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New report cites SMEs as crucial for UK Defence resilience  

Homeland January 27, 2026

A new report by Babcock International Group (Babcock), the defence company, and the University of Exeter (UoE) has called for significant reforms to help Small and Medium sized Enterprises (SMEs) more readily support UK defence and overcome common challenges.

The Next Line of Defence: Unlocking SME Potential in UK Defence from Policy to Practice report has identified six areas of focus to help leverage more SME participation in UK defence as a rallying call is issued for joint industry and government collaboration.

1. Beyond Bureaucracy: simplifying procurement
2. Recasting Primes: from gatekeepers to partners
3. Stabilising Funding: patient finance and private capital
4. Reframing Defence Careers: building a skills pipeline
5. Modernising Infrastructure: digital and physical security
6. Protecting the Country: ensuring sovereign capability

This report comes at a pivotal moment for UK defence, with SMEs identified as being central to the UK’s ambition of becoming a leading, technology-enabled defence power by 2035.

With SMEs currently representing only ~4% of defence expenditure, this not only limits UK defence capability but also hinders a wider defence dividend being realised through more local jobs and growth that SMEs could create in communities across the country.

Among the wide-ranging proposals include a call for more risk-proportionate contracting, adapting requirements to SME scale, enabling faster entry without lowering standards and a cultural shift in collaboration.

Alongside the publication of the report, it was revealed that a new 10-point industry led SME Charter is expected to be launched in the coming months. This will provide a framework for change with the aim to encourage more consistency across SME engagement through industry adoption of the charter.

Donna Sinnick, Chief Delivery Officer from Babcock said: “Babcock is wholly invested in working with SMEs across the defence enterprise and is already helping to unlock their true potential.

“In the time critical defence environment, SMEs can deliver niche technologies fast. They are agile and essential to building sovereign resilience in areas like AI, cyber and autonomy. This report provides a positive picture of the conditions that are already being created but it’s also a reminder that we still have to collectively do even more. This is both a security and economic imperative.”

Professor Harry Pitts, Deputy Director of the Centre for the Public Understanding of Defence and Security, University of Exeter said: “The threats faced by the UK and its allies demand rapid rearmament and defence innovation at a significantly ramped-up pace and scale, and to gain the upper hand against unpredictable and unconventional adversaries demands advantage in the technological cutting-edge.

“A new policy landscape promises to remove barriers so that Britain’s SMEs can help UK Defence meet both of these challenges. But to fully unlock their agility and expertise and enable more small businesses to pivot to defence opportunities, a joint effort across industry and Government is required to put policy into practice. 

“This research identifies the structural obstacles that must be dismantled and the practical action that must be taken in order to strengthen our national security through a more resilient defence industrial ecosystem – from the smallest start-ups to the largest primes.”

Image: Donna Sinnick,  Chief Delivery Officer, Babcock and Professor Harry Pitts, Deputy Director of the Centre for the Public Understanding of Defence and Security, University of Exeter launch SME report

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Post written by: Vicky Maggiani

Vicky has worked in media for over 25 years and has a wealth of experience in editing and creating copy for a variety of sectors.