LONDON — The United Kingdom government resolved a dispute between the Ministry of Defence (MoD), the Treasury, and the Prime Minister's office regarding additional defence funding. The resolution involves approximately £15 billion in new military spending, conditioned on Treasury oversight of a major fighter jet programme. This decision follows weeks of internal disagreement and criticism that negatively impacted cabinet relations, according to Whitehall sources.
Government departments agreed to reduce capital budgets by approximately 1 percent to allocate additional funds for military expenditure, with energy and transport departments agreeing to larger reductions. The MoD will receive nearly £20 billion in extra funding over five years, confirmed in a cross-government spending review published in June alongside a strategic defence review. In February, the prime minister agreed to increase defence spending to 2.5 percent of gross domestic product.
MoD officials stated they require an additional £28 billion over four years to fund commitments made in the defence review. John Healey, the UK defence secretary, requested approximately £18 billion from the Treasury for the Defence Investment Plan, citing escalating global conflicts increasing departmental budget demands, according to Healey allies. Rachel Reeves declined to approve requests exceeding £12 billion for several weeks.
The prime minister applied pressure on the chancellor to approve approximately £15 billion in additional defence spending. "The whole process has been a mess," said a Whitehall official. "First the Ministry of Defence told everyone their plans were fully costed and didn’t need extra cash," said the official. "They infuriated people by then coming back and asking for billions more, but then the Treasury absolutely refused to budge, dragging this out for much longer than they should have," said the official.
"The MoD conducted a defence review at the same time as the Treasury was doing its spending review specifically to avoid this scenario," said a government source. "The MoD has a terrible record in keeping its costs down so it is galling to be asked for more money just months after the defence review," said another government source. The Treasury will assume control of a multibillion-pound fighter jet programme in exchange for approving the funding. The Defence Investment Plan is expected to be published in the coming weeks. The prime minister promised to announce the plan before a Nato summit early next month.
A spokesperson for the prime minister said: "The prime minister is determined to get the Dip right to ensure we deliver the best equipment and technology into the hands of our frontline forces, whilst investing in and growing the UK economy."