Next chancellor will have to find £5bn to fund black hole in defence funding, government figures reveal – UK politics live

Britain, and other Nato countries, have committed to raising defence spending to 3.5% of GDP by 2035.

In an initial response to the defence investment plan, the Institute for Fiscal Studies thinktank says that, to reach that, the government will have to raise defence spending by the equivalent of £25bn a year in today’s money.

Max Warner, a senior research economist at the IFS, says:

Zooming out, the UK is currently committed to spending 3.5% of GDP on defence by 2035, alongside Nato allies. Defence spending was 2.2% of GDP in 2023–24, and today’s plans imply it will reach 2.7% next year and remain there until 2029–30. While the announced increases today are quite small, the overall increase in defence spending since this government came to office remains substantial – but even so, only gets us just over a third of the way to 3.5%.

Defence spending will likely remain one of the biggest fiscal pressures facing the UK in the medium term. If the UK is to get to 3.5% of GDP spent on defence in 2035, this will mean finding around an additional £25bn each year by 2035 in today’s terms relative to the newly announced plans. Given the clear difficulties of finding less than a sixth of this per year as part of the DIP process, this will be one key challenge facing the next prime minister, along with deciding how a substantial share of today’s top-ups will be funded.

Labour governments should never think that being able to deploy military force is incomptable with liberal values, Lord Hermer, the attorney general, said today.

Speaking at a New Statesman conference, Hermer said Labour should “reject the false choice between exercising power and defending liberal values”.

Hermer said “power without values is not strength”, and “ultimately destructive”. But he also said that “values without hard power are illusory”.

Defending the case for higher defence spending, as set out in the defence investment plan today, Hermer said:

A progressive response to our dangerous world must be underpinned, unapologetically, by hard power.

Progressives do not always feel comfortable talking about hard power.

We prefer to speak about soft power: the influence the UK can wield in the world by exemplifying values like justice; fairness; rights and compassion.

Those things matter enormously. They are the lodestars of our collective politics.

But in government you learn that in a dangerous world, soft power is not enough.

Military power matters. Economic power matters. Technological power matters.

Without such hard power, our principles become aspirations rather than achievements, and our values ring hollow if we cannot defend them.

But he also stressed the importance of having a rules-based international order.

Multilateralism and the rules-based order is manifestly in the UK’s national, economic and security interests.

Shared rules make Britain more prosperous, allowing us to trade with confidence. They make us more just, by underpinning protections for our citizens. And they make us more secure, by enabling cooperation with allies.

The post-World War Two order we helped build coincided with a period of the greatest economic and social advancements in the history of humanity. That is not a coincidence.

Andy Burnham has said he will end the culture of briefing against female ministers, promising Labour MPs he will sack any staff who undermine women in his team, Jessica Elgot reports.

Rachel Reeves, the chancellor, has published her own written statement about the Dip funding. It largely repeats what was in the Dip funding explainer produced jointly by the MoD and the Treasury. (See 4.29pm.) She says the remaining £4.7bn will be found at the next budget “in a fair and balanced way”.

It is funded primarily by reallocating budget from across government departments, with £10.3bn identified now. A further £4.7bn over four years will be confirmed at Budget 2026, in a fair and balanced way.

The Ministry of Defence has also published a document explaining how the £15bn Dip is being funded.

As Keir Starmer explained in his speech this morning, all departments have been asked to cut capital spending by 1%. (See 10.56am.) That generates £4bn over four years.

Two departments have been asked to make bigger cuts: transport, which faces further cuts worth £800m over four years, and energy, which faces further cuts worth £2bn over four years.

Explaining the energy cuts, the document, jointly produced with the Treasury, says:

DESNZ [Department for Energy Security and Net Zero] will find an additional £2bn of savings – including £400m financial transactions – while maintaining the fastest growing capital budget out of any department across this spending review period. Getting off fossil fuels is vital to our national security, safeguarding household, business and government finances. DESNZ will reshape its capital budget in a way which continues to protect the clean power mission, drive renewable and nuclear build-out and insulate us from future gas price spikes on the path to energy independence. More detailed plans will be shared by autumn.

And, explaining the transport cuts, it says:

DfT [Department for Transport] will provide savings of up to £700m from its roads funding. The department will consult on reductions to the third Road Investment Strategy (RIS3) – including the potential cancellation of the A38 Derby Junctions and A46 Newark bypass schemes, both of which are yet to enter contract and not as far along as other road schemes. There will be stakeholder consultations before any final decision is taken.

DfT will also explore limited reductions to as yet uncommitted roads funding. The government remains committed to protecting funding for local authorities to mend potholes and repair their roads, protecting investment in rail infrastructure, including Northern Powerhouse Rail, and the proposals will not impact bus or rail services.

The document also says that the next chancellor will have to find almost £5bn over four years (including almost £2bn from government spending for 2026-27) to fund the rest of the Dip.

‘Next chancellor’, because even Rachel Reeves now accepts that she will not stay in post when Andy Burnham becomes PM. Her joint appearance with Keir Starmer this morning had a valedictory feel to it. At times it was as if Starmer were giving the speech at her leaving do. (See 11.36am.)

Back in the Commons, the Lib Dem MP Al Pinkerton asked Dan Jarvis if it was true that he was asked to remove a line from his speech saying the chief of defence staff supported the Dip. (See 12.40pm.)

Jarvis said that was not true. He said all the service chiefs supported the Dip.

The MoD has now published the defence investment plan.

It contains this chart showing how defence spending is rising.

The DEL is the departmental expenditure limit. Resource DEL is day-to-day spending, and capital DEL is capital spending.

And this chart shows defence spending by category.

This is what the Stop the War Coalition has said about the Dip. It is a statement from Chris Nineham, the coalition’s vice-chair.

In a telling and desperate bid to leave ‘a legacy’, Keir Starmer has insisted on announcing the defence investment plan before leaving office and before the Nato summit. Never mind the cost-of-living crisis or the collapsing services he leaves behind, Starmer wants to be remembered as the man who ramped up spending on weapons to record levels.

He claims he doesn’t want war, but that the best way to avoid it is to be prepared for it. This is a transparent lie. His government has done little more than enable the US and Israel’s illegal wars and has enthusiastically backed the war in Ukraine, doing everything possible to prolong the carnage in the effort to, as he put it today, “turn the screws” on the Russian economy.

It is clear that security, defence and the fantasy and implausible threat from Russia, which is constantly talked up by ministers, generals and arms companies, are now the main ways that the ruling classes are justifying attacks on social programmes, on welfare and working-class living standards in general in favour of still more missiles.

In the Commons Wes Streeting, the former health secretary, said the government needed to go further and faster in raising defence spending. He asked Jarvis why the government was not joining the Defence Security and Resilience Bank.

Jarvis said the government would look at different mechanisms to increase defence spending. He said, in his two weeks as defence secretary, he had not had a lot of time to look at longer-term spending plans. But he said he would look at what allies were saying, take advice and was “not ruling anything out or ruling anything in”.

This is from Tan Dhesi, the Labour chair of the defence committee, on the Dip.

The defence investment plan sets out clear priorities and welcome additional investment, particularly in readiness, nuclear capability and support to Ukraine.

However, compared with previous plans, it contains significantly less detail on how that investment will be delivered, particularly over the longer term. It is disappointing that we do not have a clear timeline for reaching 3% of GDP, let alone the pathway to 3.5% which the UK has committed to at Nato.

Al Carns, who resigned as armed forces minister over the Dip, only a few hours after John Healey resigned, went next. He asked what proportion of the defence budget was being spent on drones.

Jarvis said he knew Carns had a particular figure in mind, and he said he was keen to discuss that with him. But he said the Dip involved “the largest ever investment in drone warfare”.

James MacCleary, the Lib Dem defence spokesperson, also described the Dip as “too little, too late”.

After years of Conservative neglect, Britain needed a government willing to match the scale of the challenge.

Instead, we’ve had months of delay and now a plan that still appears to have a significant gap between the ambition and the resources required.

John Healey, the former defence secretary, says these plans mean the UK will be spending 2.7% of GDP on defence by 2030. He asks Jarvis if he agrees that more needs to be done.

Jarvis says the government has a clear “commitment that [defence] will be a number one priority at the next spending review”.

James Cartlidge, the shadow defence secretary, is responding to Jarvis. He repeats the line he used earlier about this being “too little, too late”. (See 8.37am.)

He says much of the capability outlined in the Dip “won’t be in service until the 2030s, when the threat we face is right now”.

He says the chief of the defence staff wanted £28bn for the Dip. But this plan will deliver barely half of that, he says.

Jarvis says the UK remains committed to the Nato target to raise defence spending to 3.5% of GDP by 2035.

The UK made a promise to our allies as they did to us – 3.5% by ‘35 – and in a more dangerous world, our commitment to Nato is absolute.

I gave my word to the [Nato] secretary general and to all our allies that promise will be met and a credible plan will be produced to ensure that it is. We will reach 3% in the next parliament, with funding set out at the next spending review, in which defence will be the number one priority.

Jarvis is now summing up the key elements of the Dip. (See 12.30pm.)