Defence Secretary Wes Streeting has denied “kicking the can down the road” over how much the UK spends on defence.
The government has faced criticism for not setting out a pathway at Wednesday’s Budget to hit its target of spending 3% of GDP on defence by 2030.
Streeting is at odds with MPs on the Commons defence committee over the issue.
It comes as Chancellor John Healey and Streeting announce that foreign firms which are awarded defence contracts of more than £50m will need to invest an equal value back into the UK.
Under the new investment rules, described as an “offset strategy”, these companies will need to spend an equivalent amount on British factories, jobs and training.
The Ministry of Defence will apply the rules on a “case-by-case” basis from April 2027, the government said. Healey and Streeting will unveil the policy on a visit to UK defence contractor BAE’s shipbuilding site in Glasgow later.
Countries including Poland, Norway and the Netherlands have mandated similar rules to “boost the economic benefit from defence procurement”, the government said.
While ministers hope the rules increase investment in Britain’s defence industry, they appear designed to do so in a politically palatable way rather than committing to spending cuts.
Tan Dhesi, Labour chair of the cross-party Commons defence committee, said on Wednesday that decisions had been “kicked into the long grass” to next year’s government spending review, rather than announced in the Budget.
He warned that without building capabilities now, “we risk leaving ourselves seriously vulnerable in the event of a major conflict”.
Streeting hit back at these comments as “unfair” and “unfounded”.
Speaking on Thursday, Dhesi said the committee stands by its criticism.
“We had hoped to see that the chancellor would set out a precise pathway to spend 3% of GDP on defence by 2030,” Dhesi told BBC Radio 4’s Today programme.
“But instead some of those key decisions on defence have lamentably been delayed until next year’s spending review.”
He praised the government for plugging a £4.7bn hole in the Defence Investment Plan in the Budget, through asking government departments to cut their capital budgets by 1%.