New Medium Helicopter Contract

Lord Coaker Excerpts

Wednesday 14th January 2026 Lords Chamber

[The Minister of State, Ministry of Defence (Lord Coaker) (Lab)]

The noble Baroness will know that the final decision on the award of the new medium helicopter contract will be made through the wider defence investment plan. With respect to what she said about the defence industry being a desert, the Government have signed 1,000 major defence contracts since July 2024, 86% of which have been with British companies. Many contracts relate to lethal capabilities and are not published for national security reasons. We are spending billions of pounds on British industry; we want to grow its capacity and are doing all we can to support it. However, on the noble Baroness’s specific question about Leonardo, that will have to wait for the defence investment plan.

[Lord Fox (LD)]

My Lords, I met Leonardo’s chair and CEO today. He told me that, as the Minister may know, Yeovil accounts for 3,300 direct jobs and an annual input into the local economy of £320 million. As the Minister also knows, that is our only sovereign capability for full helicopter construction and it has huge export potential. However, there is a real prospect that this will be the Government who close the gates on Westland for the last time. All this seems to hinge on the defence investment plan but, even if that plan is published soon, and even if it indicates that the medium-lift contract is going to be funded, the real question is when. Work does not need to start now, but it needs to be a secure prospect for Leonardo: it needs to have a solid workflow, which means that contract negotiations have to start very quickly. Does the Minister recognise that, without that kind of certainty and knowledge of workflow, the Yeovil site is in real jeopardy?

[Lord Coaker (Lab)]

The noble Lord and I have spoken about this. I understand exactly the points that he has made with such passion, force and logic. I cannot say any more than that the final decision will be contained within the defence investment plan. The only thing that I will say to him is that we are spending billions of pounds on the defence industry, and that amount of money is increasing. Many noble Lords say it is not enough, but it is a hugely significant sum. I quoted the total CDEL figure last time and I will quote it again: in 2024-25, the total CDEL figure was £22.7 billion but in 2028-29 it will be £31.5 billion—a nearly £10 billion increase—and we are doing all that we can to ensure that as much of that money as possible is spent within the UK on the British defence industry. On the noble Lord’s specific question, as I said to the noble Baroness, I understand the importance of that factory and the jobs that depend on it, but the final decision will have to wait for the defence investment plan.

[Lord Lancaster of Kimbolton (Con)]

My Lords, I declare my interest as director of the Army Reserve. Successive Governments have rightly linked defence investment to economic growth. Of course, a key element of that is the export element. However, we have a history of procuring the exquisite, which naturally limits its exportability. I simply ask the Minister whether this particular contract is reliant on the export element, or will the domestic procurement mean that it can stand in its own right?

--- Later in debate ---

[Lord Coaker (Lab)]

Obviously, exports are an important component of contracts that are made. On the more general point about exports, the noble Lord is right to raise the whole issue. As a Government—to be fair to the noble Baroness, she started to try to do this in the previous Government—and as a country, we need to laud our industry far more in terms of the exports that we seek to deliver across the world. As a fundamental part of the carrier strike group that went out, I went out on a number of occasions, as did a number of other Ministers and representatives of industry. We had industry workshop after industry workshop on the carrier, and on the other parts of the carrier strike group, to promote British exports and the British defence industry. The more general point that the noble Lord makes about the need for us to laud and promote our own industry in whatever sphere is exceptionally important, and we will do that.

[Lord Harrington of Watford (Non-Afl)]

My Lords, maybe I can enlighten the Minister about the export prospects for the contract with Leonardo, which amounts to about 500 aircraft by 2040 for about £400 million. Leonardo—I declare my interest as chair of Make UK, which has 1,100 defence members, including Leonardo—has been very patient about this. This contract has been going on for about four years. Leonardo is the only tender for the contract. We have been hearing about the defence investment plan for the whole of the last year and it has now been postponed until the spring. I would not be surprised if the management of Leonardo’s parent company had had enough. This has gone on for a long time and the Government should decide immediately whether they want to support UK manufacturing and defence, UK exports and 1,200 jobs in the south-west.

[Lord Coaker (Lab)]

We are in constant discussions with Leonardo about this particular contract. However, the noble Lord will have heard what I said: the final decision in respect of the contract with Leonardo will be part of the defence investment plan. He makes the point that other noble Lords have made, including the noble Baroness, Lady Goldie, that alongside that we are doing all we can with the additional money that we are spending to support British industry and promote British jobs. That is part of the policy of the Government, and it is what we are doing.

[Lord Spellar (Lab)]

My Lords, I hope the Minister will have got the message that he has support from right across the House to get across to the Treasury that a flow of funds is needed to ensure that orders come through. There is great pressure not only on Leonardo—which is, of course, also a major partner in the GCAP project—but on companies in its supply chain, which actually have to employ people to order new equipment. They do not have the same resilience and financial reserves. They need those orders so that they can start planning. Can the Minister get that message across to people across Whitehall?

[Lord Coaker (Lab)]

We are certainly making those points—with respect not only to the importance of the main contract but to the impact on the supply chain that is dependent on these contracts—to the Treasury, not just on the important Leonardo discussions but on the many other contracts the Government are signing with British industry.

[Baroness Smith of Newnham (LD)]

My Lords, is it not precisely that this contract is not being let? As my noble friend said, the conversations need to start now. If Leonardo is the only company in the running, why are the Government not having those conversations right now?

[Lord Coaker (Lab)]

We are having conversations with Leonardo; we have been talking to it for a considerable period. Those discussions go on. All I am saying to the noble Lord, Lord Fox, and to the noble Baroness is that the final decision with respect to Leonardo and the new medium helicopter will be made as part of the defence investment plan. She will have to wait for the outcome of that for final decisions to be announced.

[Lord Evans of Rainow (Con)]

My Lords, further to the point about the supply chain, is the noble Lord aware that when these small and medium-sized enterprises and family companies try to get finance to invest in the machinery required, some financial institutions see investing in companies providing services for defence as a negative? They are seen as immoral. Is the noble Lord aware of that? What can be done to reassure financial institutions that investing in the defence of the realm is exactly the right thing to do?

[Lord Coaker (Lab)]

That is a really important point; let me just broaden it. It is not just financial institutions: we still sometimes read of universities not welcoming defence industries on to their campuses and recruitment fairs not welcoming defence industries. If the threats we face become real then everyone will being saying, “Why didn’t the Government do something about it?” We need to ensure that we support all our defence industry, whether small, medium or large companies, so that they can recruit and do what they need to do to deliver the capabilities that our Armed Forces and our country need. Those financial institutions need to wake up to the threat environment in which they are operating.