UK Government Publishes New Defence Procurement Offsets Policy Requiring Overseas Contractors on £50m-Plus Contracts to Reinvest Up to Full Contract Value in British Jobs and Industry

The UK government published its new Defence Procurement Offsets Policy on 30 October 2026, announced jointly by Chancellor John Healey and Defence Secretary Wes Streeting during a visit to BAE Systems in Scotstoun, Glasgow. Under the policy, overseas companies winning significant UK defence contracts (defined as contracts worth over £50 million) will be required to invest benefits back into the UK up to the same value as the contract. A £100 million overseas contract could therefore require reinvestment of up to £100 million into the UK economy. Qualifying investments include creating British jobs and apprenticeships, opening or expanding UK factories, investing in British suppliers, transferring technology and know-how to UK firms, and using more UK-made components. A new central Offset Authority will agree, value, and monitor delivery through dedicated Offset Agreements, providing oversight across the lifetime of each contract. The policy applies to a select number of procurements from April 2027, with suppliers to be notified early where offset requirements will apply. The policy sits within the government's broader Back British approach announced at the October 2026 Budget, and is linked to the government's target to spend 3% of GDP on defence by 2030. The government notes that since 2016, over £35.2 billion has been spent on defence contracts with industry overseas, representing around 11% of total Ministry of Defence direct expenditure with industry and commerce between 2016/17 and 2025/26. The UK joins existing offset-using allies including Poland, Norway, and the Netherlands. The policy is described as complementing treaty negotiations commenced with the Netherlands, Poland, and Finland under the Multilateral Defence Mechanism announced at Budget.