UK introduces Offsets policy for large overseas defence contracts

The UK Ministry of Defence and HM Treasury announced a new Offsets policy on 30 October 2026. Under it, overseas companies that win significant UK defence contracts will be required to invest back into Britain. The government’s press release describes the threshold both as contracts worth £50 million or more and as contracts worth over £50 million.

The benefits that contractors deliver could reach the same value as the contract. The release gives the example of a £100 million contract leading to jobs, facilities or skills training worth up to £100 million in the UK. Companies could meet the commitment by creating British jobs and apprenticeships, opening or expanding UK factories, investing in British suppliers, transferring technology and know-how to UK firms, or using more UK-made components.

A new central Offset Authority will agree, value and monitor delivery through dedicated Offset Agreements. The MoD will apply the approach case by case. The policy was published on 30 October and will apply to a select number of procurements from April 2027, with suppliers notified early where offset requirements will apply.

The release puts the scale of overseas buying in context: since 2016, more than £35.2 billion has been spent on defence contracts and services with industry overseas, which it says is 11 per cent of total MoD direct expenditure with industry and commerce between 2016/17 and 2025/26.

The government says the UK joins allies that already use similar offset policies, naming Poland, Norway and the Netherlands.