Denial of Banking Services: UK Defence Sector

Debate between Lord Browne of Ladyton and Lord Livermore

Wednesday 4th June 2025 Lords Chamber

[Lord Livermore (Lab)]

I was not quite sure where the noble Baroness’s question was going, but I definitely agree with where it ended up. The Government have made it absolutely clear that we consider defence an ethical investment. We do not see a conflict between sustainable investment and investment in our world-leading defence sector. At the end of the day, it is not for the Government to tell investors what they can and cannot invest in, but at a time of increasing geopolitical instability, supporting the defence sector has never been more critical.

[Lord Browne of Ladyton (Lab)]

My Lords, perhaps I may ask a supplementary to the excellent Question asked by the noble Lord, Lord Sharpe of Epsom, based on the experience of an entrepreneur and inward investor who plans to build a much-needed factory in the United Kingdom to manufacture weapons-grade ammunition and who has been refused access to banking facilities, because of the defence nature of his proposal, by one of our leading banks. As the strategic defence review makes clear, one criterion for success over the next few years will lie in the number, scale and diversity of defence and dual-use technology companies in the UK. The review also emphasises the need for a whole-of-society approach to defence. With that in mind, does the Minister agree that we must ensure that banking facilities are more readily available beyond the historic primes to defence companies, particularly those which aspire to be, or are, suppliers to the UK Government, and that our procurement should support SMEs to do just that?

[Lord Livermore (Lab)]

I am grateful to my noble friend for his question, and I agree with everything he said. The Government have been clear that no company should ever be denied access to financial services solely on the basis that they work in the defence sector, and the banking sector should never take a blanket approach to any one sector. I very much recognise the story that my noble friend tells, and that SMEs face unique challenges working in the defence sector, compared with larger, more established suppliers, including in accessing financial services, as the noble Lord said in his original Question. As my noble friend said, they face difficulties opening bank accounts and an increased risk of sudden bank account closure, as well as higher costs of borrowing and access to capital, and they often face a higher compliance burden. That is why we have set out that supporting and unlocking the full potential of SMEs will be a key consideration of the forthcoming defence industrial strategy.

Strategic Priorities Statement: Defence

Debate between Lord Browne of Ladyton and Lord Livermore

Tuesday 25th March 2025 Lords Chamber

[Lord Livermore (Lab)]

I am grateful to the noble Lord for his question, but I am not sure he listened to the first Answer I gave. I very clearly said that the statement of strategic priorities sets out how the National Wealth Fund will invest in defence. It says very clearly that it should invest in

“dual-use technologies and … support supply chain resilience across these priority sectors, to better support the UK’s defence and security”.

It also says that the National Wealth Fund

“should consider the role it can play in supporting the delivery of the wider Industrial Strategy, including in defence”.

That wider industrial strategy absolutely achieves many of the things the noble Lord is talking about. The strategic aim of the defence industrial strategy is to make sure that the imperatives of national security and a high-growth economy are fully aligned.

[Lord Browne of Ladyton (Lab)]

My Lords, I thank the noble Lord, Lord Jackson of Peterborough, for bringing the attention of your Lordships’ House to this issue and once again encouraging me properly to research a subject. On 19 March, the Chancellor wrote to the CEO of the National Wealth Fund to communicate the Government’s strategic priorities for the fund. That latter document on three occasions explicitly identifies defence as a priority under Investment Principle 2. It also goes on to enjoin the CEO to refer, in assigning priorities, to the Government’s industrial strategy Green Paper, which in turn refers to the importance of the UK’s defence sector no fewer than 38 times. The former Conservative Business Secretary, Greg Clark, described that Green Paper as a serious and substantial document and applauded it for singling out eight sectors, including defence, as priorities. Does the Minister agree with me that it is reasonable to expect the CEO of the fund to read beyond the press release and to examine in depth the correspondence and references to which his attention has been drawn?

[Lord Livermore (Lab)]

I am very grateful to my noble friend for his question. He far more eloquently than me set out what I was attempting to say in my previous answer. He draws attention to the importance of reading the documents that are in your Question before tabling your Question.