In May 2025, the UK government announced a sweeping “Engine for Growth” package of procurement reforms to speed up defence spending and boost small business innovation. Defence Secretary John Healey unveiled measures to cut contracting times dramatically, create a new technology marketplace, and pour funding into cutting-edge projects, all aimed at turning Britain into a “defence industrial superpower.” Key initiatives include a Ministry of Defence “Tech Scaler” marketplace with enterprise agreements for AI and software providers, target procurement timelines reduced by up to 60%, and a new UK Defence Innovation organisation with a £400 million budget this year. The package also establishes a Defence Industrial Joint Council to coordinate public-private investment.
Healey stressed the urgent need for change. He said that “the war in Ukraine confronts us with the truth that a military is only as strong as the industry which stands behind it.” The new measures are part of Prime Minister Keir Starmer’s strategy to ensure increased defence budgets benefit UK industry and jobs. For example, procurement targets have been slashed: contracting time for major kit (planes, tanks and ships) is to be cut from an average of six years to two, while upgrades and software buys are likewise accelerated to one year and even three-month cycles respectively. Healey said this means the armed forces “will get what they need when they need it, and for investors… a timelier return on investment”.
Tech Scaler (Marketplace): A new MoD digital platform to drive innovations from lab to front line. The government has already signed enterprise agreements with AI and software firms (e.g. Adarga, Hadean) worth up to £50 million.
Procurement Reform: A segmented, faster process for equipment and services, with targets such as 6→2 years for major hardware, 3→1 years for system upgrades, and off-the-shelf buys in quarterly cycles.
UK Defence Innovation: A new organisation launching by July 2025, with a ring-fenced £400 million budget to invest in cutting-edge technologies for the armed forces.
Defence Industrial Joint Council: A body led by the Defence Secretary to co-ordinate public-private investment strategies, aiming to boost UK defence jobs and skills.
These reforms accompany new data highlighting the defence sector’s economic value. The Ministry of Defence’s Defence and Security Accelerator (DASA) reported that its funding of 461 defence SMEs attracted nearly £600 million in private investment and created 1,842 UK jobs, including £174 million raised in 2024 alone. Daniel Maguire, Group Head at the London Stock Exchange Group, welcomed the plan, noting that “the defence industry plays a vital role in the wider UK economy, supporting jobs and creating long-term value alongside ensuring our national security. We welcome the Government’s new measures and hope that LSEG can support… initiatives to help unlock capital for companies, boost growth, and promote innovation.”
These steps build on wider defence-industry strategy. Chancellor Rachel Reeves had already described the UK’s defence procurement system as “broken” and promised reforms in her March 2025 budget. Critics welcomed the speeded-up contracting. For instance, the TechFunding News platform noted that procurement decisions for fast-moving innovations like drones will now be made within three months. Healey echoed this urgency: “UK Defence is open for business and together we can make Britain secure at home and strong abroad,” he said at the launch event in the City of London.
Industry commentators observe that these reforms come as the UK commits record spending. Starmer has pledged to raise defence outlays to 2.5% of GDP by 2027, and the new package is explicitly designed to ensure SMEs share in the growth. In Defence Secretary Healey’s words, the initiative “will ensure that smaller firms benefit from increased defence spending, attracting new suppliers and fast-tracking the technologies of the future into the hands of our Armed Forces”. With faster contracts and dedicated funding, the government aims to unlock innovation and jobs, strengthening national security while building a broader “defence dividend” for the British economy.
Sources:
New ‘engine for growth’ package announced as Defence Secretary closes London Stock Exchange – Gov.uk
UK unveils growth package for defence SMEs to boost innovation – Reuters
Defence Secretary Unveils Engine For Growth Package – Mirage News
