In this week’s Ellwood Brief, Strategic Advisor to Universal Defence and Security Solutions and former Chair of the Defence Select Committee, Rt Hon Tobias Ellwood , looks forward to the Chancellor’s Spring Statement and its wider implications for government strategy, economic resilience, and national security.
Key topics covered:
• The need for urgent investment in defence amid a rapidly changing geopolitical landscape
• The ethics of defence spending and how ESG (Environmental, Social & Governance) ratings are affecting financial decisions
• The problem with ESG frameworks: unregulated, inconsistent, and potentially undermining defence capabilities
• How cultural and financial red tape is creating barriers to defence sector funding
• Why we must urgently review the regulation of ESG standards to reflect today’s security realities
Tobias argues that the time has come to “turn on the financial taps” and support defence firms facing a more dangerous world.
Watch now and join the conversation or read on:
It’s Time to Turn the Financial Taps Back On for Defence
By Rt Hon Tobias Ellwood MP, Strategic Advisor, UDSS
The big political event this week is, of course, the Chancellor’s Spring Statement — the moment when the government lays out its financial plans and broader economic strategy for the year ahead.
Yes, we’re expecting an increase in defence spending. But let me be clear: it’s not just about more government money. That alone won’t be enough.
What we urgently need is investment — in skills, in industrial capacity, in research and development. We need to back innovation, especially as the character of conflict continues to shift dramatically thanks to emerging technologies. Staying ahead of that curve requires more than just government grants. It demands a robust, confident, and well-supported defence industry — one that can attract meaningful private sector investment, particularly in our SMEs.
But here’s the problem. Investment in defence is increasingly being labelled as unethical — and that judgment is largely being made through the lens of ESG: Environmental, Social, and Governance criteria.
Now, at face value, ESG is entirely reasonable. These standards are used by investors to assess whether companies are meeting modern expectations around environmental responsibility, social impact, and regulatory compliance. Whether it’s avoiding coal-fired power, protecting user data, ensuring fair working conditions, or adhering to FCA guidelines — these are principles we should all support.
But here’s the catch: ESG ratings are largely determined by unregulated, commercial agencies. Each uses different methodologies, and there’s little transparency or accountability in how those ratings are compiled. As a result, companies can be rated highly by one agency and poorly by another.
And somewhere along the way, defence has been swept into the same category as arms dealers and irresponsible military regimes — with little distinction between legitimate defence and aggression. That false equivalence has serious consequences.
Many pension funds and institutional investors now shy away from backing British defence companies. That means less capital, fewer growth opportunities, and a stifling of innovation — just when we need it most.
This needs to change.
If we are serious about strengthening Britain’s role on the world stage — and about preparing for the increasingly complex threats we face — then we need to turn the financial taps back on for the UK defence sector. Our firms are ready to lead. They are hubs of innovation, tech development, and high-skilled jobs. But they’re being held back by cultural red tape and outdated assumptions.
It’s time for a more balanced conversation.
We need the Chancellor — in her Spring Statement — to signal a shift. That means encouraging greater private investment in defence, and announcing a formal review of how ESG standards are applied and regulated.
Britain is waking up to the new reality: a more dangerous, more unpredictable world. We cannot afford to weaken our industrial base with well-meaning but poorly applied financial frameworks.
We must act now — to strengthen our security, support our defence sector, and ensure the UK is ready for what lies ahead.