It’s a pleasure to be here at this truly global event.
…suppliers from 121 countries
…more than 40 international pavilions
…and a record number of first time exhibitors
DSEI only comes round every 2 years…it takes a full year to put it all together.
I was here 2 years ago as Minister for Business.
Then defence was preparing for the Afghan drawdown, readying itself to face new threats, in an age of contingency.
We didn’t have to wait too long.
Since then we’ve seen a resurgent Russia, the emergence of ISIL, and huge migration flows caused, in part, by the appalling terrorism we have seen in the Middle East.
These threats to our security and prosperity underline the need not just for strong armed forces but for the best capability.
We’ve got the best capability. And we’re putting it to good use.
Our Typhoons and Tornados are defending us and the Baltics from Russian aggression and striking at ISIL targets.
Our ships are rescuing migrants from the Mediterranean and helping to keep trade routes open.
Meanwhile, our Huskeys and Mastiffs have returned from Afghanistan to help train our troops so that when the call comes they will be ready to roll.
Investing in capability
Having cleared a £38 billion defence deficit
….got to grip with major projects
… and put over £160 billion into our equipment budget
… new equipment is rolling off the production line.
Like the world’s leading stealth fighter the F35 Lightning II. Earlier this year, I saw the 200th fuselage coming off the production line in Samlesbury.
Like the newly named Ajax, that is proudly displayed in the hall.
And like our Elizabeth Class carriers, too big to appear at Excel but the most powerful ships ever built on these shores.
Those fighters must be armed with the finest missiles.
Today I’m pleased to announce we are signing a contract with MBDA UK worth over £300 million to ensure our Typhoons are supplied with state of the art short-range heat seeking air to air missiles.
These weapons allow the pilot to engage multiple targets with several missiles simultaneously.
And they’re not just good news for our armed forces but for the local economy since the missiles will be manufactured at MBDA’s new Bolton site next year and safeguard 400 high technology jobs in our country.
And with a defence budget growing for the first time in years we can continue upgrading our capability.
But the reality is the cutting edge planes, tanks and ships on display all rely on people for their manufacture and maintenance.
So let me say thank you to the 160,000 people in our defence industry who power our economy and keep Britain safe.
I’m sure you’re keen to know where UK defence is going next.
Our strategic defence and security review is assessing the threats we face in the future and the equipment we will need in response.
It will create a new framework for defence, helping us maintain our operational and technological edge, recruit and retain the best people and forge stronger international partnerships.
There will be plenty of opportunity in our strategy for industry.
But you don’t have to wait until the release of the SDSR at the end of the year to know where you fit in.
Let me set out 3 ways you can seize the day.
Firstly, I’d like you to focus on innovation that goes to the heart of DSEI.
If you want to see what Britain is capable of just visit the medical zone.
Where you will learn about medical practices pioneered in Afghanistan, Iraq and most recently by our medical troops in Sierra Leone.
Over a year ago 500 new cases of Ebola were being diagnosed every week, sparking fears of virulent global pandemic.
Tragically, that disease did cause terrible loss of life.
But thanks to our armed forces, working alongside DfID, FCO, the NHS and voluntary organisations, whose efforts I’ve been privileged to see first-hand, the number of new cases has now been reduced to single figures.
Later today I’ll be attending a special homecoming parade, to give those individuals who’ve done so much to keep us safe the credit that is their due.
Or go and visit the land zone you’ll see the latest gear designed to protect our troops.
This year is the first that army units will be receiving the Virtus system, the next evolution of body armour.
Our innovators in Dstl are already hard at work on the prototype for the next generation of personal protection.
Both examples are on display at this exhibition.
And with our adversaries intent on competing for fifth generation technology and seizing on weapons proliferation, the challenge is to continue to stay ahead.
Disruptive capability is one area where progress is vital.
How can we increase underwater capabilities to counter anti-access area denial?
How can we maintain air dominance and continue to strike in non-permissive environments?
How can we develop our counter-electronic warfare capabilities?
If you’ve got the answer we’ll help make your solution a reality.
Our Centre for Defence Enterprise is already funding novel high risk, high potential ventures and they are here today.
We’ve also launched the joint MOD/Tech UK Innovation challenge.
Each quarter it will be setting a challenge
…focussed on a specific area of Digital Innovation
…whether cloud technology
…or leveraging open source data.
This year we will be reviewing Dstl to ensure its business model meets emerging future defence and security requirements. We want to sustain Dstl’s ability to invest in its people and its capabilities, and to encourage innovation in the delivery of Science and Technology.
The real secret to success in innovation lies in opening up your supply chains and tapping the creative talents of our SMEs.
In the last year of the last Parliament we spent 20% of our defence budget directly and indirectly with SMEs.
The latest figures show MOD did business with over 5,400 SMEs, worth over £800 million.
In this Parliament I want us to do more.
Industry too is upping its game.
Inward defence investment to SMEs has rocketed beyond the £1 billion mark.
Saab is a good example of what can be achieved.
They talent spotted a small company designing and manufacturing underwater Remote Operated Vehicles.
They liked what they saw…and today the SAAB SeaEye facility has expanded 35% in the last couple of years.
The other 8 companies involved in DSIESP all have similar stories to tell.
And I am determined to do more to benefit from the agility SMEs offer us.
We’re putting a Supply Chain Champion in place and tomorrow first set of winners for our £10 million Defence Growth Partnership Innovation Challenge, will be announced here at DSEI, will include many small and medium sized enterprises who want to bring new technology into defence.
Skills are the final piece of this innovation jigsaw.
Large or small defence companies won’t succeed without great British brainpower.
Recently, alongside industry, we threw down the gauntlet to young engineers to help us design the battleship of the future.
Their answer, Dreadnought 2050 with its 3D printed drones, holographic command table, “supercavitating” torpedoes, laser weapons and an electro-magnetic railgun all sounds like science fiction.
But so did the original Dreadnought. As soon as it launched…all competitors became obsolete.
Hands-on expertise matters as much to us as high concept thinking…especially in an area like nuclear…where demand is outstripping supply.
So we’re working across Whitehall and with the Nuclear Industry Council to keep a steady stream of specialists coming through our doors.
My second point is that competition for government contracts is tougher than ever. So the onus is on industry to focus on exportability.
We often do well in this area.
We’re blessed with many world class strengths in unmanned air systems …synthetic operational training…in intelligent systems…and cyber security.
I am proud that our companies continue to win big deals:
…Rolls Royce is supplying Trent 700 engines for the A330 Multi-Role Tanker Transport (MRTT) aircraft in France
…MBDA UK is selling ASRAAM to India
…Thales Air Defence is securing contracts with Indonesia for the ForceShield Integrated Air Defence System.
In 2014 defence and security exports were worth £12 billion.
Yet we’ve often succeeded in spite of ourselves.
In the past MOD contracted for highly bespoke products, at great expense, but found such high specification proved a hard sell in the international marketplace.
Only later, perhaps too late, did we consider how such capabilities could meet the requirement of other potential customers.
That’s why we want you to build exportability into your products DNA
…considering it early in the acquisition cycle
…making greater use of modularity and open systems
… doing more to consider the commercial viability of products.
Let’s not forget without defence we would not have had the radar, the jet engine, and the computer. Even today’s technology once used to protect soldier’s clothing from chemical attack provides splash proof technology on millions of mobile devices.
This crossover from the defence to civil sector needs to become more commonplace.
There’s no mystery about our desire to see you achieve export success.
Exports are good for the economy. And what’s good for the economy is good for our national security.
That’s why the government will continue to work tirelessly to champion the UK defence and security sector to highlight our world class capabilities.
That’s why my department continues to support the promotion of the equipment and services that are in use with our own armed forces as there is no better testimony abroad than the outstanding servicemen and women who use this equipment and these services daily.
But as a government boosting our export successes in what is an increasingly competitive marketplace has to be the priority.
I am therefore pleased to announce that the MOD will be stepping up its role in export promotion. The MOD will lead on key strategic export campaigns including Typhoon and Complex Weapons.
These are areas where my department is best placed to offer unique benefits, such as exchanges, advice, doctrine and training that can enhance the long-term capabilities of our partners and increase the interoperability that the are seeking.
This will deliver military benefit to the UK while supporting jobs in the UK.
My final point is about the need to become more efficient.
While others out there pose a serious risk to our nation’s security, we have always recognised security and prosperity go hand-in-hand.
That’s why the Chancellor has committed to increase defence spending and confirmed that we will continue to meet NATO’s pledge to spend 2% GDP target every year of this decade.
But while the defence budget is going to grow again, we’re not the same MOD.
We’re on track to deliver more than £5 billion of savings since the last SDSR in 2010.
We’ve sold enough land to build 38,000 homes.
Next year we will be letting out 70,000 square feet of spare prime office space.
We’re transforming our logistics and supply capability and taking a leaf out of Amazon’s book by introducing a single Defence Fulfilment Centre to open next year in Donnington.
Instead of tired old warehouses built after the war we’ll now have a state of the art warehouse, 18 metres high and covering an area of 12 football pitches, allowing us to provide higher levels of service to our fighting forces at lower cost.
So we’re making savings. But we want you to make savings too.
Part of that requires a change in mindset. We want you to see yourselves as a deliverer not supplier of defence.
Doing more to share the risk and the reward of your work.
This is happening, the renegotiated carrier contract was a watershed moment.
Since then we’ve done deals
…to maintain our ships better delivering savings of £350 million
…to improve the fuel efficiency of our RAF planes… saving around another £370 million
… outsourcing the repair of army vehicles…leaving us half a billion pounds better off.
That kind of approach must now become the norm.
And we have the greatest of incentive of all to save.
Every pound we save goes not to the Treasury but direct into buying, building and maintaining the ships, submarines, aircraft, armour and equipment, .…not to mention recruiting and retaining the talent we also need.
It will of course be the kit at DSEI that grabs the headlines.
But it’s the people in this audience and attending this week that make this exhibition and the defence industry such a success.
The challenge now is to continue to harness the brainpower. I’ve no doubt if you spend enough time focusing on innovation, exportability and efficiency you will match your great abilities with the great opportunities out there.
Doing deals that not only guarantee our armed forces the capabilities they need to defend our shores but ensure the nations represented here can continue to prosper.