Defence Industrial Strategy 2025 — Making Defence an Engine for Growth

THE UK’S MODERN
INDUSTRIAL
STRATEGY
DEFENCE INDUSTRIAL
STRATEGY
Making Defence an Engine for Growth
CP 1388

Defence Industrial
Strategy: Making Defence
an Engine for Growth
Presented to Parliament
by the Secretary of State for Defence
by Command of His Majesty
8 September 2025
CP 1388

© Crown copyright 2025
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Contents
Ministerial Foreword 5
Executive Summary 8
Context 15
Vision 17
Strategic Framework 19
Implementation 26
Making Defence an Engine for Growth 31
Backing UK Based Businesses 49
At the Leading Edge of Defence Innovation 59
A Resilient UK Industrial Base 73
Fixing Defence Procurement 84
Forging New Partnerships 92
Conclusion 100
Accountability Table 101
3

4 Defence Industrial Strategy: Making Defence an Engine for Growth

Ministerial Foreword
Rt Hon John Healey MP
Secretary of
State for Defence
The men and women who serve in our
Armed Forces make extraordinary
sacrifices to keep our nation safe.
They are rightly respected here at home
and abroad for their dedication and
professionalism. Y et we know that when
a country is under threat, its Armed
Forces are only as strong as the industry
that stands behind them.
Earlier this year, the government published the
Strategic Defence Review (SDR) – our plan to make
Britain safer: secure at home, strong abroad.
The objective of our Defence Industrial Strategy is to
ensure we have an industry capable of successfully
implementing the SDR. In doing so, we will strengthen
our national security through the strong deterrence
provided by a strong industrial base whilst supporting
economic prosperity so that every region and nation
of the UK benefits from the Defence Dividend.
Our Defence Industrial Strategy will make Defence
an engine for growth, backing British jobs, British
industry and British innovation. The UK has one of
the most advanced, innovative defence industrial
5Ministerial Foreword

bases the world over. But we are in a new era of threat, which demands a new era for UK
defence. To move to warfighting readiness to deter threats and strengthen security in the
Euro-Atlantic, we will REFORM procurement, INNOVATE at wartime pace, and GROW our
industrial base.
The commitments made in this Defence Industrial Strategy and SDR are supported by the
largest sustained increase in defence spending since the end of the cold war: 2.6 per cent
of GDP by 2027, an ambition to increase to 3 per cent in the next Parliament, as fiscal
and economic conditions allow, and a historic commitment to spend 5 per cent on
national security by 2035 alongside our NATO allies. With a promise to invest more, comes
a responsibility to invest better. This strategy will use the levers in the Government’s means
and put in place policies to ensure that every pound spent on defence will make our
Armed Forces stronger and the British public better off.
For too long, defence procurement has been burdened by waste, delay and complexity.
Yet, today, we know whoever gets technology to their frontline forces the fastest, wins.
Business as usual is not an option. Our new segmented approach to procurement sets
ambitious targets to drastically reduce the timescales to get new projects on contract.
As part of the biggest shakeup to the MOD in over 50 years, we have created the role
of National Armaments Director. And to improve demand signals and demonstrate a
clear shift towards long-term economic growth, we will reform the Acquisition Pipeline.
Our Strategy commits to a five-year forecast of planned procurements, with the ambition
to review and extend this.
Our new £250 million investment will generate new jobs and new opportunities and ensure
the benefits of the defence dividend are shared across the UK. In a reformed partnership
between industry and devolved and local governments, we are launching new Defence
Growth Deals. The deals build on established strengths in these communities by improving
skills, infrastructure and innovating SMEs.
The war in Ukraine demonstrates that innovation – both in speed and scale – is central to
our fighting strength and to deterrence. Our Strategy outlines how we will use the newly
established UK Defence Innovation and rapidly produce technologies which give our
Armed Forces the advantage on the battlefield and it sets out the first of the innovation
challenges we want industry to get after. The UK will be at the leading edge of defence
innovation in NATO. We will support the sustained growth of artificial intelligence,
autonomy, quantum, and space suppliers. And we are investing to transform and enhance
the testing of cutting-edge technologies along with new measures to slash red tape.
Our Defence Industrial Strategy is designed to prioritise UK-based businesses to deliver
the “Defence Dividend” from the Government’s uplift in Defence spending whilst
sustaining sovereign capabilities and operational independence. We will make it easier for
British-based firms – including SMEs – to do business with the MOD.
This strategy sets out the requirement for a dynamic and innovation focused industrial
base, that assures UK sovereignty, operational advantage and freedom of action. We will
deliver this by strengthening the defence sectors essential for national security and supply
chain resilience as well as those with the greatest economic growth potential.
Defence Industrial Strategy: Making Defence an Engine for Growth6

We will greatly improve value for the British taxpayer when we turn to our allies and
partners to enhance our war-fighting capabilities. Subject to consultation, the UK
government will introduce an offset policy. This means whenever we invest in overseas
suppliers, we will ensure that the British economy is strengthened in return through new
jobs and novel technologies. This sits alongside our reformed approach to social value
and comprehensive commercial review which will incentivise industry to make long-term
investment in the UK.
In order to ensure the UK can take advantage of the growth opportunities in Defence,
we must make sure we have the right skilled workforce. We will invest £182 million
to strengthen the future skills of the workforce and equip our defence industry with
the expertise and skills it needs. We will make it easier and faster for members of our
Armed Forces and workers in other industries to move into the defence sector. We will
establish new Defence Technical Excellence Colleges, promote the benefits of a career
in industry to school pupils and ensure more apprentices and graduates are taking up
defence-related courses.
When we export defence capabilities, we not only strengthen our shared security overseas
but create high-skilled jobs at home. Improving Britain’s export market offers a huge
opportunity for economic growth. Through our Strategy, we will seize it. The new Office
of Defence Exports means responsibility for defence exports has been unified under the
control of the MOD. This creates a government-to-government exports offer which reflects
what our allies and our industry need. Our Strategy sets out further reforms to boost British
exports success.
Our Defence Industrial Strategy is the culmination of many months of engagement with
Defence firms of all sizes, the investment community, trade associations, trade unions,
and academia. Throughout the process, our aim has been to tap into the shared sense of
endeavour between Government and the whole of the Defence sector of getting the best
kit into the hands of our Armed Forces and supporting growth across the UK. We are aware
this has set high expectations within the defence industrial base – and we are determined
those expectations are now met.
The Defence Industrial Strategy will strengthen our security and grow our economy. With a
clear plan backed by major investment, this Strategy outlines how our government and
industry will now combine around a clear set of priority outcomes:
1. Making Defence an Engine for Growth
2. Backing UK-based businesses
3. Positioning the UK at the leading edge of defence innovation
4. Developing a resilient UK industrial base
5. Transforming procurement and acquisition systems
6. Forging new and enduring partnerships
7Ministerial Foreword

Executive Summary
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.
1
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
8 Defence Industrial Strategy: Making Defence an Engine for Growth
1 Spending Review 2025 (HTML) - GOV.UK ; https:/ /www.gov.uk/government/news/uk-to-deliver-on-5-
nato-pledge-as-government-drives-greater-security-for-working-people

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.
The Strategic Defence Review (SDR) vision
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.
Making defence an engine for growth
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,
2 over 24,000 Ministry of Defence apprentices3 and
£28.8 billion spent with UK-based business.4 Nearly 70%5 of defence jobs6 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.
7 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.
2 MOD supported employment estimates 2023/24 - GOV.UK
3 Annual Report and Accounts 2023 - 24
4 MOD regional expenditure with industry 2023/24 - GOV.UK
5 MOD supported employment estimates 2023/24 - GOV.UK
6 J obs directly supported by MOD expenditure
7 Defence Nuclear Enterprise 2025 Annual Update to Parliament
9Executive Summary

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.
Backing UK based businesses
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
Defence Industrial Strategy: Making Defence an Engine for Growth10

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.
11Executive Summary

At the leading edge of defence innovation
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,
8 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 resilient UK industrial base
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.
8 Spending Review 2025 (HTML) - GOV.UK
Defence Industrial Strategy: Making Defence an Engine for Growth12

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.9
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.
Fixing defence procurement
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:
1. Major platforms (such as tanks, frigates and aircraft) with a timescale target to go
from an average of six to two years to contract.
2. Pace-setting modular upgrades (such as comms, sensors and weapons upgrades)
with a timescale target to go from an average of three to one year to contract; and
3. Rapid commercial exploitation (such as uncrewed systems/drones and digital
software) with a target of three-month cycles.
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
9 https:/ /www.gov.uk/government/news/uk-to-expand-submarine-programme-in-response-to-strategic-
defence-review
13Executive Summary

a bigger, better, and more resilient sector which attracts investment, delivers growth,
and boosts UK prosperity.
Forging new partnerships
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.
10 Joint Expeditionary Force
11 Organisation for joint armament cooperation
12 Five Eyes – anglosphere intelligence alliance comprising of Australia, Canda, New Zealand, the UK and the US.
Defence Industrial Strategy: Making Defence an Engine for Growth14

Context
As the Strategic Defence Review makes clear, the UK is entering
a new era of threat. Innovation and industrial power are
central to deterrence, with the conflict in Ukraine providing
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. To support a return to
warfighting readiness, the UK’s defence innovation and industrial
base must be able to adapt and surge to meet emerging
priorities and demands.
The UK also faces a significant challenge to drive economic growth. Despite fundamental
economic strengths, UK productivity has grown too slowly for more than a decade,
and global economic competition has intensified. Security and prosperity have become
inextricably linked and intertwined; this demands a new approach and serious reform.
As we increase the share of GDP dedicated to defence, we must maximise the potential for
the defence industry to drive long-term economic growth and productivity, so the Defence
dividend is felt all across the UK, while meeting the new imperative for a strengthened
British industrial base as we return to warfighting readiness.
15Context

While the global context is challenging, there are substantial prizes to be won. The military
imperative to stay at the technological cutting edge is also where there is the greatest
economic potential for spillovers to the wider economy. This Government is committed to
increasing defence spending to 2.6% of GDP by 2027, the largest sustained increase since
the end of the Cold War, with an ambition to increase to 3%
13 in the next parliament as
fiscal and economic conditions allow and a historic commitment to spend 5%14 of GDP
on national security by 2035 alongside our NATO allies. Our European allies are doing
similarly – between 2021-2024, EU member states’ defence expenditure rose by more
than 30% reaching an estimated €326 billion in 2024 and expected to rise by more than
another €100 billion in real terms by 2027.
15 Rising global defence spending represents a
substantial opportunity for the UK to secure investment, international collaboration and
for export wins, but we can only grasp that opportunity if our industrial base can compete
and win in a competitive global marketplace.
The defence sector is a huge source of pride for the UK – from shipbuilding in Scotland,
missile manufacturing in Northern Ireland, land vehicle development in Wales, combat
aircraft manufacturing and submarine building in the North-West of England, through
to cyber in Manchester and AI in the North East. We have a world-class production
and manufacturing ecosystem, which provides high-quality, cutting-edge armaments,
components, and technologies for our Armed Forces and our allies. It also supports
over 270,000 industry jobs across the UK, with every £1 of defence spending felt in every
part of the UK.
16
But as the Strategic Defence Review points out, the nature of warfare is changing, with less
emphasis on exquisite, crewed platforms and a greater emphasis on drones, autonomous
systems, networked capabilities and AI, and so the composition of our defence industrial
base must adapt and transform to stay at the cutting edge. Today, lots of the best
innovation is found in the civil sector, where technical talent and investment capital
congregate, and greater risk appetite drives rapid progress. The increasing prevalence of
dual-use technologies has widened the net of potential suppliers that can contribute to
MOD outcomes and benefit from increased investment in defence. There is a deep range
of partners outside MOD that we must work to bring in beyond defence primes, including
technology and innovation startups and scale-ups, SMEs, and private investors.
With global threats increasing, the new Defence Industrial Strategy must succeed. To do
so, we must acknowledge the problems in the defence sector which has held back growth
in the past and led to poor outcomes for UK Defence. And we must set out to fix them.
As the sector plan for defence in the Modern Industrial Strategy, this Strategy sets out how
this Government will back our defence industry in new ways and take the actions necessary
to transform our approach and become a defence industrial leader by 2035.
13 Spending Review 2025 (HTML) - GOV.UK
14 National Security Strategy 2025
15 EU defence in numbers - Consilium
16 MOD supported employment estimates 2023/24 - GOV.UK
Defence Industrial Strategy: Making Defence an Engine for Growth16

Vision
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”. This Strategy will deliver the industrial component
of that vision.
We must ensure the UK gets the maximum benefit from the increase in UK and global
defence spending, international collaboration, export opportunities, and developing new
areas of comparative advantage, to strengthen our national security and support this
Government’s mission to boost economic growth. The UK must become the best place to
export from and the most attractive country in the world to grow a defence business in,
with a defence sector that is more competitive, more integrated, more innovative and
more resilient. This is why our vision is to become a defence industrial leader by 2035.
A more competitive defence sector is one that wins contracts and partnerships in the global
marketplace as Europe’s leading defence exporter; has a thriving skills base, attracting the
best talent and procures in new ways, significantly reducing the average time taken for the
delivery of equipment and capability. It embeds collaboration, exportability and industrial
resilience at the heart of decisions; increases private investment so the UK remains one of
Europe’s leading destinations for venture capital
17 in defence, closing the gap with the US by
50%; and supports the breadth of the UK defence sector to succeed, including increasing
spending on SMEs by £2.5 billion by May 2028 with an aspiration to go further and deliver
the next defence unicorn company in the UK.
18
A UK defence sector that is more integrated with our international partners ensures
we maximise opportunities to co-design, co-develop, co-produce, and co-support on
17 NIF report Defence Security and Resilience
18 Unicorn status is defined as a privately owned business valued at more that US$1 billion
17Vision

capabilities where we are collectively stronger together; with an increased number of
significant international defence and security partnerships involving the UK by 2035;
and a real terms increase during the next parliament in the five-year average value of
defence exports orders according to DBT data. It also means being more integrated
with our defence industry, who are critical to delivering the capabilities our armed forces
need, with a new Defence Industrial Joint Council and enhanced strategic partnerships,
which will increase the number of research and innovation outputs.
A more innovative defence industry is one that can respond to the changing nature of
warfare and battlefield advantage, through exploiting data and software and maximising
opportunities for defence procurement, exports, innovation and R&D to drive UK science
and emerging technological advantage, including in clean technology. It will deliver
the benefits from 10% of MOD equipment budget spent on novel technology and an
increased number and scale of deep tech and dual-use suppliers in the UK. R&D spend is
critical for driving broader growth and should continue to be prioritised as part of wider
defence spending. The Spending Review confirmed that MOD’s research and development
budget will be over £2 billion in 2026-27 and will rise each year in line with the uplift in
defence spending. This will be the baseline for the next 10 years.
Our national security is defended by our Armed Forces, but they are only as strong as the
defence sector which equips them. We know aggression is aimed at industry, our supply
chains, our know-how and our people, not just our Armed Forces. We will deliver a more
resilient defence sector by changing the mindset in MOD to recognise the strategic need
for resilience, embedding it at the heart of everything MOD does, and reducing supply
chain vulnerabilities in the access to critical inputs to the defence sector. This includes
investing an additional £1.5 billion in an ‘always on’ pipeline for munitions.
A more competitive, integrated, innovative and resilient defence sector will ensure the UK
defence industrial base in 2035 reflects the changing nature of warfare as laid out in the
Strategic Defence Review. The industrial base must be capable of supporting the transition
to a ‘high-low’ mix of equipment, for example the Royal Navy’s ‘Atlantic Bastion’ concept
and plans for hybrid carrier airwings, to the Army’s ‘Recce-Strike’ model for land fighting
power, to the RAF’s deployment of the Future Combat Air System. To do this, we will:
• Prioritise our national security subsectors and frontier defence industries (see Section 1.3).
• Retain and improve our ability to design and build Major Modular Platforms in the UK
and these platforms will have exportability built into their design to maximise revenues
for our defence industry.
• Foster a competitive, dynamic market with pace-setting spiral and modular upgrades
to increase UK advanced manufacturing and build the digital architectures.
• Use the power of the new UKDI and the Novel Technologies ringfence to pursue Rapid
Commercial Exploitation to build a vibrant and competitive defence tech ecosystem,
crowding in private capital by demonstrating clear pathways to scale for innovative
SMEs and startups.
• Increase our industrial productivity to ensure industry is ready to scale and sustain
innovation and production as required, using reformed and enhanced commercial levers.
Defence Industrial Strategy: Making Defence an Engine for Growth18

Strategic Framework
The Government’s Modern Industrial Strategy confirms defence as
one of the eight priority sectors for economic growth. This Defence
Industrial Strategy is the sector plan for defence and will help
deliver the Modern Industrial Strategy’s objectives to drive growth
and support Net Zero, regional growth, and economic security
and resilience.
1.1 Challenges
Through extensive engagement with industry, we have tested and expanded on the
problems proposed in the Defence Industrial Strategy’s Statement of Intent.19 This Strategy
seeks to overcome systemic challenges currently facing the defence sector and bring
down key barriers to growth. These challenges are:
• Strategic incoherence: Our investment focus, global strategy, and economic strategy
are currently misaligned. Our strategies and processes do not factor in economic
growth considerations coherently. To project leadership in NATO, we require greater
industrial resilience and further alignment of NATO standards, procurement,
information sharing, and interoperability.
19Strategic Framework
19 Published on GOV.UK on 2 December 2024

• Inefficient spending and private sector investment: We need greater defence and
economic output for every pound spent. The defence industrial base continues to
be driven by peaks and troughs of capability cycles resulting in a ‘feast and famine’
approach to investment. This is insufficient to sustain and grow key capability areas,
creates uncertainty, fails to unlock private sector investment, and treats exports like an
afterthought.
• Lack of competition: Competition is beneficial both for the MOD and the economy
as a whole, driving innovation and efficiencies and providing greater value for every
pound spent on defence. An uncompetitive defence market will mean our companies
do not keep pace with the latest innovations, do not provide value-for-money and
fail to compete internationally against allies and adversaries who seek to seize the
opportunities of increased global defence spending.
• Falling behind on exports: Exports are essential to sustain a resilient defence sector.
Currently MOD’s inward-facing procurement culture drives outcomes where exporting
is an ‘optional extra’, rather than vital to sustaining a resilient defence industry with
HMG support steered towards them.
• People in defence: Solving the skills shortage is a whole economy task but is a critical
challenge for defence. Shortages in critical defence industrial skills, particularly in
STEM, are constraining our supply chains, limiting investment across the UK economy
and risking our ability to remain at the forefront of technological innovation.
20
• Pace of innovation: With persistent fragmentation across the commercial and
innovation landscape, the MOD has struggled to prioritise science and technology
spending and to exploit innovation for operational advantage. This means disruptive
technologies developed by innovative UK companies often do not move to prototype
development, and the number of successful spinouts is low. This constrains the
economic growth and national security benefits that innovation brings.
• Lack of long-term partnerships and delivery: Previous defence industrial strategies
did not do enough to embed partnership and genuine collaboration into Defence’s
institutions and governance, leaving industry without a clear, long-term demand signal
and ultimately reducing investment, slowing research and development.
• Investment bottlenecks and barriers to entry: Access to finance, including being
able to open a bank account or secure a loan, can be a problem for smaller defence
suppliers. The absence of potential scale in defence remains a barrier to many
early- stage tech investors. Other barriers to entry affecting SMEs and small start-ups
include complex, opaque procurement processes, prolonged decision-making and
innovation cycles, a lack of long-term strategic certainty, and fragmented access
points and support mechanisms.
20 Trends in International Arms Transfers, 2023
Defence Industrial Strategy: Making Defence an Engine for Growth20

1.2 Priority Outcomes
To become a defence industrial leader by 2035 and deliver the vision set out above we will
deliver six priority outcomes:
1. Making Defence an Engine for Growth: Increased investment in priority sub-sectors,
places and towards resolving skills challenges, in partnership with Mayoral Strategic
Authorities and the Devolved Governments, and private investment ‘crowded in’ to
the defence sector.
2. Backing UK based businesses: Increased defence spending is directed towards UK
suppliers and priority defence sub-sectors, with the aim of making the UK defence
market as competitive as possible. Capability collaboration and exports are
increased, growing and sustaining the UK industrial base.
3. UK at the leading edge of defence innovation: Harnessing the UK’s technology
ecosystem, pace and scale of innovation are increased, barriers to innovation are
reduced, tech companies are supported to scale up, and investment in research and
innovation is long-term and protected.
4. A resilient UK industrial base: UK deterrence and defence is enhanced, in turn
strengthening NATO, and the foundations for a thriving UK economy are secured
through resilient supply chains, increasing inward investment and improved
industry productivity.
5. Procurement and acquisition systems are transformed: waste is reduced,
productivity is increased and SMEs are connected and empowered.
6. Forge new and enduring partnerships: to improve delivery institutions and industrial
partnerships and invest in powerful international partnerships and collaborations.
To support these outcomes, we will prioritise national security sub-sectors and frontier
defence industries key to our growth and security. We will develop clear visions
for each and tilt our business environment interventions towards them. For the first
time, the Defence Investment Plan process will explicitly factor in economic growth
considerations and set a long-term procurement demand signal to give businesses
and investors confidence to invest.
21Strategic Framework

1.3 Approach
Three key design principles have shaped this strategy:
1.3.1 Shaped by the sector
This strategy is guided by the views and experiences of stakeholders across the
defence sector. We had an exceptional response to the public consultation with 200
responses – from not only our critical defence primes, trade associations and trade
unions, but also innovative SMEs, technology leaders, world class universities, financial
institutions, and interested members of the public. Industry participation in numerous
workshops, ministerial roundtables, and policy dialogues have fundamentally shaped
the interventions set out in this Strategy, including those where we have set an ambition
headmark, but signalled that further industry engagement on the practical development
and implementation is required. There is a clear and consistent sense of the scale of
opportunity, potential and ambition that exists within the sector. This document reflects
the barriers to growth that stakeholders raised with us and sets out how we will work as
MOD, and in collaboration with the sector, to overcome these barriers and deliver a UK
defence sector that is truly thriving and resilient.
1.3.2 A whole of society approach
The war in Ukraine has shown that, when faced with extraordinary and urgent threats or
conflict, defence is an all-of-society challenge. The UK will continue to support Ukraine,
demonstrate leadership in NATO and develop our defence industrial base to one which
is best-in-class both militarily and economically. This recognition of the importance
of a whole society approach is also vital to the Defence Nuclear National Endeavour,
the collective effort required to support a strong and thriving future for the UK’s defence
nuclear industry. We need to look beyond traditional defence companies to redefine
the industrial base, reflecting the deep range of partners and expertise both with our
traditional defence sector but also those in adjacent sectors.
Defence Industrial Strategy: Making Defence an Engine for Growth22

Academic institutions, including apprenticeship providers, further education
colleges and universities;
UK-based companies, including both those who serve only the defence
market and those who provide ‘dual use’ goods and services to both civilian
and defence markets;
Banks and other financial services companies, whose capital and expertise
we need to invest and grow the defence sector;
Goods and services firms in insurance, logistics, law, warehousing;
Technologists and technology firms, whose expertise, innovation and
software is critical to modern capabilities;
Trade unions and their members, who are the workforce without which
delivering this strategy would not be possible.
We are therefore redefining the UK defence industrial
base to include:
This holistic approach to the defence sector will be both at the heart of our new partnering
approach and reflected in our new Defence Industrial Joint Council (DIJC). We will
proactively bring together groups from across the sector to identify and solve some of the
most difficult national security challenges and to drive growth. We will derive substantial
global competitive advantage through this broad approach, which will see business,
academia, technologies, financiers and workers coming together in the defence of our
country and its core values.
1.3.3 The defence sector as a strategic resource
The National Security Strategy is clear that as the threat environment worsens, a dynamic
defence and innovation-focused industrial base that assures UK sovereignty, operational
advantage and freedom of action, will be more important than ever. This Government is
committed to strengthening the defence sectors essential for national security and supply
chain resilience as well as those with the greatest economic growth potential. Interventions
in this Strategy are intended to create the business environment needed for the UK
defence industry to thrive and grow in these areas. The priorities below will directly inform
the Defence Investment Plan and segmented commercial approach to 2035.
23Strategic Framework

National Security Priorities. There are priority industrial capabilities we need to meet
national security and operational independence requirements. There are sub-sectors
where strategic imperative requires full, or majority, industrial capability to be UK-based.
These include nuclear deterrence capabilities, nuclear submarines, and cryptography.
There are others where varied levels of autonomy in the UK is required to conduct military
operations and protect sensitive technologies, such as: combat air, shipbuilding, ground
combat systems, complex weapons and munitions. Across these, we will work closely with
business to ensure the necessary elements of assured design, development, production,
maintenance and support capabilities in the UK, and closely with our partners to deliver
the best capability while ensuring UK industrial resilience. These priorities will inform the
Defence Investment Plan and application of our reformed commercial model.
Supply chain priorities. The conflict in Ukraine has provided a stark reminder of
the importance of resilient supply chains and security of supply. We need to better
understand our supply chain vulnerabilities, where we need to bolster businesses in
the UK, and strengthen our approach to managing critical supply chains to guarantee
continued access. An example of this Government’s commitment to action can be seen in
its acquisition of Octric Semiconductors. Areas where action is needed, in partnership with
the sector, to strengthen UK and allied capability include: steel, construction, energetic
material, batteries, semiconductors and rare-earth elements. These will be the focus of
the Defence Supply Chain Capability Programme.
Durham-based Octric Semiconductors bolsters UK
defence supply
In September 2024, the Ministry of Defence acquired a semiconductor foundry in
Newton Aycliffe, County Durham. The future of the facility, and the over 100 jobs
and specialist skills it supports in the North East of England, was safeguarded by
the Government after its previous owners were looking to sell or close the site.
This factory, renamed Octric Semiconductors UK, is the only secure facility in the
UK with the skills and capability to manufacture gallium arsenide semiconductors.
These types of specialist semiconductors are used in a number of military platforms,
including fighter jet capabilities. It was deemed crucial for our national security that
this facility remains available for UK defence. Semiconductors are vitally important
for the functioning of almost every electronic device we use in modern life and are
equally as important in military platforms.
Defence Industrial Strategy: Making Defence an Engine for Growth24

Economic Growth Priorities. For the first time, we are considering sub-sectors with high
economic growth potential – our frontier industries. The interventions in this Strategy
seek to reduce barriers to growth in these priority areas which also meet our military
requirements. These are areas which can contribute most to increasing the overall
productive capacity of the UK economy – in particular: areas which have synergies
with, and spillover potential to, civilian markets; can crowd-in private investment; have
existing strong export and collaboration potential or where the UK can feasibly develop
comparative advantage in the future; and where market dynamism drives innovation,
efficiencies and productivity gains. These include combat air, complex weapons,
directed energy weapons and next-generation land and maritime capabilities. Dual-use
sub-sectors include quantum technologies, drones and autonomous systems, space,
artificial intelligence, cyber, engineering biology, advanced connectivity technologies

and semiconductors.
Interventions in this Strategy are intended to create the business environment needed
for the defence industry to grow and thrive. The Defence Investment Plan will set out
in more detail how we will support the UK’s long-term economic growth through our
investment choices. It will outline the MOD’s spending plans in line with the SDR and SR
outcomes and layout clearly our capability plans for the next decade. It will be deliverable
and affordable, consider infrastructure alongside capabilities, enable flexibility to
seize new technology opportunities, and maximise the benefits of defence spending to
grow the economy.
25Strategic Framework

Implementation
2.1 Summary
Previous defence industrial strategies have failed where ideas are prioritised over
implementation. This Strategy puts implementation and effective delivery at its heart,
overseen by the National Armaments Director with support from the new Defence
Industrial Joint Council. It is also being delivered in tandem with the most significant
transformation of defence in 50 years. It is these reforms that will allow us to drive delivery
and successful outcomes.
The radical Defence Reform programme was implemented on 1 April 2025, grouping the
department under four leaders, reporting to Ministers, with much clearer accountabilities.
These changes create a strong organisational leadership structure with clear accountabilities
for delivery, and means we are already putting the plans and powers in place to deliver
this Strategy, including an accountable Director General for each of the actions in this
strategy (Annex A).
The Department of State, led by the Permanent Under Secretary (PUS), as Accounting
Officer, will play a central role in coordinating the delivery of the Defence Industrial
Strategy, ensuring alignment with government growth policy and value for money in its
implementation. DG People and DG Transformation will work with the Department for
Education to deliver the ambitious skills package set out in this strategy. The Ministry of
Defence’s Chief Scientific Advisor sets the applied science and technology demand signal
for the National Armaments Director Group to deliver. DG Finance will, in coordination
with HM Treasury, lead the work across all four areas to deliver a Defence Investment Plan
by 2025, laying out the priorities and portfolios of investment. Creating enduring portfolios
under the National Armaments Director and Chief of Defence Nuclear will set the
26 Defence Industrial Strategy: Making Defence an Engine for Growth

conditions to execute faster; and our implementation plan will be aligned to the Defence
Investment Plan to ensure clear agreement of funding to deliver the plan.
The Military Strategic Headquarters, led by the Chief of the Defence Staff (CDS),
will design force structure and set the problem statements, which allow for exports and
innovation. Under the new model of capability decision making, the military are now
focussing on flowing up warfighting plans from the Single Services to be integrated within
the Military Strategic Headquarters. These aggregated ‘operational problem statements’
flow to the National Armaments Director who works collaboratively with UK-based industry
and with allies to develop capability that meets the need of our Armed Forces and is
optimised for the export market.
An integrated Defence Nuclear Enterprise, cohered by the Chief of Defence Nuclear
(CDN), will strengthen our strategic partnership with the nuclear industry, enabling
long-term investment and driving productivity. Delivering the nuclear deterrent is a National
Endeavour, involving partnership between central government, industry, local government,
and local communities. The financial nuclear ringfence allows a focus on delivery and
outcomes, with the Chief of Defence Nuclear acting as the clear point of accountability
for the ringfence. The Defence Nuclear Enterprise will continue to work as an Enterprise
– Team DNE – as part of One Defence and embrace the platform of Defence Reform to
strengthen its ability to deliver the critical mission.
The National Armaments Director (NAD) Group, with full visibility of the end-to-end
procurement process, will allow us to make impactful interventions much more easily,
empowered by the new £11 billion per year ‘invest budget’. One of the top priorities for
the NAD is to drive progress on the delivery of the Defence Industrial Strategy, providing
clear leadership accountability (see Annex A for detail) for much of this Strategy’s actions,
which are found later in this document, and will drive the mindset shift needed to support
a resilient UK defence industry.
27Implementation

2.2 Metrics
Our Vision sets out the measures of success for delivering a more competitive, more
innovative, more resilient and more integrated defence sector. To assess the progress
against the priority outcomes of this strategy, we will consider the below indicators among
a broad range of data points. We will report on economic impact and performance
against these metrics as part of yearly Modern Industrial Strategy update and progress will
be overseen by the Defence Growth Board.
By 2035 we will make Defence an engine for growth:
(1) Proportion of MOD spend on R&D, and levels of privately funded R&D
(2) Regional distribution of MOD spend with UK industry
(3) Completion of defence-specific and defence-relevant training
(4) Levels of VC investment in UK defence companies
(5) Number of successful defence scale ups and defence IP spun out
(6) A defence competition index, to be developed as part of the DIS
implementation plan
By 2035 we will back UK based businesses:
(1) MOD spend with UK-based businesses
(2) MOD spend with SMEs & number of SMEs engaged
(3) UK defence export data, including UK share of global defence export market
(4) Reduction of regulatory burden for defence suppliers
By 2035 we will ensure the UK is at the leading edge of defence innovation:
(1) MOD spend in the ‘Rapid Commercial Exploitation’ procurement segment
(2) Number of SMEs and non-traditional suppliers involved in MOD
innovation programmes.
Defence Industrial Strategy: Making Defence an Engine for Growth28

By 2035 we will have a more resilient UK industrial base(1) Measures of defence industry business outlook
(2) Trade data for critical inputs
(3) Proportion of companies with business continuity plans and contracts with
mitigation plans in place
By 2035 we will transform procurement and acquisition systems:
(1) Average procurement cycle time to delivery
(2) Proportion of suppliers registered on the central procurement platform
By 2035 we will forge new partnerships with international allies and industry:
(1) Number of new or enhanced international agreements with provisions for
defence industrial collaboration
(2) Joint government-industry R&D investment in collaborative programmes
(3) Frequency of relevant domestic industry and international engagement
Data on the defence sector is limited due to the challenges in defining the sector and
the dual-use nature of many firms. These data limitations make it difficult to understand
and monitor change in the defence sector. Through the lifetime of this Strategy, we will
change the way we collect data, in collaboration with the Office for National Statistics;
with the Competition and Markets Authority on monitoring competition and supply chain
structures in the defence industrial base; and with industry, who have the best sense of our
supply chains. We want to increase the sector’s contribution to growth. As we improve the
data available and establish regular, reliable datasets, we will focus in on a handful of the
most telling data to measure our progress, including on comparative advantage, business
investment, private sector R&D spending and Defence wages.
29Implementation

2.3 Plan through to 2035
2028
• MOD spending with SMEs increased
by £2.5 billion
2025
• National Armaments Director
appointed
• New Strategic Partnership with
HVM Catapult
• DIJC Launched
• UKDI launched
• Defence Growth Deals launched
• Office of Defence Exports and G2G
offer launched
• Defence Reform and Efficiency
Plan published
• DIP published
• SSCR review outcomes
2026
• Defence Office for Small Business
Growth established
• Acquisition measures in effect
by April
• New approach to social
value implemented
• Defence Finance and Investment
Strategy launched
• Defence Energy and Capability
Resilience Centre of Excellence
begins delivery
• Subject to full consultation,
UK offsets regime launched
• DTECs launched
2035
• Deliver the next UK
defence unicorn
• Realise international ambitions
Defence Industrial Strategy: Making Defence an Engine for Growth30

Making Defence an
Engine for Growth
3.1 Summary
Vision: Barriers to growth are identified and overcome, and public and private
investment are tilted towards high-tech, high-growth subsectors. Defence
maximises the benefits of its spending to local areas, while skills challenges across
the supply chain are resolved.
Economic growth is this Government’s number one mission. Growth is the only way to raise
living standards for everyone and fund our public services and defence. As well as growing
the economy as a whole, this Government is determined to boost regional growth across
the UK. Defence has a key role to play in achieving these objectives.
Defence already contributes to the UK’s economic prosperity. Investment in deterrence
and defence creates the stability in which the UK economy can prosper – there is no
sustainable economic growth without peace. Defence offers rewarding and meaningful
careers in all areas of the UK, supporting over 460,000 jobs in the UK, over 24,000
apprentices, and with nearly 70% of direct defence jobs outside the South-East, including
in Scotland, Wales and Northern Ireland.
21 Trade Unions play a vital role in fostering this
highly skilled and resilient workforce, which is essential for driving growth. The Defence
31Making Defence an Engine for Growth
21 MOD supported employment estimates: 2023/24 - GOV.UK

Nuclear Enterprise alone supports a supply chain of over 3,000 UK-based businesses and
generates a current workforce demand of over 48,000, with demand set to grow to around
65,000 by 2030.
22 Investment in R&D and equipment programmes has kept the UK at the
forefront of modern technologies and techniques, while this Government is committed
to making the UK a leading defence exporter, boosting growth at home by supporting
allies abroad. This has begun with the landmark Type 26 frigate export deal with Norway,
our biggest ever warship export deal by value, which will boost the UK economy by
£10 billion and sustain 4,000 jobs across the UK.
23
But we must do more. As defence spending rises to 2.6% of GDP by April 2027, with an
ambition to reach 3% of GDP in the next Parliament as economic and fiscal conditions allow
and a historic commitment to spend 5% of GDP on national security by 2035 alongside
our NATO allies, we must take a fundamentally different approach to realise defence’s
untapped potential to further boost the productive capacity of the UK economy. Achieving
the Strategic Defence Review’s vision of a tech-enabled, integrated force that innovates
at wartime pace aligns closely with where defence spending can best support long-term
economic growth. The Ministry of Defence is uniquely positioned to use its buying power to
support innovative and high technology sectors, given its significant market size, its ability
to purchase at scale through coordinated procurement, and a constantly evolving need
for technology.
To unleash this untapped potential, we will weight defence spending towards capital and
prioritise R&D and innovation, with Defence’s R&D budget at over £2 billion in 2026-27
and rising each year.
24 We will ensure taxpayer-funded research and defence investment
is targeted towards our priority problem sets, and science and technology experts and
innovation voices have space at the top table in MOD to shape the strategic vision and
support delivery. We will capitalise on private sector interest in defence and growing defence
stock to unlock private capital and expertise, including bringing down the barriers to
investment and developing better partnerships with financial institutions. We will develop
Defence Growth Deals focused on priority sub-sectors and based on strong local-national
partnerships, combining national and regional funding with expertise to develop local
strengths and stimulate place-based growth. We will also create a pipeline of skills and
creative talent to help the sector continue to develop cutting-edge capabilities for defence,
now and in the future, while developing the foundations for economic growth. Investing in
defence is investing in our collective future – future skills, future places, future opportunities.
22 Defence Nuclear Enterprise 2025 Annual Update to Parliament
23 https:/ /www.gov.uk/government/news/boost-for-uk-growth-and-security-as-norway-selects-uk-warships-
in-10-billion-partnership
24 MOD departmental resources: 2024 - GOV.UK
Defence Industrial Strategy: Making Defence an Engine for Growth32

Total MOD-Supported Direct
Industry, Civilian and Military
Jobs by Region 2023/24
under 10,000
10,000 - 20,000
20,000 - 30,000
30,000 - 40,000
over 40,000Scotland 26,100
Northern Ireland 3,300
North West 23,200
Wales 7,100
West Midlands 17,800
South West 96,600
North East 3,300
Y orkshire & the Humber 17,500
East Midlands 17,600
East of England 25,100
London 18,000
South East 86,300
Selected UK Defence
Industry Locations
Glasgow (BAE Systems,
Rolls-Royce, Thales)
Belfast (Harland & Wolff,
Spirit Aerosystems, Thales)
Fivemiletown
(Cooneen Defence)
Barrow in Furness (BAE Systems)
Bolton (MBDA)
Telford (RBSL)
Aberporth (QinetiQ, Tekever)
Merthyr Tydfil
(General Dynamics)
Glascoed (BAE Systems)
Bristol (Airbus, BAE Systems,
GKN Aerospace, Leonardo,
MBDA, QinetiQ, Rolls-Royce)
HMNB Devonport
(Babcock)
Y eovil (Leonardo)
Rosyth (Babcock, QinetiQ)
Edinburgh (Leonardo)
Tyne & Wear
(BAE Systems, Leonardo)
Newton Aycliffe
(Octric Semiconductors)
Warton; Samlesbury
(BAE Systems)
Sheffield (Sheffield
Forgemasters)
Derby (Rolls-Royce)
Ampthill
(Lockheed Martin)
Stevenage (Airbus, MBDA)
Aldermaston (AWE)
London (Helsing, Palantir)
33Making Defence an Engine for Growth

34 Defence Industrial Strategy: Making Defence an Engine for Growth

3.2 Actions
3.2.1 Outcome: Supporting regions and our defence
industry across the UK
Economic growth is the number one mission of this Government. We will deliver the aim
of higher living standards in every part of the UK by the end of this Parliament. We know
geographic concentrations of interconnected companies and institutions in a particular
field hold advantages in productivity, innovation and new businesses, driving economic
growth both within a region and for a country more broadly.
25 This is illustrated by the
emergence of Regional Defence and Security Clusters (RDSCs) across the UK, while we
have seen success with the holistic approach taken with the Plan for Barrow initiative.
In this map, we have identified some of our key defence clusters across the UK. We will
work with businesses, devolved governments and local authorities to ensure that every
region’s potential is realised, building on good examples of similar partnerships in the
South West and North East.
Case Study: Plan for Barrow, collaboration in action
The Plan for Barrow recognises the critical importance of Barrow-in-Furness for
maintaining the UK’s nuclear deterrent and our national security. ‘Team Barrow’ –
a partnership between the Government (led by the Ministry of Defence and Ministry
of Housing, Communities and Local Government), Westmorland and Furness
Council, and BAE Systems – will address historical underinvestment and high levels of
deprivation, including through more than £200m of government investment over the
next ten years. Team Barrow is a model of cross-government collaboration in action.
It is not just being delivered by the Ministry of Defence and the Ministry of Housing,
Communities and Local Government working in partnership with local leaders;
interventions from other Government departments are critical to the revitalisation of
the town. The departments for Transport, Education, Business and Trade, Work and
Pensions, and Health and Social Care are all playing a crucial role through funding
or supporting initiatives. These include improved transport connectivity, supporting
development of additional homes and new public spaces, revised education offers,
support to local businesses, and plans to meet skills requirements. The Plan for Barrow
will help to regenerate and revitalise the town to the benefit of our national security,
the local community, and the local economy.
35Making Defence an Engine for Growth
25 Industrial Strategy Technical Annex

High-Growth-Potential
Frontier Industry Clusters
1 The Central Belt (Faslane,
Glasgow, Edinburgh, Rosyth)
• World-renowned shipbuilding,
including Type 26 and 31 frigates.
• A national leader in satellite
manufacture, launch and
downstream applications.
• One of the UK’s largest Quantum,
Photonics and Semiconductor
clusters, anchored by key assets
including NMIS, Fraunhofer CAP ,
and the National Robotarium.
2 The North East
• Strengths in manufacturing,
engineering, fabrication and digital
technologies with a growing data,
innovation and cybersecurity focus.
• Strong advanced material electronics
sector, with Octric Semiconductors
and a Compound Semiconductor
Applications Catapult.
• A fast-growing space cluster, soon to
be supported by the new North East
Space Skills and Technology Centre.
3 Belfast
• Recognised as a leading cyber
security hub, augmented by
Queen’s University Belfast’s
Centre for Secure Information
Technologies. Home to a
concentration of innovative defence
firms, including Thales, Raytheon,
Spirit AeroSystems, and Harland
and Wolff.
4 The North West
• A key region for the manufacture
of fixed-wing military aircraft,
shipbuilding and maintenance via
Cammell Laird and production and
support of complex weapon systems.
• Concept-to-delivery manufacturing,
digital, and cyber strengths with
unique full platform and system
testing capabilities.
1
2
3
4 5
6
7
8 9 10
11
12
Defence Industrial Strategy: Making Defence an Engine for Growth36

5 South Y orkshire
• A key hub for the development and
engineering of high integrity, precision
materials for the defence sector,
including at MOD-owned Sheffield
Forgemasters.
• Home to the University of
Sheffield’s world-leading Advanced
Manufacturing Research Centre.
A growing defence cluster bolstered
by BAE Systems’ new artillery factory.
6 East and West Midlands Belt
• Key Defence manufacturing centres,
such as Rolls-Royce Raynesway and
RBSL Telford, enabled by world-class
assets including MIRA Technology Park
and the MTC Coventry.
• Data, AI, communications and
cybersecurity strengths driven by the
Lincoln ISTAR cluster and Cyber Valley.
7 The Oxford to Cambridge
Growth Corridor
• Strategic RAF sites Wyton and Brize
Norton anchor a key cluster for
defence and dual-use innovation.
• The UK’s leading region for computing,
data science, space innovation; home
to world famous universities and
the Harwell Campus, digital primes,
OEMs and the National Centre for
Geospatial Intelligence.
8 South Wales
• Regional cyber security and
autonomous systems expertise
bolstered by the Universities of South
Wales and Cardiff and Airbus’ Cyber
Innovation Hub.
• Companies such as Space Forge
are working in cutting-edge
manufacturing, secure connectivity
and cybersecurity, whilst General
Dynamics produce the world-leading
Ajax armoured vehicle.
9 West of England, Cheltenham
and Gloucester
• Home to several leading space and
aerospace companies, including
Airbus and Boeing, with renowned
universities and the National
Composites Centre driving cross-
sectoral innovation.
• A strong cyber sector will be bolstered
by the Golden Valley development
adjacent to GCHQ.
10 Greater London
• Home to world-leading research in
quantum computing, including at
UCL’s ‘Q-Biomed’ and at innovative
startups including Phasecraft,
Quantinuum and Post-Quantum.
• UK’s largest concentration of data and
AI industry with cutting-edge disruptors
Hadean, Palantir and Helsing.
• Hosts High Value Manufacturing and
Digital Catapults.
11 Portsmouth and the Solent
• A key maritime hub around HMNB
Portsmouth. Qinetiq’s National
Maritime Systems Centre and the
National Oceanography Centre are
at the forefront of marine science and
technology, including on autonomous
and robotic underwater systems.
• BAE Systems and Airbus are key
employers in the defence and space
sectors.
12 Plymouth
• R&D strengths in cutting-edge
maritime technologies and drones,
at the National Centre for Coastal
Autonomy, SMART Sound Plymouth,
the Maritime Autonomy Centre and
the University of Plymouth.
• A key defence ecosystem built
around Plymouth & South Devon
Freeport and the largest naval base
in western Europe.
37Making Defence an Engine for Growth

3.2.1.1 Partnerships with regional and devolved leaders. Partnership working with the
Devolved Governments, Mayoral Strategic Authorities (MSAs) and other local government
organisations will be central to this. MSAs in England will deliver ambitious 10-year Local
Growth Plans. These statutory, locally owned, long-term plans will set out how each MSA in
England will use their powers and funding to drive growth in their region. We will establish
regular strategic dialogues with relevant MSAs to maximise the synergies between the
initiatives set out in their plans and national policies to create the right conditions for that
region’s local defence sector to flourish. We will also work in partnership with the Devolved
Governments to drive growth in Scotland, Wales and Northern Ireland. This includes
addressing barriers and realising opportunities in sub-sectors and high potential clusters,
guided by links between this Defence Industrial Strategy and their plans for growth.
This partnership will reflect the devolution settlements, recognising that while defence
and security policy is reserved, other policy areas critical for defence, such as skills,
are devolved.
3.2.1.2 Defence Growth Deals. Central to our regional growth initiatives will be the
development of Defence Growth Deals across the UK. These will be directly targeted
towards the region’s strengths in priority sub-sectors, leveraging defence investment to
build up wider complementary strengths, such as in other Industrial Strategy sectors,
to maximise agglomeration benefits. Taking the lessons learned from Team Barrow, these
Defence Growth Deals will also stretch beyond defence-funded initiatives to encompass
wider government-funded interventions tailored to the needs of the region, such as skills,
housing, deregulation and planning. This holistic, nuanced and targeted approach will
not only enable the growth of the local defence ecosystem but also ensure its long-term
sustainability and attractiveness for private investment in that region. It will also be closely
tied to any new offsets policy and reforms to social value application.
The first wave of Defence Growth Deals will be launched this year in Plymouth, South
Y orkshire, Northern Ireland, Scotland and Wales. The Defence Growth Deal in Plymouth
will focus on developing the city’s emerging marine autonomous industry while also
putting in measures to support the Government’s broader investment into the area.
In South Yorkshire, we will further leverage the region’s strengths in the research,
development and engineering of high-grade components and materials critical to the
next generation of maritime, land and air capabilities. In Northern Ireland, the Defence
Growth Deal will build on commitments made in the Safeguarding the Union command
paper to leverage Northern Ireland’s cyber security clusters, academic centres of
excellence, established R&D programmes and STEM pipeline to generate military and
security capabilities. In Scotland, where growth industries such as next generation
maritime capabilities, space, quantum, semiconductors, photonics, advanced connectivity
technologies, and high value manufacturing benefit from a nexus of leading universities and
key national assets, the Defence Growth Deal will harness existing and emerging strengths
across defence and dual-use sub-sectors, both concentrated and diffuse. In Wales,
the Defence Growth Deal will focus on harnessing a range of the country’s sub-sectoral
strengths, including in autonomous systems. Development of these Defence Growth Deals
will be done with the devolved governments and local authorities, industry, academia and
other key stakeholders.
Defence Industrial Strategy: Making Defence an Engine for Growth38

We will also work with Mayoral Strategic Authorities and other local government bodies
across England where there is a significant defence industry presence to assess what
interventions and initiatives are required to enable the growth and sustainability of their
regional defence ecosystem.
Defence Growth Deal: unlocking Plymouth’s potential
to drive growth and strengthen national security
Plymouth plays a fundamental role in securing the UK’s defence and security,
supporting the continuous at sea deterrence and working to protect critical
underwater infrastructure. Recognised as Britain’s ‘Ocean City’, it is home to the
UK’s first National Marine Park and a cluster of world-class marine businesses
and leading research institutions. No other port in the country has the diversity of
operations at scale as His Majesty’s Naval Base Devonport, which is the largest
naval base in Western Europe. Plymouth is a globally significant marine autonomy
cluster with a crucial role to play in critical onshore naval capability, as well as
significant growth potential to kickstart jobs, boost innovation and dual-use
technology advancement, and support local infrastructure.
The scope of the Defence Growth Deal in Plymouth will include: strengthening
local skills initiatives, with a particular focus on STEM outreach and in fields
including electrical engineering, renewable energy systems, nuclear operations and
autonomy; driving innovation through the Advanced Marine Technology Hub for
dual-use capability innovation, marine science, and critical national infrastructure
support in the University of Plymouth; and support to, and investment in, local
infrastructure to support the defence ecosystem, this will include a coherent
and comprehensive transport strategy housing planning to support demand for
the growing workforce and shipyard investment. It will build on the substantial
investment already going into Plymouth, including this Government’s £4 billion
investment into HMNB Devonport and investment into Helsing’s new UK Resilience
Factory. The Defence Growth Deal will be a partnership between this Government,
industry and local government.
39Making Defence an Engine for Growth

40 Defence Industrial Strategy: Making Defence an Engine for Growth

3.2.2 Outcome: Higher private investment and growth in
the defence ecosystem
Crowding-in private investment is vital to unleash the full potential of the defence industry.
This Government has put money behind the mission to becoming a defence industrial
leader by 2035, but we must also create the conditions to make the sector a more
attractive investment for private capital. With the changing threat environment and this
Government’s commitment to raising defence spending, there has never been a better
time to invest in defence
26:
V enture Capital Investment
In 2024, European defence
and security related tech
start-ups raised $5.2 billion
in venture capital funding,
a rise of 24% year-on-year.
NATO Spending Surge
In 2025, NATO expects that
all 32 member countries
will spend at least 2% of
GDP on defence, up from
3 countries in 2014.
Stock Market Performance
In August 2025, the UK FTSE
All-Share Aerospace and
Defense Index was about
70% higher compared to
twelve months earlier.
The index was also more
than five times higher than
in August 2020.
From harnessing AI and quantum technologies to dual-use technologies and clean tech,
the modern defence market is growing beyond just our world-leading weapons and
battlefield hardware. Not only does investing in defence offer economic value, but it is
also the right thing to do. Our return on investment in defence is not just to guarantee
national security, a national obligation, but also to generate economic prosperity and
social stability. During our industry consultation, we heard loud and clear that better
financial support is essential to crowd-in private investment. This must look like investment
to our start-ups, growth to our scale-ups, and long-term funding and support to our
primes. Promising UK firms, especially those between start-up and scale-up, tell us they
struggle with stop-start contracts and revenues. We need to become more expeditionary
in finding the firms with the technology and ideas to drive technological change and
productivity into our defence sector and empowering their success. Our goal will be
to halve the gap with US VC funding into defence and to grow the next UK-based
defence tech unicorn.
26 V enture capital investment: https:/ /www.ft.com/content/6c21daac-1a07-4fe2-bd32-7237a8285717
NATO Spending surge: https:/ /www.nato.int/cps/en/natohq/topics_67655.htm (accessed 12/08/2025)
Stock market performance: Financial Times; data accessed 12/08/2025
41Making Defence an Engine for Growth

3.2.2.1 A Defence Finance and Investment Strategy developed by early 2026. This will
look at the entire spectrum of defence companies, from start-ups through to primes,
and provide recommendations to the Defence Secretary on how barriers to investment in
defence can be removed while making the sector more attractive for private investment,
including venture capital, private equity and pension funds. In particular, the Defence
Finance and Investment Strategy will review: the existing financing options available
for the defence sector and whether changes could be made to make access easier for
companies while also incentivising private investment; alternative funding models to
draw in private finance for defence programmes and projects, which will be targeted
towards the sub-sectors outlined in section 1.3 and build off existing initiatives in the
National Security Strategic Investment Fund (NSSIF); how the MOD can make better use
of contracting to incentivise investment into UK-based defence companies, looking at
foreign comparators such as the US; defence’s perception as an “unethical investment”
and what can be done to change this; and barriers companies face when applying
for private market finance and what can be done to reduce those. Further detail on
the Defence Finance and Investment Strategy, including terms of reference, will follow
later this autumn.
This Strategy will also set out how the Ministry of Defence can establish partnerships
with financial institutions. A new Defence Investors Advisory Group will be established,
comprising venture capital and private equity investments and other key financial services
industry stakeholders, who will be instrumental in the development and delivery of the
Defence Finance Investment Strategy.
3.2.2.2 The National Wealth Fund’s Statement of Strategic Priorities from the Chancellor
indicates that the National Wealth Fund should consider investments in dual-use
technologies to better support the UK’s defence and security and to consider the role it
can play in the wider defence sector. Following legislation, the National Wealth Fund’s
investment scope will expand to capital-intensive projects, businesses or assets to ensure
it can effectively support the Modern Industrial Strategy. The Government will introduce
legislation as soon as Parliamentary time allows.
3.2.2.3 British Business Bank Industrial Strategy Growth Capital will support investment
and growth in the Modern Industrial Strategy sectors through an additional £4 billion
of investment. The package has been designed to provide the support each sector
requires and to increase economic resilience. This includes a significant scaling up of the
capacity to make equity investments in scale-up businesses. It will also entail investing
in and building capability of specialist fund managers and investing in private debt
funds providing firms with growth capital. The British Business Bank will also introduce
tailored market approaches and offer large equity investments of £40-60 million to
strategically important, capital-intensive businesses. These investments will flow from a
rigorous process of identifying and addressing market gaps, drawing on relevant industry
resources. The process will be coupled with strong monitoring, reporting and governance
mechanisms to ensure the sector is supported through the stages of the investment cycle.
Defence Industrial Strategy: Making Defence an Engine for Growth42

3.2.2.4 UK Export Finance (UKEF) offer enhanced. As part of the Modern Industrial
Strategy, the Chancellor announced a £3 billion increase to UK Export Finance’s Direct
Lending capacity, bringing it to £13 billion, of which £3 billion is already ringfenced for
defence. This scales up UKEF’s ability to support defence, which already benefited from
a boost as part of the Spring Statement 2025. UKEF will be able to use this capacity
to unlock further opportunities for UK defence exports, such as missiles, aircraft and
armoured vehicles overseas, increasing the competitiveness of the UK’s defence industry
and allowing UK exporters to grow their business through sales to our allies. We will bring
forward legislation to increase the maximum size of UKEF’s financial portfolio, ensuring it
remains competitive with leading export credit agencies around the world. This will enable
UKEF to significantly scale up its offer for defence exports where demand for large-scale,
state-backed financing is growing rapidly. The Ministry of Defence must continue evolving
its approach to ensure UK defence exporters remain competitive on the world stage,
including by exploring new ways it can better support larger transactions more effectively
than it does today.
Case Study: UK Export Finance defence support as a
catalyst for growth
With its extensive defence sector relationships and a financing offer well-tailored to
the structure of large defence projects, UKEF’s domestic and international finance
support acts as a catalyst to help drive demand for UK exports overseas, helping UK
based businesses to seize new opportunities and build out domestic export capability.
This increases the resilience and competitiveness of these businesses, ensuring
healthy, competitive UK supply chains to meet the needs of our Armed Forces. UKEF
support for major defence export contracts helps to enable production of key military
products in the UK, positioning the UK to benefit from increased European defence
spending in the future, which sits within the objectives of the Defence Industrial
Strategy. Many of UKEF’s largest ever transactions in recent years have been in
defence, including nearly £10 billion
27 of support for the Polish air defence programme
in 202
4/25, over £2.8 billion of defence commitments to Ukraine and £5 billion to
export Typhoon aircraft and associated equipment and services to Qatar.28
3.2.2.5 The new Defence Office for Small Business Growth improves access to finance.
One of the key missions of the Office, announced in March 2025, will be to support
defence SMEs access Government funding, including the recently announced uplift
for UKEF, along with private investment. It will work across government to achieve this,
making the most of the initiatives and support announced in the Governments long-term
plan for support for small and medium-sized businesses published in July, as well as
working with HMRC to amend current SME non-disclosure agreements to enable better
access to R&D credits.
43Making Defence an Engine for Growth
27 UK Export Finance Annual Report and Accounts 2024 to 2025
28 UK Export Finance Annual Report and Accounts 2024 to 2025

3.2.2.6 Increased inward investment from overseas companies that boosts the UK’s
defence industrial capability and enhances the UK’s defence export portfolio. The UK
is already a country internationally recognised as a good place to do business, with a
high number of the world’s leading defence companies already here. They have chosen
the UK not just because we are a significant investor with a track record as one of the top
defence spenders, but because they recognise that, with a UK-based business, they get
better access to our world leading R&D facilities and universities, access to a highly skilled
workforce, market recognition of the Ministry of Defence as a customer, and the support
of HMG when exporting from that UK base. This Defence Industrial Strategy will make the
UK an even better location for those global businesses to invest in.
We will use our global network to find the highest-growing global companies in both
defence and defence-adjacent industries, such as advanced manufacturing and
biosciences. A whole-of-government approach will ensure those companies understand
why the UK is the right place for their factories, investment and people. We will bring to
bear our business support, exports support, innovation capabilities and facilitate links
with the UK’s world leading scientific base. This will not just boost prosperity and growth,
but ensure we have sovereign access to the best ideas and innovations.
3.2.3 Outcome: Increased investment and support to
resolving skills gaps and to developing high skilled,
well-paid defence jobs
Skilled workers are essential for defence, from ensuring operational effectiveness through
to driving innovation, building resilience, and maintaining our national security. Defence
provides good, well-paid jobs across all nations and regions of the UK. Competition in
both industry and the nature of warfare means it is more important than ever that we
attract, retain and develop a highly skilled workforce. Skills developed for technologies
today will quickly become obsolete.
Defence Industrial Strategy: Making Defence an Engine for Growth44

The interventions set out in this Defence Industrial Strategy will help equip the UK
workforce with the knowledge, skills and expertise needed to meet the new era of threat
set out in the Strategic Defence Review and the demands of a rapidly evolving defence
sector. In collaboration with devolved and local governments, industry, higher and further
education providers and trade unions, we will deliver the skills the defence industry needs
to foster growth and help protect our nation.
Skills England will play a crucial role in this work, providing the authoritative voice on
current and future skills needs to inform Government and support economic growth,
gathering evidence and insights to help analyse and demonstrate skills needs at national,
regional and local levels. They will mobilise employers and other partners to meet national,
regional and local skills needs, developing and refining education and training products.
This will include occupational standards that form the basis for apprenticeships, T Levels
and technical qualifications to meet industry needs, and help respond to national
priorities and local labour market needs. We will also work with the Devolved Governments,
through the Defence Growth Deals, to assess defence skills needs in Scotland, Wales and
Northern Ireland respectively and agree how we can take forward action to address these.
Trade Unions have a long history in Britain’s defence industry and they are critical to its
future. Our unions are on the front line of workers voices and rights. Trade Unions will be
central to training the next generation of defence workers and upskilling the existing
workforce, with Unite, Prospect and GMB being central to this effort. This is why, for the
first time, we have brought unions into the heart of decision-making in the Defence
Industry Joint Council.
3.2.3.1 Defence Technical Excellence Colleges to improve the quality and quantity
of training. We are introducing Defence Technical Excellence Colleges (DTECs),
which will specialise in technical education for post-16 learners in priority sub-sectors.
These will build on the success of leading Further Education (FE) colleges to become
specialist training hubs, working in partnership with other education providers and
local and national employers to ensure their training is tailored to regional and sectoral
industry needs. DTECs will directly align skills provision to employer need to ensure that
demand is met. Employers have, for instance, pointed to the need to step up supply
of key craft skills such as precision soldering. We will establish five DTECs in areas with
deep specialisms in defence and where there is a large demand for skilled workers.
Revenue and capital funding will build capacity and capability for specialist teaching and
curriculum development, while also putting in place specialist equipment and facilities
for cutting-edge defence skills provision. We will work with industry to identify where
DTECs are best placed to address capacity challenges in the FE sector, taking account of
the potential for employer investment and where they should be aligned to existing skills
academies sponsored by industry.
45Making Defence an Engine for Growth

3.2.3.2 Stronger entrance pipeline to defence careers. We will invest in our young people
across the UK so they can acquire the skills they need for a long, sustainable, and valuable
career in the UK defence industry. Defence programmes like the Future Combat Air System
(FCAS) are already inspiring and supporting future STEM professionals, innovators and
leaders. The Team Tempest industry partners report they have recruited 3,000 graduates
and apprentices since 2022, providing the opportunity to work on a range of combat air
programmes and platforms, including sixth-generation combat aircraft development
through FCAS. But we need to go further to ensure sufficient investment goes into
courses that give learners pathways into defence. We will launch regional STEM initiatives
where there is a large defence presence, working in partnership with industry and other
national and regional STEM organisations. These initiatives will coordinate and maximise
STEM engagement activities in those regions, inspiring the next generation of workers
to pursue careers in STEM. We will work with industry to identify where these initiatives
should be targeted to ensure they have access to the workforce of tomorrow where the
need is greatest. Given the STEM challenge is national and cross-sector in nature, we will
continue to work closely with other Government departments to ensure alignment of STEM
requirements and initiatives, such as Tech First.
We will work with industry to advertise and create awareness of training opportunities and
careers within defence. As part of this, we will explore a partnership with the University
and Colleges Admissions Services (UCAS) to promote defence careers and the routes into
them. This follows the success of a similar campaign used in partnership with the NHS.
To complement this, in partnership with industry, we will launch a new Apprenticeship
and Graduate Clearing System ensuring those who narrowly miss out on a defence prime
graduate and apprenticeship schemes, which are typically oversubscribed, have the
opportunity to work elsewhere in the defence sector. This will help plug the workforce gaps
highlighted above, particularly for SMEs.
We will also continue to support and promote industry-led skills initiatives, such as
encouraging returners with STEM backgrounds back into the workforce, for instance those
returning from full-time caring responsibilities. As a sector-wide challenge which requires
a sector wide response, we encourage our industry partners to continue to invest in our
young people and their future careers in defence. This will be recognised in our reformed
application of social value.
We have some of the best universities in the world – 17 in the top 100 – and the higher
education sector will play an important role in providing us with the defence sector
workforce of the future.
29 As we outlined in the Modern Industrial Strategy, we plan
to invest in cutting-edge teaching and university facilities to increase places on
defence-related courses, including engineering and computer science. Alongside this,
we will establish a Defence Universities Alliance (DUA) to form a more strategic relationship
between defence and the higher education sector. The DUA will build on existing
connections between the sectors to support careers in the defence sector and encourage
ethical defence and security research. We will work closely with Universities UK and
universities across the UK to establish the DUA, recognising that the relationship between
the sectors is critical in supporting the UK’s national security and economic growth.
29 The UK’s Modern Industrial Strategy
Defence Industrial Strategy: Making Defence an Engine for Growth46

3.2.3.3 I mproved mid-career access to defence jobs. We need to create pathways
and opportunities for those who could make a mid-career transition into the defence
sector, through reskilling and upskilling. Through consultation with industry, employers
have highlighted the benefit of short courses to support ongoing career progression,
for instance through the development of digital skills. Alongside Skills England, we will
continue to engage with businesses and the Department for Education to support the
sector’s requirements.
The competitiveness of our high growth sector rests on the ability to access skills and
talent. For both employer and employee, we need to better navigate the sector’s skills
system to create opportunities and build economic resilience. Working with industry,
we will scope the development of a Defence Skills Framework. Building on the Ministry
of Defence’s industry benchmarked Pan-Defence Skills Passport, and Zig-Zag Careers,
the digital record of an individual’s skills would enable smoother identification and transfer
between the Armed Forces, defence industry and those looking to enter from neighbouring
industries. It will provide critical industry insights, enhance visibility into workforce skills,
identify skill gaps, and support recruitment streamlining and career pathways; enhancing
collaboration with industry partners for more efficient and resilient defence operations.
An initial framework, operating concept and pilot opportunities will be scoped thorough
sector-wide consultation in 2025, supported by industry-early adopters.
We will continue to strengthen our support offer to veterans and their family members,
supporting their recruitment, retention and progression throughout their civilian careers.
Building on the excellent work of the Career Transition Partnership, supporting service
leavers into employment, we announced the expansion of support provided under
Op ASCEND
30 in February 2025, which has already equipped over 3,000 veterans and
family members with the tools needed to make their next career move over the last
12 months. We are also working across Government and industry to enhance the support
available to veterans with enterprise and entrepreneurial ambitions, helping them launch
and grow their own businesses. These enhancements will be underpinned by our continued
partnership with business and trade bodies through the Veteran Industry Engagement
Programme, funded by the UK Government and delivered by Mission Community.
Alongside the Defence’s Employer Recognition Scheme, we’re ensuring UK business fully
harnesses the unique skills and value veterans bring.
30 Latest OP ASCEND figures reported by Forces Employment Charity
47Making Defence an Engine for Growth

The Department for Work and Pensions (DWP) will help defence recruit the workers they
need in the locations they need them. Through over 600 Jobcentres and a high street
presence that is unique among HMG departments, DWP provides employment support to
millions of people across the UK, many of whom hold degree level qualifications.
31 DWP will
support some of its customers directly into high-skilled Industrial Strategy-sector jobs and
others into those more junior roles that are both a vital section of the workforce pipeline
and a vital rung on an individual’s career ladder. To support defence, as well as the wider
economy, DWP will broaden the range of employers it supports through the new Jobs and
Careers Service, including employers requiring specialist skills and talent. DWP have also
launched Inactivity and Youth Trailblazers to help the economically inactive and young
people into work or training. They will help achieve the inclusive growth we all want to see
spread across the UK.
3.2.3.4 F lexible and relevant defence skills offer. We will raise awareness of high-quality,
well-paid jobs in defence and ensure defence careers are seen as attractive, rewarding
and at the forefront of technological innovation. Negative perceptions of the defence
sector are impacting the take up of rewarding, highly skilled and well-paid jobs.
Following the successful ‘Destination Nuclear’ campaign, the Government is supporting
a new “Destination Defence” campaign, working collaboratively with ADS and the
defence sector to promote the breadth of exciting roles available across the sector and
promote opportunities for people across the country to take a leading role in keeping
our nation safe. We will work with the Department for Education to build upon existing
careers education, information, advice and guidance infrastructure for disseminating
key messages and updates. This will increase defence careers information available
to new learners.
3.2.3.5 S upporting a national conversation on defence and security. As set out in the
Strategic Defence Review, the Ministry of Defence will play its part in the Prime Minister’s
launch of a national conversation on defence and security. This includes working with the
Department for Education to promote understanding of the Armed Forces among young
people in schools and expanding in-school and community-based cadet forces across
the country by 30% by 2030, alongside a greater focus within the cadets on developing
STEM skills and exploring modern technology. We will also give the Defence Academy and
other defence training centres greater commercial freedoms to operate and, by 2026,
the Defence Academy should establish a plan for inviting company leaders, from FTSE 100
companies and wider, onto defence courses as appropriate.
31 Jobcentres - Committees - UK Parliament
Defence Industrial Strategy: Making Defence an Engine for Growth48

Backing UK Based
Businesses
4.1 Summary
Mission: Increased procurement spending is directed towards UK-based suppliers
and within priority defence sub-sectors. Strategic export benefit and revenue is
increased. A dynamic and competitive marketplace at home drives the UK back to
being Europe’s leading defence exporter.
Our world class defence industry is a key strategic resource for the UK, and we should
be immensely proud of the role it plays in ensuring our national security and that of our
allies and partners, through the provision of battle-winning equipment. As we know,
national security is a pre-condition for economic security, investor confidence and social
stability. It is also true that our Armed Forces are only as strong as the defence industry
that stands behind them. Our defence industry is therefore the bedrock on which the
sovereign capabilities and operational independence of our Armed Forces rests. That in
turn underpins our national security and our ability to deter our adversaries, including by
contributing to shared deterrence by arming nations who share our values. We must place
championing, nurturing and sustaining our defence industry at the heart of everything
we do within the Ministry of Defence and Government more widely; and we must drive
the UK back to being Europe’s leading defence exporter by fundamentally reforming our
approach through a new Office of Defence Exports.
49Backing UK Based Businesses

To become a defence industrial leader by 2035, we must invest in our UK defence industry,
as recommended in the SDR, without losing the benefits of competitive procurement.
Closing the sector from the benefits of competition and innovation would hinder the
UK’s defence and fail to achieve the potential in the sector. The best way to incentivise
companies to be UK-based is to create a dynamic and meritocratic defence market
that rewards winners, crowds in private investment, and makes us competitive on the
global stage. A thriving and resilient UK defence industrial base, producing world leading
capability, not only guarantees our own security and prosperity, it will make us an even
better partner and ally abroad. Investing in the UK’s national arsenal is investing in NATO’s
collective warfighting capabilities.
4.2 Actions
4.2.1 Out come: Robust Offset Policy in place, subject to
public consultation
Offsets are a mechanism for securing secondary benefits when undertaking defence
capability imports from overseas suppliers. Offset policies can be an effective way to
create opportunities for firms to enter global supply chains, boosting the domestic
industrial base, creating jobs and supporting economic growth. Exploring options for
a new offset policy was strongly supported by our industry consultation. We have seen
offsets work effectively to boost the economic benefit from procurement spend in other
countries, for example Australia, Norway and the Republic of Korea.
32 Learning from their
success, we will build a model to attract inward investment that works for the UK.
Learning from Australia – balancing sovereign
Development and Building strategic partnerships
Australia’s approach to offset has been evolving since it was established in the
1970s, from an early voluntary scheme to a formalised offset approach to the flexible,
lightly regulated policy we see today. Australia has successfully prioritised balancing the
desire to generate domestic supply chain and economic benefit with the safeguarding
of key strategic relationship. Their approach to offsets sits alongside a wider raft of
policies to support and promote the benefits of working with Australian suppliers for
major overseas procurements. Striking a balance between sovereign development and
building strategic partnerships, Australia’s policy, alongside other measures, acts as a
strategic enabler for partnerships with key allies in defence. The resultant approach has
been credited with driving the development of a niche defence aerospace segment
within which overseas Original Equipment Manufacturers undertake development
work in-country; a prominent example being Boeing Australia’s development of the
Defence Industrial Strategy: Making Defence an Engine for Growth50
32 Consult ation with RAND Europe subject matter experts

MQ-28 Ghost Bat, Australia’s first ‘sovereign’ UAS and marking the country’s return
to combat air production after a long hiatus. Australia’s involvement in AUKUS
further augments the strategic benefit of the flexible approach.
4.2.1.1 UK offset regime launched, subject to full consultation, in the first half of 2026 to
boost UK investment, growth and employment. The aim of a UK offset would be to ensure
secondary benefits are achieved from MOD’s procurement spend, including development
of industrial capacity, domestic competition and economic growth. Key components of a
successful regime include: clear outcomes (aligned to our priority sub-sectors); flexibility in
application to decide which procurements fall within scope; multipliers to drive investment
to priority areas and sub-sectors; the nature and level of obligation (direct or indirect;
job opportunities; workshare or content; tech transfer); and a robust implementation
regime, including penalties for underperformance. We recognise there are both benefits
and risks of an offsets regime and that this policy must be explored and developed in
partnership with the defence sector, therefore we are launching an extensive consultation
with experts to review and test options for a new offsets regime.
4.2.2 Out come: Improved procurement framework focused
on jobs and skills; technology and innovation; export
potential; and UK supply chain development
4.2.2.1 A social value model that works for defence: any new offset policy must sit
alongside reformed application of the social value model. The current application
isn’t optimised to our purposes, it drives behaviours designed to meet contracting
requirements, rather than those designed to drive growth and prosperity, disincentivises
long-term partnerships, and injects uncertainty and instability into the procurement
processes. Consultation responses were clear that the principles of social value are sound,
and it is an important vehicle for delivering increased growth and a better defence sector,
but its implementation and application is characterised by imprecision, inconsistency,
and limited industry engagement on the criteria. We know change is needed to support
our SMEs and UK industry, and we know our companies have the tools and the ambition
to support us on our growth mission. We must ensure the right tools and mechanisms are
in place to both incentivise and support our businesses. We will adopt a new approach
to applying social value to incentivise industry to support DIS objectives with delivery
of social value occurring in the UK to the greatest extent possible. This work will be
complete by the end of 2025 so that changes can be enacted for the start of the 2026-27
financial year.
4.2.2.2
Improve monitoring of defence sector competition and supply chain structures.
We will commission the Competition and Markets Authority to support us in monitoring
competition and supply chain structures in the defence industrial base. This will enable
HMG to track the state of competition in the defence sector and the impact of policies,
including those to increase participation from SMEs and non-traditional suppliers.
The Ministry of Defence will share regular data, including on procurement and acquisition,
with the Competition and Markets Authority to facilitate this, and the Competition and
51Backing UK Based Businesses

Markets Authority will work with the Ministry of Defence to identify where data could be
improved to support better monitoring in the future.
4.2.3 Outcome: Improved SME offer increases entry
and access to investment
Small and Medium-Sized Enterprises (SMEs) are at the heart of our vibrant and flexible
defence industry and are key to our ambitions. They form a vital element of the UK
defence supply base, providing innovation and agile solutions to defence requirements,
and contributing significantly to our national prosperity through high-skilled and highly
paid jobs, R&D, dual-use technology whilst contributing to the economic prosperity of
all four nations of the UK. But consultation responses were clear – SMEs still face too
many barriers preventing them from participating fully in the defence sector. As defence
spending rises in the UK and globally, we will significantly increase our support to SMEs,
helping small businesses and start-ups with big ideas to grow into national powerhouses
then global leaders.
4.2.3.1
Defence Office for Small Business Growth. As part of our reforms to the Ministry
of Defence, a new office will be established by late January 2026 to help SMEs and start-
ups to access the defence supply chain and scale up to meet defence challenges and
maximise growth. The Office will help the Ministry of Defence implement procurement
strategies that provide opportunity for SMEs to win work within the supply chain;
help prime suppliers provide a more consistent and supportive experience for SMEs within
their supply chains; provide better access to opportunities through equality of information
and market engagement (a delivery route for industry’s request for a stronger demand
signal); improve advice and support to SMEs on export matters; better cohere UK Defence
Sector Supplier Development and scale up support across Government, trade associations
and prime suppliers; and support SMEs to gain access to financial and growth capital.
All of this will streamline and cohere SME support into a single place, making access easier
and simpler, and increasing the opportunities for SME participation. The Office, combined
with SME representation on the Defence Industrial Joint Council (DIJC), will work to ensure
the SME voice is present in the implementation of this Strategy.
4.2.3.2
A bold SME Action Plan and new Commercial Pathway. We will publish a new
SME Action Plan in autumn 2025, detailing how we will deliver improved engagement
with SMEs. It will be developed in close consultation with industry, and we will harness
insights from across the Ministry of Defence and wider Government. A bespoke
commercial pathway will also be established for SMEs as part of our broader acquisition
transformation, including harnessing opportunities presented by the Procurement Act.
Through this pathway, Defence will increase the number of opportunities for SMEs, and
make our contracting processes simpler, less onerous and faster. It will consider specifically
how to support SMEs operating in dual-use subsectors covered in this strategy and the
other Industrial Strategy sector plans, to maximise growth spillovers across the economy.
This new package of dedicated support for SMEs will help stimulate the right market
conditions for SMEs and start-ups to win contracts and become more competitive.
Defence Industrial Strategy: Making Defence an Engine for Growth52

4.2.3.3 SME spend targets set. As the defence market grows in the UK and across
NATO allies, this brings opportunities for SME growth, through greater dynamism and
competitiveness domestically and in the export market. To support this, the Ministry
of Defence will increase spending with SMEs by £2.5 billion by May 2028. This increase
would equate to a 50% increase in the value of work delivered by SMEs compared to
FY 23/24.
33 As the Ministry of Defence seeks to increase spending with SMEs, we will do so
in a way that supports companies to grow and scale up. We will help incentivise growth
and recognise high-potential suppliers by extending the definition of SMEs that we use to
measure SME spend in defence. Where suppliers outgrow the Procurement Act definition
of an SME, we will continue to count spend with them for a period of three years, allowing
us to recognise the value of successful suppliers, their contribution to UK defence and put
their growth on a firm footing. In addition to measuring MOD SME spend, we will also start
to measure SME growth at a market and company level to capture export successes and
companies successfully outgrowing their SME status.
4.2.4 Out come: Easier for UK-based firms to do business
with MOD
4.2.4.1 Reducing electricity costs. From 2027, a new British Industrial Competitiveness
Scheme will reduce electricity costs by around £35-40/MWh up to 2030 and support
thousands of businesses. The scheme will benefit manufacturing electricity-intensive
frontier industries in the Industrial Strategy, and foundational manufacturing industries in
their supply chains, such as chemicals. Eligible businesses will be exempt from paying the
costs of the Renewables Obligation, Feed-in Tariffs and the Capacity Market. The scheme
will bring GB electricity costs more in line with other major economies in Europe, and level
the playing field for British businesses. Eligibility will be determined following consultation,
which will open shortly, with a review point in 2030.
4.2.4.2
Improved support to UK-based businesses drives better and more cost-effective
results. By April 2026, the Ministry of Defence will have developed a package of measures
designed to support our industrial partners to supply and collaborate with the Ministry
of Defence, driving better and more cost-effective results. We will work with stakeholders
in the sector to develop this package and explore how regulation can be improved and
streamlined to help build and develop UK comparative advantage in the key sectors
of the future. The Defence Safety Authority will also work even more closely with the
Regulated Community to reduce uncertainty across the defence regulatory system,
improving transparency and performance and providing guidance to safety risk owners.
As technology rapidly evolves the Defence Safety Authority will identify appropriate
opportunities to exploit its existing freedoms, whilst maintaining a close eye on future
capabilities and adapting accordingly.
33 This c overs MOD’s direct and indirect contracting with SMEs
53Backing UK Based Businesses

4.2.4.3 Expedited Planning Permission. The Government’s new and updated routes
for securing planning permission introduced into the Town and Country Planning Act
1990 by the Levelling-up and Regeneration Act 2023 (LURA 2023) came into force on
1 May 2025. This updates and sets out the Crown Development route and Urgent Crown
Development route. Appropriate authorities can use these, by or on behalf of the Crown,
to request and justify, on a case-by-case basis, that planning permission for nationally
important infrastructure projects can be expedited via the Crown Development or Urgent
Crown Development route. These will speed up delivery of eligible defence development
including industry, whilst meeting the criteria set out in the accompanying written
ministerial statement and procedural guidance. The Ministry of Defence and Ministry for
Housing, Communities and Local Government will issue updated procedures to enable
the use of the routes and will identify a pipeline of projects over the next 5-10 years which
may be eligible.
4.2.5 Out come: Improved Export Offer boosts growth and
strategic benefit to the UK
The UK has world leading armed forces and a world leading defence industry, but
domestic procurement alone will not sustain the defence capabilities needed to secure
the UK. Exports and capability partnerships strengthen our international relationships,
promote interoperability, enable the defence sector to grow and operate at scale and
support high quality jobs across the UK, and are a valuable tool in degrading the influence
of hostile states. Nothing shows this Government’s commitment to this mission more than
the new £10 billion deal to supply Norway with warships, which will support 4,000 UK jobs,
including more than 2,000 in Glasgow.
34
We have also seen real success in exporting to Ukraine, when the whole of Government
and industry gets behind a single vision. But we are facing increased global competition
from existing and new companies, strongly supported by their respective governments.
The UK’s lack of a coherent and coordinated offer in support of its own industry hampers
our ability to realise the full potential of the global market. At a time when NATO nations
and the EU are boosting defence spending, it is crucial for UK-based defence companies
to remain competitive. We must not lose the economic benefits that can be gained from
exporting world-leading UK capability to allies across the world. This Strategy will ensure
UK-based defence companies are able to benefit from the growing European defence
market. We will deliver the transformation needed to drive British defence exports and
supporting the Government’s ambition to ensure the UK again becomes Europe’s leading
defence exporter.
34 https:/ /www.gov.uk/government/news/boost-for-uk-growth-and-security-as-norway-selects-uk-warships-
in-10-billion-partnership
Defence Industrial Strategy: Making Defence an Engine for Growth54

Case studyLightweight-Multirole Missiles – Supporting
Ukraine and boosting the Northern Ireland economy
In March 2025, the Prime Minister announced a £1.6 billion deal to supply
thousands of advanced air defence missiles to Ukraine. These lightweight-multirole
missiles (LMM) will be manufactured by Thales in Belfast, and the agreement
builds on a previous contract in support of Ukraine signed the previous year.
Through this export, we have enhanced the capability of Ukraine to defend
itself, with the missile deployed as part of its air defences and proven to be
incredibly effective in protecting civilians and critical infrastructure from Russia’s
aggression. Simultaneously, this export has provided a major boost to the UK
economy, supporting hundreds of existing jobs and tripling Thales’s production
capacity, benefiting companies in their supply chain across the UK. This increased
domestic capacity will benefit Ukraine, the UK and other key partners and allies and
their requirements for a world class air defence system.
4.2.5.1
Transformational new Office of Defence Exports supported by, for the first time,
a bespoke Government-to-Government export offer. UK requirements alone will not
sustain the resilient defence industry we need, so we need a new approach. The Government
has already taken radical steps to address this establishing a new National Armaments
Director who is – for the first time – responsible for leading export campaigns on behalf of
the Defence Secretary. Under this leadership, we are bringing together responsibility for
and delivery of defence exports under a single ministerial accountability, by integrating
the relevant parts of UK Defence and Security Exports (UKDSE) into the Ministry of Defence
from the Department for Business and Trade. We will provide world-beating service to
industry and customers through our new Office of Defence Exports, which will be properly
resourced with commercial, legal and project management professionals. Centralising all
export-related activity under the National Armaments Director will enable the pursuit and
delivery of exports and collaboration and allow proactive pursuit of export and capability
collaboration opportunities that best retain the key strategic capabilities we need in the UK.
The Office of Defence Exports will provide a bespoke Government-to-Government export
offer and improve support to campaigning by bringing together existing expertise and
recognised processes with industry with a new cadre of specialist support and creative
approaches to broadening the existing offer. It will be a whole-of-Government effort,
bringing all levers of Government to support the success of UK export campaigns.
This strengthened offer will clearly articulate the styles of export and support that industry
and partner nations will receive by procuring in the UK to industry and partner nations;
and improved coordination will enable more innovative approaches to financing, ensuring
a competitive footing within the market backed by in-house thinking. To match existing
practices from international partners, the UK will also charge a management fee to ensure
the expertise required to deliver exports at pace is secured early on to enable a proactive
and competitive approach to any opportunity.
55Backing UK Based Businesses

As part of uplifting and transforming our support to defence companies to help seize the
growing exports opportunities, the Office of Defence Exports will support UK suppliers to
better showcase their products and will revitalise the UK approach to international exports
exhibitions by becoming part of the Government’s GREAT campaign. We will also review
our overseas footprint to ensure the right expertise is in the right places to champion our
defence companies.
4.2.5.2
Procure to export. As part of our new approach to defence exports, from now on,
the Ministry of Defence will place international collaboration and export considerations at
the start, and heart, of defence procurement. When the Ministry of Defence commissions
any new capability, a key strategic factor in its decision-making will be its responsibility to
nurture and grow the UK’s defence industrial base and support that through exports. At the
start of the procurement process, the Ministry of Defence will seek to identify partners to
collaborate with, or export to, driving down development costs and increasing industrial
certainty and stability of export orders. Equipment should be designed with the export
market in mind (e.g. to NATO standards) whilst protecting any UK capability advantage
(e.g. sensors, defensive aid suites). Our segmented approach to procurement for major
platforms will minimise bespoke capabilities and develop long-term relationships that will
incentivise exportability.
We will create the incentives needed to embed exportability in the Ministry of Defence’s
culture. Greater weight will be placed on exportability and other growth considerations
throughout the procurement process: from developing options with industry, to setting the
requirements going out to tender, to requiring at a minimum that all major procurements
35
contain an assessment of export potential, alongside other criteria in the final decision.
We will work with industry to develop these options and specifically with the Defence
Industrial Joint Council to identify other ways to improve defence export performance.
The National Armaments Director will hold Portfolio Directors to account for the
contribution of portfolios to growth metrics and will report on overall defence procurement
contribution to growth metrics, including for export performance.
4.2.5.3
Adapted export licensing and strengthened enablers. It is essential that
our export controls keep pace with the changing technological context and threat
picture, so that they support the UK’s defence and security industry while upholding
our international non-proliferation and other international legal obligations. We are
working to improve the performance and efficiency of the export licensing system as
a service to business that enables responsible exports to support UK growth. Our aim
is to create a modern, responsive, transparent and predictable service that is easy to
navigate for exporters. We are refining processes, upskilling staff and improving the
customer experience, including by introducing a new process to enable exporters to
apply for licences during the bidding process and before a signed end-user undertaking
is completed. This is designed to give greater predictability to exporters and overseas
customers. We will continue to develop our new digital licensing platform, LITE, with further
licence types and additional functionality being introduced. We will also commit to
35 M ajor procurement is defined as Category A programmes, currently defined at the threshold of £400m
for equipment capability programmes. Export potential assessment will also be considered across all
procurement decisions below £400m where appropriate.
Defence Industrial Strategy: Making Defence an Engine for Growth56

increased engagement with exporters about licensing requirements earlier to support their
understanding of the process.
Our export controls give effect to a range of international obligations and commitments
that endeavour to prevent the proliferation of weapons of mass destruction and
conventional arms. The international architecture is however struggling to keep pace with
the changing world order as well as with the rapid pace of technological change globally.
Many of the international export control regimes, including the Missile Technology Control
Regime (MTCR) and Wassenaar Arrangement, are struggling to adapt owing to continued
Russian obstruction and their effectiveness has reduced as they are no longer able to
achieve consensus. We will work with our allies and partners to ensure that the multilateral
export control regimes remain fit for purpose. Where necessary we will identify and
promote new approaches to protect our shared interests and obligations.
Case Study: NAREW – Poland-UK collaboration
delivering world-leading capability
The “Narew” deal with Poland is a landmark programme and huge step forward
in the UK-Poland defence relationship. This £4 billion+ deal is being delivered
by MBDA and PGZ, directly supporting hundreds of jobs across the UK and
Poland, the expansion of key MBDA sites such as Stevenage and Bolton, and the
industrial growth of PGZ. It is providing Poland’s armed forces with a world-leading
ground based air defence system of over 1,000 Common Anti-Air Modular Missiles
– Extended Range (CAMM-ER) and over 100 iLaunchers. Narew not only bolsters
the defence of NATO’s eastern flank, but also brings significant economic benefit
to both defence industries through an unprecedented “transfer of technology
and knowledge” agreement, which proved decisive in Poland’s choice to partner
with the UK. The Narew deal can be attributed by a close alignment of strategic
objectives between industry and governments, and close relationships from the
ministerial level through to established working-level dialogues that enabled trust
and transparency. It is a testament to what can be achieved by an example of an
effective government-to-government approach to defence exports, looking beyond
transactional exports to building a long-term partnership on industrial cooperation
and military capability development built around air defence.
57Backing UK Based Businesses

4.2.5.4 UK Export Finance bolsters the defence sector. In April 2025, UK Export Finance
(UKEF) announced a £20 billion uplift in its overall finance capacity to £80 billion allowing
it to provide more support to UK exporters (including those affected by trade tariffs).36
UKEF’s financing o
ffer supports the UK’s defence sector, building our international
footprint and diversifying our defence industry’s role in supporting key allies. In addition,
facilitating the supply of UK defence equipment overseas is beneficial for the UK’s allies,
enabling them to build their capability and expertise to defend themselves from military
threats. UKEF can also provide vital support for the working capital requirements of
both large and small UK-based defence companies, which are scaling up their capital
expenditure, for example building new manufacturing facilities, to meet the ongoing
demand. Support is also available to overseas defence companies looking to set up
operations in the UK (to benefit from UK R&D and sector expertise) and become an
exporter. Finally, UKEF offers Export Insurance to facilitate trade in higher-risk jurisdictions,
which is heavily utilised by big defence companies. UKEF is increasingly being asked to
finance very large, strategically important defence transactions.
Case Study: Nottinghamshire Aerial Data Capture Firm
Takes Flight with UKEF Backing
Based in Nottinghamshire, DEA Aviation has secured two rounds of financing backed
by UKEF to expand its intelligence, surveillance, and reconnaissance (ISR) and export
operations. DEA conducts ISR and search and rescue missions around the clock for
international government and agency customers, providing real-time intelligence
that aids in events related to border and illegal activity protection. Since the initial
investment, the workforce at DEA has increased by 10%, now employing over 220
people worldwide, primarily consisting of highly skilled engineers, pilots, sensor
operators, systems architects, and software developers located in Nottinghamshire.
Defence Industrial Strategy: Making Defence an Engine for Growth58
36 https:/ /www.gov.uk/government/news/new-trade-strategy-to-protect-and-boost-british-business

At the Leading
Edge of Defence
Innovation
5.1 Summary
Vision: Increased pace and scale of innovation, barriers to innovation reduced,
and investment in innovation is increased and targeted towards priority
sub-sectors.
The nature of warfighting is changing, and we must maintain an advantage over our
adversaries. Embracing innovation within the defence sector is not only a choice, but
a strategic imperative needed to maintain competitive advantage, enhance national
security and drive economic growth. Innovation is at the heart of the Strategic Defence
Review, as part of the vision it sets out that we must be able to deliver constant innovation
at wartime pace. Defence must recognise innovation is a capability in its own right and
develop a thriving, resilient defence innovation and industrial base which is able to adapt
and surge to meet emerging priorities and demands.
59At the Leading Edge of Defence Innovation

We will leverage both the security and economic benefits of dual-use technologies37,
to share the benefits beyond just the defence sector and into the economy as a whole;
stimulate industrial development and investment into research and novel technologies;
create high quality jobs and regional prosperity; identify opportunities for novel business
sectors to engage with defence; boost export opportunities; and contribute to the
Government’s clean energy mission.
Across the world, defence innovation is taking place with unprecedented pace. In Ukraine,
innovation is now measured in days and weeks rather than months and years. We risk falling
behind an ever-accelerating technological frontier if we do not revolutionise our approach.
Our support to Ukraine has involved many examples of speed and agility, such as the
development and delivery of British-made StormShroud drones. We must set ourselves up
to draw lessons and inspiration from Ukraine as we overhaul our processes, our technologies
and our talent. This Strategy sets out how we will bring down the barriers to growth, embed
innovation into the defence enterprise, leverage our powerful international partnerships and
alliances, and foster our diverse UK defence sector to capitalise on the ingenuity and world
leading capabilities we know are out there, in places like Farnborough and Swindon to put
the UK at the leading edge of defence innovation.
Case Study: British-made Stormshroud, factory to
frontline at unprecedented pace
In May 2025, the Prime Minister announced the British-made ‘StormShroud’ drone
had gone into operation, putting into practice a number of lessons learned from
innovation in Ukraine. This groundbreaking, first-of-its-kind drone will make the
RAF’s world-class combat aircraft more survivable and more lethal. It is a step
change in technology development, revolutionary in its tactics, and represents
unprecedented pace in delivery from factory to frontline. Delivered in 12 months,
StormShroud capitalised on research and development by the RAF’s Rapid
Capability Office, bringing together expertise from the RAF, Defence Science and
Technology Laboratory (Dstl) and industry. Enabled by Defence Safety Authority
regulation, they collaboratively developed, tested and integrated defence prime
Leonardo UK’s experimental payload with an operationally proven uncrewed
aircraft made by Tekever in West Wales, exploiting a growing manufacturing
footprint in the UK. To meet the operationally demanding timelines associated
with a UCR, and the fact small UAS are developing at an unprecedented pace,
it was necessary to take lessons from both Ukraine and the Middle East and do
things faster. Both defence and industry had to change their approach to risk,
often challenging each other to deliver in a way that maintained a searing focus
on time. The success of StormShroud has proven when the Ministry of Defence and
industry truly partner together, we are able to overmatch adversary development
life cycles and rapidly deliver battle-winning capability to the warfighter.
Defence Industrial Strategy: Making Defence an Engine for Growth60
37 Dual use technologies refers to goods, software, or technology that can be used for both civilian and
military purposes and are an area of significant growth opportunity for the UK.

Case StudyFuture Combat Air System unlocking the full
potential of the defence sector– A System of Systems
Against a backdrop of geopolitical uncertainty and a rapidly evolving national
security environment, the pace of change of the physical threat, electronic and
cyber warfare, and digital technology means that we need solutions that are highly
integrated with existing and future systems across all domains. The UK’s Future
Combat Air System (FCAS), with the Global Combat Air Programme (GCAP) at its
core, is accelerating the development of novel technologies and techniques to
outmatch our adversaries for decades to come. A system-of-systems, FCAS will
combine crewed and uncrewed platforms with cutting-edge effectors and a secure,
seamless network across air, sea, land, and space. Digital first and data-driven,
FCAS is a catalyst for digital transformation in defence, stimulating investment in
model-based systems engineering, artificial intelligence, machine learning, and
digital engineering technologies and skills with spillover benefits for the entire
economy. Collaborations between Government, industry and our internationally
recognised research universities are already creating new, game-changing
technology. From advanced manufacturing capabilities, including augmented
reality, additive manufacturing, and collaborative robots, that are revolutionising
how we will build aircraft of the future, to the development of world-leading
electrical generation technology with the ability to improve energy security and
climate resilience, FCAS is unlocking the full potential of the defence sector as an
engine for growth and strengthening our national security.
5.2 Actions
5.2.1 Outcome: Ministry of Defence adopts a bold
new approach to science, innovation and technology,
and embeds these at the heart of defence
For too long innovative companies and start-ups have struggled to engage with, and
see a pathway to scale, through a slow and confusing Ministry of Defence innovation
and commercial landscape. This has limited the growth of the UK’s defence technology
sector and constrained the wider economic and national security benefits that
innovation, particularly dual-use capability, can deliver. Our consultation highlighted
persistent fragmentation across the defence commercial and innovation landscape,
disconnected funding streams, slow procurement cycles, and a lack of consistent demand
signal. Fixing this and delivering a more ambitious approach to innovation requires
organisational change. The extant and future Defence Innovation Enterprise will continue
to partner with Dstl’s expert technical workforce in their exploitation of the Ministry of
Defence’s science and technology investment and in the pursuit of innovative solutions.
61At the Leading Edge of Defence Innovation

5.2.1.1 New UK Defence Innovation (UKDI) transforms defence’s innovation ecosystem.
This organisation, formally launched on 1 July 2025, has been set up with a clear vision to
accelerate the delivery of cutting-edge innovative capabilities so the UK is both secure
at home and strong abroad. Economic and industrial objectives will shape UKDI’s mission,
and key priorities include solving critical capability gaps, fostering collaboration with SMEs
and non-traditional defence suppliers to promote civilian-military technology spillovers,
and applying the lessons learned from recent operational experiences, such as Ukraine,
to increase pace and efficiency.
Deliver Innovative Capability at Pace. Rapidly exploit internal and
commercially available technology to enhance military capability and deliver
battle-winning operational advantage.
Drive Economic Growth. Increase Defence spending's impact in the UK
technology sector to drive economic growth through increased production,
export opportunity and job creation.
Grow the UK Technology Sector. Provide the confidence for SMEs,
start-ups, academia, non-traditional defence suppliers and VCs to invest
in technology development for the benefit of Defence.
International Influence. Enhance the UK’s global influence and strategic
partnerships, with a particular emphasis on NATO and AUKUS.
To contribute to deterrence by demonstrating the UK’s ability to credibly
deliver capability at pace.
UKDI’s Strategic Objectives:
Crucial to UKDI delivering its mission are its clear mandate, accountability, and ruthless
focus on prioritising pace and dual-use technology, all developed in close collaboration
with the Department for Business and Trade (DBT), Department for Science, Innovation
and Technology (DSIT), and the wider innovation ecosystem.
For the first time ever, UKDI will bring together all innovation efforts in the Ministry of
Defence under a single organisation. It will be a single point of coherence for industry
to engage with the Ministry of Defence on innovation challenges and opportunities,
with a streamlined operating model and consolidating existing structures into a single
coherent system that can identify and manage end-to-end pathways to successful
delivery. This includes strengthening and embedding coordination between the Ministry
of Defence, DBT, DSIT, UK Research and Innovation (UKRI), UKIC and others, to reduce
duplication, align investment and support a whole of government approach to innovation.
It is at the heart of the new Ministry of Defence operating model being established
through Defence Reform with independence from defence procurement bureaucracy and
increased procurement freedoms to bring innovative ideas and solutions quickly from
factory to the frontline.
Defence Industrial Strategy: Making Defence an Engine for Growth62

UKDI will be led by an empowered CEO, reporting into and a standing member of the
Defence Growth Board. The role holder will be responsible for delivering the objectives of
faster pull-through and a growing technology sector, working across Defence and wider
government and ensuring UKDI aligns with industry and international partnerships such as
NATO, AUKUS and GCAP . They will be a key voice in the wider options and commissioning
process, to spread the modern culture of UKDI to wider defence decision-making.
We will recruit the best candidate, with first-hand experience of technology, innovation,
commercialisation and industry. They will be held accountable for embedding economic
growth as a guiding principle and key objective within UK innovation, directing and
encouraging investment against our highest priority national security and growth driving
sectors. We will bring industry expertise into the organisation to delivering this new
approach, including through external recruitment, and by drawing on expert advice from
a Defence Innovation Advisory Panel and key industry leaders.
UKDI will have radical freedoms and independence to deliver. This includes independence
from standard MOD procurement rules. It will:
• Exercise new authorities and freedoms to operate differently. UKDI will be empowered
to fail fast, recognising the value in learning from experience, with the authority to
stop or change UKDI funded projects or programmes across the organisation and
reallocate funding and resources to ensure an efficient focus on priorities and value
for money. UKDI will invest in structures to support business growth and to increase
investment into SMEs, start-ups, and non-traditional defence suppliers to support a
diverse and agile supply chain and ensure delivery of pioneering capability to national
security and defence, whilst supporting the UKDI strategic objectives on the technology
sector and economic growth. UKDI is empowered to take greater commercial and
capability risks than traditional programmes to ensure delivery at pace and to deliver
UKDI strategic objectives.
• Have the financial power to drive meaningful change. We are backing up the
establishment of UKDI and our commitment to innovation with an ambitious ringfenced
budget of £400 million, which will increase over future years. We are increasing the
proportion of the Ministry of Defence’s equipment procurement spend spent on novel
technologies, such as quantum technologies, uncrewed and autonomous systems and
AI, and especially where investment is likely to help us meet our objectives of better
capability and increased growth. The Ministry of Defence is committed to spending at
least 10% of its equipment procurement budget on these sorts of novel technologies
from 2026. Through our investment in UKDI, we will back high-growth, high-tech UK
defence firms to create high skilled jobs and deliver cutting-edge military technology
at a quicker pace to our Armed Forces.
63At the Leading Edge of Defence Innovation

This approach is designed to deliver both military and economic value and foster
cutting-edge solutions that benefit the UK’s defence and security, while driving innovation
and growth in other sectors critical to the Modern Industrial Strategy. We will aim, through
our investment and clear prioritisation of defence’s most pressing capability problems,
to give academia, industry and the venture capital and private finance community the
confidence to invest in relevant areas to leverage both public and private investment to
make sure our collective effort is having the most impact possible. UKDI will work closely
with science and technology experts across the Ministry of Defence and wider Government
to ensure a coherent approach. This will include, but not be limited to, DSIT, UKRI, DBT,
HMT and national security-focused Government departments.
5.2.2 Outcome: Increased UK technological advantage
and ‘pull-through’ of technology into commercial viability
(including clean technology and dual-use technology)
At the heart of our drive for innovation is the requirement to promote and invest in
dual-use technology. One of the greatest strengths of the defence sector is often the
instruments we have designed to provide an advantage on the battlefield (radar, sonar,
the satellite, jet engines, GPS and drones) to become the foundation for progress in wider
society. This is also true of wartime research and skills, developed within the defence
sector, offering significant contribution to civilian life. Building skills within civil industries
and academic research is a core part of defence resilience, while defence expertise and
focused, long-term investments drive progress within industry and academia – benefitting
the whole of the UK.
We must accelerate, wherever possible, development and adoption of dual-use
technology to drive economic growth and exports, regional prosperity and contribute to
the government’s clean energy mission. This requires a clearer demand signal from UKDI,
improved access for businesses to innovation funding and advice, and a more deliberate
approach to investment and prioritisation of high-growth, high-tech dual use capabilities.
This will be done in concert with wider technology initiatives, for example, combining with
the National Quantum Technologies Programme to develop and pull through quantum
technologies in areas like position, navigation and timing.
5.2.2.1 UKDI will establish and maintain a defence innovation portfolio informed by
clear prioritisation of effort. This will be informed by military capability requirements
and growth opportunities and regularly communicated across Government and industry
to unlock private investment in support of these priorities and promote coherent shared
approaches to tackling priority defence and security problems. Greater transparency
throughout this approach is essential to grow a world-beating defence technology
ecosystem. We will develop this prioritisation jointly with DBT and DSIT, with input from the
intelligence community and industry.
Defence Industrial Strategy: Making Defence an Engine for Growth64

5.2.2.2 UKDI will drive pace and agility of defence innovation. The UKDI Rapid
Innovation Unit (UKDI RIU) will enable defence to innovate at ‘wartime pace’ by
leveraging commercially available dual-use technology to address the MOD’s most urgent
capability requirements. Under direct control of UKDI, the RIU will have the autonomy
to respond rapidly to emerging opportunities and threats, enabled by greater financial,
commercial, and procurement freedoms. This would be achieved through the governed
application of supporting innovation models, pre-tender frameworks, first customer
funding, below market rate loans, equity investments, seed grants, and direct business
mentoring. Aligned with the US Defence Innovation Unit (DIU) and working with NATO
and other international partners, UKDI RIU will tackle Military Strategic Headquarters
or command-originated problems that demand quick solutions, fostering bilateral and
multilateral innovation through collaboration and resource sharing. It will also engage with
UKDI partners across Government, including academia, to deliver innovative solutions for
defence and security challenges, utilising both proven and direct procurement methods
to integrate technology from traditional and non-traditional suppliers, including SMEs,
into defence solutions.
The RIU is already delivering on its core mission to deliver innovation capability at pace,
including through live innovation challenges where we are inviting the best solutions from
industry, making use of novel technology and AI. To create an open environment to share
our requirements and discover the most innovative solutions, we are working hand-in-hand
with industry. Examples of live challenges are:
1. O ne-way effectors. Enhancing UK and allied capability through a number of new
competitions into the sovereign UK supply chain to create long-range, cheap and
mass-produced One-Way Attack Drones.
2. N ovel Uncrewed Aerial Systems (UAS) including first-person view (FPV) drones and
crewed platform ‘mules’. Supporting both the UK and Allies, we are launching a
number of competitions, including on First-Person View Drones and Small UAS for
mass production and have already instigated a first stage industry collaboration
to shape our understanding of what might be possible to develop large and
long-range drones capable of fast-flight and carrying heavy payloads to support
and bolster our existing fleet of crewed aircraft across Defence.
5.2.2.3 Improved industry access to innovation funding and advice. Access points,
commissioning bodies, and information channels are currently too fragmented, dispersed
and difficult for industry to navigate. We therefore miss opportunities for economic growth,
innovation adoption and supplier engagement, particularly with SMEs and non-traditional
suppliers. Within 12 months, UKDI will review existing digital marketplaces and innovation
collaboration platforms to ensure coherence and a simple, end user-friendly route into the
MOD’s science, technology and innovation system for industry and academia to promote
effective collaboration. If necessary, we will develop a new digital capability to enable rapid,
real-time connections between the Ministry of Defence, key Government departments,
academia, industry and the broader sector to work on shared problems and drive integrated
solutions to the UK’s most pressing defence and security challenges. We will use best practice
from existing systems and work closely with national bodies, such as UKRI, to support cross-
65At the Leading Edge of Defence Innovation

pollination and benefit from the cutting-edge technologies delivered by the defence sector,
associated academic fields and wider government.
In addition to improved access, we must also enhance strategic partnerships to accelerate
the pace of innovation. We know improved, intelligent partnerships are required between
Government, industry and academia to leverage collective technology and supply chain
expertise to identify innovative products earlier, support R&D pull through, and realise
the economic and military benefits of innovation. We will seek new opportunities for
university partnerships on priority dual-use capabilities and technologies; build effective
networks between the 140 defence funded PhDs and other research programmes to
target problems head on; and establish new partnerships with industry. The first of these
is between MOD and the High Value Manufacturing Catapult (HVM Catapult).
Case Study: High Value Manufacturing Catapult
harnesses national innovation
The Ministry of Defence has announced a new alliance with the High Value
Manufacturing Catapult (HVM Catapult) to leverage its world-leading research
and development capabilities and further accelerate industrial transformation in
support of the UK’s national security and economic growth objectives. The Ministry
of Defence will establish the alliance this year and enhance its engagement with
the Innovate UK Catapult Network and wider UK ecosystem on a range of strategic
projects, securing access to world leading capabilities to deliver innovation at pace.
Initial areas for exploration by the alliance encompass UK sovereign energetics,
uncrewed air systems, industrial resilience, technology pull through and prototype
warfare, manufacturing scale up for SMEs and digital engineering, manufacturing
and through life support. We will leverage this Government’s commitment to the
biggest increase in defence spending in a generation to deliver a step change in the
UK defence industrial capability with the spillover benefits of innovation and skills
feeding into the broader economy.
5.2.2.4 Mutually reinforcing the Modern Industrial Strategy approach to dual-use
technology exploitation. Many of the priority growth sub-sectors are dual-use and, by
fostering innovation and expanding market opportunities for these, defence will be able
to support UK growth as well as protecting national and economic security. The Ministry
of Defence has already seen significant success in accelerating dual-use technology
development and pull through – for example, in clean technology, as well as through
significant support from the Defence and Security Accelerator (UKDI-DASA)
38 and the
establishment of NATO DIANA and the NATO Innovation Fund.
Defence Industrial Strategy: Making Defence an Engine for Growth66
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Case StudyUKDI-DASA supports the next generation
of dual use technologies
UKDI-DASA is one way the Government supports defence firms to create the next
generation of dual-use technologies. Since 2016, UKDI-DASA’s mission has evolved
beyond simply finding and funding innovation to supporting the businesses behind
the innovation. UKDI-DASA has built a defence and security ecosystem linking
up MOD and Partners Across Government (PAG) challenges with a network of
innovators, including all but a handful of UK universities. By working with industry,
academia, investments and Government, UKDI-DASA is helping to reach the full
breadth of the defence supply base to develop our innovation ecosystem. Alongside
their critical contribution to national security, UKDI-DASA is also ensuring business
growth is factored in. Their recent Impact Report highlights how UKDI-DASA funded
innovators have gone on to receive an additional £592m total equity investment
and added 1,842 jobs since 2016, while generating nearly £974m in Gross Value
Added (GVA) between 2019 and 2023. In 2024 alone, UKDI-DASA funded firms raised
£174m. These figures show the significant benefit of defence innovation activity in
support of UK defence and security and supporting UK prosperity.
39
Advances in dual-use military technologies can drive productivity in other sectors
and, vice versa, the success and scale up of dual-use technology entrepreneurs can
translate to greater advantage on the battlefield. To drive these positive spillovers,
we will improve military-civil coordination across Government, including through the new
Civil and Military Industries Forum as set out in the Modern Industrial Strategy. Working
in close collaboration with DBT and DSIT, we will improve data sharing arrangements
across dual-use programmes and priorities; collectively identify priorities for dual-
use capability acquisition and investment; and review dual-use interventions across
the Modern Industrial Strategy. UKDI and others across the science, innovation and
technology ecosystem will work with funding bodies across HMG and beyond to consider
wider benefits of funded research, ensuring effective value for money and fostering a
healthy domestic research environment. We will facilitate greater industry participation in
dual-use activities, bringing in senior external experts from across dual-use industries and
through DBT and DSIT officials’ support to the Defence Industry Joint Council, including
non-Government institutions such as the British Standards Institute.
67At the Leading Edge of Defence Innovation
39 https:/ /assets.publishing.service.gov.uk/media/6823094cf16c0654b1906159/12_05_25_-_DASA_Impact_
Report_2025_Final.pdf

Case StudyCardiff based SME driving cutting edge
British space innovation
Space Forge, an advanced materials SME based in Cardiff, is building the world’s
first returnable and reusable in-space manufacturing platform. This manufacturing
work includes semiconductors, which are crucial components of radars and frontline
battlefield communications systems. These technologies have the potential to
increase the operational advantage of our defence space capabilities. Through
the Defence Technology Exploitation Programme (DTEP), MOD has awarded Space
Forge a £499,000 grant as part of a collaborative project with Northrop Grumman.
The Space Clusters Infrastructure Fund (SCIF), administered by the UK Space
Agency, awarded Space Forge almost £8 million in 2024. This significant investment
will enable the first-of-its-kind National Microgravity Research Centre – driving
advanced material research and production. In May 2025, Space Forge raised
£22.6m, with the NATO Innovation Fund leading the round alongside World Fund,
the National Security Strategic Investment Fund (NSSIF) and the British Business
Bank. Space Forge is an example of cutting-edge British innovation with dual-use
applications, based in one of our high-potential innovation clusters.
5.2.2.5 Using AI to secure battle-winning advantage. The SDR is clear that the UK
must pivot to a new way of war. It must continually harness new technology and think
differently about what conventional ‘military power’ is and how to generate it. It is through
dynamic networks of crewed, uncrewed and autonomous assets and data flows that
lethality and military effect are now created. A shift towards greater use of autonomy
and artificial intelligence (AI) within the UK’s conventional forces should be an immediate
priority, providing the UK with greater accuracy, lethality, and cheaper capabilities and
fundamentally changing the economics of Defence. MOD must begin the development of
AI enabled capabilities by engaging and collaborating with the industrial base to identify
game-changing solutions. MOD will spend £4 billion on uncrewed and autonomous
military systems over the course of this Parliament, and since the SDR was published we
have already announced a procurement plan worth up to £180 million for digital decision
capabilities to enable scalable operations involving autonomy, including using AI and
machine learning to speed-up decision-making. We have also engaged the market on a
variety of transformative autonomous capabilities, sending a clear demand signal to our
industrial base of our ambition in this space. Further detail on MOD’s plans for investment
in AI enabled capabilities will be set out in the Defence Investment Plan.
Defence Industrial Strategy: Making Defence an Engine for Growth68

5.2.2.6 A ccelerating energy innovation and resilience. To accelerate innovation and
adoption of dual use technologies, we will establish the Defence Energy and Capability
Resilience Centre of Excellence (DECX). This will unite the Ministry of Defence, industry,
academia and research to harness opportunities for operational advantage and resilience
from emerging energy technologies and circular economy approaches. DECX will build our
technological edge and support the development of key sovereign industrial capabilities
for the UK whilst supporting our Armed Forces to operate in new ways in changing
environments. We will explore opportunities to work with industry to be an innovation
test bed for trials and experimentation that accelerates technology development for the
Ministry of Defence’s needs. We will be a demanding customer, setting out challenges to
industry that make clear specific use requirements, further building investor confidence
in the defence market for dual use energy and circular economy technology. The Ministry
of Defence will also investigate opportunities to leverage modular nuclear reactor
technologies, both to meet direct energy needs and to prove its potential for wider use in
support of the Government’s Clean Energy Superpower Mission. We will work with industry
to develop an approach to energy which builds resilience and increases the security of
critical supply chains.
5.2.2.7 U se of defence estate to meet energy demands. The Ministry of Defence is
considering how its estate could help meet the forecast increase in power demand by
Defence. Having recently concluded an Estate Energy Review, we are looking at private
energy generation, and is exploring the potential contribution that energy projects on the
estate, such as Small Modular Reactors and renewables, could make to reduce the energy
overheads for MOD and support the Government’s Clean Energy and Growth Missions,
including through development of AI Growth Zones.
5.2.3 Out come: Defence’s science, innovation and
technology ecosystem is modernised and improved,
reflecting our ambition for the sector.
5.2.3.1 MOD is se t up for success in science, innovation and technology. There is a
distinct difference between seeding early-stage scientific research (from basic principles
to lab testing) and shaping the commercial sector through collaboration and contracts.
Success in these two undertakings depends on different ways of working, skills, partners,
and networks. We will therefore, in addition to launching UKDI, evolve the current Dstl
and Defence Science and Technology teams and enhance their focus as a gateway
to academia and research institutions across the UK and allied countries, leveraging
Government-funded, world-class S&T more effectively to make it worthwhile for universities
to invest in long-term capacity and capability building. Dstl will prioritise a small number
of national security issues where sovereign ownership and skills are crucial, and Dstl will
partner with ARIA and UKRI to drive generation-after-next innovation. Dstl collaborates
extensively with academia in the delivery of MOD’s research programme, and we will
further strengthen our engagement, focussing on sovereign capabilities, critical S&T
skills development and high-growth, dual use technologies to meet the ambition of
the SDR and DIS, ensuring that the MOD remains an intelligent customer for Science
and Technology.
69At the Leading Edge of Defence Innovation

5.2.3.2 Streamlined process of scaling innovative digital solutions. Our new Defence
Tech Scaler pilot will provide a streamlined, scalable, and accessible platform for
collaboration. Focused initially on software, data and AI providers, with scope for
expansion, it establishes an end-to-end process for scaling innovative solutions across the
supplier ecosystem, from emerging SMEs to established major suppliers. Going beyond
a simple commercial framework, it integrates technology, finance, cyber, commercial
and strategy functions, creating a coherent, supportive environment for suppliers.
For the first time, new entrants and SMEs will have a clear roadmap to scale within the
MOD, outlining the requirements they must meet while offering valuable support such as
clearance sponsorship, access to MOD data, service executive guidance, and a badge
of accreditation. Defence Tech Scaler represents a significant step forward in how the
MOD engages with industry, enabling rapid access to innovation and fostering a more
prosperous and collaborative defence ecosystem.
5.2.3.3 Building AI capabilities and leveraging technology for delivery. As outlined in the
National Security Strategy, AI’s development poses era defining risks and opportunities,
necessitating a national security agenda for AI. ‘Transformative AI’ systems in particular
are expected to drive the large-scale automation of knowledge work, with profound
impacts on all aspects of UK society, defence and security. The use of AI in Defence
has grown exponentially, with projects maturing from proofs of concept to capabilities.
MOD will create a protected Defence AI Investment Fund to accelerate the adoption
of artificial intelligence across Defence, prioritising the most promising use-cases,
and facilitating a more strategic approach to AI adoption. MOD’s AI work will support
and leverage wider government AI initiatives, focusing on building national capability,
accelerating adoption, and advancing understanding of the national security risks and
opportunities AI presents in the defence sphere. This will be done by striking a balance
between self-reliance and cooperation, working closely with DSIT’s Sovereign AI Unit,
which is securing the UK’s future as a strong sovereign AI nation. Within MOD, this work
will be led by the Defence AI Centre, collaborating with the Sovereign AI Unit to invest
in new opportunities to develop sovereign AI capabilities, and secure UK strategic
advantage in AI. This in turn will support the implementation of the AI Opportunities Action
plan by encouraging the growth of the UK AI sector and supporting the emergence of
national champions.
This activity will be supported by DSIT investment of up to £12m in UK Data Sharing
Infrastructure Initiatives from April 2026. Learning from international practices,
including the Common European Data Spaces, these will promote effective and
more coordinated approaches to governance, legal considerations, regulations,
data interoperability, security, and trust. MOD is also taking forward the defence
recommendations of the Government Chief Scientific Adviser (GCSA) and National
Technology Adviser (NTA) following their Review to explore the barriers hindering the
adoption of transformative technologies.
Defence Industrial Strategy: Making Defence an Engine for Growth70

5.2.4 Outcome: a streamlined regulatory environment
enables innovation and capability delivery
The Prime Minister has set a target to reduce administrative costs of regulation to business by
25% and the SDR commits to reducing the burden of Defence Standards and Conditions by
at least 50%. Our regulatory system around defence must be updated to create a regulatory
environment fit for the current era of threat, it must be as permissive and simple as possible,
removing barriers limiting faster delivery, scale up, and innovation at wartime pace.
5.2.4.1 Targeted regulatory sprints in priority growth sub-sectors and emerging
technologies. Beginning in Autumn 2025, MOD will run a series of targeted sprints to
review the regulatory environment governing key capability areas, with a particular focus
on those with the highest growth potential. The first of these will focus on Autonomous
Systems. These will make recommendations for how to create a more permissive regulatory
environment which fosters UK comparative advantage in key sectors of the future, and
will consider recommendations for updating regulation, information sharing with industry,
and streamlining regulatory authority interfaces. The sprints will build on the success of
innovative test and evaluation (T&E) environments and will make recommendations to the
Defence Industrial Joint Council. The Defence Reform and Efficiency Plan (publishing in
Autumn) will outline the scope and focus of these reviews and the reform required to meet
the SDR target.
5.2.4.2 Regulatory reform supports regional defence industrial strength. MOD’s
commitment to creating a more permissive regulatory environment will be an essential
part of the new Defence Growth Deals. Relevant approvals organisations, local authorities
and T&E stakeholders will be closely involved in the design and implementation of the
Deals, with a particular focus on T&E innovation and exploring planning flexibilities or
expedited routes for faster and simpler defence industrial development. In Plymouth,
for example, we are already bringing together the Defence Maritime Regulator, Maritime
Coastguard Agency and Naval Base Commander, alongside the existing Smart Sound
Plymouth platform, to exploit further opportunities for innovative T&E in maritime
autonomy, including dual-use capability.
5.2.4.3 Test and Evaluation (T&E) Transformation. Too often limited access to T&E
resources and complex end-user processes act as a barrier to pace, particularly for
SMEs and new entrants. To modernise our T&E environment we are making investments
through our T&E transformation programme that will enable the Defence enterprise,
including companies of all sizes. To make it easier for everyone to find the T&E resources
they need, we will launch an online Test and Evaluation marketplace in 2026. This digital
platform will help T&E users identify and connect with suitable facilities, capabilities and
support services from across the public and private sector, and from our international
partners. This will include MOD’s T&E ranges across the UK, including sites in Scotland and
Wales, which we will seek to make more accessible to SMEs by exploring and addressing
barriers to access.
71At the Leading Edge of Defence Innovation

To support smaller firms, for whom geographically remote and highly capable test ranges
may be prohibitively expensive, we will invest in more mobile test technologies. These will
be available commercially and should enhance the capability of local and ‘pop-up’ test
sites. The initial focus of this investment will be on enabling testing for uncrewed systems,
one of our priority growth sub-sectors.
To ensure UK equipment is fit for the future, we are piloting the provision of a high-fidelity
virtual test range, focused on the evaluation of UK equipment in the most demanding
operational environments. This will pave the way for an industry toolkit and test network,
allowing UK companies to rapidly test, innovate and integrate systems in-house, using
Defence’s most demanding operational use-cases. In addition, T&E Transformation is
exploring how best to meet MOD and Industry’s shared need for secure supercomputer
capability and secret connectivity, lowering the barriers to T&E exploiting advances in
semiconductor and artificial intelligence technology.
To improve the long-term productivity and capacity of both MOD and commercially
operated UK test ranges, we are launching a ‘Range of the Future’ programme at the
Defence Science and Technology Laboratory this year. MOD will work with SMEs, range
operators and regulators to derisk T&E technology and make ranges more available,
affordable, and capable of supporting the next generation of Defence capability. We will
boost this effort by inviting industry to propose solutions to T&E Challenges run through
UKDI-DASA, with a new challenge to be launched in November 2025. Finally, we will also
consider where existing facilities and assets already exist that are led by other parts of
government but could be of direct value to defence. The next generation of technologies
tested in many facilities are inherently dual-use and could be critical both to the resilience
of the UK’s public networks and to defence communications.
5.2.4.4 Improved access to T&E resources and exploitation of existing freedoms. Defence
T&E benefits from the legal freedoms afforded to MOD, offering significant potential for
regulatory innovation, agility and flexibility, whilst maintaining fundamental standards on safety
and assurance. However, delays and inefficiencies still exist because access to information
about the T&E system and existing freedoms is not widespread. Therefore, we are launching
a Regulatory Solutions Hub (RSH), to provide better access to the T&E system for civilian and
military end-users to access and connect innovators with effective solutions quickly. This will
be supported by an engagement campaign with stakeholders through the DIJC and the
Defence Office for Small Business Growth. The RSH will partner with the Regulatory Innovation
Office to share best practice and identify opportunities for civilian-military spillovers.
Defence Industrial Strategy: Making Defence an Engine for Growth72

A Resilient UK
Industrial Base
6.1 Summary
Vision: the defence industry is protected and resilient to malign activity; resilient
to supply chain shock and disruption; able to adapt and surge to meet emerging
priorities and demand; and underpins and enables operational independence.
UK deterrence is enhanced through: a strong transatlantic and European defence
industrial base underpinning NATO’s ability to deter and defend; a nuclear enterprise that
goes from strength to strength, underpinning the nuclear deterrent; a defence industry
that is able to adapt at pace and surge to meet any emerging threat; and a thriving
defence sector that is resilient to shocks, threats and disruption.
Our Armed Forces are only as strong as the industry that equips and sustains them.
The Strategic Defence Review is clear that, for deterrence to be credible in the new era
of threats, we must increase national warfighting readiness so that, if needed, the UK
can transition to scale for and sustain a war against a ‘peer’ adversary. Our defence
industry is crucial in this effort to ensure the resilience of our supply chains, the strength
to resist threats or disruptive events, and the ability to scale-up and surge capacity as
needed at any time to meet any potential threat. The ability to innovate at wartime pace
is another essential component of industrial resilience. Ukraine and the Red Sea have
shown us that the way to deter large platforms is not always with equally large platforms.
73A Resilient UK Industrial Base

Small and novel commercial products, which have gone from factory to frontline in a
matter of weeks, have often delivered the greatest successes. It is vital that we embed the
lessons learned from these modern conflicts, strengthen the resilience and prosperity of
our thriving UK industrial base, assure our critical supply chains, champion.
This Strategy sets out how we will strengthen the resilience and prosperity of our thriving
UK industrial base, assure our critical supply chains, champion innovation at wartime
pace, and put in place the plans and powers required to surge our capacity as a
government-industry partnership, to ensure we are able to meet any future threat at
any time. This complements the approach of the forthcoming UK Government Resilience
Strategy, which will set out our long-term approach to strengthen national security and
drive whole of society resilience, particularly across our Critical National Infrastructure
and supply chains.
6.2 Actions
6.2.1 Out come: The readiness and resilience of the UK
defence industrial base is a priority for the Ministry of
Defence and Industry
The Strategic Defence Review is clear that the Government must have, if needed,
the means to prepare and respond as threats to the UK or its allies escalate. Essential to
this is ensuring readiness and resilience is a top priority for the Ministry of Defence, with the
commitment and resources to deliver it. We need an organisational approach that is
ambitious and has industry collaboration at its heart. Our defence industry is a strategic
asset that we must protect.
6.2.1.1
New organisational approach and a collaborative endeavour with industry.
Today’s strategic context demands that industrial readiness and resilience are among
the highest priorities for Defence. We are responding to this and setting up MOD to
pursue these objectives with clarity and purpose. Defence industrial resilience will
be a core deliverable for the NAD, who will provide a clear point of accountability to
Government and to the public. Relevant teams in the National Armaments Director
Group will work with colleagues across Defence to develop new policy, strategy and plans
that make the pursuit of enhanced defence industrial readiness an active effort, moving
away from previous passive approaches. We will deliver this approach in collaboration
with industry, embedding it as ‘business as usual’ by leveraging new engagement
mechanisms, including the Defence Industrial Joint Council (DIJC). Activity will include the
identification of barriers to rapid scaling and the exposure of key vulnerabilities and will
play a critical role in developing the solutions and interventions required to improve the
resilience of defence supply chains. We will also start regular engagement with firms in
adjacent industries, to build understanding of the role of these first in defence readiness,
for example with car manufacturers.
Defence Industrial Strategy: Making Defence an Engine for Growth74

Last year, for the first time, the MOD hosted the first dedicated, joint Ministry of
Defence-industry wargame. This was an invaluable exercise and emphasised the critical
role the defence industry would play in any future conflict. We will embed the lessons
learned from this wargame to ensure industry is at the heart of our resilience planning.
To continue to benefit from the expertise and ingenuity of our leading industry and
innovators, we will develop regular industry wargames as part of a structured programme
of scenario testing exercises. We will also establish a scenario planning capability within
the National Armaments Director Group, which will cohere across the programme of
exercises to build robust evidence and ensure insights are incorporated into Ministry of
Defence policy, activities and plans.
6.2.2 Outcome: UK defence industry can adapt at pace
and surge to meet any emerging threat
6.2.2.1 Flexible capacity is maintained in key production lines. We will ensure defence is
an engine for growth across the UK by investing in our munitions capability, to maintain the
production, innovation, skills and investment levels needed to lay the industrial foundation
for production to be scaled up at speed if needed. We will invest £6 billion in munitions
this Parliament, including £1.5 billion in an ‘always on’ pipeline and building at least six
new energetics and munitions factories in the UK. We will provide a steady drumbeat of
investment to industry, sustaining a thriving defence industry that generates growth and jobs,
while strengthening the UK’s commitment to NATO. We will also build new state-of-the art,
UK-based factories for energetics production, creating a scalable, responsive manufacturing
capability for energetics materials and products in the UK, aligning this with our support to the
war in Ukraine.
6.2.2.2 HMG must have, if needed, the means to prepare and respond as threats to the
UK or its allies escalate, and, crucially, before crisis becomes war. MOD will work across
Government to implement the SDR’s recommendations to improve national readiness.
Important areas of focus will be on ways to make the scaling of defence production easier,
including de-regulating where we can and learning lessons from our most important
allies, for example the formation of a new reservist force focused on the best and the
brightest from sectors like advanced manufacturing and software engineering. We will
develop proposals to reduce the burden of Defence Standards and Conditions and
reform regulations, to make scaling of defence production easier, and to intervene more
deeply in the sector as a last resort. We will also pursue new agreements with defence,
and defence-relevant, firms to establish routes to surge their workforce to support a
rapid scale-up of defence outputs. We will examine closely the legislative powers in the
USA (including through the US Defense Production Act) and France to leverage their
defence industrial bases in times of crisis. MOD will engage with industry on options by the
end of the year.
6.2.2.3 Scalability and resilience of production regularly assessed for all major
procurements. The ability to monitor and demonstrate the scalability and resilience of
defence industrial production is a key part of our deterrence of potential adversaries.
We will ensure that, between the Ministry of Defence and our major suppliers, we gather
the information we need to generate confident assessments of our ability to scale
75A Resilient UK Industrial Base

and sustain production. We will reinforce existing defence conditions (DEFCONs) on
business resilience to ensure suppliers are conducting the assessments and providing the
information required, supported by enhanced guidance, advice and monitoring across
the end-to-end supply chain. We will introduce a new Supplier Resilience Maturity (Self)
Assessment framework and tool, and work with our most important suppliers to review
these assessments on a regular basis, including considering how defence suppliers could
support the resilience of other Modern Industrial Strategy sectors with overlapping inputs.
To do this, we will draw on analysis from the new Supply Chain Centre on strategic inputs to
Modern Industrial Strategy sectors, including with a focus on the supply chain sub-sectors
set out in Section 1.3. Finally, we will explore options for an ‘inventory management clause’
that would set requirements for stock levels and tracking and reporting of inventory.
6.2.2.4 Best practice on surge capacity and resilience is shared between the UK, allies
and partners. Most of the threats we face are ones we share with our close allies and
partners. It is essential we support each other to enhance our collective preparedness.
This is built into AUKUS and the Global Combat Air Programme, both of which are
developing trilateral supply chains to enhance collective resilience. We will push for
greater working-level international collaboration on defence industrial readiness,
including through greater international involvement in wargaming and planning
exercises, and ongoing alignment of strategy. We will incorporate supply chain resilience
considerations into our approach towards international defence industrial policy by
default. We will build on existing forums, like the UK-US Bilateral Countering Weapons of
Mass Destruction (C-WMD) Leadership Group where we have identified common C-WMD
industrial base challenges – mapping our respective supply chains and collaborating with
the US to build resilience into a high-risk area.
6.2.3 Outcome: defence industry is protected and resilient
to malign activity, shocks and disruptions
6.2.3.1 Strengthen supply chain data and enhance resilience. We must also take a
long-term strategic approach to the way we manage our critical and cross-cutting supply
chains. Our transformation of the procurement and acquisition landscape will be coupled
with a sensible approach to supply chain management, delivering market stability,
supply chain resilience and growth. The Defence Supply Chain Capability Programme will
drive a step-change improvement in how the Ministry of Defence understands, designs
and manages our industrial ecosystem to deliver a resilient, adaptive and collaborative
end-to-end defence supply chain. This step change will involve shifting our approach
to managing supply chain risk from a reactive to a proactive end-to-end approach,
supported by enhanced digital enablement. We are implementing a new approach to
Category Management within the National Armaments Director Group to build resilience
and security of supply into our most critical supply chains. This will allow us to better
manage disruption to our front line and improve our ability to shape markets, creating
enhanced access to industrial capabilities where operational sovereignty and freedom of
action are crucial.
Defence Industrial Strategy: Making Defence an Engine for Growth76

6.2.3.2. Building Resilience of Critical Raw Materials for UK Defence. Across global
markets, demand for Critical Raw Materials (CRM), including Rare Earth Elements (REE),
continues to rise, driving competition for access to virgin materials. A circular economy
approach presents a key opportunity to secure future supply and enhance resilience. This
can reduce our reliance on third parties and supply chains which are potentially vulnerable
to disruption. Working with industry to develop our ability to apply circular economy’s
principles on Defence Critical Raw Materials, we will: unlock new domestic and export
opportunities of high-value materials; develop cutting-edge technologies in robotics,
automation, and less polluting processing (including chemicals); generate employment
in both high-skilled R&D roles and broader industrial operations; and increase reshoring,
nearshoring and friendshoring opportunities for critical materials’ processing.40
In addition, by investing in advanced recovery and refining processes and advanced
manufacturing, we will also position the UK as a global leader in critical mineral recovery
and reclamation, enhancing both industrial competitiveness, national security and
growing UK skills that are attractive within a global market.41 We have developed a
Sustainable Circular Economics Concept Note for Defence42 and are already working
with industry on a decision support framework, applicable across capabilities, platforms,
sub-systems and components, and is examining how the sector can mitigate supply chain
risks. Action is also already underway to bolster our ability to use out of service material as
feedstock for critical components and other uses. This includes the ‘Tornado to Tempest’
project, which has demonstrated the potential of recycling surplus assets containing
strategic metals such as titanium into feedstock for additive manufacturing to make new
parts, including for the MOD’s FCAS programme.
6.2.3.3 Defence procurement. As well as prioritising UK-based businesses, a new policy
approach to social value and launch of an offset policy, subject to consultation, will allow
Defence to use its significant procurement levers to promote resilience in defence supply
chains. Supply chain resilience will be a key objective in the design of any new offsets
policy and will also be one of the key objectives the Ministry of Defence will prioritise in the
application of social value, alongside growth.
6.2.3.4 Security and resilience risks to the defence industry operations are managed
collaboratively. The smooth running of daily life and the economy depends on critical
national infrastructure and the continuity of essential services. We are working in even closer
collaboration with key suppliers to deliver an enduring security posture, enhanced threat
reporting and increased mutual awareness of critical national infrastructure. This will ensure
that we are more comprehensively identifying and managing industry-specific critical
national infrastructure dependencies. This supports the delivery of data-driven strategies
and policies to bolster industry resilience. Critical national infrastructure mapping will also
enhance the Ministry of Defence’s understanding of its supply chain to deliver the policy and
activities to alleviate risk and increase resilience.
40 Refuse, Rethink, Reduce, Reuse, Repair, Refurbish, Remanufacture, Repurpose, Recycle, Recover Energy
(Van Buren et al., 2016, cited in the Sustainable circular economics for Defence concept note - GOV.UK)
41 Defence Advanced Manufacturing Strategy - GOV.UK
42 Sustainable circular economics for Defence concept note - GOV.UK
77A Resilient UK Industrial Base

6.2.3.5 Economic security in the defence sector assured. The UK’s open and outward-
looking economy is a source of great strength, and it will remain open to safe foreign
investment to drive growth across the UK, including in the defence sector. However, below
the level of armed conflict and in an era of strategic competition, adversarial nations are
strategically employing investments and economic measures in security-sensitive sectors
of the economy to harvest critical technologies, gain access to pioneering innovation and
R&D efforts, access or influence our CNI and create supply chain dependencies leaving
us exposed to disruption. The MOD has a dedicated team focused on economic security,
and we are further developing our capacity to identify and counter a wider range of
economic security threats, including those related to research collaboration, employment of
defence and technical experts from the UK, procurement, exports, and the use of business
partnerships and technical support contracts that include the transfer of specialist defence
knowledge. We are also continuing to strengthen collaboration and information sharing
with our closest allies to this end and develop economic security and resilience planning in
collaboration with other parts of government and industry.
Case Study: Energy and Circular Economy Technology
as a Strategic Capability
Russia’s War in Ukraine shows how energy has been weaponised: through targeting
of energy infrastructure and control of fossil fuel supplies. Learning the lessons from
Ukraine, we must adopt a different approach to energy in defence, as a key strategic
capability to drive operational advantage and build resilience. The future battlespace
will have a greater energy demand, including through direct energy weapons, AI and
cyber capabilities, as well as a requirement to generate an increasing proportion
of energy at the point of use. To operate effectively it will be vital to harness
emerging opportunities for power generation, storage and distribution from more
diverse sources and new technologies, enabling increased lethality, resilience and
self-sufficiency and agility. Trialling technology including modular nuclear reactors,
sustainable drop-in fuels, smart microgrids, batteries, and hybrid and electric drive
vehicles has the potential unlock advantages over a conventionally powered force
and ensure that we remain relevant and interoperable, with partners and allies facing
the same capability choices. In a rapidly transforming energy landscape, building
resilient supply chains will also be a critical enabler of advantage and will mitigate
new dependencies and security risks. This includes harnessing opportunities through
circular economy technology, developing our ability to recover and reclaim Defence
Critical Raw Materials.
Defence Industrial Strategy: Making Defence an Engine for Growth78