Alert
Alert
11.03.25
The UK Government has announced a new “Back British” defence offset initiative aimed at ensuring British businesses, workers and communities benefit when the Ministry of Defence (MoD) procures equipment or services from overseas suppliers. In an official press release published on October 23, 2025, Minister for Defence Readiness and Industry Luke Pollard unveiled a 12-week industry consultation on this proposed offset approach. The goal is to boost UK jobs, skills and innovation by requiring international defence contractors to invest in the UK economy as part of any major procurement deal.
Key Features of the “Back British” Offset Approach
Under the proposed offset policy, when the UK buys defence capabilities from an international partner, the winning contractor would be required to create jobs, share know-how and generate investment opportunities in the UK. In practice, this could mean that a foreign supplier must:
This approach—first outlined in the Defence Industrial Strategy published in September 2025—is designed to strengthen the UK’s economy and industrial base while maintaining strong international partnerships. By “backing British,” the MoD intends to ensure that even when defence contracts are awarded abroad, a significant portion of the value returns to British industry and communities.
A major focus of the initiative is support for UK SMEs. The government has committed to increase defence spending with SMEs by £2.5 billion by 2028, recognizing the role of smaller firms in driving innovation and creating skilled jobs. In line with this commitment, the MoD’s new offset plan is expected to give UK-based SMEs greater opportunities to participate in large defence projects through subcontracting and partnerships with prime contractors.
Consultation and Next Steps
The consultation period for the proposed offset policy runs for 12 weeks, closing December 23, 2025. During this time, the MoD is seeking feedback from defence industry stakeholders on how to shape a final offset framework that works for both UK companies and international suppliers. In particular, the consultation invites views on: (1) the potential benefits and risks of implementing a UK offset requirement; (2) opportunities to enhance international collaboration while safeguarding British interests; and (3) the anticipated impact of an offset policy on the UK defence sector.
After the consultation, the Government will review industry input and refine the policy’s details. If implemented, the “Back British” offset framework would mark a significant shift in UK defence procurement, embedding local economic benefit as a formal condition of doing business with the MoD. This could have far-reaching implications for defence contractors worldwide and help ensure that increases in UK defence spending translate into more domestic jobs, skills development and technology investment.
For more information on this development, please contact James Campbell, Joe Mallet or your normal contact at Pillsbury.