Labour was yesterday urged to use a multi-billion pound increase in defence spending to boost UK industry – as governments across Europe face up to the need to rearm.
Stephen Phipson, head of manufacturing trade body Make UK, said a pledge to increase Britain’s defence budget to 2.5 per cent of GDP should focus on ‘building sovereign capability’ – making weapons at home rather than importing them.
Governments have responded to the seismic shift in America’s military relationship with its allies under Donald Trump – raising fears that Washington will no longer come to their aid.
Those fears deepened yesterday as it emerged that the US was pausing military aid to Ukraine.
Meanwhile, European Commission president Ursula von der Leyen unveiled plans for a massive rise in defence spending across the EU that could mobilise up to £660billion over coming years.
It comes after Prime Minister Keir Starmer outlined plans to add £6billion a year to the defence budget as it climbs from 2.3 per cent of GDP to 2.5 per cent by 2027.
Going nuclear: The BAE submarine factory in Barrow-in-Furness. Labour was yesterday urged to use a multi-billion pound increase in defence spending to boost UK industry
Spending is intended to rise further, to 3 per cent of GDP, in the next Parliament. The British and European moves have resulted in defence stocks surging.
Phipson told Make UK’s conference in London that the Government must use the extra funds to cement Britain’s position as a global leader in the defence sector.
‘As war rages on in Europe due to the barbaric invasion of Ukraine by Russia, it has highlighted that we must do more as a country to ensure that we have the capabilities to defend ourselves and our allies,’ he said.
‘The UK has some world leading manufacturers in the defence sector.
‘With defence rightly being identified as one of the priority sectors of the UK economy, we must start to capitalise on our research and innovation capabilities to make sure that the defence sector is leading the way globally for years to come.’
Chancellor Rachel Reeves told the conference that she wished to ‘fire up Britain’s industrial base’ to increase arms production and would seek changes to military procurement rules to speed up delivery times.
She said Labour was ‘making defence a cornerstone of our industrial strategy to create jobs, drive growth and meet emerging global threats head on’.
Former Rolls-Royce boss Warren East told the BBC that industry would have trouble ramping up supply chains and recruiting engineers – and needed to boost investment.
BAE boss in line for £14m payday
BAE Systems’ boss is in line for a pay packet of almost £14million this year under a new ‘golden handcuffs’ deal.
The total package for Charles Woodburn, who has led Europe’s biggest defence firm since 2017, could include a £9.5million bonus.
But the maximum payout is dependent on BAE’s share price rising by at least 50 per cent and Woodburn remaining in his role until 2030.
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