GovWire

A big thank you to Nicola King and John Deans. This is a very special conference. Im very pleased to be here, and I must say, I spent quite a lot of time in the city 20 years ago when I was a Treasury Minister but I have never been to a venue like this. So, thank you for hosting us this morning in this wonderful place. I guess a few years ago, it would be unusual to see a Defence Secretary make a point of coming to the city to speak to investors. But I regard that now, in this day and age, with the threats that we face and the sort of introduction that Iain has given us, I regard that as imperative. And to be quite honest, I expect to spend as much of my time in 2025 talking to investors as I do to industry itself. Thank you also to the London Defence Conference, Im very pleased and quite proud to be linked with the LDC from the very early days. Its going from strength to strength now, and in many ways, that is a testimony to the very personal vision that you provide to it. So thank you for inviting me to join here today.

I want to start with one central thesis, which is this; that national security, at home and abroad, is the foundation for the stability, the certainty and confidence, which in turn, are the preconditions of economic success. And my aim is to align imperatives of strong national security with a high growth economy, ensuring that defence in particular, contributes fully to the governments number one mission - which is to secure higher economic growth throughout the UK.

And so today, were publishing a framework for a new mission driven defence industrial strategy, which will boost UK jobs and growth. It sets out at this point, guiding principles for a new strategy, which we will now develop in wide consultation. Well do that alongside the development of the Strategic Defence Review, and well look to publish this new Defence Industrial Strategy in the spring. Weve got some really proud British defence firms with a long history of world class reputations, and well work closely with them. I also want to hear from beyond these established businesses; from tech firms in the civilian sectors, from startup entrepreneurs, from trade unions, from exporters that want more government muscle behind them, and also from investors. Investors who recognize the central importance of security as well as stability and market value. And finally, this is going to be a national endeavour, private, public, primes and SMEs, innovators, educators, trade unions. Its about creating a defence industry which is better and more integrated, and one that can keep our Armed Forces equipped, innovating at a wartime pace and therefore ahead of our adversaries.

If I had to draw out three hallmarks of the framework for the future, first, it means a principle to direct more UK defence investment to UK based businesses, creating more defence jobs in every region and nation of the UK. Second, it means learning the lessons from Ukraine, where the pace of innovation is measured in weeks, not months, and where in many cases, smaller, cheaper innovations are beating far more expensive, exquisite platforms. The third is taking to heart what Ukraine also tells us, which is that the nations armed forces are only as strong as the industry that stands behind them. And so, consistent with NATO thinking and the new emphasis that Mark Rutte has given to NATO - deterrence, thirdly, is at the heart of our approach. Because adversaries must know that we have an industry with the capacity to generate and regenerate the equipment our forces need, that we have a science and tech base to ensure that we can deliver leading edge capabilities and that we have the ability to innovate at a wartime pace, if faced with conflict.

As Iain said in his opening remarks, everyone now agrees that we must, as a nation, spend more on Defence. We must do that to meet the increasing and diversifying threats that we face. We have a government, a new government now, that is totally committed to increasing defence spending to 2.5% of GDP. A level we havent seen in this country since 2010, when Labour was last in government. Weve had the Prime Minister and the Chancellor confirm that we will set out the path to increase spending to 2.5% in the spring.

But this cant be done by the government alone. Iains central point and mine: we need investors. We need innovators. We need industry working together with government, and that is at the heart of the new defence industrial strategy. So, the framework sets out a requirement for longer term partnerships with industry, longer term market signals and redefined relations. At the heart of it will be a new Defence Industrial Joint Council. At the heart of it also will be a relation between government and the sector. So today, for the first time, were staging wargames with key industry players, so we together will look to understand better the decisions that will be required of government, that will be required of industry, in order to be able to sustain our war fighters on the front line when supply chains are disrupted, or when we may be faced with extended conflict. And so, in the face of rising global threats, we need public and private together, investors, industry innovators, and my message is this, invest in defence and send a strong signal to Putin and other adversaries that would do us harm.

Finally, this is an industry with a long-established tradition and a base right across the country, 134,000 jobs directly supported by defence investment in this country, another 105,000 indirectly linked to that investment. A government and partner, which is spending over 25 billion a year on military equipment. But we also need to face up to some of the problems with the approach in the past. Yes, there was a Defence Industrial Strategy produced by the last government, but that was back in 2021, it was before Ukraine. Its not been updated. Unlike the European Union and the US that in the last year have produced an overhaul, updated defence industrial strategy, nows the time for us to do the same. And the problems that have held us back in the past, I think, are clear and well known - inefficient spending, skill shortages, a lack of focus on exports, a lack of the long-term partnerships that can make this work in the future. Thats why Im really pleased to see that alongside today, weve got announcements from BAE, from Babcock and from Helsing, on new investments in the workforce and in production capacities for the future.

So, to finish, Iain, if I may, where I started, national security is the foundation for national stability and economic growth. In keeping with your event theme today, I believe defence should, can and must be an engine for jobs and growth in Britain in the future. Thats why well develop our new industrial strategy for defence. Well develop it with industry. Well develop it with the innovators, and I want to develop it also with investors. And with a stronger UK defence sector, we can make Britain more secure at home and stronger broad.