‘Defence investment is ethical’ says Healey as he meets firms to drum up capital

The Defence Secretary has met with start-up investors in an effort to drum up support for “ethical” investments in European defence.

John Healey spoke to venture capitalists at a meeting in central London on Wednesday as part of wider Government efforts to drive private capital into the sector.

With US support for Ukraine hanging in the balance under US President Donald Trump, both the UK and Europe have in recent weeks come under pressure to shore up the continent’s security in the face of threats from Russia.

The UK Government has now committed to spending 2.5% of gross domestic product by April 2027, and 3% by the next parliament.

But calls have also been growing in Westminster for a private sector rethink on environmental, social and governance (ESG) investment requirements that often exclude defence firms as unethical.

Mr Healey said: “We want to mobilise private investors to take a fresh look at defence, alongside the certainty of our Government’s record long-term uplift in defence spending.

“With countries across Europe facing new threats stepping up to take more responsibility for our continent’s defence is an ethical investment, and it’s good to see increasing numbers of private investors recognising that.

“There is no more important investment than in our European security.

“As a Government we are determined to tackle any blockers which are preventing private finance from flowing into UK defence, which is why today’s landmark meeting is so important.”

At the meeting, Mr Healey joined Khaled Helioui, co-founder of early-stage investment fund Plural and Grace Cassy, a non-executive director at Ten Eleven Ventures, who has supported the development of the Government’s forthcoming strategic defence review.

The group discussed how to incentivise private investment into defence and deep technology, focusing on start-up and scale up firms.

The Defence Secretary also argued that the Government’s defence spending hike – the largest sustained increase since the Cold War – as well as defence reforms will help to unlock private sector investment into high-growth British companies.

The Government’s new direct expenditure target for small and medium-sized enterprises (SMEs) will also help to give high-growth companies more certainty and sight of future investment, Mr Healey said.

Elsewhere, he cited Chancellor Rachel Reeves’ announcement last week of a £400 million ringfenced budget for defence innovation and a government commitment to spend 10% of the defence equipment budget on novel technologies.

The Government said it comes as some VC firms look to renegotiate their agreements with limited partners – the investors who provide the capital for the fund to invest in high-growth firms – to better enable financial flows into defence.

Alongside the meeting, the Government confirmed it will invest up to £250 million with Roke, a Hampshire-based defence tech firm, under a six-year contract.

The partnership aims to support around 150 jobs and deliver analysis, trials and technology development against ballistic and hypersonic missile threats.

The Defence Secretary said the Government is bringing “a clear mandate to bring innovative technology to the frontline at speed and enable the defence sector to create high-growth British success stories that deliver investor returns and national security”.