Foreign firms winning UK defence contracts over £50m will have to invest the same amount back into Britain from 2027

Wes Streeting and Chancellor John Healey announced the 'offset policy' at BAE Systems' Scotstoun shipbuilding site in Glasgow, requiring foreign winners of defence contracts worth £50m or more to reinvest an equivalent value into British jobs, apprenticeships, factories and domestic suppliers. The Ministry of Defence will apply the rules on a case-by-case basis from April 2027. Streeting told BBC Breakfast the policy would deliver 'bang for the British buck' as defence spending rises come 'at a cost to other things we'd like to spend money on.'

The policy is designed to help reach the government's target of spending 3% of GDP on defence by 2030, ahead of the Nato commitment of 3.5% by 2035.

Poland, Norway and the Netherlands already operate similar offset rules on defence procurement.

Labour defence chairman Tan Dhesi warned the government's timetable for defence funding is too slow, saying 'our adversaries are not bound by fiscal years and spending cycles.'