Foreign firms awarded large defence contracts will need to invest an equivalent amount back into the UK to maximise value for British taxpayers, Defence Secretary Wes Streeting has announced.
Under the new rules, companies receiving contracts exceeding £50 million will be required to spend a comparable sum on British manufacturing, employment and training initiatives.
The announcement follows ongoing pressure on the government to meet its goal of allocating 3 % of GDP to defence by 2030, a target that some opposition MPs and defence analysts have expressed doubts about achieving.
Streeting told BBC Breakfast that the new rules would help meet this target, noting that defence spending “does come at a cost to the country and other things we would like to spend money on”.
“Our aim is to ensure that on the most valuable contracts of £50 million or more, we secure tangible benefits for Britain—maximising the return on public expenditure at home,” he added.
The government’s investment requirements for foreign businesses, referred to as its “offset strategy”, are intended to boost investment in the UK’s defence sector.
The Ministry of Defence will apply the rules on a case‑by‑case basis starting from April 2027, the government said in a statement.
Countries such as Poland, Norway and the Netherlands have introduced comparable measures to “boost the economic benefit from defence procurement”, the statement continued.
It added that the government is prioritising the purchase of British defence contracts wherever possible. “Where it must acquire equipment from overseas, this new approach will ensure that British workers and businesses still benefit.”
Defence Secretary Streeting and Chancellor John Healey will launch the new rules during a visit to BAE Systems’ Glasgow shipbuilding facility.
The policy is designed to make additional defence spending more politically acceptable, avoiding the need for direct cuts or increased spending elsewhere.
