Gratitude for Today’s Gathering
Thank you, Lady Mayor, for graciously hosting this event, and good afternoon to everyone present. It is a genuine pleasure to stand before such a distinguished assembly today. Under this roof, we gather leaders and decision-makers whose contributions are vital in igniting the next generation of defence innovation necessary for safeguarding our nation and supporting our allies. Your presence here today signifies a commitment to this crucial cause, and I sincerely appreciate the time you have dedicated to participate.
Honouring Ukrainian Resilience
It is an honour for me to serve as the opening speaker before my esteemed friend, the Ukrainian Ambassador. Over the past couple of years, I have spent considerable time in Kyiv, and the unwavering courage displayed by the Ukrainian people deserves not only our admiration but also tangible support. We must translate our words into action by ensuring we provide substantial backing for their frontline, their nation, and their innovators. This support goes beyond merely supplying equipment; it encompasses collaboration, innovation, and the joint development of new technologies.
I recognise that many individuals in this room are actively engaged in this mission and are making significant contributions to our allies in Ukraine. For this, I extend my heartfelt gratitude.
Navigating a Changing Geopolitical Landscape
We convene at a time when global geopolitics has become increasingly fragile, disruptive, and unpredictable. This reality compels us to rethink our approach to warfare and deterrence, necessitating more innovative strategies and the integration of new weapon systems that can transform the battlefield. The United Kingdom’s military operations today are fundamentally different from those at the onset of Putin’s full-scale invasion of Ukraine just four and a half years ago. We are learning invaluable lessons from Ukraine, and in doing so, we are compelled to adapt our operational methods.
Our most pressing task is to reshape Britain’s defence posture and significantly accelerate innovation. Many of the most crucial advancements in defence are now emerging from technology startups and scale-ups—agile businesses that are quickly seizing opportunities and driving rapid change. Our challenge today is clear: how can we enhance our ability to identify, fund, and empower the most creative minds and enterprises to swiftly deliver cutting-edge technology to our armed forces and those of our allies?
Transforming Defence Procurement
Over two years ago, this government took office, inheriting a defence programme that was, quite frankly, inadequate to address the current threats we face. We are committed to advancing towards a state of warfighting readiness, but this requires us to abandon the comforting notion of simply refurbishing outdated systems and hoping they will suffice. If our technology and equipment are not effective in Ukraine, they have no place in our armed forces. This presents an opportunity for fresh technologies, innovative thinking, and new weaponry to come to the forefront. We must design our advancements with today’s conflicts and tomorrow’s battles in mind.
Our supply chains play a critical role in this transformation. Those within our industry are acutely aware of the slow, cumbersome, and often costly nature of the Ministry of Defence’s (MOD) previous procurement processes. We are working diligently to change this. This has particularly affected small businesses and scale-ups with remarkable products that have struggled to find the right buyers within the MOD.
New Strategies for a Resilient Military
Since that time, we have developed a new framework for a reimagined military and procurement approach. We have released our Strategic Defence Review, Defence Industrial Strategy, and Defence Investment Plan to create a more resilient and warfighting-ready military, supported by a world-class supply chain. Our goal is to place industry at the heart of defence, recognising it as a fundamental enabler of all our objectives. This initiative not only enhances our national security but also fosters success and prosperity by generating high-quality defence jobs, skills, and opportunities in every community.
In the past, I was encouraged by the MOD press office to assert that defence serves as an engine for growth during interviews. Now, with Andy Burnham in Downing Street, the focus has shifted to re-industrialisation. Nevertheless, the underlying truth remains: investment in defence creates good jobs and opportunities, particularly for our youth. We must boldly and unapologetically advocate for this reality. Defence spending is indeed a catalyst for growth, a means of re-industrialising, and a pathway to ensuring our safety.
Empowering Small and Medium Enterprises
To fortify our nation’s security and success, we must cultivate more high-quality defence jobs, skills, and opportunities. Small and medium enterprises (SMEs), in particular, are essential to this endeavour. Within the MOD, we have enacted reforms, including the appointment of a new National Armaments Director, Rupert Pearce, who brings corporate expertise and energy to our procurement processes.
We have established the Defence Office of Small Business Growth to eliminate barriers to entry, reduce red tape, and implement a 50% increase in MOD spending with medium and small firms by the summer of 2028. This initiative aims to channel an additional £2.5 billion into the hands of SMEs by streamlining our procurement methods and facilitating easier access to our supply chains.
Supporting Local Defence Networks
We have also published our SME Action Plan, outlining our commitments to ensure accountability for these changes while supporting start-ups, scale-ups, and other companies in their growth. Assisting small firms in navigating funding opportunities is vital to unlocking their potential. On a national level, our Defence Office for Small Business Growth offers guidance to simplify these processes, eliminate redundancy, and clarify points of entry as necessary.
At the local level, I am delighted to see the successful rollout of regional defence and security clusters, which have fostered the development of tailored support networks for businesses. These clusters unite local suppliers, devolved and local governments, and investors, providing a platform for collaboration and investment.
Learning from Ukraine’s Innovation
Ukraine has demonstrated the capacity to innovate at an astonishing pace, driven by the urgent demands of their ongoing conflict. In following their example, the defence sector in Britain must leverage the resources available not only within technology and engineering but also across finance, consulting, and academia to inspire and implement the necessary changes. The role of finance is particularly pertinent to our discussion today.
The government is already increasing its defence spending, and as a defence minister, I would naturally advocate for further funding. However, opportunities for investment in defence extend beyond taxpayer contributions. It is imperative to attract private capital and utilise the established frameworks of the City of London and the UK’s prominent position in global finance to enhance investment in defence, thereby generating quality jobs and bolstering our deterrent capabilities. Public investment will remain a cornerstone of our mission as we enhance our defence capabilities, but in an increasingly perilous world, we must build capacity now rather than solely relying on anticipated increases in defence funding over the next decade.
Strategic Investment for Future Readiness
This is why the Defence Investment Plan outlines key areas for immediate and future investment, providing clarity for investors regarding the types of technologies and defence sectors that will receive government backing while also seeking private sector investment. We must strive to ensure that Defence and our investment partners communicate effectively. At present, there exists a risk of misunderstanding, and aligning our language and data will enhance our capacity to deliver results.
Historically, Britain has thrived when government, industry, and finance have collaborated effectively. Our current task is not to reinvent the financial sector but to cultivate a new partnership suitable for today’s challenges. The potential rewards are substantial—not only in terms of strengthening national defence and security but also in creating a more innovative defence sector and expanding markets that foster re-industrialisation and offer opportunities for export. Our allies within NATO and beyond are also increasing their defence investments, creating a competitive environment.
Creating a Clear Path for Investment
Within the Defence Investment Plan, we have announced the formation of a Defence Investment Unit. This initiative aims to provide investors with a clearer interface with the defence sector while equipping defence with the financial expertise needed to translate priorities into market-ready propositions. Following the autumn budget this year, we will release the Defence Finance Investment Strategy, which will establish a clear framework for collaboration between government and responsible private capital in pursuit of security, resilience, and growth. Additionally, in December, we will host a defence investment summit designed to transition strategy into actionable outcomes, bringing together government, industry, and investors to accelerate capital flow into priority defence capabilities.
Realising the Potential of British Innovation
Before I conclude, I want to emphasise that this is not a theoretical exercise; it is happening right now, and we must facilitate more frequent occurrences. In May, 13 British startups secured contracts of up to £4 million through the Defence Unicorn Fund programme. One notable recipient, Kraken Technologies, which produces maritime uncrewed surface vehicles, has raised $175 million in a Series B funding round, achieving a valuation of $1 billion. Another firm, Green Jets, has attracted significant funding to develop a low-cost drone interceptor and was one of three companies chosen by the MOD for this initiative. Both Kraken and Green Jets received backing from the National Security Strategic Investment Fund and NATO Innovation Fund, with additional support from the British Business Bank. JET Connectivity, a small enterprise specialising in 5G and 6G communications tools, was the only British company selected for