Defence Industrial Strategy

Lord Skidelsky Excerpts

Wednesday 10th September 2025 Lords Chamber

[Lord Coaker (Lab)]

I thank the noble Baroness for her comment about the Type 26 success that our country had and the frigates that will be built on the Clyde. It is a massive success for our industry. I also thank her for her continued efforts with respect to small businesses, not only in Northern Ireland but across the whole of the UK.

I hope the noble Baroness will notice that in the defence industrial strategy we tried hard to make sure that all the regions and the nations of the UK were properly represented. In one diagram on page 33, the noble Baroness will see the number of jobs in Northern Ireland: a total of 3,300 MOD-supported direct industry, civilian and military jobs. The noble Baroness is quite right to point out that we need to make sure that it is not only Thales in Northern Ireland which is of benefit, important as that is, but the small and medium-sized businesses. I do not want to incur the wrath of my noble friend Lord Beamish, but we have set up a specific body to drive small business growth and made a commitment to ensure that billions of pounds-worth of investment in the industry is directed towards small and medium-sized businesses.

[Lord Skidelsky (CB)]

My Lords, I would like to offer a dissenting opinion, but some noble Lords will be used to that. I strongly support industrial policy, but the coupling of defence and industrial strategy needs some thought. It suggests that industrial policy is driven by military needs, whereas in fact the case for industrial policy needs to be made apart from that. To a student of economic history, it is reminiscent of military Keynesianism, which was born in the Second World War, continued in the Cold War and dropped only with the end of the Cold War. There seems to be a pattern here.

Is the Minister entirely comfortable with basing the case for industrial policy on the need to rearm, as developed in the strategic defence review? I support industrial policy, but I would not want to hinge my whole argument on the need to rearm. That itself is something that needs to be discussed quite independently of the case for industrial policy.

[Lord Coaker (Lab)]

I know that the noble Lord has an opinion that not many people agree with, including me, but I appreciate that he puts it forward time and again in a respectful, calm and intellectual way. He is to be congratulated on that.

My argument to him would be this. There is a need to rearm and a defence industrial policy has to be geared towards the rearmament that needs to take place. I will give him one example, with which I know he will disagree. My premise is that it is a good thing that we are supporting Ukraine. Despite what we have been doing, with the defence industry as it was, we—not only us but other European countries—were not able to deliver the equipment necessary for Ukraine to do all that it wanted to do as easily as it could. That is a difficult, if not dangerous, position for us and our allies to be in.

I made this point at DSEI yesterday. I said that, as a Minister of State for the UK MoD, I do not want to be in a position where I believe in supporting Ukraine but read in the paper—as I did, going back probably a year—that Ukraine had had to withdraw because it did not have the necessary military equipment to continue the fight. That is not a situation we should be in. Part of dealing with that is to develop our defence industry and improve its capability and capacity, so we are not in a position where we cannot support those we would wish to support.