Maximising the contribution of defence to Labour’s growth plans

At the Tony Blair Institute’s recent Future of Britain conference, Wes Streeting, the Health and Social Care Secretary, stated that he wants his department to be focused on not just healthcare but “economic growth”.

For the Labour government to achieve its ambitious target of securing the highest sustained growth in the G7 by the end of its first term, that is exactly the kind of thinking the entire structure of government needs – driven by the Chancellor, Rachel Reeves, but reaching into every part of the administration.

This week, Farnborough International Airshow, one of the largest trade events in the UK, brings together hundreds of companies and governments.

The Prime Minister, Ministers and parliamentarians are taking time out of their busy schedules to travel down the M3, or jump on the train from Waterloo, to attend. Foreign dignitaries from all around the globe are joining them. Anyone who is anyone in the aerospace, defence, security and space sectors are at the show to see what Britain has to offer.

These industries already make huge contributions to UK economy – the latest ADS data revealed that, cumulatively, they added almost £64 billion to the UK economy in 2023. With pro-growth reforms, they can contribute even more.

To unlock that growth, we need to be open and comfortable about the economic contribution the defence sector makes to the UK and be clear why it is an essential underpinning to the society we want to uphold. Too many so-called ethical funds or organisations still have a policy of not investing in defence or security-related enterprises. That is naive and dangerous when you consider how unstable the world we currently live in is.

At the NATO summit earlier this month, the Prime Minister highlighted the need to keep supporting Ukraine, with £3 billion set aside every year for as long as it takes to defeat Russia. Defence and security firms are vital to that - Kyiv would have fallen to the tyrannical Putin regime long ago had we heeded the calls of activists to make investing and engaging in the defence sector taboo.

So, the UK has a basic need to invest in the security that makes possible all the wider progress we want to deliver. Ministers can do that knowing the procurement decisions they will make in the wake of the Strategic Defence Review kicking off now create and sustain high tech jobs right across the United Kingdom. These are firms who have long been leading the way in generating positive social impact in their communities while often not getting the recognition they deserve.

Finally, we must ensure our regulatory systems work efficiently. The UK rightly holds itself to high ethical standards on arms control. But thorough and fair scrutiny does not need to be slow and unnecessarily burdensome. Logjams at the Exports Control Joint Unit, which issues export licences, are currently causing delays of up to two years, meaning vital windows close.

The Labour government need to expand the regulatory capacity of the ECJU and other quasi-judicial bodies that are business-facing. These key units of government need more bodies and more efficient technology to process applications at pace in support of exports and investment. To paraphrase the Health and Social Care Secretary – cutting down waiting times will contribute to economic growth.

With a new government, Farnborough Airshow could have a new lease of life. It is in many ways a perfect launch pad for the government’s growth agenda.