Defence Online

Scottish Affairs Committee hears from BAE Systems, Babcock, Leonardo and QinetiQ on supply chain bottlenecks, SME risk and the urgent need for the Defence Investment Plan.

The leaders of four UK defence primes have told the Scottish Affairs Committee that the pace of MoD procurement, an uneven distribution of SME spend, and continued uncertainty over the Defence Investment Plan (DIP) are holding back investment and supply chain growth across Scotland’s defence industrial base.

Giving evidence on 22 April 2026 in the Securing Scotland’s Future: Defence Skills and Jobs inquiry, Neil Holm (BAE Systems Naval Ships), John Howie (Babcock), Cathy Kane (QinetiQ) and Mark Stead (Leonardo) delivered a unified message: long-term contract certainty is the single biggest enabler of a resilient Scottish supply chain.

The session highlighted a stark imbalance – just 2.5% of UK defence SME spend lands with Scottish SMEs, against 54% concentrated in the south-east and south-west of England. Howie linked this to proximity to MoD procurement centres but said the rapid emergence of dual-use technologies in oil and gas, renewables and the wider tech sector should help redistribute spend.

The primes detailed their Scottish footprints: Babcock works with 454 Scottish suppliers (65% SMEs), BAE Systems with 49 Scottish SMEs, and Leonardo draws 25% of Edinburgh supply from Scotland. Babcock’s new SME Charter aims to ensure primes carry appropriate risk rather than cascading it to smaller firms.

Witnesses warned that drawn-out procurements – citing the New Medium Helicopter competition – risk “hollowing out UK sovereign industry”. Kane called for a shift from project-by-project awards to programmatic packaging of work, while Stead urged Government to publish the DIP, saying most UK defence sites should be turning into “building sites” to grow capability.

Skills pressures are acute: ADS is tracking 10,000 sector vacancies, and Babcock expects to need 3,500–4,000 new Scottish workers over the next decade. Apprenticeships are heavily oversubscribed, but witnesses said the limit is long-term work, not applicants. With the Type 31 programme winding down at Rosyth, future intake decisions are tightening.

Strong support was voiced for the £50m Scottish Defence Growth Deal, the Arrol Gibb Innovation Campus, the Clyde Innovation Centre and £10m earmarked for two Defence Technical Excellence Colleges, contingent on Scottish Government match funding.

Asked whether defence should be recognised as a strategically critical sector, all four witnesses answered: “Yes.”