Rachel Reeves has ruled out increasing defense spending this year under pressure from military chiefs.
On Wednesday, the chancellor said the Ministry of Defense would have to wait for “future spending reviews” before committing billions to the UK military.
Defense ministers have asked the Treasury to increase its budget for day-to-day defense spending amid fears of a £28bn black hole in the Ministry of Defense budget. They have repeatedly warned of the possibility of war with Russia in the coming years and believe that rapid rearmament is necessary.
On Tuesday, The Daily Telegraph revealed officials had asked for a renegotiation of the Ministry of Defense settlement in last year’s spending review.
But Ms Reeves’ team is concerned about wasteful defense spending, sources said, adding that no further funding would be provided to the department.
“Biggest increase in spending since the end of the Cold War”
“As chancellor, I am proud to have found the funds to deliver the biggest increase in defense spending since the end of the Cold War,” Ms Reeves told the media on Wednesday.
“This year alone, defense spending is £5 billion higher than under the previous Conservative government. This is the right thing to do amid the global challenges we currently face,” Ms Reeves said.
“We will increase defense spending to 2.6% of GDP by April next year, and of course we can increase that. Of course, more money will be allocated in future spending reviews.”
The next spending review is expected to take place next spring, and Ms Reeves’ position suggests that no further funding will be provided by the Ministry of Defense until then.
Ms Reeves is under pressure to increase defense spending within the government as quickly as possible. Military leaders have warned of new threats from Moscow, while Britain’s armed forces face a host of problems including personnel shortages.
The professional chiefs of Britain’s armed forces and the head of the Royal Air Force both spoke out last week about defense funding, arguing ministers should press ahead with the long-delayed Defense Investment Plan, expected to be implemented this spring.
Defense ministers hope the program will provide additional solutions for the Department of Defense while growing GDP to 2.6%.
Questions about financing
Ministers are yet to announce how the figure will be funded and are understood to be considering a range of innovative financial solutions, including international borrowing.
These plans could involve a new multilateral “defence bank”, possibly controlled by the Treasury rather than the Defense Department.
The Defense Department budget is facing a tens of billions of dollars shortfall, due in part to inflation and procurement delays, resulting in calls for more defense funding.
Sir Keir Starmer has set a target of spending 2.5% of GDP on defense by April 2027 and is “ambitious” to increase this to 3% again after the next election.
Sir Keir Starmer said on Saturday: “In order to deal with the wider threat, it is clear that we have to invest more money faster.” – Stefan Rousseau/AFP via Getty Images
The prime minister told Nato allies at a security summit in Munich on Saturday that he wanted to speed up Europe’s rearmament, saying: “In order to deal with the wider threat, it is clear that we are going to have to invest more money faster.”
Donald Trump has similarly pressured European NATO powers, including Britain, to increase defense spending.
However, No 10 sources hit back at suggestions Sir Keir is considering accelerating this increase to 3% by 2029. The Treasury is thought to be concerned about any suggestions of a faster pace.
Neither the Treasury nor the Defense Department denied claims there were disagreements over a funding solution to restart the department last year.
A Treasury spokesman told The Telegraph: “The Chancellor has made clear her strong commitment to national security. That’s why she has funded the biggest increase in defense spending since the Cold War to back up our armed forces with better equipment and support good jobs across the UK.”