UK defence reform faces hurdles as government balances innovation and domestic capacity

Debate in the House of Lords highlights urgent need for the UK to overhaul its defence procurement, foster smaller industry players, and reduce reliance on overseas suppliers amid calls for faster decision-making and domestic capacity rebuilding.

During a recent House of Lords debate, ministers faced pointed scrutiny over the Ministry of Defence’s (MoD) reform pace, the inclusion of small and medium-sized enterprises (SMEs) in defence contracts, and the ongoing relian...

ce on overseas suppliers for critical equipment. This discussion unfolded into a comprehensive examination of the MoD’s strategy to rebuild domestic industrial capacity, accelerate acquisition timelines, and align procurement culture with the government’s declared ambition for war readiness.

Lord Coaker, a central figure in the debate, highlighted what he described as a cultural issue within the MoD. He noted the appointment of a new National Armaments Director and ongoing reform efforts but questioned why, in peacetime, the department lacked the urgency and streamlined decision-making typical of wartime operational requirements. He argued that this wartime mindset and swift cutting through of bureaucracy must become a permanent fixture to meet current and future threats effectively.

Several peers raised concerns about barriers faced by manufacturers, especially SMEs. Lord Cromwell distinguished the sluggish UK procurement processes from the rapid innovation demonstrated by Ukrainian developers producing wearable drone-detection technology, technology that is saving lives in Ukraine but remains absent from British troops’ equipment. He pressed for a defence industrial strategy that more actively engages small suppliers and fosters joint ventures with frontline innovators, an issue compounded by lengthy contract finalisations.

Lord Coaker concurred that the Ukraine conflict revealed the limitations of relying predominantly on large prime contractors, underscoring the need for small-scale innovation to coexist with traditional production. The recently established defence office for small business was cited as a positive step toward addressing this challenge.

Peers also tackled wider supply chain and capability concerns, including reducing dependence on foreign manufacturing. Baroness Humphreys questioned how procurement might shift towards greater domestic production. Lord Coaker acknowledged the UK’s industrial decline as a strategic vulnerability and stressed the government’s commitment to revitalising defence industries. He referenced efforts to boost exports and engage with industry during the carrier strike group’s Indo-Pacific deployment as part of this approach.

Baroness Goldie raised the issue of reconciling the government’s war readiness goals with what she characterised as a budget shortfall and stalled domestic procurement. In response, Lord Coaker mentioned the forthcoming defence investment plan, expected this year, aimed at detailing necessary capabilities and funding decisions influenced by lessons from Ukraine.

Lord Cryer linked current vulnerabilities to post-Cold War defence job cuts, advocating for a rebuilding of the manufacturing base. While Lord Coaker acknowledged progress in defence-supported employment, from 244,000 to 272,000 direct and indirect jobs, he admitted the growth rate remained insufficient to meet strategic needs.

Complementing these insights, recent government initiatives reflect efforts to bolster domestic defence capabilities and SME involvement. The Strategic Defence Review includes plans to construct at least six new munitions and energetics factories, aimed at producing up to 7,000 UK-built long-range weapons and supporting nearly 2,000 jobs, underlining a commitment to economic growth alongside military strength.

Moreover, a newly established seven-year framework, valued up to £850 million, permits SMEs to bid for work related to enhancing warship and submarine readiness, integrating innovative solutions from smaller companies to improve fleet availability. This move aligns with government announcements promising historic boosts to defence spending targeted at energising SME contributions, fostering innovation, and supporting economic expansion.

Nonetheless, challenges persist. Former Chief of the Defence Staff Sir Tony Radakin has publicly criticised MoD’s decision-making environment, pointing to the proliferation of online meetings and growing bureaucracy as significant impediments to timely reform and capability enhancement. His observations echo concerns voiced in the Lords about the need to streamline processes and cultivate a more agile procurement culture.

Additional efforts include the Defence Suppliers Forum, serving as the strategic communication bridge between the MoD and industry partners, aimed at smoothing procurement hurdles and enhancing collaborative engagement. In parallel, a recent £320 million contract awarded to IBM UK will deploy an advanced defence equipment management platform, modernising military logistics and creating over 100 skilled jobs, contributing further to the technological and industrial upgrade the MoD seeks.

Taken together, these developments illustrate a government recognising the critical importance of revitalising the UK’s defence industrial base and procurement culture. However, persistent structural and cultural challenges within the MoD, bureaucratic inertia, and the need for a more inclusive approach to innovation, especially from smaller enterprises, remain key issues to resolve if the ambitious war readiness goals are to be fully realised. The forthcoming defence investment plan is widely anticipated as a pivotal moment to clarify the government’s strategic and financial commitment to this transformative agenda.

Source: Noah Wire Services