We are in a new era of threat, which means we need a new era for UK defence. The Government has announced the largest sustained increase in defence spending since the end of the Cold War – rising to 2.6% of GDP on defence by 2027, an ambition to reach 3% in the next Parliament when economic and fiscal conditions allow and a historic commitment to spend 5% of GDP on national security by 2035 with our NATO allies.
Alongside sustained investment must come serious reform and a fundamental shift in how the Ministry of Defence (MOD) maximises its potential to drive economic growth, delivering on the Government’s central mission. The Government has introduced the deepest reforms to defence for over 50 years, including the creation of a new National Armaments Director to deliver UK growth and fix defence procurement, as well as bringing all defence export responsibility back into Defence to drive up our export performance. As one of the eight priority sector plans in the Government’s Modern Industrial Strategy, the Defence Industrial Strategy (DIS) will accelerate this reform agenda and ensure that every pound spent on defence both makes our country safer and grows the UK economy. It will demonstrate how the ‘defence dividend’ of increased defence investment will be measured in good jobs in every nation and region of the United Kingdom.
We are entering a new era of global defence spending. In addition to this Government’s commitment, spending across our NATO partners is increasing at an unprecedented pace. This presents a historic opportunity for the UK to benefit from the investment, collaboration, and export opportunities this increased spending brings. We must ensure the UK becomes the best place to export from, Europe’s leading defence exporter and the most attractive country in the world to grow a defence business. This Strategy’s aim is to make the UK a defence industrial leader by 2035 with a new partnership with industry, workers and our Armed Forces. Through this strategy, we will grow a more competitive, integrated, innovative and resilient defence sector. In doing so, we will make Britain secure at home, and strong abroad.
Innovation and industrial power are decisive factors in war. And they are therefore central to deterrence. The conflict in Ukraine has shown that a military is only as strong as the industrial base that stands behind it. Ukraine provides a stark reminder of the imperative of maintaining sufficient inventories of munitions and spares, the fast replenishment and resupply by industry, and a rapid, continual cycle of innovation between industry and the front line. Innovation and Research and Development (R&D) is also where the Ministry of Defence has the greatest potential to drive spillovers into the rest of the economy. The Strategic Defence Review vision is for, by 2035, the UK to be a “leading tech-enabled defence power, with an Integrated Force that deters, fights, and wins through constant innovation at wartime pace”. To deliver this, the SDR demands a new partnership with industry: developing a thriving and resilient industrial base, making defence an engine for growth, and creating a rapid, continual cycle of innovation between industry and the frontline. The Strategic Defence Review defines what we must do, and this Defence Industrial Strategy shows how to build a resilient, high-growth industry to deliver it.
Defence is the cornerstone of national security, providing the underpinning stability that allows economic investment and activity to occur. But that’s just the start. Defence supports over 460,000 jobs in the UK, over 24,000 Ministry of Defence apprentices and £28.8 billion spent with UK-based business. Nearly 70% of defence jobs are outside the Southeast. The Defence Nuclear Enterprise alone supports a supply chain of over 3,000 businesses based across the UK, generating a current workforce demand of over 48,000, set to grow to around 65,000 by 2030. MOD is also a major investor in innovation and technologies that can drive productivity and growth across the economy.
Defence is uniquely positioned to use its buying power to support economic growth, given its significant market size, ability to purchase at scale through coordinated procurement, and a constantly evolving need for technology. Our investment must create opportunities for defence businesses, including start-ups and SMEs, to grow and thrive in the UK. By investing in the UK, these businesses can help us protect the UK’s national security and drive innovation, skills and other improvements key to long-term economic growth and living standards. For the first time, we are prioritising frontier industries with high economic growth potential.
These include military-specific subsectors, as well as sectors with civil and military applications where we will coordinate interventions across government to capture global market share.
Investment in defence is investment in jobs and growth in every nation and region of the UK. Building on the success of the Plan for Barrow, we are launching new regional Defence Growth Deals across the UK. These Deals, created in partnership with industry, local government and other regional organisations, will see investment in that area’s sub-sector specialisms, harnessing their ingenuity and mass, while also launching specific interventions that help support that defence ecosystem and the places themselves, delivering long-term and sustainable regional growth across the UK. The first of these will be in Plymouth, and South Yorkshire, while we will work with the Devolved Governments to develop ones in each of Scotland, Wales and Northern Ireland.
We need the UK’s world leading financial institutions to invest in UK-based defence companies, recognising the social value of these investments and moving away from a world in which defence is seen as unethical. To crowd-in this finance, we are developing a dedicated Defence Finance and Investment Strategy, supported by a new Defence Investors’ Advisory Group who will bring their industry expertise to our central mission to boost high-growth, high-tech companies of the future and build the next unicorn defence company in the UK. Investment that drives economic growth and ensures national security can also contribute to the government’s clean energy mission and to Net Zero 2050 through accelerating innovation in dual-use technology. Responding to the threat of climate change and environmental degradation will help to ensure that we are fit for the future, as we implement the SDR and shift to warfighting readiness.
We must work with the UK defence sector to boost skills, build rewarding careers and bring prosperity to all nations and regions. There is no defence industry without the people working in it with the skills and dedication to keep our nation safe. Drawing on the experience of the successful ‘Destination Nuclear’ campaign, we are partnering with industry to deliver a new defence skills mission – ‘Destination Defence’. We will boost defence skills across the country to train the welders, coders and engineers of the future by launching new regional STEM initiatives, establishing Defence Technical Excellence Colleges, and creating a new strategic relationship with higher education institutions through the Defence Universities Alliance. We will make it easier to find out what a defence career entails and how you can access it with a new UCAS defence portal, while a new apprenticeship and graduate clearing system will help boost defence supply chain workforces across the country. Finally, we will make it easier to transfer into, and across, defence mid-career by scoping the development of a Defence Skills Passport.
As a nation, we take pride in the professionalism and dedication of our soldiers, sailors and aviators. To ensure they have the world-class kit and equipment they need, we must grow a stronger, more resilient and more competitive defence industrial base here in the UK to meet the challenges of tomorrow.
This Government is committed to investing in and onshoring the necessary industrial capabilities we need for our sovereign national security and those we should foster and support to boost the UK economy. UK-based businesses are at the heart of this strategy. That is why we are changing course, and we will now put in place policies to direct UK investment to grow productive high skilled jobs in UK based businesses. The new Military Strategic Headquarters will determine the military problem statements, while the National Armaments Director will work with industry to produce capability options that deliver the required military effect, produce the industrial base required to either design, produce and/or support that capability. Across the range of capabilities the UK requires for warfighting, this Strategy outlines our national security industrial priorities, where varied levels of autonomy in the UK is required: nuclear deterrence capabilities, nuclear submarines, ground combat systems, cryptography, combat air, shipbuilding, complex weapons and munitions; our supply chain priorities: steel, energetic material, batteries, semiconductors and rare-earth elements; and our frontier industries: combat air, complex weapons, directed energy weapons, next generation land and maritime capabilities, quantum technologies, drones and autonomous systems, space, AI, cyber, engineering biology, advanced connectivity technologies, and semiconductors. We will establish, maintain and sustain the necessary elements of these subsectors by investing through our new segmented commercial approach to the market, and interventions including end-to-end export support, regulatory reform, new skills investment and new Defence Growth Deals.
The forthcoming Defence Investment Plan will outline our investment priorities, taking into account our priority national security sub-sectors and the associated UK industrial capability.
The strategy sets out our commitment to revamping our procurement framework: delivering a comprehensive review of defence contracting to incentivise productivity and improve delivery, and an offsets policy, subject to consultation which ensures that those sub-sectors which are essential for our national security and growth benefit most from our procurement spend. This will ensure that defence investment supports a resilient and competitive defence sector in the UK and brings economic benefit to all nations and regions of the UK. We will also support our thriving ecosystem of defence small and medium sized enterprises (SMEs) through our new Defence Office for Small Business Growth and dedicated SME Commercial Pathway to boost opportunities and access, supported with greater investment by introducing a new target to increase our spending with SMEs by £2.5 billion by May 2028.
The new National Armaments Director will be responsible for ensuring that building a resilient industrial base and promoting exportability are explicit considerations when making procurement decisions developing options to meet military requirements. This will begin at the outset of the procurement process by closer working with industry to develop capability that meets the need of our Armed Forces and is optimised for the export market, rather than the Armed Forces buying exquisite and overly complex kit.
The UK will export its world-leading defence capabilities to allies around the world by setting up a new Office of Defence Exports to support UK industry to compete in the global market. This will include, for the first time, a Government-to-Government exports offer which reflects the modern reality that both our allies and our industry want to work in strategic partnership with the UK rather than simply be seen as customers and suppliers.
The Government is committed to putting the UK at the cutting edge of defence innovation in NATO. This will ensure world leading capability rapidly gets into the hands of our warfighter to bolster our national security and it will make a powerful contribution to this Government’s central growth mission by driving technological advancements and productivity in the defence sector and beyond; stimulating industrial development and investment in research; creating high quality jobs; and boosting export opportunities. The Spending Review confirmed that MOD’s research and development budget will be over £2 billion in 2026-27 and will rise each year, this will be the baseline for the next 10 years.
The newly established UK Defence Innovation (UKDI) will ensure the Ministry of Defence puts into practice the lessons learned from Ukraine. Hardwiring innovation and pace into the defence enterprise; possessing radical freedoms and independence to deliver; providing the financial backing needed for success; and maximising the opportunities from dual-use technology, working across the UK’s world leading innovation ecosystem to drive growth. Through UKDI, we will invest in our most innovative defence companies with a ringfenced annual UKDI budget of at least £400m. This will increase in future years, with a significant increase in the proportion of the Ministry of Defence’s equipment procurement spent on novel technologies such as uncrewed and autonomous systems. This will be underpinned by world leading software including AI‑enabled capabilities, which are developing at an extraordinary pace and will enable Defence to take leaps forward both in how it fights and the productivity with which it delivers. From the next financial year, the Ministry of Defence will spend at least 10% of its equipment procurement budget on novel technologies. We will also support the Prime Minister’s target to reduce the administrative cost of regulation by 25% by taking a bold new approach to doing business and innovating in the defence sector in the UK, including a programme to transform our Test and Evaluation enterprise and targeted regulatory review sprints to identify improvements at pace.
A secure and resilient United Kingdom is a precondition for the Government’s central growth mission. Our national security requires a resilient and thriving UK industrial base, with assured supply chains; the plans and powers in place to surge our capacity as a government/industry partnership; and our largest, most complex programmes delivering to schedule and maximising cost efficiency.
The MOD will now conduct regular wargames with industry to ensure they are at the heart of our resilience planning; reform commercial processes to drive increased productivity and resilience into the defence industrial base and remove unnecessary regulation and other barriers; and consider whether legislative powers are needed to drive delivery of projects critical to national security and leverage the industrial base in times of crisis. All of this is to ensure we can ramp up production of key capabilities at any time. We will grow an economy and defence industrial base which can rise at any moment to meet any challenge. Together we will meet the threats of tomorrow.
This Government is steadfast in our commitment to the nuclear deterrent in the face of rising global threats and growing Russian aggression. This commitment is reinforced by our “triple-lock” on the deterrent, guaranteeing (i) the building of the four Dreadnought nuclear submarines in Barrow-in-Furness; (ii) that we will maintain the UK’s Continuous At-Sea Deterrent (CASD); and (iii) the delivery of all future upgrades to ensure the safety and effectiveness of our deterrent. To remove barriers to productivity, the Defence Nuclear Enterprise is also partnering across government to deliver the Plan for Barrow and National Nuclear Strategic Plan for Skills and is supporting the launch of the Prime Minister’s independent Taskforce on Nuclear Regulation, which published its interim report in August. We are making strategic choices and investments to secure long-term delivery of the deterrent, including committing to £15 billion investment in the sovereign warhead programme this parliament, supporting over 9,000 jobs.
We will also strengthen our supply chains, investing £6 billion in munitions this Parliament, including £1.5 billion in an ‘always on’ pipeline for munitions, and building at least six new energetics and munitions factories in the UK, generating over 1,000 jobs and boosting export potential.
To keep our nation safe and realise the significant economic potential of the defence sector, we will deliver deep reforms to the Cold War era procurement system to reduce waste, improve delivery and support growth, while strengthening critical supply chains. This strategy sets out our approach to next-generation acquisition: increasing pace, cutting red tape, and attracting inward investment into a UK on the leading edge of innovation. It is a system built with our defence sector to allow us to produce and procure to meet the threats of tomorrow, as well as the needs of today. To deliver this we will introduce a new segmented approach to procurement, along with associated timescale targets to enable MOD to tailor acquisition processes to the type of capability, supplier and risk involved. The segments will be:
We will succeed in delivering this transformational approach, because we are backing it up with the deepest defence reforms for 50 years through the Defence Reform programme. For the first time, our National Armaments Director – and Chief of Defence Nuclear in the case of nuclear – will hold all the levers of procurement to oversee the end-to-end acquisition process and hardwire growth into everything we do. By doing this we will deliver a bigger, better, and more resilient sector which attracts investment, delivers growth, and boosts UK prosperity.
This is not just the Government’s Defence Industrial Strategy, but a national endeavour: public and private; SMEs and primes; innovators and educators; trade associations and trade unions; all creating a thriving UK defence sector, with world leading, innovative capabilities. These efforts must be supported by the right institutions, helping government and industry work in lockstep to meet the challenges of the future. We have already taken the first step in driving a new partnership with industry, with the establishment of the Defence Industrial Joint Council, but we are also in the process of transitioning to a new operating model where we resolve defence challenges, and identify solutions, in collaboration with industry, and involve a more diverse range of stakeholders in our strategy and decision-making, including academia and trade unions.
The UK’s strategic strength comes from our allies and, in a dangerous world, our unshakeable commitment to NATO means we will never fight alone. Our international partnerships and collaborations have generated some of the most impressive capability advancements and have transformed the way that conflicts are fought and won. We will deepen our relationship with the allies and partners who share our values, whether that’s NATO, US, JEF10, EU, OCCAR11, AUKUS, the Global Combat Air Programme or through our Five Eyes12 partnership, we are all working to the same goals of a safe and stable world. World leading UK capability will be delivered through international collaboration, taking the right opportunities to co-research, co-develop, co-produce and co-support with allies and partners.
Read the full strategy below.
Source: UK Government: https://www.gov.uk/government/publications/defence-industrial-strategy-2025-making-defence-an-engine-for-growth
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