The UK government’s defence investment plan (DIP) will guide the spending decisions of the Ministry of Defence and armed forces not only for the remainder of this parliament, but also for the five years from 2029. So far, the plan has been praised and criticised in equal measure. But one element that has attracted widespread attention is the overall spending figures.
Part of the settlement that has been agreed with the Treasury rests on the Ministry of Defence (MoD) finding around £11 billion in efficiency savings between now and the end of the financial year in 2030. This will be a significant challenge – but efficiency details like these are often used in government funding calculations to increase the headline figure.
There will be an additional hurdle for the new chancellor however: there is still a a shortfall of around £4.5 billion in the funding available against the expected spending, even once the savings have been factored in. This will have to be found before the next general election if the commitment to spend 2.7% of GDP on defence from 2027-2028 is to be met.
Andy Burnham has said that if he becomes the UK’s next prime minister he will not deviate from either the current plan or the longer-term policy for the UK to spend 3.5% of GDP on core defence by 2035.
Achieving this will mean there are various constituents that will have to be kept happy. Backbench MPs will not want local infrastructure and construction projects cancelled to fund defence. On the other hand, Burnham cannot afford to lose a defence secretary in the way that Starmer did.
But if the planned spending doesn’t happen, the UK’s Nato allies may question the nation’s commitment to both the alliance and wider collective defence. Funding defence without resorting to spending cuts in other departments, increased taxes or borrowing will continue to be challenging as the UK navigates an increasingly dangerous and volatile world.
Light on detail
Spending shortfalls are not a new problem for government calculations, however. They are often seen in the MoD, particularly with regard to the purchase of major weapons systems. These projects often start without a guaranteed funding stream in the hope that the extra money will be made available in future years. This often means that money is transferred from one project to another in order to continue progress.
But the DIP is light on the details of how these efficiencies will be found. Some of the ideas involve greater automation and the use of artificial intelligence, as well as the removal of around £1 billion that is currently spent on external assistance, which includes consultancy.
The ambition is that 20% of human resources, finance and commercial functions within the MoD will become automated. The plan does not, however, set out how much money the move towards automation will free up. As such, it will be difficult to hold service chiefs to account on this.
When such efficiency savings were proposed in the past, such as in 2015 when savings of £9.2 billion were earmarked, this was money that was required to support programmes like the purchase of new weapons systems. These programmes depended on the savings being made in order to continue.
When journalists challenged the MoD on this recently, they were assured that this is not the case with the current investment plan. In other words, money clawed back through efficiency savings will be used to bolster frontline military activities.
In theory, this means that there should be an increase in the capability and efficiency of the UK’s armed forces, providing more security and protection for the population. This in turn should strengthen the UK diplomatically and give it more influence in global affairs.
But of course it depends on whether the efficiency savings can actually be found – and if they meet the original estimates. Often, savings are harder to find in real life than they are to identify on paper and may not lead to the kind of figures originally estimated. This can of course increase the projected shortfall, meaning further difficult choices over UK security in future.
The MoD has agreed to find around £11 billion in efficiency savings.
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But one very welcome move, among others, within the plan is the increase in funding for the air defence of the UK. This has been an area of weakness for several decades and is desperately in need of modernisation. Radar systems, sensors and counter-drone technology will be upgraded to minimise the threat from Russian drones over UK military bases and civilian airports.
The plan is a compromise, but one that tries to meet the most serious defence needs of the country. The UK simply does not have the financial resources to create a military force that can do everything, and so tough choices are necessary. The big question is whether the efficiency savings on which the plan depends can be achieved.
Given increasing global instability, the need for action is more pressing than at any point since the end of the cold war. Delays in decisions today due to a lack of funding could have catastrophic consequences in the years and decades to come.
Matthew Powell does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.