INP0007

Written evidence submitted by ADS Group Ltd

1.      INTRODUCTION

 

1.1.  ADS is the premier trade association for the UK’s defence, security, aerospace, and space sectors. ADS has more than 1,100 member companies across all four sectors, with over 95% of these companies identified as Small and Medium Size Enterprises (SMEs). The UK is a world leader in the supply of defence, security, aerospace and space products and services. From technology and exports to apprenticeships and investment, our sectors are vital to the UK’s growth, with companies in 2020 generating £79 billion turnover in the UK, including £45 billion in exports, and supporting over one million jobs.

 

2.      EXECUTIVE SUMMARY

 

2.1.  Industry welcomes the increased attention shown by the UK Government in the Indo-Pacific, a region which is increasingly providing new commercial opportunities for UK plc. The signing of AUKUS is an important demonstration of confidence in the UK’s defence industrial base, which must now be exploited through an energised industry-government approach to the region.

 

2.2.  To further develop these opportunities in the Indo-Pacific and beyond, the Government need to swiftly progress on maturing a standardised Government to Government (G2G) commercial mechanism for defence and security sales and work with its global partners and industry to implement this policy effectively. Furthermore, the Government need to fully adopt a ‘Team UK’ approach to pursuing exports opportunities in the region, while also securing the widest possible access to opportunities through the CPTPP.

 

2.3.  Alongside pursuing opportunities in the Indo-Pacific, continued investment in NATO, enhanced engagement through the National Technology and Industrial base, and a fresh approach towards dialogue and partnership with European partners on defence and security could further help maximise the economic potential of the Global Britain agenda.

 

3.      OPPORTUNITIES FOR THE DEFENCE INDUSTRY IN THE INDO-PACIFIC

 

3.1.  From 1970–2016, GDP and GDP per capita growth in Asia was much higher than elsewhere in the global economy. Its share of the world’s GDP rose from less than one-tenth to three-tenths, while its share in world industrial production jumped from 4 per cent to 40 per cent. Asia’s economy is now officially larger than any other region in the world and by 2040, economists estimate that the region could account for more than 50% of global GDP. In this light, industry welcomes the UK’s move to join the £8.4 trillion CPTPP free trade area.

 

3.2.  From a defence perspective, between 2011-2020, military spending in the Indo-Pacific increased by 47%, and in 2020, after the Americas, the Indo-Pacific region had the second largest world share of military spending (27%). The UK has already had some significant exports and collaboration successes in the region. This includes the Type-26 collaboration with Australia; the UK-Japan joint agreement on developing sensor technology for the Tempest and Japan’s FX programmes respectively; the AH140 design licence export to Indonesia; a UK-South Korea industry MoU to support South Korea’s aircraft carrier programme; a UK-Australia space bridge agreement; the deployment of a ground station for the UK Skynet system in Adelaide; and the F35 collaboration with Australia and sales to Japan, South Korea and Singapore.

 

3.3.  The AUKUS trilateral agreement is a highly important signal not just to UK strategic partners in the Indo-Pacific, but also to industry across the supply chain, representing a significant and concrete commercial opportunity for UK Plc. Though the current focus of the agreement is centred around the provision of nuclear-powered submarines to Australia, industry is encouraged by the inclusion of cyber capabilities, artificial intelligence, quantum technologies and additional undersea capabilities as other opportunities for collaboration. Industry also welcomes the discussion around further collaboration on capabilities beyond these areas, as reported by the AUKUS Joint Steering Group meeting on Advanced Capabilities in December 2021.

 

3.4.  The economic opportunities combined with the UK’s involvement in the Five Eyes intelligence alliance, the Five Power Defence Arrangements, and its deployment of the Carrier Strike Group to the Indo-Pacific therefore give significant credence to the Government’s renewed interest in the region.

 

3.5.  While the UK has already seen some important export and collaboration successes in the region, there are clear opportunities for further success. In order to maximise the opportunities, the Government need to swiftly mature a standardised Government to Government (G2G) commercial mechanism for defence and security sales, as referred to in the Defence and Security Industrial Strategy (DSIS), and work with its global partners and industry to implement this policy effectively. This will require an effective international partnerships strategy, which understands the wants and needs of partners in the Indo-Pacific and beyond, so that industry can tailor solutions and further develop exports opportunities. Furthermore, the Government need to fully adopt a ‘Team UK’ approach to pursuing exports opportunities in the region, in the way that other allied nations do, while also securing the widest possible access to opportunities through the CPTPP as the UK approaches accession.

 

4.      MAXIMISING THE ECONOMIC POTENTIAL OF GLOBAL BRITAIN

 

4.1.  Alongside developing opportunities for the advancement of UK prosperity through a renewed strategic interest in the Indo-Pacific, the UK should continue to invest in NATO, the NTIB and pursue a partnership on defence and security with the EU. The Think NATO initiative announced in the DSIS offers an important opportunity to strengthen commercial relationships through NATO and NATO allies in North America and Europe, while enhanced involvement through the National Technology and Industrial Base (NTIB), composed of the UK, the US, Canada, and Australia, also offers significant opportunities to eliminating trade and non-trade barriers between the component states. A fresh approach towards a defence and security dialogue and partnership with European partners, providing the UK an opportunity to influence nascent EU developments in the UK national interest, could further strengthen the economic opportunities open to industry across the supply chain and ensure UK industry’s international competitiveness.

4th March 2022