Committee publication · Correspondence · 19 June 2025
Letter to the Secretaries of State for Business and Trade and Defence relating to the Defence Industrial Strategy, 18 June 2025
From: Business and Trade Committee
Inquiry: Industrial Strategy
Summary
The Business and Trade Committee writes to the Secretaries of State for Business and Trade and Defence setting out recommendations for the forthcoming Defence Industrial Strategy. The Committee welcomes the Government's ambition to position defence as a driver of economic growth and supports increased defence spending confirmed in the Spending Review, but emphasises that success requires clarity on sovereign capabilities, measurable growth objectives, and coordinated governance across three basic strategic questions and nine implementation imperatives.
Key findings
- The Committee identifies three foundational strategic questions: what sovereign capabilities does the UK require; what growth contribution is sought from defence spending; and how will progress be measured and reported.
- The Government must define sovereign capabilities across critical technologies including munitions, autonomous systems, semiconductors, and rare earth supply chains, and conduct a full supply chain audit led by the National Armaments Director to ensure resilience.
- Defence spending is not automatically growth-generating; the Government must clarify the composition of defence spending and ensure resources are weighted toward productivity and long-term economic growth, not solely military need.
- Nine implementation priorities are identified: maximising synergies with industry spill-overs, sophisticated innovation strategy, maximising regional growth, maximising net exports, transforming defence procurement, guaranteeing multi-year budgets, clarity on 'buy British' rules, improving wider business environment, and establishing governance and accountability.
Tone
CriticalTopics
Key actors
Jonathan Reynolds MP (Secretary of State for Business and Trade), John Healey MP (Secretary of State for Defence), Business and Trade Committee, National Armaments Director, BAE Systems, Babcock International, Airbus, ADS
Notable line
“… defence can make a significant contribution to both national security and economic renewal — but only if the Defence Industrial Strategy provides clear sovereign priorities, measurable economic objectives, coordinated governance …”
Key Quotes
“The Government must first define the sovereign capabilities the UK requires. Without this clarity, it is impossible to assess how defence spending can most effectively support growth.”
“"we cannot do it all, so there must 5 Ministry of Defence, Strategic Defence Review: Making Britain Safer: secure at home, strong abroad …”
“Simply spending more on defence is not, as Dr Ethan Ilzetzki (London School of Economics) told us …”
“… defence spending has "no greater inherent capacity to generate growth than other kinds of government expenditure" 26 and indeed defence …”
“We cannot export something if the intellectual property does not reside in the UK.”
“At the end of this Parliament, the best outcome would be to have policies that are coming out of the Government that reflect the industrial reality. By that I mean that there is not the artificial divide — or at least not such a tight artificial divide — between defence and wider advanced manufacturing.”
Source · parliament.uk record ↗