Foreign defence contractors face matching UK investment requirement

Foreign defence companies awarded UK contracts worth more than £50m will be required to invest an equivalent amount in Britain under rules due to take effect in April 2027, the government says. The policy is intended to bring more jobs, industrial activity and training to the UK when military equipment is bought overseas.

Defence Secretary Wes Streeting announced the approach, described by the government as an “offset strategy”. The Ministry of Defence will apply it case by case, and the investment could go towards British factories, jobs and skills training.

The government says it will continue to prioritise buying from British suppliers where possible. When it buys equipment from abroad, the new rules are intended to ensure British businesses and workers also benefit.

Streeting told BBC Breakfast that the policy would help the government meet its defence spending goals while returning economic benefits to Britain. He said the spending came at a cost to other things the country might want to fund.

The announcement comes amid pressure on ministers to set out how they will meet the target of spending 3% of gross domestic product on defence by 2030. Labour MP Tan Dhesi, who chairs the Commons Defence Select Committee, said key decisions had been delayed until next year’s spending review. Conservative leader Kemi Badenoch criticised Chancellor John Healey for not setting out a plan to reach 3% in the Budget.

Streeting rejected the criticism, saying the government was doing as much as it could as quickly as it could, while acknowledging there was more to do. He said the spending review would allow ministers to consider spending as a whole.

The government says Poland, Norway and the Netherlands have similar rules intended to increase the economic benefits of defence procurement. It plans to unveil the UK policy during a visit by Streeting and Healey to BAE’s shipbuilding site in Glasgow.