8th Report - AUKUS

Our inquiry has underlined the importance of the AUKUS partnership, but has also laid bare the scale of the endeavour that will be required to successfully deliver it. For the UK, AUKUS presents challenges but also great opportunities. Meeting those challenges and seizing those opportunities will require sustained political will and strong leadership and direction from the very top of successive governments. (Conclusion, Paragraph 10) The geopolitical context

Almost five years on from the announcement of the AUKUS partnership, the world is a very different place. Russia’s full-scale invasion of Ukraine and shifting US priorities have placed increasing pressure on Western nations’ defence and security apparatus. The alliances that have underpinned global security for decades can no longer be taken for granted. There can be no doubt that these changes will present challenges for the partnership, as defence budgets come under increasing pressure and diplomacy enters a new era of unpredictability. They do not, however, undermine the fundamental rationale of AUKUS: bolstering security in the Indo-Pacific (and elsewhere); strengthening alliances between the US, UK and Australia; and seeking technological advantage through collaboration. (Conclusion, Paragraph 18) Governance and leadership

It is deeply disappointing that more than a year after Sir Stephen Lovegrove completed his review of AUKUS, the Government’s commitment to issue a public version of his findings has not been fulfilled. This reflects poorly on the Government and is damaging to stakeholder and public confidence. It is also symptomatic of wider issues around the lack of public engagement with AUKUS, which we examine in more detail later in this report. (Conclusion, Paragraph 21) 48

We urge the Government to issue a public version of Sir Stephen Lovegrove’s report as soon as possible. (Recommendation, Paragraph 22)

The UK Prime Minister must take a more prominent role in driving the delivery of AUKUS. Many of the challenges we identify in this report arise from a lack of funding or prioritisation within Government rather than any underlying structural or technical issues. More visible Prime Ministerial endorsement for AUKUS will provide impetus and direction for Whitehall; without this leadership we are not confident that the cross-government coordination, prioritisation and pace required to deliver AUKUS will be achieved. (Recommendation, Paragraph 28)

As we approach five years since AUKUS was launched, following changes of Government and with domestic reviews of the programme recently completed in all three partner nations, a natural opportunity arises for national leaders to convene and make a powerful joint statement underlining their continued commitment to the programme, sending a clear public message both domestically and to adversaries. (Conclusion, Paragraph 32)

The appointment of a Prime Minister’s Special Representative on AUKUS, initially for a year, has been a positive step welcomed by stakeholders in industry and across the trilateral. We recommend that the role be made permanent, providing consistency for stakeholders and sending an important signal across Whitehall and to our international partners about the UK’s commitment to AUKUS. (Recommendation, Paragraph 38)

The Government should advocate for the US and Australia to follow the UK in appointing their own Special Representative (or an equivalent role). Consideration should also be given to establishing a joint secretariat to support them. (Recommendation, Paragraph 39)

The remit of the Prime Minister’s Special Representative is broad, with both domestic and international focus across a wide range of capabilities. If its functions are to be exercised effectively, it must be adequately supported by the Civil Service. Alongside the extension of the role, the staffing of the office should be reviewed with a view to bolstering the resource available. (Recommendation, Paragraph 40) Engagement

The need to engage more openly with the public in a national conversation on defence and security issues has been a recurring feature of the political discourse in recent years and one on which we have previously pressed the Government for action. A programme of AUKUS’ length and cost will rely on public support if it is to succeed. (Conclusion, Paragraph 45) 49

Within an overarching dialogue about the role of defence in society, AUKUS offers an opportunity to demonstrate the more tangible benefits that a thriving defence industry can bring to local economies across the UK. Members of Parliament can play a key role in this messaging at constituency level, but our attempts to engage with the MOD to achieve this have so far been frustrated. In its response to this report, the MOD should set out how it will take a more proactive and open approach to working with Members, and to engaging with the media to achieve this shared goal. (Recommendation, Paragraph 46) Workforce and skills

Whilst the groundwork has been laid for growing the nuclear workforce, the scale of the recruitment needed to deliver AUKUS calls for more creative solutions. These should harness existing strengths, such as the world- leading skills academies run by UK defence primes, and use the unique recruitment opportunity presented by the trilateral partnership to tap into new sources of talent. The Government should encourage and incentivise recruitment from geographic locations and demographics without strong existing links to defence, using AUKUS as a vehicle to extend skilled employment and prosperity across the UK. (Recommendation, Paragraph 54)

We are deeply concerned by the Government’s failure to recognise the impact of barriers to workforce movement across the trilateral. The ensuing inconvenience and cost may currently be manageable—although they are having a stifling effect on collaboration—but it is clear to us that existing arrangements will not be sustainable as work on AUKUS intensifies. With the programme already working to ambitious timelines, this problem must be addressed now to avoid future backlogs and delays, which could threaten the delivery of SSN-AUKUS in both the UK and Australia. (Conclusion, Paragraph 61)

The Government must urgently remove barriers to workforce mobility across the AUKUS partners, beginning with security clearances. We recommend that the MOD, working with trilateral partners and in consultation with industry, set out within six months a clear plan to enable mutual recognition or continuity of security clearances for AUKUS-related work, and report to Parliament on progress. The introduction of an AUKUS visa should be considered as part of this work. Failure to address this now will constrain collaboration, slow delivery, and impose escalating costs as the programme intensifies. (Recommendation, Paragraph 62) 50

The development of new SSN facilities in Adelaide and Perth could pose a risk to workforce retention at the UK’s equivalent facilities in Barrow-in- Furness and Plymouth. The MOD must closely monitor workforce flow as the design and build of SSN-AUKUS progresses, and should ensure that efforts to streamline workforce movements do not inadvertently create a detriment to the UK’s submarine industrial base. Efforts to regenerate Barrow and Plymouth will be key to mitigating this risk, as we address in more detail later in this report. (Recommendation, Paragraph 65) Pillar 1—The Optimal Pathway

For the UK, delivering SSN-AUKUS will be a lengthy and complex undertaking requiring a sustained financial commitment from Government across several electoral cycles. It is deeply concerning that there are signs that the investment pipeline that underpins that commitment has already faltered. This cannot be allowed to happen again: the need for timely and appropriate levels of investment must be prioritised within Whitehall. Shortfalls or delays in funding risk a failure to deliver SSN-AUKUS on time, with potentially severe consequences for UK and wider Euro-Atlantic security, and our standing with our trilateral partners. (Conclusion, Paragraph 76)

The Government must demonstrate that the industrial uplift required to deliver SSN AUKUS is being funded and delivered at pace. We recommend that an annual assessment of planned versus delivered investment in submarine industrial capacity be conducted by the Prime Minister’s Special Representative, to be submitted to the Prime Minister and published in a form suitable for Parliamentary scrutiny. Any slippage should be explicitly justified. Given the long timelines involved, early delays will compound and materially threaten delivery. (Recommendation, Paragraph 77) Pillar 1—Build

As Australia works against tight timescales to develop the infrastructure and workforce required to build its sovereign nuclear-powered submarine capability, it will need to take decisions which could have implications for the UK’s own build schedule at Barrow. The UK Government must co- ordinate closely with the Australian Government as it finalises its plans, ensuring that the UK has developed contingencies for all possible options. (Recommendation, Paragraph 80)

There was a clear consensus in our evidence that the regeneration of the town of Barrow-in-Furness is essential to the delivery of AUKUS. The formation of Team Barrow and the investment committed to date to address 51 this is welcome, but it does not go far enough. The scale of the challenge was laid bare in the evidence before us and was made apparent during our visit to the town. (Conclusion, Paragraph 91)

With the successful delivery of SSN-AUKUS dependent on attracting and retaining a skilled workforce at BAE Systems’ site in Barrow, the Government must do more to ensure that the ambition laid out by Team Barrow is met. This will require additional funding from central Government to provide the investment in housing, healthcare, transport and education which the town urgently needs. Barrow’s unique role as the home of the UK’s submarine building capability means that failure to do so will jeopardise not only AUKUS, but also the nation’s defence and security. Put simply, the regeneration of Barrow is too big to fail. (Recommendation, Paragraph 92)

Although the planned regeneration is in its early stages, Team Barrow must ensure that visible change is seen on the ground as soon as possible to reassure the local community that their role in the national endeavour has been recognised, and that meaningful change is underway. (Recommendation, Paragraph 93) Pillar 1 —Sustainment

Delivering on the UK’s commitment to increase port visits and later rotate an Astute-class submarine out of Australia will be essential to maintaining credibility within AUKUS. We were glad to receive the Minister’s assurance that the UK remained on track to meet this obligation, and we welcomed the subsequent arrival of HMS Anson in Western Australia. However, it is clear that fulfilling this commitment has stretched the Astute fleet to—or even beyond—its limits. (Conclusion, Paragraph 102)

With submarine availability critically low, and against a backdrop of deepening concern about the readiness of the Royal Navy, the Government must deliver infrastructure improvements at HMNB Devonport and HMNB Clyde at pace to relieve pressure on the fleet. Failure to do so will risk the UK’s ability to meet its obligations under AUKUS whilst continuing to maintain security in the Euro-Atlantic. (Recommendation, Paragraph 108)

Workforce growth at HMNB Devonport will be key to delivering the infrastructure required to improve submarine availability and prepare for SSN-AUKUS. Team Plymouth will play a central role in creating the local conditions to attract and maintain this larger workforce and will also be key to delivering the local defence dividend promised by the city’s Defence Growth Deal. The Government must provide timely and adequate funding for Team Plymouth to enable it to meet the workforce challenge and maximise defence-related growth. (Recommendation, Paragraph 109) 52

The UK must throw its full support behind Australia’s development of new infrastructure in Perth, particularly the new Defence Precinct at Henderson. Close working between the UK and Australia at government and industry level will enable the UK to share its experience in constructing and operating its own nuclear sustainment infrastructure, assisting Australia in expediting progress and allowing both countries to maximise the benefits to be gained by operating a common fleet. (Recommendation, Paragraph 112) Export controls

The lifting of export control restrictions under AUKUS is a significant achievement for the partnership. It has the potential to bring immense benefits across UK defence. However, that potential will only be realised if Government removes barriers to participation and raises awareness across industry, encouraging businesses—including those which may not consider themselves to be traditional defence suppliers—to make the most of the opportunity presented. (Conclusion, Paragraph 120)

The Government should seek to identify those organisations which could benefit from membership of the Authorised User Community—especially SMEs—and proactively promote it to them, offering guidance and support where required. The new Defence Office for Small Business Growth should play a key role in this effort. The MOD must also work closely with the Department for Business and Trade to monitor applications and ensure that early delays to the granting of approvals are not repeated. (Recommendation, Paragraph 121) Pillar 2 delivery

With its aim of harnessing trilateral collaboration on advanced technologies, Pillar 2 has the potential to be transformative, but progress to date has been disappointing and inadequate. It now faces an uphill battle to restore credibility. In the short term, the Government must press for swift agreement within the trilateral on priority projects which provide tangible benefit to the warfighter and their subsequent delivery at pace. The Government must also provide clarity around funding mechanisms so that industry is provided with the investment confidence needed to produce those capabilities at scale. (Recommendation, Paragraph 132)

There is an obvious alignment between the workstreams covered under Pillar 2 and the Defence Industrial Strategy’s themes of innovation, resilience and prosperity; and it offers clear opportunities for defence-related growth. However, the UK’s approach to Pillar 2 has so far been disjointed and has failed to fully exploit those opportunities. (Conclusion, Paragraph 140) 53

The MOD must work closely with the Department for Science, Innovation and Technology, and the Department for Education, to drive a truly joined-up, whole-of-government approach to Pillar 2. The Government must also do more to involve SMEs directly in Pillar 2 activities, harnessing their agility and innovation to enhance capability development. (Recommendation, Paragraph 141) Expanding Pillar 2

Expanding Pillar 2 to include additional partners offers potential opportunities, but it will add a further layer of complexity and negotiation to what is already proving to be a difficult task. Whilst remaining positive about a future expansion of Pillar 2, we reluctantly conclude that the focus for now must be on achieving tangible results within the existing trilateral: AUKUS must first deepen collaboration before widening it. (Conclusion, Paragraph 146) Conclusion

A programme of AUKUS’ scale and scope will not succeed if it is perceived within Whitehall as one of many defence programmes competing for scarce resources. Only strong and visible political leadership from the very top of Government can counter a drift into bureaucratic obscurity and ensure that AUKUS receives the funding and priority that the nation’s defence and security demands. (Conclusion, Paragraph 147)

As we approach five years since the partnership came into being, with changes of Government in each partner nation and domestic reviews completed, now is the time to seize the opportunity AUKUS presents and demonstrate the UK’s firm commitment to making it a success. The recommendations in this report identify the steps that must be taken to address the challenges that have already emerged, and to inject a new impetus into the delivery of AUKUS. We call on the Government to adopt them without delay. (Conclusion, Paragraph 148) 54