The Ministry of Defence’s headline claim that the bulk of its contracts are placed with UK-based businesses has been questioned by industry, which says the figure depends on what counts as a British company.
The challenge was put at a Treasury Committee evidence session on defence spending and finance on 3 June 2026, which questioned three experts on how the UK funds its defence capabilities and on the dynamics between the Whitehall departments that sign off defence spending. Andrew Kinniburgh, Director-General of Make UK Defence, gave evidence alongside Lucia Retter, Assistant Director for Defence and Security at RAND Europe, and Max Warner, a senior research economist at the Institute for Fiscal Studies.
Kinniburgh told MPs that his organisation was working with the department to define what a UK business actually is, suggesting the existing measure was superficial. He referred to “some quite glib statements from MOD about 80% of contracts being let with UK-based businesses” and asked what such a description really meant.
The test, he argued, should be more than a registered address. “What is a UK-based business? Is it one with a postcode and a company number, or is it actually a company that’s creating intellectual property, registering patents, making stuff using the supply chain in the UK?” he said, suggesting it was a question the committee might want to put to the department.
His point was that a firm could count towards the headline figure while carrying out much of its valuable work, from research and design to manufacturing, outside the United Kingdom, meaning the proportion of contracts placed with UK-registered companies may overstate how much economic benefit actually stays in the country.
The intervention came as Kinniburgh argued that greater certainty of future demand would unlock more private finance for defence firms, and warned that British companies were being bought up by German and American buyers, with parts of the United States actively courting UK defence businesses to relocate. He described the risk as not just a brain drain but a “company drain”, in which firms and the intellectual property and skilled people they embody leave the country altogether.
Government statements have increasingly stressed the share of defence spending going to British industry and to small and medium-sized enterprises, billing it as evidence that rising budgets are supporting domestic jobs and skills. The challenge raised in the evidence is that such figures turn on definitions, and that without a clearer test of what makes a business genuinely British, a headline proportion may not capture where the design, the patents and the manufacturing actually take place.
Obviously a UK company is one that pays taxes in the UK, probably not many of those left though.
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So have HMG been caught being “economical with the truth” again?
Well mate, Starmer was in Swindon this morning saying how he is reminded every day that defence of the relm is the governments first priority…
Its a great pity he isn’t reminded on the hour and doesn’t act on it!
Welfare and securing the votes it brings is obviously their first priority, I think defence is way down the list, certainly below maintaining a well stocked subsidised members bar at the Westminster cesspit
Surely not.. Of course they are only really capable of counting potentia votes. Talking heads.
I’m sure Starmer’s curiosity had him work that out with questions, but I guess it’s not a very curious Lawyer, so why change when in Governance.
HMG are economical with the truth far too often.
The New York Times, not noted for its right wing bias, last week blew the lid off any governmentsl justification for diverting necessary increases in defence funding towards the now clearly dotty pursuit of ‘net zero’
‘, the lengthy New York Times piece contained numerous stunning confessions:
“For years, critics of the high-emissions scenario had argued that it was always unrealistic, in part because it envisioned that countries would burn coal at absurdly high rates.”
“Predicting emissions over the next century is extremely difficult, since so much depends on future economic growth and technological changes.” Just like so many of us have been saying (or screaming) for years.
“The high-emissions pathway wasn’t meant to be a prediction, but more of a ‘worst case,’ said Detlef van Vuuren, a climate scientist at Utrecht University…” That’s not the way it was sold.
“News stories about climate research often emphasized results based on RCP8.5 as a picture of what the world can expect unless countries slash their emissions, which isn’t right, either…the highest estimated damages based on RCP8.5 were a big focus and got more attention, including in The New York Times…many policymakers and researchers continued to emphasize the high-emissions scenario for years afterward,” as one think tank critic said. The story quotes several people who now say that the worst-case scenario was not intended to be presented as realistic.
And yet, it was. It was used to demand radical changes.’
And, in Britain, it still is. Government subsidies in the quixotic pursuit of ‘net zero’ are precisely the reason why we cannot incentivise our innovative defence SMEs or make the increases in defence spending that we now so clearly require.
Thanks Monro. HMG is breaking our economy and loading our energy bills (domestic and industrial) with green levies as part of the drive to Net Zero when the UK is responsible for less than 1% of annual global greenhouse gas emissions! Its crazy. We should instead spend a fraction of that money on educating and training the big emitters in the world and scrapping our own Net Zero efforts entirely. Then there would be more money for Defence…or cut welfare.
Interestingly the extra £28bn required for Defence represents 4.5 weeks spend on Welfare.
Spot on, Graham,
And we know precisely why Defence is being effectively ignored, because they told us:
‘Every meeting I have is ‘who can we tax in order to pay benefits to others’. They’re asking the wrong questions.”
Our representatives are only concerned with bribing their core vote to save their nice little stipends within the crumbling palace of Westminster. They cannot even manage their own palace with any competence.
Unfortunately things must get worse, quite possibly a great deal worse, before they can get better…
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