Britain’s defence industry is holding back investment, recruitment and planning decisions while it waits for the long-delayed Defence Investment Plan, senior figures from BAE Systems, Babcock, QinetiQ and Leonardo told the Scottish Affairs Committee on Wednesday, with all four companies describing a sector that knows money is coming but cannot act at full pace until it knows where that money will go.
Babcock’s John Howie described the current moment as one of three overlapping inflection points, the first being the changed geopolitical landscape, the second being the rapid emergence of low-cost autonomous technology from Ukraine that was forcing the industry to ask fundamental questions about what product development should look like, and the third being the financial consequence of both, saying the UK was waiting “with bated breath” for the Defence Investment Plan and that the large primes were already reorienting around AI, autonomy and uncrewed platforms but that this “will not gather full speed until we understand what the scale of the investment from Government will be and where their buying patterns will shift.”
Leonardo’s Mark Stead was equally direct, saying that most significant defence industry sites in the UK “are, or should be, becoming building sites in order to grow more capability” but that to do so they needed “clearer commitments through the defence investment plan, which will give us guidance, directional planning assumptions, access to investment, and those major programmes of record that feed us and our supply chain.”
He said Leonardo’s Edinburgh business benefited from existing programmes of record including the ECRS Mk2 radar for Typhoon and the Global Combat Air Programme which had maintained funding through the DIP hiatus, but said the plan “cannot come soon enough” so the company could plan, co-invest and build the skills and capacity needed for national resilience.
QinetiQ’s Cathy Kane confirmed that delays in domestic orders caused by the Strategic Defence Review and Defence Industrial Strategy had already slowed the company’s growth in the first half of 2025, declining to provide specific figures when asked by the committee but saying that “the opportunity to have a long-term strategic vision so that we can adapt our business to ensure that we are delivering what you need is most helpful to us.”
BAE’s Neil Holm said the company had invested over £300 million in the last two years and was looking forward to the Norway Type 26 deal sustaining Clyde shipbuilding well into the next decade, but that the alignment between industrial strategy and defence procurement was “deeply important” and that “a close link between the industrial strategy for the UK and defence procurement will give a huge benefit.”
Howie also highlighted a fundamental challenge posed by the convergence of geopolitical urgency and technological uncertainty, asking whether “a billion-dollar missile and a £200 drone carry the same effect” and suggesting the answer to that question was shaping how the whole industry was thinking about where to invest, with companies reluctant to commit fully until the government had clarified its own position on the future force mix through the Defence Investment Plan.
The committee heard that the DIP’s absence was having knock-on effects beyond investment decisions, directly constraining the number of apprentices companies felt able to take on, the pace at which they could grow their workforces, and their ability to give early career workers the long-term certainty needed to make defence an attractive career, with Howie saying the problem came down to “the need for long-term contracts” and that without them the industry could not responsibly take on workers it might not be able to keep.
Is DIP a synonym for Pink Flying Pig or Rocking Hose Poop or Hen’s Teeth? I only enquire for information….
The brutal truth, this Labour government can not face the huge cost of restoring the UK’s defences. The Tories made a pig’s ear of the future procurement costings, to such an extent that it may be impossible to resolve. To add salt to the wounds, the deterrent appears to be out of control and programmes such as Ajax is compounding the problems. Thankfully, Tempest is now becoming an international project and, as such, is less likely to be axed. Starmer has made the DPI a priority but the Treasury is holding back as outside factors are rapidly exercising the number crunchers to the point of despair. The mantra ‘Welfare Before War’ is not just privi to the UK as many European countries are scratching their heads too, as the Iranian situation grinds down global growth by the day. That said, a modified DPI is no doubt being prepared, placing only critical needs and basically striking a pen through the wont to buys. Recent initiatives between the MOD and Treasury to encourage industry to co-fund programmes is an indication just how bloody the situation is.
Sorry DIP.
I’m not sure if it’s just the labour government that doesn’t want to face up to the cost of rebuilding defence or the country at large.
Survey show that 70% of voters want to increase defence spending but only 30% want to see cuts elsewhere to pay for it.
That being said starmer is the PM and he should have the balls to put his foot down and raise taxes to cover an increase in defence. The country would understand and in the long term it might make his legacy.
I agree
No 1) Starmer is still the prime minister not reeves and he needs to grow a pair and get it done. Somebody needs to bite the bullet over Ajax and makes decision . From what I know ( very little) it needs to be scrapped and an off the shelf alternative found .
2) Reeves needs to be reminded that defence of the realm is government first priority and nothing else matters unless we can.
3) a strong defence is a lot cheaper than a war.
4) the DIP is the latest in a long line of shields for the government to hide can kicking.
@ Michael Hannah: the only issue Starmer ever grew a pair over was prosecuting social media users for offensive posts.
Jim & MH, it’s a thorny issue alright; however, Mandelson occupies parliament at the moment, and vital hours have been lost on this issue where defence matters could have been addressed. As an aside, have you noticed how sparsely attended defence business issues are in the Commons? It highlights my belief that defence is the elephant in the room 90% of the time in Westminster. However, back to the issue of DIP and how it is strangling growth in the defence industry and, as you say, the defence of the realm appears to be sidelined by Starmer trying to stay in post and drawing all the air out of the room for other business. I fear only significant events will alert the government to do something, and believe it or not, Ukraine and Iran are not deemed serious enough to change the compass of complacency. That said, the Falklands issue may just spark some urgency and thereby create the fulcrum by which the DIP gets accelerated?
This is going to trigger some people because it’s really weird and involves AI, I asked Copilot AI and unusual question:
“Transpose the UK defence situation to a Gran Turismo 7 player entering an online, worldwide, Japanese GT500 tournament, where ANY car is allowed to enter. What car would the UK-proxy use and what would it do?”
Copilot’s answer, paraphrased: “Enter a road-spec, mildly-tuned Supra. Not remotely competitive with the competition, but still physically capable of racing, blocking other drivers, improving lap times. Argue with the pit crew over who’s paying for the tyres. Manage problems while declining to meaningfully upgrade the car, saying the upgrades are under review and the car will become competitive in a few months; point out improving lap times as evidence the situation is getting better.”
Are you 9 ?
(It’s OK, you still don’t have to reply If It upsets you).
I feel sorry for AI having to answer questions like that
😀
If Carns had integrity he’d resign over the shambles of a govt in building up our armed forces. Each of the services have never been weaker.