UK aims to speed up defence contracts, finance minister says

UK wants to open up defence contracts to smaller companies

*

Government working with companies to boost capacity

*

Industry group welcomes plan

LONDON, March 4 (Reuters) - British finance minister Rachel Reeves said she would speed up defence procurement, after the UK announced an increase in military spending last week in response to U.S. President Donald Trump's call for Europe to do more to protect itself.

Trump has since paused military aid to Ukraine, heaping pressure on Britain and its allies to step up alternative support for Kyiv, and adding fresh impetus to the need to accelerate the production of munitions and other kit.

Reeves told a conference for British manufacturers on Tuesday that the government wants to cut red tape to help deliver equipment more quickly, and learn from the steps taken recently to secure arms for Ukraine.

More defence contracts would be opened up to small and medium size companies, she said.

"Innovation often comes from smaller businesses, from start-ups, particularly those that are sort of on the cusp between tech and defence," she said.

Her plans follow Prime Minister Keir Starmer's pledge on Monday to set the Ministry of Defence targets for spending with smaller companies.

Industry group Make UK, which is hosting Tuesday's conference, welcomed the changes. Andrew Kinniburgh, Director-General of Make UK's defence group, said Britain had become overly focused on big companies.

Speaking at a parliamentary committee on Tuesday, he said Britain's defence ministry should simplify its requirements and contracts to attract smaller players.

As an example of complexity, he said components manufacturer Filtronic had a 90-page contract with the Ministry of Defence, compared to an eight-page contract with SpaceX in the United States for the same equipment.

More ammunition could be produced in Britain if the government moved away from a single supplier model, he said, adding the "capacity is there".

Starmer announced last week he would increase defence spending to 2.5% of GDP by 2027 and target a 3% level, in what analysts said was an opportunity for Britain's biggest defence companies, including BAE Systems and Babcock.

"I do want to make sure that as we spend more on defence that is used to support British jobs and British industries," Reeves said on Tuesday.

Britain would always need to buy kit from abroad, she said, but added the government was working with UK defence companies to help them increase capacity and the capability to "step up" given the geopolitical situation.

The government is due to publish its Strategic Defence Review this spring, which will provide further detail on what type of equipment and technology Britain will prioritise. (Reporting by Sarah Young, additional reporting by Sachin Ravikumar, Editing by Sachin Ravikumar, William James, Paul Sandle and Christina Fincher)