Government claims a £2.9 billion uplift in defence spending
October 30, 2024
It was acknowledged that defence is central to the security, economic growth and prosperity of the United Kingdom, and vitally, it did not shy away from a blunt assessment of the threats to the UK’s national security which it said are “intensifying and diversifying, with hostile state actors being increasingly assertive and acting together in an attempt to reshape the world order.”
Defence has been identified as one of the growth-driving sectors under the government’s forthcoming Industrial Strategy, and the MOD is expected to spend more than £20 billion with UK industry next year – marking a substantial contribution to the UK economy. Defence supports more than 400,000 direct and indirect jobs across the Union, and the
budget recognised that Defence has a disproportionate benefit to deprived parts of the UK, delivering a strong regional impact. Some 67% of MoD spend on UK industry goes to areas outside London and the South East. Crucially, the defence sector plays a key role in driving research and development, producing a positive economic spillover effect to other parts of the economy.
The budget set out plans for around £25 billion of defence spending on UK industry in 2024-25, supporting advanced manufacturing in aircraft, radars, submarines, and other key industrial capabilities. This represents a significant ‘slice’ of the overall £56.9 billion defence budget.
The Chancellor has said that: “The settlement provides £2.9 billion of additional total funding to the Ministry of Defence (MoD) compared to 2024-25, growing the defence budget by 2.3% per year on average in real terms compared to 2023-24… This means the defence budget will grow in line with the economy in 2025-26, ensuring the UK comfortably exceeds the NATO spending target of 2% of GDP. The government will set a path to spending 2.5% of GDP on defence at a future fiscal event.”
Elsewhere in the document, the average annual real terms growth for Resource Expenditure between 2023-24 and 2025-26 was given as just 1.7%, with average annual real terms growth in capital expenditure at 3.4%.
Critics point out that this increase may not be enough to address the existing shortfall in defence spending, nor to fill the ‘gaps’ in the equipment plan. Others point out that using percentages of GDP as a measure of defence policy is inadequate and misleading, since it represents a measure of fiscal input, rather than of military output.
Crucially, some are asking whether a £2.9 billion increase is even enough to replace equipment already sent to Ukraine
The government has said that this funding will: “Guarantee continued support to Ukraine, committing £3 Bn per year in support for Ukraine for as long as it takes.” This represents around 5% of current annual defence spending.
In addition to modestly increasing the defence budget, the settlement will increase spending on the Single Intelligence Account (SIA) by around £340 million between 2023-24 and 2025-26.” This represents a real-terms growth rate of 2.4%.
Buried in the small print was the assurance that: “In Phase 2, the government will transform the defence operating model, establishing a new Strategic Military Headquarters and National Armaments Director role to create clearer accountability, faster delivery, less waste and deliver greater value for money.”
The budget also ‘flagged up’ the forthcoming Strategic Defence Review which “will determine the role, capabilities and reforms required of UK defence to meet the challenges, threats and opportunities of the twenty-first century.”
The Chancellor said that: “This settlement strengthens our armed forces and protects our national security,” and promised that it will: “Maintain the UK’s unshakeable commitment to the NATO alliance, enable the UK to continue to play a leading role in NATO, including through the nuclear deterrent, combat and surveillance aircraft, surface and submarine fleets, forward land forces, Special Forces and cyber and space capabilities, as well as currently leading the Allied Rapid Reaction Corps.”
It was stressed that the government’s commitment to the UK’s nuclear deterrent is absolute, describing it as the cornerstone of defence for the UK and its NATO allies.
