PARLIAMENTARY DEBATE
Support for Defence SMEs - 2 February 2026 (Commons/Commons Chamber)

Can I associate the Government side of the House with your tributes to Lord Wallace and Lord Flight, Mr Speaker? I pay tribute to Captain Philip Gilbert Muldowney of the 4th Regiment Royal Artillery, who died on 25 January. He was an outstanding young officer. I convey the condolences of the whole House to his friends and family.

I also inform the House—as you know, Mr Speaker—that my hon. Friend the Armed Forces Minister is in the Norwegian High North on reservist training. When we said we would boost the reserves, this is the Defence team delivering in person.

Turning to the question, my message to Great British businesses of all sizes is that we want the UK to be the best place in the world to start and grow a defence business. That is why we have set a target to spend an extra £2.5 billion with SMEs by 2028. That is an uplift of 50%. This is a Labour Government delivering for defence and delivering for Britain.

Impcross, a company in my constituency of Stroud, is the sole supplier of flight-critical parts to the Typhoon aircraft and a key supplier for the Vanguard submarine fleet. It is on the verge of collapse, and His Majesty’s Revenue and Customs is filing to wind it up, after the owners were prohibited from selling their business on the grounds of national security and sovereign capability. What support is the Secretary of State offering to critical suppliers that are struggling financially, and will he meet me to discuss what steps we can take to support this company?

I am grateful to my hon. Friend for championing Impcross in his constituency. I think he will accept that it is right that when British companies deliver the sort of sovereign UK capabilities he mentions that we scrutinise hard any sale to foreign firms. Impcross does indeed play an important role in the Typhoon and F-35 supply chains, and my hon. Friend the Minister for Defence Readiness and Industry would be happy to meet him.

Domo Tactical Communications in my constituency manufactures drones and communications equipment used around the world. It is having some problems engaging with the Ministry of Defence on sovereign capability, and the previous Minister of State for Defence Procurement was due to visit the company in my constituency, but that meeting has since fallen through since the reshuffle. The Minister confirmed on 25 November that he would visit. Can I ask that the meeting is arranged as soon as possible, please?

The hon. Gentleman points to a firm in his constituency, and it is true that for too long too many small firms have felt locked out of MOD contracts. It is also true that the last Government, his Government, missed their own targets for SME defence support. Our new office for small business growth, which opened its doors for the first time last week, will help turn that around. At the risk of overburdening my hon. Friend the Minister for Defence Readiness and Industry, I am sure that he would be willing to meet the hon. Gentleman.

I call the Chair of the Defence Committee.

My hon. Friend and his Committee know a great deal more about this than The Times does. He will know that a competitive contract process is under way for the new medium-lift helicopter. He will also know that we are working flat out to finalise the defence investment plan. And he will know that, as part of that plan, we are dealing with a programme of record—a previous commitment to equipment—that was hugely overcommitted, underfunded and, in some cases, unsuited to the threats we face. For the first time in nearly 18 years, the Ministry of Defence is taking a line-by-line approach to building up our plans for the future.

Does the Minister recognise that many small and medium-sized enterprises in the defence sector are supported by bigger defence firms? Companies such as Honeywell operate on the Leonardo site in Yeovil. Does he therefore accept that, if bigger defence firms such as Leonardo cannot get contracts like the one for the new medium-lift helicopter, we risk losing not just Leonardo but smaller defence firms, too?

Firms such as Leonardo are getting defence contracts. I was in Edinburgh just the week before last to award a £450 million contract to Leonardo for a really important part of upgrading our Typhoon jets for the future. Of course, the hon. Gentleman is right that the supply chain to smaller and medium-sized firms is often mediated by primes such as Leonardo, which is why it is important that, since the election, we have let over 1,100 major contracts in defence, 84% of which have gone to British-based firms.

I call the shadow Secretary of State.

I associate the Opposition with the condolences expressed to the families of Lord Wallace, Lord Flight and, of course, Captain Philip Muldowney.

Last June, from the Dispatch Box, the Secretary of State promised to deliver the defence investment plan by the autumn. He failed to do so. At our previous oral questions in December, he promised to work “flat out” to deliver the DIP by the end of the year. He failed to do so. With continual dither and delay, it is no surprise that reports last month indicated the worst sentiment among UK defence SMEs for 20 years. The DIP is well overdue, so can the Secretary of State confirm that it will finally be published this month?

We are working flat out to complete the DIP, and the hon. Gentleman above all, having been responsible for defence procurement in the last Government, will appreciate just how overcommitted his own programme is. He will appreciate the truth of his former boss saying that, over 14 years, the Conservatives had “hollowed out and underfunded” our armed forces. We will deal with that overcommitment, we will deal with the underfunding and we will deal with the fact that his plans were unsuited to many of the threats we face.

I call the Liberal Democrat spokesperson.

We all know that we must urgently increase defence spending, but we are not hearing many ways to get it moving right away without harming British security in other ways. Slashing international development aid or investment in renewable energy, for instance, is just robbing Peter to pay Paul.

The Chief of the Defence Staff has warned that there is a £28 billion funding shortfall, so I want to offer the Secretary of State a practical, costed way to close much of that gap. Defence bonds would raise £20 billion over the next two years and get investment straightaway into capability and the industrial base, including the SMEs we rely on. Will the Secretary of State give this proposal serious consideration as part of a clear, funded plan to plug the funding gaps and get defence investment moving?

I remember when the hon. Gentleman’s predecessor stood in this House after the election to argue, like the hon. Member for South Suffolk (James Cartlidge) did, for this country to invest 2.5% of GDP by 2030—the hon. Member for South Suffolk called for it 13 times before the Prime Minister said, a year ago, we would do it three years earlier.

We will look at any way of raising the level of investment going into defence, but the hon. Member for Yeovil (Adam Dance) could start by recognising that this Government have made a commitment to record investment in defence—the largest increase since the end of the cold war. I note in passing that he seems to be against how we will fund this to reach 2.5% and 2.6% next year.

We are still on Question 1, so it would be useful if Members can help me.