New policy to apply to large overseas defence contracts in bid to secure UK jobs

The UK Government has announced new policy rules which it says will see more defence work carried out in the UK.

The Offset Policy, published on Friday, will apply to a select number of procurements from April 2027.

Under the new rules, overseas companies that win significant UK defence contracts will be required to invest back into Britain by providing new British jobs and apprenticeships, opening UK factories and investing in domestic suppliers.

The new policy was announced by the Chancellor and the Defence Secretary on a visit to BAE Systems in Glasgow.

Chancellor John Healey said: “We are putting British jobs and British businesses at the heart of how Government spends taxpayers’ money.

“When a big contract goes overseas, these changes will ensure 100% of the value creates new opportunities for workers and businesses here at home, strengthening our industrial base and supporting growth across Britain.”

The policy applies to overseas defence contracts worth £50 million or more, delivered through the Government’s Back British approach set out in the Budget.

Contractors will be required to deliver benefits to the UK that could reach the same value as the contract, for example a £100 million contract could see new jobs, facilities, or skills training up to the same £100 million value in the UK.

The announcement comes after the Government set a target of 3% GDP spend on defence in 2030, on the path to the Nato commitment of 3.5% in 2035.

Defence Secretary Wes Streeting said ‘we are backing British by buying British wherever we can’ (Andrew Matthews/PA)

PA Wire

Defence Secretary Wes Streeting said: “Every pound we invest in defence should be judged by what it does for Britain.

“That’s why we are backing British by buying British wherever we can.

“Even when that is not possible, we are acting to ensure that any investment brings jobs, skills and investment back home, strengthening our national security by boosting our domestic industry.”

The defence economy in Scotland is worth £2.5 billion and supports 12,200 jobs.

Lats year a £10 billion Norway export deal for Type 26 Frigates was secured which supports 2,000 jobs in Scotland.