Overseas companies winning British defence contracts worth more than £50 million will be required to put benefits back into the country that could match the full value of the contract, through jobs, apprenticeships, factories, investment in British suppliers and transfers of technology, under an offsets policy published today, according to the government.

A contract worth £100 million could carry an obligation to deliver up to £100 million of new jobs, facilities or skills training in Britain, and a new central Offset Authority will agree, value and monitor what each supplier owes through dedicated Offset Agreements.

The policy was announced by the Chancellor and the Defence Secretary on a visit to BAE Systems at Scotstoun in Glasgow, and forms part of the Back British approach set out in the Budget.

John Healey, Chancellor of the Exchequer, said: “We are putting British jobs and British businesses at the heart of how Government spends taxpayers’ money.

“When a big contract goes overseas, these changes will ensure 100% of the value creates new opportunities for workers and businesses here at home, strengthening our industrial base and supporting growth across Britain.”

Wes Streeting, the Defence Secretary, said: “Every pound we invest in defence should be judged by what it does for Britain. That’s why we are backing British by buying British wherever we can.

“Even when that is not possible, we are acting to ensure that any investment brings jobs, skills and investment back home, strengthening our national security by boosting our domestic industry.”

The money at stake is the eleven per cent of departmental spending with industry that goes abroad. More than £35.2 billion has been spent on defence contracts and services with overseas industry since 2016, measured against total direct expenditure with industry and commerce between 2016-17 and 2025-26, while 85 per cent of spending already goes to British firms. Last year defence investment supported 274,000 jobs in British industry, up ten per cent on the year before, with £34.1 billion going to businesses based in Britain.

Companies holding qualifying contracts will be able to meet the obligation by creating British jobs and apprenticeships, opening or expanding factories here, investing in British suppliers, transferring technology and know-how to British firms, or using more British-made components.

Offsets of this kind are standard practice among allies, and the government named Poland, Norway and the Netherlands as countries already running similar schemes. Britain abandoned its own industrial participation requirements more than a decade ago in favour of open competition, so the policy reverses a position held across several governments.

Scotland was chosen for the announcement because the defence economy there is worth £2.5 billion and directly supports 12,200 jobs, with the £10 billion Norwegian order for Type 26 frigates supporting 2,000 local jobs and a £453 million Typhoon radar contract supporting 300 roles in Edinburgh.

The policy delivers commitments from the Defence Investment Plan and the Defence Industrial Strategy, and follows the Chancellor’s confirmation on Wednesday that the National Wealth Fund and the British Business Bank will deploy up to £5 billion over four years into defence, dual use and other sectors supporting national security, alongside the start of treaty negotiations with the Netherlands, Poland and Finland on a Multilateral Defence Mechanism to procure and stockpile equipment at scale.