Chancellor Rachel Reeves is being called to approve a £1billion military helicopter contract or face a “biblical” level of job losses at Someret factory, with 3,000 positions at risk.
This latest intervention comes amid reports that Treasury officials informed the Ministry of Defence (MOD) earlier today that funding for the new medium helicopters programme would not be sanctioned until the department’s broader equipment plan was finalised.
It is understood this potential move from the Chancellor would effectively dooms the contract, as Leonardo’s bid formally expires at the end of Sunday.
Britain’s last remaining helicopter manufacturing facility in Yeovil, Somerset, now faces an uncertain future. The factory employs approximately 3,000 workers and represents the nation’s sole capability for designing and building helicopters from conception to completion.
The Chancellor is under fire
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A senior figure briefed on discussions told the Telegraph: “It’s over. There’s been a lot of activity but now Treasury officials have said this is not going ahead. This is really bad news. It is going to be biblical we’re looking at 3,000 job losses.”
Senior Leonardo executives had made a covert journey to the Somerset site on Thursday, anticipating that Defence Secretary John Healey would announce the long-awaited deal.
Their hopes were dashed when the visit was reportedly called off at the short notice. The company had remained optimistic about securing the contract until that point.
Defence industry sources indicated that Sir Keir Starmer might still have the power to rescue the factory. Both Downing Street and the MoD are understood to support the agreement, but the Treasury remains the obstacle.
The factor’s future is in doubt
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Sharon Graham, the general secretary of Unite said it is ‘inevitable’ that Sir Keir Starmer will be replaced as Prime Minister | PA
An MoD spokesman maintained on Thursday evening that “no decisions have been made.” Leonardo has declined to comment on the situation.
The Treasury’s refusal to approve the contract stems from the delayed defence investment plan, a strategic document intended to outline military procurement over the coming decade.
Ministers had pledged to publish this blueprint before the end of last year, yet it remains outstanding amid reports of a £28billion funding gap. The Chancellor has reportedly instructed the MoD to operate within spending limits agreed previously, declining to authorise additional funds.
The MoD stated it was “working flat out” to complete the defence investment plan, which would “deliver the best kit and technology into the hands of our frontline forces at speed, while investing in and growing the UK economy”.
Defence Secretary John Healey | PA
The NMH tender process has dragged on for years, with Leonardo now the sole remaining bidder after competitors withdrew. James Cartlidge, the shadow defence secretary, condemned the potential collapse of the programme in stark terms.
He said: “If Labour scraps the new medium helicopter programme, it will be a disaster for the factory at Yeovil and the UK’s sovereign military rotary capability. Above all, it would be a disaster for thousands of skilled workers in the South West and right across the UK, the supply chain, whose jobs rely on the site.
“Rachel Reeves has banged on about how defence is an ‘engine for growth’, but in reality her total failure to put money into defence is destroying a once-great industry.”
Unite general secretary Sharon Graham issued a blistering attack on the Chancellor earlier this week, suggesting Ms Reeves should consider her position if she cannot support the helicopter deal.
She said: “We have to invest in the industries of the future. Otherwise, where are the jobs. If she is so locked into those fiscal walls that she doesn’t understand that particular point, then maybe she’s not the person to carry out the vision.”
GB News has contacted the Treasury for comment.