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Defence investment

Backing UK Based Businesses

The UK government is committed to backing UK-based defence companies and making Britain the best place in the world to grow a defence business. This strategy will help strengthen our national security while driving economic growth across the country.

What we’re doing

Making it easier to work with the Ministry of Defence

We’re improving how UK companies can work with the Ministry of Defence by:

  • Reducing electricity costs – From 2027, a new British Industrial Competitiveness Scheme will cut electricity costs by around £35 to $40 per megawatt hour until 2030, helping thousands of businesses compete more effectively
  • Streamlining regulations – We’re working to reduce red tape and make it simpler for companies to supply equipment and services to the MOD
  • Better support for businesses – By April 2026, we’ll have a comprehensive package of measures to help our industrial partners work with us more effectively

Supporting small and medium-sized businesses (SMEs)

Small businesses are vital to our defence sector. We’re helping them through:

  • The Defence Office for Small Business Growth – This new office will help small defence companies access government funding and private investment
  • Setting spending targets – We’re establishing clear targets for how much the MOD spends with small and medium-sized enterprises
  • A bold SME Action Plan – This will include a new commercial pathway specifically designed for smaller businesses

Investing in UK manufacturing

We’re building up our domestic defence manufacturing capability:

  • £6 billion investment in munitions – Including building at least six new factories for energetics and munitions production
  • Protecting critical skills – We’ve safeguarded facilities like the semiconductor foundry in County Durham, the only secure UK facility capable of manufacturing specialist semiconductors for military use
  • Regional growth – Major investments like the Plan for Barrow are revitalising defence communities with over £200 million of government investment

Defence investment in action

Government investment is helping British companies develop the next generation of defence technology, keeping Britain safe and putting UK innovation on the world stage.

Kraken – Kraken isn’t your average boat. It’s a fully autonomous surface vessel that can travel at high speeds without a crew onboard. Its advanced design and remote-control capabilities are helping shape the future of maritime technology. Kraken are producing a boat a day, designed and built right here in the UK.

Why this matters

A strong UK defence industry means:

Better security

Our Armed Forces get world-class equipment designed and built in Britain
More jobs – Defence already supports over 460,000 jobs across the UK, with nearly 70% outside the South-East

Economic growth

Defence spending of £28.8 billion with UK-based businesses drives innovation and prosperity

Stronger alliances

Helping our allies with British-made equipment strengthens our partnerships and global influence