Insight: Scotland’s defence sector is facing a looming jobs crisis

How can Scotland grow its economy, get more people into work and reindustrialise all at once? Defence is likely to be a big part of the answer to that, according to the latest report from the Scottish Affairs Committee, published this morning.

But though the report starts out rosy, the report moves quickly to highlight crucial warnings facing Scotland’s defence sector – and urges both the UK and Scottish governments to step up.

Firstly, and most significantly, there is a skills shortage. The training available is falling far behind the needs of the sector. What does this mean in practice? If defence companies and related businesses can’t staff their workforce, this impacts supply chains needed to produce essential parts, which in turn affects how Britain can bolster our national security, but also the aid it helps supply overseas, for example, to Ukraine.

The deficits can be seen almost everywhere: from those qualified in STEM subjects (science, technology, engineering and maths) to shipbuilding jobs to advanced manufacturing and cybersecurity skills.

While the UK has sought to bring in workers from overseas to help plug gaps (Babcock took in 300 workers from the Philippines for this exact reason) and while the report notes that ‘in the short-to-medium term, it is clear that Scotland will not be able to deliver upcoming naval and civil programmes solely through the domestic labour market’, there are issues here too.

Due to some roles requiring high levels of security clearance, it is not always possible to fill a vacancy with an overseas worker. This is a problem.

Another problem is that the skills shortage is not unique to defence. The energy sector needs workers from the same group of engineers, welders and crane drivers, to name a few. In fairly unequivocal terms, and using fairly graphic language, MPs have warned that ‘this competition risks cannibalising adjacent sectors’ workforces’ – meaning that simply hiring more workers from this pool risks creating labour shortages elsewhere.

What is particularly concerning about these shortages is the amount of time needed to train up highly-skilled workers means they cannot be filled quickly – and yet the demand for workers is there. Major defence programmes based in Scotland, like the building of Type 26 and Type 31 frigates and the Dreadnought submarines, need considerable workforces in order to succeed.

This report is a long-form hazard warning that defence recruitment needs to ramp up now. Both parliaments should pay attention: the Scottish Government is responsible for skills and higher education policy, including apprenticeships, while research and development funding involves Westminster.

Funding decisions have raised eyebrows: the Scottish Committee has raised questions about why Scotland was only given £20m for skills funding out of a cash pot that totalled £182m. Defence minister Luke Pollard told the MP group that this wasn’t the only sum being provided for Scotland and that more money would be made available.

It’s worth noting that, under the previous prime minister, Sir Keir Starmer, Pollard’s colleagues quit after insufficient funding was designated for the much-delayed Defence Investment Plan. New Prime Minister Andy Burnham appointed former defence secretary John Healey as his chancellor, but he is refusing to set out a roadmap to spending 3% of GDP on defence by 2030 before next year.

Some of these skills shortages will be addressed through the Defence Growth Deal for Scotland, while the UK Government hopes to build two Defence Training Excellence Colleges (DTECs) in Scotland – one in the east and one in the west. The UK Government has put £10m towards these, and MPs have called on the Scottish Government to match that funding, warning that neither training college will be completed without an extra injection of cash.

And there is another issue facing the expansion of the defence sector in Scotland: the bad press it receives. The final part of today’s report raised concerns about negative perceptions of the industry. Defence firms believe that this is one of the biggest barriers to recruiting students and early-career professionals into the sector.

Senior figures, including John Howie, formerly of Babcock, suggest an ideological stance that defence is “bad and unethical”, while others note that defence as a whole is often viewed through the “narrow” lens of combat and munitions. Mark Stead of Leonardo said that small businesses linked to defence can ‘suffer from the stigma’ of the sector, even risking vandalism to their sites.

There are accompanying stories about landlords who won’t rent properties to defence firms and banks who won’t allow them to open accounts.

The Scottish Government has come under fire too, with the report noting that the industry had raised concerns about SNP policies that had worsened this perception. STV News has contacted the Scottish Government for comment. Scottish Labour MP Graeme Downie, who has frequently spoken on defence in the Commons, told STV News that the Scottish Government had “utterly ignored the defence industry for decades”. He added: “We’re dealing with their historical legacy of not caring about defence… [Instead], defence could be a perfect way of devolution working.”

So far, the Scottish Government hasn’t confirmed whether it will put £10m towards developing the two defence technical colleges in Scotland, which, it is hoped, will go some way to helping stem the skills shortages. Indeed, it is clear that industry is crying out for more support from both governments. But in a world of competing priorities, it’s not clear how much they are prepared to listen.