Government plans to increase spending on defence will see support offered to businesses to ensure they benefit from the historic decision to increase defence spending to 2.5% of GDP.
A new hub to provide SMEs with better access to the defence supply chain is to be created with the Government also committing to direct SME spending targets for the Ministry of Defence by June this year.
The move is designed to boost the resilience of the UK’s defence industrial base and to seize the full power of rapid technological change as part of the Government’s forthcoming Defence Industrial Strategy.
Nearly 70% of defence spending goes to businesses outside London and the South East, bolstering local economies from Scotland to the North West. However, only 4% of this spending went to SMEs in 2023-2024.
“For too long small businesses felt locked out of defence,” the Defence Secretary John Healey MP said. “Our 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.”
In 2023-24, defence spending supported over 430,000 jobs across the UK, the equivalent to one in every 60. In the same year, the Ministry of Defence spent a total of £28.8 billion with UK industry, with spending in the East Midlands increasing by 30%, equivalent to £328 million, on the previous year.
Northern Ireland also saw a rise of 20%, with other increases in Yorkshire and the Humber and the North West, up 19% and 18% respectively. With increased support for SMEs and the upcoming Defence Industrial Strategy, the government plans to increase this further.
“SMEs working in a whole range of sectors are developing technology that could offer value to the to the defence industry, ultimately equipping the warfighter with enhanced technological solutions,” Jayne Moorby, head of marketing at Oxley Developments in Ulverston, said.
“However the defence industry landscape is incredibly complex to navigate, the new support hub will provide businesses with a single ‘front door’ to gain advice and support on how to win business in this sector.
“This is incredibly good news for SMEs and will open up new opportunities and enable growth across the UK.”
