Politics

Departments told to find 1% cuts to fill £4.7bn defence gap

Eleanor WhitcombePublished 10m ago2 min readBased on 6 sources
Departments told to find 1% cuts to fill £4.7bn defence gap
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Chancellor John Healey has told every government department to find cuts of 1% to their capital budgets, the money set aside for long-term spending on things such as buildings and equipment. The savings are meant to fill a £4.7bn gap in funding for the Defence Investment Plan, the government's plan for defence spending on equipment and capability. BBC News

The new cut is on top of 1% reductions departments were asked to make earlier this year. Those earlier savings paid for the first £10.3bn of the plan, which has an overall price tag of £15bn. Reuters reported that the additional cut applies from 2027-28.

The Budget 2026 speech said the plan is fully funded, including through reprioritising capital spending across Whitehall, the term for the central government departments in London. Budget 2026 speech

Healey said he will set out at next year's spending review how the UK will meet its NATO commitment to spend 3.5% of GDP, the total value of the goods and services the economy produces, on defence by 2035. He also gave a target date of 2030 for reaching 3%. NATO is the North Atlantic Treaty Organization, the military alliance.

Speaking to MPs, Healey said that meeting the 3% goal would involve "looking hard at public spending". The Office for Budget Responsibility, the government's independent forecaster, estimates that the 3.5% target will cost £35bn.

NATO Secretary General Mark Rutte said the UK was on "a credible path" towards the commitment made by all NATO allies in The Hague.

Healey also said the UK is starting treaty negotiations with Finland, Poland and the Netherlands to set up a "multilateral defence mechanism", which would allow allies to share resources. He said the National Wealth Fund and the British Business Bank will be directed to put £5bn into "defence, dual-use technology and sovereign capability". Dual-use technology has both civilian and military applications.

Defence is a reserved matter, which means decisions on it are taken at Westminster for the whole of the UK.

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