The industrial base
Where the money lands — and who receives it.
Most of it stays in Britain
In 2024/25, 85% of MOD global expenditure with industry was attributed to UK activity, including work reached through foreign-government payments and Foreign Military Sales.
- UK — 85%Includes UK work through foreign-government channels
- Overseas — 15%
Source: MOD Regional Expenditure with Industry 2024/25.
What this measures. This global measure includes indirect channels. Direct payments alone were £31.9bn to UK industry out of £35.4bn worldwide (90%). Location of work does not establish UK ownership, intellectual property, value for money or readiness.
The domestic share alone cannot establish value for money or readiness. The policy question is which capabilities require a secure UK supply chain, and where allied procurement can meet the same requirement at lower cost or risk.
Ten companies, and everybody else
The growth argument for defence spending is that it creates jobs and industry across the country. The spending data shows where it actually goes.
Over 39% went to the ten largest suppliers in 2024/25; BAE Systems accounted for 16.3%. MOD publishes the ten largest suppliers in rank order but a percentage only for the largest and smallest of them. The eight in between are ranked, not quantified. The rounded top-ten total does not support an exact residual for the other nine suppliers.
16.3%
To BAE Systems alone
The largest single supplier
4%
Direct UK-industry spending with SMEs
£1.2bn in 2024/25. Separately, 559 new contracts worth £876m.
£21.442bn
Across 2,398 new contracts
2024/25
The comparison that matters. The ten largest suppliers received over 39% of MOD procurement expenditure, including 16.3% for BAE Systems. Separately, SMEs received 4% of direct expenditure with UK industry. The denominators differ, so these percentages cannot establish a four-to-one spending ratio.
What the 4% does and does not count. The 4% measures direct expenditure with UK industry. SME work through prime contractors is not captured. The publication does not quantify that indirect contribution, so no total supply-chain share is inferred.
Why concentration is a genuine trade-off, not simply a failure
Only a handful of firms on earth can build a nuclear submarine or a combat aircraft. Concentration in those programmes is unavoidable and not a scandal. The risk is what it does to everything else: competition, prices, the government’s negotiating position, and whether a smaller firm with a better idea can ever get in.
Buy British, or buy from allies?
This is one of the few defence arguments where both sides are straightforwardly right some of the time.
Buy British
- ✓ Jobs, tax revenue and skills stay in the UK
- ✓ Sovereign capacity that cannot be switched off by another government
- ✓ Supply security if war disrupts international trade
- ✗ Often higher unit price
- ✗ Less competitive pressure on the supplier
- ✗ Can be slower to reach the front line
- ✗ Risks entrenching the concentration shown above
Buy from allies
- ✓ Off-the-shelf equipment available sooner
- ✓ Usually cheaper at the point of purchase
- ✓ Interoperability with the forces you will fight alongside
- ✓ Access to technology the UK does not have
- ✗ Dependency on another state’s export controls
- ✗ Overseas supply chains that a conflict could cut
- ✗ Money leaves the UK economy
- ✗ Long-term erosion of domestic capability
The sensible position is not 100% British procurement, and not open competition regardless of consequence. It is sovereign capability where dependency would be an unacceptable strategic risk — munitions, nuclear, shipbuilding, missiles, propulsion, cyber — and international competition where it would not.
Can Britain build at rate?
How fast could British industry replace what a war consumed?
Ukraine has shown that high-intensity war consumes munitions, drones and vehicles far faster than peacetime production replaces them. A country can have a large budget, a modern design and no ability to build at rate. That is a different problem from underfunding, and more money alone does not fix it.
Skills
Nuclear engineers, welders, systems and software engineers, shipbuilders and cyber specialists are scarce — and AUKUS, Dreadnought, warhead modernisation and shipbuilding are all bidding for the same people at once.
Order predictability
Factories, apprenticeships and supplier networks cannot be built around unpredictable annual orders. Multi-year visibility is a precondition for capacity, not a bonus.
Continuous production
The alternative to standing capacity is dormant factory, then crisis, then scramble. Maintaining a minimum production rate costs money in peacetime and buys time in war.
Not yet measurable here. Production rates, stockpile depth and surge capacity are the numbers that would actually answer this question, and they are not published in a form that can be charted. This site will not estimate them. What can be said is that the constraint is recognised by the government and by NATO, and that several defence programmes rated Red give supply-chain and engineering shortages as the reason.
Related: the nuclear enterprise, which competes for the same engineers and the same budget. Or back to the defence overview.
What defence spending buys from industry
MOD direct expenditure with UK industry
£bn at 2024/25 prices · 2021/22 to 2024/25
Industry data and definitions
| Year | UK cash (£bn) | UK real (£bn) |
|---|---|---|
| 2013/14 | 18.838 | 25.763 |
| 2014/15 | 19.124 | 25.838 |
| 2015/16 | 18.712 | 25.101 |
| 2016/17 | 18.547 | 24.330 |
| 2017/18 | 18.853 | 24.349 |
| 2018/19 | 19.238 | 24.333 |
| 2019/20 | 20.260 | 25.033 |
| 2020/21 | 20.389 | 23.909 |
| 2021/22 | 21.929 | 25.866 |
| 2022/23 | 25.212 | 27.779 |
| 2023/24 | 28.945 | 30.123 |
| 2024/25 | 31.909 | 31.909 |
MOD official ODS, Table 1 · released 10 June 2026 · last successful refresh 10 October 2026 · within refresh window. The chart starts after the source’s 2020/21 series break. Earlier observations are retained in the table and must not be treated as directly comparable across that break.