Written evidence submitted by ADS (SSF0005)
Securing Scotland’s Future: Defence Skills and Jobs – ADS Submission to Scottish Affairs Committee, December 2025
About ADS & ADS Scotland
Executive Summary
Inquiry questions
1.1 Scotland already plays a pivotal role in the UK’s defence and national resilience. The sector employs over 16,000 people directly, contributes around £3.3 billion in turnover, and provides national capabilities across shipbuilding, electronics, optics and armoured vehicles. Increased UK defence spending presents an opportunity for Scotland’s industrial base to consolidate and grow to aid resilience, particularly if investment is accompanied by targeted support for skills, infrastructure, and innovation.
1.2 While the UK Government holds responsibility for procurement, innovation and strategy for the Scottish defence industry, it is the Scottish Government that pulls the myriad levers behind the key areas of education, skills and regional economic development. For Scotland to maximise the benefit of the increased UK defence spend there will need to be structured collaboration between the UK and Scottish Governments. Aligning these areas of policy would ensure that Scotland’s industrial strengths are all positioned to meet national defence demands efficiently and inclusively.
1.3 Defence investment has the potential to support communities far beyond traditional shipbuilding hubs. The aerospace, defence, security, and space sectors in Scotland already sustain 36,900 high-quality jobs across Scotland. Defence activity in Scotland supports highly skilled jobs from communication, to computing and data analytics, to highly technical engineering. Continued and increased activity in assuring defence readiness, through activity such as Test & Evaluation (T&E) activity and training, will support employment in Scotland’s air and maritime test ranges. These currently include rural sites such as the Hebrides, Kyle of Lochalsh and West Freugh. To ensure that the benefits of increased defence spending are felt across Scotland, investment in infrastructure and supply chain enablement will be critical. Access to secure warehouse infrastructure, for example, is critical for all companies across the supply chain, from Primes to SMEs.
1.4 To best spread the economic benefits across the regions of Scotland, including rural and deprived areas, both Governments should look to build on the existing university and college networks to strengthen the Defence Growth Deals. Facilitating the connection between Scottish Universities, innovative SMEs, and established defence companies will create sustainable growth in the Scottish Defence and Security ecosystem. This network could be used to ensure the Government’s Defence and Industrial Strategy’s (DIS) policies can rightly impact the regional skills training and R&D investment in areas such as Moray and Ayrshire. This alongside the leveraging of the DIS’ Defence Growth Deals and the expansion of Scotland’s supply chain participation, as noted in sections 3 and 4 respectively, would distribute defence-related prosperity geographically, not just within existing industrial clusters.
1.5 The implementation of reforms to the Procurement Act 2023 could also have a potential impact in ensuring industry in more rural areas of Scotland can benefit from MOD procurement, through the right to make geographic locations a determining factor. To succeed in this, cooperation between UK Government and Scottish Government is critical to ensure this new power can be leveraged to best support the entirety of Scotland.
1.6 When considering Scotland’s future economic growth, it is important not to overlook the Scottish First Minister’s statement of 3 September 2025. The Scottish Government announced a pause on new awards of public money and support to companies working in sectors where their ‘primary market’ is defence (including defence industrial sectors such as aerospace & aviation, land systems, space & intelligence, and defence logistics and support) if they, or a member of their global corporate group, has defence products or services that may ultimately be provided to any country where there is ‘plausible evidence’ of genocide, at this time currently defined by Scottish Ministers as Myanmar and Israel.
1.7 This policy, introduced with ‘immediate effect’ on 3rd September was not discussed with industry in advance to ensure that there were no unintended consequences in the implementation. It was introduced with no accompanying impact assessment being made public. ADS has now received implementation guidance which makes clear that the ‘primary market’ must be defence for these restrictions to apply to global operations. While this could reduce the scope of the policy, there are still multiple details which require clarification, such as definitions of a number of terms in the guidance, how often and how it will be reviewed if a country has plausible evidence of genocide being committed and might be removed from the ‘specified country’ list, how sensitive submissions from companies will be handled , and wider communication of what will and will not be in scope is still needed. Although the Deputy First Minister’s office emphasised that “The Aerospace, Defence, Marine and space sectors are not only fundamental to our national security but also serve as strategic drivers of Scotland’s future workforce”, policies such as this undermine this sentiment.
1.8 Many Scottish firms rely on support, advice and guidance from Scottish Enterprise, and other economic development agencies. Many of the sectors high growth companies may look to the Scottish National Investment Bank to invest in new capabilities and maintain competitiveness. Without clarity on how these funding restrictions will be applied, there is a real risk that Scottish companies may be unable to match the pace of innovation and capital investment occurring elsewhere in the UK, potentially reducing their ability to compete within defence supply chains and to create high-value employment in local communities. Scotland’s ability to participate fully in the economic dividend generated by rising UK defence spending may be constrained, despite the country’s proven industrial strengths. The development, announcement and implementation of the policy further raises questions about Scotland as a stable environment for defence investment. At a time of unprecedented opportunity and need in modern defence, the Scottish sector is currently in a state of ‘limbo’ as industry awaits clarification, with a risk of being put at a competitive disadvantage undermining its ability to fully support UK national security. Any delay in investments is time that companies, the sector and the country can ill afford to waste and sends a negative message not only to Scottish companies but the global community and investors.
1.9 A coordinated and common approach between the UK and Scottish Governments is essential for UK security and is needed to ensure that Scotland’s defence sector retains full access to emerging opportunities within the national defence landscape, whilst continuing to play its crucial role in UK security.
1.11 Another prime example would be Prestwick Aerospace cluster, which is a leading civil aerospace hub with over 5,000 highly skilled staff, and 8,000 engineering graduates produced annually by the Universities in a 45 mile radius. Prestwick provides a strong foundation for innovative methods such as dual-use, into which the DIS plans to invest. Together, these examples highlight how Scotland’s industrial base already contains the building blocks for transformative growth. By harnessing existing strengths, Scotland can accelerate progress in high-value sectors and ensure prosperity is shared across every region.
2.1 Defence must be at the very heart of an industrial vision for Scotland. There are currently significant barriers around skills and public funding, which are impeding Scotland’s attractiveness as a place for defence companies to invest and do business. Significant growth is certainly possible, but only if the UK and Scottish governments work together to take the next steps. Addressing barriers requires a coordinated approach that uses the UK Government’s defence procurement power alongside Scotland’s devolved education and training levers
2.2 Research from ADS and Public First revealed that currently the defence and aerospace sectors in Scotland already outperform the UK average on job quality, with 81% of Scottish defence jobs being rated above-average in pay, skills, stability and development. To maintain and grow this high-value employment, the focus needs to be on skills and pathways. Both the UK and Scottish Governments need to work in partnership with the other devolved administrations to join up their skills strategies and promote a cohesive strategy by sharing best practices, future skills needs and behaviour modelling. There should also be regular curriculum reviews to ensure Science, Technology, Engineering and Mathematics (STEM) learning and careers advice is reviewed and delivered in partnership with industry. It would therefore be beneficial for Government to involve industry in curriculum design, with the aim of better integrating new technology and working practice innovations so to help prepare future generations. ADS is ready to support with promoting careers across our four sectors and supporting in-house learning across future skills needs.
2.3 Increasing the number and type of apprenticeships will deliver an economic dividend and ensure that the UK has the skills to meet the threats of the future. To deliver this, we must see an expansion in the scale of engineering skills provision, particularly around the number of pathways and opportunities for skills in dual-use technologies. Broadening the volume in the pipeline is key to generate STEM and engineering skills, agnostic of sector, but to the benefit of all sectors. Working closely with SMEs who work across multiple sectors would help promote business growth, and enable greater connections between sectors such as aerospace, space, and energy with defence in the supply chain. Building on this, the Scottish Government should work with the UK Government to ensure Scotland can access the benefits of new Defence Technical Excellence Colleges. For many training providers, the defence apprenticeships delivered underpin the viability of the education establishment, supporting apprenticeships in sectors such as Offshore Wind, and clean energy. Supporting defence apprenticeships therefore has the wider economic benefit of reinforcing the ability to provide apprenticeships in other sectors as well.
2.4 ADS welcomes the principles underpinning the Tertiary Education and Training (Funding and Governance) (Scotland) Bill. Fragmentation in the skills landscape has compounded the skills challenges, so simplification of accountability under the Scottish Funding Council (SFC) is welcome. However, an expectation must be set so that the SFC responds to industry demand. Closer collaboration between the UK Department for Education and Education Scotland is also critical to ensure learnings can be shared around curriculum development to support STEM and engagement with local employers.
2.5 The principal barriers to attracting and retaining talent are well understood. Demand for apprenticeships far exceeds supply, but funding for apprenticeships remains below 2019/20 levels. Fragmented responsibility between devolved and reserved systems can slow down decision-making, while competition from the energy and technology sectors, which often offer comparable or higher salaries, makes recruitment more challenging. Negative perceptions of the defence sector also hinder recruitment. The UK and Scottish Government must work together to promote the importance of the defence sector in keeping us safe and enabling prosperity. The current inability for organisations who pay into the Apprenticeship Levy to use leftover sums in devolved nations also currently hampers opportunity. Moreover, a lack of clear, visible career pathways from school through to industry deters young people from pursuing long-term careers in defence. Increasing support for paid internships could provide some of this visibility, as opportunities such as this enable students to gain an informed view of the defence sector, and greater knowledge on potential career paths.
2.6 A significant opportunity to address Scotland’s apprenticeship and early-career skills needs lies in the implementation of the new Apprenticeship and Graduate Clearing System, as presented in the DIS. This mechanism has the potential to rebalance access to talent by ensuring that individuals who are not taken on by oversubscribed anchor primes can be matched efficiently with SMEs and regionally disadvantaged industries that urgently require such entrants. By widening the distribution of early-career workers and preventing concentrations of talent within only the largest employers, the clearing system could help ensure that the benefits of defence workforce investment are shared more evenly across Scotland.
2.7 The UK Government has a vital role in ensuring that Scotland’s defence workforce can meet future demand. By co-funding apprenticeships and Defence Technical Excellence Colleges, and by working with the Scottish Government to align curricula with defence needs, the UK can help remove the bottlenecks that limit Scotland’s capacity to grow. A joint UK-Scottish skills taskforce could ensure that the funding, delivery and standards of training programmes are consistent across the UK, while also recognising the distinctive regional advantages of Scotland’s industrial base. Such collaboration would demonstrate that an increase in defence spending can serve both national and regional interests. The recently published DIS also highlights £182m for the development of skills, but it is not yet clear if and how Scotland will benefit from this. There needs to be a clear allocation of this £182m among the regions spotlighted in the DIS, only then can the full opportunity facing Scotland be recognised. It is also important that funding mechanisms for skills from the UK Government are able to be utilised by Scottish Government with flexibility to provide the greatest impact, in alignment with any UK-Scottish skills taskforce.
2.8 Innovation and collaboration clusters are already proving to be powerful drivers of skills and jobs. As mentioned in paragraph 1.10 the NMIS shows how government, academia and industry can co-locate expertise to improve productivity and training. Expanding this model into the defence sector, particularly through regional satellites in rural communities, would spread the benefits of innovation far beyond the Central Belt. The UK Government can help by providing stable funding for these hubs, ensuring they are fully integrated into national R&D and procurement programmes.
2.9 Collaboration with the civil aerospace sector is a must, as it offers an opportunity to strengthen the defence workforce. The close relationship between defence, aerospace, space and energy industries enables skills and technologies to flow across sectors. This cross-sector mobility, often most visible in SME activity, underlines the point that Scotland’s industrial ecosystem is not starting from scratch, it is already rich, diverse and globally competitive. However, this interdependence also fuels competition for talent, as workers with transferable engineering or data skills are often drawn to high-paying technology firms. The challenge, therefore, is to turn competition into collaboration, using joint training programmes, shared apprenticeship pipelines and regional innovation clusters to retain and grow the talent base. With coordinated UK-Scottish policy support, collaboration can transform competitive pressure into a catalyst for higher skills, productivity and inclusive growth across Scotland’s advanced industries.
2.10 The new Defence Skills Passport, as promised in the 2025 Defence Industrial Strategy, will allow for a promotion of zig-zag career paths. It will offer an online careers service for individuals in the defence industry, providing them with a profile and CV using simplified terminology, as well as advertising an individual’s talent and transferable skills. There is an opportunity offered by the passport to utilise the ‘benched’ workforce within primes, by seconding them out to smaller firms within a supply chain, plugging key workforce gaps. Although the passport’s initial rollout will be defence-focused, the UK Government should move quickly to extend it to adjacent high-value sectors. This will only be achieved through cross Whitehall collaboration, between MOD, DSIT, HO and DBT. This cross departmental collaboration regarding critical skills is also vital to maximise dual use opportunities – ensuring that new technologies with dual use potential can be developed and deployed at speed. Opening the scheme to aerospace would allow Scotland to fully leverage its exceptional engineering and aviation talent, creating a seamless skills pipeline across interconnected industries. This expansion would not only strengthen the defence supply chain but also enable Scotland’s existing industrial clusters to respond more flexibly to demand and boost productivity.
2.11 While the Defence Skills Passport has wide benefits for Scotland, its limitations are understood and would need to be carefully managed to ensure the tool delivers equitable value across the whole defence ecosystem. First, its effectiveness depends on widespread uptake. The scheme cannot be a regionally limited programme and both UK and Scottish Governments need to embrace the system to maximise the opportunity in promoting Scottish business; this means that proactive communication and promotion will be essential so that workers, SMEs and major employers all understand its purpose and advantages. Safeguards would also be required to mitigate commercial sensitivities and market-intelligence risks; without proper controls, the Passport could inadvertently reveal where companies are struggling or not hiring, distorting competitive dynamics and hampering regional collaboration. Crucially, the system must be designed to support a balanced labour market. SMEs and rural suppliers should have equal influence in shaping the passport. This also means ensuring SMEs receive tailored guidance and user support; unlike major primes, they do not typically have large HR teams to administer new workforce systems.
3.1 The central purpose of such a deal should be to connect national defence priorities with Scotland’s regional economic strengths. By focusing on key industrial clusters, a Defence Growth Deal could create a coherent framework for skills, infrastructure, and innovation funding. This would not only secure existing employment but also expand opportunities into surrounding supply chains, delivering inclusive growth across rural and deprived communities. Local economies would benefit from long-term contracts that provide the confidence for firms to invest in new equipment, training, and apprenticeships. To maximise impact, the Growth Deal should mirror successful regional models, knitting together UK procurement and R&D funding with Scottish skills and enterprise support. This co-funding approach would enable local authorities, colleges, and universities to partner with the defence supply chain on projects that meet local needs while contributing to national capability.
3.2 Embedding Scotland within the DIS would ensure that Scottish firms, universities, and research centres are fully integrated into UK-wide supply chains. This would create the certainty industry needs to invest in automation, digital manufacturing, and sustainable technologies, sustaining productivity and high-wage employment for decades.
3.3 Any new initiatives must prioritise cross-sector collaboration. Defence innovation increasingly overlaps with energy transition, space technology, and AI-enabled manufacturing, all areas where Scotland already leads. By fostering partnerships between sectors, the Defence Growth Deal can turn technological convergence into economic opportunity. This integrated approach would not only sustain high-quality, high-paying jobs but also reinforce Scotland’s position as a critical contributor to UK and NATO capability.
4.1 Scottish-based suppliers are well embedded in the UK’s defence supply chain, though the depth of integration varies by subsector. Large anchor employers such as BAE Systems on the Clyde and Babcock at Rosyth have built mature, multi-tier supply networks that stretch across Scotland. Nonetheless, while Scotland’s larger primes are fully integrated, many smaller firms remain only partially connected to major MOD and procurement frameworks.
4.2 The MOD has made progress in engaging with Scottish SMEs through initiatives such as the Defence and Security Accelerator (DASA) and regional industry days. These mechanisms have provided a platform for innovation and early-stage collaboration. However, engagement is not yet consistent or visible enough across Scotland. Many SMEs report that procurement processes remain complex, resource-intensive, and geared toward larger suppliers with established compliance systems. Industry groups like ADS Scotland have played a valuable bridging role, connecting SMEs with anchor primes and MOD representatives, but capacity remains limited. Strengthening the visibility of MOD supply chain opportunities in Scotland would help ensure SMEs across all geographies have a fair opportunity to compete.
4.3 The principal barriers include procurement complexity, cashflow constraints, and limited awareness of MOD requirements. SMEs often struggle with the administrative burden of pre-qualification, security vetting, and cyber compliance. The scale of contracts and lengthy payment cycles can also deter smaller firms from bidding or scaling up. In rural areas, connectivity and infrastructure gaps compound these challenges. Furthermore, a lack of visibility of long-term MOD planning, or certainty of delivery makes it difficult for smaller companies to justify capital investment or workforce expansion.
4.4 For SMEs in rural and remote communities, the key to deeper integration lies in visibility and partnership. The MOD and the UK Government could work with the Scottish Government to expand regional supply chain hubs to act as local gateways into defence programmes. These hubs would provide shared facilities, mentoring, and access to procurement frameworks, reducing the overhead for smaller firms.
4.5 With targeted support, Scotland’s SME base can play a larger role in delivering resilient UK defence supply chains. The foundation already exists; the challenge now is to connect, scale, and sustain it. Strengthening engagement and simplifying access would not only widen participation but also translate directly into new, high-value jobs and investment across Scotland’s rural and industrial heartlands, ensuring that increased defence spending delivers inclusive national benefit.
December 2025
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