The UK government is set to unveil plans for a new defence industrial council with business, in a bid to deepen Whitehall collaboration with technology companies and smaller start-ups, as well as the sector’s giants.
John Healey, UK defence secretary, will on Monday outline proposals for small and medium-size businesses, investors, academics and trade unions to join the body, alongside major “primes” such as BAE Systems and Babcock International.
The council will involve a wider range of voices than the existing defence suppliers forum, which focuses more heavily on the biggest companies in the sector.
Healey told the Financial Times that he wanted “to hear from others beyond those established defence businesses”.
He added: “We want greater involvement from tech firms whose innovation can benefit defence. We want to work with entrepreneurs and start-ups, with exporters who are looking for more government muscle behind their efforts, and with investors wanting to play a bigger part.”
Its cast list is likely to be finalised alongside a new defence industrial strategy, promised in Labour’s manifesto, that officials say will be published in the first half of 2025.
The result of the government’s strategic defence review, which will examine which capabilities the UK should be investing in, is also expected early next year.
Speaking at a London Defence Conference event on Monday, Healey will argue that “national security is the foundation for growth”, as he publishes a statement of intent about the strategy.
It will explicitly prioritise UK-based companies for military-linked state investment in order to drive domestic growth and jobs, aligning the government’s economic and security agendas.
The plans are the latest attempt to overhaul how the Ministry of Defence procures equipment from industry. Successive governments have tried to fix a system that has come under fire for wasting billions of pounds of taxpayer money on equipment that is late and over budget.
The UK last published a defence industrial strategy in 2021 before Russia’s full-scale invasion of Ukraine in February 2022. The war has underlined how modern warfare is shifting from the use of traditional hardware such as tanks, guns and munitions to more software-defined technologies to enable troops to outsmart the enemy.
Investors, innovators, industry and trade unions will be invited to feed into the framework, whose goal is to increase defence sector jobs in “every nation and region of the UK”, Healey will say.
The industry is already viewed as an important source of highly skilled and well-paid jobs in less prosperous parts of the country. The defence sector supports one in every 60 UK jobs, of which more than two-thirds are outside London and the Southeast, according to government statistics.
It follows concerns in Whitehall that over the past decade MoD procurement has too often been conducted on a contract-by-contract basis, with an agnostic attitude towards the ultimate economic beneficiary of a deal and the destination of jobs.
However, ministers frequently face a choice between cheaper overseas procurement options that offer better immediate value for money and more expensive British alternatives that may bring broader domestic economic benefits in the long term.
Healey’s intervention is likely to fuel renewed focus on when the government will meet its manifesto commitment to increase defence expenditure to 2.5 per cent of GDP.
Chancellor Rachel Reeves said at the Budget that the move would be announced at a future fiscal event, without providing a timeframe.
The defence industrial strategy will also aim to boost deterrence by improving the resilience of the UK’s industrial base, with a particular emphasis on semiconductors and steel, and its ability to innovate at pace during wartime.
Defence departments are having to adapt their procurement and are increasingly turning to technology-led companies that promise faster development cycles than traditional contractors.
Palantir, the US-listed government contractor founded by technology veterans including Peter Thiel, has already become a key player in the UK and secured substantial contracts with the MoD.
Europe’s Helsing, which specialises in AI-based defence software, will on Monday announce plans to mass produce thousands of AI-enabled drones as part of a £350mn investment into the UK over the next five years.
Healey will say the defence industry must be “better and more integrated” and vow to “mobilise the private sector to help face down global threats, direct more public investment to British businesses and create jobs and growth” across the UK.
