The Minister for Defence Procurement, Lord Drayson, address to Lord Mayor’s Appeal, Defence Industry Dinner (Banqueting House, 31 October 2005

Investing in our Defence future

Lord Drayson, Minister for Defence Procurement

Thank you for that kind introduction. As this is my first SSAFA Defence Industry Dinner I thought I would take the opportunity to talk about UK defence procurement, but first I would like to say a few words about SSAFA, the charity, alongside the Fishermen’s Mission, that we are here tonight to support through The Lord Mayor’s Appeal.

This year marks the 120th anniversary of the creation of SSAFA Forces Help, a charity dedicated to helping serving or ex members of the Armed Forces. Today the help they provide is vital to the welfare − and success − in the demanding operations that our Armed Forces undertake. I am immensely grateful for the many services that they continue to provide to our servicemen and women and their families around the world. Over 7,000 volunteers undertake around 70,000 cases on an annual basis. Services include a confidential telephone help line, a team of qualified social workers, holidays for disabled children of military personnel and an adoption service.

As we sit here tonight, members of the Armed Forces are deployed operationally in Iraq, Afghanistan and the Balkans, as well as on humanitarian relief operations in Pakistan. And whether it is the soldier patrolling the streets of Basra, the airman delivering aid in Muzaffarabad, or the sailor deterring terrorist attacks in the Northern Arabian Gulf, they all rely on the vital role the UK defence industry plays in ensuring they have the equipment they need. You should all be rightly proud of the excellent service that you provide them both at home and in operations overseas.

Many of your may know that I worked in the bio tech business before taking my post at the MOD. I trained as a manufacturing engineer at Longbridge before doing a PhD in robotics and going into business. I know first hand that success of the company I ran in the bio-tech industry was based on remaining at the cutting edge of technology through sustained R&D investment. The investment in R&D in the defence sector, another area of continued technological advancement, is as important so was delighted to see that the recent DTI R&D Scoreboard for R&D investment identified the Pharmaceuticals & Biotechnology and Aerospace and Defence sectors as the two where the UK has the highest intensity of R&D, with BAES and Rolls Royce both in the top 10 companies.

I have also experienced first hand the pleasure and pride of manufacturing a product customers want. I have similarly known the unique frustrations and media spotlight that comes from working on high profile Government projects. As I am sure many of you will testify – it is not for the faint hearted.

Coming into the Ministry of Defence, one of my first impressions was of the real complexity of the challenge facing both industry and the MOD in delivering and sustaining the kit that our Armed Forces need. The operational threats we face are evolving quickly, technological change is increasingly driven by civil investment, and our forces are operating ever further afield and with a wider range of allies.

Companies too are being forced to contemplate significant changes to their businesses. The UK defence industrial landscape has changed considerably over the past decade; with substantial consolidation, overseas acquisitions and increased foreign investment today’s UK supplier base is comprised of truly international defence companies. In some sectors, and for some companies, the UK Government is no longer their main customer. Investors are free to invest in different geographies and different markets. Sustaining our sovereign capabilities, affordably, whilst making a healthy profit is a challenge for industry - but essential for defence too.

I understand that if the UK defence industry is to remain attractive then the future must see longer, more assured revenue streams based on long-term support and continuing development. Not a series of big 'must win' procurements. The platforms of tomorrow, such as Future Carrier and the Future Rapid Effects System need to be underpinned by an emphasis on through life capability.

For our part, we need to set out our likely future needs as clearly as we can for industry. I have asked the MOD to work urgently on a Defence Industrial Strategy that will set out by Christmas the key capabilities that must be fostered and sustained within the UK to keep the defence industry competitive, innovative, and able to meet our future requirements – but I must caution - I do not expect the list to be a very long one.

I don’t need to remind anyone who is here this evening that at a time when our Armed Forces are actively deployed on operations around the world the priority of the Defence Industrial Strategy is to ensure that we provide them with the equipment that they need, at best value for money for the taxpayer. I do not mean the best short term value for the defence budget but a long-term framework that considers the industrial impacts of our decisions in the round. Inevitably this will mean we have to take difficult decisions as there is only so much money available for Defence. If we buy something from a British supplier where an equivalent, cheaper alternative product is available abroad, – or at the same price a better one - the Armed Forces will either get less, or worse, equipment than they deserve. Unless there are valid Defence reasons for taking a broader view of the relative value for money none of us should accept this. What we require is improvements in performance, quality, and efficiency within the industry if our programme is to be affordable.

The equipment we buy for our Armed Forces does not stay on the parade ground being gently polished – it is used in action. This provides the UK defence industry with great advantage, At DSEI a UK defence supplier was quoted on the BBC saying “If it is used by UK forces, that puts you ahead of the competition straight away.” The combined requirements of effectiveness on operations and affordability makes the UK defence customer unique and provides the UK, MOD and industry, with an opportunity, through the DIS, to position our industry well in a globally competitive market place. The UK today is facing up to the issues which others will have to in 5 to 10 years.

Finally I would like to thank the Lord Mayor for all he has done for the Services during his 12 months in office. I hope that the Defence Industry Dinner will become an annual event and part of the highly successful SSAFA Forces Help Corporate Friends Scheme.

Last Updated: 12 Dec 05