UK firms 'suffering financially' as government drags heels on Defence Investment Plan

A majority of UK defence technology firms have suffered financial harm because of a chronic delay in the publication of a government investment plan for defence, a survey has revealed.

Exactly one year after Sir Keir Starmer unveiled the results of a crucial review of the armed forces – which underlined the need to rearm at a time of growing threats – his government has still not set out how this transformation will be funded.

The Defence Investment Plan (DIP) should have been published last autumn.

But a failure by the Ministry of Defence and the Treasury to agree on the size of additional funding required by the military means the date has repeatedly been pushed back.

A government minister signalled at the weekend that it should finally be released in the coming weeks amid expectations that an extra £18bn will be given to defence over the next four years.

The settlement is still thought to be billions of pounds short of what is required.

In addition, a push by John Healey, the defence secretary, to improve the way that the Ministry of Defence procures equipment has yet to deliver meaningful change, according to sources.

Staggering findings in survey of defence firms

The persistent uncertainty around investment has been ruinous for defence companies at a time when they should be investing in expanding production capacity to prepare for the possibility of the UK to be drawn into armed conflict at scale.

Offering a sense of the damage, techUK, a trade association, has polled 45 technology firms that either have contracts with the Ministry of Defence or have had such contracts.

Its findings, published on Tuesday, showed that almost three quarters of respondents - 73% - said that the market environment for UK defence tech companies has declined in the 12 months since the Strategic Defence Review (SDR) was published.

Staggeringly, the same high number - 73% - said they had experienced a contract suspension or cancellation in the last six months, while 87% have experienced funding delays or reductions.

Read more from Sky News:
British soldier killed in training accident
Israel seizes Crusades-era fortress in Lebanon

In further signs of woe, 47% of companies polled said they are still awaiting a contract extension from the financial year ending March 2026, with several reporting that this now puts the delivery and maintenance of existing operational capabilities at risk.

Such a move means the army, navy and air force risk being left less able to fight.

The trade body said that almost all respondents - 93% or 42 out of 45 companies - said they are having to reassess investment or recruitment decisions.

Asked why they were experiencing such problems, the same causes were repeatedly given, with 62% of firms citing the delay to the defence investment plan.

'This is no longer a theoretical risk'

Julian David, techUK chief executive, said: "These results are stark. Companies of every size are reassessing investment and recruitment; SMEs [small and medium enterprises] are being pushed out, and the very industrial capability the SDR depends on is being eroded in real time – at exactly the moment the government is asking industry to scale up.

"This is no longer a theoretical risk; it is measurable, immediate harm. Publishing the Defence Investment Plan, with the granularity industry needs to plan against, is the single most important step the government can take to turn the SDR's ambition into reality."

The Ministry of Defence has been approached for a response.

(c) Sky News 2026: UK firms 'suffering financially' as government drags heels on Defence Investment Plan