Key facts
- Sir Keir Starmer claims £22 billion in fiscal headroom can cover a £1 billion annual defence funding gap.
- The Defence Investment Plan allocates £15 billion over four years, falling short of a £28 billion request.
- The plan involves finding £10.7 billion in savings and £4.7 billion in tax rises or spending cuts.
- Defence spending will increase to 2.7% of GDP, short of the 3% target by 2030.
- Funding includes £8bn for the Global Combat Air Programme, £63bn for nuclear deterrence, and £5bn for the army.
Sir Keir Starmer has unveiled the Defence Investment Plan, stating that £22 billion in fiscal headroom can cover a £1 billion annual defence funding gap. During a speech, defence secretary Dan Jarvis, Chancellor Rachel Reeves, and the outgoing Prime Minister defended the plan, emphasizing investment in drones and technology over large warships and jets. Jarvis stated the plan would make the armed forces "better prepared," and Reeves called protecting the UK a "defining pillar" of Starmer’s leadership. The country remains committed to lifting defence spending to 3.5 per cent of GDP by 2035, a Nato target.
Starmer asserted that Europeans must take more primary responsibility for their own defence, framing these changes as defining his premiership and the current times. He argued for meeting new world challenges head-on to ensure national safety and seize opportunities from investing in sovereign strength, stating the defence programme had been underfunded and unsuited to current threats.
However, the £15 billion package over the next four years falls short of the £28 billion requested by military officials. The plan suggests defence chiefs must find around £10.7 billion in savings over three years, while the upcoming Budget will need to secure an additional £4.7 billion through tax rises or spending cuts to meet defence spending commitments. John Healey criticized Starmer and Reeves for being "unwilling" and "unable" to commit to raising defence spending to three per cent of GDP by 2030, noting that spending would only increase by under 0.1 per cent from the current 2.6 per cent level.
Starmer claimed the government would spend £80 billion a year on defence by 2029 but warned against issuing new war bonds, calling it "just borrowing by another name." Reeves stated the extra funding came from "reprioritising spending across government," with cuts made to road and energy projects. The Prime Minister described this as a "huge historic shift" and a "legacy" to be proud of.
Major projects funded include £8 billion for the Global Combat Air Programme (GCAP) with Japan and Italy, approximately £63 billion for nuclear deterrence, and £5 billion for the army. Military officials are expected to be largely dissatisfied, and the incoming Prime Minister may adjust procurement plans and spending settlements. The next Spending Review, potentially revising funding agreements, is scheduled for mid-2027.
Lord George Robertson, former Nato chief, and Fiona Hill, former US adviser, criticized the Treasury for insufficient and slow funding. Starmer highlighted the use of AI systems for uncrewed ships and drones to collect intelligence, aiming to make the army "ten times more lethal." Andy Burnham, expected to succeed Starmer, has reportedly accepted the Defence Investment Plan.