Babcock International and the University of Exeter have published a new report calling for wide ranging reforms to enable small and medium sized enterprises (SME) to play a greater role in supporting UK defence capability and resilience.
The report, The Next Line of Defence: Unlocking SME Potential in UK Defence from Policy to Practice, positions SMEs as central to the UK’s ambition to become a leading, technology enabled defence power by 2035. It argues that current structures limit SME participation and, by extension, constrain innovation, sovereign capability and wider economic benefit.
Despite their recognised value, SMEs currently account for only around four percent of UK defence expenditure. According to the report, this under representation not only weakens defence capability but also restricts job creation and regional growth that could be generated through a broader and more inclusive defence supply base.
Priority Areas
The study identifies six priority areas for reform. These include simplifying procurement processes, recasting prime contractors from gatekeepers to partners, stabilising funding through patient finance and private capital, reframing defence careers to build a sustainable skills pipeline, modernising digital and physical infrastructure, and protecting sovereign capability.
Central to the recommendations is a call for more risk proportionate contracting and procurement models that are adapted to SME scale. The report argues that faster routes to market are needed without compromising standards, alongside a cultural shift towards deeper collaboration between government, primes and smaller suppliers.
The publication comes at a time of heightened focus on defence readiness and innovation, with the report framing SMEs as vital to delivering agility and technological advantage in areas such as artificial intelligence, cyber and autonomous systems.
10 Point Charter
Alongside the report, it was revealed that a new industry led 10 point SME Charter is expected to be launched in the coming months. The charter is intended to provide a practical framework to drive consistency in SME engagement across the defence sector through voluntary industry adoption.
Donna Sinnick, Chief Delivery Officer at Babcock, said: “Babcock is wholly invested in working with SMEs across the defence enterprise and is already helping to unlock their true potential.
“In the time critical defence environment, SMEs can deliver niche technologies fast. They are agile and essential to building sovereign resilience in areas like AI, cyber and autonomy. This report provides a positive picture of the conditions that are already being created but it’s also a reminder that we still have to collectively do even more. This is both a security and economic imperative.”
Defence Ramp-Up
Professor Harry Pitts, Deputy Director of the Centre for the Public Understanding of Defence and Security at the University of Exeter, added: “The threats faced by the UK and its allies demand rapid rearmament and defence innovation at a significantly ramped-up pace and scale, and to gain the upper hand against unpredictable and unconventional adversaries demands advantage in the technological cutting-edge.
“A new policy landscape promises to remove barriers so that Britain’s SMEs can help UK Defence meet both of these challenges. But to fully unlock their agility and expertise and enable more small businesses to pivot to defence opportunities, a joint effort across industry and Government is required to put policy into practice.
“This research identifies the structural obstacles that must be dismantled and the practical action that must be taken in order to strengthen our national security through a more resilient defence industrial ecosystem – from the smallest start-ups to the largest primes.”
Pic: Donna Sinnick, Chief Delivery Officer, Babcock and Professor Harry Pitts, Deputy Director of the Centre for the Public Understanding of Defence and Security, University of Exeter with SME report
