New defence contracts and cash to target small businesses to support Royal Navy, Army and RAF supply chains

The Ministry of Defence (MoD) will also launch a new “hub” for small and medium sized enterprises (SMEs) to direct them towards defence contracts. The push to involve small British businesses comes after the prime minister set out plans to boost defence spending to 2.5 per cent of the UK’s economic output (GDP) by 2027.

Sir Keir Starmer said: “The UK’s defence industry is a source of national pride. It supports hundreds of thousands of good jobs up and down the country and represents British manufacturing at its best.

“Increasing our investment in defence is not only bolstering our national security, it is an opportunity to put more money into working people’s pockets and boost economic growth. By helping smaller businesses to access this money, we’re making communities across the UK better off and opening up more opportunities to train for good, skilled, productive jobs.”

Some 12,000 SMEs could be supported by the plans, the MoD said. Some 70 per cent of defence spending is outside the south east of England and London but ministers say only a small amount of this went to SMEs last year, and plan to change this. Many of these businesses support the construction of new capabilities for the Royal Navy, Army and RAF.

Defence Secretary John Healey said: “This Government’s historic increase in defence spending to 2.5 per cent of GDP by April 2027 will boost national security and make defence an engine for economic growth throughout the UK.

“For too long small businesses felt locked out of defence but we’ve listened and we’re acting. Today’s announcement will ensure that smaller firms benefit from increased defence spending, attracting new suppliers and fast-tracking the technologies of the future into the hands of our Armed Forces. This a new era for defence and we will ensure it plays the fullest part in our national economic growth.”