MoD benefits

Defence spending surges for Scots SMEs

Frigate on Clyde

A frigate under construction on the Clyde

Small Scottish firms supplying the defence sector have enjoyed higher levels of spending by the UK Government, according to a new report.

Expenditure by the Ministry of Defence on the Scottish supply chain has increased from 2.5% in 2020/21 to 7% in 2021/22.

The rise in spending has been welcomed by MPs on the Scottish Affairs Committee which was concerned that companies north of the border were being overlooked by the MOD and prime contractors.

The Government’s confirmation that the share of spending with SMEs has increased has been welcomed by the committee.

However, in its report – Defence in Scotland: Military shipbuilding – the committee raised concern that the building of warships is gradually being ‘offshored’, with competition opening up to international companies which could be to the detriment of Scottish shipyards and supply chains.

In particular, the committee considered the decision to award the Fleet Solid Support (FSS) ships to an international consortium, Team Resolute, rather than a Team UK bid which would have supported more UK – and in particular Scottish – jobs.

The committee is seeking further clarification as to why the Team UK bid was non-compliant with the terms of the competition and to better understand how the decision was consistent to the objectives outlined in the National Shipbuilding Strategy.

Committee chairman Pete Wishart has today written to the Defence Secretary asking for clarity. 

He said: “It is brilliant news that UK Government spending with Scottish defence SMEs has jumped in recent years. I hope supply chains across Scotland start to feel this investment, with will support many jobs and local economies. It is a vote of confidence in the Scottish defence sector.

“While the Government’s response to our report was largely welcome, we were disappointed with the lack of information on the decision to award the FSS contract to an international consortium over a Team UK bid that would have supported Scottish shipbuilding.

“If the UK Government is insistent that it is not offshoring the building of warships, we need to better understand the reasons for its decision.

“I hope the Defence Secretary is able to shed some light on this issue in response to my letter today.” 

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