The UK's defence budget is accelerating at a pace not seen in years, with significant implications for the country's supply chain. Defence Secretary Wes Streeting announced that over £11.8 billion in contracts were agreed within 10 days of the Defence Investment Plan being published.
Streeting's message to industry was clear: the waiting is over, and the responsibility now lies with suppliers to deliver. He acknowledged the difficulties faced by many firms in the lead-up to the plan's publication and urged them to work towards making it a success.
The government has committed £298 billion over the next four years, including an additional £15 billion on top of last year's Spending Review settlement. NATO members have reaffirmed their commitment to spending 3.5 per cent of their GDP on defence by 2035.
Streeting highlighted the need for speed in modern warfare, citing a Typhoon upgrade that went from start to finish in just 42 days. This pace is now the new standard, and the Defence Secretary has instructed his department to take a new approach to risk, tolerating failure as a necessary cost of moving quickly.
This shift in procurement culture could benefit smaller suppliers, who are often at a disadvantage when competing with established primes. Ministers have already established a dedicated unit to open MoD contracts to smaller firms, and manufacturers have pressed for binding offset commitments to channel spending into the SME base.
The programme detail points to significant opportunities for work in various sectors. The collaborative combat air programme, for example, aims to get a demonstrator flying next year, with the system operational by the end of the decade and supporting 2,000 jobs once the full production line is running.
The UK's air sector already employs 70,000 people, and 4,500 work on the integrated combat air system. Streeting framed the defence budget as a central contributor to building economic growth, rather than just a recipient of its proceeds.
The defence budget's multiplier effect only works if spending reaches beyond the primes, and analysis suggests that the economic dividend will be maximized if smaller suppliers are able to secure contracts.
