Andrew Kinniburgh – Director-General at Make UK Defence, the UK’s Defence Supply Chain champions and Make UK’s Defence Trade Association.
The Role of UK Manufacturing in National Security
The UK defence industry is at a pivotal moment. As the Director-General of Make UK Defence, I’ve seen first-hand how critical our manufacturing capabilities are to national security. In my 30 years in the defence and security industry, I believe we are approaching a historic moment for the industry and the sector as a whole. If the Government and the big defence primes are willing to listen carefully and genuinely embrace change, then we can deliver a sea change for the whole of our highly capable UK Defence supply chain and enable SMEs and mid-tiers to play a much bigger role going forward.
Harnessing Innovation in the UK Defence Sector
The Importance of SMEs and Mid-Tier Companies
Ukraine has taught us that small, agile businesses can respond incredibly quickly and innovate on a continuous basis. The UK needs to learn to harness that ‘superpower’ more effectively and to drive innovation, providing battle-winning technology quickly to our armed forces. Of course, we will always need strong primes in defence for the major programmes, but we are simply not using SMEs and mid-tiers as effectively as we could today.
Global Collaboration and the Future of Defence Programmes
The Complexity of Large-Scale Defence Projects
With obvious ‘hostile actor’ exceptions, defence is a global business, and big programmes like Lockheed Martin’s F35 and the UK’s Global Combat Aircraft Programme are simply too large and complex for a single nation to deliver alone (perhaps with the exception of the USA and of course our adversaries in China and Russia). Running counter to that is the potentially isolationist policy of the new Trump Administration, but hopefully, that same administration will be pushing NATO member countries (including the UK and Europe) to spend significantly more on defence. Russia’s illegal occupation of Ukraine is unfortunately likely to remain a hotspot for defence equipment and ammunition for some time longer.
The UK Defence Industry in the International Market
Exporting and Job Creation in the Defence Sector
In the international market, the latest Make UK Defence Annual Survey published this month reports that 50% of our members export their products and services, with 75% of those exporting to the EU and 40% exporting to the USA. If one extrapolates those percentages across the whole UK defence sector (estimated at 11-12,000 companies), we are looking at between 5,500 and 6,000 exporters in defence, which in turn creates many thousands of jobs in the UK. Defence manufacturing is an important part of the UK manufacturing sector, which in total provides 2.7 million jobs.
The Strategic Defence Review and Defence Industrial Strategy
Strengthening Sovereign Capabilities
The upcoming Strategic Defence Review and the Defence Industrial Strategy (DIS) will be hugely important to the UK Defence Sector. A well-defined DIS that clearly identifies sovereign capabilities that we want to retain in the UK and then proactively manages those capabilities will be a major step forward. The addition of the word ‘Industry’ to Rt Hon Maria Eagle MP’s title of Minister for Defence Procurement is also a welcome sign and will hopefully mean the Defence industry will see some consistent political engagement from Government after many years of short-term ministerial appointments in this important leadership position for the Defence industry.
The Impact of a Stronger Defence Industrial Strategy
A measure of the success of the DIS will be its ability to deliver a consistent and predictable order book. This order book will underpin those key sovereign capabilities and thus provide the UK with freedom of action as well as supporting UK-based science, technology, engineering, and manufacturing jobs, economic growth, and importantly, strengthen the UK’s supply chain resilience and national security.
Increasing SME and Mid-Tier Involvement in Defence Spending
The Disparity Between UK and US SME Defence Spending
We would like to see an improvement in the percentage of work awarded to SMEs and mid-tier businesses in the UK Defence Supply Chain, working towards the 40%+ spend currently achieved by the US Pentagon directly and indirectly with SMEs. The UK Defence Sector is currently running at around 20% spend with SMEs. In the USA, hard targets for SME spend are mandated across procuring departments in the Federal Government, including the largest spending department, the Department of Defence (DoD).
Enforcing SME Spending Targets
DoD is required to spend 23% of its total spend directly with SMEs, and the major Primes are required to commit 30% of their total spend to SMEs. These targets are enforced by a team of 750 civil servants from the DoD Office for Small Business Programmes, headed by a 2* Senior Civil Servant.
The UK Government Spending Review and Defence Budget
The Importance of Increased Defence Spending
Domestically, the UK Government Spending Review, now due in June of 2025, will be an important inflection point for the defence industry. We hope this review, or ideally an earlier announcement separate from the spending review, will set out a timetable for UK Defence spending to move from its current approximate spend of 2.2% of GDP to 2.5%.
The Economic and Strategic Impact of Increased Funding
This would add around £10 billion to the defence budget, which in turn could lead to orders for an additional estimated £5 billion of equipment and services. If the announcement is delayed or the timetable to meet the 2.5% commitment is dragged out over years, then there will be no significant change in the short term, and defence businesses will continue to have little clarity for their long-term investment plans and direction of travel.
The Future of the UK Defence Industry
The Role of a Strategic Defence Review
However, together with the spending review, there is an opportunity for this Government to deliver a well-thought-through Strategic Defence Review, reframing the UK’s relationship with the EU collectively and with individual countries and underlining our commitment to NATO and the collective defence of our allies.
Strengthening the UK Defence Supply Chain
In turn, the Defence Industrial Strategy can have a genuinely game-changing effect on the UK Defence Supply Chain with a clearly defined set of UK Sovereign Capabilities underpinning a vibrant and well-funded sector. This will help to re-build the UK as one of the most successful defence exporters in the world and simultaneously equip the UK Armed Forces with battle-winning equipment and technology at an affordable price through life.
Ensuring Speed, Simplicity, and Fairness in Procurement
The key to achieving all this is ensuring that speed, simplicity, and fairness lie at the heart of defence procurement and that the DIS reaches all the different levels of the supply chain.
Supporting SMEs and Mid-Tiers in the Defence Industry
The Role of National Defence Trade Associations
National Defence Trade Associations like Make UK Defence, together with Regional Aerospace Alliances and other groups, must work together to ensure that SMEs and mid-tiers, which can sometimes be overlooked, benefit from any improved defence spending funding settlement, together with the Primes.
Lessons from Ukraine for UK Defence Procurement
Hopefully, reversing a recent trend of reduced spending with SMEs (last year, total SME spend for MOD and the Primes fell from 25% to 20%). Ukraine has taught us that SMEs can innovate and develop technology and ideas at lightning speed, and UK Defence procurement needs to capitalise on this by using SMEs and mid-tiers more effectively to ensure that the UK Armed Forces are equipped with the best kit at the best price.
The Importance of Defence Trade Shows and Conferences
DPRTE as a Marketplace for Innovation
Combined Trade Shows and Conferences like DPRTE are therefore increasingly important. Its blend of scale, UK defence supply chain focus, and friendly atmosphere enables SMEs, mid-tiers, and Primes to meet together with each other and with MOD as equals.
Shaping the Future of UK Defence
Essentially, DPRTE is a marketplace of ideas, innovations, and conversations. As SME and mid-tier defence companies, we must use this opportunity to drive forward our arguments about change in the UK defence supply chain and articulate our existing and potential contribution to national security, economic growth, and scientific innovation across all defence domains. We must seize this moment to shape the future of the UK defence industry.
