areas a very a very broad price list, if you like, of what is needed. So that helps. I think the thing that we're all waiting for now is the, the DIFS the defence investment financial strategy, which will put a little bit more sort of flesh on those bones and, and go down a level or two to tell us what exactly is needed and precisely into, into which spaces I would just pick up, I think on the.
11:27
11:27
11:27
Speaker 1
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Speaker 1
There's Defence Investment Advisory Group and they have identified, I understand they've taken 12 potential infrastructure and housing opportunities down to six, down to three. But this has taken a very long time. And we're still waiting to hear what what the three are that they would like to see expressions of interest in. And meanwhile, the the industry is firing in, you know, ideas and opportunities, but they don't seem to make fast enough progress.
11:27
11:27
Lord Best
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Lord Best
to dig a little bit deeper on the regulatory barriers to investing in defence. You've identified you say you've identified the key blockers. And defence. You've identified you say you've identified the key blockers. And I think you're identifying in particular this this pointless process of time I think you're identifying in particular this this pointless process of time consuming checks for anti-money money laundering. And you're telling us that the FCA is on the consuming checks for anti-money money laundering.
case and progress is being made. Is this a tick in the box or should case and progress is being made. Is this a tick in the box or should we be concentrating on this one? Is this a big number? I think it's we be concentrating on this one? Is this a big number?
case and progress is being made. Is this a tick in the box or should case and progress is being made. Is this a tick in the box or should we be concentrating on this one? Is this a big number? I think it's we be concentrating on this one? Is this a big number?
11:28
Speaker 1
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Speaker 1
I think it's it's not a tick in the box yet, but the pen is hovering over the the square to put the tick in. I think it is it is a it would be a helpful move if progress were to be made there. It's not the silver bullet that that solves all problems. And in fact, what I'm told is that, yes, it's helpful to do that. The bigger thing is about the the credit decision and how that operates alongside the procurement decision.
So but it is definitely a positive if we can pull it off. And I think we can be reasonably confident that we will be able to pull it off. And the answer lies largely in regulation, not in legislation. So there may be a kind of a quick, quicker way through for that. The the other thing, which I think in in if you're digging deeper into regulation and sort of slightly granular issues like that, this point that I mentioned earlier about standard form documentation for private equity and venture capital, that is quite an important point.
It's not it's not a thrilling point, but it is an important point that what we had in the past was standard forms of documentation, which basically on a blanket basis tended to exclude a lot of defence, very sort of loosely defined, and people would would veer away from it. What, what we now have as the standard industry documentation is something which says the. United Nations controversial weapons are excluded. Yes, fine.
That's always been the case, but everything else is explicitly included. So if the underlying asset owner, the the person whose money it is, is happy with that, that's what the fund can invest in. That makes quite a big difference. It's one of these sort of slightly dull changes, but dull but worthy and important, shall we say.
So but it is definitely a positive if we can pull it off. And I think we can be reasonably confident that we will be able to pull it off. And the answer lies largely in regulation, not in legislation. So there may be a kind of a quick, quicker way through for that. The the other thing, which I think in in if you're digging deeper into regulation and sort of slightly granular issues like that, this point that I mentioned earlier about standard form documentation for private equity and venture capital, that is quite an important point.
It's not it's not a thrilling point, but it is an important point that what we had in the past was standard forms of documentation, which basically on a blanket basis tended to exclude a lot of defence, very sort of loosely defined, and people would would veer away from it. What, what we now have as the standard industry documentation is something which says the. United Nations controversial weapons are excluded. Yes, fine.
That's always been the case, but everything else is explicitly included. So if the underlying asset owner, the the person whose money it is, is happy with that, that's what the fund can invest in. That makes quite a big difference. It's one of these sort of slightly dull changes, but dull but worthy and important, shall we say.
11:30
Lord Best
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Lord Best
Yeah, those are important. dull changes, but dull but worthy and important, shall we say. Yeah, those are important. Just, if I may, on the military housing, because there's Just, if I may, on the military housing, because there's £7 billion at stake on this one. Just a little bit of a progress report. Just a little bit of a progress report. Are we near to finding investors, private investors that are going to take on this Are we near to finding investors, private investors that are going to take on this challenge?
11:30
Speaker 1
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Speaker 1
I think there is there is quite a lot of appetite for doing this. It always depends on the details of the individual project and the terms of any transaction. But I think there is undoubtedly interest and the the the area from which I think the interest will come. And I sort of slightly aim off for this because this is part of my past career. So I have a bias in this direction. But if you think about the defined benefit pension schemes which have been bought out by insurers, that's a flow of new of capital of about £40 billion a year, give or take that sort of scale.
That money lands with insurance companies. That money has to be invested into something. The constraints about around what it can be invested into are quite tight because they're driven by the solvency UK rules. So you have to have certain security of credit. You have to have a very predictable or set cash flow. And these are the types of assets that could be made to work in that type of structure.
I mean, economically I don't see this see, military family housing is not particularly different from social housing, which is highly investable and serving single persons accommodation, arguably economically, not very different from student accommodation. So I think the models exist to do this. The thing we need to get around is how do we avoid the problems that Annington created or ran into, in particular around the maintenance contracts? I think that is the the bit that requires some serious thought.
That money lands with insurance companies. That money has to be invested into something. The constraints about around what it can be invested into are quite tight because they're driven by the solvency UK rules. So you have to have certain security of credit. You have to have a very predictable or set cash flow. And these are the types of assets that could be made to work in that type of structure.
I mean, economically I don't see this see, military family housing is not particularly different from social housing, which is highly investable and serving single persons accommodation, arguably economically, not very different from student accommodation. So I think the models exist to do this. The thing we need to get around is how do we avoid the problems that Annington created or ran into, in particular around the maintenance contracts? I think that is the the bit that requires some serious thought.
11:32
11:32
11:32
Baroness Valentine
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Baroness Valentine
Thank you. Thank you. I've known John in various roles in the past. I've known John in various roles in the past. So hello, John. So hello, John. So you've touched So you've touched on the financial sector on the financial sector investing alongside the government in defence capabilities. investing alongside the government in defence capabilities. Can you just give us a little more detail on what sort of support and commitments would investors need in order to do that? Can you just give us a little more detail on what sort of support and commitments would investors need in order to do that?
11:33
Speaker 1
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Speaker 1
Yes, absolutely. I mean, I think on the equity side, the potential exists for the private sector to work with the British business Bank. You know, either co-investing in specific single situations or by, for example, co-creating a fund or playing into a fund of funds type model. So I think in the equity side, the models exist to do that. On the debt side, it's largely around the question of guarantees, I think.
So if you think about defence companies, which manufacture items which ultimately are destined for export, there is clearly a UK export finance guarantee, which can cover up to 80% of the value of those those products. The definition of exports is quite flexible because an SME producing something and selling it to one of the big primes, which may subsequently export the completed item. You know, let's say you're making, you know, door handles for for aeroplanes or something.
And, and the aeroplane ultimately is sold is exported. That guarantee can apply. So you have that. The question I think that is sometimes a challenge is can you increase the guarantee status by using some of the balance sheet, for example, of the UK wealth fund or in the housing space?
So if you think about defence companies, which manufacture items which ultimately are destined for export, there is clearly a UK export finance guarantee, which can cover up to 80% of the value of those those products. The definition of exports is quite flexible because an SME producing something and selling it to one of the big primes, which may subsequently export the completed item. You know, let's say you're making, you know, door handles for for aeroplanes or something.
And, and the aeroplane ultimately is sold is exported. That guarantee can apply. So you have that. The question I think that is sometimes a challenge is can you increase the guarantee status by using some of the balance sheet, for example, of the UK wealth fund or in the housing space?
11:34
11:34
Speaker 1
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Speaker 1
role of homes? subsidiary, to support some of the creation. And there's an idea here which is potentially interesting, which is around mixed use in housing, which also has the benefit, as Lord best particularly would know, of being able to take some of that off the off the government's balance sheet and and do it that way. So there are a number of puffins, which I think could play into this space both in debt and in equity.
11:35
Baroness Valentine
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Baroness Valentine
Just to follow up on that, the wealth Just to follow up on that, the wealth fund and Homes England traditionally have been pretty risk averse, and quite fund and Homes England traditionally have been pretty risk averse, and quite often one was trying to work alongside them. That's the bit that the private sector needs is to often one was trying to work alongside them. That's the bit that the private sector needs is to take the early stage policy.
Government sort of confusion out of the equation. Is Government sort of confusion out of the equation. Is there anything in what you've just said easier now than it used to be?
Government sort of confusion out of the equation. Is Government sort of confusion out of the equation. Is there anything in what you've just said easier now than it used to be?
11:35
Speaker 1
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Speaker 1
I think there are some very good examples of where Homes England this is from. From my personal knowledge, there may be many other examples using the other puffins, as they're called public finance institutions. But but Homes England certainly has been effective in quite a number of projects in de-risking in that sense. I mean, I think it's important to emphasize here that, you know, the private investor is not looking for a subsidy here.
There is a question of de-risking and making it more possible for their money to flow through on the normal kind of risk reward basis. And I think more could be done specifically with the military housing in that sense. And there are some very interesting things where public private arrangements could also be brought to bear in the more complicated infrastructure. So if you think about about airfields, for example, you know, there is an existing interesting model in Belfast International Airport, which is both military and civilian.
There's a question here. If you need to refurbish, for example, Brize Norton in its entirety, you know, is there a route which gives you a sort of partly commercial application and partly a military application? And how do you divide the two? So the these these are big, big and difficult projects, but they're not without potential to be solved.
There is a question of de-risking and making it more possible for their money to flow through on the normal kind of risk reward basis. And I think more could be done specifically with the military housing in that sense. And there are some very interesting things where public private arrangements could also be brought to bear in the more complicated infrastructure. So if you think about about airfields, for example, you know, there is an existing interesting model in Belfast International Airport, which is both military and civilian.
There's a question here. If you need to refurbish, for example, Brize Norton in its entirety, you know, is there a route which gives you a sort of partly commercial application and partly a military application? And how do you divide the two? So the these these are big, big and difficult projects, but they're not without potential to be solved.
11:37
Lord Fuller
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Lord Fuller
Yes. Thank you. Yes. Thank you. Look, I've listened very carefully, and it seems to me a lot of the problems you're describing are for what the AIM market was established me that a lot of the problems you're describing are for what the AIM market was established to fix. to fix. You're from the city UK. You're from the city UK. You haven't mentioned AIM or You haven't mentioned AIM or Pisces, which is the similar sort of private company.
Pisces, which is the similar sort of private company. Exchange can't raise capital, but you can switch shares amongst Exchange can't raise capital, but you can switch shares amongst yourselves. yourselves. So I can understand that venture capital, private equity and debt certainly has a role. So I can understand that venture capital, private equity and debt certainly has a role. But why haven't you has the AIM market the junior stock market been forgotten But why haven't you has the AIM market the junior stock market been forgotten and what could they do about it? and what could they do about it?
Pisces, which is the similar sort of private company. Exchange can't raise capital, but you can switch shares amongst Exchange can't raise capital, but you can switch shares amongst yourselves. yourselves. So I can understand that venture capital, private equity and debt certainly has a role. So I can understand that venture capital, private equity and debt certainly has a role. But why haven't you has the AIM market the junior stock market been forgotten But why haven't you has the AIM market the junior stock market been forgotten and what could they do about it? and what could they do about it?
11:37
Speaker 1
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Speaker 1
Well, it's a very interesting question. And of course , it's not a unique question for defence SMEs or companies. But there is a shortage of listings into AIM, which is a broader thing. And, you know, there are much bigger sort of potential solutions required in order to to revive the UK listed company markets, whether that's big listed companies or smaller listed companies. Some of those things revolve around listing rules, which, you know, are, have been, have been amended.
I don't think that has worked its way through the system. Some of it is about competitive valuations.
I don't think that has worked its way through the system. Some of it is about competitive valuations.
11:38
Speaker 1
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Speaker 1
required. Some of it is is simply about the, the competition. That small, smaller, potentially listed companies are seeing from private equity. So we do absolutely need to solve all those bigger problems. And that should be helpful in this particular sector as well. But I don't I wouldn't distinguish defence specifically as finding it difficult to to go into the listed markets.
11:39
Lord Fuller
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Lord Fuller
I just find it odd that, you know, you're with city UK, it is the junior stock market and it know, you're with city UK, it is the junior stock market and it hasn't been mentioned once. hasn't been mentioned once. And this is for the purpose for which not just defence companies but smaller companies in that And this is for the purpose for which not just defence companies but smaller companies in that £25 million range, which is the sort of ones.
£25 million range, which is the sort of ones.
£25 million range, which is the sort of ones.
11:39
Lord Camoys
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Lord Camoys
Grace Cassidy, who was involved in preparing the SDR but is also an investor in In defence, told us that there's actually there is a lot of interest investor in in defence, told us that there's actually there is a lot of interest and funds to invest in defence apart from I think she call it sort of the final 5%, the bits that go and funds to invest in defence apart from, I think you call it sort of the final 5%, the bits that go bang.
What can be done beyond relying on bang. patriotic family offices to, to invest in, in, in, you know, a very crucial bit patriotic family offices to, to invest in, in, in, you know, a very crucial bit of, of the defence industry. of, of the defence industry.
What can be done beyond relying on bang. patriotic family offices to, to invest in, in, in, you know, a very crucial bit patriotic family offices to, to invest in, in, in, you know, a very crucial bit of, of the defence industry. of, of the defence industry.
11:39
11:40
11:40
11:40
11:40
11:40
Speaker 1
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Speaker 1
But but that is very much, I think, part of it. And if we can simply increase investment into the 95%, then then I think the 5% does become more fundable. I think there's also possibly an element still of the kind of hangover from ESG about this last 5% of energetics and so on. And I think the change that I mentioned to some of the documentation for for PE and VC investors should help in that space, which will leave only a smaller percentage uninvestable, which is clearly nuclear and things that are on the controversial list that nobody has ever invested in.
Really.
Really.
11:41
11:41
Baroness Hayter of Kentish Town
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Baroness Hayter of Kentish Town
I found this fascinating. There's a very broad question I'd like to pose. It's the wrong analogy. But when Notre pose. It's the wrong analogy. But when Notre Dame burnt down. Dame burnt down. My understanding is that Macron met every week. My understanding is that Macron met every week. And when there was all these And when there was all these different problems and they'd be held up hold ups here, there and everything, and he basically sorted different problems and they'd be held up hold ups here, there and everything, and he basically sorted it and said, we'll deal with that.
it and said, we'll deal with that. We'll deal with that, whatever it was. We'll deal with that, whatever it was. Do you feel the government has a similar Do you feel the government has a similar desire to make sure that SDR happens? desire to make sure that SDR happens? Because Because what you've told us is lots of little problems in all sorts of ways. Do you feel that there's a driver from what you've told us is lots of little problems in all sorts of ways.
Do you feel that there's a driver from government that is saying, we will make these? There can be quite small things. The one government that is saying, we will make these? There can be quite small things. The one you've given is an interesting example, but do you feel there is a driver in government that is making this you've given is an interesting example, but do you feel there is a driver in government that is making this happen? happen?
it and said, we'll deal with that. We'll deal with that, whatever it was. We'll deal with that, whatever it was. Do you feel the government has a similar Do you feel the government has a similar desire to make sure that SDR happens? desire to make sure that SDR happens? Because Because what you've told us is lots of little problems in all sorts of ways. Do you feel that there's a driver from what you've told us is lots of little problems in all sorts of ways.
Do you feel that there's a driver from government that is saying, we will make these? There can be quite small things. The one government that is saying, we will make these? There can be quite small things. The one you've given is an interesting example, but do you feel there is a driver in government that is making this you've given is an interesting example, but do you feel there is a driver in government that is making this happen? happen?
11:42
11:42
Speaker 1
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Speaker 1
in this that we do need to have some strong leadership on this from the Ministry of Defence, particularly the national armaments director, I think is in a good place to do that and is now able to do it now that the dip is published, that they had rather gone to ground while waiting. And I think you're absolutely right that we need to, to, to pull all that together and make it happen. There is a joint Defence Industrial Council, and I think one of the simple things that could be done is to get financiers into that council at a senior enough level to help them take decisions.
I mean, the the opportunities are enormous. If you think about just JP Morgan, just, you know, it's the biggest bank. But think about JP Morgan. They have a fund for Defence and Resilience, global fund of $1.5 trillion. It's a sort of unthinkably huge amount. Now, even if we get 5% of that invested by them into the UK, that is probably three times or so more than the dip. So we need to get people like that to the table at a very senior level.
And as you say, you know, bang the table and make it happen.
I mean, the the opportunities are enormous. If you think about just JP Morgan, just, you know, it's the biggest bank. But think about JP Morgan. They have a fund for Defence and Resilience, global fund of $1.5 trillion. It's a sort of unthinkably huge amount. Now, even if we get 5% of that invested by them into the UK, that is probably three times or so more than the dip. So we need to get people like that to the table at a very senior level.
And as you say, you know, bang the table and make it happen.
11:44
Baroness Hayter of Kentish Town
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Baroness Hayter of Kentish Town
Thank you very much for your time. I think it's been invaluable and we Thank you very much for your time. I think it's been invaluable and we appreciate the work you've done, the submission you gave as well as today. Thank you. appreciate the work you've done, the submission you gave as well as today. Thank you.
11:44
11:44
Baroness Hayter of Kentish Town
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Baroness Hayter of Kentish Town
session. Welcome to this Welcome to this evidence session of the Industry and Regulators Committee. It's part of our inquiry into the evidence session of the Industry and Regulators Committee. It's part of our inquiry into the relationship between government and the defence industry. The meeting is being broadcast live on the relationship between government and the defence industry. parliamentary website. There will be a Hansard record of this, but you'll have a chance to have a quick look at parliamentary website.
There will be a Hansard record of this, but you'll have a chance to have a quick look at that in case we've misunderstood anything that you've said. that in case we've misunderstood anything that you've said. But I'd like to welcome you to this meeting. My name is Diane Hayter, and I'm going to this meeting. My name is Diane Hayter, and I'm going to introduce my colleagues as they pose questions later on. But we're delighted to have today Peter Anstice with us, introduce my colleagues as they pose questions later on.
But we're delighted to have today Peter Anstice with us, who is the from Tim Barrow. We'll hear more about. who is the from Tim Barrow. And director of Strategic We'll hear more about. And director of Strategic Partnership and Investment there. Would you like to just introduce yourself and then we'll start some Partnership and Investment there. Would you like to just introduce yourself and then we'll start some questions.
There will be a Hansard record of this, but you'll have a chance to have a quick look at that in case we've misunderstood anything that you've said. that in case we've misunderstood anything that you've said. But I'd like to welcome you to this meeting. My name is Diane Hayter, and I'm going to this meeting. My name is Diane Hayter, and I'm going to introduce my colleagues as they pose questions later on. But we're delighted to have today Peter Anstice with us, introduce my colleagues as they pose questions later on.
But we're delighted to have today Peter Anstice with us, who is the from Tim Barrow. We'll hear more about. who is the from Tim Barrow. And director of Strategic We'll hear more about. And director of Strategic Partnership and Investment there. Would you like to just introduce yourself and then we'll start some Partnership and Investment there. Would you like to just introduce yourself and then we'll start some questions.
11:46
Lord Camoys
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Lord Camoys
Thank you very much, chair. Yes. So for the last 18 months or so, I've been part of the leadership team of Tim Barrow, Thank you very much, chair. Yes. So for the last 18 months or so, I've been part of the leadership team of Tim Barrow, which at its core is a partnership between the Westmorland Furness Council, the local which at its core is a partnership between the Westmoreland Furness Council, the local authority in South Cumbria Bay systems and the Ministry of Housing, authority in South Cumbria Bay systems and the Ministry of Housing, Communities and Local Government, who are the focal point in our partnership into central government.
It's not the complete Communities and Local Government, who are the focal point in our partnership into central government. It's not the complete picture, however, because we also have some very influential national organisations such as the NHS, picture, however, because we also have some very influential national organisations such as the NHS, Homes England, many other smaller organisations. Part of the partnership to transform Homes England, many other smaller organisations. Part of the partnership to transform Barrow in Furness as part of the national endeavour to deliver the next generation of Barrow in Furness as part of the national endeavour to deliver the next generation of submarines.
submarines.
It's not the complete Communities and Local Government, who are the focal point in our partnership into central government. It's not the complete picture, however, because we also have some very influential national organisations such as the NHS, picture, however, because we also have some very influential national organisations such as the NHS, Homes England, many other smaller organisations. Part of the partnership to transform Homes England, many other smaller organisations. Part of the partnership to transform Barrow in Furness as part of the national endeavour to deliver the next generation of Barrow in Furness as part of the national endeavour to deliver the next generation of submarines.
submarines.
11:47
Baroness Hayter of Kentish Town
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Baroness Hayter of Kentish Town
Thank you. Thank you. your main input to government is through MH CLG your main input to government is through MH CLG with defence sort of an add on, which is quite interesting. So if you could tell us a little bit with defence sort of an add on, which is quite interesting. So if you could tell us a little bit about that working relationship. Yeah. With with the national government, how it actually works in practice, about that working relationship.
With with the national government, how it actually works in practice, the different parts you've already mentioned, some of them that you deal with, including the different parts. You've already mentioned, some of them that you deal with, including obviously, and how well all that is working.
With with the national government, how it actually works in practice, the different parts you've already mentioned, some of them that you deal with, including the different parts. You've already mentioned, some of them that you deal with, including obviously, and how well all that is working.
11:47
Lord Camoys
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Lord Camoys
I think I think by way of context, it's worth starting with the observation of how important the relationship by way of context, it's worth starting with the observation of how important the relationship with central government is. When the decision was taken, national commitment to Baron with central government is. When the decision was taken, national commitment to Baron Furness to become the sole location where submarines for the Royal Navy could be Furness to become the sole location where submarines for the Royal Navy could be designed, developed, manufactured.
designed, developed, manufactured. That commitment, made several decades ago, That commitment, made several decades ago, progressively meant that the shipyard, which for many, many years since progressively meant that the shipyard, which for many, many years since Victorian times had been making all sorts of products and services for surface vessels, Victorian times had been making all sorts of products and services for surface vessels, submarines, ultimately military, commercial, and so on. submarines, ultimately military, commercial, and so on.
Suddenly it had to focus on Suddenly it had to focus on one particular product range, one particular customer, and it one particular product range, one particular customer, and it naturally lost the ability to diversify and do anything else. naturally lost the ability to diversify and do anything else. There isn't an export There isn't an export market because of technology constraints and so on. market because of technology constraints and so on.
The specialist facilities required the skills, the cost base, the security environment means that the only thing that can be done is the design and development manufacturing of submarines. is the design and development manufacturing of submarines. Consequently, the fortunes of the yard, the fortunes of the people of Barrow have waxed and Consequently, the fortunes of the yard, the fortunes of the people of Barrow have waxed and waned in direct relationship to defence, procurement and submarines in waned in direct relationship to defence, procurement and submarines in particular, of all of the defence products have such huge impacts because of the particular, of all of the defence products have such huge impacts because of the vast value of the contracts, but also the very cyclic nature of their procurement, vast value of the contracts, but also the very cyclic nature of their procurement, their products which are required, which are ordered in small batches, often with many years between those their products which are required, which are ordered in small batches, often with many years between those batches.
And that's resulted in an economy locally, with the major And that's resulted in an economy locally, with the major employer moving from perhaps a peak of circa 20,000 direct employees, maybe another employer moving from perhaps a peak of circa 20,000 direct employees, maybe another 20,000 indirect employees, to a trough of some 2 to 3000. And the fortunes of the people of Barrow for generations now have had to contend with, you know, these huge cycles of literally feast and famine.
know, these huge cycles of literally feast and famine. And And so it's inevitable, therefore, when we talk about the relationship between what we're doing in Barrow and so it's inevitable, therefore, when we talk about the relationship between what we're doing in Barrow and central government and the government generally, that we home in on defence procurement, central government and the government generally, that we home in on defence procurement, our Barrow Transformation Fund, as it's known just over £200 million, is largely our Barrow Transformation Fund, as it's known just over £200 million, is largely supported, funded through the Mod, which reflects that relationship.
And I think it's absolutely supported, funded through the Mod, which reflects that relationship. And I think it's absolutely vital, therefore, that we acknowledge that Barrow, the town, the residents, the local vital, therefore, that we acknowledge that Barrow, the town, the residents, the local area, has for decades now been dependent on that relationship. Working. area, has for decades now been dependent on that relationship. Working. To your point about why is the entry point with the Ministry of Housing, To your point about why is the entry point with the Ministry of Housing, Communities, local government? I think it's worth reflecting on the fact that if we look at the number Communities, local government? I think it's worth reflecting on the fact that if we look at the number one priority to address now in Barrow and the surrounding area, it is housing.
one priority to address now in Barrow and the surrounding area, it is housing. It is the regeneration of the town centre. It is the transformation around that of It is the regeneration of the town centre. It is the transformation around that of some of the education and health and social infrastructure. But at its core some of the education and health and social infrastructure. But at its core is the regeneration of the town and providing housing, both at one end of the is the regeneration of the town and providing housing, both at one end of the spectrum of social housing for existing residents, particularly those who have been disadvantaged by the spectrum of social housing for existing residents, particularly those who have been disadvantaged by the recent sort of trough in the town's fortunes, but also looking forward to a recent sort of trough in the town's fortunes, but also looking forward to a dramatic increase in the number of people who will be employed, and not just dramatic increase in the number of people who will be employed, and not just people in the shipyard, but also in the dependent industries and so on.
I people in the shipyard, but also in the dependent industries and so on. I think I'd also draw the committee's attention to the fact that we're also going to think I'd also draw the committee's attention to the fact that we're also going to play host to Australians and Americans, military and civilian personnel whose first impressions of the play host to Australians and Americans, military and civilian personnel whose first impressions of the UK will be formed by their secondment to Barrow in Furness and the UK will be formed by their secondment to Barrow in Furness and the surrounding area.
So I think we also, as a nation have this overriding consideration about not surrounding area. So I think we also, as a nation have this overriding consideration about not just doing the right thing to address some of the inequalities of the past and to ensure that the national just doing the right thing to address some of the inequalities of the past and to ensure that the national endeavour can be delivered, but also to recognise that we are an extension of the endeavour can be delivered, but also to recognise that we are an extension of the UK's face to our allies and international partners.
One final UK's face to our allies and international partners. One final introductory remark I'll make, if I may, and that is to say that this is acknowledged by central government. This issue of introductory remark I'll make, if I may, and that is to say that this is acknowledged by central government. This issue of the great cycles of feast and famine, as I've referred to it. And so one of the other sort of the great cycles of feast and famine, as I've referred to it.
And so one of the other sort of outcomes that we've been tasked with tackling is the diversification of the local outcomes that we've been tasked with tackling is the diversification of the local economy, so that in the out years after this future long term growth economy, so that in the out years after this future long term growth phase that we're entering now has peaked. We have an economy which isn't so vulnerable to those phase that we're entering now has peaked.
We have an economy which isn't so vulnerable to those cycles of defence procurement and that new industries like the offshore energy green energy sector for production and cycles of defence procurement and that new industries like the offshore energy green energy sector for production and storage of energy are sort of embraced and become a storage of energy are sort of embraced and become a mainstay of the local economy, along with many other aspects, which I can come back to in the hospitality, mainstay of the local economy, along with many other aspects, which I can come back to in the hospitality, retail, sports and leisure sector.
So a huge task and the relationship with retail, sports and leisure sector. So a huge task and the relationship with central government is absolutely key.
designed, developed, manufactured. That commitment, made several decades ago, That commitment, made several decades ago, progressively meant that the shipyard, which for many, many years since progressively meant that the shipyard, which for many, many years since Victorian times had been making all sorts of products and services for surface vessels, Victorian times had been making all sorts of products and services for surface vessels, submarines, ultimately military, commercial, and so on. submarines, ultimately military, commercial, and so on.
Suddenly it had to focus on Suddenly it had to focus on one particular product range, one particular customer, and it one particular product range, one particular customer, and it naturally lost the ability to diversify and do anything else. naturally lost the ability to diversify and do anything else. There isn't an export There isn't an export market because of technology constraints and so on. market because of technology constraints and so on.
The specialist facilities required the skills, the cost base, the security environment means that the only thing that can be done is the design and development manufacturing of submarines. is the design and development manufacturing of submarines. Consequently, the fortunes of the yard, the fortunes of the people of Barrow have waxed and Consequently, the fortunes of the yard, the fortunes of the people of Barrow have waxed and waned in direct relationship to defence, procurement and submarines in waned in direct relationship to defence, procurement and submarines in particular, of all of the defence products have such huge impacts because of the particular, of all of the defence products have such huge impacts because of the vast value of the contracts, but also the very cyclic nature of their procurement, vast value of the contracts, but also the very cyclic nature of their procurement, their products which are required, which are ordered in small batches, often with many years between those their products which are required, which are ordered in small batches, often with many years between those batches.
And that's resulted in an economy locally, with the major And that's resulted in an economy locally, with the major employer moving from perhaps a peak of circa 20,000 direct employees, maybe another employer moving from perhaps a peak of circa 20,000 direct employees, maybe another 20,000 indirect employees, to a trough of some 2 to 3000. And the fortunes of the people of Barrow for generations now have had to contend with, you know, these huge cycles of literally feast and famine.
know, these huge cycles of literally feast and famine. And And so it's inevitable, therefore, when we talk about the relationship between what we're doing in Barrow and so it's inevitable, therefore, when we talk about the relationship between what we're doing in Barrow and central government and the government generally, that we home in on defence procurement, central government and the government generally, that we home in on defence procurement, our Barrow Transformation Fund, as it's known just over £200 million, is largely our Barrow Transformation Fund, as it's known just over £200 million, is largely supported, funded through the Mod, which reflects that relationship.
And I think it's absolutely supported, funded through the Mod, which reflects that relationship. And I think it's absolutely vital, therefore, that we acknowledge that Barrow, the town, the residents, the local vital, therefore, that we acknowledge that Barrow, the town, the residents, the local area, has for decades now been dependent on that relationship. Working. area, has for decades now been dependent on that relationship. Working. To your point about why is the entry point with the Ministry of Housing, To your point about why is the entry point with the Ministry of Housing, Communities, local government? I think it's worth reflecting on the fact that if we look at the number Communities, local government? I think it's worth reflecting on the fact that if we look at the number one priority to address now in Barrow and the surrounding area, it is housing.
one priority to address now in Barrow and the surrounding area, it is housing. It is the regeneration of the town centre. It is the transformation around that of It is the regeneration of the town centre. It is the transformation around that of some of the education and health and social infrastructure. But at its core some of the education and health and social infrastructure. But at its core is the regeneration of the town and providing housing, both at one end of the is the regeneration of the town and providing housing, both at one end of the spectrum of social housing for existing residents, particularly those who have been disadvantaged by the spectrum of social housing for existing residents, particularly those who have been disadvantaged by the recent sort of trough in the town's fortunes, but also looking forward to a recent sort of trough in the town's fortunes, but also looking forward to a dramatic increase in the number of people who will be employed, and not just dramatic increase in the number of people who will be employed, and not just people in the shipyard, but also in the dependent industries and so on.
I people in the shipyard, but also in the dependent industries and so on. I think I'd also draw the committee's attention to the fact that we're also going to think I'd also draw the committee's attention to the fact that we're also going to play host to Australians and Americans, military and civilian personnel whose first impressions of the play host to Australians and Americans, military and civilian personnel whose first impressions of the UK will be formed by their secondment to Barrow in Furness and the UK will be formed by their secondment to Barrow in Furness and the surrounding area.
So I think we also, as a nation have this overriding consideration about not surrounding area. So I think we also, as a nation have this overriding consideration about not just doing the right thing to address some of the inequalities of the past and to ensure that the national just doing the right thing to address some of the inequalities of the past and to ensure that the national endeavour can be delivered, but also to recognise that we are an extension of the endeavour can be delivered, but also to recognise that we are an extension of the UK's face to our allies and international partners.
One final UK's face to our allies and international partners. One final introductory remark I'll make, if I may, and that is to say that this is acknowledged by central government. This issue of introductory remark I'll make, if I may, and that is to say that this is acknowledged by central government. This issue of the great cycles of feast and famine, as I've referred to it. And so one of the other sort of the great cycles of feast and famine, as I've referred to it.
And so one of the other sort of outcomes that we've been tasked with tackling is the diversification of the local outcomes that we've been tasked with tackling is the diversification of the local economy, so that in the out years after this future long term growth economy, so that in the out years after this future long term growth phase that we're entering now has peaked. We have an economy which isn't so vulnerable to those phase that we're entering now has peaked.
We have an economy which isn't so vulnerable to those cycles of defence procurement and that new industries like the offshore energy green energy sector for production and cycles of defence procurement and that new industries like the offshore energy green energy sector for production and storage of energy are sort of embraced and become a storage of energy are sort of embraced and become a mainstay of the local economy, along with many other aspects, which I can come back to in the hospitality, mainstay of the local economy, along with many other aspects, which I can come back to in the hospitality, retail, sports and leisure sector.
So a huge task and the relationship with retail, sports and leisure sector. So a huge task and the relationship with central government is absolutely key.
11:53
11:53
Baroness Valentine
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Baroness Valentine
I guess I should declare that I work with businesses in the community part time, and they have a relationship with British Aerospace and British Aerospace in particular. We work with in Blackpool, and they have a relationship with British Aerospace and British Aerospace in particular. We work with in Blackpool, just down the coast from Barrow, where there's a sort of comparable partnership to just down the coast from Barrow, where there's a sort of comparable partnership to Barrow.
Well, not quite comparable. It's trying to do the same sort of thing, tackling deprivation and getting everybody around the Barrow. Well, not quite comparable. It's trying to do the same sort of thing, tackling deprivation and getting everybody around the table. So my question though is, is, is why has table. Team Barrow chosen the model that it has with a separate organisation rather than the local Team Barrow chosen the model that it has with a separate organisation rather than government taking the lead? And what lessons could other areas with defence the local government taking the lead? And what lessons could other areas with defence growth deals learn from Team Barrow's experience and possibly vice versa?
Well, not quite comparable. It's trying to do the same sort of thing, tackling deprivation and getting everybody around the Barrow. Well, not quite comparable. It's trying to do the same sort of thing, tackling deprivation and getting everybody around the table. So my question though is, is, is why has table. Team Barrow chosen the model that it has with a separate organisation rather than the local Team Barrow chosen the model that it has with a separate organisation rather than government taking the lead? And what lessons could other areas with defence the local government taking the lead? And what lessons could other areas with defence growth deals learn from Team Barrow's experience and possibly vice versa?
11:53
Lord Camoys
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Lord Camoys
To your first To your first point about why have we chosen the model? I think the important thing to note is that point about why have we chosen the model? I think the important thing to note is that a really diverse range of skills and experience required to deliver this enormous challenge. a really diverse range of skills and experience required to deliver this enormous challenge. It's a combination of understanding the demand, It's a combination of understanding the demand, of creating the environment that will attract people to the area, which in itself is a big of creating the environment that will attract people to the area, which in itself is a big issue.
issue. It's about creating an environment where people can exercise It's about creating an environment where people can exercise judgement based on their experience, rather than being totally constrained by governance judgement based on their experience, rather than being totally constrained by governance and process, looking at outcomes and benefits. And I think it's recognised that to do that, and process, looking at outcomes and benefits. And I think it's recognised that to do that, you have to blend a combination of skills that you get from industry, from you have to blend a combination of skills that you get from industry, from government with its access and influence, and with the local authority who have the ability government with its access and influence, and with the local authority who have the ability to lead on things like planning and town centre regeneration and land acquisition and so on.
to lead on things like planning and town centre regeneration and land acquisition and so on. I think, therefore, that combination is the optimum I think, therefore, that combination is the optimum model to bring different skills, different experience and so on, and to act as a vehicle by which model to bring different skills, different experience and so on, and to act as a vehicle by which enormous amount of resource and capacity can be drawn upon if necessary. So at its enormous amount of resource and capacity can be drawn upon if necessary.
So at its core, it's a small group of people. I'm representing the leadership team of a group of around core, it's a small group of people. I'm representing the leadership team of a group of around 20, but the total partnership, when you add the sort of horsepower that you can get 20, but the total partnership, when you add the sort of horsepower that you can get from a local authority, central government, a global defence contractor allied to the from a local authority, central government, a global defence contractor allied to the NHS, homes, England, Abbey ports and others.
NHS, homes, England, Abbey ports and others. Those skills and that resource and that Those skills and that resource and that experience that you can bring together, I think, is an absolutely essential prerequisite for the experience that you can bring together, I think, is an absolutely essential prerequisite for the type of work that we're doing, which spans housing, town centre, type of work that we're doing, which spans housing, town centre, healthcare, education, transport, infrastructure, healthcare, education, transport, infrastructure, social equalities and and social infrastructure.
social So no one organisation has the sort of breadth and remit to, to bring those skills and levels of experience to bear to your second point about other lessons learned for other parts of the country, we very much hope so. Now, frankly, we're kind of flattered and daunted in equal measure by the fact that we are held as a bit of an exemplar in many ways for this sort of way of working. Sir Keir Starmer on a visit a few months back or about a year ago now, he sort of observed that what was happening here was regarded as a blueprint for the nation.
Now, what I think he was referring to there was the fact that just simply pouring large sums of money into infrastructure projects or defence, or, you know, it could be a HS2 or whatever, and expecting something to happen which benefits communities and addresses any inequalities of the past, for example, just expecting it to happen naturally is never going to work. And so we've found ourselves playing host to visits from all over the country. You met, I believe, with colleagues from Plymouth, for example, who have we've spent some time with we hosted visits from the team at Sizewell Sizewell C, we're working with colleagues in Derby.
And what we're demonstrating, I think, is that with the right interventions, not only can you put the money in the sort of the top of the hopper to produce, in this case, defence equipment, but by the right interventions, you can also ensure that the community is sustainable around it, that the capacity, the defence infrastructure that you need that goes beyond manufacturing capability in a shipyard that goes into the whole of the community, can be transformed with the right interventions. Without those interventions, you end up with a very sort of vibrant Monday to Thursday economy of people travelling, typically single employees, invariably going back on a Thursday night to their sort of homes elsewhere in the North west or even further afield in our case.
And you have an economy locally in Barrow in Furness, which from Thursday to Sunday has a real problem. It has empty hotels. It doesn't can't sustain the retail, hospitality, tourist economy that most places can, despite being in an extraordinary location with amazing seascapes and landscapes and, you know, industrial heritage, amazing buildings, nothing between Thursday and Sunday because the necessary interventions have not been made in the past. Our role is to change that and to actually put those interventions in place.
And yes, I think it is an exemplar for other parts of the country. I think we are keen to sort of pass on our experience without being in any way complacent or arrogant, that we've got all the answers. The reality is it's a steep learning curve for us all.
issue. It's about creating an environment where people can exercise It's about creating an environment where people can exercise judgement based on their experience, rather than being totally constrained by governance judgement based on their experience, rather than being totally constrained by governance and process, looking at outcomes and benefits. And I think it's recognised that to do that, and process, looking at outcomes and benefits. And I think it's recognised that to do that, you have to blend a combination of skills that you get from industry, from you have to blend a combination of skills that you get from industry, from government with its access and influence, and with the local authority who have the ability government with its access and influence, and with the local authority who have the ability to lead on things like planning and town centre regeneration and land acquisition and so on.
to lead on things like planning and town centre regeneration and land acquisition and so on. I think, therefore, that combination is the optimum I think, therefore, that combination is the optimum model to bring different skills, different experience and so on, and to act as a vehicle by which model to bring different skills, different experience and so on, and to act as a vehicle by which enormous amount of resource and capacity can be drawn upon if necessary. So at its enormous amount of resource and capacity can be drawn upon if necessary.
So at its core, it's a small group of people. I'm representing the leadership team of a group of around core, it's a small group of people. I'm representing the leadership team of a group of around 20, but the total partnership, when you add the sort of horsepower that you can get 20, but the total partnership, when you add the sort of horsepower that you can get from a local authority, central government, a global defence contractor allied to the from a local authority, central government, a global defence contractor allied to the NHS, homes, England, Abbey ports and others.
NHS, homes, England, Abbey ports and others. Those skills and that resource and that Those skills and that resource and that experience that you can bring together, I think, is an absolutely essential prerequisite for the experience that you can bring together, I think, is an absolutely essential prerequisite for the type of work that we're doing, which spans housing, town centre, type of work that we're doing, which spans housing, town centre, healthcare, education, transport, infrastructure, healthcare, education, transport, infrastructure, social equalities and and social infrastructure.
social So no one organisation has the sort of breadth and remit to, to bring those skills and levels of experience to bear to your second point about other lessons learned for other parts of the country, we very much hope so. Now, frankly, we're kind of flattered and daunted in equal measure by the fact that we are held as a bit of an exemplar in many ways for this sort of way of working. Sir Keir Starmer on a visit a few months back or about a year ago now, he sort of observed that what was happening here was regarded as a blueprint for the nation.
Now, what I think he was referring to there was the fact that just simply pouring large sums of money into infrastructure projects or defence, or, you know, it could be a HS2 or whatever, and expecting something to happen which benefits communities and addresses any inequalities of the past, for example, just expecting it to happen naturally is never going to work. And so we've found ourselves playing host to visits from all over the country. You met, I believe, with colleagues from Plymouth, for example, who have we've spent some time with we hosted visits from the team at Sizewell Sizewell C, we're working with colleagues in Derby.
And what we're demonstrating, I think, is that with the right interventions, not only can you put the money in the sort of the top of the hopper to produce, in this case, defence equipment, but by the right interventions, you can also ensure that the community is sustainable around it, that the capacity, the defence infrastructure that you need that goes beyond manufacturing capability in a shipyard that goes into the whole of the community, can be transformed with the right interventions. Without those interventions, you end up with a very sort of vibrant Monday to Thursday economy of people travelling, typically single employees, invariably going back on a Thursday night to their sort of homes elsewhere in the North west or even further afield in our case.
And you have an economy locally in Barrow in Furness, which from Thursday to Sunday has a real problem. It has empty hotels. It doesn't can't sustain the retail, hospitality, tourist economy that most places can, despite being in an extraordinary location with amazing seascapes and landscapes and, you know, industrial heritage, amazing buildings, nothing between Thursday and Sunday because the necessary interventions have not been made in the past. Our role is to change that and to actually put those interventions in place.
And yes, I think it is an exemplar for other parts of the country. I think we are keen to sort of pass on our experience without being in any way complacent or arrogant, that we've got all the answers. The reality is it's a steep learning curve for us all.
11:59
Baroness Valentine
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Baroness Valentine
Can I just ask you one thing about the sort of governance structure you've got? Can I just ask you one thing about the sort of governance structure you've got? So so So so you sort of, in a sense, risk having a large pot of money coming in to Barrow and some big you sort of, in a sense, risk having a large pot of money coming in to Barrow and some big players. And in the Mhclg, British Aerospace.
players. How do you And in the MHC, LG, British Aerospace. How do you balance that top down with community interests? How do you balance that top down with community interests? How do you. really get under the skin of what works for the community and that sort of model? really get under the skin of what works for the community and that sort of model? And, and I quite often find that if you put the money into early, that actually .
Works. And, and I quite often find that if you put the money into early, that actually works against getting the community to be honest about what the issues are.
players. How do you And in the MHC, LG, British Aerospace. How do you balance that top down with community interests? How do you balance that top down with community interests? How do you. really get under the skin of what works for the community and that sort of model? really get under the skin of what works for the community and that sort of model? And, and I quite often find that if you put the money into early, that actually .
Works. And, and I quite often find that if you put the money into early, that actually works against getting the community to be honest about what the issues are.
11:59
Lord Camoys
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Lord Camoys
I think firstly, it's important to distinguish between the money that the government invests in defence procurement to be a systems, formerly British Aerospace. That money is not something that Tim Barrow has involvement in. To be clear, that's a BA systems responsibility, although they are very active as a company in the community with their social value agenda, etc. , the money we have equates to just over £20 million a year, which, after our operating costs and all the commitments that we have for monitoring the evaluation and so on, means that we probably have 12 to 15 at the moment, discretionary expenditure, which has to address all of the things I've referred to.
So it is a large sum of money by any metric, except when you come to do a town centre regeneration or create 7000 homes and grow the population by 5000 in order to sustain a national endeavour, you quickly realise that it's a relatively small sum of money. So, so so that's one observation in terms of the governance structure, which was the related point. To date, we've operated on a model whereby for essentially for convenience at startup, we've benefited from the local authority being the so-called accountable body.
So the central government funds have transferred into the local authorities bank account in effect, and we apply local authority processes and procedures to spend that money in accordance with best practice, local authority governance. Looking ahead , and literally within months, led by some very talented people within the Mhclg organisation, we've got a new organisation, a new company, Barrow Rising Limited, a company limited by guarantee, which will have a number of directors and people brought in from outside, who will be, as I said earlier, empowered to use their judgment and experience to take decisions in a way which we hope is more fleet of foot, but also in a way which builds on the experience of other parts of the country doing similar things.
And just if I may, a final point on that, I say similar things because most other sort of regeneration programmes are coping with a downturn. They're coping with the loss of a steelworks or another industry, and they're trying to attract people in to try and create an economy and to and employment. We have totally the opposite problem. We have huge demand and we have insufficient capacity in terms of accommodation and skilled people and construction workers and so on.
So we're in a completely different mode to other parts of the country in that we have to cope with dramatic growth to deliver the national endeavour.
So it is a large sum of money by any metric, except when you come to do a town centre regeneration or create 7000 homes and grow the population by 5000 in order to sustain a national endeavour, you quickly realise that it's a relatively small sum of money. So, so so that's one observation in terms of the governance structure, which was the related point. To date, we've operated on a model whereby for essentially for convenience at startup, we've benefited from the local authority being the so-called accountable body.
So the central government funds have transferred into the local authorities bank account in effect, and we apply local authority processes and procedures to spend that money in accordance with best practice, local authority governance. Looking ahead , and literally within months, led by some very talented people within the Mhclg organisation, we've got a new organisation, a new company, Barrow Rising Limited, a company limited by guarantee, which will have a number of directors and people brought in from outside, who will be, as I said earlier, empowered to use their judgment and experience to take decisions in a way which we hope is more fleet of foot, but also in a way which builds on the experience of other parts of the country doing similar things.
And just if I may, a final point on that, I say similar things because most other sort of regeneration programmes are coping with a downturn. They're coping with the loss of a steelworks or another industry, and they're trying to attract people in to try and create an economy and to and employment. We have totally the opposite problem. We have huge demand and we have insufficient capacity in terms of accommodation and skilled people and construction workers and so on.
So we're in a completely different mode to other parts of the country in that we have to cope with dramatic growth to deliver the national endeavour.
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Baroness Carberry of Muswell Hill
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Baroness Carberry of Muswell Hill
Hello. If I could just follow Question, which is from Baroness Carberry. Hello. If I could just follow up the last point you made about the availability of up the last point you made. about the. availability of skilled staff, and. particularly the skills that the. skilled staff, and particularly the skills that the defence industry needs and the both the shipyard and suppliers? And the both the shipyard and suppliers? I think what you've told us is, rather than seeking to I think what you've told us is, rather than seeking to source these skills locally, the industry source these.
Sucks in staff from elsewhere, including from other. sucks in staff from elsewhere, including from other countries. And I wonder whether this is something Team Barrow is addressing, because. And I wonder whether this is something Team Barrow is addressing, because presumably there are young people coming through the educational presumably there are young people coming through the. system in Barrow. You would want them to be fed into highly skilled In Barrow.
You would want them to be fed into highly skilled areas. Is this something that is a direct intervention that Team Barrow Is this something that is a direct. is engaged in at the moment?
Sucks in staff from elsewhere, including from other. sucks in staff from elsewhere, including from other countries. And I wonder whether this is something Team Barrow is addressing, because. And I wonder whether this is something Team Barrow is addressing, because presumably there are young people coming through the educational presumably there are young people coming through the. system in Barrow. You would want them to be fed into highly skilled In Barrow.
You would want them to be fed into highly skilled areas. Is this something that is a direct intervention that Team Barrow Is this something that is a direct. is engaged in at the moment?
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12:04
Lord Camoys
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Lord Camoys
BAE systems. Their approach has very much been to grow the workforce through apprenticeships. And I know that some 800 applications a year are accepted from around 6 or 7000, sometimes even more applications for apprenticeships. So dramatic growth in the number of apprentices and all that goes with that. So that's the first thing my comment about the Monday to Thursday economy was referring to. What happens if you don't intervene in the way that I'm describing.
That's the sort of natural thing that we've seen in Sizewell, for example, which, you know, colleagues from there have explained. So it's a question for BA systems in terms of how that workforce is delivered specifically for the yard. But what I can talk about is the Team Barrow experience in some of the other areas that are absolutely critical, notably construction skills. It's at this point, I think we should mention national competition, because it might seem strange when we talk about massive growth in jobs and and the opportunities for apprenticeships and skilled people to, to be gainfully employed for, you know, really good careers over the long term.
But the reality is, you know, we are at the southern south west corner of Cumbria, geographically fairly remote. We don't have an enormous pool of people to draw upon when it comes to local residents who aspire to go into, for example, construction skills. And nationally, we know there is a shortage and the alternatives are in Derby, in Plymouth, on HS2 and Heathrow in Sizewell and so on. So Barrow has to appeal not just in terms of the nature of the work, but also the geography, its location, which of course quickly brings us back to the town centre.
That's the sort of natural thing that we've seen in Sizewell, for example, which, you know, colleagues from there have explained. So it's a question for BA systems in terms of how that workforce is delivered specifically for the yard. But what I can talk about is the Team Barrow experience in some of the other areas that are absolutely critical, notably construction skills. It's at this point, I think we should mention national competition, because it might seem strange when we talk about massive growth in jobs and and the opportunities for apprenticeships and skilled people to, to be gainfully employed for, you know, really good careers over the long term.
But the reality is, you know, we are at the southern south west corner of Cumbria, geographically fairly remote. We don't have an enormous pool of people to draw upon when it comes to local residents who aspire to go into, for example, construction skills. And nationally, we know there is a shortage and the alternatives are in Derby, in Plymouth, on HS2 and Heathrow in Sizewell and so on. So Barrow has to appeal not just in terms of the nature of the work, but also the geography, its location, which of course quickly brings us back to the town centre.
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Lord Camoys
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Lord Camoys
jobs outside of the sort of primary roles that may be advertising for other family members who have no aspiration to build nuclear submarines or be in the construction sector. So we need to create additional capabilities, hence the opening of the Barrow site of the University of Cumbria, which has courses not just in science and technology, but also in nursing, for example, and entrepreneurship.
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Lord Camoys
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Lord Camoys
with the Furness Education Trust in particular, where a wide range of other skills are being encouraged in parallel to those required for the so-called national endeavour and the dependencies for construction. But they're all intertwined. We've got to make Barrow the place that people aspire to live and work and bring their families up rather than work Monday to Thursday, and that is changing. There has been success, apprenticeships have been very successful, but it's it's a big challenge.
You know, we've we're in sort of first 18 months of, of operation. And we've lots that we're very proud of, but we're under no illusions as to how big a task this is.
You know, we've we're in sort of first 18 months of, of operation. And we've lots that we're very proud of, but we're under no illusions as to how big a task this is.
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Baroness Carberry of Muswell Hill
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Baroness Carberry of Muswell Hill
So for example, how is So for. How is. BAE systems managing a its relationships with A its. relationships with local colleges and schools and is Team Barrow as an entity local colleges and schools and is Team Barrow as an entity content to allow the company to get on with that content to allow the. company to get on with that and. Or is there local encouragement, local intervention.
Is there any Or is there. local encouragement, local intervention. Is there any central. In trying to ensure that there's a steady flow of young people coming out of those institutions into steady flow of young people coming out of those. institutions into. apprentices, apprenticeships at all levels?
Is there any Or is there. local encouragement, local intervention. Is there any central. In trying to ensure that there's a steady flow of young people coming out of those institutions into steady flow of young people coming out of those. institutions into. apprentices, apprenticeships at all levels?
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Lord Camoys
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Lord Camoys
I as I say, I can't speak on behalf of BA systems, but obviously I've worked very closely and I can observe the progress that has been made and the active engagement that they make in just those areas. But what I'd like to do, if I may, is to give you an example of a team, a very tangible team. Barrow working with our partners to deliver fundamental change to achieve these aims. So literally, within the shadow of the yard, there is a secondary school which has seen over the years, as a result of the sort of troughs that I've referred to, has seen an exodus of of talent and so on that has now been rejuvenated, that new leadership has come in and more most recently, literally within the last couple of months through Team Barrow, using funding from the Barrow Transformation Fund, working with the Baker Dearing Education Trust, we've invested £1.7 million in the creation of a university technical college leave for that school, which will have an impact of attracting talent, both teaching and pupils.
It will transform the syllabus. It will enable more of the kids who progress from the school to be eligible for apprenticeships and other roles within not just the shipyard but in other sectors, and we're expecting that within 1 to 2 years, those changes will manifest themselves in a much greater local participation in the sort of applications for apprenticeships. I mentioned previously the Furness Education Trust, which has
It will transform the syllabus. It will enable more of the kids who progress from the school to be eligible for apprenticeships and other roles within not just the shipyard but in other sectors, and we're expecting that within 1 to 2 years, those changes will manifest themselves in a much greater local participation in the sort of applications for apprenticeships. I mentioned previously the Furness Education Trust, which has
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Lord Camoys
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Lord Camoys
cooperation between industry and the trust. And we're looking, for example, currently not just at direct support for the education components, but at things like Barrow Education and Arts Theatre, which could be both a small venue for the community, but also primarily be an education facility to encourage, you know, people who aspire to go into the arts and culture sector and performing.
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Lord Camoys
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Lord Camoys
financially and also financially. For me, we channel the social value funding and the ESG support, the social responsibility agendas of many of the defence supply chain and other companies in the area, again in close association with BAE systems. But we encourage those companies to support investments in the community, which have the same effect, using a percentage of some of the funds that they receive as a result of being involved in either the defence supply chain or the submarine, you know, yard infrastructure or perhaps offshore energy.
It's an important part of what we do.
It's an important part of what we do.
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Lord Fuller
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Lord Fuller
and raised in Great Yarmouth. So some of the coastal community. Yeah, some of coastal communities. The aspirational the aspirational points are very familiar to me. So look, BA systems is driving points are very familiar to me. So look, BA systems is driving this and they have their own commercial imperative, but you've got to support them. To what extent are you wholly this and they have their own commercial imperative.
But you've got to support them. To what extent are you wholly. reliant on funding from government in all its guises, to deliver your government in all its guises, to deliver your. programme, or is there an idea that you might be able to put some sort of financing Or is there an idea that you might be able to put some sort of. financing together? Because funding is just writing the cheque financing is putting the deal together, and to together, because there's funding is just writing the check financing is putting the deal together, and to what extent are you with your entity, legal entity and the what.
extent are you with your entity, legal entity and the council putting together a financing package that might be appropriate for wider investors or even the council putting together a financing package that might be appropriate for wider investors or even the new mayoralty, which presumably is coming your way? I mean, are you going to issue a bond, a Barrow bond, for example? new mayoralty, which presumably is coming . Your way? I mean, are you going to issue
But you've got to support them. To what extent are you wholly. reliant on funding from government in all its guises, to deliver your government in all its guises, to deliver your. programme, or is there an idea that you might be able to put some sort of financing Or is there an idea that you might be able to put some sort of. financing together? Because funding is just writing the cheque financing is putting the deal together, and to together, because there's funding is just writing the check financing is putting the deal together, and to what extent are you with your entity, legal entity and the what.
extent are you with your entity, legal entity and the council putting together a financing package that might be appropriate for wider investors or even the council putting together a financing package that might be appropriate for wider investors or even the new mayoralty, which presumably is coming your way? I mean, are you going to issue a bond, a Barrow bond, for example? new mayoralty, which presumably is coming . Your way? I mean, are you going to issue
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Lord Camoys
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Lord Camoys
Our aspiration is to use that as effectively sort of seed funding, as sort of a catalyst for giving confidence to other investors that this is a very real national endeavour. We've got firm footing for this. And so my role has changed in the last few months. I've moved from being the CEO with the the leadership of the formation of Barrow in its early stages, at least, to now concentrating on the development of strategic partnerships and inward investment.
And what that means is that we are determined to get, just as you describe, funding from private sources. And they could be major capital projects looking
And what that means is that we are determined to get, just as you describe, funding from private sources. And they could be major capital projects looking
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Lord Camoys
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Lord Camoys
The some of the associations, like the Association of British Insurers, National Wealth Fund, British Business Bank, and so on. And so there's a big pot that we are striving to achieve there. However, I think it's also important to recognise that many of what many of the things we want to do, many of the things are not just not big enough to get the. attention of such big organisations. You know, we want small interventions which can be game changing for the local community.
So we're also working with the local mutual building societies such as the Furness and the Cumberland. We're working very closely with them who are very supportive of what we're doing. I've already mentioned the use of social value funding from the defense supply chain and others to invest in the community. We're also looking at.
So we're also working with the local mutual building societies such as the Furness and the Cumberland. We're working very closely with them who are very supportive of what we're doing. I've already mentioned the use of social value funding from the defense supply chain and others to invest in the community. We're also looking at.
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Lord Camoys
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Lord Camoys
Which is another area that Barrow has a great history of of that. And also this partnership that I refer to at its core, the three members I mentioned. But we have an enormous number of supporters. A major one locally is Hawker Estates. Lord Cavendish and his family, who are investing in social housing in further houses on a commercial basis for new homes for.
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Lord Camoys
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Lord Camoys
But also have a history of making major. contributions to the social. infrastructure of Barrow and the surrounding area. So my job is to do just that. It is to pitch Barrow and the. opportunities from huge. infrastructure through to local social interventions that might. benefit community groups . To
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Lord Camoys
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Lord Camoys
From central government. Is there any marriage value with Sellafield? Well, we work very closely with the sort of the energy Britain's energy coast to give it its collective. We work very closely with Sellafield in terms of our experiences. When we look at things like a rail upgrade programme, the Defence and Energy Coast rail upgrade, we connect very closely the nuclear requirement, the nuclear waste. requirements of, you know, the Sellafield.
organisations with those of Barrow, how we look at the development of the port, the Royal Port as it now is in Barrow, how do we fully utilise that in support of the energy sector and a major infrastructure project sort of out there under consideration at the moment is the geological Disposal facility a huge project off the coast of Cumbria? Should that come to fruition? You know, obviously that's another thing. So so yes is the short answer.
We work very closely with all of the other. infrastructure demands of Cumbria. And I think people who visit, you know, quickly realise there's more to Cumbria than the Lake District National Park. Important though that is, the industry around the coast is quite extraordinary. And the community spirit, particularly that we experience in Barrow is quite exceptional. People . Pick that
organisations with those of Barrow, how we look at the development of the port, the Royal Port as it now is in Barrow, how do we fully utilise that in support of the energy sector and a major infrastructure project sort of out there under consideration at the moment is the geological Disposal facility a huge project off the coast of Cumbria? Should that come to fruition? You know, obviously that's another thing. So so yes is the short answer.
We work very closely with all of the other. infrastructure demands of Cumbria. And I think people who visit, you know, quickly realise there's more to Cumbria than the Lake District National Park. Important though that is, the industry around the coast is quite extraordinary. And the community spirit, particularly that we experience in Barrow is quite exceptional. People . Pick that
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12:16
Speaker 1
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Speaker 1
I think you may have to unmute your investment into the the town more widely. Are there any changes that you think the government could make that would support your efforts? I mean, you've talked about the the fund, which is essentially central government funding of. 200 million or. thereabouts over ten years. But are there other things that government could do to support your efforts to boost investment into into Barrow and and does the.
relationship with defence and the centrality of. defence to Barrow's.
relationship with defence and the centrality of. defence to Barrow's.
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Lord Camoys
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Lord Camoys
Such that private. investment and investment from all sorts of other sources have got the. confidence to. progress with projects in housing or town centre regeneration and so on. So I think. defence is a real asset. I think the economy is so dependent on it that even with our, you know, early progress that we're making in.
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Lord Camoys
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Lord Camoys
The dominant nature of the the yard and the razor wire and the security environment and the high vis jackets and the surveillance cameras and so on. It conditions daily life. So we can't play that down. That does affect some people, particularly those who don't aspire to careers in science and technology.
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Lord Camoys
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Lord Camoys
grant scheme, for example, for bringing back empty buildings to life and to reuse. You know, we need. consistency of. commitment to get the private investment. I think that's the key role of government. I think also, you know, we're very aware that the spotlight is on us a bit. And, you know, we enjoy many.
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12:20
Baroness Hayter of Kentish Town
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Baroness Hayter of Kentish Town
That's our objective. Thank you. Thank you very much. our objective. Thank you. Thank you very much. I think, you know, probably the statement you would most have liked to finish this session with a really nice You know, probably the statement you would most have liked to finish this session with a really nice upbeat one. Can I thank you on behalf of the committee. I think that's been invaluable Can I thank you on behalf of the committee.
I think that's been for our for our work and our thinking. So I'd like to thank you for your time and for your early start this morning invaluable for our for our work and our thinking. So I'd like to thank you for your time and for your early start this morning to get down from your beautiful .
I think that's been for our for our work and our thinking. So I'd like to thank you for your time and for your early start this morning invaluable for our for our work and our thinking. So I'd like to thank you for your time and for your early start this morning to get down from your beautiful .
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