The Defence Industrial Strategy (DIS) publication has signalled a
decisive shift in Government procurement policy to recognise the
strategic importance of the UK's steel industry in delivering
national defence and security.
The new DIS notes that steel is an “industrial security priority”
for supply chains, and marks a departure from the long-standing
'global competition by default' approach within the Ministry of
Defence (MOD). Instead, a new, clear emphasis is focused on
onshoring industrial capability:
-
Backing UK-based businesses with longer-term
contracts, procurement reforms, and a departure from
“competition by default.” following UK Steel's strong advocacy
to improve home-grown supply chains.
-
Building a resilient industrial base by
securing supply chains, manufacturing capacity, and stockpiles,
with the encouragement of inward investment into key industries
that promise to boost defence capacity.
-
Fixing procurement by simplifying processes,
offering greater predictability, and improving transparency,
with a greater focus on early market engagement with industry,
a key demand of UK Steel in our submission to the Strategic
Defence Review.
The strategy's ambitions are backed by a revised Procurement
Policy Note for Steel (PPN) which was released in June. The PPN
is part of a wider Government package aimed at increasing
national security. It will require departments to explicitly
consider UK-made steel for all public projects in the name of
national security.
For the first time, with the DIS and the PPN in place, the MOD
will be empowered to prioritise UK-based suppliers not only on
cost, but also on the broader value they deliver in terms of
national security, supply chain resilience, and regional economic
growth.
UK Steel Director-General, Gareth Stace said:
“The Ministry of Defence is leading from the front. The
Secretary of State for Defence has said that he wants UK steel to
supply to UK defence projects. For too long, our producers have
been overlooked for major defence contracts, despite our
capability and quality. The Defence Secretary's commitment in the
DIS is a welcome endorsement of the strategic role of our
sector.
“As global supply chains are pressured and geopolitical
strains remain, the UK's commitment to strategic sovereignty
sends a powerful message. We look forward to working closely with
the new Defence Industrial Joint Council to showcase our ability
to scale up, innovate, and deliver the steel our armed forces
need, produced right here in Britain.”
Notes to editors
The UK steel industry can supply steel for naval vessels,
military vehicles, aerospace components, and key infrastructure -
all of which are essential to modern defence platforms. With the
UK investing heavily in next-generation military capabilities,
these reforms are expected to unlock significant new demand for
domestically sourced steel.
The revised Government
Procurement Policy Note for
Steel requires:
- Central government departments will be told to consider
UK-made steel for all projects, and use exemptions for buying
rules wherever possible to support steel makers, in new guidance
issued today.
-
- Consult the UK Steel's Digital Catalogue prior to design
and procurement decisions being made. Include a contract
clause which extends this obligation to Tier 1 contractors
and their subcontractors (where relevant).
- Consider if the national security exemption in paragraph
25 of Schedule 2 to the Procurement Act 2023 is relevant to
the procurement and apply as appropriate.
- Steel Procurement Taskforce final report,
2022: https://www.gov.uk/government/publications/steel-procurement-taskforce-final-report
Government is also bolstering British industry and
business:
- British industries such as energy, steel and cyber are set to
get more of the £400bn spent on Government procurement each year
under new plans being considered to protect UK national security.
The consultation, which closed on Friday 5 September, will
consider new rules to give the government greater power to back
our national security through government buying and ensure the
country retains a strong, homegrown industrial base.
- New rules would also ensure the public sector excludes
companies that have failed to pay small businesses on time.
About UK Steel: UK Steel is the trade
association for the UK steel industry. It represents all the
country's steelmakers and most downstream steel processors.
The UK steel sector:
- Produced 4Mt of crude steel in 2024 and supplied 30% of the
UK's annual demand of 9.2Mt
- Employs 36,800 people directly in the UK and supports a
further 46,000 in supply chains
- The median steel sector salary is £39,245, 24% higher than
the UK national median and 33% higher than the regional median in
Wales, and Yorkshire & Humberside where its jobs are
concentrated
- Directly contributes £1.7 billion to UK GVA and supports a
further £2.2 billion
- Directly contributes £3.1 billion to the UK's balance of
trade
- 96% of steel used in construction and infrastructure in the
UK is recovered and recycled to be used again and again
