Defence industry supporting Royal Navy, Army and RAF supply chains "not prioritised" by Treasury, report says

As reported in The Financial Times, the UK National Wealth Fund (NWF) “will not have the defence industry as one of its priority sectors”. This is despite prime minister Sir Keir Starmer previously stating that businesses which support the Royal Navy, Army and RAF supply chain sustain “hundreds of thousands of good jobs across the country”.

British small and medium sized enterprises (SMEs) are being given preferential treatment for Ministry of Defence (MoD) contracts. The government has also pledged to increase overall defence spending to 2.5 per cent of GDP by 2027, with further information being outlined after the Strategic Defence Review (SDR) is being completed.

Chancellor Rachel Reeves said yesterday (March 19) she wanted the UK National Wealth Fund, a government vehicle which will have a budget of roughly £28bn by the end of the current parliament, to consider investments in “dual-use technologies” and to boost “supply chain resilience” in the UK defence sector.

Despite this pledge, The Financial Times reports that the Treasury did not list defence among the key sectors it would concentrate on while laying out its strategy to NWF chief executive John Flint. Britain is coming under increasing pressure to invest more in defence as tensions rise across the globe.

The chancellor said yesterday: “I am determined to go further and faster to get our economy growing. By directing tens of billions of pounds into the UK’s industrial strengths, we’ll deliver the high-skilled, high-paid jobs of the future in every corner of the country.”

What is the National Wealth Fund (NWF)?

The NWF is the UK’s sovereign wealth fund, a publicly owned body with its sole shareholder being the Treasury solicitor in capacity of the Treasury. Its aim is to invest in major projects alongside the private sector. It often targets sectors which governments want to develop.