The UK Ministry of Defence (MoD) has been directed to spend 10% of its equipment budget on “innovative technologies” moving forward, amid controversy as the UK Chancellor Rachel Reeves delivered a Spring Statement to Parliament on 26 March.
It is unclear what the definition for innovative technologies allows for, although it is likely a call to promote the greater integration of small and medium enterprises in providing for military capability, an area where the MoD has historically been poor.
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Speaking before a packed House of Commons on 26 March, Reeves detailed that £2.2bn ($2.8bn) would be added to the MoD’s budget in the 2025/26 financial year, though with the target of 2.5% of GDP spent on defence by April 2027 unchanged and no commitment to raise this further during this parliament, it appears to be more an exercise in front-loading funding.
Additionally, an apparently new £400m protected budget for defence innovation was also created, intended to bring emergent technologies into military servicer quickly by harnessing the speed of development in the UK’s small and medium enterprise sector.
However, little information was forthcoming from the UK government as to the kinds of capabilities that will be sought through this fund.
During the Statement, Reeves spoke of the “regeneration” of Portsmouth Naval Base, and contracts announced in the 24 hours preceding the Statement detailed a £1.6bn deal extension to Babcock, dubbed “investment” by the UK government, for British Army maintenance.
James Marques, defence analyst at GlobalData, said the £400m innovation commitment could not be considered “DARPA-level funding”, in reference to the US defence and technology agency.
“We have to wait and see what happens, but I feel like in the current circumstances it will be important to see whether these new programmes go towards quick and simple boosts to frontline equipment, like buying a batch of COTS drones, or are spent on more broader ‘long term’ projects like infrastructure, AI, computing, and manufacturing, that don’t have such a straightforward hard-power impact,” Marques added.
COTS refers to consumer-off-the-shelf technology, effectively commercial grade systems that can be utilised or adapted for military use, as seen in the battlefields of Ukraine.
The lack of specificity in investment into the digital domain was also raised by Matthew Hodgson, CEO at encrypted messaging platform Element, which is used by the Ukrainian, German, and Polish militaries.
“The Spring Statement falls short in one critical area: defence spending, particularly in data privacy and secure communications,” Hodgson said.
“The announced £2.2bn boost to defence spending is a step in the right direction, but it must be carefully allocated to modernise secure communications and strengthen the UK’s overall defence capabilities.
“A stronger focus on cyber defence and secure data management is not just a necessity, it is an urgent priority. If the UK is to remain a leader in global security and intelligence, the government must recognise that cybersecurity and secure communications is defence,” Hodgson stated.
It should be noted that a programme to replace the British Army’s Bowman communications system under the £3.2bn Project Morpheus is at a standstill after years of delays.
UK claims British Army support “investment”
Hours before the Spring Statement was made, the UK government published a press release trumpeting a £1.6bn “investment” that would support the maintenance of the British Army’s Challenger 2 tanks, 105mm artillery guns, Trojan armoured vehicles, and other platforms.
In reality, the contract is a continuation of a previous deal with Babcock that, were it to have slipped, would have been a disinvestment in necessary maintenance requirements.
The UK government said the move would “boost the readiness” of British Army combat vehicles and support 1,600 jobs across the defence supply chain.
In its own release, UK defence prime Babcock stated that the five-year extension would be worth around £1bn in revenue which would be taken into the company’s contract backlog, and around £600m delivered as agent, not recognised as revenue.
Delivering contract funding as agent refers to the practice of an entity or individual acting on behalf of the funder to manage funding for a specific project, rather than directly receiving and managing the finances themselves.
