Defence Secretary John Healey has announced that British firms will be given priority over foreign competitors in defence contracts, using national security exemptions to bolster the UK's industrial base – a move that comes as the government struggles to agree on how to pay for its long-delayed Defence Investment Plan.
Speaking at the GMB Union's congress on Tuesday, Healey said he would take an “unashamedly pro-Britain” approach, promising to change a procurement system he described as “toothless”. The chancellor, Rachel Reeves, he noted, “was right recently when she said we need to buy British”.
“Healey announces pro-British defence contracts using national security exemptions as funding dispute with Reeves intensifies.”
“The government will develop a new approach that looks to give credit in future defence contract decisions to British-based companies based on a genuine, substantive presence in Britain and long-term commitments to British communities and British supply chains,” Healey said.
Under the plans, the Ministry of Defence will make greater use of exemptions in the Procurement Act 2023 to require certain capabilities to be built in Britain. Large defence contracts will include provisions ensuring significant sub-contracts are placed with UK-based companies, or guaranteeing competitions so British firms are not shut out. If a contract is “sent overseas”, the industry will be required to create jobs in the UK under what Healey called a “British offset”.
The announcement follows a letter from Reeves to every cabinet minister ordering them to “buy British” wherever possible, focusing on shipbuilding, steel, AI and energy infrastructure. Reeves said there needed to be a “fundamental shift” in spending, given current global tensions.
But behind the rhetoric, wrangling over the Defence Investment Plan – the blueprint for military spending – is going “down to the wire”, according to sources. Healey has issued a pointed message to the prime minister over the funding shortfall. Reeves is understood to be refusing to budge on a settlement of £13.5bn, far short of the £18bn originally expected.
Rather than borrowing more or raising taxes, Keir Starmer and the chancellor are likely to push ahead with spending cuts across Whitehall to fund the plan. Unions and defence firms have warned that the continued delay to the blueprint threatens British jobs, skills and national security.
Healey said his department would develop guidelines to give British-based businesses a leg up in defence competitions. But without a settled investment plan, the question of how to pay for it – and whether the promised “pro-Britain” contracts can be delivered – remains unresolved.