The Spring Statement signalled a much needed and meaningful shift in the government’s approach to strengthening the UK’s independent defence and security capabilities.
In response to growing geopolitical headwinds, the Chancellor increased the MoD’s budget and committed to speeding up procurement timelines, particularly for novel technologies and for greater investment in dual-use technologies – those innovations with both civilian and defence applications. This is welcomed.
The government now needs to match these positive decisions, not just with action, but action at a speed that’s akin to the country being on a “war footing” and materially accelerating the speed and boldness of its procurement of independent dual-use technologies from Britain’s world-leading science and technology companies.
The geo-political risks are getting more challenging by the day – government action needs to be days and weeks, not years and decades.
The Commercial Opportunity
Many of the technologies we take for granted today, from GPS to drones, began as military programmes before transitioning into successful commercial applications.
The United States has mastered this transition, with companies such as SpaceX and Anduril succeeding in both the defence and civilian markets, adding billions to the American economy whilst also strengthening US national security.
The UK is well placed to follow suit, as a world-leading centre for science and technology research and the foremost military power in Europe, we are building a strong pool of companies developing dual-use technologies.
One example is the Oxford spinout Alloyed, which raised £37m of capital in March, and is developing advanced metal components for high-performance defence and aerospace applications, while also working with consumer tech companies and the automotive industry.
The Valley of Death
Yet, despite the country’s exceptional research base and the innovative dual use companies that are emerging from it, they struggle to scale here. Part of the challenge is the widely covered lack of UK-domiciled scale-up capital.
But the other major challenge for dual-use companies is that selling into the UK defence establishment has been likened to a “valley of death” – to the point that some technology investors actively avoid backing companies which have the UK government as part of the go-to-market strategy.
This is a travesty: the UK’s world-leading dual-use technology base is not fully deployed to strengthen the independent security of the country; our defence tech risks falling behind that of our adversaries; other more established (including non-UK) companies increasingly dominate the defence supply chain; and those innovation-led UK companies with viable, cutting edge dual-use technologies end up “following the money” out of the UK, primarily to the US, providing little to no benefit to the UK economy or its national security.
To unleash their potential, we need to direct more of the UK’s procurement power towards UK dual-use innovations and remove the barriers to British early-stage companies.
Backing British companies
The Spring Statement did acknowledge the need for greater speed and announced plans to make significant cuts to procurement timelines. This includes reducing the time to contract for major platforms from six years to two, cutting modular upgrades from three years to one, and implementing rapid commercial exploitation cycles in just three months.
In a further sign that the government is aware of the potential in this space, it ringfenced at least 10% of the MOD’s equipment procurement budget for novel technologies, including dual-use technologies.
Together with the creation of a new body responsible for defence tech innovation, announced earlier in the month, these reforms, if implemented effectively, will mark a significant improvement in the way the UK brings new technologies into service.
To fully leverage the opportunity, however, the government must ensure these reforms deliver for those British companies that have best-in-class technology. Like other nations, we should be unashamedly trying to back our homegrown winners to succeed, not least because we have the leaders in many areas of dual-use technology.
This means the government – and specifically the MoD – need to be much more proactively seeking out and engaging with those early-stage dual-use innovation companies now – to both fast-track the transformation of our defence so that it’s fit for this age of advanced technology, but also to strengthen and support the UK’s independent early-stage dual use innovation ecosystem. Without both the long-term, strategic security of the nation will be compromised.
Read more: MoD tech spending could be just what British AI needs
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