Tom Tugendhat has backed a report calling for greater involvement from the financial services sector to boost defence spending in the UK.
The MP for Tonbridge, who served as security minister from September 2022 to July 2024, said the City of London has a “vital role to play” in the country’s national resilience.
“From Taiwan to Alaska, the return of state-based threats and instability has reawaken an era of competition. Nowhere is this more fierce than in technology,” Tugendhat said.
“The age of incremental investment has to give way to a generation of innovation. Defence industry, and capital markets, are key.
“The shift in technology – in areas like AI, quantum, cyber and space – show the need to rethink where modernisation matters and adapt our industry and those that support and train our future innovators. We no longer have the luxury to ignore our own security needs.”
The report, produced by DWP Technology, called on the government to catalyse more private capital investment into defence, including by committing to refreshed public-private partnerships for critical national infrastructure, designating programmes for private capital funding and reforming procurement rules to speed up the award of contracts.
Co-authored by Air Marshal Andrew Turner CB CBE, the report urged the financial sector to invest more into defence and security, promoting London as the European centre of global security and defence financial services with the introduction of a “defence guarantee” to encourage greater private sector investment and lending.
Turner said: “Investment in security and driving national growth are not just symbiotic, they are critically inter-dependent.
“The markets and Government must work together to unlock public and private capital, drive innovation, and ensure that the United Kingdom retains its edge.
“The potential to lead is within reach, but greater and faster investment is required.”
Defence spending plans
The report comes as the UK’s defence ministry pledged to spend £250m on funding five “defence growth deals” across the UK to “unleash the potential of local authorities, businesses and research institutions to support UK defence” in a move that could generate thousands more jobs in the sector.
The government said the cash will help forge long-term partnerships between national, devolved and local government, uniting businesses and research institutions to harness local expertise and resources in defence and the dual-use sectors.
In May, defence secretary John Healey unveiled plans to open a “marketplace” that will allow suppliers from different areas of the economy to support defence firms, telling an audience at the London Stock Exchange that “UK defence is open for business.”
Healey announced the new scheme linking up the defence sector with companies in software, data and artificial intelligence before becoming the first defence secretary to close the day’s trading at the London market.