Foreign defence contractors will need to invest in UK under new rules

Image source, Getty ImagesImage caption, The government says overseas defence procurement will need to be matched by British investment into jobs, industry and skills.ByJonathan Beale , Defence correspondent, Ewan Somerville, Political reporter and Harry SekulichPublished2 hours agoForeign 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 BBC 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.Pressure to hit 3%It comes as a row continues over how the government will reach its defence spending targets amid tight public finances.Tan Dhesi, Labour chair of the Commons defence select Committee, said key decisions had been "lamentably delayed" to next year's spending review rather than being announced in Wednesday's Budget."We need to urgently rebuild our capabilities now, or we risk leaving ourselves seriously vulnerable in the event of a major conflict," the MP said.And Tory leader Kemi Badenoch said on Wednesday that Healey "failed his own test" by not setting out a "plan for 3%" in the Budget.Streeting has hit back at the criticism, saying he "strongly disagrees" with Dhesi, insisting that the government was not "kicking the can down" the road on defence, as it critics claim. "I think we're doing as much as we can, as fast as we can... of course there is more to do," he told BBC Breakfast.He said delaying detail about hitting the 3% target to next year's spending review was "the right thing to do" so that ministers can look at "spending in the round".He added that the UK was ready to deal with hostile threats, but "we're not where we'd want to be"."There's no sugarcoating the fact that our Armed Forces were under-invested in for more than a decade," he told Breakfast.Some estimates have suggested the government will need to spend an additional £10bn annually to reach its 3% target by the end of the decade, and match the Nato-wide commitment of spending 3.5% of national income by 2035.Healey resigned as Sir Keir Starmer's defence secretary in June, claiming at the time that the former prime minister's proposed defence investment fell "well short of what is required for defence and the country at this dangerous time".Related topicsUK defence spendingJohn HealeyWes StreetingMore on this storyHealey tells departments to make 1% cuts to fund defencePublished1 day agoWhat's happened to UK defence spending?Published11 JuneUK needs 'credible path' on defence spending, says Nato chiefPublished17 September