First Report - Defence in Scotland: military landscape

Scotland is experiencing a new era of confidence and investment in the defence sector. We welcome the MOD’s clear commitment to Scotland, shown, for example, by making it home to the UK’s submarine service, the new fleets of P8 Maritime Patrol and E-7 Wedgetail aircraft and that Scotland will host a greater proportion of the Army, with an increase in the number of battalions, as outlined in the 2021 Future Soldier review. We also welcome the MOD’s significant investment in Scotland, in particular in Argyll & Bute and Moray, and the economic benefits this brings to local communities.

We welcome the increased military capabilities the MOD is gaining in Scotland, especially in light of ongoing increases in Russian aggression, and the importance that Scotland’s military capabilities play in strengthening the UK’s international alliances, such as NATO.

We note that the 2014 commitment to increase the number of Regular Armed Forces personnel has been superseded by changing strategic priorities. We welcome the 2021 Future Soldier programme to increase the number of battalions in Scotland and that Scotland will host a greater proportion of the Army in the future. (Paragraph 21) Defence industry in Scotland

We welcome the MOD’s high level of spending with Scottish industry (around 10% of total spending with industry) but are concerned that this spending is very heavily skewed towards major international prime contractors rather than SMEs. This is illustrated by the fact that only 2.5% of the MOD’s spending with UK SMEs goes to Scottish businesses. While this figure is higher than the MOD’s spending with SMEs in the North West of England, Wales and Northern Ireland, it is far lower than both the UK average and Scotland’s population share of the UK. Scottish SMEs have the skills and ambition to match any other part of the UK yet are losing out. While the MOD’s SME Action Plan is timely and relevant, it is unlikely to tackle engrained hesitancy within the defence sector towards working with Scottish SMEs.

The MOD should, with the assistance of the Scotland Office, initiate a culture change process within its own ranks, and in its prime contractors, that addresses perceptions of engrained hesitancy towards working with SMEs in Scotland, with a view to increasing the proportion of SME spending north of the border to at least 8% by the end of the MOD SME Action Plan implementation period.

The military shipbuilding sector provides an important pipeline of highly skilled jobs for Scottish industry. While current Royal Navy Type 26 and Type 31 orders are very welcome, the future of the sector is dependent on favourable UK Government policies and a regular ‘drumbeat’ of orders, which we will explore further in our inquiry into military shipbuilding. (Paragraph 39) 36 Defence in Scotland: military landscape

The UK Government should clarify definitively its position on whether current policies potentially allow for Royal Navy warships (such as destroyers, frigates and fleet solid support ships) to be procured and/or built overseas. If this potential exists—which could have a dramatic impact on shipbuilding in Scotland—the MOD should indicate the likelihood of any of its warships being procured or built overseas in the next 30 years. (Paragraph 40) MOD base closures and base expansion

MOD base closures, base expansions, speculation on base closures and reversals/ changes in basing decisions can all have major consequences for local communities in Scotland. All of the local authorities we heard from—regardless of whether they were facing MOD increases or decreases—desired greater collaboration with the MOD on basing decisions.

The formal partnership arrangement between the MOD and Argyll and Bute Council has been a great success and should be seen as a model for MOD interactions with Scottish local authorities. The MOD and relevant local authorities in Scotland should work together to increase the use of formal partnership arrangements.

The MOD should intensify its collaboration efforts with all Scottish local authorities facing base closures or base expansions, and engage with them at earlier stages in those processes. The MOD should also work with Scottish local authorities to jointly produce, and act on, impact assessments to help ease local challenges caused by MOD basing decisions. These should be produced within a suitable timeframe to inform and enable appropriate action ahead of base closures or major expansions. (Paragraph 62) MOD collaboration with the Scottish Government

While defence is wholly reserved to the UK Government, MOD decisions on military basing nonetheless have significant implications for areas of devolved competence, such as child education, healthcare and housing.

MOD engagement processes on military basing decisions currently take place predominantly between the MOD and affected local authorities and health boards. While this approach might work in England, in Scotland an adapted approach is needed in order to recognise the different regulatory frameworks and the role of the Scottish Government in devolved policy areas. Nevertheless, we recognise that engagement with local authorities and health boards is also important due to their operational role.

The MOD should increase its efforts to collaborate with the Scottish Government on basing decisions. This would facilitate improved information sharing, in both directions—for example, in relation to future basing intentions and the likely impact on local communities.

The Scottish Government must commit to properly funding local authorities and health boards local to military bases to ensure there is sufficient provision in place. This was not the case for dental and maternity services for military families in Moray. Defence in Scotland: military landscape 37 Both of these efforts would benefit military communities who rely on locally provided services, and Scottish communities nearby to MOD bases who share the same local services. (Paragraph 76) Movement of personnel in and out of Scotland

While improvements have been made in this area—for example the Scottish Government’s ‘Welcome to Scotland’ guide—there is scope for the MOD to be more proactive in the information it routinely shares with Armed Forces personnel and their families when they move to bases in Scotland, and from Scotland.

The MOD should conduct a review of the formats and quality of information it proactively and routinely shares with all Armed Forces personnel and their families when they move to bases in Scotland, and from Scotland. The Scottish Government should also review their own information to make the transition for military families moving to Scotland easier. Particular focus should be given to the provision of clear information in relation to the implications of the differing child education, healthcare, tax and professional qualifications systems between UK nations. As part of these reviews, the MOD should ensure that ‘best practice’ is shared between Services and the MOD and Scottish Government should ensure that details of the three service Family Federations and SSAFA are proactively and routinely signposted.

The UK Government should accelerate work with relevant responsible bodies across the UK to reduce barriers that military spouses and partners face when attempting to transfer their professional qualifications—for example, teaching qualifications— between UK nations. In line with the Armed Forces Covenant, military spouses and partners should not be disadvantaged in their employment by virtue of their association with the Armed Forces.

We welcome the MOD’s annual payment to 7,000 Armed Forces personnel in Scotland. However, the Scottish Government should consider an exemption from the extra income tax in Scotland, and for the spouses of Armed Forces personnel. (Paragraph 94) 38 Defence in Scotland: military landscape