Defence Spending: The PMQs Clash Over How to Pay for Britain's Armed Forces

Kemi Badenoch used Prime Minister's Questions on Wednesday to press Andy Burnham on defence spending, urging the prime minister to cut welfare and redirect the money into the armed forces. The Conservative leader repeated existing Tory proposals to fund an increase in defence spending by reimposing the two-child benefit cap, reforming housing benefit, and removing the VAT exemption for Motability vehicles. (BBC News)

Labour scrapped the two-child benefit cap in April. The policy, which limited universal credit and tax credit claims to a family's first two children, had been a long-standing point of contention between the two parties. Badenoch denied that reimposing it to fund defence would increase child poverty. (BBC News)

The Conservative Party said its defence spending plans would include saving at least £4 billion through reforms to housing benefit, which accounts for about 12% of the government's welfare bill this year, with £37.3 billion forecast to be spent. A further £1 billion would be raised by removing the VAT exemption for Motability vehicles. The Motability scheme, operated by a private company overseen by a charity, has historically given disabled people in receipt of eligible welfare benefits a 20% VAT discount on cars. Rachel Reeves made the first changes to the scheme in 50 years last year, removing about 50,000 premium cars and reinstating 20% VAT for most new vehicles alongside higher mileage charges. (BBC News)

Badenoch also said the Conservatives would hit the 3% defence spending target by using savings from the Chagos deal and re-purposing money from the British Business Bank into defence. (BBC News)

Burnham, at the dispatch box, insisted his government is committed to fully funding its defence plans. He told MPs the government would set out a pathway to spending 3.5% of GDP on defence by 2035 in the spring. The prime minister reaffirmed the UK's NATO commitment to that 3.5% target and said he would not hesitate to disagree with Trump. (BBC News; C-SPAN; WION)

The exchange at PMQs sits at the centre of a running dispute over defence funding that predates Burnham's tenure. A NATO target agreed by Keir Starmer committed the UK to lifting defence spending from 2.6% of GDP in 2027 to 3.5% by 2035. GDP, or gross domestic product, is the total value of goods and services produced by a country in a year; defence spending targets are expressed as a percentage of it. The Telegraph reported on 29 July 2026 that Burnham failed to commit to spending 3% of GDP on defence by 2030 when questioned. (The Telegraph; The Guardian)

Incoming defence secretary Dan Jarvis, before taking office, called on Burnham to show a path to the 3.5% target. Jarvis won a modest £1.5 billion more over the next four years as part of a £298 billion defence investment plan. (The Guardian)

Badenoch had previously pledged to raise defence spending by £10 billion by cutting the welfare bill, delivering a speech in June in which she warned that Russia could attack NATO as soon as the coming years. (The Guardian; Conservatives.com)

NATO's secretary general said he is confident Burnham will stick to the alliance's long-term spending commitments. (The Guardian)

Within Labour, the pressure is not confined to the opposition benches. Labour MP Tan Dhesi called on the prime minister to commit to setting out a path to spending 3% of GDP on defence by 2030. Badenoch, in a separate line of attack, asked whether Keir Starmer had told Burnham he would have to find £4.7 billion for the defence investment plan. (BBC News; Facebook / Mark Pritchard MP)

Badenoch had laid the groundwork for Wednesday's exchange in early July, publishing an article on her own website titled "Andy Burnham has already fallen into the Labour trap." In it, she said Burnham had made a dire warning to emphasise the importance of a defence investment plan that was already late and rumoured to be far short of target. (kemibadenoch.org.uk)

Burnham has framed national security as his defining priority. In an official Facebook post on his BurnhamGM account on 4 August, he stated that increasing national security "in every sense" would be his first priority as prime minister. (Facebook / BurnhamGM)

The broader context here is a narrowing fiscal corridor. Think of the government's budget as a household with limited room to manoeuvre: Badenoch's proposals seek to identify specific welfare savings that could be redirected into defence without raising taxes or borrowing, but several of the revenue streams she has identified have already been partially tapped. Reeves's changes to Motability, for instance, reinstated 20% VAT for most new cars last year, which constrains how much additional revenue a future Conservative government could raise from the same source. Housing benefit reform at the scale required to save £4 billion would entail significant policy trade-offs, given that £37.3 billion is already forecast to be spent this year and demand is rising.

For Burnham, the commitment to publish a pathway to 3.5% by 2035 in the spring buys time but does not resolve the near-term question of whether the UK can credibly show an upward trajectory before the end of this parliament. NATO's secretary general has offered public reassurance, but with backbench Labour MPs joining Conservative demands for a firmer 2030 milestone, the political space for further delay is limited.