LONDON: Britain’s nine-month delay in setting out its defence spending plans to meet a rising threat from Russia has forced some small suppliers to collapse, others to hold off investments and many more to expand abroad instead.
Prime Minister Keir Starmer is finally expected to publish the Defence Investment Plan on Tuesday, one of his final acts before he steps down in July, after his defence and finance departments spent months arguing over how to fill an estimated £28 billion shortfall.
Many companies in the sector say that delay has damaged the UK’s military supply base and potentially the government’s efforts to make its cash-strapped forces war-ready. “We need the DIP to provide the confidence to private investors to scale investment,” said Shefali Sharma, chief executive of Oxford Dynamics, an AI defence company. “Currently its absence is costing businesses.”
As they wait, contract awards from Britain’s Ministry of Defence have dried up and even small procurements are taking longer than usual, pushing British defence companies to focus on winning business overseas and meaning the UK is losing out on jobs and investment.
Dozens of smaller companies have gone out of business, or shut down their defence units to focus on other industries as a result, the defence lobby group ADS told Reuters. The chief executive of UK defence company Cohort CHRT.L said that over the last 18 months demand from militaries in other countries where it works, such as Germany, Poland, the Nordics and Baltics, has been clearly ramping up, in contrast to Britain. “Because of the lack of defence investment plan, it’s really difficult for the MOD to contract new programmes,” CEO Andrew Thomis said, adding that procurement which had been expected in the UK has not yet come through.
Cohort, which is a parent group of seven different defence-related companies, said that while its total revenue is expected to grow 12 per cent in the last financial year, the UK’s share fell below 50 per cent, having stood at 80 per cent just a few years ago.
Britain’s dithering at a time when other countries are awarding contracts has hurt domestic production. Q5D, an early-stage company based near Bristol in south west England which has automated the manufacturing of the wiring used in drones and other equipment, has won contracts with the US Army, but not in the UK, making the US the more likely site for a new factory.
