Bringing together the defence and financial services sectors is a win-win
3 min read
Trump’s interventions in Ukraine have forced the UK and our continental neighbours to completely rethink our defence. His tariffs have torn apart the established world economic order.
It has reignited the debate about sovereign capabilities – most recently in the steel industry – and underlined the importance of the Prime Minister’s commitment to increase investment in our armed forces.
We welcome this because ensuring our country’s security is the primary duty of any government. Through our participation in the Armed Forces Parliamentary Scheme, we have had the honour of meeting hundreds of servicemen and women and have come to understand the very real challenges that they face.
Our Forces are severely stretched because of 14 years of underinvestment. We owe it to them to provide the state-of-the-art technologies and equipment that they need to be effective in modern warfare.
This is not only in the interests of national security but also in the interests of the economic success of some of the UK’s poorest communities.
Defence industries are represented widely around the country. The sector is responsible for one in 60 UK jobs and the majority of these are highly skilled and well paid, with salaries 33% above the manufacturing average.
Our constituencies, Aldershot and York Outer are home to dynamic and growing clusters of high-tech defence and aerospace concerns, including household names like QinetiQ and BAE Systems.
They tell us that the Prime Minister’s promise of sustained increases in defence investment – if paced correctly – will give them the impetus and certainty they need to grow.
But they also warn about the barriers to what otherwise sounds like a win-win scenario, particularly investment and procurement.
That is why we launched a campaign looking at these barriers, particularly in relation to Defence SMEs which often struggle to access the banking and finance facilities they need to grow their business.
We’ve brought together the Defence and Financial Services sectors and we’re delighted to see a commitment from both sectors to work through these challenges. We’re also pleased to see Funds revising criteria so its ESG funds can invest in defence.
To supplement and de-risk further private sector investment, we are also advocating for accelerated international discussions on the creation of a multilateral Defence, Security and Resilience (DSR) bank.
The DSR would be a financial vehicle, owned by nation states, to mobilise capital into defence production and supply chain resilience. It would use public capital to attract private, giving industry predictability on scaling, while relieving fiscal pressure on national budgets. It isn’t about replacing NATO or duplicating the European Investment Bank. It fills the gap between strategy and delivery and could do so with speed, scale and sovereign control.
If the government can combine a resolve to overcome existing barriers, as well as seize opportunities such as leading the setup of the DSR Bank, this is how we can turn the macroeconomic headwinds into tailwinds.
Alex Baker MP & Luke Charters MP, Mission Delivery Champions for the South East and Yorkshire and the Humber
