Four Royal Navy warships are to get DragonFire laser weaponry that use intense light beams to cut through targets as part of a technological boost
New money for drones and laser weapons to “revolutionise” Britain’s armed forces has been announced by Rachel Reeves as part of a £2.2bn rise in defence spending. Vowing to turn the UK into “a defence industrial superpower”, the chancellor used her spring statement to unveil plans aimed at boosting arms exports and reaching a target of spending 2.7% of GDP on the sector by 2027.
Four Royal Navy warships are to get DragonFire laser weaponry that use intense light beams to cut through targets as part of a technological boost. A minimum 10% of the Ministry of Defence’s (MoD) equipment budget will go on novel technologies that include drones and AI-enabled kit.
The boost comes on top of £6.4bn that Keir Starmer had pledged in February would go towards the defence budget by 2027.
Other announcements include plans to create a new quango, the Defence Growth Board, in a move that Reeves said would “maximise the benefits from every pound of taxpayers’ money that we spend” and put defence at the heart of industrial strategy.
UK Export Finance (UKEF), a government agency that is supporting UK businesses with export finance, will also get £2bn to provide loans for overseas buyers of UK defence products.
Arms companies welcoming the statement included the UK subsidiary of Anduril, the US military drone manufacturer backed by the tech billionaire Peter Thiel. The company – which has said it is considering opening a factory in Britain – said in a statement released through the Treasury that the spring statement’s defence plan “echoes our thoughts and our values as we work hand in glove with the government”.
However, the extra defence funding will come at the cost of cuts to the aid budget, and Reeves was accused of “rushing through the cuts” by Bond: the membership body for NGOs. They were surprised the cuts were confirmed to start immediately from the new financial year (2025-26). Reeves said that, from next month, 10 per cent of the MoD’s kit budget would be ringfenced for investment in emerging technologies, including drones and systems enabled by artificial intelligence.
This is designed to bolster advanced manufacturing production in places such as Glasgow, Derby and Newport by creating demand for skilled engineers and openings for homegrown start-ups. The areas are already important sites for some of the UK’s largest defence players including BAE Systems, Rolls-Royce and Airbus. The ringfenced £400mn budget, which will increase over time, would be given “a clear mandate to bring innovative technology to the front line at speed”, Reeves added.
UK defence secretary John Healey and Reeves would meanwhile co-chair a new defence growth board to put the sector “at the heart of” the government’s upcoming industrial strategy, she said. The board will oversee work already started by Healey to fix the MoD’s “broken” procurement system, streamlining its operation and improving accessibility for smaller businesses competing for government contracts.
In future, the MoD would take a new “segmented” approach towards procurement along with associated targets to improve delivery timescales, Reeves said.
She highlighted the government’s announcement this month that it was providing £2bn of increased capacity for UK export finance to enable loans for overseas buyers of British defence goods and services, in order to take advantage of rising military spending across Europe and beyond.
Defence industrial hotspots including Belfast, Teesside, Plymouth and Rosyth would benefit from fresh jobs and “new confidence”, Reeves said. She also pinpointed Plymouth naval base as a target for regeneration and highlighted a previously announced £200mn investment in Barrow-in-Furness, where the next generation of submarines that will inherit the country’s Trident nuclear missiles are under construction.
While industry has welcomed fresh investment in defence, the pace of cuts to the international aid budget has sparked anger among campaigners. The Spring Statement revealed that the funding would start to fall from next year, reducing by £200mn in 2025-26.
