UK to require overseas defence contractors to invest back in Britain from April 2027

Centre · 2The UK government has published a new Offset Policy requiring overseas companies that win large UK defence contracts to invest back into Britain. 1 2 Centre · 2It covers overseas defence contracts worth £50m or more, and the Ministry of Defence will apply it case by case from April 2027, according to the government. 1 2 Centre · 2Contractors would provide new British jobs and apprenticeships, open UK factories and invest in domestic suppliers; the benefits could reach the contract's value, so a £100m contract could bring up to £100m of jobs, facilities or skills training. 1 2

Centre · 2Defence Secretary Wes Streeting and Chancellor John Healey announced the policy on a visit to BAE Systems' shipbuilding site in Glasgow. 1 2 Centre · 2Healey said the changes would ensure "100% of the value creates new opportunities for workers and businesses here at home" when a big contract goes overseas, and Streeting said the aim was "bang for the British buck" on the most valuable contracts. 1 2 Centre · 2The government said it is prioritising buying British where possible, and that Poland, Norway and the Netherlands have mandated similar rules. 2 1

Left · 1The Guardian's live blog, quoting the Ministry of Defence, said contracts over £50m "will be considered for offsets", that benefits would include technology transfer and innovation know-how as well as jobs, factories and domestic suppliers, and that further details are in an offset policy paper published on the day. 3 Centre · 1The announcement follows a government target of spending 3% of GDP on defence by 2030, on the path to the Nato commitment of 3.5% by 2035. 1 Centre · 1The BBC reported that the government faces pressure over whether it can meet the 3% target, and that some estimates put the extra cost at about £10bn a year. Streeting told BBC Breakfast the offset rules would help meet the target. 2

Centre · 1Labour's Tan Dhesi, chair of the Commons defence committee, said key decisions had been "lamentably delayed" to next year's spending review, and Conservative leader Kemi Badenoch said Healey "failed his own test" by not setting out a "plan for 3%" in the Budget. Streeting said he "strongly disagrees" with Dhesi and that delay was "the right thing to do". 2 Centre · 1The Evening Standard added that the defence economy in Scotland is worth £2.5bn and supports 12,200 jobs, and that last year's £10bn Norway export deal for Type 26 frigates supports 2,000 Scottish jobs. 1 Centre · 1The BBC described the policy as appearing designed to make extra defence investment more politically palatable, rather than committing to outright increased direct spending. 2

Left · 1The Guardian's Andrew Sparrow framed the policy as a shift away from a "conventional globalist, free market approach" in which cost and quality were all that mattered, and as an example of Europe prioritising local employment in government procurement as the US has become protectionist. 3