Defence, Security and Resilience Bank

Lord Howell of Guildford Excerpts

Tuesday 19th May 2026 Lords Chamber

[Lord Livermore (Lab)]

I agree with much of my noble friend’s analysis, but they are two slightly separate issues. The Government have been very clear that there is nothing contradictory between ESG considerations and defence, and that no company should ever be denied access to financial services solely on the basis that they work in the defence sector. The Government are working closely with the defence sector and with financial services to identify the extent of this issue, to reduce barriers to essential banking services and to support a resilient defence industry. More widely, the proposed multilateral defence mechanism will help improve value for money and address fragmentation in the defence sector through joint procurement. It will support greater standardisation and interoperability, helping to ensure that allies’ capabilities work together more effectively. It will increase the availability of munitions and other critical capabilities when we need them most. It will support a more resilient and efficient defence industrial sector, and it will accelerate defence sector investment.

[Lord Howell of Guildford (Con)]

My Lords, is the idea behind this plan to meet vital public expenditure needs without upsetting the bond markets too much? Can the Minister just explain a little more how it will work?

[Lord Livermore (Lab)]

The scale and precise focus of the mechanism remain to be determined, but the scope of those activities would include lending to sovereigns and to the sector and providing loans to supply chains and loans for capacity expansion. We anticipate that it will make a material contribution to defence spending and investment across those involved. The intention is that this mechanism will be established as an independent international financial institution underpinned by an international agreement and with sovereign countries as members in the first instance. As with other international financial institutions, paid-in capital will be expected to leverage in private sector funding by a multiple of that initial contribution.