Labour is reconsidering its criteria for defining a “British” defence company as part of ongoing efforts to prioritise domestic suppliers in military procurement, with indications that American and European-owned firms operating in the UK may still qualify under the policy.
Earlier this year, government ministers committed to a “back British” approach when purchasing defence equipment, aiming to strengthen the UK’s manufacturing base, support jobs, and enhance economic growth. However, sources within the defence industry now expect a more inclusive definition that acknowledges the significant role played by multinational corporations with substantial UK operations.
Officials at the Ministry of Defence (MoD) reportedly settled on a broader interpretation after extended internal debate. They have engaged industry stakeholders through recent workshops to clarify the policy framework and its application. One industry insider noted that a strict definition limited to companies wholly British-owned would exclude many key suppliers, given the global nature of defence manufacturing.
Defence Minister Luke Pollard, speaking at the Labour Party conference, indicated that the government’s stance is evolving. He defined a British company as one with a physical UK presence that employs workers locally, contributes to skills development, and pays taxes in the country. Pollard emphasized openness to foreign firms meeting these criteria, including those from the United States and Europe.
The defence investment plan released over the summer stresses the importance of sustaining sovereign capabilities within the UK. This shift has been accelerated by supply chain vulnerabilities exposed during the COVID-19 pandemic and the conflict in Ukraine, alongside concerns about overreliance on foreign technology arising from periods of geopolitical tension, notably between the Trump administration and European allies.
A critical upcoming decision will test how the “back British” policy is applied in practice. The government will soon choose the contractor for the next generation of Skynet 6 military satellites. European aerospace company Airbus, which has a significant manufacturing facility in Stevenage, is competing with American defence giant Lockheed Martin, which has promised to establish a new UK base if awarded the contract. Both companies argue that their UK operations constitute British enterprises, employing thousands and supporting local supply chains.
An MoD spokesperson said the government aims to make the UK a leading environment for defence business growth, balancing the promotion of domestic industry with compliance to international agreements. The department intends to introduce measures that define British enterprises pragmatically, prioritise strategic purchases that enhance UK resilience, and support the development of critical skills and manufacturing capacity within the country.