LONDON, ENGLAND - FEBRUARY 27: A sign outside the Ministry of Defence building on February 27, 2025 in London, England. On Tuesday, British PM Keir Starmer announced he was accelerating his country's defence spending target to hit 2.5% of GDP by 2027, three years earlier than planned. The increase, which was made ahead of a meeting between Starmer and US President Donald Trump, was to be paid for by cutting the UK's foreign aid budget. (Photo by Dan Kitwood/Getty Images)
A new team dedicated to supporting small British businesses to win more defence contracts has been established by the Defence Readiness and Industry Minister, Luke Pollard MP, on a visit in late January to the National Manufacturing Institute Scotland.
Pollard has established the Office for Small Business Growth (OfSBG), designed to assist with SME’s bidding for Defence contracts.. It will support small and medium UK firms to bid for and win more defence contracts. The ambition is to reverse the decline in Ministry of Defence (MOD) spend on SMEs, as identified in the Defence Industrial Strategy.
This will also help deliver on the Government’s pledge to increase defence spending with SMEs by 50% by 2028 and is a significant vote of confidence in around 12,000 SMEs across the UK, marking an important step in removing barriers faced by SMEs at a crucial time for national security and innovation.
The team will help to simplify and speed up cumbersome processes, provide advice to SMEs, and encourage private sector investment, supporting the Defence Secretary John Healey’s pledge to make Britain the best place in the world to start and grow a defence business.
The OfSBG will oversee a comprehensive programme of change, ranging from policy and commercial process simplification – such as improving cash flow when under contract – to encouraging private investment by providing long-term clarity on procurements. This work is in addition to enhancing transparency and knowledge sharing within the sector, all aimed at backing British SMEs.
As well as visiting the National Manufacturing Institute Scotland, which backs the manufacturing of innovative technology, Minister Pollard also visited SMEs on Monday, including Viper::Blast, based in Aberdour, who specialise in fast, high-fidelity simulation of air blast, explosive detonations, and structural loading.
Minister for Defence Readiness and Industry, Luke Pollard MP, said:
Small businesses told us defence procurement was too slow, too complex and too hard to navigate. We listened, and now we’re acting.
We’re breaking down barriers and opening new avenues for innovation. We are ensuring that our SMEs can play a vital role in strengthening our defence capabilities.
Defence is an engine for growth, and small businesses are the backbone of UK defence. This is a collective endeavour, and we are committed to supporting British businesses, enhancing our security, and driving prosperity for working people across the country.
The creation of the Defence Office for Small Business Growth aims to help boost opportunities and access to investment, supported by our pledge to increase spending with SMEs by £2.5 billion by May 2028.
Defence is a key driver for renewal in Scotland, with the Ministry of Defence spending more than £2 billion a year with the sector in Scotland, supporting nearly 12,000 industry jobs.
Scottish Secretary Douglas Alexander added:
‘As we up our game on defence, Scotland’s world class industry and supply chain and global demand for Scottish expertise will play a big role in ensuring Britain’s security, deterring our adversaries and driving economic growth for years to come.
UK SMEs saw £1.2 billion of direct investment from the MOD in 2024/25. To make defence even more of an engine for growth, the Government has set an SME spend target of an additional £2.5 billion through to May 2028, taking total MOD spending with SMEs to £7.5 billion.
For both new and existing suppliers, the OfSBG will act as a central hub for advice and support on engaging with defence, ensuring procurement processes are faster, simpler and more effective. Services include structured guidance on tendering, contracting and working with the MOD and wider defence supply chain, mentoring schemes, networking opportunities with prime contractors, signposting to regional defence clusters and trade associations, and a confidential channel for SMEs to raise concerns.
A public-facing web portal and contact centre will initially support 30 SMEs, from carefully selected sectors, covering cyber to aeronautical engineering, and covering the whole of the UK from the south coast of England to Scotland, Wales and Northern Ireland. They represent a cross section of industry including those who have previously worked with the MOD and those who are new, ensuring industry is supplying the best of British capabilities to defence. These companies will help rapidly test, trial, and refine the service before planned expansion to embrace the wider business community over the coming weeks and months.
National Armaments Director, Rupert Pearce, said:
SMEs are the backbone of UK defence, bringing the innovation, agility and fresh thinking that our Armed Forces need to stay ahead of evolving threats.
A more vibrant SME supply chain means better capability for our Armed Forces, greater resilience in our industrial base, and economic growth for communities across the country. I look forward to working with businesses of all sizes to deliver on this ambition.
By working across defence, government and with private investors, we will build a dynamic ecosystem of innovative, well-capitalised small businesses ready to deliver the capabilities our Armed Forces need.
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