Britain will require overseas defence companies that win selected UK military contracts worth more than £50 million (about $67 million) to deliver jobs, investment, skills or other economic benefits back into Britain, under a new Offsets policy announced on Friday, Reuters reported.

The policy was announced by the Chancellor and the Defence Secretary during a visit to the BAE Systems Scotstoun shipyard in Glasgow, the UK government said on GOV.UK. Contracts worth over £50 million will be considered for offsets, and the benefits a contractor must deliver could reach the same value as the contract itself.

Source: GOV.UK

How the offsets will work

Overseas contractors can meet the requirement by creating British jobs and apprenticeships, opening factories in the UK, investing in domestic suppliers, or transferring technology and know-how, the government said. A new central Offset Authority will agree, value and monitor delivery of each Offset Agreement over its lifetime.

Yaani, in easy terms: if a foreign company wins a £100 million contract — 10 crore pounds — it could have to put up to £100 million worth of jobs, factories or training back into Britain. The government said more than £35 billion — yaani 3,500 crore pounds — has been spent on defence contracts with overseas suppliers since 2016, about 11% of direct Ministry of Defence spending with industry.

Source: Reuters

£50 millionMinimum contract size considered for offsets
100%Maximum benefit value — up to the full contract value
April 2027When the policy starts applying to select procurements
£35 billion+Spent with overseas defence suppliers since 2016

The policy, published on 30 October, is part of the government's 'Back British' approach set out in the Budget and will apply on a case-by-case basis to a select number of procurements from April 2027, with suppliers told early and clearly where offset requirements will apply, GOV.UK said.

The move comes as Britain raises defence spending and tries to turn military contracts into industrial growth at home, so that money spent on foreign equipment also builds factories, skills and supply chains inside the UK.