The Defence Technology Strategy unveiled by the MoD is an attempt to foster the sort of “start-up” culture that led to the creation of companies such as Microsoft.

Lord Drayson, the Defence Procurement Minister, believes that the increasing use of technology on the battlefield makes it vital that Britain play a leading role in military research.

The idea is based on Lord Drayson’s experience in the biotech sector. He was the founder and chief executive of PowderJect, the FTSE 250 biotech, and he wants British scientists and engineers to apply their talent and innovative ideas to defence technologies.

He said: “I have spent my lifetime working in innovation, and I believe there are a number of ways of achieving it. In defence the model has been that the customer dictates the research, but there are other models that can provide more incentive.”

The path to success in the biotech and software sectors is well-established, with scientists or developers coming up with a breakthrough and then seeking financial backing to develop it. If this proves successful, it attracts the attention of large corporations, which buy the start-up or form an alliance to bring the technology to market.

Lord Drayson wants to facilitate the same model in the defence industry. However, contractors expressed concern that the model may not work in an industry that is heavily regulated for security reasons. If a company spends millions of pounds on developing a military technology and the MoD decides that it does not want it, there are no other possible customers.

Lord Drayson believes that such circumstances can be addressed through proper negotiation and a lucrative rewards structure.

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