EXCLUSIVE: There is growing outrage over Labour’s uncertain defence spending plans, with some UK firms ‘going to the wall’ amid a slowdown in contracts.
Sir Keir Starmer speaks to Navy personnel in front of an advanced F-35B fighter jet (Image: Getty)
The Government has “paralysed” Britain’s defence industry with the continued uncertainty over spending plans pushing the UK to rely even further on an unpredictable Trump administration.
The former heads of two major firms have warned the Ministry of Defence (MoD) is failing to maximise the potential of British aircraft design and manufacturing skills.
It came as the Express exclusively revealed yesterday that it’s believed defence chiefs inherently favouring major US companies, which they see as lower risk, and a likely lengthy, costly selection process being imposed for the tender to find jets to replace the ageing British-made Hawk, could see the Red Arrows flying in foreign built planes.
It is understood Aeralis, the only British designer and manufacturer in the running to build the replacement of the Hawk for the iconic RAF display team, could turn its attention to opportunities outside the UK due to contract uncertainty while the wheels of bureaucracy slowly turn.
The UK has been warned it has become too reliant on the US for key military kit (Image: Getty)
Mike Turner, former head of BAE Systems, said he believes British companies are being overlooked and the MoD is now relying too heavily on America.
He said he warned previous Labour governments in the 2000s that Britain was too often opting for overseas options rather than backing British firms.
He added he attempted to encourage defence officials to modify RAF Typhoon fighter jets to operate off the Navy’s Queen Elizabeth-class carriers, rather than US-built F-35s.
The first option was “much cheaper”, said Mr Turner who claimed the MoD was “determined” to buy the US-made warplanes, despite him believing the UK would never be able to afford enough for the two multi-billion pound warships.
Britain’s F-35B fighter jets have cost around £88 million each (Image: Getty)
Mr Turner told the Express: “We are very, very dependent on the US for a lot of our equipment, including nuclear.
“We are totally dependent on the US and if they ever turn their backs on us, we have a major problem because we have never had a defence industrial strategy.”
It’s thought 87% of the RAF’s aircraft are US-made or fall under Washington’s International Traffic in Arms Regulations.
Slow contract processes, coupled with doubt over spending and a perceived bias towards established — typically American — firms have all been identified as factors hamstringing Britain’s homegrown defence sector.
The MoD is said to be facing a £28billion gap in funding, while the long-awaited Defence Investment Plan (DIP) has still not been published.
Defence Secretary John Healey and PM Sir Keir Starmer (Image: Getty)
An insider told the Express that delays to the DIP risks “undermining” UK security and sovereignty.
They added this is pushing some companies “to go to the wall” and potentially face insolvency.
The source said directors of some small and medium enterprises (SMEs) are having to put up their homes as collateral for bank loans to pay their workforces and cover outgoings while waiting for contracts to be awarded.
“The Government doesn’t want to spend money and when it does, it spends it on overseas firms rather than solid British companies,” they claimed.
Other sources have warned a lack of contract awards is impacting UK defence manufacturers.
One insider described a “major cash flow problem” within one area of the sector as a result.
Another said smaller firms are wrongly being viewed within the MoD as “risky”.
They added SMEs are often filtered out because they cannot afford to spend the time and money to take part in lengthy procurement processes, described as a “myriad” of rules and red tape.
This leaves established firms with greater financial power as the ones left in the running.
Professor Sir Iain Gray, former managing director of Airbus UK, said: “There’s lots of good words spoken, but I’m involved in a lot of SMEs in the defence sector in particular where it’s incredibly difficult to get funding, the support that’s needed to help maintain and build capability.”
He added: “You lose some of the SME supply chain innovation, some of that capability, ultimately that will have an impact on our defence sector, our sovereign capability, our ability to make good decisions in terms of our defence procurement.”
The Government is under growing pressure to publish the DIP, which is now expected to be released in March.
Shadow Defence Secretary James Cartlidge said: “Labour’s DIP is long overdue, having been promised for autumn 2025, and there is one overriding reason why — this is a Government that has prioritised welfare over defence of the realm.
“For all their talk about defence spending increasing, the reality on the factory floor is far removed from Labour’s rhetoric.
Senior Conservative James Cartlidge MP accused the Government of prioritisng welfare over defence (Image: Getty)
“Procurement is on hold and UK SMEs are having to look elsewhere.”
James MacCleary, defence spokesperson for the Liberal Democrats, accused Labour of “dithering” and “negligence”.
He said: “While ministers drag their feet on the DIP, British SMEs are being pushed to the brink and we are sleepwalking into even deeper dependence on the US for critical kit we should be building — and sustaining — at home.
“Delays are endangering vital sovereign capabilities like helicopter manufacturing in Yeovil which we could lose altogether if this squabbling between government departments continues.”
The head of Leonardo has said the defence giant’s Yeovil factory — the last military helicopter factory in the UK — could close unless Labour commits to a £1billion deal for a new fleet.
Thousands of people are employed at the Somerset site, with the firm warning it could have to rethink its entire UK presence.
Andrew Kinniburgh, director general of the Make UK Defence trade association, said the industry is holding its “collective breaths” for the DIP amid a “pause” in procurement.
He said: “We just need some common sense, we need some pace and we need some money.
“The kind of frustration at the moment is ‘come on, get off the pot, make some decisions and make sure that UK businesses are absolutely at the heart of that’.”
A spokesperson for ADS, the trade association representing the UK aerospace, defence, security and space industries, said: “Neither industry or military planners can do their jobs appropriately without the certainty provided by the financial backing of the DIP.
“Announcements and intentions are all very well, but without the follow through businesses of all shapes and sizes are actively suffering with the in-year slowdown in spending.”
A MoD spokesperson said: “This Government is backing British jobs, British industry, and British innovators, making defence an engine for growth across the country. Since July 2024, we have signed 1,100 major contracts, with 84% of our annual spend going to British companies.
“We are working flat out to finalise the DIP, which will deliver the best kit and technology into the hands of our frontline forces at speed, while investing in and growing the UK economy.
“This is backed by the biggest boost in defence spending since the Cold War, with an additional £5billion for defence this financial year alone and £270billion investment across this Parliament.”
