Source · Select Committees · Defence Committee
Recommendation 26
26
Acknowledged
Publish Defence Finance and Investment Strategy, detailing funding solutions and implementation plan, including new mechanisms.
Recommendation
We recommend that the Government uses the Defence Finance and Investment Strategy to set out the data it holds and the conclusions it has drawn alongside its approach to resolving the issues with each type of funding difficulty. In the strategy the Government will need to set out how much state intervention it is willing to commit to and for how long. It should accompany the strategy with a timetabled implementation plan, detailing which Department is responsible for each action. As a minimum, the Government ought urgently to create a method of payments services provision in areas where no market participants are willing to provide their services. However, we recommend the Government rapidly conclude and publish its assessment of the viability of creating a defence-specific fund within the British Business Bank and also explore the potential to create other mechanisms. Furthermore, the Government should commit to making the Defence Investors’ Advisory Group available to give evidence to Parliament—whether that be to us, to the Treasury Committee, the Business and Trade Committee or a joint session—once the strategy is published. (Recommendation, Paragraph 100)
Government Response Summary
The government states the Defence Finance and Investment Strategy (DFIS) will address finance challenges, considering implementation, ownership, and gaps in payment services, and is assessing the viability of a defence-specific fund; however, it states transparency to Parliament regarding the DIAG will be through the Department, rather than the DIAG giving evidence directly.
Government Response
Acknowledged
HM Government
Acknowledged
The DFIS will provide conclusions on the key challenges within the defence finance and investment ecosystem and will set out how we intend to address those challenges. Implementation and ownership will be considered for each policy included in the strategy. As part of the DFIS, evidence for gaps in payments services provision for the defence sector will be considered, and policies will be shaped to address the gaps identified. Finance and investment providers, whose capital and expertise we need to invest and grow the defence sector, are being engaged in the development of the DFIS through the DIAG. This includes venture capital, private equity, banks, and pension funds. This engagement informs Government, industry, and the investor community which types of opportunity are appropriate for external capital, and how barriers to investment in defence can be removed while making the sector more attractive for private investment. Mobilising and directing external capital into Defence will deliver growth and strengthen the UK industrial base. The case for a defence-specific fund, alongside other mechanisms, is being assessed as part of the development of the DFIS, through engagement with the DIAG alongside convening of public financial institutions, including the British Business Bank. This work includes exploring the ownership and focus of any such fund, to ensure any fund addresses gaps in the market and is additional to the public financial landscape. The DFIS will publish any commitments made regarding a defence-specific fund, or other funding mechanisms. The DIAG, as an external expert committee, is providing non-binding advice into the MOD during the development of the DFIS. As such, the Government holds ultimate accountability for the strategy. The appropriate route to ensuring transparency to Parliament will be through the Department.