Foreign firms awarded large defence contracts will need to invest an equal value back into the UK to create “bang for the British buck”, Defence Secretary Wes Streeting has announced.
Under the new rules, companies receiving more than £50m will need to spend an equivalent amount on British factories, jobs and training.
It comes as the government continues to face pressure to hit its target of spending 3% of GDP on defence by 2030, an objective some opposition MPs and defence analysts have questioned its ability to deliver.
Streeting told Breakfast the new rules would help achieve this target given it “does come at a cost to the country and other things we’d like to spend money on”.
“What we’re aiming to do is on the most valuable of those contracts worth £50m or more, is to try and get benefit for Britain, bang for the British buck back here at home,” he added.
The investment stipulations for foreign businesses, which the government described as its “offset strategy”, are hoped to increase investment in Britain’s defence industry.
The Ministry of Defence will apply the rules on a “case-by-case” basis from April 2027, the government said in a statement.
Countries, including Poland, Norway and the Netherlands, have mandated similar rules to “boost the economic benefit from defence procurement”, the statement continued.
It added: “The government is prioritising buying British defence contracts wherever possible.
“Where it must buy defence equipment from overseas, this new approach will ensure British workers and businesses still benefit.”
Streeting and Chancellor John Healey will unveil the new rules on a visit to the UK defence contractor BAE’s shipbuilding site in Glasgow.
The policy appears designed to make the proposed extra investment in defence more politically palatable, rather than committing to outright increased direct cuts and spending.