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Will defence spending help businesses boom?

Joshua Aitken
BBC Politics North
BBC A man working for Kromek sits with a neat quiff, looking at a screen. He's sitting at a bank of desks with a range of electrical equipment spread across them. In the background a woman sits working on a small black electronic device about the size of a standard house brick. BBC
There are hopes the increase in defence funding could benefit businesses in the north-east of England

A Labour MP has said investment in defence announced by Chancellor Rachel Reeves could directly benefit small businesses in the north-east of England.

Alan Strickland, who represents Newton Aycliffe and Spennymoor, recently led a debate on the issue, highlighting the work of small technology firms across the region.

Defence spending was a beneficiary of Wednesday's Spring Statement, receiving an extra £2.2bn in the next financial year.

However, former Middlesbrough Conservative MP Sir Simon Clarke said, despite this, the government was "doing precisely the wrong things" to bring more jobs to the region.

One company celebrated by Strickland in the debate was Kromek - a technology company set up in County Durham.

CEO Dr Arnab Basu pointed to a £400m fund for defence innovation as an exciting prospect for many technology businesses.

"It is a good thing because, in the UK today, we need to build resilience and also nurture our own supply chain within our country," he said.

"As long as this money reaches the right companies, and reaches every corner of the country, I think we will see a deep impact with this fund."

Dr Arnab Basu stands wearing a pastel blue shirt with the same desk of electronic equipment behind him.
Kromek supplies defence resources to partners including the UK and US governments

Sir Simon, who previously served as Levelling Up minister under Liz Truss' government, said while he welcomed the additional funding he was sceptical it would translate into more jobs.

He told BBC Politics North: "I think it's right that the UK should rearm, particularly in the face of the Americans' new policy, but I would really caution about an expectation of lots more employment.

"The biggest single problem that we face is the increase in National Insurance which is coming into effect in April.

"The government talks a good game on employment, it's actually doing precisely the wrong things and the fact that the growth forecast was halved this week is testament to the fact this government is getting things wrong."

Sir Simon Clarke, Rachel Featherstone, and Alan Strickland all sitting on a red sofa in a BBC studio with presenter Richard Moss. The guests and host look towards Sir Simon who's wearing a blue tie. Teal coloured, Politics North branded mugs sit on the white coffee table in front of them.
Local politicians debated Labour's handling of the economy on the economy in this week's BBC Politics North

Defending the government, Strickland said "the significant investment" it was making in national defence and the defence of allies would lead to British investment and jobs.

Businesses were "glad to see real investments in different industries", he said.

South Tyneside and Sunderland Green Party campaigner, Rachel Featherstone, said she welcomed additional investment but was also worried about who would ultimately benefit.

"Jobs in the North East are always a good thing but we have concerns that actually this money will end up in the offshore accounts of multinationals and shareholders and not be invested back into our communities," she said.

"We seem to be a bit of a leaky bucket here in the UK, our tax money goes into private companies and it goes out of the country."

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