Norwegian frigate deal shaped new offset policy

The Chancellor has cited Norway’s own requirements as an example of the thinking behind Britain’s new offset policy, telling reporters that Norwegian industry is part procuring the frigates being built on the Clyde and that Britain will now ask the same of foreign suppliers in return, according to remarks made at a press huddle in Glasgow.

John Healey was asked what role Scotland will play in the Defence Investment Plan, in manufacturing and jobs, and what impact the plan will have in Scotland specifically.

He said: “Defence is our number one priority. We also announced today the defence secretary and policy, where people have seen this is a government that will direct our defence investment first and foremost in British jobs and British businesses. But there will be things that we need to buy from abroad and from allies.

“So Norwegians, for instance, are part procuring some of this portion behind us, and they will require us because they have a policy that we’re now introducing for the first time ever in Britain, which we call an offset policy. We will buy some of the things the Norwegians produce that we can’t here.

“Now, in future, when Britain places contracts abroad, we’ll make sure that those we place those contracts with invest in Britain as well, jobs, business support, innovation, so that we can make sure that every pound of British taxpayers’ money works twice. It works for the national security of this nation, and it works also to reinforce jobs and businesses in the future of this country, including across the UK here in Scotland.”

Norway ordered five Type 26 frigates from Britain in a £10 billion deal that supports 2,000 jobs on the Clyde, the largest warship export in a generation, and Norwegian industry expects work in return under arrangements of exactly the kind Britain is now adopting. Oslo has run an industrial cooperation requirement for decades, obliging foreign suppliers of significant defence equipment to place work with Norwegian firms.

Under the British policy published today, contracts above £50 million placed with overseas companies will be considered for offsets, and suppliers can be required to deliver benefits worth up to the full contract value through jobs, apprenticeships, factories, investment in British suppliers or transfers of technology. A central Offset Authority will agree, value and monitor each arrangement, and the policy applies to a select number of procurements from April 2027.