Government explores private investment to drive defence

The Defence Secretary and Chancellor have met with leaders from UK banking, venture capital and strategic finance to explore how private investment can be leveraged to accelerate defence readiness and drive economic growth, with the government announcing a Ministry of Defence-led sprint to examine how that investment could be structured.

The meeting took place through the Defence Investors’ Advisory Group, which brings together leaders from the UK financial sector to advise the government on investment priorities, and which the Defence Secretary announced will be expanded and placed on a permanent footing as part of a deeper partnership between government and the financial sector.

As part of that expansion, industry secondees will join the Ministry of Defence through a new Defence Finance Zig-Zag secondment programme, aimed at embedding private sector expertise directly within government.

John Healey said: “In a more dangerous world, our national security is the guarantor of our economic security and investment confidence. A strong UK economy needs strong UK defence. The Chancellor and I are determined to bring together investors in a new partnership that delivers for our security, for our economy and for hard-working families up and down the country. As part of this, we are exploring how private investment can be leveraged to help build the defence capability Britain needs, creating jobs, making defence an engine for growth and making every pound go further.”

Chancellor Rachel Reeves said: “National security is this government’s first responsibility, and in an increasingly uncertain world we must explore how we can leverage private sector investment and expertise to keep the country safe. Alongside the largest sustained increase in spending since the Cold War, this government is committed to working with the financial sector to explore how we accelerate the creation of defence capability in ways that creates jobs, supports economic growth and always has value for money for the taxpayer at the forefront.”

Cathal Deasy, Global Co-Head of Investment Banking at Barclays and a member of the advisory group, said: “These steps are about building the right long-term framework for partnership between defence, industry, and finance. Clearer priorities, better engagement routes, and more modern delivery models will help attract private capital at scale, support innovators and supply chains, and strengthen resilience across the UK. We are seeing strong appetite from our clients to invest in UK defence and this framework provides the infrastructure to modernise our defence capability, including the estate and energy systems, while ensuring the UK can respond with greater speed, flexibility, and endurance in a more contested world.”

The announcements sit alongside a £20 million fund to offer accelerated contracts to small innovative British startups with limited or no previous MoD business, and build on earlier efforts including a venture capital roundtable held by the Defence Secretary last year and a Dragon’s Den-style event where defence firms pitched directly to major investors.