Thank you very much indeed Michael [Professor Clarke, Director of RUSI] for that kind introduction.
Ladies and Gentlemen, friends, Good morning.
Or should I say, “Bonjour, tout le monde”?
I’m delighted to be here.
I have attended many of these annual gatherings in the past, which have served as valuable and candid forums to measure the health of the UK’s Defence exports business, so it is a real pleasure to be here this year as the Minister responsible for this part of the shop.
As some of you know, for years I’ve talked about the three great lies in the world – “the cheque’s in the post”; “Of course darling I’ll still love you in the morning”; and “I’m from the Government and I’m here to help.”
So you will appreciate my predicament when I say: I am from the Government, and I am here to help…
This Government has been clear from the outset, and so have I: we are proud to support the biggest Defence exports drive in decades.
The whole country should care about exports which last year contributed £7,200 million to our balance of trade.
Because our security relies on a healthy economy.
As you know, we inherited a national debt which was growing at the rate of £150 billion a year – enough to fund three Type 45 destroyers per week.
And we’ve been left with a £38 billion ‘black hole’ in the Defence budget.
So addressing the deficit and bringing the Defence budget back into balance is not an option; it is a vital part of how we protect our security.
That’s why the SDSR had to take the tough but realistic decisions it did.
But I do want to emphasise that the SDSR marks the start – not the end – of the road to our Future Force 2020.
We are fundamentally reviewing how the MoD delivers its capability.
As part of our reforms, we have decided that there should be Defence Reviews every five years, broadly in line with the term of each Parliament.
So that means there will be another Defence Review in 2015, which we hope will take place in more benign circumstances than prevail today.
And I share the Prime Minister’s strong view that making Future Force 2020 a reality will, and I quote, “require year-on-year real terms growth in the Defence budget beyond 2015.”
So fiscal responsibility will help the economy to grow.
But that is only one part of the equation.
We need a balanced and sustainable plan for that growth.
Part of that will be our exports strategy which allows businesses to benefit from the expanding global economy; and enables them to compete, not fall at the first hurdle.
In some quarters, there is a tendency to view the rise of India, Brazil and others in apprehensive competitive terms.
Instead, I think we should be seeing terrific export opportunities, and encouraging these countries to be open to trade so that everyone reaps the benefits of competition and innovation.
Vince Cable made the point this morning that the Government’s focus must be on exporting, not spending, our way out of recession.
In Britain, we are fortunate; we have the ingredients to make this work.
We have some of the world’s leading authorities and institutions in the fields of science, technology, and innovation – a point I will come back to later.
Our Armed Forces are universally recognised as being among the finest in the world, and a source of immense pride to the people of this country.
We have the training and heritage which so many other countries are keen to use as a model for their own Armed Forces.
And in UKTI DSO, superbly led by Richard Paniguian, we have a world-class team who are doing a fantastic job, supported by a small, but perfectly formed, team in the MoD itself.
And I know that industry is appreciative; they tell me regularly.
I have a number of letters, including a recent one from Paul Everington, the Chairman of Ballistic Toolkit, who complimented the “total support from UKTI DSO” and the “real help in empowering SMEs to release their true potential”.
I think that’s very important.
It isn’t just the big players, and is an indication that DSO is here to help SMEs too.
The other key ingredient is all of you in industry.
I’m a rugby man, and there are many important positions across a team.
But, as in politics, I believe the most important number is, of course, Number 10...
The skills required by an outside-half are the ones which industry must show too - vision, quick thinking, and consistently taking decisions which move the ball forward.
You’re going to need those skills because two weeks ago, when we published our Strategic Defence and Security Review, all of you here today were picked to play.
Yesterday, some of you will have heard my colleague, Peter Luff, set out what the SDSR means for industry.
I won’t repeat what he had to say, except to say that we will publish a Green Paper by the end of this year which will set out our intended approach to industrial policy and technology policy.
Our main priorities will be: strengthening bi-lateral co-operation and collaboration; supporting the small and medium-sized enterprises which are a vital source of innovation and flexibility – and we will be working closely with Mark Prisk and our new enterprise adviser, Lord Young, on this; protecting the industrial capabilities associated with our sovereign requirements; recognising the vital importance of Science and Technology to our future security; and giving our full support to exports.
So between now and the Green Paper being published later this year is your big opportunity to make sure we’re asking the right questions, and to offer solutions.
After a formal consultation period in the New Year, we will publish a White Paper next Spring which will set the strategic context until the next strategic review in 2015, and bring clarity to and build confidence in our plans.
This is not just about Defence, as you’ve already heard.
To reflect the scope of the SDSR itself, both the Green and White Papers will also include security issues.
This will mean we can better reflect the new challenges which have been identified such as cyber-related threats, which Baroness Neville-Jones will talk about later.
This work will formalise the Government’s support to Defence- and security-related exports.
In practice, this means embedding exportability from the outset.
We must end the quest for what US Defence Secretary Robert Gates has called the “exquisite solution”, which has so often meant higher costs and delivery delays.
As Peter said yesterday, that solution, when it is finally delivered, is “often admired, but rarely bought.”
That’s why the Type 26 Global Combat Ships, which will replace the Royal Navy’s current generation of frigates, present us with an immediate and timely opportunity to change.
As we design them, we see a tremendous opportunity for establishing a partnership with other nations which have a similar requirement, along the lines of the JSF programme in the United States.
Furthermore, it offers the opportunity to move from traditional customer-supplier relationships to potentially more rewarding ones.
The benefits are considerable – economies of scale and reduced costs for our own equipment, sustaining skills and high quality jobs, but, more importantly, the chance to strengthen existing alliances and develop new ones for the longer-term, thereby fashioning a network of alliances which could make a significant contribution to enhancing Britain’s ability to help shape the world in which we find ourselves – an increasingly unstable one.
So our aim with the Type 26 GCS is to develop jointly, internationally, a modular approach which will allow us to adapt the capability for our own specific needs, but offering an affordable, yet flexible, mix of systems and roles.
Increasingly, there is a new reality which we have to recognise: partner nations will require technology transfer.
This presents a new and potentially exciting opportunity, but clearly not without risk.
It will require changing cultures, primarily in industry, though it is manifestly not without serious implications for Government.
But in Britain we are ahead of the game.
We have considerable experience in sharing our expertise with our friends, as for example we are doing on the Hawk programme in India, and we will work with industry to reach a common position.
And as you know, we are also looking to work closely with other nations, as yesterday’s Anglo-French summit indicated.
And I am pleased to welcome some of our key partners from the US, Turkey, Malaysia, and South Korea today, so that we can hear at first hand their experience as customers of British Defence equipment.
Thank you very much for coming.
And we are pleased that the US Congress has at last ratified the US-UK Defence Trade Co-operation Treaty, which we hope will simplify export licensing arrangements for the end-use of both countries, reduce the bureaucratic burden on industry, and ultimately help our front line Armed Forces.
All this is happening today, and a great many people are involved, but I would particularly like to thank the project teams, especially the joint MoD-Industry-UKTI DSO-Type 26 GCS team, for recognising the importance of exportability.
Because it is something that everyone’s got to understand.
But of course, having a marketable product and a level playing field is only one half of the story; sealing the deal and supporting it is what really counts.
And while we will take account of exportability in future systems, as Richard said, we must also promote existing systems and strengthen existing relationships with the same partnership messages – he mentioned Typhoon as an example.
The good news is that this government’s foreign policy recognises that Britain’s prosperity and security are bound up with those of others.
Critically, the policy recognises that Defence exports are a key driver in securing our Defence Diplomacy objectives.
So where Defence exports serve wider MoD interests, they will receive the maximum support which the MoD can provide.
This includes a sharper focus on promoting our national security and prosperity through our global diplomatic network, as the Foreign Secretary himself is insisting.
Because even with 21st century communications there is no real substitute for having the right person on the ground.
And building personal relationships between Ministers is vital too.
That’s why Richard and I have undertaken what I regard as truly joined up visits across Government and with industry – notably to Poland and Brazil – precisely because they offer the opportunity of strategic government to government relationships.
The Prime Minister has led from the front, visiting India and UAE; the Foreign Secretary has been to Japan; and Vince Cable to Brazil.
And we have launched a major initiative with our friends and allies in the Gulf – including Ministerial visits to Saudi Arabia, Qatar, and Oman, among others – reviving and strengthening traditional, long-standing relationships in a region which Britain has historically understood.
The common refrain has been: “Where have you been? We’re delighted you’re back”!
As part of this reinvigorated Defence Diplomacy campaign, we have undertaken to these countries that we will return on a regular basis.
However, there is only so much that government can, and should, do.
We cannot support every campaign.
We look to you in industry to tell us when you need our focused support, because we know there’s much that you can and should do without Government assistance.
So help us to help you!
You need to think more carefully about each campaign in terms of understanding the customer’s requirements and timescales, as well as things like local build, local regulations, and the support you offer into your eventual bid.
And let me be candid: if you promise something to your customer, you must deliver it.
An entire country engagement strategy, worked out over a period of years, can be wiped out by not giving customers the respect and attention they deserve.
With profit comes responsibility and we will not take kindly to companies which harm the opportunities for those that follow.
One final point, I’m a Minister for Her Majesty’s Government, not an arms salesman.
Knowing when to engage Ministers effectively requires careful orchestration.
I always admired the former Commons Speaker, Bernard “Jack” Weatherill, who perfected the art of calling Members to speak.
He knew when to choose the triangle, and when to call the double bass.
Ladies and Gentlemen, and friends, I hope I’ve been clear about our objectives.
This Government is full-square behind an exports drive, the like of which this country hasn’t seen for a very long time.
If industry plays its part – here at home and overseas – the prize is an export-led recovery, and a re-balanced and stronger economy where industry will play a major role.
Together with our overseas partners, we can achieve this.