Intellect’s new year defence dinner
Speech by Philip Dunne, Minister for Defence Equipment, Support and Technology.
Introduction
I would like to thank Intellect for inviting me here to speak today.
I do not have to tell this audience how essential the technology sector is to the lives and livelihoods of us all and how quickly it is transforming local economies.
I see this in my constituency in Shropshire, the county which claims the highest percentage, at 15%, of home working in the country, thanks to the internet revolution.
Using services that Intellect members supply, some of my constituents are now running global businesses from countryside historically deriving most employment from farming sheep.
I have first hand experience of the excellent work that Intellect does on behalf of its members.
Before becoming a minister I was a director of EURIM the cross-party European Information Management Group and parliamentary chair of its Information Governance Group.
Intellect was a key contributor to and supporter of this work.
Our aim was to maximise the free flow of information and encourage resulting economic benefits.
We were keen to promote self regulation of the internet and discourage government control.
What I learned from this work was the centrality of the technology sector to the functioning of modern society: its economy, its culture and its politics.
And what I have learned since becoming Minister for Defence Equipment, Support and Technology is that the same is true for defence.
Put simply, defence cannot function without the technology sector.
The importance of the technology sector
Almost every activity conducted by our armed forces today utilises some form of information technology.
From warfighting: collecting intelligence, communicating on the battlefield and acquiring and prosecuting targets.
To the more mundane: paying our service personnel their salaries and allowances, helping them train in any environment and allowing them to communicate with their families.
Both are important.
The first provides military capability; the second maintains the morale which sustains that military capability.
In Afghanistan last month I saw how the Afghan security forces are paid by a text message on a mobile phone, where they had been paid quarterly.
The technology that you provide is essential to maintaining our operational advantage and, therefore, keeping our country safe now and in the future.
Let me paint you a picture:
British soldiers use computers to move around a simulated urban environment and fight a virtual enemy, training for operations. Their every action is monitored by a sophisticated system of computers and advanced simulation software.
When they deploy they have unprecedented situational awareness, through realtime imagery from tiny surveillance helicopters, about the size of ones hand, and they are supported by a shot detection system which accurately pinpoints the origin of incoming fire.
As I’m sure you’re aware, this is not science fiction, this is happening today on operations in Afghanistan, and in the United Kingdom.
I have seen the Black Hornet nano UAV and the Boomerang shot detection system being used today by our armed forces in Afghanistan.
Just last month, 190 soldiers from the 2nd Battalion the Royal Welsh completed the British Army’s largest ever simulation exercise at the Land Warfare Centre in Warminster.
This kind of technology helps prepare our armed forces for difficult and dangerous environments and protects them when they get there.
In the few months I have been in this role, it is becoming increasingly clear to me that the nature of the defence capability we require to meet present and future threats is changing.
Just as IT’s role in providing situational awareness has transformed the battlespace, so the development of electronic warfare capabilities will transform weapon systems delivering conventional kinetic power.
Today’s National Audit Office report on cyber security highlights the very real risks faced by us all in confronting new threats.
So when people ask me whether my priorities are promoting growth in our defence industry or providing the best equipment available to our armed forces, I tell them both, they are the same thing.
National security is a collaborative effort.
It is the product of what we refer to as the ‘whole force’ concept.
This whole force comprises our armed forces, the best and the bravest people our country has to offer, the civil servants who support them and our defence industry which equips them.
The services and products your companies provide can help to increase our security and save lives on the front line.
Support for exports
That is why this government is so committed to supporting a strong and vibrant defence sector.
And why we have taken measures like publishing our ten year £160 billion equipment plan, giving industry more information about our priorities, allowing them to invest in the future capabilities our armed forces need.
Unlike equipment lists under the previous government, this equipment plan is properly funded, properly thought through and will allow you, therefore, to plan with much more certainty.
But we recognise that one of the most effective ways that government can help is by working with you to boost defence exports.
In 2011 the UK exported £8 billion of defence and security goods and services.
Defence exports made up £5.4 billion of that figure, with security exports, which increased by £600 million, making up the rest.
Once again the UK maintained its position as the second largest defence exporter, behind the US.
So we understand the significance of defence and security exports and we are determined to do what we can to encourage your business growth through responsible exports.
We do this not for reasons of altruism, but because of hard headed self interest.
A healthy and competitive industry in the UK makes a significant contribution to developing and sustaining key defence and security capabilities.
A strong UK defence sector, manufacturing, servicing, and crucially exporting - is a vital part of our strategy of rebalancing our economy so it can return to sustainable growth. The Defence Growth Partnership will play a role in that effort.
Exports can also reduce the costs of equipment programmes for UK forces.
Export customers can help to spread the costs of fixed assets needed for long-term support and allow government to recoup some of its investment by the use of levies.
A well regulated trade in these products and services helps the government to underpin strategic relationships and enhances the security capacity of our allies.
In this way, exports can form an essential element of our defence engagement initiatives.
The recent announcement of the sale of 12 Typhoons and 8 Hawk trainer aircraft to the Kingdom of Oman is a good example, cementing our already close defence ties with this important Gulf ally, generating some £2.5 billion of defence exports over the next few years and supporting British jobs.
The Typhoon programme alone supports thousands of jobs in this country, across BAE Systems, Rolls-Royce, Selex-ES and their supply chains.
It is for all of these compelling reasons that this government is working at all levels to promote exports.
One of the simplest things I believe we can do as ministers, to help British companies succeed in the global exports markets, is to support British defence products and services in person.
This is one of the reasons why since May 2010 there have been more than 160 outward ministerial visits to the Gulf region alone, a key export market for all.
The Prime Minister himself has visited the region four times.
This year, wearing my defence exports hat, I will be leading regular delegations to overseas expos and defence trade shows.
Last week I was in Bangalore, next week I will be at IDEX in Abu Dhabi and next month I am visiting Malaysia.
Last month the Secretary of State, Philip Hammond, was in Australia and Indonesia, and my colleague, Dr Andrew Murrison, Minister for International Security Strategy, will be visiting Brazil in April.
You will notice a pattern in the geography of these visits.
They are focussed on emerging markets.
That is because we recognise that most defence budgets in the west are under pressure.
So defence companies are sensibly looking to markets where there is growth, such as the Middle East and far east, and we are willing to travel.
We will certainly not neglect our existing relationships with longstanding allies, but we understand that we must work doubly hard to help you penetrate new markets, and to position the UK ahead of its competitors.
But this is not a task for defence in isolation.
It is a whole government effort.
Promotion activity for defence exports in government is led by the Defence & Security Organisation within UK Trade & Investment, who you will all know well, and with whom I and my department work closely.
Serving members of our armed forces work within UKTI DSO, providing that essential service to service dimension that can play such a vital role in securing defence exports.
And many of the civilian posts in DSO are staffed by MOD civilians with an intimate knowledge of defence.
The MOD is also committed to supporting the Defence Growth Partnership work led by BIS, which builds on the successful model of joint government and Industry engagement already established for the Aerospace sector.
I am encouraging those leading the formative work of this partnership to focus on identifying ways to remove barriers to growth and enhance the competitiveness of the UK defence sector, building on the National security through technology white paper and helping you to export successfully.
We also work very closely with the Home Office to ensure that we are synchronised when it comes to defence and security exports, particularly in the IT and cyber domain.
Many companies see the defence and security market as a continuous whole, so government must do the same.
There are some good examples already of export successes in the cyber area, Selex’s central involvement in NATO’s Computer Incident Response Capability programme, is just one.
But government also has a role in helping to make sure that UK products are the best and most advanced on the market.
This means appreciating that defence products are not like other products.
We can help to make the wider package on offer as attractive as it can be to prospective customers.
Export success depends on more than just the hardware on offer and the department will back you in meeting the wider requirements of our allies.
For instance, by providing the capacity, wherever possible, for training alongside UK forces, or helping you demonstrate the value of long term equipment support and the responsible transfer of technology.
In many of the areas you are focussed on, British companies are producing world leading equipment, used by our armed forces, which can be the crucial differentiator in securing successful exports to other countries.
One great example is the Bowman digital radio system designed and built by General Dynamics UK, which our armed forces are successfully using on operations across the globe.
The product has generated lots of interest internationally, including sales to the Dutch Marine Corps.
We are committed to work with UK Industry to foster the concept of exportability and embed it as behaviour to be pursued wherever possible in our design and acquisition processes.
But it must be subject to the overriding considerations of maintaining our freedom of action and protecting our operational edge, within the available financial envelope.
Investing in science and technology and SMEs
Central to this operational edge is our technological advantage.
And it is to ensure that we maintain this advantage that the MOD has protected its annual investment in science and technology at a minimum of 1.2% of the defence budget, over £400 million a year, part of a much larger R&D spend.
I believe this investment can play a valuable role in catalysing private sector innovation.
And that is why around 60% of our S&T budget is spent outside of government, including, I am pleased to announce, £10 million worth of contracts recently awarded to three QinetiQ led consortia and Niteworks.
These contracts, managed by our Defence Science and Technology Laboratory and DE&S’s Technical Directorate, will help deliver our “Information superiority for contingent operations” research programme.
For defence, information superiority is about obtaining a greater degree of information about the battlespace and using it more rapidly to give an advantage to the UK’s armed forces.
This programme intends to develop and deliver cost effective solutions to support the MOD’s information superiority capability within a five year timeframe.
The research will benefit from the input of academia and a wide range of SMEs.
And much of our research funding goes to SMEs, either directly or indirectly, acknowledging the contribution that they make to the economy and in particular to innovation.
For example, 43% of the contracts awarded by our Centre for Defence Enterprise (CDE) have gone to SMEs.
I am a champion for SMEs doing innovative work in the defence and security sector.
I know that SMEs are not the only source of original thinking in our sector, but they often provide the niche expertise which can lead to breakthroughs in defence applications.
The Centre for Defence Enterprise has already done some excellent work in supporting SMEs in this area, helping them to commercialise their high tech ideas.
CDE started off as a pilot scheme. Four years on it has become a going concern having received over 4,000 proposals for funding, resulting in more than 600 contracts valued at over £36 million.
We are now extending CDE’s support beyond just funding.
In December last year I was pleased to launch the CDE Marketplace, where SMEs who have completed their CDE contracts are given the opportunity to pitch their capabilities to leading international and UK defence suppliers.
These Primes have been very supportive and are keen to help pull through innovation into the market.
Many of CDE’s contracts are for software development, such as one awarded to a new company called 2iC Limited, to develop software for use by integrators to coordinate separate and disparate IT systems rapidly and flexibly.
The 2iC software was trialled in October 2012 as part of a Land Open Systems Architecture development programme, which is now shaping the target architecture for Army 2020, our blueprint for the future British Army.
Conclusion
Investing in this innovation helps to develop our future military capabilities and supports your future exports.
Every platform our armed forces operate, every weapon system they use and every operation they engage in is underpinned by vital contributions from the technology sector.
Our armed forces are among the best and most advanced in the world.
This is, in part, down to companies like yours.
Just as other countries look to our armed forces for military assistance and expertise, they look to our defence industry for equipment and services, particularly in high-tech areas.
I see it as my role to ensure that government supports you in reaching those overseas markets.
I hope that all of the activity I have outlined convinces you that we are not being complacent with regards to defence exports.
But I am always keen to do more.
I engage with business on a very regular basis and consider it a core part of my job to do so.
I always try to pick up on industry’s ideas during these interactions and I hope that the following Q&A session will allow me to do this again.
Thank you.