In recent years UK governments have reduced the defence budget, but with no compensating reduction in the scope of equipment and services they require, only a reduction in quantity.
The conventional defence budget is now closer to 1.5 per cent of GDP than two. They have persisted in a policy of a government-sponsored oligopoly of prime contractors (‘primes’) – the political-industrial complex −delivering the equipment and the services, in an attempt
to pass risk from political to industrial responsibility and ‘simplify’ acquisition. They have compensated for some of the reduction in volume by contractorising equipment support and services to the existing and a few new primes.
BAE Systems remains the dominant prime, but it is now more American than British. Indeed, most of the primes are now foreign-owned. The inclusion of through-life support has had the effect of reducing the equipment acquisition and research budgets, making the equipment primes less able to provide next generation systems. However, there are no requirements visible for major new systems that would keep the primes busy and encourage investment.
The current budget cannot fund the existing generation.
With this as our starting point, we need to consider how the political/industrial complex needs to evolve to meet UK needs if we want to rebuild our competitive stance.
Such a change implies a different defence industrial strategy that will confer asymmetric advantage to the UK.
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I suggest that this requires:
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Reform of the political components of the political/industrial complex to change ownership of defence and research strategy to parliament rather than government. We must educate the politicians interested in security and re-skill the departments, especially MoD, changing the attitudes and behaviour of its staff, raising aspirations, and reintroducing technical competencies. This requires new leadership that will operate in collaboration with and in support of existing personnel, many of whom already possess the necessary skills and
knowledge, and to empower them to set aside existing procedures and processes. The challenge will be for ministers and officials to provide and enable this leadership rather than writing off the problem as being just too difficult.
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Development of an appropriate funding system to support the log-term investment required by defence whilst retaining parliamentary oversight
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Building our acquisition capability and capacity on the basis of our whole industry and economy, not just on a separate defence industry. This does not just refer to pieces of equipment. The future capabilities and capacities we will need are just as likely to be
services with people as their main component − think intelligence or cyber.
We do not want to preserve or rebuild the old forces we had; we want to build new, relevant forces which will be radically different.
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Adopting a defence industrial strategy based on supporting the network of existing SMEs and those that would emerge from dismantling some of the primes. The dismantling process would need government facilitation and advice from the financial sector. Encouraging management buy-outs would keep the local organisations and empower them to
get rid of the top layer of redundant management. These companies will need to do both civilian and military work if they are to succeed. As we have noted elsewhere in this study, the UK’s Formula One provides a most successful example of this kind of network system. The strength of the new network of smaller companies would depend upon an effective
network for the industry, perhaps created from the existing trade association.
MoD would need to provide strategic leadership to the research side in co-operation with academia, industry and commerce. With the reduced scale of our forces, increased emphasis needs to be placed on design,and the (highly successful) model of a Soviet Design Bureau or the US Skunk Works, combining design,R&D and prototype production, and generating
competition between designers rather than betweenproducers (as production runs will be so small).
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Rebuilding the UK advanced manufacturing sector, stimulated by research investment
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Rebuilding the defence research programme. Without this, we will not be able to produce anything special which will give us an edge, or which others will want to buy. We need to harness academic, civilian and defence research, and to understandhow to acquire and exploit world knowledge.
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Reconsidering academic policy to support UK students in departments that are able to support MoD needs, or establishing if this can be achieved by dramatically expanding the Defence Academy to create the equivalent of a major technical university.
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Recognising the need for industry/academe/government collaboration in order to develop
rapidly new capabilities in support of experimental formations at an advanced capability development centre, based on a merger of the Centre for Defence Enterprise with Dstl and the Defence Academy. This would also house a dramatically enlarged technical
intelligence capability.