On Thursday, the government published it’s white paper on the future relationship between the UK and the EU. After a tumultuous week in which Cabinet unity and a common approach to Brexit appeared to have been secured during their behind-closed-doors Chequers gathering a week ago, this was thrown into doubt with the resignation of two cabinet ministers at the beginning of the week on the grounds that the plan was both unworkable and not in the spirit of the Brexit vote. However, though the detail is yet to be fully digested, the Prime Minister nevertheless appears to have stuck to the principles outlined last week, when EEF welcomed the commitments on simple movement of goods, the protection of the integrated supply chain and a lack of friction at the border.
On security cooperation, the white paper reinforces the self-styled ‘ambitious’ vision for a future security relationship with the EU, recognising that, though our security relationship cannot continue on the same basis as before, shared interests and threats require a partnership covering the breadth of security interests. The paper calls for this to be supported by ongoing cooperation and operational integration through partnership programmes, including the UK’s ongoing participation in European Defence Agency programmes. Of particular interest to NDI members, sections 2.2 and 3.4 outline a vision of constructive and mutually beneficial cooperation on programmes such as the European Development Fund (EDF) and Permanent Structured Cooperation (PESCO) projects, explicitly stating that the UK is seeking the best possible deal within these for the European defence industry as a whole. To this end, the future security partnership is envisaged to include an effective collaboration of UK and EU defence companies, facilitating supply chains and ensuring that the UK and EU member states can work together on research and development projects for mutual benefit. Specifically, the white paper includes a proposal for a defence research and capability development accord that would provide for our participation in the development of EU defence programmes. Other proposals also include ongoing UK participation in EU strategic space programmes, including Galileo and Copernicus, which would ensure eligibility for UK entities to compete for all programme contracts on an open and fair basis.
NATO leaders meet for 2018 Summit
Political leaders from the 29 member nations met at NATO’s Brussels headquarters for the 2018 Summit on Wednesday and Thursday this week. The resulting communique outlining the collective decisions reached, which focuses on the need to reinforce deterrence against Russian aggression, boosting counterterrorism capacity and improving collective mobilisation capabilities. Though the communique also reiterated the need for NATO allies to boost their defence spending, specifically the commitment to meeting the 2024 pledge to spend 2% of GDP on defence, this underplayed the critical rhetoric of President Trump, whose antagonistic stance reset the agenda of the summit by putting defence spending, and the perceived lack of it by the majority of partner nations front and centre. Mr Trump went as far as to call, without warning, for a new target of 4% GDP spending, even at a time when only five nations – US, UK, Estonia, Latvia and Greece are currently recognised as spending 2%. With an approach to public rhetoric that has come to define Mr Trump’s sceptical approach to NATO, the President forced an unscheduled, closed-door meeting on the subject, apparently intimating that the US’s commitment to NATO itself depends on greater financial burden sharing. Though the President emerged from the meeting to claim that he secured new financial commitments from the alliance's full membership to increase defence spending ‘immediately’, it is not clear that this vision of unity was shared by the rest of the partners.
UK Defence Prosperity Review published
On Monday, the government published Philip Dunne’s independent review into the defence contribution to national prosperity. Mr Dunne, a former defence procurement minister, was tasked by the Defence Secretary, Gavin Williamson to provide an i-depth picture of the national economic and social value derived from investing in the armed forces, designed to inform and support proposals for an increased defence budget as part of the Modernising Defence Programme. The report specifically took into account the economic benefits derived from the UK defence industry, in terms of regional employment, tax receipts and export revenue. Mr Dunne’s key recommendations include the suggestion that MOD should review its procurement processes and culture in order to maximise the prosperity return, including earlier and deeper coordination with industry, the commissioning of more in depth work to better understand the economic metrics of defence for the UK, and closer coordination of exports – in particular the link between equipment sales and MOD-derived training for customer armed forces. In addition, and perhaps most significantly, Mr Dunne recommends that the Treasury look at reducing the burden of VAT administration within the defence community, to make investment in UK industry more competitive from an MOD perspective.
NDI welcomed Mr Dunne’s report, which puts an important spotlight sometimes neglected national benefits from defence beyond the operational outputs of the armed forces. Andy Tuscher, director of NDI, said that the report ‘correctly acknowledges the vital role that the UK defence industry occupies, not only in ensuring our national security, but also contributing to our national prosperity by supporting thousands of highly-skilled jobs in every corner of the UK, and generating many billions of pounds every year in export sales.’ To what extent Mr Dunne’s recommendations will be taken forward by the department remains to be seen. The Modernising Defence Programme, initially envisaged for publication this week in advance of the NATO summit, has been delayed indefinitely, though Mr Williamson told the House of Commons this week that his aim is to introduce the headline findings before Parliament rises for its summer recess on 24 July.
EUROPEAN DEFENCE COOPERATION: Asked what involvement the UK plans to have in the EU's new defence fund and defence industrial programme, Minister for Defence Procurement, Guto Bebb MP reliped that ‘…the UK wants to agree a future relationship with the European Defence Fund, including the European Industrial Development Programme. The UK has always participated in European collaborative programmes and we support this new mechanism for managing collaboration. Our track record shows we have much to offer and our defence industry is world-class. We have a key role to play in European defence and security.We are open to considering all options for participation in the EDF and the Government will be guided by what delivers the greatest economic advantage to the UK and UK industry.’
INTERNATIONAL TENDERING EXEMPTIONS: Asked to publish each defence procurement exercise his Department has exempted from international competition under Article 346 of the Treaties on the Functioning of the European Union since August 2011, Mr Bebb relied that ‘all information and records related to these exemptions are sensitive and classified. The information requested cannot be provided as excessive efforts must be applied by the MOD to cleanse sensitive data from these records in order to publish the information openly and therefore information could be provided only at disproportionate cost.’
UK DEFENCE PROCUREMENT FROM US: Asked what the total value is of all contracts in US dollars for military equipment purchased by the MOD since 23 June 2016; and if he will list (a) those contracts with a value of more than US$10 million, their individual value and the date on which the invoice for each contract was settled, Mr Bebb replied that ‘the information is not held in the format requested. MOD contracts with US suppliers are generally through a company's UK subsidiary and are priced in sterling. Any conversion would be an inaccurate representation of the contract value.’
MOD DEFINITION OF WARSHIPS: Asked if MOD classifies River-class Offshore Patrol Vessels as warships, Mr Bebb replied that ‘the National Shipbuilding Strategy (paragraph 92) defines Royal Navy Warships as destroyers, frigates and aircraft carriers. For the purposes of shipbuilding, all other naval ships are not classified as such.’
AWACS REPLACEMENT: Asked when announce will be made on the replacement for the Royal Air Force E-3D Sentry AWACS aircraft, Minister for Defence People and Veterans, Tobias Ellwood MP, replied that ‘any decision on the way forward for the Airborne Warning and Control System capability will be taken in the best interests of national security in the face of intensifying threats. It would be inappropriate to comment further at this time.
MOD SPENDING WITH AIRBUS: Asked what the value is of Airbus goods sourced from outside the EU under the Government's defence contract with that company, Mr Bebb replied that ‘the MOD does not hold information on the contracts delivered by Airbus subsidiaries outside the European Union, nor the source of the goods provided under those arrangements; both are primarily a matter for Airbus.’