UK's defence funding crisis: £16.9 billion shortfall threatens reliance on allies

The British government lacks a credible plan to fund the purchase of all the arms needed by the armed forces, warned the Public Accounts Committee. This situation threatens that the country, in terms of defense, will have to rely on allies.

The report of the Public Accounts Committee reveals that the budget deficit in the Ministry of Defence for arms purchases is £16.9 billion and is the largest since the ministry began publishing its annual procurement plan for the coming 10 years in 2012. This has happened despite the government increasing the amount allocated for this purpose by £46.3 billion by 2033.

As explained, most of the awarded amount, i.e., £38.2 billion, will be allocated to the modernization of nuclear deterrence. This includes the refurbishment of submarines, missiles, and warheads. The situation is worsened by inflation, which raised the cost of purchasing arms by £10.9 billion, and the unfavourable exchange rate of the pound relative to other currencies, which added £2.2 billion to the costs.

However, members of parliament have pointed out that the £16.9 billion deficit only concerns planned purchases. If the Ministry of Defence were to purchase all the equipment that is actually needed by the armed forces, it would lack as much as £29 billion.

The committee criticised the Ministry of Defence for avoiding difficult decisions regarding which equipment purchase programmes would have to be cancelled to make the plan financially viable. Instead, the ministry based its plans on the assumption that the government would increase defense spending to 2.5% of GDP from the current level of about 2.1%, despite there being no guarantee when this will happen.

In an increasingly unstable world, the lack of a credible plan by the Ministry of Defence to ensure fully funded military capabilities in line with government expectations leaves us in an alarming situation. We are disappointed that not only are we dealing with the same issues we are accustomed to, but they also seem to be worsening – stated commission chair Meg Hillier.

In the budget presented on Wednesday for the fiscal year 2024/25, Finance Minister Jeremy Hunt did not announce an increase in defense spending, which many members of parliament expected, but only said that it will rise to 2.5% of GDP, "when the economic situation allows it".