Greater defence spending will support local economies and high-end manufacturing near sites like BAE Systems’ Barrow-in-Furness factory - BAE Systems/SWNS
Off the coast of Devon for the past few weeks, an autonomous submarine that may one day protect UK waters has been quietly undergoing sea trials.
The British-built Cetus drone – named after a sea monster in Greek mythology – is billed by the Royal Navy as the largest and most impressive uncrewed vessel of its kind in Europe.
It has been designed by MSubs, a start-up based in Plymouth, to move stealthily underwater for long periods of time, listening out for enemy vessels or to protect critical national infrastructure such as subsea cables and pipelines.
At roughly the length of a bus, the experimental device is precisely the kind of home-grown innovation that John Healey, the Defence Secretary, and Rachel Reeves, the Chancellor, want to stimulate as they pour billions of pounds more into domestic defence companies.
Under plans previously announced, defence spending is set to rise from 2.3pc of GDP to 2.5pc by 2027, a signal designed to show Britain is serious about rearmament – although still below what many experts believe will prove necessary in the longer run.
Much of the uplift will go towards replenishing munition stockpiles or better accommodation for forces personnel, with a large chunk of the Ministry of Defence’s (MoD) budget already taken up by big-ticket items such as nuclear submarines, frigates and next-generation fighter craft.
“We will put defence at the heart of our modern industrial strategy, to drive innovation that can deliver huge benefits back into the British economy,” the Chancellor told MPs in her Spring Statement.
She unveiled plans to dedicate a minimum of 10pc of the MoD’s budget to high-tech weaponry such as drones and digital technologies, as well as a ring-fenced £400m per year budget for a new agency called UK Defence Innovation – which will become a one-stop shop for start-ups with big ideas.
At the same time, procurement rules are being changed to speed up deployment of kit.
This will see the MoD dramatically crunch down the time it takes to advertise and award major contracts. For large platforms such as tanks, frigates and aircraft, ministers want this timeline to shrink from six years to two.
The target for “pace‑setting modular upgrades” covering communications, sensors and improvements to weapons will be one year, compared with three now, while for drones and digital technologies it will be just three months.
This, plus the greater domestic focus, promises to deliver a boost to companies such as MSubs in Plymouth, as well as the larger so-called primes, including BAE Systems and Babcock.
“It’s music to our ears,” says Brett Phaneuf, chief executive of MSubs.
Sharon Graham, general secretary of Unite, Labour’s biggest union donor, last month warned Healey against “wooing Donald Trump by selling our defence jobs abroad”.
The RAF had reportedly been leaning towards buying more F-35s.
F-35 fighters are made by American giant Lockheed Martin - Marco Garcia/Reuters
But the case for doing so now looks shakier given pledges by ministers to funnel more money into British products.
There are also growing concerns in Europe – including London – about depending on American equipment following Donald Trump’s recent pronouncements about Nato, which have prompted doubts that the US can be relied upon as an ally.
The case for greater defence spending is not just about security or maintaining key capabilities, however – ministers have also alighted on it as a way of supporting the British economy and high-end manufacturing.
For example, Sir Keir Starmer recently pointed to the economic benefits that Barrow-in-Furness, the Cumbrian port where BAE is building a raft of multibillion-pound submarines, will gain. The area is one of Britain’s poorest.
“John Healey has talked about the prosperity agenda, and this money going into British factories for British jobs,” says Francis Tusa, an independent defence analyst.
“But people are not yet hearing him. He’s not using mealy mouth words. He’s saying this will be defence money spent in British factories.”
Sir Keir Starmer has hailed the economic benefits of building a raft of submarines in Barrow-in-Furness - Oli Scarff/WPA Pool/Getty Images
Outside Wellington Barracks on Wednesday afternoon, the Defence Secretary and the Chancellor were keen to show off some of the technologies that could benefit from the spending uplift.
JHub, an innovation hub within the military’s strategic command, demonstrated Morrighan, a heavy-lift uncrewed system, named after the Celtic God of War and described by one major as a “game changer”.
By using a helicopter-style platform and a winch system and cargo box, the autonomous system can be flown into a front line in order to surreptitiously evacuate the casualty.
It means medics aren’t sent into areas of danger and robots can evacuate the wounded in simple containers such as cargo boxes, which can lift upwards of 100 kilograms and will ultimately draw less attention from the enemy as they are flown away.
“Getting people back from front lines is becoming really difficult,” the major added.
He said it not only put more risk on the casualty but also on those performing the evacuation.
Now, those risks can potentially be eradicated as uncrewed systems can perform rescue missions.
Four companies have been awarded money by the Ministry of Defence to develop prototypes: Skylift UAV, Aether Aerospace, ISS Group and Black Space Technology.
Speaking at the barracks, Healey said: “What you’ve seen here is the future of our forces keeping one step ahead of the enemy.
“It’s also the future of making sure that when we invest in defence we also invest in driving economic growth in all parts of the country.”
As ever, however, smaller businesses say the real test of the reforms will be whether money really finds its way to the most innovative firms – and doesn’t get tied up for years in bureaucratic processes.
“It’s certainly a step in the right direction,” says Phaneuf, of Plymouth’s MSubs. “But what we can’t do is just take all this money and keep sticking it into systems that don’t work.”
