Edinburgh Castle

Friday 24th June 2022

Culture change needed at the Ministry of Defence to ensure SMEs in Scotland receive a fair share of defence contracts

The Scottish Affairs Committee today, on the eve of Armed Forces Day, argues that small and medium enterprises (SMEs) in Scotland are being overlooked by the Ministry of Defence (MOD) and its prime contractors when they select companies to fulfil defence contracts.

This is despite Scottish industry having the skills and ambition to match any other part of the UK and the nation being pivotal to the UK’s military infrastructure. While nearly 10% of the MOD’s spending with industry is spent in Scotland, this spending is heavily skewed towards major international prime contractors. Spending with Scottish SMEs accounted for only 2.5% of the MOD’s total spending with SMEs in 2020/21. The Committee heard how Scottish SMEs find it “extremely difficult” to access the UK defence sector and that that “culture change is required” to address UK disparities in spending with SMEs.

Defence in Scotland is however a positive story to tell. In its report, Defence in Scotland: military landscape, the Committee highlights evidence that Scotland’s diverse military capabilities are vital to the UK, for example RAF Lossiemouth’s role in intercepting foreign aircraft in UK airspace. Scottish bases – such as HMNB Clyde and RAF Lossiemouth – are already benefiting from increased funding the UK Government has allocated to defence this Parliament. This funding is having a positive impact on communities and local economies around bases.

The Committee considered the impact of military personnel and their families moving between bases in Scotland and the rest of the UK. The Committee heard how moves can be disruptive for individuals and families adjusting to different education and healthcare systems, and different tax rates. Discussed with UK Defence Minister Baroness Goldie at an evidence session, difficulties transferring professional qualifications such as teaching can be barrier for Armed Forces families moving between England and Scotland. To ease this burden, the Committee recommends that the MOD conduct a review of the information it shares with military personnel moving to bases in Scotland and accelerates efforts to reduce barriers regarding the transfer of professional qualifications.

The UK Government has announced its goal to reduce the defence estate by 30% by 2040, creating fewer and larger sites. The Committee collected evidence that the impacts of base closures in Scotland can vary depending on location. In prosperous areas, bases can become much-needed sites for housing or businesses but, in less affluent areas, the consequences can be damaging and long-lasting, with instances where local people need to leave the area to seek new employment opportunities. To mitigate negative impacts, the Committee recommends that the MOD intensifies its collaboration with Scottish local authorities, including engagement at earlier stages, and that impact assessments for proposed base closures and major expansions be compiled and acted on.

Scottish Affairs Committee Chair Pete Wishart MP said:

“Scotland’s contribution to UK defence is undeniable. Our varied Scottish defence estate, ranging from land, sea and air, are pivotal to UK security and vital to our military allies. It’s brilliant news that the UK Government’s increased defence spending is benefiting MOD bases and local communities in Scotland.

“Scotland’s impressive reputation in defence can be enhanced further if more Scottish SMEs are engaged by the MOD to fulfil UK defence orders. The overlooking of Scottish SMEs must change so that different areas of the UK can benefit and contribute to our national security, and allow more local economies to thrive.

“The MOD must acknowledge the numerous barriers that Armed Forces personnel and their families are facing when they move between UK bases. This is an issue likely to be exacerbated with base closures and expansions elsewhere, in Scotland and around the UK, as the MOD looks to reduce its defence estate by 30%. Guidance on differing healthcare and education services, tax and even transferring professional qualifications needs to be reassessed to make sure moves are as smooth as possible.”

In its report, the Committee also requests clarity on the UK Government’s policy on military shipbuilding procurement: an issue that will likely be revisited in its inquiry Defence in Scotland: Military Shipbuilding.

Read the report


Report cover Defence in Scotland Military landscape

Top image by Kevin Phillips from Pixabay

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