Ministry of Defence

Alex Baker Excerpts

Wednesday 4th March 2026 Commons Chamber

[Alex Baker (Aldershot) (Lab)]

It is a huge privilege to speak in this debate. I want to use my time to highlight why the UK must join the Defence, Security and Resilience Bank as a critical part of our defence strategy. I have been campaigning for this for over a year, and I feel that this is a moment for us to think about how we support and finance our growing defence capabilities.

This Government are making record investments in defence in the years ahead, responding to increasing global threats, but we must recognise that defence spending and defence financing are two distinct matters. That is where the issue lies: our current financing structures do not support the defence sector adequately. In my constituency, we have a strong defence industrial base, and I have heard directly from businesses about the barriers they face. This is not about the big defence contractors, but rather the tier 2 and tier 3 suppliers and the SMEs. There is a misconception that these businesses are doing well and thriving because of increased defence spending, but in reality they are struggling to get access to the capital they need. British banks are heavily restricted in lending to defence companies due to international regulations, and our businesses often stay silent about these challenges, but they do affect them.

One business leader who has had the courage to speak out is Rob Taylor from 4GD. His company has been able to access the capital it needs to grow despite being based in the UK. The extreme barriers faced include being asked by banks to provide 160% security on loans—an unsustainable expectation for any business. Rob is now considering relocating his business to the United States, where there is a much more supportive environment for defence companies.

Rob is clear that the Defence, Security and Resilience Bank would provide a solution for 4GD and other businesses like it. It would offer sovereign-backed credit guarantees to UK banks, allowing them to lend much more freely to our defence sector. Economists estimate that, with such credit guarantees in place, UK banks could lend £30 for every £1—over 50% more than they can lend today. Furthermore, through its yield curve, the DSRB could enable us to achieve the 3% GDP defence spending target by 2030, which is crucial for our national security. The bank would help us to ensure that every £1 we invest in defence works harder for our country.

If we fail to expand our supply chains and support SMEs, increased spending will lead only to more expensive capabilities and defence inflation. We have already seen the impact of that in the price of 155 mm artillery shells, which has risen over 300% since Russia’s illegal invasion of Ukraine. Without a solid financial mechanism, those costs will continue to rise.

The DSRB may not fix everything, but it is an essential tool for ensuring the growth and of our defence industry. It is about supporting businesses that are essential to our national security, which are located in every community across the UK. Canada is already paving the way. Prime Minister Carney, a former financier, is backing the DSRB and urging our allies to join as charter negotiations begin. The Defence Committee welcomed a delegation from the Parliament of Canada yesterday, through the Commonwealth Parliamentary Association, and they urged the UK to join the talks.

If we want the UK to lead, this is our moment. This is as significant as when a Labour Government founded NATO 77 years ago. Joining the DSRB will allow us to shape the future of defence finance. This is a once-in-a-generation opportunity; let us act now so that we do not miss it.