Foreign defence firms must invest back in UK jobs
Overseas companies winning large defence contracts from the United Kingdom will in future have to give something back to the British economy, under a new policy announced on 30 October 2026. The Chancellor and the Defence Secretary unveiled the Offset Policy during a visit to BAE Systems Scotstoun in Glasgow, framing it as part of the government's “Back British” approach set out in the Budget.
What the new rule requires
The policy applies to overseas defence contracts worth £50 million or more, on a selective, case-by-case basis. A qualifying contractor may be required to deliver UK benefits worth up to the full value of the contract. In practice, a £100 million contract could carry a requirement for up to £100 million in British jobs, facilities or skills training.
Those benefits can take several forms: British jobs and apprenticeships, opening factories in the UK, investing in domestic suppliers, or transferring technology and innovation know-how to British firms. A new Offset Authority will oversee the agreements and check that the promised benefits are actually delivered.
When it starts, and why now
The policy will apply to a select number of procurements from April 2027. Ministers say it delivers commitments in the Defence Investment Plan and the Defence Industrial Strategy, and is designed to make sure defence spending supports the domestic industrial base rather than flowing entirely overseas.
The context is stark: more than £35 billion has been spent on defence contracts with overseas suppliers since 2016, about 11% of direct Ministry of Defence spending with industry. The government also plans to raise defence spending to 3% of GDP in 2030, on the way to a NATO commitment of 3.5% in 2035, so the sums at stake are set to grow.
Whether offsets genuinely build lasting capability, or simply add cost and complexity to procurement, will depend on how the new authority enforces the deals. What is certain is that from next spring, a big foreign defence win in Britain will come with a British jobs price tag attached.
