The Spring Statement wasn’t quick enough for defence innovation – UKTN

What Britain needed from the Spring Statement was concrete steps towards boosting its defence capabilities. There’s room for improvement, and we await the Strategic Defence Review led by former Secretary General of NATO and Labour Defence Secretary Lord Robertson with even greater interest. The confirmation that defence spending will rise to 2.5% of GDP by 2027, plus a new £400 million Defence Innovation Fund, and the dedication of 10% of the Ministry of Defence’s (MoD) equipment budget to novel technologies showed that defence is high on the Government’s priority list, and rightly so. Almost gone are the days when the industry and investment into it were seen as “taboo”. However, we have to ask ourselves: are these welcome changes enough to establish the UK as a defence industrial superpower? Is the timeframe sufficient? Has one even been established, apart from the GDP commitment?

Money talks, but so does speed

 The UK has committed to the biggest sustained increase in defence spending since the end of the Cold War. While 2.5% of UK GDP is significant, the figure is still inadequate compared with the resources of other global powers such as the US or russia. There is a vast chasm between the UK and US defence spend in monetary terms – with $967.96 billion of American investment while russia ploughed $145.9 billion and almost a tenth of its GDP into the military even as its economy fails. Germany, despite its more conservative GDP commitments, spent $85.97 billion in 2024 compared to the UK’s $81.06 billion. Not only is the budget less than many allies and our collective adversaries, we only have a timeline for the spending in relation to GDP to come into effect. Even still, two years from now is not fast enough. Making sure that we do and that the implementation lead time is realistic is essential for both Britain’s national interests and Ukraine’s war effort. The Chancellor needs to outline when the Defence Innovation Fund will be up and running and how soon we’ll see a portion of the MoD’s equipment budget redirected to new technologies. Unsurprisingly, the sooner, the better..

It has become apparent that the UK has to focus on achieving more with less in the immediate future. The effective allocation of limited defence resources will be crucial, ensuring that this additional funding does not disappear into primes but fulfils its intended purpose. These large, established companies that have contracts with governmental departments, such as the MoD, swallowed 96% of the defence budget in 2023-24. The US has long since recognised the importance of allocating capital to small defence businesses with a stipulation that 25% of Department of Defense contracts go to SMEs, a figure it typically exceeds. Startups will be key to unlocking sovereign defence capabilities and maintaining national security.

Defence innovation

 Chancellor Rachel Reeves is championing ‘novel technologies’ and has pledged 10% of the MoD’s equipment budget to this. As such, the focus on nurturing homegrown technology talent to enhance military tactics is hugely positive. Technologies such as cybersecurity, AI, drones, and electronic warfare (EW) are key to the UK’s future national security. However, we should not underestimate the power of leveraging battlefield-proven defence technologies from Ukraine to ensure the UK’s defence strategies reflect the realities of modern-day warfare. These innovations already have a “stamp of approval”, which shows they work in the most dire circumstances and could be harnessed by the UK post-war.

DefenceTech startups have the capacity to innovate quickly. Dronarnia, Huless, Kvertus and Skyeton, which focus on drone R&D, tethered drones, EW, and unmanned aerial systems (UAS) respectively, are but a few examples of world-class Ukrainian innovation. The full-scale invasion of Ukraine has required businesses to iterate technology effectively and efficiently to minimise the loss of Ukrainian life and protect its infrastructure.

Earlier this year, Kvertus launched the £103 million Project Atlas to create an advanced anti-drone ‘wall’ spanning 1300km across the frontline, using its EW technologies. Supported by the Ukrainian Armed Forces, the grassroots project utilises EW and electronic reconnaissance (ER) innovation for the simple purpose of saving and protecting against the escalating threat of unmanned aerial vehicles (UAVs). The lessons Kvertus and other startups have already learnt have led to the development of automated drone detection and suppression technology, which will be paramount for Ukraine and wider Europe to help address any future UAV threat.

There are also startups in the UK, like Black Sea Associates, a veteran-owned risk management and intelligence firm, that are committed to supporting Ukraine. The team combines extensive operational expertise from law enforcement, NATO militaries, and Ukraine’s defence intelligence sector. Its cost-effective and user-friendly drone technology is developed from extensive experience in Ukraine. This is exactly the kind of international collaboration and cooperation we need for transformational defence innovation.

Incentivisation

We should also seek new ways to incentivise private investment that ensures public funding further supports the growth of promising DefenceTech companies. We could, for example, mirror Denmark’s new €130 million government programme that guarantees compensation to Danish companies willing to invest in Ukraine’s defence industry. A combination of public and private funding could help to close the gap between the UK and other global powers in defence. Peace in Europe is paramount, and the Government should seek to achieve this. No matter the cost.

Time is of the essence

We, unfortunately, do not have the luxury of time as war rages in Europe. The Chancellor’s commitments to the defence sector are appreciated, but if the Government truly wants to bolster defence capabilities, more public and private capital is needed – and quickly. A price cannot be put on people’s safety or the protection of critical infrastructure. Greater investment in the sector is needed, and it’s needed now. This, in tandem with support for DefenceTech startups and those tried and tested in Ukraine, is how the UK can become (and remain) a defence industrial superpower.

Andriy Dovbenko is Founder and Principal at UK-Ukraine TechExchange

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