A report by Intellect, July 2010

Introduction

Information Superiority (IS) is essential to protecting and defending UK nationals from various threats. Whereas the utility of platform capabilities such as warships, submarines, and military aircrafts provide a very visible role in enhancing the nation's security, IS capabilities, whilst less visible, are the most critical capabilities in achieving the UK's defence and security goals. This paper, written by Intellect, will illustrate how these technologies benefit the UK's defence and security operations. Intellect is the trade association for the UK technology Industry, representing around 800 companies across the information technology, telecommunications, and electronics sectors. Its members include the strategically important companies active in the defence and security markets of interest to the UK.

IS provides the foundation for the UK's intelligence and information capabilities. These capabilities form the eyes, ears, and nervous system to the Ministry of Defence's (MoD) military operations. The UK's success in defending and securing the country from current and future threats depends on the country's ability to understand its adversaries' movements and intentions and the environments that they operate in. Gaining this understanding means that UK Armed Forces must be capable of continuously collecting (sense) critical data, interpreting what this data means by transforming it into useful and usable information or intelligence (understand), communicating this information to those who need it (share), and exploiting this information to make better informed decisions (decide).

Tangible benefits arising from various IS capabilities are evident in the context of the UK's current and likely future operations. For example, when conducting counter-insurgency operations, a strategy employed by UK forces in Afghanistan, information is the key capability for determining success. The UK must understand the operational environment better than the enemy, i.e., achieve information superiority. Industry's IS capabilities also play a critical role in ensuring the security and resilience of the UK, its public and private sector, and its critical national infrastructure. In this capacity, IS is critical in policing and emergency response activities.

By investing in these capabilities, the UK's defence and security operations benefit from increased effectiveness in the precision of action and the ability to conduct joint operations, which often lead to reduced fratricide and improved survivability both of defence and security forces and equipment. Therefore, IS capabilities allow the UK to defend and secure the nation at a smaller cost, both in terms of money and the loss of life.

Ship 1 - HMS Daring was declared in service with the Royal Navy in July 2010.

Ship 2 - HMS Dauntless was Commissioned into the Royal Navy in June 2010. Sea Viper was fired from HMS Dauntless on 29th September in the first firing of the missile from a Type 45 platfrom.

Ship 3 - Diamond was accepted off contract at Portsmouth Naval Base in September 2010.

Ship 4 - Dragon will shortly commence her first set of sea trials.

Ship 5 - Defender was launched in October 2009 and is currently being fitted out in Glasgow.

Ship 6 - Duncan was launched on 9th October 2010 and was 60% complete on launch. The ship is named after Admiral Lord Viscount Adam Duncan who defeated the Dutch in the Battle of Camperdown on 11th October 1797.

Rees Ward, Chief Executive ADS

The UK defence industry is a crucial partner for the Government if it is to achieve its aims around support to the Armed Forces and the Force 2020 vision, on economic growth and on exports. Without sufficient investment in the UK sector the industry will be unable to develop new battle-winning products onshore specific to our own Armed Forces as well as products for export.  There is great potential for development of the fragmented UK security market, and we support proposals for Government and industry to work together more effectively to support national security and promote economic growth.

The UK defence industry supports over 300,000 jobs and generates an estimated £35 billion per year to the economy.  It represents 10 per cent of UK manufacturing and exported £7.2 billion of products in 2009.  The wider security sector supports around 600,000 jobs and is poised for strong global growth thanks to the innovative, world-leading and proven equipment and capabilities that it develops.

The UK industry is a crucial partner for the UK Government to achieve its military and economic aims and the Green Paper offers an excellent opportunity to suggest ideas to the Government about reforms and improvements to deliver additional benefits for our troops and security authorities.  This will also benefit the taxpayer through providing increased value for money and enhanced public protection.  We welcome the open attitude in which this consultation has been carried out and we look forward to further discussions with the Government on how industry can help in the future.

In the industry's view the White Paper that will follow this Green Paper should describe how the UK's national security policy can both underpin the nation's defence and bring broader value to our economy, including how Government policy can contribute to advanced manufacturing and engineering, to the skill base and to British exports.

The experience of the defence and security sectors as well as their excellence in products and services is recognised both at home and by other nations.  The UK is number one in Europe and second only to the US worldwide in the defence exports market with a 21 per cent market share.  Furthermore, the innovative and proven UK security sector is primed for global growth providing the correct climate is delivered by the Government.  UK industry is also a world leader in providing engineering and training support services through innovative contracts and partnerships that demonstrably reduce MoD costs and have great potential as an export model in their own right alongside equipment sales.

Industry believes that the Government would gain through assessing the economic benefits of the UK defence and security supply chain as well as the unique strategic value of the industry to the nation and to UK national security.

A|D|S is the trade organisation advancing the UK Aerospace, Defence, Security and Space industries. A|D|S was formed from the merger of the Association of Police and Public Security Suppliers (APPSS), the Defence Manufacturers Association (DMA) and the Society of British Aerospace Companies (SBAC) in October 2009. A|D|S also encompasses the British Aviation Group (BAG).

The US-UK Defence Trade Cooperation Treaty has passed its final hurdle towards ratification on both sides of the Atlantic with approval coming from the United States Senate and House of Representatives.

The Treaty was signed in June 2007 by then UK Prime Minister Tony Blair and then United States President George W Bush. It aims to streamline and improve defence export processes and allows for the export of defence articles, without a license or other written authorization, from the US to an "approved community" of recipients in the UK and US and the subsequent transfer of these articles within that community without further US authorisation. This has the potential to boost trade between both countries and benefit the economies of both nations by retaining control of such transfers but speeding up the process for sales of equipment with US-made components to the UK Ministry of Defence and UK-sourced equipment to the USA.

Ian Godden, Chairman of the defence indutry body A|D|S, said: "The approval of the Treaty by the Senate is most welcome news. It has been a long journey but we sincerely hope that it will be worth the wait given the potential benefits that could now result.

"The Treaty reflects the close working relationship of our armed forces and the industrial collaboration of our two countries and it should deliver clear benefits for our troops. The UK is the largest international supplier of defence equipment to the US and is second only to the United States in the global defence export market. Therefore, the long-term significance of this new defence export control regime should not be underestimated."

Aerospace Industries of America President & CEO Marion C. Blakey said AIA that welcomes passage of the U.S.-UK and U.S.-Australia Defense Trade Cooperation Treaties by the full Senate.

"Ratifying these treaties will provide important benefits to both our national security and our economy.

"The treaties will streamline the licensing system for defense exports to our staunch allies, the UK and Australia. AIA has long advocated that we should do everything possible to ensure that their troops and our troops are able to fight shoulder-to-shoulder with the best equipment available.

"Passage of these treaties is in concert with the Obama administration's plan to modernize export controls. Our industry, with about 820,000 employees and 30,000 suppliers from all 50 states, strongly supports efforts to adjust outdated restrictions on American companies as we work to equip our closest friends and allies with the technology that allows our militaries to defend our mutual interests.

"We congratulate the Senate for passing the U.S.-UK and U.S.-Australia Defense Trade Cooperation Treaties, and thank both the House and Senate for passing the accompanying implementation legislation."

As the Prime Minister prepard to chair a National Security Council meeting to discuss the options around the Strategic Defence and Security Review Ian Godden, Chairman of A|D|S, the UK's aerospace, defence and security trade
organisation, highlighted the significance of decisions on defence spending

The Government needs to bear in mind that as well as the decision-maker on defence
it is also the customer.  Its decisions have a profound impact on our armed forces
and the 300,000 people who work across the UK in the defence industry to support our
troops.  The defence budget has been relatively flat with little in the way of
increases over the last 20 years while other Government departments have seen their
budgets double or even triple over the same time period.  With our troops constantly
being asked to do more with less, the Government keen to increase exports and
defence able to deliver enhanced returns on investment - a £100m spend yields £227m
in returns - it makes no sense on any level to be cutting investment in defence
because of this knock-on effect on our armed forces and economic recovery.  Defence
is 10 per cent of UK manufacturing and Britain is currently number one in Europe and
second only to the US in terms of the global defence exports market but this
position would be under threat if investment is cut, leading to a dearth of new
programmes to export.

Furthermore, the proposals for a greater reliance on high-technology equipment in
the future do not align with the cuts of over 20 per cent in the MoD research and
technology budget over the last three years - that have already cost hundreds of
high-skilled jobs in the industry.  This budget, of less than 1.4 per cent of the
total defence budget, must be reprioritised within the MoD to deliver the future
capabilities for our armed forces.

There is of course room for reform within the armed forces, the industry and the
MoD to deliver even greater improvements and we are committed to playing a full part
in these changes that will also deliver savings.  But the implications for any
further cuts in defence spending in terms of their impact on our troops, our
national security, our global trading position, our economy and on the long-term
capability of our industry to continue to supply the best possible equipment to our
armed forces cannot be ignored.

The voice of Britain's big defence companies, the Defence Industries Council today released public opinion polling data showing that both the UK Armed Forces and the British defence industry that provides them with their equipment are both highly regarded by the public.

By Great North News Services staff reporter

The campaign by Harwich MP Douglas Carswell against the UK defence industry has been carried to the House of Commons – and been slapped down by the Shadow Defence Minister.

Gerald Howarth MP said " As far as the defence industrial strategy is concerned, I am afraid to say that I fundamentally disagree with my hon. Friend the Member for Harwich. He is entitled to his view, but I have to put on the record that some of the things that he said about buying off the shelf are not the policy of the Conservative party. The policy of our party is to ensure that we have sovereign capability over key equipment, such as the joint strike fighter, and his suggestion that the whole procurement programme is a corporatist, protectionist racket is very wide of the mark."

By Jeffrey Sterling and Nick Butler

Over the next three weeks the coalition Government will make the most significant set of decisions on UK industrial policy which have faced any administration in the last four decades. Important enough in terms of Britain's strategic position in the world, the decisions on the defence budget to be announced by the Chancellor could also crucially shape the future of much of our remaining industrial and engineering base.
Attention, both within Whitehall and in the media has inevitably focused on the possible reductions in troop numbers, on the number of carriers and jet fighters we need, on the role of the Royal Air Force, and on the future of the UK's independent nuclear deterrent.

All are serious issues but equally important, and so far barely discussed at the meetings of the National Security Council which will advise the Prime Minister on defence issues, are the questions concerning the industrial capacity which must underpin any defence strategy.
No one can deny the serious economic circumstances facing the Government or the budget problems facing the Ministry of Defence in particular. The bow wave of commitments repeatedly "pushed to the right" - a piece of civil service jargon reflecting the tendency to extend the timescale of individual projects in order to spread the cost into future years - has been well documented. So too has the "bias to optimism" which has produced a persistent and repeated underestimation of costs.

Both are real and serious problems. As the Defence Secretary has said the MoD's finances are in a mess and must be sorted out. But Britain's future defence capability cannot be made the victim of punishment for past mistakes. Defence cannot be treated as just another Government department while soldiers are fighting and dying for their country in Afghanistan. Five years ago the UK devoted some 4.5 per cent of its GDP to defence. To reduce that proportion to only 1.6 per cent – which would be the effect of the proposals currently under consideration - would not only breach our commitment to NATO which has set a two per cent guideline but would also ignore the reality of the risks we face. Balancing the budget is important but so too is Britain's ability to defend itself and our strategic international interests in a dark and threatening world.

The definition of those interests and the scale of resources applied to their protection are matters for high political decision. But defence is not an abstract concept. The details of each assertion of defence policy depend on the underlying ability to deliver what is promised. In 2005 the Defence Industrial Review identified the key areas where Britain needed to protect and develop engineering and technical strengths to meet specific defence needs. The report was clear. While some equipment can be bought on the open, international, market other elements absolutely require indigenous industrial capability. The integration of complex information in the cockpits of planes , the management of information gathered from multiple sources which make up the most advanced Command and Control systems and cryptography – the protection of vital information – are not skills which can be outsourced even to suppliers located in countries with whom we are close allies.

At the heart of defence policy is the national interest and to protect that interest in extreme circumstances we need companies which can develop, manufacture, supply and then service each of key leading edge technologies. We need to retain the skills and experience of the individuals and teams spread across large and small businesses whose brain power has given Britain not just security but a source of real competitive advantage.

In many of areas UK companies hold world leading positions. Although some technology cannot easily be traded, much can – to the benefit of the balance of payments and to employment across the UK. Such trade can also bring direct benefits to our own defence. There are huge spin off benefits from a sector which now represents Britain's largest remaining investment in advanced manufacturing and high level engineering skills.

A prime example is in homeland security where the world leading technology developed in this country which tracks the movements and activities of individuals and groups through advanced data management technology helps protects both against terrorism and against organised crime. Much of that technology can be sold abroad and such sales can extend the security of people in this country by making other countries such as India and Pakistan safer against threats which respect no national frontier.

The analysis behind the 2005 Defence Industrial Review was extended and updated by work undertaken by the Ministry of Defence, the Department for Business and the Home Office before the General Election. That work, commissioned and led from No 10 by one of the authors, identified the crucial links between defence policy and industrial capability. That report also identified the extent and quality of the supply chains which underpin the strengths which exist today. Regrettably that report remains unpublished.

That report should be on the table for the National Security Council, the Chancellor and the Prime Minister as they take the crucial decisions on defence policy over the next few weeks.

Traditionally and beneficially major decisions on defence in the UK have been taken on a bipartisan basis. Both the Prime Ministers we have worked for, from their very different political perspectives, believed that defence was too important to be left to the bickering and pointscoring of party politics. That was the spirit in which the last Government launched the current Strategic Defence Review. The terms of reference were discussed on a cross party basis. The timetable for the review was deliberately set to run beyond the General Election and in order to ensure that the conclusions as far as possible could be reached without reference to short term political advantage.

The serious risk now is that hasty decisions driven solely by budget considerations will destroy that bipartisan approach and will pre-empt the serious work which needs to be done in analysing the threats and risks to our national interest. We need a defence strategy which is not only resilient in the face of a fluid and volatile set of risks but also and crucially a strategy which is matched at the industrial level by an absolute commitment to maintain the means of delivery.

Once destroyed by random budget cuts that capability cannot be recreated. To cut without thought for the consequences would be to imperil the security of the nation which is the first, and preeminent responsibility of any Government.

Lord Sterling was a senior adviser on industrial policy to the Government of Margaret Thatcher. He was also Executive Chairman of P and O SN.

Nick Butler was senior policy adviser on industrial policy to the Government of Gordon Brown until the last election. He was previous head of strategy for BP.

This is an extended version of a letter published in the Financial Times yesterday.