Chancellor Rachel Reeves is poised to award a crucial contract to Italian defence company Leonardo, securing the future of Britain’s last military helicopter manufacturing site and safeguarding 3,000 jobs.
A Treasury source confirmed on Friday that the deal will prevent the closure of Leonardo’s Yeovil facility in southwest England, which the firm had threatened without a new agreement.
The deal, worth up to £1 billion, had faced uncertainty just days before a 1 March deadline.
A Treasury source indicated Ms Reeves felt compelled to intervene, ensuring UK defence spending protects British business and employment.
“She wasn’t going to let this deal collapse under her watch,” the source added. The approved contract will see 23 medium-lift support helicopters acquired, fewer than the 44 originally outlined in a 2022 government notice.
A spokesperson for Leonardo declined to comment.
A separate source told Reuters Leonardo’s tender offer expires on 1 March, adding that further talks between the government and Leonardo were likely in the coming days.
Sky News had reported earlier that defence minister John Healey had been due to visit the factory in Yeovil on Thursday to announce the deal but pulled out because the finance ministry had yet to sign it off.
The government has previously said it needed to finalise its defence investment plan before it could award the helicopter contract.
That plan has been delayed from the autumn amid media speculation about a 28 billion pound ($38 billion) hole in the military budget, despite Prime Minister Keir Starmer’s pledges to boost defence spending.
The Yeovil facility dates back to 1915, when it was known as Westland and made planes used in World War One. It pivoted to helicopters in the 1950s and has recently produced the Merlin and Apache helicopters.
As well as the 3,000 jobs on site, a further 9,000 jobs in the supply chain are supported by the factory.
