Moderate

Justice, Security & Defence

Despite renewed funding support from HM Government defence investment priorities are changing significantly and cost pressures in all departments remain.

Sector trends & challenges

  • Existing programmes

    Sizable funding deficits remain across the Defence Equipment plan, which will require continued focus on cost overruns and value maximisation. This is likely to be exacerbated by any budget cuts following the impact of COVID-19.

  • New threats and capabilities

    Cyber defence and intelligence are the increasing focus of defence spending, potentially resulting in the prioritisation of new technologies over conventional capabilities. Procurement on traditional capabilities may be curtailed.

  • Management of change and transformation

    There is a push to ensure efficiency and effectiveness across the public sector. Defence, Security and Justice are engaged in several transformation initiatives with implications for operating models and the wider supply chain.

Sector rating profile

The restructuring activity associated with the public sector is different to the wider economy and often focuses more specifically on operational efficiency, transformation programmes and cost reduction. Given the record post-war budget deficit that has emerged as a result of the pandemic, this sort of activity is increasing and will continue to do so for some time.

Justice, Security & Defence

Justice

The UK justice system has seen significant changes in recent years, not least in a reduced footprint as outmoded or underused facilities were closed and remaining courts refurbished or improved.

COVID-19 has resulted in a significant backlog in court cases, in some cases stretching to months or even years. Creative solutions have been found to maintain a flow of courtwork, with closed cinemas or theatres being used to accommodate juries unable to physically enter courtrooms due to social distancing requirements.

In the medium-term, finding innovative means of keeping courts operational will be essential, as will ensuring the facilities remain fit-for-purpose.

Looking at prisons, the current mixed model of service provision, with both public and private operators, continues to be an area of focus for policymakers. The prison estate is in need of significant upgrade to continue remaining fit-for-purpose as well as providing value-for-money for the taxpayer.

Security

The police have experienced significant reductions in real-terms government spending, reducing personnel numbers and demanding material cost savings and efficiencies.

Although there is a promise of increased funding in the years ahead, there will still be a focus on efficiency as forces are required to do ‘more with less’. In particular, the threat posed by cybercriminals and the dark web requires significant outlay in new personnel, equipment and establishing national (and international) collaboration efforts.

The admission to court of new evidence-gathering techniques, such as audio forensics, will also increase in importance in the coming years – again demanding further technical and human resource investment. The upshot is that, like defence, the cost pressures on ‘conventional’ policing activity are likely to remain despite an overall uplift in government spending.

Defence

The commitment by the UK Government to increase defence spending by £24.1 billion over the next four years has been broadly welcomed by the defence sector, following over a decade of budget reductions.

What remains somewhat unclear is how the proposed additional commitment will be used. Cyber defence and intelligence are now critical elements of defence activity, and it appears that much of the proposed new spending will be aligned to tackling this growing threat. There have also been announcements of an agency dedicated to Artificial Intelligence as well as the creation of a new Space Command.

Although some spending is explicitly earmarked to replace or modernise conventional military capability (including the Future Combat Air System), the focus on emerging threats may limit the impact of new spending on traditional defence contractors.

It’s unlikely that current cost pressures arising from funding shortfalls in the forward equipment plan will be easily addressed however – leading to a continuing focus on value for money and efficiency. The supply chain must therefore continue to identify savings and efficiencies in order to remain competitive and demonstrate taxpayer value.

Find Your Expert

Craig Masters is Interpath Sector Lead for Public Sector, which includes Justice, Security and Defence as one of four core segments. Dan Berrill leads our approach to the Justice, Security & Defence sector nationally. For a full list of our senior people with experience in this sector use the button below.

Our senior team