Defence Industries: West Midlands

11:00:00

I beg to move, That this House has considered defence industries in the West Midlands. It is an honour to serve under your chairship, Dr Murrison. Global threats are evolving, making defence investment more critical than ever. A strong defence underpins our security and sovereignty, but we must scale up to meet the modern challenges. The warning flags were raised in 2014, yet the UK lacked a long-term strategy. The defence industry drives innovation and economic growth, but skill shortages and supply chain volatility risk holding it back. Our armed forces are only as strong as our defence sector. Across the west midlands and the UK, the defence industry provides security, supports thousands of jobs, and fuels innovation in areas such as AI, cyber and advanced manufacturing. The region is home to major players, including Rolls-Royce, BAE Systems and Babcock, with BAE Systems alone working with 11 small and medium-sized enterprises, including one in my constituency of Tamworth. The Government’s renewed focus on defence as part of their industrial strategy is welcome. I also support the recent commitment to the largest defence spending increase since the cold war, meaning that we will spend 2.5% of GDP on defence. With post-war alliances shifting, we must continue investing in our defence capabilities.

I recently visited Somers Forge in my constituency—it is the 10th oldest SME in the United Kingdom, and has been supplying defence equipment since the Battle of Blenheim in 1704. It was great to meet with its team, and see the important work that it does. Does my hon. Friend agree that our defence industrial strategy will help SMEs access defence investment and boost businesses such as Somers Forge in the west midlands?

I absolutely agree. This industrial strategy is essential in making sure we have the focus to support our businesses right across the region, and in making sure that they are successful. The upcoming defence industrial strategy must prioritise British businesses, including SMEs, ensuring that investment creates jobs and strengthens our national security. Currently, nearly 18,000 people work in defence SMEs in the west midlands, and the Ministry of Defence spends £1.6 billion annually in the region, making it the UK’s third largest defence hub. By backing UK industry, and fostering co-operation between Government, business and workers, we can build a defence sector fit for the future.

I commend the hon. Lady for bringing this issue forward, and she is certainly making a reputation for herself as an assiduous MP on these issues. I welcome what she said in relation to the Government’s commitment to 2.5% increasing to 3%—there is nobody in the United Kingdom who does not welcome that. I know that we in Northern Ireland have very strong sectors in the work we do with the Royal Navy and Thales, but does the hon. Lady agree that we must ensure that all parts of the United Kingdom can get the advantages that she has referred to, in terms of not just security, but the economy, jobs and opportunities? If we can all be part of this process going forward, that could support the Minister and the Labour Government.

I absolutely agree with the hon. Member. In fact I will go on to talk about just how important it is that all our regions and nations are embedded in this process, and that they all contribute different skills that are of value. There are so many different aspects to defence, and our defence industries that contribute and go well past into other areas of manufacturing. I thank him for raising that point. Last week, the Business and Trade Committee heard from Rolls-Royce, BAE Systems, Leonardo and MBDA on the global combat air programme, which is an alliance between the UK, Italy and Japan, who are designing Tempest fighter jets. That alliance integrates advanced air combat technology, ensuring that our defence capabilities match evolving threats. Defence alliances are a cornerstone of trade diplomacy, driving both national security and industrial growth. They have been cited as having the potential to drive our export growth, while cementing important alliances for our defence. One issue raised with the Business and Trade Committee was the short-term nature of defence funding cycles; even major companies operate on a one-year funding cycle, making it difficult to sustain long-term projects such as Tempest. National security priorities do not fit neatly into parliamentary terms, and our defence sector needs stability. It was suggested that moving to a three or five-year funding model would provide certainty, drive innovation and ensure that the UK remains a global leader in defence. What conversations is the Minister having on the contractual arrangements currently in play for companies and the assessment that he has made of their ability to help the Government to reach their goals for the sector and national security? Export-led growth will be essential to the defence industries that need a wider base than just their own sovereign purchasing power. By exporting technology and products, companies will be able to keep the continuity of build programmes going away from that boom-and-bust cycle. We could use industry to foster diplomatic relations of bilateral importance. The future of the defence industry relies on a workforce equipped with the right skills and adaptable to the evolving demands of our armed forces and the Ministry of Defence.

I thank my on. Friend and neighbour for securing this important debate. Every year, Bedworth residents show their pride in our armed forces with their Armistice Day parade, which I was privileged to take part in this year. Many of my constituents already work in the defence and security sector in small and medium-sized enterprises around the west midlands. I am glad that this number will only go up with the Government’s increased investment in our defence and security. Does my hon. Friend agree that the west midlands should be proud of the contribution we make towards the defence and security of our nation, and should look forward to seeing more people benefiting from the skills and training that come from joining this industry?

That contribution is paramount to the debate; the west midlands is very proud not only of being the third largest region in terms of our contribution to the defence sector, but that our constituents work very hard to contribute to that. It is incredibly important that people see that they are a part of this endeavour, and it is not something that is happening far away from them. They are an essential part, so I thank my hon. Friend for raising that point. To achieve this, we must create clear, skills-based career pathways that allow individuals to upskill or transition into the sector at different stages of their career. One effective way to address that challenge is through closer collaboration between further education centres and the defence industry. These partnerships are critical in identifying skills gaps and shaping education programmes that directly address industry needs. By doing this, we can provide young people with a clear vision for how they can step into the defence industry. Young people too often underestimate the transferability of their skills across industries. Many assume that the expertise they gain in education or early career roles is limited to a single sector, but abilities such as problem solving, teamwork, communication and technical proficiency are in high demand across multiple fields. An engineering student may not realise that their expertise is equally valuable in defence. At the same time, we must ensure that those already in the armed forces and the Ministry of Defence have the opportunity to reskill and upskill—a zig-zag career approach, where individuals move between roles and gain new skills. That would allow personnel to adapt to the changes, ensuring that the MOD retains experienced talent, while keeping pace with technological advancements. In my constituency, we are fortunate to house Defence Medical Services Whittington, which hosts the defence medical academy. That institution is dedicated to advancing the training and research that can provide our military personnel with the best medical care and knowledge required to tackle complex injuries on the battlefield. Linking our industries with our military centres provides opportunities for skills development and transfer. The social value created by defence industries is strategic value. Larger companies in the west midlands are capitalising on key skills. Some companies, such as Rolls-Royce and BAE Systems, are currently creating their own apprenticeship training programmes. How is the Minister working with the Minister for Skills on developing pathways and opportunities that directly respond to the needs of the sector?

I thank my hon. Friend for securing this important debate. I attended a roundtable in my constituency held by the Manufacturing Technology Centre and chaired by the Minister for Defence Procurement and Industry, my right hon. Friend the Member for Liverpool Garston (Maria Eagle), and the Minister for Nature, my hon. Friend the Member for Coventry East (Mary Creagh), who is one of my neighbouring MPs, to discuss with local businesses their involvement in the defence supply chain. I am very interested in what my hon. Friend is saying about large companies investing in skills development. GE Vernova is a 130-year-old company based in Rugby that specialises in electric propulsion systems for naval vessels. It has supplied propulsion systems for the Royal Navy’s Type 23 frigates, and it developed and delivered the world’s first fully electric warships. Indeed, 92% of the Royal Navy’s fleet is powered by its electric propulsion systems. This is vital, because it is creating new jobs in Rugby and across the country. Does my hon. Friend welcome the Government’s commitment to spreading the economic benefits of the defence sector across the entire country?

I absolutely agree. It is almost as though my hon. Friend predicted what I will speak about next, because I will soon tell a story about a visit that I made. The fact that the company has been in his constituency for 130 years shows that Britain has this prowess, and we do not want to lose it. Through this strategy, we have to ensure that such businesses are still going and that that innovation is being incorporated into technology. The Business and Trade Committee went to Scotland on Monday. Although ships are manufactured in Scotland, it takes a whole country to build them. The Committee witnessed the incredible shipbuilding work taking place at the BAE Systems site in Govan. The commitment to skills development in Scotland is impressive, with competitive apprenticeship programmes open to all ages, allowing career changes and retraining. The programmes are more competitive than gaining a place at Oxford University, highlighting the value of practical skills and apprenticeships. The narrative that university is the only option to success has, in part, fuelled a shortage in skills. During our visit, I stood onboard HMS Cardiff in its fit-out stage and saw where HMS Birmingham will soon start the next phase of its construction, in a giant hangar that is large enough for two ships to be built side by side. The Type 26 frigates being built in Scotland are world-class and, when used properly, will be crucial for our trade diplomacy strategy, with many countries eager to buy British. A key theme raised as being important to the success of the defence industrial strategy was the continuity of work to preserve an essential skills base. For example, steel may come from Port Talbot in Wales, making up 4% of the cost of a ship, but 25% of the cost is in the combat systems, requiring digital engineering and design expertise found in places such as Hertfordshire. Fostering innovation across the defence and civil sectors such as aerospace is crucial, as demonstrated by the evidence given to the Business and Trade Committee yesterday by Airbus, which said that more than 50% of the supply chain is both defence and civil. Our visit reinforced the importance of a collaborative, nationwide approach to defence. From steel manufacturing to advanced digital systems, every region and nation of the UK contributes to defence and innovation, playing a part in our national security. Will the Minister meet me and defence companies in my constituency to talk about how they can continue to play a part—and, indeed, play a greater part—in the endeavour that the Government have set out? To ensure the long-term security and strength of our defence and industrial sectors, we must build that greater resilience in our supply chains.

I thank my hon. Friend for securing the debate and for the way she is leading it. In my constituency, we have JCB, which is a major employer and manufacturer, but we also have Crestchic Loadbanks, which is an SME that often finds it difficult to get access to Government contracts. Does she agree that, as we look at the defence industrial strategy, we have to ensure that we are backing British business and that all those companies can make a contribution to our shared national defence?

I absolutely agree. We have to back British, we have to buy British, and we have to keep the west midlands in pole position, innovating and ensuring that companies working across civil and defence can get the maximum benefit from the new procurement contracts coming from the MOD. A comprehensive review of the UK supply chain is essential to ensure that SMEs have visibility and fair access to Government contracts. Smaller businesses often struggle to break into large procurement processes dominated by major players, and access to funding is difficult. Again, the annual funding cycles were cited by Flare Bright and Gibson Robotics as problematic for growing SMEs in the evidence we heard yesterday.

I thank my hon. Friend for her generosity in giving way and for giving us the opportunity to discuss this important issue. She is clearly setting out the value of the defence sector in Tamworth, the villages and our region more widely. In Cannock, engineers at Briggs Equipment have extended the operational life of the RAF’s fleet of bespoke air-transportable forklift trucks by at least 10 years. This might not be the most high-profile equipment, but those specialist forklifts are being used for everyday logistics and for military and humanitarian missions as far afield as Cyprus, Ascension Island and the Falklands. Does my hon. Friend agree that such local businesses are essential to the wider defence supply chain, providing high-quality jobs, boosting skills and contributing to Staffordshire’s success?

I absolutely agree, particularly with my hon. Friend’s shout out to his constituency and, of course, Staffordshire, which plays an important role. As hon. Members have said, we have a concentration of hard-working companies, and there is a benefit to their dual-use aspects. That is something we should push as a nation to ensure we get the most for all our regions. RAND Europe, commissioned by the MOD in 2021, found that “SMEs and mid-tier suppliers report difficulties accessing and engaging with both top tier suppliers and the MOD”. Barriers included a lack of corporate functions and challenges in marketing their businesses to prime contractors. UK defence supply chains also struggled to attract non-traditional suppliers due to slow, inflexible and bureaucratic processes. It concluded that the MOD’s approach to contracting is seen as “inflexible” and disadvantageous to lower-tier suppliers, which “discourages innovation.” Examples of how the MOD could support smaller suppliers and foster innovation were cited as being, in part, possible due to the defence and security accelerator programme, or DASA, because it creates a contract for revenue, which is vital so that firms can demonstrate to other investors that they are viable—grants cannot be treated in the same way. Can the Minister reflect on how the DASA programme could be expanded to align more closely with the challenges that SMEs face in developing products and solving problems? The DASA programme has an element of mentoring, which those who have used it have cited as very valuable. The US also uses a model in which technical liaison officers scout for companies and then support them through the complex military procurement and due diligence processes. Has the Minister considered a similar scheme in defence industrial policy, and has he spoken with his colleagues in the Department for Business and Trade on how to align those goals for maximum impact? Yesterday, the Business and Trade Committee heard that procurement towards capability might better suit the fast-paced environment that military technology now inhabits. Ukraine has shown that innovation is happening in weeks, not years, so the procurement need —rather than defined items—may in some circumstances foster better results. The strategic defence review will also be an important part of informing those decisions. It is a vital first step, taken by this Government, to ensure that we have the right force capability fit for the future and that, when we spend money, we spend it well. It has been suggested that one large innovation hub could be created, establishing facilities for testing programmes that could then enable smaller companies to continue developing, leading to small-scale buying programmes that could later be scaled into larger ones. That sets a clear pathway that could be stewarded by an individual liaison. Those are some of the things the Committee has heard that we think could support the Government’s ideals. The west midlands is showcasing the incredible potential of the UK’s defence industry as a driver of security, economic growth, innovation and skills development. Investing in reskilling and upskilling is crucial for those currently serving in the armed forces and the MOD, as well as for future-proofing our defence workforce. Building resilience in our supply chains by prioritising UK businesses, especially SMEs, in procurement decisions is essential. I thank the Members present for showcasing the work of their constituents, and of the companies in their constituencies, to support the defence industries. By making funding more accessible and breaking down barriers to entry, we can harness British innovation and ensure that our defence industry remains competitive globally. The Government have taken decisive action by focusing on an industrial strategy that prioritises defence. Amid global uncertainty, we must provide calm and focus on developing security systems that prepare our nation for any eventuality. Including our regions in the strategy unlocks opportunities and high-skilled jobs that benefit local communities everywhere, including those in my Tamworth constituency. We have talent, expertise and ambition, and now we must make the right choices to unlock that potential.

11:20:00

It is good to see you, Dr Murrison. As a former Defence Minister, you will know these subjects well. I might be a proud Janner—someone from Plymouth—but my great-grandfather, Alfred Carey, worked in the automotive industry making Hillman Minxes in the west midlands, so I feel that the debate has a connection with my past. I thank my hon. Friend the Member for Tamworth (Sarah Edwards) for securing this debate and for speaking so passionately about not only why we need to defend our national security and learn lessons from Ukraine, but how we can spend the increased defence budget announced by the Prime Minister to create more British jobs and more opportunities for our young people to develop skills that will last them a lifetime and support the growth mission, which is this Government’s No. 1 mission. As a native of the area, my hon. Friend the Member for Tamworth knows better than most the importance of defence to the west midlands. Although it is clear that defence makes a considerable contribution to the west midlands in jobs, investment and prosperity, today’s debate also reminds us of the huge contribution that the west midlands makes to UK defence, and the possibility of doing even more. Billions of pounds are injected annually into west midlands defence enterprises by industry and Government, but we know that our military is only as strong as the supply chain that supports it. What we have heard today is not only a clarion call of support for the big defence companies in the west midlands—the Rolls-Royces, the BAE Systems, the Babcocks—but a call for further investment in SMEs, which I will come back to. As a Government, we are determined to nurture and develop the region’s defence cluster and defence businesses. As part of that, we need to invest more in skills, and I am glad that my hon. Friend the Member for Tamworth spoke about that. We know the world is becoming more dangerous and Britain is facing rising threats. The Government also face the challenges of rebuilding and reinvigorating our armed forces after a decade and a half of underfunding and hollowing out. That is why we launched the strategic defence review: to assess the dangers we face and determine the capabilities we need to meet them. It is why we brought forward our promise to spend 2.5% of GDP on defence to April 2027, and 3% in the next Parliament when economic conditions allow. It is why we are working hard on defence reform and the new defence industrial strategy: to unlock the potential of suppliers across the country. As my hon. Friend the Member for Tamworth alluded to, there is a well-known phrase in military circles that soldiers win battles, but supply chains win wars. She was right to make the case that we need to invest more in our defence industry, because there are companies out there that will not regard themselves as defence companies. People who work in data, digital or advanced manufacturing, or who support the wider supply chain, are defence companies in waiting. They are the innovative people who could support the next generation of military equipment and military operations. In making the case for investment in defence businesses, the Government need to be aware that if we get defence procurement right, we can expand the number of companies involved. That increases the economic benefits of spending, but also enables us to access skills, ingenuity and innovation, especially among SMEs.

The Minister has mentioned the examples of the automotive sector and cyber-security, and how many people do not realise that they are working in comparable industries. As parliamentarians, how can we work to showcase the different ways that people are contributing to the defence industry, or could be working in it? How can we promote that? What does the Minister think we can do to make sure people realise that this is a wider, shared endeavour and that their skills are very transferable?

That is an excellent question. It comes down to how we implement the defence industrial strategy that my colleague, the Minister for Defence Procurement and Industry, is leading within the Department. That needs to tie in with the whole-of-Government and whole-of-society effort for our national defence, which is something Parliament will need to speak more of in future. To defend our nation and support our allies, we will need this mission to be held passionately not just by people in uniform and the Ministry of Defence. We will need every Department to understand its contribution to that mission. When we invest in skills, we will have the opportunity to do that. I am grateful that my hon. Friend mentioned the Type 26 builds in Scotland. As the MP for Devonport in Plymouth, where the Type 26s will be based, I know how incredible these frigates will be, how they will deter Russian submarine activity in the north Atlantic, and how they will contribute directly to the security of our nation and our allies. To build those frigates, we will need to invest in skills on a long-term basis. We are looking at how we can have multi-year budgets, to invest more in skills and supply chains, rather than having the annual cycle. Frankly, and as the Defence Secretary has made very clear, defence needs to spend money better than it has in the past. That is why he started a programme of defence reform to make sure we reform not only how we fight and how we are configured, but also how we procure. The recruitment for a new national armaments director is a significant part of driving the defence reform needed to support SMEs as well as primes.

We are talking about procurement. Just this week I met Members of the European Parliament in Brussels to talk about our collective response to Ukraine. One of the challenges that Somers Forge in my Halesowen constituency faces is the struggle with European supply chains and the trade barriers between the UK and Europe. As we go through a new reset with Europe, will the Minister commit to push for greater access for defence industries to the European market?

I am grateful to my hon. Friend for talking about Somers Forge and those opportunities. It is certainly something that my Cabinet Office colleagues, who are leading that reset work with Europe, are very conscious of. It is also something that the Defence Secretary picked up with High Representative Kallas from the European Commission yesterday. They looked at the opportunities for UK industry, which is already integrated across our European partners, to work without some of the obstacles in the way of delivering the defence capabilities we need to deter Russian aggression. There is an opportunity here. A number of Members have spoken about the importance of SMEs in their constituencies and the jobs that they provide. Five years ago, the Ministry of Defence spent 5% of its direct spend with SMEs. In July 2024, we inherited a situation where that had fallen to 4%. The Department has now set an ambition to spend more direct spend with SMEs across the country. We are consulting on what the level should be, so that it is achievable but stretching. We are working with organisations such as Make UK to understand what barriers need to be overcome and removed to support SMEs to access that direct spend—rather than just supporting the brilliant work of our primes as subcontractors—because we know that if they have a direct spending relationship with the MOD, they are more likely to be able to access overseas export markets. It is precisely for that reason that we are adjusting how we deliver defence procurement within the Ministry of Defence. It could not only spend the money better in the UK and create more jobs, it could also increase the size of our economy by receiving export orders from abroad. In their interventions on my hon. Friend the Member for Tamworth, Members talked about how we can invest more. I am keen to invest more in SMEs, and I am keen that we speak about the opportunity for young people to find a brilliant career in defence. The zig-zag career proposal is absolutely vital. We need to make sure that we do not create cliff edges and that transferring from regular service to the reserves is easier, so that people can serve in our military, move into industry and then return to service without there being cliff edges that get in the way. There are huge opportunities. I am glad that my hon. Friend the Member for Tamworth secured this debate and that we have had this conversation about how we can invest in our defence, grow our economy and provide jobs that will benefit our young people for their entire careers. Motion lapsed (Standing Order No. 10(6)).

11:30:00