Page 51 - Five Forces of Americanisation Richard Hooke 04072025 final post SDR1

The UK Defence Industry in the 21 Century
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The Five Forces of Americanisation

Over the last twenty years, UK Defence Reform has been constant, with the frequency of public
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reports and reviews exemplifying a restless and largely unsatisfied desire for change and
improvement. The foundations for UK defence industrial reform - the central premises of competition,
the efficiency of commercial business and the culture this embedded - were established in the 1980s.
UK defence companies faced both the sector’s need worldwide for rationalisation and the transition
to private ownership whilst supporting front line British troops at war, first, independently, in the
Falklands and later, alongside US warfighters in Iraq. The MoD chose this period to introduce a new
“competition by default” procurement policy, whilst successive UK governments, enthused by
privatisation and deregulation, insisted that reshaping and consolidating the UK defence industry was
a “commercial matter for business”.
Some industry observers have viewed successive UK governments’ reliance on financial markets to
develop its DIB as a political choice.
“Since 1997, the British approach to defense industry has mostly reflected the political ideology of
the party in power. Labour has tended to prefer partnering with industry and shaping the British
industrial base — combining private sector practices with strategic partnering. By contrast,
successive coalition and Conservative governments have opted for a greater reliance on the free
market and competition by default, focusing on “value-for-money” through competitive “off-the-
shelf” methods to achieve this.”
(William Reynolds, PhD, “War on the Rocks”,January, 2025)

There is little evidence to support this over the last 20 years. The actions of both parties in power,
from procurement to export promotion and from industrial restructuring to technology transfer,
demonstrate a common view that commercial and financial disciplines and imperatives would be
relied upon to manage the development of the UK’s DIB. In 2005, the Tony Blair government and later,
in 2019, the Theresa May government, both expressly stated that they would leave the task of
reshaping the DIB to “business”.

Indeed, from the mid-1980s, UK Defence Reform ended a well-established collaborative relationship
between the UK military and its domestic industry. This had owed much to the foundations developed
in the Second World War but probably more to their evolution to a new level of intimate complexity
in 1985, when the UK government signed a defence equipment supply contract with Saudi Arabia. Al
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Yamamah , as it was called, was said to be worth at least £43 billion and was regarded as a personal
triumph for then UK Prime Minister Margaret Thatcher and the relentless efforts of an integrated
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government, military and industrial community . That said, the relationship between government and
its national defence industry had, in peacetime, given rise to a “cost plus” approach to pricing and a
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relaxed attitude to business efficiency and operational improvement .
Al Yamamah appeared to provoke a major change in UK defence procurement policy but it also
ultimately led, several years later, to charges of corruption, both in the UK and USA, against the UK
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government’s prime contractor, BAE (then British Aerospace) and its agents . Provoked by tighter
budgets at home and declining defence spending across the world, a major focus on export
programmes in the Middle East and South East Asia was a prudent response, with France the main
competitor. The need to export also stimulated collaboration with the US Marine Corps on attack and
advanced trainer aircraft (both initially designed, developed and built in the UK) and with European
partners on both combat aircraft and weapon systems. All provided impetus to initiatives aimed at
improving performance and efficiency, combined with the need to rationalise operations across the
several locations and companies joined together through the industry’s privatisation in 1981 and
1985. Adding further momentum to major change was the need for investment and improved
efficiency in the four British commercial aircraft businesses (from regional turboprops and jets to
corporate aircraft and Airbus large commercial aircraft) serving a rapidly expanding civil market.
The government’s competition policy therefore came at time of enormous change in UK defence and
aviation and its place in the world market. Consultation might have enabled a more constructive

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07/07/2025 Richard Hooke 2025