Written evidence submitted by Professor Trevor Taylor (SSF0012)

Call for Evidence

Skills and Defence Industry in Scotland

Professor Trevor Taylor

RUSI

The defence industrial sector

The defence industrial sector is difficult, almost impossible, to delineate with precision.  As well as involving specialist defence technology businesses, it uses much dual-use and even civil material. While the major defence firms are well-known along with their primary sub-system suppliers, the predominant civil and defence businesses in the UK use core competence thought.  This directs that organisations should focus on the tasks at which they can excel while entrusting other needed functions to sub-contractors.  Thus, major defence firms have hundreds of sub-contractors contributing to their products.  Some are in their region and others are not. Many of these supplier firms are SMEs, some with a long history of focused expertise.  Many such firms do a mix of defence and civil work in a ratio that fluctuates of time.  There may be some that are making things that they do not even know are destined for a defence product. In brief, we know where the defence industrial sector ends but not where it starts.  Research is needed among the Scottish members of relevant industrial and professional bodies, including ADS, MAKE UK Defence and the Royal Aeronautical Society.

Clearly political parties and their representatives are often most interested in the local economic impact of businesses doing defence work but the strategic importance of defence industrial capabilities should not be understated in the current political situation.  In terms of declared policy, the sustainment and development of national defence industrial capabilities is a prominent item on the government’s overall agenda.  Defence industry is seen as a major contributor to UK military capability and freedom of action as well as prosperity. Moreover, it needs to be resilient in the face of hostile action. As the 2025 Defence Industrial Strategy observed: 

The strength of our Armed Forces is only as strong as our defence sector, and aggression is aimed at industry, our supply chains, our know-how and our people, not just our Forces.[1]

Defence Industry in Scotland

Scotland has a diversity of firms which visibly serve the defence sector (see Annex A). They do not have a standard or even static sense of attributes for school or university leavers to join their workforces. Clearly STEM subjects are commonly useful but firms also need to develop a full range of personal and management skills in their staff.   Defence firms are dealing with multi-year projects and programmes dealing with development, production, in-service support and even disposal.  They must work hard to understand their future staffing needs.  The norm is to have extensive apprenticeship recruitment schemes that can include support for graduate degrees.  

The larger and established defence businesses in Scotland are subsidiaries of larger UK firms (BAE Systems and Babcock), continental European businesses (Thales and Leonardo) or USA enterprises (Raytheon/now RTX). [2]   These organisations have opted to invest in Scotland because of the expertise, infrastructure and promise present in the enterprises involved.   All the firms noted above have been active in the country for decades.

The national industrial body ADS (Aerospace, Space and Defence) does not disclose the number of firms in its Scottish membership but does report that defence employed 10,000 people in 2020 in Scotland, rising to 16250 in 2024.[3]

The JED Hub, based in the Defence Solutions Centre has worked the scale of defence industrial activity in for some years and its 2024 report reiterates a common finding that the defence industrial sector is better paid than most businesses, with implications for the multiplier effects it generates in local economies. It  reports 7674 full-time equivalent jobs in defence industry in Scotland in Defence  with an average salary of £52,022.[4]   The Scottish Government reports that the median salary in the country as £38.464 .[5]

Oxford Economics (OE) has been contracted by several defence firms to assess their contribution to the UK economy.  These are significant pieces of work with national detail.

Its July 2025 report on BAE Systems found that the company employed 4000 jobs in Scotland, supported the jobs of a further 6,200 people, and spent £550 million with 300 Scottish suppliers.[6]

OE’S  February 2025 report on Babcock International found that it directly employed 5400 people and spent £150 million with Scottish suppliers. [i]

OE’s 2024 work on Leonardo focused on its work in Edinburgh where it employed 2500 people, and spent £61 million with local suppliers,of whom most were engaged in manufacturing. [7]

Thales has not commissioned OE since 2017/18 and the lest report did not deal with the regional impact of Thales work, but the firm has about 700 employees in Scotland[8].

Raytheon/RTX emphasises its long history in the UK and its current development, including the opening of a new site in Livingstone, but has not arranged Scotland-focussed work. [9]

In 2025 the demand for the products of the major businesses and thus their supply chains looks brighter than for many years, with the Type 26, Type 31, Dreadnought and AUKUS submarines, and Typhoon and GCAP/FCAS combat air programmes having a firm base in UK Governmental commitments.   The Type 26, the Type 31, and Typhoon also have important export orders.

The diversity of skills and knowledge needs

While some industries have an established set of personnel needs, such as pipefitters, electricians and welders in shipbuilding, the skills required are not fixed but evolve, such automated welding machines already available for some tasks.  They need expert staff to direct them. Leonardo’s Scottish business is centred on radars, i.e sensors, electronics and data processing involving algorithm development. Computer models and digital engineering are increasing most areas of defence technology advance.

Future staffing needs involve more than just formal qualifications and confirmed specific skills.  They involve people knowing how to undertake specific tasks efficiently and reliably, perhaps as part of a wider team.   That means people often need to be prepared by the firms over a period of a decade or more beyond their apprenticeships so as to generate the right knowledge/experience to be useful in the future.

While the companies provide much training and fund further and higher education, they must rely on the schools and further education bodies to generate young people who can be trained and educated.  BAE Systems found in Barrow, when a lack of submarine work after the Vanguard class generated much social deprivation, that the local schools were struggling to motivate enough young people suitable to move into employment.  It is the author’s impression, needing confirmation, that most school leavers joining Scotland’s defence companies are from their local area.  However, some are recruited from further away, including a few from outside Scotland.

It should be noted that young people may need other than intellectual attributes to work in defence:  some will need to be eligible for a security clearance. That should be part of any defence skills passport.

SMEs and rural areas

The committee has a particular interest in the opportunities for SMEs and rural areas.  There is a national concern with how to ease SME’s access to defence work, including consideration of travel costs to meet the buyer and other briefing events. The MoD’s DASA has a presence in Scotland that promotes the capability and research areas of particular interest. there are also changes needed in defence procurement practices needed to press governmental defence to take more chances with inexperienced firms with limited financial backing that could still have good ideas.   I would judge that there is awareness of these issues within the MoD, including the problems of companies in remote site, but appropriate remedial measures have not been easy to implement.

On remote areas, ADS figures show that most its members lie along a band running north easy across Scotland from around Glasgow (ThemeNcode PDF Viewer [Do not Delete] - ADS Group p.7)

The MoD itself has a base at Lossiemouth, where there appear to be more than 500 civilians employed).  The MoD with its suppliers also use the missile test areas in the Hebrides operated by QinetiQ. The current number of people employed there is not available.

The involvement of the Scottish Government

The education system in Scotland is controlled by the Scottish Government which has ben controlled for more than a decade by the Scottish National Party.  The SNP’s positions on defence can be found on its website.

Defence manufacturing infrastructure in Scotland is fundamental to our national engineering and manufacturing sector. Scotland is home to a wide range of world-class defence manufacturers including BAE, Thales, Leonardo, Babcock and many others. In the event that voters choose an independent future for Scotland, they will be voting for a Scotland that will take its defence and security obligations seriously.

While the SNP supports an independent Scotland’s NATO membership and opposes the nuclear presence at the Clyde Naval base, it is not clear how much effort the Scottish education system puts into building awareness of the opportunities for young people available in the defence sector. Its analysis of the capabilities sought for Scottish military forces places considerable emphasis on strengthening resilience in the face of sub-threshold attacks and natural disasters rather than the major systems (ships, submarines and advanced radars) than dominate the defence industrial sector there. [10]

Annex: A sample of defence-related businesses in Scotland

Significant government defence installations

Rural communities of Shetland benefit from the Test ranges in the Hebrides and from the RAF base at Lossiemouth.

UK looking to restore its propellant and Higg explosive capabilities with Scottish sites under consideration. 

Bishopton was previously a manufacturing base.

The extensive security measures at such sites include large land areas available only in rural areas