Budget 2026: Insights on defence issues

In the area of defence, Partner Tom Saunderson expressed cautious optimism. He stated “The defence sector has been here before. Fully funding the Defence Investment Plan and confirming the 3% GDP target for 2030 are meaningful commitments, but headline numbers without contractable pipelines do not fill supply chains.” He highlighted that the detailed spending blueprint was deferred to next year's Spending Review, meaning "the legal and commercial architecture needed to translate political ambition into signed contracts remains to be built." He emphasised the significance of the Innovative Defence Finance Taskforce and formal negotiations with Finland, Poland, and the Netherlands regarding a Multilateral Defence Mechanism, noting that these steps address long-standing investment barriers. Moreover, he raised pertinent legal questions about how public funding may impact GDP spending commitments and the terms of industry capital access.

Additionally, Principal Associate Nick Pearson discussed the potential of public financial institutions in defence investment, saying “The decision to channel defence investment through public financial institutions represents an opportunity for bold, forward-thinking partnership between public and private capital.” He argued that enhancing sovereign defence capability necessitates long-term investment, indicating that the critical issue lies in developing a robust legal framework.

Turning to data centres, real estate lawyer Darren Ashworth remarked “Government appears to be listening, and the Budget's proposed British Data Centre Covenant puts that into practice.” He underscored the importance of demonstrating local benefits and responsible resource use for developers seeking support. Partner Ben Standing echoed this sentiment, stating “Recognition of the impact imposed on communities that host vital public infrastructure such as data centres is an important first step in securing broad public support.” He encouraged developers to collaborate with local communities to gain acceptance for new data centre projects.

In the area of devolution, Partner Peter Ware hailed the proposed fiscal changes as a significant shift. He noted “Assigning a share of income tax revenues and increasing business rates retention for English mayors marks the most significant shift in the fiscal relationship between Westminster and local leaders in a generation.” He stressed that this approach empowers local authorities through locally generated tax revenues and raised important questions regarding fiscal autonomy for communities in Wales, Scotland, and Northern Ireland.