BAE chief demands ‘clarity’ over defence spending amid MoD-Reeves row

Matt Oliver

Wed, February 18, 2026 at 7:14 PM GMT+9 5 min read

BAE Systems reported over £36bn in global orders as Europe rushes to re-arm

The boss of Britain’s biggest defence company has called for urgent “clarity” on Britain’s military spending plans amid a Government row over budgets.

Charles Woodburn, chief executive of BAE Systems, said businesses can deliver a surge of new equipment but required “a clear signal of what’s needed” first.

The Telegraph revealed on Wednesday that Rachel Reeves, the Chancellor, is pushing back against demands from the Ministry of Defence (MoD) for more money, days after Sir Keir Starmer’s pledge to build up “hard power”.

Military chiefs are said to have warned that the defence investment plan, which will set out the equipment the Government wants to buy, is currently facing a £28bn shortfall.

Ms Reeves is said to be resisting calls from the MoD for more money amid concerns that it would be wasted and require higher taxes.

Asked whether defence companies can deliver quickly if spending rises, Mr Woodburn, who is chairman of the Defence Industrial Joint Council, said: “There’s a lot of speculation as to what may or may not happen.

“But I’m actually pretty confident that the industry would be ready. We just need a clear signal or a clear steer of what’s required.

“The way we’ve stepped up in recent years, I think, is a good indication that industry can deliver when we’re given a clear outlook.

“What we’re waiting on, which I think you all know, is the defence investment plan and clarity around that.”

Charles Woodburn (left) with Volodymyr Zelensky in 2023. The BAE boss says the defence industry is ready to step up production

He added: “Earlier clarity means that the industry can make plans and invest, deploying our strong balance sheets to invest and grow in the future.

“We’re clear that we need to see the publication of this as soon as possible.”

Mr Woodburn said there was an “awful lot of work going on as we speak” to resolve the impasse on spending, “so there’s certainly no lack of effort to reach the right conclusion here”.

Fears over Tempest jet project

The delay in the defence investment plan, originally due to be published last year, has raised concerns about Britain’s next-generation fighter programme and the country’s last remaining helicopter factory.

Leonardo, the Italian defence giant that owns the former AugustaWestland plant in Somerset, has said it will be forced to shut down its manufacturing site if the MoD cannot confirm a new contract soon.

At the same time, The Telegraph this month revealed that contracts for the next phase of the Global Combat Air Programme (GCAP), a next-generation fighter project also known as Tempest, were being held up because of Britain’s delays in publishing the defence investment plan.

Britain’s Tempest fighter jet programme faces delays because of the lack of a UK investment plan - Andrew Harker / Alamy Stock Photo

Sources said the holdup was causing frustration in Japan and Italy, the two other countries in the programme.

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Asked about the programme on Wednesday, Mr Woodburn could not say whether GCAP would be protected from defence cuts.

He instead referred to “reassuring” remarks made by the Prime Minister recently in Tokyo and the House of Commons, saying: “At the moment, GCAP is proceeding under national contracts and the work is ongoing at pace, and I think we’re all pleased with the progress that we’re making.

“Notwithstanding, [we’re] looking for further clarity when the defence investment plan does get published.

“The PM certainly, in his comments, made some supportive remarks around GCAP.

“There’s not much more I can say, apart from going back to the PM’s reassuring comments.”

Sir Keir initially sparked speculation that he was pushing for higher spending after he told the Munich Security Conference that he wanted “more spending, faster”. However, Downing Street swiftly denied this.

Ms Reeves has been urged by some in Labour to change her “fiscal rules” to accommodate more military expenditure.

However, gilt traders separately warned the Financial Times on Wednesday that such a “ruse” would be likely to prompt investors to demand higher borrowing rates – defeating the entire purpose.

BAE boosts orders

In the meantime, it has led to criticism from the defence industry that Britain is failing to push forward with major contracts while other European countries – most notably Germany and Poland – ramp up spending.

BAE also announced two major export sales on Wednesday: Type 26 frigates to Norway and Typhoon fighter jets to Turkey.

The company ended 2025 with a record £83.6bn order backlog, up from £77.8bn the previous year, following new orders from Turkey and Norway for Typhoon fighter jets and Type 26 frigates, respectively.

HMS Glasgow is one of BAE’s Type 26 frigates - BAE Systems

Last year, it took in more than £36bn of orders globally as European countries scrambled to rearm in the face of Russian aggression and fears that Moscow will use a proposed peace deal as an opportunity to rebuild its military.

British defence officials have repeatedly warned about the possibility of a conflict with Russia in the coming years, saying that rapid rearmament is crucial.

Air Chief Marshal Sir Richard Knighton, chief of the defence staff, last week also called for “hard choices” on spending as he warned Russia’s military posture had “shifted decisively westward.”

He is understood to have told the Prime Minister about the possible £28bn spending shortfall in a Downing Street meeting before Christmas.

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