Oral Answers to Questions

Sadik Al-Hassan Excerpts

Monday 30th June 2025 Commons Chamber

[Luke Murphy (Basingstoke) (Lab)]

3. What steps his Department plans to take through the defence industrial strategy to support SMEs.

[Sadik Al-Hassan (North Somerset) (Lab)]

8. What steps he is taking to ensure that SMEs are able to participate in defence procurement contracts.

[The Minister for Defence Procurement and Industry (Maria Eagle)]

The Government’s modern industrial strategy, launched last week, announced a 50% increase in MOD spending with small and medium-sized enterprises to £7.5 billion a year by 2028, reversing the downward trend under the previous Government. Our new SME hub will help small firms to access better opportunities, and our reform of defence procurement, along with ringfenced innovation funds, will give SMEs access to the defence dividend. This Government’s increase in defence spending will provide jobs and growth across the UK.

[Maria Eagle]

My hon. Friend makes an interesting point. There is some flexibility under our procurement rules to specify national security grounds upon which to make a decision. Half our spend is already through sole-source contracts. I am of course happy to meet him and his SMEs. We are delivering for defence by promoting new procurement models that are easier for small firms to access, and our SME hub will engage directly with SMEs to help them to access defence supply chains.

[Sadik Al-Hassan]

In my constituency of North Somerset, many small and medium-sized enterprises are springing up to support our country’s rearmament efforts. In Nailsea, one such company, 1415 Industries, was recently blocked from opening a business bank account due to blanket prohibitions and excessive delays by retail banks, hindering its ability to organise seed funding and bid for procurement contracts. Will the Minister meet with me to discuss the case of 1415 Industries and the wider problem relating to financial institutions and their interactions with defence SMEs that the case highlights?

[Maria Eagle]

I recognise my hon. Friend’s point, and I will of course meet with him and his SMEs. Over the last six months, the Defence Secretary and I have convened stakeholders from industry and finance to discuss this issue and make it clear that defence is an ethical sector that they should support. The strategic defence review committed us to developing a dedicated financial services sector strategy, which we will aim to publish in spring 2026. That should give us a further opportunity to make sure that the finance industries know what a good investment defence can be.