Chancellor Rachel Reeves is poised to give the green light to a substantial £1 billion agreement for the construction of new military helicopters, a move that will effectively safeguard approximately 3,000 manufacturing positions at the historic Yeovil facility in Somerset. This decision comes after months of intense speculation and uncertainty regarding the future of the site, which had been under threat of closure.
Contract Signing Imminent
The chancellor is expected to formally sign a contract with Leonardo, the Italian owner of the former Westland factory in Yeovil, to produce new battlefield helicopters. This development follows a prolonged period of anxiety among workers, who had feared that Leonardo would follow through on its threats to shut down the plant by the end of March if the UK government failed to place a timely order for the new aircraft.
Background of the Deal
Leonardo emerged as the sole bidder for the UK's £1 billion "new medium helicopter" contract, which was launched in February 2024. This occurred after other major aerospace players, including the US company Lockheed Martin and Europe's Airbus, withdrew from the competition. The new helicopters are intended to replace the Royal Air Force's ageing fleet of Puma helicopters, which have been in service since the 1970s.
The decision to proceed with the contract, which was first reported by the Financial Times, was made just before Leonardo's offer was set to expire on Sunday. The agreement had faced repeated delays due to the Ministry of Defence grappling with a significant funding gap. This financial shortfall has also hindered the publication of a crucial military spending plan, known as the defence investment plan (DIP), which was originally due last year.
Industry Frustrations and Strategic Importance
Manufacturers across the defence sector have grown increasingly frustrated with the prolonged wait for the DIP. This plan is essential as it outlines how the government will fund its strategic defence review, a blueprint aimed at transforming the UK military in response to growing threats from Russia and rising commitments to Nato.
In a statement, an MoD spokesperson said: "The UK's new medium helicopter programme is ongoing and no final procurement decisions have yet been made. That outcome will be confirmed in due course." However, reports indicate that the contract approval is imminent, marking a critical step forward for the programme.
Leonardo's Stance and Negotiations
In November, Leonardo's chief executive, Roberto Cingolani, informed investors that he was engaged in negotiations with the MoD to "boost the collaboration with the UK government." By December, the situation had escalated, with Cingolani writing to Defence Secretary John Healey and threatening to scrap all investment in Britain if the helicopter contract faced further delays or cancellation.
Cingolani described the new medium helicopter contract as "a cornerstone" of Leonardo's UK strategy. He emphasised that any setbacks in the programme would force a reevaluation of the company's presence in the UK, including investments in electronics and cyber security divisions. Leonardo has been approached for comment on the latest developments.
This £1 billion deal not only secures thousands of jobs but also underscores the UK's commitment to modernising its defence capabilities amidst evolving global security challenges. The approval by Chancellor Reeves is seen as a vital measure to support the manufacturing sector and maintain strategic industrial partnerships.
