2 min read - 2 Nov, 2026
Defence contracts to prioritise British jobs and skills
British workers, businesses, and apprentices will benefit from major changes to UK defence spending following the launch of a world-leading Offsets policy.
Under the new rules, overseas companies winning significant UK defence contracts will be required to reinvest back into Britain to support domestic skills, industry, and innovation.
The policy applies to overseas defence contracts worth £50m or more, delivered through the government’s Back British approach set out in the Budget. Under the policy, contractors will be required to deliver benefits to the UK that could reach the same value as the contract, for example, a £100m contract could see new jobs, facilities, or skills training up to the same £100m value in the UK.
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.
The move will encourage overseas defence suppliers to build enduring partnerships with UK industry, helping UK SMEs to access global supply chains and create new opportunities for growth.
Overseas firms winning UK defence contracts will be required to invest benefits back into the UK under a new Offsets policy / Picture: MoD © Crown copyright
Wes Streeting MP, defence secretary, 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.”
Since 2016, over £35.2bn has been spent on overseas defence contracts and services, representing 11 per cent of total MOD direct expenditure with industry and commerce between 2016/17 and 2025/26. The new policy ensures that future spending of this kind directly supports domestic growth.
Companies winning qualifying contracts can meet their offset commitments in several ways, including:
• Creating British jobs and apprenticeships
• Opening or expanding factories in the UK
• Investing in British suppliers
• Transferring technology and know-how to UK firms
• Using more UK-made components.
A new central Offset Authority will agree, value and monitor delivery through dedicated Offset Agreements, ensuring consistency across the lifetime of each arrangement. Applied on a case-by-case basis by the MOD, the policy aligns the UK with allies who already use offsets, such as Poland, Norway, and the Netherlands.
Last year, MOD investment supported 274,000 UK jobs, up 10 per cent on the year before, with £34.1bn spent with UK-based firms.
The new Offset policy will apply to a select number of procurements starting in April 2027, with suppliers notified early where requirements apply.
