“New partnership” between defence and private sector set to boost UK defence sector

Major venture capitalists from across Europe can help unlock billions of pounds of private investment into UK technology and defence firms, as part of a “new partnership” between defence and private investors, the Defence Secretary has said today. 

In a first-of-its-kind meeting between venture capital firms and a UK Defence Secretary, John Healey MP spoke at a breakfast roundtable at Plural's offices in central London. The meeting was convened by Plural co-founder Khaled Helioui, and Grace Cassy of Ten Eleven Ventures who has supported the development of the Strategic Defence Review as part of the Defence Review Team.

In a changing world, with increasing threats and war in Europe, the group discussed how to incentivise greater private investment into defence and deep technology, to help deter Britain's adversaries, secure the UK economy, protect the incomes of hard-working families up and down the country and support European security. 

The Defence Secretary set out how the Government's largest sustained increase in defence spending since the Cold War – with 2.5% of GDP spend by April 2027 and a commitment to hit 3% in the next Parliament – coupled with defence reforms, can unlock private sector investment into high-growth British firms – boosting jobs and delivering on the Government's Plan for Change by making defence an engine for growth across the UK. This includes:

• A new ambition to unlock more private defence investment, supported by long-term certainty of rising Government defence investment over the next decade, alongside the new Government direct expenditure target for SMEs including start-ups and scale-ups to give high-growth companies more certainty and sight of future investment.

• Turbocharging innovation with a new £400 million ringfenced budget for UK Defence Innovation, announced by the Chancellor last week, alongside a commitment to spend 10% of the MOD equipment budget on novel technologies.

• Making clear that “defence is an ethical investment” in deterring conflict and preventing the huge human and economic costs caused by conflicts such as Ukraine. It comes as some funds look to renegotiated Limited Partner Agreements to better enable investment into defence.

In a sign of the Government backing British firms with long-term public investment, the meeting comes as the Government confirms up to £250 million investment across the next six years with UK defence tech firm Roke – supporting around 150 jobs and delivering analysis, trials and technology development against ballistic and hypersonic missile threats.

Roke – based in Hampshire and focused on innovation and AI development – have been awarded a contract up to six-years in length, known as Science and Technology Oriented Research and development in Missile defence (STORM). The framework streamlines crucial research into innovative technologies, helping enhance the UK's ability to detect, identify, and defeat ballistic and hypersonic missile threats – work that is essential to safeguarding the UK and its allies. 

Defence Secretary, John Healey MP said:

“In this new era of rising threats, national security isn't just a military imperative. It's the foundation for economic growth, securing Britain's future and our Government's Plan for Change.

“As Defence Secretary, I am determined to bring together investors, innovators and industry in a new partnership that drives British jobs and growth. We want to mobilise private investors to take a fresh look at defence, alongside the certainty of our Government's record long-term uplift in defence spending.

"With countries across Europe facing new threats stepping up to take more responsibility for our continent's defence is an ethical investment, and it's good to see increasing numbers of private investors recognising that. There is no more important investment than in our European security.

“As a government we are determined to tackle any blockers which are preventing private finance from flowing into UK defence, which is why today's landmark meeting is so important.”   

The Defence Secretary also said the government is bringing “a clear mandate to bring innovative technology to the frontline at speed and enable the defence sector to create high-growth British success stories that deliver investor returns and national security.”  

ENDS

 Background: 

• UK Defence Innovation will enable innovative technology to rapidly progress from idea to the front line to secure competitive advantage, with a £400 million ring-fenced budget. 

• Defence Reform is the biggest transformation of the MOD in over 50 years, with the new operating model underway this week. It is a radical departure from previous structures and will ultimately create a stronger defence centre which is able to secure better value for taxpayers, and better outcomes for our Armed Forces.

• As part of these changes, the Defence Industrial Strategy (DIS) will recognise the significant potential offered by private finance to the growth of a better, more integrated, more innovative and more resilient defence sector. It will help overcome key barriers like slow procurement processes, lack of funding for commercialising new technologies, skills gaps, and inadequate export support.

• The government is significantly increasing the proportion of MOD's equipment procurement spend on novel technologies like dual-use tech, uncrewed and autonomous systems and AI-enabled capabilities, spending at least 10% from 2025-26 - as the Chancellor announced during the Spring Statement last week.