Overseas companies that win large UK defence contracts will in future be expected to put value back into Britain, under a new offsets policy published by the Government on 30 October.

The policy, announced by the Chancellor and the Defence Secretary during a visit to BAE Systems' Scotstoun shipyard in Glasgow, applies to selected overseas defence contracts worth more than £50 million. It forms part of the Government's wider Back British purchasing approach set out in the Budget.

How offsets will work

Under the scheme, a winning overseas supplier could be required to deliver benefits to the UK worth up to the full value of its contract. The Government gives the example of a £100 million contract potentially generating up to £100 million of UK activity through jobs, facilities, training or other investment.

Suppliers will be able to meet the commitment in several ways, including creating British jobs and apprenticeships, opening or expanding factories in the UK, investing in domestic suppliers, transferring technology and know-how to UK firms, or using more UK-made components. A new central Offset Authority will agree, value and monitor delivery through dedicated offset agreements.

Selective start from April 2027

The policy will not apply automatically to every overseas purchase. It will be applied case by case to selected procurements from April 2027, with suppliers told early in the process whether offset requirements apply to their bid.

Ministers link the move to the Defence Investment Plan, backed by £298 billion over four years, and to a target of spending 3% of GDP on defence by 2030. They say the policy is intended to support British workers, businesses and apprentices when equipment has to be bought from abroad, while buying British remains the preference wherever possible.