The UK government is set to approve a major new military contract with Italian defence company Leonardo, a deal worth up to £1 billion that will secure the future of Britain's last military helicopter manufacturing site and protect thousands of jobs. Chancellor Rachel Reeves has stepped in to ensure the agreement goes ahead, preventing the potential closure of Leonardo's facility in Yeovil, southwest England.
Deal Secures Critical Jobs Amid Uncertainty
A Treasury source confirmed on Friday that the deal will safeguard 3,000 jobs directly at the Yeovil site, with an additional 9,000 positions supported across the supply chain. The source indicated that Chancellor Reeves felt compelled to intervene, stating she "wasn't going to let this deal collapse under her watch" and emphasising that UK defence spending must protect British business and employment.
Contract Details and Timeline
The approved contract will see 23 medium-lift support helicopters acquired for the UK military, significantly fewer than the 44 originally outlined in a 2022 government notice. The deal had faced considerable uncertainty just days before a 1 March deadline, with Leonardo's tender offer set to expire on that date.
Defence Minister John Healey had been scheduled to visit the Yeovil factory on Thursday to announce the agreement but pulled out because the finance ministry had not yet signed off on the contract. Further talks between the government and Leonardo were expected in the coming days to finalise details.
Historical Significance of Yeovil Facility
The Yeovil manufacturing site dates back to 1915 when it operated as Westland, producing aircraft used in World War One. The facility transitioned to helicopter production in the 1950s and has recently manufactured the Merlin and Apache helicopters for UK and international military forces.
Broader Defence Context
The government had previously stated it needed to finalise its defence investment plan before awarding the helicopter contract. This plan has been delayed from autumn 2025 amid media speculation about a £28 billion shortfall in the military budget, despite Prime Minister Keir Starmer's pledges to increase defence spending.
A spokesperson for Leonardo declined to comment on the pending agreement. The deal represents a significant intervention by the Chancellor to maintain Britain's defence manufacturing capabilities while protecting vital employment in the southwest region.
