Lack of data threatens UK defence procurement decisions – report

28 April 2015

Government decision-making on defence spending may be “substandard” due to a lack of data, according to a study.

A report by the Policy Institute at King’s College London looked at the military, economic and security value of the UK’s defence industry.

It found there was a lack of analysis on defence spending and procurement, and said there was an urgent need for detailed data on the impact of this spend in the UK economy.

The report, A benefit, not a burden, said there was a dearth of data and rigorous analysis concerning the scale, scope and nature of the economic return of defence expenditure in the UK defence industrial base.

The authors also said they were surprised the Ministry of Defence had significantly reduced the scope of data for expenditure with the UK defence industry, the wider domestic economic and employment impact of spending, and the security and economic benefits of defence exports.

The report said: “Our findings suggest that without this data it is difficult – for the government or independent analysts – to conduct rigorous analysis on how any economic benefits of a domestic defence industrial base can be fully identified and exploited. Our analysis also suggests that without this data, government procurement choices may be substandard, with potential implications for the nation’s overall defence and economic wellbeing.”

The UK defence industry is a significant domestic industrial sector that adds around £8.2 billion in gross value to the economy. The MoD’s procurement choices between products and services sourced from the UK defence industry or through direct imports have consequences in terms of domestic employment levels, high-technology skills and financial contributions, the study said.

However, without official data, it is not possible to provide rigorous, robust calculations of the full economic and employment benefits to the UK, the report concluded.

The authors recommend that the government conducts or commissions a systematic study identifying the net economic benefits and costs of onshore defence industrial activity to the UK.

They also recommends a study to identify the aggregate economic and technological value provided by the UK supply chains that support the activities of the MoD and its prime contractors, and wider contributions to national innovation and the ‘knowledge economy’.

The report concluded that an onshore defence industry and thriving domestic defence industrial base and supply chain was needed to stop the UK jeopardising its freedom to act in an unstable, fast-changing world. The authors suggest that without this there is a risk that British forces may lose their technological advantage over potential opponents.

And called for a clear distinction between UK military capabilities where domestically sourced capabilities are necessary to ensure freedom of action and those where reliance on foreign sources is acceptable.

The report said despite a lack of data it was clear the maintenance of onshore defence industrial capacity provided significant military benefits to UK security and defence because it ensured a secure, assured and agile supply chain. The authors suggested that there is evidence defence exports also making a considerable economic contribution to the UK, as well as achieving security and defence objectives.

The report says: “In conclusion, our overarching message is that the onshore defence industrial base provides military, national security, economic, technological and strategic value to the UK. Identifying and quantifying where this value lies will be a critical pre-cursor to a considered and evidence-based approach to Britain’s forthcoming review of defence and national security strategy.”

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