Chancellor John Healey and Defence Secretary Wes Streeting have launched a new Offset Policy that will require overseas companies winning major UK defence contracts to invest back into Britain, through jobs, apprenticeships, factories and British suppliers.
Under the new rules, overseas contracts worth more than £50 million will be considered for offsets, with contractors expected to deliver benefits to the UK that could reach the full value of the contract. A £100 million contract, for example, could bring new jobs, facilities or skills training worth up to £100 million in the UK.
John Healey: 'British jobs at the heart of how government spends'
"We are putting British jobs and British businesses at the heart of how Government spends taxpayers' money," John Healey said on a visit to BAE Systems Scotstoun in Glasgow. "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."
Wes Streeting: 'Backing British by buying British'
"Every pound we invest in defence should be judged by what it does for Britain," Wes Streeting said. "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."
Since 2016, more than £35.2 billion has been spent on defence contracts and services with industry overseas, around 11 per cent of the Ministry of Defence's direct spending with industry. Firms will be able to meet their commitments by creating British jobs and apprenticeships, opening or expanding UK factories, investing in British suppliers, transferring technology and know-how, or using more UK-made components.
A new central Offset Authority will agree, value and monitor each arrangement. The policy, which follows similar approaches used by allies including Poland, Norway and the Netherlands, will apply to a select number of procurements from April 2027. Scotland's defence economy alone is worth £2.5 billion and directly supports 12,200 jobs.
